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Steel Industry

Volume 986: debated on Thursday 19 June 1980

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With permission, Mr. Speaker, I wish to make a statement.

On 11 December 1979 and 17 January this year, the British Steel Corporation announced proposals for a large reduction in manned capacity at Llanwern, Port Talbot, Consett and Scunthorpe.

The Government have made it clear that they would act to alleviate the economic and social consequences of the substantial and concentrated job losses involved. Now that the prospects have been discussed with the unions, more details of the prospective job losses are available and the Government have taken the following decisions. Subject to the necessary approval of the European Commission, we propose to make the Port Talbot travel-to-work area a special development area, and the Scunthorpe TTWA and the whole of the Newport TTWA and the Cwmbran employment office area into development areas. Firms in these areas will then be eligible for the full range of regional incentives, including regional development grants and regional selective assistance under section 7 of the Industry Act 1972. Consett is, of course, already an SDA. The reductions in the coverage of the assisted areas that I announced last July should increase the relative attractiveness of Derwentside.

The necessary orders will be laid following receipt of the EEC Commission's approval. I am aware of the need to complete this process before 1 August. The Government are aware of possible further redundancies in these and neighbouring areas—particularly Swansea—consequent upon the rundown at these steelworks or through related closures, and will continue to keep a careful watch on the situation relative to the rest of the United Kingdom.

The Government will make available any additional resources that may be needed for increased entitlement to regional development grants. The Government also plan the following expenditure measures, which will be found from within the programme allocations for which my right hon. Friends and I are responsible.

First, I deal with factory building and site development. My right hon. Friend the Secretary of State for Wales has already announced a two-year programme of land acquisition, derelict land clearance, site development and factory building in those areas in South Wales affected by the rundown. For Consett and Scunthorpe, the Government will provide £19 million at 1980 public expenditure survey prices to enable the English Industrial Estates Corporation to increase building over the next five years—about two-thirds to Consett and one-third to Scunthorpe.

Derelict land clearance grants of up to £10 million will be available in the three to four years beginning in 1981–82 for approved reclamation schemes at Consett and, to the limited extent that they are relevant, Scunthorpe, within the framework of the new system of local authority capital expenditure controls that will operate from April next year.

On manpower measures, the Government recently announced a new scheme to provide assistance towards the cost of in-plant training and this scheme will be of particular value to those areas suffering from steel redundancies. The Manpower Services Commission, in addition to its normal placing and training services, will be introducing certain new measures for steel rundown areas. They include work assessment/reorientation courses on which job finding and retraining possibilities will be expanded. Small business training courses on how to start businesses will also be expanded.

Assistance will be provided through industrial training boards to help firms that take on first or second year craft apprentices made redundant by the steel industry. In the operation of the youth opportunities programme, special attention will be given to the needs of these areas.

The Government are also considering the scope for extra assistance for unemployed people in these areas who move home to take up a job in another area.

There are a number of detailed points in the right hon. Gentleman's statement which the House will wish to study and we will expect a debate upon them in Government time.

The remedial measuers are introduced to alleviate a problem created by the Government themselves. They do not affect the heart of the matter, which is the decline in manufacturing industry and steel production, which has now accelerated to crisis proportions. I ask the Secretary of State three questions.

First, last year's Government announcement on regional policy proposed to cut down on areas of special assistance. These measures, apparently, now propose to increase the number of those areas. Is that not an admission of total failure by the Government?

Secondly, I take Consett, which two of my hon. Friends mentioned during business questions, as an example. If Consett is closed unemployment in Derwentside goes up to, I believe, about 50 per cent. In this package there is no mention of the creation of a single new job. How many new jobs does the Secretary of State's Department calculate will be created and on what time scale?

Thirdly, what industries does the Secretary of State think will be induced to go into these areas in the light of Government policy, in the light of Government refusal to invest, in the light of high interest rates and in the light of an—over valued pound? Would not the best remedial measure of all be the resignation of the Secretary of State?

The answer to the right hon. Gentleman's first question is that successive Governments have been proved, in the event, to have over-expanded the nationalised British steel industry. The Labour Party, when in government, started, though after a long deferment, a process of reducing the manned capacity of the steel industry. We are having to face up to deferred decisions that should have been taken by the previous Labour Government.

I am asked by the right hon. Gentleman how it can be right that after the announcement of a substantial reduction in the number of assisted areas new assisted areas should now be added. The whole purpose of the reduction of the number of assisted areas announced last year was that, in the view of the Government, the number of such areas was so large that help to the areas that most needed assistance was being substantially reduced. It is because we have pruned the number of those areas that the announcement of an additional few assisted areas now makes practicable the concentrated help that will be of most use to areas in need.

The rate of unemployment that may occur in Consett is 20 per cent. It is not the far higher figure mentioned by the right hon. Gentleman. I am asked what new jobs would be created and how new firms will come into existence in those areas. The answer is shown by the evidence in South Wales, where only this morning in the newspapers there is news of five more—admittedly relatively small—factories opening there in different industries. A number of new advance factories being built in South Wales already have tenants waiting to use them and I have no doubt that the new factories to be built at Consett and Scunthorps will, in time, be the location of new firms and new jobs.

The Secretary of State is good at answering his own questions. Would he mind answering mine? How many new jobs has his Department calculated will be created by these measures, and on what time scale?

It is impossible to give a precise figure, but we would expect that over the next few years the factories that are now being built in South Wales will provide space for about 5,000 new jobs. The land, when developed, will accommodate a further 15,000 to 20,000 new jobs.

I cannot give a precise figure for Consett, but 80 acres of land will be developed for industrial purposes. That is in addition to an industrial estate already under construction in Consett.

Will my right hon. Friend accept that his announcement in relation to my constituency at Scunthorpe will be received with deep gratitude by everybody there? It will be received with gratitude not only by me but also by the Labour-controlled Scunthorpe borough council and the Glanford borough council, which have joined me in representations to his Department during the last four or five months. They will be most grateful for the way in which my right hon. Friend has responded to their representations.

Is my right hon. Friend aware that his announcement will help in the task of trying to make a one-industry town less dependent on a single industry and does he accept that his announcement will not be regarded as the be-all and end-all in trying to attract and encourage new industry to the area? Will he accept that local authorities, local industry and I fully accept that we must play our part in attracting and encouraging new industry to the area of Scunthorpe? Will he also accept that during the course of the last few years we have done our best to make sure—[Interruption] This is a matter——

Order. I believe that the hon. Member for Brigg and Scunthorpe (Mr. Brown) was reaching the conclusion of his peroration.

I was indeed, Mr. Speaker.

Will my right hon. Friend accept that my constituency is particularly grateful to his Department for the grants made through the English Industrial Estates Corporation?

I agree with much of what my hon. Friend said. I think that in Scunthorpe, more than in Consett, there is the prospect of some private sector industrial building in addition to public sector building.

Is the Secretary of State aware that unemployment in Consett is already running at 12½ per cent. and is rising and that we need 2,000 new jobs now, with £15 million to £20 million of immediate investment, plus the retention of the steelworks? If the steelworks go, the right hon. Gentleman's estimate of an unemployment rate of 20 per cent. is absolutely ludicrous—it will be nearer 50 per cent. If the steelworks are closed, £80 million of investment will be needed in the area to make good the job losses.

Since it is now one of the famous BSC open secrets that Consett has a potential profit level this year of £7½ million, is not the best investment for the country to keep the works open?

I do not wish to attempt a glib answer about Consett. In the view of the British Steel Corporation, the product of the steelworks there is not needed. We are providing large sums of taxpayers' money for new factory building. But I cannot deny that the male unemployment rate will probably be 25 per cent. when the steelworks close. The overall unemployment rate will be the 20 per cent. to which I referred. We shall do our best to help——

For years and years the policies introduced or supported by successive Labour Governments have driven successive entrepreneurs out of Britain.

Does my right hon. Friend accept that there will be satisfaction that the Government have moved and taken action? As additional redundancies have been announced at Shotton since the original remedial measures of the Government were offered earlier this year, will he reconsider whether the aid provided for North-East Wales is sufficient to meet a situation that is still deteriorating?

My hon. Friend is right to refer to some additional redundancies that have occured in that area. He will be aware that by no means all of the £15 million of taxpayers' money for spending in the area that he represents has been committed by my right hon. Friend the Secretary of State for Wales. There is further public money still available from that source. My right hon. Friend tells me that there is hope of some private sector investment in industrial building.

Does the right hon. Gentleman realise that it has taken more than six months since the British Steel Corporation announced its redundancy proposals for him to make his statement? Does he realise that, despite that incredible delay, he still has it wrong? Does he accept that his statement is pathetic in its inadequacy in respect of Wales, where 50,000 jobs have already been declared redundant in addition to the steel jobs that are now to go?

Is the right hon. Gentleman aware that in Wales the travel-to-work areas are not an adequate description of the catchment areas of the enormous steel works, as 50 per cent. of the work force travels for more than five miles? Does he accept that because of that it is essential that Newport, Cwmbran, Newbridge and the whole of West Glamorgan should have full special development area status? Has he considered the repercussions—they are not mentioned in his statement—for the Welsh coal industry, where possibly as many jobs will be at risk? What assessment has he made of the job loss in that industry? Why is no extra help announced in his statement for the affected coal areas?

The right hon. Gentleman is wrong in attacking me or the Government for any delay. My right hon. Friend the Secretary of State for Wales announced in the House a £48 million programme for South Wales only a few weeks after the British Steel Corporation first announced that it was to propose a number of redundancies in the steel industry in South Wales. It would have been wrong for the Government to quantify those probable redundancies until the process of discussion with the trade unions had led to firm decisions by the BSC.

We are trying to provide fair treatment in assisted area status for not only employment areas in Wales but for each travel-to-work area in Wales, Scotland and England. It would be wrong to base upgrading or downgrading on the first announcement of figures before final decisions are made. The Government have been prompt in making today's set of announcements as the final decisions were taken by the corporation only two or three weeks ago after discussions with the trade unions.

Does my right hon. Friend agree that what is not needed in these areas is the development of factories to produce cosmetics, shirts and women's underwear? What is wanted is factories that will employ male labour. Is his Department able to influence development in that direction?

I am not sure that I agree with my hon. Friend. Factories that produce what customers want at home and abroad are wanted in all these areas.

I failed to answer one of the questions put to me by the right hon. Member for Swansea, West (Mr. Williams). He asked whether the Government had taken into account the repercussions in the coal industry. We are aware that there may be redundancies in that area. The redundancies that may occur will be far fewer than the scare figures canvassed by Labour Members some months ago.

We do not know what they will be. We know that they will not be anything like as high as was being suggested by Labour Members. We do not know the timing of them. We are always prepared to reconsider the status of any travel-to-work area as new figures come into existence. I remind the House that we have not taken into account precisely the new jobs that are coming on stream from investment, both private and public, that has already been made.

Is the right hon. Gentleman aware that as well as being a disaster for Consett the closure of the steel plant, if it goes ahead, will be a disaster for the whole of the Northern region and will have the same implications for the coal industry in County Durham and for other industries in the Northern region as for South Wales? Will he tell the House how much taxpayers' money will be required—that is, money from taxpayers in the Northern region, in South Wales and from other parts of the country affected by the Government's cuts—to go into the measures that he has announced in Consett? How can he justify spending that money on the closure of a plant that is profitable, can make a contribution to the whole community and can save taxpayers' money?

The fall in the use of coal from the closure of the steelworks would be just as great if the steelworks remained open but did not produce steel because it could not be sold due to the uncompetitiveness of our steel or the fall in the market. I have said that about £12 million of taxpayers' money will be devoted to Consett.

I welcome my right hon. Friend's statement, but is he able to indicate the success of BSC (Industry) in attracting new businesses to the closure areas? Is it empowered to seek buyers for complete steelworks? Is he able to confirm that Sir Charles Villiers is being retained by the corporation to help with this work?

I cannot give precise figures. The work of BSC (Industry) is useful. The corporation is always ready to discuss the sale of complete steel works. I believe that Sir Charles Villiers is doing work connected with BSC.

Is the right hon. Gentleman aware that there will be great disappointment in West Glamorgan at his pathetic response to the representations made by my right hon. and hon. Friends, by the county councils and by the trade unions in drawing attention to the problems in West Glamorgan, which will be heightened in Port Talbot? Does he not realise that Port Talbot is the means of providing work throughout West Glamorgan? Nothing short of making the whole of the country a special development area will deal with the situation.

I repeat that we have tried to play fair as between all the different claimants throughout England, Scotland and Wales to assist in area status. I believe that we have the balance right in this instance.

Will my right hon. Friend bear in mind that last year my constituency lost its intermediate area status, a fact that I defended robustly even though my local council did not entirely agree with the decision? Will he bear in mind that the constituency of Scunthorpe abuts mine? Will he confirm that his decision does not constitute the first U-turn?

I gladly confirm that. We have emphasised at all stages that we shall review the status of any part of the country in the light of its evolving economic position.

Does the right hon. Gentleman accept that the measures that he has announced go nowhere near meeting the real needs in Durham, and especially in Consett? Is he aware that there are 4,000 direct jobs in the steelworks and 2,000 indirect jobs? He will have read in today's edition of The Times that 1,000 jobs in that area have been lost during the past 12 months due to Sir Charles Villiers challenging the work force in Consett to be viable by March 1980. It has met that challenge. Would it not be sensible economically and socially at least to give it a chance for another two years and to keep the works open? Any measures announced today will have no direct effect in Consett for at least two years.

The Opposition tend to assume that Governments can create jobs at their own will. I am not underestimating the impact on Consett. The impact on Consett is a reflection of the market position in which the British Steel Corporation finds itself. Consett has made heavy losses for almost every period in recent years, as the right hon. Gentleman is aware. I do not underestimate the impact of the changed position on the people of Consett.

Is my right hon. Friend aware that I am delighted to congratulate him on putting money into areas where it is really needed? Even if it is not a U-turn, may I congratulate him on at least a little S-bend?

As I am slightly concerned about Consett, it is as well that an expression should be made by Government supporters that this could create another Jarrow—a town in which I lived as a boy—in the North of England. Will he consider slowing down the process until some industry gets there, or offering it—this should appeal to my right hon. Friend—for sale to the private sector?

It was made clear by British Steel and the Prime Minister that we would welcome offers from the private sector to take on Consett.

Is the Minister aware that the thousands of unemployed in Bilston will be astonished that they were not even mentioned in the modest recital of schemes that he submitted to the House? Is the Minister aware that following the closure of steel making in the town of Bilston unemployment rose to 14 per cent. and that only one job is advertised for every 14 workers? Will the Minister accept from the Opposition that unless massive risk capital is put into these areas all the schemes suggested will come to nothing?

I am ready to consider any claim that any one area which does not have the right status should be reconsidered. In the light of the hon. Gentleman's comments, I shall reconsider the travel-to-work area concerned and write to him. However, I do not want to hold out any hopes.

In my right hon. Friend's statement there occurred in three separate places the somewhat incongruous phrase "subject to EEC approval". What happens if that approval is withheld?

What happens if that approval is withheld is presumably the same as would happen if it is withheld by the Commission in any application from another country in the EEC for assisted status. After all, it is in the interests of the people of this country that our partners in the EEC should not apply taxpayers' money excessively to their areas. In return for that, we commit ourselves to the same criteria.

Is the Secretary of State aware that it is not only the areas which he announced this afternoon that are affected by steel closures? Does he recall that the rod and bar mill at Irlam, in my constituency, closed last year; that last year he removed assisted area status from the whole of the Newton constituency ; and that in July this year the profitable Bewsey Road rod and bar mill in Warrington will be closing?

Is the Secretary of State also aware that the Cheshire education authority has just released figures which show that, other than Glasgow, Cheshire will have the highest unemployment rate among young people in the United Kingdom? Will the right hon. Gentleman reconsider his ludicrous decision to remove assisted area status from the Warrington travel-to-work area, to assist my constituents, who have been so grievously affected by his decisions in the past?

I shall certainly look again at the figures. It is a question of looking not only at the unemployment figures but at all the criteria that are laid down in the Act and comparing them with those for the rest of the country—always remembering that the more widespread is assisted area status the less focused is the help that goes to those most in need.

Order. I interrupt the hon. Gentleman to inform the House that I intend to call every hon. Member who has been rising.

I make no apology for bringing the Secretary of State back to the situation which will be created at Consett as a result of the closure of the steelworks there.

The Secretary of State said in quiet and sympathetic terms that he did not underestimate the devastation—that is my word—that will result in the town. Does he recognise that his announcement today is inadequate in the face of those problems, and that special development area status will go no way towards meeting the problems that will result? Should not the right hon. Gentleman create a special task force to consider immediately the situation in Consett in particular and in Derwentside in general? Should he not, in view of his own admission that there is not a single new job in the pipeline for the town at the moment, put more money into bringing industries in immediately to provide employment in Consett and the surrounding area?

The hon. Gentleman knows from his experience in the Labour Government that it is not possible to bring in new jobs immediately. It is possible to create conditions in which new jobs come of their own accord and that is what happened over the years, for instance, at Ebbw Vale, where the Labour Government, after a long delay, presided over the closure of a large steelworks. I could have announced this afternoon something that would have appeared to be an active initiative, such as a special task force. However, I do not believe that it would have done any good. Therefore, I did not propose it. The fact is that this country needs a more encouraging climate for industry. That could best come from co-operation between work forces and their management in getting down inflation and increasing productivity and profit.

Is the Secretary of State aware that the general manager of the British Steel Corporation's operations in West Cumbria applied to the Allerdale district for rate relief under sections 53 and 54 of the General Rate Act 1967, "pleading poverty" ?

In the light of the added redundancies of nearly 1,000 in BSC Cumbria over the past four months, and the jobs that have been displaced, would the Secretary of State be willing to review the downgrading of West Cumbria which he announced on 13 July last year?

I am always ready to review, provided that the act of reviewing does not raise false hopes.

Is the Secretary of State aware that the pathetic measures proposed by the Government for Corby as a remedial means are already proving to be inadequate? The Commission for the New Towns in that town will run out of money before Christmas for advance factory building. The decision of the Ministry of Transport to defer the building of the M1 link until 1984—giving preference, as I understand it, to bypasses for historic towns—is causing a deep depression in the area. I only hope that the remedial measures which the right hon. Gentleman announced this afternoon will prove more successful than those that were promised for Corby.

Does the Secretary of State accept that Wales will be dismayed by this puny and tardy response? As he said, it takes time to bring jobs to an area, and his Department knew months ago, last autumn, that a plan for Llanwern and Port Talbot inevitably meant that there would be massive rundowns. Are not he and his Department culpable for the inexcusable lack of response now? Will he take it from me that the response now given so belatedly, which does not consist even of special development status for Cwmbran and Newport, shows a lack of appreciation of the yawning gap between the jobs in the pipeline and the factories that are going up, and the inevitability that a huge pool of unemployment will remain.

Has the Secretary of State no ingenuity or inventive ideas, after this long incubation period, other than to revive the special development area status? Will he now have the courage to go again to Wales in the light of what he has announced, and will he accept that he will have no less a warm reception than he had on the last occasions?

There is a certain ambiguity about the last part of the hon. Gentleman's question, but for the rest I do not think I should answer in the way his rhetoric suggests. I do not accept that there has been a delay. A massive building programme was announced and initiated by the Secretary of State for Wales within weeks of the announcement of probable redundancies. There is a large building programme going ahead in the hon. Gentleman's constituency. We have to be careful to apply fair treatment to each travel-to-work area in the whole of England, Wales and Scotland. To have acted on announced intentions of redundancy rather than final decisions would not have been the way to provide fair treatment.

Does not the Minister realise that by closing steelworks in the way that this Government are closing them will in the end cost the taxpayer a small fortune in unemployment pay, redundancy pay, loss of tax, and tax rebates that will have to be paid in some circumstances? Does he not also realise that we have been through all this before in the coal industry, in the 1950s and 1960s, under Governments of both parties? The same principles that he has announced today were applied then. They did not rescue the coal industry. The coal industry was rescued only because the country suddenly found itself short of energy as a result of the oil monopoly and the rising price of oil.

On the question of entrepreneurs, the climate created by this Government has resulted in money going into property. Mr. Jim Slater and Mr. John Bentley are back on the scene. Ladbroke's profits increased by 71 per cent. Pleasurama announced a 41 per cent. dividend in crease. Rank has made a £15 million profit——

I believe that all the hon. Gentleman's assumptions are based on fallacies. He would have us preserve jobs for the sake of jobs without realising that industries are growing as other industries are declining. He is making purely static assumptions—that all those who are unemployed will always remain unemployed.