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Steel Industry

Volume 35: debated on Monday 17 January 1983

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asked the Secretary of State for Industry if he will make a statement about the future prospects for the British Steel Corporation.


asked the Secretary of State for Industry whether he will make a statement about the future of the steel industry.


asked the Secretary of State for Industry when he next plans to meet the chairman of the British Steel Corporation to discuss future plans for the industry.

I have nothing to add to the full statement made by my right hon. Friend the Secretary of State on 20 December 1982.

Does the Minister agree that neither the corporation, the steel industry as a whole, nor the country is assisted by the current conspiracy imminently to introduce a further and major measure of steel privatisation? Would he accept that if this goes forward, evidence is or should be in the Government's possession to illustrate that such a development would drastically and seriously further reduce our steel industry capacity and also clearly lead to a major increase in the amount of steel imported into this country?

There are two problems. First, there is an excess of capacity in several areas of the products of the British Steel Corporation where they overlap with the private sector, and rationalisation is needed there. Secondly, there is a difficult area of competition between the public and private sectors. To see that the private sector is not damaged by subsidised competition from the public sector we think that an element of privatisation in those areas is absolutely essential. There has to be a clear boundary between the private and public sectors.

Is the Minister aware that, despite the decision to keep open Ravenscraig, more than 3,000 jobs in the Scottish steel industry have been lost during the past six months? Will the Minister tell Ian MacGregor that we have had enough of the steady haemorrhage of jobs from the Scottish industry and that, if further redundancies are being considered, it would be better to make Ian MacGregor redundant when his contract comes up for renewal later this year?

Obviously, I cannot agree with the hon. Gentleman. Mr. MacGregor has done an excellent job as chairman of the British Steel Corporation. He has given the corporation some hope for the future, which it has not had for a long time. The hon. Gentleman referred to job losses, which are to be regretted, but the corporation has been uncompetitive and overmanned for some time.

With regard to Llanwern, will the Minister tell the chairman to forget about the privatisation of essential services, if only because the previous move towards private contractors led to fiddling on a massive scale? Does the hon. Gentleman agree that we need an early decision giving the go-ahead for the Concast plant, because any long drawn-out suspense on that matter can only lead to further demoralisation of the work force?

The provision of the Concast plant at Llanwern is a matter for the management of the corporation, which has not yet made such a proposition. I repeat that we have always made it clear that as much of the corporation as possible should be privatised. Had that happened earlier, there would be more jobs in the British steel industry than there are today.

Recognising that in the Government's statement before Christmas there was an instruction to ensure that steelmaking should continue at five plants rather than at three or four, when the Government receive the details of the corporate plan from the corporation, will my right hon. and hon. Friends in the Department of Industry ensure that Mr. MacGregor's plan does not involve less steelmaking at plants that were not under threat of closure than might otherwise have been the case?

We have always made it clear that, although the statement implied that the five-plant configuration should persist for the time being, decisions about the make-up of individual plants and the steel made there must be a matter for the corporation. However, I shall consider what my hon. Friend said.

How much do the Government expect to pay to Lazards for Mr. Ian MacGregor's performance-related transfer fee? Does he agree that if Ministers were judged on the same basis, they would all be on the free transfer list and that it would be difficult to find a taker for them?

No payment has yet been made. The matter must be decided by the review body that considers Mr. MacGregor's remuneration.

Is my hon. Friend aware that, although the Government have shown great courage in supporting some of Mr. MacGregor's courageous decisions, there are still some painful decisions to be made? Does he agree that the deferment of a decision on Ravenscraig—for that is what it was—means that there is an even heavier reckoning to come?

It is correct to say that some painful decisions have been taken. I have no doubt that, unless the world-wide outlook for steel improves, painful decisions lie ahead in the longer term. However, we have taken painful decisions. Manpower has been reduced from 186,000 to 90,000. Installed capacity has been reduced from 26 million tonnes to 21 million tonnes and manned capacity is only 14 million tonnes. Although my hon. Friend's note of realism is correct, many tough decisions have been taken by the Government.

Is the Minister aware that many departments of the special steels group in South Yorkshire have been run down and demanned to the point where they cannot possibly be profitable? Is that not deliberate policy as a preliminary to the privatisation of what remains of the corporation's special steels division at a figure far below the true market value?

The hon. Gentleman is not correct. We wish to see a better position for the special steels sector, which is why we have pressed in Europe for an extension of EC arrangements on some special steels. We recognise the difficulties faced by the industry.

Does my hon. Friend agree that perhaps the most important determinant of the prospects for the British Steel Corporation is the competitiveness of our major steel-using industries, such as motor cars, shipbuilding and machine tools? Does he further agree that to try to build a future for the steel industry without considering the competitiveness of those industries is to live in cloud-cuckoo-land?

My hon. Friend is absolutely right. That is why the chairman of the corporation has said that it is wrong to believe that the problem of the British steel industry is imports. The problems of the British steel industry are high costs, lack of competitiveness and a decade of high inflation. Those problems have destroyed British industry, especially the steel-using industries. Until we become more competitive, the demand for steel will be low.

Is the Minister aware that since the Secretary of State made his statement on steel in late December, several hundred more jobs have been lost in Scotland and 600 in Hartlepool, which is one of the largest areas of unemployment in the United Kingdom? When will such bleeding of the industry stop? As my hon. Friends have said, if we do not stop it we shall not have a viable industry. I support the demand by my hon. Friend the Member for Newport (Mr. Hughes) for an early statement about the Concast plant at Llanwern. Such a statement must be made as soon as possible.

I have already said that the management of the British Steel Corporation has not yet put a proposition to the Government. The right hon. Gentleman is perhaps reflecting the views of the local management rather than of the corporation. We have always made it clear that manning at individual plants is a matter for the corporation, notwithstanding the Government's involvement in the decision on the five major integrated sites.