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European Steel Council

Volume 87: debated on Wednesday 27 November 1985

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asked the Secretary of State for Trade and Industry if he will make a statement on the outcome of the European Steel Council in Luxembourg on 29 and 30 October.

I was extremely pleased by the outcome of the Steel Council on 29 October. Industry Ministers agreed a tough new code on state aids to the steel industry, which should protect all United Kingdom steel firms against the risk of subsidies to their continental competitors. The first steps were also taken towards a return to a free market in steel, with the ending of quotas on coated sheet and reinforcing bar.

In addition, my hon. Friend the Minister of State negotiated an improvement in BSC's quota of 360,000 tonnes. The corporation has had to resort to expensive and uncertain quota purchases over the last two years to maintain its share of the United Kingdom market at a time when the United Kingdom economy was expanding faster than continental economies. This quota increase should consolidate BSC's position after the acquisition of Alphasteel, without the need for more ad hoc deals.

Does my right hon. and learned Friend agree that BSC is now one of the most cost-effective steel producers in Europe, and compares well with Japan and the United States? Does not this welcome increase in quota achieved by my hon. Friend the Minister of State represent an opportunity for BSC to achieve increased viability, which is the only means of securing job security and its long-term future?

My hon. Friend is absolutely right. The private and public steel industries' achievements have been substantial and are worthy of my hon. Friend's commendation.

What further closures are intended in the engineering steels sector, since the Govenment are to put money into the new private sector company that will take over next April, and since the Council of Ministers has decided that no state aid will be permissible after January unless associated with capacity reductions? Can the House feel confident that the right hon. and learned Gentleman knows more about the steel industry than does the Minister of State, who, four weeks ago, assured me and my hon. Friend the Member for Wentworth (Mr. Hardy) that rumours of further cuts were complete conjecture, at the very moment when BSC' was announcing them in Rotherham?

I assure the hon. Gentleman that our agreement to the completions package does not have any implications for closures such as he has in mind.

Does the Secretary of State accept BSC's prediction in its corporate plan that there will be no increase in demand for steel in the 1990s because of the further decline of British manufacturing industry?

I do not accept the question in the terms that the right hon. and learned Gentleman has employed. BSC has to make its plans. It is entitled to do so. The basis of the Government's decisions in regard to steel were announced in August and have not changed since then.