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Steel Industry

Volume 115: debated on Wednesday 29 April 1987

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8.

asked the Secretary of State for Trade and Industry if, when he next meets the chairman of the British Steel Corporation, he will raise the future of the five integrated plants; and if he will make a statement.

The strategy agreed in 1985, which was based on the continued operation of all five integrated works for at least three years, remains firmly in place. Decisions on a strategy thereafter must wait until a clearer picture has emerged of market developments, particulary within the EEC.

Will the Minister recognise that the Ravenscraig plan is fundamental to Scotland's long-term industrial future? Is he aware of the damage that recent speculation has done to confidence in the plant's long term future? Will he accept that the commitment to maintain steelmaking until August 1988 is no longer adequate? May we have a long-term commitment from the Government?

I understand the hon. Gentleman's concern. He will be aware that I, in company with my hon. Friend the Under-Secretary of State for Scotland, the Member for Galloway and Upper Nithsdale (Mr. Lang), who has responsibility for industry in Scotland, visited the Ravenscraig plant not long ago and had discussions with management and trade union representatives. I made it clear to them at that time that the five integrated sites policy will remain in place and cannot be altered until we have assessed the position nearer the date. The Ravenscraig plant today is working above the planned output in all areas, with some additional weekend work in the strip mill. This is a very good performance and a powerful indication that the proposals are working well at the British Steel Corporation.

As my hon. Friend knows, the British Steel Corporation is on target to make a profit approaching £200 million this year. Will he confirm that the future of the five integrated plants depends upon commercial success? If jobs in the industry, and the industry itself, are to be preserved, it is essential that the corporation remains commercially successful. Does he agree that any judgment on the future of those plants—my hon. Friend will know that the plant in my constituency is the most successful within the British Steel Corporation — must depend upon commercial success. profitability, viability, quality and reliability?

I have to endorse wholly what my hon. Friend said. The crucial factor that remains to be resolved, having agreed that the corporation is now performing with extreme success in virtually every activity, is that the market for steel products should be receptive and buoyant.

Does the Minister appreciate the need to build long-term stability and confidence in the industry and that that can best be done with assurance from the Government about the future ownership and control? Does he further appreciate that the present policies seem to be based on the premise that if steel is produced efficiently, at some future date the industry will be flogged off to the highest bidder?

The hon. Gentleman may have his own views about that, but the fact undoubtedly remains that the corporation should be in the private sector. That is where, ultimately, the Government intend to place it. The reason for that is simple — it will then be able to demonstrate beyond doubt, without any taxpayers' money being put at risk, that it can survive from profits, competition and productivity.

Does my hon. Friend agree that when the Conservative Government returned to power in 1979 British Steel was in a very sad way? It was overmanned, uncompetitive and could not win contracts against the rest of Europe, or indeed, the world. Today it is a very different story, is it not? We are now competitive. We can compete with anybody. Had it not been for the Government's help and advice, there may not have been a British Steel Corporation today.

My hon. Friend is right. It was the decisive way in which the Government tackled the problems associated with the manufacturing and marketing of steel products that enabled the corporation to restructure and to survive during the biggest steel crisis in Europe, which gave rise to the original strategy decisions in 1982 and to the decision in 1985, which is still in place.

The Minister has just confirmed his party's commitment to the privatisation of this sector of the steel industry, but will he also confirm that the previous chairman of BSC said that, regardless of productivity and profitability improvement, the privatisation of this sector could be achieved only if one of the five plants was closed?

The right hon. Gentleman will also know that over a considerable period there have been discussions with various BSC chairmen on the restructuring of the corporation. He will know that there were several discussions of that kind in 1982 and in 1985. The corporation is at the moment looking at plans for privatisation and the Government are taking advice from merchant banks. When all the advice is available, we shall take a view on how privatisation can best be achieved.

Since the top management of British Steel is notoriously anti-Ravenscraig and anti-Scottish, what guarantee will the Minister give that, in the event of privatisation, the first act of the newly privatised corporation will not be to close Ravenscraig steelworks and thus take away Scotland's indigenous steel industry?

The hon. Gentleman must take it from me that the five integrated site policy was agreed with the corporation in 1982 and 1985. There has been a consistent campaign by some Scottish representatives who seek to suggest that the corporation is not supportive of the five integrated site strategy. It is supportive of it, and it is that strategy that has brought the corporation to a highly enviable position within the EEC.