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British Steel

Volume 131: debated on Wednesday 13 April 1988

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To ask the Chancellor of the Duchy of Lancaster what representations he has received from private sector steel companies about the proposed role of British Steel in the private sector.

I have received no formal representations from private sector steel companies on this subject.

Does my hon. Friend accept that if we are seeking to establish a fair market in Europe it is important that the steel quotas should be abolished so that the efficient firms in our country can prosper?

My hon. Friend will be well aware that my right hon. and learned Friend the Chancellor of the Duchy of Lancaster is at the forefront of a campaign to do just what my hon. Friend wants.

Bearing in mind that the present level of profitability in BSC is only just a little above what Sir Robert Scholey says he needs every year for reinvestment, is it not obvious that the Government are rushing BSC into the private sector because Ministers want to get it off their hands before it is hit by the full impact of electricity price increases, which will reduce its competitiveness, and before it is thrown into a cut-throat price war in Europe following the abolition of quotas? What assurance can the Minister give the House that a privatised BSC would be able to prosper or even to survive in those circumstances, and without the kind of backing that its competitors in Europe will certainly get from their Governments?

We are entirely happy with the achievements of the chairman of British Steel, together with the work force. We are more than satisfied that the sort of effort that is being put into making the company successful now will help it to be just as successful when it returns to the private sector, where it belongs.

Is it not true that steel quotas cost jobs in the steel-consuming industries by pushing up the price of steel? Will my hon. Friend put up a firm fight against the European steel producers who are pushing for an extension of those pernicious quotas, which do our economy nothing but harm?

Is it not the case that in the Federal Republic legal action is being prepared, not only against Finsider, the Italian steel company, but against the British Steel Corporation? In view of that development, is it not reasonable to suggest that a proper response should be offered and any difficulties surmounted before any further progress is made along the course of privatisation?

I understand that the West German Iron and Steel Federation has complained to the European Commission about the Commission's approval of payments made to BSC between 1975 and 1985, which were approved by the Commission under the rules operating at that time. It is not a new complaint. Similar complaints have been made by German industry in the past and they have been rejected by the European Commission. It is, of course, for the Commission to consider the present complaint. We reject any allegations that illegal state subsidies have been paid to BSC in the past, since all those payments were approved by the Commission. BSC is now profitable and self-supporting.

We have been talking about the single market in the EEC. If BSC is returned to the private sector, will it not have to compete in unfair conditions in the sense that it has to face energy costs which are being used as a form of indirect taxation and to pad out the proposed privatisation, and rate support grant cuts which again are being used as a form of indirect taxation? That means that BSC will not he able to compete on equal terms. Or do the Government not care, once it is out of their control and responsibility?

These are matters for the British Steel Corporation. As I said earlier, we are satisfied with the judgment of the chairman, the board and the work force of British Steel about being able to cope, because they want to be returned to the private sector.