§ Motion made, and Question proposed That this House do now Adjourn.—[Mr. Humphrey Atkins.]
§ 4.15 p.m.
§ Mr. Michael Foot (Ebbw Vale)
Unfortunately, we have only a short time for this debate. I emphasise at once that we on this side, and, I hope, hon. Members opposite, regard the subject as one of extreme national importance, particularly in view of the shocking and, as I would describe them, shameful unemployment figures published today.
We are concerned about the future of a great British industry. We are concerned about the livelihood of many of our constituents, particularly on this side of the House since we represent most of the steel constituencies. If in my speech the famous name of Ebbw Vale intrudes into what I have to say, I know that my hon. Friends will forgive me. What we are all seeking to do is to bring to the attention of the House of Commons and the Government the fears, the passions, the uncertainties and the agonised controversies which now grip every steel town in the country.
I begin with some of the awkward financial facts which we must face. The British Steel Corporation made a profit in the first six months of the current year of some £30 million, but it is now heading for an overall deficit during the year of probably £25 million. During recent months costs have risen at a figure of well over £100 million a year, and if that position were to continue without any remedy in the forthcoming year the probability is that the loss of the Corporation might amount to as much as £125 million. That is a bleak prospect and one for which remedies have to be provided. But one of the things we are concerned about in this House is that panic measures should not be advocated, much less taken, in order to deal with such a situation, and I would first like to put some of the difficulties in another and perfectly legitimate perspective.
There is the question of the financial situation which the Corporation inherited. I shall not go over the old controversies about the state of the industry, although we would be willing to do so. But if one takes the 13 companies 1672 taken over by the Corporation in 1967, under the new and better form of accountancy which the Corporation has applied to the industry their collective loss would amount to something like £56 million in the last year under the old owners.
However the figures of the losses of the Steel Corporation are taken, including the £25 million loss this year, it did not make as big a loss as in the last years under the old companies. The last fact which puts the figures in a slightly different perspective is that if the Corporation had been permitted—and whether it should have been is a matter for argument—over the past two or three years to charge the same prices as those which have prevailed on the Continent of Europe, it would have had an extra revenue of £200 million, which again would put these figures in a somewhat different perspective.
That does not mean that we do not have to remedy the situation. We have, but it puts a different light on matters. I dare say that this is one of the major factors that has to be taken into account in deciding upon the application which I understand the Corporation has made to the Government about a price increase.
Over the past year or so, or at any rate until fairly recently, there has also been another picture in the steel industry, a hopeful and adventurous one. That was the picture that the steel industry presented through the investment programme which the Corporation has spent much of its time devising. It is a £3,000 million programme designed to raise production in the steel industry from the present level of something like 25 million tons to 42 million tons by the year 1980—a most comprehensive and ambitious programme and, as some of us believe, one that should have been embarked upon many years earlier.
If the programme is carried through it makes a startling change in the industrial affairs of this country, because over the past 15 years or so the annual percentage increase in production in the steel industry has only been about 2.6 per cent. or 2.8 per cent., a derisory figure. If this plan were put through it could be built up to 6 per cent., 7 per cent., 8 per cent. or more. It would begin to make the steel industry, while not exactly comparable with the Japanese 1673 industry, at least one to be thought of in a similar context.
That was a hopeful development. Throughout the country what the Corporation did was to propose methods, to have discussions with the different industries and plants as to how that development programme could be carried into effect. Undertakings, proposals and commitments have been made by the British Steel Corporation and, in my opinion, this was one of the most hopeful developments that had taken place in the industry for generations.
My accusation against the Government in the debate is that they have done nothing to assist those hopeful developments but have begun a whole series of measures which have injured the position. I know that the Prime Minister never likes to accept responsibility for anything done by his Government. What I propose to deal with are measures taken by the present Government which have influenced the position of the Steel Corporation. I do not say that everything the Corporation does is right by any means. I do not say that every detail in the development programme is right. Many of my hon. Friends have criticisms to make of particular parts, but I believe it should have been a major responsibility of a Government genuinely concerned with the prospects of a great industry of this character to assist in the development programme.
Soon after the General Election the exchanges started between the right hon. Gentleman the Secretary of State for Trade and Industry and his Department and the Corporation on the whole question of the structure of industry. Ever since, for about nine months, a large part of the energies and resources of the Corporation have had to be devoted to the task of dealing with the proposals or suggestions or innuendoes or rumours circulated by hon. Gentlemen opposite about cutting off this part of the industry or that part of the industry.
§ Mr. Foot
The right hon. Gentleman shakes his head. Perhaps he will tell us whether or not reports have been required by him from the Corporation dealing with these matters. Does he not think 1674 that a large part of the time of the Corporation has been spent dealing with these matters? We all know that it has been going on. Perhaps he will tell us who in the whole country has been in favour of the dismantling of the present structure of the Corporation? It is not the City of London, it is not the C.B.I.—the right hon. Gentleman can tell us about that—and it is certainly not the T.U.C. or the trade unions, or those who work in the industry.
I have talked to people working in the industry throughout the country over the past weeks and months and there is one proposition above all others on which they are agreed: they want an end to the uncertainty about the structure of the industry. This is the view expressed to me not just by people who happen to agree with me politically but by people who are Conservatives, by those who are working in the industry—and there are a lot of Conservatives working in the industry—in management and elsewhere. All of them without exception say "For heaven's sake let the Corporation get on with the job of carrying through the development programme".
Perhaps I can say a word or two in parentheses about Lord Melchett, the head of the Steel Corporation. I do not want to say anything too friendly about him which could do him damage with the Government, but I think it would be churlish of me not to point out that when Lord Melchett was appointed to his position as head of the Corporation by my right hon. Friend the Member for Greenwich (Mr. Marsh) I did not heap upon my right hon. Friend the bouquets that I always like to offer him—with which I normally tried to sustain the last Government when they were engaged in good works.
I am quite ready to acknowledge now that he was right and I was wrong—a most staggering development, almost unique in modern parliamentary history. I say, quite seriously, that I believe that the steel industry at this critical time in its development has the good fortune to be led by a man of courage, honesty and intelligent judgment, a man who has, despite all these difficulties, gained great support throughout the country among management and unions. This part of what I say I say officially on behalf of representatives of the Steel Committee of 1675 the T.U.C. who saw me and said this. In these circumstances of the industry it seems a considerable achievement of management, and I say to the right hon. Gentleman and the Government that if Lord Melchett were forced out of his position by pressure from the Government it would be a calamity for the industry.
I hope that one result of this debate will be that we will end this tomfoolery about carving up the structure of the Corporation and that the Corporation under the leadership of Lord Melchett will be enabled to go ahead with the real task of carrying through the modernisation of the steel industry.
I come to some of the other measures which have been taken by the Government—things for which they cannot blame anyone else. These are measures which have imposed fresh burdens on the steel industry. There is the abolition of the investment grants, likely to cost the Steel Corporation £100 million in a full year. The investment programmes of the Corporation are proposed to run at something like £300 million a year. Investment grants amount to a third of that figure.
I do not know what discussions the hon. Gentleman had with the Corporation before he decided to abolish the investment grants. Perhaps he will tell us. He should have had discussions, because the fact that investment grants play such a major part in the Corporation's finances is an indication of the major part which the operations of the Corporation play in the activities and hopes of all the development areas. The Corporation will be denied that assistance in carrying through its development programme unless the Government put forward alternative financial proposals which offer it equally good prospects.
Then there are the proposals which have not been fully carried into effect—we have been told about them in the way in which the Government carry out their operations—for ending the control over the export of scrap. I do not know whether those proposals will be carried through. If they are, they will add another £20 or £25 million to the Corporation's burden.
There is also the question of dealing with the jagged edges between the dif- 1676 ferent parts of the industry. It is a question, not of hiving off, but of hiving off slightly and hiving on in respect of proposals which the Corporation put to the Labour Government before they went out of office to which it has had no answer from the present Government.
All those measures, together with the uncertainties about the structure, are making it much more difficult for the Corporation to do its job. However, formidable though they may be in creating difficulties for the Corporation, they pale beside the other measures which the Government have been taking, particularly in recent months, such as the merciless financial squeeze which has been applied to the steel industry, and the day-to-day interference in its borrowing operations which has meant that in some weeks the Corporation has not known from where it would get the money to pay the wages.
We saw one of the most spectacular consequences of the Government's measures last week with the announcement of 2,600 redundancies in many of the steel areas. Perhaps the Minister will tell us whether he expects another 5,000 to be added to that total. What the Government have been doing in this respect, worse even than all the measures I have described, is to impose such an economic squeeze on the Corporation that it has had to make its closures earlier than it had calculated. I understand many of the investment projects are being postponed as a result of direct representations by the Government. If that is so, it could go far towards wrecking the whole development programme. The idea of the development programme is that the run-down in certain parts of the industry should take place only in parallel with the build up in other parts of it. That was the proposition put to us in Ebbw Vale.
Do not let anyone talk as if all these developments will not mean awkward changes. Over a considerable period there will be a big reduction in the number of people working in the industry. The Minister knows that the steel unions and the people working not merely in London but in the different areas have been prepared to accept the proposals because they realised they were sensible. But if one says, particularly under Government pressure, that one proposes to alter the intelligent calculated pace of 1677 the development programme by making the closures much faster and by postponing the investment projects, one will wreck the whole development scheme of the Corporation and will stir furious anger in all the steel towns.
§ Mr. Christopher Tugendhat (Cities of London and Westminster) rose—
§ Mr. Tugendhat rose—
§ Mr. Deputy Speaker (Miss Harvie Anderson)
Order. If the hon. Gentleman does not give way the hon. Member for the Cities of London and Westminster (Mr. Tugendhat) must resume his seat.
§ Mr. Foot
I shall not give way to the hon. Gentleman because many of my hon. Friends wish to speak and I do not wish to speak at great length. The hon. Member and everyone else in the House knows that I normally give way, but this is a very abbreviated debate and I want to address my remarks to the people directly involved.
§ Mr. Foot
I want answers from the right hon. Gentleman about the Government's attitude to the various investment proposals put forward in the development plan by the Corporation. He had better give them to us in detail because of the suspicions and rumours which have been spread.
What is the position in Shotton? What will happen at Ravenscraig? What will happen at East Moors in Cardiff to which my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) referred in the Welsh Grand Committee? I am sure that what my right hon. Friend said has been reported to the Minister. What will happen at Rotherham and Llanwern? A document was issued by the Corporation only a few days ago, on 4th March, saying:Llanwern development is given the go-ahead".1678 Are the Government trying to hold up the development? Let the Secretary of State tell us exactly the position. Let him tell us whether he is in favour of all these development programmes or whether the Government have a new kind of surveillance over them. If the Government intervene and prevent the Corporation from carrying out these carefully devised schemes, they will face a very grave industrial situation.
§ Mr. Foot
I will tell the hon. Gentleman where the threats come from. There are threats to the employment of people in Ebbw Vale and to the people of Wales and elsewhere as a result of Government "leaks". I do not know whether the hon. Gentleman read the article in the Economist of 13th March in which it was asked:Is British steel really worth an investment of £3 billion?Let us have the answer from the Minister. The Economist says:A Cabinet office study on the plan is now sufficiently advanced for Mr. John Davies to postpone any other scheme for hiving off …The Minister shakes his head. We shall be glad to hear that there is no such study. Perhaps his hon. Friends do these things without telling him. When the journalists in Fleet Street telephoned the right hon. Gentleman's office to find out whether this was true they were told that such a study was indeed proceeding. We shall see.
The question raised by the doubts which the Government have cast on the development programme of the industry is this: are we to have a steel industry at all? Perhaps I can give what I believe to he the proper answer to that question, taking my constituency as an illustration.
Ebbw Vale over its history happens to provide classic refutation of the doctrine of rigid laissez faire economics which seems to be so lovingly accepted by hon. Gentlemen opposite. Let me explain. In the 1920s and the 1930s the iron and steel works at Ebbw Vale was silent. That was at a time when this country largely lost its industrial pre-eminence by allowing other countries to provide much more steel at the elbows of their workers than we did in this country. 1679 This happened because of the ultra-cautious investment policies of those who believed that there were considerations which were much more important than carrying through the expansion of a great industry.
However, at the end of that period, in Ebbw Vale, a new industry with new methods, which were eventually adopted in the rest of the country, started largely as a result of the industrial genius of William Firth and those who supported him. We remember very well that, because the Government of the day could not see a swift early profit, they wanted to strangle that industry before it even started. The ugly bird had scarcely been allowed to escape from its shell when some of the wise people in the City and the Conservative Ministers were shaking their heads and saying, "Is it really wise for us to try to keep this lame duck alive?" Fortunately it was kept alive, and the steel industry of Ebbw Vale helped to win the Second World War. Up until recent months—[Laughter.]—I do not know what hon. Gentlemen are laughing about. We are concerned about a great industry and the employment of our people. In Ebbw Vale, which I use as an illustration, thanks to the fact that we went ahead with bold and adventurous investment, despite all the cautionary cries from Conservative vested interests at the time, that great industry was sustained and continued to make a profit right up to the last few months, when the blizzards which were blowing in the steel industry all over Europe swept across our country as well.
We are facing the same question that we had to face then. Are we to have a real steel industry in this country at all? That is the question which the Government have to decide. If we are to have such a steel industry, we must have the £3 billion investment programme that the Steel Corporation has devised and which it has largely agreed with trade unions and others throughout the country. If that programme is to be carried into effect—
§ Mr. Peter Rost (Derbyshire, South-East) rose—
§ Mr. Foot
I cannot give way. I want people from the steel constituencies to speak in this debate. If we are to carry that programme into effect, the Govern- 1680 ment must be prepared to provide for the Steel Corporation the resources it needs to carry out the programme. In the next few months the Government may have to decide whether we are to have a steel industry at all. We on this side of the House have already given our answer. Indeed, many of the projects to which I have referred are projects which were approved by the Labour Government. The general programme commanded the support of hon. Gentlemen and my hon. Friends. Our answer to the question is clear. It would be industrial defeatism of the most dangerous kind for the Government to refuse to the Steel Corporation the resources to carry out its programme.
We are concerned about the welfare of this great industry and the livelihood of our people, and I hope that even at this eleventh hour the right hon. Gentleman will speak today in the interests of the steel industry, which are so closely concerned with the interests of the nation. Let him not tell us that the difficulties suffered by the steel industry are the same as the difficulties from which the rest of the country is suffering. It is partly true, of course. There is a squeeze everywhere. Let him not say, "Why should the steel industry complain about being stuck in the mud?". Do not the Government know that they are steering the whole national economy into the ditch? That is not a good excuse.
The best way for the Government to deal with this economic situation is by building up the investment of the nation. I thought we were all agreed that the investment of the nation should be expanded. In the last few weeks, and in the last few days I understand, the right hon. Gentleman and his hon. Friends have been curtailing some of the most essential investments of the nation. I ask the right hon. Gentleman to speak words which will give us hope that we can carry out this programme, the greatest programme in the history of the modern British steel industry. Let us carry it through. It is one way of saving not merely the jobs in the steel constituencies but the nation as a whole.
§ 4.45 p.m.
§ The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies)
I hope that 1681 I shall give, in response to what the hon. Member for Ebbw Vale (Mr. Michael Foot) has said, a reasonable and balanced account of the steel industry, in which, believe me, I have as great an interest and as deep a hope as he has. I will do so by giving a review of the years that have gone by since vesting day three and a half years ago and saying something of the build-up of the industry, what has happened to it, what it sets out to do and explaining the context in which we have to take decisions.
About 120 plants spread over the length and breadth of the country were taken over at that time, with great concentrations in the North-East, Scotland, Lincolnshire and South Wales. They were massive, disparate plants and their production in terms of crude steel—although that is perhaps not the perfect method of describing the complexity of the production of this industry—was in 1967 nearly 22 million tons. The turnover in the first financial year was about £1,000 million. The numbers employed at that time were about 257,000 people.
The commencing capital debt which the industry owed to the Government was £834 million together with a further £271 million outside the Government, £700 million of the commencing capital debt being subsequently transformed into public dividend capital, which was a novelty at the time. The object was to simulate as far as possible something like equity capital in the private sector. The intention was that the earnings of this public dividend capital should be at least equivalent to the earnings on the loans but that they should progressively increase as time went on.
The prospects of the industry with this vast capital behind it were-at that time a matter of great concern and interest and entailed great planning by the Corporation and others concerned. No one should underrate the immense tasks that faced the management of the Corporation. It had on its hands an organisation which constituted in aggregate one of the biggest industrial enterprises in the world, which had not grown up, as many have, as a planned unit starting from small beginnings and growing progressively by its own internal planning, but which had been created by a series of disparate decisions taken in different 1682 decision-making centres and then aggregated into a whole.
Essentially, the management's task was threefold. Its first task was to try so to frame the structure of this aggregation of disparate parts that it had effective control of the enterprise which it had taken over. Second, it had to overcome the deficiencies of an industry which had been beset since the war by uncertainties and changes in predictabilities and to try to overcome the dangers before they were fatally incurred. Third, it had to chart a course for the future to try to make sure that it could see that industry growing at least on terms with its overseas equivalents, able to match their advances in productivity and able equally to realise the economies and improvements. They had therefore to devise mammoth investment programmes to procure all these different things. At that time, vesting day in July, 1967, and in the immediate ensuing period, the prospects of attaining all those objectives seemed quite bright. In looking forward, the Corporation saw, from the end of 1969, an encouraging future and spoke of profits thereafter increasing. It foresaw profits, it saidbefore depreciation, interest (other than on short term borrowings), taxation and dividends on Public Dividend Capital presently expected to amount to about £200 million in 1970–71."—(Finance for Steel, May, 1969.)I shall be looking later at the extent to which these encouraging forecasts were fulfilled, but the fact is that there has not been any dividend paid on P.D.C. for want of profits from which to pay it.
In its 1967–68 annual report the Corporation outlined the means by which these improvements were expected to be achieved and recognised that a crucial part of the whole process lay in a major rationalisation of the industry. Subsequently, in January 1969, it announced a seven-year programme involving the scaling down of the total manpower to some 50,000 jobs by 1975, largely arising from the closure of outmoded or unwanted plants. In saying all this I am simply seeking to set the scene against which the present situation of the industry has to be viewed. The whole prospect then, both according to the then Government's utterances and to the expectations of the B.S.C. itself, was one of reorganisation, rationalisation and a return to profitability.
1683 No one for a moment should underrate the task which the management had been set to accomplish. To anyone with the least experience of mergers, the fusion into a single organisation of this mammoth and disparate industry simply bristled with problems.
In the light of hindsight it can well be felt that the optimistic forecasts in the early months and years after vesting day were too sanguine of what could be achieved, but that in no way diminishes the understanding of the scale of the reorganisation proposed. Nor should it be allowed to cloud one's judgment as to what has already been achieved. In what I have soon to say it may well be considered that the performance of the Corporation has been disappointing in contrast with its bright hopes of a few years ago, but the sheer scale of the task and problems encountered must not be lost to view.
I will not dwell upon the various structural changes, the first objective which I outlined earlier, although it is, rather obviously, of immense importance. The debate is concentrated primarily on investment, manpower and finance. I shall not, therefore, dwell at length on the structural changes which have taken place within the Corporation and which sought to do that which I have mentioned, to bring under control what were such fragmented and disparate elements to start with. Suffice it to say that the changes which have been made have encountered no fewer problems than has the rest of the reorganisation and restructuring of the industry.
The Corporation is now organised in a form that largely concentrates the major decision-making capacity at the centre, and it has devolved a considerable measure of operating autonomy to its divisions.
I come to the more recent situation in the Corporation. I start with consideration of its present financial performance, with particular reference to the expected out-turn of its operations for the current year 1970–71. I ask you to remember, Mr. Deputy Speaker, that this is the year when, as I earlier mentioned, the Corporation predicted back in May 1969 that it would achieve an approximate 1684 level of profit of the order of £200 million before charges.
When the present Government came to power, they found a forecast made in March last year by the B.S.C. to the previous Government that the B.S.C. would attain a profit for this current year of £101 million. But that is after calculating charges. The figures are not comparable, and I do not wish to make them so. Already, in July, that forecast had been greatly reduced from £101 million to £37 million, the reduction being attributed to operating difficulties of various kinds with the plants rather than to cost increases. In August the £37 million had become £15 million. In October a £7 million loss was advised. In the light of these events a price increase took place in that month at a level sufficient to convert the loss to which I have referred into an anticipated profit of approximately £20 million for the whole financial year. It will be remember how at the time I expressed the grave concern felt by the Government at the deterioration in forecast performance and told of the urgent steps which we were taking to seek to clarify the financial position, so that firm financial objectives could be specified and attained, both in relation to the effective result to be anticipated and to the implications for future performance of the Corporation. I will come later to the work in course now to analyse the expected outcome of operations of the B.S.C. and the consequences for investment.
Despite all this, by January of this year the expected result for the current year had slid again and we were warned of a loss of £5 million, despite the price increase. By the end of the month that loss had escalated to £20 million, at which level it is currently understood to stand.
Looking over the span of the year, there has been a turn round of about £150 million in the expected results of the Corporation, that is, from a profit of £101 million at the beginning to a loss of £20 million, despite the £27 million arising from the price increase. This rapid and vast change round has been constantly arising, almost at short notice, without great forewarning. Hon. and right hon. Gentlemen on both sides of the House will realise what shifting sands such a deterioration constitutes in which 1685 to draw up an effective and proper plan for the future.
The hon. Member for Ebbw Vale referred to the vacillation that we were showing in the face of the investment funds of the Corporation. But any reasonable enterprise should show caution when faced over the course of a year with a turn-round of this order.
Another consequence of this enormous change has been that instead of repaying £22 million to the National Loans Fund and £75 million to other sources, as forecast in the April, 1970 White Paper on the National Loans Fund, the Corporation has borrowed an additional £43 million from the Fund and has not repaid anything to other sources. I mention this in view of what the hon. Member for Ebbw Vale had to say about the extraordinarily rigorous nature of the financial squeeze which has been placed upon the Corporation. The National Loans Fund has made available the very large sum of £43 million during this period.
Arising from these disappointing developments, I have found it necessary to take certain action. I have arranged for a very deep-seated review of the whole of the Corporation's financial and development position, in co-operation with the Corporation, which will, in particular, examine immediately the Corporation's short term financial position and investment programme for the coming year, and will subsequently assess the longer term options for the Corporation in both development and financial terms, to which the hon. Member for Ebbw Vale referred.
§ Mr. Michael Foot
Would the right hon. Gentleman tell us in detail what these proposals mean for the commitments that have already been entered into by the British Steel Corporation? In the case of the area that I have mentioned, firm commitments have been made. Will he tell us what will be the effect of this investigation on those commitments?
§ Mr. Davies
The hon. Gentleman was so impatient with interruptions from this side when he was speaking that he might exercise a little patience in respect of any answers that I might have to give him.
I intend that this review should be very thorough and that realistic decisions on development, finance and financial 1686 objectives should flow from it. I stress that this in no sense impinges on the Corporation's management's own financial responsibility, but in the sense that I act in some ways as both banker and shareholder it is only right that the Government should take a deep and profound interest in these factors which so enormously affect the financial outlook.
In the meantime we must ensure that options which are still open remain open until the way is clear to reach decisions upon them. This in no way affects existing development, which accounts for the vast bulk of the current investment programme. For instance, it does not affect the Lackenby basic oxygen steel plant which I had the pleasure of seeing the other day, nor the vast Anchor scheme at Scunthorpe.
However, it does mean that starts on new projects on which the option is still open will have to be deferred at least until the immediate financial situation is re-assessed. The only scheme so far which comes into this category is the Llanwern C development, which as at present proposed would increase iron- and steel-making there to about 3½ million tons a year. I understand that this was accepted by the previous Government provisionally last year, but since then the cost has increased by about 40 per cent. to almost £60 million. I am urgently examining this with the Corporation so that a decision can be reached as quickly as possible within the review, but surely with this kind of escalation of costs it would indeed be an irresponsible person who would simply say, "Sign the cheques and get on with it".
§ Mr. Michael Foot
Does the Secretary of State intend also to calculate what will be the extra cost of the investment programme if he carries through these postponements?
§ Mr. Davies
Clearly, the Government will take into account all the factors concerned with the cost and the outcome of this investment, as indeed all others.
On its side the Corporation has put to me for urgent consideration a proposal to increase prices by 14 per cent. overall—that is, covering all products. Of course, the effect on individual products will vary, and this is not a rate of increase which can be applied to the lot.
This proposal, which I have had since the latter part of last month and upon 1687 which I have some further elucidation in the first part of this, is the subject also of great study with the Corporation. Its impact upon steel users throughout the country, and thereby upon a wide variety of products both for export and for home consumption, needs no stressing. It is perhaps significant for me to say that the effect of such an increase in terms of money over a whole year would be about £165 million, so that the impact of such an increase upon costs of production in British industry can hardly be over-rated.
§ Mr. Reginald Freeson (Willesden, East)
To what extent is the request for a 14 per cent. increase due to the deferments, in part or in whole, of the capital investment programme which the right hon. Gentleman has now announced or confirmed to the House?
§ Mr. Davies
This increase is sought entirely for the reasons I have earlier specified, namely, the extraordinarily serious rundown in the profitability of the current year. This is largely, as I said earlier, due both to disappointments with plant performance and to escalating costs. It is not because of any factor of deferment, certainly not deferment in any relation of which I have been speaking today.
As to manpower and closures, I do not in any way under-estimate the acute human problems which particular closures cause in localities affected, but industrial change has been recognised as unavoidable by both sides of the House; and a healthy and viable steel industry cannot be achieved without reorganisations and considerable rationalisation.
The aim must be to carry this through with the minimum of hardship and the greatest humanity in terms of the inevitable trouble that it causes. I am convinced that the Corporation is doing all it can to achieve these purposes. For instance, it ensures that a full six-months notice is given of a closure; and of this, three months is definitely allocated to consultation before a final decision. In the case of big closures the Corporation allows and seeks to have a still longer period of advice.
The Corporation effectively controls recruitment in relation to natural wastage. Redundancy payments are generous and are above the statutory requirements by 25 per cent. There is a keen determined 1688 effort to redeploy within the Corporation people rendered redundant by closures.
Perhaps the House will be interested to know that of the 8,600 men who have been rendered redundant already during the period of the Corporation 38 per cent., or 3,300, have been reabsorbed. The Corporation takes quite considerable steps to attract additional employment where a closure is inevitable.
It has long been recognised by numerous authorities that this rationalisation was essential. Before the Act of nationalisation the Benson Report, which looked at the whole scale of the industry at a time when it comprised 315,000 people, foresaw that between the time of that Report in 1966 and 10 years later—in 1975—there would be a compression need of about 100,000 people. This is not far different from the Corporation's own assessment carried out in January 1969, when it foresaw the need for a compression by 50,000 people, 40,000 because of rationalisation and 20,000 arising from productivity, offset by 12,000 new job opportunities.
It is interesting to note that the total employment of the Corporation today is almost exactly what it was on vesting day. The Corporation still employs about 257,000 people, as it then did. Although the United Kingdom output last year was somewhat higher than it was in 1967, it is true to say that it was just about the same as it was in 1965. These crude statistics of steel output are always somewhat misleading in terms of effective values in employment.
As a result of this comparison of the total manpower now with the total manpower then, it must be said that the overall productivity has not significantly improved and we remain still lagging behind many other countries in output per man year. For example, we have been employing about twice as many men product by product as compared with the United States for a given point of output.
Within the total, the Corporation has since 1967 secured some local reductions in manpower through closures, though this has evidently been offset by gains through taking over activities previously undertaken by contractors.
Specifically, by the end of 1970 8,600 job opportunities had been lost through 1689 closures, though these gave rise to only 4,500 redundancies.
For the future, the Corporation—this is a point the hon. Member for Ebbw Vale particularly asked me to mention—has already announced further reductions due to closure and shift reductions: 16,800 is the number it has notified, of which 8,200 are expected to arise in 1971.
This is a matter for the Corporation, but it consults me about it and there will no doubt be a need in the future for further redundancies.
The Corporation has made it clear that a serious decline in steel orders over the past few weeks, coupled with a substantial increase in raw materials and production costs, has led to its announcement last week of the speeding up of its rationalisation plans and the proposed closure of a number of loss-making plants. This, again, is the Corporation's decision, and it must be accepted.
§ Mr. Davies
The need for rationalisation has always been recognised, as I have said, and this is the working out of what the previous Government referred to in their White Paper which said:…central planning …and a far reaching rationalisation of the structure of the industry require common ownership …
§ Mr. James Callaghan (Cardiff, South-East)
Nearly every hon. Member who represents a steel constituency wants to know the fate of his own works, and obviously we cannot all ask the Minister. Will the right hon. Gentleman undertake to publish in HANSARD a list of the schemes being reconsidered under the plan that he has announced so that we can see whether our own places are affected, and will he try to give us the date when he expects the reconsideration to be concluded?
§ Mr. Davies
I cannot do better than repeat what I have said. Wherever there has been an effective start, there is no deferment. Where there has not been an effective start, there is a hold-up pending the review. The only case that I specifically mentioned was that of Llanwern. The others will be subject to the urgent review now being undertaken. It is my hope that that review, which affects the shorter-term financial 1690 situation of the Corporation, will be completed within six weeks or two months. I hope that that helps the right hon. Gentleman.
In all this, I recognise that the Corporation has had a difficult inheritance and major problems of reorganisation within the merged industry which have doubtless impeded its progress. But the inescapable fact remains that the industry, under whatever ownership, must be able to pay its way, and the necessary steps must be taken to see that it does.
I come now to future development, to which the hon. Member for Ebbw Vale devoted a good deal of his speech. The major review of the Corporation's activities to which I have referred has also to look at the longer-range outlook. The Corporation has submitted a further long-range development plan which is also part of our major scrutiny. It envisages a capacity of 35 million tons in 1975, which is 2½ million tons higher than the previous plan, and 43 million tons in 1980. The cost over the decade 1972 to 1981 has gone up from £3,000 million to £4,000 million, and I need not emphasise the immensely heavy burdens that that implies in terms of capital raising and budgetary provisions.
Clearly, this long-range programme is intimately linked with questions of the longer-term development of the structure of the Corporation and the business of the industry in general. I know that there is great concern. I have been aware of the pressures put upon me to conduct this operation at a speed greater than I think appropriate. The delay is not one for the sake of simple dilatoriness. It is a delay for the sake of finding the right solutions for the profound and difficult problems of an enormous industry in a thorough way. It is a delay to carry out a full review of the existing and future structure of the industry which has emanated from the Corporation. It should not be imagined that it is concerned with ideas which have originated within the Department. The Corporation has ideas of its own about its development which require careful thought.
The industry is in a crucial phase of its existence. The first essential is to put it on a profitable footing, because on that depends its future development and, 1691 with it, so much of the future performance of British industry as a whole. The next weeks and months will present both the Government and the industry with major decisions in the short and the long term. Naturally, it will be my purpose to keep the House informed of progress. But I must reiterate that the scale and implications of the decisions that we have to make are not of a kind which allow me to make snap judgments and over-rapid considerations. I intend that both will be taken with due regard to their importance.
§ Several Hon. Members rose—
§ Mr. Deputy Speaker
Order. Before calling the next speaker, I should re-emphasise the shortness of the debate. It will be clear to the House how many right hon. and hon. Members wish to speak. I ask those who do to make their remarks as brief as possible.
§ 5.15 p.m.
§ Mr. Arthur Bottomley (Middlesbrough, East)
It must be said, first, that the speech of the Secretary of State was most disappointing. Before entering this House, the right hon. Gentleman had made a very high reputation in industry. Although he, like me, wants to see the country economically strong, what he has done today is to preach the same doctrinaire Tory policy that neglected the economy and led us to the troubles that we have faced ever since the Tory Government were thrown out of office in 1964.
I hope that the right hon. Gentleman will recognise that it is not merely a question of the profitability of the industry. It is an essential industry. We cannot do without it. It must be considered in that respect as well as in terms of the profit that it can make.
Those of us who represent constituencies concerned with steel are deeply troubled about redundancies. In my own constituency, thousands have been put out of work. In addition, many works are being run down, and short time working is in operation. However, we recognise that in many instances the present state of affairs is necessary if we are to have a more efficient industry to serve the nation. In saying that, we want to know that those workers who are dis- 1692 placed will be treated very generously and fairly considered. Many of them have given their lives to working in the industry.
It is not only my constituency which has been affected by redundancies. They are taking place in the North as a whole. My right hon. Friend the Member for Workington (Mr. Peart) is unable to speak to day because of his Front Bench responsibilities, but I know that he is concerned about the closures in his area.
We all have to recognise that if we do not rationalise and make our steel industry efficient we shall fail the country and prevent it becoming strong economically. Other industries which are developing in the North-East have been slowed down because of the Government's policy of not giving the same opportunity as those afforded by the last Government. But I ask the Secretary of State to do all that he can to see that displaced steel workers to have the chance of employment in other industries. There are opportunities for them to be employed again in the steel industry. On Teesside, for example, we could do with a modern steel foundry. Certainly that would greatly assist the export drive.
I should like to pay tribute to Lord Melchett and his fellow directors for the way in which they have concentrated upon the basic reorganisation and long-term planning of the industry. While concentrating upon this development, it has been necessary for the Corporation to keep many uneconomic units in production. This has been necessary to save the country importing steel, so helping our balance of payments position. In such circumstances, it is asking too much of the industry to expect it to make huge profits.
The Government are right to attempt to save Rolls-Royce. They are trying to make sure that we have an aircraft industry for the future. How much more important it is that we have a steel industry for the future. We have had two major examples of Government intervention in essential industries: the railways and coal. Now we have the steel industry. Shall we never learn from our past mistakes?
I was one of those in 1945 who were not anxious to nationalise the railways and the coal mines. I knew that 1693 they had been run down by private enterprise and that within a few years private enterprise would have begged the Government to take over its industries. What happened was that the Government took over inefficient industries. They had to compensate their former owners. Then those industries were expected to make profits. It was an impossible situation.
To some extent the steel industry is being put in the same position. In the way that we have over the years had to give subsidies to the coal and transport industries because we cannot do without them, so it will be with the steel industry unless we do everything possible to make that great industry equal to the best in the world. I believe that Lord Melchett and his colleagues have been moving in this direction. For that reason I gave thanks earlier.
Steel is the only major British industry which is in the process of getting out of a mess rather than into one. The industry is enabling us to meet our competitors in all parts of the world. For this reason, I make a special plea to the Government to assist the industry by concentrating upon the work in hand and providing the stability necessary to build up a modern steel industry. Do not split up the industry in any way. Let it carry on in the way that it is working now. It is showing that it can be an efficient industry which will serve the nation well. Although it is not realising profits at the moment, it will, I know, ensure not only full production and strength to our economy but profits for the future.
I hope that the Minister will see to it that money is forthcoming for investment in this great industry which, if it fails, fails not only hon. Members on both sides of the House, but, indeed, the country as a whole.
§ 5.22 p.m.
§ Mr. A. E. Cooper (Ilford, South)
In these debates I sometimes feel, as it were, like Alice in Wonderland because things get curiouser and curiouser. I listened carefully to the hon. Member for Ebbw Vale (Mr. Michael Foot). When he reads his speech tomorrow he will probably think, "This is about the worst thing I ever did". He is like an actor. He learns his lines and comes out from the wings and makes his speech. But 1694 when we get him down to details, we find that he knows nothing whatever about the subject on which he is talking.
The hon. Gentleman represents an important steel community, Ebbw Vale, but when it comes to the real details of how an industry is managed he does not know a thing about it. [Interruption.] The hon. Gentleman is very good at writing book reviews—two or three a week. That is a job at which he is good.
§ Mr. Cooper
But getting down to details of running British industry is something the hon. Gentleman knows nothing whatever about.
I make the hon. Gentleman a challenge. I am quite prepared that he should spend one week or one month, if he would like it, with me going round visiting customers, finding out how to develop business and get orders. If he were put in front of a factory he would not know what it was. He does not know such a thing. It would be a different matter if he were put in front of some printing ink.
When the hon. Gentleman talks about investment in industry, the developments and difficulties—
§ Mr. Cooper
I do not think that the hon. Member for Penistone (Mr. John Mendelson) is in a position to talk about delaying tactics. I shall deal with him in a moment.
§ Mr. Deputy Speaker
Order. It is for the Chair to decide whether hon. Members are employing delaying tactics. I hope that no such tactics will appear in this Chamber this afternoon.
§ Mr. Cooper
It is not my desire to do any such thing, Mr. Deputy Speaker.
I want the hon. Member for Ebbw Vale to understand that all we want, whether it be in the steel industry or in any other industry, is an opportunity to develop and prosper and to provide jobs for people. There is no desire on the part of management to wake up on a Monday morning and have to sack people and do this, that and the other. We want the money to earn the profits. We want to create a situation in which industry can prosper.
1695 The hon. Member for Ebbw Vale talked about our not providing sufficient funds for investment. He should know that it was the previous Administration which in 1965 created Schedule F which took away from industry about 25 per cent. of all the profits which it earned and which today is one of the prime reasons why company liquidity is so bad. This is not a matter for argument; it is there. I sincerely hope that my right hon. Friend will be able to impress upon the Chancellor of the Exchequer that this is an important matter which has to be dealt with.
I do not want to weary the House, but I should like to give one example. There are many companies in this country with an employed capital of about £5 million, which is quite a lot of money, earning about £1 million profit. Before 1965 a company making £1 million profit would have been able to retain about £100,000 to £140,000, out of which its investment was developed. But in 1965, when Schedule F was introduced, in exactly the same situation that company would be left with only £2,000. So when the hon. Member for Ebbw Vale talks about lack of investment in the steel industry or anywhere else, he should be reminded that he and the previous Administration are the evil men who created the situation in which we now find ourselves.
It is no use pillorying us today. This is our inheritance and we are trying to deal with it, but it will take a long time. We must get rid of these iniquitous tax surcharges which the previous Administration placed upon industry. When these are out of the way this country will again be able to make its way in the world.
§ 5.28 p.m.
§ Mr. Donald Coleman (Neath)
I must first declare an interest. I am a member of the British Iron, Steel and Kindred Trades Association which organises the overwhelming majority of workers in this industry. I also have steel interests in my constituency. Those steel interests are not with the British Steel Corporation but in the private sector. They, too, are undergoing serious difficulties at the moment. The Albion Steel Works at Briton Ferry is faced with the redundancy of 300 men as a result of the closure of the billet mill at the end of February.
The steel industry is facing redundancies in areas where unemployment is 1696 already high and is increasing at an alarming rate. To arrest this situation, it is vital that there should be greater investment in the industry.
The need for the modernisation programme of the British Steel Corporation is indisputable. The present plans of the Corporation, in our view are, though not over-ambitious, at least an improvement on those which have been put forward in the past. About £2,000 million, at least, will be required by the end of the 1970s if we are to remain internationally competitive. We are told that the optimum size of an integrated steel works is about 10 million tons of steel per year. Japan, Russia and the United States have such steel works. We have none. The developments which we are told should take place in Port Talbot, Scunthorpe and Lackenby must continue, but we shall regard them only as holding operations. We must also have new works to produce 10 million tons a year. These plants themselves will cost about £1,000 million each. We must have a total of these by the end of the 1980s.
Britain is in serious danger of losing the ability to compete in world steel markets by lack of plants which can produce maximum economies of scale. Any cut-back or postponement in the investment programme would be catastrophic for the industry. We are too far behind our international competitors already, and we cannot afford the luxury of delay.
There is also the human aspect. Morale is very low, because the post-war history of the steel industry has been one of hopeful objectives. This has resulted in overwhelming labour co-operation and enthusiasm from those employed in the industry. But if the Government's present objectives are maintained, I am afraid that the workers will be doomed to final disappointment. The industrial relations record of this industry is exemplary, but I give this warning to the House—there is a limit to the temper and the resilience of the employees in the industry. When that comes about, the traditional attitude of steel workers will give way to the adoption of inflexible attitudes in the face of the repeated disappointments which we have had and the vague future which we see for the industry.
1697 It is now nearly nine months—a significant period—since the Secretary of State for Trade and Industry lost his political virginity, and by now he should have produced something more than cries of pain while holding on to the iron fists of his midwives, the hon. Members for Bournemouth, West (Sir J. Eden) and Cirencester and Tewkesbury (Mr. Ridley) and screaming that he is making every effort. This is only an excuse to cover the sterility of constructive ideas about the future of this industry.
The British Steel Corporation must remain and be encouraged, and an announcement must be made about the future of the industry now. Such announcements as these will boost both the demand for steel and the morale of steel workers and will equally ensure that Britain remains in future a major producer of steel based on manufactures.
§ 5.32 p.m.
§ Mr. John Biffen (Oswestry)
I was fascinated by the almost Freudian analogies of the hon. Member for Neath (Mr. Coleman), but he made an understandable contribution, because his constituency, like many others in South Wales, is very much affected by the fortunes of the steel industry. It is appropriate that in such a debate contributions are also made by those with no such direct constituency interest, who nevertheless have an abiding concern, if only, in the words of my right hon. Friend the Secretary of State, because we find ourselves today, as parliamentarians, acting in trust as bankers and shareholders of this industry.
There is a tradition that Supply Day debates contain a certain degree of political knockabout, but the hon. Member for Ebbw Vale (Mr. Michael Foot) excelled himself. At one point, I thought that Clause 4 was about to be re-interpreted, to have a subsection (a) to include the maintenance of Lord Melchett as the Chairman of the Steel Corporation. I found it slightly difficult to square that with the astringent comments which the hon. Gentleman made later about the City of London.
It may be inevitable, but the extent to which this House engages in discussions of the merits or otherwise of senior officials in the nationalised industries is pretty unhealthy. There was a time 1698 recently when it seemed that there was an open season for the hunting of Lord Robens. That seems to be past. On the whole, it would be just as well if the supposed friends of Lord Melchett kept silent, rather than give the impression that they are allies in a certain amount of careful, publicly-contrived, political arm-twisting.
The hon. Member for Ebbw Vale said that the question which was at stake in this debate was "whether we were to have a steel industry at all". These are the very words which one would expect from a double-dyed industrial conservative who could not contemplate any changes in an industry because he would immediately represent them as threatening the integrity and survival of the industry itself. We recognise this symptom. We are confronted with it in our dealings with a range of industries which think that they have some claim—and, indeed, do have some claim—upon the public purse, and which believe that they can use these arguments to legislators.
Sooner or later, we shall have the arguments about regional balance and the balance of payments, both of which have been used by hon. Members today. But the true friends of steel in this country, whether the financing or ownership of it proceeds in public or private hands, will not be found among the double-dyed industrial conservatives. They can be found only among those who are prepared to accept the challenge and the change which must inevitably attend an industry which was so dominant in the first Industrial Revolution and which, of necessity, must make major adaptations to live in a modern industrial situation.
May I therefore address myself unashamedly, in the spirit of the Secretary of State, to two very prosaic points. The first is the question of costs in the industry. It is not just the steel industry which has seen the rapidly escalating costs which are causing the extremely disquieting deterioration of its profit forecasts. This is true of almost all heavy engineering. Therefore, we must ask ourselves what contributions hon. Members are making in the economic debate which can best help to contain the rise in industrial costs. What contribution did the hon. Member for Ebbw Vale make in the debate on the coal industry, when it looked as though there would be 1699 developments in that industry which would increase the cost to steel makers?
There is no doubt that when industrial costs are rising at the rate of recent times, the sheer financing of raw materials, of work in progress, and of finished stocks hits the heavy end of engineering industry and the steel industry much more sharply than it does light engineering and many activities more closely related to the consumer durable field.
Therefore, I wish my right hon. Friends well in their determined policies to control the money supply, as I believe that they are the only policies likely to be effective in bringing about a slowing-down in the rise of industrial costs. I wish all success also to the Secretary of State for Employment. But I can only conclude that they are getting precious little encouragement from the Front Bench opposite. If I had to choose one person who has singled himself out proudly to offer no such encouragement, it would be the hon. Member for Ebbw Vale.
Clearly, the piece of information divulged to the House today which will, I suspect, when it reaches the papers tomorrow make the greatest impact is the news that the Steel Corporation has placed a request for a price increase of 14 per cent. with my right hon. Friend. I hope that he will be wholly commercially realistic in considering that request. We cannot see the deterioration in the accounts of the British Steel Corporation without realising that it could not proceed without a price increase of some sort. But we know, nevertheless, from the past circumstances of price increases that there has been considerable disquiet and resentment at the way the pricing structure of the British Steel Corporation has applied as between those companies which are solely customers and those which are both its customers and, in a composite character, also its competitors.
I am sure that this will give urgency to the requirement for my right hon. Friend to put before the House at an early date new ideas on the rôle of the Monopolies Commission so that it may embrace the activities of the nationalised industries. I know this to be a policy to which my hon. Friend the Minister for Industry has turned his attention, and I know, also, that in pursuing it 1700 he will be speaking in the interests of both steel users and steel producers.
§ 5.40 p.m.
§ Sir Geoffrey de Freitas (Kettering)
I regret that time is so short that there cannot be a real debate today. I shall be parochial—I make no apology for that—hut I shall be brief.
I am concerned about the steel town of Corby in my constituency. In many ways it is the most complete steel town there is. In 1931 it was a little village of 1,500 people built round its 13th-century church in the heart of rural England, but it stood on a field of ironstone. Today the steel works and the quarries produce 2,000 miles of steel tubes every week. Corby is today a town of 50,000 people, and 87 per cent. of the workers work in the steel works. I criticise the Government for this lack of diversification.
Corby, as I say, is overwhelmingly a steel town. Ever since our debate on steel in February last year there has been great concern about what the Conservative Party might do to the British Steel Corporation which would threaten the prosperity of the town. I do not believe that the Conservative Party in office, however doctrinaire, will hive off the Corby steel works. I do not believe that, but the people of Corby do not know. Month after month I have asked the Minister to make a statement on this matter, but it has been postponed again and again. The Government do not seem to realise how worrying this is for the men and women—not so many women, but particularly the men—who work in the steel works.
Furthermore, we have been told in recent weeks of the closure of the strip mill in September, and the British Steel Corporation has announced a 10 per cent. cut in the Tubes Division staff throughout the country. We do not know how much of that will be in Corby. But what concerns my constituents above all is their fear of a Conservative Government policy of refusing to modernise the steel industry and, instead, forcing British industry to import steel from abroad. That policy would throw more and more people out of work in the industry, apart from the consequences of importing foreign steel.
If that happened, I could in my constituency say, "I told you so". But 1701 that does not help the unemployed, and it does not help the country.
Corby is a new town under the New Towns Act. It has good amenities, a good urban district council and a good development corporation. I have criticised both the present Government and the previous Government for failing to allow other industries to go there. I can explain Corby's problem in this way. Only a few weeks ago, on television, I criticised both the previous Government and this Government for refusing industrial development certificates. I received many telephone calls—this was during the postal strike—from people who blamed the Government strongly for wasting the taxpayers' and ratepayers' money in allowing the continued building of the new town, with an infrastructure for 83,000 people, the population being, as I say, only 50,000 now. The building of the new town is continuing, with all the infrastructure, the roads, the swimming pool, civic centre, theatre and the rest, yet the Government are refusing to allow any industries other than steel to come to Corby. Although the town is being built for 83,000, it is now known that on steel it will not expand to anything like that.
In that respect—I emphasise "in that respect"—this Government are no worse than the previous Government. I must be fair about that. There are firms anxious to come to this steel town so that it may diversify, but they are refused permission. In the last few weeks the Government have refused permission to several small firms and one large one which could have employed 500 to 600 workers. We have the houses and everything ready for them.
The situation is ridiculous. The Department of the Environment encourages the spending of £20,000 a year to advertise "Come to Corby", and then the Department of Trade and Industry refuses industrial development certificates. My constituents and I are very concerned about it.
At this stage Corby needs one great boost to its morale; that is, a large I.D.C. allocation. The workers come, in particular, from Glasgow and Northern Ireland; their first loyalty is to Celtic or Rangers, but after that it is to Corby, and they feel this whether they work in steel or not. 1702 There is enormous potential there, but as matters stand public money is being wasted. The local authorities are waiting for a lead. They may get it from the East Midlands Economic Planning Council if—as I hope it does—it issues an emergency report on what is happening in Corby today. In that event, it will be the task of the local authorities and the Member of Parliament to push a reluctant Government to give Corby special consideration.
I emphasise that the taxpayers and ratepayers have spent £25 million in this town. Its assets are being wasted because they are not fully employed. There are great opportunities. It is ridiculous for the Government to adopt their present policy when they are undermining, or at least making very worrying, the future of the steel industry in Corby. Corby has a great future. For heaven's sake, let the Government press ahead and do their job.
§ 5.46 p.m.
§ Mr. T. H H. Skeet (Bedford)
The right hon. Gentleman the Member for Kettering (Sir G. de Freitas) made a very fair speech. He spoke of the difficulties in pipes and tubes, and I have often wondered about this myself. At the present time, with the pipelines being constructed under the North Sea and a number of others being built in Africa and elsewhere, there would seem to be a prospect of some of the orders coming to the United Kingdom. I suspect that they are going to the Italians, to Dalmine, and there may be something in it on price.
I was rather surprised to learn that the British Steel Corporation is now asking for a 14 per cent. increase across the board. Perhaps certain items are to carry more than others, but the question which now arises is whether we shall price ourselves out of the European market and the world market. This would be extremely serious. I could then accept the view of the hon. Member for Ebbw Vale (Mr. Michael Foot) that the loss this year might be £25 million, or even more than that.
§ Mr. Eddie Griffiths
On the question of pipes, if the hon. Gentleman takes advice from his right hon. Friend he will, I think, find that the problem here is 1703 not price competition but one of tolerances and quality.
§ Mr. Skeet
I am aware that there are certain problems. The Italians make the big pipe and the United Kingdom is inclined to make pipe of smaller diameters. I realise that, but investment over past years, well before we became the Government, could have rectified that.
I come now to the question of investment. I have always regarded two industries as being the indicators of the state of the economy—one, sulphuric acid; the other, steel. When the economy is not expanding fast, there is a good deal of sulphuric acid about and there is a good deal of steel about. However, looking at the general programme, I think that my right hon. Friend is perfectly right in his approach. He has to look at this £3,000 million programme and ascertain to what extent it is feasible in the next five to ten years. After all, what is good for the public sector is good also for the private sector.
A very well organised company, the Royal Dutch Shell Group, has just cut its £200 million investment programme in Carrington very substantially because it saw inflation pushing up its costs to a marked degree. If the Royal Dutch Shell Group does that at this stage, it is not surprising that the B.S.C. is forced to look again at its economics. With the delay in delivery of plant and the escalation of wage costs and so on, inflation is a most material item.
Its last annual report said that recent home price increases were in danger of being seriously eroded by rapidly increasing material costs, such as coal, coke, and fuel oil and by increased labour costs. It referred to the high cost of steel imports and so on. I am sure that the B.S.C. appreciates the problem, and this is why the whole investment programme must be the subject of close examination.
Let us consider the matter realistically. We are planning ahead for a number of years. The Conservative Government have been in office for about eight months. Most of the decisions were taken many years ago, and the results of those decisions are coming to maturity now.
The hon. Member for Ebbw Vale said that certain decisions that had been taken 1704 in the past should be retrieved and altered rapidly because we were now running into difficulties. The trouble is that those difficulties would have arisen in any case. After all, the whole purport of nationalisation was to effect economies. The right hon. Member for Greenwich (Mr. Marsh) said that rationalisation was an essential feature of nationalisation and would result in economies. However, the Minister pointed out that we employ twice as many, pro rata, as they do in the American steel industry. The West Germans employ fewer than we do. We must get our unit costs right.
In this connection, I congratulate all concerned on what has been done about redundancies. The redundancy payments are good, and there is a procedure for taking the unions into confidence when a steel closure is planned. This enables the matter to be argued out well in advance, and if it is thought fit to close a plant, the decision is taken early and there are discussions with the men well in advance.
Time does not permit me to comment at length on, for example, the subject of finance. Suffice to say that it would be useful if the B.S.C. did not have to go to the Government on every occasion it wants to borrow money. If it were independent in that matter, nobody could say that the Government were setting priorities for the industry. I do not see why it should not borrow on the open market, either on the Continent of Europe or on the British market. Perhaps it could even borrow on the Eurodollar market, though I appreciate that it might have difficulty borrowing when running into losses.
A focal point must be the organisation of the industry. It started on a regional basis, but it has now proceeded to a product basis. I do not suppose hon. Gentlemen opposite would subscribe to the sort of organisation that I would like to see, which is the way in which the industry is now working successfully in, for example, Persia. In 1954 there was a big problem in that country. A lease covering the assets was granted by the National Iranian Oil Company to an international consortium to run the steel plants for that country.
I suggest that it would be most useful here for the Government to grant a franchise for perhaps 25 years—at the 1705 same time the Government could hold the assets—to successful private enter-price operators, who would run it in accordance with modern principles and techniques. Instead of having losses, we would probably have profits.
I do not regard the present structure of the industry as immutable. Indeed, I am amazed that for the last few years two structures should have been available. We must be prepared for further changes. I appreciate the need for stability, but whoever is the Chairman of the B.S.C. must accept that the only way to reach the right set-up for this industry is to conduct a thorough investigation, to get the structure right, to follow that by planning ahead correctly and then to get investment right. Perhaps once that is done we shall be able to turn to the B.S.C. as an important sector of the economy which, by that time, will be making profits and paying its way.
§ 5.55 p.m.
§ Mr. George Lawson (Motherwell)
The hon. Member for Oswestry (Mr. Biffen) mocked my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) for speaking of the possibility of this country not having a steel industry at all. I wish to emphasise with all the strength at my disposal that there is a real possibility, judging from what has been said by the Government so far, that there will be no steel industry in Scotland within a few years.
One is bound to be led to that conclusion when, for example, the Minister did not say a word about what is to happen at Ravenscraig. We have been told that extensive expansion is to take place not only at Ravenscraig but elsewhere. Indeed, on 3rd February the Under-Secretary of State for Development, Scottish Office, the hon. Member for Ayr (Mr. Younger), said that the plans were for 4½ million tons of production of steel in Scotland. As recently as yesterday the Secretary of State expressed considerable confidence in the Scottish steel industry.
I do not think hon. Gentlemen opposite who represent Scottish constituencies really know what is happening north of the Border. We demand a statement from the Government about the present situation there. It is regrettable that the Secretary of State is not in his place. Is he unable to sit through even a three- 1706 hour debate on an issue as important as this?
We are bound to be gravely concerned over what is happening when redundancies are occurring all the time. The B.S.C. has said that when major redundancies arise through rationalisation, two to three years' notice should be given of those likely redundancies, and not six months' notice. Unless notice of that duration is given, the people of Scotland, Wales and the other affected areas should demand that measures be taken to see that those employed in the steel industry are treated no worse than those employed in the coal industry, though we appreciate the hardship that has been suffered when there have been pit closures.
I accept that temporary difficulties arise when steel markets decline. That is, however, no reason for killing off established steel plants in this country. If there must be redundancies because of, for example, a recession in demand, they should be spread over the board. If the nation considers that the industry should be scaled down, it should be accommodated in those parts of the country that are most useful for the industry, such as deep water sites. Unless this happens we shall not achieve any alteration in a smooth and orderly way. There will continue to be disruption. It is up to people like the Under-Secretary of State for Development to fight with all his power to see that smooth and orderly progress is made.
No nation is worth a damn if it does not measure up to challenges from abroad. We have been dropping behind the league leaders in steel year after year. It is no good saying that my hon. Friends took this or that action when they were in Government or that the Tories have taken different steps. We must, as a nation, get our priorities right, and we shall not be doing that if we do not measure up to the challenge from other countries.
The only answer we get from the Minister is that we must look at this from the profitability angle. There is more to it than that. This is not just a question of crude steel. We have been dropping sharply behind other countries even in the production of what have traditionally been highly profitable special steels. We must think of steel in the way we think of defence, as a 1707 vital matter for the Government. It would be absurd to suggest that defence should be left to private enterprise. The same applies to steel.
The nation must set its sights higher when thinking in terms of steel output. Production of 26 million tons by 1980 is not good enough. Let us aim for 50 million tons. At the same time, we should be kicking the steel industry along the right path and telling the B.S.C. that our prospects as a nation are good and that if we tackle the problem in the right way we can measure up to any challenge from any quarter. We have the men, the means and the sites. If hon. Gentlemen opposite fail to rise to this challenge they should be washed out altogether.
If anything would turn the people of Scotland into rabid nationalists it would be the killing of the Scottish steel industry. I could even almost become a rabid Scottish nationalist myself if that happened. Everything possible must be done to see that there is no disregard of the nation's interests because of a miserable idea about making the maximum profit over a short period. The nation's life is at stake, and we must insist that the measures which are so necessary are carried out.
§ 6.0 p.m.
§ Mr. Ronald Bray (Rossendale)
The subject is investment and redundancy. An attempt has been made to stress redundancy, but we recall that on Third Reading of the Iron and Steel Bill the right hon. Member for Greenwich (Mr. Marsh) said:The Corporation will, after vesting, be in a position to initiate a co-ordinated pricing policy and measures to improve efficiency by concentrating output on works with the lowest escapable costs and to study in depth such problems as the effects of fluctuations in steel stock-holding in exaggerating the fluctuations in the basic demands for steel."—[OrriciAL REPORT, 26th January, 1967; Vol. 739, c. 1811.]The hon. Member for Motherwell (Mr. Lawson) said a minute or so ago that it would be useful to have two or three years' notice of rationalising or thinning out in the industry. The industry had that notice four years ago, but it has been disregarded. Perhaps, like Mr. Micawber, it hoped that something would turn up.
Why have steel output and orders for steel fallen? The answer goes back to 1708 the fiscal policy of the previous administration. Companies have been forced to thin out their inventories of raw materials so that they can finance their businesses. That is one of the basic reasons for the cut-back. In the other European countries that have been mentioned, and in America, in many cases inventories of raw materials are up to 40 per cent. less than ours, and 40 per cent. less material in hand means an appreciable saving in cash and capital employed. Those are inescapable factors.
As my right hon. Friend the Secretary of State pointed out, forecasts of profitability have fallen by £150 million-odd over 12 months. There is no excuse for that if an organisation is effectively managed.—I shall not say "I like Melchett" or "Melchett out". The simple facts speak for themselves. If an industry is efficiently managed it will have an idea of its affairs. It will not over-budget, it will not over-capitalise, and it will not have a fixed, inviolate programme for five, six or 10 years ahead. Industries need a rolling system which can be fixed three or four years ahead at the most, and not remain virgin for all time. We must be flexible in industry and in demand.
I agree with my right hon. Friend about the review. For all we know, some of the £3,000 million capital investment may be going to fringe activities. How much is going into the basic steel industry and how much to what I term "flanker" industries? How much is going into nonprofit-making investments? Investments will be non-profit-making unless the Corporation is encouraged by the Government to get its house in order in double-quick time.
§ 6.5 p.m.
§ Mr. Ifor Davies (Gower)
My hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) brought the House face to face with the real issues of the debate in his forceful opening speech. I deeply deplore the way in which he was insulted by some Conservative hon. Members.
The vital issues in the debate are rationalisation and redundancies. Like other hon. Members, I shall confine my comments to the effects in my constituency, where those two words dominated the lives of steel workers for many years. To many people in other walks of life 1709 they are merely abstract terms but to steel workers and their families they are very ugly words. I depored the detached manner of the Secretary of State's reply on these matters.
Last week those words spelled disaster for 300 people in my constituency involved in the announced closure of the Gorseinon Works. The situation is all the more bitter because it is the second time within a few years that some of the same men have been involved in redundancy.
The steel industry is remarkably diverse, with a host of products and byproducts. I refuse to believe that that plant, with its excellent facilities, cannot still be utilised and some of the jobs saved. Next door to it we have the Bryngwyn Fabricating and Organic Coating Works, which has gained great success in recent years. I warmly congratulate the management and men on their success, which has been so remarkable that the Strip Mills Division now claims that it can offer as wide a range of coated steel products as any company in the world.
The general manager, Mr. Donald Davies, said in Steel News of 4th March that the development of organic coatings meant that many thousands of tons were being sold to customers who otherwise would have chosen material other than steel. He believes that there are still many fields in which it could expand by proving that pre-coated steel was the most economic material.
In the light of this promising forecast I urge the Government, and particularly the Welsh Office—I am glad to see the Minister of State, Welsh Office present—to press the Corporation not to abandon the Gorseinon Works, so conveniently at hand to the Bryngwyn, and to reconsider its closure.
There is no area in the country where the stresses and strains of the industry are reflected more than in Wales, particularly in South-West Wales, where once again all the old fears are returning. The unemployment figures today have cast an even greater shadow there. All these fears were dramatically brought before some of my hon. Friends and myself at a recent conference in Swansea where we met representatives of all the local authorities and the trade unions.
1710 South Wales has a very proud tradition in the steel industry, as have other areas, I am proud to speak as the son of a steel-worker. Names like Margam in Port Talbot, Trostre in Llanelli and Pontardawe, Gorseinon and Velindre in my own constituency are household names in the steel world. Who in this House has not heard of Ebbw Vale, too? Those areas contain an army of skilled steel workers second to none in the world, an army which the Corporation cannot do without, if it is to win the battle for greater efficiency and compete successfully with the Americans, the Japanese and the Germans. Those people must be looked after, those areas must not be ignored in any plans for future investment, whether in the form of a new integrated plant or the expansion of existing units. In this connection 1 commend the Velindre Works with its first-class production records and excellent facilities for expansion.
The whole of South-West Wales deserves and demands the fullest consideration of its rightful claims, especially as a development area.
We all talk about new effort. The record of the people in my constituency is second to none, and the Government will ignore the industry at their peril. As my hon. Friend the Member for Motherwell (Mr. Lawson) said, we shall not stand by silent, but we shall meet the challenge that the Government have thrown down of an atmosphere of indifference and detachment which I deplore.
§ 6.10 p.m.
§ Mr. Peter Rost (Derbyshire, South-East)
The hon. Member for Ebbw Vale (Mr. Michael Foot) was particularly insulting to me when I sought to intervene in his opening speech. He shouted across the Floor suggesting that he refused to give way because I did not understand anything about the steel industry or did not represent a steel constituency. Although I perhaps cannot be an expert on the industry in the sense that he is—after all, he is the only person who knows anything about it—and I cannot expect him to understand that there are other steel plants in the country besides Ebbw Vale, there is an important steel unit in my constituency, the Stanton and Staveley Ironworks. There is now redundancy and short-time working at that plant. 1711 Therefore, knowing that the hon. Gentleman is an hon. Member, I naturally expect that he will withdraw those remarks.
§ Mr. Rost
I notice that the hon. Gentleman has not jumped up to volunteer a withdrawal, so I will let that be noted.
The hon. Gentleman suggested that the £3,000 million of capital expenditure planned by the steel industry should not be subjected to Government scrutiny. That is an extraordinary suggestion, considering that it is taxpayers' money. The Government of the day, apparently, should have no right even to investigate whether that sum is being spent in the most effective way. If the steel industry were generating that capital investment from its own profits, we could perhaps understand that attitude, but we understand that it is running at a loss, which the taxpayer is having to finance. The bulk of the capital investment will have to come from the taxpayer, and therefore it is not just sensible but essential that the Government should thoroughly scrutinise the whole development project.
The main problem of the industry is lack of profitability, something which Labour hon. Members do not appreciate, because they do not believe in profits. The money must come from somewhere, but it must not come from profits, because that is immoral. The lack of profitability is due to lack of growth in the industry, slack production and rising costs. We have slack production because of the general lack of economic growth after six years of Socialist stagnation. The stagnant demand in many industries is only too evident when we consider the stoppages in the motor industry, for example. No hon. Member opposite can tell me that this is not affecting demand for the steel industry or at least one section of it.
The only answer is to put the steel industry under the discipline of the capital market in the same way that private enterprise industry has to undergo that discipline. Only then can we expect a really efficient management, higher productivity and a more adequate return on capital, so that modernisation 1712 can proceed more rapidly. If there is any doubt by hon. Members opposite about lack of productivity in the industry, they should spend a little time studying the steel industries of our competitor countries, particularly the United States, Japan and Germany. There, the steel industries are under private enterprise and the productivity is very much higher. The profitability is higher and therefore the capital investment which is generated from cash-flow is very much higher. Only when we get to that sort of basis and inject the discipline of private capital into the steel industry will we solve these problems. The industry should never have been nationalised in the first place. That is the basic cause of all its problems. Until we tackle that we cannot expect to have a flourishing steel industry.
§ 6.16 p.m.
§ Mr. Brian O'Malley (Rotherham)
I wish there were time to take apart the archaic views of the hon. Member for Derbyshire, South-East (Mr. Rost), but there is not.
As late as the autumn of 1970 informed economic commentators were taking an optimistic view of the level of demand for steel and the level of steel production for 1971. The industrial correspondent of the Financial Times wrote of the steel industry on 3rd August:All the indications are that the machine will pay out again with another record for the steel-makers in 1971…unless Mr. Heath makes some adjustments.The adjustments were made by the Government. Today, my constituency faces 1,300 redundancies which should never have happened. The right hon. Gentleman came along to give an account of his stewardship as a Minister but held out no hope for anyone. I do not know what he is like as an accountant but as a politician he is a disaster, and he has brought disaster into my area. He had no proposals which would help the current situation and the current crisis in the industry.
On the basis of the record balance of payments brought about by the last Government, there is room to reflate the economy. There is room to reduce the cost of borrowing and that is something which the Government should do immediately. I would be grateful if the right hon. Gentleman would examine 1713 the possibility of the Government financing additional stocking, both in the short term and long term, for ingot stocking by the Corporation and producing some kind of incentives to stock holders to prevent the run-down reaching below defined levels.
The right hon. Gentleman can dress it up as he likes when he is talking about the investment programme but in effect he is saying, "We are holding back and are stopping all starts on new projects at this time. "We need a new high tonnage bar mill near my constituency. We need two new electric are furnaces. Apparently that sort of development is going by the board. Heavy capital investment is going on in Rotterdam, Dunkirk and elsewhere in Europe. If we are to compete in the 1970s, we need massive investment in steel, which is now apparently at risk. Because of some shortfall in production arising from the inadequacy of previous investment the Corporation was having to import foreign steel during 1969–70. We should look at what the French Government did not long ago with low rate interest finance for steel. All over Europe the return on capital and assets in the steel industries is too low to finance the kind of industrial investment they should be having.
I hope that we shall have what we have not yet had, an assurance about the hiving-off of profitable parts of the industry. The Minister for Industry is one of the most vicious anti-Corporation and anti-publicly-owned industry Members of this House. Will he confirm or deny whether an offer or offers have already been made to the Corporation for the purchase of plants whose closure the Government are already discussing with the Corporation?
We do not want to see any change in the scrap export policy. A change would mean that the electric are furnaces in my constituency would face an extra cost of about £3 a ton. Will the Minister examine the possibility of reverting to the last Government's system of investment grants rather than investment allowances? I give an example to illustrate this point. It is not only a question of the Corporation's cash flow, and the fact that the financial help was larger in amount under the old system. Between January and June 1970, in my constituency we had initial inquiries which would 1714 have given us 2,871 jobs. These resulted in planning permission for building which will provide 1,568 jobs. Since the announcement of the change to investment allowances, we have not had one such inquiry. Everything has stopped.
I do not blame the British Steel Corporation for the current crisis. It has made substantial savings through productivity and cost reduction schemes. It took over an industry in which there had been inadequate investment for years and it is doing as well as its European competitors. I blame the Government, as do the steelworkers in my constituency, who realise that they are getting no help at all from the right hon. Gentleman.
§ 6.22 p.m.
§ Sir Anthony Meyer (Flint, West)
Unlike the hon. Member for Rotherham (Mr. O'Malley), I have great confidence in my right hon. Friend the Secretary of State to strike a right balance—and it is a question of striking the right balance. I see a great advantage wherever possible in the process of hiving-off nationalised industries and in denationalisation generally, but I have never felt that steel was the ideal industry in which to begin the process.
I am much impressed by the line which has been taken by the Corporation and the fact that steel, although a monopoly in national terms, is far from being a monopoly in effective terms since it has to meet foreign competition. But if on the one hand my right hon. Friend is right to resist those who would use steel as an experiment in denationalisation, he is equally right to resist those who would like to treat the industry as a vast system of out-door relief.
I understand that steel is an industry which generates passionate loyalty. I listened with great emotion to the hon. Member for Gower (Mr. Ifor Davies) and the hon. Member for Motherwell (Mr. Lawson), because they were speaking from the heart about an industry for which they care passionately. It is understandable that for them to talk of the industry in terms of productivity is almost a profanity. Yet no such industry can possibly survive in the modern competitive world unless it makes a profit. We cannot all live on cross-subsidising one another's losses. The industry must be made profitable if it is to survive.
1715 To make the industry profitable implies a double process. First, it must slim down because it has too much fat. Secondly, it must expand on the basis of existing successful works. In this connection, I want to put in a special plea for the steelworks in which a great many of my constituents work at Shotton. This is one of the works operating at a profit and it has land available for expansion. I hope that, when my right hon. Friend and the Corporation come to consider where expansion should take place, they will take account of the advantages of building on success and of expanding Shotton.
§ 6.25 p.m.
§ Mr. John Morris (Aberavon)
It was my privilege, as Parliamentary Secretary to the Ministry of Power, to play a small part in drafting the White Paper on the Steel Industry in 1965. We were seeking to ensure then that this great industry should be organised to serve the nation and not the few. We were conscious of the growth of the steel industries in other countries, of the fragmentation of our own industry and of the lack of investment in it in previous years. If we were to compete on a worldwide basis, the industry had to be organised for purposes more akin to the needs of the nation.
The right hon. Gentleman talked about turnround. This industry has always been bedevilled by cyclical patterns. What is needed is confidence to invest not in times of boom but in times of low demand so that we can catch the next boom and not suffer, as we have perennially suffered, from the balance of payments situation. My criticism of the Government is that they have created uncertainty. They have nourished every hairbrained idea to fragment the industry once again. They are the political liquidators of publicly-owned industries, the modern buriers of the British publicly-owned steel industry.
The message that will go out from the debate to every steel constituency is that starts on new projects will be deferred. Instead of the Corporation being allowed to get on with its job of planning this great industry, it is bedevilled by requests from Ministers for hiving- 1716 off schemes or for the B.P. solution—every kind of idea to throw the industry back to the wolves.
I believe that the Government do not believe in public ownership at all, so how can we expect any great increase in public investment from them? The article in The Economist horrified me. The kites were flown so low one could almost see the names of the owners. I would like to know who interiewed The Economist and gave this kind of philosophy to it. That philosophy is that it does not matter about the level of British unemployment, about the lack of British investment or about the British balance of payments. The suggestion is that there should be an import of crude steel from Japan because costs are lower in that case. I hope that the Government will repudiate that article and every kind of consideration which would make such action attractive to the Treasury.
The redundancies are coming at a time when the Government are doing less and less for the development areas. They are being grossly unfair to every development area in South Wales, England and Scotland at a time when the British steel industry is being deprived of £100 million in investment allowances. In an era of expansion, it is difficult to wear this kind of thing but in an era when there are fewer jobs in prospect and less investment is taking place, there is real cause For fear in all the steel areas—and my fear is that this is just the beginning and that more redundancies will take place throughout the country.
Lastly, I want to say something about the new integrated strip mill. I am glad that today we have not had any battle regarding the site. It is not a short-term answer to the future of the steel towns but it is a long-term answer. The first consideration is that a decision should be taken speedily by the Government on the need for investment in a new integrated strip mill. Secondly, it should start soon. Thirdly, it should go to a development area. When my hon. Friend the Member for Swansea, East (Mr. McBride) asked the Minister the other day for an assurance that it would go to a development area, that assurance was refused him. This decision is needed in the long-term interest of the nation and I hope that it 1717 will not be delayed. Otherwise, the nation will pay a heavy price for the dilatoriness of the Government.
§ 6.30 p.m.
§ Mr. David Crouch (Canterbury)
Whenever we discuss the coal industry I am at one with all those concerned about the problems of running down that industry and the redundancies which put men out of work. Today, however, we are not discussing a contracting industry and do not propose to speak of the redundancy problems. We are discussing an industry which should be expanding. We are speaking of one of the most important and fundamental industries, more important than Concorde in my opinion. I do not want to look at the immediate problems on the hill of difficulties we face—and it is right that these problems should have been examined in detail—but would rather look over that hill to the difficulties beyond and the opportunities beyond, as the right hon. Member for Aberavon (Mr. John Morris) has done.
This is a great industry in need of great support. I am not happy with the approach of the Corporation on long-term planning and investment. My right hon. Friend may not enjoy what I say now but my principal criticism is of the Corporation for its long-term thinking. To me its plan to develop on existing sites is to face up to the immediate problems of the next few years but not to the fundamental problems of the development of the industry. It is like putting a jet engine into a Dakota aircraft rather than buying a Boeing airframe and matching the two pieces of modern equipment.
What we should be thinking about is the need for a large investment in the future—building of it can be delayed but not for too long. We must have a thoroughly integrated coastal site. I am talking of a large operation, a coastal site capable of producing 10 million tons annually and 6 million or 7 million tons of finished product. It would be a completely integrated site, receiving ore from overseas on a site possibly employing as many as 12,000 or 16,000 men.
Only in this way can the industry compete with the real competition which will develop over the 10 or 15 years in Japan and our doorstep in Europe. In Japan there are already five major companies developing no less than two of these 1718 integrated sites to produce a capacity of 100 million tons annually. It is this sort of competition that we shall have to look to in future and that we may well see growing in at least five different places in Europe. While I recognise our immediate difficulties and the absolute necessity to raise profitability, we must also begin to look over this immediate hill to the absolute necessity for proper investment and proper modernisation so that we can compete in the future.
§ 6.35 p.m.
§ Mr. Charles R. Morris (Manchester, Openshaw)
I am grateful for the opportunity of reflecting the concern and disquiet of the steelworkers at the British Steel Corporation plant at Openshaw, in Manchester, in my constituency, over the announcement made in the course of the past few days that 600 workers there are to lose their jobs in a few months time. I would emphasise that these men are not industrial malcontents, unreasonably demanding that the nation or the world owes them a living. If we need evidence of their reasonableness then I could usefully point out that these are the men who recently accepted lower bonus rates which reduced their earnings by £2 10s. a week to make the operation of the plant more economically viable. They accepted the reduced manning of furnaces, they accepted one-man manning, and they have repeatedly urged the Corporation to make fresh capital investment at the plant.
Yet the result of their co-operation is still the same—redundancy, rationalisation. Call it what you will, it means in essence the sack for those 600 men, it will affect their livelihood and their families. I know that it will be argued, and the right hon. Gentleman has made the point, that the decision is not operative for some time at Openshaw. Perhaps the hope will be held out that the plant may yet be saved. My first question to the Minister is: is the decision on Openshaw irrevocable?
The Openshaw steel works is part of the Special Steels Division of the Corporation. The division has its headquarters in Sheffield and to some extent my constituents' fears are motivated by three factors. The first is geographical in that they are remote from the point of decision, the headquarters of the Corporation in Sheffield and London.
1719 Secondly the men are anxious and fearful that this move is a prelude to a Government decision to hive off the special steels section of the industry. If they needed support in this direction then they got it in an article which appeared in the Financial Times on 9th March this year written by Leslie Daniels in which he said:In the process of the formation of the British Steel Corporation Sheffield has become the headquarters of the Special Steels Division, which is the most profitable of all the divisions and the one most tipped for hiving off if the Government so decides.A third factor is the belief that the jobs at Openshaw are being sacrified to make way for low cost imported steel produced by overseas competitors. I hope the Minister will reply to those points. Are the jobs at Openshaw and elsewhere being sacrificed to subsidise low cost imports of steel? These questions demand an answer. I do not accept that the Corporation does not have a future. It has a good future and I hope that the Openshaw works will be part of that future.
§ Mr. Speaker
Before I call the next hon. Member I want to say that I am very disappointed that I have not been able to call all hon. Members who wanted to speak on matters which are of very great interest to them and to their constituents. According to my calculations we have had 15 back bench speeches in about 87 minutes. I want to thank those hon. Members who have made this possible and express my regret that it has not been possible to call all hon. Members who desired to speak.
§ 6.38 p.m.
§ Mr. Eric G. Varley (Chesterfield)
I sympathise with those of my hon. Friends who have not been able to speak during the debate. I know that they come from important steel constituencies and we will be pressing the Government as soon as it is appropriate for more time for a debate on this important matter. To some extent the debate has concentrated on the redundancies announced on 11th March. My hon. Friends have highlighted the social consequences in their constituencies. As many of them have said, the redundancies are only part of the story. Rumour is rife that there are more to come, that there are more in the 1720 pipeline, likely to be announced immediately after this debate. I hope that that is not the case and that the announcement has not been held over for this time.
We must consider not only the question of redundancies but the 25,000 people who are on short time working. The steel industry is concentrated, to a very great extent, in the development areas, and it is a double blow when redundancies are announced. In view of the background of an unemployment situation which is the worst for 30 years, I can understand the concern which has been expressed today.
The Secretary of State was a little disingenuous in claiming that the question of redundancies was not for him. He said that the matter had been decided by the Corporation in isolation. He suggested that he had been consulted about the redundancies. He cannot try this confidence trick on the House. With economic activity running at such a low rate, with industry in bottom gear and being put in decline by the Government, and with manufacturing investment at rock bottom, the Secretary of State cannot absolve himself from responsibility.
I have talked to workers and management in the industry over the last day or two, and I can tell the Government that morale has never been as low as it is now. Skilled technicians who the industry needs and will continue to need, no matter what its size, are seriously considering whether they should look for new jobs. The people engaged in the industry believed a few months ago in the long term future of the industry; they thought that it was secure. But now they have doubts and frustrations.
Since the announcement of the industry's development plan, the country knew, but, what is more important from the point of view of morale, the men who work in the industry knew what the future held. The productive capacity of the industry was to be increased, but rationalisation was to be a carefully planned operation. Everybody knew that there would be plant closures and that fewer people would be needed to produce more steel. But this was to be a properly planned and phased operation. The Corporation had a well developed 1721 arrangement for minimising the disruption which would take place. We all know about the social policy unit and that, by and large, it had the support of the trade unions involved.
My hon. Friends and I believe that the publicly-owned industries have a special responsibility to their employees. The projected manpower redundancies were to be effected by normal wastage and properly designed schemes. In view of the way in which the redundancies have been announced in the last few days and the manner and nature of them, I do not think the industry will get the co-operation which it has been able to secure from the trade unions in the last few years. This is one of the most disturbing aspects. Rationalisation in any industry can be carried through successfully only with the support of those who work in it.
The Secretary of State did not say one word about structure or hiving off. I should like the Minister for Industry to give a categorical assurance that there will not be any hiving off. The Secretary of State talked about a thorough-going study of the industry. When it was in opposition, the Conservative Party, said on page 14 of its manifesto about the question of State involvement in industry:We will progressively reduce the involvement of the State in the nationalised industries, for example, in the steel industry…This is the most ruthless scrutiny of the industry. It is not disengagement. The Government are taking over the industry and threatening it with hiving off. It should not be subjected to this doctrinaire nonsense of the Government.
The Secretary of State cannot have it both ways. He talked about the poor financial returns and said that they reflected a deteriorating position in the economy, and said that we cannot insulate the Corporation from these factors. Do the Government disclaim responsibility for the economy? Is the new theory that if the steel industry is in difficulties as a result of the downturn in the economy it is nothing to do with the Government? If so, it is a strange doctrine. The Secretary of State and the Government should declare openly and forthrightly that they support a steel industry of a size and capability which will meet our long term needs. That is the crucial issue.
1722 Reference has been made by my hon. Friends to the article in the business section of the Economist last week in which it was said that the Treasury was sceptical about the investment plans for steel. When my hon. Friend the Member for Ebbw Vale mentioned this matter, the Secretary of State shook his head. He did not deal with it in his speech. When it was referred to from this side of the House he said there was no truth in it. Can the Minister for Industry tell us that there is not a grain of truth in the article? If it were taken seriously, the situation would be very strange indeed.
Suppose that we took the advice of the Economist or the Treasury and began to import more cheap steel from lower wage countries, of which Japan is a prime example. What sort of implications would that have on our balance of payments? Surely the Government do not want to put our balance of payments at risk. They did it before, but surely they do not want to do it again. They should have at least learned that lesson.
The argument for the importation of such a vital product as steel from the so-called low wage countries is exactly the same kind of specious argument which was used throughout the 1950s and 1960s by the oil lobby about importing oil to replace coal. Not many people would follow that line again. In view of what is happening to oil prices, let us hope that the Government will not follow the advice. The more one looks at the arguments for large scale imports, the more ludicrous they become.
We in Britain can have a strong economy and improve our industrial position only on the basis of a strong steel industry which can meet all the needs of the nation. That is why the development plan must go ahead. It is no good the Secretary of State complaining about the poor financial returns. The industry is under-capitalised, and the development plan must go ahead. It is not the Opposition's purpose to be apologists for the Steel Corporation. We shall criticise it when we need to do so, but it is labouring under difficulties which are not of its making.
The fundamental issue facing the country and the House is this: do we want a steel industry of a size which will meet all our future needs and contribute 1723 to our exports? If the Government declare themselves in favour of further investment in the industry, they will be taking a step in the right direction and, in view of all the anxieties which have been expressed by my hon. Friends, will go some way to restoring confidence and stability in the steel-producing areas on which so much of our future depends.
§ 6.50 p.m.
§ The Minister for Industry (Sir John Eden)
Shortage of time prevents me from making reference to the many individual and constituency points raised during the debate but, as hon. Members will understand, we shall be giving them careful study when they are available in the OFFICIAL REPORT.
It has long been recognised that there has been a need to reduce over-manning in the industry. Some hon. Members have referred to the 1965 White Paper. The main justification for nationalisation was substantially based upon the need for rationalisation in the industry. The present director of social policy, a former Labour Minister of Health, Kenneth Robinson, has written in the current issue of "British Steel" of the need to close many older plants. The case for the present closures is best summarised by the British Steel Corporation in its news release of 11th March, 1971:The closure of a number of plants and mills which are now making losses is essential if the corporation is to remain economically viable and establish a firm foundation on which to build for the future an efficient, streamlined industry capable of meeting severe competition from foreign producers.There is no doubt from those views of the men responsible for the management of the industry that manpower savings are an essential step towards profitability.
It could be that some of these measures would have been taken earlier, but there has been a sustained high demand for steel for some years. At the moment there is a market down-turn which has been precipitated by the high wage-cost inflation which has affected many of the schemes of the user industries. The need to close plants has also been brought about by the realities of rising costs, notably the increase in raw material costs which the corporation, like other big industrial consumers, has had to bear. Coal prices have gone up twice in the last year, 1724 and have added more than £30 million to the corporation's costs.
I cannot answer in this short debate for the individual plants to which hon. Member referred. In any event, the future of individual plants is primarily a matter for the corporation. There is a carefully laid down procedure for consultation in the event of plant closure. First, notice of intention to close is given. This is followed by a period for consultation. Then, after a period—
§ Mr. Charles R. Morris rose—
§ Sir J. Eden
I have five minutes in which to reply to the debate and I am not taking up any more time than I feel is necessary. After the period of consultation comes the final decision. This decision when it comes to be taken is invariably seen to be based on compelling economic grounds. The unions have habitually come to recognise the validity and force of the Corporation's case, but as before, hon. Gentlemen opposite refuse to face realities.
It is easy to talk ourselves into an atmosphere of crisis. I do not believe that there is justification for the excessive language used by the hon. Member for Ebbw Vale (Mr. Michael Foot), but no one can be sanguine about the serious position described by my right hon. Friend. We have witnessed a change-round in one year of £150 million, from a forecast profit of £101 million to a loss, on the latest figure, of £20 million—and that despite price increases of £27 million. It is not only the magnitude of the turn-round, but the sad persistence with which one set of firm figures has been so rapidly overtaken by worse ones. We recognise the need to come to decisions, but it has not been possible to do so in the absence of firm figures on which to base a judgment. This is what my right hon. Friend described as the "shifting sands" of deterioration.
There is, therefore, clearly a need for a thorough review of the Corporation's financial and development position. In the short term we shall have to reappraise the investment programme for the coming year and then consider the options which are available to the Corporation in the longer term. Against these harsh financial facts which have been put before the House by my right hon. Friend, it is absolutely right that particular schemes 1725 should be looked at again. The short-term reappraisal will be carried through as expeditiously as possible, within six weeks to two months, or quicker if it can be done. We fully recognise the importance of this, but when the cost of schemes has risen to the extent that it has for Llanwern "C" it is absolutely right to reconsider their justification. Nothing that has been said in the debate so far affects the existing developments already in hand, such as Lackenby and Scunthorpe—
§ Mr. Lawson rose—
§ Sir J. Eden
—are how big a programme will be a profitable use of resources, and what is the correct balance between investment in the industry and in other proposals making a claim on public funds.
The hon. Gentlemen who spoke from the Front Bench opposite built up their case on Press gossip and rumours, some no doubt of their own creation. We cannot tell now what should be the exact shape and size of the industry in the future. We are, therefore, engaged in a major review, in which we have been enormously helped by the valuable advice of the Corporation and B.I.S.P.A. and of
§ many of steel's principal customers. We are looking at the structure of the Corporation as well as at the broad range of its activities. We shall also have regard to the likely developments in international competition and the need to ensure the most advantageous disposition of our national resources—[Interruption.]
§ Mr. Speaker
Order. Hon. Members are not being fair. The two Front Bench speakers winding up deliberately curtailed their speeches so as to allow more time for speakers from the back benches. It is not fair to treat the Minister like this.
§ Mr. Lawson
The hon. Gentleman is supposed to be replying to a debate—he is replying to nothing at all.
§ Sir J. Eden
These are matters of immense significance, and they will not be rushed by the Government. They merit the most careful consideration. The hon. Member for Ebbw Vale talked about the fever of uncertainty. It is nothing comparable to what took place in 1964 and has taken place since with the nationalisation of the industry. It is the Opposition who are primarily responsible for precipitating the uncertainty and frustration. We shall carefully consider the long-term projection for the industry in the light of the present situation.
§ Question put, That this House do now adjourn:—
§ The House divided: Ayes 248, Noes 300.1729
|Division No. 257.]||AYES||[7.0 p.m.|
|Abse, Leo||Callaghan, Rt. Hn. James||Doig, Peter|
|Albu, Austen||Campbell, I. (Dunbartonshire, W.)||Dormand, J. D.|
|Allaun, Frank (Salford, E.)||Carmichael, Neil||Douglas, Dick (Stirlingshire, E.)|
|Allen, Scholefield||Carter, Ray (Birmingh'm, Northfield)||Douglas-Mann, Bruce|
|Archer, Peter (Rowley Regis)||Carter-Jones, Lewis (Eccles)||Driberg, Tom|
|Armstrong, Ernest||Castle, Rt. Hn. Barbara||Duffy, A. E. P.|
|Ashley, Jack||Clark, David (Colne Valley)||Dunnett, Jack|
|Ashton, Joe||Cocks, Michael (Bristol, S.)||Eadie, Alex|
|Atkinson, Norman||Cohen, Stanley||Edwards, Robert (Bilston)|
|Bagier, Gordon A. T.||Concannon, J. D.||Edwards, William (Merioneth)|
|Barnes, Michael||Conlan, Bernard||Ellis, Tom|
|Barnett, Joel||Corbet, Mrs, Freda||English, Michael|
|Beaney, Alan||Cox, Thomas (Wandsworth, C.)||Evans, Fred|
|Benn, Rt. Hn. Anthony Wedgwood||Crawshaw, Richard||Fernyhough, Rt. Hn. E.|
|Bennett, James (Glasgow, Bridgeton)||Cronin, John||Fisher, Mrs.Doris (B'ham, Lady wood)|
|Bidwell, Sydney||Crosland, Rt. Hn. Anthony||Fitch, Alan (Wigan)|
|Bishop, E. S.||Cunningham, G. (Islington, S.W.)||Fletcher, Raymond (Ilkeston)|
|Blenkinsop, Arthur||Dalyell, Tarn||Fletcher, Ted (Darlington)|
|Boardman, H. (Leigh)||Davidson, Arthur||Foot, Michael|
|Booth, Albert||Davies, Denzii (Llanelly)||Fraser, John (Norwood)|
|Bottomley, Rt. Hn. Arthur||Davies, G. Elfed (Rhondda, E.)||Freeson, Reginald|
|Broughton, Sir Alfred||Davies, Ifor (Gower)||Garrett, W. E.|
|Brown, Bob (N'c'tle-upon-Tyne, W.)||Davis, Clinton (Hackney, C.)||Gilbert, Dr. John|
|Brown, Hugh D. (G'gow, Provan)||Deakins, Eric||Ginsburg, David|
|Brown, Ronald (Shoreditch & F'bury)||de Freitas, Rt. Hn. Sir Geoffrey||Golding, John|
|Buchan, Norman||Delargy, H. J.||Gordon Walker, Rt. Hn. P. C.|
|Buchanan, Richard (G'gow, Sp'burn)||Dell, Rt. Hn. Edmund||Gourlay, Harry|
|Butler, Mrs. Joyce (Wood Green)||Dempsey, James||Grant, George (Morpeth)|
|Grant, John D. (Islington, E.)||McCartney, Hugh||Robertson, John (Paisley)|
|Griffiths, Eddie (Brightside)||McElhone, Frank||Roderick, Caerwyn E.(Br'c'n&R'dnor)|
|Griffiths, Will (Exchange)||McGuire, Michael||Rodgers, William (Stockton-on-Tees)|
|Gunter, Rt. Hn. R. J.||Mackenzie, Gregor||Roper, John|
|Hamilton, James (Bothwell)||Mackie, John||Rose, Paul B.|
|Hamilton, William (Fife, W.)||Maclennan, Robert||Sheldon, Robert (Ashton-under-Lyne)|
|Hannan, William (G'gow, Maryhill)||McNamara, J. Kevin||Shore, Rt. Hn. Peter (Stepney)|
|Hardy, Peter||MacPherson, Malcolm||Short, Rt.Hn. Edward (N'c'tle-u-Tyne)|
|Harper, Joseph||Mahon, Simon (Bootle)||Short, Mrs. Renée (W'hampton, N.E.)|
|Harrison, Walter (Wakefield)||Mallalieu, E. L. (Brigg)||Silkin, Rt. Hn. John (Deptford)|
|Hart, Rt. Hn. Judith||Mallalieu, J. P. W. (Huddersfield, E.)||Silverman, Julius|
|Hattersley, Roy||Marquand, David||Skinner, Dennis|
|Healey, Rt. Hn. Denis||Marsh, Rt. Hn. Richard||Small, William|
|Heffer, Eric S.||Mason, Rt. Hn. Roy||Smith, John (Lanarkshire, N.)|
|Horam, John||Mayhew, Christopher||Spearing, Nigel|
|Houghton, Rt. Hn. Douglas||Meaeher, Michael||Spriggs, Leslie|
|Howell, Denis (Small Heath)||Mellish, Rt. Hn. Robert||Stallard, A. W.|
|Huckfield, Leslie||Mendelson, John||Steel, David|
|Hughes, Rt. Hn. Cledwyn (Angiesey)||Millan, Bruce||Stewart, Rt. Hn. Michael (Fulham)|
|Hughes, Mark (Durham)||Miller, Dr. M. S.||Stoddart, David (Swindon)|
|Hughes, Robert (Aberdeen, N.)||Milne, Edward (Blyth)||Storehouse, Rt. Hn. John|
|Hughes, Roy (Newport)||Molloy, William||Strang, Gavin|
|Hunter, Adam||Morris, Alfred (Wythenshawe)||Strauss, Rt. Hn. G. R.|
|Irvine, Rt.Hn.SirArthur (Edge Hill)||Morris, Charles R. (Openshaw)||Swam, Thomas|
|Janner, Greville||Morris, Rt. Hn. John (Aberavon)||Taverne, Dick|
|Jay, Rt. Hn. Douglas||Moyle, Roland||Thomas, Rt. Hn. George (Cardiff, w.)|
|Jenkins, Hugh (Putney)||Mulley, Rt. Hn. Frederick||Thomas, Jeffrey (Abertillery)|
|John, Brynmor||Murray, Ronald King||Thomson, Rt. Hn. G. (Dundee, E.)|
|Johnson, Carol (Lewisham, S.)||Ogden, Eric||Tinn, James|
|Johnson, James (K'ston-on-Hull, W.)||O'Halloran, Michael||Tomney, Frank|
|Jones, Barry (Flint, E.)||O'Malley, Brian||Tomney, Tom|
|Jones, Dan (Burnley)||Oram, Bert||Tuck, Raphael|
|Jones, Dan (Burnley)||Orbach, Maurice||Urwin, T. W.|
|Jones, Rt. Hn. Sir Elwyn (W.Ham,S.)||Orme, Stanley||Varley, Eric G.|
|Jones, Gwynoro (Garmarthen)||Oswald, Thomas||Wainwright, Edwin|
|Jones, T. Alec (Rhondda, W.)||Owen, Dr. David (Plymouth, Sutton)||Walden, Brian (B'm'ham, All Saints)|
|Judd, Frank||Palmer, Arthur||Walker, Harold (Doncaster)|
|Kaufman, Gerald||Pardoe, John||Wallace, George|
|Kelley, Richard||Parker, John (Dagenham)||Watkins, David|
|Kerr, Russell||Parry, Robert (Liverpool, Exchange)||Weitzman, David|
|Kinnock, Neil||Pavitt, Laurie||Wellbeloved, James|
|Lambie, David||Peart, Rt. Hn. Fred||Wells, William (Walsall. N.)|
|Lamond, James||Pendry, Tom||White, James (Glasgow, Pollok)|
|Latham, Arthur||Pentland, Norman||Whitehead, Phillip|
|Lawson, George||Perry, Ernest G.||Whitlock, William|
|Leadbitter, Ted||Prescott, John||Wiliey, Rt. Hn. Frederick|
|Lee, Rt. Hn. Frederick||Price, J T. (Westhoughton)||Williams, Alan (Swansea, W.)|
|Leonard, Dick||Price, William (Rugby)||Williams, Mrs. Shirley (Hitchin)|
|Lestor, Miss Joan||Probert, Arthur||Wilson, Alexander (Hamilton)|
|Lever, Rt. Hn. Harold||Rankin, John||Wilson, Rt. Hn. Harold (Huyton)|
|Lewis, Arthur (W. Harn, N.)||Reed, D. (Sedgefield)||Wilson, William (Coventry, S.)|
|Lipton, Marcus||Rees, Merlyn (Leeds, S.)||Woof, Robert|
|Loughlin, Charles||Rhodes, Geoffrey|
|Lyon, Alexander W. (York)||Richard, Ivor||TELLERS FOR THE AYES:|
|Lyons, Edward (Bradford, E.)||Roberts, Albert (Normanton)||Mr. Donald Coleman and|
|Mabon, Dr. J. Dickson||Roberts, Rt. Hn. Goronwy (Caernarvon)||Mr. William Hamling.|
|Adley, Robert||Boscawen, Robert||Churchill, W. S.|
|Alison, Michael (Barkston Ash)||Bossom, Sir Clive||Clark William (Surrey, E.)|
|Allason James (Hemel Hempstead)||Bowden, Andrew||Clegg, Walter|
|Amery, Rt. Hn. Julian||Boyd-Carpenter, Rt. Hn. John||Cockcram, Eric|
|Archer, Jeffrey (Louth)||Braine, Bernard||Cooke, Robert|
|Astor, John||Bray, Ronald||Ceombs, Derek|
|Atkins, Humphrey||Brewis, John||Cooper, A. E.|
|Awdry, Daniel||Brinton, Sir Tatton||Cordle, John|
|Baker, Kenneth (St. Marylebone)||Brocklebank-Fowler, Christopher||Corfield, Rt. Hn. Frederick|
|Baker, W. H. K. (Banff)||Brown, Sir Edward (Bath)||Cormack, Patrick|
|Balniel, Lord||Bruce-Cardyne, J.||Costain, A. P.|
|Barber, Rt. Hn. Anthony||Bryan, Paul||Crouch, David|
|Batsford, Brian||Buchanan-Smith, Alick (Angus, N&M)||Crowder, F. P.|
|Beamish, Col. Sir Tufton||Buck, Antony||Curran, Charles|
|Bell, Ronald||Bullus, Sir Eric||Dalkeith, Earl of|
|Bennett, Sir Frederic (Torquay)||Burden, F. A.||Davies, Rt. Hn. John (Knutsford)|
|Bennett, Dr. Reginald (Gosport)||Butler, Adam (Bosworth)||d'Avigdor-Goldsmid, Sir Henry|
|Benyon, W.||Campbell, Rt. Hn. G.(Moray&Nairn)||Dean, Paul|
|Berry, Hn. Anthony||Carr, Rt. Hn. Robert||Deedes, Rt. Hn. W. F.|
|Biffen, John||Cary, Sir Robert||Digby, Simon Wingfield|
|Biggs-Davison, John||Channon, Paul||Dixon, Piers|
|Blaker, Peter||Chapman, Sydney||Dodds-Parker, Douglas|
|Boardman, Tom (Leicester, S.W.)||Chataway, Rt. Hn. Christopher||Douglas-Home, Rt. Hn. Sir Alec|
|Body, Richard||Chichester-Clark, R.||du Cann, Rt. Hn. Edward|
|Dykes, Hugh||Kiffedder, James||Reed, Laurance (Bolton, E.)|
|Eden, Sir John||Kimball, Marcus||Rees, Peter (Dover)|
|Edwards, Nicholas (Pembroke)||King, Evelyn (Dorset, S.)||Rees-Davies, W. R.|
|Elliot, Capt. Walter (Carshalton)||King, Tom (Bridgwater)||Renton, Rt. Hn. Sir David|
|Elliott, R. W. (N'c't1e-upon-Tyne, N.)||Kinsey, J. R.||Rhys Williams, Sir Brandon|
|Emery, Peter||Kirk, Peter||Ridley, Hn. Nicholas|
|Farr, John||Kitson, Timothy||Ridsdale, Jullan|
|Fenner, Mrs. Peggy||Knight, Mrs. Jill||Rippon, Rt. Hn. Geoffrey|
|Fidler, Michael||Knox, David||Roberts, Michael (Cardiff, N.)|
|Fisher, Nigel (Surbiton)||Lambton, Antony||Roberts, Wyn (Conway)|
|Fletcher-Cooke, Charles||Lane, David||Rodgers, Sir John (Sevenoaks)|
|Fookes, Miss Janet||Langford-Holt, Sir John||Rossl, Hugh (Hornsey)|
|Fortescue, Tim||Legge-Bourke, Sir Harry||Rost, Peter|
|Foster, Sir John||Le Marchant, Spencer||Russell, Sir Ronald|
|Fowler, Norman||Lloyd, Ian (P'tsm'th, Langstone)||St. John-Stevas, Norman|
|Fox, Marcus||Longden, Gilbert||Sandys, Rt. Hn. D.|
|Fraser, Rt. Hn. Hugh (St'fford&Stone)||Loveridge, John||Scott, Nicholas|
|Fry, Peter||McAdden, Sir Stephen||Scott-Hopkins, James|
|Galbraith, Hn. T. G.||MacArthur, Ian||Sharples, Richard|
|Gardner, Edward||McCrindle, R. A.||Shaw, Michael (Sc'b'gh & Whitby)|
|Gibson-Watt, David||McLaren, Martin||Shelton, William (Clapham)|
|Gilmour, Sir John (Fife, E.)||Maclean, Sir Fitzroy||Simeons, Charles|
|Glyn, Dr. Alan||McMaster, Stanley||Sinclair, Sir George|
|Godber, Rt. Hn. J. B.||Macmillan Maurice (Farnham)||Skeet, T. H. H.|
|Goodhart, Philip||McNair-Wilson, Michael||Smith, Dudley (W'wick & L'mington)|
|Goodhew, Victor||McNair-Wllson, Patrick (NewForest)||Soref, Harold|
|Gorst, John||Maddan, Martin||Speed, Keith|
|Gower, Raymond||Madel, David||Sproat, Iain|
|Gray, Hamish||Maginnis, John E.||Stainton, Keith|
|Green, Alan||Marples, Rt. Hn. Ernest||Stanbrook, Ivor|
|Grieve, Percy||Marten, Neil||Stewart-Smith, D. G. (Belper)|
|Griffiths, Eldon (Bury St. Edmunds)||Mather, Carol||Stodart, Anthony (Edinburgh, W.)|
|Grylls, Michael||Maude, Angus||Stoddart-Scott, Col. Sir M.|
|Gummer, Selwyn||Maudling, Rt. Hn. Reginald||Stokes, John|
|Gurden, Harold||Mawby, Ray||Sutcllffe, John|
|Hall, Miss Joan (Keighley)||Maxwell-Hyslop, R. J.||Tapsell, Peter|
|Hall, John (Wycombe)||Meyer, Sir Anthony||Taylor, Sir Charles (Eastbourne)|
|Hall-Davis, A. G. F.||Mills, Peter (Torrington)||Taylor, Edward M.(C'gow, Carthcart)|
|Hamilton, Michael (Salisbury)||Mills, Stratton (Belfast, N.)||Taylor, Frank (Moss Side)|
|Hannam, John (Exeter)||Miscampbell, Norman||Taylor, Robert (Croydon, N.W.)|
|Harrison, Brian (Maldon)||Mitchell, Lt.-Col.C. (Aberdeenshire, W)||Tebbitt, Norman|
|Harrison, Col. Sir Harwood (Eye)||Mttchell, David (Basingstoke)||Temple, John M.|
|Harvey, Sir Arthur Vere||Moate, Roger||Thatcher, Rt. Hn. Mrs. Margaret|
|Haselhurst, Alan||Molyneaux, James||Thomas, John Stradling (Monmouth)|
|Hastings, Stephen||Money, Ernle||Thompson, Sir Richard (Croydon, S.)|
|Havers, Michael||Monks, Mrs. Connie||Tilney, John|
|Hawkins, Paul||Monro, Hector||Trafford, Dr Anthony|
|Hay, John||Montgomery, Fergus||Trew, Peter|
|Hayhoe, Barney||Morgan-Glles, Rear-Adm.||Tugendhat, Christopher|
|Heseltine, Michael||Morrison, Charles (Devizes)||Turton, Rt. Hn. R. H.|
|Hicks, Robert||Mudd, David||Vaughan, Dr. Gerard|
|Higgins, Terence L.||Murton, Oscar||Vickers, Dame Joan|
|Nabarro, Sir Gerald||Waddington, David|
|Hill, John B. (Norfolk, S.)||Neave, Airey||Walder, David (Clitheroe)|
|Hill, James (Southampton, Test)||Nicholls, Sir Harmar||Walker, Rt. Hn. Peter (Worcester)|
|Holland, Philip||Noble, Rt. Hn. Michael||Walker-Smith, Rt. Hn. Sir Derek|
|Holt, Miss Mary||Normanton, Tom||Wall, Patrick|
|Hordern, Peter||Nott, John||Walters, Dennis|
|Hornby, Richard||Onslow, Cranley||Ward, Dame Irene|
|Hornsby-Smith, Rt. Hn. Dame Patricia||Oppenheim, Mrs. Sally||Warren, Kenneth|
|Howe, Hn. Sir Geoffrey (Reigate)||Orr, Capt L. P. S.||Weatheriil, Bernard|
|Howell, David (Guildford)||Owen, Idris (Stockport, N.)||Wells, John (Maidstone)|
|Howell, Ralph (Norfolk, N.)||Page, Graham (Crosby)||White, Roger (Gravesend)|
|Hunt, John||Page, John (Harrow, W.)||Whitelaw, Rt. Hn. William|
|Hutchison, Michael Clark||Parkinson, Cecil (Enfield, W.)||wiggin, Jerry|
|Iremonger, T. L.||Peroival, Ian||Wilkinson, John|
|Irvine, Bryant Godman (Rye)||Peyton, Rt. Hn. John||Wolrige-Gordon, Patrick|
|James, David||Pink, R, Bonner||Wood, Rt. Hn. Richard|
|Jenkin, Patrick (Woodford)||Pounder, Rafton||Woodhouse, Hn. Christopher|
|Jennings, J. C. (Burton)||Powell, Rt. Hn. J. Enoch||Woodnutt, Mark|
|Jessel, Toby||Price, David (Easlleigh)||Worsley, Marcus|
|Johnson Smith, G. (E. Grinstead)||Prior, Rt. Hn. J. M. L.||Wylle, Rt. Hn. N. R.|
|Jones, Arthur (Northants, S.)||Proutrfoot, Wilfred||Younger, Hn. George|
|Jopling, Michael||Pym, Rt. Hn. Francis|
|Joseph, Rt. Hn. Sir Keith||Quennell, Miss J. M.||TELLERS FOR THE NOES:|
|Kaberry, Sir Donald||Raison, Timothy||Mr. Reginald Eyre and|
|Kellett, Mrs. Elaine||Ramsden, Rt. Hn. James||Mr. Jasper More.|
|Kershaw, Anthony||Rawlinson, Rt. Hn. Sir Peter|