HC Deb 22 October 1982 vol 29 cc664-72
Mr. Stanley Orme (Salford, West)

On a point of order, Mr. Speaker. I received the statement at 10.52 am. That is completely unacceptable. This practice is occurring regularly, and I protest strongly about it.

The Secretary of State for Industry (Mr. Patrick Jenkin)

I unreservedly offer my apologies to the right hon. Gentleman and other hon. Members who are entitled to receive the statement. Until a very late hour last night I was first in Brussels and then in Birmingham and I caught the first train to London this morning. We did our best, but I fully acknowledge that we did not deliver the statement to the right hon. Gentleman and other Members within the accepted time scale. I can only profoundly apologies and hope that they will forgive me.

I should like to make a statement on steel exports to the United States of America and the steel regime in Europe.

Yesterday, the European Community reached agreement on the terms of a negotiated settlement with the United States. We have thus avoided the imposition of countervailing and anti-dumping duties on certain United Kingdom steel exports.

The Government recognised from the outset the importance of resolving the issue in a way that would guarantee the United Kingdom steel industry a reasonable share of the United States market, to which we have traditionally had access, and avoid the imposition of punitive duties. We gave our full support to the European Commission's efforts to that end. The negotiations lasted several months, and continued until the last possible moment. On Wednesday all member States except Germany had signified their acceptance of the package. The German Government had a number of last-minute reservations, but they were satisfactorily resolved in Brussels yesterday. That enabled the United States Administration to persuade the American steel industry to withdraw their countervailing and anti-dumping cases, and this the companies did formally late last night.

The settlement will establish, from 1 November, restrictions by means of export licences on Community sales of a range of carbon and alloy steel products until 31 December 1985. In addition, Community exports of steel pipes and tubes will be monitored, and if they exceed a 5.9 per cent. share of the United States market immediate consultations will be held, with the possibility of control measures being introduced. While the arrangements with the United States of America inevitably represent a compromise, the outcome is without any doubt much better for our steel industry and for jobs in British steel plants than it would have been without an agreement. I shall place details of the arrangements in the Library as soon as possible.

Anxiety over United Kingdom steel exports to the United States of America has by no means been our only worry. Markets for steel across the world have been collapsing and there is a world-wide excess of steel-making capacity. Those problems pose real threats to the European steel industry. Yesterday in Brussels, we again pressed for a significant tightening of the voluntary restraint arrangements governing imports from non-Community countries, which come up for renewal at the end of the year. As a result of our pressure, those arrangements will be on the agenda at next week's Foreign Ministers' meeting. I also pressed Vice-President

Davignon to ensure that the measures to restore stability to European Community steel markets are enforced more effectively, including the mandatory production quotas and the rules about pricing. We are determined to ensure that the quota regime and the price rules are observed as scrupulously by other countries as they are by us, and I have made it clear to the Commission, which has the responsibility for policing the regime, that we intend to keep them up to the mark.

I also spoke to Commissioner Andriessen about what other member States are doing to restructure their steel industries. He confirmed my fear that, despite the major contribution made by the United Kingdom, the preliminary figures for cuts in steel-making capacity notified to the Commission by member States did not meet any reasonable estimate of forecast demand. I said that I expected the Commission to apply the rules of the ECSC State Aids Decision strictly and fairly, so that aids would not be permitted unless accompanied by commensurate capacity reductions. This country has already done a great deal. Both the British Steel Corporation and private sector firms have made great sacrifices to make the steel industry competitive. The Government are doing all in their power to ensure that other member States face up to their responsibilities and bear their share of the necessary sacrifice. I shall be pursuing all those issues individually with my Community colleagues and jointly with them at an informal meeting of industry Ministers, to be held in Denmark on 18 November.

The steel industry in Britain is an essential part of our manfacturing industry. I am determined to safeguard the best interests of the industry and all those whose jobs depend on it.

Mr. Orme

The statement has been made at a time of crisis in the British steel industry. The Opposition view the position with grave concern. Was agreement reached between the German Chancellor and the Prime Minister during his recent visit to Britain, or were the German actions sprung upon the remainder of the Community during the negotiations? The German action appears to be rather odd.

Have not the Germans now been allowed to increase their capacity under the EEC provisions to allow for the cuts, especially in tube exports to the United States? Does the Secretary of State agree that, as the United States Commerce Secretary stated, the agreement will substantially reduce European steel imports to the United States? What steps will the right hon. Gentleman take to ensure that the excess steel does not find its way into the dwindling United Kingdom market?

Are not steel imports into Britain well in excess of 30 per cent. of our total consumption? More than two thirds come from the EEC, and the other one third from Third world countries. What action will the Government take in a shrinking British market? It is not sufficient for the Secretary of State to say that he will monitor the position. We want action. Will he not tell Viscount Davignon that other countries in the EEC are violating agreements and that the voluntary agreements are not satisfactory?

As the United States has imposed quotas, presumably without retaliation, should not the British Government take similar steps to protect our industry? We want import controls to protect our domestic industry, or one or two of our major steel areas will be in jeopardy.

A report in The Guardian today states that the chairman of the British Steel Corporation has told the Government that they must take responsibility for deciding whether the Ravenscraig plant in Scotland should close, with the loss of 4,400 jobs. That would be wholly unacceptable to the Opposition. Not one of the five main centres can be allowed to close, in any circumstances. We want a categorical assurance from the Secretary of State that that will not happen.

There are two courses of action that the right hon. Gentleman can take. One is to extend the cash limits that are now pressing in on the steel corporation. The second is to introduce import controls. The Government might also increase demand, which would have a dramatic effect. It is under grave circumstances that steel workers today are taking action to defend their communities, interests and industry. It is our industry as well. The Secretary of State's statement is completely unsatisfactory for the future of the British steel industry.

Mr. Jenkin

l do not disagree with the right hon. Gentleman's description of the present position as one of crisis. It is a grave position. We should try to look at it as rationally as possible.

The problem all along with the Germans is that the levels of anti-dumping and countervailing duties against German steel in America were at a substantially lower figure than those for most of the other Community countries. Therefore, they felt all along that if there were to be an arrangement they should not bear a proportionate share of the cut but should have a larger share. Nothing new happened this week. They have always had reservations, particularly about the tube and pipe addition on which the Americans insisted. The German Cabinet decision on Wednesday was made expressly subject to agreement on burden sharing. That agreement was reached in Brussels yesterday. That there should be such a major commercial difference of interest and that it should have been resolved in the way it was augurs well for Anglo-German relations.

The right hon. Gentleman asked about Mr. Baldridge's statement. There is a reduction of European steel imports to America. That is the purpose. However, he must remember that the American steel market has declined by about 20 per cent. The reduction in imports will probably be less than 30 pet cent., so that less than 10 per cent. is attributable to the agreement. Had we not had an agreement, far more than that would have been at risk, particularly for the British Steel Corporation, which stood to lose about £50 million worth of exports directly and perhaps twice as much indirectly because of the duty. Therefore, I think that we have averted what I would regard as a disaster.

The right hon. Gentleman asked what action we would take. I spelt out the steps that we are taking to make sure that the Commission, which has the authority in these matters, will enforce the new regime as strictly as possible. It is not just a question of monitoring. We are looking for action on lower totals under the voluntary restraint arrangements. That will be discussed next week at the Foreign Affairs Council. We are looking for action on the strict implementation of the aids regime and on the implementation of the quota and pricing rules. We are simply monitoring but looking for the Commission to take action to enforce that regime because without it we cannot expect stability to return to the steel market.

The right hon. Gentleman seems to believe that we could impose import controls unilaterally. He knows, because he was a member of a Government who lived under the Paris and Rome treaties, that our capacity to do that is strictly limited. In most of those products the Community has the competence. I have no doubt that we have secured a much better deal as a result of our membership of the Community than we could have done on our own. In all the actions that I am pressing upon the Commission and in my discussions with Mr. Davignon and Mr. Andriessen yesterday, it has been clear to me that the Commission shares our view and is our ally. We want to work with it to make sure that the regime works properly.

The right hon. Gentleman referred to the report in The Guardian. Mr. MacGregor has told the Government that the British Steel Corporation cannot now expect to meet its financial target to break even in 1982–83 and that the prospects for the following two years have deteriorated. We are discussing with the British Steel Corporation the economic and financial framework within which the corporation's new three-year plan from 1983 to 1986 will be prepared. I make it clear to the right hon. Gentleman that no decision on the closure of major steel works would be taken by the British Steel Corporation without close consultation and the agreement of the Government. I shall not shuffle the responsibilities on to Mr. MacGregor's shoulders. They are the Government's responsibilities; I am prepared to shoulder them. We do not yet know precisely what steps need to be taken to deal with the new situation, but I shall find an opportunity to inform the House as soon as decisions are taken.

Mr. Tam Dalyell (West Lothian)

My right hon. Friend the Member for Salford, West (Mr. Orme) asked the right hon. Gentleman about Ravenscraig.

Mr. Jenkin

I cannot give specific undertakings one way or the other. The hon. Gentleman will understand that.

The right hon. Gentleman asked for my view on the strike. The steel industry is facing serious problems. Without any doubt, the 1980 strike cost the British Steel Corporation hundreds of thousands of pounds, perhaps millions of tonnes of custom. Any strike must weaken customers' confidence in the ability of BSC to deliver. I should have hoped that the trade unions would understand that. They are not helping their case one little bit by the action that they are taking today.

Mr. J. Enoch Powell (Down, South)

What is the nature of the American quid pro quo? We and other EEC countries are imposing by law restrictions upon our citizens. Is the law of the United States to prevent the resumption of the countervailing and anti-dumping cases or will the American companies be free legally to resume those cases at their will?

Mr. Jenkin

As their side of adherence to the agreement, the American companies have withdrawn their anti-dumping cases. The agreement runs until 1985. So long as the agreement is withheld it is clear that the American companies could not seek to raise cases based on the agreement. If it were broken, different considerations would arise. However, some more recent cases involving special steels, which are not covered by the agreement, continue to be pressed. We shall continue to negotiate through the Commission for a satisfactory resolution of those problems.

Mr. Donald Anderson (Swansea, East)

Is not the American protectionist attitude in a matter that so vitally concerns the Americans' national interest a precedent for us when so many steel imports affect our own interests? What will the Commission do about the unfairness of Italy being able to increase its steel capacity when our steel capacity has been so brutally reduced?

Mr. Jenkin

I am sure that the hon. Gentleman recognises that the world faces a threat of a trade war with rising protectionism as a means of trying to deal with the current recession. It cannot be to the advantage of this country, which exports a higher proportion of its gross domestic product to other markets overseas than any of our major industrial competitors, to embark on a trade war of rising protectionism. The right hon. Gentleman's call for import controls sits uneasily alongside his criticism of the Americans.

The hon. Gentleman's second question was one of the points that I discussed with Mr. Andriessen yesterday. The aids regime is dependent upon cuts in capacity to bring capacity in line with projected demand. The Commission has powers in that regard. We are determined to see that it uses them.

Mr. John G. Blackburn (Dudley, West)

Does my right hon. Friend accept that this news will be received in my constituency with cautious optimism, as it is dominated by the Round Oaks steelworks? In view of the sacrifice made by 2,600 of my constituents who have been made redundant, we must insist that there is thorough control of the policing of the agreement. We expect every help from the Department in obtaining the 5.9 per cent. market share of the American market in tubes.

Mr. Jenkin

Insofar as it lies within our power, the Department will want to make sure that the agreement is implemented to the maximum advantage of the British steel industry, in the public and private sectors. I am grateful to my hon. Friend for his recognition that the agreement is a cause for optimism. However, I do not disagree with the epithet that he applied to it.

My hon. Friend will recognise that in present conditions no one can be guaranteed a job, but I intend to ensure that a British steel industry with an adequate capacity survives.

Mr. Michael Foot (Ebbw Vale)

What is adequate?

Mr. Jenkin

As the right hon. Gentleman knows, that is a question that we are examining. I read the speech that he had to make to his constituents when his Government closed down steel making in Ebbw Vale.

Mr. Foot

We are now talking about a drop to 14.4 million tonnes.

Mr. Jenkin

The production of liquid steel last year was 14.4 million tonnes, but the actual capacity was over 20 million tonnes. With the market collapsing, the question is how much of that can sensibly be kept in being.

No one can be guaranteed a job, but I wish to do all that I can to protect the steel industry's interests.

Mr. Richard Wainwright (Colne Valley)

The Secretary of State made a grave statement about other member States failing to restructure their steel industries, but gave no information about the extent of that failure. Will he undertake to place in the Library preliminary figures for cuts in steel making capacity that have been notified to the Commission by other member States?

Mr. Jenkin

The lists for State aid closed a month or two ago. Mr. Andriessen tells me that he has a large pile of paper that his department is seeking to analyse, but his preliminary view is that the proposed cuts in capacity did not measure up to what was necessary to bring capacity in line with demand. I asked him when we might have more detailed figures, and I expect more detailed information when we meet in Denmark next month. Without commitment, I shall bear in mind the hon. Gentleman's request that the figures be placed in the Library.

Mr. Dalyell

Will the Secretary of State take it from a Scottish Member who represents only a few steel workers that on 18 November in Denmark he should bear in mind that any closure at Ravenscraig would be a greater industrial calamity that the closures at Linwood, Corpach and Invergordon combined and that, if anything were to happen to Ravenscraig, in the sober view of a number of us the consequences would go far beyond the steel industry and, indeed, beyond industry generally? Does the Cabinet understand that?

Mr. Jenkin

The hon. Gentleman would not wish me at this stage to comment on what he has said, but I am peculiarly aware of its importance.

Mr. Nigel Forman (Carshalton)

May I congratulate my right hon. Friend on his part in getting the agreement? Is it not a fact that the European Commission has the legal competence to deal with these matters and a much more effective capability to negotiate on behalf of the Community than we have on our own?

Mr. Jenkin

My hon. Friend is right. The American countervailing and anti-dumping duties imposed significantly higher levels of duty on British steel products than on those of any other country. Although we were successful in the preliminary proceedings in reducing the figure from 40 per cent. to about 20 per cent., it still represented a virtually insurmountable hurdle, and we stood to lose more and were more vulnerable than most of our Community partners. An agreement has been reached. It is a compromise, but it is a darned sight better than the situation would have been had an agreement not been reached.

Several Hon. Members


Mr. Speaker

Order. I propose to call the five hon. Members who have been rising to their feet before I call on the Front Bench spokesmen.

Mr. Ian Wrigglesworth (Thornaby)

Although the agreement is welcome, is the Minister aware of the anxiety, particularly in steel making areas, first, about whether the steel industry will remain a viable national industry and not fall below the Alamein line so that it ceases to be viable, and, secondly, that the devastating blow of closing the plant at Redcar would extend way beyond the industry and affect the social and economic infrastructure of a community that already has 20 per cent. unemployment? As well as pursuing the courses that he mentioned, will he urge his Cabinet colleagues to reflate the economy to take up the capacity available at Redcar, Ravenscraig and so on, which is the only solution to the problem facing the steel industry?

Mr. Jenkin

I cannot say anything specific about Redcar. There is a need to control public expenditure, but capital investment in the public sector has not fared badly. Between 1981–82 and 1982–83 the Government will be spending 14 per cent. more on new construction and nationalised industry investment will rise by 26 per cent. A general reflation aimed at boosting the demand for steel could not possibly avoid returning us to the dismal spiral of increased inflation and high interest rates, which has done more than anything else to damage industry's prospects.

Sir Brandon Rhys Williams (Kensington)

May I, too, congratulate my right hon. Friend on coming to a common-sense agreement in an extremely painful situation? Is not the position of our exporters and manufacturers reminiscent of the problems of the 1930s, but with the special advantage that we maintain free access to the Common Market countries? Will he give an undertaking that the Government will do nothing to damage our free trade commitments to the other EEC members?

Mr. Jenkin

I am grateful to my hon. Friend for what he says. Imports into this country have increased, but the total import penetration in the United Kingdom steel market in the period from January to July was 28 per cent., which is significantly lower than the import penetration for a number of our European competitors—for instance, France, where imports account for 43 per cent. of the market, and Germany, where the figure is 35 per cent.

The availability of a free European market in steel is essential, but to achieve a proper balance between demand and capacity the regime that the Community countries have agreed must be effectively enforced. That is the main burden of what I said to the Commission yesterday.

Mr. Gavin Strang (Edinburgh, East)

Is the Minister aware that the suggestion that the BSC is even contemplating closing the plant at Ravenscraig Es outrageous and utterly unacceptable to the people of Scotland? Does he not understand that to close steel production at Ravenscraig would write off Scotland's future as an industrial nation? May we have a statement next week to put an end to the wholly damaging speculation?

Mr. Jenkin

I cannot promise a statement next week. The problems are difficult and will take time to resolve. Mr. MacGregor, in seeking to find a way through the problems that the BSC faces, is right to present the Government with a number of options. That is what I have asked him to do, and that is what he is doing. I do not wish to say more about Ravenscraig. I do not wish to create hopes or cause undue despondency. The Government have closely in mind the points that the hon. Gentleman has raised.

Mr. Roger Moate (Faversham)

May I, too. congratulate my right hon. Friend on taking part in securing an agreement, which, although it has not stopped the increasing pressures on the British market, has prevented an even worse situation? As we are likely to be subjected to even more pressures, perhaps from Continental imports, on our already inadequate steel market, if we can enter into voluntary quota agreements with our American partners, why cannot we do the same with our European trading partners and secure from them voluntary restraint on exports to our markets, especially at this crucial time, when there is clear evidence that they are not all abiding by the agreements to reduce capacity, particularly in Italy and Germany?

Mr. Jenkin

In 1980 the Governments of the Community believed that it was appropriate to impose mandatory quotas on production, to ensure price transparency and to ensure that companies adhered to the provision for listing prices. It is left to the forces of competition to ensure that efficient industries will receive the money. The British Steel Corporation, under Mr. MacGregor's leadership, has taken manful steps to increase efficiency and some plants are as efficient as any in Europe.

However, we must ensure that the agreement sticks. If it does not, the Council of Ministers must consider further measures. In the meantime, I shall do everything in my power to ensure that the Commission fulfils its responsibilities under the regime that is in force and that is intended to provide the stability that we all wish.

Mr. Bob Cryer (Keighley)

Can the Secretary of State confirm that the agreement represents a cut of a least 10 per cent. in exports to America? He referred to monitoring exports of pipes and tubes from Britain to America. Is there an arrangement that would trigger off action by American companies against increased imports of pipes and tubes during the monitoring process? The right hon. Gentleman mentioned the Government's determination to enforce a quota regime. Is that not entirely in the hands of the EEC Commission, and is it not true that the Government have no control over the matter? Does the right hon. Gentleman believe that the Commission will do worse or better in this matter than it did on textiles, which is seen by the industry as little short of unmitigated disaster?

Mr. Jenkin

I cannot add to what I have already said about pipes and tubes. The arrangement that we have reached with the Americans is that the export of pipes and tubes will be monitored. If the 5.9 per cent. share of the American market is exceeded, immediate consultations will take place with a view to enforcing controls. That is a reasonable compromise.

The Government are not completely powerless to deal with production quotas. Article 58 of the Paris treaty states that production quotas are a mandatory requirement. The Commission must enforce the article. If it fails to do so, certain steps are open to the Government to force it to do so. The hon. Gentleman mentioned textiles. He will know that the German Government have taken a case to the European Court because, in their view, the Commission failed to apply the textile aids regime properly in relation to Belgian textiles.

I am satisfied that our aims and those of the Commission are almost identical in ensuring the proper enforcement of the regime. Our best hope is to ensure that the Commission remains our ally.

Mr. Eric S. Heifer (Liverpool, Walton)

In view of the right hon. Gentleman's final statement, will he tell the House what steps the Government will take if the EEC countries do not abide by their responsibilities? There has been a tremendous increase in imports from the EEC—more than 67 per cent. in the steel industry—so is it not clear that the other member States are not accepting their responsibilities and that we must take action? After all the nice, friendly discussions, what action will the Government take if the other European countries do nothing? What will the Government do to face up to their responsibilities to the British people and to the steel industry?

The Secretary of State said that the Government have discussed options with Mr. MacGregor. May we have a statement next week in the House on the matter? The right hon. Gentleman said "No", but we wish to have a statement and an early debate before he meets his fellow European Ministers. It is a crisis for our industry and our people. We wish to know precisely what the Government intend to do about it. We shall back them all the way if they do something positive, but we shall oppose them if they do not face their responsibilities. They have not faced them up to now.

Mr. Jenkin

Although I understand the hon. Gentleman's anxiety—much of which I share—I can go no further than I went in replying to the hon. Member for Keighley (Mr. Cryer). My right hon. Friend the Leader of the House must decide whether we debate the matter. I cannot promise a statement next week because the subject is complicated. The should be able to express its view, either after a statement or during a debate, when decisions are reached, as is our normal procedure. However, I cannot yet present any decisions to the House. Therefore, a statement would be premature.