§ Order for Second Reading read.
§ Mr. Deputy Speaker (Sir Paul Dean)
Before we begin the debate, I should tell the House that Mr. Speaker has not selected either of the amendments on the Order Paper.
§ Mr. Michael Fallon (Darlington)
On a point of order, Mr. Deputy Speaker. Regarding the conduct of the debate, you will be aware that Mr. Speaker has received many applications from right hon. and hon. Members to participate in the debate, but you will have observed also that there is no amendment on the Order Paper standing in the name of the Leader of the Opposition. As the trade union movement seems to be in support of the Bill and Labour Members are divided on whether to oppose the Bill in principle, will you be taking that into account when you consider whether to conform with your usual practice of calling hon. Members alternately across the Chamber?
§ Mr. Bryan Gould (Dagenham)
Further to that point of order, Mr. Deputy Speaker. If I may correct a quite erroneous assertion by the hon. Member for Darlington (Mr. Fallon), I have the authority — which is hardly needed, given their well-known position on the subject — on the basis of recent conversations with the TUC steel committee and the Iron and Steel Trades Confederation, to make it clear that they are totally opposed to the Bill, as is Her Majesty's Opposition. There is no amendment because we propose to vote against the Second Reading.
§ Mr. Alex Salmond (Banff and Buchan)
On a point of order, Mr. Deputy Speaker. Would it not have been in order for the Chair to select the amendment in the name of my hon. Friends and me or that in the name of the Liberal party?
§ Mr. Deputy Speaker
As I am sure the House knows, Mr. Speaker does not give reasons for selecting or not selecting amendments. I have announced Mr. Speaker's decision to the House, which is that neither amendment has been selected. That does not mean, of course, that the arguments on those amendments cannot be advanced in the debate; they can.
§ The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)
I beg to move, That the Bill be now read a Second time.
I welcome the unusual exchange through points of order between my hon. Friend the Member for Darlington (Mr. Fallon) and the Opposition Front Bench. Like my hon. Friend, I had not received a great deal of opposition from the Labour party before today. We look forward to the arguments of the Opposition. We are sure that force of persuasion in the course of the debate will get them, even at this late stage, to reconsider their position and to vote for the Bill's Second Reading.
In the past, steelmaking as an industry has given rise to high passions and strongly held views. Anybody who pays a visit to a steelworks, as no doubt most of us have, 170 understands the excitement of the steelmaking process. It conjures up memories of the finest days of the industrial revolution and it is an exciting industry with which to be associated. That high public interest has in many ways been the misfortune of the steel industry over the past 40 years.
The industry has attracted the attention of politicians who wish to control the course of the British economy and have repeatedly sought to impose their own strategies on the industry. Those strategies, not surprisingly, were essentially political and took insufficient account of the market forces which govern industry, even nationalised industry. Many of those strategies led to difficulties.
It is high time that British Steel is seen for what it is. It is a key modern industry, of course — but it is essentially a normal commercial enterprise like any other. It is successful and it belongs in the private sector.
The Government believe that good commercial enterprises should be in the private sector because they thrive better there. They are free of Treasury control, free of ministerial control and further away from political lobbying which raises problems now or in future. Management and work force in a private company are faced by the reality that their prosperity and their job security depend on their success in the market and the satisfaction of their customers. They are exposed to commercial disciplines when they raise their capital. The management are free to take the best decisions about how to tackle the market place. The present management of British Steel and those who work for the corporation will be able to tackle the problems of the market place with great effect.
Echoing what my hon. Friend the Member for Darlington said in what might have been a helpful intervention, I think the nationalisation-denationalisation debate is effectively over in this country. Looking back over the past few decades, that is quite remarkable. After 40 years the public have seen that the great state corporations dreamt of by Herbert Morrison are not in practice efficient providers of goods and services.
Steel debates have aroused great passions in the past. Then, my hon. Friend the Member for Darlington never could have made that comment about whether to nationalise or denationalise steel. Steel is one of the great issues that has caused divisions between parties and within parties — and definitely within the Labour party at certain times in the past. I do not think that those old battles will be fought again. I do not wish to provoke the hon. Member for Dagenham (Mr. Gould), but I shall be surprised if any hon. Member speaking for the Labour party threatens to return the corporation to the public sector, if ever there is a Labour Government. If the hon. Gentleman makes such a promise, he will live to regret it when he returns to his main role of trying to reconstruct the Labour party and make it electable again.
§ Mr. Fallon
My right hon. and learned Friend has spoken about the view of the Opposition and the view of the management of the British Steel Corporation. Does my right hon. Friend accept that the management and the workers of the British Steel Corporation at BSC Redcar who live in my constituency look forward to the passage of the Bill? They consider that it will give them greater freedom from political interference and the opportunity, for the first time in recent memory, to take a stake in their own industry and have some control over their future.
§ Mr. Clarke
l am grateful to my hon. Friend, who is closely in touch with the opinions of steel workers in his constituency—[interruption.] In due course I shall listen to speeches from the Opposition which will seek to refute what my hon. Friend has said, but I believe that the underlying current of public opinion in Britain on the nationalisation of such industries has changed irreversibly.
I agree strongly with my hon. Friend that steel workers have also undergone a change of opinion. My contacts with steel workers confirm that most of them realise that the change in the steel corporation in recent years have been beneficial, and they look forward to privatisation.
§ Mr. Clarke
The debate is showing signs of arousing passions that I thought were extinct in the Labour party. It is good to see history repeating itself.
§ Mr. Campbell-Savours
If the terms of trade were to change against the steel industry, and if it were suddenly to move into a period of international pressure, which could happen under any Government, and if it suddenly were to be losing a lot of money, does the Minister rule out the possibility of bringing it back into the public sector? Would the Minister's attitude be to let it go and to lose it, or would the state have a new role to play in those conditions?
§ Mr. Clarke
I must not spend too long discussing issues of principle, though they are interesting and I would like to spend as much time as possible on them. As the hon. Member for Workington (Mr. Campbell-Savours) appreciates, whether a company is nationalised or denationalised, it cannot be immune to movements in trade and changes in the market place.
Essentially, the well-being of a state corporation and its employees or a private sector company and its employees depends upon the market and the conditions of trade and how well the company thrives within them. A private sector company has to react when market conditions move against it. History shows that the great private corporations in Britain are more effective at doing that than the nationalised industries, which are usually constrained by the Government not to react until it is too late. That was the case with British Steel, with disastrous consequences, from which we took some years to recover.
§ Mr. Clarke
In a moment. I should like to make a little progress. No doubt this theme will be raised throughout the debate.
I shall be interested to see whether the Labour party is in favour of renationalising our key modern industries. That would he quite a surprise, even to people who voted Labour at the last election.
The Bill heralds the start of a new chapter in the history of the British steel industry. It will lead to the end of the saga which began in November 1948, when the Minister for Supply the right hon. G. R. Strauss, during the Second Reading of the Iron and Steel Bill, said:There is general agreement that this Bill is profoundly important and vehemently controversial … the great majority of the people will share the Government's view that if our country is to prosper and our people to live a higher and a better standard of life, this Bill is essential." — [Official Report, 15 November 1948; Vol. 458, c. 53.]172 That is what was said 40 years ago, and I put it to the House that the wheel has now turned full circle. The Bill is not vehemently controversial. It is, however, an important Bill that will allow British Steel to escape from the politial arena and return to the mainstream of British industry in the private sector.
The Iron and Steel Act 1948 and its successor Acts did not achieve all that was hoped for. Thirty years of intervention one way or another could not keep market forces at bay. This is no criticism of the men and women employed in the industry. Despite their best efforts, they were trapped in an industry which was repeatedly obliged by successive Governments from both sides of this House to take decisions which satisfied politicians and which often did not accord with commercial realities. They were also in part the victims of the downturn in the world economy after the mid 1970s. But as a nationalised industry answerable to politicians the corporation lacked the flexibility to cope with the new challenges imposed by that recession. The net result was that the corporation became increasingly hopelessly ill-equipped to compete in the market place. As hon. Members will recall, in the late 1970s it made increasing losses, culminating in 1979–80. in a net loss of nearly £1.8 billion in one financial year which had to be paid for by the taxpayer. That catastrophe was in large measure attributable to the refusal of previous Governments to allow the corporation to face up to commercial realities and take the necessary decisions, painful though they inevitably were.
When the necessary steps were finally taken, they were sometimes more painful than they need have been if a more gradual, market-oriented approach had been adopted from the outset. I readily acknowledge that the price of BSC's present success has been high in terms of job losses. But it is counterproductive to put our heads in the sand and pretend that market forces do not exist. We cannot ignore the market in the private sector, and we cannot afford to do so in the public sector.
§ Mr. Cryer
When the Minister talks about the reaction of the steel industry, the reaction is to sack workers. Has the Minister made any calculations about the cost to the public purse of putting workers on the dole, the loss of tax revenue, and the cost of unemployment benefit and supplementary benefit payments to the several hundred thousand people who have been put on the dole as a consequence of his Government's policy?
§ Mr. Clarke
In the short-term, such costs obviously have been incurred, but what was done was not done as the hon. Gentleman characterises it. Workers were not simply sacked; surplus capacity was closed. Redundant plant that would never again make products of a quality that would sell was closed. There was investment in good quality plant and alteration of working practices to ensure that plant again became competitive.
The hon. Gentleman was a Minister in my present Department when the last Labour Government refused to face up to the fact that anything needed to be done until the very last years of their term of office. For a time Labour Ministers forced the corporation to invest in new capacity based on fanciful market forecasts. The Labour Government pursued such a policy when it was, obvious that they were being unrealistic. They refused to turn around until they took some faltering steps by closing the plant at Ebbw Vale and some other plants right at the end of their period of office.
§ Dr. John Reid (Motherwell, North)
The Minister spoke at great length about the huge losses that were incurred during the period of public ownership. Will he accept that those huge losses and all the financial sacrifices throughout that period, which have led now to a profit, were made by the taxpayer? Can he explain to the taxpayers why, when their money was used during the hard period to subsidise losses, they are not to get the profits now being made, which are to go to a few of his friends in the City of London?
§ Mr. Clarke
The taxpayer will get the benefit of the proceeds of privatisation and will get the value of what the company is worth on the market. I have never understood the extraordinary argument which is sometimes made by Opposition Members that billions of pounds' worth of losses made over the years are somehow an asset which the taxpayer now owns instead of being money which the taxpayer has waved goodbye to for ever. The Opposition seem to think that somehow the new owners are capable of compensating the taxpayer for those losses. In a good flotation the taxpayer will get the value of the British Steel Corporation as it now is as a result of what has been achieved over the last few years.
§ Mr. Clarke
I always spend too long opening debates by giving way too often. I will give way again in a few moments, but I should like to proceed on this theme which is obviously of interest to Opposition Members.
I want to explain what has been done since we inherited the problem to get the corporation back to its present much healthier state. Basically, what we have sought to do is to give the corporation greater freedom to get on with its business even though we as Government remain the owners of it on behalf of the state. The corporation has responded magnificently. The enthusiasm and the commitment of the management and the work force have brought their own rewards. The management and the work force—not the Government—have through their own efforts brought about a remarkable transformation in the fortunes of the corporation.
The corporation recently announced half-year profits of nearly £200 million and all the signs are, and all the reports I am getting indicate, that this success will continue. That is an impressive record and I am delighted to pay tribute to all involved in the British Steel Corporation. In many ways I think that what has happened to British Steel is symbolic of what has happened to the British economy as a whole since 1979. The improvement in BSC's performance is all the more creditable for having taken place in the European market, where there is still substantial overcapacity and under a production quota system which has tended to restrict BSC.
The British Steel Corporation is well placed to consolidate its present strong position as the liberalisation of the European steel market proceeds. As the House knows, I shall have the opportunity of referring to where we are in the European steel regime in more detail in a separate debate later.
§ Mr. Martin Flannery (Sheffield, Hillsborough)
The Minister has talked about what happened in 1978–79 and attributed it to a nationalised industry here not understanding market forces. Can he explain what happened to American, German and French steel 174 throughout that period? Did those industries not lose on a grand scale in exactly the same way, even though they were not nationalised?
§ Mr. Clarke
The losses and the consequences of the crash would have been less if British Steel had not been allowed to charge headlong to the buffers until far too late in the 1970s. Of course, there was a big downturn in steel demand, as I have acknowledged, in the recession, but all the indications were ignored for a long time by Ministers in the Labour Government who pressurised BSC not to take the decisions which were required to try to prepare for what was to come until far too late. The losses were thereby made much worse.
I have been asked how many jobs were lost in consequence. A large number of jobs were lost. I hope that Opposition Members are not about to assert that it would have been a sensible policy for steel to keep all those people on the books and to keep all the plants open. [Interruption.] Of course, it is the point. If Opposition Members intend to oppose the Bill by saying that they think we were wrong to shed all the labour from British Steel, are they really saying, as was said on behalf of the Labour party by the hon. Member for Kingston upon Hull, East (Mr. Prescott) not long ago, that nationalised industries should largely be looked upon as a way of creating extra jobs and that Government policy on nationalised industries should be to make them take on extra labour as a cure for unemployment? That folly—and it is folly—led British Steel into its problems in the first place. If the Opposition propose to oppose the Bill on the grounds that they still look upon nationalised industries as an employment creating machine, I fear they will take us back to where we used to be.
§ Mr. Campbell-Savours
Does not the Minister understand that the impact of what he did on Workington was to give thousands of men no hope for the future? Many of those men have never found work. I would have had no objection to the rundown of the steel industry if at the same time it had been accompanied by real measures of employment which insulated communities like mine from the ravages of unemployment. But it did not happen like that. The Government imposed a huge dollop of unemployment on my constituency and we have never recovered. We have schemes, but they do not give people the sense of identity with an industry which they had in the past. The Minister fails to understand. We wanted change in the steel industry. We understood it, but the Government gave us nothing in return.
§ Mr. Clarke
That is the issue between us. It is a great tragedy that Workington as a town reached the position where it had no future as a major steelmaking town for a variety of reasons which were not the fault of the people of Workington. Those plants could no longer produce steel that had a sensible prospect of being sold in the market place. Therefore, the future for Workington lies in finding alternative employment and new industrial activity of a kind which will give new hope to the town. As we have come out of the recession it has sometimes been difficult to find new jobs on an adequate scale for towns that are disadvantaged by geography and other problems, as Workington is.
As the British economic revival has speeded up, it has steadily had consequences on deprived regions, including steel towns. The more we succeed in getting growth in the 175 economy and in reviving attitudes which encourage enterprise, the better prospects we have of getting new business and new jobs in towns like Workington. It is happening. Unemployment is falling more quickly in the older industrial parts of the country. If the hon. Gentleman goes to places like Consett, Corby or Scunthorpe, which suffered terrible losses through the closure of steel plants, he will find large numbers of new enterprises, large numbers of new jobs and a whole new future.
One thing which we all appear to be agreed upon and which has to be accepted is that the British Steel Corporation is an example of a flourishing industry. It is a flourishing nationalised industry; it is not because it is nationalised that it is flourishing, but despite that. It is, in fact, an example of an industry which, through considerable efforts by management and workers, has made a success of itself despite being hampered by the inevitable constraints imposed on the commercial freedom of nationalised industries. It is an industry which now knows that its success is dependent on meeting the requirements of its customers. British Steel understands that it operates against a background of world overcapacity in steel and that if it is to prosper in that environment it must place itself in the forefront of new technology, provide the highest quality and operate to the maximum efficiency. This it has done, and will continue to do. British. Steel knows from experience that it is no use relying on Governments. That does not work in the longer term.
The time has come to give the corporation the opportunity to stand alone and to give it the flexibility and independence that it needs to face up to the highly competitive international environment.
The Bill is short and is well precedented by other privatisation Acts. Its provisions are, however, somewhat technical and it may help hon. Members if I spend a short time explaining them.
The Bill itself does not bring about privatisation; it will enable privatisation to take place. The Bill provides, in clause 1, that all of the property, rights and liabilities of the corporation will vest in a successor company. That company will be a Companies Act company limited by shares which in the first place will be wholly owned by the Government. Privatisation will take place when the Government go on to exercise their ability to offer their shares for sale to the public.
The successor company will inherit the whole of the corporation's undertaking, both assets and liabilities. Technically it will be a different person in law from the corporation, but it is our intention, which is represented in the Bill, that it would be regarded for all practical commercial purposes as the same company representing an unbroken continuation of the corporation's undertaking. The vesting is required only to enable the flotation to take place, by changing the status of the corporation from a statutory corporation to a Companies Act company. This transformation amounts to a change in the legal constitution of the company, but does not affect the nature of its activity or the extent of its assets and liabilities. I make it clear at the outset, and this is important, that the corporation will not benefit from any special Government handouts in the process of privatisation, nor do we propose that there will be any write-off of debt.
After vesting has taken place, on a day nominated by order of the Secretary of State, which we call the appointed 176 day, British Steel plc will be a public limited company wholly owned by the Government. The Government will then be able to sell its shares at any time, and decide the exact timing of that sale according to market conditions and the performance of the company. But for various technical reasons, including the passage of this Bill through both Houses of Parliament, I do not anticipate that it will be possible to contemplate selling those shares until the end of this year, at the earliest.
The corporation will not be dissolved immediately after vesting has taken place. It will continue in existence as a shell. This is necessary because some of the corporation's assets and liabilities are located overseas, and are governed by foreign law. United Kingdom law might not therefore be effective in securing the vesting of all those assets immediately on the appointed day.
The corporation will stay in existence until it has taken such steps as may be required to secure the effectiveness of the vesting of the assets and liabilities in the successor company. As soon as this process has been completed, the corporation may be dissolved by the Secretary of State by order, under clause 10. We are calling the period between vesting and dissolution of the corporation the transitional period. During that period, the corporation will have no powers other than those necessary to effect vesting of its overseas assets.
The successor company will require a capital structure that fits with the requirements of the Companies Act. Clauses 2, 3 and 7 of the Bill provide for that capital structure. At present the corporation has an accumulated deficit on its profit and loss account. That is not debt, as the corporation does not owe the money in its profit and loss account to anyone; it is simply a record of past trading losses that reflects the erosion of the original capital base of the company through its trading losses. It is open, in the private sector, to any Companies Act company to go to the court and apply for a reduction in its capital to write off such accumulated losses. The amount of capital shown on the balance sheet after a restructuring of that kind will then more accurately represent the value of the net assets of the company.
As a statutory corporation, BSC is unable to go to the court to apply for a reduction of its capital, so that will be authorised by the Secretary of State under clause 2. That clause further provides for the extinguishment of the public dividend capital that remains after the reduction. That will not, however, result in taxpayers' money being lost, because, in exchange, securities will be issued to the Secretary of State or to the Treasury, as his nominees, at his direction under clause 3.
§ Mr. Clarke
I should like to finish with this point. Only the public dividend capital will be extinguished. The successor company will be obliged to continue to meet the terms of any loans from the Government or outside bodies that are vested in it.
§ Sir Giles Shaw
On the question of treatment of the company's debt and the accumulated loss, I understand my right hon. and learned Friend's reluctance to eliminate the debt. He is describing the somewhat complex and awkward proposal of a company that is about to float being required to continue to take a debt of the order of £700 million, and presumably accumulated losses substantially greater than that. Does my right hon and 177 learned Friend think that there will be difficulty in achieving the return on the assets, which I believe the company clearly will have?
§ Mr. Clarke
It will require capital restructuring. I have been endeavouring to describe the nature of capital restructuring that the Bill will facilitate. The accumulated losses on the profit and loss account will need to be written off, in just the way that a private sector company with this kind of trading background would seek to have authority to do, by an application under the Companies Act.
What we are not intending to have is straighforward debt write-offs. That would amount to an attempt to subsidise the corporation by the back door, which we have no intention of doing. We want to give the corporation a proper capital structure. It would be behaving as we would expect it to do if it was in the private sector and able to operate under the Companies Act, by seeking to get its capital structure to reflect its present capital assets and liabilities, and to wipe off these long-standing losses in the profit and loss account.
To the extent that the nominal value of the securities issued to the Government in exchange for cancellation of the Government's investment in the corporation is less than the value of the capital extinguished, the balance will go to make up a statutory reserve of the successor company. That is specified in clause 7. The nominal value of the shares will have to be no more than their sale issue price at the time of the flotation, because the Companies Act forbids the issue of shares at a discount. In practice, it is usual to set a nominal value significantly lower than the anticipated issue price.
Private sector companies generally have a mixture of share and loan capital and reserves. The process of restructuring the balance sheet of the corporation is complementary to the vesting provisions of the Bill. Instead of a nationalised corporation funded by public dividend capital, the successor company will be a Companies Act company, with capital and reserves similar to other Companies Act companies.
The remaining provisions of the Bill are subsidiary and technical. Clause 4 allows the Government to invest in securities of the successor company to maintain the proportionate level of any residual shareholding, if one is retained. The Government's securities in the successor company may be held by nominees, under clause 5. The Government may fix a limit on its future investment in the successor company, under clause 6. Clause 8 provides for the Government to lend money to the successor company while it remains in the public sector. Clause 9 allows the Government to impose temporary restrictions on the borrowing of the successor company. Clause 11 contains provisions relating to taxation of the successor company. Clauses 12 to 17 and schedules 1 to 3 contain other supplementary provisions.
In deciding whether to invest in the new private sector company, potential investors will obviously have to form their own judgment about the track record of the corporation and, in particular, the prospects of the new company. When I came to the House last December and announced our plans for the privatisation of the corporation, I was able to report the good news about the corporation's impressive half year profit. I regard that figure as a reflection of all the hard work that has been put 178 in by the employees of the corporation, which helps to make it one of the most profitable steel producers in the world. Its productivity has improved every year since 1980.
Its selling prices have risen much more slowly than inflation. Exports are up in absolute terms and as a share of total sales. Capital expenditure has increased steadily since 1982, and customer service has been given much higher priority than before. All that has resulted in great improvements in the quality of the product and the efficiency with which it is produced and dispatched. The results are plain for all to see, and they are all the more impressive for having been achieved in a difficult market.
§ Mr. Rhodri Morgan (Cardiff, West)
Is the Minister aware that at a recent meeting with the parliamentary Labour party the chairman and chief executive of the corporation said that, after it was privatised, they would have to reduce the proportion of material exported, because its price was so poor that it would not enable them to maximise profitability?
§ Mr. Clarke
That would depend on movements in international steel prices. We shall have to see what happens to steel prices when European quotas come to an end, as I am sure they will in the next few years; and possibly in six months' time — I shall be dealing with that later tonight —and also what progress is made in getting rid of the excess capacity in other parts of the world.
The fact is that the record of achievement that I am reading out has not been achieved by other European steel corporations, many of which still have vast overcapacity. Once that excess capacity has been reduced, we shall see how the markets shape up.
§ Mr. Peter Hardy (Wentworth)
The Minister has clearly recognised the enormous contribution to the achievements to which he has referred by the work force. In view of that contribution to success, could he not give some reassurance to the work force, before he sits down, that their terms and conditions of service will be no worse under the private operation than they have been heretofore?
§ Mr. Clarke
The employees of the corporation will continue under the contracts of employment that they have now. As I have said, for all purposes, the new company will be the successor, with all the assets, liabilities and contractual obligations of the previous corporation. I can happily give that assurance.
I hope—and I am not pretending to describe how it can be done today—that we shall enter into discussions to reassure the work force that their accrued pension rights will not in any way be affected. We shall no doubt have plenty of opportunity to discuss pensions between now and the flotation, perhaps in Standing Committee, if not in discussions. It is also our intention, as everybody knows, to move on to the prospect of offering the employees—who, I quite agree with the hon. Member for Wentworth (Mr. Hardy), have made a substantial contribution to the present position — the prospect of having some shares in the successor company and a share of future profits.
The corporation knows that, if it is to survive and progress and protect its business as a whole, it must continue to change and adapt to suit the needs of the market. To do that, it must continue to take decisions on 179 a commercial basis. Fortunately, here again, we have been able to give reassuring news to the House. BSC has been able to give its commercial judgment of the future for its five integrated plant, including Ravenscraig, which has given rise in recent years to a quite unnecessary level of political controversy north of the border.
§ Mr. Clarke
I am going to say more on Ravenscraig, so perhaps I had better leave Scottish interventions for a moment or two.
I remind the House that the corporation has been able to say that, subject to market conditions, it expects that there will continue to be a commercial requirement for the steelmaking and continuing casting capacity of the corporation's five integrated plants for at least the next seven years. The hot strip mill raises other problems because there is surplus capacity in hot strip at the moment throughout Europe, and British hot strip mills are running at very low capacity indeed. But, even there, because of the strength of BSC's present position, having reviewed the position thoroughly, the corporation has concluded, on the basis of commercial judgment, that the Ravenscraig mill will continue to operate until at least 1989. [Interruption.]
I look forward to hearing which plants the Opposition are prepared to guarantee against market conditions, which ones they are going to reopen and how they are going to put the clock back to the days when BSC was operated on the basis on which they operated it.
The commercial judgments that I have given are some of the best news that has been given to people working in the Scottish steel industry for very many years and they reflect the advances that I have described.
§ Mr. Clarke
I will give way to the hon. Gentleman in a moment. I am aware, of course, that a report published last week by the hon. Member for Motherwell, South (Dr. Bray), with the support of the local Labour party and his council, tried to cast doubts on the future of Ravenscraig. I have to say, as an Englishman who now makes frequent visits to Scotland, that I have the greatest difficulty sometimes in coming to terms with the nature of the Scottish political debate. The Scottish Labour party appears to thrive on trying to represent to the world that Scottish industry is in a desperate state of decline and is loss-making. When it gets the commercial assurances that I gave a moment ago, which I have described as among the best news that has been given to the population of Motherwell and west central Scotland for many years, the Scottish Labour party spends its time desperately trying to find someone who will cast doubts on the good news, no doubt to reinforce the unworthy position that it took in the last election when it tried to represent Scottish industry as on the verge of collapse and its members as the only rescuers of it. I see absolutely no point in members of the Scottish Labour party going to outside bodies which cannot have full access to all the commercial information available to BSC to try to rubbish good news about the commercial prospects of the steelworks.
§ Dr. Bray
Will the Chancellor acknowledge that the so-called undertaking, which reads:Subject to market conditions, there will be a commercial requirement for steelmaking at Ravenscraig for at least the next seven years",180 is not an undertaking at all, but an economic forecast? And, given BSC's forecasting record, does he think that it means very much?
§ Mr. Clarke
The previous three-year undertaking was subject to market conditions. Of course it is subject to market conditions. It is the best commercial judgment that can be made. There is no other sensible proposition to put forward. The hon. Gentleman has great expertise in economic policy and is one of the more erudite Members of the House. If he suddenly got to his feet and gave in ringing tones a guarantee about the future of an industrial plant regardless of market conditions and commercial considerations, he would destroy his reputation with me and with most other people. I should regard him as an idiot. Any politician who says that his political party can guarantee the future of an industrial enterprise regardless of market conditions is an idiot. Anybody who believes such a guarantee has only to look back over the history of nationalised and private sector companies in the last few years to know that such guarantees are worthless pieces of paper, given by people who do not understand how the steel or any other industry works.
The reason why I criticise the hon. Member for seeking to undermine what he calls the undertaking is that it is extremely good news that the management, which is in the best position to know and at the moment is the most successful management in steelmaking in western Europe, is able to give as its considered commercial judgment that it will require steelmaking at Ravenscraig for the next seven years — subject, of course, as any sensible management has to say, to market conditions remaining satisfactory.
§ Mr. Malcolm Bruce (Gordon)
In view of what he is saying, will the right hon. Gentleman acknowledge that his right hon. Friend the Secretary of State for Scotland gave a guarantee that he had an assurance that the mill would stay open for three years, and that he was very proud to boast about his record on that? It is well known that the management of British Steel wanted to close Ravenscraig. If it had done so, how could Ravenscraig now be there to contribute profits? Was not that guarantee necessary and beneficial to the steel industry?
§ Mr. Clarke
The assurance on which my right hon. Friend relied and, to the extent that I was pressed about it, I relied as well when I went to Scotland during the election, was subject—[Interruption.] No doubt I left a trail of devastation behind me, but on the assurance, I was on very sound ground. Not only was that three-year assurance expressly subject to market conditions, but it turned out, despite all the doubts heaped upon it by the Opposition, to be a valid assurance. It has been lived up to, to the deep disappointment of the Scottish Labour and Liberal parties. The assurance expired at the end of three years, but was replaced by the much better assurance that we now have, that Ravenscraig steelmaking is required, in the commercial judgment of the corporation, for the next seven years, so long as market conditions allow.
§ Mr. Salmond
With regard to the Minister's foray into Scotland during the general election, I seem to recall that on a previous occasion he said that it had substantially benefited the Opposition parties. The right hon. and learned Gentleman referred to worthless pieces of paper. Was he referring to such things as golden shares? Is not the 181 scepticism in Scotland regarding the Minister's seven-year guarantee for Ravenscraig based on a realistic assessment of the investment patterns in the steel industry, which most certainly leave Ravenscraig vulnerable?
§ Mr. Clarke
There is a £15-million investment going into coal injection plant at Ravenscraig at the moment. Investment decisions are best made by the commercial management of a company, having regard to its market needs and its judgment of the best way of serving them. The moment politicians of whatever party — Scottish National, Liberal, Labour or Conservative—start to get deeply immersed in the investment decisions of a corporation, one gets into difficulty. While this corporation continues to be nationalised, all major investment decisions above a certain size have to come to me and, unless there is some obvious flaw in them, naturally I shall tend to approve those proposals by the corporation between now and the date of flotation.
One thing that I shall certainly not do is start arguing with the corporation that its proposed investments should be altered for political reasons contrary to the commercial interests of the corporation, because I believe that, if it acts contrary to the commercial interests of the corporation, it acts contrary to the interests of the work force. If the work force at Ravenscraig looks at the assurances that it has had, which have been lived up to, it should be very cheered by the assurance which it now has of the seven-year future in the circumstances that we have given.
I do not think that the hon. Member for Motherwell, North is doing a service to British Steel or the Scottish economy as a whole by seeking to advertise the economy of his region as being much more fraught than it is in the judgment of the major employer in the town.
I have looked at the report, and it recommended that the Government should consider—and I stress that the recommendation was no more than that we should consider it — the separate sale of the plants at Ravenscraig, Dalzell and Shotton. I emphasise Shotton, because this is sometimes referred to as a separate Scottish privatisation. It is nothing of the kind. It is a Scottish and a part of Wales privatisation. Perhaps a Welsh hon. Member will catch your eye during the debate, Mr. Deputy Speaker, but I understand that the trade unions at Shotton are horrified by the suggestion. There is not much Welsh support for the amazing idea that Shotton should be swept into a separate company.
§ Mr. Jones
I can only say at this stage that if I am lucky enough to catch your eye, Mr. Deputy Speaker, I shall be able to give the House the view of the Shotton steel workers. I would rather it was me than the right hon. and learned Gentleman, but in the interests of brevity I must tell him that my steel workers wish very much to remain in one unit with the BSC if there is privatisation.
§ Mr. Clarke
That is rather as I thought, and the hon. Gentleman will be glad to know that that was my reaction to the report. We considered such an option—indeed a whole range of options for dividing the corporation up or 182 privatising it as a whole—in detail with our merchant bank advisers and with the British Steel Corporation before our initial decision to privatise it as a single entity. I am not questioning the bona fides of Arthur Young, which is a reputable and expert consultancy company. However, it did not have access to some of the commercial information. BSC could not be expected to reveal that information because it would have been of value to BSC's competitors had it leaked out—as tends to happen even with the best will in the world. Nothing in the report issued last week cast any doubt on the conclusion that we had already reached on the basis of the better information to which we had access—that it was in the best interest of BSC, its work force and, indeed, the taxpayer to maintain the corporation in its present form into the private sector. I should make it clear that it remains the Government's intention to privatise the corporation as a single entity.
The privatised British Steel will use its independence to respond even more effectively—
§ Mr. Donald Dewar (Glasgow, Garscadden)
Before the Minister passes on from Ravenscraig, let me ask him whether the seven-year guarantee — perhaps assurance would be a better word — will be repeated in the prospectus of the company at privatisation?
§ Mr. Clarke
Subject to there being no sudden changes in market forces or commercial judgment between now and then, the answer is yes. We said when it was issued that it would in effect be reflected in the prospectus.
The privatised British Steel will use its independence to respond even more effectively to the needs of its customers. By doing so it will contribute enormously to the economy, through both its domestic activity and its export earnings. The British Steel Corporation belongs in the private sector and it is there that it will best prosper. The Bill represents a historic opportunity and I commend it to the House.
§ Mr. Bryan Gould (Dagenham)
The Government's reasons for bringing forward legislation are often obscure, but never more so than in this case. None of the reasons advanced by the Minister, either today or on other occasions, stands up to examination. His difficulty is that the true reasons are reasons of dogma, partiality and cowardice, and therefore cannot be stated.
The Minister puts his case in terms of the industry's success. It is that success, he says, that now makes privatisation both possible and desirable. Yet that argument is a total non-sequitur. There is no causal connection between success and privatisation. Success has been brought about with no help from privatisation and does not depend on privatisation for its continuation.
The success is of course undeniable, and it is very welcome. In terms of productivity and profitability —though not in terms of output or market share — the steel industry has indeed recovered and is now among the most successful in the world. Let us be clear how that success has been achieved. It has been achieved at very considerable expense to the taxpayer and as the consequence of very great sacrifices and contributions by the work force.
The Minister declined to estimate in his statement of 3 December how much the taxpayer has contributed over recent years, but £5 billion seems a not unreasonable estimate and that is confirmed in a written answer given 183 by the Under-Secretary of State for Trade and Industry on 15 December. In other words, the public purse has provided the necessary investment on which the industry's recovery has depended. There is no way that private owners would have been willing or able to provide the money needed to carry the industry through difficult times and to emerge stronger at the other end. If public investment was the precondition not only of the industry's success but of its survival, experience, and particularly the experience of the past 10 years, also gives the lie to the argument that the industry cannot function efficiently under public ownership. It is precisely under public ownership that the industry has made its gains in productivity and efficiency. We do not need privatisation because essential improvements are still awaited. They have already been achieved, and it is not possible to argue, on the basis of experience, that they cannot be maintained or extended under public ownership.
As so often with the Government's privatisation measures in recent years, this privatisation is produced to take advantage of industrial and commercial success, not to provide it. The steel industry provides perhaps clearer evidence of that than any other. The history of the industry shows clearly that it is under private ownership that the industry gets into difficulties, fails to invest, takes refuge in price cartels and begins to operate against the public and national interest. Under public ownership it has made the necessary investment, put its house in order and begun to serve the national interest and guarantee its future; so much for the argument that privatisation is needed to grapple with the industry's problems.
§ Mr. Coleman
Would my hon. Friend like to contemplate how the British steel industry could have succeeded had we not brought into public ownership the 14 predecessor companies in 1967? Does my hon. Friend think that had those companies remained the British steel industry could have succeeded in modern conditions?
§ Mr. Gould
My hon. Friend is right. The investment record — in particular the investment record of those private companies in 1967—shows exactly what would have happened to the steel industry in the difficult conditions that it faced subsequently had it remained in private ownership.
If there is no argument from practicality, the Government's real reasons must be those of dogma—a belief in the principle, without reference to practical evidence, that it is simply wrong for the Government to be involved in the ownership and management of the steel industry. Yet that argument is equally unsupported by reason or practice. The notion that the Government can stand aloof from the future course of the steel industry is plainly nonsense. That is mainly because the industry is by its very nature extremely cyclical. Private owners will be very happy with their investment as long as the industry, its markets and profits are buoyant, but private owners quickly become disenchanted when the industry has to face tough times. It is then that the necessary investment fails to be made, and the industry gets into further trouble. Only public ownership provides the vision and long-term approach to make the counter-cyclical investment that is required.
§ Mr. Richard Holt (Langbaurgh)
Will the hon. Gentleman say whether it is now Labour party policy to renationalise the steel industry after it has been denationalised?
§ Mr. Gould
Of course, I expected that question to be asked at some point, although it is wholly inappropriate to this part of my speech. However, for the reasons that I have yet to develop fully, Opposition Members and the trade union movement strongly believe that the steel industry is most appropriately owned in a form of public ownership. We shall decide that form and the order of priorities by which it is to be secured when we return to power and we have no intention of having our agenda dictated by Conservative Members this afternoon.
It is impossible to expect the private purse to finance the investment that the industry requires when the going is tough. That is inevitably so.
The industry's current and foreseeable need is for annual investment amounting to about £300 million. That can be financed at present levels of profits, but, as one of my hon. Friends said earlier, it would require only a slight change in market conditions or comparative costs to throw that into jeopardy.
The industry is cyclical because it requires substantial investment in expensive plant to compete, and it can provide a return on that investment only if it is used at or near capacity. If it is required to run below capacity for any length of time, unit costs rise alarmingly and profitability is immediately threatened. That threat occurs all too frequently because the industry is sensitive not only to movements in its own costs and to the intense competition which it inevitably faces, but to the level of demand in the industrial economy as a whole.
A cold summer can mean a lower than expected demand for tinplate because less beer is sold; an industrial dispute in the car industry can reduce demand for hot rolled coil; and that is to say nothing of such matters as movements in the exchange rate which, at the time of the 1980 steel dispute over a possible 2 per cent. increase in overall costs, managed to raise British prices by 40 per cent. over Japanese prices without anyone in the Government appearing to notice. Of course, the customer did notice.
That vulnerability to cyclical movements is exacerbated by the international, and particularly the EEC, context in which the industry has to operate. The EEC concludes in its latest report that there is still 30 million tonnes overcapacity in the EEC and that a further 80,000 jobs will have to be shed. The present reaction of the British industry is, understanably, to take the high ground—to say that in view of its present strength it is not dependent on EEC regulation of the industry and that it could well expect to survive and flourish in a free market. That is why the net of the quota system is widely welcomed, with our support, as providing a real opportunity for the British steel industry to make progress. There is certainly a powerful case at present for resisting any further pressure for cuts. We only wish that the Government had taken that line a little earlier because the British industry has already taken its medicine and a good deal more.
No one can be confident that the present advantages that we enjoy in terms of cost and efficiency can be maintained over a long period, particularly given the uncertainties introduced by privatisation. It is impossible to say that within a short time, for the cyclical reasons that 185 I have given, we shall not again be fighting for the industry's survival. In those circumstances, the notion that the Government can wash their hands of the industry, particularly at a time when other EEC Governments are becoming increasingly involved with their steel industries, simply cannot be sustained.
The question asked by my hon. Friend the Member for Workington (Mr. Campbell-Savours) is relevant and must be answered. What would the Government's attitude be if they found the EEC context and market conditions generally as adverse as they have been at certain times during the past decade? Would they stand by and refuse to intervene or, as some of us suspect, would they be forced, for the reasons that I am about to deploy, to renationalise the industry, as they have done in other cases, notably Rolls-Royce? We are again forced to the conclusion that private ownership is at best a fair-weather friend. The Government and the taxpayer will again be called to the rescue, in both an EEC and a national context, when the going gets rough, as assuredly it will.
We can be confident of that conclusion because the steel industry cannot be allowed, when in private hands, to follow the course which would normally be followed when an industry ceases to be viable. The steel industry may, as the Minister explained, no longer be quite the commanding height that it once was — many of its customers have since changed to other materials—but let there be no misunderstanding that it remains a fundamental underpinning of our industrial economy and of great strategic importance to our future development. It is unthinkable that it should be allowed to disappear, be substantially reduced in size or pass into non-British hands. The loss of a sizeable indigenous steel industry would be a body blow to the British economy and would render us incapable of providing from within our own resources the basic materials needed by our armed forces in time of war. Public ownership remains the only guarantee that the steel industry will be sustained.
If the Government's ideological prejudices provide no acceptable rationale for the measure, their other reasons are no less disreputable. The privatisation will provide the usual bonanza to private interests who, having allowed the taxpayer to pick up that sizeable bill for so long, will now step in and expect to pick up the profits. That is to say nothing of the huge fees and commissions for which City institutions are already queuing up and which they will expect to charge for their part in this charade.
It may be, too, that the Government are keen to privatise because they are anxious to put a privatisation programme, much undermined by the British Petroleum fiasco, back on the rails, politically and financially. But it can surely hardly be the case, given all the boasting about how much money the Chancellor now has at his disposal, that the sale is needed to raise the cash. But some explanation is required for the unseemly haste with which this privatisation has been rushed forward.
It is only a matter of months ago that Ministers and British Steel were talking of a three or four-year time scale for privatisation, following a well-established track record of profitability. What has happened to change that perspective and to produce the current urgency? Do the Government know something that we do not? Is some window of opportunity about to close? Why have past statements been so quickly jettisoned? The Minister looks 186 puzzled, but why is the measure now being brought forward with such haste when it was mentioned neither in the manifesto of less than a year ago nor in the Queen's Speech of a few months ago? We need some explanation for this sudden volte face.
It is for all those reasons that we believe that privatisation is a disastrous option to take. It subjects the industry to disruption and uncertainty at a time when it needs to build on the successes achieved by the present regime. It offers short-term profits to private investors at the expense of a fair return to the taxpayer and at considerable risk to the industry's future investment needs. Moreover, it does so without any measureable benefit to the industry itself. That is why we oppose the Bill. Let there be no doubt that we oppose the Bill outright. We shall fight it, with total support from the trade unions involved, throughout its passage through the House.
Quite apart from the threat to the industry as a whole, and the quite unnecessary jeopardising of its future, there is a specific threat to the future of the plants at Ravenscraig and Dalzell under the privatisation proposals. The Minister, in his statement to the House on 3 December, gave what he claimed was an assurance about their future. But, as has already been pointed out, a moment's consideration of what he said on that occasion will show that any apparent guarantee was illusory. He made it clear that the only firm guarantee about Ravenscraig runs out at the end of the year, in 10 months' time, and any further decision on its future will be made by the new private owners on commercial grounds and according to market conditions which they themselves, by virtue of their plans for reinvestment, or rather the absence of them, will largely control.
As I have already explained, the considerations to which the Minister is now prepared to entrust Ravenscraig and its future would have meant the closure of the whole industry at almost any time over the past decade. The only thing that has now changed is that the Government clearly hope that by divesting themselves of the industry through privatisation they will also succeed in divesting themselves of the political responsibility for what happens to it and its constituent parts. It is clearly the Government's hope that they will be able to leave to private owners and market forces a decision which, politically, they have been too lacking in courage to take themselves.
I must warn the Government that they will not succeed in that hope. Even if the Bill proceeds, I put the Government on notice that they will be held responsible for the future of the 11,000 jobs and £100 million worth of wealth-creating capacity in Scotland which depends on Ravenscraig. We shall not accept arguments to the effect that those issues are entirely a matter for commercial judgment. They remain issues of the greatest importance to the economic well-being of a whole community and as such their resolution is the Government's responsibility. That community, with the full support of the Labour movement, will fight, both politically and industrially, to save the plant, the industry and those jobs, and to make the Government face their responsibilities.
If the Government think that they can shuffle off their responsibilities by claiming that the decisions are for private owners and have nothing to do with them, they have another think coming. [Interruption.] The Minister may say that that is an empty threat. We shall see, but the fact that he can use such a phrase shows very well what is in Ministers' minds.
187 We want to know what the Minister will do when, as is all too clearly presaged in the weasel words of his 3 December statement, the private owners propose to close Ravenscraig. We want bankable guarantees, which the Minister ought to give now, on the maintenance of those plants and the reinvestment programmes that will be needed to keep them viable. Other specific questions need answers. The Minister has provided at least partial answers to some of the questions that I intended to raise, particularly on the writing off of debts, and I shall be interested to pursue that with him in Committee. However, there are other questions to be answered.
What provision is to be made to ensure that control of the industry remains in British hands? Is the Government's apparent indifference to the issue on the same level as their indifference to the growing Kuwaiti stake in BP, or does the Minister accept the strategic argument that makes British ownership and control of the industry essential in our industrial and defence interests? If so, what does he propose to do to safeguard the position? He has said nothing about that today. Will it be a golden share, or is the experience with Britoil too painful to repeat? Will he take a Rolls-Royce solution and fix a limit for foreign shareholdings, at 15 per cent. or a similar figure —something he appeared to rule out on 3 December?
What has been done—this question was raised by my right hon and learned Friend the Member for Aberavon (Mr. Morris) —to safeguard the pensions interests of the work force? Is there to be a rejigging of pension arrangements to suit the interests of new private owners, as we have seen in some other privatisations? What date is proposed for the flotation, and what form will it take? What is to be said about EEC quotas in the prospectus, and what will be the initial target investment level? The Government's plans for the industry — I assume that they must have plans—are meaningless unless we receive some answers to those questions.
§ Mr. Campbell-Savours
Will my hon. Friend also press the Minister vigorously about what will happen if the new company starts to make losses? The national interest is at stake. Steel is a strategic industry, and I feel that we are entitled to know what will happen to it. Will it be allowed to go to the wall in sectors in which the product is of strategic importance, or will the Government intervene? If they do intervene, in what form will they be willing to do so? They must have considered those matters in advance.
§ Mr. Gould
My hon. Friend is right. This is the nub of the issue, and we have yet to hear anything sensible, helpful or constructive from the Minister on what is a vital and central problem.
We also need to know what safeguards will be provided for consumers and steel interests against unfair exploitation by British Steel in private ownership of its near monopoly. What guarantee will we have that British Steel will not become more and more a steel importer and marketer, rather than a steel producer?
The Bill is the product of suspect ideology, political cowardice and the Government's familiar readiness to provide goodies for their friends in the City at the expense of those whose livelihoods depend on a continuing and thriving steel industry. It is a product of a typically short-term attitude—the attitude that says that it is right to cash in on short-lived profitability rather than to make long-term provision for the industry's investment needs. It 188 is the product of a cavalier approach to national security and to our industrial future, and of a blind faith in market forces which, as bitter experience should by now have taught us, is a recipe for disaster. It is because we care about our industrial future, about the steel industry and, above all, about those who work in it and have made such a contribution to its current success that we will oppose the Bill.
§ Mr. Deputy Speaker (Sir Paul Dean)
Many hon. Members with strong constituency interests are hoping to speak. I appeal for brief contributions.
§ Sir Giles Shaw (Pudsey)
It is interesting to hear the hon. Member for Dagenham (Mr. Gould) give such a weighty address about his views on nationalisation, denationalisation or renationalisation. I wonder whether he would use the same language when speaking to the Ford motor company in his constituency to find out its views on the long continuity of employment—to which, no doubt, he is wholly devoted.
It comes ill from the hon. Gentleman to castigate the Government, and to accuse my right hon. and learned Friend the Chancellor of the Duchy of Lancaster of dogma, partiality and cowardice, when we have just heard a fine demonstration from the hon. Gentleman of all three. My hon. Friend the Member for Langbaurgh (Mr. Holt), in a telling intervention, asked the hon. Gentleman what kind of policy he would pursue. I think that we can agree that the hon. Gentleman genuflected to dogma; he certainly referred with pride to nationaliation as a major part of the historical development of British industry. He was clearly partial as well, because he gave a partial response to my hon. Friend by suggesting that there would be some kind of public ownership, and he showed complete cowardice by refusing altogether to give any cast-iron assurance or guarantee on what exact form of public ownership would be used.
We have heard the Opposition Benches erupting into enthusiasm to try to obtain some kind of copper-bottomed guarantee on the future of a certain steel works in a certain part of the United Kingdom. I think that the hon. Member for Dagenham has let the side down pretty badly in entering the debate with a series of half truths. Not a single Scottish voter will sleep safely in his bed, wherever it may be.
My right hon. and learned Friend the Chancellor of the Duchy of Lancaster has brought a most important measure to the House, and I congratulate him on his courage in doing so. He is wholly right not only in what he seeks to do, but in the manner in which he seeks to do it. It is amazing that the transformation of the British Steel Corporation has achieved such a turnaround from a scale of loss to a scale of profit unmatched in the private sector during a comparable period. I echo the view expressed on both sides of the House, as well as by my right hon. and learned Friend, that that significant achievement was only partially due to the Government's policy towards the British Steel Corporation. It was largely due to the fact that the management and work forces in the various plants took on board the crucial importance, following the lean and desperate uncompetitive years of the 1970s, of refashioning their operation—of going for productivity, 189 customer satisfaction, price and investment. The management of BSC, led vigorously and effectively by chairmen of various kinds, have brought the company to its present profitable state.
I must pay a particular tribute to the corporation's existing chairman, the old anvil-hammerer of Wagnerian opera Sir Robert Scholey. Even he must now feel that the achievement of a privatised corporation is within his sights after so many years of trying.
§ Mr. Coleman
Let me put to the hon. Gentleman the same question that I put to my hon. Friend. How does he think that the achievement would have been possible if the 14 companies that were taken into public ownership in 1967 had still been operating in the industry?
§ Sir Giles Shaw
I think that the hon. Gentleman has provided the answer to his own question. Obviously, if those 14 companies had not been taken into public ownership, there would not be a Bill taking their ownership back into the private sector. I am quite willing to argue with him that the 14 companies might well have been replaced by 24 other companies specialising in the production of British steel and services.
We have to satisfy Opposition Members on the question whether the security of state control will somehow guarantee jobs and development to a greater degree than would the private sector. Sir Robert and his team have now reached a point at which it is possible to privatise the corporation, and I am glad to learn from my right hon. and learned Friend that that could happen in months rather than years. The sooner it happens, the better.
I pay tribute to my right hon. and learned Friend for deciding to privatise the corporation in whole. The British Steel Corporation, as presently constituted, is a major asset for the United Kingdom. However, its prime role in the marketing of steel and steel products is essentially not a United Kingdom role, but a European and international role. The only future for the British Steel Corporation, whether in public or private hands, is to be able to compete Europe-wide in a market that is sufficiently large for the corporation's present share to look comfortingly towards successive periods of growth. If my memory serves me correctly, it has a 2 per cent. share of the European steel market—that is a low share.
From the point of view of the corporation's future— I trust that it will be in private hands—Europe will be where its future competitive growth will mainly lie. There are two reasons for that. The first is the huge contribution that has been made by the work force and the management to restructure the corporation from within. The second reason relates to the consequences of those ghastly years of contraction, of obsolete plants being closed and, if my memory serves me right, of the loss of more than 50,000 jobs from the numbers employed in the heydays of the 1970s. All that has left the British corporation with a much higher rate of productivity and competitiveness than any of its European competitors. However, its only prospect of competing in the European Community is to maintain its present scale of operation.
I hope that none of my hon. Friends disputes the principle of the Bill. It would be sheer folly to divide and break up the corporation from its present size. Looking around the European market, at the giants of Thyssen and 190 at the French and Italian companies and beyond them to Nippon, Pittsburgh and Bethlehem, one sees that those huge companies have grown to significant sizes and it is not possible to compete with them in the international arena for steel products and steel production unless the United Kingdom component is of a comparable size. Therefore, the single structure that my right hon. and learned Friend has chosen is the correct one.
I believe that the window of opportunity to which the hon. Member for Dagenham was looking is crucially to be observed. It is a window through which to see that as we move to a termination of the quota system within the European Community, the British Steel Corporation, in private hands, will be able to develop a significantly increased share of the European market. I must press my right hon. and learned Friend on the European issue. Obviously, I understand that that will be more closely addressed in the following debate, but perhaps my hon. Friend the Under-Secretary will at least say that the background to the Bill must be that the steady and, I trust, orderly return to a market in steel and steel products in the European Community should be the proper context in which a privatised corporation can work. If that context is not both orderly and sensibly arranged, it will be difficult to make full use of the new assets that we possess in a steel company with high rates of productivity, competitive prices and a much improved product basis.
I sincerely hope that the development of a free market in steel will be accompanied by significant reductions in overcapacity of other member states. As the hon. Member for Dagenham rightly pointed out, the British Steel Corporation has substantially reduced its overcapacity in past years. With the possible exception of rolling mill overcapacity, it has eliminated all the overcapacity that previously existed, at vast cost to the taxpayer and vast sacrifice to its work forces. If we are to move successfully into the private sector, it is crucial that the European market for steel should likewise address itself to its overcapacity before the British Steel Corporation can rightly look forward to a more profitable future.
We face somewhat difficult positions in relation to debt and accumulated profit and loss. I understand my right hon. and learned Friend's point. I recall that the European provisions on competitive practices are such that a significant debt write-off might be seen as anticompetitive. However, I beg my right hon. and learned Friend to examine more carefully British Steel's position in terms of both accumulated debt and accumulated loss to see whether there is a formula whereby some of the indebtedness from either side can be reduced prior to placing the corporation in the market.
I would not wish shareholders or investors to find that their first act might be trying to write off from generated revenue huge amounts of accumulated loss. They may well make application for a redress of the balance sheet, as my right hon. and learned Friend suggests, but if this is a form of privatisation, it is a pretty miserable form of privatisation which has an albatross of that size slung round its neck.
In my judgment, the Bill is correctly timed. It is the correct decision. It is not a decision based on simple dogma or even on the expediency which the Government may have wished to use when finding themselves with a corporation on their hands which has made profits so 191 rapidly. It is in the correct order of magnitude that the corporation should take its place among the largest private steelmakers in the world. I wish it well.
§ 6.5 pm
§ Mr. Bruce
If my calculations are correct, the Bill represents the fifth change of ownership for the steel industry in just over 40 years. Therefore, in some ways the House may not be surprised when I say that I hope that it will be the last, although some of the questions raised suggest that it may not be quite as definitive as that. It is apparent that the Bill has been brought forward in something of a hurry compared with the original proposals, for reasons that have not been fully explained to the House, other than that the industry now appears to be in profit and, of course, the privatisation of electricity looks like slipping further down the schedule, and the Government wish to ensure a rolling programme.
Speaking after the hon. Member for Pudsey (Sir G. Shaw), it is worth recalling that profitability has been achieved at a substantial price. That price would not have been freely available to a private sector corporation. I am referring to the public write-off of a £3.5 billion debt, which has been accompanied by dramatic reductions in capacity and in the work force. The British Steel Corporation employed 24 per cent. of the total number of people employed in the steel industries in the European Community in 1975, but now accounts for only 14 per cent. of employees. That demonstrates the degree to which the British Steel Corporation has reduced capacity at a far faster rate than any of our European competitors. If it is any small consolation to the Chancellor of the Duchy of Lancaster, that is why I wholeheartedly agree with him that we have carried our share of the cut and should not have further quotas imposed upon us. Indeed, we should be able to benefit from a lifting of quotas which, I hope, will proceed rapidly.
It is a fair reply to the interjection from the hon. Member for Langbaurgh (Mr. Holt) to say that it is a reasonable challenge to the Labour party to ask whether it would renationalise the British Steel Corporation. It has certainly never been our view that one should wish to commit to change and to reverse policies for ideological reasons. However, the House must confront the possibility that the steel industry is crucial to the bedrock of our economy. What would a Conservative Government of the present complexion do if, after the flotation, given the considerable difficulties that steel has faced nationally and internationally over the years and the investment that has taken place, especially in Third world countries, our privatised steel corporation got into substantial financial difficulties?
I agree that nationalisation is not the only solution. However, I hope that whoever replies to the debate will give the House an assurance that there is a recognition that the strategic core of steelmaking capacity must be retained. I agree absolutely that ideally, in all reasonable circumstances, that core should be efficient, profitable and successful, rather than dependent on subsidies and acting regardless of proper rules of economic efficiency.
The reductions that have taken place mean that the British Steel Corporation now employs 59,000 people—that figure is a little out of date and the actual number of employees may have dropped —compared with 184,000 in 1975. The corporation produces about 12 million tonnes, although a 14-million tonne capacity is its stated 192 aim. However, it accounts for only 2 per cent. of the European Community market and that is obviously well below the target that we hope it may achieve. Such are the general circumstances in which the Bill has been introduced.
We are also left with the problem of the carry forward of a £700 million deficit which has not been written off. Against the background of an external financing limit of minus £300 million, which suggests that the corporation will not, apparently, be allowed to carry forward a profit against the accumulated deficit, is the Minister satisfied that the rather complicated formula that he explained to the House meets the European Community requirements? I believe that that formula is rather transparent and I am not sure that our European partners will be ready to accept it. However, if that is the case, obviously it is proper that anyone buying shares in the new corporation should do so in realistic circumstances rather than simply writing off the accumulated debt.
Inevitably, representing a Scottish constituency, I speak with some concern about BSC's operations within Scotland. Indeed, the reasoned amendment tabled by my colleagues and to which I have put my name makes it clear that our main concern is not with the principle of the sale of the steel corporation, but with the future of the industry in Scotland and the rights of the employees to ensure that they have a substantial stake within it. I was rather disappointed that the Minister, in his fairly long opening speech, did not address himself to that problem. I believe that the opportunity for the employees to secure a substantial stake is something which the steel unions and the employees rightly expect. I hope that such terms will be offered and will be attractive to ensure that those employees secure a substantial stake.
I was interested in what the Minister said about the future of Ravenscraig and the future of the Scottish steel industry. If I interpreted him correctly, he said that the Secretary of State for Scotland's proud boast that he had used his influence to secure the future of Ravenscraig through a given period — conveniently, during the last general election — was a worthless guarantee. The Minister said that his right hon. and learned Friend's guarantee was not what he had claimed it to be and that had he been Secretary of State for Scotland — God forfend — he would not have secured such a worthless guarantee and nor would he have made such a substantial claim for it. At least we have no reason to complain that we do not understand the Minister's position.
The Minister should be aware that within Scotland there is much concern—private and public—about the sustained hostility demonstrated by the management of BSC in general and by the current chairman in particular to the continuation of Ravenscraig. It can be argued that, if the Secretary of State for Scotland's guarantee is significant and if he succeeded in persuading BSC not to close Ravenscraig, that plant would not otherwise be operating to make a contribution to the profitability that has enabled the Government to introduce the Bill. That being so, it is a little rich to expect the Scottish people and the Scottish steel industry to regard the qualified guarantees that have now been given with any great confidence.
When the Select Committee on Trade and Industry investigated Ravenscraig it uncovered accounting methods used by BSC to undermine the apparent profitability of Ravenscraig. The Chairman of that 193 Committee said that once that information was unearthed it was a dead give-away of the management's objective: to undermine the apparent viability of the mill and secure its closure.
It is hardly surprising that the guarantees and assurances that have been given have a hollow ring to most people in Scotland. I believe that we are entitled to ask the Government to consider how we can overcome such reservations, given that the existing management has shown such hostility.
I do not wish to give a definitive solution—I accept that the hon. Gentleman representing Ravenscraig has put forward his own solutions; the Arthur Young proposal is one of them—but I believe that there are four options for the Scottish steel industry. A link between Shotton and the Scottish steel industry is one such proposal. I accept that the employees of Shotton may not be so keen on it. If that is the case, I suggest that an alternative option is to explore the viability of an independent Scottish steel company. I am not suggesting that that is the ideal approach, but such an independent company might be preferable to privatising the whole of BSC, whose management is committed to having no Scottish steel company.
§ Mr. Barry Jones
I know that the hon. Gentleman is speaking as a good Scot, but I emphasise that my people at Shotton see themselves as Welsh people and they want to be associated with their sister plants of Llanwern and Port Talbot.
§ Mr. Bruce
I recognise the hon. Gentleman's argument and I am aware of that dimension. The Shotton link is a possibility, but obviously such feelings would count against it.
I believe that the third option is for the Scottish company to be part of another European company, which would ensure a degree of competition. The fourth option, as the previous chairman of BSC mooted, is for the Scottish steel industry to join with a non-European company.
I am not suggesting that such options represent perfect solutions, but I find it rather depressing that the Minister is anxious to ensure that we privatise BSC in its entirety without exploring alternative ways, within the right hon. and learned Gentleman's ideology, to ensure that the Scottish steel industry has a viable future with a management committed to its survival and providing it with investment. While such a commitment is not apparent, I believe that it is difficult for anyone who is genuinely concerned for the Scottish economy to support the Bill.
The loss of a steelmaking capacity within Scotland does not only represent the loss of another few thousand jobs, but would tear the heart out of an already devastated economy. It is estimated that 5,400 jobs are directly involved with the steel industry and a further 2,000 depend indirectly on it. Indeed, many thousands more depend on the wider influence of that industry. British Rail, for example, is extremely dependent on the revenue it receives from steel operations in Scotland, as are other forms of transport and haulage. Against that background, a requirement to ensure the continuation of that industry should be regarded as paramount by any responsible Government. I agree that there may be several ways of 194 achieving that continuation, but I am not convinced that what the Minister has offered is likely to prove the solution.
There is another national circumstance that must be considered. There is clear evidence that BSC, in its enthusiasm—
§ Mr. Kenneth Clarke
The hon. Gentleman does not appear to be adducing any commercial or industrial argument against the proposal that BSC should be privatised as one entity. He appears to be founding his doubts against the proposal on the proposition that the present management is, in an unreasoned way, hostile to Scotland. I assure the hon. Gentleman that in all my contacts with the management I have detected no such sentiment. The present chairman and management of the corporation have issued their commercial judgment about its future. It would be most unwise to seek to fragment the corporation simply because of deeply held views in Scotland — with no basis in practice — that the management are hostile to the Scottish steel industry.
§ Mr. Bruce
I believe that that confirms what was said by the hon. Member for Banff and Buchan (Mr. Salmond) as to why we should encourage the right hon. and learned Gentleman to make frequent visits north of the border. His lack of understanding of the situation certainly ensures that his remaining colleagues who represent Scottish constituencies will be rapidly extinguished from the House.
The record of the past three years demonstrates that the right hon. and learned Gentleman's argument is not true. If it was, the Secretary of State for Scotland would not have needed to secure guarantees and boast about them the length and breadth of Scotland. I am afraid the Minister cannot understand the depth of feeling about this matter.
One argument that may ultimately work in favour of the Scottish steel industry within the BSC—indeed it is already working to our advantage and has enabled a "qualified" assurance to be given—is that the mill that BSC wishes to close is now contributing significantly to the viability and profitability of the corporation. If that mill were closed, British Steel would be relying, even on its present targets, on 100 per cent. capacity from the remaining mills. Everybody acknowledges that that is not attainable.
In addition, if the British Steel Corporation's ambition is to secure an expanding share of the European market, it needs to invest in Ravenscraig to show that it recognises that that capacity is required. Hon. Members representing Scottish interests would start to have confidence in the British Steel management if the substantial investment required came forward. Investment is not an absolute guarantee and the sum mentioned by the Minister is merely an ongoing commitment rather than a long-term assurance.
The Government have failed to acknowledge the significance of the development for Scotland or to take account of the interests of the work force. They have not come forward with any imaginative ideas as to how the work force could be given a significant stake in the industry. I do not believe that changes of ownership per se are critical, but the Government are pursuing a hurried measure which they have not thought through and my colleagues will vote against it.
§ Mr. Allan Stewart (Eastwood)
I am sure that the House was on tenterhooks, waiting until the end of the speech of the hon. Member for Gordon (Mr. Bruce) to discover which way he was going to vote. As I understand it, at the last general election, the alliance manifesto was in favour of the privatisation of the steel industry. It may simply be a question of the usual problem of achieving agreement among the various parties for which the hon. Gentleman spoke.
I agree with the hon. Gentleman on one point—the importance of employee share ownership. Clearly, that has been an important part of the success of privatisation. My right hon. and learned Friend the Chancellor of the Duchy of Lancaster rightly said that we are considering an industry that has shown a remarkable turnround in recent years. That is a tribute to the management and work force of the steel industry. For example, we now have one of Europe's few profitable steelmakers. A few years ago, the industry cost the taxpayer £5 million a day. The number of man hours per tonne of liquid steel has improved from a figure of 14.5 in 1980–81 to a figure of 6.2 in 1986–87 and, in the past six months, there has been a further improvement to a figure of 5.4.
Those improvements and the resulting reduction in costs have been shown in the performance of the entire corporation, including the three integrated hot rolled coil works at Port Talbot, Llanwern and Ravenscraig. Those improvements have been due to two factors—investment and new technology, and the spirit of competition which has clearly been a major factor in driving down production costs.
The forecasts made in respect of Ravenscraig and Dalzell are clearly valuable. They state that the hot strip mill at Ravenscraig, and the other mills, will continue in production at least until 1989, that steelmaking at Ravenscraig and plate rolling at Dalzell will continue for seven years and that, if British Steel wished to close Ravenscraig, it would consider any wholly private sector offer for the facilities. However, whether we consider them politically or as an expression of the corporation's commercial forecasts, they are valuable statements. In inevitably changing market conditions, few companies would be able to make such forecasts.
What is the best guarantee for Ravenscraig or any other steelworks? Part of any such guarantee is a management committed to the success of a particular enterprise. I do not go so far as the hon. Member for Gordon, but there have certainly been suspicions, justified or not, in the Scottish steel industry. Privatisation has brought to other industries, and can bring to the steel industry, substantial advantages of full commercial freedom and wider employee share ownership.
There has been some debate about the Government's intention to privatise BSC as a single entity. BSC is not a monopoly because of the level of imports and because it will operate in an increasingly free European market. I hope that Ministers will recognise that a number of people from different political viewpoints have questioned whether that is necessarily right. The proposal that Ravenscraig, Dalzell and Shotton be privatised as a separate company is not one that can be simply thrown to one side. It is not a proposal to privatise the Scottish steel industry, as the hon. Member for Gordon suggested. It has not been suggested by those who put forward the proposal 196 that the tubes division of Clydesdale and Imperial steelworks would be privatised along with Ravenscraig and Dalzell. That would not make commercial sense.
The hon. Member for Motherwell, South (Dr. Bray) and others will no doubt speak with greater expertise on this subject. The Arthur Young team did not have access to the commercially confidential information held within the BSC. I do not criticise BSC for that, but there is still a case to be answered. It is not sufficient for the Government to say that they have all the secret figures and that those figures disprove the case. One needs a rather better defence than that.
I do not claim sufficient expertise to be able to say whether those proposals are necessarily commercially sensible. It might be commercially sensible to privatise Ravenscraig, Shotton and Dalzell separately. That might be sensible for the Treasury and it would certainly be in line with the Government's competitive philosophy. Clearly, there would be more competition in the industry. That might result in two companies which would have the same access to international associations, technology and marketing outlets, so it might not be a zero sum gain. There might be genuine benefits.
§ Mr. Barry Jones
My nightmare is that I may not catch your eye, Mr. Deputy Speaker, before the debate is over. When I spoke to the leaders of the steel workers in Shotton, they said that if the industry is to be privatized—and they do not wish it to be so—they wish to see the corporation remain as one unit and they want Shotton to play its part there. I apologise for intervening. I know that the hon. Member for Eastwood (Mr. Stewart) has to make a case, but I must also provide a voice for the steel workers in my constituency.
§ Mr. Stewart
The hon. Member for Alyn and Deeside (Mr. Jones) is right to make that point. Inevitably, that is the initial reaction from Shotton. There might be considerable benefits for Shotton from the arrangement proposed. I do not claim that that is necessarily the case, but there is a case to be answered. I hope that when my hon. Friends on the Front Bench ask the officers in their Department to examine these proposals — including some of the suggestions made by the hon. Member for Gordon — they will not adopt a policy of asking how best they can shoot them down. I hope that the proposals will be looked at in a reasonably open-minded way.
I have no doubt that the time is right for my right hon. and learned Friend to bring forward this Bill. As the steel industry moves towards the challenges and opportunities of the private sector, we must, however, ensure that the structure is the right one for its long-term prospects, its customers and its work force.
§ Mr. Michael Foot (Blaenau Gwent)
I know that many of my hon. Friends are alarmed about the effects of what the Government are doing on their constituencies. I want to express the alarms of my constituents about what could happen to the industry for the reasons most admirably stated by my hon. Friend the Member for Dagenham (Mr. Gould) at the beginning of the debate.
Whatever else is to be learnt from the past 20 or 30 years about the steel industry, it is clear that it cannot be left to have its whole status and future determined by market conditions—yet that is what the Government are 197 risking. They have not answered that major point yet; indeed, there is no answer to it. Anyone looking back over the past 20 or 30 years will see the strength that the industry has been given by public ownership and the weakness that has been caused by trying to leave it to market forces. That does not mean to say that the Steel Corporation does not have to take account of market forces—of course it does—but it must do so in a proper context. The Government's Bill does not do that.
It so happens that I was introduced to the steel industry by Henry Spencer, a man who really knew something about steel, when I went to Ebbw Vale in 1960. He taught me everything I know about it, and about how private industry and public industry could co-operate. He taught me how necessary it was to have public backing and support when the steel industry had its back against the wall. He was also a great expansionist and believed it was essential that Government backing should be forthcoming so that the industry could properly expand. It was chiefly under his inspiration that the Llanwern works were built in Newport. I know that there was a lot of controversy about whether Ravenscraig should have gone ahead at the same time, but we in Wales certainly owed a great debt to Henry Spencer, to those who backed the project and to the works at Newport. The great victory in the industry that the Minister is celebrating today owes much to the foresight, investment and vision of the workers and managers, and of leaders such as Henry Spencer who wanted an expanding industry with the strength and backing in difficult years—as well as in prosperous ones—to enable it to grow.
The right hon. and learned Gentleman's account of what happened in the 1970s was a travesty of the facts. He spoke of us steaming ahead to the buffers with no interest in what was to come. We wanted to secure an intelligent pace of changeover from the older industry to the newer. We knew that changes had to take place but we believed that if that were done properly we could be saved from the ravages that had occurred in the previous industrial revolution, when great industries were allowed to sink into decay and nothing was done to build up other ones at the same time. When we were faced with the rundown of the industry, thanks to public ownership we were able to make intelligent plans and to prepare for the future. That is what we wanted to do in all the great steel towns up and down the country.
Unfortunately, our chance of doing this on anything like a scale on which it should have been done was wrecked. When the Government came to power in 1979 they did nothing about steel. All they knew was what they had been told by the present Secretary of State for Wales, who had introduced a far more expansionist plan at the beginning of the 1970s—but they write that out of the history books now. In 1979 the Government arrived and wrecked our regional policy, cutting down the enormous grants that we believed were necessary by so much that the amounts of grant that we were giving to make the changeover in the steel towns are being written out of the records now. When the Secretary of State for Wales gives us figures today he tells us that we cannot take account of the £40 million that we put into Ebbw Vale to make the changeover in those days. So the idea that we were not 198 trying to carry through an industrial changeover is nonsense, and the Minister should not dare to speak to the House in those terms.
We tried to carry out the change on a proper basis; we were carrying it through; and the Government who came in in 1979 wrecked it in one place after another. Shotton and all the other places quoted in the debate today were afflicted by the savage way in which the Government applied market conditions so ignorantly and ineptly in 1979, 1980 and 1981. If anyone seeks an authority on that, I tell him to go and ask the present head of the steel board, Sir Robert Scholey. He is a fine fellow and should have been appointed to the job seven or eight years ago. We would have been much better off if we had had him, instead of having to pay the huge sums that were paid to Mr. MacGregor to come in. I remember going to see Mr. MacGregor when he first came to run the industry. He told us that he could not be bound by the previous undertakings of the British Steel Corporation. Also, he did not want to have anything to do with building up new industries. He was opposed to the scheme that we, in the Labour Government, introduced for British enterprise. It was a way of trying to introduce other industries, with all the backing, knowledge and expertise of the Steel Corporation available to them. The Labour Government devised a fine scheme, but MacGregor said that he did not want it; everything should be done by the Government, and it was none of the business of the Steel Corporation.
I am glad to say that other persuasions eventually succeeded, and a similar pattern for building up new industries was then introduced into the coal industry by MacGregor on the instructions of the Government, who had to tell him how to do it. We had to deal with all these problems throughout the 1970s, and very difficult problems they were.
I am glad, as I am sure all those in the steel industry areas are, that the publicly owned steel industry has come through the fire as well as it has done. But it is at a much lower level than it was before, as my hon. Friend the Member for Dagenham said. Sir Harry Spencer would never have dreamt that one would call successful an industry that was producing only 15 million tonnes, or whatever the figure is. Of course, the amount could be far greater if the Government had given the steel industry the support they should have given it over a much longer period. I had hoped that they would be willing to do so now, but the Bill offers us no such hope.
I ask the right hon. and learned Gentleman what guarantees he can give. He can give none, because he is handing over the business to someone else. Can he offer guarantees of the sort that we gave Ebbw Vale during the rundown of 1976 and 1977? We put £70 million then into the new tinplate plant. It is partly because of that that it enjoys the profits it now has, which have contributed to the profits from the rest of the industry. That is the sort of investment that was put in back then and we need that sort of investment again now in Ebbw Vale to sustain and expand our tinplate finishing plant.
The same applies to the steel plants that are represented by my hon. Friends. They all want to know how they will be able to obtain the necessary amount of investment in the future. It is a question not only of guarantees for Ravenscraig—although I am all in favour of that being clarified—but of how a range of different steel plants will receive their investment in the future. It is an industry 199 from which one does not receive short-term returns or short-term profits; one must have long-term reports and long-term investment to secure the improvements about which the Minister is now boasting.
§ Mr. Kenneth Clarke
The right hon. Gentleman is talking of a much bigger steel industry, 10 years after the problems that he and I have been describing. Is he asserting that 15 million tonnes is not enough? Does he realise that 32 million tonnes of excess capacity has been taken out of western Europe over the past seven or eight years, yet there is still excess capacity? Does he not recognise the damage that has been done in the past by plucking these fanciful aims of bigger capacity out of the air and then investing in completely non-viable steel plants?
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. I suggest to the Chancellor of the Duchy that some of these points could perhaps be dealt with by the Minister who replies to the debate.
§ Mr. Foot
The right hon. and learned Gentleman has given a completely false account of what we propose and of what has happened. We have not campaigned for a much bigger steel output. The campaign for bigger steel output was conducted by his right hon. Friend the Secretary of State for Wales when he introduced his so-called plan in 1972.
It is not a tremendous feat to say, "We have an industry that is now producing 15 million tonnes." We could have produced more than that in any case. I hope that there will be proper provision for an expansion of the industry, which is something that nobody can calculate.
Only the insane Government of 1979, 1980 and 1981 could have inflicted such damage on the rest of our industry that the cut in steel demand was so excessive. There was a collapse in our motor industry. Much of British industry was allowed to collapse or was driven to the wall by the appalling exchange policy of the Government. The Government inflicted the biggest single injury on the motor industry. Some Conservative Members—not the right hon. and learned Gentleman—know something about the motor industry.
British industry was devastated, which is why the changeover in the steel industry was made all the more difficult. I am gratified, as are many others, that it has come through all those problems. All credit should be given to the workers and trade unions, who were able to carry it through. As I have already said, credit should be given to Sir Robert Scholey, who has been the real manager of the industry and who should have been appointed at the beginning, instead of bringing a fancy manager from across the Atlantic and paying him hundreds of thousands of pounds to mess up the industry before moving on to mess up the coal industry. If Conservative Members want to criticise what I am saying about Sir Ian MacGregor they should consult their right hon. Friend the Secretary of State for Wales, who was subjected to a long visitation from Sir Ian MacGregor.
The Government are unable to tell us how they will be able to guarantee a proper future for those steel workers who made such sacrifices and for the industry, which has come through all those difficulties. Much better prospects should be ahead for the industry. However, the 200 Government cannot say anything about this matter because they are handing it over for somebody else to deal with.
The tests in the future will not be those that we quite rightly applied in 1976, 1977 or 1978—the tests for the long-term future of the industry which have led to the present levels of productivity. The Government are handing over those decisions to a few entrepreneurs private capital — to make the decisions. They, like the old steelmasters, will not have any objective view of how they will serve the long-term interests of the nation.
That is what the Bill is about, which is why it is such a disgrace.
§ Sir Anthony Meyer (Clwyd, North-West)
The right hon. Member for Blaenau Gwent (Mr. Foot), giving one of his inevitable performances as the Phantom of the Opera, carried us back to the heady days of 1963 when the British Steel Corporation's 10-year strategy for an output of 33 million tonnes was denounced by the Labour party as miserably inadequate.
My right hon. and learned Friend the Minister may be relieved to learn that I wholeheartedly support this measure. I say that as no doctrinaire partisan of privatisation. I still require to be convinced of the case for the privatisation of the water industry. I still have strong reservations about the apparent methods that the Government will use to privatise electricity. Furthermore, I am deeply suspicious of attempts to fatten up industries to make them more attractive to entrepreneurs. The steel industry is a conspicuous and welcome example of the opposite. It has been not fattened up but slimmed down to prepare it for privatisation.
I have not been altogether happy about the game of ping-pong that has been played with the steel industry in the past. First, it was nationalised, then denationalised, threatened and then threatened the other way. The world has moved on, and Socialist parties, with the exception of the British Labour party, are recognising the enormous advantages that can accrue from privatisation to workers in those industries. In that regard, we have the recent example of the National Freight Corporation, the privatisation of which has brought immense benefits to those who work for it. That particular debate, as my right hon. and learned Friend the Minister said, is over.
The hon. Member for Workington (Mr. Campbell-Savours)—who is no longer present in the Chamber—made a valid point, of which I know the hon. Member for Alyn and Deeside (Mr. Jones) is well aware, about the problems that arise when an industry is slimmed down to make it more efficient, resulting in enormous losses of jobs and the very large interval that occurs between the process of slimming down and the arrival of replacement jobs. In that context, I am not surprised that hon. Members representing Scottish constituencies express great anxiety about the future of Ravenscraig.
I should like to mention the experience that we went through in north-east Wales; I know that the hon. Member for Alyn and Deeside is particularly concerned with this matter. The hon. Gentleman put up a heroic fight on behalf of his constituents for many years to try to maintain steel production at Shotton. I, from a constituency that at that stage closely bordered Shotton, gave him what support I could. The hon. Gentleman's 201 reward has been reflected in the majorities that he has managed to maintain over a series of elections. He earned the grateful thanks of his constituents.
I am not criticising the hon. Gentleman — he will know that I have made this point before—when I say that in the long run he and I did a bad service to our constituents by delaying a decision that had to be taken. Had that decision been taken at the time that it was planned, the new jobs, which are now coming in to replace the jobs that we lost in the area, would have arrived much sooner and before the recession. Any hon. Member faced with a threatened closure in his constituency is bound to fight tooth and nail — whatever the general arguments may be in favour of that closure — against it. It is no criticism of the hon. Gentleman that he did so. My criticism is of Governments, in particular the Labour Government of 1974, for fudging the issue and postponing the decision. They are the guilty men. [AN HON. MEMBER: "Lord Beswick."] As my hon. Friend says, it was Lord Beswick who was the instrument of the guilt. I clear the hon. Member for Alyn and Deeside from any guilt. It was a copybook example of how political pressures inexorably work against sensible commercial decisions in matters such as this.
There is a lot of talk about overmanning. In the course of looking into the steel industry, I went to Scotland and was taken to see the superb facility at Hunterston for handling ore imports. Alongside it is the magnificent direct production plant, which has never been operated from the day it was installed. I was struck by the ore terminal, which is one of the best equipped places I have ever seen. About a dozen men were standing on the quayside, and, looking at the clock, I said to the harbour master, "When are you expecting the next ship to come in?" He looked across the desk to his calendar and said, "I think it is on Thursday week." I said, "In that case, why are 15 men standing by the quayside?" He said, "That was the agreement we reached with the Transport and General. The ISTC were perfectly reasonable about this and said that they would send their chaps along when there was something to be done, but the only term on which we were able to open the facility was to have 15 dockers standing there, whether or not there is a ship."
§ Sir Anthony Meyer
When I am not speaking in the Chamber, I am usually dealing with other parliamentry business. Those chaps were playing cards. It is a bit reminiscent of preserving the dinosaur hall at the Natural History museum.
Steel is no longer the dominant industry in Wales. Other industries, largely based on firms outside the country, have come in to take its place and Wales is moving steadily into the 21st century, but for as many years ahead as we can see steel will have an important part to play.
Shotton is renaissance; it has a new facility equal to any in Europe. South Wales has steel mills which are more competitive than any in the world. It is vital to ensure the future of the slimmed down Welsh steel industry. God forbid that we should think in terms of hiving off bits of it. It would be much better to keep the corporation whole, 202 not as a shrine for the preservation of our industrial past but as a brightly gleaming beacon lighting the way to a new future for Wales based on an industry of the 21st century.
§ Mr. Stan Crowther (Rotherham)
I was not surprised to hear the hon. Member for Clwyd, North-West (Sir A. Meyer) say that he supports the Bill, because I remember that many years ago he urged denationalisation of the steel industry. I shudder to think what state the steel industry would be in today if his advice had been accepted.
We are debating a piece of pure dogma. It is the 11th commandment of the old Tory testament—thou shalt not make a profit and remain in the public sector. The Government consider that the only purpose of the public sector is to act as a hospital for lame ducks, to take over an industry which has been badly let down by its private owners because they have failed to invest adequately, then to put it right and restore its health so that it can be returned to the same private sector in which it suffered its earlier disasters. That is the Government's philosophy.
The industry has received substantial public funds. Much of that money has been spent on new capital investment, which was desperately needed when it was taken over in 1967. Another large chunk of money has been spent on closures and getting rid of over 100,000 jobs. The social pain of that is still being felt in steelmaking areas, including my own, where unemployment is 19 per cent., largely as a result of job losses in the industry.
The industry has gone through an appalling traumatic period, but at the end of it, thanks to the support it has received in the public sector, BSC has emerged as an efficient, competitive and to some extent profitable organisation. Let us not run away with the idea that the profits are enormous, because they are not, but at least it is profitable. Now it is to be restored to the private sector. Public pain for private profit is the keynote of the Government's philosophy.
Does anyone seriously believe that BSC would still be operating five integrated plants today if it had been in the private sector? Of course it would not. Would the stainless plant at Sheffield—which is now working flat out and bursting at the seams with orders, but which a little while ago was going through a difficult period — still have been with us today if it had been in the private sector? It would have been closed down. Even the works at Rotherham and Stocksbridge, which are part of United Engineering Steels — the biggest engineering steelmaker in western Europe—might have been closed during that difficult period a few years ago if they had still been in the private sector.
There has been a dramatic increase in the demand for steel, thanks mainly to the beneficial movement in exchange rates in the past year or two. Total output in January was 31.6 per cent. up on January of last year. In the Yorkshire and Humberside region—which includes the BSC plant at Scunthorpe and the BSC stainless plant at Sheffield, as well as the works at Rotherham and Stocksbridge—output is up by a staggering 49 per cent. My hon. Friends from Scotland will know that the increase in Scotland has been 35 per cent. But for the sustained campaign of my hon. Friends from Scotland, the trade unions, the Select Committee on Trade and Industry and the right hon. Member for Ayr (Mr. Younger), Ravenscraig would have been closed a long time ago.
203 Where would the capacity have come from to meet the great increase in demand which is taking place? It is absolutely unthinkable that the capacity would have existed if the industry had been in private ownership. There is no doubt that public ownership has saved the industry from virtual extinction, as it has saved other vital industries when private owners have badly let them down by failing to invest sufficiently to match foreign competition.
As BSC is showing a bit of profit — we are not talking about a lot — the Government are rushing headlong to privatise it. We have no assurances about future investment or the availability of capital for investment in the industry. Sir Rober Scholey, the chairman of BSC, whom I have known since he ran the Rotherham works, has said that £300 million a year is needed for new investment. On present profit figures, that is sailing very close to the wind.
My hon. Friend the Member for Dagenham (Mr. Gould) asked why there is such unseemly haste. I think I have the answer: the Government are determined to get the industry on to the market before the full impact of the electricity price increases hits it and reduces its competitiveness and profitability. They want to sell it to the private sector before the cut-throat price war starts in Europe following the phasing out of quotas. Given those two circumstances — the considerable reduction in competitiveness because of electricity prices going up, coupled with a fierce price war against companies which will still have backing from their Governments, whether legal or not—the Government want to wash their hands of the whole industry, and that is a disgraceful decision.
Meanwhile, as my hon. Friend the Member for Dagenham pointed out, there is no assurance that there will be any restrictions on foreign ownership in the privatised British Steel Corporation, or whatever the company is to be called. I have had correspondence with the Under-Secretary of State for Industry on this matter which is of great concern to people in BSC and in United Engineering Steels where 50 per cent. of the shares still belong to BSC. They want to know what is to happen to those shares. I wrote to the Minister and he replied that it is difficult because of EEC regulations. I wrote back and said that there were EEC regulations when Rolls-Royce was privatised, and how did he manage to get round that and provide a 15 per cent. limitation on foreign ownership in Rolls-Royce? My right hon. and hon. Friends will be amazed at the Minister's reply, which was that in the case of Rolls-Royce there was an additional factor: it is a strategically important defence contractor.
I have pointed out that without steel Rolls-Royce could not make a single engine. I can hardly think of an industry more important to our defence capability than steel.
§ Mr. Crowther
My hon. Friend is quite right. The engineering industry in south Yorkshire has expressed serious concern about that. It is an important defence issue.
Our steel industry has been saved at considerable financial cost and even greater social cost in the areas 204 where the jobs have disappeared. My constituents and I wish to know whether all the sacrifices have been made only to provide someone with some private profit. That is what is upsetting my constituents. It is disgraceful that, after all the pain it has suffered, this great industry is now to be put at risk for the sake of doctrinaire Toryism.
§ Mr. Richard Holt (Langbaurgh)
I have noted down some of the topics on which I have received correspondence in the past week. I have received letters about a prisoner in Iraq, the life peerage of the Chief Rabbi, school buses in my constituency, the local post office which is under threat of closure, clause 28, the National Health Service, education and badgers. There has been not one letter about steel nationalisation. There is a steel works in my constituency, and not one person has written to me in the past week opposing the Government's proposals.
Three weeks ago I received a letter from the Iron and Steel Trades Confederation telling me that it was not going to oppose the Government's proposals because:The union could spend large sums of money and considerable resources, as other trade unions have, campaigning against privatisation, but such a campaign would be a futile gesture. Steel is no longer one of the commanding heights of the economy nor is it a public utility. Instead, the ISTC is facing up to reality and must apply all its resources to safeguard the interests of its membership"—the interests of its membership in the industry being denationalised.
§ Mr. Holt
I shall not give way.
We have heard a great deal of statistics. One can wage a war with statistics to make one's case either way but this is not a debate about statistics. It is a debate about philosophy, attitude, and perhaps about dogma.
It was quite interesting that when I asked the hon. Member for Dagenham (Mr. Gould) what was the Labour party's policy, he said that the Labour party would renationalise the steel industry, which is about to be denationalised. Nothing could be more damaging.
§ Mr. Holt
I was listening. That is exactly what the hon. Member for Dagenham said. He was unsure about the form, but he said that the industry would be taken back into public ownership. At least some of the more honest Opposition Members are nodding in agreement. That is what the Opposition Front Bench spokesman said, and that is what Hansard will reveal tomorrow.
§ Dr. Reid
I shall repeat what he said. It is unfortunate that the hon. Member for Langbaurgh (Mr. Holt) cannot repeat, parrot-fashion, what was said earlier. My hon. Friend the Member for Dagenham said that in his view such a strategic industry for Britain should be under some form of social ownership. Had the hon. Member for Langbaurgh not been so busy shouting abuse he might have heard my hon. Friend's reply.
§ Mr. Holt
I heard specifically what the answer was and it will be in Hansard.
205 The debate embraces a philosophical attitude. Langbaurgh on Tees has a steelworks which for many years was a hallmark of inefficiency. Today, it has less than half the work force it had five years ago and is producing 120 per cent. of the steel it was producing then. That is a measure of the improvement of production at Redcar and other steelworks, which include the Skinningrove steelworks in my constituency in the years since 1979.
I do not wish to deal in statistics. We are about to decide the future of the steel industry for decades to come. The right hon. Member for Blaenau Gwent (Mr. Foot) waxed eloquent but he did not say a great deal. However, he did say that there had been a missed opportunity during the 1970s and that there was not the investment that there should have been. I agree with that. One of the reasons for the lack of investment historically was the ping-pong effect of nationalisation and renationalisation that has constantly occurred. If the private sector is asked to put money into a private industry which is liable to be renationalised when there is a change of Government, it will not invest.
The country has changed in its outlook. Twenty or 25 years ago very few people owned shares and young people did not know what shares were. I have a son of 26 and a daughter of 22 who are shareholders in a number of industries. That is not amazing but it reflects the change of philosophy between my youth and theirs and the outlook in the country today. The present opportunity to put the steel industry back into the private sector will enable young people such as my son and daughter and many others to invest in that industry. They will do so and the investment for the future will be there. The only thing that can stop that is the possibility that there will be renationalisation, when the dead hand of the Minister knowing best will return to the steel industry, as it has in the past.
Opposition Members have suggested that we denationalise industries only when they are making a profit. If Opposition Members can find someone to buy British Rail I shall guarantee that the Government will sell it, but there is no one foolish enough to buy an industry in such debt as British Steel was five or six years ago. All the money that was poured down the drain achieved nothing but it caused a greater change when the change had to come about. It may have been easy to phase in the changes to modernise the industry, but because there was a failure to address the problem between 1974 and 1979 it was important that it was done soon afterwards. Today the industry is much more realistic in its outlook.
I heard recently that a strike had been threatened by workers in Redcar during the past few days. British Steel said to them, "Strike if you will. If you do, we will close the plant and it will stay closed." What happened? British Steel prevailed and the men knew that the management meant what it said. They did not strike. They worked, and as a consequence they have kept the plant open and their future is secure.
§ Mr. Holt
If the hon. Lady wants to make a speech, she should have come in and sat through the debate from the beginning, as I have done. Then she would probably be called and could represent her constituents in the same 206 way as I am representing my constituents. I shall not give way to the hon. Lady. She has only been in the Chamber five minutes and that is not long enough for me to give way to her.
Everyone should know the history of the Langbaurgh and Teesside area. The steel mills were built there because of the juxtaposition of coal and iron ore. There is no iron ore left in the ground and there is not so much coal-mining. So we are concerned for the steel industry. The security of being in private hands will keep the steel industry on Teesside. If it were still to be in public ownership in the future, a "Yes, Minister" attitude might prevail over the Minister of the day who might be told to close this and that. I am delighted that, throughout the entire debate, although we have heard a hell of a lot about closing Ravenscraig, we have heard nothing about closing Redcar. That is because of the success of the complex on Teesside.
My hon. Friend the Member for Pudsey (Sir G. Shaw) hit the nail squarely on the head when he dealt with the contribution of the hon. Member for Dagenham. I would have liked to use his words because they were so apposite in the context of the hon. Gentleman's speech. It was a poor speech, but I suppose one can understand that. When one has not got one's heart in a subject but has the commitment, as the Front Bench spokesman, to say a few words, it must be difficult. Apart from the Labour party, the only people who now want to vote against the Bill are the Liberal party, despite the fact that it said in its manifesto that it would vote with us. The unions and the people want steel to be denationalised.
Five or six years ago, immediately after the rundown of the steel industry, there was a very depressed air in Teesside. People were walking round with long faces. Unemployment was terrible. Today there is a new outlook and a new attitude. There is no longer so much unemployment. The number of unemployed is dropping. In every ward in my constituency there was a reduction in unemployment in the 12 months from January last year to January this year.
We now have the Teesside Development Corporation, which is working closely with the British Steel Corporation. A new attitude has come about because management, the workers and—yes—the unions in that area, want the industry privatised. They know that that will give them the opportunities and the security they seek. So the Government are not premature in bringing forward the legislation. It is spot on. This is the first time that they could have brought the steel industry to the market place after the years of decline and waste of money.
Let us think of what we might have done with the billions which have been wasted on steel. How many hospitals might we have built? How many other improvements could we have made to the social life of the country? What did we do? We poured all that money into a small, narrow area to sustain what was at that time a badly managed industry. I refute entirely what the right hon. Member for Blaenau Gwent said. It was only when Ian MacGregor came into the industry that he was able to put some backbone into the management which made it fight the trade union and tell it, "You do your job and we will manage the business." That is what is happening today. The management of British Steel wants privatisation because it wants the challenge. Anyone who disputes that should speak to any senior member of the board. All board members will say the same thing. They are looking 207 forward to the challenge and the opportunity. The Government's proposals will create a steel industry for the future.
In years to come I hope that we shall be debating not whether to close down Ravenscraig but how to expand it, or how, under the private sector, it has been expanded. All the time one has to be realistic enough not to believe that we can produce steel for which there is not a market place. The right hon. Member for Blaenau Gwent said that there was no need to have a market place, because we do not have to sell steel and we are not in competition with other people. Of course we are, and within the EEC there will be even more ruthless competition. As a privatised industry, steel will be able to meet the competition because decisions will be made quickly and commercially and will not have to go through the procedure of ministerial approval and committees before we get anywhere, with the prospect of losing the market, the shares, the opportunities and the jobs.
That is the epitome of a nationalised industry. Invariably nationalised industries have been badly run. Today they are improving. One of the main reasons for the improvement has been the introduction of many trade union reforms, with the result that industrial relations are much better. In the steel industry in the sixties and seventies many days were lost through strikes. The position is not comparable today. After privatisation there will be even fewer strikes.
I am pleased to have had the opportunity to contribute to the debate. I am pleased to speak on behalf of my constituents because they believe, as I do, that the Government's decision is correct. The timing is right and we look forward to the expansion of the steel industry. That is what my constituents want. That is why I shall rejoice when I vote in support of the Government.
§ Mr. Donald Coleman (Neath)
I wish to make two declarations of interest. The first is that my hon. Friend the Member for Motherwell, South (Dr. Bray) and I are the only hon. Members who have attended the whole of this debate who served on the Standing Committee which saved the industry in 1967 by bringing it into public ownership. I am sorry that I have had to listen to the twaddle and claptrap that we have just had from the hon. Member for Langbaurgh (Mr. Holt).
My second declaration of interest, which the hon. Gentleman cannot make, is that I represent the steelworkers. I am sponsored by the Iron and Steel Trades Confederation. I was authorised by the executive council, meeting in London last week, to say categorically and clearly in the House that the union is utterly opposed to the privatisation of the British Steel Corporation. That declaration was made last week by the executive council of my union.
§ Mr. Ian Taylor (Esher)
Is the hon. Member for Neath (Mr. Coleman) prepared to tell us whether that is his view, or the view of the union that instructs him to say it?
§ Mr. Coleman
I assure the hon. Member for Esher (Mr. Taylor) that I am an hon. Member of the House, and when I say something of that nature it is the truth. I challenge the hon. Gentleman to challenge me outside. If he says the same thing outside, I will take him— [Interruption.] I am not used to getting into fisticuffs of that sort, nor am 208 I used to telling untruths. I assure the hon. Gentleman that what I said was declared last week in Swindon house, the headquarters of the union. Does that satisfy him?
§ Mr. Coleman
We in the Iron and Steel Trades Confederation oppose the Bill because we do not believe that it would be in the national interest. The steel industry should not be taken into the private sector, as the Government seek. Nor is it in the national interest to disregard the fact that in the past 10 years about £5 billion of taxpayers' money has been expended on the British Steel Corporation, to make it the most successful steel industry in Europe, if not in the world.
That would not have happened had the arrangements for bulk steel production in Britain existing before 1967 still been in operation. My union says, too, that now the industry is showing itself capable of making profits, those profits should be returned to the taxpayer, not through tax cuts to promote the popularity of the Government, but in expenditure on the Health Service, pensions or some other desirable social requirements. That is how we say that the profits of the British steel industry and the investment by taxpayers in the industry should be spent.
Further, now that the steel industry is profitable, that profit should not fall into the hands of speculators, especially from overseas. I do not suppose, however, that that declaration by my union, the principal union in the steel industry, will influence Conservative Members not to swarm into the Aye Lobby to support the Bill. But nor will their action prevent me from demanding in this debate the safeguards that I want, and my union wants for the country and the people who work in the industry. We demand that, should the Bill become law, there will be no break-up of the British Steel Corporation. It must remain a single entity. It seems that the Government, the Secretary of State and I are on the same side. We in the Iron and Steel Trades Confederation say that the industry is best served by remaining one entity, because anything else will be a disaster.
We also say that whatever company the Bill spawns must be a wholly British-owned company, with a substantial Government investment. In other words, the Government must retain a golden share in the company. We have a right to demand that, because the taxpayers' £5 billion investment in BSC has made this publicly owned industry an attractive proposition, and the sacrifice in job losses in the industry that has gone on over the years must be taken account of, and that contribution recognised. Let the Minister tell the House that there will be a golden share in the company, and that he will undertake that the company will be wholly British-owned. We cannot accept any other objective. We demand that the Government make it absolutely clear.
We also point to the industry's importance to the defence interests of Britain. We demand from the Government that they make it clear tonight that those interests are safeguarded. It is vital that the House is assured on this point. It will be too late to make these demands if such needs arise. We must be sure that the nation's defence is not put at risk through the failure of the new owners of the steel industry to invest properly to keep the industry efficient, as it is now, or through cuts in 209 capacity, especially if they are ordered by the European Coal and Steel Community, that could affect the British industry adversely.
Let us remind ourselves that never before has a bulk steel producer in private hands had to deal with the ECSC, which decides the amount of steelmaking capacity in Europe. It has the power to compel cuts. Conservative Members should remember that the circumstances of the British Steel Corporation are significantly different from the privatisations of British Telecom, British Gas, the water authorities or the National Bus Company. Hon. Gentlemen must remember that the European Commission has a say in steel matters and we are not masters in our own house. For that reason, British Steel might not prove to be such an attractive proposition.
While we are talking about the Commission, let the Minister tell the House tonight what will be the impact of lifting ECSC quotas in June 1988. It is important that we should know in this debate about the likely impact. I suggest that any investors would also want to know about that, and would think carefully about it before making their investment. They might be safer to put their money on a racehorse that I know about, which belongs to a cooperative of west midlands ex-steel workers. It is called "Springvale Campaign", and that name will not be lost on my hon. Friend the Member for Wolverhampton, South-East (Mr. Turner).
Before I raise a matter that has a bearing on investors' interests in the privatisation of steel, and whether it would be such a good deal for them, can the Minister tell us the reason for the indecent haste that has overtaken the Government in selling off steel? From what the Trades Union Congress steel committee could glean as recently as 4 June last year, there was no intention to move as soon as this to privatise the industry. What is the indecent hurry? Perhaps the answer can be found in the Government's refusal to publish the full report completed a year ago by the Monopolies and Mergers Commission. Is there, perhaps, something politically unfavourable to the Government in the report? I expect that the Minister will say that the report contains commercially sensitive matters, and for that reason they are withholding publication. Surely, if that be the case, investors or potential investors have a right to know about it before they buy the shares.
I look to the Minister for two further guarantees. First, will he make sure that the future requirements of British manufacturing industries are guaranteed? We must take care that those interests are safeguarded, and the Minister must make the point clear. Nothing else will do for the British industry. It must have guarantees on this matter.
The other guarantee that we must have is that employees' pension rights and conditions will be protected. These have already been paid for through redundancies. Part of the arrangements whereby job losses in the industry were effected concerned employees' pensions and conditions. We must have a cast-iron guarantee on those matters.
I look to the Minister to give satisfaction on those points before the Bill becomes an Act. He has a duty to the workers in steel, who made a sacrifice. Perhaps Conservative Members did not realise it, but without the 210 co-operation of the union that sacrifice would not have been made and British Steel would not be as healthy as it is today.
The Bill is a betrayal of the country's investment in steel and of the workers' sacrifices. It does not deserve a Second Reading and it ought not to get one.
§ Mr. Michael Irvine (Ipswich)
I have a strong stomach, but it was tested to the full when I heard the hon. Member for Dagenham (Mr. Gould) say that British Steel's success of the past few years was a great advertisement for public ownership. He claimed it was under public ownership that the success had been achieved.
What the hon. Member overlooked was that this success was only possible under public ownership because this Government had the courage to follow a commercial approach, to take commercial decisions and to apply commercial principles. The Government applied the principles of private industry to a publicly owned industry. Over the past nine years hon. Members opposite have opposed just about every sensible decision that the Government have taken in relation to the steel industry. They have shown hostility to every hard but necessary decision. They have sought to make short-term political capital out of every difficult long-term decision that has had to be made.
My right hon. and learned Friend the Chancellor of the Duchy said that in 1978–79 the BSC's annual loss was £1.8 billion. That was in a single financial year. That is equivalent to £35 million a week. That is why my hon. Friend the Member for Langbaurgh (Mr. Holt) was right to draw attention to the scale of the losses which were being incurred, the draining away of public wealth.
It puts current disputes over the National Health Service into perspective. In my own constituency of Ipswich we are shortly to open a new, ultra-modern 86-bed hospital extension, which cost £4 million. So the weekly £35 million drain that the steel industry was imposing on the British economy in 1978–79 was the equivalent of something like nine hospital extensions of that kind a week.
§ Mr. Elliot Morley (Glanford and Scunthorpe)
I am grateful to the hon. Gentleman for giving way. In terms of the points that he has been making about steel losses in the past, does he think that it is justifiable that those billions and billions of pounds of public money which were invested in steel to get it into the situation it is in today should simply be written off, because the price the Government will get for BSC will in no way compensate for that public investment? BSC should be kept in public ownership so that the profitability that came from that public investment can go towards repaying it.
§ Mr. Irvine
The hon. Member for Glanford and Scunthorpe should remember that that trough in 1978–79 was the culmination of 12 years of steel in public ownership, and that what has happened since has been the application of commercial principles to a nationalised industry. Left to the policies, dogmas and doctrines of his party, the steel industry today would still be uncompetitive, overmanned, under-capitalised and fundamentally weak.
The great opportunity that privatisation will give to British Steel will be to enable those commercial disciplines to be maintained. At the same time, it will bring British 211 Steel freedom from Treasury control. It will give it greater flexibility. It will make it much more likely that British Steel will he able to take part in effective joint ventures with overseas corporations.
§ Mr. Irvine
I should like to give way, but many hon. Members, particularly on the Opposition side, also want to speak.
The one baleful shadow that I see is that of the European Economic Community quotas. I acknowledge that there was a time when those quotas were necessary as a short-term measure to deal with the problems of oversupply while the steel industries of the various European nations were putting their respective houses in order. But the short-term value of those quotas has ended. At present those quotas are simply protecting the inefficient and at the same time penalising the efficient. Now, fortunately, British Steel is numbered among the most efficient companies in Europe instead of, as formerly, among the most inefficient. Those quotas are holding back British Steel from making full use of its capacity.
I urge my right hon. and learned Friend to make every effort to ensure that those quotas are phased out, and quickly. The shadow of those quotas needs to be removed from the scene. For all that, I am confident that this Bill, by making it possible for privatisation of the British steel industry to take place, will usher in a new era of prosperity and dynamism for the industry.
§ Dr. Jeremy Bray (Motherwell, South)
In 20 years of public ownership, after much effort and expenditure, the steel industry has been transformed from the chaotic and rundown state under private ownership that my hon. Friend the Member for Neath (Mr. Coleman) and I knew 20 years ago into what is today the most efficient and profitable steel industry in Europe, under a public ownership that could continue indefinitely.
Why, then, oh why throw it all again into the melting pot? The Opposition are totally opposed to the privatisation of the steel industry, which will contribute not a thing to the efficiency of the industry. It is a quite unnecessary threat to steel communities which have suffered huge job losses and which were looking forward to a period of stability in which they could build up employment again in more diversified local economies.
Nowhere are we more opposed to privatisation than in Motherwell, where Ravenscraig and its associated plants, which are fully competitive by world standards, have for years been picked out by BSC as next in line for closure. The privatisation announcement on 3 December set BSC free to take the decisive, irretrievable step next year with the closure of the hot mill, leading progressively to the loss of 11,000 jobs on top of our present level of 18 per cent. unemployment in Lanarkshire, much of it from past steel closures.
The threat is so grave that, out of common human concern and responsibility to our constitutents, my hon. Friend the Member for Motherwell, North (Dr. Reid) and I have had to concentrate on finding means of averting it. We have had to seek means within the letter and the spirit 212 of the Government's competitive, free-market, private-enterprise policies, which they have the majority to carry through Parliament. We cannot afford the luxury of political posturing. It is a matter of survival.
Motherwell district council asked Arthur Young, the management consultants, to examine the impact of the privatisation of BSC on the future of Ravenscraig and Dalzell works in my constituency. I have deposited a copy of the report in the Library and I have copies for any hon. Member who does not have one already and who would like one.
The report concludes that, if BSC is privatised as a single entity, even allowing for a 30 per cent. increase in United Kingdom manufacturing output over the next five years, it would not be in the interests of BSC as a commercial enterprise to keep Ravenscraig open beyond 1991 or Dalzell beyond 1994. The director of the CBI in Scotland, Mr. John Davidson, described the Arthur Young report as "highly professional and interesting".
If Ministers are bothered about the date of the next election, I agree that uncertainties about the market and BSC's response could certainly shift the dates of the closures by a year or two, but the final closure of Ravenscraig is inevitable once the hot mill is closed and the plant allowed to run down. The increase in profits of BSC as a single entity from the closure of Ravenscraig would be about £100 million a year, and shareholders would want to know why Ravenscraig was not closed.
However, the Arthur Young report offered an alternative. It rests on the nature of the competition that the BSC faces. The present proposal to privatise BSC as a single entity assumes that the competition comes from Europe. That is the view as seen and presented by the chairman, looking out. It is part of the truth. Certainly European competition has set, and will set, the general price level, but the competition that has so effectively reduced costs within BSC, particularly in strip products, has been the fight for survival between works, as every hon. Member who represents a steel constituency knows. Ask any steel worker or steel manager.
That is the reality. That competition would be brought to an end if privatisation took a form that simply allowed BSC to close Ravenscraig. The pressure would he off at works level. No amount of comparison with a distant and different Nippon Steel, Thyssen or Krupp would have the same effect. Look at the struggle in Ford, even within the same company, to make comparisons stick between Dagenham and Saarlouis. 'Would Wales have won with such brilliance at Cardiff on Saturday if Scotland had not been 17–10 in the lead at half-time?
The Arthur Young study found that, by maintaining the competition, with Ravenscraig, Shotton and. Dalzell forming a separate group, the competition would need to bring about only a 5 per cent. higher level of sales, and 6 per cent. lower variable costs than would otherwise have been achieved by a single entity, for the combined profits to equal what a single entity BSC could achieve by the soft option of closing Ravenscraig. Is competition worth no more than 5 per cent. on sales and 6 per cent. on operating costs? Production, employment, incomes, technical progress, and the contribution to the balance of payments from increased exports and reduced imports would be higher with the competitive solution. No direct jobs would be lost in north or south Wales, and the number of indirect jobs would, of course, increase. The only people worse off would be Sir Robert Scholey and the board of the British 213 Steel Corporation. With a smaller corporation, £85 million a year of profits would go into the new company. Is it any wonder that Sir Robert Scholey does not like the idea, and did everything that he could to block even the study?
Let me deal with some objections. The force of objections is somewhat diminished when we have heard them coming first from Sir Robert Scholey — with his knowledge, but also his interest in the matter. They should nevertheless be fully considered. We have no interest in deception or in patronising obscurantism. First, people who argue that size gives strength have not followed all that has been happening in recent years. I quote from this week's Fortune business magazine, in an article on "Corporate Strategy for the 1990s":Most of the classical justifications for large size have proved to be of minimal value, or counter-productive, or fallacious. McKinsey's Bergsma goes through the list: Access to capital? That era is past. Better information? New third party providers are making information available to all. Economies of scale? Flexible manufacturing systems are driving out advantages of size. Markets for many corporate functions have developed — transportation companies, purchasing specialists"—and so on. The BSC has cut its research and development by 40 per cent. in real terms since 1979. For all its size—perhaps because of it—BSC makes practically no use of outside contract research. It recruited only two first-class honours graduates into its research departments last year. BSC is almost alone among large industrial companies in having no employee serving on any research council or research council committee. BSC could do with some pretty stiff technological competition in Britain. That is as important for the industry in south Wales and the Port Talbot laboratories and on Teesside and at Scunthorpe as it is in Shotton and in Scotland.
Secondly, it is argued that the two companies would not compete because—apart from Shotton—BSC is not in coated sheet. In fact, with its strip mills, BSC is most of the way there, and Shotton would not and should not accept hot rolled coil from Ravenscraig that is not fully competitive — any more than it does today. By the competitive solution, we would at least maintain the present level of competition, while BSC seeks the soft option of reducing it by closing Ravenscraig.
Thirdly, the Minister said that his consultants had access to commercially confidential information to which Arthur Young did not have access, and that they reached different conclusions. The Minister can do better than that. He personally denied that access and has refused to give information on the advice that he has received. As for the fig leaf of commercial confidentiality, Sir Robert Scholey would describe the position of a rugby ball in midfield as commercially confidential if he thought that would help his case. Remember that he has £100 million a year at stake. Sir Ian MacGregor will tell the Minister, as he told me, that cost estimates can be synthesised from the standard industry sources, and Arthur Young used them.
There is always room for argument about timings, capacities and forecasts. However, there seems to be no doubt about the principal points; first, the proposed closure of the hot mill, which all informed people agree means that the end would be only a matter of time. Secondly, there is no doubt that the proposed Ravenscraig-Shotton-Dalzell group would be viable. That 214 leaves as the only major question the extent to which continuing competition in the United Kingdom would continue to improve performance, and that must be a matter of judgment. With BSC having scarcely begun to tap modern advances in material sciences, there is still plenty of room for improvement.
Finally, Shotton workers would not like it. As my hon. Friend the Member for Alyn and Deeside (Mr. Jones) knows, I have been there and have discussed the proposal with their trade union representatives. Like my hon. Friend, they have made their opposition transparently clear. I like the idea of industrial democracy. Perhaps we could have a vote on privatisation. The new group would give Shotton a much higher profile, with the head office and sales department of a sizeable company, with a full research and development laboratory, able to provide an outlet for the considerable untapped technological potential in new materials in north Wales and Merseyside.
It will take time to win acceptance, as change always does. I was told that Shotton would prefer a management buy-out. Well, why not? Why limit it to Shotton? With the shortages in hot rolled coil that were already developing last year, about which Ministers do not seem to have heard, it would not be sensible for Shotton to be without secure supplies. It is far too static a view to think that Shotton could rely on simply shopping around for spot supplies of hot rolled coil that could quickly cease to be available. Ravenscraig is the present and most appropriate source, and with it comes the strength of Dalzell's position in plates.
§ Mr. Barry Jones
On Saturday, Scotland's first quarter of play was some of the most robust and brilliant that I have ever seen. I know from my hon. Friend's remarks about his visit to my constituency to talk to my steel workers that he is an honourable and truthful man. Since I do not know whether I will catch your eye, Madam Deputy Speaker, I can only say that my steel workers remain unconvinced and have urged me to emphasise their Welshness and their wish to keep their link with Llanwern and Port Talbot.
§ Dr. Bray
I entirely understand my hon. Friend's attitude and position. As an Englishman with the privilege to represent a Scottish constituency, and having been to school in Wales, I do not regard the Welsh or the Scots as a racist people. We all need time to work out just what our interests are on these matters.
Rugby is not the only thing that Scotland takes to Wales. Scottish financial institutions, not to mention Scots, are already playing a considerable part in industrial development in Wales, just as Welshmen are in Scotland. We even have them in Ravenscraig. Why be dominated by a London-based BSC, when one can run oneself better in Shotton? I would lay a fair bet with my hon. Friend that it would not be long before people were saying that, if privatisation had to happen, the new materials group was the best thing that could happen to Shotton.
I have been upbeat and buoyant because the alternative does not bear thinking about. The Arthur Young study has told us that Ravenscraig and Dalzell will not long survive the birth pangs of a BSC privatised as a single entity. But an operation can save them, and the parts of BSC can live. At the very least, that is a proposition that should be properly examined, not just by the Minister and his advisers, but by all the people who can make it come true. It will need time to be examined.
215 We are not talking about a conflict of interest between Welsh and Scottish steel workers, nor even about giving the steel industry in Scotland a chance of survival. For the Government, we are talking about whether the competitive free markets in which they believe are good for economic growth, or only for the shortest-term profits of restrictive private monopolies. Is not properly structured competition good for jobs and economic growth as well as for profits?
For the Opposition, we are talking about whether we can organise a market economy to achieve economic growth. The Arthur Young report has made it impossible for us to hide our heads in the sand, or make strutting cuckolds of ourselves by demanding assurances and making promises of support for Ravenscraig which we know to be empty.
In Motherwell, we have moved very far and very fast to glimpse a chance of survival. The proposal for the new group has the support of all political parties in Scotland, as reflected in the speech of the hon. Member for Eastwood (Mr. Stewart), certainly in and outwith Motherwell, according to soundings that we have been able to take. It has the support of the trade union representatives of the 3,200 steel workers at Ravenscraig.
Lest my hon. Friend the Member for Alyn and Deeside should feel left out, let me say that the trade union representatives of the 700 workers at Dalzell, demonstrating—I believe, of course, only for Scottish steel trade unionists — some of the vacillation and parochialism which is not the strongest aspect of trade unionism in the steel industry, and clinging to hopes of survival on their own which are denied even by their own management, have long worked on the principle of being against anything that Ravenscraig is for.
We all need time to work things out. With no mention of steel privatisation in either their election manifesto or the Queen's Speech, and no consultation before announcing the proposed single entity, the Government must now allow time for thoughts to be gathered. It was only last Thursday that the Arthur Young report was published. Nothing that the Minister or the Government can say will now stop the Ravenscraig-Dalzell-Shotton option being examined.
If Ravenscraig is to be killed, it will die with dignity. But the House will understand the politically explosive effects in Scotland if our largest fully competitive industrial unit were closed with the Government having denied the test of the market, in which they believe, of a course which would have allowed both Ravenscraig and it competitors to continue.
§ Mr. Hal Miller (Bromsgrove)
It is a pleasure to follow the hon. Member for Motherwell, South (Dr. Bray) and to return to him the compliment that he kindly paid to me. He spoke with knowledge, commitment and compassion on his subject and did not baulk at the difficult issues involved. It is tempting to follow him a little further about where the political opportunism lay. Perhaps it was on the Opposition Front Bench. It is even more tempting to explore the difference between social ownership and public ownership and how that is to be made clear to the electorate in due course. However, I came late to the debate, for which I apologise, and many hon. Members are waiting to speak. Certainly those points will have to be explored on a future occasion.
216 This is an emotional evening for me because I resigned from my minor post with the Government in 1981 on the issue of British Steel unfairly competing, with taxpayers' subsidies, against private steel companies. The debate has shown Opposition Members to have selective memories when they claim that only public ownership could save jobs. They have not alluded to the number of people working in private steel milk, particularly in the west midlands, who were put out of work by that self-same public company and its subsidies.
I do not wish to go over those battles, but I am afraid that the journalist triumphed over the historian in the entertaining remarks of the right hon. Member for Blaenau Gwent (Mr. Foot). It was his Government who shirked, or deliberately avoided—at any rate, he cannot deny that they postponed it — the issue of the Beswick report and the steel mill closures that it recommended. That was deliberately put off until the inevitable election. To claim that those plants were viable and, indeed, should have been expanded is an entertaining scenario for the right hon. Gentleman's constituents, but it cannot hold water with hon. Members.
The right hon. Gentleman also referred to the motor industry. Savage reductions have been made in our capacity and output, but the defects in quality and consistency of output rather put the boot on the other foot, leading to the decline in demand on the steel mills—despite the efforts of some, particularly at Llanwern, to improve the quality of their products.
Where do we go from here? A number of difficult points are outstanding. The hon. Member for Neath (Mr. Coleman) in particular drew attention to such problems as the EEC quotas. It should at once be stated that those quotas have not always been favourable to manufacturing industry. I am one of those who have been trying to secure the admission from abroad of high-tensile steel which cannot be obtained elsewhere for the manufacture of motor car wheels. Steel quotas have not always helped our industry to modernise itself or to improve its products.
As far as I am aware, the United States has not yet been mentioned. Many perils face our exports of steel products to that country, and the Government will still have to be involved in questions of trade. That is, I think, part of the assurance that Opposition Members have been seeking. It is not a matter of the Government removing themselves altogether from the steel scene, because they still have onerous responsibilities. It would be as well if my hon. Friend made that point in his reply.
The idea that the industry has succeeded only because it is in public ownership really cannot be sustained, and takes no account of the continuing unfair basis of competition with companies in the private sector—and even the basis on which the Phoenix companies, such as United Engineering, should work. That firm is of particular concern to me as it has a large plant in my constituency. We still have such firms as Walter Somers, in open hearth die steel, competing with Sheffield Foregemasters on a very uncertain basis, with the latter's access to the taxpayers' pocket.
I welcome the Government's early step to resolve the problems. I have argued all along, even when the privatisation of steel was not possible, that steel in public ownership must operate on a basis of company accounts so that it can be seen where the subsidy has gone and the basis of competition can be understood.
217 I believe that this step had to come. It gives the workers so ably represented by the hon. Member for Neath the chance to take a stake in their own industry, and enables suppliers, consumers and the public to do the same. That is the sort of public ownership that we want, which is why I heartily support the measure.
§ 8.5 pm
§ Mr. Barry Jones (Alyn and Deeside)
Having intervened in virtually every other speech, I hope that there will be no interventions in mine, and I can promise a brief speech.
Let me say to the hon. Member for Clwyd, North-West (Sir A. Meyer) that, even given the Government's current highly dubious unemployment figures, 10,000 are now unemployed in the travel-to-work area of Shotton. The male unemployment rate is 18 per cent. I calculate that several thousand of those are my constituents, who have not worked since they lost their jobs when the Shotton steelworks were closed in 1980. That was a tragedy. The workers did not wish to surrender; nor did I, and nor did a single one of our local authorities. I felt that it was our duty to fight, and to propose new steelmaking at the Shotton works. Notwithstanding progress in the creation of a new economy, the existing unemployment figures proved right those of us who had wanted to fight.
On Saturday, I met members of the Shotton steel committee representing the works. They had told me in a letter that they wished to make a public statement. They write:We are convinced that any hiving off of the industry into smaller groups or units would not be in the best interests of the BSC as a whole or any works in particular. Having suffered the ravages of closure of the major part of the works with its subsequent loss of jobs on an unprecedented scale, we now feel that having weathered all the storms of the last eight years, we are now in an extremely strong and healthy position. The order book is full, investment is guaranteed and we have first class products which are in an expanding market. This can only bode well for the future. To maintain and continue this success story we need the security of the corporation as a whole, for future investment, continued research and development and marketing expertise. To this end we see no benefits by isolating ourselves from the mainstream of the industry. Job security, safe working conditions, fair wages, good pensions—these are what we seek and hope for our members. And we feel that these aspirations, plus the future prosperity of the Shotton works, with its benefits to the community, are best served by our continued association within the BSC and not by fragmentation of the industry however well meaning these proposals may be.In an encounter on Saturday in my surgery in Connah's Quay, that letter was given to me by Joe Gibson of the Amalgamated Union of Engineering Workers, Ron Hill of the Iron and Steel Trades Confederation and Bob Butt of my own union, the Transport and General Workers Union. They told me that they did not want a management buy-out.
I want to emphasise briefly the achievements of the work force at home. Locally, we are seen as the "jewel in the crown" of the corporation's empire. We have slimmed down hugely; we have had immense demanning and have increased productivity at an astonishing rate—all under the leadership on the shop floor of local trade unionists who have sweated blood in difficult conditions. My constituents at Shotton can rival any Japanese or German work force for productivity. I cannot praise them too 218 highly. They have made every sacrifice. I know that about £100 million in a decade has been invested in the Shotton works. Management and labour have collaborated effectively to compensate for the loss of 8,000 jobs in 1980, between Christmas and Easter. Arguably, that is the biggest ever loss of industrial jobs in Western Europe. It all happened in just three months. That is why my colleagues from the Shotton works came to see me last Saturday and gave me their considered thoughts. I support them to the hilt and respect all that they seek to do and all that they say.
I see the Bill as a step in the dark. I want to know what will happen to the privatised company if world trading conditions take a turn for the worse. Would the Government bail out that company?
I also have a question on imports. Is the Bill designed to lessen importation, or not? I advise the hon. Member for Bromsgrove (Mr. Miller), that the Government told me that in 1986 our nation imported over £1 billion of foreign steel — mostly strip. I know the hon. Gentleman's interest in the motor industry and advise him, in addition, that in that same year, 1986, Britain imported 1 million motor cars at a cost in excess of £4.5 billion. Every car that is imported into Britain is foreign steel and foreign strip. Every right hon. and hon. Member knows that our balance of payments is in an unhealthy state. However, there has been £5.5 billion worth of imports which, as time goes by, I predict will prove to be an immense strain to the British economy. Does the Bill presage more imports or fewer?
I now address the subject of pensions. I seek a categorical assurance for my constituents at Shotton steelworks that the corporations' employees will not lose out. They tell me — I agree — that satisfactory arrangements are vital. Can we be sure that foreign companies will not be allowed to obtain a major shareholding in the new company? Like my hon. Friends, I see the steel industry as Britain's strategic industry. We need to guarantee that if the steel industry is privatised, a foreign company or a foreign power will never have leverage on our fundamental industry. I note that there are already cracks in the Government's approach relating to other privatised industries. Only earlier today in the statement, we had an example of that. I hope that if the Minister catches your eye, Madam Deputy Speaker, he will address that national point.
I ask again, "Will there be genuine consultation and negotiating procedures, nationally and locally, about the future shape of the industry, and about wages and conditions of service?" When I talk to my steel workers, I know that they want me to seek guarantees about health and safety. We want more not less work in that vital area.
On training, can we be sure that there will be more, not fewer, apprenticeships? Economically, the future of Britain in the next century is related to the way in which we tackle training. We need more not less training in steel in the years ahead.
On research and development, if the industry is to prosper in the next century we need to know what the privatised company is prepared to invest under that heading because it is of crucial importance.
I ask the Minister to express concern for the environment because throughout Britain our citizens are now demanding improvements. Would a privatised profit-conscious company cut corners with regard to the environment? I hope not.
219 I notice that the Financial Secretary to the Treasury is in his place on the Treasury Bench. I should like to say to his face a word of thanks for the manner in which he has delivered speedily over £500,000 to constituents of mine with regard to top slice tax relief that should have been paid in 1980. He efficiently delivered it late last year, which is much appreciated in my constituency.
Finally, we will listen with care and interest to what the Minister says about the writing-off of debts. Your wish, Madam Deputy Speaker, is for short speeches; I hope that mine has been reasonably short. I warn the Government that this is a step in the dark and even at this late stage they should think again.
§ Mr. David Nicholson (Taunton)
The hon. Member for Alyn and Deeside (Mr. Jones) spoke with passion, concern and great authority. Many Opposition Members have represented constituency interests strongly. I do not have a constituency interest, but for five years before I became a Member of this House I worked for the Association of British Chambers of Commerce which, in their individual capacities, have shown concern for individual steel plants and the effects of their closures, and in their national capacity have shown continuing concern for manufacturing industry and its competition. Indeed, through that work I learnt about the point that was made by my hon. Friend the Member for Bromsgrove (Mr. Miller) about the importance of the private steel companies being able to compete with British Steel.
I welcome the Bill because it is long overdue. Indeed, since calls for nationalisation are normally greeted with cheers by the Opposition, and calls for denationalisation — I hope that we can occasionally use that now outmoded word — are greeted with applause by Conservative Members and, I believe, by the country, I am somewhat surprised that this measure was not forecast either in our election manifesto or in the Queen's Speech, but perhaps we will have a response to that later.
In my election address on the subject of privatisation—call it what one will—I said that the interest of the consumer was paramount. I had in mind not only the two great privatisations of the previous Parliament—British Telecom and British Gas — on which continuing vigilance by this House and its Select Committee will be necessary, but also the two major privatisations that are predestined for the rest of this Parliament — electricity and water. I advise my right hon. Friends that I cannot guarantee that I shall take an entirely uncritical approach to those. However, I believe that steel is a relatively straightforward case.
I disagree strongly with those Opposition Members who have claimed that the value of public ownership has been proved by what has happened since 1979. Let us look at what has happened since 1979. Until my right hon. Friends took the industry by the scruff of the neck its history in public ownership had been one of political interference. It had been forced to keep open non-viable plants and, by 1979, West Germany, with a steel production work force only 50 per cent. higher than that of Britain, was producing more than twice as much steel. Indeed, profit figures have already been mentioned. In 1979–80 BSC lost £1,784 million but that loss has now been converted into a profit.
The measures that have been taken to bring BSC back into a competitive position have required unpleasant 220 actions in a number of areas. I pay tribute to the success of the enterprise zone and the creation of new businesses in Corby that have led since 1985 to a 51 per cent. fall in unemployment.
I would remind the House that fewer steel workers now expect to remain in the steel 'industry for the rest of their working lives. The other day I met a taxi driver in My constituency—I have no idea of his political allegiance — but he had been made redundant from the Scunthorpe steelworks six or so years ago. He had had a difficult time in regaining a viable living. However, thanks to the enterprise allowance scheme, he has now set himself up as a taxi firm in Taunton. That is a success story for the Government's employment measures.
This is a historic occasion because the ownership of the steel industry has moved backwards and forwards from public to private ownership since the war. I have had an interest in such matters for some time. I should like to make two points with reference to the historical perspective. I do not believe that everything that the private sector does is good and, many years ago, there were occasions when private steelwork owners were open to criticism. Correlli Barnett, in his book, "The Collapse of British Power", states:The evidence given before the Iron and Steel Industries Committee in 1917 portrayed a generation of industrialists in whom ignorance vied with complacency. These were men far whom their own old curiosity shops of foundries represented the summit to which progress might aspire and for whom the sophisticated metallurgical science of foreign competitors was not a matter worthy of the attention of a British iron or steel-master.
§ Mr. Nicholson
No, not at all. We need to be aware of history and be warned by past events.
Let us consider another lesson from the past that points to Government policy regarding the economic conditions in which industry operates. I quote from a book which I had the honour to edit, "The Leo Amery Diaries". On 19 November 1925 his diary read:Committee of Civil Research which is now getting near the summing up stage on the Iron and Steel business. Philip"—Sir Philip Cunliffe-Lister, then President of the Board of Trade—summed up ably and temperately in favour of a safeguarding inquiry;"—the aim was to give a tariff to the industry.
then Chancellor of the Exchequer—naturally to the effect that the evidence had obviously shown that we could not grant one"—an early Cabinet split—I as naturally in the opposite sense comparing all these efforts to wriggle out of the proper and obvious solution of all our difficulties to bluebottles buzzing in a fly trap.Those quotes demonstrate the position of the industry and the economic circumstances surrounding it.
I hope that privatisation will help us regain at least part of the 40 per cent. of the market that we have lost to foreign imports. I emphasise that the success of the industry depends upon the Government's attitude, for example, to exchange rates. Those rates caused us considerable difficulties in 1980 and I hope that the Government will address that point.
The Iron and Steel Trades Confederation journal for February 1988 states:The union could spend large sums of money and considerable resources — as other trade unions have — 221 campaigning against privatisation. But such a campaign would be a futile gesture. Steel is no longer one of the 'commanding heights' of the economy, nor is it a public utility. Instead the ISTC in facing up to the realities of the situation must apply all its resources to safeguarding the interests of its membershipI am sure that that is correct and that shows that certain trade unions—more and more, I hope—do not take the strongly ideological opposition to this measure that I fear has been adopted by Labour Members.
§ Mr. Alex Salmond (Banff and Buchan)
If the Bill is passed unamended, it will be a death warrant for the Scottish steel industry. It will send, virtually unencumbered, a corporation into the private sector whose senior management's antipathy to the Ravenscraig complex is well known and well documented. It is a relatively simple matter to map out the bleak future for Scottish steel if the Bill is passed. Indeed, the hon. Member for Motherwell, South (Dr. Bray) did so extremely professionally.
Over the next seven years successive parts of the Ravenscraig operation will be closed as alternative capacity becomes available elsewhere. First, the strip mill, then one of the blast furnaces and finally the rest of the operation — no doubt in good time to meet the ministerial promises of seven years' iron and steel production at Ravenscraig.
In Scotland we know when bad news is coming. It is preceded by statements from Tory Central Office entitled, "Good news for Scotland". Indeed, it was with that banner headline that the Tories greeted the closure of the Gartcosh finishing mill. I have absolutely no doubt that someone is beavering away at this very moment attempting to interpret the Britoil announcement as more good news for Scotland.
In December the Minister suggested that hon. Members representing Scotland should be pleased with the equivocal assurances of seven years steelmaking at Ravenscraig, yet it is another example of the Government's track record of deceit. If the Minister wishes to prove us wrong he should re-word the guarantee to include all steel operations at Ravenscraig, Dalzell and Clydesdale.
Bevan said "Why look at the crystal ball when you can read the book?". In Scotland we do not need a crystal ball to divine the intentions of the BSC. We need only to refer back to 1982 when it had to be prevented from closing Ravenscraig by political intervention. Those were the days when Scotland still had a Secretary of State who considered it part of his responsibilities to fight Scotland's corner in the Cabinet. The right hon. Member for Ayr (Mr. Younger) may have lost more battles than he won, but he is infinitely preferable to his successor who has not lost a political battle because he has fought no fight at all.
Let us consider the absurd spectacle of the Secretary of State, in what was billed as a major speech and, apparently, in all sobriety, proclaiming the virtues of privatisation for the Scottish economy—that in the week that has seen the sell-out of its largest company, Britoil, because of the Government's failure to keep promises made at the time of its privatisation. The Bill aims a dagger at the heart of the Scottish steel industry as a result of more privatisation.
The decision to sustain Ravenscraig in 1982 was clearly correct. The work force has broken production record 222 after production record. Ravenscraig has been operating at well above design capacity. It has been crucial to the build-up of profitability in BSC and that, of course, has made viable the privatisation we are discussing. Unless the Bill is stopped or substantially altered, those efforts will be rewarded by a long lingering death for Ravenscraig over the next seven years. Just as BSC was wrong in 1982, so it is wrong about Ravenscraig in 1988. As an integrated unit Scottish steel could face an outstanding future, responding to the revival of the oil market in the 1990s. As a peripheral plant in a privatised BSC there is little or no prospect for survival.
The implications for the loss of the steel industry go far beyond the direct and indirect impact on the economy and beyond the social consequences for individual communities. When uncertainty surrounds Scottish steel all business, which uses up primary material, is under threat. What country will develop or expand a steel dependent industry when there is a clear danger that a steel rundown will remove Glasgow as a basing point for pricing steel products? The effect will be further to catapult industry towards the midlands, which is the hidden agenda behind the Government's pursuit of steel privatisation.
There is a case for the privatisation of steel. It is not a case which I support, but it is one which is arguable. There is only the poorest case for the privatisation of steel as a single unit. If the BSC is sold as a single entity with dominant market control in the United Kingdom, its capacity will inevitably be reduced below the level which will pertain if it is kept in the public sector or sold as two or more competing units. Over time, the new privatised BSC will reduce output to maximise profitability and will meet excess demand through further imports.
Such is the option open to a company sent into the market with neither the constraints of public accountability nor major domestic competition. The measure smells of opportunism, the chance to make a quick buck in a tidy fashion without the complication of having to think things through. Privatisation in that form will be bad for all the steel industry. Ravenscraig could well be the first casualty, but, most certainly, it will not be the last.
Our colleagues in Plaid Cymru are extremely worried that a free market force will further emasculate the industry in Wales. Since the war, the number of steel workers in Wales has dropped from over 100,000 to under 20,000. As in Scotland, whole communities are dependent upon steel and their future is in the balance.
In its aftermath, the Bill will bring political changes. The threat to the Scottish steel industry may convince many Labour supporters, and perhaps even a few Labour politicians, that the state of the United Kingdom is not compatible with the health of the Scottish economy. The remaining Tory Members from Scotland face a dilemma this evening. Here is a measure which is both anti-Scottish and anti-competition. It is against not only the principles of the SNP, the Labour party and the alliance, but what should be the economic principles of the Conservative party.
I offer the remaining Tory Members this warning, or at least I would do if there were any in the Chamber tonight. If, as Opposition Members suspect, the Bill is the preliminary closure notice for Scottish steel, it will most certainly be the final closure notice for the Scottish Conservative party.
§ Mr. Elliot Morley (Glanford and Scunthorpe)
Steel, iron and ironstone have been an integral part of the economy of my constituency. We appreciate how important the Bill is for the constituency and the future of steel work there.
In our debate, we have discussed whether steel workers welcome the measure. My predecessor was a Conservative Member and, in the last general election campaign, the future of the British Steel Corporation and the question of privatisation featured prominently. Before the campaign started, my predecessor was all for privatisation and demanded that it be brought forward as soon as possible. Quite amazingly, during the campaign, he changed his tune and said that there would be no privatisation during the life of the next Conservative Government, and that privatisation was many years away. Ministers who visited my constituency during the campaign repeated the message that the BSC would not be privatised for many years.
We can already see what has happened, in the first Session of a new Parliament. If the Government can he so dishonest towards the electorate, particularly when the manifesto and the Queen's Speech made no mention of the proposal, how can people trust the Government? During the election campaign, it was evident that the people of Glanford and Scunthorpe trusted the Labour party more than the Conservative party to defend the interests of steel workers and the future of the steel industry. I do not intend to break faith in the confidence that those people put in me when they sent me here to represent their interests.
I want to talk about the interests of steel workers and of the industry. The Bill makes no mention of pensions, protection of jobs or protection against foreign takeovers. It makes no mention of giving the work force a share in the benefits of the industry. Perhaps the Minister will tell us whether he wants to see speculators in the City take all the short-term benefits or whether he intends to give a free issue of shares and a share in the industry to the people whose productivity has made a turnround possible.
In some ways, Scunthorpe has recovered from the shattering blow of the steel closures. Eighteen thousand people were employed in the steel industry there. The current figure is 7,500. That was a tremendous blow to the town. Is that tremendous sacrifice to be thrown away when the industry is now back in profit and Scunthorpe is breaking all productivity records and is capable of competing with any other steelworks? Are we to lose the sacrifice of all those families who lost breadwinners when they were put out of work?
In a reply, the Minister told me that, since June 1979, £5,151 million have gone into the BSC. All that is to be written off. Let us make no bones about that. That debt is to be wiped off to enable the industry to be sold. When the industry is in profit, as a result of public investment, it is wrong and irresponsible to write off that debt and not to keep the steel industry in public ownership to make its contribution to paying back that investment.
I fear very much for the future of the industry. In world and European terms, the BSC is not the largest steel producer. The advantage of public ownership is that it evens out the cycles which affect the industry. When the flotation is announced, will the Government warn small investors just what a high-risk investment it will be? The problem of over-production in Europe has still not been 224 resolved. The industry is vulnerable to currency fluctuations. It is a high-risk investment and does not compare with the natural monopolies of British Gas and British Telecom, which were privatised at some considerable loss.
It has been argued that the measure would free the industry from state interference. I wrote to the Minister and asked him how much the BSC advertising campaign was costing. He replied that that was a matter for the board and not for him. There does not seem to be much control when the Minister allows a public corporation to spend its money in a way which blatantly advertises privatisation through its slogan, "The shape of things to come". I do not oppose the BSC marketing itself. It has had a considerable achievement and should be proud of that.
Those people who work in the industry in Scunthorpe are proud of their achievements and their contribution to the industry. It is an act of irresponsibility to write off those debts when the industry is in profit. My constituents tell me that the Humber bridge board, which affects my constituency, has debts of £300 million. It costs £1.50 each way to cross the bridge. It is affecting the economy of the region, as it represents a cost barrier, yet the Government refuse to write off the £300 million debt when they think nothing of writing off a £5 billion debt.
Those are the Government's priorities. That is hypocrisy. The Government are prepared to plunge steel into the uncertainty of private ownership for short-term gain and pure ideological commitment. When steel is doing so well, why not keep it as it is and let the people who work in the industry have some security and let taxpayers enjoy the returns on their investments over so many years?
§ Ms. Marjorie Mowlam (Redcar)
I shall he brief because many of my hon. Friends want to participate in the debate. I want to put on record my response to the cheap political jibe from the hon. Member for Langbaurgh (Mr. Holt). I am learning to know and hate his jibes. I was not in the Chamber because was serving on a Committee, and it is difficult to be here all the time.
Let us be straight about what the Bill is about: short-term profit. It is about selling off the assets of British Steel cheaply. Steel communities such as Redcar know what it is to have seen the industry made lean in previous years. My hon. Friend the Member for Rotherham (Mr. Crowther) put the point succinctly earlier when he said that we are suffering public pain for private profit.
The hon. Members for Langbaurgh, for Stockton, South (Mr. Devlin) and for Darlington (Mr. Fallon), all of whom inhabit the Conservative Benches, have frequently told us that the workers on Teesside are sitting and longing for privatisation to arrive; they are desperate for privatisation and the chance to buy shares. If the matter is put to them in terms of quick money and profit, people will respond in the way that Conservative Members tell us they will, but it is important for Conservative Members who represent Teesside to realise what has happened.
I quote some of the differences between the current prices of shares and the issue price for privatisation. The issue price of British Petroleum was 363p, its current price is 248p; for British Gas, the figures were 135p and 130p respectively. For BAA, the issue price was 245p, and the 225 currrent price is 104p. So Conservative Members should be straighter when talking to workers on Teesside about what the price of shares will bring them in the long run—
§ Ms. Mowlam
I shall not give way, because Conservative Members did not.
Let us examine the issues of privatisation that concern the workers on Teesside. I shall explain the worries they have expressed in my surgeries. They are concerned about guarantees of their pensions, terms and conditions—the Bill offers none. As my hon. Friends have said, the workers see public money being spent for private profit. Clause 14 clearly explains that public money will pick up the cost of advertising. The Minister will not tell us how much that will cost, now or during privatisation. In answer to a parliamentary question on 18 January we were told that the advertising cost for British Telecom was £11.7 million; for Britoil, £3.1 million; and for British Gas, £11.5 million. So we have some idea of how much public money will be wasted on the privatisation.
We have also heard quite a lot about the debts that will be written off to make British Steel a more profitable bet for the private sector. The Minister shakes his head, so we look forward to hearing from him why this privatisation will be different. Why will it be different from 1980, when £100 million was written off for the National Freight Corporation, and when £160 million of Government loans were written off for British Airways? Perhaps it will be different because the Government already wrote off £3,000 million for British Steel in 1981, and another £1,000 million in 1982. Perhaps the Government have managed to write off some debts through the back door already.
I am a new Member and I do not completely understand clause 5, so perhaps the Minister will clarify it for me. It states that the Government will be appointing—I presume, after the Bill becomes law—nominees for the purpose of the issue or allotment of securities. If the DTI's press notice of 1 February is correct, I presume that that has already been done. I know that my hon. Friends have already asked this question, but the answers were unsatisfactory. Has clause 5 been pre-empted before the Bill came before Parliament?
As my hon. Friend the Member for Neath (Mr. Coleman) said, the ISTC has fought hard, nationally and locally, to show what British Steel can do, along with workers and management in the industry. On Teesside, we want economic progress and not financial speculation. That will be achieved by leaving British Steel where it is now—in the public sector.
§ Dr. John Reid (Motherwell, North)
First, I congratulate my hon. Friend the Member for Motherwell, South (Dr. Bray) who made an eloquent, passionate and committed speech on behalf of his constituents. It was based on his expertise in the steel industry and on a feeling that pervades the whole of Lanarkshire and Motherwell—of fear for the future of the jobs, families, community and steel workers, because of the threat to Ravenscraig. His eloquence stood in marked contrast to the Minister's speech.
226 The Minister started off with a philosophical ramble around the privatisation houses. He informed us in the course of discussing old battles that the battle is now over and won and the ideological tussle finished. I do not want to get into a philosophical dispute with him, but he is mistaken if he thinks that. He mistakes minutes for hours. Although he may have made advances in the past few years, if it comes to the choice between unfettered free enterprise, irrespective of the consequences for human beings, and a planned, sensible intervention in the economy, in the course of time the Minister's philosophy will be washed up on the shores of history like the anachronism it is.
There is some nostalgia in the debate, because there have been battles. In my case, the nostalgia is bitter, because almost a quarter of a century ago my predecessor, in his maiden speech, argued strongly for the necessity of returning British Steel to the public sector because of the desperate need for investment, job security and long-term security for the industry. Today we are debating the very opposite — the Government's dogmatic insistence that the publicly owned steel industry, no matter how healthy, profitable, productive and efficient, should be returned to the private sector and hived off for private profit to the Government's friends in the city.
Privatisation is a bad deal for the taxpayer, the work force, Scotland and Britain. In the first instance, the taxpayer will, as usual, get the worst deal. As was admitted earlier today and is recognised on all sides, the taxpayer subsidised the steel industry through its loss-making period and through rationalisation to the tune of £5 billion. The same ordinary taxpayer, for whom the Government shed crocodile tears in their publications and propaganda, has footed the bill for the massive investment that accomplished the turnround in British Steel's fortunes. That long-suffering taxpayer bore the burden of redundancy payments and the benefits paid to unemployed workers thereafter, and it is our friend the taxpayer who will continue to pick up the tab for any future cost of maintaining labour shed by the British Steel Corporation.
With such commitment, sacrifice and financial investment being made by the taxpayer, it might just be expected that he could expect some return now that the television commercials every evening bear testimony to the strength and profitability of the British Steel Corporation — but no such thing. The Government and their financial friends have entered upon a peculiar sort of contract with the British taxpayer. It can be summed up as, "Heads we win, tails you lose." The sell-off of British Steel also represents the sell-out of the British taxpayers.
Another group has also been sold out by the Government. They have invested all they have in the now profitable British Steel Corporation. In the main, they have little capital to invest; they do not have huge bank accounts and cannot sell Picassos to buy block shares in the new corporation. I refer to the work force of the corporation, who have invested their lives, energy and efforts in making BSC the prosperous concern that it is today. They have accepted cuts in numbers, moderation in wage increases, flexibility in work practices and increases in productivity. What will be their share of the BSC bonanza?
What is in it for the steel workers at Belshill, Motherwell, Llanwern, Port Talbot or elsewhere? Will there be guarantees that their future and plants will be 227 secure, or will there be, as there often has been in the past, the inheritance of ambiguity and threats of insecurity, which has always come when steel has returned to the private sector? Those workers and their families, particularly in my area, where the threat is greatest, deserve, at least, a guarantee that their future will be secure. The Minister refuses to give such a guarantee.
My constituents work in the shadow of the Ravenscraig steel plant at the less popular plant — less popular among the press—at Clydesdale tube works in Belshill. Over the past few years, they have been struggling against a decline in their main market, which was directly related to North sea oil activity. In addition, as the Minister will know, fluctuations in the exchange rate have worked against them. They have suffered from a desperate lack of investment in their mills.
Despite those losses of market and difficulties with the exchange rate, the workers and management—to give them their due—at Clydesdale can take some pride in the fact that the order book is filling up, the shift pattern is increasing and losses have been cut steadily. Only yesterday we learned that over the past three months the books have been balanced.
Under public ownership, contingency would be made for short-term fluctuations. There is no evidence in the history of private steel ownership that a position such as that at Clydesdale would be sustained, even though it is suffering in the short-term from factors outside its control.
To safeguard the United Kingdom's strategic position in supplying the North sea oil industry, the Government must give an assurance that substantial production will continue at Clydesdale in the long-term. Indeed, recently the Minister—to give him credit—and the chairman of BSC were able to confirm a more optimistic long-term future. Will that view still be taken when Clydesdale, along with the other plants, is pushed out of the public sector and into the quick-buck private sector? Will we be able to intervene in the long-term interests of the work force, the local community or the British people? Will we be able directly to influence the management about the need to maintain future investment? We will not be in a position to do so, and the Minister knows that only too well. Part of the reason for privatisation is to avoid those obligations if BSC were to remain in the public sector.
The Chancellor of the Duchy told us—no doubt we will hear it again — that he recently came to the Dispatch Box with what he was pleased to call a guarantee for the future of Ravenscraig and the Dalzell works at Motherwell. He made a statement to the House and waved his papers in the air and said:subject to market conditions, there will continue to be a commercial requirement for steel making at Ravenscraig for at least the next seven years … there will be a similar requirement for plate rolling at Dalzell."—[Official Report, 3 December 1987; Vol. 123, c. 1107.]That was an extremely convincing performance; the Minister is not without charm. I had to push continually from my mind the analogy of Neville Chamberlain waving a piece of paper and promising peace in our time. We were promised steel in our time, subject to market conditions.
I have learnt that a Conservative Minister — Mrs. Thatcher's lieutenant—calling upon market conditions is rather like Pontius Pilate calling for the hand towel and soap. Effectively, that was not a guarantee but a timetable for execution laid out by the Minister for those who had eyes to see.
228 The paper was as worthless as that waved by Chamberlain. Had he been more honest, the timetable for Ravenscraig could have been summed up as "legislation in 1988, flotation in 1989, amputation in 1990 and termination in 1991". That sums up the Minister's statement. The Bill is a further extension of that.
Market conditions—which were referred to as a get-out for the Minister—were dealt with to some extent by my hon. Friend the Member for Motherwell, South. We could not gain access — primarily because of the intervention of the Minister and the chairman of the BSC — to all the available market conditions criteria and information. My friends on Motherwell district council employed Arthur Young and Company to commission the study that was referred to earlier by my hon. Friend. Time prevents me from elaborating on that study, but the case has been made for an investigation of it in greater depth by the Minister and his Friends.
The Minister referred earlier to the fact that, along with merchant bankers, the Government investigated various forms of privatisation. There is a duty on the Minister—if not tonight, at least in Committee—to make the evidence, conclusions and details of that investigation available to the Committee so that we can ensure that every option has been explored.
The Minister described public sector interest in steel as interference. He blamed us for taking an interest and accused us of lobbying the management of BSC. If it had not been for that lobbying and interference and the political messing about of hon. Members, Ravenscraig would have been closed in the early 1980s. It has been kept alive only by that political pressure. If the Minister boasts of the guarantees that were extended politically by the Government on the one hand, he can hardly decry political interference on the other as being something associated with the public sector that is detrimental to BSC.
We have all heard the lesson before, but the ultimate irony of the statement that the Minister made in December was that it was couched in effusive congratulations—as was his speech earlier — for the record-breaking performance of BSC's workers, which is right. BSC made a profit of £190 million in 1987–88, which is an increase on the profit for 1986–87 of £187 million, and is in stark contrast to the massive losses of the 1970s. I have already mentioned the efforts of the Clydesdale work force, the ability of the Dalzell plate mill to produce a quality of steel that is unavailable elsewhere — which is vital to our defence industry—and the regular achievement of new production records at Ravenscraig.
During 1987, no fewer than nine of the 15 records for production in different parts of the plant were broken. Significantly, one of the only records that was not broken was that for the coke ovens, which was because no amount of physical ingenuity or effort of the workers could overcome the desperate need for further investment. Those factors explain the profits which now make the BSC such an attractive investment for the private sector.
Inherent in the Bill is the abdication of the Government's responsibility to steel workers and their communities. The potential effect of the productive rundown of the Scottish steel plants after privatisation would be disastrous for the communities to which they belong, not only to the steel workers. It is only natural that in highlighting those issues I should have concentrated on the interests of my constituents, but the implications of the Bill are bad for all steelmaking areas in the long term. This 229 cannot be seen as just a Scottish problem; it poses serious problems for workers, steel consumers and local communities throughout Britain. The transfer from public to private ownership will affect future investment and the strategic trading interests of the United Kingdom.
The Government may win the vote tonight, but the real decisions will be made by the British people over a much longer period. In the long run, the privatisation of steel will be judged not on whether it fits the dogma of Conservative Members, was mentioned in the Tory manifesto or fits the philosophy of free enterprise. Privatisation will be judged according to whether it advances the national interest, provides sufficient investment to maintain the industry, protects a strategic industry through short-term cyclical downturns, continues to satisfy the needs of customers and is responsive to the needs of employees and communities. By all those criteria, the Bill and its sponsors will be found wanting in the long run.
§ 9 pm
§ Mr. Roy Hughes (Newport East)
I thought that my hon. Friend the Member for Motherwell, North (Dr. Reid) was filibustering. In making such a long speech, he has not advanced the cause of Ravenscraig.
his is the second time that the steel industry has been denationalised — or privatised, to give it its more fashionable description. I remind the Chancellor of the Duchy of Lancaster that the last time the steel industry was handed over to private enterprise it was hardly a success. The steel industry lagged behind its European counterparts in technological advancements and suffered from lack of investment, which is why the Labour Government renationalised it in 1967. The industry today, relatively speaking, is thriving, albeit in a slimmed down state.
The taxpayers provided the resources for the rescue operation and essential new investment, and it seems now that the City is hoping to reap the profits. The operation is being carried out with undue haste, first because although British Steel is presently on a high, the industry is cyclical and subject to booms and slumps. Secondly, the Government, in order to pursue their doctrinaire ambitions, must keep up the revenue from various privatisation measures. Steel, being profitable at present, can play its part in the process.
Little concern has been expressed about the sacrifices made by the work force. In 1976 BSC employed 210,000 people and it now employs 72,000. The communities in which steel workers live have suffered badly from closures and redundancies in the past decade. I recall the traumatic experiences at Llanwern in my constituency, culminating in the slim-line operation seven years ago. That works has risen like a phoenix from the ashes, and I pay tribute to Mr. Bill Harrison, the works director, who has done a wonderful job, as has the whole work force.
I find interesting the attitude of the BSC higher management to the Government proposals. This is one of the few occasions when I have to disagree with my right hon. Friend the Member for Blaenau Gwent (Mr. Foot)—after all, we are all a mirror of our experiences. To say that Sir Robert Scholey and the people surrounding him are in favour of the privatisation would be an understatement. Sir Robert Scholey has held important positions over the years in our publicly owned steel 230 industry, but he hardly seems to be a supporter of the principle of public ownership, if his recent utterances are anything to go by. Over the years some Opposition Members have questioned whether the industry was in the right hands. That is a lesson for a future Labour Government.
Sir Robert Scholey's henchman, Mr. Llowarch, at a meeting of the parliamentary Labour party's steel group which I attended, indicated that a privately owned British Steel Corporation, to maximise its profits, would reduce exports below the 40 per cent. now being achieved. That is hardly a patriotic sentiment, bearing in mind our parlous balance of trade. In the same vein, that gentleman believes that British Steel would prefer to reduce capacity to the level where it would have to import steel during periods of high demand in the United Kingdom economy. There is no need for steel workers to look into the crystal; they can read the book. They are being warned about what lies ahead.
Of course, the trade unions' attitude must be considered. Mr. Roy Evans, the general secretary of the ISTC, pointed out that the trade unions have always been in support of public ownership of the industry and have advocated it since the 1930s. That sentiment means little to the Government. I agree with the unions that privatisation should be as a single entity. At least we can be glad for small mercies because the Government appear to accept that principle.
What assurances can the Government give about job security for the future? The Chancellor of the Duchy skated over that issue. Would the Government rescue the steel industry if, yet again, it got into financial difficulties? There is the vital question of the pension rights of the work force, and thousands of people who have been forced to leave the industry. There is a good deal of concern over that issue. I know that there were tremendous problems with the privatisation of the royal ordnance factories. The Government should be more forthcoming. We certainly need more solid assurances.
The Bill marks the end of an era. It will put the industry back into all the uncertainties and inefficiencies of the past. It will have an unsettling effect on the steel communities throughout the country which have suffered so much in recent years. It is an unnecessary Bill and Opposition Members are quite right to oppose it.
§ 9.8 pm
§ Mr. Rhodri Morgan (Cardiff, West)
I rise in my customary position as number eleven in the batting order to bring to the attention of the House some points which have already been made. I shall put them into context and I hope that the Minister will be able properly to consider them. I made some points in an intervention, but I am sure that he did not understand what I was trying to say.
My hon. Friend the Member for Newport, East (Mr. Hughes) referred to a meeting between the parliamentary Labour party steel group and the two most senior managers—the chairman and the chief executive—in the British Steel Corporation. We asked them what changes would be brought about by the privatisation of the industry in the style of management, in the options for investment and in the way they went about their business.
They made four points. My hon. Friend the Member for Newport, East has already mentioned that they thought an export quotient of 40 per cent. was too high and that if they wanted to maximise profit, they would 231 bring that down. Another point they made, which would have serious consequences for the balance of trade, was that they would not want to run the industry at a capacity capable of meeting all demands. It is a cyclical industry. They would want to use imports at times of big demand because that would be more profitable than maintaining a capacity which would cover all states of demand. I hope that the Minister will deal with the consequences of that for the balance of payments.
Thirdly, they mentioned that there would be an attempt to buy stockholders so as to reduce competition in the middleman sector of the industry. The Minister must give attention to that. Is this what privatisation is about—the reduction of competition in the wholesaling part of the industry? Does he give credence to that suggestion? Does he think that it is worth supporting? Is privatisation about taking greater control of the wholesale part of the industry? Will that be good for consumers or will it simply give greater power to manipulate prices for the benefit of profit but not for the consumers of steel?
The last point that they made was one that I think we would all agree with, that finishing end investment should take priority over steelmaking investment for the foreseeable future. That is not controversial.
In the last two or three weeks, in the press treatment of privatisation, two other mysterious announcements have been made by Sir Robert Scholey. I hope that the Minister will deal with these in his reply. The first is that he plans a lot of joint ventures with other EEC steelmakers. Again, will we see a great reduction in competition throughout Europe if future investment is not contemplated so much by the BSC on its own but only for joint ventures with the Italian, French or German steelmakers in plate mills, section mills or whatever? Will this lead to a reduction in competition which will not benefit consumers? After all, we hoped that privatisation might bring benefits for consumers, if the Government meant what they said.
There has also been a strange reference by Sir Robert to workers' shares. He has said that he wants some form of employee share ownership within the industry on a long-term basis, where workers would not have the option of selling their shares. We asked the steel unions if they knew anything about this and they said that BSC had not said a word to them. What kind of privatisation is it which is presented constitutionally to the House, with other bits being leaked to the press which have not been discussed properly with the trade unions? The impression is that the interests of the workers are paramount, yet the trade unions have not been consulted. Is it part of the kidology with which the measure is presented?
We are told that privatisation is supported by workers and that it will benefit consumers. Yet it will really mean a reduction in competition, and, through a phoney mechanism which has not been discussed with the trade unions, workers will be told, "You will love this. We will not ask your permission to do it but you will have funny money shares which you will not be able to sell. That is why we have not bothered to consult the trade unions about it, because they might have had strong views."
That is not a good way to approach the privatisation of such an important industry. It reveals that the Government are in a rush to privatise the steel industry. I was interested in the comments of the hon. Member for Taunton (Mr. Nicholson) who made the point that this was not in the Queen's Speech or in the Conservative manifesto. The measure has been brought in because of 232 problems with electricity and water privatisation. The hon. Member for Taunton was right to suspect that it has been slotted in well ahead of schedule, long before it was planned and long before it is proper from the point of view of investment. It is a rush job. There is every danger that it will be a botched job. For instance, for how long has the British Steel Corporation been making a profit? Roughly 18 months. Its finances are healthy and its performance has been magnificent. There is no question about that, but it has been in profit for only 18 months.
Would an investor honestly think it proper to take on an industry that has been in loss for most of the past 15 years and suddenly makes a profit once in that time? It has been helped by the fact that many of its investments have turned out to be very good and currency movements have turned in its favour, with the pound — deutschmark — dollar triangle working exactly right for most of BSC, barring the tubes division.
On the basis of 18 months' profitability, would it not have been proper to hang on for about three years of solid profitability before thinking about its sale? Its absence from the Conservative manifesto indicates that. There would be a much healthier price-earnings ratio after three or four years of continuous profits, and the investors and taxpayers could see how BSC had resisted changes in currencies and the trade cycle. If there is to be a downturn in the economy, as most commentators believe there will be next year or the year after, how will British Steel respond to that? Will it still be profitable, or is this sale an example of political opportunism, combined with "short-termism" in the City?
Although the Government will probably be able to sell British Steel this year, will they get the proper price for it? They will get the proper price only when purchasers can see three years or four years of continuous profitability. If the sale has to wait until the next general election, so much the better—for the taxpayers, who will know that they are getting the proper price, and for investors, who will know they can put a reasonable valuation on the industry. They would see that this is not just a fly-by-night job, dreamed up to fill the gap left this year because of the Government's difficulties with the privatisation of electricity, and because they do not know what to do about the nuclear power programme and the electricity industry, as they cannot privatise both. They are having difficulties with the water industry over splitting the regulatory side from manufacture. That is political opportunism. The Government needed a privatisation in this financial year. Steel made a good profit so the Government said, "Let us pull a rabbit out of a hat. Let us bring the steel industry down the slope to privatisation."
But the Government will not get a proper price-earnings ratio for the sale of BSC because the record of profitability is so short. That is why I believe privatisation now is an appalling way to deal with an asset of huge importance to taxpayers and, above all, to the communities that depend on it and the workers in the industry. This unholy rush will leave the management in charge of the industry and determined to shrink it for the sake of profit maximization, rather than to expand it for the good of the country's balance of payments, the communities, and the workers in the industry.
§ Mr. Donald Dewar (Glasgow, Garscadden)
The debate started with the Minister mourning the fact that steel is the 233 stuff of political controversy and is very often in the eye of the storm and subject to pre-emptive strikes from Governments of the Left and the Right. I suppose that that is self-evidently true, but I am not sure that it advances the argument very far.
At times, this has been a slightly quaint debate. For example, the hon. Member for Darlington (Mr. Fallon) appeared momentarily in our midst to argue that those who work in the industry wanted it to be privatised. He offered personal testimony of that fact. I suspect that the hon. Member for Darlington is the sort of man who imagines that his constituents want the poll tax, so I am not entirely convinced by his arguments.
The Minister, in his opening, showed a touching interest in our intentions as a party when we return to power. I have to say to him that the question is not whether it is right to renationalise steel in a few years' time, but why we should privatise it now. Why sell off a major industry in the way that the Government propose? For the right hon. and learned Gentleman to complain about our political approach is a piece of cheek. He smells dogma in our midst. Considering the Prime Minister's ruthless charge, he doth protest too much.
I thought that the Chancellor of the Duchy was in a very illogical position. He gave much space to management achievements within British Steel and how it had triumphed despite what he described as the restraints of the public sector. He went on, very properly, to draw attention to the advances in productivity, efficiency, the export record and a very large number of factors in the undoubtedly excellent performance of the industry in recent years.
If that is common ground, the question that then shouts out for an answer, and was not answered, is why in those circumstances do we privatise. Is the industry unable to modernise itself? Has it got a poor efficiency rating? The answer, of course, is no, and the Minister very fairly said no. We have come through—and many Opposition Members almost personally bear the scars, at least in constituency terms — a dramatic, indeed a traumatic, period, with perhaps 1980 being the low point in that cycle. But in Consett, Corby, Scunthorpe and Workington, and in various places in Wales and Scotland, we have seen the most horrible and horrific social consequences of closure. These have been borne with considerable courage by those communities, which have worked through them, in many cases, to a position of success, which has been recorded in recent figures.
It is extraordinary to remember that in 1974 in my own area, in the south Clyde region, British Steel directly employed 24,500 people, and today it is under 5,000. If one looks at results—and again this point has been made—man hours per tonne of liquid steel have come down in eight years from over 14 to under six. As for profit—and the Minister referred to this with some satisfaction—in 1986–87 it was £178 million, and in the last half-year for which figures are available it was about £190 million.
So again I ask: why the change? Why plunge this industry into confusion and uncertainty? Why must we have privatisation when we have a successful steel industry that is beating some countries such as Germany, where it is already a private sector operation? It really is an odd belief that is offered by the Minister and one or two of his 234 supporters that in some way we want to do it because, while putting the industry into the private sector, we can sanitise it, withdraw it from political controversy and hand it over to the clean, ethical, sharper world of business.
Anyone who looks at the industry, at the politics of the European Economic Community and at the problems that will arise over steel quotas in the next few years will know that there are probably many sacrifices still to be made. There will certainly be attempts to force us into further cuts in capacity. In particular, there are difficult issues with the talk about contraction of another 7 million tonnes in European terms. It is living in the land of make-believe to imagine that somehow steel can be extracted from that political climate and handed over to commercial interests which will run it in some way beyond controversy and in tune with the wider needs of the country.
I do not think that the case has been made out, and certainly, as a Member who comes from Scotland and represents, in this at least, all the steelmaking areas, I can say that there is a deep resentment about the uncertainty and the difficulties that lie ahead after privatisation.
For Ravenscraig in particular—to concentrate on that for a minute or two — we have the so-called guarantee of steelmaking for a seven-year period. This has been presented on occasion as if it were immutable, bankable and copper-bottomed, but of course it is open to considerable qualification, as the Minister has conceded. It is "subject to market conditions", and the Minister says, after all, this was true of the old guarantee. But the difference is a fundamental one. As has been pointed out again and again by the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) in his capacity as Secretary of State for Scotland, under the old arrangements, under the guarantee that is about to expire, it was a political decision that was keeping Ravenscraig safe. It was said again and again that if there was any threat it would have to be considered at Cabinet level. It was that political element, properly paraded as a badge of honour by the right hon. and learned Gentleman, that was the key to the matter.
If that is replaced by what is no more than a business projection in the private sector, without that political backing, it is an illusion to pretend that it is on the same basis as what has existed up to now. I do not believe for a moment that, without that political hold, we can face the future in a privatised steel industry with any great confidence.
I do not want to weary the House with a long history of the relationship between Ravenscraig and the management and higher management of British Steel. However, I was amazed that the Minister failed to understand that there was a problem of credibility in that respect. I do not think that he is a stupid man, although he is many other things. On this occasion, he was being disingenuous, and indeed probably perverse. Anyone—I do him the credit of assuming that he is someone in this respect — who has examined Select Committee reports over the past six or seven years, who has read the press reports and who has met and talked to Sir Robert Scholey, as many of my hon. Friends and I have done, knows that there is an inherent hostility and a feeling that there is an excess of capacity and that for all sorts of geographical and, perhaps, almost mythical traditional reasons it is assumed that Ravenscraig is the plant at risk.
Few believe that that situation will change as if by magic simply because privatisation has been brought in by 235 fiat of the Prime Minister. The hon. Member for Eastwood (Mr. Stewart) recognised that fact at least, and I am grateful to him. He said that the guarantees given were valuable. Perhaps we can compromise on that. They may be worth something, and I am relieved to hear, on the small print, that the guarantees will be included in the prospectus when privatisation comes, if we reach that stage.
I put it to the House that there is still a substantial problem that will not go away and to which any honest hon. Member representing steel interests will have to address himself. What happens now? Are we to turn over the steel industry—Ravenscraig and Dalzell in particular—to a future in which the profit motive rules and in which an opportunity to increase profits from £400 million to £500 million a year will be taken, whatever the social cost and the cost to the public interest? We must ask ourselves the genuine question how we can expect the directors of a public company to reconcile their loyalty to their duties under the Companies Acts with their wider social concerns and economic responsibilities to the community.
The best protection for Ravenscraig or any other steel plant in this country is the defeat of the Bill. Opposition Members aim to retain, if at all possible, a structure that allows sensible balanced decisions in the public interest to be made and controlled in the House. As realists, we have to face the fact that the scheme that the Minister has espoused may be bulldozed through, and there is no doubt that he is determined to pursue that course. If that happens, there will be a great deal of anxiety and dismay in my area and in many others.
I fully understand the arguments advanced by my hon. Friends the Members for Motherwell, North (Dr. Reid) and for Motherwell, South (Dr. Bray) about the report produced by Arthur Young. That report has been with us for only a few days but it is clearly intended as a serious contribution to the debate. It is right as a general principle that this House should consider every option if this misconceived scheme of privatisation is to be pushed through. As my hon. Friend the Member for Motherwell, North argued effectively and forcefully, it would be wrong to slam the door on any contribution to the debate before it has been properly examined, and the report cannot yet have been properly examined.
I resent the Minister's implication that those who have the genuine concerns of Ravenscraig at heart have been rushing around in a desperate search for someone to rubbish good news. If that were true, it would, indeed, be a cynical exercise. However, very few people view privatisation as good news and no one is interested in rubbishing anything. We are interested in finding correct solutions and some protection for a fundamental industry that provides the livelihood of a whole community.
Our opposition is fundamental. If privatisation goes ahead we shall continue to fight to save the industry—whether Ravenscraig or any other major plant. I must protest against the idea that the proper realism shown by my hon. Friends from all parts of the country about the difficulties and dangers should he condemned by Ministers as defeatism or an attempt at knocking copy. Again, it was the hon. Member for Eastwood who recognised the reality of the arguments and the difficulties. The sooner that that kind of common sense prevails in the thinking of 236 Government Front Bench spokesmen, the better for everyone in the debate and in the communities which depend upon the steel industry.
Of course, I accept, as was said by my hon. Friends the Members for Motherwell, North and for Motherwell, South that, with the closure of the hot mill at Ravenscraig, the whole plant will be in great difficulties. That is true. But we do not want the closure of that hot mill. Perhaps the Minister would turn his mind to his guarantee for strip production at Ravenscraig. He referred to 1989 with an air of pride, but 1989 is tomorrow for the steel industry in terms of its planning. The greatest contribution that he could make towards giving some credibility to his good intentions would be to take the decision now that strip mill production should continue at Ravenscraig.
Given British Steel's profitability and record, there is no case for the closure of major capacity. If I may pray in aid an unlikely ally for me, I was interested to see this week in The Economist—a magazine which is not hostile to the idea of privatisation; I would not pretend that it was that there is a survey of the industry and the article concludes:That should not mean closing British plants, now efficiently run and unsubsidised.That is right. There is no such case, whether it be in a nationalised or a privatised industry. That is our approach and that will be our attitude to any threat, whether it be in Ravenscraig or South Wales, in Teesside or any other part of the country where that threat may materialise.
The Under-Secretary of State has a number of questions to answer. There were some extraordinary doubts in the speech of the Chancellor of the Duchy of Lancaster, which was remarkable for what he did not have to say. My hon. Friend the Member for Dagenham (Mr. Gould) asked him specifically about the timetable and form of the flotation. It is right that the Minister should lift the lid of the box a little way and let us see what creepy crawlies are within. It is important that he should be a little franker than his senior colleague was about exactly what is proposed.
Several of my hon. Friends have properly pressed the Minister about the matter of control and ownership. For example, my hon. Friend the Member for Alyn and Deeside (Mr. Jones) fairly and frankly put the point of view of his work force and also raised the whole question of foreign ownership and control in a privatised industry.
§ Mr. Barry Jones
My hon. Friend also heard our views From Wales on what might happen with regard to organisation after privatisation.
§ Mr. Dewar
Yes, indeed. My hon. Friend made a concise and straightforward speech, as is his style, but the point that I was making concerned control and ownership and it is important that the Minister should say something about that.
We know from the statement made in December by the Chancellor of the Duchy of Lancaster that the control or restriction of foreign shareholdings did not instantly appeal. He said that almost in an aside. It is owed to us to know whether there have been second thoughts on that or whether that is the Minister's last word.
I can understand the scepticism of hon. Members from both sides of the House on this issue, given the Government's record. Indeed, that scepticism must be in a remarkably healthy state on the day in which the capitulation over the independence of Britoil has been 237 announced from the Dispatch Box. The whole concept of the golden share has been well and truly devalued. But there are, as my hon. Friend the Member for Dagenham said, other possibilities. For example, there is the 15 per cent. limit in the Rolls-Royce equity.
No one would question the fact that there is genuine public anxiety about the possibility of the kind of opportunistic raid upon a privatised British Steel Corporation that has been carried out, largely in conditions created by Government incompetence, by the Kuwaiti Investment Office on BP. It is important that the Government explain exactly where they stand, and, if the alarming silence in the Chancellor's speech is to be taken as meaning that there will be no control, no attempt at protection or safeguards, I must give warning that that is a serious matter which will be open to widespread criticism far beyond the Opposition Benches.
Our position on privatisation is clear. I make that point because, with all respect to the hon. Member for Gordon (Mr. Bruce)—whose speech entertained me greatly—I have to say that I had considerable difficulty in understanding where he, or indeed his party, stands on the privatisation issue. [Interruption.] I am a simple person: I simplify all great and complex matters, and I shall always think of his party as the Liberal party.
The hon. Gentleman outlined three or four options that might become relevant after privatisation, and was careful to make it clear that he advocated none of them. It may well be said that he could have advocated all of them, and what he said would have been as important and as relevant.
What I found even more remarkable was that the hon. Gentleman was very unclear about his attitude to privatisation itself. Fortunately, those of us with long memories can remember the Liberal party's election manifesto, and also the exchange of letters in Scotland between the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) and myself during the election. In a letter written on 18 May, the right hon. Gentleman made it clear that he was in favour of the privatisation of the steel industry. I suppose that that is no surprise. The Liberal amendment welcomes the Bill becauseit paves the way for the successful flotationof British Steel. After all that, all that I can do is congratulate the hon. Member for Gordon on managing to get himself into the right Lobby at the end of the day, for it seems to me that the confusion in that camp is remarkable.
Let me conclude by saying that I fear that the Government will show a brittle inflexibility on the issue. It is remarkable—this point was fairly made by the hon. Member for Taunton (Mr. Nicholson) — that no mention was made of the measure either in the election manifesto, which I had remembered, or in the Queen's Speech, which I had not remembered until he reminded me. I believe that it has been pushed through with indecent haste.
With a group of my Scottish colleagues, I went to meet the Chancellor of the Duchy of Lancaster shortly after his appointment, in the aftermath of the general election, and we went to see him again in January. He gave us some hope at that time. He went out of his way to say that strategic decisions about investment and structure in the steel industry would not be conditioned by privatization 238 considerations. The impression that was given was of a lengthy time scale. The right hon. and learned Gentleman did not disguise the fact that privatisation was at the end of the road as the Tories saw it, but our clear impression was that it was way down that road, perhaps several years away. That impression was gained not only by me but by all my hon. Friends at that meeting, many of whom are in the Chamber now.
It is extraordinary to discover that we are now debating the Second Reading of this Bill—a Bill which has been introduced with a haste which means that almost every interest will be bulldozed, and which will exclude any consultation, any imagination or understanding of the fears and problems that will arise. The only argument for the Bill can be stated in the language of short-term financial gain; there is no other logic. I also hold that it is hardly an honourable exercise, even in terms of popular capitalism.
I was amused by the suggestion of the Chancellor of the Duchy of Lancaster that investors would be able to form their own judgment on the merits of investment. What will really happen is a ruthless hard sell, glitzy and cynical, with all the ethics of the most primitive of market places—television, advertising and all the drama and promise of profit with no proper consideration of the risks and difficulties.
This is a shoddy measure which promises destabilising uncertainty. It is totally irrelevant to the real interests of the industry, and it is based on dogma. The Labour party is unequivocally, implacably opposed to it, and we shall vote accordingly.
§ Mr. Morgan
On a point of order, Mr. Speaker. Is it in order for the Chancellor of the Duchy of Lancaster to be licking and sealing 28 envelopes during a debate on a very important topic? Will it not give a very bad example to new Members such as myself—reverse Privy Councillors, as we like to refer to ourselves—and is there not an office for the purpose in the Duchy of Lancaster?
§ The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins)
We have had an interesting debate today and to that extent I am delighted to be able to summarise it in the short time available to me. Indeed, I am pleased to have less time, because that has allowed other hon. Members of all parties to make speeches that they would not otherwise have had the chance to make.
I must confess that, having sat here throughout the whole debate, I am fascinated by the fact that although this was supposed to be one of the most controversial issues facing the Scottish Labour party, prior to the windup speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar), there has not been what one might call a full complement of the Scottish Labour party present this evening.
To make progress, I should like to try to summarise the debate—[Interruption.] If Opposition Members would keep quiet, I might be able to answer some of the points that they have raised during the debate. If they are going 239 to shout all the way through, they will not get the answers until they choose to serve in Committee. The sooner they learn that, the better for all concerned.
The hon. Member for Dagenham (Mr. Gould), who opened the debate this afternoon for the Opposition, gave the lie to the new trendy Socialism to which I noticed the hon. Member for Garscadden referred at the culmination of his speech when he talked about "glitzy", show business, television, walking on cliff tops and a variety of other things. He even mentioned red roses which, dare I mention it, were pinched from my right hon. and learned Friend the Chancellor of the Duchy of Lancaster and those other Lancastrians who deserve to wear them—[Interruption.] It is no good Opposition Members ranting. I shall answer the debate in my own way, and if they do not like it they can do the other thing.
The hon. Member for Dagenham raised several questions to which he wanted answers. However, he will understand only to well that many of those questions cannot be answered immediately becaue, as he knows, the Bill is an enabling Bill, and not one to privatise the British Steel Corporation, as it is presently stated. In those circumstances, some of the questions that he asked—for example, about the date of flotation, pension arrangements and share arrangements generally — will be considered, answered and discussed in Committee when we get there.
However, there was one question about the so-called golden share. I emphasise what my right hon. and learned Friend stated: we think that there might be a case for an anti-takeover provision, but we are not yet persuaded that specific restrictions on foreign ownership are necessarily required. On consideration, that view may change, but at the moment that is what it is and what we believe it should be.
The hon. Member for Dagenham gave us the new Socialist leadership's views on life. He thinks that he might renationalise the British Steel Corporation, but does not know how. Despite the image of yuppie Socialism, he is still in favour of clause 4, but is not entirely certain what he will do, or how he will do it, if he comes to renationalise.
The hon. Gentleman suggested that the Ravenscraig-Shotton-Dalzell issue is not one for commercial judgment. We beg to differ. We think that the achievement of the British Steel Corporation has come about because of commercial judgment, which is why we believe it to be important.
My hon. Friend the Member for Pudsey (Sir G. Shaw), who apologised for not being here for the wind-up speeches this evening, made a speech that we all recognise as one of considerable knowledge, having held this post as the Minister responsible for the steel industry before the previous election. My hon. Friend welcomed the Bill and made an effective contribution, especially in his remarks about the hon. Member for Dagenham, whom he squashed most effectively. My hon. Friend, more than most, understands the industry. He asked questions about the European regime; the House will be aware that my right hon. and learned Friend will deal with that matter in detail after this debate.
My hon. Friend the Member for Pudsey and others asked about the so-called writing off of debts. Let me make one thing absolutely clear: no subsidies and no writing off of debts are involved. Anyone who says so has got it entirely wrong.
240 The hon. Member for Gordon (Mr. Bruce) thrashed around looking for options to evade the commitment that he gave in the alliance manifesto during the last election. The hon. Member for Garscadden also made reference to that. We—I suspect that Labour Members share our view—were conspicuously unimpressed by the difficulties he had in changing the view he held at the election. His performance summed up the many alliance and Liberal parties that we presently have in the House.
My hon. Friend the Member for Eastwood (Mr. Stewart) spoke with some knowledge and authority about the issues as he sees them. I intend to answer the points that he and other hon. Members have made.
§ Mr. Atkins
It would help if Labour Members, having posed questions, tried to listen to the answers. At this time of the evening the House would expect a Minister to try to answer the debate. People who have made contributions deserve comment upon them. Labour Members who have asked questions will get some answers if they belt up. [HON. MEMBERS: "Oh!"]
The right hon. Member for Blaenau Gwent (Mr. Foot), who has an emotional and lifelong commitment to nationalisation, made a speech with which I cannot take great issue because of his stance over the years. We will just have to agree to differ over the conclusions he draws. I defer to his experience and knowledge in this issue because he represents a steel constituency and he speaks with authority on the matter. None the less, I disagree with him.
Much reference has been made to the Arthur Young report. The Young report looked at the Ravenscraig-Shotton-Dalzell option, but without, as hon. Members on both sides of the House have said, all the facts. Because of the commercial confidentiality involved in providing the information to Arthur Young, my right hon. and learned Friend believed that it was not right to provide all the facts, and I agree.
It must be borne in mind that the Government must look at the industry as a whole, whereas Arthur Young was commissioned to look at the industry as it particularly related to the Ravenscraig-Shotton-Dalzell option. Incidentally, even the Arthur Young report commented that there was no need for substantial capital expenditure on the RSD option over the next five years. Reference was made earlier to the fact that there should be more capital investment, but even Arthur Young has discounted that argument.
For reasons of confidentiality, Arthur Young was not privy to all the information available to BSC, the DTI and its professional advisers. The Department and its advisers had no hard and fast rule in the early stages about the break-up or whether the corporation should be sold as a single entity. Indeed, Samuel Montagu, which examined the matter closely in the spring and autumn last year, made it quite clear in its conclusions that it was firmly against the break-up of the corporation.
Throughout the debate, reference has been made, especially by the hon. Members for Motherwell, North (Dr. Reid) and for Motherwell, South (Dr. Bray), to the involvement of Shotton in the RSD option. I can do no better than to reiterate what the hon. Member for Alyn and Deeside (Mr. Jones) said, in a number of interventions 241 supported by other hon. Members representing Welsh constituencies, in supporting what Mr. Joe Gibson, the chairman of the joint unions committee at Shotton, said:We feel that our destiny must continue to lie with the big unified BSC and not with any carved-up small units as suggested. We feel that this would be in our best interest and probably be so in the long run for Ravenscraig too.We see our future as staying with the corporation rather than splinter groups. We are happy about our future and we have expansion and good investment".That effectively destroys the arguments by Scottish Members, including the hon. Members for Motherwell, South and for Motherwell, North. The unions disagree with them.
§ Mr. Atkins
The hon. Gentleman is behaving like a headless chicken.
It is also the case that the executive of the local ISTC rejected the studies sponsored by Motherwell district council and backed by local Members of Parliament. Supporters of the idea argued that it would make for a viable, integrated company and remove doubts about the plant's future, but union representatives, particularly from Shotton, doubt the scheme's feasibility. The executive argued that, if British Steel is to be privatised, it should be sold as a single unit. [Interruption.] Opposition Members may not like that, but I am only telling them what they have already been told and what has been expressed publicly by Opposition Members from Wales about what they think of the division as proposed in the Arthur Young report. Hon. Members may not like it, but it happened to be the case.
Let me remind the House of the solemn assurance given by the BSC in December:Subject to market conditions, BSC expects that there will continue to be a commercial requirement for steel making and continuous casting capacity of the five integrated plants for at least the next seven years.That is exactly the same as in the previous two three-year extensions.
My right hon. and learned Friend the Chancellor of the Duchy of Lancaster was right when he suggested that the Labour party is turning over every stone in an attempt to find something nasty to say about the very plant that it wants to keep open. The hon. Member for Motherwell, South has even resorted to seeking advice from so-called Right-wing groups, such as the Institute of Economic Affairs and the Adam Smith Institute. It seems slightly odd that he has to resort to his opponents to try to justify his case. The continual knocking of Ravenscraig and what it stands for is scarcely likely to help Opposition Members, but that is largely what we have come to expect from them.
242 About a month ago, I had the honour to lead a trade mission to Poland, during the course of which I visited Huta Lenina, which is the largest steelworks in the country. It employs over 30,000 people, using equipment more than 30 years out of date. Some of the expert business men who were in the mission with me reckoned that the figure of 30,000 could be cut to 10,000 because that was all that was needed to run the plant more productively, effectively and profitably. [Interruption.]
§ Mr. Atkins
The Poles who met us at the steelworks wanted to know about the British Steel Corporation and why it had achieved such efficiency. They wanted to know what equipment the British Steel Corporation was using — [Interruption.] I am fascinated by Opposition Members. They have made great play of the Bill being controversial and of how concerned and upset they are, and all they can do is giggle and laugh about the issues that they claimed were serious. That sums up the fraudulent, synthetic opposition to this important Bill. We shall not forget the attitude Opposition Members are adopting—[Interruption.]
§ Mr. Atkins
The attitude of the Poles who were running a steel works to the success of the British Steel Corporation is a measure of the scale of the achievement of the work force and management of the corporation and one of the chief reasons why it is right that the corporation should once again be returned to the private sector.
During the debate on the nationalisation of steel in May 1965, the then Minister of Power, Mr. Fred Lee, took as a central theme the following:The crucial test of our proposals is whether they are well designed to meet the challenge of the future to which I have been referring.A subvention by Government and taxpayers of £8.6 billion in public dividend capital since 1967 suggests that those proposals were not as well designed as that Minister suggested.
Later in the same debate, which I had the pleasure of watching from the Gallery, in a rare flash of farsightedness, George Brown said:It has always seemed to me that if it is attempted to impose State control on people who have to earn their living by reference to the profit motive, one is bound to get the worst of all worlds."—[Official Report, 6 May 1965; Vol. 711, c. 1582, 1689.]So it has proved.
If I may return to the theme of the speech made by my right hon. and learned Friend in opening the debate, British Steel must be given the freedom to take its own business decisions. It needs that freedom if it is to be sure of building on the solid commercial base it has now created for itself. It needs to know that it can take decisions quickly, without having to revert to Government at every turn. It needs flexibility and independence if it is to withstand pressure of an increasingly competitive international market. The British Steel Corporation has made outstanding progress in recent years. It has transformed its business into a modern, efficient and profitable organisation, which can compete successfully in world markets.
Hon. Members who understand the steel industry know full well what has been achieved in recent years. If they 243 deny the success of the achievements of the work force and management, they fly in the face of the facts. I recognise that the corporation was not restored to health without a painful process of rationalisation; it would have been less painful, perhaps, if the necessary steps had not been shortsightedly delayed. My right hon. and learned Friend has described the efforts that have been made and the splendid results that have been achieved. I join him in congratulating the management and work force of the corporation on those results.
A number of the points raised by right hon. and hon. Members on both sides deserve and will get consideration as the Bill goes through Committee. But our record on privatisation, of British Aerospace and a variety of other companies—Rolls-Royce, the British Airports Authority—has been more successful than anyone would have expected, and gives the lie to the suggestion by Opposition Members that the British Steel Corporation will be anything less than a great success in the private sector. The time has come to embark on the next step in the transformation of the corporation into a successful commercial enterprise and to return British Steel to its right and proper place—the private sector. The Bill will pave the way for that step, and I commend it to the House.
Question put, That the Bill be now read a Second time: —
§ The House divided: Ayes 280, Noes 219.246
|Division No. 192]||[9.59 pm|
|Amos, Alan||Dicks, Terry|
|Arbuthnot, James||Dorrell, Stephen|
|Arnold, Jacques (Gravesham)||Douglas-Hamilton, Lord James|
|Arnold, Tom (Hazel Grove)||Dover, Den|
|Atkins, Robert||Dunn, Bob|
|Baker, Rt Hon K. (Mole Valley)||Durant, Tony|
|Baker, Nicholas (Dorset N)||Dykes, Hugh|
|Banks, Robert (Harrogate)||Eggar, Tim|
|Barnes, Mrs Rosie (Greenwich)||Emery, Sir Peter|
|Batiste, Spencer||Evans, David (Welwyn Hatf'd)|
|Bennett, Nicholas (Pembroke)||Evennett, David|
|Bevan, David Gilroy||Fallon, Michael|
|Biffen, Rt Hon John||Farr, Sir John|
|Boscawen, Hon Robert||Favell, Tony|
|Bottomley, Mrs Virginia||Fenner, Dame Peggy|
|Bowis, John||Field, Barry (Isle of Wight)|
|Brandon-Bravo, Martin||Fookes, Miss Janet|
|Buchanan-Smith, Rt Hon Alick||Forman, Nigel|
|Burt, Alistair||Forsyth, Michael (Stirling)|
|Butler, Chris||Forth, Eric|
|Butterfill, John||Fowler, Rt Hon Norman|
|Carrington, Matthew||Fox, Sir Marcus|
|Cartwright, John||Franks, Cecil|
|Chalker, Rt Hon Mrs Lynda||Freeman, Roger|
|Chapman, Sydney||Fry, Peter|
|Chope, Christopher||Gale, Roger|
|Churchill, Mr||Gardiner, George|
|Clark, Dr Michael (Rochford)||Garel-Jones, Tristan|
|Clark, Sir W. (Croydon S)||Gill, Christopher|
|Clarke, Rt Hon K. (Rushcliffe)||Gilmour, Rt Hon Sir Ian|
|Colvin, Michael||Goodhart, Sir Philip|
|Conway, Derek||Goodlad, Alastair|
|Coombs, Anthony (Wyre F'rest)||Goodson-Wickes, Dr Charles|
|Coombs, Simon (Swindon)||Gow, Ian|
|Cope, John||Gower, Sir Raymond|
|Cormack, Patrick||Grant, Sir Anthony (CambsSW)|
|Couchman, James||Greenway, Harry (Ealing N)|
|Currie, Mrs Edwina||Greenway, John (Ryedale)|
|Curry, David||Gregory, Conal|
|Davies, Q. (Stamf'd & Spald'g)||Griffiths, Sir Eldon (Bury St E')|
|Davis, David (Boothferry)||Griffiths, Peter (Portsmouth N)|
|Day, Stephen||Grist, Ian|
|Devlin, Tim||Ground, Patrick|
|Dickens, Geoffrey||Gummer, Rt Hon John Selwyn|
|Hamilton, Neil (Tatton)||Montgomery, Sir Fergus|
|Hampson, Dr Keith||Morris, M (N'hampton S)|
|Hanley, Jeremy||Morrison, Hon Sir Charles|
|Hannam, John||Morrison, Hon P (Chester)|
|Hargreaves, A. (B'ham H'll Gr')||Moss, Malcolm|
|Hargreaves, Ken (Hyndburn)||Moynihan, Hon Colin|
|Harris, David||Mudd, David|
|Haselhurst, Alan||Neale, Gerrard|
|Hawkins, Christopher||Neubert, Michael|
|Hayward, Robert||Newton, Rt Hon Tony|
|Heathcoat-Amory, David||Nicholls, Patrick|
|Heddle, John||Nicholson, David (Taunton)|
|Hicks, Mrs Maureen (Wolv' NE)||Nicholson, Emma (Devon West)|
|Higgins, Rt Hon Terence L.||Onslow, Rt Hon Cranley|
|Hill, James||Oppenheim, Phillip|
|Hind, Kenneth||Owen, Rt Hon Dr David|
|Hogg, Hon Douglas (Gr'th'm)||Paice, James|
|Holt, Richard||Patnick, Irvine|
|Howard, Michael||Patten, John (Oxford W)|
|Howarth, G. (Cannock & B'wd)||Pattie, Rt Hon Sir Geoffrey|
|Howell, Rt Hon David (G'dford)||Pawsey, James|
|Howell, Ralph (North Norfolk)||Peacock, Mrs Elizabeth|
|Hughes, Robert G. (Harrow W)||Porter, Barry (Wirral S)|
|Hunt, David (Wirral W)||Porter, David (Waveney)|
|Hunt, John (Ravensbourne)||Portillo, Michael|
|Hurd, Rt Hon Douglas||Powell, William (Corby)|
|Irvine, Michael||Price, Sir David|
|Irving, Charles||Raffan, Keith|
|Jack, Michael||Raison, Rt Hon Timothy|
|Jackson, Robert||Rathbone, Tim|
|Janman, Tim||Redwood, John|
|Jessel, Toby||Renton, Tim|
|Johnson Smith, Sir Geoffrey||Rhodes James, Robert|
|Jones, Gwilym (Cardiff N)||Rhys Williams, Sir Brandon|
|Jones, Robert B (Herts W)||Riddick, Graham|
|Kellett-Bowman, Dame Elaine||Ridley, Rt Hon Nicholas|
|Key, Robert||Ridsdale, Sir Julian|
|Kilfedder, James||Rifkind, Rt Hon Malcolm|
|King, Roger (B'ham N'thfield)||Roberts, Wyn (Conwy)|
|Kirkhope, Timothy||Rossi, Sir Hugh|
|Knapman, Roger||Rost, Peter|
|Knight, Greg (Derby North)||Rowe, Andrew|
|Knox, David||Rumbold, Mrs Angela|
|Lamont, Rt Hon Norman||Ryder, Richard|
|Lang, Ian||Sackville, Hon Tom|
|Latham, Michael||Sayeed, Jonathan|
|Lawrence, Ivan||Scott, Nicholas|
|Lee, John (Pendle)||Shaw, David (Dover)|
|Leigh, Edward (Gainsbor'gh)||Shaw, Sir Giles (Pudsey)|
|Lennox-Boyd, Hon Mark||Shaw, Sir Michael (Scarb')|
|Lightbown, David||Shephard, Mrs G. (Norfolk SW)|
|Lilley, Peter||Shepherd, Colin (Hereford)|
|Lloyd, Sir Ian (Havant)||Shepherd, Richard (Aldridge)|
|Lloyd, Peter (Fareham)||Shersby, Michael|
|Lord, Michael||Sims, Roger|
|Lyell, Sir Nicholas||Skeet, Sir Trevor|
|Macfarlane, Sir Neil||Smith, Tim (Beaconsfield)|
|MacKay, Andrew (E Berkshire)||Soames, Hon Nicholas|
|Maclean, David||Speed, Keith|
|McLoughlin, Patrick||Speller, Tony|
|McNair-Wilson, M. (Newbury)||Spicer, Sir Jim (Dorset W)|
|McNair-Wilson, P. (New Forest)||Spicer, Michael (S Worcs)|
|Madel, David||Squire, Robin|
|Malins, Humfrey||Stanbrook, Ivor|
|Mans, Keith||Steen, Anthony|
|Marshall, John (Hendon S)||Stevens, Lewis|
|Marshall, Michael (Arundel)||Stewart, Allan (Eastwood)|
|Martin, David (Portsmouth S)||Stewart, Andy (Sherwood)|
|Mates, Michael||Stokes, John|
|Maude, Hon Francis||Stradling Thomas, Sir John|
|Mawhinney, Dr Brian||Sumberg, David|
|Maxwell-Hyslop, Robin||Summerson, Hugo|
|Mayhew, Rt Hon Sir Patrick||Tapsell, Sir Peter|
|Meyer, Sir Anthony||Taylor, Ian (Esher)|
|Miller, Hal||Taylor, John M (Solihull)|
|Mills, Iain||Taylor, Teddy (S'end E)|
|Miscampbell, Norman||Tebbit, Rt Hon Norman|
|Mitchell, Andrew (Gedling)||Temple-Morris, Peter|
|Mitchell, David (Hants NW)||Thompson, D. (Calder Valley)|
|Monro, Sir Hector||Thompson, Patrick (Norwich N)|
|Thorne, Neil||Watts, John|
|Thornton, Malcolm||Wheeler, John|
|Thurnham, Peter||Whitney, Ray|
|Townend, John (Bridlington)||Widdecombe, Ann|
|Townsend, Cyril D. (B'heath)||Wiggin, Jerry|
|Tracey, Richard||Wilshire, David|
|Tredinnick, David||Winterton, Mrs Ann|
|Twinn, Dr Ian||Winterton, Nicholas|
|Vaughan, Sir Gerard||Wolfson, Mark|
|Waddington, Rt Hon David||Wood, Timothy|
|Wakeham, Rt Hon John||Woodcock, Mike|
|Walden, George||Yeo, Tim|
|Walker, Bill (T'side North)||Young, Sir George (Acton)|
|Walker, Rt Hon P. (W'cester)||Younger, Rt Hon George|
|Ward, John||Tellers for the Ayes:|
|Wardle, Charles (Bexhill)||Mr. Alan Howarth and|
|Warren, Kenneth||Mr. Kenneth Carlisle.|
|Abbott, Ms Diane||Dunnachie, Jimmy|
|Allen, Graham||Dunwoody, Hon Mrs Gwyneth|
|Alton, David||Eadie, Alexander|
|Anderson, Donald||Eastham, Ken|
|Archer, Rt Hon Peter||Evans, John (St Helens N)|
|Armstrong, Hilary||Ewing, Harry (Falkirk E)|
|Ashdown, Paddy||Ewing, Mrs Margaret (Moray)|
|Ashley, Rt Hon Jack||Fatchett, Derek|
|Ashton, Joe||Faulds, Andrew|
|Banks, Tony (Newham NW)||Fearn, Ronald|
|Barnes, Harry (Derbyshire NE)||Fields, Terry (L'pool B G'n)|
|Barron, Kevin||Fisher, Mark|
|Battle, John||Flannery, Martin|
|Beckett, Margaret||Flynn, Paul|
|Bell, Stuart||Foot, Rt Hon Michael|
|Benn, Rt Hon Tony||Foster, Derek|
|Bennett, A. F. (D'nt'n & R'dish)||Foulkes, George|
|Bermingham, Gerald||Fraser, John|
|Bidwell, Sydney||Fyfe, Maria|
|Blair, Tony||Galbraith, Sam|
|Blunkett, David||Garrett, John (Norwich South)|
|Boateng, Paul||Garrett, Ted (Wallsend)|
|Boyes, Roland||Gilbert, Rt Hon Dr John|
|Bradley, Keith||Godman, Dr Norman A.|
|Bray, Dr Jeremy||Golding, Mrs Llin|
|Brown, Gordon (D'mline E)||Gould, Bryan|
|Brown, Nicholas (Newcastle E)||Graham, Thomas|
|Brown, Ron (Edinburgh Leith)||Grant, Bernie (Tottenham)|
|Bruce, Malcolm (Gordon)||Griffiths, Nigel (Edinburgh S)|
|Buchan, Norman||Griffiths, Win (Bridgend)|
|Buckley, George J.||Grocott, Bruce|
|Caborn, Richard||Hardy, Peter|
|Callaghan, Jim||Harman, Ms Harriet|
|Campbell, Ron (Blyth Valley)||Hattersley, Rt Hon Roy|
|Campbell-Savours, D. N.||Heffer, Eric S.|
|Clark, Dr David (S Shields)||Henderson, Doug|
|Clarke, Tom (Monklands W)||Hinchliffe, David|
|Clay, Bob||Hogg, N. (C'nauld & Kilsyth)|
|Clelland, David||Home Robertson, John|
|Clwyd, Mrs Ann||Hood, Jimmy|
|Coleman, Donald||Howarth, George (Knowsley N)|
|Cook, Frank (Stockton N)||Howell, Rt Hon D. (S'heath)|
|Cook, Robin (Livingston)||Howells, Geraint|
|Corbett, Robin||Hoyle, Doug|
|Cousins, Jim||Hughes, John (Coventry NE)|
|Cox, Tom||Hughes, Robert (Aberdeen N)|
|Crowther, Stan||Hughes, Roy (Newport E)|
|Cryer, Bob||Hughes, Sean (Knowsley S)|
|Cunliffe, Lawrence||Hughes, Simon (Southwark)|
|Cunningham, Dr John||Illsley, Eric|
|Dalyell, Tam||Ingram, Adam|
|Darling, Alistair||Janner, Greville|
|Davies, Ron (Caerphilly)||John, Brynmor|
|Davis, Terry (B'ham Hodge H'l)||Johnston, Sir Russell|
|Dewar, Donald||Jones, Barry (Alyn & Deeside)|
|Dixon, Don||Kaufman, Rt Hon Gerald|
|Dobson, Frank||Kinnock, Rt Hon Neil|
|Doran, Frank||Kirkwood, Archy|
|Douglas, Dick||Lambie, David|
|Duffy, A. E. P.||Lamond, James|
|Leadbitter, Ted||Randall, Stuart|
|Leighton, Ron||Redmond, Martin|
|Lewis, Terry||Rees, Rt Hon Merlyn|
|Litherland, Robert||Reid, Dr John|
|Livingstone, Ken||Richardson, Jo|
|Livsey, Richard||Roberts, Allan (Bootle)|
|Lloyd, Tony (Stretford)||Robertson, George|
|Lofthouse, Geoffrey||Robinson, Geoffrey|
|McAllion, John||Rogers, Allan|
|McAvoy, Thomas||Rooker, Jeff|
|McCartney, Ian||Ross, Ernie (Dundee W)|
|Macdonald, Calum A.||Rowlands, Ted|
|McFall, John||Ruddock, Joan|
|McKay, Allen (Barnsley West)||Salmond, Alex|
|McKelvey, William||Sedgemore, Brian|
|McLeish, Henry||Sheerman, Barry|
|McNamara, Kevin||Sheldon, Rt Hon Robert|
|McTaggart, Bob||Shore, Rt Hon Peter|
|McWilliam, John||Short, Clare|
|Madden, Max||Skinner, Dennis|
|Mahon, Mrs Alice||Smith, Andrew (Oxford E)|
|Marshall, David (Shettleston)||Smith, C. (Isl'ton & F'bury)|
|Marshall, Jim (Leicester S)||Smith, Rt Hon J. (Monk'ds E)|
|Martin, Michael J. (Springburn)||Snape, Peter|
|Martlew, Eric||Soley, Clive|
|Maxton, John||Spearing, Nigel|
|Meacher, Michael||Steinberg, Gerry|
|Meale, Alan||Stott, Roger|
|Michael, Alun||Strang, Gavin|
|Michie, Bill (Sheffield Heeley)||Straw, Jack|
|Michie, Mrs Ray (Arg'l & Bute)||Taylor, Mrs Ann (Dewsbury)|
|Miilan, Rt Hon Bruce||Taylor, Matthew (Truro)|
|Mitchell, Austin (G't Grimsby)||Thompson, Jack (Wansbeck)|
|Moonie, Dr Lewis||Turner, Dennis|
|Morgan, Rhodri||Vaz, Keith|
|Morley, Elliott||Wall, Pat|
|Morris, Rt Hon A. (W'shawe)||Wallace, James|
|Morris, Rt Hon J. (Aberavon)||Wardell, Gareth (Gower)|
|Mowlam, Marjorie||Welsh, Andrew (Angus E)|
|Mullin, Chris||Wigley, Dafydd|
|Murphy, Paul||Williams, Rt Hon Alan|
|Nellist, Dave||Williams, Alan W. (Carm'then)|
|Oakes, Rt Hon Gordon||Wilson, Brian|
|O'Brien, William||Winnick, David|
|O'Neill, Martin||Wise, Mrs Audrey|
|Orme, Rt Hon Stanley||Worthington, Tony|
|Patchett, Terry||Wray, Jimmy|
|Pike, Peter L.||Tellers for the Noes:|
|Primarolo, Dawn||Mr. Frank Haynes and|
|Quin, Ms Joyce||Mr. Ray Powell.|
§ Question accordingly agreed to.
§ Bill read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).