Below is the text of the statement made by Eric Varley, the Secretary of State for Industry, in the House of Commons on 22 March 1978.
With your permission, Mr. Speaker, and that of the House, I should like to make a statement about the British Steel Corporation.
As my right hon. Friend the Prime Minister told the House on 28th February, the Government have been conducting a study in depth of the medium and longer-term position of the British Steel Corporation. There has recently been much public concentration on the Corporation’s likely losses in 1977–78. As I have told the House, these losses result from the worst crisis in the world steel industry for more than 40 years and one in which the BSC’s overseas competitors are suffering in common with the Corporation.
Our review has now been completed. Close consultations have taken place with the Corporation and the TUC steel committee. We have also taken account of the reports of the Select Committee on Nationalised Industries. The Government’s conclusions are set out in a White Paper which is being published today. A separate White Paper will be published soon giving the Government’s response to the Select Committee’s recommendations.
A modern steel industry is vital to an industrial nation. The Government will therefore ensure that a substantial bulk steel-making capacity is available in this country. The BSC plays a key role in supplying our manufacturing industries with the major part of their steel requirements. That must continue.
Our examination has shown that the present world surplus of steel will last for many years and that the sales opportunities for BSC, both at home and overseas, on which the ten-year development strategy of February 1973 was based, are no longer realistic even on the most optimistic assumptions. In present market conditions, the Corporation has substantial over-capacity. In the next few years, considerable additional capacity will become available from large modernisation and expansion schemes already close to completion. A sufficient margin is essential to supply home and export needs when the world economy moves out of recession, and to provide for the unforeseen eventualities which have persistently invalidated previous forecasts. But neither the Corporation nor the country can afford the cost of the mounting overcapacity that would result from unchanged policies.
Accordingly, the BSC has proposed, and the Government have agreed, the following policies. First, modernisation and expansion projects already approaching completion must be finished—for example, Redcar II B and Ravenscraig III. Secondly, substantial investment to improve product quality and so ensure competitiveness in the 1980s must continue. Subject to the conditions in the White Paper, the Corporation hopes to make a start on the installation of continuous casting facilities at Port Talbot in 1978–79.
Very substantial improvements in productivity are also needed if the Corporation is to become viable. The trade unions and local workers’ representatives have a major role to play in this. The TUC steel committee has made clear its commitment to achieving this improvement. For their part, the Government are determined to give full, sustained and public support to steps to achieve improved productivity in BSC and will continue to promote this with both the BSC management and the TUC steel committee.
Only by a common effort can we attain an internationally competitive British Steel Corporation that supplies the steel our manufacturing industries need, a Corporation that provides a secure livelihood for those employed in it while making a proper return on the resources invested by the taxpayer—the efficient, competitive and profitable British steeel industry that we need and are determined to achieve.