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Lord Hylton: My Lords, will the noble Lord draw to the attention of London Transport the track problems that affected the Circle Line yesterday? Will he ascertain from LT its long-term plans to improve the southern section of the Circle Line where there is intense competition between at least three or four lines?

Lord Whitty: My Lords, essentially those are operational problems for the management of London Transport. However, I shall make inquiries about the noble Lord's point in relation to the Circle Line. Our strategy is to provide additional investment for London Transport which has been so sadly neglected in recent decades.

Lord Brabazon of Tara: My Lords, the noble Lord refers to additional investment in London Transport. Can the Minister say what is to happen after 2000, or whenever the mayor of London takes over responsibility for London Transport, when I understand that all government subsidy will cease? Will the future burden then rest upon the London fare-payer or ratepayer? Many people believe that all of the extra money that the Government have offered to London Transport so far will be used to complete the Jubilee Line extension.

Lord Whitty: My Lords, noble Lords will be aware that the Government are looking to a public-private partnership. London Transport is considering that matter at the moment and is due to report shortly to my right honourable friend the Deputy Prime Minister. No decision on the situation beyond 2000 will be made before that report is considered. As regards fare income, clearly that will make a contribution towards the

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investment programme, but there will also be a need for new funds, which is what the PPP discussions are all about.

Earl Russell: My Lords, I declare an interest in asking the Minister whether he is aware that one of the factors that encourages travellers to use cars instead of the Underground is the increasing unreliability of the service. Is he aware that major tube breakdowns are no longer regularly reported even in the Evening Standard? But does he agree that in this case no news is bad news?

Lord Whitty: My Lords, I certainly agree that an increase in the number of breakdowns is bad news and that London Transport has an obligation to address that problem. To do so requires a long-term investment programme which the Government will back.

Lord Blackwell: My Lords, the Minister refers to public-private partnership and the creation of money for investment. The noble Lord may remember that the former government proposed to raise over £1 billion by selling the assets of London Transport and re-investing that money in better services. Unless the Government have better proposals, will they reconsider that proposition?

Lord Whitty: My Lords, the Deputy Prime Minister and his colleagues considered that proposition and drew the conclusion that the way they are proceeding would be the better approach in terms of mobilising funds and delivering the service to Londoners.

Baroness Ludford: My Lords, the Minister jokes about people having an incentive to move out to Reigate. Does the noble Lord accept that the whole quality of life is important in London? It is important to ensure that our towns and cities are good places in which to live and that we keep cities dense and do not spoil the countryside by unnecessary new development.

Lord Whitty: My Lords, I agree with the noble Baroness to that extent. She will know that we would not wish to spoil the countryside by engaging in substantial development, in particular in the crowded areas of the south-east.

Steel Industry and Wales

2.50 p.m.

Lord Roberts of Conwy asked Her Majesty's Government:

    What are the anticipated effects, especially in Wales, of the proposed changes in the steel industry.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, the British steel industry is undergoing a period of extended restructuring to retain its competitiveness in the face of difficult international trading conditions. This will result in the closure of uneconomic plant, together with job losses: some

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2,700 of those have been announced since April. The effect will be to ensure that British steel companies continue to be among the most productive in the world. Although 1,600 of those job losses are in Wales, there are also some encouraging developments in the Welsh economy. From May 1997 to the end of October of this year, the Welsh Development Authority recorded 184 projects, which forecast 14,227 new jobs and safeguarded 4,865 others. Over 6,000 of those new jobs relate to projects recorded in the past seven months alone.

Lord Roberts of Conwy: My Lords, I am grateful to the Minister for that frank and honest reply, depressing though it may be with regard to job losses envisaged. However, can he tell me what is the root problem of the industry? Is it the strong pound, a fall in demand for steel or over-production of steel worldwide? Can he assure us that everything that can properly be done is being done to safeguard the export trade in steel, to stop the dumping of steel in Europe in particular and to preserve jobs not only in the steel industry but in the many manufacturing industries that use steel?

Lord Sainsbury of Turville: My Lords, the industry's present difficulties have many causes. The economic crisis in Asia has contributed to rapidly falling world steel prices--up to 30 per cent. in specific cases. There is global overcapacity. The high exchange rate has also had an impact, although we believe that it is at the right level from the general economic position. The noble Lord can be entirely assured that we are doing everything we can to protect our industry, making certain that subsidies do not take place in other countries.

Lord Bruce of Donington: My Lords, will the Minister give an assurance that the practice of subsidising continental steel companies, at present permitted by the Commission, is rectified with a minimum of delay?

Lord Sainsbury of Turville: My Lords, we are determined that the UK steel industry should not be disadvantaged by illegally subsidised competition. We have consistently pressed for strict rules on subsidies to the steel sector, in particular the rigorous enforcement of the steel aid code by member states, and the stringent monitoring of enforcement by the Commission. I think that that has contributed to a climate in which legal state aids have significantly declined in importance for the UK steel industry.

We are pressing also for equally strict controls for state aid to the steel industry to be incorporated in a successor regime to the steel aid code which expires in the year 2002. We shall be vigilant in ensuring that the British industry is not disadvantaged. We shall investigate quickly any evidence put forward of illegal subsidies. We shall consider what action might be appropriate.

Lord Hooson: My Lords, does the Minister agree that while we are losing 1,700 real jobs in steel in Wales, we are and have been spending hundreds of millions of pounds encouraging inward investment, often from companies from abroad which close outlying factories

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down as soon as any recession appears? Would it not be better for this country to spend a little more time encouraging domestic industry?

Lord Sainsbury of Turville: My Lords, we shall do everything right and proper to encourage inward investment and British companies. We are doing everything we can within the permitted rules to support the British steel industry.

Lord Islwyn: My Lords, does the Minister appreciate--

Lord Renton of Mount Harry: My Lords, perhaps I may--

The Lord Privy Seal (Baroness Jay of Paddington): My Lords, I think that it is the turn of this side to ask a question. There is plenty of time to take all the questions.

Lord Islwyn: My Lords, does the Minister appreciate that the Welsh steel industry is efficient, well managed and has a well motivated, highly trained labour force? It is at present bedevilled by the high value of the pound which has led to a flood of cheap foreign imports into this country. What measures are the Government taking to improve that situation, bearing in mind how vital the future of the industry is to the Welsh economy?

Lord Sainsbury of Turville: My Lords, British steel is to be congratulated on the fact that it has increased productivity per man by nearly 10 per cent. a year for 20 years. Nearly 70 per cent. of UK steel types available today have been developed in the past 10 years to meet demands for stronger, lighter materials. It means that we have a competitive world-class steel industry.

We are taking specific measures to help the industry. The Department of Trade and Industry is supporting a range of activities to improve the steel sector's competitiveness. It has provided grant support through the UK Steel Association and Steel Training Ltd. for a range of products involving bench-marking, education and training. We are currently supporting a sector's challenge project on the training and development needs of steel industry managers into the 21st century; and have funded a recently completed study of the wire and reinforcement sector.

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