Lord Lieutenant, Lord Mayor, High Sheriff, Senior Warden, My Lords, Ladies and Gentlemen.
It is a pleasure for me to be your guest on this great occasion of the Cutlers' Feast with its long and famous history.
In your speech, Senior Warden, you compared the history of Parliament with that of the Cutlers' Company. Both have had some turbulent times.
As we all saw in approaching this Hall tonight, the Cutlers' Feast appears to have attracted some attention and interest. It is not the first time. [end p1]
I am told that in 1756 the Master Elect was sworn in amid the howlings of a rowdy mob which for some days had the town at its mercy. The rioters sent word to the Master Cutler that they proposed to dine at the top table at his Feast and to make what changes they thought proper in the Company's Laws. The Feast was postponed for a fortnight. I am glad that this has not been necessary on this occasion. [end p2] Press release begins
Thank you, Senior Warden, for your interesting speech. You have spoken directly, as Yorkshiremen are wont to do. I prefer it that way. I will try to reply to some of the points you have made so cogently. But first I would like to look at the wider context—our performance as a trading nation.
Our Performance as a Trading Nation
Last year we in Britain exported thirty per cent of our total output. A country which can do that is not inefficient: It is enterprising and it is successful. [end p3]
The United States for all its immense wealth exports only ten per cent of its total output.
Japan with its enormously powerful industry exports only fifteen per cent.
France, despite everything which is said about unfair trading practices, exports only twenty-four per cent of its total output. It had a deficit on its trade last year of £10 billion.
We, on the other hand, had a surplus of more than four and a half billion pounds last year, following the highest surplus ever, in 1981, of £7 billion. Our exports continue to perform very well indeed. [end p4]
The present world trading system—with all its defects—has been greatly to the advantage of the United Kingdom. Let us not cast it away.
Of course, we do take action wherever we can against unjustified trade restrictions, against unfair competition and to cushion the effects of change upon our industries. We take action ourselves and the European Community takes action on our behalf.
I could reel off a whole list of protective measures—on motorcars, video recorders, television sets, numerically controlled machine tools, textiles, Footwear, and the steel industry itself. [end p5]
But let us not forget our successful trading record. It is one which many other countries envy.
Secondly, let us look at the character of our people. I remind you of the striking words of the Mr. GoodwillPresident of Sheffield's Chamber of Commerce in a recent speech:
“… .The real Sheffield is still a city of industrious, skilled people capable of providing a massive range of products from teaspoons and jewellery to rolling mill complexes and railway systems from computer software to confectionery and from silverware to steel, all at a quality second to none… .”
That, Master Cutler, is the spirit which accepts a challenge, which turns change from an enemy into a friend. [end p6]
The Steel Industry
Against that background let me turn to the industry which has, since the Sixteenth Century, been of vital importance to Sheffield—iron and steel and their products.
The prolonged and deep recession which has becalmed all major Western economies has nowhere had a more devastating effect than on the steel industry. World steel capacity today stands at about one thousand million tons, but world demand is below seven hundred million tons. Steel production —in Japan has been at its lowest level for ten years [end p7] —in the United States at its lowest level for thirty years —the German industry is working at only 54 per cent of capacity.
Such has been the collapse in the market for steel.
To make matters worse it has come at a time when more and more of the developing countries are producing steel. Thirty years ago only about thirty countries were steel producers. Today that number has more than doubled—to over seventy. And the trend continues. Indeed, along with some of the companies represented here tonight, I have myself been [end p8] involved, when, eighteen months ago, I visited Mexico for a Summit Meeting. Our Mexican friends were planning to set up a steel plant, and our steel plant contractors were after the business. Of course, you could say that the plant, when finished, would compete with ours. Nevertheless, we as government decided to give our contracting companies every help we could. As the Mexicans were determined to build the steel plant, the important thing was that they should buy it from us rather than from Japan, France or Germany. [end p9]
The story has a happy ending. Davy McKee, one of the great success stories of the Sheffield area, won the two hundred million pound contract; and it is today providing jobs not only in South Yorkshire, but in many other places too. I am delighted to see that both Davy McKee and two other local firms, R. G. Holland and Carbolite Furnaces. Have recently won the Queen's Award for Export Achievement.
You spoke, too, Senior Warden, about the very serious situation of the private sector steel industry. I understand how you feel. [end p10]
But the fact is that both public and private sectors have faced grievous problems, and this is so whether you look at capacity, manpower or market share. My aim, and the aim of the Government, has been to try to keep as much steel making here as we could, and to treat both public and private sectors fairly. For example, you will be familiar with the rationalisation of the joint venture schemes.
There is one point I must add. The steel strike in 1980 did enormous damage to Britain and to the industry as a whole. [end p11]
There is one point I must add. The steel strike in 1980 did enormous damage to Britain and to the industry as a whole. [end p12] We lost orders then, which we have not recovered since. It was a self-inflicted wound.
That is of little comfort to any of us; least of all to those who work in special steel. We are still striving to persuade Europe to extend the quota arrangements to your products. But our European partners are strongly opposed. Therefore, it is no use pretending that the Government can offer early shelter from the fierce competition of our larger and less fragmented rivals in Europe.
You referred critically to the Steel Aid Scheme. But no application for grants under the Scheme has been turned down for lack of funds—indeed [end p13] fifteen companies in Sheffield are benefiting from its assistance to the tune of eighteen million pounds; and much, probably the bulk of the money which the Government are putting into the scheme is going into new investment.
The health of the steel industry, of course, depends critically on the health of the steel using industry, which employs fourteen times as many people.
The Government's success in bringing down inflation will do much to improve the competitiveness of all our steel using industries. Some countries, like France, have chosen to [end p14] subsidise particular industries. We've done some of that too. But our underlying effort has been to curtain public spending, to abate inflation, and to reduce interest rates. That is a policy to benefit all industries, including steel and the steel users. That is the best way to help all our industry to flourish.
Master Cutler, the problem of steel imports did not begin in the aftermath of the steel strike in 1980—let alone in May 1979. The surge in Imports came during the decade of the Nineteen Seventies, when our coasts and [end p15] prices rose faster than those of our competitors.
INDUSTRIAL COSTS
You who run industry know how important it is to keep costs down.
One of your costs is the cost of Government. I want to report to you what we have been doing to reduce it. We too have been cutting down on manpower. We now have the smallest civil service for seventeen years. And in a year's time we will have the smallest civil service since the war. [end p16]
Moreover, it was not this Government which increased the National Insurance Surcharge, of which you rightly complain. We are the Government who cut it, from three and a half per cent to one per cent—putting back into private sector industry £2,000 million a year. It is a tax on jobs and we are on our way to eliminating it.
Senior Warden, I know that you feel strongly about energy costs, particularly electricity prices. But the main energy source for electricity in Britain is coal. And coal is both heavily protected and heavily subsidised. [end p17]
Therein lies a lesson. High subsidies and high protection lead to high prices. To protect one industry can be to harm many others.
We have put more investment than any other Government into coal. My message is that the coal industry must so run its affairs that the benefit in increased productivity from this investment must be passed on in lower prices and cheaper electricity. That would be the best message which coal could bring to Sheffield; and it would best for the future for the coal industry too. [end p18]
Meanwhile, we have helped by reducing electricity prices to heavy users. Since then, according to the CBI's own survey our electricity prices are about the same as the average price paid on the Continent, Unlike most Continental countries, however, we will hold our average price throughout 1983–84. [end p19]
RATES
But in South Yorkshire you have another very high cost to cope with. Here in Sheffield the general rate, at 275 pence in the pound is the highest in Britain this year—a dubious distinction indeed.
The rates bill for some Sheffield firms amounts to as much as £2,000 in rates per employee—that is about one quarter of the average wage. The Sheffield Chamber of Commerce reported last year that one third of its members were thinking of moving to an area with lower rates. And who can blame them if they want to stay in business and their employees in work. [end p20] High government spending, whether central or local, drives away business and destroys jobs.
Senior Warden, do you not think that your members could help to reduce the burden of rates if a greater number of those who know about running industries sought to become district or county councillors? They could then bring to local government that same control of costs, that same insistence on value for money, that same management discipline which they have to apply every day in their own businesses. That would give a boost to business and employment in Sheffield. [end p21]
THE CHALLENGE OF CHANGE
Master Cutler, unemployment is the problem of our time. It is far too high. It concerns us deeply. Here, it is due in part to the shift from traditional industries which made Sheffield famous throughout the world.
If we are to find new prospects and new hope, we must not be afraid of change. The cutlers of Sheffield did not gain their reputation by sticking to old ways but by constantly seeking new ones. In Whiteley Woods, not far from here, stands a memorial to Thomas Boulsover who developed a process of making Sheffield plate 200 years ago. [end p22] It took the industry into the most advanced technology of that time, and into new and expanding markets.
Throughout our history, Britain's inventive genius has very often achieved firsts. Recently we have become concerned about the inadequacy of our research effort in advanced electronics and computers. [end p23]
It is vital to our young people and to jobs, in South Yorkshire and elsewhere, that we should be in the forefront of the new electronics revolution. In the development of great new technologies, we often come to a stage where a fundamental breakthrough is necessary. Today the work is so sophisticated and expensive that many companies, and even whole industries, could not tackle it on their own. [end p24]
In response to the Alvey report we have therefore decided to set up new partnerships in research and development between government and industry and the academic world to do work in four areas of the new information technology where advance is vital if we are to produce the next generation of equipment to rival our competitors. These collaborative projects will be financed jointly by government and industry. This work is so important we believe it justifies investing some £200 million of taxpayer's money over the next five years. [end p25]
I am happy to describe this exciting new venture in Sheffield. The Government funding involved takes place with the cooperation of the Treasury, of which I am First Lord, and to which I have recently appointed a new Civil Service Head, Peter Middleton, who is a son of Sheffield and a graduate of your famous University. Such is my confidence in the products of Sheffield. [end p26]
RECOVERY
So I hope, Senior Warden, that we can look to the future with some optimism.
Steel, and engineering have had a particularly difficult time, and so much of their recovery depends on the success of their customers who turn steel in to the machines which play such a large part in our lives—from the kitchen, to the car, to the ship, to the aero engine. But there is now better news, and we welcome it. Things are looking up. This week's CBI survey showed improved business optimism, improved order books, improved expectations of output and investment, and of export orders and deliveries. [end p27]
Only today one of our great companies, ICI, has published excellent results for the first quarter of the year.
The car industry is back at work again. It would have been better for everyone if it had never come out. In Britain car sales in the first quarter of this year reached am all-time record, and the share of imports was slightly down.
The demand is there. It is up to our factories to get the business. Their success will be our success, and your success in Sheffield too.
Already we see hopeful signs of recovery on the steel industry. In the first quarter of this year steel production—admittedly at a very low level in the last three months of 1982—was up by 38 per cent. And import penetration of our market in January was lower than any time in the last two years. [end p28]
So things are moving ahead. I even note, Senior Warden, that the train which is named after your illustrious office has been speeded up by half an hour in the course of last year.
PERORATION
Senior Warden, no one could stand in this hall on this great occasion without a sense of history and a sense of pride. [end p29]
The pride is the achievement of your forebears whose work, in the words we see in this hall, done by English hands, was unsurpassable by that of any living nation.
Another philosopher, hundreds of years before, said—
“How many I recognise a craftsman? First by the reputation of his ancestors for honesty and sincerity: then by his ability to create something new with an experience that is old” .
Those words might have been written about Sheffield. We must make them true today. [end p30]
Sheffield, like the rest of industrial Britain over the centuries, has continuously fashioned new products out of its long experience.
That capacity to use skills and craftsmanship to anticipate and win future markets, has carried it through lean times to prosperity.
Adapt and prosper—how often you have shown that to be true! [end p31]
Britain is on the move again. We can build up the momentum by our own efforts and enterprise.
A wise businessman, is one who, makes more opportunities than he finds.
This room is full of wise businessmen. I have great expectations of your next chapter of achievement.