HC Deb 25 July 1979 vol 971 cc771-82

11.44 p.m.

The Under-Secretary of State for Industry (Mr. Michael Marshall)

I beg to move, That the draft European Communities (Iron and Steel Employees Re-adaptation Benefits Scheme) Regulations 1979, which were laid before this House on 11 July, be approved. As the House knows, the steel industry is making determined efforts to become profitable. For that to happen it is essential that the entire industry should reach the standards of manpower productivity of our major European competitors. With that end in view, there has been an enormous amount of capital investment in the British Steel Corporation over the past few years. As a result, it will be entering the 1980s with the best technical equipment available. That is a point that the House way well wish to consider. Perhaps in our debates lately we have concentrated on the problems of the industry, but it is with that background—with the best technical equipment that is available—that we look to the 1980s for the British Steel Corporation.

Similarly, the private sector has been intent on investing in new plant to make it fully competitive in its markets. However, as the House readily appreciates, the elimination of old and obsolescent plant inevitably involves reductions in manning, and the Government are very much aware of the human implications of that situation. Indeed, it is the hardship that will result to the individual steel workers that the Government are anxious to overcome and use every means available to alleviate.

The Government regard the iron and steel employees readaptation benefits scheme-ISERBS for short—as an important instrument for helping to reduce the grave social effect of redundancies. We are here tonight to discuss some improvements to that scheme, which will make it even better fitted to meet the needs of redundant steel workers.

The modernisation that the steel industry has undergone is vital to its future. Steel is one of the foundations of an efficient engineering industry and a product that appears in one form or another in half of British exports. It is for these reasons that steel, together with coal, was identified as being an area in need of special post-war assistance, resulting in the formation of the European Coal and Steel Community in 1951. The Community exists to advance economic expansion, the growth of employment and a rising standard of living in member States, and, as the Treaty of Paris puts it, to progressively bring about conditions which will ensure the most rational distribution of production at the highest possible level of productivity while safeguarding continuity of employment ". To that end it makes financial resources available to contribute to the costs of investment, to examine possibilities for re-employing redundant coal and steel workers and also to assist financially these workers whether unemployed, redeployed or retraining.

The United Kingdom, on accession to the Community, negotiated an agreement to take advantage of Community loans and grants for the steel industry. Tonight we are especially concerned with article 56 of the Treaty of Paris, which authorises the Community to provide non-repayable aid, matching Government-supplied funds, to redundant steel workers.

Perhaps I could be more specific. There are three main ways in which assistance has been given to redundant steel workers. First, there are tide-over payments to bring earnings in new jobs up to 90 per cent. of pre-redundancy earnings, and special unemployment benefits payable to those ex-steel workers who are unemployed. Secondly, there are payments during approved vocational training courses, by which means the often highly skilled steel worker can enter another industry equipped with new skills. Thirdly, there are travelling and resettlement grants to encourage mobility within the steel industry.

Over 33,000 steel workers, affected by about 79 closures or reductions in activity, have become eligible for assistance. Not all have needed aid, but to those who have drawn scheme benefits about £27 million has been paid over the past five years. The cost of that is borne jointly by the United Kingdom Government and the ECSC, the latter using funds that have been gathered in levies from the coal and steel industries of the member countries.

That assistance helps to smooth the path of reconstructing the industry to a modern, profitable and efficient producer that can compete effectively in world markets. Equally important, it has proved extremely valuable both by helping those steel workers who have been made redundant while they are finding other employment and by helping to provide in-house training for redeployed workers whereby they can build a new life and a new profession for themselves.

The readaptation agreement between the United Kingdom Government and the European Commission was concluded in September 1973 for an initial period of three years. It was renegotiated under the previous Administration in 1976 for an unlimited period, subject to revision if either party wished.

Amendments were made in 1976 and 1978 to bring certain benefits up to date and to introduce a more convenient method of paying training allowances. At all stages consultation with the main interested parties—the British Steel Corporation, the British Independent Steel Producers Association and the TUC steel committee—has preceded the making of regulations. Such is the case tonight.

We are seeking to consolidate the legislation and to make several amendments to the scheme. The majority of the amendments are technical alterations, which take account of changes in other legislation.

There are also some changes of substance that the Government propose, which will make the regulations more flexible and adapt them to meet the requirements of those who are in greatest need. The European Commission has already agreed in principle to the proposed changes.

Foremost among the changes is the inclusion of a ceiling on previous earnings for the purpose of calculating benefits. This will have the effect of placing a limit on payments to previously highly paid steel industry employees. We propose to base this on twice the limit imposed under the Employment Protection Act provision for an earnings-related lump sum payment to all redundant workers. This will provide for a ceiling of £11,400 per annum.

The amendments also update rates that have not kept up with inflation. Under the scheme, those who remained unemployed after exhausting their national insurance earnings-related supplement received a flat-rate special unemployment benefit for up to 52 weeks. The rate was set at £5 in 1973 and was increased to £9 in 1976. These levels were approximately the amount of earnings-related supplement payable to an unemployed man with average steel workers' earnings. We propose to introduce an automatic adjustment to this rate of benefit in line with future changes in the earnings-related supplement.

The scheme rate is to be set at 90 per cent. of the maximum weekly rate of the earnings-related supplement. On that basis the new rate will be £14.50.

The final amendment of substance involves a minor adjustment to the terms of eligibility for resettlement and removal grants in order to avoid the necessity of calculating in detail the differences in relevant costs of the old employment against those of the new when contributing to the costs associated with transfer to other work with the same steel company.

The aim of the iron and steel employees readaptation benefit scheme continues to be to help to reduce the grave social effects of redundancies which are an unfortunate corollary of the necessary modernisation of the steel industry. By encouraging the movement of labour into new skills, new industries and different regions, the scheme will help to increase competitiveness and efficiency and, in a humane way, help with the problems that face this great industry. I commend the regulations to the House.

11.54 p.m.

Dr. John Cunningham (Whitehaven)

I welcome the introduction that the Under-Secretary of State has given the document. It is as well that we do not follow the procedure in the United States and have speeches read into the record, because the hon. Gentleman's speech would have been longer, since the document runs to 15 closely written pages. It is a complicated document. I do not pretend that I understand every aspect of it. The Under-Secretary would not pretend that he did, either.

My hon. Friend the Member for Neath (Mr. Coleman) and I would like to ask the Minister some detailed questions. We do not share the Minister's view of the way in which the steel industry has been treated by the Government. I shall restrict myself to saying that the handling of the situation at Shotton was not an auspicious beginning for the new incumbents at the Department of Industry.

The Minister of State, Department of Industry (Mr. Adam Butler)

How different is it from the handling by the BSC of matters at Corby?

Dr. Cunningham

The Minister of State knows that the handling of the situation at Corby was dealt with under a procedure in which the steel committee of the TUC and the unions involved agreed to discuss the rundown with the BSC. That was not in breach of a pledge given by the chairman of the BSC or the Secretary of State for Industry, as is the case at Shotton. There are substantial differences in the handling of the situations at Shotton and Corby.

However, I agree with the Under-Secretary's views of the great social consequences of the rundown of industries. Those of my hon. Friends who, like me, represent constituencies with coal and steel interests know only too well the devastating effects of rundowns and closures not only on individual families but on whole communities.

I predict that the Government will face considerable opposition not only from the steel unions but from their political friends in the county and district councils in the Shotton area who are finding that the cuts in public expenditure which they happily supported during the general election campaign are a different matter when they come home to roost in their areas.

I understood the Under-Secretary to say that the proposed amendments to the regulations were all aimed at improving their impact on workers. May we have a categorical assurance that none of the changes will leave any worker in the industry worse off?

Regulation 3 deals with the current earnings payment made under the scheme to bring the current earnings of an eligible steel employee to 90 per cent. of his previous earnings, which are defined as the average of his weekly earnings from employment by a steel company for a period of 13 weeks immediately preced- ing the fourth week before the relevant date. The problem is that that provision disregards the current value of previous earnings. How is that dealt with in the regulations?

There are a number of other matters that I should like to put to the Under-Secretary, but in order to facilitate the business of the House I shall defer to my hon. Friend the Member for Neath, who has major steel interests in his constituency and is associated with the unions involved.

Subject to the answers that my hon. Friend receives from the Minister, and subject to our receiving an assurance that no worker will be worse off as a result of the amendments, we shall be happy to see the regulations proceed.

12 midnight

Mr. Donald Coleman (Neath)

I declare an interest. I am sponsored by my union, the Iron and Steel Trades Confederation, the principal trade union in the steel industry. I wish to raise some matters of concern to fellow members of my union, among them a number of my constituents who were affected by the closure of the Briton Ferry steelworks, which was in the private sector of the industry, in the latter part of 1978.

More emphasis on one matter that has already been raised would not come amiss. Paragraph 3 of schedule 1 to the regulations is concerned with supplementation of current earnings and refers to the weekly payments under the scheme to bring the current earnings of eligible steel employees up to 90 per cent. of previous earnings. Previous earnings are defined as the average of the employee's weekly earnings from employment by a steel company for a period of 13 weeks immediately preceding the fourth week before the relevant date.

The definition disregards the current value of previous earnings. If a steel worker is redeployed or made redundant in the last week of December and there is a 10 per cent. increase in the rates on the following 1 January, that steel worker will be in receipt of only 80 per cent. of the current value of his previous earnings. On the other hand, a working colleague who became redundant or was redeployed some 17 weeks after 1 January would be in receipt of 90 per cent. of his improved earnings. That is a 10 per cent. differential between identical workers.

Three years ago, my union asked the then Labour Minister to provide for cost of living adjustments to the ISERBS—the Iron and Steel Employees Re-adaptation Benefits Scheme—payments. This he did. Regulation 12 gives the Secretary of State discretion to increase the weekly payments as he may think appropriate to take account of changes in the cost of living. But such increases can only occur in the second 52 weeks of payments. For the first year, the differential exists.

In addition to what has been done, my union would like to see the definition of previous earnings extended to include any subsequent increases in the monetary value of the previous work performed which would have occurred if the worker had continued in that form of occupation. I ask the Minister to take this matter on board.

A further matter of concern to my union and its members, particularly those involved with these problems, concerns the effect of British legislation on unemployment benefit. Our legislation does not permit the payment of unemployment benefit to people who go on holiday outside Britain. The iron and steel readaptation benefits are linked with unemployment benefits. It follows that the same prohibition applies to both benefits. This results in cases of extreme discrimination within the EEC.

For instance, German, Belgian, Dutch or French steel workers on holiday in Britain receive their full entitlement to readaptation benefits provided by the ECSC treaty, but a redundant British steel worker on holiday in any other EEC country is denied his readaptation benefits.

My union maintains that workers in receipt of ISERBS benefits have a right to them under the Treaty of Paris, wherever they may be within the EEC. We shall if necessary be prepared to take this matter to the European Court of Justice, but we hope that the Government will see the justice of this and will rectify this serious discrepancy and reimburse the very small number of people who have suffered financially from the operation of the present regulations in respect of unemployment benefit.

My last point concerns the somewhat lethargic way in which the agency office in Sheffield makes these payments to those who are entitled to receive them. I have heard and had a number of complaints from constituents of mine who were employed at the Briton Ferry steelworks about the delays that are taking place. These delays are often the cause of hardship. They are certainly the cause of much annoyance.

I hope that what I have said during this debate about these delays will penetrate as far as Sheffield and that the people concerned will understand that they have a responsibility to the people who have been declared redundant in the steel industry.

These regulations are necessary, and they will become the more so in the light of the present Government's antipathy towards the British steel industry, as I fear that there will be many more British steel workers who will have recourse to them in the future.

12.6 a.m.

Mr. Michael Marshall

By leave of the House, Mr. Deputy Speaker, I should like to reply briefly to some of the points that have been made.

The hon. Member for Whitehaven (Dr. Cunningham) raised a general question on which I should like to give some assurance. He really asked whether I could say to the House that no one would be worse off under the amendments proposed by the regulations before us tonight. I can give the hon. Member that broad assurance. The one category that I spelt out quite clearly was the higher-paid employees, where the ceiling, in effect, is £11,400. I think that the hon. Member will realise that there must be some reasonable cut-off point in this matter and that that figure is very much in line with the general level in the European Community of other steelmaking nations.

As for the hon. Member's question on previous earnings, to which his hon. Friend the Member for Neath (Mr. Coleman) also referred, it is correct to say that the provision for a cost-of-living increase is one year after redundancy. I took on board what the hon.

Member for Neath had to say on that point.

I turn briefly to what the hon. Member for Neath said. I am sure that many hon. Members in all parts of the House would join me in saying that we are delighted to have the chance to hear the hon. Member breaking his vow of silence, because we appreciate that his other responsibility has curtailed his activities. We know of his longstanding connection with the Iron and Steel Trades Confederation. I think that tonight the hon. Member gave a good example of the way in which he is able to bat on its behalf.

Having said that, I am sure that the hon. Member will appreciate that what he has raised are a number of detailed points going outside the regulations as amended tonight. But I shall look at them. I undertake to write to the hon. Member. I know that he will also appreciate—this is meant in the friendliest spirit—that having reached agreement with his union within the context of the consultations that have gone into these regulations, it is not proper for me to open up negotiations across the Floor of the House with him. However, I shall look at the points that he made about the differential pay in the first year and what he described as holiday pay discrimination.

Dr. John Cunningham

I understand that the hon. Gentleman cannot reply to the detailed questions tonight. We make no complaint about that. But can he give us some guidance on the way that the Government feel about the matter of principle that my hon. Friend raised? If people are entitled to these payments as part of our membership of the EEC, ought this not to be put right? Could the hon. Gentleman not give us at least that general assurance?

Mr. Marshall

The hon. Member for Whitehaven, in his usual tempting way, wants to reduce this to a simple matter. It is a much more complex matter because of the interrelationship between the domestic benefit, the Community benefit and the balance between the two. We need to look at this with much more care. I will do so and let him have a copy of my findings, having had this exchange tonight.

I recognise that delay in payment has been a problem, particularly in respect of the closure of private sector steel companies. The difficulty is—I, too, am aware of it from constituency cases—that we are talking about an intermix between Treaty of Paris and Treaty of Rome products. Tonight we are speaking about the Treaty of Paris, which concerns essentially the heavy end of the steel industry and which relates much more to the British Steel Corporation than to the private sector. Given that the Commission has to reach a view on these applications to meet roughly half the cost of United Kingdom expenditure, it has to look into each case. There are difficulties, in that steel companies vary in the amount of notice that they give to the Commission. I understand what the hon. Gentleman said and am anxious to do what I can to maintain pressure for prompt settlement, but there are special difficulties there.

I will revert in a little more detail to what the hon. Member for Neath asked about the previous earnings definition. The object of the scheme is to protect the redundant steel worker's actual lost earnings, not some theoretical amount he might have earned had he remained in steel employment. It would be administratively difficult and costly, and it would delay payments, if the hypothetical earnings of all workers had to be followed up. That is part of the answer to the hon. Gentleman's basic question.

I am glad that the hon. Member for Whitehaven sees the importance of these measures. I hope, however, that on reflection he will realise that he is striking a somewhat sour note in suggesting that the Government are not fully aware of the need to use every possible opportunity to overcome the problems of steel closure. He tried to make out that there was a special situation over Shotton. He knows perfectly well that the situation at Shotton is precisely the same as it is at Corby. The type of consultations which began in February on the possibility of closure at Corby have begun at Shotton. The cash limits for the BSC are precisely the same this year as those imposed by the previous Government.

We hope very much that there will be a satisfactory outcome to these consultations, but we are in the process of consultation between the BSC and the steel trade unions, in accordance with the procedure laid down. Therefore, it does not help for any of us to shoot off our mouths too wildly. I accept that the hon. Gentleman is one of the more sensible figures on these matters, but I appeal to him to think carefully, because this will be a matter of great difficulty both to the BSC and to steel trade unions. They need all the help and understanding that they can get. That is why I urge the hon. Gentleman to think long and hard. I do not believe that there is any way in which this matter will be resolved in this place; it will be resolved elsewhere.

Dr. John Cunningham

I am grateful to the Under-Secretary of State for giving way. I do not want to delay the proceedings, except to say that there is a fundamental difference between us on this matter, and no doubt at a more appropriate time we shall return to it.

Mr. Marshall

The hon. Gentleman must speak for himself about the difference. I find it hard to see. These regulations are an essential part of the way in which each and every situation must be looked at on its merits. We must seek to do what we can to help in this difficult shift.

I said at the beginning that the industry is geared with new plant to move into the 1980s. What has been said tonight ignores the progression of closure, which was an inevitable part of securing viability for steel under the previous Gov- ernment. All these matters were foreshadowed, and we are nearing the end of the line of those closures. While that remains the position, the regulations are important and we are right to commend them to the House. We shall examine in detail the matters that have been raised. I am glad to see that a number of hon. Members with an interest in steel have taken an interest in the debate. These occasions are useful to help us to understand the problems and the opportunities that are open to the British Steel Corporation.

Mr. Martin Flannery (Sheffield, Hills. borough)

It is a complicated document. I hope that the hon. Gentleman can clear up a point for me. If a worker leaves one works, for whatever reason, and goes to another but works for less than 52 weeks at the new firm before he becomes unemployed, how will matters affect him?

Mr. Marshall

I should like to take further advice on that matter. The thrust of the regulations essentially relates to a worker moving within the steel company within the 52-week provision. However, I will examine the point and write to the hon. Gentleman.

Question put and agreed to.

Resolved, That the draft European Communities (Iron and Steel Employees Re-adaptation Benefits Scheme) Regulations 1979, which were laid before this House on 11 July, be approved.