§ [Relevant documents: European Community Documents Nos. 6472/93, relating to the privatisation of the German steel company Sachsische Edelstahlwerke GmbH, Freital/Saxony, 9098/93, relating to the restructuring of the Spanish integrated steel company Corporacion de la Siderurgia Integral (CSI), 10074/93, relating to the future of the European Coal and Steel Community Treaty, 10167/93, relating to the restructuring of the Portuguese steel company Siderurgia Nacional (SN), 10276/93 and 10359/93, relating to the restructuring of the German steel company EKO Stahl AG Eisenhuttenstadt, SEC(93) 1434, relating to the restructuring of the Spanish steel company SIDENOR, and 5473/94, a Commission Report on state aid to the steel industry.]
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§ The Minister for Industry (Mr. Tim Sainsbury)I beg to move,
That this House takes note of European Community Documents Nos. 10166/93 and 11317/93, relating to the Italian state iron and steel industry; endorses the Government's decision to support the agreement reached on the package of state aid cases discussed at the Industry Council on 17th December 1993; notes with approval the undertakings secured at the Council regarding the stringent monitoring of approved aids, which will help to ensure that they are not used to disadvantage unaided competitors, the commitment to the strict application of ECSC state aid rules to end subsidisation, the recognition that there will be no further aid to these companies if viability is not achieved, and the early privatisation of most of the companies involved; and endorses this agreement as a useful step towards ending the distortion of state subsidies in the steel industry.The debate is a welcome opportunity to comment on recent developments in the European steel industry and in particular on the package of proposals for state aid to restructure six steel companies, including the Italian company Ilva, agreed at the 17 December Industry Council. The other companies concerned are EKO Stahl and Freital in Germany, CSI and SIDENOR in Spain and Siderurgia Nacional in Portugal.The House will be aware that the proposals were made under article 95 of the treaty of Paris, which requires the unanimous assent of the Council. Several of the proposals have been under discussion for more than a year, during which time some of the companies had continued to receive state support. The continued operation in the Community of inefficient companies propped up by massive illegal state aid has been directly responsible for preserving over-capacity and allowing uneconomic pricing, both of which have put great pressure on our own unsubsidised and highly efficient steel industry.
I should like to emphasise straight away that, throughout the lengthy and complex negotiations on the proposals from the Commission, I, and my officials, kept in close touch with the British Iron and Steel Producers Association and our leading steel producer, British Steel. I can assure the House that we shall continue to consult them, particularly on any reports or proposals that come from the Commission. The Government and the industry have a shared aim: a level playing field with fair trading in steel in the Community. It is, however, much easier to identify and agree on that aim than it is to achieve it.
For the Council on 17 December, the industry and I had four main objectives. First, we wanted an agreement that there should be an immediate end to running cost subsidies. The industry was prepared to draw a line under past unauthorised subsidies, if that was the price of agreement to strict observance of state aid rules in the future. Secondly, we wanted to see adequate capacity reductions at the companies concerned. Thirdly, we looked for explicit acceptance that there would be no "second 76 helpings" for those companies, so that if the planned restructuring failed to restore them to viability, no further aid would be allowed, and further capacity cuts—or, indeed, total closure—would follow. Finally, we were determined to get far more rigorous arrangements for monitoring how the approved aid is spent. We wanted, for the first time, a role for the Council, rather than, as in the past, supervision of the aid being given left entirely to the Commission.
As I have already said, throughout the negotiating process we maintained close contact with the industry. Because the proposals had been brought under article 95, which requires the unanimous assent of the Council, I was able to take a firm line on the conditions that Britain would attach to any agreement. During the negotiations, I had to take account of the support for our proposals from fellow member states and the extent to which we could achieve each of our objectives. I had constantly in mind the consequences for our industry of failure to obtain agreement in the Council of Ministers. It was, I regret, clear that, if there were no agreement, illegal subsidies would continue, probably for at least another year, and we would have made little or no progress on essential capacity reductions.
As a result of our tough stance, our four objectives were substantially agreed. Working with industry advice, we were also able to negotiate the tightening up of aspects of a number of the specific cases, notably EKO Stahl, CSI and SIDENOR. However, I will not pretend to the House that the agreement reached on 17 December was ideal—far from it. I have to say that, during the final stages of the negotiations, we had much less support from our partners in the Community for a better deal than I would have hoped.
The terms finally agreed for Ilva, the Italian company, were not as good as we would have liked, especially on capacity reduction, but they do commit the Italian Government to total privatisation of the company at an early date. Privatisation should help to ensure that its future operations are carried out on a proper commercial basis. The Council did accept other points for which we had pressed—an agreement to end subsidies, no "second helpings" of aid, and stringent monitoring of authorised aid. So we achieved three of our four objectives. As to the industry response to the decision, I can do no better than quote Brian Moffat, chairman of British Steel, who said that the agreement reached in December was
the best in the circumstances.I attach particular importance to the agreement that we reached on stringent and effective monitoring—the text owes a lot to our proposals and is an important step forward. It is much stronger than those in previous restructurings. That monitoring will include visits to the plants to see what is really happening. With the involvement of the Council of Ministers, we can ensure that the views of our industry are taken into account.The conclusions of the 17 December Council set out in some detail the rigorous monitoring procedures. For the first time, as I have said, the Council of Ministers has a role in the monitoring process. The Commission is required to report on its findings to the Council at regular intervals. Indeed, at the industry council on 22 April, the Commission gave an oral report on the first monitoring period—up to 15 March. The first formal written monitoring report was presented on schedule and discussed at an ECSC working group meeting on 3 May. It was 77 prepared by a small team—established within the Commission—that has the assistance of specialist consultants as necessary.
The Commission describes the first report as providing, in effect, the base line against which future developments can be measured, as well as covering some developments since December. Our initial analysis is that, while it represents a useful starting point for future work, it is clear that much more needs to be done. It is evident from the report that, by late April, the Commission had still not received all the information requested from the six companies. There is a particular lack of information from Ilva.
Of at least equal concern, the report also shows that what information has been provided demonstrates that the financial position of some of the companies, notably CSI, SIDENOR and Siderurgia Nacional, has deteriorated further since their restructuring plans were drawn up. It is, however, encouraging to report that, at the ECSC working group meeting last week, Commission officials undertook to take infraction action against countries and companies that transgress the terms agreed.
The Commission has also confirmed that its monitoring team will do more than just examine its member states' regular returns on progress and report them to the Council—the Council previously did not have the benefit of such reports. The team will take, according to the Commission, a proactive role by seeking additional information that is relevant, inspecting plants and verifying—this is particularly important—the information provided and the financial performance of the companies.
At the working group meeting, my officials took a firm line on the need for full information and insisted that failure to meet agreed conditions should be punished. They also insisted that, in accordance with the agreement reached in December, there must be no attempt to provide additional aid to companies with worse-than-forecast results, even if that means further capacity cuts or, as I said earlier, even the total closure of a company.
My Department will also carry out some independent monitoring through our industry contacts and our embassies in the relevant countries. We shall watch carefully to ensure that the Commission team examines all the information that it receives with a critical eye and that any necessary action is taken to ensure that the terms of the article 95 decisions are observed in full.
The December agreement is not the only state aids issue occupying the British steel industry at present, and I took the opportunity of the Council on 22 April to raise two other cases, Klöckner and Saarstahl, which are causing grave concern and which I had already taken up personally with Commissioner Van Miert. The Government regard those cases as important tests of the commitment of the Commission and the Council to apply the rules of the treaty and the steel aids code against state aids to steel producers. I am pleased to report that I had strong support for our views on those cases from a number of colleagues in the Council chamber in April.
The 22 April Council also received an interim report on the progress of voluntary restructuring of the steel industry, as envisaged in the Braun plan. I expressed my disappointment at the slow progress of that exercise, but said that I understood the reluctance of the private sector, unsubsidised industry to commit itself to closures until it is certain that member states and the Commission have 78 shown the political will to enforce the treaty and steel aids code and until it is clear that the conditions attached to the 17 December agreement are being observed.
The Council agreed to an extension of the supporting measures first agreed in February 1993 to facilitate voluntary restructuring until September of this year, but I made it clear that we would want to see firm evidence of restructuring by that time. Any decision to participate in the voluntary restructuring process, either by offering capacity cuts or by helping to finance closures elsewhere in the Community, is entirely a matter for the company concerned.
The United Kingdom steel industry is now universally recognised to be highly efficient and capable of competing successfully anywhere in the world. It is the envy of many other countries. That is an achievement of which the industry can be justifiably proud, although it has sadly meant closures and job losses. It is now the turn of other countries and companies to take their share of the pain.
To conclude, I can assure the House that the Council and the Commission are in no doubt about the importance that the British Government attach to rigorous implementation of the enhanced monitoring procedures agreed in December. I am not assuming that the battle has been won, but I see evidence of progress towards the creation of a fairer single market in steel, a market in which our highly efficient industry will be able to compete effectively and fairly. I commend the motion to the House.
§ Mr. Derek Fatchett (Leeds, Central)I fear that the Minister's speech could have been made on several occasions over recent years. I suspect that if we were to go back and examine copies of Ministers' speeches and ministerial press releases, we would find the same words and sentiments.
There is agreement about two points. First, it is abundantly clear that there is over-capacity in the European steel industry. Secondly, it is plain that the British steel industry is now Europe's most efficient steel industry. It is clear from the figures that our efficiency compares well with that of the steel industries of other countries.
According to figures published in "World Steel Dynamics" in February, Britain has a competitive advantage over the Japanese of nearly 42 per cent., over the Germans of 30 per cent., over the French of 17 per cent., over the Koreans of 17 per cent. and over Taiwan of 23 per cent. It may be relevant to the debate to note that "World Steel Dynamics" could not produce figures for the Italian steel industry. While the Minister may find that amusing, it is the heart of the problem because those figures are simply not available.
The British steel industry is efficient, but it has not enjoyed the support of its Government in recent years. It is clear from the figures that the British steel industry has borne the lion's share of capacity and employment cuts over the past decade.
It is odd for a Minister of a Government who believe in free markets and competition to come to the House on behalf of the British steel industry to argue that the most efficient industry in Europe should be the industry that, in recent years, has been forced to lose jobs and capacity. That has occurred not because of the failure of the management or the work force of the British steel industry. According to all criteria, efficiency and productivity in the 79 industry have increased. The deep problem facing the British steel industry is that the Government have not offered their support for the industry in the way in which other Governments have offered support to their steel industries.
If something is going to happen in the way that the Minister described it, and if real action is to be taken to deal with the subsidy problem, the British steel industry should not lose jobs or capacity. However, what does the Minister say? He says that on 17 December he and the Council of Ministers set themselves four objectives, but those objectives are simply not being met.
As I said earlier, the Minister's comments today could have been made at any time over the past few years. They clearly show the extent to which the Government have failed to deliver to the British steel industry. Let us consider those four objectives—the end of running-cost subsidies, capacity reductions in other countries' steel industries, no "second helpings" and no further aid, and rigorous arrangements for monitoring. The simple fact is that the Minister's speech shows that not one of those objectives has yet been achieved.
Brian Moffat said that the Minister achieved the best deal "in the circumstances" when he went to negotiate on behalf of the British steel industry last December. However, I wonder what that really means. I suspect that it means that the Minister came back with exactly the same set of promises that he has returned with on every other occasion.
Does not the responsibility for the dilemma now facing the British steel industry rest wholly at the Government's door? How can steel managers and steel employees be expected to improve their productivity and efficiency when they know that if they become more competitive in the marketplace, they will be undercut by companies and industries that are operating on a subsidised basis? At the same time, they know that the British Government are so weak and so incapable that they are not delivering on promises to cut subsidies in other countries.
The Government are in a dilemma. We have a strong steel industry, but we have a weak Government. Our real problem is the weakness of our Government. The Government spend their time fighting and arguing among themselves instead of fighting and arguing in Europe for Britain's interests. If more energy, effort and commitment were devoted to fighting for the British steel industry instead of fighting for position within the Conservative party, those working in the British steel industry might have a better deal.
When the Minister goes to the Council of Ministers, he finds himself on this issue—as I suspect on many others—alone and without allies. Is that not surprising given that this Government, under this Prime Minister, claimed that they were going to be at the heart of Europe? They are marginalised on each and every issue. When the Minister was trying to negotiate a tough new regime to remove subsidies, his Government were alienating every other European Government on the issue of qualified majority voting.
§ Mr. SainsburyI wonder whether the hon. Gentleman was listening earlier when I clearly said that it was welcome to hear the strong support that I received from Ministers in the Community at the meeting on 22 April.
80 One might say that I led the charge on Ilva but I had strong support around the table, which was welcome. That does not seem to reflect what the hon. Gentleman is saying.
§ Mr. FatchettMy fear for the British steel industry is that the Minister, as the general leading the charge, will remind many of the first world war. I fear that it will be yet another general who takes his troops into a loss of jobs and a loss of capacity. The simple fact is that the Minister has made the same promises and commitments for years, and they simply have not been delivered.
Britain's way of playing issues and policies in Europe is to find itself in isolation and without friends. The key point of the Minister's speech—I know that many of my hon. Friends want to speak in the debate because they have key constituency interests—is that, despite all the words that he used tonight, all the promises and all the suggestions that he has come back with a better deal, there is a simple question that he must answer: how will this be enforced? Despite all those words, there is no evidence of the rigorous monitoring that will lead to enforcement.
I dare say that in 12 months or two years—if the Government and the Minister survive that long, which is highly improbable—the Minister will come back and say yet again that he has an agreement that will lead to cuts in subsidies and cuts in capacity. While that is happening, further British steel industry jobs and capacity will be lost.
It is time that the Government showed some real commitment to our manufacturing base, recognised the importance of our steel industry and did for our steel industry what other Governments are doing for their steel industries—protect jobs, protect capacity and fight in Europe. We are fed up with Ministers coming back with wishy-washy statements. Now is the time for action and now is the time to protect the British steel industry. We shall be voting against the motion tonight because we believe that the Government have had too long and they have simply failed on the issue.
§ Mr. John Morris (Aberavon)The House is grateful for the opportunity of drawing attention to the progress—or lack of progress—in cutting subsidised steel capacity in the EC, particularly in Italy. I endorse some of the remarks of my hon. Friend the Member for Leeds, Central (Mr. Fatchett); we have been waiting too long for progress.
Nearly 30 years ago, as a young Minister in the Ministry of Power, I visited Italy to look at IRI, the Istituto per la Riconstruzione Industriale—Italy's mechanism to finance industrial development. If I remember correctly, it is one of Italy's inheritances from Mussolini. I visited Taranto, its subsidiary steelworks—today, it is one of our problems. It was an enlightening visit. There was hardly a worker in sight, and it was held up to us as a model.
In the United Kingdom, we have gone through, and paid dearly for, the process of restructuring our steel industry. In my time, I have seen the numbers of workers walking through the gates of the plant at Port Talbot come down from 14,000 to 15,000 a day to fewer than 5,000 now. We have survived.
I should be profoundly dismayed if our highly competitive steel industry, of which we are proud, should, through no fault of its own—it is able to compete with anyone in the world—suffer because of the failure of other parts of Europe to weed out their dead wood and, indeed, to continue to subsidise that dead wood at our expense. I 81 yield to no one, having lived through an awful period of redundancies, in my concern for redundancies themselves. But the funds are there to be utilised. I was glad to read of a decision at last by the Italian Government to deal with more than 10,000 redundancies reported only a few weeks ago in Ilva.
First, we all recognise that there is a huge problem of over-capacity. According to BSC, that over-capacity is in the order of 30 million tonnes of crude steel or 19 to 25 million tonnes of hot rolled products. The Council has agreed to the Commission's plan to reduce the figure by 19 million tonnes. As Commissioner Bangemann confirmed in his letter to the president of the Council on 14 April:
The Community's steel market has deteriorated seriously since November 1992 …The Commission accepts that capacity reductions already decided upon are insufficient.That is an indication of my concern and that of my hon. Friend as to the effectiveness of the present arrangement to meet the decision made at the December meeting or in the discussions that continued in April.The agreement reached in December was extremely disappointing from the viewpoint of non-aided companies such as British Steel. We have all noted the careful words of Mr. Brian Moffat—they were careful because there was nothing else that he, or, indeed, the Minister could accept. The meeting in December was not a success, and the sooner we recognise that the better. The closure timetable will have a negligible effect on supply in 1994 and 1995. The highly subsidised flat product mills of Italy and Spain increased their deliveries to the United Kingdom market in 1993. That is the position.
The balance sheet of proposed closures shows that 2.3 million tonnes are to be closed in the Basque region of Spain. However, the Spanish authorities intend to replace that with a new mill of 1 million tonnes—or possibly two—as soon as possible. That is an intention which the Commission will not resist if at least 51 per cent. of the capital is from private sources. Secondly, there will be a restriction of 1.2 million tonnes at the Taranto strip and plate mills. That will not affect current output.
Thirdly, there will be the demolition or sale of a strip mill at Bagnoli in Italy which has not operated for two years. That accounts for 0.3 million tonnes. The real effect is in fact zero. It is a theoretical capacity reduction in Italy, but it will have no effect on real production potential. To offset that, a new mill will be created with state aid at EKO Stahl in east Germany. It will be limited to 900,000 tonnes per annum—for the moment, I suspect. That is the economics of the madhouse. It is obvious that the great bulk of the desired capacity reduction is to be effected by unaided steel producers.
As for reducing capacity in loss-making, inefficient subsidised companies, the Council meeting on 17 December was not a success. The inevitable result—this is where it affects my constituents—is an effect on the unaided companies which must influence their restructuring and decisions.
There were two good results from the December meeting. I commend the Minister because it was the Government's pressure that brought about the hoped—for improved monitoring system. A great deal is expected from that. I also welcome the fact that the Council resolved that the exceptional measures that had been taken to authorise subsidies would not be repeated in the future—what the Minister described as second helpings.
82 Two other important matters were not in the discussions in December. I tried to follow what the Minister said—as I understand it, he raised the matters at the April meeting. This is significant. The bankrupt German company, Saarstahl, continues to operate at full capacity under German bankruptcy regulations. It has done so for more than a year and the Commission appears to be powerless. The pricing policy being pursued by the company producing rods and bars is seriously disruptive. The Minister said—I have received reports on this—that complaints were made only at the April meeting. Obviously, no decision was taken, or he would have reported it.
The Commission has approved a sort of act of forgiveness—the Klocknerstahl company of Bremen. Last year, the company persuaded its creditors to cancel 40 per cent. of its debts. I draw the attention of the House to what is happening there. That was conditional upon the company undertaking to close one of its blast furnaces. The Commission recently agreed that the closed furnace should be reactivated, as the remaining furnace had technical problems. I am sure that the Minister knows about this and I am sure that he will want to inquire further about whether the Commission is willing for the Belgian company Sidmar, as a condition of its participation in the equity of the company, to be allowed to maintain both blast furnaces and the full capacity of the hot coil mill if compensating capacity reductions can be found elsewhere in the Sidmar/Arbed group.
That is a sorry tale and it appears that the Commission abandoned its responsibility once it agreed to the reopening of the mill. Therefore, we are deeply concerned about the future.
In closing, I shall deal with what the Minister has emphasised is monitoring. It must be adequate and, whether it is by the committee of the Commission or not, it must be able. I would have preferred independent auditors to be employed to ensure that there were regular reports on the physical and financial restructuring.
I was glad to note in today's Metal Bulletin that the Commission is moving in respect of monitoring Ilva, EKO Stahl and Freital. Italy is believed to have withheld its full 1993 balance sheet for Ilva, and refused at the May meeting of the Commission's committee to provide further details. I am glad that there is movement in that respect.
As Commissioner Van Miert said:
The credibility of the whole plan for restructuring …depends on compliance of conditions laid down and agreed to.Obviously, there should be no new subsidies and, where there is privatisation, it should be for the full and fair market value. Those are the problems which affect us and we are deeply unhappy about them. They have a much wider significance than to the steel industry alone, because subsidiaries of some of those companies have been able to tender successfully from Italy and Spain to secure public contracts here—including, for example, the Severn bridge approach roads—by under-bidding United Kingdom contractors. That will go on until there is a level playing field.Those who have paid the price of reconstruction—my constituents—are entitled to a fair chance to produce steel and to become as competitive as anyone else. We want also to be able to sell it in markets that are available.
§ Sir Russell Johnston (Inverness, Nairn and Lochaber)I am sensitive to the fact that there are many hon. Members with direct steel interests in their constituencies who wish to speak, and I shall limit myself to some short remarks.
I shall make two preliminary points. First, I wish that the Government would stop congratulating themselves on their motions. I suppose that they think that if they did not do it, nobody else would. The Government motion says that the House
notes with approval the undertaking secured",as though all Council meetings consisted of the British Government telling the other 11 what to do and getting them to respond to it. It is not always like that at all.Secondly, it is worth remarking in passing—we are approaching the European elections and our place in Europe is being questioned—that the ECSC treaty, by subsidies and industry levies, has helped a great deal to ease the pain of the closure of steel mills and the loss of nearly half a million workers in the past 20 years in the Community, and that is worth saying.
The Minister must recognise that there is a great deal of scepticism about whether that will work, whether the latest round of subsidies will be the last or whether the capacity cuts will be real. That scepticism is against the background which the right hon. and learned Member for Aberavon (Mr. Morris) spelled out, of a painful time all over the United Kingdom. In Scotland, the closure of Ravenscraig was a tragic and painful experience for everybody. It is an expensive package and it works out, I am told, at about 1,250 ecu per tonne of cut capacity. In the case of Portugal, it goes up to 2,183 ecu. I am not complaining about that if it works, but it is essential that it works. The Minister talked about "no second helpings". He could also say, "Stick to the diet" as a complement.
The hon. Member for Leeds, Central (Mr. Fatchett) made most of the arguments cogently and I shall add only one supplementary. The Minister said that monitoring reports would be produced by the Commission and will go to the Council of Ministers. As I understand it, those may not necessarily be made publicly available. The Council of Ministers is not a notoriously transparent and open organisation and I do not think that that makes accountability terrible easy. I would like the Minister to remark on that.
I repeat what the right hon. and learned Member for Aberavon said about the Bremen factory, the Klocknerwerke, which went bankrupt last year. It discovered somehow that the Bremen Land can subsidise that and that it is not against German law. The Commission seems not to be sure whether it should be against European law or not.
My last point is that there is a problem with regard to the countries of central and eastern Europe. We are all agreed that we should do as much as we can to help those countries which emerged from communist totalitarianism. Everybody says that the great thing is not only aid, but trade. What can those countries trade in? They can trade in textiles, agricultural products, armaments and steel. We all know—it does not need me to spell it out—that there are difficulties in all those sectors, but most particularly in steel. What will the Government, and perhaps the Commission, do about that problem, which is boiling away and which one day soon must be faced?
§ Dr. Robert Spink (Castle Point)Before the hon. Gentleman sits down, will he explain what his party's policy might be to secure a level playing field for steel in Europe and to secure the necessary capacity reduction? The Government have been fighting for that successfully. Is his party's policy to go belly-up on steel in Europe as they go belly-up on everything else in Europe?
§ Sir Russell JohnstonI am not trying to be terribly controversial—it is not in my nature. I shall simply say that we will not vote against the motion, as we see no point in doing so. If the Opposition felt that they wished to do so, they should have tabled an amendment spelling out alternatives. We accept that it is a difficult area, but I think that the Government can be questioned and criticised on certain aspects.
§ Mrs. Helen Jackson (Sheffield, Hillsborough)I am grateful for the opportunity to mention the special steel sector, which is of particular relevance to United Engineering Steels, the plants in my constituency and the associated industries in the Sheffield area. That sector of the steel industry provides no less than 70 per cent. of all the special steel supplies for manufacturing industry in the United Kingdom.
There is no question but that, if that crucial sector of the steel industry goes, the UK's manufacturing base will be left without a UK special steel supplier, and that will have a significant effect on the United Kingdom manufacturing base. Therefore, we are not just talking about the steel industry, but about the welfare of the overall manufacturing sector of the United Kingdom.
I remind the Minister—if he needs any reminding—that the special steel sector has retained its profitability through the recession. During the past year, it has suffered from a variety of problems including the rise in the price of scrap metal for electric arc furnaces and the failure of the Government to control satisfactorily the price of energy for major manufacturing enterprises, such as those with electric arc furnace production. That has resulted in an electricity cost which is half as much again as that in the French electric arc steel-making industry.
I remind the Minister that jobs have gone: 200 jobs at UES Aldwarke and 200 jobs at Stocksbridge Engineering Steels in my constituency last year. Significantly, 190 jobs were lost at UCAR Carbon in my area, which is the only United Kingdom manufacturer of graphite electrodes, which are used in the electric arc steel-making enterprise. Special steel no longer has a United Kingdom manufacturer of graphite electrodes, so it has to import them. A drip-by-drip decline is taking place in the special steel capacity. It will have a major effect on the capacity of the United Kingdom manufacturing base.
I see our vote against the Government tonight as one that says that we have no confidence in the Government's policy. Their policy of the past two years has failed. It is one of being the odd man out in Europe. Britain is one country against the Eleven saying that everyone else is acting unfairly and that only we have the right policy for special steel. We say that everyone must come into line. The Opposition feel that the Government have failed to support the steel industry and manufacturing in research, in investment in new environmental technology, in action on energy costs and in action on training.
85 The Minister must realise that the jobs that are disappearing now in my constituency and the surrounding area are those of technicians and engineers. At a time when we are trying to boost our manufacturing base, to put on the dole those highly skilled, highly trained technicians and engineers who have the skills to bring the industry around again must be economic madness. My guess is that our European competitors and partners believe that a policy that allows that to happen in this country is one of economic madness.
All that I have heard today is a promise that more monitoring of the situation in Europe will reap results. We have no confidence that that alone will be enough and we look to a Government who will take major action to support this core element of our manufacturing industry.
§ Mr. Barry Jones (Alyn and Deeside)I support the arguments of my hon. Friend the Member for Sheffield, Hillsborough (Mrs. Jackson) and particularly those of my right hon. and learned Friend the Member for Aberavon (Mr. Morris), who always speaks with great insight into one of Wales' greatest industries—steel.
The debate is about cheating on the continent and the need for fair play for Britain's steel industry. It is fundamentally about manufacturing in Great Britain. Manufacturing is wealth and wealth gives us our national health service, to name but one of the provisions that we expect in a civilised society. I conclude that we must ensure that we in Britain promote and further support our remaining steel plants. We need and we want a powerful and strong British steel industry.
Above all, I want to see Britain great again as an economic power. To be great again as an economic power, we must have a powerful, developing and modern manufacturing industry. Looking back at the period of disastrous stewardship of the then Chancellor of the Exchequer, Sir Geoffrey Howe, and the then Secretary of State for Industry, Sir Keith Joseph, I recall that almost 2.75 million manufacturing jobs in Britain were allowed to drain away. Britain lost its ability to create many of its manufactured goods. We will pay a very heavy price for that in the years ahead.
I know steel to be a bedrock industry. We have made sacrifices in the steel industry and it is as well to consider some of them. Since 1975, 142,000 jobs have disappeared in Britain. That may be a conservative estimate. Certainly there has been a 77 per cent. reduction in the number of jobs in the steel industry. Until four years ago there was a steel works in Clwyd called Brymbo, which had about 1,400 employees. Overnight it was closed. Months later near there I saw a series of heavy, powerful motor trailers taking the remains of Brymbo steelworks—the furnaces and all—to the docks at Birkenhead, there to be transported to the Republic of China. The former Brymbo steelworks is now in part in China producing steel. That is a salutary tale.
There were enormous steel job losses in Wales at the still-great plants of Llanwern and Port Talbot. They are two of the finest steel plants in the world, but they have had their blood and their sacrifices. In my constituency, Shotton steelworks once supported a town or large village of some 14,000 or 15,000 steel workers. Now there are but 1,300 at the works. That again was a grievous blow to manufacturing in Wales.
86 The great plant at Ravenscraig no longer exists. There is no steel making in Scotland at Ravenscraig. It is fair to say that our steel communities have made enormous sacrifices and have taken terrible redundancies. In Deeside there are still more than 3,000 people out of work. Streets, estates and communities suffer long-term unemployment. Such communities throughout Wales and Britain have lost development area status and access to structural funds and they no longer have the iron and steel employees readaptation benefit scheme.
For what have those sacrifices been made? Why have those tens of thousands of redundancies rained down on the British steel communities, with all their grievous social and economic consequences? In Britain, in Wales, in Scotland, in England, and on Deeside there have been sacrifices, closures and redundancies. The debate must send a message to Brussels. It must tell the continental nations who are not playing fair that we want fair play, we want justice, and we want a future. The British steel industry must have backing. We want to see further capacity cuts in Germany, Spain and Italy or else the end of subsidies to inefficient continental plants.
Are Ministers indifferent? I do not want to say that they are, but we have to say that the steel work force in Britain has to be rewarded for its efficiency, its sacrifices and its productivity. The Government have given the coal industry the kiss of death. British steelworkers are not impressed by the Government's handling of the steel industry's problems. We want to enhance, not to curtail, the British steel industry. We do not want more redundancies or any more cuts in our capacity. We do not want any more plant closures.
§ Mr. Roy Hughes (Newport, East)These European Community documents are something of a contrast. Essentially, they concern Italian steel companies and companies in other countries, such as Germany and Spain, which seem to be transgressing EC rules.
I am concerned about their possible effect on British Steel. What has happened in the Italian steel industry has been a direct threat to our domestic steel industry. I have no wish to make a racist attack on the Italians, but they seem to have scant regard for EC rules. As far as I have been able to make out from the documents, Ilva, the Italian steel producer, is wholly owned by IRI, the Italian state holding company which, as my right hon. and learned Friend the Member for Aberavon (Mr. Morris) reminded us, goes back to the days of Mussolini. Like my right hon. and learned Friend, I visited some of those operations more than 20 years ago.
I also learned from the documents that Ilva's debts exceed the value of its assets, which is rather extraordinary. Furthermore, the Minister for Industry tells us that the European steel industry is suffering from substantial over-capacity and depressed prices. I fail to understand why action was not taken earlier to deal with the Italian steel industry. The British steel industry was rationalised well over a decade ago, with all the hardship that that caused. The Government's motion is altogether too smug.
In recent months, I have been pursuing the request by the illegally subsidised Italian steel company Arc-Sipra, which has asked the Department of Transport to put it on its list of approved suppliers. Asset International—a steel company in my constituency—was most concerned about 87 the Italian threat. The Italians wanted to get a foot in our door to dump products in the United Kingdom at prices below cost and to steal our markets. I understand that they have already done so in France. Those tactics could certainly harm Asset International in my constituency, let alone British Steel's Llanwern plant, which is so important to the economy of south-east Wales.
The Department of Transport has acknowledged that approaches have been made, and states that it is considering what action can be taken to exclude companies that are in receipt of illegal state aid.
The Government must take positive action to stop those pirate activities. In those circumstances, is it any wonder that British steelworkers and their trade union are calling on the Government to use their veto to save our steel industry in the same way that the French Government use theirs over agriculture? A campaign is also being launched to urge companies in this country to buy British steel. In the present circumstances, that certainly makes sense.
Unfortunately, the Government have made a difficult situation worse by their decision in January to contract out of the iron and steel employees' re-adaptation benefit scheme—ISERBS. The effects of that Government decision are already being felt in south Wales and other steelmaking areas. Recently, 351 workers were made redundant at Ebbw Vale and Trostre. I know that my hon. Friend the Member for Blaenau Gwent (Mr. Smith) has been very concerned about that.
When those workers requested parity of treatment with other European steelworkers, they were turned down, which means that those 351 redundant south Wales steelworkers will each lose between £10,000 and £15,000. What a disgrace, and what an indictment of the Government's policies. The Minister talks about the industry being successful, but all the workers are getting is a smack in the eye.
§ Mr. Llew Smith (Blaenau Gwent)Is my hon. Friend aware that trade union representatives have met the Government to find out whether they have reconsidered their decision about ISERBS? Is he also aware that the answer was no, which puts those 300 to 350 redundant people in my constituency and in Trostre in a terrible situation, especially as they are in one of the most deprived areas in Wales—an area with some of the worst unemployment in Wales? The jobs coming into the constituency are low-paid, part-time, menial and nonunion, and there is no way that they will replace the jobs lost in the coal and steel industries. The Government's refusal to reconsider their decision is another smack in the face for those workers.
§ Mr. HughesMy hon. Friend describes the position very well. Even at this late stage, will the Minister reconsider his position on the ISERBS scheme? Our steel industry is badly in need of it in the difficult times that are looming.
§ Mr. Michael Bates (Langbaurgh)From recollection, the average cost of ISERBS is £20,000 per steelworker. What advice would the hon. Gentleman give, and what would he say, to a constituent who lost his job but did not work in the steel industry and thus did not qualify for any money? Why should that worker be differentiated from a British Steel worker?
§ Mr. HughesOur steelworkers are entitled to expect parity with steelworkers on the continent. They are asking no more than that, and it seems a pretty fair demand.
Last week, the Conservative party and the Government took a real thrashing in the local elections. They were just about wiped out in Newport, which is a steel-making community.
Our steel communities have suffered greatly. There have been massive redundancies and steel areas in other parts of the country have also been affected. If there is any justice, it is now up to European producers to rationalise their industries and not engage in unfair and illegal trading practices. All our steelworkers are asking for is a level playing field. They are engaged in a lean and fit industry, which can compete in world markets. The Government need to ensure that those workers get proper backing.
§ Mr. Elliot Morley (Glanford and Scunthorpe)This deal does not go far enough, and it is totally unsatisfactory in view of the situation of the steel industry in this country and in Europe.
In the early 1980s, more than 22,000 people were employed in the steel industry in Scunthorpe. Now, it is about 7,000. The Scunthorpe works and the ancillary works of the United Merchant bar mill—UMB—and the Allied Steel and wire rod mill are some of the most efficient works in Europe, but that efficiency has been bought by the jobs of thousands of people and has had a knock-on effect on the local community in Scunthorpe and on all communities dependent on steel.
Steel Action was set up for that reason, and was supported by 25 local authorities, because they can see the threat posed to our steel areas because steel has not been restructured in Europe. As my hon. Friend the Member for Newport, East (Mr. Hughes) rightly said, we have had a decade to do something, but there has been precious little action from the Government to deal with that very real problem.
Not one British steelworker's job should be lost as a result of illegal or inefficient subsidies to other European steelworks. We do not want to see other steelworkers thrown on the scrapheap as our workers have been, but the deal struck should have concentrated more on restructuring, retraining and jobs than on capacity.
The Minister's claim that this successful deal has been welcomed is not borne out by an article that appeared in the Financial Times on 28 March, which stated:
Although Mr. Bangemann's entourage insists it is delighted that the industry has apparently met the European Commission's demands for further steel reductions, in private officials admit the deal may have been little more than a face—saving camouflage.We can see why when we study the details of the deal.Monitoring is one of the key aspects of the motion, but I have heard nothing from the Minister to reassure me that adequate monitoring will be conducted to ensure that steel companies—particularly Italian ones—make capacity reductions properly. I believe that Ilya hid an entire reheating furnace when the Commission was trying to judge its capacity.
I understand that the whole deal went through because of concessions from the United Kingdom Government. Why did the Minister offer them? It is understandable that countries such as Italy should stick out for the best deal for their steel producers and work forces in depressed areas: nevertheless, they are dependent on the total aid package 89 available from the deal. Surely that fact gave the Minister some cards that he should have played more skilfully when the deal was struck.
The deal consists of enormous aid packages, but it does not deal with certain anomalies. For example, Ilva received £1.9 million in illegal subsidies through capital injections in 1991–92. Will those illegal capital injections be taken into account in the overall package? I see no evidence to suggest that that will happen.
As a result of the deal, the cut in production from the Bagnoli hot strip mill is being counted as a capacity reduction of 300,000 tonnes per annum, but that mill has been mothballed for two years. If it is counted in the overall package it will not make any major contribution to capacity cuts.
It is not surprising that the Select Committee on European Legislation said:
The deal struck at the Industry Council was unsatisfactory.It emphasised that the capacity cuts would have little effect on production capacity. I am not surprised that Mr. Moffat, who used his words carefully, described the original deal as a "sham". A study of the small print explains why.Although a capacity reduction of 5.3 million tonnes is supposed to be achieved, because of the examples that I have cited, the actual figure will be nearer 2.5 million tonnes. The price of that reduction will be about £5 billion. That enormous amount of money should have been directed at aids to the work force to help them look for new jobs, and at encouraging alternative employment in depressed areas.
The Minister may talk about effective monitoring, but I understand that the reports that the Commission will produce as a result of the deal will not be made public, but will be secret. That hardly represents effective monitoring. Independent groups will be unable to discover what progress has been made towards capacity cuts.
In Bremen, the local council has bought the strip mill at Klockner. Is that subsidy from the local council illegal? I would not want to criticise that local council, because I understand that it has done what it can to save local jobs for local people. It is interesting to note that a local council in Germany has the autonomy, power and skills to do that, whereas our local councils are being neutered by an over-centralising Government.
The deal does not go far enough to protect the work force of the steel industry. It does not offer the kind of support that is needed for our steel industry, which is the backbone of our manufacturing industry. For 15 years, little support or attention has been given to our manufacturing base. Now we are paying the price for that and witnessing the consequences.
To add insult to injury, ISERBS is to be phased out, as my hon. Friend the Member for Newport, East has said. The very same Minister who sits in the Council of Ministers and votes huge sums of money to our European competitors is taking away money that could aid steelworkers who still face redundancy, many of them as a result of Government inaction in the past 15 years.
The Government's policy in Europe has been a complete failure. It is little wonder that we get such bad deals when we have so few friends in Europe. It is little wonder that we have so few friends, when all we get from the Government is a negative response. We have an opt-out, cop-out Government who care little for our manufacturing base, for building alliances and for the future of our communities that depend on steel.
§ 8.5 pm
§ Mr. FatchettWith the leave of the House, Mr. Deputy Speaker, I shall reply to the debate.
I congratulate my right hon. and learned Friend the Member for Aberavon (Mr. Morris) and my hon. Friends the Members for Newport, East (Mr. Hughes), for Sheffield, Hillsborough (Mrs. Jackson), for Glanford and Scunthorpe (Mr. Morley) and for Alyn and Deeside (Mr. Jones) on the knowledge and experience that they have brought to the debate. It was clear from their contributions that they have an intimate knowledge of the steel industry and the communities based on it.
Anyone who reads the debate in Hansard will be hit by one striking fact; throughout the debate not one Government Back Bencher felt interested enough in the steel industry to speak in defence of the Government's policies. That reflects a deeper—
§ Mr. FatchettOnly in an intervention. We did not hear a speech from one Conservative Back Bencher, which not only reflects the Government's lack of interest in the steel industry, but their deep lack of interest in manufacturing.
§ Mr. BatesSurely our silence reflects our confidence in the Minister's ability to fight our corner in Europe. It was astonishing to listen to speeches from Labour Members who said that they wanted to send a message to Brussels that we want to get tough on subsidies when they will vote against a motion that says just that. What sort of message is that?
§ Mr. FatchettI congratulate the hon. Member, because he must be the only Conservative Back Bencher who can get up and say, with a straight face and without any sense of embarrassment, that he has absolute confidence in his Government. That degree of political skill and sycophancy may do him a lot of good in the future. The underlying fact that has emerged from the debate is that the Conservative party is so inward looking and so deeply split that it does not have time to look up and consider the real issues that face our steel and manufacturing industries.
§ Mr. Llew SmithCan my hon. Friend explain why we should feel confidence in the Government and their so-called defence of the steel industry when that campaign resulted recently in another 159 jobs lost in Ebbw Vale and a similar number lost in Trostre? Does my hon. Friend get the impression that other steel-making countries are laughing at us because we are willing to go along with quotas and regulations, when other countries refuse to do so in defence of their industries? Does my hon. Friend believe that the British Government should defend the steel industry as the French Government are willing to defend their industries?
§ Mr. FatchettThat important point ran through my hon. Friends' speeches, and I shall refer to it later.
§ Dr. SpinkWill the hon. Gentleman acknowledge that I have sat through the debate? I have done so because I wanted to hear the Opposition's alternative policy to the Government's successful policies, which have achieved a level playing field and reductions in steel capacity in Europe for the benefit of our industry. Those policies have not yet been forthcoming.
91 I hope that we shall hear those policies, so that we may have the opportunity to comment on them in our interventions. Will the hon. Gentleman explain whether he follows the example of his hon. Friend the Member for Livingston (Mr. Cook) in calling for public funds to subsidise that sector of British industry? If so, does he have the shadow Chancellor's agreement to that?
§ Mr. FatchettThe hon. Gentleman has an ability to find success where success does not exist. To speak about the success of this Government's policies in relation to protecting the British steel industry very much distorts the truth. [Interruption.]
One of the other themes that ran through the speeches made by my hon. Friends was the Government's attitude towards ISERBS. My hon. Friend the Member for Newport, East (Mr. Hughes) made a telling point about the Government's attitude when he referred to the 351 redundancies at Ebbw Vale and Trostre and said that each employee there will lose £10,000 to £15,000. Does it not tell us a great deal about the Government that, at a time when they introduce tax cuts for the very rich, they can still take from redundant steelworkers rights that they have enjoyed in recent years?
When the hon. Member for Langbaurgh (Mr. Bates) says that those rights are not enjoyed by other people and therefore should not be enjoyed by the steel industry, he reflects, does he not, the attitude of the Conservative party throughout history to any social improvement and change? The Conservative party has always been in favour of levelling down rather than improving. The hon. Gentleman wants to take away from the steelworkers in his constituency the rights that they have enjoyed. Will the hon. Gentleman go round his constituency, telling steelworkers there that they should lose £10,000 to £15,000? Is he doing that?
§ Mr. BatesThe whole House will have heard the hon. Gentleman's statement about the Conservatives being in favour of levelling down, implying that the Labour party is in favour of levelling up. Is he suggesting that all people who lose their jobs ought to have a £15,000 to £20,000 retraining package?
§ Mr. FatchettI wish that I had not given way to the hon. Gentleman for a second time. It was obviously a mistake, because the second intervention was no better than the first.
The nature of Britain's social history is that the Labour party has tried to improve social conditions and the Conservative party has always tried to level down. The hon. Gentleman's comments about the rights of steelworkers were typical of the history of his party and its current ideological position.
The Government's attitude to ISERBS shows a meanness and a weakness on the Government's part.
§ Mrs. Helen JacksonDoes my hon. Friend agree that the statement by the Government in the autumn of last year that the ISERBS scheme was no longer useful to steelworkers in the area was nothing short of disgraceful? Is he aware that no fewer than 4,000 workers—4,000 people—from United Engineering Steels have benefited in the past few years, and that every one of them would endorse the view that the ISERBS scheme has been a major 92 benefit to them in their tragic situation? It is selling our work force short to say that that is no longer useful, when our European competitors are taking steps to extend the scheme for their workers.
§ Mr. FatchettMy hon. Friend is correct, and she makes the argument with telling knowledge about her constituency in the Sheffield area.
The key theme that ran through the speeches of all my hon. Friends and of the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) was the extent to which the British steel industry and the communities based on it have endured significant change and pain in the previous decade. Job losses have damaged communities. My hon. Friends spoke about those communities in Scotland, in Wales, in Humberside and in Teesside, where there have been job losses, great change and great social stress as a result.
All my hon. Friends, and the hon. Member for Inverness, Nairn and Lochaber, said that that pain had not been fairly distributed. It is a pain that has come to an industry which has changed, which has improved, which is now a world leader, but it is a pain that has come disproportionately to British steel, and there is, in the jargon, as my hon. Friends have said, no clear level playing field in terms of competition.
That is the crucial argument that the Minister has to answer. All my hon. Friends said that we had been here before. The debate has taken place before; the issues have been aired in the House and outside before. The British steel industry cazn compete, but it cannot compete against subsidies and unfair competition. What will the Government do to ensure that the agreement that was reached in December, and has been further monitored and discussed subsequently, will be kept and implemented? That is the crucial question.
The words that came through from my hon. Friends were words of scepticism, because they wanted to know exactly what the Government intend to do if there is no delivery in terms of surplus capacity in other countries. My fear is that there will be no change in other countries: as my hon. Friend the Member for Newport, East said, this is not just a debate about the Italian steel industry; it affects each and every steel industry and steel community in the country. If the Government do not get it right, there will be more job losses, in Sheffield, in Wales and on Humberside, which will be a direct result of the Government failing to protect the British steel industry.
My final question to the Minister is as follows. We have little faith in the agreement. We have little faith that it will be implemented and enforced. What we want to know is, what happens if that agreement fails, as other agreements and other words have failed in the past?
This is an important debate. Opposition Members are saying tonight that the British steel industry is important to our manufacturing base. It is the essence of our wealth production in the future. That is why we take the position that we do. We want our industry, a world leader, to be able to compete fairly and openly with similar industries in other countries. We do not believe that that chance is there, and we believe that it is the responsibility of the Government to ensure that that opportunity is available. So far, the Minister and the Government have simply failed to deliver that level playing field. It is not words we want, but action from the Government.
§ Mr. SainsburyThe hon. Member for Inverness, Nairn and Lochaber (Sir R. Johston) asked the Opposition to spell out alternatives. I thought that he made a fair argument. He said that his party would not vote against the motion and I wondered why Labour Members were planning to do so. He, I feel, should not have been surprised at the failure of the hon. Member for Leeds, Central (Mr. Fatchett), with two opportunities to do so, to spell out the alternatives.
My hon. Friend the Member for Castle Point (Dr. Spink) also noticed that lack of alternative. He probably shared my lack of surprise, however, at the failure of the hon. Member for Leeds, Central to produce an alternative, for the simple reason that he has no alternative. He blustered away, but he has no alternative.
Perhaps I am not being fair to the hon. Gentleman. Perhaps there is an alternative that he did not want to tell us about. He made one revealing remark. He said that the Government have not offered their support in the way in which other continental and European Community Governments have. Other Opposition Members made it clear that they were well aware—even if the hon. Member for Leeds, Central was not—of the type of support that some European Community Governments had offered their steel industries. They had offered their steel industries massive subsidies. It was not clear to me whether the hon. Member for Leeds, Central was succumbing once more to that road to ruin.
§ Mr. HughesThe Government have been in power for 15 years, and our steel industry suffered badly more than a decade ago. Why have not the Government ensured parity of treatment between our steel industry and others, particularly in Italy? They have given our steelworkers a smack in the eye by getting rid of ISERBS.
§ Mr. SainsburyI am astonished that the hon. Member for Newport, East (Mr. Hughes) insults our steelworkers by suggesting that they should have parity with Italian steelworkers. The Italian steel industry is the most overmanned, inefficient and uncompetitive in the world. As a result of the Government's policies, our steel industry is as competitive and efficient as any in the world.
Under the last Labour Government, it took more than 13 man hours to produce a tonne of steel, and the steel industry absorbed massive subsidies and lost a great deal of taxpayers' money, whereas under our policies the steel industry requires fewer than five man hours to produce a tonne of steel. In spite of what the hon. Member for Leeds, Central said, our steel industry is the world's fourth largest, and is as efficient as any in the world.
The Opposition have failed to justify opposing the motion. The hon. Member for Newport, East suggested that we should veto the deal. I thought that, like the Liberal Democrats, the Labour party wanted to abandon the veto. That would be very helpful in those circumstances.
§ Mr. Llew SmithThe Minister asks why we oppose the Government's line on the steel industry. Two examples of recent weeks concern Ebbw Vale and Trostre, which have resulted in a further 350 redundancies. The steelworkers in those communities are arguing that, were the Government willing to stand up for the steel industry as the French stand up for their industries, those 350 redundancies would not be necessary. Also, we are not supporting the Government 94 also because they are too mean to give those 350 people, who will now be on the scrap heap, the ISERBS they deserve to relieve their position. They represent and are living in some of the most deprived communities in the United Kingdom.
§ Mr. SainsburyThe motion is not about ISERBS and, as far as I can gather from what the hon. Gentleman and some other hon. Members have said, the Opposition want the extension of subsidies not only to encourage overmanning and inefficiency in the steel industry but to provide massive and unhelpful aid.
May I explain to the hon. Member for Sheffield, Hillsborough (Mrs. Jackson) that that aid is unhelpful because it does not help redundant steelworkers to return to employment. The Opposition want to give such unhelpful aid to everybody who loses his or her job. Will the hon. Member for Blaenau Gwent (Mr. Smith) work out what that would add to the burden of public debt?
§ Mrs. Helen JacksonHas the Minister any idea of the difference between subsidies and support for a major manufacturing industry? I speak of support in terms of research and European grants for environmental technology. The Government have done nothing along those lines to support the key overheads of that core industry. Does the Minister have an answer to that type of support, which other European Governments successfully give their steel industries?
§ Mr. SainsburyI do have an idea. Those European Governments now realise that they can no longer afford those large subsidies. As a result of pouring subsidies into their industries, they have overmanned and uncompetitive industries, on which they must now cut back. Changing the name from "subsidy" to "support" does not change the nature of the beast. A rose by any other name smells just as sweet, and a subsidy is just as wasteful.
The right hon. and learned Member for Aberavon (Mr. Morris) expressed a welcome to the points agreed at the December council. I thank him for that recognition. It may be another split in the Labour party—another disagreement between those with experience on the Back Benches and those without it on the Front.
The right hon. and learned Gentleman asked about Saarstahl. I find the position there as unsatisfactory as he does. It was made clear not only by me but by other Ministers at the last Industry Council that we did not regard it as acceptable that the German Government should shelter behind their bankruptcy laws effectively to provide subsidies to allow their company to continue in operation when it was losing large sums of money.
The right hon. and learned Gentleman also asked about Klocknerstahl. Our complaint, supported by other Community Governments, about Klocknerstahl is still under investigation by the Commission. Some reports have said that the Commission will allow Klocknerstahl to retain the steel-making capacity which it had earlier demanded be closed as part of the original debt restructuring plan.
When the company first filed for bankruptcy protection, the Commission, in the shape of DG XVIII, was among its creditors. The Commission agreed to restructure the debt in exchange for the definitive closure of one blast furnace and the reduction of 500,000 tonnes of hot strip capacity. A date was not set for the definitive closure, but the company has been held to the production limits.
95 Negotiations are now at an advanced stage for another steel company, Sidmar, to participate in the restructuring. The Commission has said that it would accept the reduction of alternative closures if that would help to rationalise the merged companies. But it has insisted that any replacement capacity cuts must be in the same product sectors, and affect plant in current use.
I agree with the hon. Member for Glanford and Scunthorpe (Mr. Morley) who referred to the Italians counting the reduction at Bagnoli as a reduction in current capacity. We should not like to have agreed that. However, in respect of that, as of other matters that were less than satisfactory in the agreement, the alternative to reaching that agreement, which could be brought about by using the veto which Opposition Members want us to abandon, would have been the continuation of those subsidies for a considerable time and no capacity reductions.
Moreover, we would not have obtained the most satisfactory feature of that agreement, which is a monitoring arrangement that is stricter, more rigorous and more capable of being overseen than anything that we have had before.
§ Mr. MorleyWill the Minister give way?
§ Mr. SainsburyNo, I must complete my speech.
It is a major step forward that the agreement requires a report to the council. There is a good reason for not making the monitoring reports public: they contain a lot of sensitive commercial information. For the first time, however, they will be made available to the Council of Ministers, which also means to my officials, who can scrutinise exactly what is happening.
That has never happened before. It gives us a much better prospect of achieving what we set out to achieve, which is a level playing field for an efficient British steel industry that deserves our support, rather than the criticism that it has received from the Opposition.
§ Question put:—
§ The House divided: Ayes 295, Noes 212.
98| Division No. 231] | [8.27 pm |
| AYES | |
| Ainsworth, Peter (East Surrey) | Biffen, Rt Hon John |
| Aitken, Jonathan | Blackburn, Dr John G. |
| Alexander, Richard | Bonsor, Sir Nicholas |
| Alison, Rt Hon Michael (Selby) | Booth, Hartley |
| Allason, Rupert (Torbay) | Boswell, Tim |
| Amess, David | Bottomley, Peter (Eltham) |
| Ancram, Michael | Bottomley, Rt Hon Virginia |
| Arbuthnot, James | Bowden, Andrew |
| Arnold, Jacques (Gravesham) | Bowis, John |
| Arnold, Sir Thomas (Hazel Grv) | Boyson, Rt Hon Sir Rhodes |
| Ashby, David | Brandreth, Gyles |
| Aspinwall, Jack | Brazier, Julian |
| Atkins, Robert | Bright, Graham |
| Atkinson, David (Bour'mouth E) | Brown, M. (Brigg & Cl'thorpes) |
| Atkinson, Peter (Hexham) | Browning, Mrs. Angela |
| Baker, Rt Hon K. (Mole Valley) | Bruce, Ian (S Dorset) |
| Baker, Nicholas (Dorset North) | Budgen, Nicholas |
| Baldry, Tony | Burns, Simon |
| Banks, Matthew (Southport) | Burt, Alistair |
| Banks, Robert (Harrogate) | Butcher, John |
| Bates, Michael | Butler, Peter |
| Batiste, Spencer | Butterfill, John |
| Beith, Rt Hon A. J. | Campbell, Menzies (Fife NE) |
| Bellingham, Henry | Carlile, Alexander (Montgomry) |
| Bendall, Vivian | Carlisle, John (Luton North) |
| Beresford, Sir Paul | Carlisle, Kenneth (Lincoln) |
| Carrington, Matthew | Hendry, Charles |
| Carttiss, Michael | Higgins, Rt Hon Sir Terence L. |
| Cash, William | Hill, James (Southampton Test) |
| Churchill, Mr | Hogg, Rt Hon Douglas (G'tham) |
| Clappison, James | Horam, John |
| Clark, Dr Michael (Rochford) | Hordern, Rt Hon Sir Peter |
| Clarke, Rt Hon Kenneth (Ruclif) | Howarth, Alan (Strat'rd-on-A) |
| Clifton-Brown, Geoffrey | Howell, Rt Hon David (G'dford) |
| Coe, Sebastian | Hunt, Rt Hon David (Wirral W) |
| Colvin, Michael | Hunt, Sir John (Ravensbourne) |
| Congdon, David | Hunter, Andrew |
| Conway, Derek | Jack, Michael |
| Coombs, Anthony (Wyre For'st) | Jackson, Robert (Wantage) |
| Coombs, Simon (Swindon) | Jenkin, Bernard |
| Cope, Rt Hon Sir John | Jessel, Toby |
| Cormack, Patrick | Johnson Smith, Sir Geoffrey |
| Couchman, James | Johnston, Sir Russell |
| Cran, James | Jones, Gwilym (Cardiff N) |
| Curry, David (Skipton & Ripon) | Jones, Robert B. (W Hertfdshr) |
| Davies, Quentin (Stamford) | Key, Robert |
| Davis, David (Boothferry) | King, Rt Hon Tom |
| Day, Stephen | Kirkhope, Timothy |
| Deva, Nirj Joseph | Knapman, Roger |
| Devlin, Tim | Knight, Mrs Angela (Erewash) |
| Dickens, Geoffrey | Knight, Greg (Derby N) |
| Dorrell, Stephen | Knight, Dame Jill (Bir'm E'st'n) |
| Douglas-Hamilton, Lord James | Knox, Sir David |
| Dover, Den | Kynoch, George (Kincardine) |
| Duncan, Alan | Lait, Mrs Jacqui |
| Duncan-Smith, Iain | Lament, Rt Hon Norman |
| Dunn, Bob | Lawrence, Sir Ivan |
| Durant, Sir Anthony | Legg, Barry |
| Eggar, Tim | Leigh, Edward |
| Elletson, Harold | Lennox-Boyd, Mark |
| Evans, David (Welwyn Hatfield) | Lester, Jim (Broxtowe) |
| Evans, Jonathan (Brecon) | Lidington, David |
| Evans, Nigel (Ribble Valley) | Lightbown, David |
| Evans, Roger (Monmouth) | Lilley, Rt Hon Peter |
| Evennett, David | Lloyd, Rt Hon Peter (Fareham) |
| Faber, David | Lord, Michael |
| Fabricant, Michael | Luff, Peter |
| Fenner, Dame Peggy | Lyell, Rt Hon Sir Nicholas |
| Field, Barry (Isle of Wight) | Lynne, Ms Liz |
| Fishburn, Dudley | MacKay, Andrew |
| Forman, Nigel | Maclean, David |
| Forsyth, Michael (Stirling) | McLoughlin, Patrick |
| Forth, Eric | McNair-Wilson, Sir Patrick |
| Foster, Don (Bath) | Maddock, Mrs Diana |
| Fowler, Rt Hon Sir Norman | Madel, Sir David |
| Fox, Dr Liam (Woodspring) | Maitland, Lady Olga |
| Fox, Sir Marcus (Shipley) | Major, Rt Hon John |
| Freeman, Rt Hon Roger | Malone, Gerald |
| French, Douglas | Mans, Keith |
| Fry, Sir Peter | Marland, Paul |
| Gale, Roger | Marlow, Tony |
| Gallie, Phil | Marshall, John (Hendon S) |
| Gardiner, Sir George | Marshall, Sir Michael (Arundel) |
| Garel-Jones, Rt Hon Tristan | Martin, David (Portsmouth S) |
| Garnier, Edward | Mates, Michael |
| Gill, Christopher | Mellor, Rt Hon David |
| Gillan, Cheryl | Merchant, Piers |
| Goodson-Wickes, Dr Charles | Michie, Mrs Ray (Argyll Bute) |
| Gorman, Mrs Teresa | Mills, Iain |
| Gorst, John | Mitchell, Andrew (Gedling) |
| Grant, Sir A. (Cambs SW) | Mitchell, Sir David (Hants NW) |
| Greenway, Harry (Ealing N) | Moate, Sir Roger |
| Greenway, John (Ryedale) | Molyneaux, Rt Hon James |
| Griffiths, Peter (Portsmouth, N) | Monro, Sir Hector |
| Hague, William | Montgomery, Sir Fergus |
| Hamilton, Rt Hon Sir Archie | Moss, Malcolm |
| Hamilton, Neil (Tatton) | Needham, Richard |
| Hampson, Dr Keith | Neubert, Sir Michael |
| Hanley, Jeremy | Newton, Rt Hon Tony |
| Hannam, Sir John | Nicholls, Patrick |
| Hargreaves, Andrew | Nicholson, David (Taunton) |
| Harvey, Nick | Nicholson, Emma (Devon West) |
| Haselhurst, Alan | Norris, Steve |
| Hawkins, Nick | Onslow, Rt Hon Sir Cranley |
| Hayes, Jerry | Ottaway, Richard |
| Heald, Oliver | Page, Richard |
| Paice, James | Tapsell, Sir Peter |
| Pattie, Rt Hon Sir Geoffrey | Taylor, Ian (Esher) |
| Pawsey, James | Taylor, John M. (Solihull) |
| Pickles, Eric | Taylor, Sir Teddy (Southend, E) |
| Porter, Barry (Wirral S) | Temple-Morris, Peter |
| Porter, David (Waveney) | Thomason, Roy |
| Portillo, Rt Hon Michael | Thompson, Sir Donald (C'er V) |
| Redwood, Rt Hon John | Thompson, Patrick (Norwich N) |
| Rendel, David | Thornton, Sir Malcolm |
| Renton, Rt Hon Tim | Thurnham, Peter |
| Richards, Rod | Townend, John (Bridlington) |
| Riddick, Graham | Townsend, Cyril D. (Bexl'yh'th) |
| Rifkind, Rt Hon. Malcolm | Tracey, Richard |
| Robathan, Andrew | Tredinnick, David |
| Roberts, Rt Hon Sir Wyn | Trend, Michael |
| Roe, Mrs Marion (Broxbourne) | Twinn, Dr Ian |
| Rowe, Andrew (Mid Kent) | Vaughan, Sir Gerard |
| Rumbold, Rt Hon Dame Angela | Viggers, Peter |
| Ryder, Rt Hon Richard | Waldegrave, Rt Hon William |
| Sackville, Tom | Walden, George |
| Sainsbury, Rt Hon Tim | Walker, Bill (N Tayside) |
| Scott, Rt Hon Nicholas | Ward, John |
| Shaw, David (Dover) | Wardle, Charles (Bexhill) |
| Shaw, Sir Giles (Pudsey) | Waterson, Nigel |
| Shephard, Rt Hon Gillian | Watts, John |
| Shepherd, Colin (Hereford) | Wells, Bowen |
| Shepherd, Richard (Aldridge) | Whitney, Ray |
| Shersby, Michael | Whittingdale, John |
| Sims, Roger | Widdecombe, Ann |
| Skeet, Sir Trevor | Wiggin, Sir Jerry |
| Soames, Nicholas | Wilkinson, John |
| Spencer, Sir Derek | Willetts, David |
| Spicer, Michael (S Worcs) | Wilshire, David |
| Spink, Dr Robert | Winterton, Mrs Ann (Congleton) |
| Spring, Richard | Winterton, Nicholas (Macc'f'ld) |
| Squire, Robin (Hornchurch) | Wolfson, Mark |
| Stanley, Rt Hon Sir John | Wood, Timothy |
| Steen, Anthony | Yeo, Tim |
| Stephen, Michael | Young, Rt Hon Sir George |
| Stern, Michael | |
| Stewart, Allan | Tellers for the Ayes: |
| Streeter, Gary | Mr. Sydney Chapman and |
| Sumberg, David | Mr. Irvine Patnick. |
| Sykes, John | |
| NOES | |
| Abbott, Ms Diane | Clarke, Eric (Midlothian) |
| Ainsworth, Robert (Cov'try NE) | Clarke, Tom (Monklands W) |
| Allen, Graham | Clelland, David |
| Anderson, Donald (Swansea E) | Clwyd, Mrs Ann |
| Anderson, Ms Janet (Ros'dale) | Coffey, Ann |
| Armstrong, Hilary | Connarty, Michael |
| Ashton, Joe | Cook, Frank (Stockton N) |
| Austin-Walker, John | Cook, Robin (Livingston) |
| Banks, Tony (Newham NW) | Corbett, Robin |
| Barnes, Harry | Corston, Ms Jean |
| Barren, Kevin | Cousins, Jim |
| Battle, John | Cunliffe, Lawrence |
| Bayley, Hugh | Cunningham, Jim (CovySE) |
| Beckett, Rt Hon Margaret | Dalyell, Tam |
| Bennett, Andrew F. | Darling, Alistair |
| Benton, Joe | Davies, Bryan (Oldham C'tral) |
| Bermingham, Gerald | Davies, Rt Hon Denzil (Llanelli) |
| Betts, Clive | Davies, Ron (Caerphilly) |
| Boateng, Paul | Davis, Terry (B'ham, H'dge H'l) |
| Boyes, Roland | Dixon, Don |
| Bradley, Keith | Dobson, Frank |
| Bray, Dr Jeremy | Donohoe, Brian H. |
| Brown, Gordon (Dunfermline E) | Dowd, Jim |
| Brown, N. (N'c'tle upon Tyne E) | Dunwoody, Mrs Gwyneth |
| Byers, Stephen | Eagle, Ms Angela |
| Callaghan, Jim | Eastham, Ken |
| Campbell, Mrs Anne (C'bridge) | Enright, Derek |
| Campbell, Ronnie (Blyth V) | Etherington, Bill |
| Campbell-Savours, D. N. | Evans, John (St Helens N) |
| Canavan, Dennis | Ewing, Mrs Margaret |
| Cann, Jamie | Fatchett, Derek |
| Chisholm, Malcolm | Faulds, Andrew |
| Clapham, Michael | Field, Frank (Birkenhead) |
| Clark, Dr David (South Shields) | Flynn, Paul |
| Foster, Rt Hon Derek | Morgan, Rhodri |
| Foulkes, George | Motley, Elliot |
| Fraser, John | Morris, Rt Hon A. (Wy'nshawe) |
| Fyfe, Maria | Morris, Estelle (B'ham Yardley) |
| Gapes, Mike | Morris, Rt Hon J. (Aberavon) |
| Garrett, John | Mudie, George |
| George, Bruce | Mullin, Chris |
| Gerrard, Neil | Murphy, Paul |
| Gilbert, Rt Hon Dr John | Oakes, Rt Hon Gordon |
| Godsiff, Roger | O'Brien, Michael (N W'kshire) |
| Golding, Mrs Llin | O'Brien, William (Normanton) |
| Gordon, Mildred | O'Hara, Edward |
| Graham, Thomas | Olner, William |
| Griffiths, Nigel (Edinburgh S) | O'Neill, Martin |
| Griffiths, Win (Bridgend) | Orme, Rt Hon Stanley |
| Grocott, Bruce | Parry, Robert |
| Gunnell, John | Patchett, Terry |
| Hain, Peter | Pickthall, Colin |
| Hall, Mike | Pike, Peter L. |
| Hanson, David | Pope, Greg |
| Hattersley, Rt Hon Roy | Powell, Ray (Ogmore) |
| Henderson, Doug | Prentice, Ms Bridget (Lew'm E) |
| Heppell, John | Prentice, Gordon (Pendle) |
| Hill, Keith (Streatham) | Prescott, John |
| Hoey, Kate | Purchase, Ken |
| Home Robertson, John | Quin, Ms Joyce |
| Hoon, Geoffrey | Randall, Stuart |
| Howarth, George (Knowsley N) | Raynsford, Nick |
| Howells, Dr. Kim (Pontypridd) | Redmond, Martin |
| Hoyle, Doug | Reid, Dr John |
| Hughes, Kevin (Doncaster N) | Robertson, George (Hamilton) |
| Hughes, Robert (Aberdeen N) | Robinson, Geoffrey (Co'try NW) |
| Hughes, Roy (Newport E) | Roche, Mrs. Barbara |
| Hutton, John | Rogers, Allan |
| Illsley, Eric | Rooker, Jeff |
| Ingram, Adam | Rooney, Terry |
| Jackson, Glenda (H'stead) | Ross, Ernie (Dundee W) |
| Jackson, Helen (Shef'ld, H) | Rowlands, Ted |
| Jamieson, David | Sheerman, Barry |
| Janner, Greville | Sheldon, Rt Hon Robert |
| Jones, Barry (Alyn and D'side) | Shore, Rt Hon Peter |
| Jones, Ieuan Wyn (Ynys Môn) | Simpson, Alan |
| Jones, Lynne (B'ham S O) | Skinner, Dennis |
| Jones, Martyn (Clwyd, SW) | Smith, Andrew (Oxford E) |
| Kaufman, Rt Hon Gerald | Smith, C. (Isl'ton S & F'sbury) |
| Keen, Alan | Smith, Rt Hon John (M'kl'ds E) |
| Kennedy, Jane (Lpool Brdgn) | Smith, Llew (Blaenau Gwent) |
| Khabra, Piara S. | Soley, Clive |
| Kilfoyle, Peter | Spearing, Nigel |
| Lestor, Joan (Eccles) | Spellar, John |
| Lewis, Terry | Squire, Rachel (Dunfermline W) |
| Litherland, Robert | Stevenson, George |
| Livingstone, Ken | Strang, Dr. Gavin |
| Lloyd, Tony (Stretford) | Taylor, Mrs Ann (Dewsbury) |
| Llwyd, Elfyn | Turner, Dennis |
| McAllion, John | Vaz, Keith |
| McAvoy, Thomas | Walker, Rt Hon Sir Harold |
| McCartney, Ian | Walley, Joan |
| McFall, John | Wareing, Robert N |
| McKelvey, William | Watson, Mike |
| Mackinlay, Andrew | Wicks, Malcolm |
| McLeish, Henry | Williams, Rt Hon Alan (Sw'n W) |
| McMaster, Gordon | Williams, Alan W (Carmarthen) |
| McWilliam, John | Wilson, Brian |
| Madden, Max | Winnick, David |
| Mahon, Alice | Wise, Audrey |
| Mandelson, Peter | Worthington, Tony |
| Martlew, Eric | Wray, Jimmy |
| Meacher, Michael | Wright, Dr Tony |
| Meale, Alan | Young, David (Bolton SE) |
| Michael, Alun | |
| Milburn, Alan | Tellers for the Noes: |
| Miller, Andrew | Mr. John Cummings and |
| Moonie, Dr Lewis | Mr. Jon Owen Jones. |
§ Question accordingly agreed to.
§
Resolved,
That this House takes note of European Community Documents Nos. 10166/93 and 11317/93, relating to the Italian state iron and steel industry; endorses the Government's decision
99
to support the agreement reached on the package of state aid cases discussed at the Industry Council on 17th December 1993; notes with approval the undertakings secured at the Council regarding the stringent monitoring of approved aids, which will help to ensure that they are not used to disadvantage unaided competitors, the commitment to the strict application of ECSC state aid rules to end subsidisation, the recognition that there will be no further aid to these companies if viability is not achieved, and the early privatisation of most of the companies involved; and endorses this agreement as a useful step towards ending the distortion of state subsidies in the steel industry.