EUROPEAN COMMUNITIES (IRON AND STEEL EMPLOYEES RE-ADAPTATION BENEFITS SCHEME) (AMENDMENT) REGULATIONS 1976

HL Deb 27 July 1976 vol 373 cc1285-9

8.15 p.m.

The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett) rose to move, That the draft European Communities (Iron and Steel Employees Re-adaptation Benefits Scheme) (Amendment) Regulations 1976, laid before the House on 15th July, be approved. The noble Lord said: My Lords, the steel industry is one of our most important heavy manufacturing industries. It is also a major employer, currently employing around a quarter of a million people in plants in every part of the country. In many towns the steel works is the major source of employment. This means that measures to improve the competitive strength of the industry can bear very heavily on the individual worker.

It was in recognition of the major part that the steel and coal industries must play in the future of Western economies that the ECSC was set up in 1951, to bring about such conditions in these industries as would ensure a rational distribution of production at the highest possible level of productivity. Since we joined the Community, both the NCB and the steel industry have been able to take advantage of ECSC aid in carrying forward their programme of rationalisation and modernisation which are cornerstones of the public ownership of these industries. The provisions of the Treaty of Paris setting up the ECSC are therefore at hand to assist our coal and steel industries with the modernisation and reconversion of the plant, and to cushion the blow of any necessary redundancy. Such provisions have already been used to great advantage by our coal and steel Community partners in equipping their industries to meet both domestic needs and exigencies of export trading.

Today, we are concerned with Article 56 of the Treaty of Paris, and particularly with the parts of that Article which allow for the provision of assistance to certain redundant steelworkers, the cost being supported jointly by the national Government and the funds of the ECSC. The forms of assistance which have for several years been available to redundant steelworkers include, first, tideover payments to bring earnings in new jobs up to a percentage of pre-redundancy earnings, and special unemployment benefits to men who are unable to find another job immediately; secondly, travelling and resettlement grants to encourage mobility both within the steel industry and away from it; and, thirdly and most importantly, payments during approved vocational retraining courses by which means the often highly skilled steelworker can aim to take his place at a similar level in another industry.

On these criteria, over 13,000 steelworkers from some 25 locations have become eligible for assistance. Not all have needed aid, but, to those who have drawn scheme benefits, we have paid some £4½ million in all over the last three years. The cost is borne jointly by the national Government and the ECSC, the latter using funds which have themselves been gathered in levies from the coal and steel industries of the member countries. It is generally agreed that such assistance has been very valuable, both to those steelworkers who have been made redundant and in helping to provide in-house training for redeployed workers.

We consulted both unions and management before the scheme was set up and, in its existing form, it takes account of the needs that could be forecast at the time. However, three years' experience of the scheme has thrown up several aspects which require some amendment, either to ensure that the scheme adheres more exactly both to current United Kingdom legislation and to the convention which authorises the European Commission to contribute towards the cost, or to improve certain aspects which have been found wanting. In the former category, there are some minor technical and consequential alterations. There are also some changes of some substance which the Government propose to make to the scheme and to which the European Commission have already agreed to contribute.

Foremost among these is the inclusion of an Article enabling the Secretary of State to adjust the weekly benefits to take account of changes in the cost of living. It is proposed to calculate this using as a basis changes in the Retail Price Index over the year after each individual comes to benefit, and again over two years if the person still qualifies for benefit. These increases will of course be contained within the present, and any future, pay policy agreements which may be instituted. This amendment brings the steel redundancy scheme in line with the redundant mine-workers schemes and it is expected to prove valuable in maintaining the present purchasing power of benefits.

The cost of living adjustment will not be applied to flat rate benefits, but it is proposed to increase present flat rate benefit of £5 to £9 to take account of changes since the scheme was introduced. This will particularly help, for the first year after redundancy, the younger unemployed who are, in the present economic climate, having considerable difficulties in finding jobs.

As I have already mentioned, one of the most important aspects of this scheme is the provision that it makes for the re-training of ex-steel workers. Two amendments are proposed here. The first widens the range of the training courses which steelworkers may attend under the scheme. In consequence people training, for example, as computer technologists, radiographers and for work with the mentally handicapped will now receive the benefits during the first year of the training course. The second amendment lists, with reference to the steelworkers' previous earnings in the steel industry, the actual amount the person can expect to receive while retraining, for a maximum time of one year with variations for the number of dependants. The table will give trainees very approximately an equivalent amount to their previous take-home pay as steel workers and will greatly simplify the previous complicated system of calculating training payments. The final amendment of substance is to include the self-employed in eligibility for benefit.

My Lords, these are in brief the major amendments which the Government are proposing to make to the existing Iron and Steel Employees Readaptation Benefits Scheme. The measures already available, with the substantial improvements provided by these amendments, will help to reduce the very grave social effects of the redundancies which are an unfortunate corollary of the modernisation of the steel industry in this country, so necessary for the future health of the United Kingdom engineering industry as a whole and for our position as a major manufacturing nation. I beg to move.

Moved, that the draft European Communities (Iron and Steel Employees Re-adaptation Benefits Scheme) (Amendment) Regulations 1976, laid before the House on 15th July, be approved.—(Lord Melchett.)

8.22 p.m.

Lord REDESDALE

My Lords, first I should like to thank the noble Lord, Lord Melchett, for giving such a clear exposition of this measure. I found it most helpful as no doubt the rest of your Lordships did, and obviously the noble Lord's long association with the steel industry helps him to assimilate this. This measure highlights one of the benefits of belonging to the ECSC under the Treaty of Paris in that it shows the amount of money that can soften the hardship incurred by closures which we were discussing in this Chamber the other day. I intended to ask the noble Lord one question, but he answered it half way through, although I did not quite catch the number of people who have benefited. I believe the figure given was 3,500, but I might have got a nought wrong on that.

However, I should like to ask the noble Lord the 64,000 dollar question; that is, how many people does he think will be benefitting over the next two years? That is obviously a hard question to answer. Another point which I should like him to confirm is whether Her Majesty's Government will be contributing on the same basis as the European Steel Community—on a 50–50 basis, on a basis which I believe is known as additionality.

Finally, there is one small point which I should be grateful if the noble Lord can clear up. It arises on page 9 of the Regulations. The final phrase in the Explanatory Note, under Regulation 14, states: …and render ineligible for benefit persons who are not ordinarily resident in the United Kingdom. The question of residence seems to have different definitions with different bodies, from the Inland Revenue onwards, and I should be grateful if the noble Lord can clarify this. Otherwise we welcome the measure wholeheartedly.

8.25 p.m.

Lord MELCHETT

My Lords, I am very grateful to the noble Lord for his welcome to this scheme. As he said, I am sure that it is a very valuable contribution to the enormous hardship undoubtedly caused by major closures of steelworks in areas of the country where very often the steelworks provides the only source of jobs in a particular town because of historical reasons. In my opening remarks I said that 13,000 steelworkers had become eligible for assistance so far. Not all of those have needed to take up the aid, but we have paid out £4½ million in all over the past three years. With regard to the cost, my understanding is that this is borne 50–50 by the national Government and the ECSC, and I think that that will continue to be the case in the future.

As to the detailed definition of "residence", it would probably be most helpful both to myself and to the noble Lord if I wrote to him about that. I do not know what particular technical definition of "residence" is being used and I think that is the question which the noble Lord asked me. It is quite clear that the scheme should not provide benefits to people who are not normally resident in the country and I do not think there is any difference between us on that point, but if I may, I will write to him on it.

On Question, Motion agreed to.