HL Deb 23 July 1979 vol 401 cc1679-85

5.26 p.m.

Viscount LONG rose to move, That the draft regulations laid before the House on 11th July, be approved. The noble Viscount said: My Lords, I am this afternoon concerned with Article 56 of the Treaty of Paris, and particularly with those parts of that article which allow the provision of assistance to certain redundant steelworkers, the costs being jointly supported by the Government and the funds of the ECSC. Before moving on to the details of the amendments to the Iron and Steel Employees Re-adaptation Benefits Scheme (ISERBS) which are now proposed, it might help our consideration if I described briefly the background of the steel industry itself and what part Article 56 of the Treaty of Paris plays in helping redundant steelworkers.

I am sure your Lordships are aware of the widespread depression in the steel industry, particularly in Western Europe, because steel demand has fallen below expected levels. There is consequently a substantial surplus in world steelmaking capacity, which had been expanded in anticipation of a continuing rise in the demand for steel. In addition, the competitive edge of our steel industry is blunted because of the lower manpower productivity achieved compared with our major European competitors. If the steel industry is making and selling less steel, it will inevitably be employing fewer men, and these factors have meant that there have been redundancies in the industry in the past and that there will inevitably need to be more in the future.

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 and efficient distribution of production. 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 programmes of modernisation, which are essential to the profitable future operation 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 their modernisation, and to cushion the blow of any necessary redundancy. Such provisions have already been used to great advantage in this country and by our Coal and Steel Community partners in equipping industries both to meet domestic needs and to produce exports.

There are three main ways in which assistance has been given to redundant steelworkers. First, tide-over payments to bring earnings in new jobs up to 90 per cent. of pre-redundancy earnings, and special unemployment benefits payable to those ex-steelworkers who are unemployed. Secondly, payments during approved vocational retraining courses, by which means the often highly-skilled steelworkers can enter another industry equipped with new skills. Thirdly, travelling and resettlement grants to encourage mobility within the steel industry. Over 33,000 steelworkers from some 79 locations have become eligible for assistance. Not all have needed aid, but, to those who have drawn scheme benefits we have paid some £27 million in all over the last five years. The cost is borne jointly by the national Government and the ECSC, the latter using funds which have 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. It helps to smooth the path of reconstructing the industry into a modern, profitable and efficient producer which can compete effectively in world markets.

The readaptation agreement between the United Kingdom Government and the European Commission was concluded in September 1973 for an initial period of three years, and re-negotiated in 1976 for an unlimited period, subject to revision if either party wished. Amendments were made in 1976 and 1978 to bring certain benefits up to date and to introduce a more convenient method of paying training allowances. At all stages, consultation with the main interested parties—BSC, the British Iron and Steel Producers' Association and the TUC Steel Committee—has preceded the making of regulations. Consultation has again taken place on these amendments and no objections have been raised.

The Government are now seeking to consolidate the legislation and to make a number of amendments to the scheme. The majority of these amendments are technical alterations taking account of changes in other legislation. There are three major areas to which I wish to draw your Lordships' attention. Foremost among these is the inclusion of a ceiling on previous earnings for the purposes of calculating benefits. This will have the effect of placing a limit on payments to a small number of the highest-paid but now redundant steelworkers. It is proposed to base this on twice the limit imposed under the Employment Protection Act provision for an earnings-related lump sum payment to all redundant workers. At present this would provide for a ceiling of £11,400 per annum. The amendments also update rates which the Government feel have, with inflation, fallen behind. Under the scheme, those who remain unemployed after exhausting their National Insurance Earnings Related Supplement (ERS) received a flat rate special unemployment benefit for up to 52 weeks. The rate was set at £5 in 1973, and increased to £9 in 1976: these levels were approximately the amount of ERS payable to an unemployed man with average steelworker's earnings. The Government are now proposing to introduce an automatic adjustment to this rate of benefit in line with future changes in the ERS rate. The scheme rate is to be set at 90 per cent. of the maximum weekly rate of ERS. On this basis the new rate will be £14.50.

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

These are, in brief, the amendments which the Government would propose to make to the existing Iron and Steel Employees Readaptation Benefits Scheme. The aim of the scheme continues to be to help to reduce the grave social effects of the redundancies which are an unfortunate corollary of the modernisation of the steel industry in this country which is so necessary for the future health of the United Kingdom engineering industry as a whole and for our position as a major manufacturing nation. In encouraging the movement of labour into new skills, new industries and different parts of the country, the scheme supports the market forces which lead to the increased competiveness and efficiency of the whole country. I beg to move.

Moved, That the draft regulations laid before the House on 11th July, be approved.—(Viscount Long.)

5.35 p.m.

Lord WALLACE of COSLANY

My Lords, may I first thank the noble Viscount for his very detailed and clear explanation of this—may I say, with respect—extremely complicated order. On behalf of my colleagues, I would give it a welcome, albeit a limited and cautious one. Not having had much opportunity to digest the details of this complicated order, may I ask the noble Viscount whether there are in the order any changes detrimental to the workers of the steel industry; or is it the general assumption that the order is an advance on any previous order issued? There is another question I should like to put. I came across it by sheer accident but it is an interesting and important point. Why is it that the tubes and pipes division of the steel industry do not come under these regulations? This could cause a very difficult situation, for instance, at Corby, which we know is threatened, and possibly in other areas; but I am not sure whether Shotton is involved. It is a point that intrigues me. I should have thought that there would be a comprehensive order covering the whole industry.

There is another point which I think the noble Viscount touched on. I understand that very many workers are not aware of the benefits of this order and consequently many are not claiming. I am sure that the Government would like people to claim if they are qualified to do so. I am pleased to note from what the noble Viscount has said that there has been full consultation with all sides of industry. Is it possible that, in consultation with the unions and the British Steel Corporation, some steps might be taken to publicise generally the benefits and entitlements of the scheme? It could be done quite simply without getting involved in complicated memoranda and so on.

Finally I must make the point that the regulations are coming in at a critical time for the steel industry, facing, as it does, widespread closures which are not wholly but partially to do with Government policy. Today is Monday, and Monday is always a difficult day, but it seems to me, with the Statements that have been made, a day of gloom and despair—and it seems also to have affected the weather. But I can assure the noble Viscount that I do not blame the Government for that.

Viscount LONG

My Lords, I am grateful to the noble Lord, Lord Wallace of Coslany, for his kind words. I will agree that Monday is not a day to go to town on all the questions after having heard the Statements which have been made. I will give him a rest on that. He asked three questions. One of them was: Are the changes detrimental to the workers of the steel industry? As I have already said in my speech, it will, on balance, be an advantage to the steel workers. The order will limit, not eliminate, total benefits. That will have an effect on a small number of highly-paid men in the industry; and I think that I mentioned that during my speech.

The second question which the noble Lord asked was in respect of tubes and pipes. He mentioned Corby and Shotton. Of course, we are not speaking at this moment about the tube industry in Corby. The Corporation are not closing that particular industry down. It is only the steel industry with which we are concerned at this stage. If I can make the noble Lord's mind in any way happy, this has nothing to do with the tubes and pipes industry. This will not affect them at all.

The last question, which I understand concerned the publicity on steel workers knowing where they can get these benefits from, is an important question. So many people ask, " Why did I not know? " after the event has taken place. The Government are fully aware that the applications can sometimes arrive late. Even though they arrive late, they are still taken into account and passed. The individual might not be aware of such benefits; but I can assure noble Lords that, by and large, both the unions and the management are fully aware of the benefits. They would be looking after those people who are entitled to the benefits. I think that was all that the noble Lord said, except that he blamed the Government for the disasters and the redundancies that were going to take place in the steel industry. I can assure noble Lords that the steel industry in the United Kingdom is finding it as difficult as other steel industries throughout the world through competition.

Lord DAVIES of LEEK

My Lords, before we leave this vital point, may I ask what may seem an irrelevant question? When these compensations are given to steel workers, and should a steel worker he lucky enough to get a job in the Saar, Ruhr or even Pennsylvania, will there be any attitude of saying: " He has had a lump sum and we will reclaim it?

Viscount LONG

My Lords, I am not at all certain on that question. I should like to write to the noble Lord as regards reclaiming if a person has gone to Western Europe.

Lord DAVIES of LEEK

My Lords, I am very grateful to the noble Viscount. It was not meant as a trick question because I remember the establishment of the European steel and coal community. Mobility was one of the points that was supposed to be the forte of the scheme. I should be grateful for a reply and I thank the noble Viscount very much for his attention.

On Question, Motion agreed to.