UK Steel Industry (Hansard, 11 April 2002)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the Government are fully aware that the UK steel industry continues to experience difficult trading conditions which are reflected in the losses recorded by Corus. The company is seeking to address this situation in part through the sale of its aluminium interests. Market conditions are forecast to improve this year. It is hoped that Corus will return to profitability in the near future.
524 As for subsidies to steel companies, within the EU there are strict rules limiting aid. Agreements with applicant countries also recognise that it is important to move away from high levels of state aid as soon as possible to help ensure a level playing field is created in the enlarged EU.

§ Baroness Miller of Hendon
My Lords, I thank the Minister for that reply. Does he agree that, as a result of the illegal tariffs put on our steel exports by the United States of America, the losses could be even greater? That is despite the fact that our steel industry is one of the three most efficient and productive ones in the world. Given that situation, can the Minister tell us what discussions his right honourable friend the Prime Minister had with President Bush last weekend about relieving us from this illegal tariff, particularly as we understand that Mr Mittal, whom the Prime Minister aided in his letter, was actually responsible for the lobbying? We should like to know what proposals his right honourable friend brought up and what the results of those proposals were.

§ Lord Sainsbury of Turville
My Lords, the Government are determined to stand by our steel producers in combating this unjustified and deeply regrettable action. Britain has one of the most efficient and productive steel-making industries and workforces in the world because we have been through restructuring. It has not been a pain-free process. Since 1980 some 86,000 jobs have been lost in the UK.
My right honourable friend the Prime Minister raised the issue of the tariffs with President Bush during his meeting in Crawford, Texas, last weekend. He reiterated the UK's disappointment with the US action; he confirmed our support for the robust response by the European Commission; and he expressed support for the efforts by UK companies to secure product exclusions from the US measures. So we have made our views very clear to the American President on this issue. We shall have to wait to see what the impact of that statement is. That would not have taken place immediately with the American President giving his response, but obviously he took that on board.

§ Lord Brookman
My Lords, I declare an interest as a former general secretary of the Iron and Steel Trades Confederation, the leading union in the steel industry. I agree with the sentiments expressed that the unions fully endorse the actions of the Government on the tariff question. But is my noble friend aware of the great concern of the trade unions in the steel industry and indeed elsewhere in manufacturing that, whereas in mainland Europe unions meet employers and discuss strategic changes, in this country nothing of a similar nature occurs? Bearing in mind the international context of the steel industry and others, does the Minister agree that our situation is untenable? Furthermore, the chairman of Corus is to receive in excess of £500,000 a year while the workers are experiencing a pay freeze? Does my noble friend agree that that is not helpful?

§ Lord Sainsbury of Turville
My Lords, the Government's position is clear. When important strategic issues are involved they want to see that there have been serious discussions between management and unions. So far as concerns Brian Moffat's salary, we do not comment on individual cases. The setting of executive pay is a matter for the company and its shareholders. But we have been consulting on strengthening the disclosure requirements for directors' remuneration. Legislation will be introduced shortly for a compulsory annual shareholders' vote on the directors' remuneration report.

§ Lord Razzall
My Lords, does the Minister accept that, notwithstanding the obvious illegal actions by the United States, for which undoubtedly it will be penalised in due course, the worse thing that Her Majesty's Government could do at the present time is to attempt to promote a tariff or a tit-for-tat trade war with the United States as that would cause damage to the steel industry and other industries? Does he further accept that the major requirement of the UK steel industry is a strong and healthy UK manufacturing industry which can purchase steel products? What do the Government propose to do to arrest the steady erosion and decline in the manufacturing base of this country?

§ Lord Sainsbury of Turville
My Lords, I agree that we do not want a tit-for-tat war taking place, but the Government fully support the action taken by the European Commission in invoking the World Trade Organisation dispute settlement and in requesting consultation with the US under the WTO safeguards agreement, including seeking compensation. We have every right to take firm action.
Of course, it is critical to steel producers that there is a buoyant manufacturing sector. The Government are deeply concerned to create the right environment for that, but it is not within the Government's scope to make certain that manufacturing industry grows. That depends on the performance of manufacturing industry. All that we can do is to set the right conditions for that, which we have done with our macro-economic policies.

§ Lord Tebbit
My Lords, is the noble Lord aware that it is now more than 20 years ago that I represented the United Kingdom in the negotiations that concluded a steel deal in Europe to ban permanently, for all, the subsidisation of steel? Yet, as his Answer indicates, European countries are still subsidising their steel industries. In view of that subsidisation, contrary to the agreement of 1981, is it surprising that the American Government feel pretty unhappy?

§ Lord Sainsbury of Turville
My Lords, I have not followed all the details of the noble Lord's career—especially in its early stages—but I think that he probably did a good job. It is a feature of the steel aid code of the European Coal and Steel Community 526 treaty that steel subsidies have largely been banished. The issue today concerns the position of the accession states and action is also being taken on that front.

§ Lord Jones
My Lords, will my noble friend tell us how many jobs remain in the British steel industry?

§ Lord Sainsbury of Turville
My Lords, I cannot give an exact figure but I shall write to the noble Lord with it.