HL Deb 18 March 2003 vol 646 cc134-7

3.8 p.m.

Lord Brookman asked Her Majesty's Government:

What steps they propose to take to avoid the demise of the British steel industry, in view of the prospect of further plant closures by Corus.

Lord Sainsbury of Turville

My Lords, the Government fully recognise how worrying the situation must be for the company and its employees. The Secretary of State for Trade and Industry met the company this morning and was assured that a significant and viable steel industry in the UK would feature strongly in Corus's long-term strategy. The Secretary of State urged the company to communicate its plans at the earliest opportunity. The Government have also met trade union representatives and are pleased that they have expressed a willingness to work with the Corus management to deliver a plan for the profitable future of the company and its employees. The company is currently in discussion with its bankers. We need to await the outcome of those commercial discussions, but I can assure the House that the DTI stands ready to assist.

Lord Brookman

My Lords, I thank my noble friend for that reply. At Corus—once British Steel, a name I preferred—10,000 jobs have been lost in the past two years, and its share price is floating between 3p, 4p, 6p and, this morning, 8½p. The situation is very serious, as acknowledged by the Minister. What I, and the trade unions that I used to represent, want to see is a tripartite discussion between government, the company and the trade unions to try to ensure a viable future for the steel industry in this country. I want that message pressed home to the appropriate Ministers in the Department of Trade and Industry.

Lord Sainsbury of Turville

My Lords, as I made clear, the Secretary of State is keeping a close watch on the situation. Clearly, it is now for the management of Corus to come forward with its restructuring plans and its plans for the future. We will keep a close eye on the situation and stand ready to assist as much as we can.

Lord Razzall

My Lords, does the Minister agree that the Government could do one practical thing in the 36 or 24 hours before the war in Iraq begins? They might use our influence with the United States and its President to do something about the imposition of tariffs against the steel industry, which was seriously criticised in this House—and has been criticised by the Government. The price of war may be heavy, but is this not an opportunity for the Government at least to ameliorate it in this regard?

Lord Sainsbury of Turville

My Lords, the Government have applied significant pressure on behalf of UK companies, and we were more successful than any other country in achieving exclusions last time. We are still pressing for the sanctions to be lifted altogether, and we will continue to do so now and in future.

Lord Naseby

My Lords, does the Minister's reply to the noble Lord, Lord Brookman, mean that the Government will ensure that there is a viable steel industry in the UK?

Lord Sainsbury of Turville

My Lords, the Government cannot possibly give that assurance. This is a commercial matter and it must be for the company and the steel industry to put forward plans on a commercial and viable basis that will get the support of the shareholders and bankers. That is the major task. The Government can only create the right conditions for this and provide help if restructuring is necessary.

Lord Morris of Aberavon

My Lords, when did the Secretary of State become aware of the possibility of a catastrophe for the steel industry in this country? Were the Government monitoring the share price of Corus? What steps are in place to ensure that a predator does not buy the company and sell off the pieces? Will the Government take all necessary steps to ensure that there is a viable steel industry in this country, and provide the financial basis for it?

Lord Sainsbury of Turville

My Lords, the department monitors carefully the position of the steel industry. In this case, the Government and the company were faced with a surprising change in the fortunes of the company, due to the position of the Dutch supervisory board. That created this crisis situation, which was not helped by the publication of the company's financial results. However, it is for the company to come forward with a viable strategy; we will do everything that we can to help in any restructuring task.

Baroness Miller of Hendon

My Lords, some noble Lords may find it reassuring that the Secretary of State is considering the situation and may be pleased by the fact that the management of the company must come up with a new plan, which the Secretary of State is monitoring. However, manufacturing has declined in this country and there is less demand for steel, while at the same time there is an influx of cheap imported steel from east European countries and Asia, due to the fact that we have signed up to the Social Chapter. Is it not time to do something more than simply taking a look at the situation and telling the company to do something on its own?

Lord Sainsbury of Turville

My Lords, there are two issues here; one of them is EU enlargement. We understand the steel industry's concerns about EU accession terms, but state aid will mostly cease by accession. When that is not the case, as in Slovakia, there will continue to be a package of measures that ensure quantification and clarification of aid and impose strict monitoring, while restricting the market access benefits of accession. We are considering that situation.

Secondly, this is a tough time for manufacturing, which is why we have a manufacturing strategy to support manufacturing in this country.

Lord Davies of Coity

My Lords. I understand the Minister's comments on the commercial realities of the steel industry. However, does he recognise that in the past 30 years the productivity increase in the British steel industry has meant a reduction in jobs from about 267,000 to about 26,000 jobs? Does he recognise, too, that the difficulties facing the British steel industry result from dumping on the world market and government subsidies in other countries? Should we not take measures to counter that kind of provision?

Lord Sainsbury of Turville

My Lords, the Government recognise that there have been substantial increases in productivity and a decrease in jobs. When any cases of dumping are raised, we shall seriously pursue the matter and take action in an international forum.

Earl Russell

My Lords, does the news from Corus strengthen the view that employment opportunities for men in South Wales are such that the New Deal is not a sufficient remedy for poverty? In some places, there are simply not enough jobs to go round.

Lord Sainsbury of Turville

My Lords, if restructuring takes place and it leads to a reduction in jobs, the Government will take all possible steps to give help. As yet, we have had no details from the company of the number of jobs or locations; when we have those details, we will take action. The RDAs will take the lead as normal, working with government offices, Jobcentre Plus, the unions, local government and other agencies to pull together government action, including job shops and training.

Lord Paul

My Lords, the survival of Corus is important to the whole manufacturing industry in this country, because so many industries are dependent on it. Will the Minister consider what action the Government can take, apart from simply waiting for the commercial decisions to be taken?

Lord Sainsbury of Turville

My Lords, the Government are well aware of the importance of Corus as a supplier to many parts of manufacturing. As I hope I made clear, the company assured the Secretary of State that a significant and viable steel industry would feature strongly in its long-term strategy. However, this is an area in which clear EU rules govern state aid to the steel industry. They forbid investment aid and rescue and restructuring aid, so any action we take must be within those rules.