Steel Industry

HC Deb 07 February 2001 vol 362 cc233-54WH

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Touhig.]

9.30 am

Mr. Huw Edwards (Monmouth)

I am pleased to have been granted a debate on the future of the steel industry and thank my hon. Friends for their support.

The date 1 February 2001 will go down in history as the day of the devastating announcement that more than 6,000 jobs in the steel industry were to be lost: about 3,000 in Wales and 3,000 in England. In Llanwern, near my constituency, 1,340 jobs will be lost and heavy steel production is planned to finish by the end of the year. In Shotton, 319 jobs will be lost. In Ebbw Vale, the entire production will be closed down with the loss of 780 jobs. Another 127 jobs will be lost in Bryngwyn, near Gorseinon in Swansea. In Port Talbot—whose port receives the iron ore for Port Talbot and Llanwern—jobs will be lost in central services. In Teesside, 234 jobs will be lost.

The south Wales steel industry has played an important part in my political consciousness. I was brought up in the London Welsh community, but we travelled regularly to our family home town of Neath. I well remember my sense of pride as the train passed from Port Talbot to Neath, alongside the mustard-coloured works, and I read the sign, "The Steel Company of Wales", above the red dragon. I also remember the sense of desolation when one of my uncles, John Williams, was killed in a blast furnace explosion at the Port Talbot steelworks in 1968.

I remember the development of the Llanwern steelworks, near Newport, built by the then nationalised British Steel Corporation in the 1960s. That massive steelworks, which I have visited twice, lies just outside my constituency, in that of my right hon. Friend the Member for Newport, East (Mr. Howarth), and some of the Llanwern work force live in my constituency. When it opened, Llanwern attracted many workers to Chepstow; the Bulwark estate was developed to house the influx of steelworkers from the valleys, other parts of Wales and beyond. The industry gave its employees good wages and security, and it brought great economic benefits for the south Wales economy.

Many of those who came to work in Llanwern are now retired, but they give the border town of Chepstow a distinct Welsh identity. Many workers took early retirement and others faced redundancy, but they all contributed to the reputation of Llanwern as a premier steel plant. They contributed to the productivity gains that Llanwern achieved. Now, as pensioners, they have seen their British Steel pension fund raided by the present company.

On the day of the announcement, the statement by my right hon. Friend the Secretary of State for Trade and Industry argued that the move demonstrated the short- term approach that Corus had taken. Corus had failed to discuss its plans with the Government, relevant information had not been disclosed and it had resisted any meaningful dialogue. Offers of assistance from the Department of Trade and Industry and the National Assembly for Wales were met with a total lack of co-operation.

Mr. Win Griffiths (Bridgend)

Like my hon. Friend, I was involved in the meeting with Sir Brian Moffat before the terrible announcement was made, and felt that there was no real dialogue between the company and the Government. I would like to contrast that with the approach of the multinational Ford motor company. It has announced a £245 million investment in my constituency that will create more than 600 jobs. Effective consultation between the Government and the unions, and particularly between the management and the work force in Bridgend, brought that about. Should not Corus take note of that example and recognise that productive relationships with its work force and the Government can achieve a successful outcome.

Mr. Edwards

My hon. Friend makes a powerful point. He represents a constituency where tremendous investment from both America and Japan has been achieved through dialogue and co-operation. That is in marked contrast to what the Corus announcement represents. In recent weeks, Toyota and Nissan have taken positive decisions on future production and we have had further welcome news about manufacturing growth in Wales, with additional orders for Airbus at BAE Systems in Broughton, in the constituency of my right hon. Friend the Member for Alyn and Deeside (Mr. Jones).

The Welsh economy has been growing recently. It is in better condition now than it has been since the 1950s and 1960s, and British production is at its best level since 1994. That is the economic context in which Corus has taken its short-term view. Only last August, Corus claimed that it would invest £35 million in relining the No. 3 blast furnace at Llanwern. Nick Cragg, the managing director of Corus Strip Products, said: The decision to proceed with the relining is a positive step forward and provides a real opportunity for Llanwern … despite difficult trading conditions. The headlines at the time read "Llanwern rescued". I wrote to Mr. Cragg to congratulate Corus on its investment. I suggested that we might make representations to the Government, the National Assembly for Wales and the European Commission about the challenges that the company faced, given that there were difficult trading conditions and that some unemployment would be inevitable. I received no reply. The decision to reline that blast furnace has been rescinded, and the investment has been cancelled. John Bryant, a chief executive at that time, was considered by the unions to be someone who was committed to the UK steel industry and who saw a future at Llanwern. He was sacked in December. Another chief executive, Mr. Fokko van Duyne, was also sacked.

Predictably, people were aghast at the Corus announcement. The Archbishop of Wales, formerly the Bishop of Monmouth, reacted by saying: Many people feel that Corus' failure to implement any kind of consultation suggests that they do not trust their own workforce and that they do not take the lives of those people seriously. I discussed the situation with the Archbishop only last Friday. I agree with his view that the announcement pinpoints problems about the methods and standards of management and the lack of consultation in this country.

It is widely acknowledged that steel production in Britain has faced difficult trading conditions. The general strength of the economy has resulted in a high sterling value in relation to the euro, although in recent weeks the pound has weakened by about 10 per cent., thus reducing Corus's losses by about £150 million. The failure by Corus to take a long-term view stimulated the union, the Iron and Steel Trades Confederation, to propose a buy-out that would allow the Llanwern steelworks to retain heavy steel production, given the strengthening euro and better prospects for the economy as a whole.

Tower colliery at Hirwaun in the constituency of my hon. Friend the Member for Cynon Valley (Ann Clwyd) provides a famous model. The miners were determined to prove the viability of the colliery when the previous Government were closing all the coal mines in Wales. That determination led to success at Tower, which is now the only deep mine left in Wales. Another example is Rover, following the appalling decision by BMW.

The union's offer for Llanwern was refused. Sir Brian Moffat, the chairman of Corus, stated that it would "lead to competition". Better to make 1,200 people redundant than to risk competition, as far as Sir Brian Moffat is concerned. Better to close the Ebbw Vale steelworks, putting 760 people out of work, than risk competition. That is an example of the ruthlessness of a chairman who once stated that his company was in business to make money, not steel. He is known as the silent assassin. He is cold, calculating and detached from the human impact of his business decisions—a manager who has built his reputation on managing decline. Yet he was knighted under the previous Government. Was that for services to the steel industry? His ruthlessness reminds me of Victorian mill owners. In the 19th century, captains of industry could get away with a great deal, before we had state intervention, decent standards of employment and trade union protection. Such behaviour is not acceptable in the 21st century, and would not be acceptable in other European countries. In fact, Lord Wedderburn said, in his statement on the announcement in the other place, that it may be illegal. I ask the Minister to consider that.

Sir Brian Moffat was invited to a meeting called by Welsh Labour Members last week—the Monday before the announcement. I am currently chairman of the Welsh Labour Members and I distinctly remember that Sir Brian said that no decisions had been made on any plants. If he was telling the truth, it implies that all decisions on the plant were taken in just two days, and confirms the short-termism of the announcement. If he was not telling the truth, it confirms that he has treated the Government, the work force and hon. Members with deceit and contempt.

Mr. Barry Jones (Alyn and Deeside)

My hon. Friend fights hard for his people. We admire that in him, as do the people of Newport and Ebbw Vale. Can he recall such cynical and brutal treatment of a magnificent work force anywhere in the western world? Does he realise that the company is unilaterally downscaling British steel production by 4 million tonnes a year? There is no evidence of any blood, job losses or downscaling of production on the Dutch side. It is a terrible way to treat a magnificent work force.

Mr. Edwards

My right hon. Friend makes a powerful point, which he has made on many occasions. It is widely felt that the British steel industry is being sacrificed for the Dutch steel industry. However, I am sure that he will acknowledge that trade unions in Holland have refused the work that has been transferred from England and Wales. We should put on record our gratitude to the Dutch trade unions for their stance.

Given what we heard from Sir Brian Moffat, we can understand why Peter Law, the Welsh Assembly Member for Blaenau Gwent said: They lied about the blast furnace at Llanwern. They lied to the workers at Ebbw Vale. That was why other colleagues and I suggested that Sir Brian Moffat and other members of Corus should be required to give formal evidence to the Welsh Affairs Committee—of which I am a member—so that the views on and background to the saga can be heard. I understand that arrangements for that are being made.

To their credit, the Government have repeatedly attempted to work with Corus to discuss an alternative to the proposed massive job losses. Ministers have been rebuffed at every turn. I congratulate my right hon. Friend the Secretary of State for Wales, my right hon. Friend the Member for Cardiff, West (Mr. Morgan), First Minister of the National Assembly for Wales, Deputy First Minister Mike German and others in the Assembly on their efforts to find a resolution to the crisis. The Llanwern taskforce consists of representatives from Newport borough council and the National Assembly and it is working hard to find an alternative.

The trade unions, too, have been rebuffed at every turn. Every promise that they have made to Corus has been kept, yet every promise made by the company to the work force has been broken. It is widely acknowledged that Corus's fundamental problem is mismanagement, not trading conditions, the pound or other minor issues raised by the official Opposition. The mismanagement starts at the top with the chairman, Sir Brian Moffat. My message to him is that he cannot treat his work force and our communities like this. My message to the Government is that nobody should be allowed to treat any work force or community like this.

Corus's announcement has been ruthless, and it has treated its work force with contempt. The UK steel industry must be retained; it is not in the interests of the work force, shareholders or the country to allow 6,000 jobs to be lost. We ask the company to reconsider, to minimise the impact of the job losses, to consult the trade unions and to co-operate with the Government to find an alternative that will maintain the capacity of the UK steel industry. That would preserve steel production as a strategic industry for economic and security reasons. Every effort must be made to save as many of the 6,000 jobs in Llanwern and other UK plants as possible.

9.44 am

Ms Dari Taylor (Stockton, South)

It is a great pleasure to follow my hon. Friend the Member for Monmouth (Mr. Edwards). He has shown passion and sheer determination in identifying the serious problems created by Corus's announcement, for not only our work forces but our communities. Many people see this blow as an attempt to close their communities, never mind the steelworks.

I believe that the announcement made by Corus last week, which amounts to more than 3,000 job cuts with a further 3,000 anticipated, is not only thoroughly unprincipled, but an act of short-term accountancy that will achieve little in restructuring the industry and will not secure an active future for steel production. My area, Teesside, faces the closure of a coil mill and of Steel house, the company's head office. Steel house was an important signal to the whole of Teesside that British Steel, which is now Corus, meant to stay there and was good for the community; now it will be closed and we are told that the administration will be taken to Scunthorpe.

This is not just about the job losses and the closure of two important parts of steel production. It is unpalatable that a company should behave in such an unprincipled way and not tell us what more we are to suffer. A further 1,000 job losses are anticipated, and we are told that there are more cuts to come. That has made many people in my community anxious about their future and that of their families.

If we consider how Corus has marketed itself recently, we can reach only one conclusion. The short-term nature of the announcement is clear, given the profits previously made from steel. In the year to March 1998, British Steel made a profit of about £315 million; in the year to March 1999, it made a loss of £142 million. I am skilled at scrutinising company finances but I am amazed that, by December 2000, it claimed an estimated operating loss of more than £1 billion. We see a four-year track of profit, small loss and then significant loss. Corus pointed to the high value of the pound as a problem, but the value of the pound was relatively static throughout that period, so that cannot be the answer.

The company also stated that the figure is an estimated operating loss. If the costs associated with the recent restructuring are stripped out, one sees that the estimated operating loss was only £23 million. I suggest that Corus is playing with money and finance, and ruining our communities to boot. It is not prepared honestly and faithfully to put its problems on the table and allow the Government to respond.

By stating those figures, I want to make the point that Corus is managing a marginal decline in demand for steel by closure and redundancy. It is not looking, as Ford did, for new markets and products, or to improve efficiency. It simply wants to close things down. My hon. Friend suggested that it is moving the company to Holland. That is strikingly obvious to many of us, and we will fight it.

Corus has stated that demand has not been great and that it is concerned about that. Naturally and inevitably, we are all concerned, but the statistics for Britain and Europe together show that there has been an increase in demand, not a decline. When some parts of the steel industry are examined minutely, declines can be seen, but that does not apply across the board. Consumption of finished steel products in the UK has fallen by 1.2 million tonnes, and the figure for the rest of Europe is marginally lower. I say again to Corus that if there is a marginal fall in consumption, a marginal impact on the company could have been anticipated; but the savage way in which Corus has brutalised our steel industry is unacceptable. The company should present us with an honest factual picture so that we can see its problems and how best to help.

It is interesting to note that it is estimated that, between 2001 and 2005, demand for steel in Europe will increase from 144.8 million to 150 million tonnes. The world picture is even more revealing: global demand is set to rise by some 60 million tonnes.

The British steel industry is equipped with the best technology and an incredibly good work force who are competent, capable and flexible and prepared to negotiate. They have accepted being pared down to make the company efficient, and are acknowledged to be 10 per cent. more efficient than any other steelworkers. Given the projected increase in European and global demand, are we seriously saying that we are going to slaughter the industry in this way? That is unacceptable.

Hon. Members have not been given a true picture of what is happening. We are witnessing the destruction of our communities and our companies, and we are not prepared to accept it. Corus had better come to terms with that fact quickly.

The productivity of British steelworkers is astounding. It is claimed that German and French workers have the highest productivity, but the figures reveal that our workers are the best: a UK steelworker can produce more than 571 million tonnes a year, whereas German steelworkers produce 543 million, and the French only 534 million.

European companies also face cuts, but France and Germany face cuts nothing like as savage as ours, and the Spanish steel industry is even growing. That makes us extremely uncomfortable. We believe that there could be chains of supply from eastern Europe. No hon. Member would speak more determinedly than I would in favour of the growth of the eastern European economy, but I am not prepared to accept that it should thrive while my economy on the Tees declines and dies.

We have entered a consultation period, and we need to be spoken to as adults so that we can negotiate fairly and squarely. I want to believe that Corus is treating it as a real consultation period. I want to believe that our steel group will have a proper meeting tomorrow with Sir Brian Moffat in which we take each other seriously and speak about the reality of the situation.

Mr. Win Griffiths

I want to contrast again the ways in which Ford and Corus manage their affairs. The Corus workers have been given only 14 days' notice, virtually as an afterthought to the announcements made by the company. In the United States, although it is under no legal obligation to do so, Ford gives the work force 90 days' notice before final decisions are made about major changes in employment at its plants, or about major investments, such as the one at Bridgend. My intelligence from America is that it managed to reach a deal with the workers in Cleveland simply because of the way in which such investment decisions are handled.

Ms Taylor

I am most grateful to my hon. Friend for that intervention, which demonstrates that there are models of good industrial relations that define the best practice not only for our work force but for companies. We live in an era in which partnership is writ large. If companies do not work in partnership with a loyal work force and, in this case, with a Government, we shall see the end of what has been, and should be, a vibrant industry.

The consultation period is set. We have been told that Corus is going through a strategic restructuring. One fact has been made very clear: the company is concerned primarily with the accounts—how the books are balanced and how the shareholders are paid. It is trying to achieve that by savage and seemingly random cuts. That is not an effective model of management; it is management in the most scrambled, opportunist and unprincipled manner.

Corus has told us that it will make no further investment in the UK. That is a serious statement. There are still 22,000 people employed directly in our steel industry. That is no way to treat 22,000 people and, I would submit, a further 90,000 and their communities who rely on this source of employment and who have given their lives to it. Many of my people have worked for 20 or 30 years in the industry, a lot of them alongside their fathers and their children. That is the extent of their commitment and their loyalty. We have a Government offering help. My plea to Corus is to adopt a different approach. There is time for it to do so, to think this problem through and to achieve a resolution that we can all live with. By opening a meaningful dialogue with the Government and the trade unions, Corus can save jobs and communities.

On behalf of a very large community of steel-workers—in particular the 6,000 who know that there is a heavy hatchet over their heads—their families and their communities, I urge Corus to think again and to work with the Government to achieve a resolution, ensuring that, as demand for steel increases, the UK can respond efficiently and effectively as one of the best steel producers in the world.

9.59 am

Mr. Martin Caton (Gower)

I congratulate my hon. Friend the Member for Monmouth (Mr. Edwards) on having secured this debate, and on the power of his opening argument. In the circumstances, it is not a pleasure to participate, but I am grateful for the opportunity to do so. I also congratulate my hon. Friend the Member for Stockton, South (Ms Taylor) on the powerful case that she has made.

The loss of 130 jobs at the Bryngwyn plant in my constituency is, on the face of it, not in the same league as the proposed job losses of 1,300 at Llanwern and 780 at Ebbw Vale, but it is part of the same blow, which has hit Wales hard. For the village of Gorseinon, it is a second shock in less than 10 days. A week before the Corus announcement, we learned that the French company Valeo intends to close its factory at Gorseinon, which makes car heating and air conditioning systems, with a loss of 330 jobs. A fairly small community faces a possible total of 460 job losses, which would have many consequences for the local economy and even for the social fabric of the area.

Although Valeo and Bryngwyn have very different processes and products, their recent histories show a remarkable similarity. Both sites were named, just a few months ago, as centres of excellence in their industries, and their work forces were lauded, yet after no consultation or information sharing, those workers have now been told that they will all be out of a job by the end of July.

The double whammy leaves the Gorseinon community reeling. The Corus workers at Bryngwyn, victims of restructuring proposals, are bewildered and angry. At the weekend, the Welsh Assembly Member for Gower, Edwina Hart, and I met shop stewards of the Transport and General Workers Union and the Amalgamated Engineering and Electrical Union at Bryngwyn. They told us of more than seven years of full order books for Bryngwyn's colour-coded product. Last April, Corus managers had shown them production and profitability charts and told them that Bryngwyn was leading the way and should keep up the good work. Nine months later, they have been told that that good work is to be stopped, that no productivity or new orders in the period up to July can change that, and that their members will receive only the basic redundancy package.

The situation is summed up by the telephone call that a Corus representative made to tell me, as the local Member of Parliament, of the devastating decision about Bryngwyn. After hearing the plans, I asked whether there would be a meaningful consultation period, and was told, "Yes, all the people who are being made redundant will receive counselling." Clearly, it is not only Sir Brian Moffat who fails to understand the meaning of the word "consultation". It has been deleted from the whole company's vocabulary. That is shameful.

My hon. Friend the Member for Stockton, South hopes that there will be meaningful negotiations. I share those hopes, but so far we have precious little evidence on which to base them. I am going to the Bryngwyn works tomorrow to discuss the local campaign to save the jobs. I hope that the possibility of a local buy-out will be mentioned, which would allow the team there to carry on its successful work. My hon. Friend the Member for Monmouth mentioned the attitude that Corus had to that option when the ISTC mooted it for Llanwern, but the people of Gorseinon will be looking to the Government to make every effort to shift Corus's thinking on the matter.

We must tell Corus that it cannot have it both ways. If the south Wales plants are long-term loss makers, then why should it fear a management-work force takeover? What competition does a lame duckling offer to the restructured, reinvigorated swan that Corus is supposed to be becoming—unless the duckling is not quite so lame, and the swan not really rejuvenated? Unless Corus is prepared to change direction, steel needs to be partly outside its monopolistic control if it is to have a future in our country.

10.4 am

Mr. Barry Jones (Alyn and Deeside)

I am pleased to follow my hon. Friend the Member for Gower (Mr. Caton), who is a defender of his community. When my hon. Friend the Member for Monmouth (Mr. Edwards) referred to Shotton steelworks, he reminded me of those far-off days when I was working at No. 2 blast furnace at Shotton. It was one of the best jobs that I have ever had. I was given a crowbar, a pick and a shovel, a wheelbarrow and some moulding sand and told to get on with it, so I did. It was a tough job, but it was easy. I did not have to think. I did as I was told. My father had worked at that steelworks, as had my two grandfathers. At the time, it was a mighty, thriving 14,000-strong integrated steelworks. I am making these remarks to put into context the raw, powerful feelings that we all have about our communities now being put at risk by a cynical, brutal, thoughtless, profit-mad company—no more, no less.

I am also reminded of the former Secretary of State for Trade and Industry, Peter Walker, who in 1972 brought forth a White Paper. His aim was to restructure the then nationalised industry. Because his proposals meant the loss of jobs in my steelworks, I took a deputation to the then Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), who was very courteous, accessible and accommodating. I took steelworkers from my constituency to the Cabinet Room and sat opposite the then Prime Minister, now the Father of the House. Above him was a painting of Walpole, the first Prime Minister. The workers and councillors spoke up well. It seemed that the Prime Minister wanted to be of help, but that was not possible.

As a result of that, more than 3,000 people arrived in London on three special trains and marched to this honourable House. Our bass drum was arrested on Vauxhall bridge and taken to Cannon Row police station. There were so many people in the area that the whole of Millbank was closed. Thereafter, security in the House of Commons and its surrounding environment was changed. We made a valiant effort to stop the loss of thousands of jobs, but after looking at the papers in 1980, the then Secretary of State for Trade and Industry, Sir Keith Joseph, said that steelmaking had to end. We lost 8,000 direct steel jobs overnight and at least 10,000 others were lost as a consequence. Hundreds of people from the estates in my constituency were out of work. Between 1980 and 1982, I think that male unemployment increased officially to 25 per cent.

Mr. Edwards

The Tory years.

Mr. Jones

Yes, they were the years of a Conservative Administration.

I emphasise the importance of this debate. When those redundancies rained down on my constituency, its social fabric could not take the strain. Unhappiness and unemployment were terrible wounds on the Deeside community. I do not want that for the constituencies in Wales or the rest of the United Kingdom. What is being proposed is unjust. If it comes about, it will not be good for our country, for our constituencies or for the steel-worker constituents of my hon. Friend the Member for Monmouth and their families.

At present, my steelworks has fewer than 1,000 employees, yet we have been told that we are to lose 319 jobs. What reward is that? The work force are magnificent and, over the years, have collaborated with the board of Corus and its predecessor in de-manning.

Each time, the works leadership was told that if it de-manned, stepped up productivity and became more competitive, more successful and more profitable, it would be able to survive into the new century and retain what was left of the works; but that has not proved true. What Corus told my constituents at Shotton steelworks was not correct. Our people gave everything to the board and have received nothing in return but a kick in the teeth. They believe that they are being sacrificed on an altar that represents profit, and that their interests and those of the great industry come behind those of the shareholders.

Mr. Win Griffiths

My right hon. Friend's reference to workers in his constituency and throughout the steel industry in the United Kingdom being sacrificed on the altar of profit reminds me of the fact that when Corus was created, British Steel was cash rich. It had money in the bank, and it used nearly £700 million of that money as a sweetener in special dividends to shareholders to approve the merger. If British Steel had planned properly, it could have had that money available for the rainy day of the past year or so, and our workers would not have been sacrificed for the sake of a sweetener.

Mr. Jones

A week ago, my hon. Friend made that point to the chairman of Corus. Yards from this Chamber, the chairman and chief executive of Corus met Welsh Members of Parliament. It was an unique and historic meeting, and he made that point powerfully. However, my point was that if our country is divested of its steel capability on the colossal scale now proposed by the company, that will be a cut for ever. We will not be able to bring back that productivity. I seriously warn the company about that.

We maintain a large standing Army. We have a seaborne nuclear deterrent. We have ambitions as a middle-rank, modern nation state in Europe. We are a world leader, and we want to retain our influence. It will not be possible to do that if the nation is divested of a steel industry—and that is what is happening. We can now see the future, in which Sir Brian Moffat's board is planning by stealth to end steelmaking in Britain and concentrate it in another country across the channel. That cannot be right for Britain, for Wales or for Deeside and Shotton in my constituency.

We are discussing nationhood and the future of Britain. It is not possible to have a future or a nation without a steel industry. A steel industry is a foundation industry. There is nothing without it. It is incredible that a board of anonymous men and women hidden away can make a decision unilaterally, without consulting anyone or telling the British Government, the British Prime Minister or the Secretary of State for Trade and Industry. They are not telling us what they are about—but we know what they are about, and they will bring on our communities unhappiness, unemployment and hopelessness. I have seen it before. That is a terrible, searing thing to do to communities, and I hope that, even at this late stage, Corus will think again. I do not believe that it is equal to the task.

My right hon. and hon. Friends have behaved magnificently in trying to defend steelworkers in their constituencies, and I pay tribute to union convenors, such as Robert Butt of the transport workers, Jim Mullins of the steelworkers, Mike Parkinson of the engineers and Arthur Watson of the GMB, who are magnificent in doing what they are trying to do, and do not deserve the injustice that is being visited on them. All my Welsh colleagues know that what Corus is doing in Wales is wrong and unjust. The board must think again and come to the Prime Minister and offer to revisit the subject; it should stand back; it should think again; it should not do this to my steelworks.

10.14 am

Mr. Ieuan Wyn Jones (Ynys Môn)

May I say how privileged I am to be able to speak in this debate, in which several hon. Members representing steel areas in Wales have spoken so eloquently about the devastating blow that was struck at the heart of their communities when Corus announced that 3,000 jobs in Wales were to be lost in south Wales, at Llanwern, Ebbw Vale and Bryngwyn, and in the north in Shotton? Those are jobs in areas where, over the years, unemployment has had a devastating effect—that is especially true of Ebbw Vale. We have heard from the right hon. Member for Alyn and Deeside (Mr. Jones) about the destruction of the steel industry in his area decades ago.

Over the past week or so, I have heard many eloquent speeches both here and in the National Assembly about the effect that the job losses are having. What underlies those speeches is a recognition that those working in the steel industry in Wales have made such a massive contribution to the economy of Wales, the United Kingdom and the rest of the world. What is also true is that those were good-quality jobs of the kind that attract incomes that we cannot afford to lose in Wales.

The loss of those jobs has a massive effect on the communities that I have mentioned, and it comes on top of other job losses. We have heard from the hon. Member for Gower (Mr. Caton) about the job losses at Valeo in Gorseinon, but we have also heard about job losses at Sony, Panasonic, Dewhurst and Gossard. Those are jobs in manufacturing—clearly not on the scale of the steel industry, but jobs that we can ill afford to lose in Wales.

I shall come to the decision by Corus in a moment, but alongside that, we must consider the Government's economic policy. How can it be right that Wales, with its heavier reliance on manufacturing, should suffer that haemorrhage of jobs without the Government's being prepared to countenance any change in economic policy to protect the future of our manufacturing industry? I appeal to the Minister to address that issue.

Mr. Win Griffiths

We all deplore what Corus are doing—there is a huge case against it, and it should be in the dock today—but when we look at manufacturing in Wales overall, there is also evidence of good news. The Bridgend plant will get more than 600 new jobs and the unions there confidently expect there to be more. That will also pave the way for the development of a new business park, in which, over a five-year period, there could easily be 1,000 new jobs. We need to look at all those issues in the round, and the Government worked well with Ford to enable that investment to be announced.

Mr. Jones

I applaud the fact that Ford have made that announcement to bring further jobs to Bridgend—of course that is excellent news—but we also have to remember the underlying trend in manufacturing in Wales. Our heavy reliance on manufacturing, which provides 27 per cent. of our jobs, compared with 20 per cent. in other parts of the United Kingdom, means that when there are job losses in manufacturing, we must take economic policy, and particularly the high value of the pound, into account. Many of those who have announced those job losses have cited that as one of the reasons why they are now uncompetitive against other plants in the rest of the European Union. I am not saying that Corus is blameless.

Mr. Griffiths

Will the hon. Gentleman give way?

Mr. Jones

No, I have already given way to the hon. Gentleman.

The economic policy must also be examined. As hon. Members from all parts of the political spectrum in Wales have said, Corus's behaviour has been totally inexcusable. Its failure to consult the Government, the trade unions, the relevant agencies—such as the Welsh Development Agency—and the local authorities has, rightly, been condemned. Of course Corus should have consulted them. Corus should have told the Government what its plans were, so that stringent efforts could have been made to save jobs. Of course that is true.

We must also remember that in other European member states Corus could not have acted as it did, because employment laws in place in Germany and the Netherlands prevent such companies from throwing their workers out of work. That is the truth. I call on the Government to tell us that such a company will never again be allowed to throw workers on to the scrapheap. We should have employment laws equal to those in Germany and the Netherlands. We want statutory rights of consultation that would not have allowed Corus to say to the Government, "I'm sorry, but we're not prepared to talk." It should have had to talk to the Government. The Government must examine that issue.

Mr. Barry Jones

Is not the hon. Gentleman pushing his luck? He wants a separate independent Wales. We would not have a steel industry at all if he was in office.

Mr. Jones

What is remarkable about that intervention is that the right hon. Gentleman clearly did not disagree with the fundamental point that I was making. None of those who have spoken would disagree with that point. If employment laws were in place, Corus would have been prevented from acting as it did. He himself said that jobs were not being lost in the Netherlands. I can tell him why: if Corus had been planning to lose jobs in the Netherlands, it would have had to go through a consultation procedure that would have lasted up to two years. It was not prepared to do that. It is essential that employment laws are put in place in the United Kingdom. No one can deny the force of that argument.

I also want an assurance that, when the Government are talking to Corus, all options for saving jobs will be discussed. We must re-examine the trade union proposal, not only in relation to Llanwern, but to see whether similar proposals may be applied in other plants.

The first tack is to try to persuade Corus not to go ahead with the redundancies. We all support that plea and want to see it succeed. We want to see the Prime Minister, the First Minister and all the relevant Welsh and UK Ministers coming together to ensure that jobs can be protected. If that fails, we must look at ways in which we can assist the workers through proposals such as those of the trade unions. Clearly, we must also have contingency plans. What contingency plans will be put in place if all the pleading fails and the jobs are lost? No firm figure has been established yet, but it is estimated that between £50 million and £100 million will be necessary for the communities to rebuild the economies of the areas devastated by job losses.

Where will that money come from? I would like the Minister to tell us, categorically, that if it is necessary to provide those resources, the Treasury will provide them above the Welsh block. We do not want the National Assembly to have to raid its own budget to provide the necessary resources to rebuild the economy of those areas. Will she assure us that, if the worst comes to the worst and those resources are needed, the Treasury will be prepared to give that money to the Assembly so that we can begin that work of rebuilding?

The communities are facing desperate times and immense problems. A community such as Ebbw Vale has high social deprivation. It will be a huge task to rebuild those economies, so I hope that the Government will show today that they stand shoulder to shoulder with those communities.

10.25 am

Mr. Richard Livsey (Brecon and Radnorshire)

I join my friends from every political party in condemning the loss of jobs at Corus and the way in which the company has gone about it. Last Saturday at Cardiff Arms Park, I saw a graphic illustration of how it has been done. I have sat next to the same person for the past 10 years—a young lad in his early 30s. The Welsh team was losing to the best English side I have seen in the past 50 years. At half-time he looked a bit depressed, and I said to him, "We're going to lose this match, aren't we?" He said, "It's worse than that: I work in the steel plant in Llanwern and I've been given my redundancy this week." There he is, a 34-year-old with a couple of kids—what future does he have? He is a skilled person, but as things stand, he does not really have a future.

We should bring the subject down to the human scale. We can talk about macro-economies and so on, but what matters are the individuals and families who are seriously hurt by Corus's disgraceful decision. Mr. Moffat is a butcher; most butchers retire eventually, and I understand that he is to retire within the next 12 months. When butchers retire, they sell their assets at the best possible price—in this case, the price on the stock markets. Corus in Holland is recruiting workers, but Corus in the United Kingdom is sacking them. The euro valuation in relation to the pound means that there is a loss on every tonne of steel produced, and exported steel in particular. No protection law exists to prevent the employees from being sacked.

It will be death by a thousand cuts. Unless this huge basic industry—the foundation of manufacturing industry in the United Kingdom—is allowed to compete properly in the marketplace, the remaining plants will also be in danger. I hope that that will not happen, but it seems possible. Corus has ruled out capital investment in its United Kingdom plants, which represents a death sentence for steel production here. We must act now—not in one or two or three years' time—to save the UK steel industry. It is a basic industry in Wales, and a vital part of the economy.

The announcement last week of the loss of 6,000 jobs in England and Wales is primarily the result of a decision by Corus to chop 3 million tonnes of production in the UK, which represents most of the export market. Most of it is going to Europe, and the industry is being downsized. Corus wants to keep spending to a minimum and will not invest for five years—we have that on good authority. Further cuts could be inevitable unless we take action. Mr. Moffat blames world overcapacity, low prices, falling UK demand and a strong pound. He may be right, but the way in which he has responded to that situation is absolutely atrocious.

That is the problem, but what do we have as a solution? Wales may receive £50 million from Whitehall, but one must set that against the cyclical nature of the steel industry. In 1996, British Steel made taxed profits of £ 1 billion. That was only four years ago, and profits could reach that level again if we remain competitive and there is investment. Turning the steel industry around is like trying to turn a massive tanker just outside Port Talbot roads: it takes a long time. It requires stability in the industry, not cuts like these. Mr. Moffat wants a good share price when he retires, which is the worst possible type of short-termism.

We cannot avoid certain facts. Corus has no legal obligation to consult, which is why it did not do so. It had no intention of doing so. As someone who worked for a multinational company for some time, I know that some boardrooms cut and run, while others co-operate and negotiate. That is the difference between Corus and Ford, for example. If we do not get the change that we want from the Corus board, we must try and try again. Indeed, consultation might have happened if we had signed up to the European Union employment protection directives. I cannot for the life of me understand a Labour Government who do not get involved in workers' rights. There is no sentiment in big business. The Government have been blocking the employment protection directives. In Nice, for example, they could have signed up to them but they did not. Why? It is a serious matter.

In his opening remarks, the hon. Member for Monmouth (Mr. Edwards) gave a marvellous prescription. Many other hon. Members—if I may use Dylan Thomas's phrase—have demonstrated a tendency to Rage, rage against the dying of the light. In this case, the dying of the light is in the steel plants. My family, in the early part of the 20th century, worked for the infamous Crawshay in Merthyr Tydfil. We all know what happened to Cyfartha ironworks: it closed down and everybody was out of a job. Indeed, the words "God forgive me" are inscribed on the grave of one of the Crawshays. I do not know whether that will be on Moffat's grave, but it would be deserved.

We are in danger of living in a cloud cuckoo land. We must recognise certain facts. There is a global glut of steel. Steel prices are at a 20-year low. Corus exports 3 million tonnes to Europe and also owns Dutch and German production, which is far more profitable. The pound has been 40 per cent. overvalued over the past two years. How can one compete with that milestone around one's neck? That is why such a loss has been made. UK steel demand is in stagnation. Corus is £1.6 billion in debt and has made a loss of £226 million during the past six months.

Something radical must be done. British Steel was uniquely vulnerable to a takeover because of inadequate takeover laws in the United Kingdom. That is why the company is in this state. Of course, the management are far too ruthless and do not care a damn about the work force. The United Kingdom is going nowhere in terms of steel production. In the long term, the cycle will change and things will get better. The nature of the stock market favours short-termism, which puts people on the labour scrapheap. The competition is massively fierce—from China, Russia, Europe and Brazil—and the overvalued pound ensures that imports easily penetrate our markets. In fact, the penetration is massive. Unless the situation changes or there is intervention, Corus will undoubtedly relocate steel production, perhaps to eastern Europe.

The stock market does not value manufacturing production. It is interested only in short-term profitability, hence the job cuts and the increase of 10 per cent. in the share price last week. There is a high pound, and we need to do much to cure that problem. We have to review the takeover rules and company ownership structures. The European Parliament has tried to make hostile takeovers more difficult, but it has been opposed in that. Indeed, Ministers allowed British Steel to amalgamate with Hoogovens.

As a result of all that, we have the demise of Ebbw Vale, a town that depends totally on steel. Everybody there will be out of a job, and there is no alternative. That is a huge tragedy. There must be a management-worker buy-out of the Ebbw Vale steelworks if it is to survive. That is extremely important, because steel is fundamental to our manufacturing industry. We are in serious trouble unless there is Government intervention, as there was in the 1920s and 1930s and in the 1960s. There must be a rapid response for areas hit by closures. Help should be given to construct small and medium-sized enterprises to use more locally manufactured steel. We must have new consultation procedures and boost local demand. Public investment is necessary to save the industry. I am a great believer in Keynesian economics, and when there is a crisis it has to be met head on.

Unless we join the euro as soon as possible, we will continue to lose money on every tonne of steel produced. There should be more buy-outs of plants to save our industry and assistance from the Treasury to increase the Welsh block. We must meet head on this huge crisis—in human as well as industrial terms—if the steel and manufacturing industries are to continue in Britain at all.

10.37 am

Mr. Richard Page (South-West Hertfordshire)

I understand the feelings of hon. Members who have already spoken. I was born in Tredegar and my mother's family have lived there all their lives. I know the importance of steel and coal to the psyche of that community. It is understandable that hon. Members want to try to protect their constituents and, if necessary, to lash out on their behalf, and they are to be commended for it. I do not criticise them, but I shall explain why I believe that their energies have been misdirected.

It is easy to run a business that is going well. The tills ring, the salesmen are out and the money comes in. Any fool can do that, but when business gets difficult, one has to start thinking about it. Business is a bit like a cake: one tackles the slices one by one. When one has finished, one hopes to have a cake that is a bit smaller. One keeps repeating the process, and the day one stops tackling the slices is the day when one goes out of business.

In 1997, British Steel made a profit of £387 million from carbon steel. The line on the graph goes straight down from that point, and now Corus is losing a similar sum. It is losing more than £1 million a day. What can be done about that? Usually, increased efficiency is the answer and the work force can be made more productive. It is unusual for me to quote the Secretary of State for Trade and Industry, but in his recent announcement on this sad affair, he said that the productivity of UK steelworkers is now at 571 tonnes a year per man—a staggering figure that makes ours one of the most efficient and productive steel operations in Europe, if not the world. We can be proud of our work force.

If lack of efficiency is not to blame, let us examine the marketplace, which the hon. Member for Stockton, South (Ms Taylor) discussed earlier. Total UK steel consumption has actually increased slightly since 1997, but if we examine that 1 million tonnes increase, it proves to consist of growth in imported steel goods and steel mill products. The pressure on our steel mills is to reduce volumes of production.

If the marketplace is not to blame, could transport be the problem? One must consider that our transport costs are among the highest in Europe.

What about regulation? If one takes the British Chambers of Commerce figures as broadly accurate—I shall not argue about £1 billion either way—we find that the cost of regulation on British business has increased by £10 billion.

Finally, we come to the largest slice of the cake, the ratio of the pound to the euro, which I think is the hammer blow. Of course, we have a further straw on the camel's back to come in the climate change levy. The Secretary of State dismissed it as a concern to Corus, but I can tell him that it is a concern to every company that tries to operate in Britain.

What can we do? The pluses are that we have an efficient work force and a market that has grown, but the minuses are transport costs, the forthcoming climate change levy, the huge burden of regulation and the impossibly high pound-euro rate.

Can Corus ask for a dramatic increase in the efficiency of its work force? No, because the work force has done magnificently. When I was the Member of Parliament for Workington, the blast furnace there was appallingly inefficient. The present operation is brilliant, and everyone connected with it can take a great deal of credit.

Can Corus do anything about the price of fuel? No. Can it do anything about the climate change levy? No. What can it do about regulations? Nothing. The damaging pound-euro ratio is the thing that really hurts not only Corus but British manufacturing in general. The hon. Members for Brecon and Radnorshire (Mr. Livsey) and for Ynys Môn (Mr. Jones) put their finger on it when they began to discuss the imbalance in the pound-euro rate.

Ms Dari Taylor

Will the hon. Gentleman give way?

Mr. Page

No—unless the Minister is happy for me to take up her time.

The Minister for Small Business and E-Commerce (Ms Patricia Hewitt)

It is entirely up to you.

Mr. Page

No, then.

Why do we have such a strong pound against the euro? It is because we have a high interest rate. Why do we have a high interest rate? Rightly, it has been set by the Monetary Policy Committee to limit inflation. I shall not argue that squeezing out interest should not be the criterion that it should operate on. It must do that because the fiscal policies followed by the Chancellor have resulted in masses of stealth taxes.

I must say to those hon. Members who gratuitously argued that Corus is slicing back assets simply because it likes to, that that seems a peculiar way to run a business. A management team that made cuts for fun would have minimal business experience.

In the last steel debate before Corus reached its decision, the Minister for Competitiveness concluded: We are taking action on the three key issues of the European exchange rate, the climate change levy and energy prices."—[Official Report, 10 January 2001; Vol. 360, c. 238WH] It is hard to say about energy prices, but what action is the DTI taking on the exchange rate and the climate change levy?

The hon. Member for Stockton, South asked what specific offers the Government have made to Corus. I, too, would like to know the answer to that question. The announcement was no surprise: it had been coming for a long time. What was Corus offered to keep its plants going, given that—through the Government's own actions—it is losing £1 million every day? In the time since this debate started, Corus has lost £55,555—I have not calculated the pence.

Ms Taylor

Please will the hon. Gentleman give way?

Mr. Page

In a minute, perhaps.

For the Government to give a few million pounds to a company in such a situation would be like turning to a drowning man with a hundredweight of lead strapped to his legs and saying, "We'll take a few pounds off you, but you'll still drown unless more dramatic help arrives."

Ms Taylor

Will the hon. Gentleman give way now?

Mr. Page

I will, but only because I have been given the nod by the Minister.

Ms Taylor

Is it now official Conservative party policy to support joining the euro, and will the hon. Gentleman be pressing for entry at the earliest point?

Mr. Page

Even I, in my ignorance, see a trap, which I shall not fall into. I see no difficulty in having a correct fiscal policy that is not only beneficial to the nation but puts us more in line with the currencies in Europe without all the penalties of joining the euro. We can have the penny and the bun: all we need to do is change the Chancellor.

I am worried that what is being suggested may not draw a line in the sand under this matter. If the high pound-euro ratio continues, it may be difficult to restore the profitability that carbon steel manufacturing enjoyed back in 1997.

I am desperately sorry for the employees who are caught up in this. They are efficient and hard-working, and it is not their fault. I understand why right hon. and hon. Members are so vehement in their defence; my attitude would be exactly the same if I had a steelworks in my constituency.

Ms Taylor

Will the hon. Gentleman give way?

Mr. Page

No.

Those in government who so loosely accuse Corus should be examining the real facts. The fault of the Government lies not in their stars, but in themselves.

10.48 am

The Minister for Small Business and E-Commerce (Ms Patricia Hewitt)

I congratulate my hon. Friend the Member for Monmouth (Mr. Edwards) on securing this important and timely debate. He and my right hon. Friend the Member for Alyn and Deeside (Mr. Jones), my hon. Friends the Members for Stockton, South (Ms Taylor) and for Gower (Mr. Caton), and the hon. Members for Ynys Môn (Mr. Jones) and for Brecon and Radnorshire (Mr. Livsey) forcefully and movingly expressed the fury that is felt by workers and their families and communities about the announcement that was made last week by Sir Brian Moffat on behalf of Corus. They also spoke about the appalling effects of the decision not only on individuals and families but on entire communities and economies. As my right hon. Friend the Secretary of State said in his statement in the House last week, the Government share absolutely that fury and sense of betrayal.

I congratulate all my hon. Friends on their efforts to support their constituents and the workers in this industry, and on working with the trade unions to persuade Corus to take a different, more constructive and long-term approach. As my right hon. Friend said last week, and as some hon. Members have said this morning, there are real problems with structural overcapacity in the steel industry worldwide. Corus has had to deal with real losses in its UK operation, from which it continues to suffer. However, last week's announcement is undoubtedly a short-term response that fails to take account of the long-term and fundamental strength of the UK economy and of manufacturing in particular. We now have a sound and credible platform for growth. We have low and stable inflation, low interest rates and sound public finances.

To be frank, the comments of the hon. Member for South-West Hertfordshire (Mr. Page) were economic gobbledegook. We all remember inflation rising to 11 per cent. and interest rates of above 11 per cent. for years on end. We all remember that 1 million manufacturing jobs were lost in the first Conservative recession of the early 1980s, and almost a further 1 million in the second one of the early 1990s. We will take no lessons from the Conservatives on economic policy and how to ensure the platform of stable economic growth that is the essential precondition for success in the manufacturing sector.

Several hon. Members have rightly referred to the general state of manufacturing, as well as the specific conditions in the steel industry, and I should stress that manufacturing output is rising. Indeed, as the Financial Times, among others, reports this morning, we have the highest growth in manufacturing output in general since 1994—an annual rate of 1.6 per cent. That should be compared with a fall in manufacturing output of 20 per cent. in the 1980s, and of more than 7 per cent. in the early 1990s. There is particularly strong growth in sectors such as the aerospace industry.

Several speakers mentioned the motor car industry. Despite the difficulties experienced by certain companies, there is real growth in that sector, with increased investment, output and exports. Moreover, the United Kingdom is retaining its position as the number one destination for direct foreign investment in Europe. Major global companies are giving a real vote of confidence to the UK. My hon. Friend the Member for Bridgend (Mr. Griffiths) rightly referred to recent long-term decisions by Ford that were taken on the basis of constructive dialogue with the Government and with workers. Decisions in recent weeks by Toyota and Nissan also illustrate confidence in the economic stability and good business environment that we have created.

In striking contrast is the announcement by Corus. As I said, the carbon steel manufacturing arm of Corus's UK operation is experiencing problems, with real losses of about £1 million a day. Corus must of course address those difficulties, but given the broad background of economic stability, growth and a sound manufacturing sector, it is simply unacceptable for the company to take this decision in this manner, and for its new leadership to refuse to talk to the Government. Indeed, until last week it refused to talk to the workers and their trade unions. I am glad that, following the decision on 1 February, Corus finally accepted that it should talk to the trade unions about its announcement. I understand that it effectively agreed to stop the clock for 14 days to allow those talks to continue. As my right hon. Friend the Secretary of State said last week, we were in discussions with the company and the joint chief executives, but the new chief executive made it very clear, very early on, that no package of measures would be of any interest to the company in terms of remedying the underlying problems as he saw them.

We have been working in Government, across Government and with the National Assembly for Wales to try to put together a more constructive long-term strategy for Corus. The problem has been its unwillingness to talk to us, to the National Assembly for Wales or, until last week, to the trade unions. Several of my hon. Friends referred to the proposal from the workers at Llanwern who want to mount a worker buy-out. We heard in the debate last week—I am not sure whether it has been referred to this morning—about the successful experience of the Tower colliery, which, following massive closures in the industry, was successfully bought out by the workers. I repeat what my right hon. Friend said last week: we urge the Corus leadership and management to sit down with the ISTC and the workers at Llanwern and seriously consider the constructive proposal that has been made for a worker-led buyout.

Several hon. Members, including the hon. Member for South-West Hertfordshire, referred to the broader economic situation and other factors that might lie behind the Corus decision. He referred to transport and, as my right hon. Friend said last week, that can hardly be an issue when the company is now proposing to move goods from Stockton to Llanwern. The company has not raised the matter with us. Similarly, the climate change levy has not been raised with us by the chief executive. Corus, in common with many other manufacturing companies and in response to our proposal, has negotiated a discount of 80 per cent. in the climate change levy in return for further improvements in energy efficiency.

On regulation, as the hon. Gentleman knows and as the Organisation for Economic Co-operation and Development recently confirmed at an international benchmarking study, we now have a lighter framework of regulation than other members of the European Union do.

The exchange rate is a serious matter, but let us be clear that much of the worsening of the exchange rate took place before 1997. In recent months, the value of the euro has strengthened. As my right hon. Friend the Chancellor has said on many occasions, it was clearly undervalued. Again, a company is failing to take account of long-term changes in the economy and making a decision on short-term considerations.

Several hon. Members, including my hon. Friend the Member for Monmouth, referred to consultation. Let me stress that United Kingdom law fully implements the European directive on collective redundancies. Corus is already under an obligation that was put into United Kingdom law by a previous Labour Government to consult workers and trade unions for at least 90 days before any dismissals take effect. That 90-day period will begin to run if the company, following its current discussions with the trade unions, confirms that the enormous redundancies are to continue.

The requirement in law for that minimum 90-day consultation period is that there should be good faith consultation, including consideration of ways of avoiding redundancies or reducing the number of dismissals or mitigating their effect in other ways. That obligation has been there for years under employment law enacted by a previous Labour Government. Also, the European works council directive applies, as it does to other multinational companies that operate in the United Kingdom.

I repeat my call to Corus to sit down with the unions, the National Assembly for Wales and us to seek a better long-term solution for the communities, economies and families affected by its devastating decision.