Corus Redundancies: Government Support (Hansard, 3 May 2001)

§ The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville)

Corus has today confirmed its intention to proceed with the job cuts it announced earlier this year. The Government's priority must now be to help the individuals and communities affected. My right honourable friend the Secretary of State for Trade and Industry has therefore announced a package of measures to assist those who face losing their jobs and plans to promote economic regeneration and job creation in the areas affected. A similar announcement is being made in the National Assembly for Wales. In total the two packages amount to around £135 million.

To help individuals to deal with the immediate financial difficulties created by redundancy, the Government intend to introduce a scheme to provide aid for workers affected by restructuring in the steel industry. The Government intend to apply to the Commission for funding available under Article 56 of the European Coal and Steel Community (ECSC) Treaty. Article 56 provides for social aid to assist workers who have lost their jobs as a result of restructuring in companies which produce products covered by the ECSC Treaty. We intend to provide a 123WA lump sum payment of around £2,500 to eligible individuals, of which the United Kingdom Government will contribute half. Those eligible will be workers involved in the production of products covered by the ECSC Treaty. We will also make similar provisions for steelworkers covered by the special framework of the Treaty of Rome for whom Article 56 makes no provision. The scheme will apply from 1 January 2000 and it is anticipated that 12,000 workers in England, Scotland and Wales will benefit from this at a total cost of about £32 million. The ECSC Treaty expires in July 2002 and the scheme will apply to eligible workers up to that date.

My right honourable friend the Secretary of State for Education and Employment is announcing the extension of the new Job Transition Service to all sites affected by the Corus redundancies. The Government will spend over £5 million in England and Wales to ensure that everyone who is affected by these redundancies has access to an equal level of support in getting a new job.

The Employment Service has already opened jobshops at Redcar, Scunthorpe and in South Yorkshire. In Wales there are jobshops in Llanwern, Ebbw Vale, Bryngwyn and Shotton. The Employment Service is liaising with Corus to assess whether additional jobshops or other facilities are needed as a result of this announcement.

The new Job Transition Service (JTS), which is already being piloted in South Yorkshire as a result of last summer's announcements by Corus, will now be extended to all the affected sites across the UK. The service offers a new approach to assisting those affected by redundancy to find new jobs.

Through the JTS, audits of the local economies will be carried out where major redundancies are taking place, and the Employment Service will work with local employers who are looking for new staff to identify their recruitment needs and analyse their skill requirements. Companies such as Nissan in the North East have already been identified as potentially offering opportunities for Corus workers.

At the same time, the JTS will provide anybody affected either directly or indirectly by these redundancies with personal advice on careers, financial matters, and general skills development. More specifically, it will direct people to suitable vacancies, identify the skills they need to develop, and discuss their training needs. Training will be funded, and—where appropriate—customised programmes will be developed.

In order to help develop this new service and ensure it is tailored fully to the needs of individuals, the DfEE and the Employment Service are working in partnership with the unions and with Corus itself on a similar package of support and training developed by the unions to be provided before workers leave the company. A joint bid to the European Social Fund for £2.5 million for England will be made in the next few weeks, with a similar bid being made in Wales.

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An employment credit for the over-50s going back to work will also be available to the individuals affected.

The Government are committed to helping the communities affected, and so we are backing projects crucial for economic regeneration, to ensure the long-term prosperity of all these areas.

In the North East, Dr John Bridge, the chairman of ONE North East, the Regional Development Agency in the area, has been asked to establish a small group drawn from the key regional partners, including the existing Tees Valley Partnership, to build on the work undertaken by the task group established in response to the previous round of Corus job cuts. The group will pave the way for the establishment of an urban regeneration company involving the five local authorities in the Tees Valley, to take this work forward over the longer term.

My right honourable friend the Deputy Prime Minister is also announcing a package of measures to help regenerate the Tees Valley. This includes a £20 million public sector project in Stockton to develop a Durham University campus and business park and to make environmental improvements; and support for the next stage of Middlehaven, a regeneration project in the Middlesbrough Docks. The Government will also fund feasibility studies into a new Tees crossing and a light rapid transport (LRT) scheme in the Tees Valley and are encouraging local authorities on Teesside to work up plans to improve transport infrastructure in the East Middlesbrough transport corridor. This is in addition to the £5 million scheme to improve access to Teesside airport which was announced on 28 March. Finally, as announced on Monday 30 April, we will be giving the West Central Hartlepool New Deal for Communities scheme £53.79 million over the next 10 years.

The Government are working with the Tees Valley Partnership, local industries and further education bodies to consider new research and development facilities. In addition, British Trade International has been asked to work with John Bridge to identify potential sites for inward investors. The Department of Trade and Industry will also be providing £500,000 for the establishment of broadband and digital communications networks in the area.

The redundancies will also affect Scunthorpe and its surrounding area. Following discussions with the local council and the Government Office for Yorkshire and the Humber, Scunthorpe will become a Tier 3 area for the purposes of the Enterprise Grant Scheme. To do this, we are redrawing the assisted areas map to make this support available. It will enable grants to be provided to small and medium-sized companies moving into the area or increasing their investment there. We are also increasing the budget available for enterprise grants in the area by £0.5 million. This will act as a major incentive to the establishment and growth of small and medium-sized companies in and around Scunthorpe.

My right honourable friend is also asking the North Lincolnshire Steel Task Force, which was set up 125WA following the previous round of Corus closures, to advise on additional measures which could be taken in the area. These will take forward the actions set out in the Metal Related Industries Impact Study, funded by DTI, and is looking both at Scunthorpe and South Yorkshire. The first report of the study is already with the task force, and we are asking it to identify immediate action points from the report and to assess what more needs to be done as a result of this round of cuts.

As in Tees Valley, we are announcing up to £500,000 funding to be allocated to RDA to help with the establishment of broadband infrastructure and related education and training in the area. This will encourage the establishment and growth of new companies and the evolution of existing ones.

The South Yorkshire Jobs Steel Task Force will also extend the programme of regeneration in Sheffield and Rotheram to ensure that the projects recently announced for new inward investment provide employment opportunities for those affected by the steel redundancies. The task force is also developing a longer-term action plan based on a recent impact study on metals related industries in South Yorkshire. This identifed the scope for developing growth in these industries over the next five years.

This morning in the National Assembly for Wales, a package of measures was also announced. The First Minister made the following statement to the Welsh Assembly:

"My Presiding Officer, following the final meeting with the steel trade unions earlier this morning, there is now little doubt that Corus is going to press ahead with the job losses announced on 1 February. Since then, the Trade Unions and Corus have been in discussion to see if less drastic restructuring options were possible. The unions put forward constructive alternative proposals for each plant but these have been turned down by the Company.
We have worked almost on a daily basis with the unions to press the Company to come to its senses and to think long term. I want to take this opportunity to commend the unions on their unstinting efforts to find a solution to this human tragedy. They come out of this with enormous credit.
Sadly, this whole episode highlights the short term thinking of Corus management and their disregard of the communities that will be devastated by their job cuts and closures.
Attention must now focus on offering practical support to the individuals and communities involved. Today I am announcing a £66 million programme of action designed to help the individuals and communities most affected.
In a few moments time details of a regeneration package on a comparable scale for steel workers and their communities in England will he given in the House of Commons by the Secretary of State for Trade and Industry. The Secretary of State has worked closely with us on this whole issue and will then be briefing Welsh MP's from steel areas as my Ministers and I will be doing. The Parliamentary Under Secretary for Wales will be covering the UK government employment and other packages.
The top priority must be to help people deal with the immediate financial problems caused by redundancy. The UK Government will therefore introduce a scheme under Article 56 of the European Coal and Steel Community Treaty to provide aid for those workers affected under this round of job cuts and those in previous rounds hack to 1 January 2000.
This is a modern version of the ISERBS scheme with which steel AMs and unions will be familiar from twenty years ago and involves a number of elements including lump sums for each worker of £2.500. This has been a complex negotiation WA 126 involving the unions and ourselves as well as the Secretary of State for Wales, the Secretary of State for Trade and Industry and the Chancellor. The estimated figure for that part of the scheme which applies to Wales is £16 million. It is subject to technical approval from Europe and that approval would include refunding of almost half the gross cost.
Allied to this, we understand that the unions and Corus will he jointly applying for ESF funds to support a training package for workers facing redundancy. The overall cost of this package is likely to be around £5.7 million in Wales and Corus have agreed to make a significant contribution to this.
£7 million of the £66 million programme for Wales, is for employment and training measures funded by the Assembly. This will pay for extra employment and training provision for workers made redundant by Corus and its contractors plus their families and those in the supply chain.
Many of those who will lose their jobs have considerable skills and talents which will allow them to find good. new jobs without too much difficulty. Others will need top quality advice and guidance and first class training if they are to move on successfully to new employers.
We have agreed with the UK Government that the UK-wide Employment Service will increase its job information work in Wales and offer a wide range of services tailored to the requirements of Corus workers. This service will include vigorous marketing to employers and to sectors such as aerospace, electronics and automotive—which are particularly strong in Wales. In areas such as Deeside, special efforts will be made to work closely with major employers such as Airbus to match Corus workers to new job opportunities arising. We have also had approaches from other employers, including those in the gas and construction industries.
The Employment Service has set up on-site Job Shops at each of the Corus plants affected. Here people can make use of the whole range of employment services. Benefits Agency Staff will also be on hand to offer advice.
We are also giving an extra £250,000 to Careers Companies so that they can offer specialist support for those who need it.
£5.75 million additional money is being allocated to ELWa to provide training tailored to the precise requirements of the individuals concerned. This strand of the programme of action will include:
- Immediate access to training in place of the normal qualifying period of 6 months unemployment;
- Help for those who are in a position to train whilst under notice of redundancy;
- Short up-skilling courses linked to the current demand;
- Customised training to help people move from the steel industry to jobs in other sectors;
- Incentives for some employers to recruit Corus workers;
- Training to help with business start-ups; and
Special help to remove barriers to work such as travelling, the cost of child care and such like.
We are also looking at how existing programmes such as Modern Apprenticeships and the Modern Skills Diploma for Adults could play their part. We are talking to the Wales TUC and the Steel Trade Unions to see how help could he provided through the Wales Union Learning Fund and other measures. Up to £1 million will be made available for these measures.
In carrying out its work, the Employment Service will do all it can to balance the needs of those who are already out of work with those of people who are likely to become unemployed in the near future.
I also welcome the positive response by the Secretary of State for Education and Employment our representations to extend the Heads of the Valleys and Caerphilly Employment Zone to cover Torfaen. This will make additional help available for long term unemployed adults in an area close to the Corus plants affected.
The regeneration measures in our programme for action have been developed following detailed discussions with the local councils most closely involved and the W.D.A. We will invest £43 million in these measures over a period of years
These measures, including the training and development package, will be funded from the Assembly's own resources. The same situation applies across the UK. This is not ideal but today our priority must be the future of the steel workers affected. There will be other opportunities to debate the broader issues that this highlights.
The programme announced does constitute real, additional resourcing and must not be confused with spending committed to other programmes. The Finance Minister will be looking again at the total package in the budget round later this year, in particular the allocation for 2003–04.
European Structural Funds will also have a role to play in helping those cast aside by Corus and in the regeneration of their communities. For example, we are helping to create a Credit Union for Blaenau Gwent with support from ERDF money. In doing so, we will not be re-directing funding at the expense of any other part of the Objective 1 area. Similar considerations apply to other Assembly programmes such as Communities First—though some priorities may be re-ordered.
The first element of the regeneration programme will be a £2 million business support package to help suppliers who will be badly hit by the Corus closures to find alterative customers. This will also be used to help workers who are considering setting up their own businesses.
The WDA will also be making a special effort to highlight the inward investment opportunities presented by the early availability of a high quality workforce in the areas most affected by the Corus job losses.
If we take in turn the 3 areas of Wales affected; Deeside in North Wales; the communities taking the brunt of the losses in South West Wales at Gorseinon and Port Talbot; and finally that part of South East Wales most affected by the rundown of the plants at Ebbw Vale and Llanwern—Gwent more or less:
First the position at Deeside where job losses at Shotton will be a bitter blow to the area. Fortunately, owing to the buoyancy of the local economy, Corus workers will find a wide range of alternative job opportunities open to them compared to their colleagues in the other parts of Wales, with Ebbw Vale at the other end of the scale.
The focus on Deeside will be on training and employment and business support. It makes sense to concentrate on enabling the maximum number of people to take advantage of the 1700 new jobs being created by Airbus at Broughton with the financial backing of £19.5 million from the Assembly. Those 1,700 jobs are already understood to be supplemented by a further 200 jobs from the recent UPS order for A300 Airbus planes. Furthermore another 150 civilian aerospace jobs have been announced at DARA Sealand. If more needs to be done, then the case for doing so will be given priority when we review the spending plans for 2002–03 onwards.
At Gorseinon, the local economy has suffered a double blow with the recent announcement of the closure of the Valeo plant. Also, Port Talbot has had its share of the pain with planned redundancies. We are therefore providing some £4 million extra funding for the WDA's South West Division to tackle the regeneration needs of the area. This is in addition to the higher level of investment already planned by the Agency in projects such as the Baglan Energy Park. There are immediate priorities that we shall discuss with the WDA and the local authority.
Turning to the major job losses in prospect at Ebbw Vale and Llanwern amounting to 2,300 direct Corus job losses plus 1,000 or so contractors. This area of South East Wales—and Blaenau Gwent in particular—will need significant help. We will therefore invest nearly £32 million of the £50 million available for the programme of action in this area. The lion's share of this is earmarked for tackling the hugh problems created by the complete closure of the Ebbw Vale works.
We will work with our partners to ensure that we get the very best return from it in terms of new, quality jobs and stronger, more diversified local economies. Improvements to North South transport links between Ebbw Vale and the M4 corridor are bound to figure large in any planning for future. In addition, we need to see what can be done to improve the quality of life in the towns and communities most affected by the job losses.
It would he a huge mistake to invest simply in a series of unconnected projects. We must get the strategic framework right. I have therefore decided that we should agree the accelerated development of a comprehensive economic, transport and spacial framework for that part of South East Wales most affected by the closures and job losses.
I want the Assembly to work with its partners to complete this exercise by the late autumn. The framework will need to make clear what improvements are required in the area's economic and transport infrastructure. It will therefore help us to prioritise the projects so as to achieve maximum impact. Later today, the Deputy First Minister will he discussing the details of this exercise with the Executive Group of the All Wales Steel Task Force.
We will also be consulting on the most appropriate structure to assist with this regeneration. Newport County Borough Council, for example, has suggested the creation of an Urban Regeneration Company. This would not be another quango. It would be a partnership in which the local authority would play a leading role. A URC would be well placed to take advantage of the wide-ranging package of incentives for regeneration announced in the Chancellor's recent budget. However, we will look to see whether other structures could allow us to capitalise on incentives of this kind, in Newport and elsewhere.
We have asked the Council, together with other agencies, to come back to us as soon as possible on their preferred structure for the redevelopment of the areas most affected by the job losses at Llanwern. Some £200,000 will be made available immediate in start-up costs should there be support for a URC. I do not exclude the possibility of a similar solution in other areas, but the URC does appear particularly appropriate to the circumstances of Newport. £5 million will remain unallocated within the package to allow us to move ahead with priority proposals which emerge from the consultation process.
As regards the future use of redundant land and buildings, the company has committed itself not only to co-operate on drawing up redevelopment plans but also to meeting its obligations on site remediation and its environmental obligations so as to maximise the potential for land regeneration and therefore the benefit to local communities.
The Assembly administration is working on the clear principle that the public sector should not pick up the tab for the cost of the site reclamation.
Potentially, the various Corus sites offer enormous economic opportunities for the areas involved. Unlocking these opportunities will take a huge amount of work, time and resources. Short-term job creation will need to take place off-site—on new or existing sites in the steel closure areas.
Corus has created the problems we are dealing with today. It must also be part of the solution. I am therefore pleased that the Company will use UK Steel Enterprise, its wholly owned job creation and regeneration subsidiary—the successor to British Steel Enterprise, to assist with the creation of new opportunities for its displaced employees.
A Team Wales approach is needed in which the private sector is also bound to play a major role. We will therefore project manage the programme in the following way:
The existing All Wales Steel Task Force—which I and the Deputy First Minister Chair—will provide the policy leadership, drawing on the advice of the partner organisations involved, including local government, the unions, the agencies and—indeed—Corus itself.
The Deputy First Minister will Chair the Executive Group of the Task Force. This will meet regularly with senior officers from the various organisations involved to manage and co-ordinate the programme across Wales, This Group will meet later today.
Existing local arrangements will be built on to manage the process locally. We have enough groups and task forces already without adding to them. But the WDA has agreed to appoint Graham Moore—a senior director—to work with the administration and its partners to help manage this process across Wales and ensure we get the best return from the resources announced today.
Mr Presiding Officer, we have worked tirelessly with the unions and our partners in Wales and in Whitehall to convince the Company that it should scrap the job cuts, or if not scrap them, then at the very least defer, suspend or reduce them. These arguments have fallen on deaf ears. Our earlier commitment to do everything in our power to deal effectively with the consequences of the job losses for the individuals and communities involved now comes into play. This programme demonstrates that we have the will to honour it.
By working with our partners across Wales I am totally confident that the communities involved will ultimately come out of this in a better position than they are now on the basis of new skills, new jobs and a better quality of life. We will report progress on the programme at regular intervals to the Assembly and the relevant committees.

In all the areas affected, the Government will work with the regional development agencies, British Trade International, the Small Business Service and local partners to support business start-ups and small firm growth and to attract inward investment.