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Sahaviriya Steel Industries UK Limited

Volume 600: debated on Monday 12 October 2015

I want to update the House on matters relating to SSI in Redcar, which entered liquidation on Friday 2 October 2015.

Both the Minister of State for Small Business, Industry and Enterprise and I were in Redcar during the recess. SSI’s work reviving steel making in Redcar has faced increasing challenges and this announcement came as deeply disappointing news, undoubtedly making for a tough time for the workforce and Teesside more broadly.

The Government cannot intervene in the liquidation process, which is now in the hands of the Official Receiver, however we are absolutely committed to helping the workforce and local economy.

The Government have announced a package worth up to £80 million to support people who have lost their jobs as a result of SSI’s liquidation, and mitigate the impacts on the local economy. The funding will include support for workers to retrain and help for local firms to grow and create jobs.

In addition, we have asked Amanda Skelton, Chief Executive of Redcar and Cleveland Borough Council, to chair a local taskforce which is examining what steps need to be taken to support the local economy and workforce.

Full details of the package are being worked through and discussed with local stakeholders, however I wanted to set out in more detail two of the elements of the support package that are already available to SSI’s employees.

First, both employees and contractors made redundant as a result of SSI’s liquidation will be able to access Jobcentre Plus’ rapid response service, which helps people to move quickly into alternative employment. This service is delivered locally with partners, is tailored to an individual’s needs, and can include some or all of the following elements:

Help with job searches including CV writing and, interview skills;

Help to identify transferable skills and skills gaps (linked to the local labour market);

Training to update skills, learn new ones and gain industry recognised certification that will improve employability;

Help to overcome barriers to attending training or securing a job or self-employment such as child care costs, tools, work clothes, travel costs etc.

This service has been mobilised and is delivering support to SSI employees following the first announcements of redundancies and Jobcentre Plus will continue to play a full part in the taskforce we have established.

Secondly, there are special arrangements in place to ensure employees who are dismissed on the insolvency of their employer receive a basic minimum of the debts they are owed from the National Insurance Fund. This includes payments for statutory redundancy, holiday and notice pay, and arrears of wages, subject to statutory limits.

The redundancy payments service (RPS) has issued SSI staff affected with a letter, explaining their rights and how to make an online claim for redundancy pay. If any SSI employees have not received this letter, they should contact the redundancy payments inquiry line on 0330 331 0020. The RPS has established a dedicated team to process these applications and make sure SSI employees receive their payments as quickly as possible.

Unpaid pension contributions are also payable, within specified legal limits, from the National Insurance Fund. If there are unpaid pension contributions, the pension fund trustee will lodge a claim with the RPS, so employees do not need to submit an application for this. If employees have concerns about their pension, they should contact their scheme administrator.

Turning to the steel industry more broadly, it is clear that the industry is facing extremely challenging economic conditions. We are working closely with the sector to help where we can, and as such, will be holding a Steel summit on 16 October to understand the challenges the sector faces and explore what more can be done to support the industry. I am pleased that not only the industry and the unions, but a number of MPs representing constituencies with close links to the steel industry have accepted the invitation.

Finally, I wish to place on record that on Friday 2 October 2015 an indemnity was provided to Ken Beasley, the Official Receiver, in his capacity as liquidator of Sahaviriya Steel Industries UK Limited.

It was urgent and necessary to provide the Official Receiver with this indemnity, so that he felt able to accept the appointment as liquidator of the company and ensure that the company’s site could be secured and health and safety concerns associated with the site addressed from that point.

The indemnity is uncapped. However it is limited to liabilities arising as a consequence of the Official Receiver:

carrying out the proper performance of his duties as liquidator of the company, and

maintaining, securing and funding the ongoing operation of the company’s undertaking, and distributing the assets of the company in the ordinary course of his duties as liquidator of the company.

The Government can terminate the indemnity by giving at least 14 days’ notice to the Official Receiver.

In accordance with the guidance contained in “Managing Public Money”, on 8 October, I wrote to the Chairs of the Public Accounts Committee and the Business, Innovation and Skills Select Committee outlining the indemnity committed to on behalf of Government and the reasons for the urgency in this case.

As a matter of record I have placed a departmental minute in the Libraries of both Houses explaining the procedure followed and containing a description of the liabilities undertaken.