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Redcar Steelworks

Volume 600: debated on Thursday 15 October 2015

Before I take the urgent question, may I underline to the House that its narrow terms should be adhered to? This must not simply be a re-run of exchanges that took place the other day. That is the first point.

The second point that it might be helpful for the House to know is that I am keen to move on to business questions at approximately—but very close to—10.50 am, so this will be a pithy exchange.

(Urgent Question): To ask the Secretary of State for Business, Innovation and Skills if he will make a statement on the Government’s £80 million released to help former employees of the SSI steelworks in Redcar.

I may break your rule, Mr Speaker, because I actually have quite a lot to say over and above what was said on Tuesday.

We know and accept, and everybody understands, that this is a deeply dreadful time for all concerned in Redcar. That is why, on 2 October, the Secretary of State and I went to Redcar—I had been there since the previous Wednesday—and announced a package worth up to £80 million to help both the workers directly affected and the supply chain and the local economy more broadly. We briefed the local taskforce, including the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), that day on the contents of the package.

As Members will know, some elements of that package have already been rolled out and are delivering support. In terms of helping individuals, only yesterday the Jobcentre Plus service co-ordinated a very large and very successful jobs fair to help people affected to move into jobs as quickly as possible. Initial reports are that about 1,500 people attended the event, along with 50 employers offering 1,000 vacancies. That is on top of the individual support sessions that Jobcentre Plus has already been offering locally.

The redundancy payments service has established a dedicated team to process the redundancy pay, holiday pay, arrears of wages and other elements that are due to SSI employees. That is of course subject to statutory limits, but will be done as quickly as possible. I also note that the Government’s business support helpline is prioritising calls from businesses directly affected by the SSI closure, businesses in the local area with the potential to grow and take on former SSI employees, and former SSI employees who are looking for advice on starting a business. That is up and running, and it is working well. Callers will be fast-tracked to an expert adviser, who will provide advice on the issues they are facing, provide information on the local support package and refer them on to any other forms of support they need. That is a good start, but we know we need to do more.

As Members will be aware, we established a local taskforce to help to shape the support to be provided. Right from the start, our intention was not to impose solutions from Whitehall, but to ask the local taskforce for solutions on how best to target money and support. It is meeting right now, but I can understand why both Members who are part of the taskforce—the hon. Gentleman and the hon. Member for Redcar (Anna Turley)—are in the Chamber and not at that meeting. We have now received some initial proposals from the taskforce about supporting workers impacted by the closure of SSI, mitigating the impact on other companies directly affected by the proposal and supporting the growth of the wider economy. As hon. Members might imagine, we are assessing those projects urgently.

I know that the hon. Member for Middlesbrough South and East Cleveland has asked about further education colleges. The full cost of retraining former SSI workers and others made redundant in the supply chain will be met. Local colleges will therefore be able to claim full funding for education and training provided to any learner who was employed at the SSI Redcar plant at any time during 2015, or to a learner made redundant in the supply chain as a result of the plant closure, to support them to gain employment or start their own business. Eligibility will be confirmed by a referral from a Department for Work and Pensions work coach or a National Careers Service adviser who is working with affected individuals. That will enable local colleges to provide wide-ranging support to learners for short programmes of training that enable immediate entry into the labour market or for study that leads to full qualifications such as A-levels or their equivalents. Colleges that meet the quality criteria will receive additional funding to cover the costs incurred because of the additional flexibilities.

I will continue to work closely with the local taskforce, as I hope will the hon. Members for Middlesbrough South and East Cleveland and for Redcar, on how we can best support the workers of SSI, the affected supply chain and the local economy. I pledge that no worker will be left behind.

The official receiver has indicated that the Government have released no further funds to buy coke. The last shift at Redcar coke ovens pushed the final bed this morning. One hundred and seventy years of steelmaking have come to a terrible, shuddering halt in only four weeks.

Since the liquidation announcement, we have learned that the original figure of £80 million was a public relations gimmick. There is no new money. Why has the Secretary of State continued to ignore calls to provide at least £30 million of new money, when it has been demonstrated that that money is guaranteed under statute for any worker who undergoes redundancy? Why have no colleges or training providers dealing with SSI workers, contractors and downstream workers received any additional funding on top of their existing budgets? What are the estimated clean-up costs of the Teesside Cast Products site in Redcar? How will security and funding be guaranteed for the Redcar bulk terminal and beam mill, which are still in operation? Why are arguably the best coke ovens and the largest blast furnace in Britain, which are on one of the handful of sites in the EU where production costs are lower than 90% of other EU sites, being allowed to close, while less efficient sites continue during this global steel price downturn?

That was a large number of questions and time precludes me from answering them all. I undertake to ensure that any questions that are not answered in what I say receive a written response.

It is not true that there is no new money. There is an £80-million package, £30 million of which is an estimated figure. We discussed all that during the urgent question on Tuesday. Indeed, the hon. Member for Redcar said that the estimate was between £20 million and £30 million. In any event, there is at least £50 million of new money. I have answered the question on FE colleges. That £50 million of new money is there to support the workers and the supply chain, so that there is reskilling, retraining and—[Interruption.] I am sorry, but I cannot hear what the hon. Member for North Durham (Mr Jones) is saying. If he wants to ask a question, he is more than capable of doing so, and I will answer it.

The reason why we are in this situation in Redcar is that, unfortunately, month on month, year after year, SSI lost money. It never made money at the Redcar steelworks. The coke ovens, as I said on Tuesday, were losing £2 million month on month. That is the harsh reality. The hon. Member for Middlesbrough South and East Cleveland knows the situation. Of course he feels huge passion about it because he has put a long-seated investment of his own life and skills into the plant. He knows the devastating effect that its closure will have on the local community, but the Government have done all they can and now we have to look to the future.

They absolutely have. The hon. Gentleman who shouts at me from a sedentary position knows what Government officials and I have done on numerous occasions in the face of the most peculiar and appalling practices from the Thai owners. He knows that on one occasion, for example, the employers liability insurance had not been paid. We found out at 4.20 in the afternoon. I was making calls at 9 o’clock at night to make sure that the workers still had their insurance cover at least up to Monday. We literally scrabbled around looking for money. We made sure that the workers were paid their wages. He knows that that was done on the specific direction of myself and the Secretary of State, who said, “Get the money together to make sure the workers are paid.” Those are the sorts of things that the Secretary of State and I have done.

Now we have to look to the future to ensure that there is a future for the workers, their children and their grandchildren. That is what this package delivers.

I thought the hon. Gentleman was standing—I had been so advised. Never mind; it is a rarity that he does not wish to contribute. I call Mr Alan Mak.

Will the Minister confirm that although strict EU state aid rules have prevented the Government from directly intervening in the steel industry, the £80 million package that they have announced represents strong and practical intervention in a difficult situation?

That is the case. It is not good enough for Labour Members, who know the confines of the state aid rules, to shout “rubbish”. Let me put SSI’s losses on the record: 2012, £275 million; 2013, £193.5 million; 2014, £81 million. Until the end of June 2015, there were losses at Redcar of £92.5 million. That represents more than £0.5 billion of losses in little more than three years. That is indeed heartbreaking, but it is the harsh financial reality of the situation at Redcar.

One has to ask what moral universe Ministers inhabit if they think that it is acceptable to spin about the financial package for workers at Redcar. We have just heard an admission from the Minister that the figure is not £80 million, which is the figure that the Government have used and widely publicised. She now claims that there is £50 million of new money, but we need to look more closely at that. How much of that money is from the Work programme? How much is money that Ministers have put aside from the Government’s resources as new money to help the workers at Redcar, and how much is just recycled spin? That is what we have been getting from the Minister.

There are still questions to answer—I will not go on for too long because of what you said earlier, Mr Speaker—[Interruption.] The Minister said “Oh good”. I bet she did. She has not said anything to answer questions about the clean-up of the site, which she was asked earlier this week and today. This country needs an industrial strategy. We are losing an irreplaceable strategic national asset without a fight from our country’s Government, and that is an unforgiveable betrayal.

I will accept some criticisms, but to say that I have not fought for Redcar is outrageous because it is not true. I assure the hon. Gentleman that my officials and I worked—I have an email trail that proves it—until midnight last night—[Interruption.] There is no point shouting as it does not achieve anything. I was on the phone on that Friday night until 9 o’clock in the evening, and along with the Secretary of State and my officials, I was literally going around looking for sums and pots of money to help. The harsh reality is £0.5 billion of losses over five years.

On the clean-up operation, if the hon. Gentleman had taken time to find out from the taskforce and the meeting that I attended on 2 October—[Interruption.] I was there; he was not. I am trying to tell him, but he is sitting there pointing his finger and heckling. It does not get us anywhere.

Yes, well I’m entitled to under the circumstances. I answered this question on Tuesday, but I am happy to answer it again. In truth, the Health and Safety Executive and the Environment Agency had been engaged with my officials for some considerable time leading up to 2 October because we feared that that day would come. The hon. Gentleman should know—this is my experience having gone to Redcar—that some of the people with the most responsible realistic assessments of the situation were the leaders of the unions, and particularly the Community trade union leadership. Because they were working there, they knew the awful, harsh financial reality of a plant that was losing £0.5 billion over five years.

The Minister will be aware that we had a similar experience in Sherwood with the collapse of UK Coal. Will she assure the House that Government support and taxpayers’ money will go into the pockets of workers to help them to get new careers, and not into the pockets of receivers, accountants, consultants and a failing company?

Yes, I can give my hon. Friend that assurance. I pay tribute to him for the work he has done for the workers at Thoresby. May I put on record that this sum of money, which is new money, represents £44,000 and more of investment per worker—it is investment in them as individuals—so that they can get the skills and training they need to get new jobs?

The Minister is overseeing the death of 170 years of steelmaking on Teesside. It does not have to be the end—the site is still viable. You’ve thrown the towel in. I have literally just got off the phone to people on the site. German companies are willing to buy foundry coke that we can produce in the coke ovens. That sells at £520 a tonne, compared to £190 for ordinary coke. The site is viable. We have companies willing to invest. We have companies willing to come in and supply the coke ovens to keep the plant running and to do the mothballing. You are not giving us time. You are just throwing the towel in. The official receiver has not done proper diligence. We can find buyers, we just need three months. Please, keep the plant alive. You hide behind the excuse that it is the Thai banks, the Swiss banks, the American banks, the British banks—this is British industry.

Order. We have the point. Can people please remember that I haven’t done anything in this matter?

And neither have I, apparently, Mr Speaker. But I have and I think the hon. Lady knows that. The hon. Lady is fighting for her constituents. She does so with passion and she is right so to do. She is putting on record that this is the end of steel production. It is a tragedy. But what I would say to the hon. Lady is this: I have an email trail that she knows I am more than happy to share with her and the hon. Member for Middlesbrough South and East Cleveland. I do not know all the detail, because some of it is apparently commercially sensitive, but she needs to know this. The official receiver specifically said to those people who were interested, “Put the money in to buy the coal to keep the coke ovens going” and they refused. That is the harsh reality.

Does my right hon. Friend agree that in these circumstances it is right and proper that the Government do all they can—which they are doing—to support the workers in Redcar and in the communities around Redcar?

My hon. Friend is right. What happened on 1 October, when we were looking at ways of support, is that we suddenly discovered—literally on a website, on a tweet—that the parent company in Thailand had effectively gone into administration and had registered so in Thailand. That changed things completely. The Secretary of State and I sat in Redcar at 9 o’clock that morning and we knew and understood that any money we put in would go straight into Thailand and into the pockets of three Thai banks. There are no procedures and no devices in those circumstances to ensure that the money would, in any event, have gone to Redcar—never mind the state aid rules.

Why is the Minister not listening to the two consortia that have come forward with bids at the last minute? They should be given the opportunity to formulate those bids and the Government should be keeping it going. It is no good doing the Pontius Pilate act and just washing your hands of the responsibility. Why are Ministers privately supporting mothballing, yet not getting that support from the Secretary of State and the Prime Minister? If you can’t answer this, what are you there for? What’s your purpose if you don’t step up?

The hon. Gentleman is right, but I am afraid he is, in this instance, absolutely wrong. The situation is that, yes, there have been expressions—[Interruption.] No, let me answer. He is right that there have been expressions of interest very late in the day, after the official receiver said on Monday that no deals had been forthcoming that were workable. The official receiver then went back to those consortia and said, in effect, “Put your money where your mouth is,” and they refused—[Interruption.]

Order. Mr McDonald, I absolutely understand and empathise with your incredibly strong feeling on this subject—and I mean that—but we cannot have a situation in which people yell at a Minister who is giving an answer. You might not like the answer, but, forgive me, the answer must be heard. The Minister is capable of looking after herself, but the answer must be heard. Please. I will always give people a chance, but the Minister must be heard.

The hon. Gentleman can sit there and say, “You can”, until he is blue and red in the face, but the state aid rules are incredibly clear.

The hon. Gentleman forgets that the last time Redcar was mothballed, it was mothballed by Tata, and it did so because those were the state aid rules. If there was a viable offer and anyone looked, as they have, at the situation at Redcar, they would say, “Those ovens are losing £2 million month on month”. The steel was losing half a billion pounds. In reality—and the official receiver has said the same—who will want to invest in something that was losing money hand over fist?

I wish to convey my sympathies to the community in Redcar following this devastating news, but I would mention that the steel price has almost halved in the last year, China now produces 50% of steel, whereas in 2000 that figure was 15%, and the number of jobs has reduced under successive Governments. Is not the key thing now, on a cross-party basis, to deliver this retraining and bring more jobs to the north-east?

I very much agree with my hon. Friend. The harsh reality is that all the steel industries in this country are losing huge amounts of money. Some companies are regularly losing £700 million per year. That is the reality, but we are determined not to lose the steel industry in this country, so we now have to find the solutions to save it.

I do not question the Minister’s efforts, but she has clearly been hung out to dry by the Prime Minister and the Business Secretary. Many small companies in the north-east are affected by this closure. Has the Department drawn up a register of where they are, and what measures will she put in place to help those small companies that are creditors?

I always give a straight answer to a question. I honestly do not know the answer, but I will make inquiries and write to the hon. Gentleman and everybody else who is concerned. I must make it clear, however, that I, the Business Secretary and the Prime Minister are as one on this.

Clearly, we are all concerned about the loss of jobs at Redcar and the impact on individuals and families, but would the Minister agree that the only way to create new jobs and businesses is to invest properly in infrastructure and skills, and will she make this a priority for Redcar?

Yes, absolutely, and that is why we have put this package together, which, as I say, is worth about £44,000 to each worker.

It is important and proper that resources and support be given to mitigate the impact of the closure of SSI Redcar, particularly for those staff who will lose their jobs, but it is reactionary, and it seems that little has been learned with the benefit of hindsight. In how many other constituencies will the Government need to repeat this process? What will they do to support the steel industry in my constituency at Clydebridge and that of my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows)—

Order. I am sorry, but we must focus narrowly on this particular situation, rather than on wider issues. I think we can leave it there.

Just to say, we are holding a steel summit tomorrow. All these matters will be raised, and I am sure we will share all the outcomes with the hon. Lady.

I recognise the difficulty of the situation in Redcar, especially as I represent a seat in the west midlands with a long and proud history of steelmaking, but will the Minister agree that her and the Government’s focus should be on taking all the practical action necessary to provide alternative job opportunities and reskilling for the people affected in Redcar?

I absolutely agree and embrace everything that has been said, and would add that the task now is to ensure we do everything we can to support this vital industry, as the Prime Minister said.

This is not the first time the north-east has suffered the closure of steelworks under a Conservative Government. As well as being devastating for those communities, it can take a long time for people to move into alternative employment. The Minister mentioned short-term training, but will she stay with those workers for the longer term to ensure they find new employment?

There is a side of me that cannot be bothered to play party politics because this issue transcends it, but it needs to be said that the last time the Redcar plant closed was under a Labour Government. In other words, it is all completely meaningless. What the hon. Lady suggests is vital and she makes a good point. One thing we do know is that a large number of the people who were laid off last time did not return when the plant reopened, and it is newer and younger workers who are now, unfortunately, being made redundant at SSI.

As the hon. Member for North Durham (Mr Jones) has said, the livelihoods of thousands of self-employed people and workers in small enterprises will now be at stake as a result of the collapse of SSI. Can the Minister confirm that Her Majesty’s Revenue and Customs will deal sympathetically with those small businesses, which may now be unable to meet their liabilities as a result of the collapse of this company?

The coke ovens and the blast furnace are national assets, and this Government should do everything, even at this eleventh hour, to secure them so that they are not lost and are instead retained in order to allow the future to be bright again.

That is exactly what we will do: we will do everything we can, within the law, and bearing in mind the harsh economic realities that face Britain’s steel industry.

Teesside without steel is almost unthinkable, and I hear nothing from the Government on how they are going to replace these 2,200 jobs. The Minister has talked about small business, but it is simply not realistic to expect people to do what she has suggested without help with living costs. Will she therefore confirm that there will be help with living costs within start-up allowances?

What I can confirm is a £50 million package that will mean that, in effect, there is an investment of £44,000 in each and every worker to help them find alternative work.

It was the Tory Lord Heseltine, as he now is, who said that to help British business he would

“intervene before breakfast, before lunch, before tea and before dinner. And…get up next morning to start again.”

Might the Minister not regret the fact that she did not save steelmaking on Teesside, which would have been far better for our national economy than the package that she has announced today?

Obviously, the hon. Gentleman will not have access to all the television interviews that I did at the time. If I had a magic wand, the simple answer would be, “Absolutely, yes”, but the harsh reality is that we have slab falling by half its price, overproduction, under-consumption and a steel plant losing half a billion in five years. That is the harsh reality, and it would not be fair on his constituents if we were to try to bail out Britain’s steel industry, which would probably cost £1 billion a year.