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The Steel Industry

Volume 621: debated on Tuesday 30 January 2001

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Whether they have had any recent discussions with Corus on the future of the British steel industry.

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

My Lords, both the Prime Minister and the Secretary of State for Trade and Industry have held discussions with Corus at the highest level and will continue to do so. It would not however be appropriate to disclose the details of commercially confidential discussions between Ministers and private companies. The Government will continue to take all the steps they can to try to secure jobs in the steel industry.

My Lords, does the Minister recognise that the steel industry is of basic importance to the nation? Does he further recognise that at Llanwern there is a highly trained, skilled and adaptable work force which is being treated badly? For months the future of those jobs has been hanging like a gossamer thread, with no consultation whatever. As the Government are so enamoured with Europe, why have they not signed up to the directive on information and consultation? Further, what are they doing about the large quantities of dumped steel which are arriving from Russia and the eastern bloc? America and China have taken action. Must we go cap in hand to Brussels before we can take action?

My Lords, I am more than happy to agree that the steel industry is a key part of the British economy and that it is extremely efficient. Between 1998 and 1999 alone, it increased productivity from 533 to 571 tonnes per person, which is well above the levels in Germany and France.

As regards the directive, we believe that we should not accept it while there are procedures for consultation. We also believe that we should maintain the flexibility which exists in this country. Furthermore, if there is any, the Government would be only too keen to see any evidence of dumping and charges so that they can take appropriate action.

My Lords, will the noble Lord take on board the fact that Corus shed some 2,000 jobs in Wales last year and that thousands more job losses are expected? What plans do the Government have to replace those jobs or are they at a loss on this?

My Lords, I am well aware of the significant redundancies which have taken place in the steel industry in the past months. It is a bitter blow for people in that industry. If further job redundancies are announced shortly, we shall take the action that we have taken in similar cases to ensure that we create jobs in the area and enable people to search for new jobs.

My Lords, does the Minister agree that although the steel industry is more efficient and competitive than it was two or three years ago it is faced with bankruptcy? Given those circumstances and the fact that the Government recognise that the principal problem is the misalignment of the euro and the pound—indeed, the whole international community recognises that the euro is undervalued—cannot the Government think of short-term ways of compensating Corus so that its long-term capacity and presence will remain and be secured? That would help to meet a relatively short-term difficulty.

My Lords, as far as I know, Corus is not faced with bankruptcy, although it is having to take serious action. We have spoken to it about the amount of action that we can take commensurate with the European Coal and Steel Community Treaty, but it has made it clear that that will not affect its position on saving plants or jobs. We are taking all the action we can to help, but longer-term problems exist.

My Lords, I recognise that it is mainly for Corus to solve its own problems, but there are issues which the Government can take up and I hope that they are doing so in their discussions. First, following the point made by the noble Lord, Lord Shore, can the Government persuade the company to take a long-term, strategic view? Circumstances vary from time to time and it would be harmful if we now disposed of steel capacity which we could need in the future. Secondly, in view of the forthcoming climate change levy, which will have a major impact on the steel industry as an intensive user of energy, cannot the Government seek to postpone its effect on that industry or modify it in other ways?

My Lords, we hope that Corus will take a long-term view of the matter because, undoubtedly, the major issue is the exchange rate. A movement of 10 pfennigs in the exchange rate has an impact of some £80 million on the company's profitability, which is substantial. Since last December, when the two chief executives left the company, there has been a movement of about 10 pfennigs in the exchange rate; so considerable movement is already taking place. We very much hope that the company will take a long-term, not short-term, view of the situation. As to the climate change levy, in terms of the overall picture and particularly the exchange rate, the levy is a comparatively small amount and is the sort of issue that could be considered in any kind of small package.

My Lords, can the noble Lord give the House an indication of how many tens of billions of pounds have been put into the coal, car and steel industries in recent years? Does the Minister agree that none of that money has been successful in reversing the trend?

My Lords, I do not believe that I can give the figure that the noble Lord requests. I agree that as a long-term solution such subsidies do not rectify situations which are due to an uncompetitive position. As I hope I made clear, Corus has had an amazing record in increasing productivity. We very much hope that short-term considerations will not play an overwhelming part in this particular situation.

My Lords, does my noble friend agree that it is the substance and outcome of discussions between the Government and Corus which are important? Can the Minister tell the House about the company's response to the package put together by the National Assembly for Wales, which I believe is supported by the Government, to maintain the current plant configuration? Does the Minister also have a view as to the recent announcement by the Iron and Steel Trades Confederation to set up a consortium to purchase the plant at Llanwern if the worst comes to the worst?

My Lords, I do not believe that I can go into the details of discussions. However, as I hope that I made clear, there was a package which was subject at least to preliminary consideration. It was made clear by the company that that would not affect the situation that it faced in relation either to plants or jobs and, therefore, that it could not correct that situation.