Skip to main content

Redcar Steelworks

Volume 765: debated on Tuesday 13 October 2015


With the leave of the House, I would like to repeat the Statement made by my right honourable friend Anna Soubry earlier today in another place. The Statement is as follows.

“Mr Speaker, I begin by saying that the significance of yesterday’s announcement is not lost on either myself or any member of this Government, because we know and understand the profound implications it will have on Teesside. I also pay tribute to the honourable lady; she and I will not agree on this matter but I pay tribute to what she does, which is, as every good MP should, to fight for her constituents—and I know she does that. At the same time, I pay tribute to the honourable gentleman the Member for Middlesbrough South and East Cleveland, who I suspect will also fall out with me, for the work he has done on behalf of his constituents.

I say that it is not lost on me because it was an honour to go up to Redcar the other week and to meet a number of people at that time. We knew SSI was under huge, considerable difficulties. To set it into context, it had never made a profit, notwithstanding the outstanding workforce, which it undoubtedly is, and a lot of good will. To set it in perspective, the coking ovens were losing, on average, £2 million a month.

The official receiver accordingly was brought in on that Friday and, in his capacity as liquidator of SSI, announced that he had received no viable offers for the coke ovens or for the blast furnace following discussions with potential buyers and would therefore begin closing those facilities. The terminology is a “hard closure”, which is a tough closure as well, and this is not mothballing, so we have to be realistic as to the implications of that.

As I say, it is hugely regrettable news, both for SSI workers and their families and the local economy more broadly. Only this morning, I spoke to the chief executive of the local council, Amanda Skelton, who informed me that at least 50% of the people employed working in the ovens and blast furnace live in Redcar; so we are under no illusions as to the significance for that town. The Government remain absolutely focused on supporting those people who find themselves out of work as a result of SSI’s liquidation and, through a package of up to £80 million, we will continue to invest in them and the future of the Tees Valley economy. Safety, as you might imagine, is a top priority, and we will continue to ensure the official receiver has all the funding and support necessary to ensure a safe and orderly closure of these assets, working with the Health and Safety Executive and the Environment Agency. I would like to thank the official receiver for what he has done. I put on record not only my thanks but also the fact that he has been able, with the assistance of government, to keep the coking ovens going until yesterday’s announcement—and that was no mean achievement.

When I was last in Redcar, we were in the position where, just by way of example as to the serious nature of what had been going on, we discussed the possible sale of coke that might just raise, that Friday morning, £800,000 that might just buy some sulphuric acid to keep the power plant going. That was the hand-to-mouth existence—the reality of SSI. Not the local management, who struggled under the most difficult of conditions, but a reflection, unfortunately, of the Thai owners, notwithstanding all the welcome they had properly received when they bought this plant and the great hope that had been invested in them by the local community.

I would like to place on record my thanks to all those, including the community trade union, I had the great pleasure to meet when I was up there, as well as local authorities, local Members of Parliament and other stakeholders who have helped operate SSI’s facilities during this particularly difficult period and who have done so much to try to ensure there is a future for steelmaking in Redcar. Unfortunately, all that good work has come to nothing”.

My Lords, the closure of this site is a catastrophe for the local economy and for the local community on Teesside: 170 years of steelmaking were snuffed out yesterday. The Government are overseeing the loss of a national industrial asset while showing no willingness, as far as we can see, to step in and try to rescue it.

Steel produced in that area is surely part of an industrial strategy. One would expect any Government concerned about the future of the economy in this country to think more closely about our automotive, aerospace and construction industry needs and the relationship they have with steel.

Did the Government explore options for mothballing this site over a longer period to save the assets? Will the Minister confirm how much it will cost the taxpayer to clean up the site? As she mentioned, there are several concerns there about toxicity. Will she reflect on the fact that we are currently engaged on the Enterprise Bill, and in that Bill there may be an opportunity to look again at the question of Chapter 11 solutions when industries of national strategic importance get into trouble?

It seems to me that the Government are washing their hands of this and standing back when they should be taking a direct interest.

I am grateful to the noble Lord for his many questions, and for his reference to the Enterprise Bill, on which we had a good debate yesterday. As I explained at the end of proceedings then, it has been difficult. The underlying problem is that the SSI operation has never made a profit. The scale of decline in steel around the world is enormous. The world is oversupplied, with overproduction at 30%. This figure appalled me. There are 200 million tonnes of excess tonnage in China, and EU production is 169 million tonnes. We have an enormous challenge.

The right thing is to look forward. That is why we have established a steel summit on Friday in Rotherham, which obviously goes wider than Redcar. The Secretary of State will be chairing it and Anna Soubry will be there, along with all the key outside players, including, obviously, steelmakers such as Tata and Celsa, the trade unions and experts, including Oxford Economics, who are able to look objectively at the global position and look forward to see what can be done.

Chapter 11 has its advantages in some other climes. I think we have debated this before. We find that the insolvency tends to end up being less efficient, particularly in the sort of circumstance we have here, where you have a big global problem. You have to look forward to different opportunities for an area.

As an ex-general secretary of the union referred to by the Minister and an infrequent speaker in the Chamber, I am pleased that the Minister congratulated the union that I once led, under a different heading. I remember a debate in this Chamber many years ago about the future of manufacturing in the UK, which had particular relevance to the steel industry. It went down quite well—there were 19 speakers —but I was told by one of the inner crowd that we live in a post-industrial society, which implied that banking, the service sector and finance were the way forward.

The steel communities in this country, although there were 267,000 people in the nationalised industries in 1967, are very, very small. My home town in south Wales is decimated: the mines have gone, the steelworks have gone and times are tough.

If the Minister is running this conference next week, she should—please—apply her mind to keeping what is left.

I thank the noble Lord for his comments and for his experience. I certainly agree that we should seek to preserve what is good. There are opportunities in the steel industry: there is HS2, if that happens; there is specialist steel; and we have a sector-led strategy on metals. We need to look forward in those areas and to small business creation in Teesside and in other ex-steel communities.

My Lords, can the Minister confirm that £20 million of the £80 million that she says the Government are investing in Teesside is money that would be paid in any event in the form of statutory redundancy in a liquidation situation? Will she further say whether the Government, in the situation that they face in Redcar, would be prepared to consider a government-backed task force, as they did five years ago, to look at the diversification of the economy and would be prepared to consider additional funds to help that community if viable projects subsequently emerged?

My Lords, on the up to £80 million that is made available, how much goes on redundancy will depend on uptake, but we are clear that it will provide a lot of funds for training and reinvestment in skills—the sort of things that are needed and that are in the hands of the local task force that we have set up and did great work in 2010. The Prime Minister has said that, if necessary, we will look at this again, but we think that the £80 million will make a huge difference to the more than 2,000 unfortunate people who, if one takes all of them together, will lose their jobs—it is very disappointing. On a future task force, we are focusing this week on the summit and on the local task force.

Does my noble friend know that for the second Forth Bridge crossing, which was commissioned by the Scottish Government, the majority of the steel is being shipped from China? That suggests that there is a degree of uncompetitiveness or a degree of dumping of steel going on. Does my noble friend not acknowledge that one consequence of putting green taxes on high-energy-using businesses is to make them uncompetitive, leading us to import carbon from our competitors and to put our people out of work?

My Lords, I am not sure that energy policy is the issue here. We have already paid £50 million in compensation under the Energy Intensive Industries Compensation Scheme. As my noble friend said, the issue is the lack of competitiveness, but I think some public organisations do this better. If one looks at Crossrail, one sees that it used a great deal of British steel in its concretes by way of the work that it did with the supply chain to encourage it to bid for work during that excellent project.

My Lords, does the Minister recognise that the north-east has faced issues like this before? When I became the Member of Parliament for North West Durham in 1987, Consett steelworks had closed. Ironically, one of the reasons that we were given for closing Consett was to keep things going in Teesside. We then faced a male unemployment rate in the region of 20%. It took years and years to begin to get people employed, and it was very difficult to get the quality of skills that they had been used to working with in the steelworks. This is a huge challenge to the local community and I really think that the Government have not taken it seriously enough. The summit in Rotherham will do nothing for Redcar.

The £80 million, as the noble Lord said, includes statutory redundancy costs, which is an outrage. Will the Government pay far more attention to what is going to happen to that community in Redcar, which is quite isolated? Unemployment in the north-east is already the highest in the country, and in the Tees Valley area it is probably higher than in the rest of the region. This is a real crisis for local people and the Government must recognise—in a way that, locally, they are not seen as having done so far—the impact that it will have on that local community and make sure that the opportunity for change and reconstruction of some manufacturing jobs is made more possible. That means working closely with the European Union as well with the local task force and the LEPs.

My Lords, I do not share the negative view that was set out, but I agree that we need to look forward. We set out in our Statement yesterday a great number of the things that we are doing on reskilling and looking forward, as the noble Baroness suggested. We have taken action at the EU level to work with other member states who face similar challenges—the French, the Germans and the Luxembourgers—in fighting dumping, and some measures have been taken. But as I said, this is a real competitiveness issue and we need to look forward and find new opportunities in this important industry.