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Redcar Steel

Volume 765: debated on Thursday 15 October 2015


My Lords, with the leave of the House, I shall repeat in the form of a Statement an Answer given earlier today by my right honourable friend Anna Soubry MP in another place. The Statement is as follows.

“When we debated these issues on Tuesday, I was clear then, and am happy to repeat, that the significance of SSI’s closure is not lost on anyone. This is a deeply worrying time for anyone affected. We have made clear our commitment to supporting those affected by the liquidation of SSI. That is why, on 2 October, the Secretary of State and I were in Redcar when we announced a package worth up to £80 million to help the workers directly affected, the supply chain and the local economy more broadly. We briefed the local task force that day on the contents of the package, including the Member for Middlesbrough South and East Cleveland.

As Members will know, some elements of that package have already been rolled out and are delivering support. In terms of helping the individuals, the Jobcentre Plus service only yesterday co-ordinated a large jobs fair to help people affected move into jobs as quickly as possible. Initial reports from that event suggested that around 1,500 individuals attended the event, along with around 50 employers offering 1,000 vacancies. That is on top of the individual support sessions that Jobcentre Plus has offered 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, subject to statutory limits, as quickly as possible. I would also note that the Government’s business support helpline is prioritising calls from businesses directly affected by the SSI closure, from businesses in the local area with the potential to grow and take on former SSI employees, and from former SSI employees looking for advice on starting a business. These callers will be fast-tracked to an expert adviser who will provide advice on the issues that they are facing, provide information on the local support package, and refer them to any other forms of support that they need. That is a good start, but we must do more.

As Members will be aware, we established a local task force to help shape the support to be provided. Right from the start, our intention was not to impose solutions from Whitehall but to ask the local task force for solutions on how best to target money and support. We have received some initial proposals from the task force around 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. We are assessing these projects urgently.

Finally, I know that the honourable Member for Middlesbrough South and East Cleveland 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 UK plant in Redcar 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 DWP work coach or National Careers Service adviser working with affected individuals. This will enable local colleges to provide wide-ranging support to learners, from short programmes of training to support immediate entry into the labour market, or it could involve study leading to full qualifications such as A-levels or equivalent. Colleges which meet quality criteria will receive additional funding to cover the costs incurred by these additional flexibilities.

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

I thank the Minister for repeating the Answer, but it is really only about how to help redundant workers. While it is welcome, it is not all new money and it does not help other businesses, from shops and services to suppliers and transport, which will also be affected.

More than this, we should not be in this place. Redcar was to be a major player in the zero-carbon industrial zone based around carbon capture and storage in Teesside. Its loss is a major blow to the project, which had received BIS funding. The Government are overseeing the death of 170 years of steelmaking in Teesside despite the site being viable.

We welcome the steel summit, but why not mothball the site to save the asset? There are companies which are willing to supply the coke ovens or do the mothballing, but the Government have not given the time. Could three months not be found? How can we have a northern powerhouse without this fundamental manufacturing capability? How can the Prime Minister say that steel is vital and do nothing to save it?

My Lords, I thank the noble Baroness for her comments. The local task force that we have set up, which of course did very good work in 2010, will be looking innovatively at options. It is able to come forward with proposals. As she says, we have 170 years of great steel heritage and we need to look forward and find good options for Redcar. Like her, I welcome the summit, because it will look more broadly, obviously well beyond Redcar, at the problems and opportunities for the steel industry.

The noble Baroness asked about mothballing. The company made a last-minute, and I am afraid unrealistic, request for the taxpayer to make an open-ended funding commitment to maintain the coke ovens in Redcar. We were not able to accept that request. On the basis of a limited case, the Government had no confidence that there was a realistic proposal for viability and therefore could not give taxpayer support, even if they wanted to breach state aid rules. The awful truth is that there is a world oversupply of this type of steel. The company had already lost £500 million in its operation over the past three or four years, so despite all the endeavour and optimism of 2012, things did not work out. We have to look forward.

On the northern powerhouse, Teesside is actually making an impressive contribution. The Tees Valley LEP is one that I have visited and is very impressive. The latest investment, while not actually on Teesside but in Darlington, was in the National Biologics Manufacturing Centre. We share common ground that that sort of northern investment is very important for the future of the country.

My Lords, we should all be grateful to the Government for their efforts to do something to help the workforce at Redcar, but it is common ground among us that the fault leading to the closure was not that of management or of the workforce. To what extent was it caused by high energy prices in this country? On the continent, there are steelmakers far less efficient than Redcar, with a far less able workforce and far worse management, which are continuing to be in business. How can that be, in a common market? Furthermore, how can it be that the Chinese are dumping steel into Scotland at the behest of the Scottish Administration? How do these things happen? Why can our steel workers not have a level playing field?

My noble friend asks a very good question, which is the question I first asked when I heard about this great challenge. But we have in fact provided more than £50 million in compensation to steelmakers for energy costs under the emissions compensation scheme. We voted—in fact I voted—for anti-dumping measures on certain Chinese steel products and we have identified a pipeline of more than 500 infrastructure projects to help the industry to win contracts. The trouble is that we have a worldwide problem in the steel industry. I know from talking to the French, the Germans and the Luxembourgers that they share that problem.

My Lords, following on from the noble Lord, Lord Tebbit, I have a straight question for the Minister. Is it true that the Lord Chancellor, on his recent visit to China, discussed with the Chinese Government and the steel manufacturers using Chinese steel to build the rail for HS2, which is forthcoming? That is of great concern and follows on from what the noble Lord, Lord Tebbit, said. Why are we using foreign steel—Chinese steel—when we have a use for our own steel in this country to build things that we need in this country? We were talking about the steel industry, not about the general politics of industry and so forth. My plea to you last time was to do something for the steel industry.

My Lords, I am not privy to discussions between the Chancellor and Chinese senior Ministers, but I do believe in free trade. The point about the visit was to build relationships both ways. I believe that the Chinese can invest in Britain and can be helpful to Britain. Our industry obviously has to be competitive and produce great steel, as they did for example on Crossrail. That is what we need more of. We are looking forward. We are having a summit, which is taking place tomorrow, to look forward at other opportunities and prospects, and I look forward to hearing the results of that.

My Lords, the reality is that there was an offer from a local company, Hargreaves—which ironically is based just outside Consett and is essentially now a coal-mining and haulage business—to put money in and maintain the coke ovens. The coke ovens produce a new form of coke called foundry coke, which is much more value driven and therefore raises a much higher cost because it is more efficient. The Germans want to buy this coke and the only place that it can be made is at Redcar. The Government not working with the receiver to give some time has meant that the coke ovens will close today and no more opportunity will be there. That is surely something that the Government can and should do something about.

My Lords, the Government and the receiver did take time. They used the notice of intention to appoint an administrator. Talks had been going on before. As I said, it was not possible to come up with a viable case for continued use of these coke ovens and the blast furnace on a basis that would be competitive in the world. We all regret that. My heart goes out to the thousands of people who have lost their jobs. We now have to look forward, help them and find new opportunities.

My Lords, the tragedy of Redcar is that it was overdependent on one sector. When that sector has problems, which it does because of world capacity, that community is very vulnerable. The hope is that this area should be helped with diversification. Will the Minister explain something? In Portsmouth two years ago, a ministerial task force was set up in a far less tragic situation than Redcar yet I am not sure from what she is saying that the task force has direct government representation on it locally. I respect her view that local views should prevail, but should the Government not be directly involved in this task force in order to make sure that all government departments are properly co-ordinated in the rescue of this area?

My Lords, I agree that there is a problem where you are very dependent on one industry. The noble Lord made a very powerful point. The local task force will get support from government officials. It is looking widely at options. On the task force will be Paul Booth, the head of the LEP, which has a large amount of funding from the growth fund and other interests will come in as necessary. We believe that that is the right way forward. Obviously, we stand ready to look at broader issues in the way that the noble Lord described, but this seems the right way forward. We do not see a case for doing quite what we did in Portsmouth. A great deal is going on. The steel summit is taking place tomorrow. The focus on the lessons and the future is strong.