Adjournment debate on the steel industry initiated by Denis MacShane

This is the full extract as published in Hansard

Defending Steelworkers Jobs. Speech by Denis MacShane MP in the House of Commons (Westminster Hall)
7 July 2009

Mr. Denis MacShane (Rotherham) (Lab): We are here to discuss the steel industry. I am glad that my right hon. Friend the Minister for Regional Economic Development and Co-ordination is to reply, because those of us who know her in her role as the Minister for Yorkshire and the Humber know of her dedication and her hands-on, let’s-go-and-see-what-can-be-done approach. I hope that at the end of this debate she can convey the message to her colleagues in Government that we need a slightly better co-ordinated response than we have had until now.
I asked for this debate because the announcement of hundreds of steel industry redundancies in my constituency and in the neighbouring constituency of my hon. Friend the Member for Sheffield, Hillsborough (Ms Smith) is causing deep distress and concern, particularly as it appears that many of the redundancies will be compulsory. Much of the previous reduction in steel industry employment in south Yorkshire and elsewhere has been on a voluntary basis, but this situation is serious indeed.
There are many aspects of the crisis, but the basic message is simple: under the Conservatives, Britain lost its coal-mining industry; under Labour, Britain must not lose its steel-making industry. I wish to make a series of concrete proposals that I hope will stave off the worst of the impact of job cuts. I do so not with false hope nor a promise of what is beyond the power of the Government, the company or unions to deliver, but I have been raising concerns about steel across the board for the past two or three years, particularly in the past year as the worldwide recession began to develop.
Let us be clear: this is not a made-in-Britain crisis. Exports are plunging faster in Germany, unemployment is rising faster in Spain and America, and the economy of Japan may shrink by up to 12 or 15 per cent. On comparative terms, difficult as it may be for some to understand, Britain is perhaps better placed than most of our big OECD partners. But have we got sufficient grip in responding to the crisis in the steel industry? Has there been sufficient co-ordination and co-operation between Government Departments—I have to say politely that I do not think that that is the case—or, indeed, between the company and the union?
Corus has to ask itself hard questions. Would its dealings with the Government not have been more fruitful if, instead of its go-alone approach, it had co-operated fully with the main steel union community to work out common positions? The outgoing chief executive officer of Corus, Mr. Philippe Varin, and the new CEO, Kirby Adams, are open and friendly. They meet with MPs, and they put their cards on the table. I am not making a personal criticism, but a structural approach in which the company and the union spoke as one to the Government could have borne better fruit.
Dr. Hywel Francis (Aberavon) (Lab): I congratulate my right hon. Friend on securing this debate, and on his outstanding and sterling work in defending the steel industry, particularly in his constituency of Rotherham. He makes an important point about Government intervention, but does he agree that the Welsh Assembly Government and their ProAct scheme, which resulted from discussions, particularly with the steel union community of which he and I are members, has made a significant difference? Does he agree that it should be rolled out in England as well?
Mr. MacShane: I fully agree with my hon. Friend. The scheme shows the devolved Government in Wales working well. Perhaps I should have put it on the record when I began speaking that I am a member of the trade union community.
The position of the steel industry is as it has always been: steel is the canary in the coal mine of global capitalism. Whenever a crisis is about to break, steel is hit hardest and early. Steel stocks are sold but not renewed, orders do not come in and the steel companies panic. Their answer is always the same: cut down on staff even though labour costs are a small part of total steel production costs.
We are dealing with Corus, which is part of the Indian conglomerate, Tata Steel. I know Tata from my work as an international trade union official. It is a caring company that has always sought to look after its employees, which is why I supported its takeover of Corus, just as I supported the merger of British Steel with the Dutch company. I argued in the 1990s for the newly privatised British Steel to seek European and global partners, but British Steel’s parochial and provincial leadership after privatisation was poor and without any strategic vision.
Tata is a successful, profitable company. Its turnover for the financial year 2009 was $29 billion, up $3 billion from its turnover of $25.8 billion in the financial year 2008. That was on a smaller tonnage of steel delivered: 28.54 million tonnes in the financial year 2009 compared with 31.68 million tonnes in 2008. One can actually make money out of steel while producing less, if the prices are right and there is enough demand.
Tata’s profit before tax this year was $2.13 billion dollars. We are not talking about a bankrupt or cash-strapped company. Corus figures in Europe were also strong: turnover increased in the financial year 2008–09 to $21.4 billion, with higher prices offsetting lower output.
The men whose jobs have been lost in two major Corus cost-cutting exercises in the past 18 months have contributed to the survivability of the company and its continuing strong profits. It is sad that it appears that the only way the good ship Corus can stay afloat is by throwing overboard or sinking its hard-working and loyal employees. My first demand today is for Corus to accept its duty of care to the steelworkers who deliver profits for its shareholders and large salaries for its executives.
I welcome the fact that the furnaces at Rotherham and Stocksbridge have not been shut down. The British Chambers of Commerce report today that the worst of the recession may be over. Insha’Allah—let us hope so. The stocks of steel and cars that have been waiting to be sold are now being sold, thanks to the scrappage scheme.
The most important policy objective that this or any Government could follow is to maintain demand. Corus says that the best help it could have is stimulation of demand. The leaders of the world’s steel community at the OECD steel committee meeting in Paris on 8 and 9 June noted that the best help that steel can have is continued Government stimulus aimed at long-term growth. In that regard, the constant attacks by the Conservative party and the right-wing press on the Government’s demand-side policies are deeply damaging to the future of steel. The right response to an economic recession is not to stop spending but to maintain investment programmes. Minimising debt, as called for by Opposition spokesmen, the BBC and other conservative forces in Britain, would be a one-way road to fewer steel and other jobs.
Bob Spink (Castle Point) (Ind): I agree with what the right hon. Gentleman says about demand. Does he agree that it is in Corus’s best interests, and it is its responsibility, to try to maintain capacity? Eventually, the marketplace will work and world demand will come back strongly, especially for niche products, specialist skills and the high-quality steels that British steel focuses on. We must ensure that when the turnaround comes, Corus has the essential skills and the capacity to take advantage of it.
Mr. MacShane: I completely agree with the hon. Gentleman. Of course, the other thing that we must maintain is a strong position in the European Union. That contrasts with the position of his party, which wants to pull us out of Europe. That, of course, would exclude us from so many key markets for steel.
Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): My right hon. Friend is being very generous in giving way. Would he not agree that the scale of the steel industry and the global nature of steel production make it essential that the Government not only act to sustain demand in this country but work with other countries, particularly the EU but other countries as well, to sustain demand internationally? To cut demand by cutting public expenditure in this country will completely undermine their attempts to do so.
Mr. MacShane: My hon. Friend is right. The Conservatives are like the Bourbon kings, of whom it was said they learned nothing and forgot nothing: they want to return to the politics of the 1980s and 1930s, and we know where that will lead us. The Prime Minister’s leadership of the G20 in April showed Britain in the vanguard of creating an international response to the world recession. At the forthcoming G8, he will meet President Sarkozy.
I will not deal with it in my speech, but one of the big issues to be discussed is opposition to any rise in protectionism, which we see in China, Turkey, Russia and potentially in the United States.
Bob Spink: Will the right hon. Gentleman give way again?
Mr. MacShane: No, I really want to finish because other colleagues from steel communities want to speak on this matter.
What must the Government do? I ask my right hon. Friend the Minister to open a channel of communication with Ministers to plug them into the scandal of the overly high prices that our electricity companies charge to industrial users. If hon. Members look at Hansard from 8 June 2006, at column 382, they will see that I asked the then Secretary of State for Department of Trade and Industry, now my right hon. Friend the Chancellor of the Exchequer, to take action regarding the fact that electricity prices for industry were much lower in Germany in the UK—and they still are and no action has been taken.
On 22 January, as can be seen in Hansard, I asked the then Energy Minister, now the Minister of State, Department of Health, my right hon. and learned Friend the Member for North Warwickshire (Mr. O’Brien), what could be done, given the rapid decline in oil prices, to get electricity prices down. I do not want to read out the answer that I received, because it was not adequate. I have repeated that point in the House, in letters to Ministers and in private conversations with them, but there has been no grip on this problem of Britain’s having much higher electricity charges than the rest of Europe, which has cost the jobs of steelworkers. I ask my right hon. Friend the Minister to put effective pressure on her ministerial colleagues who are responsible for the oversight of these wretched utility companies and ensure fair prices for steel.
We also need joined-up government with the Department of Work and Pensions. My right hon. Friend the Member for Wentworth (John Healey) and my hon. Friend the Member for Sheffield, Hillsborough had a good meeting with Lord Mandelson and his ministerial team last month. We asked for a senior civil servant in the Department for Business, Innovation and Skills to be placed in executive charge of co-ordinating Government activity across Departments. Can the Minister tell us the name of that person, and if not will she write and let me know?
One bit of co-ordinated activity would be to use all the DWP’s funds, not as stretcher-bearers to help those who have lost jobs, but instead to create in-work training schemes so that some workers can be kept on the company payroll on training or community help schemes, rather than going out the door.
Mr. Ian Cawsey (Brigg and Goole) (Lab): I congratulate my right hon. Friend on securing this debate. I, too, declare an interest as a member of the Community trade union. My right hon. Friend may be aware that I secured an Adjournment debate a few weeks ago, in which I mentioned a joint report from the TUC and the Federation of Small Businesses on supporting the work force in work. The conclusions of that report were that Government money would be much more wisely spent on that so that industry, especially the steel industry, could keep its work force in place, ensuring that we have the capacity in Britain to meet demand as it increases.
Mr. MacShane: I agree with my hon. Friend. I wish that the civil servants in Whitehall would read these debates and that Ministers would act on the points made by Back Benchers who are a lot closer to the steel industry than others. I will come on to that point in a second.
Undoubtedly, we need to think differently. There is a sense that, in terms of industrial support policy, we are on tramlines that have not altered for the last 25 years: any job reduction is good and anything that a company wants to do has to be accepted, and the Government are powerless, as if decisions about electricity prices or tariffs or how to ladle out public funds to support people in difficulties are immutable things that, like the weather, cannot be altered. The Government must understand their responsibilities and act.
We need to see what can be done to use DWP funds to keep some workers—not all—on the company payroll in training or community help schemes, rather than have them go out the door. In particular, the role of the Communitas training outfit, which has specialised knowledge of steel, needs to be highlighted. I understand that there will be a meeting with Communitas later today, and I hope that the Minister can assure me that the Government will act to press Corus to co-operate fully with it, because that is the only training organisation that originates from the steel community. There are plenty of private training organisations and all the quangos that get a lot of Government money, and I am sure that they do God’s work in their own way, but Communitas can do the steel industry’s work better than anyone else. Corus must be told that, if it is to get Government help, it must co-operate with Communitas.
In particular, the £5 million that has been announced to help steel must be used jointly with the union and Communitas and must not be a blank cheque given to Corus to use for its own purposes while men go out the door. That £5 million is welcome, but it needs to be increased. The paltry sum of £5 million for thousands of steelworkers contrasts sadly with the new wages of £9 million announced for the new boss of the Royal Bank of Scotland, even though this bank is under Government supervision. Can my right hon. Friend understand—I do not ask her to comment on it—the outrage of families who now have to face the dole while the Government sign off on a £9 million pay package for this greed-soaked bankster? This not a moral maze; it is immoral, and the sense of injustice at the double standard, whereby the rich in the City are protected while the steelworkers of south Yorkshire are sacrificed, should not be underestimated.
In talks with Ministers—my right hon. and hon. Friends and colleagues—they all insist on their ideological commitment that there is not much to be learned from European Union, where different and more innovative policies to support steel are in place. I have heard all the reasons and excuses from Ministers, both at the Dispatch Box and in meetings, but they increasingly sound hollow. When the upturn comes, and it will, we will find ourselves importing steel from Germany, the Netherlands and France because we will have lost the capacity and the will to make steel across the board in Britain. Why are other Governments leading and the British Government lagging? Can we look, for example, at stock-piling some steel products to be sold, at a profit, when the upturn comes?
If a full-scale Dutch or German-style wage subsidy is ruled out, why not a temporary exoneration of social charges on the wage bill, as in Sweden? The Government’s refusal not to follow a single European model but to incorporate some of the better ideas from Europe makes the UK much more expensive now for steel operations. Why are we not able to help with credit insurance? Without accessible credit insurance the cost of raw materials and electricity is even higher for Corus. These are arguments about the need to help the industry, though the industry could help itself by working jointly with the Community union and presenting a common approach based on showing the jointly decided priorities to Government.
Steel is not like other industrial production. A steel plant cannot be moth-balled. The electric arc furnaces of the south Yorkshire steel industry are a key component in the new green economy, for which my right hon. Friend the Minister is a wonderful ambassador and enthusiastic advocate. But does she understand that Rotherham and Stocksbridge consume about 1.5 million tonnes of scrap metal a year? Where are all the unused, derelict cars going to be stored if they are not swallowed up as scrap by the electric arc furnaces of our region? Are they to be stacked up on street corners?
We marvelled last week at the new roof at Wimbledon, which was made with Rotherham steel. It did not bring Andy Murray quite enough luck, but it will still be there next year, as I hope will he. Half of the steel made in Rotherham goes to the car industry in the UK. If Nissan, Honda and other car manufacturers can no longer source steel in Britain because steel has gone under, they will relocate to the continent to be closer to suppliers of steel as Governments there have been willing to think out of the box and put in place pro-steel job policies.
The 800 jobs threatened in south Yorkshire represent about £3 million in local demand. There is a lot of talk about family policy these days. The best family policy is, and always will be, a secure job with fair pay so that a home can be created and children supported as they grow up. That is now under threat for too many steel communities in Britain.
Labour Members know the devastation that was caused to towns and communities when the Tories shut down the pits. My right hon. Friend the Minister represents those communities in south Yorkshire, and I am confident that she will do all in her power to help, but so far we have had more words than concrete action. It is not too late. If Labour loses steel, Labour loses power. It is as simple as that.