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House of Commons

Wednesday 31 January 2001

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked--

Corus (Llanwern)

1. Mr. Damian Green (Ashford): What discussions he has had with the Chancellor of the Exchequer with regard to the future of the Corus steelworks plant at Llanwern. [146520]

The Secretary of State for Wales (Mr. Paul Murphy): During the past weeks, I have of course discussed the future of Llanwern with my right hon. Friend the Member for Newport, East (Mr. Howarth) and my hon. Friend the Member for Newport, West (Mr. Flynn), and that of the steel industry generally with my right hon. Friends the Chancellor of the Exchequer, the Prime Minister, the Secretary of State for Trade and Industry and the First Secretary of the National Assembly for Wales. In addition, I have twice met Sir Brian Moffat, the chairman of Corus.

I have to tell the House that the Government have not been given any detail about the forthcoming restructuring of the British steel industry, much of which is, of course, based in Wales. The company has not engaged with the Government or with the National Assembly. I regret that and urge Corus to recognise the record of our steelworks and our steelworkers and not to take any short-term decision which would have devastating effects on our communities.

Mr. Green: The Secretary of State paints a very disturbing picture. Will he acknowledge that some of the problems--only some, I agree--that have led to this terrible crisis are the result of explicit Government policies, which have led to business rates being too high; the climate change levy, which particularly affects steelworks; and the web of bureaucracy and interference that they have tied around manufacturing industry? There are clearly faults on many sides in this terrible crisis. Will he accept responsibility for the fact that the Government have caused some of the problems that are presenting such a terrible prospect for the steel industry in Wales?

Mr. Murphy: I certainly do not accept that. I doubt whether many of the hon. Gentleman's constituents will lose their jobs in the next few days; many hundreds,

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if not thousands, of my constituents certainly will. I strongly reject the points that he has made. Let me tell him that I have met the chairman of Corus, and none of the points to which the hon. Gentleman referred and in respect of which we have made some representations and changes--for example, rates in Wales--would make any difference whatever to the decisions that Corus proposes to take in the next couple of days. That is what the chairman of Corus said. He said that he intends to base his decision on the restructuring of the steel industry, not on whether the company is paying too much in rates in Cardiff, Llanwern or wherever. That is not the case.

In fact, Corus has been unmoved by any offer of help whatever. The company is intent on making its decisions entirely on its own. I repeat that our steelworkers are the best in Europe; they produce the highest output per employee and our Welsh plants are the most efficient and productive in the world. In 1998-99 alone, they increased their productivity from 533 to 571 tonnes per person, which is well above that of any other country in the whole of Europe.

The devastating effects of what might happen in the restructuring will fall on my hon. Friend the Member for Blaenau Gwent (Mr. Smith) and my right hon. Friend the Member for Alyn and Deeside (Mr. Jones) and, as I said earlier, my right hon. Friend the Member for Newport, East and my hon. Friend the Member for Newport, West, but right across Wales--north and south--the effects of the decision will be calamitous. It is a decision entirely made by the company, based on what I fear are short-term considerations.

Mr. Paul Flynn (Newport, West): Does Brian Moffat's contemptible refusal even to consider the offer from a consortium to take over Llanwern prove the reasons behind his plans? The decision is nothing to do with the marvellous productivity at Llanwern, which is at least 20 per cent. better than the Dutch arm of the business; it is entirely about the fact that he said, "We don't want more competition." The "we" that he was referring to is Corus after the assets have been stripped from Llanwern and the hard-won contracts that have been earned there are handed over to the Dutch arm of the industry. If the decision is taken, it will be enormously damaging to a bedrock industry that has served Newport, Wales and the United Kingdom for many years. That will be an act of industrial vandalism. Can we not impose some common sense on the company and make it realise that it has a responsibility to Newport, to Wales and to the work force of the United Kingdom?

Mr. Murphy: I entirely agree with my hon. Friend. He worked for many years in the Llanwern steelworks, so he is perfectly aware of that plant's efficient record. I wrote to Sir Brian Moffat to tell him that the Iron and Steel Trades Confederation bid had been made and that Corus should take the bid seriously. The company has rejected the bid, but I hope that it does not reject the vote of confidence in the Llanwern steelworks that the bid undoubtedly represented. It was a vote of confidence in the workers, in the management and in the efficiency of the plant. I agree entirely with my hon. Friend.

Mr. Lembit Öpik (Montgomeryshire): Does the Secretary of State agree that the Conservatives are hardly in a position to criticise, given that they presided over the

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largest loss of steel jobs in the history of Wales? Some 35,000 to 40,000 jobs were lost under their leadership. Furthermore, does he agree that it is not the time for any one party in Westminster or Cardiff to attempt to score cheap political points when the Welsh economy stands to lose thousands of jobs? Does he agree that we must do all that we can to ensure that the Welsh Assembly has as loud a voice as possible to influence the decisions of that company?

Mr. Murphy: I entirely agree with the hon. Gentleman. It certainly is not the time to start making party political points about the future of the steel industry, particularly when Corus has said that whatever any Government could do will have no effect on the decision that the company is likely to take. All of us in Wales--whatever party we represent--must fear that 5,000 or 6,000 direct jobs could be put at risk. In addition to those, literally thousands of indirect jobs in all sorts of industries and services will be affected. It will be devastating news for Wales if what is predicted comes about. Once again, I appeal to Corus, if it has such decisions in mind, to rethink them.

Mr. Llew Smith (Blaenau Gwent): The Secretary of State may be aware that, on the day that Corus was formed, I received a call from its managing director, Tony Vickers, to tell me that there was no threat to jobs in Ebbw Vale and that the plant was secure. If we are to believe the serious press, that plant faces closure. We are told that redundancies will take place in Corus because of financial problems. If this is so, will my right hon. Friend comment on the fact that, since it was set up, Corus has handed out £700 million to its shareholders, appropriated £900 million from the workers' pension fund, wasted £135 million by buying companies abroad and given millions of pounds to sacked chief executives and massive wage increases to former Dutch managers? Is he surprised at what is happening to the industry and the steelworkers, given that Sir Brian Moffat has said that he was interested not in making steel but only in making money?

Mr. Speaker: May I appeal for very brief questions?

Mr. Murphy: I understand my hon. Friend's point. He knows that I worked in Ebbw Vale from 1971 until I came to the House. When I first started working in that town, more than 10,000 people worked in the steel industry. Today, there are fewer than 1,000 working in the industry, and the loss of those jobs to the people of Blaenau Gwent would be catastrophic. I know that, and I also know that the production and efficiency of the works at Ebbw Vale are second to none. With my hon. Friend, I hope and wish that any decision that is taken in the next couple of days will not close down that very efficient plant.

Mr. Simon Thomas (Ceredigion): I join the Secretary of State in deploring the shameful way in which Corus has refused to listen to its work force and refused to listen to representations from all political parties in Wales. However, although the axe is being wielded by Corus, the death sentence was passed by his Government and their attitude to manufacturing. There has been a lack of clarity on the future of the euro and a refusal to put forward regional fiscal policies, and the Government need to send

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out messages on those issues. Does he accept that the decision is a wake-up call to his Government to get manufacturing right in Wales and in the United Kingdom?

Mr. Murphy: Let me repeat what I have said already to the House. On all the occasions that I and the First Secretary have met Sir Brian, no blame has been attached to any Government or any Government policies for the steel industry. The hon. Gentleman knows that the relationship between the euro and the pound has improved and that Corus has benefited to the tune of many tens of millions of pounds in the past few weeks. However, it has already said publicly and privately that that issue is not the reason for the restructuring that now faces us. There are all sorts of factors, but the principal one is that the company wants to slim down its manufacturing base in the United Kingdom. We are asking Corus to think again, realise its commitments to our communities and ensure that its policy is based on long-term consideration of the economy and on its own prospects. Its decisions should not be based on short-termism, as they are currently.

Mr. Barry Jones (Alyn and Deeside): Shotton steelworkers thank my right hon. Friend the Secretary of State and my hon. Friend the Under-Secretary for what they have done to help them. However, has the First Secretary told Sir Brian Moffat in any of their meetings about the deep anxieties of the Shotton work force, who fear both closure and the loss of their cold strip mill, where 300 jobs are at stake? The Shotton work force are one of the most magnificent of their kind in western Europe. We could not suffer any more job losses after experiencing Europe's biggest redundancy in 1980--a redundancy that was, incidentally, implemented by the Conservative party.

Mr. Murphy: First, I acknowledge the enormous amount of work that my right hon. Friend has done on behalf of his steelworkers and the communities in Shotton and in Alyn and Deeside generally. I was with him not so very long ago at the steelworks. I have no doubt that the First Secretary has stressed in his meetings with Corus and others the importance of recognising that the Welsh Assembly and the Government are intent on trying to ensure that all the United Kingdom's steelworks, including those in north Wales, are saved from destruction.

Mr. Nigel Evans (Ribble Valley): I, too, call on Sir Brian Moffat to think again about the enormous impact that the job losses would have not only in Llanwern, but throughout the whole of Wales. Indeed, devastating rippling effects would be felt not only throughout Wales, but in every part of the United Kingdom. Sir Brian Moffat would tear the guts out of steel in Wales if he closed Llanwern. I applaud any action taken by the Secretary of State and other Ministers in negotiating with Corus to ensure that the jobs remain safe in Wales.

The right hon. Gentleman referred to Sir Brian Moffat's comment that business rates had no effect on the company's decision. I understand, however, that Corus made representations to the National Assembly for Wales many months ago about the enormous impact of the business rates. Has the right hon. Gentleman made

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representations to the Chancellor of the Exchequer or the Prime Minister suggesting that the climate change levy be scrapped?

Mr. Murphy: I welcome the hon. Gentleman's commitment to ensuring that we work together on the matter and ask Corus to rethink what it has in mind. He referred to negotiations, but no negotiations have occurred between Corus and the Government or the National Assembly for Wales. Our meetings have dealt only with general policy and there have been no discussions on the detail of whatever announcements await us. On the other issues that he mentioned, I told the House earlier about our suggestion to Corus that we could negotiate on matters such as business rates. Those matters were not taken into account, however, and are not relevant to the decision making of Corus. I wish that they were.

Mr. Evans: It is obvious that Corus cannot escape blame for the way in which it is handling its decision. For those who are waiting for proposals at Llanwern and other steelworks throughout Wales, the company's indecision must be torture. I implore Sir Brian Moffat to sit at the table and negotiate in the long-term interests of the Welsh steel industry and those who have the skills to work in it, to ensure a viable future. Will the Secretary of State implore the Prime Minister himself to become directly involved with the steel crisis? Will he tell the House exactly what direct action the Prime Minister has taken so far to try to save the jobs? [Interruption.]

Mr. Speaker: Order. Before the Secretary of State responds, the House must settle down. There is far too much noise.

Mr. Murphy: My right hon. Friend the Prime Minister has, of course, already met Sir Brian Moffat, only a week ago. As I said, my right hon. Friend the Secretary of State for Trade and Industry, the First Secretary and I have also met Sir Brian. We will continue to meet, but there is no point in having meetings unless the company is prepared to talk about reality. In the meetings that have so far been held, I fear that there have been no concrete negotiations whatever.

Like the hon. Gentleman, I implore Corus to ensure that when it next meets my right hon. Friend the Prime Minister or myself, it discusses details and restructuring proposals. Perhaps then it will realise that what it has in mind will have devastating effects on my constituents and those of many other hon. Members.

Mr. Win Griffiths (Bridgend): Following the unusually long delay in making the announcement, and given the great importance to Wales of the steel industry, will my right hon. Friend request that a delegation of Members be present at the board meeting where the decisions are made, so that we can put the arguments for keeping the steel industry in Wales going?

Mr. Murphy: I shall certainly make that point to Corus and to others engaged in the process. However, if Corus's record of engagement so far is anything to go by, it is unlikely to accede to that or any other request. It is disgraceful that a major public company such as this simply is not willing to listen to the leading elected Members representing the people of the country.

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