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Alan Howarth (Newport, East): I think that Plaid Cymru and, I am sorry to say, the Conservative party, have not exercised good judgment on this matter. No one believes that my right hon. Friend the Prime Minister would be improperly influenced by a donation to the Labour party; the country knows that it is simply not in his character. As long as Opposition parties continue cynically to peddle this garbage, they will do no more than demonstrate the bankruptcy of their own thinking and the fact that they have absolutely nothing useful to say about policy and how to support the British steel industry and help it to thrive. They have not done themselves any good politically, as was evident, in the recent Ogmore by-election, and they have done politics a disservice. By flaunting an obsession with sleaze—and, indeed, fabricated sleaze—they persuade all too many of our fellow citizens that politics is a squalid affair. That is a damaging thing for them to do.
Mr. Salmond: Will the right hon. Gentleman cast his mind back to when he sat in Parliament as a member of a different party and the Labour party ran a sustained campaign against the Conservatives—some of us felt that it was very justified—on the basis of sleaze? What did he think of that campaign? Did he think that the personal probity of the then right hon. Member for Huntingdon, John Major, was in doubt? His views on these matters seem to have developed as he has developed his political career.
Alan Howarth: I believe absolutely in the personal probity of the then Prime Minister and I take the same view now as I took then: such things do politics no good at all.
It is absurd that it has been alleged that the Government were indifferent to what might happen to Corus and that their sole concern was to benefit Mr. Mittal and LNM. At least since summer 2000, and for many months afterwards, my right hon. Friends on the Front Bench did everything that they possibly could to find ways to get alongside Corus and see what could properly be done to avert the threatened closures and support Corus and the UK steel industry. I have a thick file of correspondence and notes of discussions from that time with the First Minister, my right hon. Friends the Secretaries of State for Wales, Trade and Industry and Education and Employment, the Chancellor and the Prime Minister. In that period, my right hon. Friends experienced great frustrations that derived partly from the nature of the rules of the European Union, but also very much from the attitude of Corus. As we know, the European Union rules on state aid are stricter in respect of steel than of coal or the automotive industry. The steel aid code of the European Coal and Steel Community prohibits aid for the rescue from closure of a steel plant.
Mr. Simon Thomas: Will the right hon. Gentleman give way?
Alan Howarth: Not at the moment; perhaps I shall do so later.
Exceptionally, under article 95 of the ECSC treaty, it is occasionally possible, if there is unanimous agreement from the European Council, to go further in providing aid.
The unions, including the ISTC—it gives me pleasure once again to express my thanks and congratulate the ISTC on the part that it played—proposed a scheme to preserve most of the jobs that were earmarked for cuts in Corus's announcement of 14 February 2001. My right hon. Friend the Prime Minister met representatives of the steel unions. Having been present at that meeting, I can bear witness to the fact that he listened with the utmost care to the case that they made to him, was persuaded by it and supported it.Consequently, the then Secretary of State for Trade and Industry agreed to approach the European Commission and member states on the basis of article 95. A working party of Whitehall officials, Assembly officials, union representatives and Corus personnel was set up to pursue that project. However—the ISTC will bear witness to this—Corus participated only reluctantly. It did not take the initiative seriously and confirmed its closure decisions before it had received the EU response to the application under article 95. As my right hon. Friend the Secretary of State for Wales said, it was determined to take out the capacity that it took out.
In the months that preceded the announcement of its decision, Corus refused to share its thinking with my right hon. Friends or with any others who were naturally extremely concerned and had a locus in the matter. For example, Corus would not join the Llanwern taskforce. In December 2001, Sir Brian Moffat met my right hon. Friends the Secretaries of State for Wales and for Trade and Industry and the First Minister, but he did not clarify the company's restructuring plans. I understand that he was similarly unwilling to share his thinking with the Chancellor.
My right hon. Friends naturally discussed the matter with the Prime Minister, who was intensely concerned about what might happen. The sole demand that Corus made was that the Government should act to lower the value of the pound—the demand that Plaid Cymru made then and has continued to make. That was disingenuous. It is not open to the Government simply to engineer a fall in the value of the pound, and to have done so would have had dangerous consequences for inflation and interest rates, damaging the industry that we were seeking to help.
As hon. Members from all parties can confirm, Corus was equally unforthcoming in meetings of the Select Committee on Welsh Affairs and with Welsh Labour Members of Parliament. Those meetings were therefore unproductive.
In his announcement on 3 May 2001, the First Minister said:
- "We have worked almost on a daily basis with the unions to press the company to come to its senses and think long term."
- "We received the full support of the Prime Minister and the Welsh First Minister."
Mr. Thomas: Of course, the hon. Gentleman is talking about allegations that have not actually been made.
Let me return to his earlier point that the European Coal and Steel Community treaty forbids member states to give aid to companies like Corus or to the UK steel industry
in general. That treaty is up for review in July. Does the hon. Gentleman agree with my hon. Friend the Member for East Carmarthen and Dinefwr (Adam Price) that it should address the extension of investment aid, rather than operational aid, to the UK and European steel industries? That is especially important given the tariffs that are being imposed by the United States.
Alan Howarth: When a treaty of such fundamental importance is up for review we must be willing to approach it in an open-minded spirit. However, I would be wary of contemplating an opening of the gates to permit national competition in subsidies for any industry. We have had a great deal of experience of that, and by and large it does not make good sense.
When it tragically proved that Corus could not be dissuaded from making large-scale redundancies—involving, as my right hon. Friend the Secretary of State reminded us, the loss of 3,000 steel jobs in Wales—the Assembly, supported by the Government, produced an excellent package to support those made redundant, their families and the communities that depend for their livelihoods on making steel. The original announcement provided for £66 million of support, which was followed by an additional £26 million. Of that, the Government directly put in an initial sum of £16 million. Of course, the Assembly was in a strong position to produce a large-scale package precisely because of the success that my right hon. Friend the Secretary of State had achieved in the previous comprehensive spending review.
We in Newport are deeply grateful for the help that was given to us—the on-site advice centre at Llanwern, with the Employment Service, the Benefits Agency, Careers Wales, Education and Learning Wales and a variety of organisations, some from the voluntary sector, all providing a model of integrated support. That quality of support continues; only last month, a new advice centre was set up at the citizens advice bureau in Newport, funded by ELWa, for people directly or indirectly affected by last year's job losses at Corus. Case workers have been allocated to housing offices in the Alway and Ringland wards in my constituency, so I am very grateful for the sensitive support that we are continuing to receive.
The Government negotiated with the European Commission to enable modernised iron and steel employees readaptation benefits scheme—ISERBS—payments to be made. Since then, the Welsh Development Agency has held meetings with about 100 companies in the Corus supply chain, which was so damagingly affected.
The promised urban regeneration company is of particular interest for Newport because of its exciting potential. For more than a year, Newport county borough council and I have called for an urban regeneration company to be established for Newport, and I want to express my thanks again to my right hon. Friend the Secretary of State for his unwavering support for that project.
The far-reaching complexity of the direct and indirect impact of Corus's decisions on the supply chain, the retail economy and the communities that make steel requires a multi-agency, integrated and sustained response. It is not just a matter of immediate damage limitation—ensuring
that benefits are paid, that counselling is provided and that reskilling programmes are quickly made available—but of developing a coherent long-term strategy that involves rebalancing the local and sub-regional economy, so that we achieve a better balance in south-east Wales between the public and the private sectors and between manufacturing and services and a more diversified economy, supported by the inward investment that the WDA continues to seek for Wales.We need to provide education and training of the very highest quality because, in a competitive global economy, unless our skills match those to be found anywhere in the world, our future will not be promising; we indeed need to be a learning society. We need investment in infrastructure, not only in road and rail, but in information technology. We need a sensible strategy on land use, and a commitment to very high standards of urban design. We continue to need a sensitive approach to nurturing and supporting the health, well-being and strengths of the community—for example, the voluntary sector networks that are immensely important in Wales and certainly in Newport. We also need to ensure that, in our arrangements to carry forward that strategy in the future, we hear the voice of local people—those who have borne the brunt of industrial change and for whom our policies are principally intended.
That analysis was confirmed and amplified by the excellent steel communities study, led by Professors Fairbrother and Morgan of Cardiff university, which was submitted to the Assembly in July last year. That integrated process ought to be led and owned locally and democratically, so I was delighted when the First Minister wrote in a letter to me on 29 June last year:
- "In an area such as Newport, joint public/private sector action within the well focused and disciplined format of a company initiated and driven by the local authority would add real value . . . The sharing of objectives, budgets and decisions—together with the Chancellor's promised tax incentives—have the potential to make a real difference."
I would only say that we need early clarification of the structure and terms of reference of the URC. As it is, yet another consultancy has been set up, and I understand that we must wait some little time for the answers to those questions. I hope that when we have the advice of the consultants, it is that the mandate of the URC should be Newport-wide, but of course it must operate within the strategic context of south-east Wales and the five counties regeneration forum, which includes not only the Gwent local authorities but the WDA, ELWa and the Assembly. We have been waiting over a year for clarification on those points, and my constituents may be forgiven for being a little impatient now.
We have had a mass of consultants, academic studies, agencies, boards and taskforces. All the different layers of government have been involved. They are all full of good will and make valuable contributions of ideas and resources. I pay particular tribute to Mr. Allan Martin, who willingly took on the chairmanship of the Llanwern taskforce. He and his colleagues have done great service
in south-east Wales. However, this cat's cradle of overlapping programmes, budgets and accountabilities will not do. We need all the players around the table of the URC as quickly as possible, contributing their particular skills and resources in a unified effort. That way, there will be an opportunity for leadership, and we will achieve the integration of effort, decisions, action, momentum and results.Meanwhile, the communities who draw their livelihood from steel in the United Kingdom await tensely the decision that we expect to hear announced by the Bush Administration tomorrow. Last June, President Bush announced the possible activation of section 201 of the US Trade Act 1974 to protect the USA from steel imports. Already, there has been a host of measures that, to me, look pretty protectionist, and in the first 10 months of last year US steel imports were down by 25 per cent.
The US International Trade Commission is now calling for blatant protectionism—tariffs of up to 40 per cent. and quotas—in what would be clear violation of the rules of the World Trade Organisation. The problem is that uncompetitive US steel producers face great difficulties in a period of global overcapacity, and of course it is election year in the US. We well understand the miseries of restructuring. In the 1980s and 1990s, Wales and Europe as a whole went through that process. Throughout, however, European markets were kept open and strict rules on state aid for the steel industry were formulated and adhered to, even during the period when the number of steelworkers employed in the Community, enlarging as it did during that period, halved.
The ability of Corus to maintain its newly reduced configuration in the United Kingdom depends on the strength of its UK customer base, and any swamping of the UK market by cheap imports displaced from the USA would be a major disaster. I am delighted that my right hon. Friend the Secretary of State stands shoulder to shoulder with EU Trade Commissioner Pascal Lamy in making it absolutely clear that the cost of restructuring the US steel sector should not be shifted on to the rest of the world. The EU supplies about a fifth of steel imports into the USA, and we would be worse affected than Canada, Mexico and Brazil.
Europe should be open-minded about possible federal or state subsidies for what are termed the "legacy costs" of pensions and health care for the industry. It might not be a wise decision for the Americans to take, but it should be a decision for them. We cannot accept that there should be tariff barriers leading to a diversion of steel exports to Europe in order to shelter the US industry from the necessary structural change.
As Mr. Lamy has said, to listen to the debate in Washington one would think that only US steelworkers have families and mortgages, which is not the case, as we all know. I am glad therefore that my right hon. Friend said firmly yesterday:
- "Should the US propose significant action we would strongly support any moves by Pascal Lamy to seek WTO settlement action . . . We defend our right to consider options for preventing serious injury to the industry, including the possibility of safeguard measures."
In the time that it might take the EU or the WTO to get their acts together, our industries and communities could be badly hurt. The EU is permitted by the WTO rules, unilaterally and without seeking authorisation, to restrict imports of dumped steel from third countries. It must take that action if tomorrow's announcement proves as negative as it may be. I hope that the diplomacy undertaken by the Government and the European Union have persuaded President Bush against the decision that we apprehend that he might take. The Prime Minister's phone call to the President last Thursday and the call made by the Secretary of State for Trade and Industry to the United States Commerce Secretary yesterday make it clear that in this and other matters, my right hon. Friend and his Ministers are acting firmly and decisively in the interests of the British steel industry.
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