| Previous Section | Index | Home Page |
7 July 2009 : Column 188WH—continued
Ms Angela C. Smith (Sheffield, Hillsborough) (Lab):
I congratulate my right hon. Friend the Member for Rotherham (Mr. MacShane) on securing this important debate. He referred to the impact of redundancies on steel towns and areas, with specific reference to Rotherham
and Stocksbridge. The work force in Stocksbridge of approximately 850 will be reduced by 379. It does not need a mathematician to work out that the impact will be serious.
Over the years, Stocksbridge has weathered many storms, most of them from the late 1970s and early 1980s when the Conservative Government did little to intervene in the massive contractions that hit the steel industry. Stocksbridge then employed more than 6,000 people at the steelworks in the valley, but that number was reduced to 600 before increasing to 850.
Steelworking in the area goes back to the 1840s, when the works were founded by Samuel Fox. To this day, the valley is known not as the valley of the Little Don, but as the valley of the Fox, such was the impact of steel on the area. Stocksbridge exists for one reason only—steel. Without steel, Stocksbridge would still be a hamlet of a few dozen houses; instead, it has a population of 13,500. As my right hon. Friend said, the structure of the steel industry in places such as Stocksbridge has a similar effect to that of mining in any pit village. The place exists only because of steel, hence the importance of Corus Engineering Steels, even now, to towns such as Stocksbridge.
Another point that my right hon. Friend made that is worth repeating relates to the quality of the work in Stocksbridge, Rotherham and other places that provide components for niche markets, including aviation—planes have a little bit of Stocksbridge in them, whether in the landing gear or elsewhere—as well as components for the energy, oil and gas industries, and increasingly for the new green technologies, such as turbines.
If Britain is to specialise in high-value steelworking, Stocksbridge is at the niche end and highest value end of that market. Its specialisms are such that previous attempts to move steelworking capacity elsewhere have always led to its return to Stocksbridge. Attempts have been made to close the operation in my constituency, but it has always come back because the skills required to produce steel are so specialised that it has not been possible to maintain production without returning to the area. That is not surprising, because its 160 or 170 years of specialist steelworking and secondary skills in metallurgy and so on are second to none.
A long history of steelworking does not give an area an automatic right to survive, but that long history and the skills that have been built up over generations in areas such as mine means that Stocksbridge, Sheffield and so on have a right to be supported by maintaining the steel industry in their areas. What is made in Stocksbridge will be critical to the economy as it goes into an upturn. We hope that green technologies, the energy industry, aviation and the automotive industry will soon move into more positive times. Companies such as Corus will then be critical if British manufacturing is to exploit the new opportunities that will be available in the long term.
We all know why we are where we are with Corus. Demand is down and Stocksbridge is working at 25 per cent. capacity. Energy prices have crept up, as my right hon. Friend said, and it was inevitable that redundancies would be announced. We all hoped that those announced at the beginning of the year would be the only ones, so the latest announcements have been soul destroying in
places such as Stocksbridge. Many of those who worked at the plant knew that there was a possibility of redundancies, but they still came as a shock when they were announced. The announcement ran like a tremor through the town: everyone was talking about it, and everyone started to worry not just about the job losses and what they would mean for local families, but about the knock-on effect on the local economy. In a small town such as Stocksbridge, many local businesses exist only because of Corus—even the local sandwich shops exist only because of Corus. On top of that, many contractors, such as electricians and so on, who are not on the Corus payroll depend on Corus for their survival and livelihood.
What can the Government do to support UK steel, and Corus in particular? First, as my right hon. Friend said, continuation of the Government’s economic stimulus is critical. The car scrappage scheme has been helpful to Corus; it should continue and, if possible, be expanded because it has done a great deal to help UK steel, and it could help a great deal in Corus’s fight for survival.
Secondly, we would like the Department—I hope that the Minister will comment on this—to do more to stabilise energy prices in the industry, which have been a huge and ongoing problem for a number of years. Since I came to the House, both Corus and the community have told me repeatedly that the price of energy, compared with that of our European neighbours, has been a key problem for Corus’s competitiveness. The more the Department can do to help to stabilise energy prices, the better it will be for the company in the long term.
Thirdly, if our Prime Minister is to engage in discussions with the French on Anglo-French collaboration on infrastructure projects, with nuclear power being a key part of that, I hope that he will do his best to ensure that British industrial interests are well represented in those discussions. British manufacturing could have a key role in building the future infrastructure of the UK and France. We know that the capacity potential for British manufacturing and specifically steel to fulfil the requirements of the new generation of nuclear power plants to be built in this country is around 90 per cent.—it is possible for UK steel manufacturing to provide up to 90 per cent. of the components required for the new generation of nuclear power plants. There are European rules on competition and so on, but it would be good to know that the Government are doing all they can to ensure that UK steel manufacturing is well placed to exploit the opportunities that will be available. Our Prime Minister can play a key role in delivering that.
A £5 million training package was announced two weeks ago. My right hon. Friend referred to ProAct, which is a Welsh scheme, and I understand that a similar scheme in England would cost around £44 million. The Department should consider introducing such a scheme. If the Welsh can do it, why cannot the English? I would like to hear from the Minister today how the Department is working with Corus to ensure that that £5 million is well used and delivers what it needs to deliver. It is a small sum. I agree with my right hon. Friend the Member for Rotherham that we need much more such money, but we need to ensure that the money that has been provided is used properly—used to secure the long-term future of the plants in Stocksbridge and Rotherham. What is the status of the Minister’s discussions
with Corus, and what commitments is she trying to secure from Corus on the proper use of that money? We need guarantees from Corus that the money will be used to secure the long-term survival of the company in South Yorkshire. That is critical—from my point of view, it is the most important aspect of the discussion today.
Why is steel so important? It is easy for people who live in Sheffield to forget that others do not necessarily consider steel to be so important. Sheffield was once the largest steel producer in the world and stainless steel was invented in Sheffield, so it is easy for us to forget. We have to ask ourselves the question again and again and to remind people why steel is important, because we in South Yorkshire take it for granted.
Steelmaking is a primary economic activity. As my right hon. Friend pointed out, it is a barometer of the health of the economy and of the health of British manufacturing. Given that in recent debates, it has been recognised that we have become over-dependent as a country on financial services and the service economy and that we need to rebalance the economy in favour of manufacturing, now is the right time to think properly and strategically about the future of steel, because steel is a critical part of any manufacturing economy such as ours. In particular, Corus Engineering Steels is a critical part of the steel industry because of its production of components for the niche end of the market and because it represents exactly where the UK needs to be in terms of manufacturing—at the very top of the highly skilled, high-value end of component manufacturing.
Sir Nicholas Winterton (in the Chair): Order. Before I call the hon. Member for Newport, East (Jessica Morden), I should like to help hon. Members by informing them that it is my intention to start the winding-up speeches at 10.30, because I want the Minister to have the full amount of time to respond to what is clearly a very important debate. That is advice to hon. Members to indicate how long they can speak for, and perhaps to indicate, if Members have not thought of speaking but would like to, that there is still an opportunity to get in. I call Jessica Morden.
10.3 am
Jessica Morden (Newport, East) (Lab): I shall speak briefly, Sir Nicholas.
I congratulate my right hon. Friend the Member for Rotherham (Mr. MacShane) on securing this very important and timely debate. He made a convincing case for more Government support for the UK steel industry without, as he said, offering false hope. In my constituency as in many others, the dramatic drop in steel demand has had a tragic impact on workers and families. The job cuts announced by Corus in January have led to more than 500 losses at Corus in Llanwern, with the mothballing of the hot-strip mill. That has been a devastating blow for the very loyal and dedicated work force, who have stuck with Corus through thick and thin, not to mention the knock-on effects on contractors and suppliers.
During the current recession, steel has been hit more quickly and more severely than expected. We all understand that the industry faces extreme difficulties, but before
the recession, companies such as Corus were making extremely healthy profits, and I agree with my right hon. Friend that we must avoid, where possible, short-term decisions that affect the long-term future of the steel industry as a whole. In the past, knee-jerk reactions have affected sites such as Llanwern in my constituency and we should do everything that we can to avoid that now.
As chair of the all-party group on steel and metal, I thank my right hon. Friend the Minister for Business, Innovation and Skills for agreeing to come to a meeting of the group before the recess. That follows up the steel summit held by the group in May, at which representatives of the industry and the unions had the opportunity to voice their concerns and have a full and frank discussion with the Secretary of State. I look forward to my right hon. Friend the Minister reporting back on progress made on the issues that we discussed, including, as has been mentioned, action to stimulate demand for steel through the construction and automotive sectors and the car scrappage scheme; assistance with trade credit insurance; and security for energy purchases and prices. It is clear that the burden being placed on the industry by energy companies is unreasonable and unfair; I am thinking especially of the demands to pay up front. That problem could worsen as the country emerges from recession. Traditionally, most bankruptcies occur when companies’ working capital increases as they start to ramp up production. If energy suppliers continue to demand those payments up front, that will put an even greater strain on resources.
Most crucial is the retention of skills in the industry. It would be helpful if the Minister responding to this debate talked about that. It would also be helpful to have her feedback on the commitment made during the steel summit about working groups with industry and the Department to consider the issues in detail. It would be useful to know what progress has been made on those groups and how often they have met.
Other European countries are helping their industry through problems such as that relating to trade credit insurance and are offering, for example, generous arrangements for short-time working. We need to ensure that we have a level playing field to allow us to compete. We need progress on the measures now, because the benefits in all the areas that we have discussed today will undoubtedly take time to filter through to the industry. Momentum will certainly gather with measures such as action to stimulate demand, but every day is crucial, and we need help to come as soon as possible for communities such as mine in Newport, East.
10.6 am
Mr. Elliot Morley (Scunthorpe) (Lab): I, too, congratulate my right hon. Friend the Member for Rotherham (Mr. MacShane) on securing the debate. It is important for all our communities and I am pleased to see how many hon. Members from the all-party steel and metal group are present, representing their steel communities. We all have a common interest and a common cause.
Like Stocksbridge, Scunthorpe was built on steel. Before the discovery of ironstone, Scunthorpe was no more than five small villages. There have been enormous structural changes over the years, but the work force have responded with dedication and skill and have kept
production up, even though fewer people have been employed. However, although Scunthorpe has fared better than many plants in recent times, the recent announcement of 500 job losses is a very heavy blow to the town. Of course, it is a blow not just to steel production and the steelworks, but to the whole local economy, because those are good jobs with decent pay. Taking those jobs out of the local economy has a knock-on effect all the way through the economy—on other jobs, other industries, the supply side, services and manufacturing.
In addition, we do not know what the future will bring. I endorse what my right hon. Friend said about the pressures on steel and about the pressures being global. This is not a national but an international issue. Other companies all over the world are suffering in the same way as we in the UK are.
It is important that we work together to forge partnerships and to seek common cause. There should be common cause between the trade unions, management, local authorities, the regional development agency, Government and ourselves as local Members of Parliament representing our communities and the people who work in the steel industry. The Government can take a wide range of measures to help steel, but I accept, as my right hon. Friend said, that the Tata group is a very profitable group and it has some responsibilities in relation to seeing Corus get through the current period.
One advantage of being part of a very large conglomerate is that there is some shielding from downturns, which of course are not unknown in the steel industry. Many of us have been through many downturns. In the past and particularly the 1980s and ’90s, the first thing to go was jobs. I take a lot of encouragement from the fact that Corus and the Tata group have had a more thoughtful approach. They have genuinely been trying to minimise job losses and find savings in other areas, which is exactly the right thing to do.
With my hon. Friend the Member for Brigg and Goole (Mr. Cawsey), I recently held a meeting with all the trade unions in Scunthorpe to talk about how we as local MPs could work with the unions, the company and the local council, all of which are committed to seeing us through the present difficulties, to help the steel industry, which is so important to our whole economy. Some of the issues that we discussed have been touched on in the debate and they include support for UK manufacturing. Manufacturing is an important part of our economy, but it has not had the support that it deserves.
Sometimes, a small intervention can make a huge difference. One example is the car scrappage scheme, which is having a beneficial effect. Car manufacture is not a major component of output in Scunthorpe, but some companies there supply the car industry, and there is a knock-on benefit right through the economy. That is an example of a successful scheme that the Government have put in place.
We could bring forward major infrastructure projects, such as Building Schools for the Future and the construction of new health centres, as well as road and rail improvements, which the Government have announced and which I very much welcome. A lot more could also be done on
social housing and house building, which help with demand for steel and make a useful contribution to our economy.
We could promote major investment in new clean energy. We will have to have an awful lot of new power stations in the very near future. The growth of the green economy has real potential for steel manufacturing, and the Prime Minister very much believes in it, but a great deal more could be done.
We need to consider anti-dumping measures. There have been allegations of slab coming in from Ukraine at prices that are below the cost of production. We need to be wary of that and to watch what other countries are doing to ensure that there is no trade distortion. We also need to look at what we can do to promote world demand, as the Prime Minister has been doing through the G8 and the G20.
We need to explore ways to support the work force and companies in minimising job losses. We could be put at a serious disadvantage compared with what other European countries are doing to support their work forces through wage subsidies. I know the arguments on that subject and I know that this country opted out of an EU scheme in the ’80s, when anything to do with the EU was anathema, but it is at times like this that one can see the benefits of the EU, because European countries such as France and Germany are getting the benefits of the social systems that are in place.
The Welsh ProAct scheme has been mentioned, and it seems to be very successful. My right hon. Friend the Minister should look at it carefully to see how we can help through initiatives such as Train to Gain, which has been used quite successfully. How can we use support for skilling and temporary support for the work force to reduce job losses in this difficult period? We also need to ensure that UK manufacturing and UK steel get a fair share of Government contracts.
Energy prices are an issue—a complex one, as I know from my work on the Select Committee on Energy and Climate Change. It is fair to say that deregulation in the UK brought advantages for manufacturing and domestic consumers, but there is a bit of a disparity between UK and European prices. The price of gas is competitive in European terms, but the price of electricity is not, and questions need to be asked about why those disparities exist between the UK and the rest of Europe.
In some parts of the steel industry, credit insurance is a problem. I would have thought that the Government could do something to support credit insurance and to put in place measures to provide some underpinning. I hope that the Minister will look at that.
Finally, there is the question of partnerships. Steel is crucial to our local economies and to our national economy. It is in all our interests to ensure that we have a successful and viable steel industry, because steel production is part of the manufacturing base. It is important that we all work together and that the Government, the company, the trade unions, local authorities, regional organisations and trade organisations look at what we can do to ride out the world storm and ensure that we have a successful and viable steel industry in place to take advantage of the inevitable upturn. In relation to the steps being taken in other parts of Europe, we must not put our industry—steel or manufacturing—at a disadvantage. That is the
Government’s responsibility, and they have introduced some very helpful and successful measures, but the points that I have raised need to be carefully considered.
| Next Section | Index | Home Page |