Examination of Witnesses (Questions 1-25)
COUNCILLOR GEORGE
DUNNING, AMANDA
SKELTON, JOHN
LOWTHER AND
RAY MALLON
15 JANUARY 2010
Q1 Chairman: I warmly welcome everyone
here this morning. This is the first Select Committee session
taking evidence on Corus, but others will follow. We received
research documents—[Interruption.] I am sorry if
people cannot hear me—I will shout, and do my best to ensure
that everyone hears what I have to say. This is our first evidence
session on Corus, and it has been set up for a number of reasons.
Our report on innovative industry in the northern region showed
us that we have a tremendous future in the green energy field.
For us then to hear from Corus that it was potentially or definitely
mothballing—it had different tracks on the same line—was
gut-wrenching so we knew that, after our first piece of researched
report in Committee, we needed to do a second one on Corus. We
are focused on asking, and we will ask it again and again of all
who give us evidence, how and in what way they have had a positive
relationship with Corus. That will be the whole thrust of our
sitting because we want to why know, when so many of us believe
that there is absolutely no need to close Corus, mothballing is
the track that has been taken again and again. The audience will
know my colleagues, Dave Anderson who represents Blaydon; Phil
Wilson who represents Sedgefield and Denis Murphy who represents
Wansbeck. I represent Stockton, South. David Weir is the Clerk
to the Committee, and Hansard will take down every word
that is spoken. The BBC or whoever is here with a camera will
leave within two minutes. I warmly welcome all my colleagues,
and I see many of you here today listening to this evidence session.
I particularly want to thank Vera Baird, because she has been
startling in the way in which she has led all of us, in parliamentary
terms, on this issue, and I am really pleased that she is in the
audience. I also thank Ray Mallon, Mayor of Middlesbrough, George
Dunning and Amanda Skelton from Redcar and Cleveland, and John
Lowther, who has written one of the best research papers that
I have read for a long time. I know you can't hear from the back,
so I shall attempt to shout. We will ask questions, but it might
be difficult for you to hear. Although we are miked up, it is
for the Hansard recording, so you might need to
get closer. There are some seats at the front, or you can bring
your seats to the front. We need you to hear this session. Let
me start by saying that I want you to know that we have looked
at everything published by Tata. We know that this is Corus Redcar.
This is Redcar Steel, but the parent company is Tata. I want you
to know—and again and again it will be the profile of where
we are as a Committee—if the managing director Kirby Adams
can make the statement that we have realised cost savings of more
than £1 billion, we believe that "we are on track",
that the "financial targets" have been met, that we
are starting to recover and that this trend will continue. We
have no doubts that the recovery is fragile and that the construction
industry is fragile, but we believe that we are over the worst
in Europe, and that we can "look forward to returning to
a positive financial performance". That was his report to
the Mumbai board of Tata in November 2009. Inevitably, this piece
of documented evidence is very important to us as a Committee,
and we will be using it again and again. This morning, we will
ask our colleagues what their relationship is with Corus, how
and in what way have they been engaged formally and officially
in the situation Corus finds itself in. I am shouting and doing
my best to ensure that you can hear me at the back. It won't always
be feasible to shout and we may not always remember to do so,
so if you cannot hear at the back, please say so. I am sure that
our colleagues and those in front of us will raise their voices.
Ray Mallon, Mayor of Middlesbrough, would you begin? As we all
have many questions to ask, I would appreciate it if we could
keep them and our responses as nippy and as sharp as we can. For
us, it is your response that is critically important. How and
in what way have you been engaged with Corus Redcar? How and in
what way have they engaged with you? How and what can Middlesbrough
do to support Corus at this time?
Ray Mallon: Chairman, I will stand
up and raise my voice so that everyone at the back can hear me.
I will just say this before I answer the question. The North East
of England has a £29 billion productivity gap with the rest
of the country. Going back 30 years, manufacturing used to stand
at 94% of GDP. It now stands at 12% I blame consecutive Governments
over a long period of time for that failure. The North East of
England was based on manufacturing, and that has been eroded over
a long period of time. I can make this very simple for you because
I only have one message for this Committee. When the Government—whether
it be Conservative or Labour—have the real will, they can
make things happen. Ladies and gentlemen, I don't have a piece
of paper; this is coming straight from the heart. Going back to
1984, the Conservative Government had the will to torpedo and
sink the miners. This Government have had the will to take on
terrorism and other such things. It is as simple as this; Tata
and Corus are not interested in saving these jobs. They have made
that plain. The Government need to intervene. If the Government
intervene and subsidise as in some countries abroad—for
example, Germany—these jobs will be saving subsidy. It's
not a great value. I am reliably informed that steel is going
up in price—it is about £430 a tonne at the present
time—and it costs Corus about £420 a tonne to produce.
I may be wrong, but the figure is certainly under £420. It
is the gap that is a problem. You don't need a mathematical guru
to work out that it is not going to take a great deal of money.
The £60 million isn't worth anything to this area. That £60
million will not help one worker at Corus or one family member.
As far as Corus and Tata are concerned and how they've engaged
with Middlesbrough, they haven't engaged with me one iota—not
one bit. I was quite happy to sit back and let people move it
along until I went to a disgraceful meeting in London some weeks
ago that was completely stage-managed. It was offensive, impolite
and so on and so forth. I then became involved. I am pleased to
say that for whatever reason, it looks as though a number of people
are motivated. One of the pieces of evidence for that—I
am an ex-policeman and I deal with evidence—is that we have
got a Committee sitting here. I think the Committee should have
been here a lot sooner, but having said that, you're here and
I am very grateful. Frankly, I haven't got very much to say. It
is down to the Government. They need to subsidise and if they've
got the will, they'll do it, and they'll save the jobs. There
should be a manufacturing-based strategy, which I don't see anywhere
in this country. This Government have to some extent—and
I stand as an independent—almost abdicated responsibility,
instead of delegating it to civil servants. We need a manufacturing-based
strategy, and I haven't seen one anywhere.
Q2 Chairman: Thank you, Ray.
That was very clear and very concise. George, would you like to
make an opening statement?
George Dunning: Yes, I will make
an opening statement. I will try to stick to the question. What
I think Redcar and Cleveland borough council has been doing since
this was announced—since January 2009—is in relation
to the multi-trade unions. I have worked for 30 years in the steel
industry, and not just in one patch of the steel industry. I worked
for Teesside Cast Products in the continuous casting plant from
1972 to 1984, so I have some experience. The plant is a first-class,
excellent piece of kit. We have taken some steps in the right
direction in the last few days with the south bank coke ovens
coming back on-stream for three years. That is a quarter of the
kit, although it is only 100 jobs. The other part of the kit is
obviously the Redcar blast furnace. Then we've got the BOS plant
and the continuous casting plant where I used to work. That is
a step in the right direction. Ray and I were at the same meeting—the
Peter Mandelson meeting. I passed the mobile telephone number
of the Corus multi-union chair over to Peter; the chair is Geoff
Waterfield, who couldn't be there for obvious reasons. In relation
to that meeting, if it was stage-managed, the chief executive
and I were not part of that act at all. We went down there and
asked for £100 million on 4 December, when Corus announced
the mothballing of the blast furnace. We got £60 million
on that particular Tuesday. Okay, it was broken up into bits and
pieces, but to some extent it was a piece of good innovation,
because it wasn't just going to the steel lads and lasses, who
are close to my heart; it was going to the chemical industry as
well. It's fantastic to be at the Redcar race course, because
there been racing here since 1876—more than 100-odd years,
which is as long as there's been iron and steel in the borough.
I would like to thank Redcar Racecourse, because it held a Save
Our Steel day on 9 August. Thank you very much, Lord Zetland for
that—it was a fantastic day. You asked us what else we've
been doing. We had the Save Our Steel march through Redcar, which
was before the race course meeting a few months before. We've
been working closely with the multi-union chairs since 9 January
2009. We've got an announcement this afternoon from Corus and
I am hopeful that it will extend the mothballing period until
the end of February. In a nutshell, I believe Corus was very premature
in announcing that mothballing on 4 December. I wasn't expecting
it. I thought the earliest any mothballing would have been announced
would have been at the end of January. You were right in what
you said in your opening remarks about our local council—sorry,
not just about our local council—of which I am the leader.
Vera Baird our MP has been fantastic, as well as yourself. Some
of the comments made directly to the Government are a little bit
unfounded—let's be honest, what we've all got to be is completely
united on this front.
Q3 Chairman: Amanda, would
you like to take us on in this journey, because in submitting
to the Government important requests for serious financial investment,
we need to make sure that we all know what the economic assessment
of the potential mothballing and the loss of Corus could be to
this area?
Amanda Skelton: Just some facts
and figures: direct job losses at the moment stand at 1,700 and
we know that 900 of those people live in our borough in Redcar
and Cleveland. The next biggest impact will be in Middlesbrough.
The estimated indirect job losses are 4,000, and that is based
on a 2.4 multiplier. We believe that that equals about 2,000 people
in Redcar and Cleveland. In addition, 1,000 contractors work on
site in 35 different companies. At the moment, we do not have
exact figures for how many of those people would be redundant,
and how many could be redeployed elsewhere. The impact on the
national economy would be a loss of £200 million gross value
added, and in addition there is the social and health impact.
Already the local NHS has pledged £1.5 million to help Redcar
and Cleveland, as well as Middlesbrough, to help with the health
impact of this mothballing. In addition, there will be the physical
manifestation of things like shop closures. We already have a
serious number of shop closures in Redcar in particular, and this
will exacerbate that problem. In addition, there is the cost to
the Exchequer, which is estimated to be £40 million in the
first year for things like loss of income tax and employment allowances,
which adds up over five years to £192 million.
Q4 Chairman: That was brilliant.
It was a very clear statement of the disastrous impact it will
have locally on Redcar and Cleveland, but there is a wider one.
As you will know, many people in my constituency also work in
the steel industry, and have done for years, so thank you for
that. John Lowther, this is a paper I found incredibly valuable,
and I wonder if you would go into the details of why you believe
it would be valuable to see a wage subsidy process engaged in,
and support Amanda Skelton's statement. In effect, whatever the
Government put in, they will get back four times if your papers
and figures are anything to go by.
John Lowther: What we have got
to remember is that the key competitive advantage that Corus Redcar
has is the quality of the steel and, given that the plant is there
totally for export to external suppliers, the security of supply.
The steel industry is quite volatile and companies want to ensure
that they have security of supply. They want to be sure that Corus
won't have production for its own needs. That is a big competitive
advantage that Corus has. The Community union evidence, is that
the submission is that the Marcegaglia consortium made about £800
million of profit over that four-year period. That suggests that
when conditions are more normal in terms of the economic cycle,
basically the position should be that TCP should make a profit.
The problem that we face is the world market, and that withdrawal
of the Marcegaglia consortium leaves Corus with problem of how
to sell 3 million tonnes of steel over a period, and it needs
time to find those alternative markets. The evidence is that basically,
as I said in my evidence, world prices for steel are now rising,
and demand for steel is rising. Kirby Adams himself said that
in Europe demand would go up 8.5%, and figures from the World
Steel Association say 12.5% The issue is that there needs to be
a period of time when we keep Redcar going to enable Corus to
find time to find those alternative markets, which no doubt will
come as the world recession goes back. Fundamentally, the proposed
£10 million wage subsidy is very valuable, because the whole
point is that if we mothball it the Government will have to spend
about £40 million, with all the closures, the unemployment
benefits, the benefits they will have to pay out to families and
so forth. So, it seems to us that it is a £10 million investment
to save £40 million and keep jobs and things going. The other
thing that is necessary is to identify with Tata what needs to
be done to keep things going in terms of help for Government support.
The Government say in their evidence that you cannot support the
steel industry at all, that it is not allowed, that it's illegal.
But, in fact, we have been in touch with our European office in
Brussels and it indicates that where there has been restructuring
going on and there is a clear future for something, the European
Union does allow that to happen, and also where there is research
and development, and help in environmental protection. We think
that the Government could have a more proactive response to working
with Corus, to find an answer to that problem over that year.
Finally, the other thing that is quite important to Corus, and
which is in its evidence, is carbon emissions trading, which comes
forward in 2013. Corus is saying that if it goes to €40 a
tonne, which is the sort of figure that is being talked about
for carbon emissions trading from 2013, that will add between
£42 million and £112 million to its costs. The Tees
Valley is one of the areas being looked at as a pilot for the
carbon capture and storage network, which is to be funded through
the Department of Energy and Climate Change through that system.
Part of that £60 million enables us to make the business
case for that to continue, but it seems to us a no-brainer that
if we want to improve the competitiveness of the Tees Valley industry
and to ensure that Corus does not have a problem with emissions
trading, a priority for the Government has to be providing that
carbon capture and storage network for the Tees Valley as a whole.
Chairman: Absolutely. I hope that everybody
heard that. Work on carbon capture is one of the most interesting
pieces of research and an important aspect of industrial manufacturing
development. We know, because of the extent of our chemical process
industry, that we offer serious opportunities in terms of capture,
which can be used again and again. It is clean energy, and it
is cleaning up the whole industrial process. Thank you, John.
I invite David Anderson to come in.
Q5 Mr Anderson: Thank you,
Chair. In response to Mr Mallon's statement, this Committee is
here on behalf of Parliament, not on behalf of either the Government
or the Labour party. We are here to get evidence and to make recommendations.
Mr Mallon made reference to 1984, and there are two of us on this
panel who were at the sharp end in 1984 when his former employer
was part and parcel of the Government's will. So, we know what
losing jobs is about. We are not here as thoughtless politicians;
we have felt this. We have been there and we know what these people
are going through. We are determined to do our bit to make sure
that everything we can do to help you is done. I wanted to start
with that. The other point that I will raise is about whether
the Committee should have acted earlier. On 25 September, the
Regional Grand Committee met in Middlesbrough town hall and I
raised the issue then about nationalising the steel industry in
this area. I was told, "Leave things now because we're working
together; we're working with the employer". So, in terms
of timing we would have been involved earlier but the advice we
got from the people in this part of the region was, "Don't
do it yet". We have done it at the first possible opportunity,
and so I hope that that is on the record and understood clearly.I
also want to be clear about what John said about the subsidy level.
You said £10 million, John. Is that a one-off £10 million?
John Lowther: That would be for
a year.
Q6 Mr Anderson: On the back
of that, has anybody had any discussions? I hope that with the
work you have done and that other people are doing for us we can
find a way of saying to the Government, "There is a way round
the European rules". We all get this blank all the time:
we can't do anything. I won't believe that that is true, and we
need your help to show where it is not true. But if we could pull
that together, what would Corus's attitude be? There is not much
point in our saying "We'll help you out", if Corus says,
"We don't want your help".
John Lowther: I think that that
is a question you need to put to Corus. I cannot give you an answer
to that particular question because I do not think the question
has actually been put. We have, for the response group, put that
proposal forward for discussion, and we have not had a formal
response from Corus.
Q7 Chairman: Do you mean that
you were not involved in the discussions over ProAct? Your local
Member of Parliament said to Corus in early December, "I
will now go back and put ProAct on the table, centre stage".
That is an effective way of supporting people's wages and salaries.
Were you not involved in Corus's response by Kirby Adams? He said,
"That is academic. It is not useful. I'm sorry, don't do
it." So, you were not involved in that at all.
John Lowther: We have not been
involved in the discussions personally, no.
Q8 Chairman: ProAct was used
in Llanwern. We knew it was working there and that we were on
the edge of the policy, but we actually had a Member who said,
"We'll take this back, because we know where we can make
this work."
George Dunning: Are you are talking
about the Wales situation, where it was offered via the Welsh
Development Agency? Am I on the right track?
Chairman: Yes, indeed; of course you
are.
George Dunning: There was a difference
there, wasn't there? Here in the Teesside steelworks, they were
all working full-time. That was the problem. I think what you
are alluding to is when Vera, on December 4—that dreaded
day—actually put it to Corus about the short-time wage subsidy,
and I think at that particular time it was refused, on that particular
day. But there are differences between what has happened in Wales
in relation to the steel industry there and what has happened
here. It is not so easy to lay people off for two or three days
a week up here on Teesside, with the steelmaking process, as it
was in Wales. I think that was the issue.
Q9 Chairman: Councillor Dunning,
we understand that very well, but we think the discussion should
have taken place, because the trade unions should have been in
on that. They know jolly well how to use whatever it requires
in rules terms to make a policy work. The absolute fact is you
have a Member saying, "We can actually bring this to the
table" and she's dismissed by the managing director. I am
shocked that you were not engaged in this at all. None of you.
Ray Mallon: Can I make two quick
points? First, Vera Baird is on the record as indicating that—I
don't know whether it was Kirby Adams who had said, "Don't
ask". Those were the words: "Don't ask." I think
that is disgraceful. It is almost a fait accompli decision:
"We are not really going to look at this proactively."
To be blunt—very blunt—Vera Baird was disrespected
in that way. You all know that politics it is not about the subject;
it is about influencing someone to change their opinion from A
to B, and I would also say that it is the politics of people.
I would suggest that that should have gone further than Vera Baird;
it should have gone to Lord Mandelson at that point. I want to
make another point. I spoke to Stephen Hughes MEP about three
weeks ago. I cannot give you chapter and verse, but he absolutely
assured me that the legislation is there in relation to European
rules, and they have been relaxed because of the recession. Other
countries across Europe are taking advantage of that, so why isn't
this country? These are the questions. Finally, I have asked on
a number of occasions over the past five or six weeks that we
should have a subsidy, yet no one from Government has come along
and said, "You can't have a subsidy, for these reasons."
That was the point that I was trying to make to Lord Mandelson.
The public, because it is in the public interest, deserve an explanation
as to why it cannot be done. I submit to this Committee that it
can be done, and that is why I said in the opening statement,
"if the will is there". I acknowledge what Mr Anderson
said, because I was at that meeting. I will say to the public
here that I recall—thank you for the prompt—you flagging
it up. You were the first one to flag it up and you were more
or less told to pause. That is what happened. So Mr Anderson is
dead right. But it was a serious error of judgment on the part
of the advisers in saying "pause". If you people had
been here earlier, we would have had a great deal more enhanced
motivation.
Q10 Chairman: That is really
valuable. You will all have gone down the track with much of this
a number of times, but we've got to have this on the record. That
is why we are blazing trails that you have done previously. It
is very important. The argument stated now by our witnesses is
that the Department for Business, Innovation and Skills has not
done the business it should have done. That is a serious criticism
and we will be taking it up.
George Dunning: Chair, you have
two weeks to get it on the record with Corus about the short-time
wage subsidy. You have two weeks to do that because the mothballing
starts on 27 January. You still have two weeks to do it.
Q11 Chairman: The absolute
fact is we are seeing them on Tuesday, but Mr Adams, sadly, is
not available. That is what he told us. We are now looking at
Select Committee rules. There is not a banker in Great Britain
who refused to turn up for the Select Committees in the House
of Commons. If he is refusing—we have said to him, "Our
diary is open". Whatever date he can do, we will.
George Dunning: But surely, Chair,
Mr Adams has a deputy, like Ray and I. Surely there is somebody
to fill his shoes.
Chairman: No, we want Mr Adams. He is
quite central to this whole debate. We want to know how and in
what way Corus Redcar has been addressed in Mumbai, or wherever.
David, are you finished? Okay, Denis.
Q12 Mr Murphy: May I open
my remarks by supporting the position that David Anderson has
explained? I was not just on the opposite side from you on the
picket line, Ray, but I lived through the devastation of the destruction
of the mining industry and the communities that relied on it for
support. That is why we are here. We don't want to see the same
thing happening here. The £60 million package has had a mixed
reception from the people here.
George Dunning: That is a bit
of an understatement.
Mr Murphy: If you had a cheque for £60
million, signed by the Chancellor, how would you spend it to support
this industry?
Ray Mallon: This is what I would
do. First, I think the public deserve to know that £30 million
of that £60 million is coming from the regional development
agency, so it's already in the North East of England. The people
at Newcastle should be up in arms because some of the money that
is coming down here is their money. The RDA itself should be up
in arms. The other money is coming from BIS. Bearing in mind that
we have a £29 billion productivity gap between the north
of England and the rest of the country, we could have expected
some of that. When I first got this job, £60 million was
a lot of money, but in the big picture, it's not. I would like
to have seen the £60 million get members of the Corus work
force who had been unemployed into employment. We don't see that.
There is £20 million for the chemical industry. Let me point
this out. I have spoken to the chemical gurus and experts. They
say to me that that might see them through a year or 18 months
of research. They will then need another boatload of money. The
bottom line is, I am at odds with George not because I suggest
that he, or Amanda Skelton, were partner to some conspiracy. It
was a conspiracy of two or three people. When we went in there,
I was a policeman. I am not stupid. That is what I said at the
end of the meeting. It was a stage-managed meeting. It was about
placing BIS in the best possible light. Frankly, the £60
million was just a token to get us to come back up north on the
train and say, "Well, look at what we've got." Most
people could see right through it. It will do nothing for the
Corus work force. You know as well as we do, as an experienced
politician, that a lot of that money, or some of it, would be
paid to consultants and other people to give the Corus work force
some advice, which they can get within the public domain anyway.
What I want to see is real money. I don't want to see £60
million. If we are going to lose 1,700 jobs, I'll tell you how
much I want to see. I want to see about half a billion pounds.
You people and people like yourselves know about the manufacturing
industry. I will point this out. It is common knowledge that when
I was a policeman, I sided with the miners. [Interruption.]
Is that my time up? I sided with the miners as a police officer
in 1984. I wasn't on the picket lines. I sided with the miners
and I still side with the miners. But that is a different kettle
of fish. It might not have been viable—I don't know the
details—but this company and this steel industry are viable.
Going back to the question, if we're going to lose the work force,
we need about £400 million or £500 million to get them
re-employed. I accept that there are some in the 1,700 who probably
want redundancy, but not all of them do. The bottom line is that
it needs the gurus to sit down and say, "Alright then, how
should we really be spending that money?" I think that is
beyond our expertise. I can't give you a complete, comprehensive
answer as to how we would spend the £60 million, but it should
all be spent on the work force so that they can see, in pounds,
shillings and pence, what will be spent on them. Not one penny
of it would affect one member of this work force. I appeal to
you about this, and I think I am pushing at an open door. This
is about people and about families. I deal with people every day
who know the cost of everything and the value of nothing.
Q13 Mr Murphy: May I press
you a little further? The question was whether you would use the
money to support the current business or to retrain people to
move on.
Ray Mallon: Absolutely. I would
use the 60 million quid on this business. I am no expert, just
like most of you, but it is as simple as this: we know that when
we get out of the recession, the steel manufacturers that are
left standing will be stronger. The ones that go under will go
under, but they then make the ones that are left stronger. So
it is obvious. What we do as a country is say, "We've got
faith in the steel industry. We've got faith in the manufacturing
sector that we have got left and we need more of it, so what we
should do is invest. We should invest for the future." I
truly believe, on the evidence that I've got through talking to
people like Geoff Waterfield, the union Community chair, that
it has got a good viable position, but it just needs the Government
to buy it some time. I'm on everybody's team, providing the team
is going in the same direction, to save the jobs and, as a last
resort, to get the Government to be what I think is something
called the lender of last resort; it is a banking phrase, I seem
to recall. I want the Government to intervene as our last resort,
because I think it is the right thing to do. I have a feeling,
looking at your eyes and your body language, that you agree with
me.
Chairman: I think Phil Wilson wants to
come in on that.
Q14 Phil Wilson: As part of
the package of £60 million, £10 million will go on apprenticeships
and business start-ups and so on. How else would you use that
money to help Corus to get through this? Would it be with the
wage subsidy? This is for the whole panel. Corus says in its brief—it
is not necessarily what we believe, but it is what it says in
its brief—that there will not be an upturn for several years.
Other people say that the upturn is happening now. If there is
a wage subsidy, how many years would you see that lasting—a
year, two years, until perhaps we get another buyer?
George Dunning: Steel is very
cyclical. As you know, we are coming out of the recession in the
steel industry and that is why South Bank Coke Ovens is being
kept on—the price of coke is increasing and the price of
steel is starting to increase. It could be for a short period
of time. John might be able to answer a little bit better than
that, but the short-term wage subsidy could be for about a year.
I'll let John come in, Chair, with your permission. Like you said,
it is a no-brainer, really, to the Treasury—an absolute
no-brainer. You have to pay out loads more in benefit than in
providing a short-term wage subsidy. Like you said, Chair, it's
an absolute no-brainer. Pay the wage subsidy and save on the benefits.
John Lowther: Essentially, there
needs to be discussion on how long it would take Corus to be able
to develop the new markets, you might say. So it has to last for
that length of time. It has to last as long as Corus takes to
identify new markets for the products that come out of Teesside
Cast Products. That could be a year, or it could be 18 months,
but it is for that sort of period that we are talking about.
Q15 Chairman: John, do you
know anything at all about the trade union Community's idea that
there could be a stronger and purposeful partnership between Redcar
and Llanwern on the basis that if we start looking at diversifying
product that gives Redcar a much more stable future?
John Lowther: I thought that the
argument put into its submission, which says categorically that
we need to look at how we could do hot rolled coil perhaps as
a market, seems to be one that is very much worthy of further
investigation and something that should be pursued.
Chairman: That is really valuable. Phil,
do you want to come back in on that?
Q16 Phil Wilson: Tata Corus,
the steel works, is sitting on a whole host of land in the area.
Should some of the money go there? What kind of pressure do you
think should be put on Tata Corus to loosen up some of that land?
From what I understand from the brief, there is a lot of interest
in investing in that land for future jobs. What could we do in
that regard, as well?
John Lowther: There are three
major proposals for the development of part of the Corus site.
The first of those is at Redcar and Cleveland working with developers
to propose a South Tees eco-park, which is bringing in new industries
involved in making energy from waste, fundamentally. Also, there
is a scheme which is creating electricity from coal gasification
underneath the North sea. Both of those are very important to
the future development of the Tees valley. The particular site
that is required is not one which is affected by anything to do
with Teesside Cast Products, so that is one where we can see no
reason why Corus could not release that land for future development.
There is a second site, which is known as the teardrop site. For
those who have been around long enough, that is the old Warrenby
ironworks site, which is also wanted for another very important
project for a heavy oil upgrader in the Tees valley. There are
more difficulties about releasing that because that is quite close
to the existing TCP element. If Corus is going to mothball and
start withdrawing from the area, the whole site is vitally important
for future developments. There are things, such as the deep water
port area, which are vital for future development. There are the
opportunities for wind farm fabrication in the North sea, which
needs vast areas of land that are available. I don't know whether
you have ever been round the site, but it is enormous. You can't
see it because it is all behind closed doors, if you know what
I mean. The site is very big and has tremendous potential. If
Corus does decide to mothball the plant, it is important that
it releases the sites for future development, and also works with
One NorthEast, developers and Redcar and Cleveland council, to
have a clear plan about how to make best use of a site. Recognising
that Corus wants to make use of it as well, we need to see what
can be released for development for the future.
Ray Mallon: Chair, may I make
a point? I don't want to dominate because everybody has a lot
to say. In my view, on the evidence before me up to now—not
today but over the past six weeks or so—there has been too
much decoy information. I am raising my voice but I am not being
aggressive, I just want everyone to hear. For example, the £60
million was a decoy, basically to appease people like me. As far
as this plant is concerned, it is very important; that piece of
land is very important. But it is diverting us from the main issue.
Yes, there has to be a twin-track approach to save the jobs and—if
we lose them—the land. Let us get the land released. To
me, the first objective is to save the jobs. A lot of people are
decoying people. Sometimes, in evidence, it is the silence that
speaks volumes. There has been a lot of silence, as well. We have
had this decoy. My advice to you would be: it is all about the
Corus jobs. It is not about the land. This Committee, and we,
must have the single focus in saving those jobs. I agree that
there has to be a twin-track approach.
Mr Anderson: We, as a Committee, don't
have a choice in having a twin-track approach.
Ray Mallon: I agree. I accept
that but I wouldn't like to see the Committee diverted away from
the job in hand, the saving of the jobs. All I am saying is that,
from where I sit, on the evidence before me—and I have verified
it—there are an awful lot of decoy tactics. There is not
the will in this to save those jobs. The other thing I should
say is this. It is quite disrespectful for senior politicians
from BIS to say on the record in Parliament just a few weeks ago,
"But we've never been asked to intervene. We've never been
asked for subsidy." Where is the proactivity? They shouldn't
have to be asked. They should be responding to the whole situation.
I was amazed. I forget the name of the Minister; somebody help
me.
Chairman: Pat McFadden.
Ray Mallon: Pat McFadden comes
out saying, "We've never been asked." Nobody should
have asked him. He should have been responding as to why they
can or cannot do things.
Chairman: Ray will always inspire a political
response. In all honesty, that is not our jobs. Our job is straightforwardly
to take evidence. If I could say one thing to everybody, we don't
look at Corus land as deviating from saving the jobs. We are looking
at Corus land because we know it represents very serious finance.
If we put those income streams together, the fact that it could
well afford to keep that plant open with support—no one
is denying the investment required—is the argument that
we have been pressing for some time. Please don't think that we
are thinking, "Sell the land. The jobs are not important."
It is all a package that we can see beginning to develop.
Q17 Phil Wilson: One more
question to you, Mr Mallon. In the brief you sent as your submission,
you list three examples of what could happen: wage subsidy, production
cost guarantee and the use of carbon permits. Which of those would
you recommend?
Ray Mallon: Which paragraph?
Q18 Phil Wilson: I think it
is paragraph 16. Could you tell us which of those proposals you
would recommend as the route to go down, or is it a combination
of all three?
Ray Mallon: Well, the clock's
ticking—we all know that—so it's got to be the subsidy,
because, to me, the subsidy would buy us time. Those are the most
important words: can we buy time? Carbon permits and things are
more in the future and there may possibly be legal challenges
and so on and so forth where carbon permits are concerned, because
Corus might want to hang on to them, and might think that they
can, and that might have to be challenged in the courts. Subsidy
is the one that would buy us the time and hopefully that will
come to pass.
Q19 Chairman: We have virtually
come to the end of this first session. It finishes at 11 and an
awful lot has been said. The minutes will be published some time
early next week and you will all be able to get a copy in the
usual way. In ending, I want to ask our four witnesses: is there
anything that you want to add to what you've said to ensure that
we have an absolute focus on your belief that Corus has a future?
George Dunning: Briefly, as leader
of Redcar and Cleveland Council, because I have worked on the
plant, I know that it is a first-class piece of kit—excellent
kit. There have been talks about buyers coming on the scene and
anyone interested in buying that particular plant is going to
buy a first-class piece of kit. To be honest, and I'll repeat
it again, to announce on 4 December the mothballing of that plant
was far too premature. They should not have done that.
Q20 Chairman: We know that
this is a private company and that confidentiality is an absolute;
in fact, I am sick of hearing, "Sorry, you can't hear because
it's confidential." Have you got any sense or understanding
at all of why potential deals, which were on the table, have floundered?
Have you any notion of why they have floundered or why Corus has
not managed to secure a sale?
George Dunning: If I was back
on the shop floor, I'd be thinking that maybe it was because there
would be a competitor—the people who buy the plant could
be a competitor to Corus. If I was thinking cynically, as I did
in my old trade union days, I would think that maybe Corus did
not want to sell this piece of kit because they would be selling
it to a competitor.
Q21 Chairman: So, have they
spoken to you about Jamshedpur, which is the company that they
have extended in India, with the absolute statement that as a
consequence they require 17% less productivity from Redcar? Have
they spoken to you?
George Dunning: I have heard it
through the chair of the multi-union committee, Geoff Waterfield,
who has expressed that, but it hasn't been expressed to me directly
as leader of Redcar and Cleveland Council.
Q22 Chairman: Ray, is there
anything that you haven't said?
Ray Mallon: The only thing that
I want to say, because I think that I should say it, is that I
am very grateful for the Committee sitting. It is nice to see
some socialists here—
Mr Anderson: Wash his mouth out.
Ray Mallon: With a small "s".
Amanda Skelton: I'd just like
to say that we've been asked some questions about how we might
choose to spend the £60 million differently. The £60
million is being spent on good and important things that will
secure the diversification of our economic base in the future.
That is really important. We do not want that money diverted anywhere
else. We'd like additional money to buy us some time with Corus
and protect jobs in the short term, giving us time to secure the
plant in the long term, so that Corus can seek a new strategic
partner, and we have time to use money to diversify our economy
and create new and different jobs. So, I put that back to you:
we don't want to spend the £60 million differently. We'd
like much more money to spend on what I've outlined and protecting
Corus, building up our place and revitalising our towns and villages
in this region.
Chairman: Thank you, that is very valuable.
John?
John Lowther: Just to back entirely
what Amanda said, fundamentally everybody in the Tees valley wants
to ensure that Corus-TCP has a viable future. That is the No.
1 priority that we need to address. Having said that, it is also
important that we develop and diversify the economy of the Tees
valley for the future. We have major challenges coming with emissions
trading, and some major opportunities, including a pipeline of
£8 billion of investment that is coming forward. Certain
preparatory work has to be done for that and a large part of the
resource, particularly the bit coming directly from BIS, is to
help us do that work. It is vital that that resource remains as
we move things forward. Things we need to do for Teesport include
engaged enhancement, making the business case for carbon capture
and storage systems and the pipeline infrastructure for the area,
and so forth. We need to maintain an apprenticeship structure
and the apprentices whom we have at the moment, because those
people are still needed for future industries on Teesside.
Q23 Chairman: That was valuable.
Nobody from the panel has spoken about the port this morning.
We haven't asked the question, but we are well aware that the
port will be significantly affected if Corus closes.
George Dunning: I don't know if
you've seen the recent articles, but the port has increased its
container business—
Chairman: Significantly.
George Dunning: So the knock-on
effect, thankfully, from any mothballing of Teesside Cast Products
won't be that significant to the port. I would have thought like
you: most people would think that, because you've got your raw
materials coming in and your semi-finished products going out,
that would mean a big hit on the ports. Well, it would have done,
but they have diversified and their container trade has increased
substantially.
Chairman: I know, but George, do you
know something? When Harwich has those opportunities—and
more—it celebrates. We have got to stop being thankful and
grateful for what we've worked damned hard to get. I want the
"more" part of that statement. Harwich would not be
satisfied with losing Corus at this point in time. It would be
fighting tooth and nail.
George Dunning: I'm sure the management
of PD Ports and the trade unions there will not be satisfied,
Chair.
Q24 Mr Anderson: There was
a reference to Stephen Hughes MEP: it might have been John. If
you've got anything concrete—and even anything that's not
concrete—give us it so we can pursue ways to say to BIS,
"Your line on state rules does not hold water. Examine these
options."
Chairman: And we'll invite Stephen Hughes
to give evidence.
John Lowther: I undertake to do
some work on that for you. I'll send you the outcome in the next
few days.
Q25 Mr Anderson: We're interviewing
the regional Minister on Tuesday after we've seen Corus. If it's
possible to get us stuff for then, at least then we've got it
on the record, with us saying, "This might not work, but
pursue this before you go any further."
Chairman: Thank you to all who've given
us evidence. It's been a very valuable session. If people haven't
read the excellent research briefings they should do so. The one
from our own think tank, Tees Valley Unlimited, is excellent.
These are really good documents and I hope that you look at them.
The TUC document is excellent, as are the ones on communities
and on Redcar and Cleveland. These are important documents that
tell us not only where we're at, but where we could be moving
to. On that note, thank you very much for giving us evidence this
morning.
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