Thamesteel

Debate between Lord Willetts and Pat McFadden

Wednesday 21st March 2012 Westminster Hall

[The Minister for Universities and Science (Mr David Willetts)]

I congratulate you, Mr Davies, on chairing the debate. A lot of Members have been trying catch your eye, which reflects its importance.

I also congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate. I know how important the steel industry is for him, as he showed in his powerful and emotional speech. I congratulate, too, my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson), who has been working energetically on the Thamesteel issue. His words show his commitment to that industry in his constituency.

I had some involvement with Allied Steel and Wire workers when I was shadow Secretary of State with responsibility for pensions; they faced such pension problems as the hon. Member for Middlesbrough South and East Cleveland referred to, and I was impressed by their dignity and commitment. At that time, I was pleased with the shared, cross-party view on the importance of ensuring that pension obligations were properly met. This morning, we have also heard important contributions from the hon. Members for Redcar (Ian Swales) and for Scunthorpe (Nic Dakin) and my hon. Friend the Member for Warrington South (David Mowat). I followed with great interest the speeches of the hon. Members for Llanelli (Nia Griffith), for Motherwell and Wishaw (Mr Roy) and for Rutherglen and Hamilton West (Tom Greatrex).

Ironically, I came to the debate straight from the Cabinet, where the Chancellor was reporting on the Budget to his colleagues. I must not breach Budget secrecy, but it is a Budget for enterprise and one that will show further commitment to and support for British business. We recognise, however, that UK steel companies and their overseas competitors have been forced to take some uncomfortable decisions as they weathered the economic storms of the past few years—companies such as Tata Steel, which has had to reduce its work force by 25% and its capacity by more than 20%. Nevertheless, the UK steel industry remains a significant employer, and it is a welcome and important part of our broad manufacturing base. Its intensive research and development is an important contributor to the UK economy. The steel industry underpins many parts of manufacturing and, as we heard this morning, many local communities, in turn tying into crucial high-tech industries such as aerospace, automotive and construction.

Thamesteel, however, found itself at a significant competitive disadvantage on world markets, with competition from countries with lower costs, such as Ukraine and Turkey, so, sadly, it went into administration on 25 January, with the immediate loss of 350 jobs. The Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who has responsibility for business and enterprise,has been working closely with my hon. Friend the Member for Sittingbourne and Sheppey to ensure that those affected receive all the Government assistance available to get them back into work as soon as possible. My hon. Friends have met to discuss the matter.

Let me tell the House briefly what is involved. Tailored practical support is being provided by Jobcentre Plus through its rapid response service and by the talent retention solution programme, which can help engineers to find jobs in engineering. A Thamesteel taskforce has been set up locally by Kent county council to co-ordinate assistance; it has already met three times and is meeting again soon. The Department for Business, Innovation and Skills has been liaising with the Insolvency Service on redundancy payments and unpaid wages, and I understand that, with the exception of one or two cases, all claims have been processed. We will of course maintain the pressure to ensure that every claim is processed. Yes, BIS can and does speak to Her Majesty’s Revenue and Customs, although we cannot guarantee what the response will be. The sale of the plant is a matter for the administrators, Mazars, but officials in BIS and UK Trade and Investment have kept in close touch with them and have offered assistance to identify potential buyers for the business.

[Mr McFadden]

Is the Minister willing to invite potential buyers to the Department to talk about the Government’s backing for manufacturing, what help might be available from the regional growth fund and all such issues that they might wish to discuss?

[Mr Willetts]

There is indeed practical help available, and I will try to cover that.

Mazars advised that it received some 70 initial approaches and that it organised more than 12 visits to the site. It has received a number of bids, which it is considering as part of due diligence. Mazars set a closing date of last Friday, 16 March, but it is willing to consider any credible bid, including a late bid received on Monday. The bids are all commercially confidential, however, and BIS has not been provided with specific details, so I cannot share any further information with the House. Sadly, we recognise that, given the depressed steel market in Europe and other companies’ idling production facilities, sale as a going concern might prove difficult, although we are absolutely committed to supporting manufacturing in Britain as part of our commitment to rebalance the economy.

As part of the autumn statement, therefore, we announced measures worth about £250 million to help energy-intensive industries, including the steel industry, to reduce their energy bills. That package was intended specifically to mitigate the effect of climate change policies and energy policies on energy-intensive industries such as steel. In February, we launched the third round of the regional growth fund, worth £1 billion, to which steel companies can bid as long as they comply with state aid rules. The £125 million advanced manufacturing supply chain initiative is expected to go live before Easter, and that will offer further funding opportunities for building supply chains.

In addition, UKTI has a programme of support for the UK manufacturing sector, including steel, in partnership with numerous stakeholders. The support includes organising UK groups at overseas trade shows, leading targeted trade missions and bringing potential buyers, investors and decision makers to the UK to see our manufacturing capability at first hand. The UKTI high-value opportunities team is continuing to work with plants throughout the UK to access large projects overseas. I too have been on trade missions on which we have been briefed specifically on major infrastructure projects abroad so that we can help to secure export opportunities for British businesses. That UKTI team recently helped Tata Steel to win a contract to supply steel to the Singapore mass transit railway system.

In addition, the national infrastructure plan identifies a pipeline of more than 500 projects, costing about £250 billion, extending to 2015 and beyond and including, for example, more than £1.4 billion in railway infrastructure and commuter links. Those projects should make a significant difference by stimulating demand for steel and, we hope, creating significant supply chain opportunities for UK steel producers.

Procurement is important, too. After episodes such as Bombardier, we recognise the need to manage the procurement and investment processes in the public sector so that we can sustain a competitive supply base that meets the UK’s strategic needs. The growth review, about which we will hear more in a few hours’ time, looked at how the Government can support businesses and ensure that, when businesses compete for work, they do it on an equal footing with their overseas competitors. That is why we announced a series of measures at the strategic supplier summit last November. We recognise that we need a more strategic approach to how we buy public goods, works and services so that we can better develop and manage our supply markets.

Offshore wind power clearly has great potential as a market for British steel, so we understand the disappointment that an EDF offshore wind project contract, in which a UK company won some of the fabrication work, does not involve UK manufactured steel. We have to recognise that, ultimately, such decisions are commercial, but we are working with the Department of Energy and Climate Change to see how we can help to strengthen the supply chain so that UK companies are better placed to compete for such business. Together with the Crown Estate and senior executives from 17 developers, we have therefore established the offshore wind developers forum.

We are committed to rebalancing the economy and we very much hope that, as part of that, we can see a strong manufacturing sector.