Thamesteel

Pat McFadden Excerpts

Wednesday 21st March 2012 Westminster Hall

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I, too, congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate, which coincides with this afternoon’s Budget statement. If press reports are true, the statement’s main concern will be the tax affairs of people earning more than £150,000 a year. Our concern is different: it involves the hundreds of jobs lost as a result of the closure of Thamesteel and, more generally, manufacturing and steelmaking and their importance to our economy.

It is likely that we will hear a lot this afternoon about rebalancing the economy between finance and industry—indeed, the Chancellor ended his first Budget with a call for a “march of the makers”—but at Thamesteel, the makers have lost their jobs and, as my hon. Friend said, we as a nation have lost the product. I have some experience of that in my constituency, where the huge Bilston steelworks closed many years ago. I hope that that does not happen to the constituency of the hon. Member for Sittingbourne and Sheppey (Gordon Henderson), but most of my constituents would say that the area has never fully recovered from the loss of such a major employer.

I do not want to do what often happens in such debates by going over the history of the decline of manufacturing in the UK. Too many of this House’s debates on the subject are characterised by looking in the rear-view mirror. Perhaps we focus too little on globalisation’s impact on our manufacturing industries and on the possibilities for the future, which is what I hope we can concentrate on.

Manufacturing and steelmaking are still very important to the UK, even if we do less than we did many years ago. There are things that Governments can do—they are not powerless—to support those activities. I have referred to the Chancellor’s Budgets, and his autumn statement gave a relatively small rebate on energy and environmental costs to energy-intensive producers. The scale of that rebate was a fraction of those available in Germany, but at least it represented recognition that the Government have a role to play in trying to ensure that energy-intensive industries remain in the UK.

[Jessica Morden (Newport East) (Lab)]

The hot strip mill in Llanwern in my constituency was mothballed last year because of the fall in demand for steel. Does my right hon. Friend agree that what its former workers need is help now? Tata’s £20 million investment in the Port Talbot mill will help Llanwern in the long run, but Government action is needed now, not in 2013, when the measures for energy-intensive industries will be implemented.

[Mr McFadden]

My hon. Friend makes a good point. I mentioned the rebate to give an example of what the Government can do. They are not powerless when companies have a global choice about where to locate and produce.

Before I ask the Minister some specific questions, let me say that I do not believe that any Government, of whatever political colour, can prevent the closure of every factory. That is not my stance. I was a Business, Innovation and Skills Minister before the election and the Department was not always able to prevent every closure. The Government cannot do that, nor can they magic buyers out of the air if they do not exist, but there are things that the Government, the Minister’s Department, and he and his Secretary of State can do, aided by the good officials who have accompanied the Minister to the debate.

What is the situation with potential buyers? How many have declared an interest? What kinds of bid are on the table? There is a world of difference between someone who simply takes the equipment and the plant and ships them abroad, and someone who is willing to continue production in the area.

My hon. Friend the Member for Middlesbrough South and East Cleveland mentioned the experience of Teesside, which is instructive. When the closure of that plant was announced, many people would have given up on it and thought that nothing could be done and that the situation was hopeless, but that was not the case. The plant might not have had the backing and the belief of the management, but the potential buyers believed differently.

The complaint at the time was not that the Government were doing nothing, but that we were interfering too much. I am prepared to accept that complaint, because, as I had to explain to the management, it may have owned the plant, but it did not have ownership of the overall situation. The Government had a legitimate stake in it, given the jobs that were at stake and the impact on the regional economy and on manufacturing in the UK. I am delighted that a new buyer has come in that has faith in the plant, the product and the workers, and that production has begun again. That shows that it is sometimes possible to find new buyers and that Government can play a role, as an honest broker, in bringing people together.

What role is the Department playing to try to act as a broker and to send out signals to potential purchasers that the UK believes in manufacturing? Is there, as my hon. Friend has asked, any potential for purchasers to apply to the regional growth fund for funding? Are there funds available for training? Such funds have been discussed in similar circumstances in the past and they may make the situation more attractive to potential buyers. There are things that the Government can do.

At a more basic and prosaic level, will the Minister clarify the situation in relation to redundancy and notice payments? The Government have a role to play. My hon. Friend read out letters and spoke movingly about the human effect on families with young children who are waiting desperately for redundancy payments and relying on food banks. This is a desperate situation, particularly for those families with young children. Some payments have been made, but will the Minister assure us that he will use his good offices to ensure that any outstanding moneys, which are the responsibility of the Insolvency Service and the redundancy payments offices, are paid as soon as possible? Families are desperately stretched, so I hope he will do that.

The previous Secretary of State, Lord Mandelson, has been mentioned, but if the Minister does not like that reference, I urge him to consider a different inspiration—namely, a previous Conservative Secretary of State who said that he would be happy to intervene before breakfast, lunch and dinner. I am sure that all Opposition Members would be happy if the Minister took that person as his inspiration.

I hope the Minister will assure us that the practice of not meeting the work force will end—I see no sense in not meeting them when they are desperate to meet—and that he and his Secretary of State will do everything they can to attract a buyer. I also hope that potential purchasers will be made aware of any available funding. Although the Minister cannot prevent every factory closure, he can play an active role in trying to secure a future buyer to continue steelmaking on the site under discussion. That is the commitment that every Member from every party wants to hear.

[Several hon. Members]

rose—

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[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.