Select Committee on Welsh Affairs Minutes of Evidence


Examination of Witnesses (Questions 280 - 299)

WEDNESDAY 2 MAY 2001

SIR BRIAN MOFFAT, MR TONY PEDDER AND MR DAVID JACKSON

  280. Yes.
  (Sir Brian Moffat) And are going to be even more highly taxed now.

  281. Which again I am afraid brings me back to the question of why, when you were in discussion with Government, did it not occur to you to say, if you are in difficulty as you are now, for example that this is in an Objective 1 area and it is perfectly legal for you to ask for a business rates holiday which would have been £15 million saved in two plants alone?
  (Sir Brian Moffat) Which they did the reverse of: they taxed us even more.

  282. Did you ask, is the question? You do not expect them to do something if you do not ask.
  (Sir Brian Moffat) I told them I would welcome any suggestions they could make within the law which would help our situation, but I did not think that the fundamental problem of the marketplace could be solved with subsidies because I thought and still think that that would be banned under the ECSC Treaty because it would be state aid. I would also say that Ministers did not demur from that.

  283. Those discussions with Ministers must have been quite interesting then if there was no question of aid when you were saying you were in difficulty. One wonders what you did talk about.
  (Sir Brian Moffat) You can ask the Minister.

  284. We shall at some point. Since we last met you know that the Government have agreed a package with the unions that about £80 million will be paid to defray the threatened workers' wages bill for a year.
  (Sir Brian Moffat) No, I am not aware of that.

  285. The package was put to you as a company. If you are not aware, perhaps Mr Jackson or Mr Pedder might help.
  (Sir Brian Moffat) Nothing has been put to us as a company.

  286. Nothing at all?
  (Sir Brian Moffat) Nothing at all. The only thing which has been put to us as a company I have already talked about and it is to do with a training scheme where the company will match the Government pound for pound in retraining our redundant steel workers for a limited period.

Mr Paterson

  287. May I ask a couple of questions on costs? You mentioned with respect to the Welsh Assembly that you live with a taxation burden on industry. CBI reckons that dividend tax credit and high fuel duty alone have cost £26.4 billion across this Parliament. Taxes have gone up by 10p on income tax. You mentioned energy prices and Sir Brian mentioned this at the last meeting saying that he had raised the issue with the Secretary of State who said he was going to talk to the Regulator and we are still waiting for an answer. You talked about the climate change levy, which I think you have got down to £8 million but that does not apply to 40 per cent of steel producing industries because the Kyoto Treaty has not been signed up to. You say maybe this all needs to be addressed. What do you think the actual burden is on your business of regulation and tax which does not apply to your competitors in cheaper countries? Have you given a list to the Secretary of State which he could do something about?
  (Sir Brian Moffat) We have given the individual items from time to time. We have not updated that list on a rolling basis because energy prices change significantly, usually increase. No, we have not given that recently.

  288. The British Chamber of Commerce reckon in their burdens barometer a figure of £9.62 billion regulation costs on British industry per year which are new. Have you gone through that list and presented it to Mr Byers and said if he got these burdens off your back you would be better off?
  (Sir Brian Moffat) We have talked to different Ministries individually, whether it is Transport or whatever it may be, but we have not collectively added all that up.

  289. You have just said that the right hand does not know what the left hand is doing.
  (Sir Brian Moffat) I would put it at several tens of millions.

  Mr Smith: On a point of order, I object. This is just point scoring.

  Mr Paterson: This is about reducing the costs.

  Mr Smith: This is such an important subject and I do object. The Chairman of the company has made it absolutely clear that from his point of view the main factor driving this is the market and the demand for steel.

  Chairman: I shall be the judge of whether it is or not. Mr Paterson, will you continue as long as it is about costs.

Mr Paterson

  290. Sir Brian has just said that he could put a figure of tens of millions on it. Could you present a memorandum to this Committee listing these burdens?
  (Sir Brian Moffat) I think the UK Steel Association for the industry has done that. I think Mr Pedder has a report.

  291. Could you send it to each one of us[3]?

  (Sir Brian Moffat) Yes, we could send it to the Committee, if I am correct and I think I am.

  292. If those costs were lifted, how many jobs would be saved?
  (Sir Brian Moffat) I do not know, because it is about market, but it could obviously have some positive impact in saving jobs; it could have. I cannot be very specific, because I do not know.

Chairman

  293. You did say £15 million, if I am right. You said that subsidies were not going to—
  (Sir Brian Moffat) I said several tens of millions. I do not know how much.

  294. What we are talking about here, if these costs are correct, is the equivalent of £15 or £20 million subsidy. You said that would not save jobs.
  (Sir Brian Moffat) I am saying that at any one period of time one can give an answer. I think the UK Steel Association has submitted evidence—I cannot remember to which Committee—on the subject. The question to go with it, when I say it could have an effect, is that it depends how long-lasting such a situation is. We have seen prices in energy terms go up and down. We suffer that at the petrol pumps over a year, for example.

Mr Paterson

  295. You are saying clearly to the Committee that lower regulation costs, lower taxation costs, no climate change levy, etcetera would mean you saved tens of millions of pounds per year and you would be able to employ more people.
  (Sir Brian Moffat) Yes, the likelihood is that if it were sustained we could employ more people.

Chairman

  296. And if pigs had wings they could fly.
  (Sir Brian Moffat) If it were sustained there would be a degree of greater competitiveness, which hopefully would encourage our customer base in the UK also to manufacture to a greater extent and we could feed into that market. It is not just us, it is the whole effect on our customer base as well as our costs. If we can help our costs, hopefully we can also encourage our customer base because their costs will be helped.

  297. Are you saying that if all these costs were wiped out tomorrow you would not go ahead with closures?
  (Sir Brian Moffat) No, I am not saying that.

  298. No, you are not saying that; precisely.
  (Sir Brian Moffat) If we knew it was sustainable and our customers were also able to take benefits such that they would order more business from us as a result of it ...

  299. By then it would be too late because you would not be producing steel in this country.
  (Sir Brian Moffat) That would remain to be seen.


3   See page 55. Back


 
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