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Lord Renton: My Lords, will Sir Anthony's findings be published?

Lord Bassam of Brighton: My Lords, the report will be published and I have been advised that copies will be placed in the Printed Paper Office and, of course, in the Libraries of both Houses of Parliament.

Lord Davies of Coity: My Lords, can my noble friend confirm whether the previous administration, which was in power for 18 years, set up an inquiry to consider the behaviour of Neil Hamilton, Jonathan Aitken and Jeffrey Archer? If they did so, did they publish the terms of reference?

Lord Bassam of Brighton: My Lords, I am not aware that that was done. Perhaps different rules then applied.

Lord Campbell of Alloway: My Lords, will the evidence be taken on oath and will it be subject to cross-examination?

Lord Bassam of Brighton: My Lords, I do not think that this is a judicial inquiry or investigation and I am not aware that evidence will be taken in the manner suggested by the noble Lord.

Lord Cope of Berkeley: My Lords, I am sure that Sir Anthony Hammond's long experience as the in-house legal adviser at the Home Office for most of his career will enable him to probe this matter very deeply. However, if his report exonerates Mr Mandelson, will he once again be reinstated? Mr Mandelson was a most respected Secretary of State for Northern Ireland.

Lord Bassam of Brighton: My Lords, it is undoubtedly the case that Peter Mandelson was a widely respected Member of Her Majesty's Government. He did an excellent job in his ministerial postings. As regards the position of Sir Anthony Hammond, I believe that he is an official whose standing is above and beyond dispute.

The Earl of Onslow: My Lords, if Mr Mandelson is found to be lily-white and guilt free, why is he not being asked back into the Government? Alternatively,

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what was the reason for his resignation? If the Minister does not know the answer, perhaps he would like to ask his neighbour sitting to his right.

Lord Bassam of Brighton: My Lords, that is an entirely hypothetical question. Those matters are, of course, properly ones for the Prime Minister.

The Steel Industry

3.28 p.m.

The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, with the leave of the House, I shall now repeat a Statement on Corus which was made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:

    "I would like to make a Statement concerning the steel industry and the announcement made today by Corus.

    "The House will be aware that since early December Corus has been conducting a review of its operations. The results of this review were announced this morning. Corus has said that it intends to introduce radical restructuring measures which will involve significant job losses in England and Wales. Over 6,000 jobs will be lost. Around 3,000 of those will be in Wales and 3,000 will be in England.

    "Corus has failed to discuss its plans with the Government. Relevant information has not been disclosed; it has been resistant to any meaningful dialogue and has refused to discuss in detail its plans for the industry. We have expressed our concerns to the company about this lack of information at the highest possible level.

    "There is no doubt that Corus has been facing difficulties. Trading conditions are tough and there has been a clear need for the company to take steps to address these problems. The Government recognise that it is for Corus and any other company to take the commercial decisions they feel are necessary, but in this case capacity will be reduced and thousands of jobs lost as a result of a short-term response to the difficulties it faces.

    "The Government recognise that at a time of globalisation many sectors of industry are going through major reconstructing. In these circumstances the role of government is to provide economic stability. That is exactly what the Government are doing.

    "There are over a million more men and women in work than in 1997. Inflation now remains around or below the target of 2.5 per cent. Long-term interest rates are at their lowest level for 35 years. We have put an end to the old cycle of boom and bust. Building on that platform of stability, the Government have been driving forward an active industrial policy to enable established industries to modernise, to adopt new processes and technologies and to support the development of new industries.

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    "We have seen manufacturing productivity increase by around 3.5 per cent over the past year. Exports are growing, with manufacturing export volumes up by more than 9.5 per cent in the past year. Manufacturing output is rising, too. The prospects for manufacturing are improving, with most forecasters expecting growth to pick up over the next two years. Only this morning, the latest Chartered Institute of Purchasing and Supply report showed manufacturing growing at its fastest since March last year.

    "Today's announcement by Corus stands in stark contrast to other manufacturing companies. Those companies are prepared to take a long-term view. In recent weeks, both Toyota and Nissan have taken positive decisions on production in the UK when they could have gone elsewhere in the world. These companies have decided that they have a future as manufacturers in the UK. They have committed to substantial new investment. They have demonstrated confidence in their workforces and in the economic stability and favourable business environment the Government have established. Corus should--like Toyota and Nissan--weigh up its long-term interests and prospects and, in responding to the real challenges it faces, it should put greater weight on the new opportunities that exist for developing into new markets.

    "Even after today's announcement, Corus will remain a major employer, with around 22,000 employees in the UK, a demonstration of the fact that there is a future for the steel industry. It is because there is a future for the industry that Corus should think again about these proposed closures and redundancies and instead work with the trade unions, government and the National Assembly for Wales to identify a better way forward.

    "We recognise that this is a commercial decision to be taken by the company and that action has to be taken to tackle the losses being suffered by Corus. But Corus should now engage openly and work constructively with all the relevant parties, building on the strengths that exist in the steel industry.

    "UK steel workers have improved productivity dramatically in recent years. They are the most highly productive steel workers in the whole of Europe. Between 1998 and 1999 alone, they increased productivity from 533 tonnes per person to 571, well above the levels in Germany and France. We have been working with the industry to help it improve productivity, to modernise and adopt new technology.

    "The workforce at Corus has shown its long-term commitment to the industry and to the company, and I share its anger at Corus's behaviour. Corus should now work with its employees and the communities affected. If Corus refuses to change course, then it must meet its obligations. It must pay the costs of the clean-up of the sites involved in today's announcement. It should then release them quickly and play its part in helping the communities affected.

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    "The Government will not walk away from the innocent victims of this decision. We will be there alongside them. We will provide help for the individuals affected, support for local communities and backing for regeneration schemes to support the local economy and bring new jobs for people.

    "But it need not come to that. Corus should adopt a different approach. If it were to do so, it would have the support of the Government. On behalf of 6,000 steelworkers, their families and the communities in which they live, I urge Corus to think again and to work with us to identify a better way forward".

My Lords, that concludes the Statement.

3.35 p.m.

Lord Roberts of Conwy: My Lords, I am sure that we are all grateful to the Minister for repeating this very worrying Statement made in another place. I fear that the loss of 6,050 jobs is a severe blow to the British economy. Those job losses will, of course, have a ripple effect and other jobs will be lost in ancillary businesses of all kinds.

It is a particularly devastating blow to Wales, which is due to take about half the job losses, mainly at Llanwern and nearby Ebbw Vale and Bryngwyn, which are to close completely. Shotton in North Wales also loses more than 300 jobs. All this in spite of the high productivity which the Minister was happy to acknowledge.

One has to remember, too, that the job losses announced today come after 2,000 jobs were shed by Corus in its Welsh plants last year--4,200 in all in England and Wales. Employees and people generally in Wales have been deeply disturbed by this news, which comes on top of other job losses in manufacturing at Sony, Panasonic and elsewhere. So I am not quite as sanguine about the prospects for manufacturing as the Minister appears to be.

I understand that the company argues that the job losses are necessary because of over-capacity in the industry--this may explain its refusal to accept the Iron and Steel Trades Confederation's proposal for a take-over of Llanwern--although it is only the heavy end, as I understand it, that is being closed at Llanwern. Corus also blames lack of demand in the UK for certain of its products.

My first question to the Minister is whether it can be argued that Corus is engaged in reconstruction of the steel industry in the United Kingdom and whether it would qualify for financial assistance in this from the European Commission and its Steel Aid Fund. The company's losses have certainly been high and it will surely need such assistance. Have the Government sounded out the Commission? If not, will they do so?

Judging by the exchanges at Welsh Questions in the other place yesterday, the Government are critical of Corus for keeping them in the dark about its plans. The Minister echoed those feelings today. I find this rather difficult to understand because Sir Brian

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Moffat, the Corus chief executive, met the Prime Minister and a number of his Cabinet colleagues in Downing Street last week. As the Minister acknowledged, rumours of the company's difficulties and impending cut-backs have been circulating for quite some time. I cannot believe that the Government were unaware of them. My second question is, therefore, what did the Government do when they heard these reports? Did they really press Corus for its plans? Certainly they should have pressed the company harder than they did because we are told that Corus did not produce its plans.

Although it is understandable in view of the imminence of an election that the Government should attempt to load as much of the odium for these closures on Corus, it is also fair to ask whether they think that the climate change levy--80 per cent of which will be paid by Corus alone--is appropriate at this time. Will the Government consider the suggestion put forward by the noble Lord, Lord Ezra, when we discussed the steel question on Tuesday, that the Government seek to postpone its effect or to modify it in other ways? In the present circumstances the business rate paid on some of the plants should also be considered. I am told that Corus raised that issue with the Welsh Assembly some weeks ago.

On Tuesday, we were reassured by the noble Lord, Lord Sainsbury, that,


    "If further job redundancies are announced shortly, we shall take the action that we have taken in similar cases to ensure that we create jobs in the area and enable people to search for new jobs".--[Official Report, 30/1/01; col. 554.]

What exactly do the Government propose? Who will take the lead on this? Is the First Secretary at the Welsh Assembly to take the lead so far as concerns Wales? Will it be the Secretary of State for Wales; or the Secretary of State for Trade and Industry; or will it be the Prime Minister in person? There seems to be some confusion as to who is in the lead in this area. Frankly, it has to be said that too many cooks spoil the broth.

Each area affected is very different in character. Ebbw Vale, for example, is almost totally dependent on its steelworks. Each area will require special treatment. I hope that the Government will bear in mind that south-east Wales in not in the Objective One area and cannot benefit from the resources available under that heading.

When Ravenscraig, Llanwern's sister plant in Scotland, was closed a decade or so ago, there were much better prospects of attracting major inward investment projects and every effort was made to secure alternative employment in the Ravenscraig area. It will be much more difficult to do that now, in spite of the high-quality workforces available in Gwent and elsewhere, because there is not so much mobile industry available.

Finally, we are all concerned about the proposed reduction in steel producing capacity and our possible need of it at a later date. Will the Government examine the national interest in this issue in some depth? There are clearly implications for defence procurement.

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The Government cannot stand idly by, denigrating Corus, although that is understandable. They must be realistic. Although they may plead with Corus to change its mind, it is somewhat unlikely to do so.

3.43 p.m.

Lord Ezra: My Lords, I, too, should like to thank the Minister for repeating the Statement by his right honourable friend in another place. I join with him and the noble Lord, Lord Roberts, in regretting that this decision should have had to be taken and that this large number of highly skilled steel workers should no longer have employment.

From my days in the coal industry, I recall visits that I paid to both the plants in South Wales that are primarily affected, Llanwern and Ebbw Vale. Indeed, I was at Llanwern shortly after its opening in 1962, when I was shown round by the late Sir Campbell Adamson, then the plant manager. Therefore, I speak with enormous regret that such a wonderful plant, as it then was and as it has served the country ever since, should now face partial closure. I agree that everything possible should be done to reverse that decision if it is still feasible to do so.

The Minister said in repeating the Statement that it is clear that,


    "at a time of globalisation, many sectors of industry are going through major restructuring".

I should like to remind the noble Lord of the proposals that I made when the subject of manufacturing arose in this House on previous occasions, specifically in relation to the steel industry. I suggested that, because of the difficulty that many sectors of manufacturing were meeting, the Government should be studying the issue and should be bringing out a White Paper in which they could formulate a strategy. Had they done so, it would have been easier for the management of Corus to take a long-term view relating to such a strategy. I hope that it is not too late for that issue to be addressed.

I should particularly like to know, as the noble Lord, Lord Roberts, indicated, what the Government have in mind if the management of Corus were now, even at this late stage, to take a different view? What measures could the Government introduce to help Corus which would not contravene either European or British competition rules; and which could make such a material difference that we could retain these assets for the long term, as we should all like to do, maintain a higher level of employment than is presently envisaged, and at the same time enable the company to regain its viability? Those are the real issues on which we should like to be informed.

3.46 p.m.

Lord Sainsbury of Turville: My Lords, the noble Lord, Lord Roberts, was right to say that the closures will have a ripple effect. I hope that I was in no way over-optimistic about the situation in manufacturing generally--although it should be pointed out that output in manufacturing is up: we saw productivity rise by around 4 per cent throughout last year, and

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some parts of the manufacturing sector, such as aerospace or fibre-optics--one of the leading new areas--are doing extremely well. What we are seeing is a variable picture between the different parts of manufacturing. It is typically those parts of manufacturing with low margins such as steel, or where there is global excess capacity--for example, in automobiles--where the greatest pressure is being felt.

I believe that there is no question of giving help under the rules of the European Coal and Steel Community, which are very tight indeed. With the Prime Minister and the Secretary of State, we have had meetings with Corus. The company was pressed at the highest level to give us details of what it was planning to do and its long-term strategy. It is a measure of how out-of-touch the company is with current thinking on these matters that it should have refused to give us those figures, and that the figures and plans were only heard by us at eight o'clock this morning. I do not think that it is an appropriate way for a major company to behave in today's economy.

So far as concerns the climate change levy, it will be appreciated that, with the 80 per cent discount, it comes to only 10 million. Therefore, the figure has not been significant in the overall scheme. We suggested discussing a package which covered areas such as business rates and various other matters. We accept that it would not have been a huge package, because we cannot do that under the rules of the European Coal and Steel Community; however, it could possibly have gone some way to mitigating the impact of the severity of the cuts. I am sure the House will agree that any such mitigation should have been given serious consideration by the company. However, the view of the company was that it would not affect its decision in any way.

As I hope the Statement makes clear, we are asking Corus to reconsider and rethink its decision. If it persists, we shall obviously bring forward proposals on the basis of the figures that we now have. I had hoped that the other parties in this House could join with the Government in asking Corus to reconsider its decision.

As regards manufacturing industry, the Government are deeply concerned about, and have given great consideration to, the interests of manufacturing, which we believe can continue, as now, to play a very large part in the economy of this country. There are many opportunities going forward. I am not certain about a strategy, but we have policies that obviously impact on the different factors that influence manufacturing. As I believe I illustrated when I mentioned the varying situations in different parts of manufacturing, I doubt if a manufacturing strategy will take us any further.

I can tell the noble Lord, Lord Ezra, that, as I said earlier, we offered to try to put together a package that included business rates, but the company were not interested in it. Of course, the major factor as regards the company's profitability is the question of the exchange rate. But since the dismissal of the two chief executives in December the situation has moved on

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significantly by over 10 pfennigs. That, alone, would have an impact of 80 on the profitability of the company, which is the major consideration. In responding to that short-term situation, we have not been persuaded that the company has really given the proper and due weight to the long-term situation.

3.51 p.m.

Lord Shore of Stepney: My Lords, the Government need to be rather more self-critical about their failures to act in this matter. As has already been pointed out, we have known for a long time--much to the distress of many noble Lords on this side of the House--that Corus has been losing heavily financially. My noble friend the Minister gave us an illustration of just how much when he said that for every 10 pfennigs of change in the exchange rate between the euro and the pound 80 million of profit is wiped out. We are not talking about one 10p or a 10 pfennig change; we are talking about 35 to 40 changes in the exchange rate over the past two years. Indeed, we are talking about hundreds of millions of pounds of loss. We are familiar with what happened with BMW and Rover and the closure, and large loss of car making, of the two great American car subsidiaries at Dagenham and Luton.

That being so, has it really not gone home to the Government that they have to do something about the exchange rate, if they believe that it is misaligned--and they do? Indeed, my noble friend told us just how much only yesterday. We are dealing with what we have been told twice from the Front Bench is the most efficient, productive steel enterprise in Europe. Yet we are here today calmly talking about a very substantial closure. Either the Chancellor of the Exchequer must wake up to the realities of what the exchange rate policy is doing, or the Secretary of State for Trade and Industry had better get much tougher in his dealings with manufacturers who are behaving badly.


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