Steel Industry

– in the House of Commons at 3:33 pm on 5th March 2002.

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Photo of Michael Martin Michael Martin Speaker of the House of Commons 3:33 pm, 5th March 2002

We now come to the main business. I have selected the amendment in the name of the Prime Minister.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr 3:43 pm, 5th March 2002

I beg to move,

That this House
is gravely concerned about the Prime Minister's role in supporting LNM/Ispat International's contract for the SIDEX steel plant in Romania and is unimpressed with the explanations given hitherto;
notes Lakshmi Mittal's non-domicile resident status and his donation of £125,000 to the Labour Party;
condemns the Government's support for a company that is actively lobbying in the United States against the interests of the UK steel industry;
notes the potentially devastating effect on the domestic steel industry posed by Mittal-inspired steel import tariffs imposed by the US Administration;
calls for urgent action to be taken to help support the UK steel industry as a consequence of any US-imposed tariffs;
urges the Prime Minister to publish guidelines regarding Government support for companies that are also substantial donors to the governing party;
and demands a full public inquiry into the Government's support for the Romanian SIDEX steel plant deal.

The motion was tabled in my name and those of my hon. Friends, and on behalf of the UK and Welsh steel industry.

Like me, the Secretary of State comes of ironworkers' stock. His constituency suffered 1,000 job losses as a result of last year's Corus closures. I feel genuinely sorry for him that he has been chosen to answer on the Government's behalf on matters on which he was not consulted and over which he has no control. Yet again, the Secretary of State for Wales has been handed all the responsibility and none of the power.

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent

Will the hon. Gentleman give way on that point?

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

But the Secretary of State does have the choice—a very simple one: to defend his Government and his party's reputation, or to represent the people who elected him. If he will not stand up and defend Welsh industry and Welsh communities, there are many hon. Members on these Benches who are prepared to do so.

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent

The hon. Gentleman says that he is involved in this debate as a representative of the Welsh steel industry. Can he explain that remark, given that those who are closest to the industry—the trade unions—have dissociated themselves from the remarks that he has been making for the past few weeks? He is intervening not on behalf of the Welsh steel industry, but on behalf of the Welsh nationalist party.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I am sure that the Welsh steel communities will be proud of the hon. Gentleman's remarks. I do not want to get involved in an inter-union dispute, but we have received full support from employees in Allied Steel and Wire and the GMB. The GMB takes a different line from the Iron and Steel Trades Confederation as regards loyalty to the Labour Government.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I should like to make some progress, if I may. [Interruption.]

Photo of Michael Martin Michael Martin Speaker of the House of Commons

Order. The hon. Gentleman says that he wishes to make some progress.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

We demand answers from the Government on behalf of those who expect a British Prime Minister—a Labour Prime Minister, at that—to be batting for British workers, not supporting foreign business men. Throughout this affair, the Government have singularly failed to provide a satisfactory answer to the central question—why did a British Prime Minister put the full weight of the Crown behind a foreign company's investment in eastern Europe that will cost British jobs? That is the key question that the Secretary of State for Wales must answer in the Prime Minister's absence.

It is shameful that the Secretary of State for Trade and Industry has not found the time to come to the House at this critical juncture for the steel industry. She is not so much washing her hair as washing her hands of the steel industry. She found the time to attend Mr. Mittal's reception in November, however.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

On a point of order, Mr. Speaker. As you know, the rules of the House allow copious use of notes. Nevertheless—apart from the fact that I personally feel that Welshmen should speak extempore—those rules dictate that hon. Members must not follow notes too closely.

Photo of Michael Martin Michael Martin Speaker of the House of Commons

The hon. Gentleman is in order at the moment.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

Thank you, Mr. Speaker.

The Secretary of State for Trade and Industry has twice flatly refused to come to the House. At this of all times the steel industry is entitled to expect leadership from the Government, yet we see political cowardice of the most contemptible kind. The Government have tried to brazen and bluff their way out of the crisis. Downing street has issued a string of denials, discrepancies and dissembling. The Government's smokescreen of denial and fake indignation is designed to obscure the truth, but the key facts are clear.

Photo of Mrs Helen Jackson Mrs Helen Jackson Labour, Sheffield, Hillsborough

The hon. Gentleman says that he—and, I suppose, his party—speaks on behalf of the UK steel industry. What are they doing to support the Secretary of State, the Prime Minister and other members of the Government who are pressing the United States Government to take action over US steel tariffs? We hear a lot of bluster from the hon. Gentleman and his party, but what positive action are they taking to support what our Government are doing to protect the jobs of my steelworkers, as well as those in Wales?

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

The hon. Lady will know that I am a fellow founding officer of the all-party steel group. She will also know that President Bush announced his intention to call a section 201 inquiry last June. What did the Prime Minister do? He wrote a letter 24 hours before the deadline was up, yet Mr. Mittal got his letter within four days of asking. All the British steel industry is asking of the Government is parity of esteem; surely it is entitled to that.

The facts are clear. Mr. Mittal gave £125,000 to the Labour party. In July, the Prime Minister signed a letter urging Romania to sell its nationalised steel industry to Mr. Mittal's company. In November, Romania did so, after the European Bank for Reconstruction and Development had, at the Government's behest, given Mr. Mittal a loan. Labour has argued that there was no connection between the donation and the letter or the letter and the deal, and that the loan was also unconnected. The Labour party says that those are all coincidences, but I call coincidences that recur a pattern.

Of course that was not the first time that the Government had helped Mr. Mittal; he received his first loan from the Government to buy a state-owned steel plant in Kazakhstan just months after he gave the Labour party £16,000 in 1997. That is part of a chain of coincidences, where favours are given to the Government or to the Labour party and favours are done in return.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

Can the hon. Gentleman therefore explain why, on 9 March last year, the leader of the Welsh nationalist-run Rhondda Cynon Taff local authority, Pauline Jarman, met representatives of the Rhondda Cynon Taff bus and coach operators association to talk about extending their £4.5 million agreement; and why, only two weeks later in the run-up to the general election, the convenor of that group gave a £1,500 donation to the local Plaid Cymru party? Can he also explain why, two weeks after the general election, Plaid Cymru councillors on the local authority decided not only to extend the contract for a further year, but to give an additional 7.5 per cent.—

Photo of Michael Martin Michael Martin Speaker of the House of Commons

Order. Interventions should be brief.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

Unfortunately for the hon. Gentleman, I was given ample warning of that issue; it was raised by his colleague Councillor Robert Bevan in the scrutiny committee, but he immediately withdrew the allegation. Councillor Robert Bevan and the hon. Gentleman were opponents for the Labour party nomination and they are not on speaking terms, but if the hon. Gentleman were to speak to his colleagues in the Labour group, perhaps he would have better information. [Interruption.]

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

The Government have made a concerted effort to confuse, conceal and conflate our understanding of this case, and the hon. Gentleman's intervention is an example of that. Line after line of defence has been demolished, as the Government have been forced to amend, to correct and to retract statement after statement.

The Prime Minister said that LNM was a British company, which it is not. Those at Downing street argued that it was owned by a British parent company—another false statement. The Prime Minister's official spokesperson said that Mr. Mittal was a British citizen—he is not—and that the donation came after the election, but it actually came before. It was said that Mr. Mittal had given money to the Tories—another untruth that had to be retracted. It was claimed that the letter was signed after the deal was agreed—not true; a late bid from the French company triggered the letter. It was said that the letter was drafted and signed unchanged—wrong again. The original draft was written on 19 July including the words "my friend Lakshmi Mittal", which Jonathan Powell removed to avoid embarrassing the Prime Minister.

We have been assured that the Prime Minister had not met Mr. Mittal bilaterally and did not know about the donation. Again, that is untrue. Mr. Mittal, according to his official spokeswoman, had met the Prime Minister on several occasions, most recently at a celebration dinner for 15 of Labour's biggest donors just weeks after the general election. Four weeks later, the Prime Minister signed the letter.

Finally—it is such a long list that I am breathless with mentioning so many retractions—it was claimed that the Prime Minister writes frequent letters to heads of state on behalf of businesses, but when the BBC checked the list of countries, not one of them could confirm ever having received such a letter, and the Government have refused to provide any example, citing that familiar excuse—commercial confidentiality. Ten lines of defence have been uttered by the Prime Minister's official spokesman, but later retracted in one of the most appallingly inept cover-ups that this country has ever seen.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

The letter written by the Prime Minister was requested by an independent civil servant, the British ambassador to Romania. Is not that the key fact in all this? Is the hon. Gentleman suggesting—it is important to be clear about this—that that gentleman was in some way acting at the behest of the Labour party? Will he make that clear?

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

We are familiar with this Government's strategy of heaping blame on officials when events turn against them and when information comes out that contradicts Government statements. The way in which Her Majesty's ambassador in Bucharest has been treated as the fall guy is appalling. If the hon. Gentleman is seriously suggesting that a member of the diplomatic service would take it on himself to have dozens of meetings with a business man without checking for ministerial approval, his understanding of the operations of the British state is different from mine.

Photo of Mr Roy Beggs Mr Roy Beggs UUP, East Antrim

Does the hon. Gentleman agree that, in accepting £125,000 from one of the wealthiest families in the United Kingdom, the Labour party has sold itself short?

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I totally agree. It was crass and insensitive in the extreme of the Labour party to accept that donation from a Corus competitor at the same time as redundancy notices were being sent out to people in the Secretary of State's constituency. That is absolutely disgusting. Not only should we expect an explanation, but we deserve an apology, not for ourselves but for redundant and current steelworkers in the right hon. Gentleman's constituency.

Photo of Mark Tami Mark Tami Labour, Alyn and Deeside

Has the hon. Gentleman seen the comments of the Iron and Steel Trades Confederation, the main union in the steel industry, praising the British Government for their fight against any American protectionist measures? Would it not be better if we concentrated on those issues, the real issues facing the steel industry, instead of this nonsense?

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I will come on to the United States, as Mr. Mittal has clearly had a role to play there. I am not an apologist for the management of Corus, which has treated its workers appallingly, not least in the latest pay freeze.

Photo of Lembit Öpik Lembit Öpik Liberal Democrat, Montgomeryshire

Now that I get a sense of the general thrust of the hon. Gentleman's comments, will he, for my clarification, answer the following question? Has Plaid Cymru, at any stage in its history or, let us say, in the last 10 years, promoted a political point or campaign on behalf of an individual or organisation who has given a donation to Plaid Cymru?

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I am grateful to the hon. Gentleman for his robust opposition to the Government, once again. For a new Member, he is a fine example of an Opposition Member who scrutinises the Executive without fail at every available opportunity.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I crave the indulgence of the House; I want to make progress. I have been fairly generous in giving way.

Mark Tami mentioned the United States. Of course, we know that Mr. Mittal has spent $600,000 in the USA lobbying for tariffs on steel imports. Mr. Mittal's closure in Ireland has already cost British steel companies millions of pounds in its knock-on effect on credit availability. Crucially, Mr. Mittal's Sidex plant, funded by the British taxpayer, is a prime example of the problems of the steel industry: an eastern European steel maker is selling steel in western European markets, subsidised in this case by the British taxpayer.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I should like to make some progress. I hope that the hon. Gentleman catches your eye later in the debate, Mr. Speaker.

Graham MacKenzie, the chief executive of Allied Steel and Wire, said:

"The fear is that the investment in the Romanian steel is going to lead to a surge in imports from Romania and that is going to damage steel producers in the UK."

Mr. Mittal himself told The Times of India that he wanted to make the Romanian plant Europe's main steel producer and that he saw no future for manufacturing in the UK. Mr. Mittal is entitled to his opinion, but he is surely not entitled to the support of the British Government as he hammers another nail into the coffin of the British steel industry.

The balance of trade in steel has collapsed in the past five years, under this Government. A surplus of 2.8 million tonnes in 1997 turned into a deficit of 1.2 million tonnes last year. That is part of the wider meltdown of manufacturing under this Government. For the first time, the amount of steel contained in manufactured goods imported into the UK is now greater than the amount that we are producing. It is no longer enough for the Government to shrug their shoulders, point to global overcapacity in the steel industry or blame the Corus management, as if Governments are now powerless to intervene to save jobs or support indigenous industry. The Government, as the Secretary of State admitted during Thursday's Welsh debate, could have opposed the merger of British Steel and Hoogovens and referred the matter to the competition directorate, as my party demanded in June 1999. The Government refused to consider that and told us that the jobs at Llanwern were safe. I recall the Iron and Steel Trades Confederation saying something similar. The Government could have intervened in the currency markets to bring about a more competitive exchange rate.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I must make some progress. I apologise to the hon. Gentleman, but I have been generous in giving way.

The Government's policy of a high pound has led to a loss of more than £3 billion in export earnings over the past five years for the British steel industry. They could have found a Longbridge-type solution to the problems of Corus in south Wales, even supporting compulsory purchase as a last resort. Perhaps the problem is that Torfaen is not a marginal constituency whereas Birmingham, Edgbaston is—at least, Torfaen is not marginal yet.

Photo of Roger Williams Roger Williams Liberal Democrat, Brecon and Radnorshire

I do not believe that the hon. Gentleman has yet addressed the question asked of him by my hon. Friend Lembit Öpik. Has Plaid Cymru ever taken up the interest of someone who has made it a financial contribution? If he will not answer, we must assume that the answer is yes.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I am disappointed in the hon. Gentleman. As he is vice-chairman of the steel group, I should have hoped that he would use his valuable opportunity to address the concerns of the steel industry.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

My hon. Friend is making a comprehensive case for why the Prime Minister should have spent more than 30 seconds reading the Mittal letter. Does he feel that the Prime Minister should spend more time on such matters than he takes to choose his shirt in the morning? Will he address the point made by two hon. Members from the Liberal Democrats, a party that has recently exerted undue influence on South Wales police in pursuit of a Member of the National Assembly?

Photo of Lembit Öpik Lembit Öpik Liberal Democrat, Montgomeryshire

On a point of order, Mr. Speaker. Is it in order for Mr. Thomas to make accusations about individuals who are not in a position to justify themselves in a debate that has nothing to do with the police investigations into Mike German?

Photo of Michael Martin Michael Martin Speaker of the House of Commons

Mr. Thomas made an attack on a political party on a matter that has occurred outside the House. So far, he is in order, but I think that his intervention has ceased.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

Let us drag the House back to steel, Mr. Speaker.

Above all, the Government could have decided not to support, under any circumstances, an investment in an eastern European plant that would bring further competition to the British steel industry.

Photo of Michael Martin Michael Martin Speaker of the House of Commons

Order. Adam Price has said several times that he will not give way.

Photo of Mark Hendrick Mark Hendrick Labour/Co-operative, Preston

He is giving way to his own side.

Photo of Michael Martin Michael Martin Speaker of the House of Commons

Order. Let me chair the proceedings; it is easier that way.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I am grateful, Mr. Speaker.

Rather than making half-hearted and empty gestures late in the day, in order to deflect criticism of his Government's double standards and inaction over the past eight months, the Prime Minister should have announced an emergency package of contingency measures to safeguard the future of the steel industry. We have known for eight months that tariffs were coming. Where have the Government been? Where has the Prime Minister been?

The effect of the tariffs could be devastating, not just because of the loss of a market that was worth up to £500 million two years ago, but because a surge of cheap imports frozen out of the American market will flood western Europe, particularly the United Kingdom. That is where the Government should be concentrating their efforts. It will not be enough to do as the Secretary of State has said and refer the matter to the World Trade Organisation—it could take years to receive an answer from that, and by then the British steel industry could be devastated. We need action now. We need a targeted package of measures and we need the Government to lobby the European Union in the strongest possible terms to introduce EU-wide tariffs against dumping by low-cost producers.

In addition, the European coal and steel treaty is currently being renegotiated, and we need to reconsider whether the steel industry should receive targeted Government support in the form of investment aid under the new terms of that treaty.

There were many factors that should have led to extreme caution being exercised and a thorough evaluation taking place before any help was given to Mr. Mittal, whether in the form of the Prime Minister's imprimatur or the loan from the European Bank for Reconstruction and Development. There was no evidence of caution or evaluation; indeed, there was an almost reckless commitment of effort and resources. The full endorsement of the British state was given to Mr. Mittal. After the Ecclestone affair, it is surely vital for the Government to avoid even the faintest suspicion that British Government policy could be influenced by donations.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

Will the hon. Gentleman give way?

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I am afraid not.

The conduct of the Government has achieved the opposite effect: a persistent scandal and the loss of public trust. I note that the chair of the Labour party has said that

"those who do contribute overwhelmingly do so because of their desire to promote the values of the party they support".

It is interesting to note the choice of language there: "overwhelmingly", for example. Mr. Clarke clearly does not deny that some businesses try to buy access and action. In Mr. Mittal's case, it would surely be stretching credibility to suggest that he woke up one day and decided that he was a socialist.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

Now that the hon. Gentleman has moved away from the subject of the steel industry and is talking about donations, I will give him the opportunity to answer this question. Has his party received a donation from an individual—yes or no?

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I shall let the hon. Gentleman into a secret. I gave the party about £900 myself last week.

Mr. Mittal operates in countries with some of the worst—[Interruption.]

Several hon. Members:

rose

Photo of Mark Hendrick Mark Hendrick Labour/Co-operative, Preston

Is the hon. Gentleman suggesting that the Prime Minister went out of his way to support a foreign company in deliberately undermining the Welsh steel industry for a measly £125,000? [Interruption.]

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

I think I am getting somewhere here. Well done! Congratulations to the hon. Gentleman.

In 1998, Mr. Mittal was involved in a political corruption scandal in Indonesia—reported by the Financial Times—surrounding the privatisation of the former state-owned Krakatau Steel in west Java, under the Suharto Government. The former president of the board of directors of Krakatau Steel resigned in protest at what he called the mysterious way in which the sale was handled. As with the Romanian deal, the allegations centred on the under-valuation of the company and the secrecy surrounding the deal.

Ispat bought a 55 per cent. stake in the company for $400 million, even though the directors of the company had negotiated the sale of a 25 per cent. stake to another company for $500 million. The directors were not consulted on the sale and, as in Romania, no one was ever allowed to see the contract, which according to a Financial Times report, was "pocketed" by the privatisation Minister, Tanri Abeng. The deal later unravelled when Abeng was indicted for corruption in two other privatisations. The clear implication was that Ispat had bribed Mr. Abeng into accepting their lower-value bid for Krakatau.

In November, while Mr. Mittal was busy lobbying for tariffs against imports to the United States—against the interests of the British steel industry—he applied for his Mexican subsidiary to be exempted. To say that this man was two-faced would be a gross understatement, but one of his faces would certainly be the unacceptable face of globalisation, involving business without passports, without borders and without principles, and with little commitment either to the country where he was born or to the country where he lives.

Mr. Mittal is a lobbyist for tariffs, and a lobbyist against the British in Bucharest. He is an Indian in Algeria, where he bought the state-owned steel complex with diplomatic support from New Delhi, two weeks after the Sidex signing in London. He is a Republican donor in Washington, and a socialist firebrand in Hampstead, or so we are led to believe. Throughout all this, he is a man who knows the value of money.

As the London correspondent of The Times of India has said of Mr. Mittal's donation:

"He gave it to get exactly what he wanted, and they"— the Labour Party

"took it for the same reason."

It is clear from the way Mr. Mittal operates on a global scale that his donation was clearly designed to win favour with the UK Government at a critical time during the Sidex negotiations. The evidence for that may be circumstantial, but it is powerfully persuasive.

Mr. Mittal got what he wanted. I am prepared to accept that there may be an entirely innocent explanation for the Government's acquiescence in his demands. The problem is that we have yet to hear a convincing explanation. If a Minister backs a firm for a string of reasons and it happens to be a Labour donor, who can ever prove what was uppermost in the Minister's mind? The problem with this case is that the string of reasons has evaporated into thin air. We cannot know for certain whether anyone in this affair has committed a conscious act of corruption as a direct result of improper influence. This probably did not—probably did not—involve anything so overt as a crude pay-off, but something much more insidious: a culture in which business supporters of a project—to use new Labour phraseology—are not subject to the basic checks that would otherwise set the alarm bells ringing.

We can be certain of one thing—this affair will continue to poison the Government's relations with the steel industry, will corrode public confidence in the political process and will undermine the Government's standing and the Prime Minister's personal integrity at home and abroad as long as the questions go unanswered.

The British people, not least the redundant steel workers from the Secretary of State's constituency, are owed an explanation and an apology from their Government. In refusing to answer questions, in refusing an inquiry, in making a series of false and inaccurate statements, in putting up a Minister today who has no responsibility for what was done nor for what can be done, the Government have shown their contempt for democracy, for the steel industry and for the people of the UK.

The Government are running out of time and excuses. [Interruption.] With all due respect, the 3,000 redundant steel workers are not laughing tonight. Unless the Government answer the charges against them and the steel industry's calls for support, they will be held in contempt by the British people—in this case, a contempt, I regret to say, that will be richly deserved.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales 4:12 pm, 5th March 2002

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"recognises the fundamental strengths of the British steel industry, which is amongst the most efficient in the world;
believes that, despite the regrettable decision of Corus to cut UK steel capacity, the industry has a long term future in Britain, as recently demonstrated by the decision of Corus to invest in the Port Talbot works;
further recognises that the success of economic restructuring in Central and Eastern Europe, together with the enlargement of the European Union, is essential for the future of the British steel industry and other British manufacturing as it will extend markets and reduce hidden subsidies;
congratulates the European Bank for Reconstruction and Development for its work on restructuring the Romanian and other Eastern European companies, including through supporting the successful sale of the SIDEX steel corporation;
and further welcomes measures put in place by the Government and the National Assembly for Wales to train and retrain former steel workers and regenerate communities affected by Corus job losses.".

Plaid Cymru—[Interruption.] It is good to see right hon. and hon. Members on the Opposition Benches for a debate on Welsh matters; I wish we could see them a little more often. Plaid Cymru has the chance once a year to bring a Minister—me, or anyone else; all Ministers represent the Government—to the Dispatch Box to answer for Government policy, especially as it applies to Wales. Plaid Cymru wants to separate Wales from the rest of the United Kingdom, so presumably its interest lies in how these matters affect Wales.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

We will come to that in a minute. The hon. Gentleman should not be so flippant, because the essence of this debate is Romania.

Photo of David Cameron David Cameron Conservative, Witney

Will the right hon. Gentleman give way?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I shall give way in a few moments.

We could be debating the health service, days after the opening of the first new hospital in Cardiff in three decades. We could be debating education and how we can build on our record exam results. [Interruption.] That does not prevent Mr. Evans from talking about health or education matters in Welsh questions. We could be debating pensioner poverty—a real and genuine problem in Wales—and how we can build on the success of the minimum income guarantee. We could even be debating transport and how we can speed the recovery of our railways in Wales from the disastrous privatisation forced on them by the Tories. But we are debating none of those matters today. Instead, whether the Opposition like it or not, we are debating the Romanian steel industry and its impact in terms of the development of Europe.

Plaid Cymru often claims—indeed, it has done so for many years—that it is a truly internationalist party. It says that it wants to see Wales in Europe and that Britain—it has discovered Britain in the last couple of weeks—has nothing to do with that scenario. It wants to create what is termed "a Europe of the regions", stretching from the Urals in the east to County Cork in the west. Now we know the truth: its internationalism stops at the River Wye. It wants the economies of eastern Europe to remain stuck in the Soviet era, rather than having a reasonable chance of competing, like other European countries.

Photo of David Cameron David Cameron Conservative, Witney

How does the Secretary of State define Mr. Mittal's steel company? Is it a British company, a British-based company, a company with British connections or none of the above?

Hon. Members:

Phone a friend.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I think I understand what "phone a friend" means. I will come to the thrust of my argument in a moment, but first I shall touch on what the hon. Gentleman says. Of course the company has a British base, a headquarters in London and employs people in Britain. The Prime Minister wrote to the Romanian Prime Minister some days before the signing ceremony—but after a decision on the Sidex plant had been taken. If the Romanian economy prospers, develops and becomes part of an enlarged Europe—I will come to the European loan in a moment—companies in Great Britain and Wales will benefit.

Photo of Andrew MacKay Andrew MacKay Conservative, Bracknell

I have the highest regard for the Secretary of State, so I am sorry that he is the fall-guy who has to open the debate; there are others who should be at the Dispatch Box instead.

It is widely believed outside the House and on the Opposition Benches that the Prime Minister intervened only because of Mr. Mittal's very large donation to the Labour party. To prove me wrong, would the Secretary of State be good enough to consult the fat red file in front of him and tell us which, and how many, other companies with small interests in our country—like Mittal's—the Prime Minister has made representations about to the leaders of other countries?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I completely reject the accusation that the letter had anything whatever to do with a donation to the Labour party. The Prime Minister has made it absolutely clear from this Dispatch Box[Interruption.] He said what he said because it is true that the donation was in no way linked to the letter to Romanian Prime Minister. I shall come to what the letter was about in a moment, but I should point out that it dealt with nothing other than the absolute need to ensure that Romania becomes part of a new and energetic Europe.

Photo of Michael Fallon Michael Fallon Chair, Treasury Sub-Committee

Is the Secretary of State seriously suggesting that neither the Prime Minister nor any Government Department was aware that Mr. Mittal was a donor to the Labour party?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I am certainly telling the House that the donation had absolutely nothing to do with the letter. [Hon. Members: "Ah!"] Of course I am saying that.

Photo of Diane Abbott Diane Abbott Labour, Hackney North and Stoke Newington

It is with some trepidation that I intervene in what is essentially a Welsh debate. I have listened with great care to my right hon. Friend's remarks. The whole House will agree that it is in the long-term interests of the rest of Europe that the Romanian economy and steel industry be restructured, but in the short term Mr. Mittal's interests clearly run contrary to those of the British steel industry. It remains a conundrum to many people inside and outside the House that the Prime Minister should sign that letter, as in the short term he has signed up to interests contrary to those of the British steel industry.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I shall come to that point in a moment, but first I propose to address the relationship between the British steel industry—particularly in Wales—the letter and the development of the Romanian economy. That is why I am here. I am here at the Dispatch Box, not because I am a fall-guy, but because I am interested—as I am sure are all those who represent Welsh constituencies—in the development of the Welsh economy, including the Welsh steel industry. There are not many Opposition Members who represent as many steelworkers as I do. I represent a steel constituency and I know about the position of the steel industry.

Several hon. Members:

rose

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I wish to continue the thrust of my argument, which I have only just started.

Photo of Andrew MacKay Andrew MacKay Conservative, Bracknell

In the heat of the debate, the Secretary of State inadvertently failed to answer my principal question, but I am sure he will wish to do so before he moves on. How many other small companies has the Prime Minister made representations about to other heads of state, and who are they?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I cannot tell the right hon. Gentleman about correspondence between Prime Ministers, which is governed by international convention and commercial confidentiality. When his Government were in power, they did exactly the same for company after company. There was a time, when I was a younger man, when I could not go into a high street and buy produce that did not come from a firm that gave money to the Conservative party. However, I am also sure that both Labour and Conservative Governments helped those companies, to the benefit of the British economy.

Photo of Mrs Jackie Lawrence Mrs Jackie Lawrence Labour, Preseli Pembrokeshire

I am amused by some elements of the exchange that has just taken place. Will my right hon. Friend remind the House which Government introduced legislation to bring transparency to donations to political parties? What was the attitude of the party that has chosen the subject of this debate, and how did it vote on the issue? If the official Opposition are so concerned about the issue, why did they not do something about it during the 18 years they were in government?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

The irony is that the debate would not be taking place if it had not been for legislation introduced by this Labour Government. That is the reality.

Several hon. Members:

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Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I must move on; otherwise, other hon. Members will not have an opportunity to make their contributions.

During last week's Welsh affairs debate, Adam Price said that

"many things are happening in the world that will be detrimental to the prospects for Welsh companies in a range of sectors. However, should our Government actively support such developments?"

Predictably, he answered his own question, in the negative, and said that we should never have supported Mr. Mittal's acquisition of Sidex because a successful Romanian steel industry would mean that

"jobs in the Welsh steel industry will be endangered."—[Hansard, 28 February 2002; Vol. 380, c. 917.]

That, in a nutshell, is the Plaid Cymru approach to east European industrial reconstruction: there should not be any if it supposedly threatens any Welsh jobs.

In a written answer recently, the Prime Minister said:

"Privatisation of its steel industry through the sale of Sidex is an important element in its economic reform which will help to establish a level playing field between EU and Romanian steel producers and should lead to a reduction in levels of state subsidies which disadvantage UK steel producers. The privatisation did not threaten British jobs."—[Hansard, 14 February 2002; Vol. 380, c. 612W.]

Corus has also said that Mittal is not one of its major competitors.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

The Secretary of State's central point is that the privatisation of the Romanian steel industry was of benefit to a British company. The letter written by the Prime Minister to the Romanian Prime Minister clearly stated:

"I am particularly pleased that it is a British company which is your partner."

He means that Mittal's company is a British company. The letter continues:

"This should send a very positive signal to investors and businessmen"—

I do not know what happens to business women—

"in Britain and more widely. Together with the other measures you are taking, I hope it will stimulate renewed interest by British business in Romania."

The letter specifically says that a British company will be Romania's partner. As it has now been comprehensively proved that it is not a British company, does not the Secretary of State's argument fall to pieces?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

Of course it does not. The hon. Gentleman omitted to quote from the beginning of the letter, which said:

"I am delighted by the news that you are to sign the contract for the privatization of your biggest steel plant SIDEX, with the LNM Group. This represents an important step forward in the efforts you and your government are making to restructure and modernise your country's economy."

The rest of the letter came from that, not from the sentence to which he referred.

Several hon. Members:

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Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

On a point of order, Mr. Speaker. My copy of the letter that I prayed in aid and which the Secretary of State relied on comes from www.guv.ro, which is the Romanian website, as the Government refused to give it in answer to a parliamentary question from my hon. Friend Adam Price. Hon. Members may not have a copy of the letter. Will you ensure, Mr. Speaker, that a copy is placed in the Library?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

The whole letter is printed in the booklet "The privatisation of Sidex SA Galati", so it is there for all to see. The hon. Gentleman still misses the main point. It is all very well questioning the newly discovered Britishness of companies, but it is much more important to concentrate on Romania and eastern Europe. If eastern Europe does not come up to the level of other countries of the European Union, how on earth can we expect enlargement to work? How on earth do we expect companies from Wales and the United Kingdom to invest in Romania, which has a population of 25 million? If right hon. or hon. Gentlemen had a factory in their constituency that traded with Romania, they would welcome this news, not disparage it.

Photo of Elfyn Llwyd Elfyn Llwyd Shadow PC Spokesperson (Home Affairs), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Defence)

No doubt it is laudable to assist Romania to modernise and to join the European Union. We are in favour of the EU, but I doubt that it is sensible or right for the Government to bat for Romania against Welsh and British jobs, and to use British taxpayers' money to bring the Romanians over to sign the deal.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

In no way is it a question of using the full power of the state or British taxpayers' money. I shall come to the issue of the British taxpayers' money, because that relates to the European loan. I doubt the points that the hon. Gentleman and his party have made about the euro, because I saw in Wales on Sunday last Sunday the headline "Garbagegate MP Sparks Euro Storm". Presumably that refers to the hon. Member for East Carmarthen and Dinefwr, whose views on Europe may differ from those of Mr. Llwyd. They are entitled to disagree, but if the hon. Member for East Carmarthen and Dinefwr opposes Europe, I can understand what this argument is about.

Several hon. Members:

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Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I shall finish my point.

I know that the hon. Member for Meirionnydd Nant Conwy is very much in favour of the European project. Romania is a small country—of all parties, surely the Welsh nationalist party should support small countries—that is trying to develop and, as a struggling democracy, to get out of the grip of communism that held it down for years. That is what the letter and the debate is about. It is not about a nonsensical claim that the redundancies at Corus were made as a result of the letter that Mittal had. It is nonsense to suggest that, and I shall explain why.

Photo of Boris Johnson Boris Johnson Conservative, Henley

I am still perplexed about why the Prime Minister saw fit to call this company British when it patently is not. Will the Secretary of State enlighten the House as to whether he thinks LNM is any more British than Usinor, the defeated French company that also has offices in this country? If LNM is more British, will he explain why? Is there any reason other than that Mr. Mittal gave £125,000 to the Labour party?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I doubt whether there are many steelworks in the hon. Gentleman's constituency. Those of us who represent industrial areas know that in a global economy a company's headquarters may be anywhere in the world, and its factories and other parts of the company may be somewhere else. Even Corus, which has said nothing about the tariffs, has an American subsidiary. In this era of global capitalism, we know full well that virtually every company is from a different country—that is certainly the case in my constituency. It happens all the time.

Let us return to the central point. It is nonsense to suggest that the Welsh steel industry somehow suffered as a result of the letter. Let me first touch on the question of British taxpayers paying towards Mr. Mittal's company—

Photo of Crispin Blunt Crispin Blunt Shadow Spokesperson (Northern Ireland)

Can the Secretary of State explain why Jonathan Powell—or the Prime Minister, or someone else in his private office—saw fit to remove the word "friend" from the Foreign Office draft of the letter?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

First, Jonathan Powell did not do that. Secondly, as the hon. Gentleman knows and as any Conservative Member who has been a Minister will know, letters are routinely drafted and redrafted before reaching the Minister who signs them.

Let me now deal with the question of the loan, which is central to the argument advanced by the hon. Member for East Carmarthen and Dinefwr. I assume that he was referring to the European Bank of Reconstruction and Development, as there was no other financial involvement. According to the bank, its mission is

"financing the economic transition in central and eastern Europe and the CIS".

Its aim is simple and straightforward: to help those countries, just as it helps developing countries in Asia, Africa and elsewhere.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I have only just finished quoting the EBRD. I will give way to the hon. Gentleman in a second.

The bank has helped similar projects throughout eastern Europe. There has been a 14 million euro investment in refrigerator makers in Russia, as well as a 36 million euro loan to the Croatian tourist industry, a 21 million euro loan to boost the export hopes of Bulgaria's leading pharmaceutical company, and a 21 million euro investment in the railways of Bosnia-Herzegovina to improve the transport of industrial goods. There are many other examples. Just about every project that the bank supports could—if the facts were stretched beyond the realms of possibility—be said to have some effect on Welsh industries.

Let us now examine the issue of United Kingdom funding of the bank. We have subscribed 1.7 billion euro to its capital. Along with many other countries, we guarantee its loans. That allows it to borrow at preferential rates on the world's markets. But there is no question of any direct financial aid from Britain to make the purchase of Sidex possible: that is a myth.

The reason for our actions is obvious, but those who tabled the motion still do not understand the purpose of all the help for Romania and other eastern European countries.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

Of course it is not ridiculous. Let me give an example. My hon. Friend Mr. Touhig, the Under-Secretary of State for Wales, is going to Prague next week. He will take with him Welsh business people, who will try to secure as much business—and, therefore, trade and jobs—for Wales as possible. That would not happen if the Czech Republic had not been helped. If such countries are not helped to attain a certain standard by the European Union, and by developed countries throughout the world, how on earth can we be expected to trade with them?

A classic example was the privatisation of Sidex. Without it, the chances of an improvement in the Romanian economy and of Romania becoming part of an enlarged European Union would have been very slim.

Photo of Adam Price Adam Price Plaid Cymru, Carmarthen East and Dinefwr

Will the Secretary of State tell me why no assessment was made of Mr. Mittal's record as an employer in Ireland, where there was the same binding five-year agreement regarding employment as exists in Romania? Mr. Mittal ripped up the agreement two weeks after it was terminated, throwing 600 people out of work. If that is repeated in Romania, how will the Government and the country look to the Romanian people?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

It has not been repeated. Besides, although the hon. Gentleman and others seem to think that all this business happened yesterday, it happened nine months ago.

Ensuring that we help Romania, which was the purpose of the letter, depends on the success of the steel plant, Sidex. It was holding up the Romanian economy, because it was in the grip of old-fashioned, Soviet-style, communist economics. It had to change, and this was an ideal opportunity.

Photo of Nigel Evans Nigel Evans Shadow Secretary of State for Wales

The Secretary of State has just informed the House that the Under-Secretary of State for Wales will be going to the Czech Republic with representatives of Welsh companies to promote Welsh business. Will the right hon. Gentleman say what constitutes a Welsh business? How many people does a company have to employ in Wales for it to be considered a Welsh business?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

The hon. Gentleman is better than that question implies. Would he suggest, for example, that some of the American companies that between them employ 3,000 people in my constituency are Welsh? They are American, not Welsh. This nonsense about semantics is rubbish, as the hon. Gentleman, and everyone else, knows.

I turn now to the question of how this country has helped the Romanian economy. Last year, UK exports to Romania amounted to £340 million. Do Opposition Members consider that to be worthless or meaningless? Should the companies in this country that produced that £340 million of exports to Romania be discarded? The increase is substantive, compared to just a few years ago. Companies such as Unilever, Glaxo and Shell have operations in Romania, and that is a pointer to the future.

We have not yet touched on the question of what the National Assembly thinks should be done with regard to eastern Europe. A recent report to the Assembly from the Wales European Centre stated:

"There is evidence of increasing interest in securing trading links by individual Welsh companies in the central European countries . . . enlargement of the EU will vastly increase the opportunities for Welsh business."

That is what it is all about.

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan

The Secretary of State was not consulted about the matter under discussion, but he has looked into the mind of the Prime Minister and declared him to be innocent of any undue influence. Will the right hon. Gentleman look into the mind of Mr. Mittal for a few seconds? Given what we know about Mr. Mittal's global interest, why did he give £125,000 to the Labour party? Does the right hon. Gentleman think that that was a matter of principle?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I am not in the business of looking into people's minds. All I know is that the acquisition of Sidex had to be applauded by our Government and by other Governments in Europe. That is why the European loan was made. The EBRD press release about the acquisition of Sidex makes it clear that the European Union, the World Bank and the EBRD all agree the acquisition did the development of the Romanian economy nothing but good.

Of course, the principle that strong economies and trade are good for all of us is exactly why the European Union has an objective 1 programme. In my view, it is good that there are no nationalists in government in France or Germany: if there were, the chances of money coming to Wales would be zilch.

Photo of Pete Wishart Pete Wishart Opposition Whip (Commons), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Transport)

The question has been asked already, but did the Prime Minister know about the donation by Mr. Mittal of £125,000 to the Labour party? Did any Secretary of State, special adviser or civil servant know about it?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

My right hon. Friend the Prime Minister has said already that he did not know. All those matters are on the record.

I wish to return to the question of whether the factors to which I have referred in some way affected the Welsh steel industry. About 18 months ago, we heard that there were to be dramatic changes to the Welsh—and British—steel industry, and to Corus. It fell to me, as Secretary of State for Wales, to have meeting after meeting with senior officials from Corus, including with its chairman and chief executive, Sir Brian Moffat. The meetings were held in my office, and were attended by other Ministers and people from the National Assembly.

Time after time, my right hon. Friend the Prime Minister asked Corus what the Government could do to help the company out of its troubles. Time after time, the answer was, "Nothing. Absolutely nothing."

Photo of Crispin Blunt Crispin Blunt Shadow Spokesperson (Northern Ireland)

On a point of order, Madam Deputy Speaker. I am sorry to interrupt the Secretary of State, but I fear that, just now, he may inadvertently have misled the House. He said from the Dispatch Box that the Prime Minister has said, in terms, that he did not know that Mr. Mittal was a donor to the Labour party. I am not sure that the Prime Minister has said that. If the Prime Minister has not said, in terms, that he did not know about the donation, will you confirm that the Secretary of State will return to the House as soon as possible to put the record straight?

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

That is not a point of order; it is a point of debate.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

The Conservatives are more interested in that than they are in the Welsh steel industry. As I have said, time after time, we had meetings with Corus, and, time after time, it said that the Government could not help. The hon. Member for East Carmarthen and Dinefwr talked about compulsory purchase—I assume that he means nationalisation—but it did not want that, and neither did we. All the time, we asked whether there was anything that we could do. Corus has denied that the Mittal situation had any effect. None of it had the slightest effect on Corus's decision to cut 3,000 jobs in Wales and 6,000 jobs in the United Kingdom as a whole.

There was nothing that the European Union could do because of strict regulations on state aid, all of which were examined. There is no question of Corus's decision being affected by anything other than the fact that it wanted to do what it eventually did—shed those jobs. It blamed certain things such as the euro, and hon. Members might get involved in that argument. It also blamed over-capacity but, whatever the reasons, it did not blame Mittal.

Photo of Nigel Evans Nigel Evans Shadow Secretary of State for Wales

It is important to clarify this point because I do not believe that the Prime Minister has ever denied that he knew that the £125,000 donation had been made. Has the Prime Minister ever stated that he did not know that that donation had been made before he signed the letter?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

I have already answered that, and I shall not go over it again now.

Some of my hon. Friends have referred to the Iron and Steel Trades Confederation—some Conservative Members referred to it disparagingly. However, it is the biggest steel trade union. Its general secretary stated:

"As the union involved in trying to save UK steelworkers jobs and preserve this strategically important UK industry, the ISTC can state unequivocally that we received the full support of the Prime Minister and the Welsh First Minister."

Indeed, he went on to dismiss the allegation that a donation to the Labour party was linked to the Corus closures, and stated:

"I explained this to Adam Price, Plaid Cymru MP for Carmarthen East and Dinefwr following his decision to raise this matter . . . and he apologised. I am dumbfounded that he continues to make this spurious connection."

Photo of Lembit Öpik Lembit Öpik Liberal Democrat, Montgomeryshire

I listened with interest to what the Secretary of State said about our international responsibilities. Knowing about eastern Europe, on account of my roots, I have a lot of sympathy with his remarks. On the core subject of the debate, if it can be shown that the political parties who are attacking the Government have represented in a political context individuals or groups who have given money to those parties, does he feel that to some extent that undermines the credibility of the points made?

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

Of course. We might all be tempted to go down that line. The events of a previous Parliament make the subject of today's debate pale into insignificance. However, the jobs to which I referred are significant.

The Government remain implacably opposed to tariffs. The Prime Minister has made his views clear in a letter to and a conversation with President Bush. Of course, we understand that the US steel industry needs restructuring, but we believe that tariffs are against the interests of the European Union and Europe.

I represent a valleys constituency and, as has been mentioned, a steel seat. There are still steel jobs in my constituency, although, of course, many of them have been lost in the past few months. I did not read about the problems of the steel industry in a newspaper or see them on television. I have lived in steel communities in the Gwent valleys all my life. Last week, I visited Ebbw Vale—a great steel town—where I worked for 17 years. The town has taken a real knock thanks to the closure of the steelworks, not because of Mittal but because of Corus's decision. However, the people have not given up. They are not quitters, and, as my hon. Friend Llew Smith—who was here this afternoon—will agree, there is as much dynamism and entrepreneurial spirit in Ebbw Vale as there is in many towns in England and Wales.

What the people of Ebbw Vale want from Government are not handouts or even expressions of sympathy, but the solid support needed to help them pick themselves up and get moving again. The Government and the Assembly are providing just that. We have a £32 million recovery package to assist the Gwent communities hit by the Corus decisions, and we are putting money into new training and retraining packages, with £1 million going into the Wales union learning fund.

In Ebbw Vale, the Assembly is putting in the money needed to reopen passenger train services and to establish the Ebbw Vale learning campus and create a centre of excellence. We are also providing assistance for the other communities that have been hit. For example, £4 million is going to the community in Bryngwyn.

Today, Plaid Cymru Members have ignored all that. They have not said a word about the regeneration of our steel communities. They are not interested in hearing good news stories about Wales. They ask for more money from a state to which they do not want to belong in the first place. By their friends, of course, we shall know them. The hon. Member for East Carmarthen and Dinefwr was cheered by the Conservatives, and I wonder what people in his constituency will say about that. The two parties are united by many things, not least of which is their deep frustration at the successes—economic, social and electoral—of the Labour Government and those parties' opportunistic willingness to exploit the suffering of our communities under stress just for the sake of political points scoring.

That will not wash, and it did not wash in Ogmore. Nobody is fooled. When all the dust has settled on this farrago of nonsense, one thing will be remembered: Plaid Cymru's rhetoric about internationalism has no weight, no sincerity and no credibility.

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry) 4:46 pm, 5th March 2002

I congratulate Adam Price on choosing this subject for the debate. There is no doubt that it is a matter of great importance not just to the steelworkers in Wales, but to steelworkers across the country and to everyone who cares about the probity and integrity of government.

The motion tabled by Plaid Cymru encapsulates the concerns of Conservative Members too, and I shall invite my colleagues to support it in the Lobbies. It is noticeable that the motion does not refer to Wales or to the Welsh industry. It refers to the problems afflicting the whole steel industry in the United Kingdom. It is therefore extraordinary that the Government have chosen not to put up a Minister to reply to the debate from the Department that is responsible for that industry. Nothing could more clearly demonstrate the fact that the Government have something to hide than the failure of a Minister from the Department of Trade and Industry to come to the Dispatch Box today.

Photo of Frank Roy Frank Roy Labour, Motherwell and Wishaw

On the point about the United Kingdom steel industry, will the hon. Gentleman tell the House what he did when the Conservative party was in power for 18 years? Year after year in that period, the Conservative party made steelworkers redundant, including 10,000 in my constituency.

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

One of our achievements was to help to make the British steel industry one of the most efficient and competitive in Europe. It most certainly was not that when the Conservative Government came to office.

Photo of Mark Tami Mark Tami Labour, Alyn and Deeside

Does the hon. Gentleman recall that, in 1980 in Alyn and Deeside, Shotton steelworks lost 15,000 jobs in a single day? If that is the achievement of the Conservative party, it is a very sad one.

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

This is not an exercise in delving back into history, but that was part of the process that made British Steel the most efficient company in Europe. The more that the hon. Gentleman and other Labour Members attempt to distract from the main issues that the debate is about, the more the people listening out there will be convinced that the Government are desperate to avoid having to answer the real questions that have been put to them.

This is not the first occasion on which Ministers from the Department of Trade and Industry have refused to come to the Dispatch Box or that the Government have attempted to duck the issue. When the issue was first aired in the Chamber at DTI questions last month, Miss Johnson was deputed to answer on behalf of the Government. I have great respect for the hon. Lady, but she is an Under- Secretary of State whose responsibilities in the DTI have nothing to do with the steel industry. Yet those who are responsible—the Secretary of State and the Minister for Industry and Energy—were content to sit on the Bench next to her and watch her while she squirmed.

Last week, in the St. David's day debate, my hon. Friend Mr. Evans again set out the questions that steelworkers in Wales and across the country want answered. Yet in his response, the Minister did not mention the issue even once. It is clear that the Government will do anything to avoid having to answer questions on this matter. The Secretary of State's speech so far has done nothing to counter that impression.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

The hon. Gentleman is aware, I am sure, that this debate is sponsored by Plaid Cymru. It happens only once a year, for half a day, and it is conventional for Wales Office Ministers to reply to it. More significantly, does the hon. Gentleman accept that when we talk about the Welsh steel industry, the fact that his party does not have one single Member of Parliament representing a Welsh constituency puts his credibility at risk?

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

As I have pointed out, the motion on the Order Paper does not refer to the Welsh steel industry but to the United Kingdom steel industry. In his speech, the right hon. Gentleman appeared to suggest that the minority parties could bring any Minister to the Dispatch Box to answer their debate. That is clearly not the case. This debate should be answered by a DTI Minister, and it is plain that DTI Ministers are not willing to do so. Indeed, the only party that appears willing to come to the Government's aid in this debate so far is the Liberal Democrat party.

Photo of Elfyn Llwyd Elfyn Llwyd Shadow PC Spokesperson (Home Affairs), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Defence)

It strikes me as arrogant of the Government to suggest that the Secretary of State for Wales should reply to the debate even before they saw the motion. The right hon. Gentleman said to me last week that he thought that he would be replying even before seeing the motion, and the motion does not mention Wales.

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

The hon. Gentleman is entirely right. If the minority parties were able to bring any Minister they wanted to answer their debate, it would not be the Secretary of State who has been put up today, but the Secretary of State for Trade and Industry.

Photo of Lembit Öpik Lembit Öpik Liberal Democrat, Montgomeryshire

I understand the hon. Gentleman's criticisms of the Liberal Democrats. If I may clarify matters, I made my earlier contribution because I do not like hypocrisy in the Chamber. I hope and expect that the hon. Gentleman will make no criticisms of other parties if his own is not capable of achieving high standards. What bothers me most in this debate is the effort made to besmirch political parties, when the truth is that politics as a whole is involved. No public interest is served by such efforts.

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

If the hon. Gentleman really were so concerned about hypocrisy, he would be a little more critical of the Government than he appears to be.

I want to talk about the UK steel industry, which is the issue before us. The UK steel industry, as I said earlier, is one of the most productive in the world, employing 50,000 people. However, the industry is suffering from declining output and competitiveness, with thousands of redundancies having been declared in the past 18 months alone. In part, the industry is suffering from the same problems as the rest of manufacturing—the weakness of the euro, cheap imports and the cumulative impact of the extra tax and regulation that have been introduced by the Government, not least the climate change levy.

In addition, the industry is having to operate in a global market that is suffering from severe overcapacity. In a written answer to me yesterday, the Secretary of State for Trade and Industry said that there is no precise estimate of global overcapacity, but that estimates ranged from less than 80 million tonnes a year to more than 200 million tonnes a year. The United Kingdom Steel Association uses the latter figure, while some estimates are higher still.

Through the Organisation for Economic Co-operation and Development, Governments are negotiating to reduce the surplus inefficient capacity in steel with more than 100 million tonnes identified for closure within the next four years. It was in recognition of that need that the last Conservative Government pressed the European Commission not to allow the aid to be given to Irish Steel which was going to be given to pave the way for a takeover by Mr. Mittal's Ispat company. As a former DTI Minister said:

"Irish Steel, in a subsidised way, was just edging out British Steel products and that led directly to the loss of British jobs."

He made it clear that that was the view not only of British Steel but of the trade unions and indeed of Labour Members who were lobbying the Department to stop the takeover from going ahead.

What has changed since then? It is certainly not the problem of overcapacity, which—if anything—is worse. This time, why did the Government, instead of trying to encourage the reduction of global capacity, work against that by backing Mr. Mittal's proposed takeover of the Romanian steelworks?

First, we were told that such support was no different from that given by the Government to any other British company trying to win a contract abroad—except that LNM is hardly British. It is a curious definition of "British" that allows a company whose headquarters are not in London, as the Secretary of State for Wales suggested, but in a Caribbean tax haven, and which employs fewer than 0.1 per cent. of its work force in this country to qualify for support to promote its interests not only from the Government but from the Prime Minister in a personal capacity.

We were then told that the letter was merely one of congratulation after the deal had been signed, yet a spokesman for the Romanian Government has since said that it played a decisive part in winning the contract. Then we were told by the Minister for Europe, that it was a battle with the French. He said:

"It's better for a company with British staff, and British connections . . . to get a contract ahead of a French company."

However, while Mr. Mittal's LNM company has been in the UK only since 1995 and employs 91 people in this country, Usinor, the French company, has had a British arm since 1923 and has more than 250 people on its payroll. The European Bank for Reconstruction and Development said:

"The French company fell out months earlier. That was widely known."

We were then told that the letter had been drafted by the British ambassador to Romania, that the Prime Minister had barely glanced at it before signing it and that he would have had no idea that the beneficiary had given any money to his party. Yet we now know that the original draft referred to Mr. Mittal as a friend of the Prime Minister and that that reference was removed by Jonathan Powell, the Prime Minister's chief of staff. I was interested to hear the Secretary of State say that that was not the case although the "World at One" programme had clearly identified Mr. Powell as responsible.

The Prime Minister then said that he certainly had not known that Mr. Mittal was a Labour donor, nor that he had any connection with the LNM company, despite the fact that the reason why the company is called LNM is that those letters stand for Lakshmi N. Mittal—something that must have been in the briefing note supplied to the Prime Minister when he signed the letter. We also know that not long before signing the letter the Prime Minister attended a party for major contributors to the Labour party, at which Mr. Mittal was present.

The suggestion that Mr. Mittal's company was British or that the Government's support for it was part of a battle to win some lucrative contract in the teeth of French competition does not bear scrutiny. In fact, the position is even worse than that, for we now know not only that the connection between Mr. Mittal's company and this country is tenuous at best but that LNM has been actively working against our national interest.

Irish Steel, now named Irish Ispat, went into liquidation last year, owing money to hundreds of businesses in this country. Many of them are small firms such as Mawdlseys in Gloucestershire, which is owed £260,000 for work done with no indication that it will ever be paid. Even the Government are owed money in unpaid VAT, yet the Prime Minister was happy to write to the Romanian Prime Minister recommending Mr. Mittal's firm.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

If all that the hon. Gentleman says is true, why did the Conservative party refuse to stop receiving money from foreign organisations and businesses until forced to do so by the law?

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

As I pointed out, the last Conservative Government intervened to try to prevent Mr. Mittal's company from taking over an overseas business. We were standing up for British steel and British jobs, rather than supporting a company which plainly is not British and which is threatening British steel and British jobs.

Photo of Julian Lewis Julian Lewis Opposition Whip (Commons)

I apologise to my hon. Friend and to the Secretary of State for not having been present for the earlier part of the debate, but I was present for the debate on Welsh affairs on Thursday. The line that the Secretary of State took then was that the Government had acted out of the goodness of their heart to help build up Romania and deprived areas of eastern Europe. However, the line that the Prime Minister has consistently taken is that they were acting to help British industry and back a British company. Can my hon. Friend tell me which line the Secretary of State has been taking today?

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

Part of the problem is that the Government's defence of their actions has changed every five minutes. We have been given a dozen reasons why the Prime Minister chose to intervene, and each one that is probed is shown to be incredible and untrue. That is why nobody believes the Government's explanations any more.

I return to the threat to the UK steel industry.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

The hon. Gentleman has not yet touched—he may do so later in his speech—on the significance of the enlargement of Europe, and Romania being part of that. Does he agree, first, that the enlargement of Europe, which includes Romania, is a good thing for British industry, and Welsh industry, for that matter, and secondly, that a privatised Sidex is much better for competition than a communist-controlled state industry, heavily subsidised, which does not produce a level playing field for our own steel industry?

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

I am utterly delighted to welcome the Secretary of State to the ranks of those who support privatisation. That is a fairly new theme for the Labour party.

I support enlargement of the European Union. I support Romania coming into the EU. I want to help the Romanian economy. However, I do not want to do so at the expense of British steel, British industry and British jobs. That is what is at stake.

Photo of Paul Murphy Paul Murphy The Secretary of State for Wales

This question is crucial to the debate. Every time the European Bank for Reconstruction and Development gives a loan to a country such as Romania or Bulgaria, of course there will be a risk of competition. That is inevitable, but the consequence is that the trade which this country will have with the burgeoning economies of those countries will mean more jobs, more work and better conditions. Does the hon. Gentleman agree?

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

Once again, the explanation is changing by the minute. First, we were told that the Romanian steel works would have been acquired by the French, had the Prime Minister not intervened in support of a supposedly British company. There was no question of the steel works not having a purchaser if the company had not gone ahead. The point at issue, which the right hon. Gentleman should know, as he represents a large number of people involved in the steel industry, is that the biggest threat to the steel industry is overcapacity. That is why Governments across the globe are working to try to reduce overcapacity. The right hon. Gentleman's Government have maintained overcapacity, which must be damaging to the long-term interests of British steel and British jobs.

There is a greater threat to the steel industry, and it is much more immediate: the potential prospect of import controls imposed by the US Government. Perhaps the most extraordinary revelation of all in this saga is that fact that Mr. Mittal, we discover, is actively campaigning in America for the imposition of tariffs on steel imports from the UK.

At Department of Trade and Industry questions last month, the Under-Secretary of State for Trade and Industry, Miss Johnson, replied to me that

"the industry faces concerted unilateral US action on steel imports that would create fresh barriers to transatlantic trade and fresh distortions in the global steel industry. That is the real issue facing the UK steel industry."—[Hansard, 14 February 2002; Vol. 380, c. 302.]

She was entirely right. The threat of US import tariffs is the greatest threat facing the steel industry. It will directly place at risk 400,000 tonnes of UK steel exports, and it will indirectly risk adding to the steel surplus elsewhere, further depressing prices and threatening jobs. We are told that an announcement on the matter is expected tomorrow.

The Secretary of State said that the United Kingdom will support retaliatory action against the United States if import controls are imposed, and the Prime Minister raised the issue with President Bush, yet once again no Minister from the Department of Trade and Industry is willing to come to the Dispatch Box to speak about this immediate and extremely serious threat to the UK steel industry, despite it clearly being one of the main topics for debate today. Ministers are embarrassed that one of the prime lobbyists for US import controls is none other than Mr. Mittal. Ispat Inland, Mr. Mittal's American steel company, gave more than £400,000 to the lobbying organisation that is pressing the US Government to impose import tariffs; yet the Prime Minister was happy to write to the Romanian Prime Minister recommending Mr. Mittal's firm.

Why did the DTI not advise Downing street that preserving global steel-making capacity was the last thing that the UK steel industry needed? Why did it not tell No. 10 of the hundreds of British small firms that were still owed money as a result of Mr. Mittal's Irish takeover? Why did it not warn the Prime Minister that his friend was actively campaigning in the US against UK interests? It did not because, as we are now told, it was not even consulted before the letter was signed. It is the maxim of Sherlock Holmes that once we have eliminated the impossible, whatever remains, however improbable, must be the truth. The one explanation left for the Prime Minister's intervention in support of Mr. Mittal's bid is that it was a payback for the support that he had given to the Labour party.

I am not necessarily suggesting the Prime Minister wrote because Mr. Mittal rang him up to call in a favour. However, we know from Sir Richard Packer, a former permanent secretary, the extent to which the culture of cronyism permeates the Government's activities. In a masterly understatement, Sir Richard said that it was grossly disproportionate for the Prime Minister to write to his Romanian equivalent supporting Mittal's bid for Romanian assets. His explanation is that Downing street must have contacted the British ambassador in Romania to inform him that Mittal was known cordially to the Prime Minister. The ambassador would have realised that, in Sir Richard's words, examining closely Mittal's precise entitlement to help from Her Majesty's Government would be only too likely to result in the Foreign Office being told that he was proving "unhelpful". According to Sir Richard, once officials know that Ministers view certain developments or people favourably, they will do their best to help the endeavour or the individual. The result is that help is given not because it is in the British national interest, but because it is in the interests of the Labour party.

Last week, the Secretary of State for Trade and Industry said that the Government were not going to stop talking to business. No one is suggesting that they should, but the right hon. Lady should know only too well that what is poisoning the Government's reputation is the growing perception that the way to influence the Government is not by speaking to Ministers and officials, but by supporting the Labour party. As the Secretary of State said in a speech:

"we should all be worried about what happens to the health of our democracy if such cynicism takes hold."

Photo of Mr Brian Wilson Mr Brian Wilson Minister of State (Industry and Energy), Department of Trade and Industry

The hon. Gentleman mentioned Sherlock Holmes. Before he gets too deeply into conspiracy theories, I want to test one out on him. Is he aware that Tuscaloosa, the Corus subsidiary in the US, is a member of the American Iron and Steel Institute, which is campaigning for the introduction of the US steel tariffs? Does he agree that that suggests that companies behave in different ways according to the location of an interest within a multinational? Yesterday I visited Corus at Stocksbridge. It is a fantastic business that is working closely with the Government and greatly appreciates our support. Will the hon. Gentleman spin the same ludicrous Sherlock Holmes conspiracy theory charge against me if I support, encourage or collude with Corus in any way in future because of what its American subsidiary says?

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

First, I would be very surprised to learn that Corus had authorised its American arm to give £400,000 to the campaigning organisation that is pressing for the imposition of US import controls. Secondly, I am sure that the Minister will want to visit LNM Holdings in this country and to congratulate it on its work in support of British interests, but he will be hard pressed to find anybody, as most of the people involved do not live or work in this country.

Despite all the best efforts of the Secretary of State and the Minister to brush this matter under the carpet, it is not going to go away. Yesterday, my right hon. Friend the Leader of the Opposition wrote to the Prime Minister pointing out that the statements made by his spokesman have now been clearly shown to be untrue. Unless these matters are cleared up, they will leave an indelible stain on the Government. The only way of avoiding that is to conduct the full, independent public inquiry for which the motion calls. It is for that reason that I urge the House to vote for the motion. 5.10 pm

Photo of Mr Alan Howarth Mr Alan Howarth Labour, Newport East

I think that Plaid Cymru and, I am sorry to say, the Conservative party, have not exercised good judgment on this matter. No one believes that my right hon. Friend the Prime Minister would be improperly influenced by a donation to the Labour party; the country knows that it is simply not in his character. As long as Opposition parties continue cynically to peddle this garbage, they will do no more than demonstrate the bankruptcy of their own thinking and the fact that they have absolutely nothing useful to say about policy and how to support the British steel industry and help it to thrive. They have not done themselves any good politically, as was evident, in the recent Ogmore by-election, and they have done politics a disservice. By flaunting an obsession with sleaze—and, indeed, fabricated sleaze—they persuade all too many of our fellow citizens that politics is a squalid affair. That is a damaging thing for them to do.

Photo of Alex Salmond Alex Salmond Scottish National Party, Banff and Buchan

Will the right hon. Gentleman cast his mind back to when he sat in Parliament as a member of a different party and the Labour party ran a sustained campaign against the Conservatives—some of us felt that it was very justified—on the basis of sleaze? What did he think of that campaign? Did he think that the personal probity of the then right hon. Member for Huntingdon, John Major, was in doubt? His views on these matters seem to have developed as he has developed his political career.

Photo of Mr Alan Howarth Mr Alan Howarth Labour, Newport East

I believe absolutely in the personal probity of the then Prime Minister and I take the same view now as I took then: such things do politics no good at all.

It is absurd that it has been alleged that the Government were indifferent to what might happen to Corus and that their sole concern was to benefit Mr. Mittal and LNM. At least since summer 2000, and for many months afterwards, my right hon. Friends on the Front Bench did everything that they possibly could to find ways to get alongside Corus and see what could properly be done to avert the threatened closures and support Corus and the UK steel industry. I have a thick file of correspondence and notes of discussions from that time with the First Minister, my right hon. Friends the Secretaries of State for Wales, Trade and Industry and Education and Employment, the Chancellor and the Prime Minister. In that period, my right hon. Friends experienced great frustrations that derived partly from the nature of the rules of the European Union, but also very much from the attitude of Corus. As we know, the European Union rules on state aid are stricter in respect of steel than of coal or the automotive industry. The steel aid code of the European Coal and Steel Community prohibits aid for the rescue from closure of a steel plant.

Photo of Mr Alan Howarth Mr Alan Howarth Labour, Newport East

Not at the moment; perhaps I shall do so later.

Exceptionally, under article 95 of the ECSC treaty, it is occasionally possible, if there is unanimous agreement from the European Council, to go further in providing aid. The unions, including the ISTC—it gives me pleasure once again to express my thanks and congratulate the ISTC on the part that it played—proposed a scheme to preserve most of the jobs that were earmarked for cuts in Corus's announcement of 14 February 2001. My right hon. Friend the Prime Minister met representatives of the steel unions. Having been present at that meeting, I can bear witness to the fact that he listened with the utmost care to the case that they made to him, was persuaded by it and supported it.

Consequently, the then Secretary of State for Trade and Industry agreed to approach the European Commission and member states on the basis of article 95. A working party of Whitehall officials, Assembly officials, union representatives and Corus personnel was set up to pursue that project. However—the ISTC will bear witness to this—Corus participated only reluctantly. It did not take the initiative seriously and confirmed its closure decisions before it had received the EU response to the application under article 95. As my right hon. Friend the Secretary of State for Wales said, it was determined to take out the capacity that it took out.

In the months that preceded the announcement of its decision, Corus refused to share its thinking with my right hon. Friends or with any others who were naturally extremely concerned and had a locus in the matter. For example, Corus would not join the Llanwern taskforce. In December 2001, Sir Brian Moffat met my right hon. Friends the Secretaries of State for Wales and for Trade and Industry and the First Minister, but he did not clarify the company's restructuring plans. I understand that he was similarly unwilling to share his thinking with the Chancellor.

My right hon. Friends naturally discussed the matter with the Prime Minister, who was intensely concerned about what might happen. The sole demand that Corus made was that the Government should act to lower the value of the pound—the demand that Plaid Cymru made then and has continued to make. That was disingenuous. It is not open to the Government simply to engineer a fall in the value of the pound, and to have done so would have had dangerous consequences for inflation and interest rates, damaging the industry that we were seeking to help.

As hon. Members from all parties can confirm, Corus was equally unforthcoming in meetings of the Select Committee on Welsh Affairs and with Welsh Labour Members of Parliament. Those meetings were therefore unproductive.

In his announcement on 3 May 2001, the First Minister said:

"We have worked almost on a daily basis with the unions to press the company to come to its senses and think long term."

More recently, Michael Leahy, the general secretary of the ISTC, confirmed:

"We received the full support of the Prime Minister and the Welsh First Minister."

So it is grotesquely wrong to allege that Ministers were not willing to do all that they could to support Corus, and especially shabby to suggest that it was because of some possible donation.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

Of course, the hon. Gentleman is talking about allegations that have not actually been made.

Let me return to his earlier point that the European Coal and Steel Community treaty forbids member states to give aid to companies like Corus or to the UK steel industry in general. That treaty is up for review in July. Does the hon. Gentleman agree with my hon. Friend Adam Price that it should address the extension of investment aid, rather than operational aid, to the UK and European steel industries? That is especially important given the tariffs that are being imposed by the United States.

Photo of Mr Alan Howarth Mr Alan Howarth Labour, Newport East

When a treaty of such fundamental importance is up for review we must be willing to approach it in an open-minded spirit. However, I would be wary of contemplating an opening of the gates to permit national competition in subsidies for any industry. We have had a great deal of experience of that, and by and large it does not make good sense.

When it tragically proved that Corus could not be dissuaded from making large-scale redundancies—involving, as my right hon. Friend the Secretary of State reminded us, the loss of 3,000 steel jobs in Wales—the Assembly, supported by the Government, produced an excellent package to support those made redundant, their families and the communities that depend for their livelihoods on making steel. The original announcement provided for £66 million of support, which was followed by an additional £26 million. Of that, the Government directly put in an initial sum of £16 million. Of course, the Assembly was in a strong position to produce a large-scale package precisely because of the success that my right hon. Friend the Secretary of State had achieved in the previous comprehensive spending review.

We in Newport are deeply grateful for the help that was given to us—the on-site advice centre at Llanwern, with the Employment Service, the Benefits Agency, Careers Wales, Education and Learning Wales and a variety of organisations, some from the voluntary sector, all providing a model of integrated support. That quality of support continues; only last month, a new advice centre was set up at the citizens advice bureau in Newport, funded by ELWa, for people directly or indirectly affected by last year's job losses at Corus. Case workers have been allocated to housing offices in the Alway and Ringland wards in my constituency, so I am very grateful for the sensitive support that we are continuing to receive.

The Government negotiated with the European Commission to enable modernised iron and steel employees readaptation benefits scheme—ISERBS—payments to be made. Since then, the Welsh Development Agency has held meetings with about 100 companies in the Corus supply chain, which was so damagingly affected.

The promised urban regeneration company is of particular interest for Newport because of its exciting potential. For more than a year, Newport county borough council and I have called for an urban regeneration company to be established for Newport, and I want to express my thanks again to my right hon. Friend the Secretary of State for his unwavering support for that project.

The far-reaching complexity of the direct and indirect impact of Corus's decisions on the supply chain, the retail economy and the communities that make steel requires a multi-agency, integrated and sustained response. It is not just a matter of immediate damage limitation—ensuring that benefits are paid, that counselling is provided and that reskilling programmes are quickly made available—but of developing a coherent long-term strategy that involves rebalancing the local and sub-regional economy, so that we achieve a better balance in south-east Wales between the public and the private sectors and between manufacturing and services and a more diversified economy, supported by the inward investment that the WDA continues to seek for Wales.

We need to provide education and training of the very highest quality because, in a competitive global economy, unless our skills match those to be found anywhere in the world, our future will not be promising; we indeed need to be a learning society. We need investment in infrastructure, not only in road and rail, but in information technology. We need a sensible strategy on land use, and a commitment to very high standards of urban design. We continue to need a sensitive approach to nurturing and supporting the health, well-being and strengths of the community—for example, the voluntary sector networks that are immensely important in Wales and certainly in Newport. We also need to ensure that, in our arrangements to carry forward that strategy in the future, we hear the voice of local people—those who have borne the brunt of industrial change and for whom our policies are principally intended.

That analysis was confirmed and amplified by the excellent steel communities study, led by Professors Fairbrother and Morgan of Cardiff university, which was submitted to the Assembly in July last year. That integrated process ought to be led and owned locally and democratically, so I was delighted when the First Minister wrote in a letter to me on 29 June last year:

"In an area such as Newport, joint public/private sector action within the well focused and disciplined format of a company initiated and driven by the local authority would add real value . . . The sharing of objectives, budgets and decisions—together with the Chancellor's promised tax incentives—have the potential to make a real difference."

As good as his word, on 31 January, the First Minister announced pump-priming funding for the new URC for Newport of £10 million immediately from the Assembly and £10 million over three years from the WDA, with a promise that the value added through the URC's activities would be recycled back into Newport to enable us to develop the process further.

I would only say that we need early clarification of the structure and terms of reference of the URC. As it is, yet another consultancy has been set up, and I understand that we must wait some little time for the answers to those questions. I hope that when we have the advice of the consultants, it is that the mandate of the URC should be Newport-wide, but of course it must operate within the strategic context of south-east Wales and the five counties regeneration forum, which includes not only the Gwent local authorities but the WDA, ELWa and the Assembly. We have been waiting over a year for clarification on those points, and my constituents may be forgiven for being a little impatient now.

We have had a mass of consultants, academic studies, agencies, boards and taskforces. All the different layers of government have been involved. They are all full of good will and make valuable contributions of ideas and resources. I pay particular tribute to Mr. Allan Martin, who willingly took on the chairmanship of the Llanwern taskforce. He and his colleagues have done great service in south-east Wales. However, this cat's cradle of overlapping programmes, budgets and accountabilities will not do. We need all the players around the table of the URC as quickly as possible, contributing their particular skills and resources in a unified effort. That way, there will be an opportunity for leadership, and we will achieve the integration of effort, decisions, action, momentum and results.

Meanwhile, the communities who draw their livelihood from steel in the United Kingdom await tensely the decision that we expect to hear announced by the Bush Administration tomorrow. Last June, President Bush announced the possible activation of section 201 of the US Trade Act 1974 to protect the USA from steel imports. Already, there has been a host of measures that, to me, look pretty protectionist, and in the first 10 months of last year US steel imports were down by 25 per cent.

The US International Trade Commission is now calling for blatant protectionism—tariffs of up to 40 per cent. and quotas—in what would be clear violation of the rules of the World Trade Organisation. The problem is that uncompetitive US steel producers face great difficulties in a period of global overcapacity, and of course it is election year in the US. We well understand the miseries of restructuring. In the 1980s and 1990s, Wales and Europe as a whole went through that process. Throughout, however, European markets were kept open and strict rules on state aid for the steel industry were formulated and adhered to, even during the period when the number of steelworkers employed in the Community, enlarging as it did during that period, halved.

The ability of Corus to maintain its newly reduced configuration in the United Kingdom depends on the strength of its UK customer base, and any swamping of the UK market by cheap imports displaced from the USA would be a major disaster. I am delighted that my right hon. Friend the Secretary of State stands shoulder to shoulder with EU Trade Commissioner Pascal Lamy in making it absolutely clear that the cost of restructuring the US steel sector should not be shifted on to the rest of the world. The EU supplies about a fifth of steel imports into the USA, and we would be worse affected than Canada, Mexico and Brazil.

Europe should be open-minded about possible federal or state subsidies for what are termed the "legacy costs" of pensions and health care for the industry. It might not be a wise decision for the Americans to take, but it should be a decision for them. We cannot accept that there should be tariff barriers leading to a diversion of steel exports to Europe in order to shelter the US industry from the necessary structural change.

As Mr. Lamy has said, to listen to the debate in Washington one would think that only US steelworkers have families and mortgages, which is not the case, as we all know. I am glad therefore that my right hon. Friend said firmly yesterday:

"Should the US propose significant action we would strongly support any moves by Pascal Lamy to seek WTO settlement action . . . We defend our right to consider options for preventing serious injury to the industry, including the possibility of safeguard measures."

There are problems about the slowness of the WTO procedures. It can take more than a year for the WTO to arrive at an initial finding. The European Union's procedures have also been criticised as glacially slow. However, the will now exists in the EU to act rapidly and effectively.

In the time that it might take the EU or the WTO to get their acts together, our industries and communities could be badly hurt. The EU is permitted by the WTO rules, unilaterally and without seeking authorisation, to restrict imports of dumped steel from third countries. It must take that action if tomorrow's announcement proves as negative as it may be. I hope that the diplomacy undertaken by the Government and the European Union have persuaded President Bush against the decision that we apprehend that he might take. The Prime Minister's phone call to the President last Thursday and the call made by the Secretary of State for Trade and Industry to the United States Commerce Secretary yesterday make it clear that in this and other matters, my right hon. Friend and his Ministers are acting firmly and decisively in the interests of the British steel industry.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry) 5:31 pm, 5th March 2002

I congratulate Plaid Cymru on identifying a topical subject. I do not know whether it owes more to good luck or good management, but the party's timing in introducing a debate on steel the day before the American announcement was certainly deft.

The central charge made by Plaid Cymru was that the Government had acted wrongly in accepting political donations from a man and a company said to have acted against United Kingdom interests. The problem is that one charge is right and another probably not right. The right charge, emphasised by Mr. Whittingdale for the Conservatives, is that Mr. Mittal has campaigned for tariffs in the United States. If that is true, that action is damaging. Its impact would be somewhat diluted, however, if the Minister for Industry and Energy was correct in saying that Corus had done exactly the same. If that is true, Mittal is just one of a series of lobbyists who have behaved badly, but he is not unique in that.

I have greater difficulty with the other charge, which is that Mittal activities in Romania are contrary to the interests of the British steel industry. The Secretary of State made some telling points on that. I fear that I detected in at least some of the remarks of Adam Price a strong hint of economic nationalism. That did not increase the force of his many good points.

The logic of what will happen with Mr. Mittal's venture in Romania is either that it will have no impact on the UK industry or that it may even prove favourable. There are two reasons for that. First, one of the consequences of privatisation in eastern Europe is that it effectively stops the normal practice by which state-owned steel companies dump products by selling below cost or at variable cost. When a company is privatised, there is no incentive to do that. Why should Mittal sell at a loss? He is interested in short-term profit and it would make no sense for him to sell at a loss. The argument that he would undercut British workers' jobs is patently implausible. In fact, Mr. Mittal's intervention will probably increase discipline in the industry.

The second point is that Mr. Mittal is, to put it bluntly, an asset stripper. He will remove a lot of capacity from the Romanian industry. That is probably why he has taken it over. One of the central problems with the steel industry, globally and in eastern Europe, is that capacity is too great. He is not doing it for idealistic reasons, but Mr. Mittal will, because it fits the logic of his business, probably act in ways that will, in a back-handed way, turn out to help our steel industry.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

The hon. Gentleman makes an optimistic assessment of the likely effect on the steel industry. Will he consider an alternative scenario that is not an imaginary but a real one? When Ispat took over steel in Ireland, it had a five-year contract to keep the plant open. Two weeks after that contract ended, the plant closed. As a result, several companies, including Allied Steel and Wire in Cardiff, lost a huge amount of money owed by Ispat—one of Mr. Mittal's companies. That company now finds it hard to obtain lines of credit in the United Kingdom because so many investors have had their fingers burned by Ispat's dealings in Ireland. Now the hon. Gentleman may be right—

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. Interventions are meant to be brief.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I did not entirely follow the hon. Gentleman's rather complicated story, but if it is true that the Irish plant was shut, as he says, I would have thought that that undermined his argument that Mittal is investing overseas in a capacity that competes with UK workers. None the less, on this particular charge, the argument that the Romanian enterprise is taking jobs away from British workers is extremely flimsy.

The serious issue, which the Conservative spokesman and Alan Howarth were right to emphasise, is the damaging consequences of what may happen tomorrow. Whether or not we get a statement from the Secretary of State for Trade and Industry, we should spend some time reflecting on this matter. The problems in the United States steel industry have very little to do with trade. There are two central problems, one of which is that there has been a big technical change in the industry. The mini-mills, which represent the new technology for steel production, are gradually replacing the big mills, and the big mills are losing vast amounts of money.

The second problem for the American steel industry is that the dollar, like the pound, is massively over-valued for manufacturing industry, which is losing pots of money. Manufacturers are running to the Government—just as they do here—to appeal for help. As the right hon. Member for Newport, East mentioned, there is a way to help. If the American Government were seriously interested in the welfare of the workers, there would be plenty of ways of helping them—through retraining or pensions, for example.

The manufacturers—the companies—which are very close to the Bush Administration are not interested in that, however. They want something that will increase their profit margins, and the best way of doing that is to introduce a tariff, because that pushes up their domestic prices. This is naked self-interest by the producer interest groups in the United States, backed by the United States Administration.

This battle—this trade war—could well have wide ramifications not only for the steel industry but for many others if it gets out of control, and the issue that we must now face is how we are going to respond to it. There is one sensible response and one very unhelpful one. The unhelpful response is to start clamouring—as one or two Members did—for Europe to put up its own barriers against so-called cheap imports. I think I heard the phrase "floods of cheap steel" being used, in the context of needing to put up our own barriers against them. That would be wholly unhelpful. First, that response would do nothing to deter the United States, which is not an exporter of steel. Secondly, it would do great damage to our own steel-using industries, which employ far more people than the steel industry. It is an entirely perverse, illogical response that would do a great deal of harm.

What ought to happen—I agree that it is difficult—is that the European Union, pushed by the British Government, should act within the framework of international law. The World Trade Organisation has shown that it has teeth. Only a few weeks ago, it instigated a powerful action against the United States over illegal subsidies. There is no doubt that the European Union, acting within the rules—I think it is article 19 that applies to the kind of safeguard actions that obtain in the US—has every right to introduce targeted retaliatory action against the United States.

The real test for the Government is not how the Prime Minister responds to Mittal but how he responds to his friend President Bush. The Prime Minister has invested an enormous amount in that relationship, and he may well now have to confront him on the ground that the American Administration are doing something very damaging to the western world, to Britain and to international trade—something which will have to be fought. That is the issue with which we may well be confronted in the coming weeks.

A second issue relates to the lobbying that took place on behalf of Mittal. The Plaid Cymru spokesman expressed genuine shock at the way in which British officials and ambassadors cheerfully run round doing errands for companies—in this case, one with a rather tenuous relationship to the United Kingdom. He is right to be shocked. It may surprise him to learn—I do not think that it will surprise the Conservatives, because they saw this in action when they were in government—that, unfortunately, this is the way British Governments of all parties behave.

I know that because, as a civil servant, I drafted many of the letters that go to British ambassadors telling them to fight for company X or company Y. Many of the mainstream British companies with a lot of jobs here are just phantom companies whose representative a Minister may have met at a cocktail party. I do not know whether such companies gave donations. There is a deeply embedded tradition—based on the old idea of Great Britain Ltd.—that it is the job of Ministers to run errands for companies that portray themselves as British. It is a dangerous tradition, particularly in a world of globalised companies. As the Secretary of State rightly said, Toyota and Ford have more right to be called British companies because of the jobs they create than many companies which call themselves British and fly the Union flag.

The system whereby British officials and ambassadors and the Ministers who direct them are running round the world, as the Foreign Secretary did with BAE Systems last week, selling Hawk jets to India, is not the sort of thing in which the British Government should be engaged. I hope that the Government will take to heart the painful lesson learned from the Mittal affair—that that is an area of Government activity that needs to be tightened up.

Another area where Government activity needs to be tightened up is that of political donations. No one pretends that the Government are unique in accepting money from companies, but we are travelling down a slippery slope, heading towards an American type of system whereby Governments of all parties take money from large companies who expect favours in return. It may well be that no commitment to return the favour has been entered into, but the expectation is there.

In the United States, that process has reached an advanced stage. Companies give money and they expect ambassadorships and to be on commercial delegations for negotiation purposes. Here the process is much less advanced, but it is a dangerous and corrupting process. If the Government saw the danger that is being created, they would stop it.

The way to stop the process is to put a severe cap on donations to political parties. The Government have taken the first step in political reform, which the Secretary of State rightly described as a major step forward, by making the process of donations transparent. The next step is to say that companies should not give money to political parties. Companies such as BP and Shell do not do it anyway because they realise that it tarnishes their image. That should now become part of our electoral law. There should be a strict limit on individual donations to political parties. A combination of that reform, possibly augmented by state funding, is needed to clean up British politics. If Plaid Cymru's motion helps us a little along that road, it will have performed a public service.

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent 5:42 pm, 5th March 2002

Most hon. Members would accept that when the Government say or do anything that I think is wrong I say so, and vote accordingly. I have too much respect for the community that I have the privilege to represent to do anything else. I have long said that I am opposed to the Labour party taking donations from big business. That is not a recent idea but one that I have held for many a long year.

To say that is not to accept the arguments that have been reiterated by the nationalists during the past few weeks, however. It is ironic that those who now pretend to be the champions of the Welsh steel industry and its workers were hardly to be seen when some of us were involved in the struggle to defend those plants and jobs.

In my constituency of Blaenau Gwent, which was hit worse than any other community in the United Kingdom, the local trade union officials had no contact with the local nationalists. The nationalists spent most of their time writing in the correspondence columns of the local newspapers attacking the Labour Government and everyone else who was trying to support the unions and defend the jobs. What they have said during the past few weeks is utter nonsense and I want to concentrate on two of their arguments.

First, the nationalists have argued that jobs have been lost and plants have been closed, as in my constituency, because the Government did not offer Corus a favourable enough package, since they were more interested in placating and responding to the views of Mittal. Secondly, and linked to that, they have argued that the lack of Government support resulted in the failure of the workers' buy-out and, in particular, the buy-out by the Iron and Steel Trades Confederation at the Llanwern plant. Both those accusations are nonsense.

When we were campaigning to save the plant and the jobs, and in many other ways to save our communities, I had many meetings with the Prime Minister, the Secretary of State for Wales, Assembly Members, local authority representatives, trade union officials both local and national, and the chief executive of Corus. It became obvious to me when I had meetings with the Prime Minister and the Secretary of State for Wales that they had the impression, from talking to and negotiating with Corus, that it was not interested in any package, no matter how big or small.

One could argue that I, the Prime Minister or the Secretary of State would say that anyway. However, I and other Labour Members met Moffat and asked him what he required of the Government in order to maintain the jobs in the UK steel industry, and in particular in my plant in Ebbw Vale. His response was direct. He said that there was no package, no matter how big, which could persuade Corus to go back on its commitments. He said that Corus had a vision—if vision is the right word—of the steel industry's future and that it intended to go forward with that.

When we met Moffat we also put to him the charge that Corus was unwilling to support a workers' buy-out or the proposed buy-out by the ISTC of the Llanwern plant. Once again we asked him whether there was any Government package that could persuade Corus to sell that plant to the ISTC. Once again, Moffat was direct in his answer. He said that there was no package, no matter how big, which would persuade Corus to sell Llanwern to the ISTC, because to do so would be to increase the competition against it.

Some of us found that not only offensive but ironic. Throughout our political lives we have always been told by the right that public ownership equals monopoly and is bad, while capitalism—free enterprise, as it is laughably called—equals competition. But here we had the situation where a union was willing to buy out a plant in order to maintain jobs and the community, but was refused the opportunity to do so because one of the bastions of capitalism, of that free enterprise system, refused the union the right to do so. That is a funny type of competition. I came away from that meeting utterly despondent about the future not just of my plant in Ebbw Vale but of the steel industry in general.

The nationalists have done a great disservice to working class communities and steel communities such as my own. Contrary to the opinions that Corus may express, there is no doubt that it is the guilty party. I remember when Corus was formed. I had a phone call from one of its managing directors, Vickers. He rang me at 8 am from Holland saying that he wanted to confirm that there was no threat to the Ebbw Vale plant, that it had a secure future and that everything on the horizon was good. But it was obvious from day one that those were merely words, because it was clear that Corus was bent on asset-stripping the industry.

If anyone doubts that, they should look at the old balance sheet. Corus appropriated £863 million from the surplus in the British Steel pension fund and paid out £694 million to its shareholders. When we met Moffat he accepted that if Corus had not paid out that £694 million as a massive sweetener, its shareholders would not have agreed to the takeover. Corus also paid out millions upon millions of pounds to former directors, and, in particular, to its chief executive, Bryant. It also handed out millions upon millions of pounds to senior managers, once again to placate them and to line their pockets.

I have spoken to several people in and outside the industry since then. Many have expressed shock and horror at Corus's possible involvement in that act of asset stripping. To me, it was no surprise at all. Moffat is on record as saying that the company is in business to make money, not steel.

It is true that people in my community who devoted their lives to the steel industry worked for money—they had to pay the rent or the mortgage, and feed their children each and every day—but their involvement in the steel industry was somewhat different. They took pride in that industry and craft, and took great pleasure in building the Llanwern plant into the most effective and productive in the world. In return, they received a closure notice from people whose only interest in the steel industry is the money that they can make from it. The nationalists argued in the past few weeks that the blame lies entirely with the Labour Government, but in doing so they diverted attention from the real enemies: Corus, Moffat and the shareholders, who asset-stripped that industry and did their damnedest to wipe out my community.

As a past student of Coleg Harlech, Madam Deputy Speaker, you will know that one of my predecessors was Aneurin Bevan. Nye had something important to say—a phrase that he often used—on issues such as this:

"This is my truth: now tell me yours."

What I have said today is my truth, and I know it to be true because I was there. I was part of the struggle to maintain those jobs and that industry. It is sad that the nationalists have not followed that example. Once again, they have come down on the side of the bosses against the workers.

Photo of Pete Wishart Pete Wishart Opposition Whip (Commons), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Transport) 5:52 pm, 5th March 2002

I am delighted to follow those bizarre closing remarks, and I promise to be brief.

I want to start on a positive and perhaps consensual note by expressing my gratitude to the Government Whips for helping us to secure today's debates. You may be aware, Madam Deputy Speaker, that there is a new arrangement whereby we in the minority parties now represent ourselves in dealing with Government Whips. We have found that productive and useful, and we are delighted to be relieved of the dead hand of Liberal Democrat representation in Committee. Towards the end of our relationship, our Liberal Democrat colleagues were actively acting against our interests, so we are pleased to be shot of them. It is important that the minority parties have something to contribute, and we are pleased that the necessary structure and arrangements are now in place. We look forward to many more such days.

I want to congratulate my hon. Friend—it is good to be able to say that, as an SNP Member—Adam Price. I hope that I have not put back SNP/Plaid Cymru relations by perhaps pronouncing the second part of his constituency incorrectly. It is he who has unearthed and led on this issue, and who has tried to expose a new, murky dynamic involving donations by key individuals and business men, and key Government concessions. He has dominated the issue and become the major opposition, and I congratulate him on unearthing it.

The SNP has major concerns about what my hon. Friend has uncovered. As Mr. Roy will know, we in Scotland once had a viable, productive and efficient steel industry. Ravenscraig was one of the largest steel producers in Europe. In fact, it made excellent flat-rolled steel, produced in the distant steel mill in Kazakhstan that is now owned by Mr. Mittal, which he acquired with the assistance of Government money. I wish that a Mr. Mittal had been around in the 1980s, when the Scottish steel industry started to experience difficulties. Perhaps we could have encouraged him to try to get Government investment in Scotland. If such a figure had existed in those days, we might well have secured some jobs and retained a steel industry to call our own.

We are concerned not only about recent events in the steel industry, but about a further "cash for access" issue. Scotland on Sunday recently highlighted the case of Snowie, a waste company that donated some £5,000 to the Labour party in Scotland. Five months later, it secured some £30 million-worth of work. Snowie handed over the money after it was awarded clean-up work by the Department for Environment, Food and Rural Affairs and the Scottish Executive, following the foot and mouth epidemic.

There is also the case of Ballathie Estates, a hunting and fishing estate on the River Tay, in my Perthshire constituency. Its director, Mr. John Milligan, was recently appointed chairman of the Scottish new deal advisory taskforce after giving some £25,000 to the Labour party.

Finally, there is the case of Hunter Esson, a director with Aberdeen-based Esson Properties, who said that he could not imagine why anyone would think that his company's £5,000 donation to Labour had any impact on the decision to grant it planning permission to build on greenbelt land.

Photo of Frank Roy Frank Roy Labour, Motherwell and Wishaw

Is the hon. Gentleman saying that that donation was dependent on the granting of planning permission? Is he saying that that director had to pay for planning permission?

Photo of Pete Wishart Pete Wishart Opposition Whip (Commons), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Transport)

I am coming to that point.

All those cases might indeed be legitimate and above board, and I am not trying to suggest that any wrongdoing took place, but the perception is that something was not quite right. We should remember that this is the Government who were going to remove sleaze from politics, who were going to be whiter than white, who were going to clean up politics. They have had five years to do so, and the key question that must now be asked is this: what do such companies think they are getting in return for the money that they give to the Labour party? We have not received a satisfactory answer or explanation. Perhaps they are simply big investors in this socialist—or third way—Labour party, but I suggest that it goes beyond that.

It is not simply a question of what Mr. Mittal thought he was getting in return for his £125,000 donation to the Labour party. Why were the Government intervening in the first place in the fate of a Romanian steel plant that Mr. Mittal wanted to acquire? Anyone who carries out even five minutes' research into the current state of the steel industry will know that there is massive overproduction and overcapacity throughout the world. As has been mentioned, a Mittal-owned plant is lobbying the Bush Government ferociously to impose curbs and ensure tariff control for the United States.

I agree with the warning from Mr. Kilfoyle about the Labour party's business links. He is the one brave soul in the Labour ranks who has questioned the judgment of the Downing street aides who allowed the Prime Minister to sign the letter to his Romanian counterpart. The hon. Gentleman said:

"What I'm not happy with is an outcome where you have a company seemingly supported by the British Government which is acting against the interests of British workers."

That is the key issue, and I could not have put it better myself. We cannot allow any perception of a conflict between Government support for business and support for the Labour party, and that is why I ask Members to support the motion.

Photo of Hywel Francis Hywel Francis Labour, Aberavon 5:58 pm, 5th March 2002

As a representative of the steel constituency of Aberavon, I take this opportunity to thank on my constituents' behalf the Secretary of State for Wales, whose constituency of Torfaen is also a great steel constituency. He and the Labour First Minister of the Assembly have made great efforts to support the Welsh steel industry in the past year, which has arguably been the most difficult in our history since the war.

I also welcome the Government's commitment to referring the United States to the World Trade Organisation if it introduces steel tariffs. Hon. Members on both sides of the House should welcome that, and we should also welcome the support of the Secretary of State for Trade and Industry for the introduction of safeguards to ensure that steel currently sent to the US by non-EU countries is not dumped in the EU. Further to that, the House should demand that Corus in the US—Corus Tuscaloosa—unequivocally oppose US tariffs.

While my constituency has not borne the job losses experienced elsewhere in Wales, we have had our own terrible tribulations, with the tragedy on 8 November 2001, when the explosion at the No. 5 blast furnace in Port Talbot resulted in the deaths of three steelworkers. Thankfully, all the injured men have now been discharged from Morriston hospital, thanks to the dedication and skills of staff in the burns unit.

This debate affords those of us from steel communities the opportunity to review the very considerable efforts that have been made in the last year by the Labour Government and the Labour-led National Assembly in partnership with many bodies, including my own union, the Iron and Steel Trades Confederation.

The pretext for this debate, on the face of it, is one company and one political donation, but we believe that the real issues facing the industry, steelworkers and our communities are being addressed by the Labour Government in real, tangible and constructive ways. As secretary of the newly formed all-party parliamentary group on steel, I am well aware of the efforts made not only by our Labour Government here in Westminster, the Labour-led Welsh Assembly and the many Labour authorities in Wales and throughout the United Kingdom but by the many agencies and private sector companies that have worked together in social partnerships to rebuild and diversify our local economies.

In my own constituency, we have the welcome news from Corus of the £75 million investment in rebuilding the No. 5 blast furnace. We also have the announcement by the Welsh Assembly of the establishment of an advanced technology centre at Port Talbot, which will bring together Government agencies and the very best applied research in our Welsh universities to drive forward innovation in the industry. We have the continuing very good progress of the new Baglan energy park, again through public and private social partnerships, notably with General Electric, the Welsh Development Agency and Neath Port Talbot county borough council—a Labour authority that has been outstanding in its efforts to diversify the local economy. Next Monday, we launch our own Afan community credit union, with strong support from the ISTC and the Welsh Assembly—yet another example of how we are getting on with the job of rebuilding and serving our steel communities.

Across Wales, great efforts have been made by the main steel union, ISTC, and all the other unions in the industry, Steel Partnership Training, UK Steel Enterprises and Steel Action. All those bodies have placed great emphasis on the acquisition of new skills and new learning opportunities. I am proud to say that one such initiative, the newly formed Port Talbot union academy, links into the new local community learning network in my constituency, established through objective 1 funding, which our Government achieved.

Too many Opposition politicians tend to undervalue the efforts and achievements of the past year. Who on the Opposition Benches applauds my hon. Friend Llew Smith, who has consistently championed the steelworkers of Ebbw Vale? In the wake of the redundancy announcement last year, through his efforts and the efforts of Lord Brookman of Ebbw Vale, as well as those of the local Labour Assembly Member, Peter Law, and the Labour authority, we have the reopening of the passenger train service to Ebbw Vale and the new UK steel enterprise innovation centre. The new centre will be launched at Victoria, near Ebbw Vale, at a cost of £3 million, to assist local start-up enterprises.

It is clear that steel and manufacturing are still major players in the Welsh economy. Manufacturing accounts for more than 18 per cent. of employment in Wales. Corus has made it clear to our Government that Wales is now a place where world-class steel production can take place and says that it is committed to achieving that.

Much has been done in the past year that deserves praise. The Prime Minister and other Ministers supported the attempted ISTC workers' buy-out at Llanwern. The Secretary of State for Trade and Industry, the Foreign Office and the Prime Minister have all been unequivocal in their condemnation of possible US tariffs on British steel exports. The possible announcement tomorrow of such tariffs will add to the existing difficulties faced by large companies such as Corus. They have already identified issues relating to tax, transport and energy costs, which they consider to be challenges for them, and the imposition of a US tariff would only add to those problems.

It would be appropriate for this debate to focus on those challenging issues rather than the irrelevance of trying to link political donations to the Government's policies. As internationalists, and as supporters of European enlargement and the modernisation of the global steel industry, we should be proud of what our Government are doing in Westminster and Cardiff.

I trust that my right hon. Friend the Secretary of State for Wales will convey to both the Prime Minister and Mr. Mittal our expectations that every effort should continue to be made to prevent such tariffs from being introduced. That should be done in the spirit of extending and strengthening our Government's commitment to developing corporate social responsibility.

I arranged for the all-party steel group to write to Mr. Mittal last week urging him to support the aims of our group, in particular our desire to ensure a fair deal for the UK steel industry and to aid the regeneration of steel and former steel communities.

We would all concur with the words of the First Minister of the Welsh Assembly, Rhodri Morgan, earlier this year when he said:

"The new blast furnace which will be constructed at Port Talbot will not only be a memorial to those who lost their lives but also a symbol of the endurance of an industry vital to Wales and its continuing contribution in the years ahead to this country and the communities that serve it".

He continued:

"There are no quick fixes to problems as entrenched as those of our long neglected industrial communities. I believe that the programme set out"— by the Welsh Assembly—

"is a new start and the strongest possible expression of faith in the future of these communities".

Modern Wales was built on and built by those great steel communities. Historians have written that the building of Margam steelworks in my constituency was a symbol of Labour's commitment to the reviving of south Wales in the post-war period. Margam in its day was the greatest steelworks in Britain and the historian Dr. John Davies saw its creation as one of the three great political landmarks of post-war Wales.

I find it encouraging—indeed, prophetic—that the rugby sides enjoying success this year are from the great south Wales steel towns of Aberavon, Newport, Pontypool and Ebbw Vale. Unlike Opposition Members, we can speak legitimately for steel communities and former steel communities in Wales and throughout the United Kingdom. We are proud of what our party in government is doing to address the serious challenges facing our industry. That is why Labour Members took the initiative to establish the new all-party parliamentary group on steel, and I urge all Members, of whatever party, to assist us in our objectives of ensuring a fair deal for the UK steel industry.

This year, steelworkers in Port Talbot celebrate a centenary of steel making. The industry continues to be a very significant contributor to the economy of the region. It is my belief that Labour's policies assist, even in these most difficult times, in sustaining our steel communities and in assisting those who wish to develop new initiatives to achieve a more diverse local economy.

I shall end with the words of David Ferris, the chair of the unions at Port Talbot steelworks. We would all do well to listen to and show some respect for the steel unions. I only wish some parties—daffodil Tories all—had done so after the explosion in Port Talbot. David Ferris said this to me yesterday:

"What Labour is doing today is to be welcomed by all of us: it is comparable with our achievements after 1945."

Photo of Bill Wiggin Bill Wiggin Conservative, Leominster 6:08 pm, 5th March 2002

I congratulate Adam Price on his speech and it is no accident that my speech is written on a brown envelope. It is nice to follow Dr. Francis, who demonstrated clearly how the Government give with one hand and take with the other.

I wish to question the role of the Secretary of State for Wales in this debate. I was led to believe that his role was to act as a liaison between the National Assembly and the Government, and to perform his duties by ensuring that the funding for the Assembly was as successful as possible. It is a great shame that he has come before us today to defend the actions of the Prime Minister.

It is the role of the Prime Minister that is called into question by the letter that he signed in support of Mr. Mittal and his purchase of the Romanian steel mill. The question about the Government's support for that has not been answered. Many hon. Members have already asked how many other companies have been assisted in the same way as Mr. Mittal. How many other small businesses have been helped by a letter from the Prime Minister? I have written to the Prime Minister many times and I have even invited him to come to Hereford to see our hospital for himself. However, he has not written back to me. We need to know how many other companies have been helped. [Interruption.] I am not sure that I could afford £125,000. If I could manage 50 grand, who knows, perhaps I could be running the BBC.

One of the temptations for a governing party is the potential corruption that any funding from a company could bring. The Government knew about that when they took office in 1997. Their crime is that they did not learn from what history taught them. Whether or not Mr. Mittal is as British as I am is a question that needs to be answered. How were the donations given, and did the Prime Minister know about that before he signed the letter?

The human side of this affair is the effect it has on people's jobs. Anyone who has been made redundant will know the misery and despair that goes with it, and usually it is through no fault of their own. I have been made redundant once in my career, and it is a terrible thing. Before Labour Members jeer, they should wait until after the next election when they will realise what it feels like. I should have hoped that they would show sympathy for people who may have lost their jobs through the Government's actions, and I am disappointed that I have been heckled. We should have great sympathy for workers who have lost their jobs

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent

There is a slight difference between someone being made redundant in Blaenau Gwent, which is one of the poorest communities in the United Kingdom where people have difficulty paying their mortgage or rent, and someone like you who may be have been made redundant in the past—

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. The hon. Gentleman must remember to use the correct parliamentary language in the House.

Photo of Bill Wiggin Bill Wiggin Conservative, Leominster

Redundancy does not matter; what matters is the misery that goes with it. It does not matter who it applies to: what matters is what is going on.

Photo of Bill Wiggin Bill Wiggin Conservative, Leominster

I shall give way again, because the hon. Gentleman did not finish his remarks.

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent

Is the hon. Gentleman saying that there is no difference between a person who is made redundant and has nothing in the bank and a person who is made redundant who has £1 million in the bank?

Photo of Bill Wiggin Bill Wiggin Conservative, Leominster

If the hon. Gentleman is implying that I have £1 million in the bank, I have not: I wish I did. No Romanian has bunged me anything recently. [Interruption.] My envelope is from the Department for Transport, Local Government and the Regions.

I hope that we get a more truthful answer when the Minister winds up the debate. I also hope that he will describe the criteria he is using to judge the Welshness of the companies that are accompanying him to the Czech Republic. Perhaps he will take the opportunity, highlighted by Llew Smith, to apologise to all those who have been put out of work by the Government's actions. Will he tell us how many other companies have been helped? The Liberal Democrats tell everyone that they oppose the Government, so why were they so quick to leap to their defence in that shameful fashion?

The lessons from this scandal, which has rocked the Government, are that Governments must be brave enough to resist such temptation and that none of us must ever underestimate the misery and sadness that goes with redundancy. Every effort must be made to prevent that, especially in Wales.

Photo of Martin Caton Martin Caton Labour, Gower 6:14 pm, 5th March 2002

It is a great pleasure to follow Mr. Wiggin, who is always amusing, even though he talks nonsense. It is an even greater pleasure to follow my hon. Friend Dr. Francis. I pay tribute to the work that he has done following the terrible tragedy in the steelworks in his constituency. He has visited families and given support, but most of his efforts have been unsung, and he deserves credit for them.

It has been something of a groundhog day for those of us who attended the Welsh day debate last Thursday. It is more in sadness than in anger that I contribute to the debate. Opposition Members have chosen to link two important issues, each of which should be the subject of debate in the House at this time and in the weeks and months ahead.

The first issue is the danger to our democracy and to the perception of democratic politics of political parties relying on large donations from individuals, business or industry. The second is the recent history of the steel industry in Wales and the rest of the United Kingdom and, just as important, the future for steel and other manufacturing industry in our country. Plaid Cymru has tied those tremendously significant matters together with a connective tissue that artificially tries to make the central focus an unsubstantiated allegation of Government impropriety.

At its nonsensical extreme, articulated by Mr. Evans in last week's Welsh day debate, the link becomes causal. That must be the implication of his call for the Government to ask

"the 6,000 people who lost their steel jobs in the United Kingdom whether they prefer to be on the dole while the Prime Minister supports competitors in Romania."—[Hansard, 28 February 2002; Vol. 380, c. 881.]

The same line was taken by Adam Price, who asked:

"Does the Prime Minister care more about his billionaire friends . . . than the families in the steel communities that have loyally supported the Labour party for more than 100 years?—[Hansard, 28 February 2002; Vol. 380, c. 917-18.]

What about this afternoon's debate? In a reply to an intervention asking whether the hon. Member for East Carmarthen and Dinefwr was really suggesting that the Prime Minister wrote his letter to the Romanian Government deliberately to undermine the British steel industry, his hon. Friends and Conservative Members shouted yes, and he said, "I think I'm getting somewhere". That is the level of the accusation.

Not only is an unjustified and unjustifiable link being made between a donation to the Labour party and a letter from the Prime Minister to the Romanian Government, but the impact of the letter on that Government's actions has been exaggerated out of all proportion. We are supposed to extrapolate from that that if the Prime Minister had shown a similar commitment to Welsh and Teesside steelworkers, perhaps by writing a timely letter, thousands of jobs could have been saved. That is pure cloud cuckoo land, and everyone, including Opposition Members, knows it.

A debate is rightly beginning about future funding of political parties. As has already been said, the Labour Government have introduced a transparency that was not there before, and they have capped total expenditure on general elections. Those are both valuable steps forward. Like many right hon. and hon. Members across the House, I believe that we should go a lot further.

With large political donations there is always the danger that donors will want something in return. Many of the people whom we represent believe that there is or may be a payback time with such donations.

Photo of Martin Caton Martin Caton Labour, Gower

I am afraid that I do not have time to give way.

At a time when fewer and fewer people are taking part in the democratic process, that must be a cause for concern.

Photo of Martin Caton Martin Caton Labour, Gower

It is justifiable to raise the issue of party political donations, and Opposition Members could usefully have focused on it. Their accusation about the actions of the Prime Minister is unsubstantiated. They have had hour after hour to substantiate it, but they have completely failed to do so. I should like to talk about the more important issues that they failed to raise.

The hands of all political parties must not just be clean: they must be seen to be clean. It is right to consider issues such as state funding of parties, radically reducing the total spend available to each party at elections, and extending the provisions in kind available to each political party, as we do with television time for party political broadcasts. I am sure that there are many related ideas on which we could and should focus. The debate could have centred around those ideas, as part of our discussion on how we re-engage with the sections of the Welsh and British public who have become deeply cynical about politics. What is, perhaps, even more important is that we could have used this debate to concentrate on the future of the United Kingdom's steel industry, in the light of recent history and in the context of manufacturing generally. We could have raised a range of issues—[Interruption.]

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. We must not have these continual sedentary interventions—

Photo of Martin Caton Martin Caton Labour, Gower

A range of issues—

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. That applies to Members on both sides of the House. I call Mr. Caton.

Photo of Martin Caton Martin Caton Labour, Gower

I apologise, Mr. Deputy Speaker.

It is a shame that, instead of discussing those issues, we are discussing an untenable thesis that attempts to shift responsibility for last year's steel closure programme to the Labour Government. That is clearly unfair to the leadership of my party. I guess that that is politics, or at least a sort of politics; but it is a travesty of history, as was demonstrated by my right hon. Friend Alan Howarth and my hon. Friend Llew Smith. It also does a grave disservice to the steelworkers and their families who were victims of the mismanagement and intransigence of Corus.

I speak as the representative of some of those whose lives were shattered by the announcement of the closure programme just over a year ago. The Bryngwyn works, in Gorseinon in my constituency, was the smallest target on the hit list of Sir Brian Moffat, chair of Corus; but it employed 127 people, and its closure—which ended 100 years of steel making in Gorseinon—has had a real impact on the village and the surrounding area.

Last February and March I spent hours in the Bryngwyn works and in trade union offices in Swansea talking to workers and their representatives, with our local Assembly Member Edwina Hart and with local councillors, trying to put together a strategy that could have saved the plant. The work force came up with proposals—painful ones from their point of view, which would have meant the acceptance of some job losses and the mothballing of one production line to reduce costs and keep the works going until the wheel turned full circle and steel production was more profitable—but those proposals were rejected out of hand by the Corus management.

I said that I spoke as a representative of those affected by the closure. I also speak as a member of the Select Committee on Welsh Affairs, which engaged in two gruelling evidence sessions with Sir Brian Moffat and members of his management team.

Photo of Martin Caton Martin Caton Labour, Gower

Indeed, and I suspect that the hon. Gentleman will concur with my interpretation of what happened.

What became clear during those sessions—ironically, the first took place on St David's day and the second on the day after May day—was that 6,000 people in Wales and on Teesside would be sacked come hell or high water, and that nothing that government at any level could offer would change the decision. All the things that Corus had moaned about in the preceding months—the climate change levy, the comparative values of the pound and the euro, its demand for great rebates—were no longer key factors. Corus had decided that it could not export, and that demand from United Kingdom home markets was inadequate. To improve its stock-market value it wanted to downsize, and to downsize quickly.

When we asked Corus why it had paid £700 million to shareholders when British Steel merged with Hoogovens, it said that that was to make the merger fairer in terms of the cash that each side brought to the marriage. When we asked why, if it had needed to dispose of cash, it had not invested it in the UK steel industry—this, I think, is relevant to points made by Opposition Members about variations in European rules to allow investment aid, and they may find Sir Brian Moffat's answer instructive—we were told that the last thing the industry needed was more investment. But when I asked what Corus was doing with a laminator process from Bryngwyn after its closure, the management representatives admitted that it was over 30 years old and redundant.

That is typical of the company's failure to invest to improve quality in plants such as Bryngwyn, but it was only the first in a list of failures that we heard about during our two sessions. We heard of its failure, after the merger, to honour its commitments to maintain the then current configuration of plants, and to maintain and improve market share; its failure to engage and involve its work force and its representatives at any stage and any level when the new strategy was being developed; its failure even to discuss with the Iron and Steel Trades Confederation the possibility of letting a union-led consortium take over Llanwern and bring a new initiative to steel production on the site; and its failure, even at the end, to take seriously an alternative proposed for all the plants involved—presented by the unions, and backed by the Government and the National Assembly for Wales—that would have involved access to European Union and Government money to help maintain production for at least another year. Corus rejected that proposal, but admitted under questioning in the Select Committee that it had never even costed it.

The company's overall failure also included a failure to listen to Government and to explore with Government, either at Assembly or at UK level, ways of saving jobs. Even so, under questioning Sir Brian Moffat acknowledged that he had been told by the Prime Minister that the Government would help in any way they could.

It is just plain wrong to blame the Government for what has happened. Government at various levels is trying to pick up the pieces, as my right hon. Friend the Secretary of State pointed out. I pay tribute to those who have contributed to the £4 million regeneration programme in Gorseinon—

Photo of Nigel Evans Nigel Evans Shadow Secretary of State for Wales

As the hon. Gentleman will know, Allied Steel and Wire, which employs more than 1,000 people in Wales, is complaining about the climate change levy. What representations will he make to his Chancellor of the Exchequer before the Budget statement about its removal?

Photo of Martin Caton Martin Caton Labour, Gower

I shall make no such representations. I strongly support the levy. In certain circumstances when industry has specific problems—as was the case with Corus—the Government have reduced it. As Sir Brian Moffat told us, however, the levy was costing £8 million at a time when there was talk of a loss of £1 million a day. It was not a significant factor. At one stage there was an attempt to build it up into a significant factor, and the Conservative party jumped on it, but it was not the major issue.

Photo of Mark Tami Mark Tami Labour, Alyn and Deeside

I had discussions with the unions at Shotton, which spent weeks preparing alternatives to the proposed job losses. The management of Corus took just five minutes to look at those proposals and reject them out of hand. It was a cruel pretence for Corus to go through the process when it had no intention of giving serious consideration to any of the alternatives. It had made up its mind, despite all the good efforts of unions and Government to find a solution.

Photo of Martin Caton Martin Caton Labour, Gower

That was exactly the experience we had with Gorseinon, and I am sure that every steel plant facing closure or cuts had the same experience.

Photo of Mr Llew Smith Mr Llew Smith Labour, Blaenau Gwent

My hon. Friend said that during cross-examination of Sir Brian Moffat he had asked questions about the moneys handed out to shareholders. Did he have an opportunity to raise the subject of the moneys appropriated by Corus from the workers' pension fund, and did he have an opportunity to remind Sir Brian that much of the fund had been built up when the steel industry was in public ownership, and that it had therefore been appropriated from taxpayers?

Photo of Martin Caton Martin Caton Labour, Gower

We did not focus on that in the Select Committee, but I have often heard my hon. Friend explain what went on. It was an absolute crime, and he is right to focus on it.

I hope that lessons have been learned from last year's experience. I certainly welcome the investment at Port Talbot mentioned by my hon. Friend the Member for Aberavon. I think, however, that lessons will never be learned from history if we allow it to be distorted. That is one reason why we should reject the Tory-supported Plaid Cymru motion.

Photo of Betty Williams Betty Williams Labour, Conwy

On a point of order, Mr. Deputy Speaker. I should like to point out that I was present to hear the speech from Adam Price.

Photo of Elfyn Llwyd Elfyn Llwyd Shadow PC Spokesperson (Home Affairs), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Defence)

If I have misled the House, I apologise.

My hon. Friend the Member for East Carmarthen and Dinefwr made a powerful speech. We must remember that it was he who discovered the trail of deceit from Mr. Mittal to No. 10 and back, the various favours and the less than truthful accounts that have been given. It is clear that the interests of one party have been put above those of the UK steel industry. The speech was full of passion, and I congratulate my hon. Friend, and my researcher Alun Shurmer, on their hard work and research.

The Secretary of State made a rather desperate start to his speech. He wanted to refer to education, health and transport, among other devolved matters. However, by praying in aid such matters so that he would not have to refer to Mittal, he caused us to go around the trees and the woods. We discussed everything. I have a high regard for the right hon. Gentleman, but it was a desperate start.

The Secretary of State assaulted Plaid Cymru, of course, for raising the issue. Uncharacteristically, he attacked us over our participation in the House. That was interesting. We are here far more often than he is. The latest figures show that all Plaid Cymru Members have voted more often then he has recently, so I object to what he said.

The Secretary of State may have been a bit peeved to have received the hospital pass. He did not want to deal with the debate, any more than I should like to play against England at Twickenham in a few weeks. The right hon. Gentleman struggled valiantly, and made a valiant effort, but without any real success. He started in a hole and kept on digging: in the end, we lost him altogether.

A sort of explanation or apology was made for what went on—a clever bit of historical revisionism about what Corus did. The Secretary of State made it clear that the ISTC is worth listening to, but that the GMB and other unions are not, because they say things that are not favourable to the Government. That is another classic case of revisionism. The right hon. Gentleman referred to the Soviet Union, where revisionism was big. It may be coming back into fashion with new Labour.

The point is that Mittal gave money to the Government, and the Prime Minister wrote a letter. When the ISTC gave money to the Government, it had to write a letter. It was a rather desperate attempt to bail out this discredited Government.

If the Sidex deal represented so much benefit to Britain—and I accept that assisting Romania was a laudable objective—was it right that the British taxpayer had to pay for Romanians to come here and sign the deal? The Prime Minister explained that he wrote the letter because it was already a done deal. Where is the logic in that? Moreover, Romania has open government, and the Romanian Government's website makes clear what the letter said. It was patently obvious to all at the time that Lionel Jospin was in Romania to argue on behalf of the French company. That company has better British credentials than the Romanian firm.

In any event, it was not a done deal. The Prime Minister misled everyone in that regard. We were told that LNM was a British company, but clearly it was not. The French company was far more British, according to the definition used.

I listened carefully to Mr. Whittingdale. He dissected what had happened, and referred to the deletion of the word "friend" from the draft of the original letter. We do not know who did that, although the "Today" programme said that it was no less a person than Mr. Powell. The hon. Gentleman referred to a speech in the Welsh day debate by Mr. Evans, which mentioned steel in Wales. I did not speak about the matter then, as I knew that this debate was coming, but there was no mention of steel when the Ministers replied to that debate. That shows how deep their conviction was that day.

The hon. Member for Maldon and East Chelmsford spoke about the Irish Ispat company. He described how it owed millions of pounds to people everywhere, including in these islands. He noted that it sacked 600 workers without a by-your-leave only a fortnight after promising to adhere to a five-year contract. I do not think that the company is a good employer.

However, the main thrust of the speech from the hon. Member for Maldon and East Chelmsford had to do with the culture of cronyism that pervades the Government. It is obvious to all that the Government keep the door wide open for people with money. That perception grows as day follows night. We need a full and independent inquiry into what happened.

Alan Howarth tried to show that he and other hon. Members had been active during the Corus debacle. I have no doubt that he was. Who am I to doubt the sincerity of those Members? However, I was a member of the Select Committee on Welsh Affairs when we took evidence. The big question is, where were the Government for the two years before the Corus announcement was made? In that time, it was known that Corus was losing millions of pounds each month. Why did the Government not intervene when something could have been done?

I well recall one Welsh debate about three and a half years ago when the previous Member of Parliament for Caernarfon stated that Corus was in great difficulty and that we should concentrate on it. In response, Labour Members called him a scaremonger and a whinger—the usual stuff. That was a disappointing response, and nothing was done as a result.

My point is that it was all very well for the Government to jump in and act when it was too late, but where were they when they could have been doing something effective? They have acted too late, and done too little.

I also want to correct a factual inaccuracy in the speech of the right hon. Member for Newport, East. Corus joined the European Commission in opposing any action to impose tariffs as a safeguard, but it supported later objectives. The right hon. Gentleman contended that the company had been in the US, arguing for tariffs. I am afraid that that is not correct, according to my information.

Photo of Elfyn Llwyd Elfyn Llwyd Shadow PC Spokesperson (Home Affairs), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Defence)

I am sorry, but no. The hon. Gentleman has not taken part in the debate.

Llew Smith offered his usual bluster. Of course we sympathise with the people who have lost jobs. We do not lay all the blame on the Government, but we do consider that the Government acted too slowly. The hon. Gentleman referred to the unfortunate failure of the ISTC buy-out. There is no argument about the fact that everyone was disappointed about that.

The hon. Member for Blaenau Gwent as usual referred to Nye Bevan. The subliminal message is that the hon. Gentleman might be as good one day. I rather doubt that.

Pete Wishart looked at the wider issue of political donations, and the mire of political sleaze in Scotland. It is bad down here, and pretty bad up there. We can see that every day, and it is very worrying. The hon. Gentleman was right to say that we should examine business links, which do no person or party any favours. We urgently need full, thorough and public investigations into that matter, and into the general subject of the debate. We must ensure that similar things do not happen in the future.

Dr. Francis referred to the explosion at the Port Talbot plant. All hon. Members sympathise with the families of the bereaved, and with those who were badly injured. The investment of £75 million by Corus is most welcome, but it was an insurance payout. That means that the company did not dig into its reserves, but I hope—and I am sure that the hon. Gentleman does too—that there will be more investment.

The hon. Member for Aberavon has been in the House a relatively short time, but he has sadly become rather tribal. I counted the number of times that he found fault with everyone, although he made it clear that he thinks that the Labour Government are doing perfectly well. Obviously, the hon. Gentleman has been sucked into the system, which is a shame. I used to think that he was an independent thinker. The hon. Gentleman did not deal with the Mittal affair. He is a clever man, but he had no answers to the questions that have been posed. In the circumstances, it was sensible of him to avoid the matter so assiduously.

The hon. Member for Aberavon referred to the Prime Minister being opposed to tariffs. When did he start being opposed to tariffs? This week. When is the announcement to be made? Tomorrow. That is not very good stewardship of the economy or the country; it is very poor. It has been known since July of last year that the section 201 application was likely to be processed. This week, of all times, the Prime Minister's website says that he has warned—"warned", my God—President Bush.

Mr. Wiggin, reading from a brown paper envelope—no smear intended—referred to the agony of redundancy, with which we all sympathise. Mr. Caton made some good points about accepting large donations from industry. He, too, probably believes that it is time to consider the matter dispassionately, not today but in another forum. I sympathise about what happened at Bryngwyn, and I was also on the Welsh Affairs Committee at the time. As he said, when big business makes a payment, it is looking for something. However, he did not ask what Mr. Mittal was looking for. I would ask that question.

I made the point about the French company being more British than the one that was backed. I also want to refer to Ispat's attempt to purchase the Irish plant. That was disgraceful, and, oddly, in 1995, the Department of Trade and Industry objected to it on the basis that it would be against the interests of British industry. Now, however, it apparently has full support.

This is our first opportunity to have a full parliamentary debate on this subject. The Prime Minister should rightly be here to reply. He should not have given a hospital pass to the Secretary of State for Wales. The Secretary of State for Transport, Local Government and the Regions had to come here to explain himself. Why cannot the Prime Minister make time to do so? He makes time to go everywhere else in the world.

One or two questions remained unanswered about the United States tariffs. Mr. Mittal paid £400,000 to put up those tariffs against British steel interests. United Kingdom taxpayers' money was actively being used to undermine UK steel jobs at the same time as Corus was rapidly going down. At the same time, by a happy coincidence, £125,000 was donated to Labour. We remember the Ecclestone affair, the Hindujas, Mr. Mandelson and Mr. Vaz—

Photo of Elfyn Llwyd Elfyn Llwyd Shadow PC Spokesperson (Home Affairs), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Defence)

I refer to Mr. Vaz and Mr. Mandelson. The others are not yet Members; no doubt they will be parachuted in when they have paid enough.

I shall quote from the final sentence of an early-day motion tabled by the Minister for Europe when he was in opposition. It states that the House

"calls on the Prime Minister to instigate an immediate independent inquiry and instruct the Chairman of the Conservative party to open all Party accounts to public scrutiny, so that British voters will at last understand that 'The best government that money can buy' leads to the sleaze and corruption evidenced by these findings."

That sums up the present position.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary, Welsh Office, The Parliamentary Under-Secretary of State for Wales 6:44 pm, 5th March 2002

Before the debate began, Plaid Cymru was complaining to the press and others that Wales Office Ministers were being put up to answer the debate today. They did not want my right hon. Friend or me to take part. Apparently, Welsh Ministers are not good enough for the so-called party of Wales.

The debate has shown that at least Labour Members have a real interest in the future of the steel industry, since they, like me, represent steel workers. It has also shown that the issues that affect steel are common throughout the United Kingdom and the European Union, and that whingeing is no substitute for policies—a fact which, sadly, the nationalists have still not learned.

We have heard some very good and important contributions, such as that of my right hon. Friend Alan Howarth, who dealt extremely well with the history of the Government's support and efforts to persuade Corus not to make people redundant. Dr. Cable warned us of the dangers of economic nationalism, and he was right to do so. He argued that the Sidex sale to Mittal would not hit British jobs saying that the argument that it would was flimsy, and I agree with him in that respect. He also pointed out the importance of the issue of political donations, and I remind him and the House that the Labour party legislated to make them transparent.

My hon. Friend Llew Smith asked where the nationalists were when we were trying to defend steelworkers and keep their jobs. We did not see them. We supported the steelworkers all along the line and we certainly supported the attempt by the ISTC union to buy the Llanwern steelworks. I was with my hon. Friend the Member for Blaenau Gwent when we met Sir Brian Moffat of Corus and tried to persuade him to change his mind. He would have none of it. He was determined not to sell the Llanwern steelworks to the ISTC because, as my hon. Friend said, that would increase competition for him. My hon. Friend has a staunch record as a defender of his community, and we have seen that again this evening. Pete Wishart also made a contribution.

My hon. Friend Dr. Francis welcomed the Government's stance on steel tariffs and the Americans. I have no doubt that the Government will reinforce their position at every opportunity. He also referred to attempts by the ISTC to buy Llanwern steelworks. He rightly derided as irrelevant the nationalists' attempt to link the donation from Mr. Mittal to the Prime Minister's letter to the Romanian Prime Minister. He spoke about our steel heritage but he also stressed the importance of a modern Wales. He spoke legitimately as a Member representing a steel area—a steel town that has produced steel for the last 100 years.

Mr. Wiggin—the Tories have formed a new alliance—congratulated Plaid Cymru on securing this debate. He clearly demonstrated that there are close links between the two conservative parties in Wales. My hon. Friend Mr. Caton paid tribute to the efforts made by my hon. Friend the Member for Aberavon following the awful tragedy at Port Talbot steelworks. He also strongly attacked the nationalists and the Tories for their smears—their trademark throughout. It is a travesty of history to say that the job losses at Corus are the responsibility of this Government. We have done everything possible to prevent those job losses. My hon. Friend the Member for Gower spoke movingly of his efforts and those of his colleague in the Welsh Assembly to try to avoid the closure of the works at Bryngwyn.

Mr. Llwyd said that Corus's difficulties had been known about for years, and asked what the Government were doing. All I can do is refer to his remarks at a meeting of the Select Committee on Welsh Affairs, when he said to Sir Brian Moffat:

"You have already confirmed today and it was in the Western Mail yesterday, that there have been 145 meetings with Ministers and Members of Parliament over the last two years."

That is what we were doing in the two years before Corus announced the job losses.

The remarks made by the hon. Members for East Carmarthen and Dinefwr (Adam Price) and for Maldon and East Chelmsford (Mr. Whittingdale) were very similar. The hon. Member for East Carmarthen and Dinefwr said that the Prime Minister had asked the Romanians to sell the Sidex plant to Mr. Mittal. That is not true. He went on to say that this Government had given financial support to Mr. Mittal to buy a steelworks in Kazakhstan. That is not true. He went on to say that there had been a late bid by the French to acquire the Sidex steel plant, but that is not the case. He went on to accuse one of the Prime Minister's staff, Jonathan Powell, of amending a letter, but that is not the case either. For good measure, the hon. Gentleman then decided to impugn the integrity of our ambassador in Romania. That is the level that we have come to expect of the hon. Gentleman's contributions.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary, Welsh Office, The Parliamentary Under-Secretary of State for Wales

No, the hon. Gentleman has only just come into the Chamber.

The hon. Member for East Carmarthen and Dinefwr went on to insist that there were links between Mr. Mittal's donation to the Labour party and the Prime Minister writing a letter, but the hon. Gentleman then added that the evidence may be circumstantial. He cannot have it both ways. He ended his speech with every cliché known to man, save "God is love" and "Please adjust your dress before leaving the cubicle."

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary, Welsh Office, The Parliamentary Under-Secretary of State for Wales

The hon. Gentleman has had his chance. He left the Chamber part way through the debate, perhaps to give another television interview, and I am having my say now. He had his earlier.

The hon. Member for Maldon and East Chelmsford congratulated Plaid Cymru on the choice of subject for the debate and said that Conservative Members would join Plaid Cymru Members in the Lobby tonight. That is nothing new. The Tories and the nationalists are always in the same Lobby.

The hon. Gentleman referred to the letter that the Prime Minister had written to the Prime Minister of Romania. When my right hon. Friend the Secretary of State spoke earlier, he referred to the fact that the Sidex sale was important to economic reform in Romania. In a written answer to a question tabled by the hon. Member for East Carmarthen and Dinefwr, my right hon. Friend the Prime Minister referred to Romania and said:

"Privatisation of its steel industry through the sale of Sidex is an important element in its economic reform which will help to establish a level playing field between EU and Romanian steel producers and should lead to a reduction in levels of state subsidies which disadvantage UK steel producers."—[Hansard, 14 February 2002; Vol. 380, c. 612W.]

That is exactly the same message as we had from Corus more than a year ago.

Photo of Don Touhig Don Touhig Parliamentary Under-Secretary, Welsh Office, The Parliamentary Under-Secretary of State for Wales

No, I will not give way. Sit down.

If there is one thing that has characterised this debate, it is the remarkable similarity between the arguments deployed by the Conservatives and by their partners in Wales, Plaid Cymru. It has been a rerun of last week's debate on Welsh affairs, when we could not insert a cigarette paper between the arguments of the two parties. In Wales, Plaid Cymru Members say that they are socialists, yet night after night they troop through the Lobbies and vote with the Conservatives. They will do that again at 7 pm and they will do it again in the days to come. The Tories and their new partners, the daffodil Tories, are working together against the interests of the people of Wales.

Indeed, so similar were the contributions of the hon. Members for East Carmarthen and Dinefwr and for Maldon and East Chelmsford that they could go on the stage as a double act. We have had Laurel and Hardy; we have had Morecambe and Wise; now we have smear and innuendo—the typical way in which they sought to distort the real truth of this argument.

The debate has been very instructive. The fact that the Tory party has no understanding of our steel communities is not news to anyone—not to those in Gwent, Clwyd, Teesside, Corby or Lanarkshire. However, what constantly amazes me is the Conservatives' brass neck. These are the friends of Asil Nadir, Jonathan Aitken and Jeffrey Archer. They look more often like a remand centre than a political party, yet they come here to lecture us on standards in public life. The cheek of it! They have no shame. The Labour party and the Labour Government opened up scrutiny of political donations. We do not even know who paid the Conservatives' 1997 election bills, because they have not released that information.

As for the Welsh nationalists, they are silent as the grave when asked about their attempts to raise funds from foreign backers in the United States. We do not hear much from them about that. Those who thought that devolution might lead to greater maturity on the part of Plaid Cymru have been sadly disappointed, although few Labour Members will be surprised by that.

What has been surprising, however, is the complete lack of thought in Plaid Cymru's arguments in this debate. It tells us that it wants a Wales in Europe; that has been its whole theme. Until now, Britain has not existed. It has been the place that nationalists have wanted nothing to do with, but today they have argued against policies needed to strengthen Europe, to encourage trade within Europe and to help the European Union grow.

Plaid Cymru Members tell us that they want strong regional policies and structural funding in Europe, but apparently that must not apply to parts of Europe that are not called Wales. That point again emphasises their narrow, nationalist approach. They go on, as they did earlier, about their concerns about tariffs. We have concerns about tariffs, but Labour Members in the European Parliament are not arguing with their colleagues in support of tariffs. One cannot have it both ways. One is either for or against tariffs, but the nationalists clearly do not know what they are for and what they are against.

The nationalists did not stop to think about the issue that they were raising today. Like children going into a sweet shop, they thought that they had a good story with which they could knock the Government. They immediately sought to exploit it during the Ogmore by-election, but did that work? No, it did not, because a Labour Member—we won—now represents Ogmore in this Chamber.

At the heart of this argument is a letter sent by the Prime Minister to the Prime Minister of Romania. My right hon. Friend the Secretary of State has already referred to it, and it is not a secret that the Prime Minister wrote to the Prime Minister of Romania. I have the letter here that was published on 25 July last year by the Romanians at the signing ceremony. However, the Hercule Poirot of Plaid Cymru, the hon. Member for East Carmarthen and Dinefwr, now gives the impression, supported by the hon. Member for Meirionnydd Nant Conwy, that they have just discovered it.

The hon. Member for East Carmarthen and Dinefwr then sought to link the letter that the Prime Minister sent to a donation that Mr. Mittal made to the Labour party, but that donation has been known about since May and June of last year. It is not yet another great Hercule Poirot discovery, but just a sham. Both the letter and the donation have been in the public arena for eight or nine months.

As to the impact of the Prime Minister's letter to the Romanians, I refer to a comment made by the Prime Minister of Romania on 11 February when he was asked about articles in the British press that referred to our Prime Minister's letter. The Romanian Prime Minister said:

"I would like to make it very clear. A privatisation like the one at SIDEX cannot be done on the basis of a letter, irrespective of from whom it would come. Secondly, the letter came at a moment when, after months, the examination and evaluation process had been completed and a decision had been taken."

He said that the letter came as his Government were preparing to sign the contract. That is the truth of it; there is no link whatever.

After months of unending bad news, weak leadership and three electoral trashings in eight months, Plaid Cymru thought that it had a stick with which to beat the Government, but it has got it wrong yet again. We know the rotten nature of its policies. They are like so many decaying teeth; they are falling out in front of it.

At the end of the debate, Plaid Cymru will still have a second-rate leader and third-rate policies. As has been shown in the debate, the party is governed by narrow bigotry, a little Wales-ism and a hatred of anything that succeeds. It does not even qualify for a fifth-rate political party tag. Bankrupt of real policies, badly led, riven with divisions and afraid to tackle the language of extremists, this rag-bag bunch masquerading as a political party have failed Wales today. I invite my hon. Friends to come into the Lobbies with me and deliver it a resounding defeat in the vote.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 192, Noes 318.

Division number 180 Steel Industry

Aye: 192 MPs

No: 317 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

The House divided: Ayes 306, Noes 181.

Division number 181 Steel Industry

Aye: 306 MPs

No: 181 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly agreed to.

Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House recognises the fundamental strengths of the British steel industry, which is amongst the most efficient in the world; believes that, despite the regrettable decision of Corus to cut UK steel capacity, the industry has a long term future in Britain, as recently demonstrated by the decision of Corus to invest in the Port Talbot works; further recognises that the success of economic restructuring in Central and Eastern Europe, together with the enlargement of the European Union, is essential for the future of the British steel industry and other British manufacturing as it will extend markets and reduce hidden subsidies; congratulates the European Bank for Reconstruction and Development for its work on restructuring the Romanian and other Eastern European companies, including through supporting the successful sale of the SIDEX steel corporation; and further welcomes measures put in place by the Government and the National Assembly for Wales to train and retrain former steel workers and regenerate communities affected by Corus job losses.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons) 7:27 pm, 5th March 2002

On a point of order, Mr. Deputy Speaker. Have you had any indication from the Secretary of State for Health that he intends to make a statement to the House this evening, possibly at 10 pm, on the suspension of a civil servant in his Department? It apparently arises from the failure of the Department of Health to answer a number of parliamentary questions. As those were parliamentary questions, Parliament has a right to hear about the matter, rather than learning about it from the media. Hon. Members have not been properly notified; we should not hear about the matter on the news. The Secretary of State should make a statement in the House.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

I am not aware of the matter to which the hon. Gentleman refers, but he has made the point that he wanted to make. I have no knowledge of a statement being requested.

Photo of Nicholas Soames Nicholas Soames Conservative, Mid Sussex

Further to that point of order, Mr. Deputy Speaker. On a different matter, but connected with a parliamentary question, I seek your guidance in respect of an astonishing answer that I have received tonight from the Under-Secretary of State for Defence. I asked him on 6 February, which is a very long time ago—the answer is already a month late—to let me have the latest strength of the Territorial Army by unit and location, as against its establishment.

I received a reply tonight, which states that the Under-Secretary regrets

"that the strength and establishment of the TA by unit and location is not available".

Even allowing for the Government's difficulty in assembling factual accuracy, to be polite, is it not astonishing that the answer to a question of such importance can be dealt with in such a way? As I have already waited a month for the answer, may I have your guidance on how it may be possible for us to establish the strength and establishment of the TA, which is, after all, the land defence of the United Kingdom?

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

I understand the point that the hon. Gentleman makes, but I have no responsibility for the content of ministerial answers.