In committee: Steel going?

British steel mills have improved their productivity

The British steel industry has taken yet another knocking with the recent announcement from Corus that it will be cutting a further 1150 jobs and that even more hang in the balance.

With the CBI's admission that British manufacturing's decline is beyond doubt, the Trade & Industry Committee has begun an inquiry into the plight of British steel, and the implications it will have for the wider UK economy.

Martin O'Neill is the Member of Parliament for Ochil Constituency in Scotland and has chaired the Trade & Industry Committee since 1995.

The following is an abridged interview with Mr O'Neill about his thoughts on the inquiry and the Anglo-Dutch steel producer.

Isn't the gradual demise of UK steel just plain inevitable, and part of a shifting UK economy?

We're very conscious that the steel industry and UK Corus in particular has a pivotal role in the manufacturing economy. And therefore if there are problems with Corus, then it's quite likely that this is merely the tip of an industrial iceberg.

Why is it that steel mills which have apparently in recent years improved their productivity and output performances should be the victims again of Corus-led redundancies?

And why the UK and not the Netherlands? Is it because UK steel mills are less efficient or is it because it's easier to make people redundant in the UK?

British manufacturing still accounts for some 18% of GDP and it's important we have a British point of access to these supplies

Martin O'Neill, Trade and Industry Committee Chairman

I think that we have to be careful. In a globalised industrial society companies do choose to procure their requirements across the globe now in a way they didn't before.

On the other hand it is extremely convenient and important for manufacturing companies to be able to access raw materials quickly and efficiently.

British manufacturing still accounts for some 18% of GDP and it's important we have a British point of access to these supplies.

We're getting to the stage where questions have to be asked about steel making, whether or not there will be a critical mass capable of sustaining the industry and those industries that are dependent on it.

Are the Dutch doing a better job and is that why they're ok?

Well we don't know if this is the problem. Corus is a Dutch dominated organisation. We were told that when the old steel mils were taken out of the Corus portfolio that Britian would have as good a chance as any other part of the Corus Group.

The British sites have improved their productivity dramatically in the last wee while and one would imagine they can't be accused of being a drag on the company.

They are not necessarily those who bear the full responsibility or at least even a major part of the responsibility for the poor performance of the group.

We want to know why it is that Corus seems to be once again getting itself into this sort of mess

Martin O'Neill, Trade and Industry Committee Chairman

Can we blame 'Fat cat' managerial incompetence?

To the extent that it's possible to investigate managerial incompetence, we have only a limited amount of written information in front of us.

It's fair to say we want to know why Corus seems to be once again getting itself into this sort of mess where other steel companies are not in quite the same difficulties.

What about the Climate Change Levy?

The climate change levy treaty has been a pain in the neck to British industry. It's been a pain in the neck insofar as some businesses have been quite profligate in their consumption of electricity.

And because electricity prices had been falling they did not pay enough attention to energy efficiency in manufacturing.

Since then they've been required to look at the means of becoming more efficient as a means of securing a discount on the climate change levy.

But what has frustrated a number of companies is that they have set in place the kind of energy efficiency mechanisms that the Government would like but they're not given any credit for it.

Who will the Committee be talking to?

We have looked at the steel industry in the past, and had people like Moffat (former Corus CEO) in to give evidence.

I have to say it wasn't a particularly enlightening experience. He didn't really provide us with the kind of information we required, but we get the feeling there is a desire to be more open and frank on this occasion.

We will also be talking to the trade unions who have feet in several camps. They have members in the steel industry and those industries dependent upon them.

We will also be getting g in the Engineering Employers Federation which is the trade association both for the steel industry and for manufacturing.

We will be talking to some of the local authority pressure groups, the management of Corus, and at the end of the process the responsible minister who will be coming to give the department's view.

What sort of conclusions do you expect to arrive at?

We would hope to answer some of the questions I've already identified and suggest some courses of action that might be open to government.

The courses of action are not anything like as wide-ranging as once they were because the laws on state support for industry are quite clearly defined now both within the European Union and the World Trade Organisation

Government doesn't have the room to manoeuvre that it had up until the 1970s with public ownership. Subsidies were possible and there were instruments that could be applied.

On this occasion it's far more restricted. We're going to have to make this position quite clear to some of those who would advocate old 1970s style measures. No matter how desirable they may be, sadly they're no longer available to us.

BBC Parliament will broadcast the Trade and Industry Committee's meeting about the future of the UK steel industry on Friday 16 May at 1920 BST