Q5 Mr. Dave Anderson: Thank you, Chair. In response to Mr. Mallon's statement, this Committee is here on behalf of Parliament, not on behalf of either the Government or the Labour party. We are here to get evidence and to make recommendations. Mr. Mallon made reference to 1984, and there are two of us on this panel who were at the sharp end in 1984 when his former employer was part and parcel of the Government's will. So, we know what losing jobs is about. We are not here as thoughtless politicians; we have felt this. We have been there and we know what these people are going through. We are determined to do our bit to make sure that everything we can do to help you is done. I wanted to start with that.

The other point that I will raise is about whether the Committee should have acted earlier. On 25 September, the Regional Grand Committee met in Middlesbrough town hall and I raised the issue then about nationalising the steel industry in this area. I was told, "Leave things now because we're working together; we're working with the employer". So, in terms of timing we would have been involved earlier but the advice we got from the people in this part of the region was, "Don't do it yet". We have done it at the first possible opportunity, and so I hope that that is on the record and understood clearly. I also want to be clear about what John said about the subsidy level. You said £10 million, John. Is that a one-off £10 million?

John Lowther: That would be for a year.

Q6 Mr. Dave Anderson: On the back of that, has anybody had any discussions? I hope that with the work you have done and that other people are doing for us we can find a way of saying to the Government, "There is a way round the European rules". We all get this blank all the time: we can't do anything. I won't believe that that is true, and we need your help to show where it is not true. But if we could pull that together, what would Corus's attitude be? There is not much point in our saying "We'll help you out", if Corus says, "We don't want your help".

John Lowther: I think that that is a question you need to put to Corus. I cannot give you an answer to that particular question because I do not think the question has actually been put. We have, for the response group, put that proposal forward for discussion, and we have not had a formal response from Corus.

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Ray Mallon: Chair, may I make a point? I don't want to dominate because everybody has a lot to say. In my view, on the evidence before me up to now-not today but over the past six weeks or so-there has been too much decoy information. I am raising my voice but I am not being aggressive, I just want everyone to hear. For example, the £60 million was a decoy, basically to appease people like me. As far as this plant is concerned, it is very important; that piece of land is very important. But it is diverting us from the main issue. Yes, there has to be a twin-track approach to save the jobs and-if we lose them-the land. Let us get the land released. To me, the first objective is to save the jobs. A lot of people are decoying people. Sometimes, in evidence, it is the silence that speaks volumes. There has been a lot of silence, as well. We have had this decoy. My advice to you would be: it is all about the Corus jobs. It is not about the land. This Committee, and we, must have the single focus in saving those jobs. I agree that there has to be a twin-track approach.

Mr. Dave Anderson: We, as a Committee, don't have a choice in having a twin-track approach.

Ray Mallon: I agree. I accept that but I wouldn't like to see the Committee diverted away from the job in hand, the saving of the jobs. All I am saying is that, from where I sit, on the evidence before me-and I have verified it-there are an awful lot of decoy tactics. There is not the will in this to save those jobs.

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Q22 Chairman: Ray, is there anything that you haven't said?

Ray Mallon: The only thing that I want to say, because I think that I should say it, is that I am very grateful for the Committee sitting. It is nice to see some socialists here-

Mr. Dave Anderson: Wash his mouth out.

Ray Mallon: With a small "s".

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Q24 Mr. Dave Anderson: There was a reference to Stephen Hughes MEP: it might have been John. If you've got anything concrete-and even anything that's not concrete-give us it so we can pursue ways to say to BIS, "Your line on state rules does not hold water. Examine these options."

Chairman: And we'll invite Stephen Hughes to give evidence.

John Lowther: I undertake to do some work on that for you. I'll send you the outcome in the next few days.

Q25 Mr. Dave Anderson: We're interviewing the regional Minister on Tuesday after we've seen Corus. If it's possible to get us stuff for then, at least then we've got it on the record, with us saying, "This might not work, but pursue this before you go any further."

Chairman: Thank you to all who've given us evidence. It's been a very valuable session. If people haven't read the excellent research briefings they should do so. The one from our own think tank, Tees Valley Unlimited, is excellent. These are really good documents and I hope that you look at them. The TUC document is excellent, as are the ones on communities and on Redcar and Cleveland. These are important documents that tell us not only where we're at, but where we could be moving to. On that note, thank you very much for giving us evidence this morning.

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Q34 Mr. Dave Anderson: From what has been said already, it is pretty clear that we are trying to prevent such action happening. I want to explore a little of what Corus is saying about the mothballing. I worked for the coal industry so I know what is meant by, "It just doesn't work". If Corus is serious about mothballing as opposed to closure, what should it put in place to make an effective mothballing process in terms of job numbers?

Michael Leahy: Geoff can answer the particular question because he works locally. I do not know precisely what the numbers would be, but we would need to keep a significant minority of the work force because we have a widespread skill base that we need to retain. If we put in the salamander, the likelihood is that unless we keep a certain amount of heat in the furnace, it will collapse and cost a fortune to put back in production. Our view is that when they put in the salamander, that will be it. The works will close.

Q35 Mr. Dave Anderson: If the company were genuine about mothballing, can Geoff put a figure on what sort of numbers we would be looking at?

Geoff Waterfield: It is a process that is now happening locally through some of the many work steams that are going on with local management. Obviously, we have the TCP business on the site, but we must look at other businesses such as the engineering processes and administration as well as the areas that are not being mothballed. There are many levels of support. Given that we are not at that point yet, I cannot clearly give numbers but, from our view, we want to know whether Kirby Adams and the company are genuine about such action being a genuine mothball and not a "one man and his dog" job. As Mick said, we are talking about delicate, sensitive and very expensive equipment.

In a couple of weeks, the salamander will be going in. We are certainly not at that stage, which is another case for the extension. We would ask local management as well as Kirby Adams that, whatever plans they want to put in place, they demonstrate clearly that they can bring the blast furnace and production back on line if a buyer is found within the next three, six to 12 months. That says that skills have to be retained. They are vital. The numbers are vital. It is no good chopping away at the work force, making people redundant, then finding a buyer and having no one with the skills to operate a plant. Kevin can talk about it better than me, but we often talk about transferable skills. A lot of the people who we are talking about have one-off, unique skills as we see in mining and shipping. If we let them go, that knowledge will not come back-it will disappear for ever. A true mothball means protection of skills right across the site and an ability to come back on line. Again, we need to scrutinise the company's view of that and make sure that it is not a "one man and his dog" operation,

Steve Readman: We were given a commitment at the national meeting in London that it was to be a correct mothball as Geoff said, and that the plant would be taken down in a proper controlled manner. If it isn't and the mothball isn't correct, and the correct people aren't kept in place, the recommissioning costs for that site for a potential buyer will be huge and will impact on anyone coming along to buy the place.

Q36 Mr. Dave Anderson: Could you sack 1,700 people and mothball the property?

All Witnesses: No.

Q37 Mr. Dave Anderson: Is any work being done on-I hate to use the term because I know that it's not what you want to talk about-managed decline? Is there a part of the work force who would be prepared to go voluntarily at this moment in time? Could they be managed in a way that allows you to let them go voluntarily and be looked after properly, and retain the work force that would do the effective mothballing? If there is that, is there a reward for the Government in potentially creating a snap redundancy situation?

Michael Leahy: Geoff has the local knowledge.

Geoff Waterfield: It's no secret that we have an aged work force. Statistics will tell you that people change jobs every seven years, and seven times in a lifetime. I have been in the steel industry for 22 years and I still class myself as a cabin boy. I am still a new starter compared with an awful lot of people who have been there 40, 45 or 30 years. Clearly, there are numbers there who would volunteer, but there are just as many people who are reliant on that job. Nowadays, people have very expensive and very large mortgages. So, we are in that process of looking at who would be interested and what the total numbers of hard redundancies would be. It is a very difficult process.

Q38 Mr. Dave Anderson: The unions are not resistant to that as a principle? You are not saying that nobody should lose their job. You are prepared to lose some?

Geoff Waterfield: We're not blinkered to anything; we must look at everything. When we talk about thousands of people, there will always be a percentage of those who are willing to go, but there is a large percentage of people who need the job.

Kevin Rowan: The region has quite a good track record of coping with large-scale losses.

Mr. Dave Anderson: Too good.

Kevin Rowan: Yes, we have a lot of practice in it, unfortunately. In previous large-scale closures, we have talked about redeployment of 85% and 90%. You have to put that in context. It has often been the case in other parts of the region where it has been in a different economic environment and in different sectors, where the age and skills profile that Geoff alluded to have allowed it to be more successful. You need to consider the question in the unique circumstances of this company in this area at this time.

I heard some of the earlier comments about the resource that is coming from BIS to continue and complete the apprenticeships, which is incredibly important and very welcome, and I am sure that my colleagues would echo that. We might go on to talk about the additional money for developing the economic base more broadly in the Tees valley, which is very welcome, despite the comments from the previous session. It is hugely important, particularly in enabling the supply chain around Tata Corus; we have 14,000 to 16,000 engineering workers dependent on the industry. So, developing the broader company base is important for maintaining those jobs, but it is not realistic to suggest that the vast majority of those workers who would leave Corus, whether it is a mothball or closure, will either move into their own business start-ups or other employment. We need to emphasise that losing the sites and losing production is devastating.

Alan Calcutt: In response to David's question and to Geoff with regard to voluntary redundancy, from a union point of view we look at any option that gives us the chance of sustaining a viable future. If it means releasing people, we will release them. We must be mindful and consider it in a sensible manner and retain skills. That is where the Government will have to play it right.

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Q46 Mr. Dave Anderson: Over the last year, we have met you on a number of issues. I will name some of them: the positive news around Nissan, the development of offshore wind power and the infrastructure for things such as electric vehicles. Those things will all need steel. If this place goes, where will we get that steel from?

Alan Clarke: Ian might be able to help me here. I do not have sufficient knowledge of the steel industry to know what products are required for each purpose. I understand that what you need for the automotive sector might be very different from what you need for offshore wind turbines and platforms. The offshore wind industry and the gas industry may have different requirements.

In the broader sense, I have always supported the importance of manufacturing and of having a range of highly productive and efficient manufacturing in our own country to provide as much of the supply as we need going forward. We should be developing the skills that are required to develop those new industries. In the North East, we still have a higher proportion of the work force in manufacturing than other regions. Certainly, it would be ironic if in a number of years' time we needed that sort of steel-I can understand that point-in some of these newer industries and we weren't able to provide that from here. But I don't feel I know enough about the industry technically. Ian probably knows a bit more about that than I do.

Ian Williams: In terms of the technical aspects, that question is best addressed to Corus on Tuesday, in terms of its internal capability to address certain markets. Offshore wind is one example that clearly represents a significant steel opportunity for the UK. So I am absolutely certain that Corus, in its various guises, will be able to benefit from an uplift in activity there. Whether it's this particular facility, with its particular technicalities, I don't know: that question is better addressed to Corus.

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Q54 Mr. Dave Anderson: May I ask Alan or Ian whether we can explore any other avenues to get around the problem of there being no prospect of using state aid to support what's proposed? May I also say that One NorthEast has had a bit of a kicking today, but I don't think that it's deserved by and large, because it has done a great job for the region? One of the saddest things-I will be political now-is that if the election result goes the wrong way, One NorthEast will quite possibly not exist any more, because the Tories are committed to doing away with it and the Liberal Democrats, as on most things, don't know what they're going to do about it.

I make the point to the people in the audience that the Liberal Democrats and Tories have boycotted this Committee today, and they boycott it in general. They could be sitting here today asking questions of everybody who has come through the door, but they have chosen not to come here and not to take part in this process, and people need to notice that on Teesside.

George Dunning: Chair, that's slightly unfair. Next to me is the leader of Stockton council, who's a Conservative.

Mr. Dave Anderson: He's not sitting here. The Conservative party has taken a deliberate decision not to sit on these Committees.

Chairman: I have to say with great sensitivity that you're absolutely right. But to keep order, I have to ask people from the audience not to speak. I am really sorry Councillor Dunning, but I have to put that in, because what you say will not be put into the report. We are talking about Members of Parliament.

Alan Clarke: I am not a world expert on state aid, which is highly complex, although we have people in the organisation who have expertise in it. There is no doubt that, even in normal times, checking what you can and can't do through state aid can be very complex. With a lot of the activity that we undertake as an agency, we have to get advice quite regularly. We have to ask, "Can this be done? Is there a more flexible way of doing this? Does this it meet state aid rules?" Even in normal circumstances, that is a big issue for us as an agency, because you can always be open to challenge when you intervene.

On things such as ports and steel, it is even more difficult to be absolutely clear about what you can and can't do and about whether that will be interpreted differently in different countries. I am not just ducking this, but, generally, when an issue becomes as big as this, and you're talking about waste subsidies, national-level interventions and precedents that only a central Government can really set-cases where a Dutch Government or a German Government make a decision-it is probably more appropriate to look at it with the Government themselves, and they will be in the Select Committee next week. I could not discuss that.

However, I agree with one other point made in the earlier session. There is also an issue about cost when you talk about waste subsidies. I am not pouring cold water on the idea, but once you set the precedent at the national level and talk about wage subsidies during a recession, the question is where you intervene, what the priority is, how long you go on for and what the cost is. I'm not necessarily saying that you shouldn't do go down that road; I'm just saying it's a very difficult area. Once you start, you have to have a very clear view and you have to have some idea of what it costs.

Ian Williams: My colleague in one of the earlier sessions referred to rescue and restructuring aid. Clearly, it is something that can be considered for certain situations. I am not an expert in the complexities, but I understand that certain outcomes have to be achieved and certain time limits have to be placed on restructuring and rescue aid. That is something that the UK Government have to consider.

As was mentioned in the session with the unions, critical to this is clearly the attitude of and dialogue with Tata Corus. I know that your colleague, throughout the response group process, has raised the possibility of this with Corus, but unfortunately, didn't receive a positive response. Conscious of what has been said about the possibility, clearly there must be two parties in a marriage, and that is the thought that I would leave with the Committee.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.

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