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Teesside Steel Industry

I assure my hon. Friend that we are not in the business of blocking anything that might be constructive for the future of the Teesside plant or the area. In contrast, our response has been both swift and significant in scale. The third reason for Corus's decision, to which my hon. Friend the Member for Middlesbrough, South and East Cleveland referred, is specific to the Teesside plant: the collapse of the off-take agreement to buy the steel produced there. The agreement was reached in December 2004. Under it, 78 per cent. of the slab steel produced at Teesside was to be sold at cost over a 10-year period to a consortium of four foreign steel companies. Earlier this year, that agreement broke down, in part because the world market cost of steel had fallen below the cost of producing steel at Teesside; the off-takers walked away from the agreement. I spoke at the time to Corus chief executive Kirby Adams and to Antonio Marcegaglia of Marcegaglia steel, the lead partner in the consortium, to encourage them to resurrect the off-take agreement. I asked the two sides to meet again to try to resurrect the agreement, and stressed how critical it was to the future of the plant and to the thousands of people of Teesside who depended for their livelihoods on the continued operation of the plant—the reason for the agreement. Members will know that that meeting took place in July, but no agreement was reached. Against a background of falling demand and a depressed price, and with no partner for its product, the future for TCP looked bleak. Despite that, Corus tried to keep the plant alive, transferring internal work to it and securing some short-term export work. Eventually, however, the three factors that I mentioned earlier took their toll, and the decision to mothball the plant was announced. Throughout, the Government did what we could to keep up demand for steel. We brought forward capital spending on construction, which accounts for about half the steel used in the UK. Without that investment, the UK construction industry would be flat on its back. We also committed £400 million to the car scrappage scheme to underpin the vital automotive sector, another very large user of steel. Again, I stress that those stimulus measures were opposed every step of the way by the Opposition. Had we taken their advice—if they had had their way—demand for steel would have been hurt even more than was dictated by the market conditions. I set out the background in order to make it clear that Corus's decision of a couple weeks ago was not taken as a result of Government inaction. We went the extra mile to try to boost demand and to resurrect the off-take agreement upon which TCP depended. Corus has not asked for aid to keep the plant open, which in any case is not possible under state aid rules. The fact is that Corus cannot run the plant without customers and without demand for the product it makes.