Crispin Blunt

Conservative Party | Reigate

Questions on the Steel Industry and the Mittal affair

Crispin raised points today on the donation to the Labourparty by Mr Mittal of £125,000.

Mr. Boris Johnson (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?

Mr. Murphy: 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—

Mr. Crispin Blunt (Reigate): Will the Secretary of State give way?

Mr. Murphy: Yes, for the last time.

Mr. Blunt: 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?

Mr. Murphy: 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.

Adam Price rose—

Mr. Murphy: 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.

Adam Price: That is ridiculous.

Mr. Murphy: Of course it is not ridiculous. Let me give an example. My hon. Friend the Member for Islwyn (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.

Adam Price: 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?

Mr. Murphy: 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.

Mr. Nigel Evans (Ribble Valley): 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?

Mr. Murphy: 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.

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