Mr Iain Wright (Hartlepool) (Lab)
I beg to move,
That this House recognises the importance of the UK steel industry including as a provider of highly-skilled jobs and research and development; values the steel supply chain which supports strategic industries such as automotive, aerospace and construction; notes with concern Tata’s proposed sale of its Long Products Division and the impact this could have on UK steel industry capacity; welcomes the efforts of UK steel producers to cut carbon emissions and expresses concern that losing trade to countries with less efficient processes could increase global carbon emissions; further notes with concern that some steel imports do not meet British standards; calls on the Government to recognise the importance of the steel industry and to work with it, the Scottish and Welsh Governments and trade unions to provide a co-ordinated plan for the industry’s future; urges the Government urgently to reconsider whether mitigating measures on energy prices, planned to start in April 2016, can be brought forward to support the competitiveness of UK steel producers, to press the European Commission to launch an inquiry into the CARES certification of imported steel products to ensure safety and traceability and to take action through the EU and World Trade Organisation to challenge the uncompetitive subsidisation of steel products; and further calls on the Government to introduce an active industrial policy for the metals industry, including strengthening supply chains, strategic approaches to public sector procurement, encouraging innovation, skills development and resource efficiency and providing support for steel exporters.
Manufacturing matters if Britain wishes to have a modern, dynamic and innovative economy. A vibrant manufacturing sector is vital to an economy that wishes to prioritise high value and secure jobs and improved productivity, and to see rising living standards for all. In turn, the steel industry is vital to the future competitiveness and flexibility of British manufacturing.
This is not a debate that harks back to an industrial past, although I am proud to say from the Dispatch Box that I come from a family of steelworkers. Both my grandfathers, Jimmy Wright and Alan Harland, were steelworkers for most of their working lives at the British Steel site in Hartlepool.
However, this debate is not about the past. It is focused on the future—on our long-term competitiveness as a leading economic nation and on what is needed to secure our place as one of the top-ranking economies in the 21st century. Steel has to be a key part of that vision of a modern, innovative economy. As our motion makes clear, the UK’s steel and metals sector provides highly skilled jobs in all parts of the United Kingdom, from Hartlepool and Teesside in God’s own country of the north-east to, among others, Sheffield and Scunthorpe; Corby; Deeside in north Wales; Cardiff, Port Talbot and Newport in south Wales; and Clydebridge and Motherwell in Scotland.
The economic contribution that those facilities make through the wealth that is created by the plants and the workers who make the steel, and the way in which that wealth is then circulated around firms and businesses in those areas, whether through the supply chain or the spending power of the steelworkers, is the foundation of many local economies. Indeed, we should stress that the steel industry is literally the foundation of many valuable sectors of the economy, forming part of a number of important value chains in manufacturing—the construction, automotive, aerospace and energy sectors, in which Britain has a competitive advantage and which all play a significant role in downstream activities for the steel industry.
Andy Sawford (Corby) (Lab/Co-op)
As someone who is also from a family of steelworkers, it is good to hear my hon. Friend speak strongly about the traditions of the industry as well as its important contribution today. Will he join me in thanking the Community union, particularly its president, Dougie Fairbairn, who is from Corby and a very strong ambassador for Corby steelworks? We are not part of the long products division that we are focusing on today, but we recognise that we need to fight for the future of the steel industry, whichever part we are in.
Mr Wright
I thank my hon. Friend for mentioning Community, which is a fantastic trade union that wants to secure the long-term viability of the steel industry and is working hard to make sure that that happens. Its keenness to work with the work force, with management and with Government to ensure that we have a future in the UK steel industry is second to none, and I pay tribute to it.
As my hon. Friend said, this is not a sunset industry—steel cannot be seen as that. This is an industry that has, and should have, a future. Internationally, the acceleration of globalisation in the first half of this century provides rising demand for steel products, especially for long products, which I will refer to later. The World Steel Association has estimated that global steel use will rise from about 1.5 billion tonnes a year now to about 2.5 billion tonnes in 2050. Within that rising demand for steel, we see process innovation, technological developments, increasing efficiency and sustainability, and pressure to increase the added value of steel products by making them stronger, lighter in weight, less resource-intensive and more flexible in their uses and reuses. Those developments can be powerful drivers of comparative advantage for the UK steel industry.
Mark Tami (Alyn and Deeside) (Lab)
My hon. Friend will know that added value is key to the products that are made at Shotton. Does he accept that energy prices in this country are holding back some of the potential opportunities for expansion, because steelworks are finding it very difficult to compete with other countries in Europe and throughout the world?
Mr Wright
My hon. Friend has raised time and again the need for a level playing field for energy costs, as have other hon. Friends, and I will want to focus on that.
Our motion hopes to secure the support of the whole House by, crucially, recognising the importance of the steel industry. We must work in a long-term way to address the issues and challenges, whether in energy costs or other matters such as skills, research and development and innovation, to ensure that steel has a prosperous future, providing important highly skilled, well-paid jobs as part of a modern, open and innovative economy. To achieve that, we require a joint vision from industry and Government as to the importance of the industry, with an active policy that addresses the challenges and works with industry and all of Government in a co-ordinated way.
All too often, however, Ministers give the impression that the steel industry is not a priority. Their deeply unhelpful approach to the sector ensures that steel firms have to fight a battle on two opposing fronts, which undermines the future prosperity of UK steel. On the one hand, the Government offer the industry a laissez-faire approach—they say that its corporate ownership, capability and capacity, and product pricing are entirely up to the market—but on the other hand, they are intervening in the steel and metals sector in a purely negative way. By imposing additional burdens on the steel industry, they are tying steel producers’ hands behind their backs, removing the gumshield from their mouths and then pushing them back into the ring of the global marketplace. Such an approach to the future viability of the UK steel industry cannot work.
Andrew Percy (Brigg and Goole) (Con)
I share with the hon. Member for Scunthorpe (Nic Dakin) the Scunthorpe steelworks, which are very important to our constituencies, as well as to that of my hon. Friend the Member for Cleethorpes (Martin Vickers). One mistake made by this Government—my hon. Friend and I voted against them on this—was on the carbon floor price. One way to make things better would be to increase accessibility to UK Government work and contracts. There is general agreement on that, but we have not seen a great deal of progress.
Mr Wright
I am pleased that the hon. Gentleman has mentioned those two points. I will come on to the importance of the Scunthorpe works in a moment. As part of a real, active and proper industrial policy, it is incredibly important to ensure that we have smart procurement to maintain and enhance supply chains and industrial capability in this country. As he says, we often hear warm words, but we do not see decisive action from this Government or the devolved Administrations from across the United Kingdom.
The hon. Gentleman mentioned Scunthorpe, and I want to turn to the very important matter of the potential sale of Tata Steel’s long products division to the Klesch Group. That is worrying many hon. Members and steelworkers, and I raised that in an urgent question in October. My hon. Friend the Member for Scunthorpe (Nic Dakin), who has the largest affected plant in his constituency—unless it is in that of the hon. Member for Brigg and Goole, in which case I apologise—as well as my hon. Friends the Members for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Rutherglen and Hamilton West (Tom Greatrex) and for Motherwell and Wishaw (Mr Roy) have been particularly strong on this matter.
It is absolutely imperative for Britain to retain a long products capability. The construction industry, both domestically and internationally, provides a real opportunity. Improving the rail network is a good example. Network Rail will spend billions of pounds on rail infrastructure in the next couple of decades, with projects such as Crossrail, High Speed 2 and possibly Crossrail 2. I shall expand on that later, but to respond to the hon. Member for Brigg and Goole, I would say that a proper, co-ordinated industrial strategy, with smart procurement as one of its guiding principles, could unlock real value for UK steel firms and their workers.
Kevin Brennan (Cardiff West) (Lab)
At the risk of repetition, I, too, come from a steel family. My father worked for more than 20 years at Llanwern, and I even managed six months there as a young man. Is my hon. Friend surprised that no one is present in the Chamber from Plaid Cymru, the Scottish National party or even the UK Independence party to debate an industry that is very important for our country?
Mr Wright
I thank my hon. Friend for his intervention, because I had not realised that no such representatives were in the House for this debate. Given the importance of the steel industry to the United Kingdom and the role that they could play in public procurement through various Governments and Assemblies, it is absolutely vital for them to be present.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
My hon. Friend makes an important point about procurement, particularly in Scotland. As he will be aware, when the devolved Scottish Government tendered for a new Forth crossing, they chose to place the steel order with a Chinese company, rather than to support Scottish jobs in my constituency and that of my hon. Friend the Member for Motherwell and Wishaw (Mr Roy). Does that not demonstrate that warm words but no follow-through means that British steelworkers lose out?
Mr Wright
My hon. Friend, who has been a real champion on this issue, has pre-empted one of my later remarks. His clarification about the contract is absolutely right. This £790 million contract for 37,000 tonnes of steel for the Forth bridge project would have been really helpful in making sure that we had a vibrant long-term steel industry in Scotland, but all the steel came from China and Europe, and certainly none of it came from Scotland. How can that be allowed if we have a real industrial policy? I do not believe in protectionism or bailing out obsolete industries, but Governments of any complexion working with industry and the supply chain to ensure their viability is the key to a modern, innovative economy. Other countries are doing that and so should we.
Nic Dakin (Scunthorpe) (Lab)
My hon. Friend is making a powerful argument. Did he notice how the Italian Government stepped forward before Christmas to ensure that their steel industry could carry on into the future and be in a strong position to compete in Europe and the world?
Mr Wright
My hon. Friend is absolutely right. Governments, in conjunction with industry, can look at the global steel market, consider where they want to fit into the value chain and how they can exploit it, and work together in a co-ordinated way on research, development, innovation and skills to ensure that they fulfil the potential.
What has happened with long products provides a good example. It is important that this country continues to have a long products capability for domestic and international reasons. It is important that we remain a key player in that area. That is not about helping obsolete, old-fashioned industries; it is about thinking about the future and about how we can exploit the opportunities. Just because a single company, albeit one as strong and as important to this country as Tata, makes a strategic decision to divest itself of its long products division, which comprises about 50% to 60% of its steel operations, this country should not lose that capability. Should not such matters be considered in an effective industrial strategy? As I said, it is not about bailing out obsolete industries, but about identifying the parts of the value chain where we can make inroads and receive dividends in the future.
Frank Dobson (Holborn and St Pancras) (Lab)
Does my hon. Friend agree that it was not helpful of the Government to refuse to find the loan for Sheffield Forgemasters that would have put it in a position to compete worldwide in nuclear engineering?
Mr Wright
I am pleased to see my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) in her place, because she was particularly strong early on in this Parliament on the issue of Sheffield Forgemasters. My right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) is absolutely right. One key thing that an industrial strategy can do is identify the opportunities in the supply chain and work with firms to exploit that potential. When the Government came in, they did nothing to help and they might have undermined a great capability in that important part of the steel industry and its auxiliary supply chain.
Angela Smith (Penistone and Stocksbridge) (Lab)
Will my hon. Friend give way?
Angela Smith
I thank my hon. Friend. Our capability to deliver supply chain opportunities in the nuclear industry has been compromised by the Government’s decision. It was cast at the time as a cancellation of Labour’s sweeties to industries in Sheffield in an attempt to win Sheffield Central in the general election. Will he take the opportunity to deny, even now, that that was the case and to say that it had been a serious strategic investment in a key industry for the UK?
Mr Wright
My hon. Friend is absolutely right. It was a serious, strategic, targeted investment that was based on a credible assessment of what would be required in our future industrial capabilities. As someone who has a nuclear power station in his constituency and who wants to see the supply chain in steel and other parts of industry thrive as a result of a new generation of nuclear power, I think it is important that we look at this issue in a co-ordinated manner.
I want briefly to conclude my remarks about the long products division. I do not want to see assets stripped away from the UK by a buyer, so I have some questions that I hope the Secretary of State will answer when he responds. What guarantees will the Government extract from any potential buyer of the long products division on the safeguarding of jobs, additional investment and the maintenance of existing sites, such as Scunthorpe, as places where steel is made? Is any such deal contingent on grants and funding being provided by the Government, and what would those be?
The Secretary of State will be aware of the UK’s national trade union steel co-ordinating committee, which is made up of representatives of Community, the GMB, which is my union, and Unite. It has hired the consultancy Syndex to look at alternatives to Tata’s selling its long products business. What support is being given to that work, and what pressure will the Government put on all the parties concerned to ensure that any recommendations in the Syndex report are considered and acted on?
Andy McDonald (Middlesbrough) (Lab)
My constituency exists because of iron and steel, and many of my constituents continue to work in the Teesside plant. Does my hon. Friend agree that the Community union has at its disposal incredible expertise and knowledge about processes and markets in the industry? We would be foolish to ignore that resource. It should be exploited to the full as we try to preserve the long products division of Tata Steel.
Mr Wright
My hon. Friend is right. I would like to class him as a good friend, and I take great pleasure in pointing out that West Hartlepool was a thriving industrial port at a time when his area was just sand dunes. I appreciate, however, that his area was later nicknamed “Ironopolis” and was an important part of the iron and steel industry in the 19th century. He makes an important point—why would we remove assets, both physical and intangible? Why do we not exploit the real talents that lie within the trade union movement and the work force to ensure that we have a real future for the steel industry?
With regard to the ownership of the long products division, the Government say, “Let the market decide”. However, they are intervening in other areas, producing an uneven playing field for British-based producers, to the detriment of the UK steel industry’s competitiveness. Nowhere is that more acute than in the field of energy costs, as has been pointed out time and again, including by my hon. Friends the Members for Alyn and Deeside (Mark Tami), for Middlesbrough South and East Cleveland, for Scunthorpe, for Newport East (Jessica Morden) and for Llanelli (Nia Griffith).
The future of the steel industry should prioritise low carbon and sustainability, and the task of an industrial policy is to assist the sector in the transition. It should not happen in a way that forces UK steel producers out of business or away from these shores. We should not get into a ludicrous situation where there are higher global carbon emissions because we are importing more and more of our steel requirements from countries with reduced regulation.
Steel costs more to manufacture in the UK than in European neighbours, often by as much as 25% to 50%, because the French and German Governments have prioritised the steel industry as being vital for manufacturing, have not imposed cost burdens on it and have worked to mitigate any pressures quickly. In contrast, the UK Government’s response has been half-hearted and slow, reflecting the lack of priority that they give to the steel industry.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
Does my hon. Friend agree that it would be an absolute absurdity were steel production to end up being offshored to places such as China, where processes are far less carbon-efficient and carbon emissions will be higher, and where there are serious concerns about quality standards and environmental degradation?
Mr Wright
I will turn in a moment to the traceability and sustainability of imports, but I hope that my hon. Friend will be able to catch your eye later in the debate, Mr Deputy Speaker, so that he can expand upon those points.
The Port Talbot site lost 400 jobs in July, and on announcing the redundancies, Tata Steel’s chief executive Karl Koehler said that
“steel demand and prices are likely to be under pressure for some years. Our business rates in the UK are much higher than other EU countries’ and our UK energy costs will remain uncompetitive until new mitigation measures come into effect.”
State aid approval has not been pursued with any sense of urgency or vigour, and Ministers have allowed the process to drag on. Romania was able to commence and conclude state aid negotiations within six months, so why does it take years for the UK? Help to mitigate the renewables obligation will not come into force until April 2016, despite the fact that steel firms need help now. I appreciate that the process can take time, but will the Secretary of State commit to pursuing it with a renewed sense of haste? Crucially, if approval comes forward prior to April 2016, will the Government implement the measures as soon as possible?
The Secretary of State will acknowledge that when it comes to capital expenditure decisions, especially for an industry as capital-intensive as steel, global investors will base their decisions on a dashboard of different factors, including tax, access to a skilled work force, the regulatory environment, access to markets and innovation. In that context, inward investors see business rates as a fixed cost. They do not flex with changing market conditions and industrial output. Business rates are five to 10 times higher in the UK than in European neighbours, putting British-based steel at yet another cost disadvantage compared with our competitors.
I appreciate that the system cannot be changed overnight, and the Chancellor’s announcement of a business rates review is welcome and we support it. As part of that review, will the Secretary of State confirm that the Government are looking to simplify the system and ensure that it boosts manufacturing activity? Specifically, does the review cover the valuation of plant and machinery in the business rates system?
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The hon. Gentleman is right to mention business rates, which will soon be devolved to the Labour Government in Cardiff. What discussions has he had with colleagues about creating a business rates regime in Wales that would help the steel industry in my country?
Mr Wright
That is an important point, and ensuring co-ordination across the United Kingdom in things such as tax systems and procurement measures is vital. As part of a proper industrial policy, we must champion free trade and try to stamp out unfair trade. As part of that co-ordinated response, the Government should be working with other partners. We are concerned—my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) has already touched on this—that China and Turkey are subsidising their steel exports, making it impossible for UK and European steel products to compete on a level playing field, and domestic steel production suffers.
Imports from China now account for more than a third of the UK domestic steel market, and they are growing substantially year on year. I pay tribute to my hon. Friend, who has been particularly robust on that matter. We are calling for the Government to take decisive action within the European Commission and the World Trade Organisation to clamp down hard on unfair trade from other nations, but there is precious little evidence that the Government are standing up for steel and pursuing such an approach. What are they doing to ensure that fair change? The large increase in Chinese imports in recent years also includes steel reinforcement for concrete, or rebar. China has significant excess capacity in that product, and as such is exporting it to Europe. That particularly affects Celsa Steel, which is based in Cardiff, and my hon. Friend has been an extremely strong and assiduous champion for steel jobs and that firm in his constituency.
The Secretary of State may recall that I asked him a question on this issue during questions to the Department for Business, Innovation and Skills last year. As my hon. Friend has said, there is concern about traceability within the supply chain and the failure to comply with British standards—I am sure my hon. Friend will catch your eye during the debate, Mr Deputy Speaker, but I want to flag up the issue because it raises serious questions about the structural integrity of buildings and infrastructure. In answer to my question last November, the Secretary of State said that he was in the middle of an inquiry into whether the testing process operates effectively. Will he update the House on that inquiry, as well as on its findings, recommendations and actions?
I mentioned the potential of domestic markets in energy, construction and infrastructure that UK steel producers could tap into, but far too often—I think the House is united on this—British-based steel manufacturers miss out. I have already mentioned the £790 million contract for the Forth road bridge. In the North sea we have the largest offshore wind market in the world, and a supply chain that runs along the east coast—including Tata’s pipe mill in my constituency—that is ready and eager to make the steel. Tata’s offshore processing centre in Hartlepool is geared up to provide steel tubulars and line pipe for wind turbines and their foundations.
Every time I sit at Hartlepool United’s football ground, I can look out—it is often not worth actually watching the football—and see the fantastic Teesside wind farm project. However, less than 10% of the steel in that project was produced by UK-based manufacturers, even though there is a steel industry and supply chain literally on its doorstep. That is madness, and the Government need to work harder to address that.
I am not advocating protectionism, but I urge the Government to emphasise the importance of smart public procurement that aids the industrial and employment capability of supply chains in this country. Why do they not encourage local economic benefit clauses in public procurement contracts, as other countries in Europe do? Some of the work being undertaken in sectors such as automotives and aerospace is welcome, but the Government are failing to join up the dots with supply chain capability. Why do they not work harder to provide linkages between original equipment manufacturers and firms within the supply chain, to ensure that the needs and requirements of primes are understood, and that steel producers within the supply chain can adapt and work collaboratively? For example, when the Automotive Council identifies that £2 billion to £3 billion of additional value can be created in the UK car industry by reshoring some of that work, what is the Department doing, with industry, to ensure foundation industries such as steel, as well as chemicals and glass, can be positioned to take advantage of that great opportunity? By prioritising steel as a foundation industry, and as an essential part of industrial strategy and a vital component in the ongoing competitiveness and success of other, perhaps more visible, manufacturing success stories such as Airbus, Nissan and Jaguar Land Rover, UK manufacturing could be better placed to succeed in the future.
Mark Tami
How many times has my hon. Friend been around factories to see very important machinery only to be told that it has had to be imported because it is not produced here any more, and that we used to produce it years ago but we no longer have the capability? That is very sad and shows where we are going wrong.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The shadow Minister has been speaking for 26 minutes and there are 13 speakers after the Secretary of State. I do not want to interrupt the shadow Minister—he is making a great speech—but I just ask him to bear in mind interventions.
Mr Wright
Thank you for your guidance, Mr Deputy Speaker.
My hon. Friend is absolutely right about making sure that we assess, in a strategic and co-ordinated way, a vision for the steel industry: how we want it to be linked in to a manufacturing sector that is vibrant and competitive, and how we can work collaboratively to ensure that that happens.
With that in mind, work is ongoing within the industry to produce a UK metals strategy. That is welcome. I am pleased that it is industry-led rather than top-down Government imposed, but its status is unclear and there is no evidence from Ministers that it will be accepted by Government. Will the Secretary of State state how he and his officials are engaging with the process? Will the strategy be given similar status to the 11 industrial sector strategies? How will the strategy develop and ensure it does not just consist of a nice launch and a glossy brochure, but then stays on the shelf and is not a real, meaningful and co-ordinated engagement to address the challenges and ensure the ongoing success of the steel industry?
Steel matters. It is vital to a modern and innovative economy. We need a Government who recognise that, and act to addresses the challenges and the opportunities of the industry. We need Ministers to champion it. We need a Government that will stand up for steel in this country. I commend the motion to the House.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I very much welcome the debate. It is an opportunity to show shared recognition across the House of the importance of the steel industry. In terms of basic crude steel production, we still have approximately 20,000 workers in the industry. In the steel industry more widely, we have about 300,000 workers. It is a very big and important industry, and I recognise that importance. I also recognise the anxieties that exist in the industry at the moment, notably over the future of the long products division, but also over the future of Celsa in Cardiff. We are engaging with Celsa on a regular basis, but I know the uncertainties and problems the situation presents for the work force.
The motion poses a great challenge: why are the Government not more active? I will simply speak for myself. [Interruption.] I will speak for my own personal involvement as Secretary of State before the current anxieties arose. In the course of my period in office I have been to Scunthorpe, as hon. Members would expect. I have visited Port Talbot twice. I have been to Beam Mill in Redcar on two occasions. I went to the opening of the SSI plant in Redcar, which the hon. Member for Hartlepool (Mr Wright) may recall closed under his Government, but which, with the help of my hon. Friend the Member for Redcar (Ian Swales) and others, has restarted. I have been to Celsa to discuss its very particular problems, and to a wide variety of steel-using plants involved in casting, forging, pressing and steel wire rolling, and other such installations. I have tried to engage with this industry, and understand and support it. Despite the slightly carping tone of the speech by the hon. Gentleman, I hope he recognises that there has been a great deal of engagement with the industry and some positive outcomes.
Quite apart from my own personal involvement, the Department has had three Ministers of State with responsibility for this industry, all of whom have taken a very close interest in it. The current Minister, the Minister for Business and Enterprise, would have been here, but he is at a funeral, and I personally must apologise because unfortunately I cannot be here for the winding-up speeches. However, the Minister for Culture and the Digital Economy will report back on any important issues that arise.
I will not recommend to colleagues that we vote against the motion because most of the points are perfectly reasonable—they are just telling us to do things we are already doing, and I do not object to that. It is the job of the Opposition to chase us, but on almost every item that the hon. Gentleman listed, we are taking the action he described.
Given the negative tone of the hon. Gentleman’s speech, it is worth reviewing some facts about the evolution of the steel industry. Historically, of course, it was once much bigger than it is today—it has gone through a prolonged and painful process of consolidation and contraction. However, when we entered government, crude steel production was about 9.7 million tonnes a year, whereas it is now more than 12 million tonnes and growing at about 5% to 6% a year. When I looked at the long-term time series, I was surprised to learn that the current level of production is higher than it was back in 2002 and in 1980, though the last was an exceptional year. He sought to criticise the Government, but it is worth recalling that in the Thatcher years, which are not considered to have been particularly friendly to the steel industry, steel production declined from 21 million to 18 million tonnes a year. In the rather shorter period—13 years—of the Labour Government, steel production actually halved, so the rate of contraction was substantially greater than in that difficult period of the 1980s. We could do without Labour’s sense of piousness and self-righteousness.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
It would be remiss if we did not mention Geoff Waterfield, the multi-union chair at Redcar steel works, who was the real hero behind the saving of that site during a campaign that lasted from 2008 to 2011. We also need to mention that on the Secretary of State’s watch, Thames Steel has closed, and Alcan aluminium smelter—not a steel manufacturer—in Northumberland has also closed, with the loss of 500 jobs. He needs to have a broader review of his record in this period.
Vince Cable
I pay tribute to all the members of the community who fought for the steel works and secured the reopening by my hon. Friend the Member for Redcar and others.
Of course, this is an industry with a great many problems, which I will review in a moment, and the metal sector generally has been under great pressure. I was just trying to make the simple point that the rather self-righteous tone from the Opposition is perhaps not reflected in the historical record, so I would urge a slightly more balanced approach.
Angela Smith
On the subject of the Secretary of State’s record, what representations did he make to the Chancellor when the latter proposed to introduce the carbon floor price?
Vince Cable
My Department has been engaged in active discussions with the Treasury about the implications of the carbon price floor and other environmental measures. I was going to make the point that the principle of trying to change incentives through the tax system to discourage carbon-intensive production was inspired by the Leader of the Opposition when he held this role in government, and we have maintained that green principle in taxation. Of course, that has costs for energy users, and we have sought to deal with that through a compensation mechanism, which so far has made commitments of £3 billion. I shall explain in a moment the progress we have made on implementing that.
John Healey (Wentworth and Dearne) (Lab)
The Business Secretary is urging a balanced approach. Is he aware that the shadow Business Secretary has said that trade unions at their best are wealth creators for this country? We never hear that from the Prime Minister or the Chancellor. Can we hear that, along with a tribute to trade unions, from the Business Secretary?
Vince Cable
I have no inhibitions about doing that. I am always happy to engage with the trade union movement, either at the TUC level or a community union level. On this whole issue, they have been very constructive, so I have no problem agreeing with the right hon. Gentleman.
Stephen Doughty
I am slightly disappointed by the Secretary of State’s painting of this rosy picture that the Government are doing everything listed in the motion. Certainly from conversations I have had with his Department, Ministers and others, including with the steel industry in my constituency, I am aware of a cautious, sit-back approach. Letters I have received identify that, particularly in respect of action taken at the European level. When was the last time the Secretary of State raised with the European Commission the issue of countries such as China and Turkey dumping into UK markets?
Vince Cable
When I was in Brussels a few months ago—I do not recall the exact date—I was actively pursuing the issue of speeding up state aid clearance and I have certainly actively raised trade policy issues. We support the principle of the European Commission acting—if evidence can be acquired. As the hon. Gentleman will know, getting anti-dumping action and countervailing duty action by the Commission is not easy. Proof has to be established, but we are pressing where unfair practices can be established.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I thank the right hon. Gentleman for charting and laying out the facts of the decline in steel production in the UK. I have heard from a reputable source that Ravenscraig in Scotland could have been saved by being bought by a rival, but to prevent competition from other areas of the UK at the time, British Steel chose to end production at Ravenscraig. Will he look into the veracity of that statement and perhaps report back at some other time that Ravenscraig was deliberately sabotaged and ended for purposes related to other places?
Vince Cable
I recall that when I lived in Scotland, Ravenscraig was still producing as an integrated producer. I do not know the history of why it was closed, and I doubt the conspiracy theory. I suspect that the industry was under a great deal of pressure. The simple point to make is that the industry has been contracting over three to four decades, both under British Steel—some Labour Members might remember the name of Mr MacGregor—and subsequently under privatisation, so it was not ideological.
Before I finish the point about the historic trends, let me say that the decline in employment has been far more dramatic and far more brutal than the decline in output. It is worth recalling that, back in 1980, 155,000 people were working in the industry, and there are now 20,000. We are down to little above a 10th of the total labour force. There were two major spasms when this occurred. One was between 1979 and 1981, when the industry halved in manpower—a very difficult phase. Then, during the period of the last Government, the level of employment halved again after 1997. The question we now face is whether we can avoid another spasm of contraction as a result of the difficulties faced by several leading producers, particularly Tata.
Nick Smith (Blaenau Gwent) (Lab)
On the topic of jobs, looking to the future, what binding guarantees are the Secretary of State and the Government obtaining from Klesch about maintaining jobs and ensuring greater steel capacity in the UK for the future?
Vince Cable
We are not in negotiation with Mr Klesch. He has expressed an interest to Tata about acquiring the long products division. I and my officials have had a conversation with him in very broad terms. If he wants to make proposals, we will obviously look at them, then talk to him and to Tata. At that point, the issue of conditionality might well arise, but I think the hon. Gentleman is premature on this issue.
Tom Blenkinsop
Bringing the Secretary of State back to his comments on spasms of contractions of labour in the steel industry, he will know that between 1987 and 1992, in my locality and particularly the Teesside Cast Products site, the work force went from 25,000 to 5,000. My predecessor but one, the now Lord Langbaurgh, actually celebrated that in his maiden speech in this House when he was elected in 1992.
Vince Cable
I thank the hon. Gentleman for the embellishment of the detail.
I hope it is accepted that the situation with the numbers and the trends arose under both previous sets of Governments and under both nationalisation and privatisation. Let me try to get to the bottom of the underlying problems with the industry, which are serious. The first problem is structural, and has absolutely nothing to do with decisions by industry or Government; it has to do with the nature of demand.
Technology is changing. If the Eiffel tower were rebuilt now, a third of the amount of steel that was used for its original construction would be required. Construction techniques and materials have changed. Even in industries in which steel has a major market and is a major success, such as the automobile and aerospace industries, it is already being driven out at the margin by composites. Let me give a little example. In my constituency, I am trying to bring about the restoration of a pedestrian bridge over an expressway. It is a steel bridge, but if Transport for London proceeds with the project, it will be replaced by a plastic bridge at a small fraction of the cost, and composite materials will be used. Technology, about which we can do little except to encourage it in an innovative context, is a key driver in the steel industry, in respect of both production and employment.
The second problem originated with the banking and financial crisis, which resulted in a massive cut in infrastructure spending. That cut was initiated in 2009, although, admittedly, the present Government have continued restrictions on capital expenditure. The contraction of capital spending and the ending of private finance initiative projects also contributed to the drying up of a great deal of infrastructure demand.
Thirdly and crucially, the steel industry exports more than it imports. That is a rather obvious point, but the hon. Member for Hartlepool did not refer to it. He talked entirely about import competition. What he did not mention was that for Tata and the other steelmakers, export markets are critical. A key export market is the European Union, and in the European Union there is a serious problem of excess capacity. Many steel plants in France, for example, have been mothballed. Anyone who tries to compete in the European market will be operating on very fine margins, and that is a serious problem for all the producers in Europe.
Andy Sawford
Roy Rickhuss, the general secretary of the Community union, along with steelworkers in my constituency and throughout the country, will be watching this debate. Fourteen minutes into it, the Secretary of State is still being entirely negative about our brilliant steel industry, about all its opportunities for the future, and about the solutions that we need from the Government to the problems that he is describing.
Vince Cable
In the remaining part of my speech, I shall explain exactly how we will deal with the problems faced by the steel companies, but it is right to be realistic about those problems. The companies are losing money, and we shall need to understand why they are losing money before we embark on policy action.
Fourthly, there is the fundamental problem of competition and high-productivity competitors. It is all very well to complain about unfair competition, and there may be some, but the most productive steel plants in the world are in Japan, Korea and, potentially, China. For decades there has been massive under-investment in the British steel industry. Tata has invested in blast furnaces in south Wales, but there has nevertheless been chronic under-investment, which is why there is a productivity issue in relation to overseas competition.
Vince Cable
I had already begun to deal with the cost issue. Let me explain how we are trying to offset it. Among our competitors, the French have a nuclear power industry, and the marginal cost of nuclear power is extremely low. The Germans use a lot of thermal power, but, under European rules, they have been able to grandfather the support that they have given to their industry. We have not overlooked the problem; there are very specific reasons for it.
I have dealt with the problems. Let me now deal with the major areas of opportunity, as I have rightly been asked to do. What is beginning to emerge is that successful British producers—notably Tata—are finding markets in two particular areas. One is high-quality production—alloy steels, light vehicles, aerospace—using sophisticated steels. That is where the market is beginning to consolidate and where companies are making significant margins to stay in business. The second area—again, I am very surprised the Opposition spokesman did not mention it—is exports. Within the last three to four years, exports have been growing rapidly. Tata Steel has won contracts in Singapore. We are working with it to win business in Qatar and Iraq on pipelines and other things. The future increasingly lies in export. The SSI plant, which is the big success for Redcar, has been based entirely on export production. Rather than focusing just on the problems created by import competition, let us think about this as a global industry in which good British producers have significant markets.
Those are the two areas of specialisation where British steel producers are doing well, so let me now turn to the areas of policy where the hon. Member for Hartlepool (Mr Wright) is asking us to do more: energy costs; the industrial strategy; and imports and certification.
On energy costs, I completely agree with Members on both sides of the House who argue that it is completely counter-productive to drive away energy-intensive British producers who simply pollute somewhere else. Carbon leakage is not sensible policy, so we should stop it.
We fully recognise that where British producers enjoy a cost disadvantage because of high energy costs they should be compensated, and we have agreed to compensate to the scale of £3 billion, which in an environment of fiscal pressure is by no means insignificant. In respect of one area of extra cost—the EU emissions trading scheme—compensation has already been paid; the cheques have gone out. In respect of the carbon price floor and the renewables obligations, we are in the process of trying to secure EU agreement on state aid. We have been waiting 18 months. If Opposition Front Benchers were familiar with what is happening in the European Commission, they would know that there is a major bottleneck in getting state aid clearance, not just for the UK but across the EU. It is important to reflect a little on that, because Opposition Members proclaim they believe in the EU—a belief which I happen to share—but the EU has as part of its operation something we support: strict state aid disciplines. When we are dealing with very complex problems, such as the approval for Hinkley or the approval we have recently obtained for the British business bank, those strict state aid disciplines take a great deal of time. We would be happy to bring forward compensation, subject to financial priorities, if state aid clearance could be obtained, but we are still waiting for it.
Mr Chuka Umunna (Streatham) (Lab)
Is the Secretary of State saying that the only reason why the Government—I take it he is speaking for the Government—will not bring forward the compensation package due to kick in in April 2016 is state aid approval?
Vince Cable
Yes, that is the reason. There is financial provision in a later financial year. We would clearly have to argue with the Treasury for bringing that forward, and there would be an argument, which the hon. Gentleman would have were he in government, for funding that as against other priorities. That argument has to be had, but the current constraint is state aid approval, and it is a very real one.
Vince Cable
Yes, we have that discussion on a frequent basis both at European level and internally within the Government. We are well aware of the sense of urgency in the industry and the pressure it faces from high energy costs, and we are anxious that it should be compensated as quickly as possible.
When I came into this job, we did not have an industrial strategy. We now have one. We had, as the hon. Member for Hartlepool correctly said, a strategy built around 11 sectors. We have added to that chemicals, electronics and metals. The metals strategy paper will be available later this year and will be the basis on which we can work in future with the industry.
The hon. Gentleman asked for several specific respects in which an industrial strategy could help. Let me itemise them. On R and D innovation, he is right: a forward-looking industry needs Government to support innovation. The fact that the advanced manufacturing catapult is in Sheffield is highly relevant to some of the specialist producers that make major use of it. In addition, we have provided more than £8 million for a steel industry R and D centre at the university of Warwick, which will do a lot of the innovative work in this field, so we recognise the importance of R and D.
The hon. Gentleman mentioned training. Quite apart from the across-the-board work we do on apprenticeships, we have a programme to fund 100 postgraduate researchers and 250 apprenticeships for Tata, specifically dedicated to the future manpower requirements of the steel industry.
The hon. Gentleman rightly mentioned procurement issues. One of the first problems we had to confront was procurement in the rail industry, where contracts were defined in such a way that they did not help British suppliers. We have rectified that problem. We have to operate within the laws of the European Union on procurement, but under the industrial strategy we now actively seek strategically to develop British suppliers. This is now happening in respect of, for example, energy supply chains and railways—all the recent big railway contracts are going to companies based in the UK. The point is fully understood that we have to develop British supply chains, albeit within the rules of international law that we subscribe to.
Mr Umunna
I am grateful to the Secretary of State for giving way again. Does he not accept that simply waving the flag of EU state aid approval problems in respect of the use of procurement is a red herring? So long as the benefit for growth and jobs in this country is not the sole criterion used for making procurement decisions, it can be taken into account when making such decisions. It seems to me that that is not really happening in government.
Vince Cable
It is happening, it is taken into account, and end-user industrial strategies such as those for the railways sector and the energy supply chain industries—nuclear, oil and gas, offshore wind—are operating entirely on that basis. Contracts that would otherwise have gone overseas are now going to UK producers. Why else are wind turbines being fabricated on Humberside, which we hope will provide a linkage back into the steel industry in Scunthorpe in due course?
The hon. Member for Hartlepool asked about supply chain development. I do not know whether he is aware of the advanced manufacturing supply chain initiative, which is providing support for specific supply chains. A substantial award was given to the Proving Factory, based in Sheffield, which was designed specifically to develop the supply chain within the steel industry. The things that the hon. Gentleman is calling for are happening, and we fully understand the need for them.
I turn to imports and the quality issues relating to China. I think the hon. Gentleman may have misunderstood the mechanisms involved. The testing of steel—this is a particular issue, as he correctly pointed out, in respect of rebar and Celsa—is carried out by the UK Certification Authority for Reinforcing Steel, which is an industry body not a Government body. It does the testing and tracing. As he correctly pointed out, a year ago we initiated an inquiry into whether the system had integrity and was effective. We asked the United Kingdom Accreditation Service, which is part of the BIS family of institutions, to investigate whether the certification process was working and whether the correct testing procedures were being followed. It said that, having checked, there was no particular fault within the Chinese products. We have had further strong representations from Celsa, among others, and further investigations are taking place as a result. I believe that a team from CARES is doing detailed testing in China at the moment. We want to make absolutely sure that the process is investigated. So far, no hard evidence has been found of a serious fault in the Chinese products. There may be such a fault, but we have to find the evidence and, so far, we have not done so.
The hon. Member for Hartlepool raised the topical issue of the future of Tata and Celsa. The position of Tata is straightforward: it has announced its intention to sell the long products division. As I have explained in the House before, I had a substantial discussion on this matter with Mr Mistry when I was last in India. Mr Klesch has expressed an interest in buying it, and my colleagues and officials and I have had discussions with him, although we have so far discussed ideas only at a very general level. When he has proposals, he can bring them to the Government and we can discuss them and negotiate. The whole process is at a much more general level at the moment than the hon. Gentleman hinted at in his speech.
I very much welcome the fact that Tata has engaged with the Community union to produce an analysis of the future of the industry. Perhaps that will give us a whole new set of options. It is a good initiative and we are eager to work with it. I believe strongly in the steel industry. I have been closely engaged with it since I became Secretary of State. I think it has an excellent future, but it will need continuing support from this and the next Government. As far as I am concerned, I will remain close to it and closely involved with it.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. It will be obvious to hon. Members that a large number of people wish to take part in the debate, but we have only 59 minutes left. I therefore have to impose a time limit of five minutes on Back-Bench speeches.
John Healey (Wentworth and Dearne) (Lab)
I welcome this debate and I also welcome its timing, because 2015 will be a critical year for the British steel industry. At the heart of the motion is a call for the Government to recognise the importance of the industry in the UK and to work with it and the trade unions to come up with a co-ordinated plan for its future. I hope that this debate will help to achieve that aim. The general secretary of the Community union, Roy Rickhuss, captured the imperative that faces us very well when he said:
“UK steel companies and their workers need a government that is prepared to intervene to support us on areas like energy, tax and procurement, just as they do in France and Germany”.
That is what we are looking for from Ministers today.
After nearly five years of failing economic policies, Britain badly needs a successful steel industry, not only in its own right but as a foundation industry for the success of this country’s many other advanced manufacturing sectors, including the aerospace, automotive, oil and gas and renewables industries. The Secretary of State and other Ministers brag about their economic success but, in fact, we have seen a double deficit failure. We have seen failure on the fiscal deficit, with the Government promising to balance the books by this year but instead having to admit that they are borrowing £200 billion more than they planned over this Parliament. We have also seen failure on the trade deficit. Back in 2010, the Chancellor promised an
“economy where we save, invest and export”.—[Official Report, 22 June 2010; Vol. 512, c. 167.]
He failed, and we now face a trade deficit of £110 billion a year and the biggest ever trade deficit in goods.
The steel industry and our UK companies together are positive contributors in that disastrous trade balance, involving £5 billion a year of exports. In 2013, the steel industry made a positive trade contribution of £2.4 billion. Tata’s speciality steels manufacturing, which is largely based in South Yorkshire, now employs 2,250 people, 1,050 of whom are at the Rotherham site.
That steel-making in South Yorkshire is innovative, internationally competitive and successful—27% of the sales are to the UK market, with 18% going to the US and fully half to other eurozone countries—but it is under great pressure. It is hampered by high energy costs and held back by the Government not doing all they can to back this great British industry. We have been making steel in Rotherham since the early 1800s, and Tata’s steel-making, re-melting and mill processing now supplies some of the world’s highest-quality, highest-performance metals to some of the world’s biggest and best known companies.
We have come close to losing our Aldwarke plant before, and it was only because of the trade unions, working alongside the management—led by Stuart Sansome of Community union, alongside Mark Broxholme of what was then Corus Engineering Steels—that in 2009-09 we brought that company through that period. I pay tribute to them, and I was glad to hear the Business Secretary paying proper tribute to the trade unions’ role in the steel industry.
I am very short of time now. This is an internationally competitive but internationally exposed industry, clearly suffering the effects of weak eurozone demand, exchange rate changes and, above all, as a high-intensive energy user, very high comparative energy costs.
Mr MacNeil
Are there any estimates of the effects of austerity on the steel industry, because of a lack of demand coming from the Government, in particular?
John Healey
Weak demand is always a problem for an industry such as the steel industry. Although in the past year UK demand for steel has increased by 15%, most of that has been supplied by imported steel, not UK-produced steel—that is what we have to change. It is the high energy prices that pose the risk of pricing British steel-making out of business. The full cost of energy for large energy-intensive users, such as steel makers, is €77 per megawatt-hour in the UK, which compares with €49 in France, €38 in the US and €33 in Germany. Of course when high-end products go through several processes—melting, casting, re-melting, rolling and finishing—that premium and extra cost is multiplied.
We need the Secretary of State to commit his Government to bringing in, once state aid clearance is achieved, help with the cost of the renewables obligation—that is imperative. We need help and a promise to negotiate a good transatlantic trade deal which benefits the metals industry and many of its user industries and deals with some of the problems associated with restricted procurement practices arising through the “Buy America” regime. Finally, we need to see a commitment to using any local economic benefit clauses that can be put in place in public procurement. Just as there is common ground in the industry among companies and the trade unions on the future of the industry and what is needed, we need in this House, from today’s debate, common ground among the parties.
Ian Swales (Redcar) (LD)
When I was elected in 2010, I became the representative for the large steel complex in the Redcar area—the Tata long products business, based on the Lackenby beam mill and the then mothballed Tata iron and steelmaking facilities at Redcar. I was delighted that in my early months here we managed to get a deal to have the plant taken over. Many people were involved in that, particularly a very constructive group of trade unionists; Geoff Waterfield has been mentioned, and I have no problem mentioning him again. The iron and steelmaking facilities had suffered neglect and under-investment for decades.
The integrated plant suffered a big blow in 2001 with the closure of the coil plate mill and had been slowly dying. I am delighted to see that it has restarted and I am pleased that SSI—Sahaviriya Steel Industries—has invested £1.5 billion in the site to help deal with some of that under-investment and to put pulverised coal injection on to the plant. The company has plans to do a lot more, particularly in respect of energy. Only this week the chief executive gave a very positive report to the press; despite the financial problems, the corner is being turned. It was particularly pleasing to see the recruitment of 21 apprentices and six graduate trainees recently.
I will not repeat all the points in the motion. I am pleased with the common-sense measures and played a role, I think, in ensuring that the Government will not oppose the motion. However, I want to talk about a couple of things that are not in the motion. The allowances under the EU emissions trading system are inadequate for the plant in Redcar. The way that the reference period has been established means that the business has to pay extra for emissions trading, and, in fact, the allowances are declining. We need to deal with that anomaly.
The EU is imposing best available technology on steel plants, which is, in a sense, a good initiative. Levelling up to the level of the best is especially good around emissions in the area. My constituents in Dormanstown will be delighted about that. However, the amount of investment required will take time. I draw a parallel with the clean-up of the River Tees, which was a dead river when I moved to Teesside in the 1970s. It now has salmon back, but that did not happen overnight. There was a constructive arrangement between the companies involved and the Department for Environment, Food and Rural Affairs, or whatever it was called in those days, to pace that work. We need to have that same approach on best available technology.
I mentioned Lackenby beam mill. This is an incredibly uncertain time for the workers and their families, and I certainly feel for them. The Secretary of State has visited the plant where the workers proudly told him that nine out of 10 of the world’s tallest buildings have beams from that mill. On the day he visited, they were making beams for the new World Trade Centre. That plant remains a very attractive proposition for whoever owns it.
The Secretary of State mentioned exports. The complex in my constituency is almost entirely export related. Sahaviriya Steel Industries is selling not just to Thailand but to the US, Turkey and even Germany, so producing high-quality goods is one way to survive. A lot has happened. Manufacturing is reviving after being halved under the previous Government. We have sector strategies. I hear what was said about foundation industries, and I am delighted to have pushed for the chemistry growth partnership. The steel industry may be able to propose a partnership with the Government that makes sense.
I welcome the direct support for the Tata research centre at Grangetown, which deals with high-temperature research in partnership with the Centre for Process Innovation, part of the high-value manufacturing catapult. It is now turning that centre into a material institute, with support from the Institute of Materials, academia and others.
The Tees Valley city deal majors on the Teesside industrial complex. Its wish to develop carbon capture and storage will be hugely beneficial for the steel industry. The Government set the climate for the industry. They need to have a strategic view of steel for security reasons. There are no Members in this House who have lived through a world war. There are perhaps those who were born in one. The steel industry is a strategic necessity for a country such as the UK and that needs to be factored into any thinking.
What my constituency shows is that if a company has the right products, a great work force, constructive trade unions, a supportive community and long-term investors, it can still run a successful steel business in this country.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
I will not be taking any interventions so that as many Members as possible can speak.
I welcome today’s debate and the members of Community, the Union for Life, who are in the Public Gallery. I especially welcome the general-secretary, Roy Rickhuss, and make a special mention of Ross Clark, who has travelled more than 400 miles from Dalzell steel plant in Motherwell to hear this debate.
There are two elements to the steel industry: the sector itself and the people who work in it. But who is a steel worker? Who works in our plants up and down the country? A steel worker is the office worker, cleaner, canteen assistant, instrument mechanic, electrician, welder, crane driver, fork-lift driver, locomotive driver, engineer and the list goes on and on, and that is before we start to talk about the actual process workers themselves—the people who operate the iron ore, limestone and coal yards, sinter plants, coke ovens and blast furnaces. When that iron is made it is transferred to the steel plants, the degasser units, the basic oxygen steel plants and the continuous casting plants, until we get to the raw material called steel. Then the mills shape that raw material that is so badly needed in our country—the hot strip mill, the slab mill, the plate mill, the section mill, the wire rod mill, the welded pipe mill and the seamless pipe mill. Added to those are the small foundries and fabricators and steel stockholders throughout the United Kingdom. These are the most important components of what we call our steel industry.
But it is the men and women who collectively are our most vital component, the steel workers themselves. The people who ensure that we have steel are the people who ensure that we have oil rigs in the North sea; that we have pipes bringing gas and oil from the furthest north; that we have a Channel tunnel reinforced with steel in the south; that we have the ships that sail from our ports, the planes that fly from our airports, the buses and cars that drive on our roads, the trains that go along our rail tracks, the bridges, the buildings and the white goods. I could go on and on. That is the steel industry of the 21st century.
The one thing that our steel workers have in common is the need to make sure that their steel industry and their livelihoods are supported and protected by both Government and industry alike. I take this opportunity to congratulate the Community union, which today is launching its new stand up for steel campaign with four specific pillars that need addressing. It calls on the Government to support our UK steel industry by bringing forward the compensation package for energy intensive industries to help the industry become competitive and using Government procurement to deliver for UK foundation industries.
I am reminded of an earlier reference to the contract for the new Forth road bridge. Just to make sure that hon. Members know what happened, the Scottish Government gave that contract to companies in Poland, Spain and China. That steel came 7,500 nautical miles from Shanghai to Edinburgh. There is a plate mill in Motherwell called Dalzell and Clydebridge just a couple of miles down the road. Its steel could have come 35 miles along the M8 motorway, but, no, the nationalist Government decided to look after the interests of Scotland by looking after the interests of Shanghai steelworkers. We have heard much about the intended purchase of long products, but I will leave that to others to expand on.
As a former steelworker of nearly 15 years, I know from personal experience the worries of potential redundancy from an industry that workers have spent most of their life working in. Their skills are those of a steelworker, melting materials to a red hot liquid, shaping cold steel in a rolling mill that will last for more than a century. Now is the time for the Government to stand up for our steelworkers, to stand up for steel. Our steelworkers deserve nothing less.
Jessica Morden (Newport East) (Lab)
I start by saying how important it is that the Labour party has chosen to use one of its Opposition days to debate issues affecting the steel industry, which is very important for my constituency. That, combined today with the launch of the Community union’s stand up for steel campaign, provides an extremely welcome focus on an industry that, as the Secretary of State said earlier, is still experiencing extremely challenging times, which put at risk not only the contribution that the steel industry makes to the UK today, but the role that it can play in the future as we transition to a low carbon economy. This is an industry that continues to improve its processes to be more efficient in production and can provide the steel for vital renewable energy production, and is, in itself, infinitely recyclable.
I know that the Government have argued that they are addressing some of the issues around competitiveness, but I am clear from visiting those businesses in my constituency that they have done everything they can to weather the storm, but the environment remains challenging. We need the issues raised today to remain a focus for this Government, with no complacency and real action to support and promote UK steel.
I have in my constituency Llanwern and Orb, which are owned by Tata, and BRC in Lliswerry, which is part of the Celsa group. As my hon. Friend the Member for Motherwell and Wishaw (Mr Roy) said, we should pay a big tribute to those work forces working alongside their union, Community, who, as we have said in previous debates, have had to face hard decisions over recent years. They have had to adapt, accept changes and rise to the challenge of the targets that companies have set them. As Community union says, we have the best steelworkers in the world. To support them and the steel companies, we need this Government now to implement measures, as we have heard, to alleviate their energy costs and business rates, which are undermining the competitiveness of the UK steel industry and denying us a level playing field with our competitors. We also need a more robust approach to procurement for major investment projects and a more holistic look at supply chain strategies.
Llanwern in my constituency is a swing plant and a significant energy user. Unfortunately, it does not have the same ability as, say, Port Talbot to recycle energy for electricity generation. Energy costs for that plant are particularly crucial. We know that the Chancellor announced a compensation package for the renewables obligation in the 2014 Budget but, as was said earlier, that is not scheduled to come into force until April 2016. This puts huge pressure on UK-based steel producers in the interim period. That will cost Llanwern more than £4 million per annum, going up to £5 million with the tax increases in April. This is a large sum, which our competitors in France and Germany, for example, do not pay, or pay at a far lower rate.
On business rates, I understand that some plants in my constituency pay five to six times the amount that equivalent sites in continental Europe pay. There is a difference of millions of pounds. Every time they invest in new plant machinery, their bill goes up. That is bad for competing and bad for attracting investment. The Government have been lobbied to remove plant and machinery from the business rate valuation; it would be useful to hear their response.
We welcome the review of business rates announced by the Chancellor, but it is too slow. The industry is struggling now, and as an employee at Llanwern said to me this week, “Llanwern needs help now, not over a period of years. We are a good plant that, if given an even playing field, could be one of the best producers of pickle and coil, and that would also support our Zodiac, which is one of the best in the world, not just Europe.”
I agree with all the points made on infrastructure, which would help sites such as Llanwern, Orb and BRC, as would a robust approach to considering local economic benefit, such as jobs and apprenticeships. I agree, too, with the comments on Chinese and Turkish imports, which will no doubt be raised by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), and which affect BRC in Newport as well.
In my constituency there has been investment by Tata in Llanwern on the Zodiac line and others, and help from the Welsh Government through the React and Proact schemes, but we need to know what more the Government can do, working with the Welsh Government, to help.
As my right hon. Friend the Member for Wentworth and Dearne (John Healey) said, this year is a big year for UK steel. Steelworkers in my communities need to know that the Government are prepared to intervene to support us on energy, tax and procurement, as Governments do in other countries.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
I shall be brief to enable other colleagues to get in.
Unlike others who have spoken and will be speaking in this debate, I am not from a family of steelworkers and I am not a former steelworker, but I am proud to represent the dedicated work force at Clydebridge in Cambuslang, a plant that is twinned with the Dalzell plant in the constituency of my hon. Friend the Member for Motherwell and Wishaw (Mr Roy). The two plants work together, and members of that dedicated work force are here for the debate this evening.
In the past Clydebridge and its predecessor employed thousands of people and it has a strong connection with the town of Cambuslang. My concern is that without action from the Government on points that have been made and others that I shall make briefly, we could endanger the opportunity of having not just a proud industrial heritage, but a bright manufacturing future for Clydebridge and other steel plants. That is why all of us here are seeking to ensure that the Government take these points seriously today and going forward.
It was rather churlish of the Secretary of State not to recognise that the contribution from my hon. Friend the Member for Hartlepool (Mr Wright) from the Front Bench was a responsible, reasonable position, setting out a range of issues that we want to see properly addressed. I shall focus on two. The first relates to procurement, which is vital. When we look at the number of infrastructure opportunities available in a range of sectors in the UK and Europe, we see the potential of the UK steel industry to have a significant part, which would sustain jobs and sustain an industry that is the foundation of much of our manufacturing base. It is a foundation that exists not completely but largely outside south-east England. That is good for the policies of the Secretary of State, which seek to rebalance the economy not just sectorally, but geographically. That important aspect of this debate should not be overlooked.
My other point relates to the concerns about the sale of Tata Steel’s long products division. The Secretary of State, who is no longer in his place, met a number of steel MPs a few months ago when that matter was first raised. I hope that the Minister of State will be able to respond on what action the Secretary of State has taken, because at that point he talked a good game about taking this very seriously, but in his speech he seemed to suggest that he had had only one conversation about it. That is very disappointing given that Tata Steel has said, in effect, that this is its first choice and what it wants to happen. It creates real danger for jobs in my constituency and in others owing to Klesch’s record in other places, which has caused significant and serious concern. Community and other trade unions are working jointly with their appointed specialist consultants to come up with alternative scenarios that do not involve potentially losing those jobs because of plants going to Klesch, with its very poor record. Will the Minister confirm that that is being taken seriously by his Department and that its officials are fully engaged with those alternative options? All of us here who represent plants in these areas would be much more confident and comfortable about the future if it did not involve Klesch.
The Government need to be absolutely clear about the importance of this debate. We are here to stand up for steel, but to do that effectively we need the Government to stand behind the industry and recognise its strategic importance for all of us and for the economy of the UK.
Nic Dakin (Scunthorpe) (Lab)
The Olympic stadium, the Shard, Jodrell Bank, Sydney harbour bridge, the rails on which our trains run: those are just some of the world-class products produced by UK steelmakers in Scunthorpe and elsewhere. This debate represents a fantastic opportunity for all of us in this Chamber to unite behind those working in UK steelmaking and respond to the clarion call from the Community union and others that we stand up for steel today.
The UK’s demand for steel is currently at 74% of the 2007 level, and that should cause the Government real concern. Worse still, much of the demand is met by an increase in foreign imports. Alarm bells should be ringing in Government ears and action should be taken. Since the global crash of 2008, the Scunthorpe works has experienced many challenges. Work force and management have delivered everything that Tata has asked of them. That is why the valuable Network Rail contract was won—justification for the significant investment in advanced rail manufacturing at Scunthorpe. To Tata’s credit, it has continued to invest, with record numbers of apprentices being taken on, year on year, and the multimillion pound relining of the Queen Anne blast furnace.
However, Tata’s decision to divest itself of the long products division and embark on a due diligence process to sell to Klesch Group has meant that 2015 begins with uncertainty about the future ownership of a huge amount of the UK’s steelmaking capacity. Some 6,500 people are directly employed in long products in the UK, 4,000 at Scunthorpe. In reality, far more than that—32,000 to 33,000 workers—are directly employed through contractors and the supply chain. These are good jobs providing good livings and making a crucial contribution to the UK’s economic well-being. UK Steel, in its “Charter for Sustainable British Steel”, states:
“Exports of British steel were worth £4.9 billion in 2013 and contributed £2.4bn to the UK’s balance of trade. The sector’s overall contribution to the UK economy is worth around £9.5bn a year.”
There needs to be a successful partnership between Government and the industry to respond to the urgent, critical challenges that we face. I take the Secretary of State at his word—I do think he cares—but I was disappointed that at times he appeared rather complacent. He needs to put his shoulder to the wheel to make sure that these difficult things are really delivered on. We need a co-ordinated, active industrial strategy for steel to secure its long-term future. It is a credit to the UK metals industry that it is working to produce the very first industrial strategy for metals in the UK. Will the Minister provide assurances that the Government will work with the industry to take forward the metals strategy?
As many Members have said, we need a level playing field on energy. Quite frankly, the Government’s carbon price floor tax fiasco has made things worse and given all the wrong messages on energy prices. It is good that they made a commitment on mitigation in relation to the renewables obligation, but we are in 2015 and will have to wait until 2016 for that. Come on—try to bring it forward.
As my hon. Friend the Member for Newport East (Jessica Morden) said, business rates in the UK are five or six times more expensive than our European competitors’, which is surely something at which the Government can look imaginatively. We need action to ensure that local content is pursued in the procurement process, so that if, as we hope, the renewables industry takes off in the Humber and elsewhere, UK taxpayers and energy bill payers are not funding jobs outside the UK, but securing jobs in the UK, as we would wish. We also need support, with the Government putting their shoulder to the wheel, on innovation and skills.
This debate is an opportunity for the House to say very clearly that we see steel as a foundation of the UK economy, and that we are all proud to stand behind it to ensure that it delivers a prosperous and successful UK economy in the future. I am proud to stand alongside the steelworkers in my constituency and in my community, and to stand up for steel here today.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
We have nearly reached the fourth anniversary of possibly the greatest feat of industrial escapology, when Teesside Cast Products was purchased by SSI on 24 February 2011, after nearly three years of solid fighting by its work force. At the heart of the campaign was the Community trade union. It is my pleasure to declare my interest as a current member of Community, the chair of its parliamentary group, and a former industrial regional officer who helped to save the TCP site.
I want to echo many of the comments made by my hon. Friends about the importance of steel to our local economy. I know that Tata and Community have worked closely and constructively, particularly since the worldwide recession in 2008, to manage a series of major restructurings. Under projects such as Weathering the Storm, Fit for the Future and Project Ark, thousands of steelworkers have left the industry, but they did so with the goal of keeping our industry going in the hope of expanding again later, when the recession was overcome, and most importantly, of retaining and perhaps recruiting to the industry.
It must, however, be said that the news in late October 2014 about the proposed sale of Tata’s long products plants in the UK has cast a shadow over Teesside and east Cleveland. I share the same thoughts as my friend and the Labour candidate for Redcar, Anna Turley—she has said that she is now most concerned for the workers at long products sites across the UK—as well as those of, among many others, Robbie Middlemass at Skinningrove special profiles mill, Peter Hobson at the beam mill and, of course, Paul Warren, who works at the South Bank coke ovens and is the multi-union chair at SSI. Some of them are with us in the House today.
Before the memorandum of understanding was signed on 15 October 2014, there was no consultation with the trade unions, despite the existence of long-standing information and consultation arrangements, both domestically and within the framework of the European works council. That followed Tata reneging on a nationally settled two-year secondment deal at Grangetown labs in September 2014, which was an early warning sign of a new tone, or lack of tone, from Tata. Communications between management and the work force were negligible, and Tata had had many clandestine chats with Klesch for some time.
What Skinningrove and the Lackenby beam mill produce has more than the balance sheet appeal that Mr Klesch requires; it impacts on daily life where I live. A long drawn-out process of due diligence has again unsettled that way of life for the workers and their families. They have watched workers at the ESCO works in Guisborough lose their jobs, and have wondered what will happen to them. Whether Mr Klesch picked that up during his 20-minute visit to the Skinningrove works—he never even went near the mill floor—is, at the very least, debatable.
What beats me is the logic of Tata at the moment. It has decided to consolidate its business around its strip division, which is largely based in south Wales and Ijmuiden, with a heavy focus on supplying the automotive sector. However, even now, the long products division in the UK was significantly more profitable than the strip division in the last financial year.
Tata’s subsidiary Jaguar Land Rover plans to build its new Jaguar F-Pace sport utility vehicle at Solihull, but the fact that it is aluminium-based indicates the direction in which the industry is moving. Tragically, that will come too late for the 500 aluminium smelters at Alcan in Northumberland, who have already lost their jobs owing to inaction by this Government. Aluminium is providing a serious challenge to steel strip. The reduction in energy costs through the development of smelters in low-cost energy countries is putting a strip-only strategy in serious doubt.
What makes the UK steel industry stronger is diversity within the steel portfolio. Those in the industry remember not so long ago having to defend Stocksbridge from closure. It is now booming within its sector. A diverse steelmaking sector provides mutual security for each steel division. When one does well and another poorly, they look after each other, much like in a trade union.
Even more seriously, Klesch’s strategy of playing the raw materials market in order to make longs a success—a strategy that is based on cheap iron ore surpluses—is exactly the same strategy that other competitors will be using over the next two to three years. That strategy, despite the assurances, is not a panacea. Tata’s current diverse product mix within long products means that it is closer to the customer and can provide product-based bespoke solutions. Being a strip-only producer would make it difficult for Tata Steel to integrate into integrated construction solutions.
Inside the massive sheds at Skinningrove and Lackenby are human beings who are willing to work well for the benefit of our United Kingdom—men and women backed up by the spirit, traditions and history of Teesside, East Cleveland and our nation. The trade unions that represent those men and women have played a fighting role in preserving that heritage and protecting the jobs of their members. Those trade unionists preserved the history of an industry, an area and a nation. It was the Community union, led locally by Paul Warren and nationally by Roy Rickhuss and previously Michael Leahy, that spearheaded the fight to ensure that iron and steelmaking on Teesside did not die. It won that fight. The Government must help the workers to win the fight now.
Angela Smith (Penistone and Stocksbridge) (Lab)
I welcome this debate. As has been rehearsed already today, the importance of steel to the UK economy cannot be underestimated, and neither can its importance to my local economy in south Yorkshire.
Tata’s speciality steels operation, which was referred to by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), is headquartered at Stocksbridge in my constituency. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) pointed out, it nearly went under in 2008. He paid tribute to the trade unions and the management of Tata in Stocksbridge for pulling the plant around. I also want to pay tribute to my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), who as Minister of State worked hard, alongside the unions and Members, to secure the future of the plant.
Angela Smith
Indeed, the local councils in Sheffield and Rotherham were also involved. Of course, the plants at Sheffield and Rotherham, which work in partnership, survived. They are now back to the employment levels that they had in 2007-08. I have been told that every third plane that flies over the United Kingdom has a component that was made in Stocksbridge, which is a record to be proud of.
Angela Smith
That’s cars.
What has happened at Stocksbridge has not happened everywhere. In October 2014, Tata announced that it was selling its long products division. We stand together. People in Stocksbridge do not want the plants in Teesside, Scotland and Scunthorpe to be sold off to Klesch. My uncle worked for 20 years at Appleby-Frodingham in Scunthorpe, but was made redundant after the steel strike. We do not want to see that happen again. We do not want to see steel plants in the UK placed in jeopardy. I am pleased that the national trade union steel co-ordinating committee, which includes Community, the GMB and Unite, has hired the consultants Syndex to look at the alternatives. What are the Government doing to support Syndex in its work, and what will they actively do to ensure that the UK retains a long products capability?
Sheffield was once the world’s biggest producer of steel. At one point, it made more steel than the rest of the world put together. We are proud of that legacy. We have heard a lot today about family backgrounds. I come from four generations of steelworkers, if not more. Not only that, but my grandmother was a steelworker who drew wires at Arthur Lee, along with all her sisters. We in south Yorkshire are very proud of that legacy, and the future of our industry matters. It matters economically, but it is also a matter of pride.
The Secretary of State spoke about the consolidation and the way in which the industry went into decline in the early ’80s. In Sheffield, we know that all too well. The memory of it is painful. We do not want to hear the history of the steelmaking industry rehearsed in the Chamber time and time again. What we want to hear is what the Government are going to do about the future of the steel industry. That matters to Sheffield. We want to see Ministers standing up for steel and, in doing so, standing up for Sheffield, Teesside, Scunthorpe, Rotherham and Scotland.
What needs to happen to ensure the future of our steel industry? There are three key things, and the Secretary of State, to give him his due, pointed out clearly what they were: dealing with Chinese imports; developing an industrial strategy, although we heard precious little about what that would be and what the Government would do to deliver it; and creating a level playing field in energy costs and so on. A lot has been said about energy costs, and I will not rehearse the same arguments, but I will mention business rates.
Business rates are five to 10 times higher in the UK than elsewhere in Europe, and complaints about the rates facing the steel industry are beginning to reach my ears in Stocksbridge on a regular basis. The review is not due to report until 2016, but the problem is pressing, so I want to hear what interim measures the Minister is prepared to deliver to relieve the steel industry. Will he consider removing plant and machinery from business rates valuation as a short-term measure?
The steel industry matters. It is a foundation industry, and our automotive and aerospace sectors rely on its future. What are the Minister and the Government going to do to secure its future?
Nia Griffith (Llanelli) (Lab)
Like many other Members, I would like to pay tribute to all those in the steel industry, including the trade unions, who are working hard to adapt, move, modernise and do everything they can to ensure that we are as efficient and competitive as possible. Diversity is key, as my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) pointed out, and in my constituency we have a Tata plant that makes all shapes and sizes of cans, along with holographic wrapping paper, which people might not realise is a steel product.
Procurement at all levels of government is vital to the steel industry. One key point that has been made time and again is that low demand is one of the biggest problems facing the steel industry. That is where the Government can step in and do things straight away. Why on earth did they not continue with construction projects in 2010? Why did they slash, for example, the plans for rail electrification to south Wales, meaning that we had to go through a whole process to get them reinstated? If we had pressed ahead with construction projects much faster, it would have been much better for the steel industry there and then. However, it is not too late now for the Government to turn around and push forward all the promised infrastructure projects, of which very few have been started. We need to start immediately, to provide a market for the steel industry.
Of course, we should use UK supply chains. That is possible, because community benefit clauses can be used. Other EU countries do it and get around the EU rules in that way, so we should push the boat out and be brave. We should explore the limits of what we can do and ensure that we bring home jobs for the UK. Why do we want to procure here in the UK? First, safeguarding jobs locally is vital for us, as is safeguarding the future of our industry and ensuring that we do the right thing for our balance of payments. Procuring in the UK is also environmentally better, because it means that we are not bringing products thousands of miles. We have higher standards of energy use than other countries, and carbon leakage occurs when we import from elsewhere. In other words, other countries produce more carbon in making the products than we do.
It is much like energy security—if we get rid of our foundation industries, we are for ever dependent on imports. That is why it is vital not only to keep current jobs but to create future jobs, and to keep the skills base and ensure that we always have products such as steel readily available. We will always want rail infrastructure and construction work, and we will always want to build power stations, wind turbines or whatever, so we should have steel products and the steel industry here.
We need to rebalance the economy away from financial services to the foundation industries. It is also true that the foundation industries are found more in the areas of Britain where there has been less economic development—in other words, outside the south-east of England. Rebalancing towards foundation industries helps us all across the UK.
Let me turn to research and development. In the autumn statement the Chancellor stopped raw materials qualifying for R and D credits. That decision needs to be reversed, so will the Minister ask the Chancellor to do that? Enhanced capital allowances need to be used where they will have a real impact. It is also vital that we do not shilly-shally with lots of nonsense about a referendum on staying in the EU, and put companies such as Tata in an impossible position where they would be far more likely to invest in IJmuiden than Llanelli. It is vital to send the message that we will stay in the EU. We do not want to lose the industry; it wants to be on mainland Europe where it knows it will have the market.
We need a much more proactive industrial strategy in which what we want is clear. Long-term investment is vital to steel. It cannot work, day to day, year to year; it works in decades. Energy policy has already been mentioned. Why on earth did anyone bring in a carbon floor price at that level? It was a ridiculous idea. Now, with the state aid difficulties with the energy-intensive package, we have to sort it out. It would have been far better not to have set the price that high in the first place. We were punishing ourselves, unilaterally, when we belong to a perfectly good mechanism in the EU, and our Ministers should be in there, negotiating the next stage so that the steel industry is not disadvantaged.
I fully support my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on the issue of CARES, and I am horrified at the complacency I have seen from the Government. That steel needs to be sorted so we can ensure that—
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The steel industry has a proud history in Cardiff South and Penarth, particularly in the community where I live: Splott and Tremorfa. Although East Moors steelworks was closed in 1978, Cardiff remains a major centre for steel production, especially the reinforcing bar that is used in construction and infrastructure projects—such as Crossrail—across the UK.
I am proud that my constituency is home to Celsa Steel, a family owned company. It has an EU-wide footprint with 7,000 directly employed workers and more than 30,000 indirect employees. That company puts sustainability at the core of its business plan, using a modern electric arc furnace to process 100% UK scrap, with a melt shop that ranks among the top 10% most efficient in terms of carbon emissions in the EU. I pay particular tribute to the Celsa work force and the constructive working relationship between the managing director of Celsa, Luis Sanz, and his team, including James Ellis, and also to the trade union representatives, including the Community representative, Roy Rickhuss, and the senior representative at Celsa in Cardiff, Paul Simmonds.
There is a united view in the company, and from hundreds of employees who have written to me over the past few months, as well as trade union and local Labour representatives, that much more needs to be done to back the steel industry in Cardiff and across the UK, but warm words must be backed up with substantive action. I praise the Community union Stand up for steel campaign which is being launched today. It could not be more timely.
Let me be clear: Celsa and the UK steel industry are not asking for special treatment; they are asking simply for decisive and urgent action by the Government to level the playing field. They want action not to posture or erect barriers to free trade in our globalised world, or to protect the industry from fair competition, but simply to level the playing field where damaging distortions are growing to our disadvantage. Despite countless representations, meetings and letters to the Secretary of State for Business, Innovation and Skills, the Secretary of State for Energy and Climate Change, the Minister responsible for steel, the Secretary of State for Wales—I am disappointed that he was not here today—and many others, I am sorry to say that to date those have been met with dither, delay, paralysing caution and bureaucratic handwringing.
Let me raise some key issues. The point about energy and compensation essentially boils down to a simple question: would it be crazy if steel rebar currently used in British construction and infrastructure, and made by Celsa in my constituency using state-of–the-art low-carbon technology, was instead produced elsewhere in the world where there is no such regard for emissions or the environment? Other EU countries, including Germany and France, are providing additional help to their energy-intensive industries to level the global playing field, but what has been this Government’s approach? They promised mitigation for the carbon floor price from April 2013, but that was delayed and put in place only from March 2014. Although the Chancellor announced a package of compensation for the renewables obligation in last year’s Budget, as we heard, that is not due to start until April 2016.
We now understand that the Government are heading for a significant underspend in their much-trumpeted £250 million compensation package for the energy-intensive industries in 2013-15. I was intrigued by the Secretary of State’s comments on the real reasons for the delays in the programme. I would be very interested to find out further from the Minister what is really going on. Will the Government urgently reconsider bringing forward the mitigating measures? They are needed and they are needed now.
On foreign imports, rebar from countries such as China and Turkey—this has been discussed—now occupies a third of the market. Non-EU imports have increased tenfold in the past two years. Those are extraordinary statistics. The fact is that many of those products are produced using large amounts of finite raw materials before being shipped to the UK. In contrast, places such as Celsa in my constituncy have an efficient recycling process. We have heard how overall steel imports have risen by a quarter in 2014 and now make up a massive 60% of the UK market. As has been discussed, serious questions are being raised about some of those imports from a quality perspective and a lack of traceability in the supply chain. I believe that the certifying authority for steel products, the Certification Authority for Reinforcing Steels, has been too slow and ineffective in its response to date, and so have the Government. I would like clarity from the Government on this issue.
I want to draw specific attention to the charter for sustainable British steel, which has been launched today by UK Steel and producers such as Celsa. I urge support for its reasonable and straightforward demands, urging consumers in the UK to purchase carbon steel reinforcement from vendors that adhere to the framework standard for responsible sourcing, BES 6001.
Any one of the issues I have outlined is enough to put serious strain on any business. The Minister, and the Ministers involved in this industry, should be left in no doubt that the risks are real and intensifying. They require urgent and robust action from the UK Government. If capacity is lost it may be lost for ever, with dire consequences not only for employees but our economy and infrastructure supply chains.
Sarah Champion (Rotherham) (Lab)
UK steel is critical to our economy. It employs more than 330,000 workers across the country, people whose wages are then invested in their local communities and in taxes to the Government. In 2012, UK steel’s contribution to the economy was worth more than £45 billion. Clearly, UK steel reaps strong benefits for the whole economy.
Steel has a strong history in Yorkshire and the Humber, and currently employs almost 7,500 people in the region. I want to compete with my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith). The specialist steel contribution of my constituency means that every five seconds an aircraft reliant on Rotherham steel takes off or lands somewhere in the world.
The impact and reach of the UK steel industry are vast, and it is our duty to ensure they remains so. However, keeping the industry strong means creating a level playing field, a situation that does not exist at the moment. Our steel firms are severely disadvantaged both by business rates and energy costs. On energy in particular, prices paid by UK steel firms are more than double those paid in competitor countries such as Norway and Germany. High energy prices, combined with business rates five to 10 times higher than in other European countries, mean that UK steel finds itself at a severe disadvantage when pitched against manufacturers in the EU and internationally. The Chancellor proposed a review of business rates in the autumn statement. I welcome that, but we need action more quickly than the promised 2016 report. UK steel needs to be competitive now.
We already face the threat of a significant loss to the industry, with the sale of Tata Steel’s long products division. I, and a number of my constituents, have expressed our strong concern about that. I ask that the Government strongly consider giving a commitment to work with Syndex and the unions to look at alternatives to the sale.
In Rotherham, the same failure to consult has been replicated locally in the move of 135 research and development jobs to Warwick. The R and D staff in Rotherham are world-class experts dedicated to working in this specialist field. Tata Steel is asking to move them, uprooting them and their families, to Warwick or they potentially lose their jobs. That seems deeply unfair. The relocation is a lose-lose situation: Tata could lose skilled workers and those workers could lose their livelihoods. I ask today that the Government intervene to support Rotherham’s R and D team by working closely with Tata Steel and the unions to establish an alternative solution. It is not right that such a concentration of highly skilled workers is lost, particularly, as the Secretary of State said, as the advanced manufacturing centre’s catapult scheme and the steel proving factory are both in Rotherham.
Ultimately, we want steel to thrive in the UK, because it is a critical part of our supply chain, but the future sustainability of the industry will be under threat, unless the Government act quickly and strategically to safeguard UK steel. The industry needs a Government willing to act now on energy tariffs and business rates. We need a Government who will proudly fly the flag for UK steel across the world. We need a Government who not only commit to supporting the industry, but follow up with action. The UK steel industry can have a strong future, but only if we act now to protect it.
Dr Hywel Francis (Aberavon) (Lab)
I am proud to be a member of Community and a founder of the all-party group on steel in the 2001 Parliament. I also draw the House’s attention to my entry in the Register of Members’ Financial Interests, which refers to the fact that I had the privilege of addressing the Community biennial conference last year.
I represent the proud steel town of Port Talbot. The late great Jack Thomas, of the Union of Construction, Allied Trades and Technicians, once said that Sir Brian Moffat wore an Aberavon rugby jersey. I am not sure whether he always wanted to wear it, but I am proud to wear my Aberavon rugby tie today.
This has been a good, constructive and timely debate, and it has raised the key issues of energy costs, the importance of steel as a foundation industry and—the point I want to elaborate on—the importance of co-operation among the unions, management and the Government. In Port Talbot, we have developed an important initiative, called “the journey”, which in essence is a microcosm of that co-operation. Given the many important issues, it is understandable that duty of care has not been mentioned. The steel unions, particularly Community, have a proud record of representing their members, but they also have a duty of care to the steel industry. I want to mention two aspects of that: first, safety; and secondly, pensions.
My cousin, Ian Powell of South Cornelly, a mill boy aged 16, was killed in the steelworks at Port Talbot, and shortly after I was elected in 2001, Len Radford, Stephen Galsworthy and Andrew Hutin were killed in the terrible explosion in the No. 5 blast furnace. No one in the steel industry needs reminding of the price of steel. In my regular discussions with steel union representatives, including Alan Coombs, the national vice-president of Community, John Tetsill, also of Community, and David Bowyer, of Unite, safety is always the first issue discussed. In these straitened, strained and difficult times, safety should remain the top priority. In our discussions with the hub director of Strip Products UK, Mr Hridayeshwar Jha, he has recognised that point too. Recently, we have been discussing the issue of contractors working at height and the need for the proper training of scaffolders, particularly contractors.
On pensions, frequent mention has been made of the future ownership of the steel industry, and there is great concern across the industry about what will happen to the steel pensions scheme. The Government, employers and unions need to recognise the importance of their duty of care to steelworkers past, present and future.
When I entered the House in 2001, there was an enormous air of uncertainty, and as I leave the House, in 2015, there remains an enormous air of uncertainty around the steel industry. In between, particularly in Port Talbot, there have been many redundancies, but there has also been considerable investment, much of which has been off the back of the effective co-operation developed between the unions and the management. I also commend the Welsh Government—this has not been mentioned—for supporting, training and helping steelworkers past and present. I hope and trust that the co-operation among unions, employers and Governments, which we Labour Members have urged tonight, will be achieved in order to sustain this important industry, which is vital for this country.
Ian Murray (Edinburgh South) (Lab)
I declare my interest as a member of the wonderful Community union; I am very proud to be so. We have had an important and critical debate, sending out a strong message not just to the steel industry that we stand up for steel, but to the Government that more needs to be done. It is a sad indication of the Government’s commitment to this issue that we have heard only one speaker from the Government side—the hon. Member for Redcar (Ian Swales)—and nobody from the Conservative party. The Government Benches have been almost completely empty for the majority of this debate. This is not to belittle the contribution of the hon. Member for Redcar, but if someone lives in Redcar and wants a party that stands up of for steel, they should vote for the Labour party and get their MP on the Government Benches.
It is worth emphasising the importance of the industry to this country. The UK steel industry and associated metals sector has 24,000 firms employing more than 330,000 people and generating £45.5 billion in the UK economy. Every directly employed job in the sector sustains a further three jobs in the wider economy. Today’s debate is important, too, because steel is a foundation for supply chains of strategic sectors such as aerospace, automotives, construction and energy, which are so important to the UK economy. The debate is important because steel is an essential part of a low-carbon, resource-efficient future.
All these points have been raised consistently by my right hon. and hon. Friends, and particularly in the wonderful opening speech made by my hon. Friend the Member for Hartlepool (Mr Wright). The Secretary of State was ungenerous in his praise for my hon. Friend. I thought my hon. Friend made a very positive speech, outlining the industry’s problems, and it is important to raise with the Government our concerns about their actions in supporting the sector.
There is no bigger or more passionate supporter in this House of steel and manufacturing than my hon. Friend the Member for Hartlepool. He stands up for his constituents’ jobs and he stands up for his constituents in promoting the steel industry. Indeed, we should call him “Mr Hartlepool” and “Mr Manufacturing”. He does so much for current generations in Hartlepool and looks after the future as well. During his opening remarks, my hon. Friend was right to say that steel has to be a key part of the vision of a modern innovative economy. The UK steel and metal sector, as our motion rightly makes clear, provides highly skilled jobs—not just in my hon. Friend’s constituency, but throughout the United Kingdom, and we have heard contributions from Sheffield, Scunthorpe, Corby, Cardiff, Port Talbot, Newport and Clydebridge and Motherwell in Scotland.
My hon. Friend was absolutely right in his opening remarks to highlight the significant economic contribution that those facilities make through the wealth created by the plants and by the workers who make the steel. The wealth that is circulated in firms in the supply chain and businesses in those areas, not to mention through the steelworkers themselves, is often the foundation of many local economies. My hon. Friend stressed that the steel industry is the foundation of many valuable sectors of the economy, forming part of a number of important value chains in which Britain has a competitive advantage.
I have a number of pages to my speech and I would have liked to have run through them, but it is probably much better to reflect on the wonderful contributions made by my right hon. and hon. Friends. We heard speakers from Wales, from England and from Scotland who all had two things in common: standing up for steel and being Labour Members. Members from no other party—apart from the hon. Member for Redcar, who I am delighted to see back in his place—spoke in this debate.
I was delighted when my right hon. Friend the Member for Wentworth and Dearne (John Healey) mentioned the contribution of the Community union to this debate and reminded us that the union’s general secretary said:
“UK steel companies need a UK Government that can intervene just as they do in France and Germany.”
That was brought out as part of the general debate. My right hon. Friend also spoke up for his Aldwarke plant, explaining how it was saved in the past by proper co-operation among the trade unions, the Government and the owners.
Let me especially mention and pay particular tribute to my hon. Friend the Member for Motherwell and Wishaw (Mr Roy)—a steelworker himself for many years. Whenever he speaks in this House or when we speak privately and professionally together, he talks of his love for the steel industry. He stands up for his constituents in Motherwell and Wishaw, and he is a strong advocate of steel and jobs in his constituency. I was struck by what he said about all the processes involved in the steel industry. It is not just about forging and blacksmiths; it is about the cleaners, about the accountants, about the drivers, and about the wider supply chain. It is about every single business that the industry supports in his constituency.
My hon. Friend also referred to the Scottish Government’s approach to the steel industry. It was an absolute dereliction of duty for them to import £790 million-worth of steel from Poland, Spain and China for the new Queensferry crossing when there was a plant 35 miles down the road. We need Governments to stand up for industry in this country, rather than being full of rhetoric about standing up for it. Standing up for it in practice is slightly different.
We heard a valuable contribution from my hon. Friend the Member for Newport East (Jessica Morden), who rightly pressed the Government to do more. That has been a common theme in the debate. I hear the members of the Scottish National party chuntering behind me, but the facts speak for themselves. Moreover, none of them contributed to the debate, just as they did not contribute to debate on the urgent question on steel that was asked back in November. My hon. Friend spoke of the pressures on the steel plants in her constituency. As she explained, Tata and other companies have invested in key industries in her constituency for many years, but they cannot continue to do that in isolation, and the Government must help.
The Clydebridge plant in Cambuslang is in the constituency of my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex). It is a centrepiece not just of the constituency as it is now, but of the constituency’s industrial heritage. However, as my hon. Friend reminded us, it should be not just part of the past, but part of the future. He pointed out that procurement was vital, and, like many other Members, he mentioned the dangers involved in Tata’s sale of the long products division to Klesch, which has been raised in a number of other debates.
My hon. Friend the Member for Scunthorpe (Nic Dakin) speaks passionately about the steel industry in his constituency. He is one of the many Members who spring to mind and are always talked about in the same fashion when steel and manufacturing are discussed in the House. He was right to praise Tata’s contribution to the United Kingdom in the form of investment in skills and diversification—it has invested in a number of industries—but he was also right to worry about the future. That, too, was a common theme in the debate.
My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) spoke of the way in which the trade unions, Tata and the regions worked together to improve the position of the steel industry following the 2008 worldwide crash. He made a point that was at the heart of the debate when he said that it was all about livelihoods—people’s lives and communities—and not just about steel manufacturing and Government intervention. The Minister may wish to reflect on some of his comments.
My hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) told us that four generations of her family had worked in the steel industry, including her grandmother. I think that that is a wonderful model for those working in the industry.
The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
And her grandmother’s sisters.
Ian Murray
The Minister may want to mention that in his speech. We were also reminded earlier of the contribution that my hon. Friend made in highlighting the Government’s decision about Sheffield Forgemasters.
My hon. Friend the Member for Llanelli (Nia Griffith) spoke about the steel industry in her constituency. She said that it was a proud British industry that should form an integral part of the future. My hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) pointed out that, in a globalised world, we did not want protectionism; all we want is a level playing field. I think that that is a very sensible and pragmatic approach. My hon. Friend the Member for Rotherham (Sarah Champion) is not just called Champion; she champions the steel industry and jobs in her constituency.
My hon. Friend the Member for Aberavon (Dr Francis) is a founder member of the all-party parliamentary group on steel and metal related industries. We shall certainly miss his contribution to steel debates when he leaves the House later this year. He ended with a poignant reminder of the dangers involved in the industry; we should all remember those whom he lost in the tragedies in his constituency.
We have had a wonderful debate, which has shown that Labour Members, at least, stand up for steel. Our motion makes clear the importance of the steel industry to this country. The industry supports tens of thousands of jobs, and supports many of the supply chains that are key UK sectors. It supports communities and livelihoods. The Government must provide a co-ordinated response that involves energy-mitigation measures, challenges the European Union in regard to certification and safety, and supports an active industrial strategy for the metals industry in the United Kingdom. It is time for the Government to stand up for steel. Labour clearly stands up for it, but we want the Government to support it as well. I commend our motion to the House.
The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
Let me begin by agreeing with the hon. Member for Edinburgh South (Ian Murray)—who lived up to his reputation as an articulate and passionate Member of this House—that this has been a good and important debate on the steel industry. It is important to note that there will be no Division at the end of the debate, because the Government take no issue with the Opposition motion.
The hon. Member for Hartlepool (Mr Wright) set out a coherent and passionate case for what he perceives to be the issues affecting the steel industry in this country, and there was some suggestion that the Secretary of State replied to him in a somewhat churlish manner. I have worked closely with the Secretary of State for many years now, and I have to say that I have always found him to be one of the more congenial members of the Government, and I simply think that perhaps his manner was misinterpreted. He was perhaps less churlish and more wounded. That is how I would characterise the Secretary of State’s response, because he clearly articulated the many visits he has made to the steel industry itself and industries that use steel, and his great engagement with the industry, and his own perception that he is engaged with, and seeking to provide solutions to, many of the issues highlighted by the hon. Gentleman.
This has been a good and passionate debate because so many Opposition Members have strong links with this industry. As the hon. Member for Edinburgh South noted, we heard speeches from those who have worked in the steel industry and those whose families have a long and distinguished history of working in this brilliant industry. It is an industry that began in this country hundreds of years ago and, as some Opposition Members know, I have a tenuous connection with it as my father wrote “The History of British Steel”, published 40 years ago. My father had a somewhat waspish sense of humour; he died 30 years ago, and I suspect he would find it mildly amusing that his son has now spoken in three debates on the steel industry on behalf of the Government despite not having formal responsibility for the industry. However, I can tell Opposition Members that should they ever call a debate on the south London barge-building industry, I will be there to talk about the history of the Vaizeys who worked in that industry from the mid 19th century until just after the second world war.
We heard passionate contributions from the right hon. Member for Wentworth and Dearne (John Healey), who talked about energy tax and procurement, and the hon. Member for Redcar (Ian Swales), who has Tata in his constituency. We also heard from the hon. Member for Motherwell and Wishaw (Mr Roy), who has worked in the steel industry, the hon. Member for Newport East (Jessica Morden), the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), who talked about the infrastructure opportunities for the steel industry, and the hon. Member for Scunthorpe (Nic Dakin), who talked in detail about the long products division potential sale, which I hope I will have a chance to speak about. The hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) also talked about the long products division and is a worthy successor to that great former Member of this House, Ashok Kumar, who, as well as having been a distinguished Member of this House, is the only Member who has ever read John Vaizey’s “The History of British Steel”. We heard, too, from the hon. Members for Penistone and Stocksbridge (Angela Smith) and for Llanelli (Nia Griffith), and the hon. Member for Cardiff South and Penarth (Stephen Doughty), who talked, obviously, about Celsa in his constituency. My hon. Friend the Member for Vale of Glamorgan (Alun Cairns), who is sitting on the Front Bench with me, has been passionately involved in this issue, as indeed has the Secretary of State for Wales, who was in the Chamber earlier discussing the issue with me and the Business Secretary.
The hon. Member for Rotherham (Sarah Champion) made the point that every five seconds a plane made with steel from Rotherham takes off or lands—challenging, in effect, the hon. Member for Penistone and Stocksbridge (Angela Smith), who was only able to say that of one in three planes flying overhead. The final contribution was from the hon. Member for Aberavon (Dr Francis), whose daughter went to school with my hon. Friend the Member for Vale of Glamorgan, and whom we are sorry to see retiring from the House.
Mr Frank Roy
Before he sits down, would the Minister like to tell the thousands and thousands of steelworkers’ families watching or reading this debate what he is going to do for their future?
Mr Vaizey
If I am unable to answer any of the specific questions that were asked in the time allocated to me, the Minister responsible for the industry will write to each and every Member who has contributed to the debate.
The main issues that arose from the debate are the need to compensate the steel industry for the high energy costs resulting from the renewables obligation and other mechanisms designed to reduce carbon, a procurement strategy as part of a metals strategy, business rates, the future of the long products division, and CARES. As the Secretary of State explained at length, we are giving as much energy compensation as we are allowed to give under European rules. We are working as fast as we can to get state aid clearance, so that we can increase the level of compensation. We are working with industry to introduce a metals strategy. We hope that such an industry-led strategy will be produced in the next few months, to be published, provisionally, in the summer.
The future of the long products division is a very serious issue and Ministers are engaged with it. The Prime Minister and the Business Secretary met north Lincolnshire MPs, and the Secretary of State and the Minister with responsibility for such matters met Klesch. As I understand it, our officials are supporting the Syndex report, which will be published this month and will look at the rationale for sale and alternative proposals. We hope that the proposals will come forward at the end of February or the beginning of March. Those could include a commercial solution or working with organisations such as the Green Investment Bank or Infrastructure UK.
As has been well trailed, an extensive review of business rates is being undertaken, and a £1 billion package of business rate support is already in place. We do understand that the steel industry, like other large industries, is concerned that new investment in plant and equipment affects the business rate valuation, thereby increasing business rates. It wants such new investment to be excluded, and I would expect the Treasury to consider that as part of its ongoing consultation. However, Members should understand that this includes the whole business rate framework, and needs to be consulted on.
Tom Blenkinsop
Perhaps the Minister can give a succinct answer. Given that the Government are not opposing the motion, they must support it. The motion
“urges the Government urgently to reconsider whether mitigating measures on energy prices, planned to start in April 2016, can be brought forward”.
Could they be brought forward before or at the Budget?
Mr Vaizey
We are in the hands of the European Commission. There is a bottleneck on state aid and, having previously dealt with a state aid issue myself, I know that despite time being of the essence from the UK Government’s perspective, that is not always the Commission’s view. On energy prices, I remind Members that France has the benefit of extensive nuclear power, and Germany has the benefit of having grandfathered previous state aid rights into its current energy prices and state aid support.
As I have said in other debates, the important issue of rebar has been looked at in some detail and we have asked CARES to examine how it is dealing with it. It has increased sampling and checks—
Ms Rosie Winterton (Doncaster Central) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question put and agreed to.
Resolved,
That this House recognises the importance of the UK steel industry including as a provider of highly-skilled jobs and research and development; values the steel supply chain which supports strategic industries such as automotive, aerospace and construction; notes with concern Tata’s proposed sale of its Long Products Division and the impact this could have on UK steel industry capacity; welcomes the efforts of UK steel producers to cut carbon emissions and expresses concern that losing trade to countries with less efficient processes could increase global carbon emissions; further notes with concern that some steel imports do not meet British standards; calls on the Government to recognise the importance of the steel industry and to work with it, the Scottish and Welsh Governments and trade unions to provide a co-ordinated plan for the industry’s future; urges the Government urgently to reconsider whether mitigating measures on energy prices, planned to start in April 2016, can be brought forward to support the competitiveness of UK steel producers, to press the European Commission to launch an inquiry into the CARES certification of imported steel products to ensure safety and traceability and to take action through the EU and World Trade Organisation to challenge the uncompetitive subsidisation of steel products; and further calls on the Government to introduce an active industrial policy for the metals industry, including strengthening supply chains, strategic approaches to public sector procurement, encouraging innovation, skills development and resource efficiency and providing support for steel exporters.