UK Steel Industry
Ms Angela Eagle (Wallasey) (Lab)
I beg to move,
That this House has considered Tata Steel’s decision to sell its UK steel operations; and action the Government is taking to secure the future of the UK steel industry.
Mr Speaker, may I place on the record my thanks to you for granting this debate under Standing Order No. 24? Such debates are rare, but the situation facing the steel industry cannot be categorised as anything other than an emergency. Today’s debate provides an opportunity for the Secretary of State to come to the House with a comprehensive plan to secure the future of our vital steel industry which is hanging by the thinnest of threads. Anything less from him will be an abdication of his duty.
Yesterday, the Secretary of State said he was looking at the possibility of “co- investing” on commercial terms. I hope he will take the opportunity to explain to us in more detail exactly what this means. Call it what you like—“co-investing”, “part-nationalisation”, “temporary public stewardship” or “sheltering the assets”—it is clear that circumstances might require the Government to do this. They should spare their ideological blushes and just get on with it.
It is also important that today the Business Secretary hears directly from Members of Parliament who represent steelmaking communities. Between them, they have great expertise and knowledge that I hope will inform his response to the crisis from now on. Up until now, the Government and the Secretary of State have been found wanting. They have been behind rather than ahead of events. Their response to the biggest crisis in steelmaking for a generation has been warm words but little effective action. There has been what can only be described as an ideologically driven reluctance to get involved as the crisis has deepened. It has been a mixture of indifference and incompetence.
Simon Hoare
The First Minister of Wales has called on all parties to come together to work towards a future, rather than—for want of a better phrase—political point scoring. The hon. Lady is very passionate on this issue, as we are on the Government Benches—it is vital that we have a British steelmaking sector—but will she assure the House that she and her colleagues are taking that combined political approach between the parties to secure that future, rather than trying to drive a wedge between the parties?
Ms Eagle
We will judge the Government by their actions and their achievements rather than their words.
The complete absence of either a manufacturing strategy or an industrial strategy has hampered the Government’s ability to think strategically about what is needed, and never has it been more urgent that the Business Secretary does so. This is urgent because on 29 March Tata announced it would sell its entire steelmaking operations in the UK, leaving the future of the UK steel industry hanging by a thread and putting 40,000 jobs in communities up and down our country at imminent risk.
Mr David Anderson (Blaydon) (Lab)
As someone with a Tata presence in my constituency, I wonder whether the shadow Secretary of State shares my concern that although we knew about this on 29 March—people going to Mumbai knew it was going to happen—we have not discussed it formally until today, and yet three years ago, the Prime Minister reconvened the Chamber within two days, during an Easter recess, to talk about the death of Margaret Thatcher. What does that say about the Government’s priorities?
Ms Eagle
It is regrettable that there was not a recall of Parliament, but we are where we are, and we have this debate now, thanks to you, Mr Speaker.
It is imperative to underline the fundamental importance of this industry for our economy and our country. Steel is a foundation industry. While it might make up just 1% of total manufacturing output, that output is crucial. I believe that our world-leading automotive, aerospace and defence industries and our rail and construction sector all depend on a strong and sustainable domestic steel industry.
Our manufacturing sector is already facing tough times. The Secretary of State said yesterday in the House that manufacturing was up since 2010, but Office for National Statistics figures show a different picture. Manufacturing output in the last quarter of 2015 remained frozen at the level of five years ago, while output in January was actually lower than the year before and is still 6.4% down on the same period before the global crash.
In his 2011 Budget speech, the Chancellor espoused his vision of a Britain
“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
But he has failed to match his rhetoric with reality, because since then the manufacturing sector has actually shrunk. His much promised rebalancing of our economy has in reality failed to materialise. In this context, the challenges facing the steel industry represent an existential crisis for the UK’s manufacturing sector as a whole. I do not believe we can safely allow it to shrink further. And I for one am glad that the Government appear finally to have realised this.
Now we need action. Beyond the impact on manufacturing, the crisis in the steel industry matters for the wider economy too. Much has been said about the cost of supporting our steel industry, but far too little has been said about the costs of letting it be destroyed. Recent estimates show that its collapse would lead to additional costs to the Government of £4.6 billion through reduced tax receipts and increased benefit bills. It would also suck demand out of the economy, reducing household spending by £3 billion in the next decade. There would be secondary shocks, too, especially in the steelmaking communities up and down the country. For example, Tata is the biggest business rates payer in Rotherham, with an annual bill of £3.2 million. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) pointed out today, the loss of this revenue stream to the local authority is equivalent to a 1.8% increase in council tax there.
Ian C. Lucas (Wrexham) (Lab)
Does my hon. Friend agree that the way forward was shown by the Labour Government before the 2010 general election, when they introduced the car scrappage scheme to support our automotive sector? It was supported by all parties in the House at a time of dire threat to the sector. As a result of intervention and an intelligent industrial strategy, the automotive sector was preserved and now prospers. Is not that the model we have to follow?
Ms Eagle
My hon. Friend is absolutely right. I hope that the Secretary of State is taking note.
The loss of our steel industry would worsen our already record-breaking trade deficit, which is now the worst since 1948. The value of the goods and services we import now exceeds the value of those that we export by £32.7 billion. The loss of steel and our current exports of steel combined with the need to import far more steel would make this barely sustainable record deficit even worse.
Beyond the economic cost, there would also be an intolerable social cost. There are 15,000 jobs directly at stake in the industry and a further 25,000 jobs at stake in the wider supply chain. These are the kind of high-skill, high-paid jobs of which we need to see more. The end of steelmaking in the UK would be devastating for 40,000 workers and their communities. Some people have highlighted the potential costs of intervening to save the steel industry, but I believe the costs of letting steel fail are far greater.
Richard Fuller (Bedford) (Con)
I do not want to pre-empt what the hon. Lady may say, but will she confirm that it is the policy of Her Majesty’s Opposition that the steel industry should be nationalised, and should remain in public hands until it can successfully go back into private hands?
Ms Eagle
What needs to be done is what is necessary to preserve, restructure and ensure the survival of our steel industry for the future. That is the Government’s job. We will be as supportive as we can—I shall set out some parameters later in my speech—but this is about the Government getting their act in order. The Opposition are holding the Government to account for their actions, rather than just their words. That is what this debate is about.
Mr Clive Betts (Sheffield South East) (Lab)
On that point, we heard nothing yesterday from the Secretary of State, either at the meeting of the all-party group on steel and metal-related industries or in the Chamber, about what action the Government will take on energy costs and business rates—costs that are burdening the steel industry, and on which the Government could act, yet we have seen no sign at all that they will change their policies in these vital areas.
Ms Eagle
I hope that we will have the chance to hear about concrete action from the Government in this debate.
I was talking about the costs to the community of letting steel fail. The costs to manufacturing and the economy are high, but the costs to the workers and their communities would be much higher. We very much welcome the recent commitment from the Business Secretary to do everything he can to protect steel-making and processing in the UK, but this Business Secretary has form. Warm words are all very well, but they are worthless, as the community in Redcar know to their cost, unless they are followed up with meaningful action.
Opposition Members are in no doubt that there are huge challenges facing the UK steel industry, but we believe that it can have a strong and sustainable future, and we know that decisions made by this Government now will ultimately determine whether it does. That is why I welcome the commitment the Business Secretary appeared to make in yesterday’s statement to what he called co-investment. Perhaps he will tell us whether he is considering co-investment to save the blast furnaces at Port Talbot, because we did not get an answer to that question in yesterday’s statement.
Will the Business Secretary confirm here and now that he will avoid a fire sale of these assets, and ensure that irreversible mistakes are not made in the way that they are sold? If Tata is to act as a responsible seller, it must consider only those offers that seek to maintain both upstream and downstream assets—that is, both the strip business at Port Talbot, and the specialist business based in and around Rotherham, Stocksbridge and the rest of south Yorkshire. The Government must also make sure that enough time is made available to ensure that an appropriate consideration of responsible offers can take place. It took nine months for the Scunthorpe deal to be developed, yet Tata has indicated that it wishes to exit the UK in four months. What is the Business Secretary doing to reassure the existing customer base that their current and future contracts will be fulfilled during this period of uncertainty? The plants cannot be saved if their order books disappear.
Let me turn to a number of areas where I believe the Government can make a positive difference. The most significant cause of the crisis facing the steel industry is the dumping of huge amounts of cheap Chinese steel on the market. It is priced below the cost of production; Chinese state-owned steel companies are making billions of pounds in losses, yet they continue to pour out more and more product. UK steel producers simply cannot compete with this state-subsidised unfair trade, which is threatening to destroy the European industry as well as ours. We are not calling for protectionism, but we are standing up for fair trade, and calling for quick and effective tariffs that will help to level the playing field. The Business Secretary must abandon his opposition to the abolition of the lesser duty rule and block unfair Chinese imports.
Granting market economy status to China must not be automatic. China meets only one of the five criteria that must be met if this status is to be granted, yet the UK Government support granting market economy status to China as early as the end of this year. Action to level the playing field using trade defence instruments, and on market economy status for China, would give potential buyers of Tata’s UK steel operations the surest sign that the Government stand ready to act.
On procurement, the Government should take concrete action to ensure that UK steel producers are able to benefit from large public sector contracts. The Ministry of Defence will spend £178 billion on defence equipment over the next 10 years, yet the Conservative-led coalition Government scrapped Labour’s defence industrial strategy, which made British jobs and industries the first priority in all decisions on MOD contracts. We are now in the deeply regrettable situation of an aircraft carrier, British surface ships and armoured vehicles all being manufactured in the UK with mainly imported steel, when, with more planning, our domestic industry could have supplied those needs.
The Government must also take action on infrastructure investment. Despite all the Government public relations about this, public sector net investment in the UK will in reality be lower as a percentage of gross domestic product at the end of this Parliament than at the start, and half what it was under the last Labour Government. Of the projects announced in the Government’s infrastructure pipeline, just one in five is actually under way. For the sake of our steel industry and the wider economy, Labour calls on the Government to bring forward shovel-ready projects that require a significant amount of steel, and to ensure that the changes to the procurement rules, which the Government keep boasting about, actually begin to make a difference.
Ian C. Lucas
I would like to share with my hon. Friend the fact that I received a letter from the Prime Minister yesterday praying in aid and praising an infrastructure project investment in the railway between Wrexham and Chester. However, this is being funded by the Labour Welsh Government and, unfortunately for the Prime Minister, it appears to be the only example that he could put forward of investment in rail in north Wales.
Geraint Davies (Swansea West) (Lab/Co-op)
Does my hon. Friend share my concern that certain major procurement projects, such as High Speed 2 and nuclear, are being given to the Chinese? My fear is that they will naturally want to use Chinese steel. Also, if these were British companies, they would be paying British corporation tax, national insurance and income tax, and would be developing supply chains and export capacity. Does my hon. Friend share my fear that there is no proper joined-up industrial strategy to protect our jobs and our future?
Ms Eagle
I agree with my hon. Friend, and when we see the Chancellor travelling around China and asking the Chinese to bid for all these contracts, it is hard to avoid realising what is happening.
Business rates represent a far higher cost for UK steel producers. There had been reports that the Government were planning to exempt plant and machinery from business rates, which EEF has described as a “tax on investment”. The Chancellor reportedly even costed this change with a view to including it in his now infamous Budget last month before dropping it at the last minute. It seems that the measure, which would have significantly improved the future prospects of the industry, was sacrificed in pursuit of his economically illiterate and increasingly unachievable surplus target.
I said earlier that part of the problem is ideology. Labour has been calling for a modern and intelligent industrial strategy, and I am pleased to say that in yesterday’s statement the Business Secretary actually uttered the words “industrial strategy” for the first time. Now that that Rubicon has been crossed, all we need is action to match the words. Today, let us spare a thought for the thousands of steelworkers whose futures hang in the balance. The Government ignored the warning signs for far too long, and now they must act to find a suitable buyer, and to work with the steel producers, the workforce, and the clients and customers to ensure that the industry is placed on an even keel. The cost of failure, both economically and socially, is unthinkable. We need urgent action to save our steel.
The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)
The whole House will have been deeply concerned by the crisis that has affected the global steel industry over the past year. The facts are familiar, but they bear repetition. Around the world, steelmaking capacity is about 35% higher than demand. In China alone, excess steel capacity is 25 times the United Kingdom’s entire annual production. Demand has slumped in China as its economy grows, and demand here in Europe has yet to return to pre-crash levels.
That surge in supply, coupled with a fall in demand, has inevitably led to a large fall in prices, and the knock-on effect for steelworkers around the world has been, quite simply, devastating. Here in the UK, we have sadly seen the closure of the SSI plant in Redcar after its Thai parent company ran up unsustainable losses. Across Europe, some 70,000 steelworkers have been laid off since 2008. Last week we heard that the United States Steel Corporation, the biggest steelmaker in the United States, was laying off a quarter of its non-union workforce, and earlier this month, the owner of one of the two heavy steel mills left in Australia went into voluntary administration.
This is, of course, about more than just numbers. It is a human tragedy. When we talk about job losses in the abstract, it is easy to forget that each of them represents a person: a hard-working, highly skilled man or woman. Many of those men and women will have husbands, wives, children and other dependants to support, or there will be local businesses that rely on their custom, and the same pattern will be repeated throughout the supply chain. That is why, when job losses have happened in Britain, we have done everything we can to support the communities affected.
Mr Anderson
The Secretary of State said that we must not forget. I assure him that there are people in this House who do not forget. I am one of the people whom his Government did this to some 30 years ago, when they closed the coal mines. They looked at the economics, and they did not care about the social cost, which destroyed areas like mine. The Secretary of State needs to bear that in mind during this debate.
Sajid Javid
I am sure the hon. Gentleman agrees with me that when there are job losses and the Government can help, of course they must do so.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Will the Secretary of State give way?
Sajid Javid
I will plough on, but I will give way in a moment. I am about to speak about Redcar, and I know that the hon. Gentleman is interested in that as well. We have committed up to £80 million to helping people affected by SSI’s closure. That includes more than £16 million to help local firms to employ former SSI workers, and a further £16 million to support firms in the SSI supply chain and the wider Tees valley. Millions more are paying for retraining at local colleges. For example, there was a £1.7 million package to help former SSI apprentices to remain in employment, education or training.
Tom Blenkinsop
The Secretary of State said that the Government would do everything possible for the communities and people affected. As he knows, on the day of the liquidation at Redcar, he announced an £80 million total package—
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
It is £90 million.
Tom Blenkinsop
Oh, is it £90 million now? We have heard previously, from that Dispatch Box—[Interruption.]
Mr Speaker
Order. Shush, junior Minister. We do not need you to burble from a sedentary position. Be quiet! Your burbling is not required. Learn it. I have told you so many times; try to get the message.
Tom Blenkinsop
Not so long ago, at that Dispatch Box, the Secretary of State changed the figure to £50 million. Moneys on top of that have only been acquired because the Community trade union claimed a protective award from the tribunal to ensure that the workforce got what they were entitled to. The Government could have fast-tracked that some seven months ago.
Sajid Javid
I thought I heard the hon. Gentleman say “up to £90 million”. What we have always said is “up to £80 million”, and that has not changed. I agree that there is a long way to go, but so far, in respect of Redcar, nearly 700 jobs have been created, safeguarded or supported, and only a quarter of the more than 2,000 workers at SSI were claiming jobseeker’s allowance at the end of February.
Anna Turley (Redcar) (Lab/Co-op)
I do not want to take up too much time, because I shall be speaking later, but the figure of 600 jobs relates to those who are in work or full-time training, not just those who are in work. That is important, because it is work that will be vital at the end of the training.
Sajid Javid
The hon. Lady has made a very important point: at the end of the day, it is about work. Training can lead to work, as can retraining, so it is important to invest in it. I know that, to the people of Redcar, this seems like a drop in the ocean. When a community is built around a single industry, the death of that industry takes away more than just the jobs. I do not want to see any other steelmaking community suffer the same fate, and that is why the Government have been taking real action to support the industry.
Andy McDonald (Middlesbrough) (Lab)
Does the Secretary of State begin to appreciate how this flows into the community? A medical centre on Teesside that I visited recently lost two nurses, who had to give up their bursary-funded training programmes because their husbands lost their jobs at SSI. The consequences and the ripples spread right out. It is not 2,200 people who have lost their jobs; it is up to 9,000 people, and the Secretary of State should understand that.
Sajid Javid
The hon. Gentleman is absolutely right: there can be a devastating effect on the community that goes way beyond the actual job losses at SSI. That is why we must do everything, together, to prevent the same thing from happening to any other community, and we must support the supply chain, because, as he says, there is a ripple effect throughout the community on many, many businesses.
Geraint Davies
The Secretary of State may know that I worked very hard with Members on both sides of the House to secure a proper pension for the Visteon pensioners from Ford when it had short-changed them. Given that Tata has almost fully paid up its pension fund, will the Government socialise that fund, so that the pensioners can be secure in the knowledge that they will have a pension in future, and so that prospective buyers need not be concerned about that?
Sajid Javid
I will move on to the subject of Tata in a moment, but the hon. Gentleman is right to identify pensions as an issue, and we are considering all possible solutions.
Let me say a little about the action that we have already taken. We have taken action on power: £76 million has already been paid to steelmakers to compensate for high energy bills, and we expect to pay more than £100 million in the current financial year alone. In the autumn statement, just five months ago, we announced that we would go further. Energy-intensive industries will be exempted from renewable policy costs—a move that will save the steel industry more than £400 million by the end of this Parliament.
David T. C. Davies (Monmouth) (Con)
Surely my right hon. Friend agrees that, rather than compensating businesses for a tax that we levied, it would be far more sensible and logical to scrap the tax.
Sajid Javid
Given what my hon. Friend has said, I presume that our move towards exemption rather than compensation is exactly what he wants to see.
Mr Betts
Does the Secretary of State accept that the support that the Government are giving our steel industry in respect of energy costs is only a fraction of the support that Germany and other countries are giving their steel industries? It will still leave our industry with much higher energy costs than those of other European Union countries. Is the Secretary of State not prepared to consider going further to help our industry when it is in such a difficult position?
Sajid Javid
By calling it a fraction, the hon. Gentleman underplays the help that this support is providing to the industry. The manufacturers in the industry see this as a big game-changer in how they account for the cost of power. I can agree with the hon. Gentleman, however, in that I think there is still more to look at in this area, particularly with regard to Tata and securing a buyer.
Alex Cunningham (Stockton North) (Lab)
In a meeting with the Industrial Communities Alliance, which represents traditional industrial areas in the UK, the EU Commission reiterated its commitment to change the trade defence instruments, which would tackle the cheap steel issue. We are in line and the Commission is in line. Will the Secretary of State get in line to ensure that we can make these changes?
Sajid Javid
I will come on to trade defence instruments in just a moment.
I want to talk about the delivery of a new flexibility on emissions regulations. This was asked for by the industry and we have delivered, potentially saving the industry hundreds of millions of pounds. We have also taken action on procurement, and we have become the first country anywhere in Europe to take advantage of EU rules to make it easier for the public sector to buy British. That is on top of our proud record of procuring British steel.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The Secretary of State makes much of the changes he is making on procurement. The Minister for Defence Procurement, the hon. Member for Ludlow (Mr Dunne), who is sitting next to him, told me in answer to a recent question that the Ministry of Defence did not even have full records of where it was getting its steel from for UK defence projects. How can we be sure that the Secretary of State will follow through on his commitment on procurement when Government Departments are not even keeping records and when so many UK defence projects are being made in Korea, China and elsewhere?
Sajid Javid
The hon. Gentleman might hear more from the Minister for Defence Procurement in the coming days, but I can tell him that the two new Queen Elizabeth class aircraft carriers are being built with almost 100,000 tonnes of British steel, that Crossrail, the biggest construction project in Europe, is using almost exclusively British steel for its 26 miles of tunnels, and that 96% of Network Rail’s spending on steel rail goes directly to British firms. It buys 1,500 miles of steel rail every year from Tata in Scunthorpe. That is enough to build a two-track line from London to Edinburgh.
Nic Dakin (Scunthorpe) (Lab)
I certainly agree that Network Rail provides a case study in how to do procurement, and it is to be commended. However, we need to ensure that the DONG energy contract for developing the North sea wind farm, which will be the second biggest in the world, will use UK steel. What progress is the Secretary of State making with his colleagues to ensure that that happens?
Sajid Javid
We have had meetings with that particular company and many others in a similar situation. The hon. Gentleman will know that many of them are private companies and therefore not subject to all the rules around procurement, but there are ways of trying to encourage them to invest more in British steel, and that is exactly what is happening.
The question of trade defence instruments was raised earlier, and the hon. Member for Wallasey (Ms Eagle) mentioned the point as well. We have been working hard on this issue at EU level, and that work began long before this crisis broke. I hear a lot in this House about ideology, but I am just interested in one thing: what actually works. When evidence shows that tariffs against unfair trade will make a difference without harming British businesses or British consumers, I will always support them. That is why last July the UK voted to impose a 16% tariff on wire rod; since those duties were imposed, imports from China have fallen by as much as 90%.
In November, we voted to impose a 28% tariff on seamless pipes; since those duties were imposed, imports from China have gone down 80%. In January, we voted to impose an 11% tariff on rebar, and since then, imports of that particular steel product have fallen by a massive 99%. In February, we voted for a 15% tariff on cold rolled flat products, and that move has already reduced imports from China to almost nothing. This is real action with real tariffs and they are making a difference for British steelworkers.
Nick Thomas-Symonds (Torfaen) (Lab)
The European Steel Association’s spokesperson, talking about the change to the lesser duty rule, has said that
“the fact that the UK continues to block it means that when the government says it’s doing everything it can to save the steel industry in the UK and also in Europe, it’s not.”
Is not that the truth about the Secretary of State’s efforts?
Caroline Flint (Don Valley) (Lab)
I thank the Business Secretary for taking my intervention. I hope that he will also answer the question that my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) has just asked him. On the question of procurement in relation to energy, the Government are intervening more than ever before in the energy market through contracts for difference. Has the Secretary of State looked into ensuring that when those often very generous contracts are negotiated, they contain a requirement to buy British-made steel?
Sajid Javid
I can tell the right hon. Lady that no stone remains unturned in our efforts to help sell as much British steel as possible. The hon. Member for Torfaen (Nick Thomas-Symonds) asked about the lesser duty rule, and this point is raised repeatedly by Labour Members, but Labour had no problem whatever with the rule when it was in government. Scrapping the rule altogether would cost British shoppers dear. It would raise prices on everyday items that we rely on. For example, the rule saves British shoppers £130 million on footwear in one year alone. However, I told the House yesterday that I would be more than happy to look at any ways of specifically helping the steel industry, and I hope that Members will come up with ideas during the debate. I will, of course, be listening.
Ian C. Lucas
I referred earlier to the Labour Government’s intervention on car scrappage before the 2010 election. They stepped up to the plate to support the industry at that time. May I suggest that the Secretary of State approach the aerospace and automotive sectors and ask the Automotive Council and the Aerospace Growth Partnership to place on their agenda ways in which they could assist the UK steel industry by stepping up to the plate at this time of great difficulty for the industry?
Sajid Javid
As the hon. Gentleman will know, we have sector councils for both those industries, and we meet regularly and have a regular dialogue. This is exactly the kind of thing that those sector councils are designed to focus on, and it is exactly the kind of work that they are doing. I hope that the hon. Gentleman will welcome that.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I have read some very interesting statistics in the past week. There has been a 43% decline in the foundation industries across the United Kingdom since 2000, but the figure across the other OECD countries is only 21%. Why does the Secretary of State think the decline across the UK since 2000 has been twice that of the other OECD countries?
Sajid Javid
I do not know where the hon. Gentleman gets his numbers from, but this brings me to a useful point. The hon. Member for Wallasey said earlier that I had stated yesterday that manufacturing output in this country had gone up since 2010; she suggested that that was somehow incorrect. I can tell her that manufacturing output has gone up 2.2% in real terms since 2010 and that it is up 18.7% in current prices. Those are the official numbers, and manufacturing employment is also up. If she wants to hear about when manufacturing output actually fell, I can tell her that it was during the last Labour Government, when it fell from 18% of GVA to about 10%.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Steel companies are seriously concerned that the granting of market economy status to China will severely jeopardise their ability to take Chinese and other companies to court for steel dumping. What assessment has the Secretary of State made of that threat?
Sajid Javid
First, that will be a decision for the EU. We will, of course, have an input, but it will be a collective decision. Secondly, if any country wants market economy status, it must earn it. Whatever the country, it must show that it is behaving in a responsible way. Thirdly, we must remember that even when countries get market economy status, tariffs can still be imposed. Russia and the United States would be good examples.
Sir Edward Leigh (Gainsborough) (Con)
Does the Secretary of State accept that many on this side of the House believe that it is for this House and this Government to decide when a country such as China is dumping? We should decide whether to impose tariffs. Indeed, many of us think that if we had been outside the EU months ago, we would have imposed tariffs on Chinese dumping and would have solved the problem.
Sajid Javid
We have led the way in taking action, which has resulted in the right tariffs, which have helped the steel industry while protecting producers and consumers. My hon. Friend will agree that when action is taken through tariffs, we want to ensure that they are at the necessary level to help the industry without hurting consumers and producers.
Stephen Doughty
While we are still on tariffs, the Secretary of State mentioned the tariff on rebar and the drop in production. Increasing the tariff in that industry is obviously crucial, but other facts are at play. Rebar exports shunted up production before the tariffs came in, so we may have seen a drop-off due to that; there are also the exchange rate differentials. Does the Secretary of State still think that the rebar tariffs are high enough or should they be even higher to deal with the changes going on in that industry due to other factors?
Sajid Javid
We should always be driven by the evidence. The 99% fall in imports year on year, resulting from the tariff, suggests that it is effective, but we should always keep the situation under review and ensure that it remains effective.
Richard Fuller
My right hon. Friend mentioned the action that the Government have taken on procurement and their response on tariffs and power. Yesterday, he talked about Government co-investment. Will he please take this opportunity to clarify what is meant by that?
Sajid Javid
My hon. Friend will know that that comment related to Tata’s decision to sell its strip products business. What I said was really to show that when the Government say that we will consider all options to help create a long-term, viable business with a commercial operator, that would be such an option. The key point is that any co-investment would have to be on commercial terms. Investment can take a variety of forms, such as debt, but what I said was a demonstration of all the options that the Government are considering. I will move on to say a little more about Tata strip products in a moment.
Sajid Javid
Not now.
The action taken on tariffs, energy costs and procurement has sent a powerful message to investors around the world that the British Government are standing up for UK steel. That commitment is not new; I have been working with the steel industry from my very first day as Business Secretary, long before the current crisis made it on to the front pages. As I told the House yesterday, Tata contacted me several weeks ago to warn that it planned to sell parts of its strip business and to close its Port Talbot site immediately. Thanks to the groundwork laid by my team and colleagues over the past year, we were able to secure a reprieve while a buyer is found. I am leading the Government’s efforts to help to find a buyer for the strip business, and we will update the House on progress as soon as possible.
When that buyer is found, the Government stand ready, as I have said, to support it in any way we can to help to get the deal done. We have already set out some of the ways in which we can help. It would not be prudent to go into the detail, but the goal is to find a commercial buyer, with the Government helping to secure that transaction and a long-term, viable future for the business.
Tom Blenkinsop
I understand where the Secretary of State is coming from but, taking a broader view of co-investment, one option is R and D. The steel sector does not have Catapult status. Will the Secretary of State look at that as a potential route for co-investment in the steel sector, particularly in respect of organisations such as the Materials Processing Institute, to get an R and D link with our domestic steel industry?
Sajid Javid
The hon. Gentleman makes an interesting point. He will know that Catapult centres are a partnership between Government, business and academia. If that can help the steel sector, I am more than happy to look into it if a proposal comes forward.
Christina Rees (Neath) (Lab)
Hundreds of apprentices at the Port Talbot works receive on-the-job training while attending local colleges and universities. Swansea University has approximately £40 million in active grants to support research and innovation in the steel industry at the Materials Research Centre. If the steel-making facilities are removed and sponsorship is subsequently lost, future generations will be deprived and the UK will miss out on the potential to be at the forefront of materials development.
Sajid Javid
The hon. Lady makes a key point about the importance of skills and training, and I can assure her that we are already working with the Welsh Government on that. I have already started discussions with both the Minister for Universities and Science and the Minister for Skills to ensure that the issue remains front of mind.
We heard yesterday about the deal between Tata and Greybull Capital, and we will do everything we can to help finalise that transaction for Tata’s long products division. Yesterday’s announcement has also helped safeguard almost 5,000 jobs; alongside Liberty House’s acquisition of steelworks in Scotland and the west midlands, it is a real vote of confidence in Britain’s steel industry.
I would not have been able to do this work alone and I want to praise my right hon. Friend the Minister for Small Business, Industry and Enterprise, who has been absolutely tireless over the past year in her efforts to protect steel, as has my right hon. Friend the Secretary of State for Wales. I have also had the pleasure of working closely with the First Minister of Wales and the leader of the Welsh Conservatives in the Assembly. They have both proved to be positive, constructive allies in the fight to save Port Talbot. The steel unions, particularly Community, have been equally constructive, consistently coming forward with solutions rather than complaints. For that, I thank them once again.
Investors everywhere know that British steel is the best in the world and that British steelworkers are the hardest working in the world. They know that the British Government stand with the steel industry. We will do whatever we can to support it and to help it become more competitive. The challenges we face are great and the crisis facing the steel industry is global, but I am fighting for Britain’s steelworkers every hour of the day. I was fighting for them long before this crisis hit the headlines and will go on fighting for them as long as it takes. Britain’s steelworkers are the best in the world, and they deserve no less.
Neil Gray (Airdrie and Shotts) (SNP)
I congratulate the hon. Member for Wallasey (Ms Eagle) on securing this debate; I appreciate your discretion in permitting it under Standing Order No. 24, Mr Speaker. I will speak briefly from the SNP Front Bench, to allow colleagues from steel communities both in Scotland and in England and Wales to contribute to this short debate.
Yesterday, the Business Secretary tried to dig himself out of the hole he had dug by claiming credit for the news that Tata may have found a buyer for the Scunthorpe plant. He told us that this Government had done everything they could for the steel industry and that workers in England and Wales, with their jobs on the line, should be grateful to the Tories. It is welcome news that Tata appears to have found a buyer for its operations in Scunthorpe, and I hope that buyers can be found for Port Talbot and other sites. If the Government have been involved in the deal, I commend that, but I am concerned at reports of a possible erosion of workers’ terms and conditions as part of the deal. Is the Business Secretary aware of that? If he had discussions with Greybull Capital, did the changes come up? Will he now make representations to it on that matter?
I am also keen to probe a bit further the Business Secretary’s apparent flirtation with direct UK Government investment and the potential co-ownership of steel sites, including Port Talbot. He described it as co-investment in “commercial terms”. Perhaps he could clarify that, because it was as clear as mud yesterday and left more questions than answers. Indeed, it appears that this morning No. 10 was briefing against his flirtation, saying that nationalisation is not the answer. How unco-ordinated and shambolic!
Tom Blenkinsop
On what the hon. Gentleman said about terms and conditions, that ends up going to ballot, after being negotiated with lay reps on site, including those at Skinningrove in my constituency. The reductions in terms and conditions and the pension contributions are for 12 months only. In collective bargaining that is usually called a short-term working agreement, and I have negotiated those many times in order to save sites. It is also an industrial matter; it is not really a political matter for this place to discuss.
Neil Gray
I take the hon. Gentleman’s intervention in the spirit in which it was clearly given.
As I said yesterday, the fact that the Business Secretary was literally on the other side of the world at the height of this crisis two weeks ago when Tata made the announcement is a perfect metaphor for the Tory approach to the steel industry. Yesterday, I believe, was the first time this Government have proactively engaged with the House on the steel issue, and even that was after a shambolic recess, when there were calls for a recall of Parliament. On every other occasion I have been involved in discussions—certainly on the vast majority of occasions when steel has been discussed in this House—it has been because the Government have been dragged here by Opposition parties, as they have been again today. It is clear that the Government have been comfortably behind the curve on the steel crisis.
Neil Gray
I have already said that yesterday was the first time the Government had proactively done this, and that was after a shambolic recess. They have clearly been comfortably behind the curve on the steel crisis; we have seen poor, defensive reactions, rather than proactive and practical support. That is in stark contrast with the proactive, professional and diligent way the Scottish Government approached the crisis facing the Scottish plants at Clydebridge and Dalzell. Nicola Sturgeon said her Government would leave no stone unturned in saving a crucial industry, and that is exactly what happened.
The Scottish steel taskforce was quickly assembled, and I am delighted to say that my hon. Friends the Members for Motherwell and Wishaw (Marion Fellows) and for Rutherglen and Hamilton West (Margaret Ferrier) contributed to that, and that Liberty House has now bought these sites, to maintain a crucial industry in Scotland.
Yesterday, the Business Secretary was noble enough to commend the Scottish Government for their actions and efforts, and I thank him for that, but the mask slipped later on in the exchanges when my hon. Friend the Member for Rutherglen and Hamilton West asked whether the UK Government had learned anything from the approach taken in Scotland. He said the only reason why Scottish steel has a bright future is the strength of the UK economy. That was utterly complacent, arrogant and ignorant of the facts.
SNP Members now stand in solidarity with the steelworkers of England and Wales as they struggle and fight for their jobs and their industry, alongside their union representatives. We now hope the UK Government can work more co-operatively with EU colleagues on anti-dumping measures, energy costs and the other issues facing this industry, so there can be a long-term future for a crucial part of the manufacturing sector.
There needs to be a credible strategy for manufacturing and heavy industry in the UK, as the shadow Business Secretary said. This Government are facing a massive, record-breaking trade imbalance. The only way of rectifying that is if we start making things and if this Government start supporting those areas of the economy, rather than relying so heavily on other areas. Imagine what could have been achieved had the Prime Minister spent the last year touring European capitals pressing for action on steel, rather than testing the patience of European colleagues on his EU referendum gamble.
Yesterday, I asked the Business Secretary a simple question and he dodged it. He now has the opportunity to hear it again and perhaps he will take the opportunity to answer it. Will he publish details of all the meetings, phone calls and correspondence with the EU and with international and trade counterparts that he, the Prime Minister, the Chancellor and other members of the Cabinet have made in respect of the steel industry, and any such visits they have made? If he has done the work he claims to have done and if he has indeed strained every sinew for the steel industry, he can have nothing to hide. Indeed, publishing would help to show if he really had the grip on this issue he claims to have had.
I suspect that the Secretary of State dodged that issue and question yesterday because the reputation he has gained for himself in steel communities across these isles is ringing true. What we needed to hear, today and yesterday, was the commitment of this Government to save this crucial industry, not just for the workers—saving their jobs, and their skills and livelihoods—but for the wider economy. I wonder whether we will ever hear that commitment from this Government.
Several hon. Members rose—
Mr Speaker
Order. On account of the level of interest, there has to be a time limit. We will begin with a six-minute time limit on Back-Bench speeches.
Mr Peter Bone (Wellingborough) (Con)
It is a great pleasure to follow the hon. Member for Airdrie and Shotts (Neil Gray), who speaks for the Scottish National party. I have to say that I thought some of his remarks were more designed for party political purposes than to deal with what we are facing today. We are dealing with people’s livelihoods and with whether they have jobs, and I hope the tone of the House today will be about a solution and what we can do, rather than about making party political points. I also regret, Sir, that Parliament was not recalled last week, as this was a matter of such urgency that we could have come back to have a proper debate, and Members interested in this vital issue would have attended. It was quite right, Sir, that you allowed this Standing Order No. 24 application and that it was unanimously approved by this House—there was no opposition to it.
I know that many Members wish to speak, so I will keep my remarks brief. I declare an interest, as some of my constituents work in the steelworks in the neighbouring constituency and have contacted me about their concerns. This is about not just the people who work directly in the industry but those who rely on the economic benefit from it. I also spent 13 years in south Wales, so I know how important the industry is there.
The shadow Business Secretary analysed the situation very well. There has to be a steel industry in this country, and I think Members on both sides of the House agree on that. We cannot be left without a steel industry, and there is one reason for that: if there is a war in the future—I hope there will not be—we have to have our own steel industry or we cannot defend ourselves. Everyone accepts that we need a steel industry and everybody wants to work towards a solution. I know that the ministerial team have been working very hard but I do think they are working with one hand tied behind their back.
The shadow Business Secretary’s analysis was absolutely right: the problem our steel industry has is the unfair dumping of Chinese steel, and now perhaps Russian steel, on to the market, backed by state-controlled companies, which can put millions of pounds into their industries with no problem at all. If I was sitting in China and I wanted to keep my industry going, the classic way I would do it would be by selling my product abroad at less than what it costs to produce. What then happens, as we have seen, and as the Secretary of State has made clear, is that businesses across Europe close. When those industries are knocked out, the main supplier—in this case, China—takes a bigger share of the market and can then bump the price of steel up and hold the whole world to ransom. That is just what happens.
Where do I think the one hand tied behind the back is? It is the European Union. We have heard from Members on both sides of the House that the problem has been delays in the European Union dealing with tariffs. If we were in the United States, the President would just impose a tariff of 266% and that would shut off Chinese steel coming into the USA. Whatever we think about the issue and whether we think the Government have been poor in pushing for tariffs or not, I hope the whole House can agree that if this matter was totally in the hands of this Parliament, the Government could make their decision and act, and the Opposition could criticise and vote against it if they did not agree.
Sir Edward Leigh
This is a vital national industry. Can my hon. Friend imagine any previous UK Government, in war or peace, allowing our steel industry to go down the tube? My constituency abuts Scunthorpe, and many of my constituents cannot understand the situation. If we had control of our own destiny, surely we could just stop this dumping overnight. This is unfair, unreasonable and ridiculous dumping, and we should stop it.
Stephen Doughty
I was in agreement with much of what the hon. Gentleman was saying until he got on to his usual track about the EU. Celsa in my constituency is a Catalan company that operates across the whole of the EU. If we were to leave and to lose access to the single market, we would still be bound by World Trade Organisation rules on state aid and other issues. The uncertainty, damage and risk to jobs in south Wales, which he said he cared about, would be immense. It is grossly irresponsible to suggest that leaving the EU would benefit the steel industry in this country.
Mr Bone
No, I cannot give way, because other Members wish to speak.
It is interesting to note that, by the time this debate ends, a cheque for £7 million will have been written by the Chancellor to send to Brussels—that is how much money we send every three hours to the European Union. Just a fraction of that money could be used to protect our steel industry.
On the question of whether we should renationalise the industry or sell it off, I have to say that I have no problem in that regard. A partial ownership of the steel industry for a period makes sense, as this is a strategic industry, but there is no point in doing that if we cannot solve the overall problem of the dumping of steel in this country. Put simply, we must cut out the cancer first. I have not come here today because of the European Union—[Interruption.] No! I have constituents who are concerned and worried about their jobs. Let me tell the hon. Member for Cardiff South and Penarth (Stephen Doughty) that it is because of the European Union that they may lose their jobs. It is no good him smiling and laughing, because that is the truth. He should be ashamed of saying otherwise.
If we really want to solve the problem of the steel industry, we must stop the dumping. I know that some Opposition Members do not like this, but the only way to save the steel industry is to come out of the EU and make our own decisions in this House. If we had left the EU months and months ago, we would have imposed tariffs on China. If Members want to save the steel industry, they will have to vote to come out of the EU.
Stephen Kinnock (Aberavon) (Lab)
I wish to start today by thanking both the shadow Secretary of State, my hon. Friend the Member for Wallasey (Ms Eagle), for securing this debate, and you, Mr Speaker, for granting it.
I also thank the Secretary of State for his statements yesterday and today and for attending the special meeting of the all-party group on steel yesterday afternoon. However, although I am grateful to him, l regret to say that those meetings and statements have done little to address investor and customer confidence, which are of paramount importance at this time. Alongside the efforts the Government need to make to find and support a commercial operator, the priority at the moment should be securing the order book.
Erosion of the customer base is the most pressing issue facing the British steel industry. If the customer base goes, it will not come back. Unless the order book is secured, it does not matter what else happens. No one will buy a business if it has no customers—it is as simple as that. That is why I was so deeply concerned by the Secretary of State’s response to my question at the APPG yesterday, when I asked him to outline the specific actions he was taking in that regard. He said that he would be happy to engage with customers as and when they approached him. That is simply not good enough. The Secretary of State should be on the phone. He should be reaching out to the chief executive officers of Honda, Nissan, Jaguar Land Rover and others, making it clear that production of the world class steel that they have come to expect and to rely on will continue, come hell or high water.
This House and every steelworker in the country now looks to the Secretary of State to take action. He should set out precisely, and in specific detail, the representations that he intends to make in the coming days and weeks to the companies that comprise the customer base, which is the lifeblood of the British steel industry.
Sajid Javid
The hon. Gentleman makes an important point about the companies in the supply chain and the customers, and he is absolutely right to do so. What I have said to him and to others is that we are engaging with many of those organisations—I know that the Secretary of State for Wales is, too—but what he must understand is that much of this is commercially sensitive. Many of those suppliers would not like us to discuss who we are talking to and what their concerns are. I hope that he understands that it would be quite improper for us to divulge that information.
Stephen Kinnock
I fear that the Secretary of State has misunderstood me. I am simply saying that it is very important to be on the telephone to the customer base. [Interruption.] We on the Opposition Benches and the steelworkers of this country would like a little bit more detail. [Interruption.] Ministers must forgive us for being sceptical about what they are doing or for thinking that there may be a lack of action.
The Secretary of State talked about co-investment yesterday. Although I welcome the fact that he has belatedly converted to the fact that the Government and industry can work in partnership, I am not entirely sure what co-investment means in his terms. I agree with him that nationalisation is not a long-term solution, but what customers need to know is that, come what may, they will still be able to purchase strip products from the Tata sites. Such security can be offered only if the Government commit to keep all options on the table. Can the Secretary of State make such an assurance to the House?
The men and women working in steel and connected industries across this country are among the most highly skilled and effective people in Britain. The Port Talbot workers are already turning the business around, with improved productivity leading to tangible improvements in business and financial performance. Their skill and dedication is matched by that of Roy Rickhuss, the general secretary of Community, who was even praised by the Secretary of State yesterday.
The surprise announcement that we really needed yesterday was not that of a Conservative praising a trade union leader, but that of the Government announcing an end to their laissez-faire attitude. What we needed from the Government was a list of all the discussions that they have had with the customer base, but what we got was yet more prevarication and procrastination. What we needed from the Government was the announcement that all options were on the table, but what we got was ambiguity. What we needed from the Government was the announcement that they would put down their pom-poms and give up their role as China’s chief cheerleader in Europe; that they would end their championing of market economy status for China; and that they would end their campaign against trade defence reform, but what we got was more of the same.
Yesterday, the Secretary of State only confirmed something that we already knew—that the Government’s approach has been characterised by a dangerous combination of indifference, incompetence and a rolling out of the red carpet for Beijing.
Andy McDonald
Was my hon. Friend as surprised as I was to hear that, when the Chancellor went to China, he invited it to take part in the HS2 project and to bid for the steel? That would mean having Chinese steel in one of our major infrastructure projects.
Stephen Kinnock
I was not surprised. Let me remind the House that 80% of the Chinese steel sector is state owned. On what planet can that be considered a market economy? I leave that to the House to decide.
The Secretary of State’s claims that he has been working on these things for months simply do not stack up. Yesterday, both in this House and at the APPG meeting, he claimed to have been aware of Tata’s decision to sell before it was publicly announced. If that was the case and if he really knew what was coming, why on earth was he on the other side of the world when the board meeting was taking place? Why was he caught so unaware? If he really was in the know as he claims to have been, why did he have to rush back to the UK in a mad panic?
The Secretary of State also boasted yesterday that it was his actions and his actions alone that prevented Tata from closing rather than selling Port Talbot and the rest of its strip products division. I must admit that my jaw hit the floor when I heard that claim. I was out in Mumbai. I was there for the board meeting with Roy Rickhuss and Community. The Secretary of State was not. Tata has expressed deep disappointment and frustration with the lack of support that it has received from this Government. We have seen delayed action on energy compensation, with many companies still waiting to receive their money, and weasel words on procurement from a Government who got the steel for the latest set of Ministry of Defence frigates from Sweden. Above all, Tata saw a Government who refused to support the steel sector in tackling Chinese dumping by opposing trade defence reforms, while championing market economy status for China. Therefore, this supposedly pro-business Government's influence on Tata is very limited. What really made the difference was Community’s high profile “Save our Steel” campaign, and the fact that Labour MPs have raised the issue of steel on more than 200 separate occasions since the general election.
The clock is ticking. Tata has said that it will give the sale “all due time”. Yesterday’s news about Scunthorpe took almost nine months, and it is still not fully complete. The deal on Port Talbot and the rest of Tata’s strip operations may also take time. Let us therefore hope that today’s debate marks a step change in attitude and action by the Government. Let us hope that they work proactively to protect the entirety of the order book and that they save the future of the heavy end in Port Talbot,
Jonathan Edwards
The hon. Gentleman will know that his colleagues in the Welsh Government have spent £80 million on a conference centre in Newport and £58 million on the airport in Cardiff. Does he think that the £60 million allocated to Tata in Port Talbot is sufficient?
Stephen Kinnock
There is a stark contrast between the actions of the Welsh Government and the actions of the UK Government. There is £60 million on the table, and the Welsh Assembly was recalled, and that should have happened in Westminster, so the contrast is clear.
Let us hope that the Government develop and execute a proper industrial strategy, so that the Opposition do not have to raise this matter a further 200 times in the weeks and months to come. Let us hope that they will stand up for steel.
Richard Fuller (Bedford) (Con)
It is a pleasure to follow the hon. Member for Aberavon (Stephen Kinnock), but it is unfortunate that his speech veered towards the critical, rather than the constructive. However, he can be forgiven, because he is one of many MPs speaking in this debate with a significant steelmaking presence in his constituency.
My constituency is not one of those constituencies, but in Parliament we talk as one community for all our constituencies, and discuss how different constituencies and communities can reach out to communities that are severely affected when things go wrong in an industry or because of a natural disaster. Let me repeat that the issues in the steel industry are not going to go away. We face many years of brutal competition in the global steel industry. If my right hon. Friend the Secretary of State and his team can, over the coming months, successfully find long-term solutions for steelmaking plants in Motherwell, Scunthorpe and Port Talbot, that will be a significant achievement in these times.
As someone who does not have a steelworks in his constituency, I believe it is important to discuss what the rules ought to be on what is fair for communities across the country. The OECD in its report last year on the steel industry said:
“In competitive economies, it is the responsibility of the steel companies themselves to identify ways to adapt to changing market conditions.”
We have to accept that many steel companies in the UK have failed to do that. The OECD goes on to say:
“The role of governments should be to allow market mechanisms to work properly and avoid measures that artificially support steelmaking capacity.”
The OECD understands the ways in which developed and developing economies can prosper, and it is important that the Government bear those words in mind. It is also important—and I should like to hear from my right hon. Friend the Minister for Small Business, Industry and Enterprise on this in her closing speech—that while we prepare for the best we also prepare for the worst. I should like to know what the Government are doing to prepare support for Port Talbot if all their best efforts to save the steelworks do not come to fruition. May I make one point from my memory of the coal-mining communities in the 1980s? The Government can never give enough support to communities that rely on a single industry.
Richard Fuller
No, this is a lesson that we all need to learn. [Interruption.] If the right hon. Lady stops chuntering, I can make a point with which she might agree. Lessons have been learned from the 1980s, and in communities with a significant concentration of industries the Government always have to do more than they think they have to do.
Duties have been mentioned a number of times, so let us clear up the lesser duty rule. The point, as my right hon. Friend the Secretary of State said, is whether the duty is effective. We follow the lesser duty rule, and in the three instances that he mentioned, import penetration has all but disappeared. Giving up the lesser duty rule is not about stopping more steel coming in, but about raising prices on those products. If a 14% tariff is increased to 50% when imports are eliminated that will result in inflationary pressure from the steel industry to other markets, and might be regarded as supporting subsidies from one part of the steel industry to another. It is not right to give up the lesser duty rule, which is the underpinning of the World Trade Organisation, and to take the US approach of zeroing in on tariffs.
On the 267% tariff that America imposed on Chinese cold rolled flat, it was part of the same US decision that imposed a 31% tariff on Tata steel. Tit for tat on trade tariffs does not work.
David Mowat
Does my hon. Friend have a view about why Chinese dumping affects the UK industry much more than the German and Dutch industries? Indeed, Tata is trying to consolidate in Holland. Why have we been affected differently?
Richard Fuller
My hon. Friend speaks very intelligently. Private companies make decisions in different markets across the European Union. I disagree with my hon. Friend the Member for Wellingborough (Mr Bone), although we agree on Brexit, as I am not sure that the EU is pertinent to the decision that will affect the steel industry. The Government have taken effective action on procurement and power. Having served on a Bill Committee on the privatisation of Royal Mail, I think that a case can be made for the Government to take action on the pension requirements for members of the British steel industry, which was a nationalised industry. There is plenty of scope, for people like me who believe in the free market, to argue that the Government can take action on that basis.
The Opposition say that they believe in nationalisation. The hon. Member for Aberavon said that he believes in nationalisation, but that it is “not a long-term solution”. Opposition Members do not know when the crisis in the global steel industry is going to end. The global capacity glut is over 30%. I am afraid that if we nationalised, we could not determine when we could return the industry to the private market. If people nationalise, they do so for as long as it takes, and I believe, although I understand why my right hon. Friend will not do so, that the Government should rule out nationalisation, which is a step too far for the British economy in supporting the steel industry.
Finally, may I put the issue of the steel industry in context? During the time that most of us will spend in the House—I am looking at older Members—we will live though a global over-supply of capacity. That will be true not just of steel but of other sectors of our economy. We need to understand and abide by the rules that have created a free trade system that has been one of the biggest supports in improving living standards around the world. Supporting WTO rules on the lesser duty tariff is important, as is avoiding a tit for tat war on tariffs. Supporting communities with a significant industry that is affected and making sure that the Government do more than they think they need to do to support those communities are part of making sure that our economy supports them. I commend the Government on their actions, and I will continue to support them critically.
Mr Iain Wright (Hartlepool) (Lab)
It is an absolute pleasure to follow my colleague on the Select Committee on Business, Innovation and Skills. I do not agree with much of what he said, but the rigour of his analysis, both in his speech and in his work on the Committee, makes the Committee much sharper in what it does, so I commend him for that.
I welcome the emergency debate, because steel industry is facing a real emergency. It has faced it for some time. The Committee found, going back 40 years, that successive Governments failed to value manufacturing and domestic steelmaking capability as the foundations of an innovative economy. Other countries—and this is in reference to an intervention from the hon. Member for Warrington South (David Mowat)—value their domestic steel industry more than we do, which makes them more resilient to the perfect storm of over-production and low steel prices affecting global steel markets.
I want to put it on the record that the challenges facing all steel manufacturers around the world are vast. China produces more steel than all other steel manufacturing nations put together. In two years China has produced more steel than we, the inventors of modern steelmaking, have produced since the start of the industrial revolution, so even if the Government were doing all they could, those challenges would remain vast.
The Government could do more, because Britain does not face a level playing field in respect of steel production. One contributing factor is the high pound. I know that the Government will not do anything to affect that, but they can intervene directly on uncompetitive energy costs and business rates, which put British-based steel manufacturers at a disadvantage.
In December we on the Business, Innovation and Skills Committee published our report on the Government response to the steel crisis. That was prompted by big turbulence, particularly the closure of SSI in Redcar in early October. It revealed the shocking absence of an effective early-warning system in Whitehall designed to detect and address mounting problems in the industry. Industry had been crying out for some time, with five asks concerning procurement, business rates and energy costs, but the Government had been deaf to such pleas. Had they been alert, they would not have had to resort to crisis management and preside over the tragic hard closure of an integrated steel facility, the second most efficient blast furnace anywhere in Europe, and the loss forever to the steel industry of jobs and skills.
The Select Committee’s report found that the Government recognised the vital importance of the steel industry, but the increased activity had not yet translated into a measurable impact on those in the industry and the communities that they sustain. Five months on from the closure of SSI, with other losses such as Caparo, and with the decision last month by Tata to sell its UK steel operations, it is difficult to avoid the conclusion that lessons have not been learned and that increased activity has not resulted in positive outcomes.
Andy McDonald
My hon. Friend talks about the absence of an early-warning system. In his capacity as Chair of the BIS Committee, does he have any concerns that there is insufficient capacity in the Department to respond to challenges as they emerge on world markets?
Mr Wright
My hon. Friend makes an important point. The Department for Business, Innovation and Skills should be looking out for the British economy, making sure that it is the Department for future economic growth. It needs the civil service capacity to do that, and the proposal for it to lose 30% to 40% of its headcount will have enormous consequences for those early-warning systems and for the expertise and knowledge of the steel industry and other key sectors that are needed to ensure that Britain can thrive.
Today and yesterday in his statement, the Secretary of State stated that he was aware that Tata was planning to hard close its steel operations in Port Talbot and elsewhere, but that he prevented that from happening. He was fully aware of the enormity of the crisis, yet he still flew to Australia rather than Mumbai. The evidence surely suggests that he was left blindsided by Tata’s decision, which again demonstrates that no effective early-warning systems were in place. The Secretary of State should have gone out with Roy Rickhuss and with my hon. Friend the Member for Aberavon (Stephen Kinnock) to the Tata board meeting to bat for British steelmaking. The fact that he subsequently went to Mumbai, days after that key board meeting, shows that he knew he had made an earlier error.
The contrast must be made with the events of 2012, when Vince Cable as Business Secretary went to New York to persuade General Motors to make a long-term commitment to the UK, despite overcapacity and loss making in car-manufacturing operations in Europe. As a result of close partnership between the Government of the day, trade unions and local management, GM closed a plant in Germany and committed to build the new Vauxhall Astra at its Ellesmere Port facility. Given the great industrial relations in steel, fantastic trade unions, exceptional steelworkers and committed local management, why cannot this model be adopted for the steel industry?
We must look to the future and ensure that we have a sustainable steel industry. I have mentioned the existential threat to British steelmaking, but it is important to recognise that steel should be seen not as an obsolete industry, but as one whose future is essential to much of British manufacturing. We should be honest about the challenges, but we should not talk the industry down, which would further hasten the signing of its death warrant. We all have a responsibility to ensure that customers do not take flight.
The Government can help significantly with that. They have brought forward welcome changes to procurement rules that should favour British-made steel and its products during the awarding of public contracts. Something similar was announced in October following the steel summit, but we have no tangible evidence in the form of new contracts flowing to British plants and mills. Not a single pound of value has been seen. I asked the Secretary of State yesterday after his statement how greater and urgent collaboration was taking place between the Government, the Steel Council and the strategic sector councils such as the Automotive Council, the Aerospace Growth Partnership and the Offshore Wind Industry Council. Will the Minister provide further clarity about that?
Steel plays a major part in the infrastructure of the country. On 23 March, six days before the Mumbai meeting, the Government published the national infrastructure delivery plan. It contains one reference to steel. Will the Government commit to talking to the Cabinet Office to make sure that more can be done? This is incredibly important for my constituency in respect of the steel pipe mills and for the future of British manufacturing. It is important that we move from warm words to tangible action to safeguard British steel.
Several hon. Members rose—
Tom Pursglove (Corby) (Con)
It is a great pleasure to follow the hon. Member for Hartlepool (Mr Wright), whose constituency has a downstream Tata production site. We share that similarity, and I share much of the sentiment that he expressed.
The present situation is of great concern to 600 families in Corby. As the local Member of Parliament, I think about them all the time in the work that I am doing on a cross-party basis in our area to try to support them and the steel industry in general. Margot Parker, the UKIP MEP, Tom Beattie, the Labour leader of the council, and I are working closely together to campaign on the issue. That is what local people and those who work at the local plant expect us to do. I was very pleased that the Minister was able to come and join us in those efforts last week.
I am also pleased to be working with Dougie Fairbairn and the Community union representatives at the Corby plant. That relationship is very important. Their feedback helps me to participate in debates such as this, ask questions and put their concerns to Ministers. That needs to be replicated nationally. There is far too much knockabout. I want to see us all getting round the table, working with the unions, Ministers, Back-Bench MPs and employees to make sure that we find solutions to these pressing problems.
The visit last week was useful not just to meet employees, but to get a briefing on where things stand in relation to the Corby plant. A clear message came across that both investment and time are needed. We should bear that in mind as we move forward. That leads me to the challenges that the industry so clearly faces.
The first one is so evidently the overarching challenge of dumping. The unfair, uncompetitive practices that we are seeing are unacceptable. We have heard a lot about Chinese dumping, but the particular concern in Corby is Russian dumping. We have all acknowledged that we have a brilliant steel industry. The product produced in this country is world-leading, but it currently cannot compete because the playing field is not level. That frames the whole of the ensuing debate.
The Chinese objective is clear. It is to dominate the world market and put other suppliers out of business so that the Chinese can raise the price and reel in the profits. For some industries, cheap steel at present might be an attractive prospect, but the longer-term consequences will be much more serious. Industry in this country and around the world needs to recognise that. We need to respond with strong tariffs and emulate some of the actions that President Obama, for example, is taking, although I do not agree with him on very much.
Mr Nick Clegg (Sheffield, Hallam) (LD)
The hon. Gentleman makes a compelling point on anti-dumping tariffs. Does he agree that the issue is not just how high the anti-dumping duties are set? The Government have got the lesser duty rule completely wrong. It is not fit for purpose to deal with the scale of dumped steel from China. Also important is the speed with which decisions are taken. In vetoing that decision, the Government are blocking a more accelerated timetable for the imposition of anti-dumping duties.
Tom Pursglove
I am grateful to the right hon. Gentleman for that intervention. We ought to take another look at the lesser duty rule. It makes sense to refresh our thinking on these matters all the time. However, speed is important. One of the frustrations that I was going to speak about later is the time it took in the European Commission last year to approve the energy compensation package. Those delays were unacceptable. It took far too long. We need quicker action.
Mr Bone
I am grateful to my hon. Friend, who I know was at the Corby steelworks three times last week. Does he agree with the right hon. Member for Sheffield, Hallam (Mr Clegg) who criticised the European Union for being slow and ineffective in dealing with the steel industry?
Tom Pursglove
The former Deputy Prime Minister probably knows better than most how inefficient the European Union is.
Tom Pursglove
I am not going to give way, because I am very conscious of the time.
As well as getting the tariffs right—I think we should have another look at them—we should consider the market economy status argument that is being made, which is very important. I happen to take the view that if the Chinese are not going to play by the rules, they should simply not be allowed to have market economy status, and I hope that the European Union reaches that conclusion as well.
On energy costs, we have heard a lot in recent years about climate change. We need to be thinking constantly about the consequences of the policies we introduce and the agreements we sign up to. The Government must not act with a silo mentality in relation to these matters; they must be looking constantly at the implications of changes in energy policy. We must always bear that in mind. I welcome the energy compensation package to which I alluded a little while ago, but it did take months and months to approve. Yesterday the Secretary of State mentioned the package of measures that the Government are seeking to introduce in relation to exempting, and we heard about potential delays in that. I would be very interested to hear in his final remarks today exactly where we are with the exemption package, because I think it is an important step forward.
I happen to take the view that we ought to get much tougher on procurement. We have seen some really positive steps, but it is simply unacceptable for any public bodies in this country not to be using British steel at this time. We are seeing big procurement projects and fracking is coming on stream, so we ought to be exploring all the possibilities and ensuring that our procurement policy reflects exactly that. The integrity of the order book is very important, but so too is the integrity of supply chains. We need suppliers to keep on supplying, as well as buyers to keep on buying.
On business rates, at a time when we are trying to find somebody to buy the Corby site and the others that Tata owns in this country, it makes little sense that we are asking investors to step up to the mark and consider buying plant or the portfolio but then penalising them the moment that investment is made. It makes no sense whatsoever. I advocated a business rates holiday for the industry before the Budget, and I would like Ministers to have another look at that, because this is about trying to show signs of confidence that the Government are backing the industry and that we are all coming together to do just that. It is a bizarre anomaly.
In relation to trying to find a buyer for the Tata sites, I take the view that all options must be on the table. We should not rule anything out. I know that people will say, “But you are a free market Conservative,” and I am, but the fact is that our steel industry is not competing on a level playing field at the moment, and that requires action that does not necessarily go with the normal grain. We should therefore not rule anything out. If a short period of public ownership is required in order to find a buyer for the sites, I think that is exactly what we should do.
Tom Pursglove
That is absolutely right. I want to hear a little more to be able to ascertain exactly what Ministers are thinking about that. In trying to find a buyer, we must not let state aid rules get in the way. If they get in the way, we should simply ignore them and do what is right by our steel industry. That is the message that my constituents expect me to convey as their local Member of Parliament.
Angela Smith (Penistone and Stocksbridge) (Lab)
Thank you, Mr Speaker, for granting this very important debate, particularly because I have 900 very good quality jobs on the line at Tata Speciality Steels in Stocksbridge. I support everything that my hon. Friend the Member for Wallasey (Ms Eagle) said earlier. I will not rehearse the usual arguments that have been articulated so ably by so many Members already, such as on energy costs and business rates. I will not talk about co-investment, because many comments have been made about that already, too.
Instead, I want to focus on confidence in the future of the steel industry. We risk seeing the industry undermined by people posing as experts in the field, such as commentators in the print media, and giving the impression that the industry’s day is done. It is not done; it has a great future. One example is the TaxPayers Alliance—let me make it clear that this is not an ideological attack—which stated last week:
“Unlike German plants which produce specialised products used in the car industry, UK plants have tended to produce basic products using out of date technology.”
I just want to put it on the record that every Formula 1 car made in this country, apart from Ferrari, has a bit of Stocksbridge steel in it, as does every aircraft in the sky. It is Stocksbridge steel that lands the planes safely, because it is used in the landing gear. It is Stocksbridge steel that makes up part of the Rolls-Royce engine that keeps the aircraft in the sky. We in Stocksbridge are incredibly proud of what we do, and the workforce are passionate about the industry’s future and they intend to have a long-term future, but they need the Government’s support.
I want to illustrate the other things that the plant in my constituency is doing. We have just secured £50 million of investment so that we can make the steel and remelt it to make even purer steel, at the VIM, or vacuum induction melting, plant, which the Minister knows about, so that we can go even further up the value chain, instead of just aerospace steel.
Just to correct the record, let me say that Stocksbridge is not a downstream operation. Tata Speciality Steels makes its own steel, remelts it and makes some of the best steel in the world. We have four projects at Stocksbridge, one of which involves making powdered steel, which is worth £30,000 to £40,000 per tonne. If we get the investment for that, with the atomizer plant that will go on the side of the VIM plant, our future will be spectacular. We must secure that future.
By the way, I make that point in relation to all the Tata plants at risk. People say, “Let’s go niche. Let’s specialise.” Actually, Stocksbridge is very specialised, but the steel made at Port Talbot is also specialised and very high quality. It is a different type of steel and it is made according to a different process—it uses blast furnaces, rather than electric arc furnaces—but it still makes fantastic, good quality steel. We make some of the best steel in the world.
In conclusion, too many commentators are focusing on steel as an industry of the past, but it is an industry of the future. I will finish by looking at the reports recently published by the Government’s chief scientific advisor, Mark Walport. He made it clear that manufacturing will be transformed over the next 30 years or so. The future of our manufacturing industry is focused on adaptability, in terms of the rapidly changing intellectual and physical infrastructure that we need. The steel industry is very well placed to do that. Tata has been completely focused on doing that; it just needs the support to get there—or rather, the new owner will need that support.
Mark Walport also made it clear that we need shorter and more integrated supply chains, because of issues relating to quality and safety standards. Our steel industry delivers that. Aerospace companies such as Airbus and Boeing know that they need those integrated, short supply chains, and they get nervous if the supply chains are disrupted. That is why we need to maintain confidence in the industry. I call on the Government to play their part by doing whatever they can to save our steel.
David T. C. Davies (Monmouth) (Con)
I, too, want to thank you, Mr Speaker, for granting this important debate. Steel is a huge part of the economy of my home town of Newport. In fact, my first job was at British Steel. I declare an interest as a British Steel pension holder, although what that pension will be worth after all this, I do not know.
Members on both sides of the House have spoken very well. The hon. Member for Hartlepool (Mr Wright) made the point that the fundamental problem is the vast amount of steel that has been coming into the marketplace from China since about 2008, and the fact that the demand for it is just not there. In reality, as he says, nobody can do anything about that fundamental problem, but there are certainly things the Government could do to help. Tata was losing about £1 million a day—we had the figures a few weeks ago. Frankly, the Government are not doing enough to help; I will not mince my words today.
One problem is that there has been a lack of consistency on both sides of the House. We need to ask ourselves a fundamental question: do we want heavy manufacturing industries in this country? Of course, people say the answer is yes, and I think the answer is yes, but if it is, one has to ask why, over the last few years, Governments of all parties—this Government, the coalition Government and certainly the Labour Government—have enacted policies that have made it much harder for heavy industry to continue.
Those Governments swallowed lock, stock and barrel the idea that carbon dioxide is a pollutant that is causing runaway global warming, and they enacted a series of policies that made things very expensive for any industry that emits CO2, and made it expensive for heavy manufacturers to buy in energy. We have brought in renewables obligations and carbon floor prices, and as a result, we now have the highest energy costs in Europe. That point was made to us on the Welsh Affairs Committee by manufacturers and the unions. Dealing with the issue may not resolve the fundamental question, of course, but it could make the difference between an industry that is profitable in some areas and one that is not. It could also make the difference to companies such as Tata when they are deciding whether to maintain a plant here or in the Netherlands.
It is important that we think about things consistently. To be honest, I do not buy the argument that carbon dioxide is causing runaway global warming. I have spoken about this before, and I cannot deal with the issue in the next two minutes, but there is simply no correlation with the tiny increase we have had in temperature. Therefore, the Government need to rethink their policy.
Instead of deciding to get rid of the carbon taxes and energy taxes that helped to create the problem in the first place—taxes supported by Governments and MPs of all parties—the Government have brought forward a compensation package. The package is all right as far as it goes, although it had to go through a great big bureaucratic steeplechase in the European Union, which Members on both sides also support, and which I certainly do not. However, having got there in the end, and with the first cheques going out as we speak, what have we actually done? We levied a huge tax on an industry, and now we will give some of that money back, because the tax is having exactly the impact we thought it would, which is to punish the industry. I put it to the right hon. Member for Don Valley (Caroline Flint) that it would surely be much more sensible to scrap the carbon taxes in the first place. There is not much point having a tax if one has to compensate people for its effect.
David T. C. Davies
My hon. Friend makes an important point. However, if Members on both sides truly believe that carbon dioxide is a pollutant and is causing runaway global warming, they should stand up, take a bow and explain to steelworkers that those workers losing their jobs is a price worth paying to stop the minute increases we have seen in temperatures—although, in fact, we have not seen any increase in about 17 years. The whole thing is absolute nonsense.
We should say that of course we want heavy manufacturing industries in this country. It is not just steel that is threatened; this is also not just about Tata. The Minister for Small Business, Industry and Enterprise will be aware that one other steel manufacturer in south Wales has said that it may face severe economic problems unless something is done about high energy prices. Sanjeev Gupta, a constituent who is head of Liberty House, has said that we need to scrap the carbon floor price. As I said, this is not just about steel; it is about glass, chemicals, cement and all sorts of other heavy manufacturing industries. If hon. Members truly believe that these industries are polluting the atmosphere and causing a great increase in temperature, although we have not actually seen any evidence of that for 17 years, they are doing exactly the right thing. However, I happen to think that all of them, and this Government, are doing the wrong thing.
It is high time we stopped trying to tax our manufacturing industries, stopped taxing companies that could be profitable, and stopped handing the money to expensive wind farms that generate electricity at two or three times market rates, particularly when the wind farm companies involved are not even willing to buy steel from this country, and import it all instead. In the Committee, the Minister described the policy as barmy, and she was right, although she was probably being far too polite.
I have no problem at all with CO2 being emitted. I want a viable heavy manufacturing industry in this country, and I want to see lots of jobs and low taxation. I am perfectly relaxed about CO2 emissions.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
This is not just about the obvious news stories about Port Talbot or the strip industry; it involves all Tata sites, including Aldwarke, Thrybergh, Stocksbridge, Shotton, Llanwern, Orb, Corby and Hartlepool; this is a UK steel crisis.
I reiterate that Tata has to behave like a responsible seller, and we need to remind it of its antics in 2010, when Kirby Adams, the then chief executive of Tata in Europe, tried to use skulduggery to shut Redcar. We solved that problem, but it took more than two years—two years in which there was not one hard redundancy. We need to remind Tata of its previous behaviour and not see it happen again.
British steel is not a basket case, a failed industry or a sunset industry; it is a very successful industry. We had evidence of that recently, when Liberty Steel bought Dalzell and Clydebridge—integral parts of any programme for Trident renewal. Teesside Beam Mill, Skinningrove, Scunthorpe, York, Blaydon and, indeed, Hayange in France, which is part of the long products division sold off to Greybull, are another success story of assets that investors want to buy into. They also demonstrate the European aspect of the previous Corus-British Steel envelope, and we still have sites in IJmuiden and Hayange.
British steel has always relied for its totemic name on its quality and its research and development. Places such as the Materials Processing Institute in Teesside at the old labs at Grangetown, as well as the research and development capacity in Rotherham and Sheffield, when linked with blast furnaces and electric arc furnaces, gives us the ability to control the destiny of metallurgy in our nation. That means we can innovate and create new products. That must be remembered.
I am interested in the notion of co-investment, whether that is in cash terms, or whether it is about an equity stake, a loan, R and D or, more importantly, Government policy. If we are to have a real discussion in this place, we have to look at the different options for co-investment. That is not about the individual commercial parties that may be interested in purchasing, but about putting ideas on the table so that we can actually plan an industrial strategy, because we have not done that in the last five years.
Let us take the issue of Chinese dumping. This is a new phenomenon; it has been going on for four and a half years. Before that, it was not happening. The circumstances have changed, and that is why the Government have to change the way they behave on the lesser duty rule and other legislation. There are no precedents, and that is why we cannot stick to rigid dogma, or even analytical argument around World Trade Organisation rules. On co-investment, I have to question whether we are properly looking at issues such as shale gas, and whether parties are being honest about the policy on that, because we are talking about gas-intensive industries.
On carbon capture and storage, the Government have to come clean. They have pulled the rug from under energy-intensive industries on carbon capture and storage. How will they maintain energy-intensive industries—whether it is chemical processing, shale, steel, light manufacturing, glass, cement or bricks—without a proper strategy on carbon? Taxes can be implemented under the EU emissions trading scheme or unilaterally, by bringing in the carbon price floor. They did that in the Budget some years ago, and they promised to give compensation. However, they did not calculate that if they wanted to compensate people for their own unilateral British tax, they could do so only via the European Union. They had not done the requisite work; they looked at the margins that a Treasury civil servant brought forward and just applied a rule, and they are now reaping the consequences of that.
Ultimately, Port Talbot, the strip and every single other site need time. In 2010, Redcar was saved over two years; SSI had six weeks and fell. We have to give British Tata sites time so that they can be saved. We need proper definitions of co-investment for the community to discuss.
Richard Fuller
The hon. Gentleman is talking a lot of sense. On the issue of time and co-investment, the Government could provide a bridging loan that extends beyond the period for which Tata is prepared to subsidise the steelworks, until a future buyer is found. Is that the sort of co-investment that the hon. Gentleman has in mind?
Tom Blenkinsop
I thank the hon. Gentleman for his intervention and for giving me some more time. I really appreciate his comment.
Continued production is another pillar. If we are to save these sites, production has to be continuous or skills will be lost. In Redcar in 2010, the then regional development agency, One North East, along with Government agencies in Whitehall, provided a £60 million package. That came from RDA and central Government budgets. It retained people in the area on training courses while we—I was a union officer at the time—negotiated with other parties, such as Marcegaglia, Dongkuk and SSI, to get that site bought. It is vital to look at continuous production, time and other elements of co-investment, not just the cash element.
Byron Davies (Gower) (Con)
I am grateful for the opportunity to speak in this extremely important debate. I thank the Secretary of State and his team for keeping the House informed—in particular for keeping in continuous contact with me and other Members. I thank the Government for the extremely constructive and close way in which they have worked thus far with the unions and other parties.
I congratulate the Community union, whose evidence to the Welsh Affairs Committee was very impressive indeed. Representatives were here yesterday. I am pleased that the Government have kept in contact and ensured that everybody has been kept informed at every stage, because this is about livelihoods. As someone who grew up and was schooled with many who went on to the local steel industry, I recognise how important the industry, the supply chain, the steel stockholders and the maintenance companies that look after the Port Talbot steelworks are to families in my constituency of Gower.
The Government’s interesting announcement yesterday about co-investing with a buyer highlights their commitment to the people who work at Port Talbot. That will help to ensure the survival of the steelworks, but it also demonstrates the need to work on a vast number of issues, many of which have been mentioned today and during the past week, to ensure a viable long-term future for the industry.
It is crucial that parties work with each other in this Chamber and go beyond party politics to ensure the survival of steelmaking at Port Talbot. I want briefly to discuss one of the areas that we need to consider as part of our long-term strategy: the use of British steel in infrastructure projects. I know that there are rules and guidelines, but we must think strategically about our use of steel.
The Government’s increased investment in infrastructure means that British steel has had more opportunities to be used, as a result of which our workers, their families and our communities have been supported. For example, 98% of the steel that National Rail has used has been British, while 95% of that used by Crossrail has been. Indeed, HS2 and Crossrail 2 will provide further huge opportunities for our steel industry. As we have heard, something like 94% of the steel used in manufacturing aircraft procured by the Government has been British and, of course, the Great Western Railway electrification to Swansea will provide a further opportunity to use steel.
We need to ensure that our infrastructure strategy and investment tie in very closely with the use of British steel. I was extremely pleased when the Government and my right hon. Friend the Chancellor of the Exchequer set up the National Infrastructure Commission, headed by Lord Adonis, to give this country the infrastructure to support future economic growth. Will the commission examine how projects could make use of British materials such as steel and support vital industries? Infrastructure projects support local families, local businesses and local communities.
From the coffee shop to the hairdresser and the baker, businesses across south Wales, particularly in the Swansea bay region, are deeply concerned about their future. We need to look at a wide-ranging and long-term strategy to make the industry viable for south Wales. A joint strategy that supports economic growth in the region could consider projects such as the Swansea bay tidal lagoon, which is the type of infrastructure project that would not only add jobs, but continue to support those workers and families just over the bay in Port Talbot.
We must work together. Political grandstanding will not save jobs, provide a long-term viable future for steel production in Port Talbot or support businesses in the supply chain across south Wales. The history of steel in our communities runs deeper than political point-scoring, which causes confusion. Only last week, I spoke to a lady constituent who is a Tata employee, as is her husband, and both of them were appalled and disappointed by the political rhetoric from certain quarters.
We have a shared history and experience of steel in south Wales. Our communities, our social fabric and our lives have all been built or touched by the steel industry. Only by working as one can we provide the future we all want for steel in Port Talbot. Politicians who grandstand in an attempt to ingratiate themselves with steelworkers will not help. We need action, and that is what the Government are clearly providing, constructively and conscientiously. I applaud their actions to date and look forward to a positive outcome for the people of Port Talbot and the many employees who reside in my constituency of Gower.
Mark Tami (Alyn and Deeside) (Lab)
Tata’s announcement that it would no longer support its operation at Port Talbot came as no surprise to Labour Members. We had been warning the Government for months that that was coming down the line, but they chose to do nothing. The Secretary of State was on the other side of the world when the announcement came, and he now clings to the claim that he somehow saved the plant while he was in Australia. As workers at Redcar found out, this Government do too little, too late, and, as my hon. Friend the Member for Wallasey (Ms Eagle) has said, they offer warm words but no action.
This crisis now affects the whole of the UK steel industry, not only Port Talbot. The media have a habit of describing the whole UK steel industry as loss-making, but that is far from the truth for a lot of those plants that add value. Shotton steelworks galvanises and colour-coats steel. It is a profitable business that employs 800 people—quality jobs that are vital to the economy of Deeside. Profitable it may be, but that does not ensure its long-term survival. Shotton relies on steel from the Port Talbot operation. If Port Talbot closes sooner rather than later, it would not be long before Shotton would have to cease its operation due to lack of supply.
The idea that someone can just pick up the phone and buy in from China or anywhere else lots of cheap steel of the quality and quantity needed for a plant such as Shotton is far from reality. To ensure the future of Shotton—I made this point to the Secretary of State yesterday—we need a lot of time. That is a common theme of what colleagues on both sides of the House are saying.
Time is needed not only to find a buyer for the whole of the UK business that will invest and commit to the future, but to allow the downstream businesses to find an alternative steel supplier should the worst happen. I do not want to see that, but the Government have to plan for all scenarios. As many other colleagues have said, we have to reassure the customer base as well. If we do not do that, there will be no businesses to sell to, because the customers will start to leave and walk away. They need assurances.
Shotton, probably more than anywhere else, knows about the impact of job losses in industry. In 1980, despite the gallant efforts of my predecessor, now Lord Jones, and the trade unions, Shotton saw its steelmaking cease and more than 6,500 people lose their jobs. At the time, it was the largest number of job losses at a single plant on a single day anywhere in the history of western Europe. Although the area has recovered and new employers have moved in and grown, the scars of the events of 1980 remain.
On Deeside, nearly everybody has a family member or a friend who worked in the industry. Some people never worked again. The lesson is that such large-scale job losses affect not only the individuals who once worked the industry, but their families and the whole area. Such job losses destroy whole communities, which take many years to recover. The Government have an opportunity to save the industry and assure its long-term future, but they need to act—and they need to act now.
Jessica Morden (Newport East) (Lab)
We have two important debates this afternoon: this one on steel, and the debate later on the contaminated blood scandal. As a steel group member, I am incredibly pleased that my hon. Friend the Member for Wallasey (Ms Eagle) has been able to secure the debate. I gently reassure anyone who has come to lobby on the contaminated blood scandal that hon. Members will be here to speak for them in that debate later. It will be a very long day for those who have travelled from far and wide to get here. Both of the debates remind me of “Groundhog Day”, because we have to come back time and again to rehearse the same arguments and press for action.
Understandably, much of the focus has been on Port Talbot, and I praise my hon. Friend the Member for Aberavon (Stephen Kinnock) for his efforts with the steel unions. As has been said, however, this is a UK steel crisis. Steelmaking may have ceased in 2001 in Llanwern, but slab has been imported by rail from our sister plant in Port Talbot ever since. Our steelworkers are proud to roll UK steel, and they want to continue to do so. They are looking to the Government to ensure that happens.
At Llanwern, we have taken a cumulative hit over the last few years. Hundreds of jobs have been lost, to the point where we have 700 left. It has been painful. Many of the Llanwern steel workers have transferred to Port Talbot, and they now face uncertainty there. As my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) has said eloquently, steel could have a great future. At Llanwern, we have the Zodiac line, which is Tata Steel’s world-class coil galvanising line. The Zodiac line is doing well. Orb Electrical Steels, which produces a type of high-tech electrical steel, is in profit following a period of restructuring a few years ago. As is often said in debates such as this, steel is cyclical, and Orb demonstrates that. The order books are healthy.
We have had much in the way of warm words, with phrases such as “do all we can to help”—that has been said again today—but what do they mean in practical terms? The asks from the unions have been well rehearsed today, and I would like to add to them. The unions want fast action to protect the order books to ensure the businesses are saleable. It is crucial to the future of Llanwern and Orb that they are not undermined by seepage of business elsewhere before any sale or transferring of work. The unions want time for the sale, as my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) has said. It is important to know the timescale. Long Products took nine months, and Tata appears to be saying four months. As the shadow Business Secretary has said, we need time for an appropriate consideration of offers. What is the news on the Secretary of State working with Tata to ensure that it is a responsible seller?
I have many steelworkers in my constituency but also a large number of steel pensioners. Can the Government give those pensioners and future steel pensioners some reassurance about their pension fund, and can the Secretary of State outline the actions that the Government are taking?
The asks from the steel industry in recent times have been for action on Chinese dumping, on which the Government have failed. They have also failed to act on the lesser duty rule. It is ironic that while our Government have been slow to act on tariffs to protect our industry, the Chinese Government have just imposed 46% tariffs on electrical steel. Although Orb no longer exports to China, companies in other countries do. They will be looking for alternative customers in other countries, and that could mean issues down the line for our electrical steel industry sales.
We have asked for action on energy prices. That took two years to deliver, and is only just coming through now. That is too slow. We need real action on procurement, not simply the souped-up advice note that came out last week. Will the Minister tell us today what specific projects he has in mind? The Welsh Government have done all they can to help with the levers that they have had at their disposal. That has included setting up the steel taskforce to work on practical ways to help. I know from my union reps who came here yesterday how much that relationship is valued.
References were made yesterday to grandstanding, and they have been repeated today. I assure hon. Members on both sides of the House that steel group members have raised issues to do with steel time and time again in the Chamber. It is not grandstanding; it is personal. It is personal because our constituents are loyal, resourceful, highly skilled and incredibly hard-working. We understand what they are going through in tough times. These are valued jobs.
The issue is also personal because I look around the Chamber and see my hon. Friend the Member for Cardiff West (Kevin Brennan), who worked at Llanwern, as did his dad; I see my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), whose dad also worked there. I see my neighbour, my hon. Friend the Member for Newport West (Paul Flynn), who worked as an industrial chemist in Llanwern. My parents met in the steel industry at Ebbw Vale. There are many others. We cannot let our steelworkers down, and I make no apology for speaking up for them.
Marion Fellows (Motherwell and Wishaw) (SNP)
I thank all those who managed to get your permission to hold this debate, Mr Speaker.
I was a member of the Scottish steel taskforce, along with my hon. Friend the Member for Rutherglen and Hamilton West (Margaret Ferrier). The Scottish steel taskforce was a partnership of Tata Steel, local authorities, trade unions, political parties, the UK Government and Scottish Government agencies such as Scottish Enterprise, Skills Development Scotland and Partnership Action for Continuing Employment. The taskforce was put together by the Scottish Government to help to find a buyer for the threatened Scottish plants in Dalzell and Clydebridge. The taskforce did a great job, as some Members and the Minister may well know.
The handover took place on Friday, based on a back-to-back agreement whereby the Scottish Government bought the plants from Tata and sold them on to Liberty House. It was a wonderful day. We were surrounded by all the members of the taskforce, the steelworkers and their families and friends. It was an emotional day. Steel is an iconic industry in my constituency, and it is responsible for some of the specialised steel that is used in the defence industry and in the oil and gas industry. It could not be allowed to go under, and the Scottish Government did not allow that to happen. They took a very proactive approach to the threat. They put forward legislation that introduced a one-year relief on business rates for a prospective buyer. The assessor agreed to look at the state of the steel industry when revaluation takes place next year.
The Scottish Environment Protection Agency worked closely with the taskforce to make sure that any prospective buyer or anyone who was interested got the best possible advice as efficiently and quickly as possible. The Scottish Government have produced a new responsible procurement policy, which echoes and, in some instances, betters that which has been produced by the UK Government. [Interruption.] The Minister chunters; I am sorry, but I have lost my place.
The Scottish Government are working to reduce overall energy consumption and energy cost. The Scottish Government were very pleased that the EU cleared the energy intensive package in December last year, after the UK Government were prodded into action by the UK steel summit. Skills Development Scotland developed an upskilling programme to help to retain key staff and to help them to move back into employment once a buyer was found. Those were the very people who were there on Friday. Sanjeev Gupta of Liberty Steel said that the transfer of ownership could not have happened without the efforts of the Scottish Government. He has also indicated that 150 jobs will be created to get the plants back up and running again, which gets us almost back to where we were.
The UK Government cannot rely on helping workers after the event. It is the Government’s duty to be proactive, and to be seen to be so, in securing buyers for effective plants, following the Scottish Government model. Scottish Government phoned prospective buyers, kept in touch with the customer base and, at the same time, maintained business confidentiality. They can do it, so the UK Government should be able to do it. The Scottish Government also launched a manufacturing strategy only this February, which proposes to boost the Scottish economy by investment and education in order for Scotland’s businesses to compete globally. What are the UK Government doing in that regard?
Finally, may I give the Secretary of State a piece of advice? He should speak to the Scottish Government to see how saving plants can be done using actions, not words. As the First Minister has said:
“The steps we have taken in Lanarkshire should give hope to those in other parts of the UK that with the right support and a strong Government there can be a future for steel.”
Nick Thomas-Symonds (Torfaen) (Lab)
There have always been the strongest of links between the constituency of Torfaen and the steelworks at Newport. I speak today for not only the steelworkers in Torfaen, but the many more steel pensioners, including my father, whose time at Llanwern was referred to by my hon. Friend the Member for Newport East (Jessica Morden).
I echo what my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) said: the steel industry can and should have a great future. There are so many great things about our steel industry. It is an industry that has always involved working together—between workers, management, unions and owners. It is an industry that has some of the most skilled and committed workers to be found in any industry anywhere in the world. It is also an industry that I believe is vital to our national security: we cannot have a country that is secure unless a native steel industry is available to us.
We should not forget that, over many years of change, the steelworkers have been a constant. The industry has gone through change—it was nationalised after world war two; most of it was reprivatised in the early 1950s; it was renationlised by the Wilson Government in the 1960s; it was privatised again under the Thatcher Government—but the steelworkers have always shown their central commitment and demonstrated their skills during that time. It is unthinkable that there should be no steelmaking at Port Talbot, just as it is unthinkable that we should not look at this as a UK-wide problem.
It seems to me that the Government have to look strategically at two things. They must look at what they are doing practically to support the sale process at Port Talbot, and at what they can do to support both the aspects we are now coming to: the expressions of interest and the due diligence period that will follow. There are far wider questions, however, in relation to how the Government will be judged on their actions and what they actually do to help the steel industry.
The lesser duty rule has been mentioned a number of times in this debate. Let us be clear: as long as it is in place, the duty imposed will always be lower than the margin of the dumping. The European Commission wants to scrap the lesser duty rule. The World Trade Organisation rules do not even oblige the European Commission to apply the lesser duty rule. It is for the UK Government to make the case within the European Union for it to be scrapped, but of course the fact is that they are not doing that. The European Steel Association spokesman said:
“The fact is that the UK has been blocking this. They are not the only member state, but they are certainly the ringleader in blocking the lifting of the lesser duty rule. The ability to lift this was part of a proposal that the European commission launched in 2013”.
What has the Secretary of State done on this since then? The answer is absolutely nothing. There is also the issue of market economy status for China. I thought that Mario Longhi, the chief executive of the biggest steelmaker in America, put it best when he said, about even thinking of granting market economy status for China,
“where you have all the evidence in place that denies them that right it’s just ridiculous”.
The Secretary of State should bear that in mind.
The Secretary of State does have a choice, particularly when it comes to the lesser duty rule and market economy status for China. Where do his loyalties lie: do they lie with Beijing, or with the steelworkers of this country? Would it not be the most supreme irony if a Secretary of State who is supposedly ideologically wedded to free markets ends up granting market economy status to a country where 80% of the steel industry is owned by the state? Is that seriously what the Secretary of State is going to do? It is time he put aside his obsession with Beijing and acted for our steelworkers.
Andy McDonald (Middlesbrough) (Lab)
I am grateful to my hon. Friend the Member for Wallasey (Ms Eagle) for securing this hugely important debate.
We on Teesside are still reeling from the Government standing by and allowing steelmaking to die at the SSI plant at Redcar. People have very long memories, and it is a shame that it has taken another six months to discover the concept of co-investment, because that has come a little bit late. However, I very much welcome the securing of the long products division, and I congratulate the unions on their initiative in progressing the discussions to such a successful conclusion.
This is the most bizarre of circumstances: we are fearing the collapse of steel production in the UK, but we have the most superb industry, with a brilliantly skilled workforce and an excellent industrial relations history. It is therefore essential that we send out the message that we have a steel industry that is very much worth fighting for. We need to instil confidence in steel customers and suppliers alike that our steel operations are very much open for business. Steel has a bright future if we can get through these next few months.
On development, I am grateful to the mightily impressive Chris McDonald of the Materials Processing Institute for pointing this out:
“Two-thirds of the steels in use today were not even invented 15 years ago, and steel remains a vital ‘economic enabler’ for UK economic growth without which our successful high-value manufacturing sector simply could not exist.”
The automotive, aerospace, defence, nuclear and rail sectors all need the development of new steels in the pursuit of ever improving productivity, and our leading companies undoubtedly benefit from research partnerships with domestic steel producers. He went on:
“If the steel industry were to disappear altogether from the UK, reliance on overseas producers would not only mean the loss of thousands of jobs, but also slow the pace of development and risk the offshoring of the whole manufacturing supply chain”.
We should therefore grasp the opportunities presented by Tata Steel’s sale offering of its assets in the UK.
The debate is about more than just Port Talbot, but that is vital. There is an overwhelmingly strong case for the continuation of steelmaking at Port Talbot, with its advanced steelmaking equipment, its experienced workforce and its capability of making world-leading, high-quality steel for the most demanding applications. Labour Members are in no doubt that the plant can not only compete, but have a highly profitable future. In addition, there is a huge opportunity for new mini-mill operations based around electric arc furnaces, utilising 100% recycled raw materials and offering a step change improvement in carbon emissions.
I plead with Ministers to include all aspects of the future of UK steel in their thinking: the exploitation of, and commitment to, innovation and research and development will undoubtedly pay rich dividends. There is a research and development proposal on the table from the MPI, TWI Ltd and the Institute of Materials, Minerals and Mining. The proposal will leverage recent and secured future investments, which have been used to upgrade materials, research and support facilities in Rotherham, Port Talbot and Cambridge, as well as on the two sites in Tees valley. I urge Ministers to look closely at that proposal. The automotive industry has been turned round to become an enormous success, and we can do the same with the steel industry.
The timescale is crucial, but it is ridiculously tight. The kindest thing to say is that the seller is incredibly ambitious to think that such a process can be undertaken in such a short space of time. Crucially, in the final analysis, the state will indeed step in. Call it temporary nationalisation, public sector stewardship or whatever we like, but let the customers, suppliers and workers know that the UK steel industry will endure, and it will not only endure but thrive.
Nic Dakin (Scunthorpe) (Lab)
In the middle of 2014, Tata announced that it would dispose of its long products business. It has taken until this week for the conclusion of a process that involved first interest from one buyer, its pulling out and then the work that everyone—trade unions, the management team, Tata itself, Greybull Capital and suppliers, who have also had to contribute to the process—has done locally. The way forward is tough and the process is not yet complete. I welcome the Secretary of State’s statement yesterday that he would do everything possible to ensure that those matters that still need to be resolved are resolved satisfactorily, so that the sale goes ahead and there can be a future—I believe that, although different from the past, that future will be a positive one. That will be positive for all the communities throughout the long products sector, including those in Scunthorpe—the site of the largest steelworks in England, which I am proud to represent.
When the Secretary of State was first appointed I wrote to him to ask for a meeting, because I knew that the steel industry was facing a crisis. Unfortunately there were other pressures on his diary at that time. Back in September I asked the Prime Minister for a steel summit. Eyebrows were raised by Government Members then, but to the credit of the Minister and the Secretary of State, we got a steel summit in Rotherham, which helped to focus on this issue.
Let us look at the issues that we have been arguing about—I have been arguing about them for four or five years now. The Government have moved on energy costs, but that movement has been slow and laborious. They brought in a unilateral carbon floor tax, then found themselves in a mess. It has been more than three years now and the money for mitigation is only just getting into the coffers of steelworkers. Frankly, that does not give the message of confidence needed to take the industry forward. However, I welcome the Secretary of State’s comments today that he is looking at doing that by exemption rather than through the current methods. We are seeing movement, which should be welcomed.
It is deeply disappointing that the Chancellor was unable to bring us good news about business rates. Listening to what Ministers have said in many speeches, I believe that they have been fighting their corner on that. It is deeply disappointing that the Government at the highest level were unable to move on that, as it would have made a real difference. Ijmuiden, a larger plant in the Netherlands, pays less in business rates than the Scunthorpe plant. That is not right. The playing fields need levelling.
I very much welcome the Government’s movements on procurement and the production of better guidelines but, as I have said all along, the proof of the pudding is in the eating, when the guidelines are tested. I point again to DONG Energy’s development of the Hornsea project on the North sea. That is happening because of a very generous contract for difference that the UK Government have given to that private sector company. Public money is invested in that project, and the energy coming from the development will be paid for by UK taxpayers and UK energy bill payers. It will be outrageous if UK steel is not in those monopiles, blades and turbines going up in the North sea. I urge the Secretary of State to work tirelessly with his Cabinet colleagues to ensure that private companies delivering public projects also deliver on procurement for our steel industry.
Finally, much has been said about Chinese dumping. The Secretary of State’s mood music has changed on that issue, which I welcome, but the change has been very slow. We have seen action, which should be approved. We have heard from the whole steel community—from Eurofer, for example, which represents steel communities and employers across Europe—about how important it is to tackle the lesser duty rule. That would give a signal about confidence, which is what the industry needs more than anything else—and confidence not just that we are getting warm words, but that those warm words are supported by actions. Such actions should be prompt, not laggardly. Save our steel.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
Although I thank the shadow Business Secretary for securing this emergency debate, I find myself asking how many times, exactly, we are going to have to debate the crisis facing the UK steel industry before the Government take it seriously. That crisis has not arrived recently, unannounced, or sprung up overnight. The warning signs were there. There has been a constant siren of Opposition voices forewarning the Government that action was urgently needed. The steel industry has been crying out collectively for action to be taken. The all- party parliamentary group, of which I am a member, has made countless representations to the Government, spelling out exactly what action needs to be taken.
Although the Government have jumped into action recently, they are unfortunately still not going far enough. We are yet to see meaningful action on dumping. The steadfast opposition to scrapping the lesser duty rule has meant that little can be done to stem the flow of cheap Chinese imports. The Government have not only been reticent, but have apparently been leading the charge on a European level, actively blocking action. The UK Government are guilty of negligence in their approach to the dumping of cheap steel on world markets by China. While the UK is bending over backwards to accommodate Beijing’s request for market economy status—that would make anti-dumping cases much more complicated—our industry is suffering.
What has just happened in Scotland is testament to how a proactive Government, working closely with industry, unions and the workers themselves, can protect jobs and safeguard this vital industry. It is crucial that the UK Government now follow that example, and make a similar concerted effort to save steel plants in England and Wales. They must work co-operatively with the EU on anti-dumping measures. We need a credible strategy, not just for steel but for ceramics and all other energy-intensive and heavy industry in the UK. Make no mistake: the industry in Scotland still faces challenges, but the Scottish Government’s diligence in saving it has given a renewed confidence that steel has a bright future there.
On the Scottish National party Benches, we stand in solidarity with steelworkers in England and Wales. Despite all the warning signs, I want to see a bright future for steel right across Britain, and not just north of the border. For that to happen, we need a complete change of tack from the Business Minister. Throughout the crisis, the SNP has consistently called for a comprehensive and revised industrial strategy for heavy industry in the UK. The SNP recently launched a bold vision for a manufacturing future for Scotland, spelling out how industries such as steel are viewed as vital strategic assets in the Scottish economy. Although that might seem like a common-sense approach for any Government, it is visionary by comparison with Westminster’s strategy, or lack thereof.
Last Friday many workers, as well as many union representatives, attended the handing over of the keys from Tata Steel to new owners Liberty House at the Dalzell plant in Motherwell. The sense of relief, optimism and renewed hope for a better future was palpable. Beneath all that, however, there is a resilience—we can call it steely determination if we will. This is a centuries-old industry that has learned to adapt to many changes over the years. As Charles Darwin said, it is not the strongest of the species nor the most intelligent that survives. It is the one that is most adaptable to change. The steel industry is up for the challenge, and the Government need to step forward.
I hope that the change for our steel industry in Scotland is a success, but I want a successful, productive future for all of our steelworkers throughout the UK. I really do hope that the Government are listening today and will leave no stone unturned—the phrase of today—to save our steel. Our highly skilled, dedicated steelworkers need a positive future—indeed, they truly deserve that.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
First and foremost, I praise my Front-Bench colleagues for securing this debate and Mr Speaker for granting it. I also want to praise the work of the First Minister of Wales, Carwyn Jones, who has worked constructively with the UK Government to try to find a solution. He has been head and shoulders above in speaking out, along with my hon. Friend the Member for Aberavon (Stephen Kinnock) and so many others. I am proud to have him as our First Minister in Wales.
Like my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith), I want to underline the point that the steel industry in this country has a future, and that future is at the heart of our future infrastructure and defence projects. Just as she is proud of the steel produced in Stocksbridge, I am proud that steel produced at Celsa in Cardiff, in the heart of my constituency, is at the heart of Crossrail and so many other construction and infrastructure projects across the UK. We must never lose sight of that. This is not an industry of the past; it is an industry of the future—if the Government get behind it fully.
I want to touch on three issues. Regardless of the welcome announcements about Scunthorpe and, I hope, Port Talbot, we still need to address the market fundamentals that have brought us to this point in the first place. They affect the UK steel industry as a whole and will continue to affect it if we do not address them. I want to flag up some of the strategic choices and risks we face, and I want to debunk some of the myths that have, unfortunately, been propagated about the role of the EU.
First, I want to mention energy, which is at the heart of the debate. We have the highest industrial electricity prices across the EU. According to UK Steel, they are 89% higher than in other EU countries. Whatever nonsense we hear about the EU being to blame, the fact is that four of the main policies causing the higher prices for industrial energy users in the UK come from the UK Government. I welcome the steps talked about with regard to exemptions and compensation, but the fact is that those prices have come from the UK Government. The hon. Member for Monmouth (David T. C. Davies) says we should not do anything about climate change, but that is not the issue. I have made the point repeatedly that offshoring our carbon emissions to places such as China and Turkey would be absolutely absurd. I ask the Government to continue to review every aspect of this tax regime and see what the net result is for industrial energy users in this country. Are they paying more or are they paying less? If they are not paying less, we will face this problem again and again and again. It is all very well talking about a compensation package, but when I went to Celsa in my constituency just a few days ago it still had not received the money. The Government have been far, far too slow to act.
On dumping and tariffs, we heard very powerful arguments about the lesser duty rule from my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) and others. I reiterate the question I put to the Secretary of State earlier about the tariffs on rebar. We need to consider whether they are still high enough. He says they have gone down by 99%, but other factors are at play. I welcome what he says, but we need to keep them constantly under review.
I absolutely agree that we should not grant market economy status to China. That would be an absolute absurdity. On procurement, we have to see concrete steps. I was pleased to hear what the Secretary of State said about potential announcements with regard to the defence industry, but they should have happened a long time in advance. We have produced product after product after product without using UK steel. The Government talk about aircraft carriers, but what about the offshore patrol vessels, tankers and scout vehicles? They have not been produced using UK steel. We need to get in there and make sure that British steel is being used. I await that announcement with interest.
This is not just about the role of the Government in procurement, but construction companies. With other MPs, I have written to construction companies across the UK to ask them whether they will adhere to using UK steel in their products, and whether they will adhere to the BS 6001 standard, which uses high-quality British construction steel rebar. There is a responsibility for both Government and companies. I worry that unless we address these issues and maintain a diversity of production in our steel industry, using blast furnaces and electric arc furnaces to produce different products, we will lose capacity in certain areas. Once that is gone, it will be lost forever. Others, such as the Chinese, will come in and whack their prices up. That will also be a risk to our national security.
The EU is not to blame. It would be absurd if we took action now to save the steel industry and then dealt it another body blow by leaving the EU. The reality is that half of our exports go to the EU. If we lost the single market, they would be gone. State aid rules apply in the World Trade Organisation as well. We would have less capacity to act on dumping, working with others, than we have at the moment. The EU, working together, has delivered 37 EU measures to tackle dumping, 16 of which relate to China. It is the UK Government who have not done the work. It is with the UK Government that I place the blame, not the EU. We can save our steel, but only if we work together to do it.
Geraint Davies (Swansea West) (Lab/Co-op)
Port Talbot is an industrial jewel in the crown of Swansea bay. Thousands of people in the community and beyond rely on it. Clearly, we are looking to the Government to support our steel industry in its time of need. The Welsh Government, under Carwyn Jones, have come forward, and my hon. Friend the Member for Aberavon (Stephen Kinnock) has shown leadership. We want guarantees on the socialisation of pensions.
I am not here to criticise Tata. It invested £6.2 billion to buy the Port Talbot steel plant in 2007. It spent another £2 billion to cover losses and £185 million on a new blast furnace in 2013. It is a long-termist organisation. The reality, however, is that worldwide steel production has doubled because of Chinese production. As a result, world prices have halved. Tata cannot compete with the threat of China, which is 80% state owned. We need to hold on in there and do what we can to ensure a sustainable future. China is thinking strategically, whether through very low prices with HS2 and nuclear procurement, or by buying assets globally from its balance of payments surplus. We need to understand what it is trying to do and ensure that our long-term interests are sustained.
Swansea University is investing in new types of steel: multi-layered steel that generates its own electricity. It has a negative carbon footprint when it is used to clad major public buildings. We have high quality Margam coal, which is particularly good in steel production. I want guarantees from the Secretary of State. He talks about co-investment, but what co-investment are we going to have? Will the Government have an equity share in the short term? What guarantees can he give about a more level playing field on energy?
Christina Rees
Does my hon. Friend agree that the Government could see the current threat to the UK steel industry as an opportunity to change the way to do things, so that a structure can be established to protect the industry for many years to come? The Government could look to other sectors, such as the care sector, and to other parts of the world to learn from tripartite models of delivery involving public-private sector investment, as well as third sector involvement in the shape of a management-worker buyout.
Geraint Davies
We need to look creatively at company structure and procurement. We also need to think about the fact that we are in the process of displacing clean steel with environmental protection for dirty steel. There is a case for considering carbon tariffs on steel and other manufacturing products, because we share a common environment.
On procurement, my hon. Friend the Member for Aberavon made it clear that we need to know who the Government are talking to and what reassurances are being given. We have been told that this information is commercially confidential, but what those consuming steel to build cars and so on want to know is whether, if they make an order now, in a year’s time the steel will be delivered at the price paid. We need to be able to give those guarantees to secure the future. We need to hold our nerve. The need in this case, and with any business, is cash flow sustainability. The Government therefore need to think about financial packages, so that the cash flow of the business can be sustained on the back of future orders at known prices.
It has been mentioned that half our exports go to Europe. It would be a complete disaster for us to leave Europe, with the extra tariffs that might be imposed. It is important that we move past the referendum period, so there is security for prospective buyers in knowing that we are still in the single market without more tariffs being imposed. Our first duty is to secure the livelihoods of our communities, as well as our strategic interests. It is important that the Government do not give the impression that they have given up and simply want a buyer. They need to come forward and offer any of the benefits they would offer to a prospective buyer to Tata Steel. If there is to be pension buy-out to provide security for a buyer and for pensioners, and if there is to be co-investment, it should be available to Tata as well as others. Tata showed before that it was there for the long run, but because the Government showed that they were not, it pulled out. We want a sustainable future, and it is important that Tata is brought back around the table, alongside other prospective buyers.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. We are running out of time, so I am afraid I have to reduce the limit to four minutes.
Anna Turley (Redcar) (Lab/Co-op)
Yesterday, the Secretary of State pledged his commitment to the steel industry, which I welcome, but I would like him to spell out exactly why his Government are now willing to consider co-investment with a potential buyer for Port Talbot, when they ruled out anything like that for Redcar—at the time because they said that state-aid rules prevented their supporting SSI, and after SSI was liquidated because they refused to put any British taxpayer money into the Thai banks that owned the site. Why were the Thai banks not suitable for co-investment? It could have bought us time for a sale or enabled the mothballing of the blast furnace. I would like the Government to give us a full explanation of that decision.
In the weeks prior to closure, SSI asked the Government for a loan to enable it to restructure and keep the plant going. It was refused. I sat down with Ministers and potential investors—a company willing to run the coke ovens and run, or at least mothball, the blast furnace while a buyer was found—who did not want a single penny of Government money, but the Minister said it could not be done. What has changed? Does she now regret not listening to the people of Teesside, the unions and the companies we presented to them in order to keep steelmaking alive on Teesside? The cost of hard closure has been far greater than that of intervention would have been. I want to say something about that cost in the time available.
First, on the local economic cost, 2,200 direct jobs were lost overnight at SSI and over 900 further jobs were lost in the immediate supply chain, from those who provided the parts and maintenance to the companies that provided the gas or loaded the slab at the ports to those who cleaned the overalls and fed the workforce. Plus, there is no way of measuring the knock-on impact on local shops, hairdressers, builders, nurses—as my hon. Friend the Member for Middlesbrough (Andy McDonald) mentioned—and childminders. We know they are all feeling the pain. Unemployment in my constituency has jumped by 16.2%. We now have the tenth-highest unemployment rate in the country. The steelworks were the foundation industry for many businesses large and small across Teesside. For 175 years, that industry powered the local economy, providing jobs and security for local people and a source of immense pride, as our steel built the cities of the world.
Secondly, I want to talk about the cost to the Exchequer and the state. It is currently understood that the Government are paying over £200,000 a week to maintain the site in its unrecoverable coma status. Recovery of the land for future use is expected to cost the state well over £1 billion. As for the British steel industry itself, we have lost Europe’s second-largest blast furnace and coke ovens, in which millions of pounds had been invested and which were in very good shape.
Andy McDonald
Does my hon. Friend agree that trying to land a bill of £1.1 billion on the Teesside communities for the remediation of the site is totally unacceptable? I know that the Minister is ignoring it, but it will be a huge issue for Teesside if it is landed with that bill.
Anna Turley
My hon. Friend is absolutely right. I want a further commitment from the Government that they will maintain their support for the site as it stands, meet that cost and enable local people, businesses and representatives to decide the future of the site and how it can contribute to our local economy.
We have lost our blast furnace and coke ovens, in which millions of pounds had been invested—expensive national assets belonging to the British steel industry now laid to waste. We can add to that a loss to the Exchequer of the tax intake from those 3,000 workers; the £50 million—and it is £50 million, not £80 million—paid for retraining; and the further £30 million for redundancies and other costs. We must bear it in mind that the majority of workers are still awaiting payment of their protective award, on which I would be grateful for an update from the Minister. Finally, there is the loss to Redcar and Cleveland Council, which has already suffered a £90 million loss after six years of Tory austerity, of £10 million a year in business rates from SSI alone.
Thirdly and most importantly, I want to speak about the human cost. Six hundred workers are back in work or full-time training, according to Department for Work and Pensions figures. I pay tribute to them, my taskforce colleagues and all those in the jobcentres and colleges who have worked hard to achieve that, but 600 of over 3,000 workers six months after closure still leaves us with a lot of work to do. What about the thousands of others? They are signing on, many for the first time in their lives, and many are approaching the six-month cut-off point for contribution-based jobseeker’s allowance. Those with a partner with an income of more than £114 a week will soon lose their JSA entirely.
People are moving out of homes, cars are being given up and many are reliant on hardship funds to pay the bills. One worker can no longer afford to keep his rented house to have his children stay overnight because of the bedroom tax. He is having to be rehoused in a one-bedroom place and cannot have his children to stay. The effect on family relationships has been huge. There has been a widespread loss of identity, comradeship and pride in a skilled trade. Redcar and Cleveland Mind has seen a 91% increase in mental health referrals in the last year, and is doing a fantastic job, but many of my constituents are under the radar. One has not even left the house since he lost his job last September. Families have been destroyed and lives shattered. Our town has been through a tragedy. The financial and human cost of inaction is far higher than that of intervention would have been. I say to the Government: you let us down last year, but please do not let down any other steel town in the UK.
Kate Hollern (Blackburn) (Lab)
I am grateful for the opportunity to speak in the debate, and I would like to thank my hon. Friend the Member for Wallasey (Ms Eagle) for securing it when the steel industry is in crisis and it is so important to consider and discuss the issues today.
I am sure that all Members are keen to take all the steps necessary to secure the steel industry in our country. Today we have heard a number of options put forward—on energy, business tariffs and various others—but I would like to talk about defence. The last Labour Government had an industrial defence strategy, and at its heart was making British industry and British jobs the first priority in all decisions by the Ministry of Defence. The Government should perhaps reflect on implementing such a policy in this time of crisis for the steel industry.
Wherever and whenever possible, British steel should be used to build equipment, weapons, vehicles and ships that our armed forces need to keep us safe. [Interruption.] I can see that some Conservative Members find this funny, but sadly the current Government abandoned the industrial defence strategy, and we can see the implications of that decision today. Three new ships for the Royal Navy are being built in Glasgow with 60% of the steel bought from Sweden, 20% from other countries and only 20% from the UK. A £3.4 billion contract to build 590 Ajax armoured vehicles is also using Swedish imports for the majority of its steel requirements. The Government are refusing to guarantee that the Navy’s new Type 26 frigates will be built using British steel; the Defence Minister would say only that there would be an opportunity to bid. All that paints a picture of a Government who are willing to talk the talk, but not walk the walk.
The MOD has a £178 billion budget for defence equipment over the next 10 years, and Labour will continue to press the case that that money should be spent, where possible, to secure British jobs and the British steel industry.
Kate Hollern
No. [Interruption.] Perhaps the Minister will listen, because to avoid a fire sale, which would be an irreversible mistake, the Government must demonstrate to all stakeholders in the industry that they are taking a proactive approach to ensure that continued take-up of operations. The Government must look to reverse the decision to scrap the defence industrial strategy, and they must make a public statement—with haste—to make it clear that they believe in supporting British steel and British jobs.
Greg Mulholland (Leeds North West) (LD)
I am pleased to participate in this important debate, and I am delighted that the Speaker granted it. As the son of a Teessider, I am a regular visitor to Teesside and to Redcar. I was there only a few weeks ago, and to see the site of that plant, now empty and derelict, with no flame after 175 years of steelmaking, is shocking. My thoughts are with the constituents of the hon. Member for Redcar (Anna Turley) and the people in the surrounding Teesside constituencies. As has been said, when 3,000 jobs are lost, many more thousands of jobs and lives are affected. The Government are at least finally taking very slow action; what a shame that they did not take that action then, to try to prevent that closure.
As my parliamentary neighbour the hon. Member for Hartlepool (Mr Wright) has pointed out, what a contrast there is between what this Government are doing and the industrial strategy of the previous Business Secretary, the internationally respected Vince Cable, who sought to ensure that we maintained our existing industry while transitioning to new technologies. That is entirely lacking now. The current Business Secretary was so proud to say that there was now a Conservative Business Secretary, but he simply does not have an industrial strategy for the United Kingdom.
What an extraordinary situation this is. The Conservative party, while preaching free trade, is rolling out the red carpet for, and seeking to do sweetheart deals with, a communist nation whose subsidised basket case of a steel industry is producing steel that no one in the world needs or wants. It is wrecking a perfectly viable situation. Let me read the House an interesting quotation:
“Redcar has already paid the price for this ultra-free trade ideology, and Port Talbot is about to follow. There will eventually be little left if the current drift in trade policy is allowed to continue.”
Who said that? Was it the Leader of the Opposition, the leader of the Liberal Democrats, the leader of the Scottish National party? No; it was the international business editor of The Daily Telegraph, Ambrose Evans-Pritchard. That is a damning indictment of the Government’s lack of an industrial policy, and of the fact that they have turned their back on steel.
All that the Chancellor is doing is saying to the Chinese, “Can you make a little bit less steel, please?” That is all that he is prepared to do, because of his desperation to court China over projects such as the Hinkley power plant. Although China is closing five steel mills, it will still be producing 1.13 billion tonnes by 2020, according to figures from the Library. That is still far more than the world needs, and it will cause devastation.
Only six months ago, when we were seeing inaction from the Government, the Liberal Democrats called for Ministers to set up a Minister-led steering group to look at the whole steel industry so that a strategy could be delivered to save that great British industry. The Government ignored the call, and failed to act. What we are seeing today is not leadership but panic; the Government are doing too little, too late.
Ministers must now at least do what they can to reverse the present position. They must keep the Port Talbot plant operational while a buyer is sought, and they must be a little less arrogant. They must listen and learn some of the lessons of the past, including the lesson of what Vince Cable did when he went to talk to General Motors. They must ensure that we have a steel industry in the future to support the UK economy.
Kevin Brennan (Cardiff West) (Lab)
Yet again, we have had a very good debate on the steel industry, featuring plenty of contributions from Back Benchers. I think that I counted 21 Back-Bench speeches during our short debate. We heard from the hon. Member for Wellingborough (Mr Bone), my hon. Friend the Member for Aberavon (Stephen Kinnock), the hon. Member for Bedford (Richard Fuller), my hon. Friend the Member for Hartlepool (Mr Wright), the hon. Member for Corby (Tom Pursglove), my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith), the hon. Member for Monmouth (David T. C. Davies), my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), the hon. Member for Gower (Byron Davies), my hon. Friends the Members for Alyn and Deeside (Mark Tami) and for Newport East (Jessica Morden), the hon. Member for Motherwell and Wishaw (Marion Fellows), my hon. Friends the Members for Torfaen (Nick Thomas-Symonds), for Middlesbrough (Andy McDonald) and for Scunthorpe (Nic Dakin), the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier), my hon. Friends the Members for Cardiff South and Penarth (Stephen Doughty), for Swansea West (Geraint Davies), for Redcar (Anna Turley), and for Blackburn (Kate Hollern), and the hon. Member for Leeds North West (Greg Mulholland).
I join others in paying tribute to the Community trade union and the leadership of Roy Rickhuss and others. I also pay tribute to Carwyn Jones, the Welsh First Minister, who has been mentioned today, and to my hon. Friend the Member for Llanelli (Nia Griffith), the shadow Secretary of State for Wales, for all her efforts.
Our role as Her Majesty’s loyal Opposition is to hold the Government’s feet to the fire on this issue. Our industry has to have a future, and we must make sure that it has one. We are having to do this because immediately after the general election, the new Secretary of State for Business, Innovation and Skills signalled, clearly and overtly, that he would not continue the consensus that had been emerging and growing over the last decade on the need for a UK industrial strategy. [Interruption.] I wonder whether the new Secretary of State for Wales wants to learn that his job is to sit there and shut up and listen during this debate. [Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Let us stay calm. The hon. Member for Cardiff West (Kevin Brennan) may wish—I would strongly suggest—to rephrase what he has just said.
Kevin Brennan
I think that the new Secretary of State needs to sit there in silence and listen to what is being said about a very important issue that affects Wales in particular, which is his responsibility.
The UK needs an active, modern industrial strategy that understands the importance of foundation industries such as the steel industry to the rebalancing of our economy. I understand why the Business Secretary, given his City background and professed laissez-faire philosophy about politics, does not want to use the term “industrial strategy”. He is wrong about that, however. [Interruption.] From a sedentary position, I am being asked what my background is. I worked at the Llanwern steelworks for six months and my father worked there for more than 20 years, so I do not need questions about my background from a Secretary of State for Wales who cannot sit there and shut up and listen to the debate as he should do on behalf of his constituents in Wales.
I understand why the Secretary of State for Business, Innovation and Skills does not want to use the term “industrial strategy”, but I am afraid he is wrong not to do so. Unless the Government are prepared to support British industry strategically, the Chancellor’s so-called march of the makers will simply become a death march of the makers in this country. We will not stand by and let that happen. We believe that there is a future for the steel industry in the United Kingdom, and I put it to the Secretary of State that that future should not just be about steel recycling; we need to hear that he is committed to steelmaking, and not just to the recycling of steel, important though that is.
We have been asking the Secretary of State for months to make clear the Government’s view on the minimum strategic steelmaking capacity that they believe must be maintained in the UK’s national interest. They have not been prepared to give that information, which inevitably leads to a suspicion that they do not have a view on the minimum steelmaking capacity necessary for the UK’s long-term economic interest. That doubt at the heart of the Government is like an impurity in steel being poured at a steel plant. If we do not get rid of that impurity, it could lead to a disaster, and it will be a disaster if the doubt at the heart of the Government’s policy is not got rid of.
We need to make sure that the blast furnaces at Port Talbot remain. We also need to ensure that the ability to make new steel—not just to melt down old steel and reuse it—remains in the armoury of UK plc. That is why it is important that we have an industrial strategy, and not just an industrial approach. We need clarity on steelmaking, not just vague warm words. In short, we need strategic leadership, not the laissez-faire laxity now undermining UK plc.
The Minister for Small Business, Industry and Enterprise (Anna Soubry)
I begin by paying tribute to all those who have spoken in the debate. With few if any exceptions, everyone has rightly spoken with passion in their heart on behalf of their constituents and our great British steel industry. It is important that we look to the future and make sure that the message sent out from this place in all our doings is one of confidence in the continuing success of our British steel industry. Over the past seven days, I have had the real pleasure of going to Rotherham. I pay tribute to the wise words of the hon. Member for Penistone and Stocksbridge (Angela Smith), although I do not always agree with her. I went to Rotherham, and I now understand speciality steels, which are separate from the great work being done at Port Talbot; they are almost a stand-alone industry. I then went to Corby and had a great day there meeting excellent workers and excellent management, all of whom are rightly proud of the superb quality of the products that they make.
It is really important that this message of confidence should continue to unite us, for the sake of customers and suppliers alike. Despite the unfortunate remarks made by the hon. Member for Cardiff West (Kevin Brennan), there is much that brings us together on this important matter. We all agree that steel is a vital industry, and that this crisis is not confined to the United Kingdom. We should also agree that, unfortunately, the Government do not have a magic wand with which to control the price of steel. We agree that the industry is vital for not just our national economy but, as we have heard from many hon. Members, the important role that it plays in local communities, through the workers it employs directly and through the supply chain right the way through the regions. In South Wales, for example, the industry is a vital component of the continuing success of that part of our United Kingdom.
I want to pay tribute to my Secretary of State for his tireless work and his outstanding leadership throughout this crisis. One of the problems we have had since we were appointed to our positions last May is that so much has been commercially sensitive. I am looking forward to the day when I will be the first to stand up and talk about the sort of work that this Secretary of State has been quietly and privately leading. That work began as soon as we were appointed. The reason why we get so agitated on this side of the House when we have these debates is that we started delivering for the steel industry even before the tragedy of Redcar, which I will deal with in a moment. That is why I ignored the advice of my officials and said that this country would vote in favour of tariffs on dumped steel. That is what we did in July and again in November.
With losses of £600 million over some three years, the situation in Redcar was very different. Debts ran to tens of millions of pounds, and not only did the local company go bust, but so did the parent company in Thailand. The contrast between SSI and Tata is stark. We would all agree that Tata is an excellent, responsible employer, and we look forward to supporting it in all we do to ensure a successful sale and a successful future for our steel industry.
Question put and agreed to.
Resolved,
That this House has considered Tata Steel’s decision to sell its UK steel operations; and action the Government is taking to secure the future of the UK steel industry.