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Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I beg to move,
That this House has considered the future of the steel industry.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests as a member of the Community trade union. I thank my hon. Friend the Member for Redcar (Anna Turley) for co-sponsoring the debate, which is much needed to get the steel industry crisis back on the national agenda.
The steel industry is not a dead or dying industry. That is something I and colleagues here today have repeated throughout the crisis and prior to it. I know everyone here understands the importance of the industry, but some confusion persists, so I hope colleagues will understand if I reiterate why the steel industry is particularly significant to the UK.
Fundamentally, steel is a strategic and foundational industry. If the Government want to rebalance the economy away from London and to build our manufacturing sector, they simply must support the steel sector. The products of our steel industry supply the booming automotive manufacturing industry and the aerospace manufacturing industry, among others. A successful steel industry helps those industries and a weak one damages them. As well as being the foundation for other industries, steel is strategically important because it allows us to retain the capacity to build infrastructure projects, from Trident to transport to energy. It means our security, our ability to compete and our ability to keep the lights on are not dependent on other countries.
As an aside, look at the problems the French Government are having in building the Flamanville EPR nuclear reactor. In the summer, France’s nuclear safety authority found weaknesses in what I believe is Japanese-made steel in the reactor, which further delayed the project and raised safety concerns. British steel, such as that made at the main competitor to that manufacturer, Sheffield Forgemasters, is more reliable, and I hope it will be used in the similar Hinkley Point C EPR reactors. That is a simple example of the importance of using high-quality steel for infrastructure and why choosing to use British steel for such projects is not just the patriotic choice, but the best choice.
Nic Dakin (Scunthorpe) (Lab)
I congratulate my hon. Friend on securing this important debate. Does he agree that if we really are concerned about taking back control, we need control of our steel industry, so that our infrastructure is built with UK steel?
Tom Blenkinsop
I thank my hon. Friend for raising that point. There have been warm and welcome words from the Government about an industrial strategy. The Opposition have been talking about that for the past six years, but be that as it may, the Government are there and we want to work with them over the next few months to form that industrial strategy. There are immediate issues that need to be resolved, hopefully in the autumn statement, and there are further long-term issues in relation to an industrial strategy, how we form that strategy by sector and how the steel sector needs specific treatment in order to go forward.
The other aspect of the steel industry’s significance is the jobs it provides, the communities it forms and has formed, and the culture of which I am proudly a part. More than 30,000 people work in the steel industry, from watermen to control panel engineers and from craft workers to lab technicians. What is important is not only the numbers but where in the country those jobs are, because as well as adjusting the mix of our economy to include more manufacturing, a long-term aspiration of successive Governments has been to rebalance the economy away from London. The UK steel industry supplies more than 10,000 jobs in Yorkshire and the Humber, 8,500 in Wales, 4,000 in the west midlands, 2,000 in my own region, the north-east, and at least 1,000 in Scotland. Those regions are desperate for jobs and investment, and they have been the worst hit by the decline in manufacturing and domestic industry.
Simply put, if the Prime Minister is serious about spreading opportunity around our nation, she cannot abandon the steel industry. Steelworkers across the UK are not asking for charity, merely for access to a level playing field on which to compete with steelmakers from across the world, but in a number of ways, UK steel is fighting an uphill battle. The trade tariffs that protect American steel producers from Chinese steel are many times those in place to protect British producers. Despite limited Government assistance, energy for British steel producers remains more expensive than for our European competitors, and Government-led infrastructure projects, most recently Trident, continue to use foreign-made steel instead of British alternatives.
Where our industry can compete and has been leading the world is in our people and our skills. It is difficult to estimate the value of the institutional knowledge and experience in Port Talbot, Stocksbridge, Skinningrove or Sheerness, but it has helped those communities to stay afloat and their steelworks to function. The Materials Processing Institute in Teesside is producing world-leading research, and has received visits from German, Slovak and Swedish Government representatives who wish to draw on our expertise in this country.
It is testament to the combination of those institutional skills, the experience of steel communities around the country and the cutting-edge research of institutes such as the MPI that the productivity of the steel industry has consistently improved over the last decades. It is for those reasons that the UK steel industry should be seen as an opportunity—a reservoir of potential—rather than, as it is sometimes called, a burden on a modern economy.
We should be wary of how quickly that reservoir can evaporate. A steel or metals industry cannot be created from scratch overnight. The average age of a steelworker is growing, and the current crisis means fewer young people are coming into the industry. Without a secure future, the skills developed over decades could be lost. Those skills are not important only for the steel industry. I recently met representatives from Metalysis—a company that uses an innovative process developed at Cambridge University to produce metal powders and alloys that will be vital for 3D printing—who emphasised to me the importance of those skills grown in the steel industry for their business. To allow that experience and research reservoir to dry up with the decline of the steel industry would not merely affect the future of steel in the UK, but would cut off our competitive advantage for the metals sector.
Rather than let that advantage disappear, we should build on that potential by creating a steel sector catapult and a metal materials strategy, through which knowledge can be shared, built upon and turned into results for British industry. I hope the Government will work with MPI and members of the all-party parliamentary group on steel and metal related industries to fashion a new bid for that catapult. That is something the Government could commit to today that would show that they are serious about the future of the industry. I hope the Minister will remark on that later.
Steel in the UK is not an odd nostalgia but a viable industry with a future. It does not need charity but access to a level playing field on which to compete. If given that access, it is reasonable to believe the industry could be the world leader it already is. There are immediate challenges, though. The five asks on energy costs, business rates, Chinese dumping and procurement have still not been fully delivered on by the Government, and they demand the Government’s immediate attention. They can be acted on now and the solutions announced in the autumn statement.
The drop in sterling and the change in global steel price is not a solid foundation on which to build the steel industry’s future. The Government must not believe that their short-term work is done. They must take action, with long-term milestones and with a long-term view, so that not only people in the House know where they stand, but investors in the industry know exactly what the 20 or 30-year view is, and associated industries that rely on steel know exactly what to expect.
Angela Smith (Penistone and Stocksbridge) (Lab)
Members across the House could be forgiven for thinking that the Government have assumed that, because the sense of immediate crisis appears to have passed, their foot can be taken off the brake and that we can rely on the industrial strategy emerging next spring to address the problems. Does my hon. Friend agree that that is definitely not the case, and that the Government need to keep at this, on top of it, and give it the priority it deserves now?
Tom Blenkinsop
I thank my hon. Friend for raising that. There are a number of issues within that general question that still hang over the industry. I am at pains to talk about the broader industry and the new, smaller companies that are emerging. The debate tends to be dominated by issues around Tata, for obvious reasons, but we need to look at how we develop smaller companies, hence our desire for the steel sector catapult to be established. Although those smaller companies have come to the fore, they have told me directly that if a steel sector catapult existed, they would have been able to get where they are now a lot quicker and with a lot less capital, which would release more capital to do other things or to develop other research and development potential. One of the most profound issues, which I will go into later on, is the British Steel pension scheme.
Producing steel is a massively energy-intensive process. Despite the Government’s policy, which compensates energy-intensive industries for the disproportionate impact of carbon reduction measures on them, British energy prices are still far higher than those in Germany and elsewhere in Europe. The steel industry is aware of the need to transition to low-carbon energy sources, but only in a way that makes business sense.
Everyone I have spoken to in the steel industry welcomes the inclusion of the energy portfolio in the same Department as the business and industry strategy portfolio. That makes sense, and it is about time it happened. However, the Department has yet to respond to the EEF’s five recommendations aimed at addressing the competitiveness of UK energy costs. Since the initial meeting with the Department for Business, Innovation and Skills on this issue in June, EEF estimates that the disparity between UK and European energy costs means the UK steel industry has paid £20 million more in energy bills than their continental competitors. What is being done on energy costs? What benefit has the sector felt since the creation of the Department for Business, Energy and Industrial Strategy?
Mr Peter Bone (Wellingborough) (Con)
The hon. Gentleman is making an excellent speech. Can he explain why energy costs are so much lower in continental countries than here? Is it something that we as a Government are doing wrong, or is there some other reason?
Tom Blenkinsop
Other colleagues may want to comment on this, but my view is that in general the energy sector is predisposed to giving the individual consumer cheaper prices, with the costs going more towards manufacturing. The consequences of that have led to some manufacturers going off grid; and a consequence of that may be higher prices for the individual consumer, as capacity cannot be fulfilled by larger consumers. In European countries such as Germany and Holland, there are discounted energy costs for large manufacturers but with the understanding that the individual pays higher bills. There is consensus, to a certain degree, that people are willing to pay higher energy bills in order to maintain manufacturing in their country so that they have a job—but that is with open political consensus. We as politicians need to talk about what type of economy we want. Do we want to move it away from finance and services back to a more balanced economy? We need to talk about that in terms of energy policy, but I will go into that issue in more depth later.
The Government can act to support the steel industry’s attempts to improve its energy efficiency and thereby cut emissions and costs by providing an energy efficiency fund. Such a fund could supply capital for companies to make improvements and efficiencies in the way they use energy, meaning they can better compete on energy prices and millions of tonnes of carbon emissions can be cut.
The second immediate challenge is that of the British Steel pension scheme. The scheme’s deficit, estimated at £700 million earlier this year, has been a major obstacle to the sale of Tata Steel sites. In response to that, the pension scheme’s trustees have asked if it would be possible to alter the scheme’s benefits in order to make it viable without a sponsor employer. The Government have been consulted on that option and on the alteration to section 67 of the Pensions Act 1995 necessary to alter the scheme’s benefits. We are yet to hear a statement on the consultation, but recently the pensions deficit has been drastically re-estimated at £50 million, due to the trustees taking advantage of the post-Brexit economic situation—I must mention that that has more to do the British Steel pension scheme’s investments in other nations’ stock, which has boosted the pension fund.
If interest rates were to rise and the scheme’s asset value continued to increase, hypothetically the trustees may wish to withdraw their request to change the scheme’s benefits, and therefore a change in section 67 of the Pensions Act may not be necessary. The compounded complications are that any change to section 67 could affect any other workplace pension scheme, and any other representative of any other constituency without a steel interest would be highly hesitant about voting for such an action. I hope we can keep in constant contact with the Minister, so that if the scheme’s benefits continue to rise, we can look at measures short of the scheme falling into the Pension Protection Fund, because that is fundamental to the existing Tata sites. The Government must act to explore that possibility, provide certainty in an uncertain situation and secure the continued viability of Tata Steel sites. The BSPS is a fulcrum of the continuation of the current Tata sites.
As well as the five asks, strategic decisions will need to be made soon by Government that have the power to end or secure the industry’s future. Those are decisions that come in the wake of Brexit. There are many implications for the steel industry of the UK leaving the European Union, from workers’ rights to an ability to attract expertise and investment from the continent, but I wish to focus on one: trade, and in particular access to markets and trade defence measures.
Earlier this week, I warmly welcomed the Government’s actions to secure investment, jobs and growths at the Nissan plant in Sunderland, via the production of the two new Qashqai and X-Trail models. That move is warmly welcome, not least because Nissan is one of the largest buyers of British strip steel, largely from Tata Steel sites. It is a shame the Government did not take the same decisive action when it came to the closure of the SSI Redcar steel plant over a year ago, which I am certain my hon. Friend the Member for Redcar will talk about. None the less, it seems the Government have reassured Nissan that it will have access to European markets tariff-free. That is fantastic news, but it is not just Nissan or the automotive industry that rely on access to tariff-free trade with Europe.
Over half of all British steel exports are to the European Union, therefore any tariffs on British goods would damage the health of UK steel. I hope the Minister will commit today to providing steel producers with similar assurances. Doing so would again demonstrate this Government’s commitment to the sector, and of course do much for those whose jobs who are dependent on the steel trade. The Nissan deal also reflects how big and powerful the industry players and the automotive lobby is as a whole. Steel requires its players to come together and command such attention. It must also gain the understanding of the auto sector and all the other industrial lobbies that the UK steel supply on their doorstep requires their clear verbal support.
Leaving the European Union presents both an opportunity and a threat in terms of trade defence measures—a threat in that it means we would leave behind the trade defence measures provided by the EU, modest and limited though they are, and an opportunity in that it allows this country to implement our own trade defences. As many here will know, the over-production of primarily, though not exclusively, Chinese steel and its dumping, sometimes at below-cost prices, in foreign markets poses a real and significant threat to industry here in the UK. Currently the EU’s tariffs on steel differ by product: the highest import duty is about 73% on heavy plate steel, whereas in the US in March duties were set at over 265%.
While Chinese production of steel did slow as global demand dipped, the latest International Steel Statistics Bureau statistics show that Chinese exports remain at a year high, with August levels being some 7% above last year. The problem is not going to go away; it will certainly re-emerge. However, this Government seem to have set their face against trade tariffs on Chinese steel, as two quotes reveal. The first, from the Chancellor, was on granting China market economy status. He said:
“Our position on China’s market economy status is that we gave certain undertakings to China and believe that we are bound to go down this route.”
Recognising market economy status for China would limit our ability to apply duties on Chinese steel, potentially opening up our markets to a flood of cheap steel, undercutting domestic producers and risking thousands of British jobs.
Commitments made to endear ourselves to China should not take precedent over commitments to steelworkers or common sense. It is obvious that Chinese steel is not made under market competition conditions, and it is also obvious that by campaigning for MES for China, the Chancellor is campaigning against the interests of British steelworkers. This may be further complicated by Brexit. If we campaign for market economy status for China—as a country, I add; that is the Government’s position—while we are in the EU, will not this Government be obliged to recognise that once we can do so unilaterally after leaving the EU? Perhaps the Minister can shed some light on that.
The second telling quote came from the Secretary of State for International Trade. During his speech to the Conservative Way Forward group, the right hon. Gentleman, now infamous for calling British business people fat and lazy, said we
“must turn our backs on…voices that tell us: ‘It’s OK, you can protect bits of your industry, bits of your economy and no one will notice’”.
That seems to set the right hon. Gentleman against any industrial strategy and certainly against trade defence measures for the steel industry. I hope that that misapplication of free trade dogma to trade with a communist country and its state-owned and subsidised steel industry does not spill over into Government policy. I hope Ministers from BEIS have explained the absurdity of that position to the Secretary of State; if not, I fear someone will have to very soon. Those two aspects of the Brexit negotiations are fundamental to any industrial strategy and I hope the Minister will outline today the conversations he has had with and the cases he has been making to the Chancellor, the Prime Minister and the Secretary of State for Exiting the European Union about Brexit and our industrial strategy.
I would like now to address my own Front Benchers. As a party, we have been vocal in campaigning to save our steel industry, and we should be proud of that, but, if our party is to help to revive the steel industry in the UK, as I hope it will, and not merely be its pallbearer, we must stop cutting off potential demand for British steel by opposing or sitting on the fence over major infrastructure projects. Heathrow will require 370,000 tonnes of steel and could support hundreds of jobs in the industry. Labour does not seem to have a settled opinion—I know mine—and we must be clear. Trident will support British jobs in the steel industry, despite the Government allowing French steel to be used in the vessels’ hulls, but Labour’s own leadership casts doubt on our commitment to this project, despite party policy and a consensus at our conference and among trade unions to accept it.
Shale gas is an example. Our party has vowed to ban the practice of fracking. The GMB union called this decision ridiculous, nonsense and madness, and my union, Community, said the decision was rushed and did not fully consider the evidence. Both unions have since signed a memorandum of understanding with United Kingdom Onshore Oil and Gas, the industry trade body. Two proud unions, with large private sector bases and affiliated to our party, are asking the party to back a proposal that would provide jobs in regions across the UK—not just jobs, but secure, well paid jobs that would help to stop our reliance on autocratic nations for our energy. It would offer people, not least the thousands of offshore oil workers being made redundant, well trained, highly skilled, long-term roles, but we have denied them that option. Shale gas would cut energy prices for the steel industry more profoundly than any tax break or subsidy. On Teesside, it would provide a gas supply to a much-needed chemicals industry at 50% less than the cost of conventional North sea gas.
The infrastructure and sites would also require thousands of tonnes of steel. The viability of British-made welded steel pipes for fracking is currently being explored. It is vital to both Corby’s and Hartlepool’s pipe mills. The industry is moving ahead without the Labour party. We should be shaping the shale gas industry, not ignoring it for our own satisfaction. We should be making sure it is safe, that it uses British steel, that energy price cuts are passed on to steel producers and that they organise their workforce so that it can bargain collectively and secure benefits for local communities.
Blanket opposition to infrastructure projects may offer the false comfort of the moral high ground, but it is not responsible. Failing to make these choices is not the action of a Government in waiting who intend to deliver for steelworkers. As a party, we must be pro-jobs and pro-steel choices, and not just attend marches and wear badges. I hope my party will think about these issues and choose jobs over familiar, fashionable and flawed opinion.
Geraint Davies (in the Chair)
From one Tom to another, I call Tom Pursglove.
Tom Pursglove (Corby) (Con)
It is a pleasure to serve under your chairmanship this afternoon, Mr Davies. It is always a pleasure to follow the other Tom, the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who is a passionate advocate for our steel industry and with whom I very much enjoy working. People out there in the country often take a dim view of the proceedings they see in Parliament, but I believe strongly that the work of the all-party parliamentary group on steel and metal related industries is incredibly important and crosses party lines, which have nothing whatever to do with our work. We all work together for what is best for our steel industry. All Members here this afternoon can be proud of that.
I welcome the Minister to his place. I have great regard for him. He is one of the hardest-working Ministers in the Government. I am also delighted that we have a Secretary of State from good, steelmaking stock, which brings a lot to this debate. He completely understands what is at stake, given his family background. I welcome both Ministers to their new positions and look forward very much to working with them.
It would be remiss of me not to thank the previous ministerial team for its efforts. The right hon. Member for Broxtowe (Anna Soubry) and I regularly disagree on certain matters, particularly in relation to the European Union, but I have enormous respect and admiration for her work and her engagement with Members who have steel-related industries in their constituencies. She went around the country visiting our steelworks and talking to employees, unions and site managers about the steps that needed to be taken. She should be given a lot of credit for that.
I pay tribute to the Community union and Roy Rickhuss, whom I enjoy working with. He is a real advocate for our steel industry. Roy’s representatives on the ground do much to ensure that the views of steelworkers throughout our steel sites are heard as part of these debates. Great credit should be paid to him.
I am proud of much of what the Government have sought to do to try to help our steel industry. We have moved the debate on energy compensation along and have a package in place. We have made great strides forward on procurement, and I will come to that. Although there is more work to be done on dumping, I, for one, have appreciated Ministers’ efforts to raise directly with the Chinese the consequences of what is happening.
The big concern in Corby—I visit the steelworks regularly to talk to the site management, unions and employees—is that there seems to be a bit of a vacuum. Not much information is coming from Tata on where we are, and this is at a time when we have had some positive announcements about other sites, such as Scunthorpe, where the workforce now have real certainty about the future. We need further certainty about Tata’s existing portfolio. I know that discussions are ongoing with ThyssenKrupp, but I urge that the message from this Chamber this afternoon is that Tata should say publicly as much as it can about the current state of play, which hangs like a cloud over our steel towns that are Tata sites. We must try to put an end to that uncertainty as quickly as possible and to do the right thing for our steelworkers.
There are three areas where Government leadership will be key in the coming weeks, months and years. The first is EU exit. I campaigned to leave the European Union and I am pleased that the British people’s verdict was that we should leave, but I accept that other people have sincerely held views to the contrary. Exit offers a real opportunity to our steel sector, but engagement will be crucial to getting it right, and we must thoroughly engage with the unions, the companies and the workforce to get the policy absolutely right. We need to understand the requirements, needs and aspirations of our steel sector for the years ahead.
I believe that when we leave the European Union we will have more tools at our disposal, but it is important to get that right. The Government will be able to act directly on dumping and state aid rules; they have had to go through Brussels in the past. We all agonised over the difficult few months when Ministers were going to Brussels and making the case for the energy compensation package, only to see the can kicked down the road. We eventually got to the right place, but it is welcome that in future the British Government will be able to put those things in play.
Stephen Kinnock (Aberavon) (Lab)
The hon. Gentleman is making a very insightful speech, but the fact is that the way in which state aid and the European Commission work is that national Governments must provide the Commission with a list of their priority cases. It is a matter of record, however, that this Government consistently failed to put the energy-intensive industries package at the top of that list. The Commission was dealing with cases as they came from our Government, so it was the failure of our Government to make that a priority. Only thanks to the pressure that we put on them did they suddenly put the energy-intensive industries compensation package to the top of the list, and the case was then resolved within three months.
Tom Pursglove
My understanding was that British Ministers were going over to Brussels regularly to make the argument for the energy compensation package. I remember having numerous conversations with Government colleagues about the importance of that, and they were certainly relaying the significance and severity of the delay and its impact on the industry. Again, I commend them for those efforts.
Another point is that outside the European Union the British Government would be in a position, if they wanted to, to emulate the sorts of tariffs that we have seen in the United States. We would be able to do that if we felt that it was in our national interest. Whereas before we would have had to try to enact it through Brussels, we would be able to do it directly. I think that we should look at all these things.
Hannah Bardell (Livingston) (SNP)
Forgive me, but I am a little confused. Was it not the UK that, in the EU, was holding back the EU from having strong anti-dumping measures? If the UK Government were not able to do that in the EU, how on earth does the hon. Gentleman think that outside the EU and with the Conservatives in charge, they will be able to do a better job? Perhaps he can enlighten me.
Tom Pursglove
I thank the hon. Lady for her intervention. The point that I am making is that outside the European Union, that will be entirely within the gift of the British Government. We will not have to get agreement from multiple member states to make progress on these things. I have consistently said that I think we should look at the tariff side and, where there is flexibility and opportunity to increase tariffs in response to particular problems, we should look to do that.
Mr Bone
My hon. Friend has been a champion of Corby steel since the day he became the Member of Parliament for Corby. The one thing that I want to pick up on in these exchanges is that people talk about “the Government”. We have a new Government, a new team, a new Prime Minister and new Ministers. Does my hon. Friend the Member for Corby (Tom Pursglove) agree that we have seen a different attitude to steel since we have had a new Prime Minister?
Tom Pursglove
I am grateful for the intervention. I certainly agree with that point and will touch on it later.
Of course, there is a particular challenge with the current tariff situation. Ministers have said consistently that one difficulty has been that some of the tariffs are bound up with other things; the impact on other things also comes into play. It would be much easier outside the European Union. We would be able to take those decisions ourselves. We would be able to take the decisions in isolation, separated out, and not have to get that wider agreement from other nation states.
Tom Blenkinsop
I thank the hon. Gentleman, a vice-chair of the APPG, for giving way. Whether we are in the European Union or not, that issue is resolved. On the issue of tariffs, he agrees with me; we have some consensus there, and we are willing to work together to try to build in those trade defence mechanisms. The real issue is Chinese market economy status. The Government are advocating a policy of no tariffs with China—a country that is the primary problem, in terms of dumping, in the world. That presents significant complications for the UK steel industry, and we need to work together to try to change the Government’s opinion about market economy status for China so that we can defend not just steel but manufacturing generally in Britain.
Tom Pursglove
Again, I am grateful for the intervention. I have consistently said that I think it is incumbent on British Ministers to make the point to the Chinese that if they want to play in the premier league, they have to play by the rules. That is fundamental; it has to be front and centre in our ongoing discussions with the Chinese Government as we try to make progress. That is absolutely right and proper. If they want to be regarded as a significant international player in trade, they have to play by the rules.
I welcomed what the hon. Member for Middlesbrough South and East Cleveland had to say about trade earlier, because I think that this issue will be crucial. What opportunities will there be to better export British steel around the world in a post-EU exit world? I ask that because the steel that this country produces is the best in the world. There is no doubt about that, and I think that we ought to be shouting from the rooftops, making the point that the steel that we produce is of that high quality, that it is good value for money because of that, and that we want to sell it the world over. I would be interested to hear the Minister’s thoughts on that.
I also want to know about some of the early cross-departmental discussions that are taking place. What is the current thinking? What is the interface between the different Departments to ensure that the steel sector is properly represented in those discussions? What work has been done to hear what the needs, aspirations and requirements are? I recognise that there will be many competing priorities at the moment, but for my constituents and me and for all hon. Members present, the steel issue is very pressing and we need to know what the direction of travel is likely to be.
On industrial strategy, I come back to the point about the emphasis of the Government. I very much welcome the shift in emphasis. The steel APPG, to a man and woman, campaigned for it. We always wanted to see an industrial strategy develop that would help to bolster the steel industry. I am proud to be part of a Conservative Government who are delivering on that, who have recognised the need for an industrial strategy that is designed to ensure that steel is properly represented in our industrial policy. That is a very big step forward; it is a step change. And I say that coming at the debate as a small-c conservative. I recognise that the Government do not have all the answers, but this is about getting the broad economic conditions right and ensuring that where there are opportunities for our industries to thrive and prosper, we try to fit all that together to ensure that it works and has the best possible outcomes.
An industrial strategy is key to ensuring that we have strong core industries in this country. We have all said for a long time that steel is fundamental to our national security. Having an industrial strategy means that policy discussion in this country focuses on that point and ensures that no community is left behind. In Corby, people feel acutely that the steel industry is what our town is all about. Our town was built on the steel industry; that is what we are about in Corby, and I think that this measure gives real regard to that. I would therefore be interested in a progress report from the Minister on where the thinking is on the industrial strategy, what engagement there has been and what opportunities he thinks that will bring for our steel towns.
On procurement, I commend the Government, because we have made enormous strides forward, working across Government, in recent months. Of course we must maximise the public sector opportunities that exist. Today we heard about the construction of a number of new prisons. I urge my right hon. Friend the Secretary of State for Justice to ensure that British steel is used. One of the sites is Wellingborough, which is 10 minutes down the road from my constituency. We can provide top-quality steel, probably within the hour, if that is what is needed to build that new prison.
We must ensure that these big, Government-backed infrastructure projects use British products, British content and British steel at every opportunity. I want to pick up the point made by the hon. Member for Middlesbrough South and East Cleveland about fracking, because Corby is one of the sites that would be strongly placed to provide top-quality steel for fracking. When the Government are looking at subsidies for renewable energy projects or any energy projects, it makes sense to hammer home the expectation that British content and British steel will be used. That should be the key condition.
However, this debate is not just about the public sector; it now has to be looked at also in the context of the private sector. I welcomed Heathrow’s commitment to use British steel in the forthcoming construction. I hope that that will lead the way in encouraging other companies and organisations around the country to use British content wherever possible. On most occasions, we can cater for their requirements, and if we do not cater for those requirements, we have the ingenuity and ability to innovate to make that happen. The industry should be given the opportunity to cater for these projects whenever possible, because it is morally right to use British steel. We have great quality and a great workforce, and we should feel the benefit in the supply chains in this country.
Earlier, there was an urgent question on air quality. In my view, it does not make sense to be bringing poor-quality steel across from other countries around the world when we can produce great steel in this country and reduce some of the transport costs and implications of shipping steel from all over the world. Overall, that must be better for air quality across the globe.
Those issues should be front and centre of what the Government, the public sector more broadly and the private sector ought to be championing. That is a key element of the debate. How does it link to the industrial strategy? That will be a very important consideration that we need to reflect on as we move forward. How does the whole thing link together to ensure that, from end to end, we do right by British steel producers?
I am a regular visitor to the Corby works and I pay tribute to all those who work there. They are incredibly talented and hard-working people. We have a remarkable workforce and we can all be exceptionally proud of that. Whenever I visit at the moment, I am asked about three key policy areas: where is Government thinking on the industrial strategy, on the EU exit and on procurement? We have to show leadership on all those points.
I am proud of Corby’s steelmaking—the quality of our product, our incredible workforce—and of our rich steel history, which is what the town of Corby is all about. I am proud of the Conservative Government for really trying to show some leadership and for listening, acting and getting out there in pursuit of solutions to help to secure the future of the industry. But I am under no illusions; I do not think this is going to be straightforward. It is not going to be plain sailing as we move to a world outside the European Union. It is going to be difficult and there are going to be bumps in the road. However, if we get out there and get the engagement right, we can have an enormously successful future chapter for our steel industry because we have got those broad policy foundations in place.
Geraint Davies (in the Chair)
From a small “c” conservative, to a big “L” Labour, I call Angela Smith.
Angela Smith (Penistone and Stocksbridge) (Lab)
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friends the Members for Redcar (Anna Turley) and for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this debate. It is always timely to have a debate on steel, such is its importance to the economy, but at this particular moment, given the wide range of issues we face, including Brexit, it seems particularly timely.
I want briefly to go back to October 2015, when the SSI crisis hit TV screens. As we know, the company went into liquidation and 6,000 people lost their jobs. That is 6,000 men and women lost to the industry, potentially forever, and 6,000 families who face an uncertain future. Yet since the collapse of SSI and the problems that Tata faced earlier this year, although there have been some improvements in the conditions faced by steel producers—not least because of the 16% devaluation of the pound—there are still major problems facing the steel industry.
The Chinese dumping of steel continues, and the UK is still blocking attempts to put meaningful tariffs on that steel as it comes into Europe. It has never been about protectionism—this is a really important point. Rather, it is about effectively countering the hidden subsidies that the Chinese state has embedded in its own production of steel. I have listened to the Chinese and have heard them say they will roll out figures on their production and about how they are reducing the volumes of production, but they never, ever refer to the fact that they are effectively undercutting the global steel market by embedding subsidies in their pricing structures.
Let us not forget that we still have all the other issues that my hon. Friend the Member for Middlesbrough South and East Cleveland mentioned in his opening remarks: the five key asks that were developed some time ago by UK Steel, supported by the union Community and supported by parliamentarians across the House. My hon. Friend did an excellent job setting out the key strategic issues facing the industry at this point. I will not go through them all again, because he did that brilliantly and the case is made.
As would be expected of me, and because of the situation I face in my constituency, I want to focus briefly on the situation with the Tata holdings in the UK. Although the sale of Port Talbot has been suspended while Tata and ThyssenKrupp talk about a joint venture, Speciality Steels, which has plants in Sheffield—in Stocksbridge, in my constituency—and Rotherham, is still up for sale.
I do not apologise for rehearsing the point about the importance of the Stocksbridge plant. Members have heard me say before that the steel produced at Stocksbridge is in the top 7% of the value chain for global steelmaking. Two thirds of the aviation steel made globally is made in Stocksbridge: it makes steel for landing gear, for the Rolls-Royce engine and for the sliding doors on the aircraft body. It is an incredibly important and valued part of our steel industry. I have even heard it said—by people who frankly do not know a great deal about what goes on there—that there is effectively old-fashioned steelmaking going on in that facility, in something that looks like a shed. I know that the Minister has visited Stocksbridge and so entirely understands my point. What goes on inside that building—that very old facility—represents some of the best and most advanced steelmaking technology in the world.
I am incredibly proud of what Stocksbridge does, and I know that the community is too. We are confident that the plant will have a future and we know that the right investment plan can secure that future. It has got the vacuum induction melting facility, but it needs further capital investment if it wants not only to maintain its place in the value chain, but to move up it. That is the ambition: to move into the era of 3D printing mentioned by my hon. Friend. Stocksbridge wants to be able to produce—if hon. Members will forgive the layperson’s way of saying it—the powdered steel, which we know will enormously increase the value of what we make there. That is something like £30,000 to £40,000 a tonne initially. It is critically important that we get the right buyer for Tata Speciality Steels: a buyer who is in it for the long term and prepared to make the investment.
Recent reports about the apparent boardroom manoeuvrings at Tata are a little worrying, to say the least. Given the current instability at the global board-level at Tata, I ask the Minister what the Government are doing to ensure that the sale of Tata Speciality Steels in South Yorkshire is not compromised by the uncertainties apparent at boardroom level at Tata HQ. What communication is he having with Tata at the highest level? I do not expect the detail, or for commercial sensitivity to be compromised, but can he tell us what discussions are taking place to make sure that the sale of Speciality Steels is given the priority by Tata that it deserves?
Yesterday, during Prime Minister’s Question Time, I raised the Prime Minister’s visit to India next week. I did not really get the clear answer I was looking for, but can I now ask the Minister to commit to ensuring that the delegation led by the Prime Minister that is going out to India next week takes the opportunity to raise with Tata the business of ensuring a sustainable future for Speciality Steels and, indeed, the other Tata holdings at Port Talbot and elsewhere? In other words, what are the Government doing to support Speciality Steels, Port Talbot and the other Tata holdings in the forthcoming period?
If we are to have a successful steel industry, we need demand for steel produced both for home markets and abroad. Recently we have heard some pretty bad news about the demand for UK content even in British infrastructure projects. We all know about the recent decision to award the contract to supply the steel for the pressure hulls of the new successor Trident submarines to a French company, despite the fact that we have the capacity here in the UK and two UK firms submitted a joint bid for the work. There are other upcoming projects that could, with a bit of support and leverage from the Government, absolutely maximise the use of UK steel.
Tom Blenkinsop
On the Ministry of Defence contract, which occurred two years ago, when two British firms—or two UK sites—came forward with ideas for the plate steel for the hulls on the successor programme, they were actively told to go away by the MOD, as it had already procured the contract from a French site. The two British sites involved, which wanted to come together and provide a solution, just wanted a bit of time—given the time that has subsequently passed, those two sites could have provided the steel. That was another missed opportunity in a period when we were still members of the EU, and defence contracts are exempted from competition regulations.
Angela Smith
I completely agree with my hon. Friend. His point relates entirely to the situation with shale gas. My hon. Friend made an impassioned case for the shale gas industry earlier this afternoon, and I entirely support him in that. I support the signing of the memorandum of understanding by Community and by the GMB. We all know that the domestic supply of shale gas will help not only the steel industry, but a range of industries in the UK, because it will provide valuable feedstock for the chemicals industry, for example.
Are the Government continuing to support the development of the relevant steelmaking capacity to ensure, for instance, that UK steel will be used in developing the new industry? There have been difficulties in ensuring that the UK steel market can provide that capacity, but we know that work is ongoing, in partnership with the oil and gas industry, to get over those obstacles and make it possible for the UK steelmaking capacity to deliver the steel that the shale gas industry needs. That relates entirely to the point my hon. Friend made: will we ensure this time that we do not miss an opportunity to expand the UK steel industry and exploit new opportunities that become available, such as shale gas?
The same can be said of the Swansea bay tidal lagoon. Is the Minister providing input on the process to the so-called Hendry review? That is critically important. There are huge advantages for the UK steel industry from that project, if it goes ahead.
Stephen Kinnock (Aberavon) (Lab)
My hon. Friend is giving a passionate speech, as always. It is also important to note that the Swansea bay tidal lagoon is just the first in a number of projects. The economies of scale coming out of that could deliver lagoons in various places around the country—far larger, in fact, than at Swansea bay—so the potential for steel and steelmaking from lagoon projects is enormous.
Angela Smith
I completely agree. Potentially, this is an exciting new industry for the UK that would provide reliable baseload energy to meet the nation’s needs. The steel necessary for building those tidal energy projects will come not just from south Wales, but from Firth Rixson and Forgemasters in Sheffield. It will involve some of the best and most technologically sophisticated steelmaking available in the UK. Is the Minister absolutely committed to ensuring that the voice of the steel industry is heard at the heart of Government in looking at whether we give the project the go-ahead? Can we look forward to hearing something specific about that in the autumn statement?
Hannah Bardell (Livingston) (SNP)
The hon. Lady’s point about tidal and wind energy is absolutely key. Does she agree that the Government’s lack of support and their pulling of support, particularly in the wind energy sector, will have a knock-on impact? That is a serious opportunity for steel production missed by the Government.
Angela Smith
A number of opportunities have been missed over the years, and wind energy is one of them. The turbine-making capacity is not now available here in the UK. Wherever possible, it would be good to see the Government attempting to work with industry to put those mistakes right and see what we can do to develop that capacity in future.
Unlocking all that potential will mean an active industrial policy from the Government. Will the Minister therefore reassure the House that UK steel will be at the heart of the forthcoming industrial strategy? As was mentioned earlier, will he give an absolute commitment that steel—which, let us remember, is a foundation industry—is an ongoing priority as we await the publication of the strategy and that it will be at the heart of everything that the new Department does between now and next spring, when the strategy is introduced?
In an industry where investment is vital and timescales are long, certainty is important, so my concluding remarks are of course about Brexit. It is my firm view that, as an industry, steel needs full access to the single market. That is vital, especially when one considers that 50% of all the industry’s exports go to the European Union. Given that the automotive industry has secured a guarantee from the Government, as we leave the European Union, to allow the necessary investment and ensure that it continues in Sunderland—I absolutely welcome that, by the way; it is great news for Sunderland and really important for the UK economy—will the Minister tell us whether we can expect the same sort of guarantee for the steel industry? It is critical that the steel industry should be able to continue to enjoy access to its key markets. Let us remember that many thousands of jobs depend on a successful steel sector.
Steel is vital to a country that wants to continue to be a manufacturer. We need the Government to be fully engaged in helping the industry not just to survive but to develop and to provide security against the uncertainties of the global economy. The future is not going to be easy and although Brexit is frequently posited as bringing many opportunities—these nebulous opportunities that have yet to materialise—we can be absolutely certain that it will deliver more than its fair share of challenges. The steel sector will need the Government to be an active partner to help it to deal with the uncertainties it faces.
What happens to the steel industry if, when we Brexit in two years’ time—presumably in April 2019—the Government have not negotiated a long-term deal? What happens if they have not even be able to negotiate a transitional deal with the European Union? What happens to the steel industry if we end up falling back on World Trade Organisation rules? The Government need to be clear and to work closely with the steel industry and Parliament to ensure that those uncertainties are minimised and thought through, and that we are absolutely certain that, in the worst-case scenario, the Government will be there with a plan to support the steel industry as it moves forward—indeed, to support all manufacturing industry. That question is critical and is worrying the business sector to a degree that I have never seen before in my lifetime in politics.
A country without a steel industry cannot class itself as a major economy. The stakes are that high, and I implore the Minister and the Government to do everything necessary to make sure we secure a thriving steel industry for the future, preferably with the UK as a full member of the single market. Whatever happens, we need to ensure that the Government, who had no plans for Brexit, certainly have a plan if the worst materialises in two years’ time.
Geraint Davies (in the Chair)
Moving from a big “L” to a big “C”—or should I say a deep “C”?—I call Mr Peter Bone.
Mr Peter Bone (Wellingborough) (Con)
It is a great pleasure to follow the hon. Member for Penistone and Stocksbridge (Angela Smith), whose speech was very good—for at least the first two thirds. It was a very good speech and she made a strong case for the special steel produced in her constituency. I also liked the plug at PMQs for the Prime Minister to do her best when she goes to India. Years ago, I was on the Select Committee on Trade and Industry and I remember a huge business tycoon from India. I asked him, “What is the one thing we could do to boost trade between our two countries?” He said, “Pull out of the EU.” At that time, of course, nobody ever thought that would happen, but now he will get his wish. Absolutely, too, on shale gas, that makes obvious sense.
I also congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop). I always think that Westminster Hall is where we have the best debates. We do not get the party-politics nonsense that we sometimes have in the main Chamber. The way in which he made his speech will allow the Minister to deal with it in a very grown-up fashion. It was also particularly courageous to make the points he did against his party’s current policy in some regard. I will return that, I hope, and say some of the things that I think have gone slightly wrong in the debate on steel.
My interest is also connected with that of my right hon. Friend—sorry, my hon. Friend the Member for Corby (Tom Pursglove); he should be right honourable. My constituency abuts his, and a lot of my constituents work in and supply goods and services to the Corby area. I suppose I should also declare that I spent 13 years in south Wales and regularly played cricket close to the steelworks—off my bowling, the ball quite often landed in the steelworks.
As all hon. Members here will probably say, British steel has a future. Not only that; it has to have a future. It is a strategic industry. There have been two Governments recently—the one under David Cameron, and the new Government, under the new Prime Minister—and there has clearly been a shift in emphasis. What I would criticise about the previous Government is the slowness with which they did things. Very early on, when there was clearly a lot of working together and establishing things that needed to be done, such as reforming business rates and dealing with energy costs, the previous Government said, “Let’s deal with Chinese dumping.” But we did not seem to be getting there as quickly as we should have. With the new Government, things have moved on a lot.
Let me deal with the thing about free trade, the Chinese and dumping. Yes, a lot of us believe in free trade because we think it benefits everyone, but free trade does not mean that one country can dump its products in another country. Countries cannot sell their products below cost or with huge subsidies. The reason it is done, of course, is that with things such as steel, there are large fixed assets. The marginal cost of producing the steel and selling it at a loss allows those fixed assets to be kept. That is exactly what the Chinese are doing, which is why we should impose severe tariffs—not for protectionism, but because they are dumping. As any free trader will say, dumping is absolutely not allowed. I listened to the arguments about how dumping would work or did not work in the EU. I think my views on the EU are pretty clear, but we are where we are now and we must look at the advantages.
Let us look at the single market argument. I have only been in Parliament for 11 years. Before that, I was in the manufacturing business. Of course, exporters want to have something that other people want, and they want to be able to sell it. If a tariff exists, and the exporter pays the tariff and sells the product, that is fine, but it is better not to have the tariff in the first place. The exporter wants free trade access to their customers, which is not the same as a single market. If we did not have that, and there were world trade rules, exporters would pay a tariff. But let us look at what has happened since we have come out—since the referendum.
Mr Bone
No, unfortunately we have not.
Since the referendum, sterling has fallen by, say, 17%. That makes exports to the EU 17% cheaper and exports into the UK from around the world 17% more expensive. Therefore, a small tariff is irrelevant because we have already had a huge dividend from Brexit. There has been a lot of confused talk around the subject. I absolutely agree with putting tariffs on China—and other countries, if they are dumping—but I do not agree with the idea that somehow there will be a huge problem if we have world trade rules because 50% of exports go to the EU. Clearly we have benefited enormously from the devaluation of sterling. I know that a lot of people want to speak today, but we must look at two issues: the benefit of sterling and the fact that we can absolutely believe in free trade while absolutely having tariffs on dumped goods. That is rather important.
Finally—I really do appreciate that there is a time pressure—I agree entirely with having British steel for British goods. Rushden Lakes is a large development in my constituency, and all the steel there is British. Today, the Government announced a new prison for Wellingborough—I apologise that I must leave the debate temporarily to deal with a matter to do with that prison —which is an opportunity to use British steel. There is a great opportunity for us in the future. The work of the all-party parliamentary group and other hon. Members here today has kept British steel on the agenda. I think the new Government have listened, and I am really very positive about the future of steel.
Geraint Davies (in the Chair)
Thank you very much, Mr Bone; I hope you are not going to prison for too long. [Laughter.] I will not pronounce Jonathan Edwards the big “P”, but I call him to speak. If hon. Members can limit their remarks to 10 minutes each, we will get everyone in.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
It is a pleasure to serve under your chairmanship, Mr Davies. I will endeavour to follow your instruction.
I congratulate the hon. Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley) on securing the debate. I commend the hon. Gentleman on his opening remarks, in which he showed a deep understanding of the industry. It was a genuine pleasure to listen to him. I thank the Backbench Business Committee for allocating time for this important debate.
I speak on behalf of the steel industry in Wales, which is arguably the most important component of the Welsh economy. Tata Steel Port Talbot employs about 4,000 people directly, and its supply chain is reported to sustain 20,000 jobs in Wales and to contribute £3.2 billion per annum to the economy of my country. We talk about things having national economic strategic importance, and steelmaking in Port Talbot is one of the most important components in a Welsh context.
It is almost impossible to talk about anything these days without mentioning Brexit, so I will get this point out of the way right at the start. Recent revelations about the back-room deal that the UK Government cut with Nissan highlights the Tories’ strategy to pick winners when it comes to Brexit. I will of course back any incentives that support important industries such as the automotive sector, both in their own right and as customers of the steel industry, but as other hon. Members have said, guarantees of that nature must also be extended to the steel industry, which is the backbone of the Welsh economy. My answer to the Government’s Brexit conundrum when it comes to steel is to stay in the single market and the customs union.
It is fair to say that that last time we had a debate of this nature, the mood was dark and there were genuine fears about the future of steelmaking in Wales and the UK. The reasons behind the pressures on the industry are well documented and have been restated today. Instead of repeating them, I will highlight some points made in an excellent report by Swansea University that was published in September. The report, “The sun has risen over steel town: Developing a sustainable steel industry in the UK”, was written by some of the most eminent steel experts in the UK: Professor Sridhar Seetharaman, Professor Dave Worsley, Dr Cameron Pleydell-Pearce and Mr Brian Edy. I commend them for their work.
The report puts forward a very positive prognosis for the steel industry, if supported with swift strategic Government action. The Tata Steel strip business in Port Talbot is today making a profit, performing above the ambitious levels targeted in the local transformation plan put forward at the height of the crisis last year—a plan that had been rejected as over-ambitious by the Tata board in Mumbai. That is quite an incredible achievement. However, in a session held a few weeks ago by the Economy, Infrastructure and Skills Committee of the National Assembly for Wales, evidence from steel producers and manufacturers indicated that order books, although buoyant at present, could take a turn for the worse in the second quarter of next year, demonstrating once again the huge volatility of the industry and that the next crisis could come sooner than anyone would hope. In other words, this is no time for Governments in London and Cardiff to take their eye off the ball. Therefore, the issues surrounding high electricity prices, whereby domestic steelmakers face a £17 per megawatt disadvantage compared with competitors in Germany, continue to be ones that should be urgently addressed.
The UK and Welsh Governments need to look at business rates and at what can be done to remove plant and machinery investments from rateable calculations. We need firmer protocols on procurement. As the Swansea University report highlights, only 40% of domestic demand is supplied by domestic producers. I point the finger at the Welsh Government as well in that regard. The report also highlights that a main consideration for the profitability of plants such as Port Talbot are prices of raw materials and sales prices. In 2014-15 the global weighted sales price fell by 26% due to much-documented Chinese dumping; at the same time the price of iron ore fell by 60%, which is hugely significant given that Port Talbot’s annual spend on raw materials is $1 billion.
A core aim in creating a sustainable industry, therefore, is to build resilience to fluctuations. The report clearly states that it would be logical to use a period in which conditions are favourable, like now, to make the necessary technological innovations needed to make the sector more resilient. The report makes the case that Port Talbot could evolve into a leading-edge, zero-carbon steelmaker with carbon-positive products that utilise locally generated by-products as a chemical and raw materials feedstock. It also argues that Port Talbot would have a viable future once in the hands of an owner with a long-term vision that will commit to and invest in transformational change.
Tata’s ability to deliver that much needed transformational change has arguably been hindered by its decision to vastly reduce research and development investment in its UK plants and to centralise activity at IJmuiden in Holland. That brings me to the current state of play in Port Talbot, where Tata is in advanced discussions with ThyssenKrupp about a merger of their European operations. If the Minister takes one thing from today, let him be in no doubt that the proposed merger is a real threat to the future of Port Talbot. As the Swansea University report states:
“TKS believe that capacity reduction is necessary in Europe, and Port Talbot could become a convenient sacrifice for them.”
Those are not new concerns and have previously been expressed by others and by me in this place. Unite the union made the point strongly in evidence to the National Assembly only a few weeks ago.
My constituency colleague in the National Assembly and predecessor in this place, Adam Price AM, has argued on behalf of my party that the UK Government should intervene if the proposed merger goes ahead unless there are specific guarantees about the long-term future of Port Talbot. His reasoning is perfectly valid when considering the record of ThyssenKrupp. In August 2016 Reuters reported that Andreas Goss, chief executive of ThyssenKrupp Steel Europe, had announced a new aggressive cost-cutting plan for its operations based on plant closures. It is worrying that the voice of the UK Government in Wales, the Secretary of State for Wales, is on record as saying that the proposed merger is “encouraging”.
My last point is that there is an alternative option on the table that seems to be far more encouraging in terms of achieving the long-term sustainable future we all desire. The recent news that two former rivals, Excalibur Steel and Liberty Steel, have joined forces is welcome. Significantly, the bid has Welsh Government support. This rival bid would lead to the creation of a new domestic company, probably the largest Welsh company in terms of turnover.
Liberty, of course, made its name in taking over steel operations in the UK and converting them by installing furnaces capable of recycling scrap steel. The process obviously helps to remove fluctuations from the business model, helping to create a more sustainable business. The Swansea University report indicates that 60% of steel in the United States is now produced from scrap steel by re-melting it in electric arc furnaces. The Excalibur-Liberty deal therefore offers the exciting prospect of green steel and primary steel being produced side by side, thereby helping to meet the transformative challenge set by the Swansea University report.
Tom Blenkinsop
Every option has to be considered in terms of Port Talbot’s future. I remember talking in a debate about whether Tata was going to retain Port Talbot, as we foresaw that changes in prices of strip and the potential profit from Port Talbot. I reiterate that Liberty is a good company that has come in, but without the production of primary virgin steel, there is no scrap steel to recycle. My concerns are about any mill rolling slab or rebar, where that steel is coming from. That goes back to the questions about Chinese imports. We need guarantees on the primary source of slab, rebar and billet.
Jonathan Edwards
I am grateful for the hon. Gentleman’s intervention. I was endeavouring to make the point that the Liberty-Excalibur deal potentially offers a future in which green steel, as it is called, and primary steel are produced side by side in the two blast furnaces at Port Talbot. Keeping those two blast furnaces open is vital for the viability of Port Talbot. He is completely correct.
I have a simple message for the Minister: this could be a huge success story for Wales and the UK as a whole. My last ask today is for him to agree at least to meet the leaders of the Excalibur-Liberty deal to see whether there is an option for the UK Government and the Welsh Government to put their weight behind a bid that seems to have unanimous support in Wales. Diolch yn fawr iawn.
Geraint Davies (in the Chair)
I call Anna Turley. We have all been waiting for her speech.
Anna Turley (Redcar) (Lab/Co-op)
It is a pleasure, as always, to serve under your chairmanship, Mr Davies. I welcome the new Minister to his place and thank him for the accessible way in which he has already met me to discuss the former Sahaviriya Steel Industries site and the future for Teesside. I also welcome the shadow Minister to her place. She represents a steel town, and we think of her husband with great fondness—he was in this place for far too short a time, but he fought hard for the steel industry in his time here.
It will be no surprise to Members here or those watching at home that I find it painful to speak in another debate on steel and to have to continue fighting for an industry that, although fundamental to the British economy, was ripped out of my constituency last year like a heart from a body. The people of Teesside remain angry and disillusioned, and rightly so. They are the ones battling to deal with the aftermath of the Government’s failure to protect Teesside’s steel industry last year. Many are still seeking work, many have had pay and conditions slashed in new jobs, many have had to move away from their home and some may never work again, but they are all resolute, determined, made of steel. They are trying to look forward, so I owe it to them to try to look forward in this debate and to keep working for the industrial and manufacturing future not only of Redcar and Teesside but of our country.
Before I do that, l also owe it to them to raise again questions to which we have never had answers and injustices that have never been acknowledged. Why were the Government not willing to take a stake in SSI or to lend it the requested £100 million to restructure and save the plant, yet willing to take a 25% stake in Tata to save Port Talbot earlier this year at the time of the Welsh elections? Why would the Government not step in to mothball the blast furnace to allow it to be relit when market conditions picked up, as they already have? Why were offers from local companies to produce foundry coke, which could have kept the ovens alive and paid for a mothballing, never accepted?
I ask all that now not just to look back. If the Minister wants to tell us to move on and get over it, I am afraid that we cannot. I look about me now at the economic picture for the global steel market and the conditions in the UK and I could weep. The SSI Redcar plant was the one with the greatest export activity in the country, so the current drop in the pound had the greatest potential to boost our exports. It may have been able to turn around the picture at the most efficient site in the country, which before Christmas 2014 was in the black.
Industry experts tell me the value of SSI’s exports to our balance of trade could now have been £1 billion, with those exports principally heading to the far east—in other words, outside the EU. I see that international expectation in the industry is that the price of steel will continue to increase. I see a new runway being commissioned for Heathrow that needs 370,000 tonnes of steel—the same as building 16 Wembley stadiums—and a company there that wants to buy British. I see cutting-edge new developments in steel in this country—two thirds of UK steel products were not even invented 15 years ago.
SSI lacked the reserves to keep the plant alive through the crisis. If only it had been supported, it would now be exporting extremely successfully. Surely if we believe in an active, interventionist Government who support this country’s industry and exports, we are an example of where they should have stepped in.
Tom Blenkinsop
My hon. Friend is a fantastic champion for the Redcar site, which I know well. She commands great loyalty in the town from many people and I respect her for how she has played the grim hand that she was dealt as soon as she was elected. Does she agree that the sad irony of the SSI site—the old Teesside Cast Products site—is that it was the second most efficient plant in the European Union after Dunkirk?
Anna Turley
My hon. Friend is right. The SSI site was not only efficient but had a fantastic workforce. An enormous amount of money was put in to bring it up to such standards. The site had everything that could have seen it playing a leading role in the steel industry. It is a tragedy that the site could not be supported to weather a few months of difficulty so that it could thrive in the future.
The site now stands looking over the town, cold and rusting, with its future tied up in faraway wrangles between an official receiver and faceless banks in south-east Asia that show no signs of progressing. I would be delighted if the Minister had anything—anything at all—to share with us about what steps the Government are taking to wrestle the site out of the hands of the Thai banks, so that the people and businesses of Teesside can start to rebuild, invest, regenerate and bring much-needed jobs to our area.
I believe that the future for steel on Teesside did not disappear entirely with SSI. Potential inward investors recognise Teesside as the preferred location for UK investment, with its unique availability of infrastructure, supply chains, innovation support and skilled workforce, and its transport benefits through its geographical location and existing assets. Our British steel beam mill is doing fantastic work and has a great workforce. If the Government are concerned about the future of the UK steel industry, they need still to be concerned about Teesside. I have met serious potential investors who are looking closely at it, but we need the former SSI site to be liberated. Although I have come here to bat for the wider steel industry in this country and to fight for the jobs and livelihoods of steelworkers around the country, I do so on behalf of Teesside, with an anger that cannot be repressed and a determination to achieve some form of future for steel in our area.
I turn now to some broader issues. The June referendum result has huge implications for every part of our economy, and businesses from all sectors will be seeking favourable terms in the Brexit negotiations. Last week’s Nissan announcement was fantastic news for the automotive industry, and I congratulate every single man and woman at the plant and in the supply chain who sent out the message to the world that the north-east is the best place to come invest and build the cutting-edge cars of the future. We have a fantastic workforce, terrific businesses in the supply chain and world-beating research and development.
It is important that Brexit does not become a game of who can shout the loudest. Our approach to an industrial strategy as we leave the EU must benefit everyone. My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) is absolutely right that steel must have the same weight as the automotive industry in the decisions made about tariffs. The steel industry is still in crisis as it continues to battle with the challenges of global overcapacity, falling demand and uncompetitive trading conditions. Some progress has been made, but further reductions in steel jobs and production capacity are a possibility if action is not taken. The uncertainty of Brexit adds to the challenges.
We fought to secure this debate to ensure that tackling the risks to the future of steel remains a Government priority. Many of the industry’s asks remain unanswered. The primary importance of the Brexit negotiations cannot mean that other issues fall by the wayside. Many industry proposals to redress the huge imbalance in electricity costs for UK steel compared with our competitors have so far not been carried forward by the Government, and the delay has cost the sector an estimated £20 million since June. The Government have also not yet accepted the request for plant and machinery to be excluded from business rate calculations, meaning that French and German steelmakers continue to pay up to 10 times less in rates than their UK counterparts. I sincerely hope that the Government are considering that ahead of the autumn statement.
I have mentioned Heathrow’s important commitment to use British steel in the recently approved airport expansion. The same support for local materials must be present in other major construction and infrastructure projects, including High Speed 2 and 3, the new fleet of nuclear submarines and Hinkley Point. More than two thirds of UK steel exports went to the European Union in 2015. It is crucial that freedom to trade in the single market is maintained.
Steel is also a crucial foundation industry, underpinning the manufacturing sector as a whole, which itself relies on single market access for both the export of completed goods and the import of parts and raw materials. The assurances given to Nissan were positive for the steel industry, particularly as they are the biggest automotive customer of UK steel. However, the automotive sector has a large supply chain, and those companies need the same assurances that they will not be hit by tariffs when we have left the EU. It cannot be the case that the biggest companies who shout the loudest secure special protection.
On Teesside, every single one of our boroughs voted by more than 60% for Brexit. I spoke to lots of people during the referendum campaign who were motivated to vote leave by anger at the loss of our steelworks and the idea, wrongly pushed by the leave campaign, that inaction in Europe was to blame. They want the Government to be more active in their support for industry and to challenge unfair trading practices by China. When forming post-Brexit trade policies, the UK must implement robust anti-dumping measures to stop the flood of subsidised steel that has devastated the industry in the UK, not push the hands-off attitude suggested by one leading Brexit Minister, as my hon. Friend the Member for Middlesbrough South and East Cleveland exposed.
I also want to mention the importance of innovation to the future of the UK steel industry. Innovation is core to our domestic industry’s success. Such is the impact of British inventiveness that two thirds of steel produced here is in forms not invented 20 years ago. That is why I was appalled to learn earlier this year that officials at Innovate UK judged support for materials and metals not to be a priority for Britain. The implications of Tata’s announcement in March revealed the short-sightedness of that approach, so it is reassuring that the Government have overruled that decision. I would love it if the Minister agreed in this debate to the overwhelming evidence for a materials and metals catapult.
If we are to retain our lead, public support needs to reflect the research requirements of Britain’s increasingly fragmented industry and the principles of relentless continuous innovation by making long-term commitments advocated by UK steel experts, rather than Whitehall. I recommend to the Minister the work of the Materials Processing Institute in my constituency, which was established in 1944 to provide research to a then-fragmented industry similar to the one emerging again now.
The institute is Europe’s go-to steel and materials research expert, as my hon. Friend said, welcoming delegations from Germany, Sweden, China and elsewhere this summer to advise them on how to future-proof their domestic steel industries, which are wrestling with many of the same issues as ours. Just this week, the institute was approached by one of the world’s largest steel companies overseas to become its preferred research partner. Its proposals for long-term support to commercialise innovation have the support of Tata Steels Speciality Steels, British Steel, Celsa Steel, Liberty Steel, Albion Steel, Acenta Steel, the British Stainless Steel Association and UK Steel. I would be delighted to welcome the Minister to discuss the matter further and see the institute’s world-class facilities for himself.
Bridging all these issues is the need for a long-term industrial strategy that supports British industry and manufacturing to be competitive in the global market by creating an environment for investment, innovation and, ultimately, the creation of more highly skilled and well paid jobs. The assurances given to Nissan and the proposal for a 25% Government stake in Tata UK steel assets are two examples of a more interventionist Government prepared to support British industry, which is good to see. It is a marked improvement on their complacency and inaction during the SSI crisis in Redcar; this must be the start of a more proactive approach to industry. UK steel is still in crisis, but with the right help, its future both nationally and on Teesside can be secured.
Geraint Davies (in the Chair)
Diolch yn fawr. Nawr te, siaradwch, Stephen Kinnock.
Stephen Kinnock (Aberavon) (Lab)
Diolch yn fawr, Mr Davies. It is a pleasure to serve under your chairmanship. I thank my hon. Friends the Members for Redcar (Anna Turley) and for Middlesbrough South and East Cleveland (Tom Blenkinsop) for securing this debate, and for their contributions. I welcome the Minister and shadow Minister to their places.
A year on from the closure of Redcar, our steel industry is still in crisis. Make no mistake: we are still staring into the abyss. My constituency is built around the town of Port Talbot, which is living under a cloud. We are a steel town. The steelworks is the blazing heart of our economy, our community and our lives, and we do not know whether it has a long-term future. Our steel industry and the communities built around it face a perfect storm: a long-term declining British manufacturing base; an economy facing fundamental challenges, particularly in light of the referendum; and a Government who are quick with excuses but glacial when it comes to solutions or strategy.
That perfect storm comes together to create an uncertainty with a real, lived effect. It is not only hitting the order book—running down the short-term prospects of our industry, without which there can be no long term—but affecting people’s lives. I have constituents who cannot get mortgages or loans, because there is no guarantee that they will have a job in six months; constituents who do not know whether they will be able to help their kids through university or college; constituents who, simply put, do not know whether they and our town of Port Talbot have a future.
That existential uncertainty has been dragging on for a year. Just three months after Redcar closed, we learned of 1,000 steel job losses across Wales, 750 of them in Port Talbot. The men and women of Port Talbot, Llanwern and the rest of Tata in Wales were left in limbo for more than two months, unsure whether theirs would be the jobs that went. Then, about a month later, came the potentially devastating news that Tata wanted to sell. From a fire sale we got the slow burn, which somehow morphed into the joint venture in July. Today we are no clearer.
We are told that the joint venture is still the option, but what that means is not clear. What does it mean for primary steelmaking, investment and jobs? Is Tata’s British arm even part of the joint venture plans? Apparently not, unless there is a resolution on pensions. But any further delay has a real impact, because there are very practical decisions that have to be made now if the industry is to continue, such as relining the second blast furnace at Port Talbot, without which there is no sustainable future for primary steelmaking in this country.
The Government, along with both companies, must set out clearly what the joint venture really means and must give us the cast-iron guarantees that Roy Rickhuss of the union Community called for just this week on jobs, investment and the long-term future of Port Talbot and the rest of the business. Although we do not know the reality, our fear is that this joint venture is little more than a smokescreen for cutting Tata Steel UK loose to consolidate the business on the continent. ThyssenKrupp has never shown much real or active interest in Tata’s UK operations; we know that the joint venture is right at the bottom of its priority list, beneath its internal restructuring, domestic jobs guarantee and ongoing negotiations with the German union IG Metall. When that is added to Tata’s complex internal dynamics, which we saw in the changes in Mumbai, the result is a sword of Damocles, forged by an inept Government with dumped Chinese steel, hanging over the heads of people in Port Talbot.
[Mr Clive Betts in the Chair]
The situation is even more precarious given the vote to leave the European Union. Brexit poses real challenges for our industry. More than half of our exports go to the continent, so it is essential that the Government act to protect the steel industry throughout the Brexit process and negotiations. First, they must ensure continued access to the single market and continued membership of the customs union. Those matter because they will allow us to avoid tariffs that would devastate the industry and because they strengthen our hand in fighting Chinese dumping. The Minister should confirm today that his Government will strain every sinew to ensure unfettered tariff-free single market access for British steel and the tariff protections that come from standing with a market of half a billion consumers. Secondly, they must act to protect the steel supply chain. Around half the steel used by UK carmakers comes from Tata and Port Talbot; the automotive and steel industries are inextricably bound together, and each needs the other to stay in the UK in order to be successful. Last week’s news about Nissan was welcome, but the Government must commit to offering the same terms to other automotive producers such as GM, Toyota, Ford and JLR to ensure that they remain in Britain.
Those are just two of the actions that the Government must take to ensure the future of the steel industry. However, it is the Government themselves who are the greatest cause of uncertainty for our communities. For years, we have seen an approach characterised by indifference and incompetence, and now we can throw in complacency. The Government act as if the weakness of the pound is a knight in shining armour, riding to the rescue of the steel industry, but it is really a Trojan horse attacking our industry from within. In the short term, the 15% drop in the value of the pound has helped UK steel exports, but come the new year the penny will soon drop. The cost of the raw materials that we have to import—coke, coal, iron ore—and of energy will shoot up. Those costs will have a huge impact on the bottom line, as they already do for those who process scrap, who buy month to month or week to week. As Bimlendra Jha put it two weeks ago,
“you can’t make a business profitable on currency, we have to make it profitable on a structural basis.”
The reality is that the industry does not see the structural problems being fixed, because we have a Government who can talk a good game but who are sitting on their hands. It is straightforward to change that, but the Government must take concrete action in a number of areas. First, will they guarantee that the co-investment and soft loans offered last April still stand? Secondly, 12 months on from Redcar, will they finally make progress on the five asks? Thirdly, will they protect the steel industry from further Chinese dumping by voting against market economy status for China? This month, the European Commission will decide its position on this question, ahead of the December vote at the World Trade Organisation. Let us be clear: a China with market economy status is a China that can and will keep dumping with impunity. Will the Minister let us know how the UK Commissioner will be mandated on MES? Will the Commissioner vote in accordance with the European Parliament and the clear will of this House?
The autumn statement gives the Government other opportunities to give steel a fighting chance by removing plant and machinery from the calculation of business rates in a way that also compensates local authorities and, crucially, by acting on energy prices. I have no doubt that the Minister will point to the compensation package and talk about energy efficiency. That is fine, but it should be the icing on the cake. We need the actual cake first. Our prices are £17 per megawatt-hour higher than Germany’s. That is 40% to 45% more expensive, and it is killing the competitiveness of our industry. We cannot save 45% through energy efficiency alone.
The Government are motivated by tactics, not strategy. They are more interested in producing a political fig leaf to keep us quiet than in solving the problem—but we will not be silent, the industry and the workforce will not be silent and our communities will not be silent. We know that our futures depend on solving this problem and we know that the Government can and must do better.
To quote Bimlendra Jha again,
“while there has been a turnaround…we are still not out of the woods.”
Mr Jha also said that
“whether you drown one foot under the water or 10 foot, you still drown.”
That is why we need a proper industrial strategy for the steel industry. The Government’s future capabilities assessment is a welcome baby step towards that, but it is no industrial strategy. However, the Government will have some help from us with that, because next month the all-party group on steel and metal related industries will produce our industrial strategy document. Our document will show how an active and engaged Government, motivated by strategic and economic rather than tactical and political thinking, can build the environment for our industry to thrive, creating a level playing field on cost and trade, connecting up supply and demand, building enforceable procurement rules and forging a new model of partnership for growth and progress.
Just as iron needs oxygen in order to be transformed into steel, our industry needs a strategic and engaged state, working in partnership with the industry, unions and workforce. The future of steelmaking in the United Kingdom is hanging in the balance. The future of the thousands of steel workers and their families and communities in Aberavon and throughout the country is hanging by a thread. We can overcome the uncertainty and build a bright and secure future, but only if we act—and we must act now.
Mr Iain Wright (Hartlepool) (Lab)
May I say what a pleasure it is to serve under your chairmanship, Mr Betts? I pay tribute to and express my admiration for my hon. Friends the Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley), who have made moving, passionate and eloquent speeches that demonstrated their experience. They are huge champions of the steel industry and I am very proud to call them my friends.
We have discussed steel many times in the past few months, but many of the issues—the threat to domestic producers as a result of global overcapacity, subsequent steel price reductions and Chinese dumping—remain. We have also heard about how business rates, energy costs and procurement requirements undermine the competitiveness of the sector. The uncertainty about the ownership of much of the British steel industry and the increasing fragmentation of the sector remain important issues, not to mention the impact of Brexit and the lack of clarity about what our trading relationship with the rest of the European Union will be. However, my speech today will focus on how the steel industry can have a sustainable and prosperous future in the long term. I am not downgrading, by any stretch of the imagination, the importance of the short term or how the industry remains in crisis mode, but we need to think about how steel needs to make an important and growing contribution to our manufacturing sector in the decades to come.
Several hon. Members have mentioned changes in the Tata group. The sacking of Cyrus Mistry as chairman in the past ten days obviously raises greater uncertainty, which is never a positive for business, but it could lead to a change in strategy that could boost and safeguard Tata Steel’s operations in the UK. Last week, the Financial Times reported
“a person with direct knowledge of Tata’s plans”
as
“saying that…Port Talbot…was ‘virtually safe’ following Mr Mistry’s ousting, and that the company would invest ‘whatever it takes to make it efficient’.”
Those words are very welcome, but where do they leave the steel industry or Tata Steel’s footprint in our country? What about other parts of Tata Steel, such as the speciality products and the pipe mills in Hartlepool?
I am not expecting the Minister to provide a running commentary—a fashionable phrase at the moment—on the changes at the top, but does he accept that since putting the assets up for sale earlier this year, important parts of our steel industry remain in a state of limbo? That is bound to have an adverse effect on the recruitment and retention of skilled workers, whose skills are essential to the ongoing competitiveness of our steel industry. It will also have an impact on suppliers and customers of steel products, who may be concerned about getting paid and having the orders delivered.
With this additional uncertainty on top of global pressures, will the Minister—who I very much welcome to his place—take this opportunity to set out the discussions he has had with Tata, and can he say whether further reassurances and commitments about ongoing operations have been made?
Tom Blenkinsop
In addition to the removal of Cyrus Mistry and the return of Ratan Tata to the board, there is the issue of ThyssenKrupp’s sale of assets in Brazil. Its removal from the South American economy is happening at the same time as Tata’s change at the top. Will that have any effect and will the Government investigate that in conversations during the trade visit to India by the Prime Minister next week?
Mr Wright
My hon. Friend makes an important point. He has also mentioned the importance of a proper industrial strategy. Everybody who has contributed to this afternoon’s debate has mentioned that, so what are the Government doing to put in place a proper industrial strategy—this is very important to us on the Select Committee on Business, Energy and Industrial Strategy—and how does the steel industry fit in with such a strategy? How will the Minister’s departmental responsibilities help the steel industry? Joining business, energy and industrial strategy into one Department provides a better degree of co-ordination and should help sectors such as steel by providing consistency and the co-ordination of policy, but how will that work in practice?
Just over a year ago, on 15 October 2015, a steel summit was held. Three working groups, on competitiveness and productivity, international comparisons, and public procurement, were set up to address some of the challenges facing the industry. What is the current status of those groups? Did they survive the new Government and the change in the business Department? What are the findings arising from the work and how are they being incorporated into a proper industrial strategy? The universally well respected Community union, which has the long-term interests of the steel industry at its very heart and its core, and which is not prone to hysteria or exaggerated pronouncements, recently stated:
“After an initial flurry of activity and plenty of rhetoric we are becoming increasingly frustrated at the lack of urgency demonstrated by the UK government. To date very little meaningful support has actually been delivered—certainly we have not seen the game-changing intervention our industry desperately needs.”
That is a crucial quotation from an important stakeholder in our steel industry. Where is that meaningful support? Given the policy co-ordination under one departmental roof, how will Ministers take forward action on the energy costs that undermine the competitiveness of our industry? Crucially—this has been mentioned several times —will Ministers resolve to address the concerns raised about the business rates that disincentivise manufacturers, not just steel manufacturers, from investing in more efficient plant and machinery by raising what is essentially a tax bill?
Procurement is also a major way in which a co-ordinated industrial strategy can provide meaningful support for the steel industry. We have heard already about the hulls of the Trident submarines being built with French steel. That is immensely disappointing and really does not show a joined-up, co-ordinated Whitehall approach to industrial strategy. What lessons are being learnt from this to ensure that the British industry is able to address the needs of the customer, in this case the Ministry of Defence, and that local steel content can be increased?
On commercial operations, many hon. Members have quite rightly mentioned last week’s welcome decision that Nissan is to build the new Qashqai and bring the manufacture of the X-Trail to the factory in Sunderland. That should also provide more opportunities for local British-based steel producers.
We found in our Select Committee inquiry last year that Nissan, one of the most productive car plants anywhere in Europe, used British-made steel for three quarters of the steel content needed for the Qashqai. Vauxhall buys 50% of the steel it needs for production of the Astra at its factory in Ellesmere Port from Port Talbot. Given the strength of the UK automotive industry, what active steps are the Government taking to ensure that more of that successful sector’s requirements in metals are being provided in a competitive manner by British-based firms?
The UK automotive industry currently consumes about 17% of British manufactured steel. There is surely scope for a successful and winning automotive sector to take more of a growing pie. How are the Government identifying commercial opportunities for British steel? How are they encouraging and incentivising investment in technology and innovation and in the higher quality, higher value steel required in the automotive and aerospace industries? I hope the Minister will respond directly. The Materials Processing Institute can provide the means by which technology, innovation and support can be given to producers to make sure they can move up the value chain. That is vital.
This is not only about automotives; this week is offshore wind week. Offshore wind currently generates about 5% of the UK’s electricity needs. This will double to a tenth of electricity generation in five years. Firms in my constituency such as JDR Cables are winning great big orders in this field. The steel content for offshore wind is immense, but it is often imported from France and the Netherlands. How will we ensure that British-based and British-made steel provides steel content for the offshore wind industry? Are the Government working in the proactive and collaborative way needed in the modern industrial age to ensure that as much of the value in the offshore wind supply chain—more than £18 billion of new projects in the pipeline in the next five years—is captured by domestic content?
The steel industry remains a vital and essential part of our manufacturing base. It cannot and must not be viewed by anybody as a sunset industry. I hope we will see the implementation of a proper industrial strategy to ensure that the opportunities arising in the next few years are captured as much as possible by our British steel industry and that the barriers preventing a proper level playing field are addressed and resolved. That is possible only through active work by the Government, in close collaboration with the industry. With the greatest of respect, that work seems to have gone off the boil in recent months, at a time when we need it more than ever to sustain the long-term viability and prosperity of the British-based steel industry. I hope the Minister will use the opportunity today to state that the Government recognise the importance of the steel industry and will act accordingly, not only to save steel but to make sure it has a proper and fitting future in our manufacturing sector.
Nic Dakin (Scunthorpe) (Lab)
It is a pleasure to serve under your chairmanship, Mr Betts. I am delighted to follow the Chair of the Business, Energy and Industrial Strategy Committee, my hon. Friend the Member for Hartlepool (Mr Wright), who put forward such a comprehensive case, after so many excellent contributions already to this debate. I want to begin by paying tribute to everyone working in our steel industry and its supply chain. They make a massive contribution to the UK economy and to communities such as mine in Scunthorpe, where I live.
In September 2015, when I asked the then Prime Minister to call a steel summit, many on the Government Benches were sceptical of the need. By the time the summit took place in Rotherham, however, it was crystal clear even to them that the steel industry was in crisis. Now, just over a year on from the summit and the collapse of SSI on Teesside, a further 6,000 jobs have already been lost from the industry. There remains, therefore, a pressing need for Government action.
The long products business, centred on Scunthorpe, was taken over by Greybull Capital and relaunched as British Steel in June 2016. It is to the enormous credit of the workforce and management that the business is operating at a surplus. The leadership shown by Community, Unite and the other trade unions, alongside the management team, has been crucial to that success, but they would say with one voice that there is still much to do to deliver the sustainable future that everyone wants to see. I welcome the sense of greater certainty for Scunthorpe expressed by the hon. Member for Corby (Tom Pursglove). This is just another chapter and we need support from the Government. We do not need the Government to assume that everything is okay now.
The Government have a crucial role in helping to deliver. They can set the climate and the context for delivering the level playing field that our steel industry needs to prosper. There is a real, palpable concern that, as my hon. Friend the Member for Hartlepool said, the Government’s eye is once again off the steel ball as it grapples with Brexit and other issues. As a result of the immense popular pressure exerted by steel unions, steelmakers and MPs for steelmaking constituencies, the Government set up several working groups on the key issues of concern after the summit in Rotherham, but there is yet to be any real traction as an outcome of that work. There is now a Department with “industrial strategy” in its name, and we have yet to see whether that is anything more than a welcome strapline. The Government now manage to talk the talk, but we still do not know whether they will walk the walk, as we want them to.
Procurement is a case in point. One of the most tangible outcomes of the Government’s work in the past year was the new procurement guidelines that ensure that social and economic factors can be taken into account in steel procurement. However, the Government appear to have fallen at the first hurdle. The Defence Secretary, a former steel Minister, was happy to cut the first steel, marking the start of the work on Trident submarines, the only problem being that it was French steel. That is not exactly the vote of confidence in UK steelmakers that we all want. When I asked the Prime Minister in one of her first outings at the Dispatch Box whether UK steel would be used in Trident’s successor submarines, she said that
“where British steel is good value, we would want it to be used.”—[Official Report, 18 July 2016; Vol. 613, c. 566.]
I tell the Prime Minister, the House, and the public that British steel is good value. It is the best value.
It has taken a lot of parliamentary questions to try to establish why UK steel was not used for the hulls. Answers suggest that there was not a viable UK bid, without giving any inkling of what “viable” might look like. It also looks as though the new procurement guidelines were not applied, although the Government say that they would be in future. I welcome the written answer in which the Minister said that, and wish him the best of luck in his role.
In October 2015, Scunthorpe’s plate mill was mothballed and facilities in Scotland were closed. Confidence about procurement lines in relation to successor submarines might have led to a different outcome. That is a reminder, as my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) said earlier, of the need to ensure that the capacity to make the right sort of steel is available in the UK when it is required for large infrastructure projects. That demands a decent timeline of planning and certainty, which we have clearly not had in recent years. The steel sector Catapult is a potential benefit to give us extra traction in that area. I hope the Government will push forward with it and answer the questions raised by my hon. Friend the Member for Redcar (Anna Turley) in her powerful contribution.
The long-awaited announcement about Heathrow was accompanied by a clear statement from Heathrow that it intends to use UK steel in the construction of additional airport capacity. That is the sort of clear, forward-thinking decision making that is in the interests of everyone. It is leadership in action and we want more of that. That is why I welcome the Scunthorpe Telegraph campaign for High Speed 2 to be built with UK, preferably British, steel. The Scunthorpe Telegraph is adding its campaigning voice to mine and those of the Community union and others who have been making these arguments for some time. It is a very welcome move by a strong, campaigning local newspaper. HS2 is a massive public infrastructure project, forecast to require 2 million tonnes of steel, and we know that we have the expertise and the capacity to manufacture the necessary rail, long products and steel plate in British Steel, centred on Scunthorpe.
To be fair about rail procurement, we have the best example of best practice in the way that Network Rail has developed and delivered its procurement practices over the years, but that should not be an exception. It should be a template for others to learn from and aspire to. We also have the capacity to produce the steel needed for North sea wind farms being built as part of the massive Hornsea project. My area is rightly proud of the opportunity that the Humber, as the energy estuary, offers for development and jobs locally. It would be a missed opportunity if Dong were to ship in steel from elsewhere to build that crucial infrastructure. However, I fear that it may, like BAE Systems, dodge the Government’s new procurement guidelines.
When I met Dong representatives recently, I took the opportunity to remind them that it is UK taxpayers who are underwriting the generous contract for difference deal that they have been awarded. It is UK energy bill payers who will pay for the electricity that their wind farms produce. Every effort should therefore be made to ensure that UK steelmakers have the maximum opportunity to provide the steel for that massive infrastructure project. The Government’s new procurement guidelines should be followed for such projects, which benefit from huge Government support, and not only for projects that come directly from the Government. The procurement guidelines should be followed, and companies such as BAE Systems and Dong should not be able to dodge under the bar. I hope that the Minister will respond to that point.
While we consider infrastructure projects, let us not forget that if we develop shale gas extensively in the UK, we should have the procurement policies and practices to ensure that high levels of UK steel content are used. The same arguments apply as for wind and all other forms of energy. Local procurement is also important, which is why it is so positive that a large number of councils—including, to its credit, North Lincolnshire Council—have made a commitment to sustainable steel. I am delighted with the public commitment made by Scunthorpe United—the mighty Iron, currently riding high at the top of League One—to using local steel in the construction of their new football stadium. Procurement is an area in which the Government have taken steps, but they need to do better. We need not just good words on paper, but actions on the ground. The Minister is picking up the baton from a good Minister, the right hon. Member for Broxtowe (Anna Soubry), but the baton is full of words and he needs to turn them into actions.
The forthcoming autumn statement could give us support on business rates, energy costs and grants for energy efficiency. Action on all those things would be beneficial. Let us hope that the new Chancellor takes the opportunity to show his mettle, show he is an iron Chancellor, and make commitments to the steel industry in the autumn statement.
Christina Rees (Neath) (Lab/Co-op)
I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) and my hon. Friend the Member for Redcar (Anna Turley) on obtaining the debate. I welcome the Minister to his place, and want to compliment my hon. Friend the Member for Aberavon (Stephen Kinnock) on his great speech. His constituency is adjacent to mine, and I assure the House that he and I are working together for the people who live in our constituencies and work at Tata Steel.
To say it has been a difficult year for the steelworkers of Neath and Port Talbot would be an understatement. The challenge of competing in a global market, the absence of anti-dumping tariffs, the lifting of the lesser duty rate and Brexit all conspire to create a world of uncertainty and fear. Of the 1,050 jobs lost in the UK steel industry since the year began, 750 of them have been lost from Port Talbot. That was on top of the 400 jobs lost in 2014.
Steel and the steel industry are essential to Wales and its economy, and that is particularly the case for my constituency and the people of Neath. The notion that it does not have a future is simply unthinkable. There are 575 businesses making up the steel industry, employing 31,000 people across the UK. More than 50% of those jobs are based in Yorkshire and Humberside or in Wales. However, between 1997 and 2014, iron production in Wales fell by 3,210 kilotonnes—or by more than 50%. Steel production has fallen by 25% during the past 40 years. Nevertheless, last year was a record-breaking one for Tata Port Talbot, with the plant producing 3.2 million tonnes of steel.
Decline and uncertainty are things that our steelworkers have had to deal with for many years and, being as robust as the steel that they make, they have bounced back every time, working through it all to keep our country supplied with the finest steel in the world. However, the uncertainty has taken on a new form in the shape of Brexit. The European Union accounts for more than 40% of direct British steel sales— and more, when the exports of British manufacturers are considered. Post-Brexit tariffs on British steel or an elongated trade agreement might signal the death knell of an industry already fighting to compete on a level global playing field.
I remind Members that the forerunner of the European Union, the European Coal and Steel Community, was set up not only to cement peace but to help economic growth by pooling resources and preventing unnecessary competition. Its architects would be astonished at the current state of affairs and the UK Government’s inability to work with our European partners to prevent unnecessary competition from across the world. The latest industrial revolution taking place in China may well be the biggest of all. In 2015, the Chinese produced 804 million tonnes of steel, or 50% of the total worldwide output. The UK produced 11 million tonnes during the same year. It is a matter of not whether there will be implications for the UK steel industry as a result of Brexit but what their extent will be. If the Government do not do all they can, exports will be hit hard, output will be slashed, jobs will be lost and communities will be forsaken.
The picture painted may be bleak compared with a golden past, but I firmly believe that steel in Wales and the UK has a strong future. A future for any industry is all about adapting to change and turning threats into opportunities. The future of the steel industry is clearly about innovation, and technological innovation is in its business model. Beyond the heavy end of steel production that we all know so well, we also have organisations that innovate and produce high-tech products that are changing the way we view steel.
Neath Port Talbot is home to a company called Specific, which uses coated steel to make world-leading, innovative technologies that produce, store and release energy. At the heart of its work is Swansea University’s bay campus, which straddles the constituencies of Neath and Aberavon. Specific is hugely concerned about our leaving Europe, not only because of the essential funding it has received from the EU—without which it probably would not exist—but because of the potential loss of a market in which it could promote and sell its products. It is that sort of high-level innovation that needs to be harnessed and nurtured if we want to see a future for our steel industry.
Stephen Kinnock
My hon. Friend is making an excellent and comprehensive speech. It is important to underline the fact that the quality of the steel is possible only through primary steelmaking. It must be produced on the basis of a process that starts right up the chain with a blast furnace, not with an electric arc furnace. If we are going to take steel into the 21st century and as high up the value chain as we can, we must retain primary steelmaking in this country.
Christina Rees
I thank my hon. Friend for making that important point.
An innovative product is only one part of the story; we must also use the current crisis as an opportunity to change the way we do business so that a structure can be established to protect the steel industry for many years to come. What about a management-workforce buy-out at Tata Port Talbot, and perhaps elsewhere? It could be set up in the shape of a co-operative and take advantage of the benefits of a tripartite model of delivery that would also involve investment from the public and private sectors. There are many such examples from across Wales and the UK, including Tower Colliery, John Lewis, Welsh Water and hundreds of credit unions. Welsh Water’s slogan is “For Wales, not for profit”; we could apply the same principle to our other key industries, which for Wales means steel.
Co-operation, consensus and community are the founding principles of not only co-operatives but the Labour party. It is on those shared values that figures from across the Labour movement have led the development of organisations that have anchored communities during difficult times and helped to create a buffer against global economic shifts. Let us consider the possibility of doing the same in communities such as Neath, Port Talbot and elsewhere. I urge the Government to play their part in this endeavour.
Jessica Morden (Newport East) (Lab)
I, too, thank my hon. Friends the Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley) for securing this debate, and for their sterling efforts on behalf of the all-party group on steel and metal related industries, which is out today in some force.
Last week, the Community union, which does an absolutely fantastic job for its members, quite rightly praised steelworkers in a statement, saying:
“We believe the workforce should be commended, in the strongest terms, for continuing to deliver for Tata throughout this exceptionally difficult period and indeed restoring previously loss making parts of the business to profitability”.
I start with that quote because it is right that we always acknowledge what a difficult time this is personally for those who work in our steel industry. We must never underestimate the effect the continued uncertainty is having on steelworkers and their families. I know that from talking to those who work for Tata at Llanwern and at Newport Orb. A steelworker emailed me last week to say:
“We feel forgotten about and we have no news on the Government’s and Tata’s plan for the pension, no news on where we stand on the future on any proposed merger, no answer on the deficit etc. Things seem to have come to a standstill and there are no answers coming from Parliament or Tata”.
That very much echoes what my hon. Friend the Member for Aberavon (Stephen Kinnock) said at the start of his speech. Aberavon and Port Talbot’s fortunes are very much linked. I absolutely concur with what my hon. Friend said about that feeling of uncertainty and how difficult it is for people. Many steelworkers feel that their lives are on hold. I hope the Minister understands that and takes it away from the debate.
We have in this place relentless debates, questions and statements about steel. Just yesterday there were two fantastic questions at Prime Minister’s questions from my hon. Friends the Members for Cardiff South and Penarth (Stephen Doughty) and for Penistone and Stocksbridge (Angela Smith). In response, the Prime Minister said:
“This Government have stood up for British-made steel, and we have taken a number of measures”.—[Official Report, 2 November 2016; Vol. 616, c. 880.]
She also said,
“we recognise both the importance of steel and the importance of Tata in the United Kingdom.”—[Official Report, 2 November 2016; Vol. 616, c. 886.]
On the lack of clarity about Brexit, she said:
“I am very clear that what we want to achieve is the best possible deal”.—[Official Report, 2 November 2016; Vol. 616, c. 880.]
We appreciate those words, but we need more detail and more commitment from the Government, with stronger words and stronger action.
Workers in my constituency want to know that the Minister is fully engaging with the short-term urgency of the problems facing the Welsh steel industry. There are bits of good news, but the underlying problems have not gone away, as many other Members have said. We are still waiting for assurances from the Government about Port Talbot, which will affect Llanwern, and for any news on the joint venture between Tata’s strip products division and ThyssenKrupp, which could affect Orb in my constituency. If there is such news, what assurance can the Government give that commitments will be made on jobs, investment and the continuation of primary steelmaking at Port Talbot and across south Wales?
The Government lobbied against the EU imposing tariffs on the dumping of Chinese steel. The Prime Minister did not even put Chinese steel dumping on the agenda when she first met the Chinese Prime Minister. Electricity prices are still a huge issue in the UK, with a disparity of £1 million a week between the UK and Germany, which has an effect on competitiveness. As many Members have said, despite the procurement guidelines, French steel is still being imported for Trident renewal. I know we will all be watching as large infrastructure projects get the go-ahead. The Government cannot let up on ensuring that all major procurement projects—from rail to airports and tidal barrages, which will be important for places such as Newport if Swansea bay tidal lagoon goes ahead—use British steel.
As every one of my hon. Friends has said, the Nissan announcement is brilliant news, but where is the Brexit plan for the steel industry? So far, the Secretary of State for International Trade has said that he has no plans to support the steel industry with trade defence instruments. When combined with the other uncertainties Brexit has caused, that is a major concern. Brexit has many other implications for the industry, so we want similar assurances to those given to Nissan.
In brighter news, the Welsh Government are thankfully doing all they can with the powers and levers available. I very much welcome the active work of Ken Skates, the Welsh Government’s Cabinet Secretary for Economy and Infrastructure, who through Business Wales is supporting the industry through Welsh public sector infrastructure and construction projects.
I appreciate that it is not all gloom and—I will make this point before someone intervenes on me to make it—I also appreciate the point about primary steelmaking. Liberty Steel now employs about 1,500 people, including in the steelworks in my constituency and the two Scottish steel plate mills, one of which I know opened recently in the constituency of the hon. Member for Motherwell and Wishaw (Marion Fellows). Liberty Steel also has the SIMEC Uskmouth power plant and it is involved in the tidal lagoon initiatives, which were mentioned earlier and which are very important, not only for Swansea but, further on down the line, for places such as Newport. Liberty Steel has a long-term, sustainable strategy of steelmaking in the UK and actively invests in steel, power and the downstream industries. As we heard earlier, that is all built around a green steel vision, whereby Liberty Steel is working towards producing steel made from recycled scrap metal and powered by renewable power. That is an important addition to the traditional steelmaking industry.
Finally, I take this opportunity to invite the Minister to visit Newport East to see the site in my constituency and see at first hand the plans for Liberty.
Mr Clive Betts (in the Chair)
It is now time for the Front-Bench spokespersons; no more than 15 minutes each, so that there are a few minutes at the end of the debate for the mover of the motion to wind up.
Hannah Bardell (Livingston) (SNP)
Thank you very much for calling me to speak, Mr Betts, and I assure you that I will not keep you nearly as long as 15 minutes.
I speak today on behalf of my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows), who unfortunately is unwell and so cannot be here. I represent the constituency of Livingston. While Livingston does not directly have any steel jobs, it is a traditional manufacturing constituency. Over the years while I was growing up, I saw closures of sites by companies such as Motorola and Bausch & Lomb, and the devastating impact that such closures can have on a local area, so first and foremost, I will say that my hon. Friend and I stand in solidarity with the constituencies across the UK that have been devastated by the closures of their local factories.
The quality of the debate today has been fantastic and the debate itself has been very consensual. Clearly, there will be differences of opinion on certain policy matters, but on issues such as this one we have to transcend politics and come together, to call for our vital steel industries to be protected.
Last year in Scotland, as is well known, the Tata Steel plants of Dalzell and Clydebridge faced huge uncertainty, as do many others across the UK today. The Scottish National party-led Scottish Government worked with the company, with local members of all political parties, with trade unions, with local government and with local communities, and they kept their promise of leaving no stone unturned though the work of that steel taskforce and through the work of Fergus Ewing, who was the Business Minister at the time and who has recently won an award for his work on this issue.
The steelworks of Clydebridge and Dalzell have now been bought by Liberty House and are coming back into production. They had been mothballed and I absolutely take on board the point that the hon. Member for Corby (Tom Pursglove) made about his disappointment at the lack of foresight and strategy in not supporting the mothballing of a site so that it can be brought back into production later.
For the avoidance of doubt and in case anybody wants to raise this point, as it has been raised in other debates previously, in April this year, then Prime Minister David Cameron mistakenly claimed that there was zero Scottish steel in the new Forth road bridge. That was quickly corrected by my right hon. Friend the Member for Gordon (Alex Salmond), who, as Members will know, is an assiduous pursuer of the facts, because steel from the Dalzell plate mill was used in the girders at either end of the bridge. My right hon. Friend further pointed out that the reason why there was no Scottish bidder for the main steel subcontract for the bridge was the closure of the Ravenscraig steel mill.
Tom Blenkinsop
The original contract let by the Scottish Government was with a Chinese company and a Catalonian company. The Catalonian company had to withdraw and it was actually Cleveland Bridge, in conjunction with Tata’s Dalzell plant, that stepped in to fill that gap. The original contract—as signed off by the Scottish Government—fell through and Cleveland Bridge, which is in Darlington, and the Dalzell plant stepped in to fill that gap. So Scottish steel was used—in fact, it was British steel, as it was slab from Scunthorpe.
Hannah Bardell
I will take that point on board, but the hon. Member will know that much of that steel was rolled and developed in Scotland. Nevertheless, I thank him for his clarification.
I was going on to say that one of the reasons that situation came about was the closure of the Ravenscraig steel mill by a previous Tory Government in 1992. I know that Labour Members—the predecessors of the Labour Members here today—fought hard alongside our party’s Members to save Ravenscraig. I pay tribute to all those Members who tried to save Ravenscraig.
That comment by the former Prime Minister reveals the lack of understanding about Scottish steel and indeed about steel across the UK, and the cavalier attitude with which such statements have been made about the industry. We cannot let that continue; there must be, as so many Members have said today, proper commitment from the Government.
I say that because the issues that we are discussing today are not limited to the steel industry but extend to British industry in general. Post-Brexit, the uncertainty and anxiety are greater than ever, because we have no idea what kind of deal many industries will get. We know what the car industry will get, although we do not have the detail of that deal. We do not know whether other deals will be made sector by sector, or area by area. Before the Brexit vote, we knew that the international demand for steel was falling: the OECD had said that excess global capacity was expected to widen to 645 million tonnes. Now, post-referendum, the pound is falling, so UK steel will be cheaper for foreign buyers, but as other Members have said, the cost of the imported raw materials will be higher in the long-term, which will make things very difficult.
I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this debate and on the passion with which he spoke. He highlighted the contrast between the approach and guarantees given to Nissan and the automotive industry with the support for the steel industry. That is ironic, given that the World Steel Association has said that on average 900 kg of steel is used per vehicle. So we will be making cars in Britain but importing the steel to make them and many parts of those cars. I hope that irony is not lost on the Government and that they take this issue very seriously.
Strong anti-dumping measures are critical. They were nearly secured with our EU partners. In our view, it is indefensible that the UK Government blocked EU attempts to regulate Chinese steel. The hon. Member for Corby spoke about the importance of the all-party group on steel and metal related industries and its collaboration with others. He made a plea to Tata for more information and said that the Government’s leadership would be key. Although he is a self-professed Brexiteer, he wants better leadership. However, given that it was the UK that blocked the EU attempts to regulate Chinese steel, I am not sure how he thinks the UK will do a better job. He was not able to answer that question earlier; perhaps the Minister will be able to answer it. We are all interested to know how the UK industry will fare if the UK ends up operating under World Trade Organisation rules, as the Secretary of State for International Trade has said. To be fair, the hon. Member for Corby was encouraging his colleagues in the Government to be proactive in their industrial strategy and said they needed to champion steel.
The hon. Member for Sheffield Hillsborough spoke passionately about the speciality skills and products produced in her constituency and the importance of the Prime Minister’s visit to India next week in ensuring the future of speciality steel—
Angela Smith
I was the Member for Sheffield Hillsborough; I now represent Penistone and Stocksbridge. The shadow Minister, my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss), is now the MP who represents Hillsborough.
Hannah Bardell
My sincere apologies. My lack of parliamentary constituency knowledge has failed me there, so I sincerely apologise to the hon. Lady and I thank her for her intervention. I will be honest—on this occasion, Google has let me down.
The hon. Lady spoke about how a country without a steel industry could not call itself a major economy. We in Scotland are proud and glad to have secured steel and to call ourselves a major economy, but we worry for our neighbours and friends in other parts of the UK. I agreed with so much of what she said, particularly on renewables and single market access.
The hon. Member for Wellingborough (Mr Bone) gave us an insight into which team he is on; it is clear that he is backing the new “May Way” and not the old Cameron regime. He urged us to be positive about the future and mooted the merits of free trade and market access. He agreed that we should be tackling the issue of Chinese dumping as well.
The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)—I hope I have got that right—talked about the future of steelmaking in Wales and about his party’s desire to remain in the single market, as well as the importance of the single market and the customs union. He also highlighted the short-term upturn in the steel industry and the report from Swansea University that said there are opportunities in the long term to strengthen factories such as Port Talbot, but swift strategic action was essential. I wish him well in getting either swiftness or strategy from the Government. He also spoke about the Liberty and Excalibur deal and the importance of giving it careful consideration.
The hon. Member for Redcar (Anna Turley) spoke extremely passionately about the SSI closure—it was a highly efficient and productive plant—and the devastating impact that has had on her constituency. I congratulate her on the work she has done. I agree that it is devastating that the plant could not be mothballed. I am at pains to know why that could not have been done. I cannot understand it. I hope the Minister has more than warm words for her and her constituents.
The hon. Lady’s colleague the hon. Member for Aberavon (Stephen Kinnock) spoke about the tragedy of Port Talbot and the cloud hanging over him and his constituency. Again, the message was clear: swift and decisive action is needed, particularly given that the cost of raw materials will rise once we leave the EU.
The hon. Member for Hartlepool (Mr Wright) spoke of his admiration for his colleagues and what they were doing every day. Other Members spoke about the personal impact the issue is having. It is so important that we send that message to people outside. Members are in their constituencies as much as they can be, but with so much business here, balancing things is a big challenge. I know from travelling up and down the country how difficult that can be. We may have many differences of opinion, but the hon. Members for Scunthorpe (Nic Dakin), for Neath (Christina Rees) and for Newport East (Jessica Morden) sent a clear message. They made passionate pleas to the Government.
The consensus and the message is that we need strategy, action, investment and access. Those things are not outside the grasp or ability of any Government. The Government need to act now to save jobs and an industry that is vital to constituencies and areas across the UK. Through that, the communities of Members here today can be protected.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
It is a pleasure to serve under your chairmanship this afternoon, Mr Betts. I begin by congratulating my hon. Friends the Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley) on securing this vital debate. I also congratulate all my hon. Friends who have spoken. I welcome the new Minister to his place. The irony is not lost on me: I am a daughter of a steelworker addressing a Minister who has a family link with steelmaking. I think I heard that at the beginning of the debate.
The number of Members who have spoken today speaks volumes about the importance of the issue. It is a pleasure to be among this dedicated group who have been fighting for the future of the steel industry with such determination for many months and years. We must pay tribute to the all-party group. I am sure we are all awaiting the forthcoming report. I also thank the trade unions and their officials for their hard work representing their members and supporting them and the wider communities that rely on steel in incredibly uncertain times. Both they and the manufacturers have approached the situation constructively. I thank the Daily Mirror for its ongoing “Save Our Steel” campaign, which has done so much to keep the issue on the political agenda and to raise wider awareness of how crucial the steel industry is to the economy.
The last time Parliament debated the crisis in the steel industry was at the beginning of July, shortly after the EU referendum and David Cameron’s announcement that he would be standing down as Prime Minister. Members were grappling with the consequences of those things for the future of the steel industry. There were a lot of questions, but few solid answers.
Four months on, very little has changed. We have seen the chairman of Tata replaced by his predecessor, but the future of Tata steelworks across the country is no clearer than it was previously. Thanks to the drop in the pound’s value, a slight rise in steel prices globally and, not least, the dedication of our steelworks, there has been a slight improvement over the past few months. However, we must not let an uptick distract us from the fact that the industry is still in a deep existential crisis—it is hanging by a thread.
The industry has had plenty of warm words from both the old Prime Minister and the new, but so far there has been little in the way of practical policy. Although the new Prime Minister has spoken about strategically important industries needing Government support, steel manufacturers are crying out for the rhetoric to be matched by action. We have seen that Ministers are prepared to support industries in need—just look at their recent deal with Nissan. As much as we would all love to know what the deal entails, I appreciate that this may not be the debate in which to discuss it. Nevertheless, I am grateful to the Government for ensuring the continuing presence of Nissan in the UK, not least because the automotive sector is of critical importance to steel. It does, though, prompt the question: if Nissan and the automotive industry can be supported, why not steel?
With all the uncertainty hanging over the steel sector, workforce morale is understandably low. Workers are casting about for alternative careers, and once they have taken their expertise with them, they cannot be easily replaced. They need reassurance that their jobs and their industry have a viable future, and they need that reassurance now. Uncertainty also means a steady shrinking of customer confidence, and there is no surer way to undermine the steel industry than to allow its customers to think that it has no future.
Both the workforce and the manufacturers are united in calling for the Government to take a number of concrete steps. Members have highlighted those key asks this afternoon, and I want to reiterate them to the Minister and ask how his Department will respond to each of them.
The first issue is energy prices. The price of electricity in the UK for extra large users is the highest in the EU, to such an extent that it undermines our competitiveness. The difference means that UK steel manufacturers pay nearly £17 more per megawatt-hour than Germany—the next most expensive—costing the UK steel industry nearly £1 million every week. Industry has put forward a number of proposals to balance that disparity, such as a review of National Grid’s transmission charging regime and a review of the impact of the carbon price floor. However, the response from the new Department for Business, Energy and Industrial Strategy has so far been silence. Now that business, industry and energy are all under one departmental roof, I shall be interested to hear what discussions the Minister has had with his colleagues on the matter.
Gill Furniss
We have to look throughout Europe and find examples of best practice that we can adopt in this area of work, which is clearly important.
Secondly, there is the issue of business rates. By including plant and machinery in business rate calculations, we are not only at variance with but less competitive than France and Germany, where business rates are as much as 10 times less than ours. We are also creating a disincentive for manufacturers to increase productivity and are effectively taxing investment. Perhaps the best example is in Port Talbot, where Tata invested £185 million in a new blast furnace only to find £400,000 added to their business rates. Our current one-size-fits-all regime for business rates is a hangover from the days when manufacturing dominated our economy. That has not been the case for decades, and we need a tax regime that reflects that change.
Tom Pursglove
Does the hon. Lady agree that a balance has to be struck on taxes? Taking her back to the energy point, one of my concerns is that in the past, the right balance has perhaps not been struck between green taxes and levies and making sure that the needs of our energy-intensive industries are properly reflected in policy. What does she make of that? Is she concerned about the green taxes and levies?
Gill Furniss
The hon. Gentleman makes a very good point, but a lot of work needs to be done in the green energy industries to start with, because we really are missing a bit of a home goal by suddenly putting them on the sidelines. I am sure we will pursue that.
Tom Blenkinsop
On green taxes, I remind the House that the Opposition voted against the unilateral introduction of the carbon price floor by the previous Chancellor of the Exchequer. That was brought in without any conversation with the industry and without the EU’s prior knowledge. When the then Government attempted to reverse that, they were prevented from doing so by European legislation. My hon. Friend will also be aware that as well as opposing the CPF, we also put forward business cases for the industry.
Gill Furniss
I thank my hon. Friend for that point. Thirdly, I want to give credit where credit is due and thank the Government for the guidance published in October last year, which has put some emphasis on supporting British steel in major procurement projects. However, despite the good intentions behind that move, we are still seeing major contracts going to foreign steel manufacturers, most famously the new Trident submarines, which are being built with French steel. Had a British firm been engaged to supply the steel, more than 1,000 jobs would have been supported, but alas, that is not the case. Will the Minister commit to ending the exemption from the guidance of tenders funded through contracts for difference? Will he look at strengthening the guidance better to reflect the social and economic consequences of current procurement decisions? Will he follow the examples set by the Scottish and Welsh Governments and publish future pipelines of projects so that British steel manufacturers can prepare themselves to fulfil future demand?
Fourthly, there is the issue of trade defence mechanisms and Chinese dumping. Whatever else Brexit may mean, it is absolutely vital for the industry that we avoid any sort of punitive restrictions on access to the European market. Last year, more than two thirds of our steel exports went to EU countries and our own steel industry is closely bound up with the Dutch plant at IJmuiden. Our trade defence mechanisms depend so much on what the final Brexit deal looks like, but whether or not we find ourselves bound by the rules of the single market, it is critical that the UK stands up for fair trade globally. While we still have a voice in the European Commission, we should be throwing our weight behind the scrapping of the lesser duty rule, which is hamstringing all efforts to counteract Chinese dumping, and opposing China’s application for market economy status, which will kill those efforts stone dead. Free trade does not mean fair trade and until the Government wake up to that reality, the steel industry will never have the level playing field it is asking for.
On the industrial strategy, the difficulties that the steel industry has with energy prices, business rates, procurement problems and unfair global trading practices are all issues that the Government need to address immediately. There are swords dangling over the industry’s head, but if British steel is going to not just survive but thrive, it needs a proper long-term industrial strategy to put it on the right track for the future. I am glad that the Department for Business, Energy and Industrial Strategy has commissioned research into the future capacity and capability of the steel industry. I and no doubt all of us here are looking forward to its findings next year.
Every job in steel supports three in the supply chain and the industry really is the cutting edge of UK manufacturing. Most of the types of steel being produced were not even in existence 15 years ago. Steel will play a central role in our transition to a low carbon economy if we manage it correctly and it can continue to lead the world in terms of quality and innovation. Will the Minister reassure us that BEIS will put steel at the heart of its industrial strategy?
Steel is not a dying industry. It is not a relic of a bygone era. It may be a proud part of our industrial past, but it also has the potential to be a dynamic part of our economic future. Without it, we will not only have lost an industry—make no mistake—we will have lost our entire manufacturing base. No one is asking for special treatment; we are asking for a level playing field that will allow the industry to move forward with confidence. Four months on since we last debated this issue, the steel industry is still in crisis. I urge the Minister to show more energy than his predecessors and do what it takes to save our steel.
Mr Clive Betts (in the Chair)
If the Minister would just allow a few minutes at the end for the wind-up speech, that would be appreciated.
The Minister for Climate Change and Industry (Mr Nick Hurd)
I will certainly do that, Mr Betts. It is a pleasure to serve under your chairmanship and to welcome the new shadow Minister, the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), to her place.
It has been a really good debate. I know I am meant to say that, but I mean it. Anyone listening to or reading the debate whose livelihood depends directly or indirectly on this critically important sector will be in no doubt about the passion felt for the sector by their elected representatives, on both sides of the House, who have championed their interests, and none more so than the hon. Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley), who made this debate happen and who have spoken so effectively.
I do not think that I or anyone will ever give the hon. Member for Redcar full satisfaction on an explanation for the past, but she knows from the meeting that she had with me and the Secretary of State that we are determined to do everything we can, on top of the support for the taskforce, to support and engineer a beautiful rebirth of the site to the best of our ability. I repeat my offer to visit at whatever point is appropriate and valuable. The hon. Member for Middlesbrough South and East Cleveland gave a masterful speech. It was extremely well informed and constructive, and contained a good mix of challenge both for his party’s Front Bench and for the Government.
Out of respect for the debate, I am going to resist what was already a weak urge to simply unload a section of prose prepared by civil servants. I will do my best to try to respond to the debate. First, I must do something important, which is to register our complete understanding of the frustration about the uncertainty, which various Members have expressed. That is entirely understandable. I will go further and say that the Government share that frustration, because we are deeply worried, as I will come on to say, about the deep structural difficulties that the sector faces in both the long and short term.
As most Members who know more about this industry than I do will recognise, those underlying issues are extremely complicated, and therefore the solutions that the Government can implement that would have a long-term, sustained impact—that is what we should be about—are not that straightforward. I will be very frank: we are also frustrated about the pace and speed at which decisions are being taken in the private sector. I give full assurance to the Members who probed on that point that, although we might be in a slightly different age, when the steel industry is not necessarily on the front page of the newspapers, the Government are deeply aware that the difficulties have not gone away. We are fully engaged at all levels—ministerial, Secretary of State and official—to stay as close as we can to all the complex conversations that are going on. Our message to everyone is that we are here to support a long-term, sustainable future for the sector.
I refute and push back on the suggestion that underlay a number of speeches: that the Government’s eye is somehow off the ball. That is not true. We absolutely share the view expressed in the debate—I heard the Secretary of State say this directly to the chief executives of the industry—that this is not an industry with a past or a sunset industry, as the hon. Member for Hartlepool (Mr Wright) called it, that we should look at through a lens of nostalgia. We are interested in working together with the sector, stakeholders, the all-party parliamentary group, the Select Committee and everyone else who wants to shape the industry, to present a story around the sector of growth and seizing some of the very real opportunities that are out there. We are entirely sincere in that view and in that determination.
It is worth restating that that is not just because of the importance of the sector, which employs 31,000 people, or because of the huge weight and importance it has to the fundamental identity of many towns across the country represented here today, its value in terms of exports, or the fabulous opportunities that we see for it to be positioned as a dynamic component in an invaluable supply chain, supporting some of the industries where we see big opportunities for growth—the hon. Member for Hartlepool mentioned a couple of those, such as the automotive industry and offshore wind. It is not just for those reasons, but, as the hon. Member for Middlesbrough South and East Cleveland and other Members described, because we see it as a foundation sector underpinning the infrastructure of this country. It is, in that respect, strategic. We are determined—I echo the words of my long-standing hon. Friend the Member for Wellingborough (Mr Bone)—that this sector has got to have a future. We must collectively shape that.
In that context, we totally understand that, even though there may have been some short-term improvement in trading conditions, we cannot be deceived. The Secretary of State and I had a meeting with the chief executives of most of the major companies last week, and they were very clear that trading performance is improving in some ways, but they do not trust that to be sustainable. The overwhelming, crushing issue is that the picture of overcapacity in the industry has not changed, despite some shifts at the margins. Demand remains weak, the volatility of raw material prices is an issue, particularly for coke, prices remain a problem and the spread remains a concern. In conclusion, the situation remains very difficult. We have no illusions about that.
Some of the rhetoric has been: “The Government are all talk. It’s all words.” I am not complacent about this, but I need to state categorically, and to echo the words of my hon. Friend the Member for Corby (Tom Pursglove), that although the work is not done, action has been taken in some critical areas. We are aware that energy costs—specifically industrial electricity costs—remain a significant problem, but since 2013 more than £120 million- worth of public resource has been effectively reallocated to the steel sector to mitigate these problems. To anyone who describes that as limited, I say that my constituents would not consider £120 million to be small change. I know that is appreciated by the industry, and anyone who says that it is just words on this issue is wrong.
Mr Hurd
I hope I have never been associated with sloth—my mother might disagree. I do not know the background to it fully enough, but the more substantive point is that, despite that weight of money, more clearly needs to be done. We have not solved the issue. The pace may be important, but the fundamental challenge for us all is that we have not cracked the problem.
Angela Smith
I am pleased to hear that last comment, because the wholesale costs of energy are also of major concern, not just for steel but for the chemicals industry and all other energy-intensive industries, so the Government need to move on the reform of the wholesale energy market.
Mr Hurd
I will come on to that issue. The point I am trying to make is that the Government have not been all talk: we have taken action on energy.
I refute the allegation that the UK has been a fundamental obstacle on dumping. We have pressed for anti-dumping measures, specifically on wire rod, seamless tubes, rebar and cold rolled products. The EU now has 39 trade defence measures in place, and imports have fallen significantly as a result. We are an active member of the G20, which, as hon. Members know, set up a forum to look at the issue of dumping. The lesser duty rule is an issue; I do not know whether there is party division on that. Our position is that measures taken against dumping need to be proportionate because we have to balance the interests of consumers, the industry and businesses. We have been and will continue to be a very active voice on dumping.
My hon. Friend the Member for Corby rightly talked about procurement. Again, the UK has been the leader in the EU on responding to the new flexibilities, and new guidelines are in place. The feedback from the chief executives at the meeting last week was that they did not really want to talk about procurement because they recognised that action had been taken and other issues were more important to them, not least business rates, which I acknowledge continue to be an issue. The Government have reformed business rates in a way that is designed to present a net benefit to the UK economy. Steel companies will benefit from that reform. Does it go as far as the steel industry wants? No. Are there big complexities, not least around the affordability and doability of what the steel industry wants? Yes, but we will continue to try to work through them.
On the strategic direction, the Government have stepped up and offered to fund the capability study and work with the sector to identify the capabilities that are needed—that was the point made by the hon. Member for Penistone and Stocksbridge (Angela Smith)—and growth opportunities for the future. There has been action, but we are clear that our work is not done. There is no room for complacency, given the pressures on this critically important industry.
We are looking at all the options for energy. They are complicated, because what we have got to do is legal and, as the hon. Member for Middlesbrough South and East Cleveland said, a consensus has to be built on who pays. If the steel industry pays less, the chances are that someone else is going to have to pay more. Our instinct is to focus on a strategic, sustainable approach; we have to move on from the sticking-plaster approach. I am glad hon. Members are nodding.
I am going to accelerate to fulfil my pledge. Of course Brexit brings tremendous uncertainties. As hon. Members know, we have not even started the negotiation process, let alone finished it, but I say to them what I said to the chief executives last week: this Department is your liaison point. It is our responsibility to listen very carefully to the sector to make sure that the issues you face are totally understood by the Government. In that respect, the steel sector is the same as the automotive sector and other sectors. Our responsibility is to listen to the sector and understand the granularity of the issues it faces so my Secretary of State, who is at the table with the decision makers in this process, is fully informed and able to represent the industry.
Stephen Kinnock
The Minister is making a comprehensive speech. On the topic of Brexit and inter-departmental co-operation, I draw his attention to the remarks made by the Secretary of State for International Trade. He said:
“We must turn our backs on those that tell us: ‘It’s OK, you can protect bits of your industry, bits of your economy and no one will notice.’ It is untrue…We must be unreconstructed, unapologetic free traders.”
Does the Minister think that, under his right hon. Friend’s guidance and as we leave the European Union, our ability to deploy trade defence instruments against the dumping of Chinese steel will be strengthened or weakened?
Mr Hurd
I am going to accelerate now. We are clearly being proactive about championing both free and fair trade, and we are very active with the EU on measures about that. As my hon. Friend the Member for Corby made clear, Brexit may in theory present us with some opportunities and freedoms that we do not have at the moment, but all that is to be decided. It all needs to be agreed as a result of very full engagement with the sector.
My final point is about industrial strategy, which is where everything comes together. I will simply say what we said to the industry leaders: we want to work together to move the story of the sector away from any suggestion of sunset, failure or survival to talk of exciting growth. We need to work together on that to understand where the opportunities for growth are, where the capabilities are and where Government can provide support by ensuring that Brexit is right, by levelling the playing field and by helping with the innovation that is critical. We are absolutely serious in that determination. With that, I leave the Floor open to the sponsors of the debate.
Tom Blenkinsop
It is interesting that the Minister said that the Government’s eye was still on the ball and talked about short-term gains, but said that we should not underestimate the long-term issues of overcapacity in the industry and that the Government were under no illusions. He has reassured us that the Government are not all talk, but that action in critical areas has happened—it has, to a certain extent, but we will see more in the developing months.
The Minister refuted any assertion that the Government were an obstacle on dumping, and he said that he believed in free and fair trade, which Labour Members and certainly the all-party group warmly accept.
I agree with the Minister on energy, that there has to be a consensus on how we make progress to stabilise not only the steel industry but manufacturing per se. I am very interested in working with him, as is the rest of the APPG, on formulating an industrial strategy for Britain.
The Minister is obviously very charming. He has been warmly welcomed by my Opposition colleagues, but that will only go so far. We will be keeping a careful watch on him, his colleagues and his superiors about delivery on the promises, warm words and charm of today’s debate. We want to work with the Minister and the Government Front Benchers as much as possible, because our communities, our people and the very culture that we all come from depend on our creating success for the British steel industry and associated manufacturing industries. I thank the Minister for his response today.
Question put and agreed to.
Resolved,
That this House has considered the future of the steel industry.