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Richard Tice (Boston and Skegness) (Reform)
I beg to move,
That this House has considered the steel industry.
It is a pleasure to serve under your chairmanship, Mrs Harris. I want you to imagine that you are standing at a railway station in deepest rural India. You look down at the tracks on the ground and you see those immortal words “Sheffield Steel 1895”. That happened to me six and a half years ago. It sent a complete shiver down my spine—a shiver of pride in what we have given to the world, what we have created, what we have achieved. For 130 years, those railway tracks have been there, yet fast-forward to today and we face what I believe is a potential catastrophe.
Let us just take stock of where we are. I think we are potentially within six to 12 months of having zero general steel-making capacity in the United Kingdom. Just think about that. I fear that the blast furnaces at Scunthorpe, owned by British Steel, part of the Chinese group Jingye, are very likely to close, and that would be an absolute disaster. Steelmaking, manufacturing, in the United Kingdom has halved in the last 10 years or so. We would be left as a complete rump. Think about it: we would be the only G20 nation without a blast furnace except Saudi Arabia and the only G20 nation with no general steel-making capacity whatever. I think there is a lesson in that.
Perhaps it is not so smart to lose all our steel-making capacity at a time when 71% of all steel manufactured around the world is made in blast furnaces. Even if all the electric arc furnaces that have been announced are built, which of course they will not be, we will only get to a balance, in 2050, of about 50-50. The majority of all new steel-making capacity around the world being built as we speak comes from blast furnaces. There is a reason for that. And here in the UK, imports of steel from the likes of China, India and Vietnam are soaring. Hang on—I thought we were supposed to be world leaders in steel, but 66% of all steelmaking around the world happens in nations that either have no net zero targets or have targets that are general and way beyond 2050.
Now that the truth has been told to us, which is that electricity prices in the United Kingdom are the highest in the developed world—in the House of Commons the other week, the Secretary of State for Business and Trade admitted to me that there was an issue with industrial electricity prices—my real fear is that the electric arc furnaces that have been promised down at Port Talbot, and potentially promised in Scunthorpe if the blast furnaces there close, will not actually be viable. If something is not viable and we are asking a firm to invest hundreds of millions of pounds in it, they will not build it—and that is before National Grid informs us, “Oh, in Scunthorpe we can’t get you a grid connection for the electricity that you need to run an electric arc furnace.” You genuinely could not make some of this stuff up. Because our electricity prices are so high, these electric arc furnaces are quite likely to be less viable than is the case when it comes to concerns about the viability of blast furnaces.
Five and a half years ago, I gave a press conference in Scunthorpe. I said back then that the Conservative Government should not sell British Steel to the Chinese. They ignored my advice—not for the first time and probably not the last—but we are where we are. We face catastrophe, for three critical reasons. The first is that steel is a strategic national interest. After food and water, steel is the third most important component of a modern civilisation. Without steel, we would have no internet, no cars, no buildings, no infrastructure—nothing. We would be back to mud huts; I do not call that progress. It is strategically important to be able to make the strongest steel. There are genuine concerns that if we have no blast furnaces, we will not be able to make primary steel. Some say that with new technology and direct reduced iron, the strength of steel produced in electric arc furnaces may, give or take, equal what can be produced in blast furnaces, but we cannot take the risk. We must have that capacity.
Hon. Members may say, “Well, why not have a bit of each?” My late grandmother, when faced with a choice of desserts, would say, “I’ll have a bit of each.” There is nothing wrong with that, but we cannot have nothing. For someone who likes desserts, there is nothing worse than having no dessert at all.
Four years ago, in the middle of 2020, we nearly ran out of paracetamol, which is pretty important. Why? Because it is all made in India. We make no paracetamol in the United Kingdom and the sun was not shining in mid-2020, as we all remember. It is all very well those who believe in free markets and globalisation to the detriment of everything saying, “Well, you can just buy it from elsewhere,” but what happens if the sun is not shining? What happens if there is some terrible event in the world and we cannot buy steel elsewhere? That exposes us, because steel is strategically important, so we must be able to produce it here in the UK.
The second reason why I think a potential catastrophe is facing us is the economic interest. There is a thing called the multiplier effect: if we make and manufacture things here in the United Kingdom with our own jobs and money, the wealth we create circulates around the economy. I call it bubble-up economics: when we create and make things, it bubbles up from the lowest point, and the money circulates around the economy. That is hugely powerful at a time when everyone is desperately talking about the need for growth. We will not get growth if we export all our jobs and money. We might buy the good that arrives here, but we do not benefit from the multiplier effect, and therefore we lose the power of growth.
Some will say, “Hang on. Tata lost lots of money over the last 10 years or so. It’s not viable.” Well, let us just take a look at its losses, shall we? Leave aside the one-in-100-year event of 2020, cumulatively, in the overall scheme of things—relative to the multiplier effect—its losses frankly amount to a decent round of drinks. Let us call it £100 million a year, give or take. Compare that to the size of the economy and the importance of the multiplier effect.
I would suggest to the House that it is vital that we keep steel manufacturing going in a sizeable way in the United Kingdom. Not to do so would cause a self-inflicted wound, driven by the main two political parties’ obsession with net zero. That is the reality. Net zero, and the increase in renewable energy capacity, is directly linked to the increase in our electricity prices, and to the fact that we are becoming ever more uncompetitive. The Tories started it, and now under the new net zero zealot-in-chief—the new Secretary of State for Energy—it is being accelerated.
We are promised that the bills will come down, but I was at an event last week with someone who is advising the World Economic Forum and the G20 nations about renewable projects, and he admitted—in a defining moment for me—that without subsidies and Government intervention, renewables cannot be viable. That means, by definition, that they are more expensive and that those who are obsessed with them in this country will not bring the bills down. At some point, there will be a day of reckoning.
The third reason why this is a catastrophe is what I call the community interest. We saw the devastation in the coal-mining communities in the 1980s; when I have been campaigning, I still hear people talk about that. That was absolutely devastating. The oil and gas industry is under huge threat at the moment because of net zero, which is again devastating. There is a huge loss of the multiplier effect, skills are disappearing and families are concerned.
In Port Talbot and Scunthorpe, there are not thousands but tens of thousands of jobs directly and indirectly dependent on this industry, which could disappear within 12 months. It is not just the jobs; it is the families, the partners, the spouses, the wives, the children. That makes hundreds of thousands of people devastated by this. These are seriously well paid jobs: the average value of a steel job is about 50% more than the average salary in the local area.
It is all very well saying that people can retrain, but if someone earning up there retrains and all of a sudden is earning down there, I do not call that progress—I call that going backwards. The truth is that this issue will have a devastating impact on those communities. I feel that the unions have let down their members and betrayed them.
A year ago, I wanted to go and talk to more than a thousand steelworkers in Port Talbot. I met a couple of brave union leaders in secret in a quiet room. I said I wanted to talk to everybody and tell them about the madness of what is going on but, oh no. The union leaders banned me from talking to the steelworkers and telling them the truth.
Here we are today, with thousands of jobs sacrificed on the altar of net zero in Port Talbot, with the risk facing Scunthorpe in front of us. Lots of people say, “Don’t worry, Richard. We’ll be a world leader in this stuff.” Really—a world leader? I suggest that the only things we will be a world leader in are naivety, stupidity and negligence. The truth is that behind our backs, other countries making steel, growing their economies and enjoying cheap energy are laughing at us. They cannot believe how foolish we are. They cannot believe that we are serious about destroying some of our finest manufacturing industries, but they will take it. They are benefiting and we are losing.
This is an absolute disaster. One might ask, “What can we do about it?” I have a plan and most of it is achievable by this Government. The first thing is that the Business Secretary has promised us a new steel strategy next March. I happen to know that that strategy is basically drafted and written, with just a few i’s to dot and t’s to cross. I have been told that that draft is very much there.
Richard Tice
The Minister indicates that I may be wrong. This is urgent and we cannot wait six to 12 months. We cannot run the risk of civil servants saying, “I’m sorry, but we haven’t got it done by March; it will be the summer.” I urge the Minister and her team to say, “Let’s get this out before Christmas.”
My five-point plan is first to take a strategic stake in British Steel to guarantee that the blast furnaces in Scunthorpe will not close. We cannot run that risk. Otherwise, if the electric arc furnaces are not built, we have nothing—niente, zip. The second part of my plan is to scrap the carbon taxes and the potential carbon border adjustment mechanism.
The third thing is to stop the dumping of cheap imports from nations such as China. That requires, if necessary, appropriate tariffs and protectionism. America is doing it to protect its own steel industry and we should do the same. Unbelievably, according to the House of Commons Library, which helpfully produced a 50-page report yesterday, just two weeks ago, far from increasing tariffs we had to reduce tariffs on imported steel because Port Talbot has closed. Seriously, you couldn’t make this up. It is absolute insanity that we are now reducing tariffs in order to import steel. With the long-term planning that should have happened under the Conservative Government, we could have worked out that if we shut Port Talbot we would be short of rolled steel. What are we going to do about it? That is what has gone on. So that is the third part of my plan.
The fourth part is to buy British. The Secretary of State for Energy Security and Net Zero wants more and more wind turbines, but as I understand it not a single bit of British steel is used in all those turbines, which all come from overseas. If we want more turbines—some people do; some do not—maybe we should make it a condition that we use British steel to grow our own economy with more jobs and more money. Those four things plus the fifth thing are all deliverable by this Government. That is what I urge the Minister to consider.
The fifth thing is the right thing to do. I accept that it is not going to happen, but if we want cheaper electricity and to be more competitive, the fastest way to do it is to scrap net zero. That would bring down prices. It would stop us wasting tens of billions of pounds and stop blighting our countryside with thousands and thousands of pylons, including in my constituency. The first four components of my five-point plan the Government can and should do to protect our steel industry, which is strategically vital. Not to do so is negligent to the point of criminality.
Lee Anderson (Ashfield) (Reform)
It is a pleasure to serve with you in the Chair, Mrs Harris. I thank my hon. Friend the Member for Boston and Skegness (Richard Tice) for securing the debate, and for making probably the best speech so far of this Parliament—it was absolutely fantastic. Government Members are harping on about the steel strategy. I can assure them that steelworkers will be frightened to death of that strategy, because it will cost jobs and destroy our steel industry and our communities. I fear the steel strategy.
In the 19th century, this great country of ours was the world leader in steel production. Over 40% of the world’s steel was made right here in this country. I do not live a million miles away from Sheffield—15 minutes up the road—and not far away from Scunny. They were great industrial towns that drove our economy and provided hundreds of thousands of jobs, including in the wider community. They built up communities, and it is a shame that the Labour Government seem intent on destroying even more of the few communities that we have left.
Our country was built on coal and steel. Throughout the midlands and the north, we drove the industrial revolution. We used to export steel and coal, and now what are we doing? We have gone backwards. China is making over 1 billion tonnes of steel a year; we are making about 5.6 million tonnes. China, by the way, is a world leader in renewables, yet it is still opening coal-fired power stations to make steel, which it can export all around the world.
If we think about it, we are actually carbon emission nimbys. We are quite happy to import steel and products made from steel that have been made with blast furnaces from 60 or 70 countries around the world, but we say that we cannot do it here. That is hypocrisy of the highest level. I have friends who work in the steel industry and they are seeing a real downturn at the moment —they are struggling. They are struggling to pay the bills and to make their business work. The industry is in terminal decline, I fear.
The collapse of the Port Talbot steelworks means that we are now the only advanced nation in the world that cannot make its own virgin steel. It is absolutely ridiculous. We have Russia at war with Ukraine, and we are living in uncertain times. Over the past few years and during the last Parliament, we saw the problems that we had with energy supply and our dependence on foreign states for it. Now we are doing more of the same with our steel. It is beyond comprehension; it is absolute madness. We are killing off our steel communities just like we did the coalmining communities back in the ’80s—I know because I was there. I saw the impact that it had, and it still has devastating consequences 40 years later. Those communities were killed off and they are still struggling. I live there and I see it day in, day out, yet we are going to get more of the same from this Government.
Look at the coal mine in Cumbria that we want to—and should—open to produce metallurgical coal that will then help in the production of steel, which we could blend and use in blast furnaces in this country. But we seem reluctant to do that. That coal mine would produce millions of tonnes of metallurgical coal and provide 500 to 600 well-paid jobs in an area that needs them, as well as more jobs in the wider community. However, we are quite prepared to import 3 million or 4 million tonnes of coal a year into this country, rather than produce it, use it in this country and hopefully export some as well. It is absolute madness.
My hon. Friend the Member for Boston and Skegness spoke about the high electricity charges that will mean high production costs for making steel. Look at Drax power station in North Yorkshire. The electricity prices coming from there are astronomical. That is a power station that burns wood. It used to burn coal from a coal mine just a few miles down the road, but we had this great idea in this country to import wood from trees chopped down in North America. We stick them on to diesel-guzzling cargo ships, send them over the Atlantic and then set fire to them in a power station in North Yorkshire. It is absolute madness, and it will drive up the price of electricity and subsequently drive up the price of steel production. It is beyond madness.
China is getting it right; not only is it a world leader in renewables but it is making steel from blast furnaces. China is right and we should be copying its so-called steel strategy. It seems to have got it right. I agree with the five-point plan proposed by my hon. Friend the Member for Boston and Skegness but I feel that it will probably fall on deaf ears. The madness will continue. Steelworks will continue to close down and we will continue to lose jobs. We will continue to destroy communities in our great country.
The Minister for Industry (Sarah Jones)
It is a pleasure to serve under your chairmanship, Mrs Harris. I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing this important debate, which I am glad that we are having. Let me be clear at the outset: the new Government were elected on a mandate to invest in the UK steel industry and turn around its decline, and that is exactly what we will do.
As Members on both sides of the Chamber have echoed, the UK has always been a proud steelmaking nation; it has a rich heritage stretching back to the industrial revolution. My grandad worked in the tinplate factory fed by the steelworks of Port Talbot, and I think most of us in this place have connections, one way or another, to steel manufacturing. Yet, as has been said, steel has been a neglected industry for many years, with crude steel production declining by more than 50% in the last decade alone. Of course, that decline was brought into sharp focus when it was announced under the last Government that the blast furnaces would be closed at Port Talbot.
This Government do not believe that decline is inevitable. The decline we have seen in recent years has been due to a lack of care from previous Governments, who did the bare minimum only when it was too late. We saw the insolvency of SSI—Sahaviriya Steel Industries—steelworks in Redcar in 2015 and the insolvency of British Steel in Scunthorpe in 2019, and we saw how close Tata came to closing its UK steel operations. That pathway risked jobs and emissions being offshored for the long term and risked making us heavily dependent on steel imports for our vital infrastructure and our energy and manufacturing sectors.
This Government are taking a very different approach. This week, we launched a Green Paper on our industrial strategy. For that to have the greatest impact, we must be clear-eyed about the sectors that offer the highest growth opportunities for the economy and businesses, but steel is a foundational industry for practically every other important industry, from energy to infrastructure. We know that it is a vital component of our economy and our ambitions for growth, which is why we also need a steel strategy to determine the best steps forward to rebuild this hugely important industry.
We need to lay out long-term policies and plans to ensure that the UK steel industry is not left behind as the world decarbonises, so last month the Government announced that we will bring forward a new steel strategy next spring. I hear the House’s impatience for that strategy and I understand it: there has been a long period of decline, and we need to turn that around. Given the £2.5-billion investment that we have committed to the strategy, however, it is right that we talk to experts and to politicians around the country, particularly those who have steel in their areas.
James McMurdock (South Basildon and East Thurrock) (Reform)
I thank my hon. Friend the Member for Boston and Skegness (Richard Tice) for securing this debate. If I may, I will read a message that I received from someone I know:
“This Westminster Hall debate in infuriating. Talk is cheap!”
I highlight that because we all seem to agree how important the steel industry is. I acknowledge the past and that not all of that lies squarely on the Minister’s shoulders. I ask her to include in her response the steps that the Government will take to secure that future.
As the hon. Member for Newport East (Jessica Morden) eloquently put it, there are advantages to the more advanced technologies, but, as clearly laid out by my hon. Friend the Member for Boston and Skegness, there are practical reasons why they may not become reality—and we need to deal with reality. We all seem to accept and agree—
James McMurdock
Apologies. We all agree that this is vital; will the Minister please lay out how it will become practical?
Sarah Jones
I thank the hon. Gentleman for his intervention and for reading out a message from somebody watching the debate. We all agree that it is time for action and that is exactly what the Government seek.
I will expand on our plans. The steel strategy will be developed and delivered in partnership with the steel sector and the trade unions, of course. It will work in lockstep with the Government’s industrial strategy. Our intention is to increase our UK capabilities, so that we can create a more vibrant, competitive steel sector. That will turn around the situation we inherited, where— I want to emphasise this—under-investment had resulted in dated infrastructure.
My hon. Friend the Member for Stockton North (Chris McDonald), who knows so much about the steel industry, made the point about the efficiency and economy of the new technologies, and why blast furnaces have struggled to make money for the businesses that own them in this country. British Steel’s blast furnaces were built in 1938 and 1954. Both the blast furnaces at Port Talbot were built in the 1950s. They have become incredibly unproductive because they have not been invested in. The new technologies are simply more productive. If we do not keep up with what the rest of the world is doing, we simply will not be able to compete in the market.
We inherited an industry on the brink. Nevertheless, within 10 weeks of coming into Government, we negotiated a better deal with Tata with better safeguards for workers and more money invested in their future. Our £2.5-billion fund for steel will ensure that we have a steel industry for the future. The Government’s ambition is to ramp up investment, strengthen our supply chains and create more well-paid jobs in the places they are needed.
We talk of primary steel. With the help of experts, we will review the viability of technologies for the production of primary steel, including direct reduced iron.
Greg Smith
The Minister just said that she will review the options. I hope this is a binary yes/no question: is there a ministerial direction in the upcoming steel strategy to include a commitment to virgin steel production in the United Kingdom?
Sarah Jones
I think I was fairly clear. We have been in opposition. We want to produce primary steel in this country; the previous Government got us to a point where that is almost impossible without huge investment. We are supplying £2.5 billion of investment and looking, quite rightly, at the best way to spend that to create a viable steel future for this country. We are looking at direct reduced iron as part of our steel strategy, which the previous Government did not do.
The UK’s ambition is to ramp up investment. Many hon. Members talked of the need to procure British steel in this country, and we are now in a situation where 95% of the steel procured by the UK Government for infrastructure is British, if the necessary type of steel is made in the UK. The issue is that we do not produce all the different and right types of steel, so we need to ensure that we use the Procurement Act 2023 as much as we can to drive economic growth in steel.
I disagree with the hon. Member for Boston and Skegness on whether the green agenda can drive up jobs—we think that it can. For example, the Korean company SeAH is building a factory in Teesside that will build monopiles, which are the big structures that go into the ocean and anchor wind turbines. It is currently building that structure with 30,000 tonnes of steel from British Steel. We want to get to a point where we are not only building those kinds of factories in this country but using British steel where we can to make the infrastructure.
At the moment, we do not have a factory that makes turbines on the scale that we need for floating offshore wind, but SeAH is building that factory because it has an agreement with RWE, which will be running the turbines that it builds in future. That green job development into wind and renewable energy is driving our ability to build a factory in Teesside to create hundreds of jobs to build those monopiles, and we are using British steel. That is the kind of future that we want to see through the steel strategy; we are looking at those opportunities to bring new steel companies into this country and to find ways to drive up production in this country.
I should address the issues holding us back, as they were mentioned in the debate. China and excess capacity is a huge issue that we should not underplay. China is now the biggest steel producer in the world and its unfair subsidies have led to massive steel over-production, which fuels global overcapacity and drives down prices. That is a global issue with local consequences that makes profitable steel production here in the UK much harder. That key global situation is helping to shape our future steel strategy and we will need to tackle that problem through things like the carbon border adjustment mechanism—CBAM—and ensure that we are working with a level playing field.
Energy prices were mentioned by many Members, and for too long British energy-intensive industries, including the steel sector, have been held back by high electricity costs. Again, I disagree with the hon. Member for Boston and Skegness: electricity prices are set by global gas prices and the problem is our dependence on fossil fuels, as well as the fact that we did not mitigate for that situation in this country at all. When all the prices shot up with the war in Ukraine, we were in a worse position than many countries around the world.
The British industry supercharger that the previous Government developed, which the hon. Member for Brigg and Immingham (Martin Vickers) mentioned, will bring down electricity costs for the UK’s most energy intensive industries, but we know that we need to go further. It brings down only 60% of costs and there is still a disparity. We believe that, in an unstable world, cheap home-grown green energy is the future. That is what will drive down prices, reduce our exposure to the volatile fossil fuel market, protect bill payers and strengthen our energy independence. Fundamentally, that is what will bring down costs in the long term.
Members also mentioned the challenges of decarbonisation. Tata and British Steel’s plans to invest in electric arc furnaces are driven by market conditions and the desire to reduce their carbon footprint—customers want greener steel. The UK is going to have a CBAM. If we were producing steel in the UK with blast furnaces, we would be massively inhibited because the EU is bringing in a CBAM, so the cost of exporting to the EU would be much higher. We have to deal with the world as we find it, which again is where we disagree with the hon. Member for Boston and Skegness. We cannot look back and try to re-create the past; we have to deal with the world as we find it, which means that we have to move towards those more efficient and greener energies.
The EU, where 78% of our steel exports went in 2023—that is worth pointing out—will bring in its carbon border adjustment mechanism in 2027. We rely on exporting a lot of the steel we produce to the EU, and we would be at a massive disadvantage were we to carry on producing steel from blast furnaces. We have committed to a UK carbon border adjustment mechanism, which will give UK businesses the confidence that, when they invest in decarbonisation and electrification, they will not be at a disadvantage. That is important.
On other issues mentioned by hon. Members, I should touch on Scunthorpe, because that is at the forefront of everyone’s mind. No one wants to see any job losses, and everyone wants to see the steel industry thrive. Through our strategy, that is what we want to do. For commercially confidential reasons, which I am sure hon. Members understand, I cannot talk about our conversations with the owners, but I reassure Members that we are having conversations all the time and that we are working unbelievably hard to get a solution for Scunthorpe and to give the certainty that the hon. Member for Brigg and Immingham talked about. I completely understand the issue with the instability of the current situation, but all I can say to him is that we are doing all we can to work with the company on what the future will be.
Martin Vickers
The Minister and I share a desire to see a thriving steel industry. On a couple of occasions in her reply, she mentioned wanting to halt its decline, as well as the production of the steel strategy in the spring. Can she give any sort of assurance that there will be no job losses at Scunthorpe until the strategy is produced? Then we can then work together to plan the way forward.
Sarah Jones
The hon. Gentleman will understand that I am not in a position to define what commercial companies do. While we are trying to do what we can, I cannot do anything other than say that we are working incredibly hard with the owners to ensure that we get to a point that we want to get to.
The hon. Member for Strangford (Jim Shannon) mentioned Harland and Wolff, and the same situation is true there. We are working hard to understand the situation and we are hoping for a resolution relatively soon.
Jim Shannon
Will the Minister be generous and kind enough to let us know about the situation now and what she hopes progress will be over the next few weeks, if she does not mind?
Sarah Jones
The process of selling the company is going through. That is a market situation, being dealt with in that way, so Government are not providing funding or anything such as that at this point. We are allowing the process to take its course, but we are obviously talking to all parties to do what we can to ensure that we get the right outcome. I have been talking to politicians from all four of the Harland and Wolff sites, as can be imagined, and there is uncertainty in each of those areas, whether that is in Scotland, Devon or Belfast. We are working hard to ensure the right outcome.
To close my remarks, in steel, not to mention the wider economy, the inheritance of this Government from the previous Government was nothing short of a travesty. We had more than a decade of lurching from crisis to crisis, with no clear plan to safeguard the future of a competitive domestic steel industry. This Government are determined to change that, making the steel industry in this country fit for the future so that it is not left behind in a decarbonised world.
The Government are on the side of Britain’s thousands of steelworkers. We have not talked about the other parts of the country where we also have steel production. Marcegaglia, which is in Sheffield, announced a couple of weeks ago that it is investing £50 million in a new electric arc furnace in Sheffield, so we have incumbents here in the UK that are doing well.
The Government are determined to ensure the future of British steel. We are on the side of Britain’s thousands of steelworkers and we are working closely with our trade unions, experts and others to develop our steel strategy. We believe that steel will forge our future, not just our past, and I look forward to working with all hon. Members in this place to develop a steel strategy that sets us up for the next 10, 15 or 20 years to come.