UK Steel Industry
(4 years, 9 months ago)
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Nic Dakin (Scunthorpe) (Lab)
I beg to move,
That this House has considered the future of the UK steel industry.
It is a real pleasure to serve with you chairing, Mr Hollobone. Two thirds of the types of steel around today were not around 15 years ago— proof positive that steel is a highly innovative, flexible and recyclable product that we need to make in the UK if we are serious about having our defence and infrastructure security in our own hands. The strongest economies have strong steel sectors: the USA, China and Japan are first, second and third in the steel league table, with Germany coming in at seventh, while the UK lags behind in 30th position. If we are serious about our place in the world, it is high time we took steps to move up that table. Scunthorpe and Port Talbot provide the UK’s independent steelmaking capacity for long and strip steel products, and we need both for our future security.
Nick Thomas-Symonds (Torfaen) (Lab)
I congratulate my hon. Friend warmly on securing this debate on such an important issue. Does he agree that one of the obvious steps to take to get up that league table would be for the Government to commit to have the Royal Navy fleet solid support ships built purely out of UK steel?
Stephanie Peacock (Barnsley East) (Lab)
I congratulate my hon. Friend on securing this important debate. On the issue of procurement, does he agree that we need more regional support? In response to a written question, the Government admitted to me that defence spending is only £40 a head in Yorkshire, which compares with £1,000 a head in the south-west. Surely such spending should be spread much more evenly across the north and the south.
Nic Dakin
My hon. Friend makes an important point. Certainly, steelmaking is predominantly in the north, and better investment in procurement pipelines would help to address the inadequacies to which she draws attention.
Sadly, British Steel is in liquidation, and Tata is determining the direction of its UK business in the light of the failure to progress the merger with Thyssenkrupp. We face serious questions about the sector’s future. Other steelmakers, such as Celsa and Liberty, also look to the Government to confirm their commitment to the steel industry.
Melanie Onn (Great Grimsby) (Lab)
I congratulate my hon. Friend on securing this important debate, which affects many of my constituents, who are just along the A180 from his constituency. Has he had any discussions about the impact of losing the steel industry in Scunthorpe and about the wider impact across the south bank, which has many of the jobs in the supply chain?
Nic Dakin
My hon. Friend makes an important point: there are 5,000 direct jobs in the Scunthorpe area, in Teesside and elsewhere in the UK, but also 20,000 jobs in the supply chain. Steel is a significant employer, as well as a significant strategic asset for the UK. All the work that everyone is doing is to ensure that the whole business progresses under a new owner, which is the direction we all need to remain focused on, across the House and across the country.
The British Steel workforce in Scunthorpe, the north-east and elsewhere has responded brilliantly at a time when everyone working for the company sees their future in the balance. Workers, trade unions, the management team and the supply chain must be congratulated on keeping the show on the road in such difficult times. The magnificent outputs that they are achieving show what a sound business this is, still producing world-class steel day after day. British Steel has a strong strategic plan in place, externally validated by top-tier management consultancy McKinsey.
The Government have made all the right noises. The Secretary of State and the Minister showed real leadership in putting in place the indemnity that allows the business to continue as a going concern. When local cross- party MPs met the Prime Minister, she made clear her Government’s commitment to finding a sustainable future. The Secretary of State’s chairing of the British Steel support group’s weekly meetings is valued by all stake- holders. However, we are now reaching a crunch time, when warm words need to be matched with further actions to close the deal with prospective buyers.
Assurances may need to be given about the environmental liability—a no-brainer, as the liability is likely to fall to the Crown anyway if the business fails. On future carbon credits, the Government will need to show the flexible thinking that they have already shown in their dealings with Greybull Capital. Other things for the Government to look at might include loans to support investment and so on. To be helpful, will the Minister confirm that the Government, while being mindful of the need to act within the law, will do all they can proactively to close the deal with those bidders the official receiver believes can take the business forward?
Over the past few years, we have bounced from one steel challenge to another. Too often, steel policy responds to the urgent needs of the now, but fails to set out a strategic future path for this crucial foundation industry. In 2015, Sahaviriya Steel Industries in Redcar closed, meaning that the UK’s strategic steelmaking assets there are now lost forever. The cost of cleaning up the site, alongside the human cost of huge job losses at the heart of the northern powerhouse, will be with us for a very long time.
Instead of lurching from one crisis to another, the UK needs a Government that will put a plan for steel in place by responding positively to the five strategic asks made by steel MPs, trade unions and employers with one loud, consistent voice. First, the threat of a no-deal exit from the European Union is what sparked the current crisis, and anyone who talks blithely of a no-deal exit risks steel jobs and livelihoods throughout the supply chain—no deal risks no steel—so we need a positive new relationship with the EU to give certainty on the timely provision of UK-specific quotas within the EU steel safeguards. That should be a major first priority for the new Prime Minister when he takes up his post.
Stephen Kinnock (Aberavon) (Lab)
I thank my hon. Friend for securing this vital debate. I also pay tribute to him for his absolutely outstanding work as chair of the all-party group on steel and metal-related industries. He shows real leadership in this area. On the subject of the steel quotas, he rightly pointed out that, in the case of a no-deal Brexit, we potentially have the disastrous situation of UK steel being subject to EU dumping regulations. What steps should the Government take specifically to ensure that we are given those quotas, which UK Steel has said are the No. 1 priority in the short term?
Nic Dakin
It is about talking to the EU about the necessity of having UK-specific quotas. That could be part of a deal; it is a deal that can be done, and one that the new Prime Minister needs to put high on his list of priorities. That needs to happen, because steel is a strategic industry that is important not only to us in steel communities, but to the UK if it is serious about its place in the world. Ensuring that we get those quotas is therefore the first ask.
Secondly, a level playing field is still needed on electricity prices for UK steel. It is not good enough for the Government to say that they have given some of the “higher than our competitors” energy taxes back; we need some innovative approaches to level the energy-costs playing field. For example, we could put measures in place to maximise the level of relief on renewables levies, which is allowable under state aid rules, we could bring in German or French-style network cost reductions, or we could provide an exemption from the capacity market levy, as the Polish Government are doing. Those things happen in our competitor countries and, given the political will, they could happen here.
Thirdly, something needs to be done to tackle the much larger level of business taxes on steel in the UK compared with our competitors. It is bonkers that the site in Scunthorpe has higher business rates than the equivalent site, which is twice the size, at IJmuiden in the Netherlands. That is not a level playing field under anyone’s rules.
Fourthly, more could be done to maximise public procurement of steel, as my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) indicated. Progress on Government policy note 11/16 on procuring steel in major projects remains patchy. I was pleased to see the previous Minister with responsibility for the steel industry, the hon. Member for Watford (Richard Harrington), begin trying to make Departments accountable, but we have a long way to go to get real, effective traction, and we are three years on since the Government put that policy guideline in place. In answer to my written questions asking Departments if they have signed up to the steel charter, all confirmed that the current Minister is on the case and has written to them—but, in the main, the answers were hesitant and generic. The honourable exceptions were the Ministry of Justice and the Department for Work and Pensions, both of which confirmed that they will sign the charter. The next step for them will be implementation.
Andrew Percy (Brigg and Goole) (Con)
I thank the hon. Gentleman—my constituency neighbour—for securing this debate; he is a genuine champion of our local area and for steelworkers in particular. Would he encourage more local authorities to sign up to the steel charter? Last week, North Lincolnshire Council’s leader got the first London authority—Bexley, I believe—to sign up. It is really important that more councils sign up to that charter.
Nic Dakin
The hon. Gentleman is absolutely right; to its credit, North Lincolnshire Council has shown strong cross-party unity and leadership on this issue by signing up to the procurement of UK steel. A number of local authorities across the country have done so, but many more could follow that lead, and he is right to call for that action.
All Government Departments, bodies and infrastructure projects that purchase large quantities of steel should sign up to the UK steel charter, committing to specific, ambitious actions to increase the amount of UK steel used in public projects. The guidelines should be extended to cover all major public procurement and infrastructure projects. The good practice exemplified by Network Rail and Heathrow airport should be the rule, not the exception.
The fifth ask is to use the UK’s €250 million share of the research fund for coal and steel, which is paid for by industry levies and will be returned after we leave the EU, to secure an ambitious programme of innovation for the UK steel sector. A practical use for that money would be investment in our steel sector’s future. The previous Steel Minister made a commitment on behalf of the Government to convene a steel summit to consider how to realise a steel sector deal that would take the industry, its supply chain and the country forward. Will the Minister confirm that the Government will take forward that commitment? Will he respond positively to the practical suggestions I have made about how the Government can act to back steelworkers, steelmakers and UK plc?
Several hon. Members rose—
Mr Philip Hollobone (in the Chair)
Order. The debate can last until 5.30 pm, and I am obliged to call the Front-Bench speakers no later than seven minutes past 5. The guidelines are that the SNP spokesperson may speak for five minutes, the Opposition spokesperson may speak for five minutes and the Minister may speak for 10 minutes, while Mr Dakin will have two or three minutes at the end to sum up the debate. However, our afternoon will be interrupted by Divisions in the House, which are expected at 4.58 pm, so the debate is likely to finish later than 5.30 pm. Six Members wish to speak—a galaxy of talent and knowledge about the UK steel industry. Therefore, each speaker may speak for no more than four minutes, beginning with Simon Clarke.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
I will endeavour to stick to that limit; thankfully, I echo many of the comments made by the hon. Member for Scunthorpe (Nic Dakin). I congratulate him on securing this important debate; the cross-party unity in this room is mirrored in the weekly meetings we have had in Doncaster since the crisis first began. It is important that we maintain that, and show united confidence in the future of the industry and the passion that we all have to retain those skills in our local economies. Huge praise is due to both the Minister and the Secretary of State, who understand the significance, on a social and economic level, of making sure that our communities continue to have a strong future.
I represent Skinningrove, known locally as the iron valley, where steel has been produced since 1874. The heritage runs deep, but this is very much about the future rather than the past. The huge capabilities of the British Steel special profiles division, producing bulb flats, forklift profiles, cutting-edge profiles for bulldozers and track shoes, are all capabilities that we must not lose from our economy. The fact that it is co-located with Caterpillar on the same site is a huge tribute to Anglo-American co-operation, which goes far beyond the intemperate comments of the President in recent years—this is the positive face of a union that has delivered huge benefits to our area.
The conduct of Greybull is well known, and I do not propose to elaborate on it today. It is a source of immense frustration that it has let the workforce down and that the company has been allowed to reach this sad situation. We all know that it needs to be replaced by a long-term, viable investor who is committed to the lasting success that the workforce deserve, who can deliver a profitable and successful industry. I emphasise that everybody—Government, management and the unions—stand united in pursuit of a positive outcome to the talks. Only thus can we secure a sale.
Looking beyond that, as we heard from the hon. Gentleman, we need to do more on issues such as energy costs. The average electricity price for UK steel producers this year is £65 per MWh. That compares with £43 in Germany and £31 in France. We need to take steps to allow our industry to compete on a level playing field. If the Government commit to do that, the industry has said that it will reinvest the estimated £55 million a year that it would save back into production facilities.
We need to look at boosting research and development. I place on record my profound admiration for the work of the excellent Material Processing Institute, which the hon. Member for Redcar (Anna Turley) knows all about. It submitted a bid, alongside Innovate UK, to unlock funding for issues such as the steel industry transition, the digitisation of the sector and the circular economy in rare metals. We should look to pursue all those things. I hope the Minister will touch on some of those issues in his remarks, because they confer lasting benefits to British steel.
Finally, we need to promote and celebrate our steel industry, as we touched on in Doncaster yesterday. The steel charter is immensely valuable, and it is crucial that we increase the percentage of British steel in Government contracts from its current 43%. The private sector needs to play its role, too, to make sure that it explores all available opportunities. If those longer-term opportunities can be seized, there is nothing standing in the way of British steel having a long, secure and prosperous future. We all want to see that, and I hope over the coming weeks the Government will do everything they can to make sure we deliver that.
Sarah Champion (Rotherham) (Lab)
It is truly a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Scunthorpe (Nic Dakin) for securing this debate, again. It is truly dispiriting to be here again to call on the Government to act to safeguard the future of British steel production. It is a vital strategic industry, yet the Government’s record on steel is one of abject failure.
Time and again Members, many of them here today, have set out in clear terms what is required. Time and again, the Government have done nothing. They have failed to take action on high energy costs that have held the industry back against its worldwide and European competitors. They have failed to take action on business rates, which penalise investment and prevent the industry from shaping its own future. They have failed to commit to favouring British-produced steel in major state infrastructure projects such as HS2. Most damningly, they have failed to properly understand the industry, its importance and the unique challenges it faces. We find ourselves, once more, talking about thousands more workers with uncertain futures, and more communities that face having their hearts torn away.
It did not have to be like this. In Rotherham, Tata’s speciality steels division was taken over by Liberty House. While the collapse of British Steel has called into question the conduct and suitability of its owner Greybull Capital, Liberty has invested heavily in its Rotherham plant. Last year, I attended the refiring of a furnace that had been mothballed for two years. In Rotherham, steel is not losing jobs but recruiting for jobs. Yet it is reported that potential buyers of British Steel’s operations have been put off, not by the challenges common across the industry, but by our Government’s failure to commit to support investment and development in the sector.
The Government simply cannot continue to stand by and watch as the steel industry in Britain withers and dies. Promises are no longer enough. The Government must act now, in the national interest, to protect jobs in Scunthorpe and the north-east. They must do now what they should have done in 2016 and address the structural challenges that continue to place the wider industry in jeopardy.
Andrew Percy (Brigg and Goole) (Con)
It pains me to disagree slightly with the hon. Member for Rotherham (Sarah Champion)—for whom I have a high regard and whom I consider a friend—but it is simply not the case that the Government have done nothing. It is also a little rich to take lectures from Labour, under whose last tenure in government the number of people working in the steel industry halved and UK steel production fell.
It is not the case that the Government have done nothing. This Government have acted to defend the steel industry in a number of ways, whether by creating the scheme that enables the company to be reimbursed for its high energy costs, by restructuring business rates, which have a direct beneficial impact on the site in Scunthorpe, through the millions of pounds that they made available shortly before the liquidation of British Steel to cover the EU carbon credits, or through the tens of millions of pounds that the Government were prepared to put in but could not do so because an arrangement on a commercial basis, as required by UK and EU state aid laws, could not be achieved. The Government have a strong record of supporting the sector and supporting steel workers in Scunthorpe.
It was the UK Government in the EU that led demands to change procurement rules within the European Union, just a few years ago, to make it easier for us to procure UK steel. Of course, those procurement rules are still a challenge for us. The Government cannot just turn around, as some people think, and say, “We are going to use UK steel in all Government contracts.” That would be illegal under UK and EU law, and—for those who think that a no-deal Brexit is the answer to all this—it would even be illegal under World Trade Organisation rules.
Having used half my speech to slightly disagree with my friend the hon. Member for Rotherham, I will say why we need the Government to act now and set out some things they need to do.
As the hon. Member for Scunthorpe (Nic Dakin) outlined, our area relies strongly on the steel industry. Scunthorpe is a steel town; north Lincolnshire is, in many ways, a steel district. Most of the workers—the lion’s share, probably—live in my constituency. We cannot underestimate the impact of steel workers on our local economy, because these are some of the best paid and most skilled jobs we have in our area. I am not prone to hyperbole—well I am, but let us pretend I am not—but to lose them would be devastating on our local economy.
Martin Vickers
My hon. Friend is, as always, erudite—that is the word I was looking for. His point about the northern Lincolnshire economy is well made, as it was by the hon. Member for Scunthorpe (Nic Dakin). Would he also acknowledge that this issue spreads far and wide? Some 150 people are employed at the port of Immingham, either by Associated British Ports or British Steel directly. Speaking as chairman of the all-party parliamentary group on rail, I can say that there are impacts not just on the supply of steel but on the movement of raw materials.
Andrew Percy
Absolutely. I do not need to repeat what my hon. Friend said; all that is true and demonstrates how important the industry is not just to our sub-region or region, but to the whole UK economy.
Where are we now? I thank the Minister and the Secretary of State for the positive way in which they have engaged with local stakeholders, unions, the councils and local Members of Parliament. I genuinely believe that this Government are trying to do everything they can to secure a future for the site. This is an independent procedure through the official receiver, but locally we do not want to see a partitioning off or a selling off of different parts of the business. We want to see the business sold in its entirety. For the reasons stated by the hon. Member for Scunthorpe in relation to the strategic importance of the industry, we have to continue producing steel in Scunthorpe.
The Government must stand ready to do all they can financially to support the industry. There are tens of millions of pounds that were available before the liquidation, which we have been assured remain available for any new partner on a commercial basis, as required by law. Can the Minister reconfirm that today? That would be appreciated.
We have to be honest about the situation if a buyer cannot be found. We know that we are down to a shortlist —it is good that there are number of buyers who are realistic prospects to purchase the business—but as I and other colleagues have repeatedly said, we must not be close-minded about any particular structure moving forward. Nationalisation does not get us over the problems of investment having to be on a commercial basis. That might or might not be an answer in and of itself, but it does not mean we should simply rule that option out, or the option of a public-private partnership. Every option should be considered by Government to ensure that the whole business can continue to operate.
We do not want the crumbs off the plate, as it were, and just a few hundred jobs saved if part of the business were sold separately. We want it to continue in its current form because it is so strategically important to UK plc.
Jessica Morden (Newport East) (Lab)
I thank my hon. Friend the Member for Scunthorpe (Nic Dakin) for securing yet another debate about steel, for chairing the all-party parliamentary group on steel and metal related industries, and for being such a thoughtful and passionate advocate for our steel industry, and particularly his steel community, in difficult times. Steel workers in my constituency will be feeling for the steel workers in his constituency as we wait to hear about British Steel.
I pay tribute to steel workers and unions in my area, who have such pride in their industry and have made such sacrifices over recent years in this cyclical business. The communities of east Newport and over to Caldicott have been built on that pride. Most people have family or friends who have worked in the industry, but the current generation of steel workers live with the constant threat that their jobs are uncertain. They look towards Bridgend and what happened to Ford workers; they are understandably concerned and worried about problems in the automotive sector. That is not just because of the bonds of working in that industry, although that bond is real—Tata Steel’s Zodiac plant at Llanwern and the auto-finishing line depend on securing work from the automotive sector. We need the Government to urgently do all they can to ensure that our steel and automotive industries are open for business.
It is often said in such debates, but it worth repeating that steel is a foundation industry and a national asset. For our manufacturing industry and our economy to thrive we need our own steelmaking capacity. We must not neglect this foundation industry and end up importing our steel. My hon. Friend the Member for Scunthorpe reminded us in a recent debate, and again today, that the strongest economies in the world—the USA, China and Japan—have the strongest steel industries. We currently come in at number 30, and we must not fall further down the table.
I want to talk about Tata Steel’s Cogent Orb works in my constituency, which has been making steel since 1898. The 350 steel workers at Orb make electrical steel that has the potential to be used as the high-quality grain-oriented steel required to build electric vehicle motors. The automotive industry has been calling on the Government to support the production of a high volume of batteries required to support EV production in Britain and avoid the risk of importing from abroad. [Interruption.]
Mr Philip Hollobone (in the Chair)
Order. I am sorry to interrupt the hon. Lady.
Mr Philip Hollobone (in the Chair)
A Division has been called in the House. The hon. Lady has one minute and 45 seconds to finish her speech when she comes back from the Divisions. I understand that there will be multiple Divisions, so we will resume 10 minutes after the last Division.
Mr Philip Hollobone (in the Chair)
Jessica Morden has one minute and 39 seconds left.
Jessica Morden
Thank you, Mr Hollobone. I was talking about Cogent Power and the potential in the electric vehicles industry, because demand for electric vehicles is only going to grow and we have a fantastic opportunity with that company to get in on the cutting edge of that new industry and to develop a supply chain for it. But these are smaller companies and will need the Government to help to bring the supply chain together. The Orb works is the only plant in the UK capable of making the steels and is therefore a strategically important business that can support the Government’s industrial strategy in relation to electrification. We must take advantage of that new industry. I visited Orb recently and have invited the Secretary of State for Wales. I would be very keen for the Minister from the Department for Business, Energy and Industrial Strategy also to visit when he is in Newport, which I think might be fairly soon. That plant must be able to take advantage of that opportunity, but we need the Government’s help for that.
As well as Llanwern and Orb, Liberty Steel is based in my constituency. Liberty bought the old Alphasteel plant in 2015, and Sanjeev Gupta has announced that it has now become one of the largest steel producers in Europe, with a global footprint employing 30,000 workers. It appreciates that steel is a cyclical business and needs investment to get it through the cycles in order to make money. It is working on a model of an exciting bright future for steel, but it too asks the Government to deliver on the industrial strategy with a delivery taskforce to support and drive the investment that we need, particularly in the green steel area.
On behalf of the steel industry and workers in my area, I will repeat the asks so often made in these debates. We have waited too long for a sector deal for steel. We need more and faster action on energy prices. We need more action on procurement. We also need more action on dumping and on what will happen with the trade defence instruments in Europe. I am grateful for the opportunity to take part in this debate. On behalf of all those who work in Llanwern and at Liberty, I hope that we can expect action and not more warm words from the Minister.
Anna Turley (Redcar) (Lab/Co-op)
As always, Mr Hollobone, it is a pleasure to serve under your chairmanship.
I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) not only on securing this debate but on the last few months, when he has been such a doughty champion for his constituents and for the steel industry in this country. We are very proud of him and I know that his hard work is going to pay off.
Of course, we know why we are here today participating in this debate, which is extremely timely and important because, yet again, here we are in another steel crisis, while steelworkers sit at home, hoping and praying that they have a future and a job and a salary to continue to provide for their families. Yet again they are in a precarious situation.
To be honest, it is depressing that we are here again, because a year ago tomorrow we had a debate in Westminster Hall, this exact same Chamber, which was three years on from the 2015 steel summit and all the promises that were made then, and all the asks that we made of Government. And here we are yet again, despite having seen the devastation that my constituents bore the brunt of. We can see what happens when we fail on steel.
My constituency is still struggling. I am here today, not just to fight on behalf of the 700 British Steel workers in my constituency today but because of what happened to us three and a half years ago in Redcar. We lost 2,200 jobs immediately in SSI and another 900 in the supply chain. I always say to people, “Imagine that in London, Manchester, or Birmingham. It would be devastating. Then put that in a seaside town, or a town like Scunthorpe, and imagine the effect of that on an economy, on a society, on a community, on families and on individuals.”
We are still not recovering; we are still not there. We know the average salary of those who worked in the steelworks; we know they are good jobs. They were the highest paid jobs in my constituency. The average salary is down by £10,000 a year. Many workers have had to move away to find other employment. Some are working in British Steel on Teesside or have even gone to Scunthorpe, where yet again they find themselves back in this precarious situation.
A month ago, I met a worker who had had 13 different jobs since he lost his job at the steelworks. That is the kind of insecurity and economic disaster that happens if the Government do not step in and stand by our steel industry, and that is before we even get on to talking about the reclaiming of the site, which stands there corroding and rusting. It will cost millions to get that ready for other businesses to come in, clean it up and bring jobs. I just raise that with the Minister to say that this is what happens—this is the cost of failure.
I pay tribute to the Secretary of State, who I am sure cannot be with us today because he is probably—hopefully—travelling the world and trying to secure a deal for British Steel. I pay tribute to him, because I think he gets that. He understands and, to be fair, things are different to what they were in 2015. The Government have stepped in; they have given the indemnity to the official receiver; they have bought us some time; and they have kept the workforce paid and the asset in place. So I pay tribute to him, but I have a few requests to make of him and of the Minister who is here in his absence today.
Obviously, we know that the official receiver is bound by his legal obligations. However, I will echo the sentiments that were expressed earlier today about keeping the business together. It is vital that the Government support bidders who bid for the whole business—no more cherry-picking and no more asset-strippers such as Greybull.
It is vital that we have the investment to deal with the environmental liabilities that are so important on the Redcar site, but the importance of innovation must not be forgotten either. We cannot beat China and others on price, but we can beat them on innovation, with lighter, stronger, greener steel. And I make a pledge again to—
Mr Philip Hollobone (in the Chair)
Order. To be helpful to the hon. Lady, we have five minutes of Back-Bench time still to go and the remaining speaker is not here, so she can slow down rather than speed up. [Laughter.]
Anna Turley
I am extremely grateful to the Chair, because I was barely pausing for breath. I can get back into my stride.
Innovation is crucial. The hon. Member for Middlesbrough South and East Cleveland (Mr Clarke) mentioned the Materials Processing Institute, which is in my constituency. It is doing fantastic work. It has been around for 75 years; it was formed just after D-Day. It has a fantastic vision for innovation: new technologies, decarbonised steel, the digitisation of the steel and metals sector, and a circular economy for steel, alloys and rare metals. Those are really important innovations. If we do not support originations and businesses that are doing that work, I am afraid we will see more redundancies and job losses, and the loss of a huge amount of capacity and capability. Therefore, innovation must be at the cutting edge of productivity, and we must support innovation experts such as the MPI, which are at the heart of this.
Like other hon. Members, I want to highlight the importance of the long-term issues that we have raised time and time again in this place. We need action on energy prices, business rates and procurement. I hope that the long-awaited sector deal is not a figment of our imagination and that we will live to see one for the steel sector. Sector deals are as important for our sector as they are for the many other sectors that have had a response and engagement from the Government. That would send a clear signal that the Government are committed to the steel industry and want to do business with the private sector.
I will end on Brexit. The industry has been very clear that there is no Brexit deal that would bring benefits to the British steel industry. That is just a fact. Of course, the disaster of no deal cannot be underestimated. We would see 97% of our exports subject to trade restrictions, and 25% tariffs to the EU—£1 million per day for the steel industry in this country. We would lose access to £1.6 billion of research funds for coal and steel. As my hon. Friend the Member for Scunthorpe said, no deal means no steel. The industry could not be clearer about that.
I pay tribute to the Secretary of State, and I am grateful to the Minister for coming to respond. I know that he gets it. I know that the Government are trying to do all they can for British steel, and that he understands the importance of this industry to our country, our defence, our manufacturing and our place in the world. Unfortunately, the future of this proud industry hangs in the balance once again. I look forward to the Minister doing his part.
Mr Philip Hollobone (in the Chair)
We now come to the Front-Bench speeches, the first of which will be from the hon. Member for Motherwell and Wishaw (Marion Fellows). The guideline limits are five minutes for the SNP, five minutes for the Opposition and 10 minutes for the Minister.
Marion Fellows (Motherwell and Wishaw) (SNP)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Scunthorpe (Nic Dakin) for securing this important debate and for his outstanding work as the chair of the all-party parliamentary group on steel and metal-related industries.
I came into this Parliament in 2015 and almost instantly got involved in steel because my constituency used to house Ravenscraig hot strip steel mill, and now houses the Dalzell works. We have had not our troubles to seek. What has been done in Scotland and in the rest of the UK has been different in the extreme. The hon. Member for Scunthorpe—I believe it was he—said that he was looking for another UK steel summit. I was involved in the first one and the one in Scotland. The one in Scotland started proceedings by saying, “We will save both mills”—there is also Clydebridge in the neighbouring constituency. That was the focus from the minute that the summit met. The steel taskforce worked tirelessly with that one aim in mind, and it succeeded by helping Liberty Steel to buy the mill from Tata, giving it as much work as possible, giving it compensation for electricity and a rates holiday, and doing all sorts of other practical tasks. It managed to do that within the EU rules. It has always been a huge puzzle to me why the UK Government cannot do what our EU competitors do, work within the EU rules and save steel in the UK. The industry should not be lightly disregarded.
Steelworkers are a special breed, as has been said. They have taken the decision time and time again across the UK to change their terms and conditions and rates of remuneration, and they have fought to save apprenticeships—all in the teeth of a Government who do not seem to care about what happens to anything other than the financial industry. No first-world country can run an economy without manufacturing, and steel is a foundation industry for any economy that wants to have manufacturing.
I feel passionately about this issue. I am not a native of Motherwell and Wishaw; I have only been there 32 years—I always say that. However, I know how passionately steel is intertwined with the very fabric of my constituency. It was a pleasure to be there recently when the Minister from the Scottish Government signed the UK steel charter. I was in a privileged position, because I was able to be at both signings, both here and in Scotland. That commitment by the Scottish Government needs to be matched by the UK Government, because there are things that are not within the competence of the Scottish Government. We have no influence on energy prices, dealing with steel tariffs or dealing with the President of the United States, so I ask the Minister to please take this issue seriously.
Many of us who take part in these debates are sick and tired of the same debates. It has been joked that we should just pull out the speeches we made before, rewind, and keep giving the same ones. There is a place for that, but we need this Government to make a commitment that we will not leave the EU with no deal and that we will save the UK steel industry in its entirety. We must save the jobs of people who have committed to the steel industry, and the unions that have worked tirelessly with management across that industry to make sure it is still here and will be here for the future and our children’s futures.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
It is a pleasure to serve under your chairpersonship, Mr Hollobone, and I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on having secured this debate. He is a champion for his community and the steel sector more widely, and I know he has been working hard on behalf of his constituents to press the Government for clarity during this time of crisis. I thank the steelworkers, the steel manufacturers, the trade unions—Unite, Community and GMB—and also UK Steel for their unwavering support for this fantastic industry. Such a coalition is rare, but it shows how important this issue is to our communities and our country.
On 22 May, British Steel collapsed, putting at risk 4,000 jobs directly and 20,000 jobs in the supply chain. That announcement came as a shock to thousands of steelworkers who worked against the odds to defend the company’s future, and I join the thousands waiting impatiently to hear some positive news about a new buyer. It is imperative that the Government prioritise a buyer for the whole steelworks, not parts, and I urge them to make every necessary support available so that we can secure the long-term future of the company.
For decades, the steel sector has been at the heart of communities, including mine in South Yorkshire. It has provided well-paid, well-skilled jobs, and over the years, through sheer determination and resilience, the sector has manoeuvred through some very choppy waters. When I joined the House in 2016, the steel sector was going through a severe crisis, which saw the collapse of the Redcar steelworks. My hon. Friend the Member for Redcar (Anna Turley) has spoken eloquently many times in this House championing the steel sector, and I believe she will continue to champion it till her last breath. We must never let such a collapse happen again. We have to collectively value and appreciate the importance of the steel sector, and although there are global and domestic challenges, including global overcapacity, there are also enormous opportunities.
Alex Sobel (Leeds North West) (Lab/Co-op)
On that point about opportunities, my hon. Friend’s constituency was the cradle of stainless steel, and it now has ITM Power, which makes hydrogen. Does she agree that hydrogen steel furnaces are part of our commitment to address climate change, and could create a whole new steel industry in the UK, leading the world?
Gill Furniss
I thank my hon. Friend for his intervention. I absolutely agree, and I very much look forward to my home town of Sheffield taking up those opportunities, because it is well placed to lead a green industry.
As I was saying, we always need steel, which literally forms the fabric of everything we see. I sincerely worry that both contenders to be the next Prime Minister are advocating a no-deal Brexit. As UK Steel has clearly stated, that would be catastrophic for the sector. It could cost it £70 million and lead to further collapses.
The steel industry has many strengths and is able to thrive, but, for that to be achieved, we need the Government to commit to help. The future of UK steel can be bright, and the Government’s own analysis has identified a £3 billion opportunity by 2030, sustaining good jobs in the areas that need them the most. The news last week that Jaguar Land Rover will invest £1 billion in building electric cars in the UK was an enormous boost, with the company leading the way on electrifying the cars on our roads and signalling a commitment to a greener economy. The opportunities for end-to-end supply in that process—making the steel at home to support the building of those vehicles—could be enormous. That could support and encourage growth in the steel sector while spearheading a green revolution.
It is disappointing that the opportunity to secure a steel sector deal has never come to fruition. I am pleased to see the new Minister in his place, and I urge him to give that issue the greatest importance. The steel sector needs that deal for innovation, for user research and development, and to be there to take on exciting opportunities for the future. The steel industry is there and waiting to be helped with the challenges ahead and the opportunities to make it thrive.
UK steel companies pay 50% more in energy costs than their competitors in the EU. On procurement, we know that UK Government decisions are a hugely powerful policy tool to boost British steelmakers’ orders. The decision to use our steel for the royal fleet, mentioned, I believe, by my hon. Friend the Member for Rotherham (Sarah Champion), would be much welcomed. It would also make complete sense for our national defence. Please, Minister, look at that, because those are the opportunities that need to be put forward.
I commend the UK steel charter, which is aimed at enhancing and maximising procurement opportunities for UK steel producers. The Welsh Labour Government were the first to sign up to that commitment. They are leading the way, but Departments in Whitehall appear to be resistant to signing up. Will the Minister commit that all Departments will sign up to the charter?
On business rates, the perverse inclusion of investment in machinery, which increases a company’s business rates, is patently a barrier to investment. Some British steel companies have huge disparities in their business tax bills across their plants in Europe. For example, Tata pays a business tax bill in Wales that is 10 times that of its operation in the Netherlands. Will the Government join the Labour party in our pledge to remove machinery for steel companies from business rates to ease that burden and invite more investment back into the steelworks? I am not saying it will be easy, but what is a Government for if not to support our foundation industries and encourage their growth?
Our steel industry is fabulous, innovative, flexible and resilient, and it can thrive. Please help us to make sure it stays that way.
Mr Philip Hollobone (in the Chair)
In calling the Minister for steel, I think we should note the presence of the Secretary of State for Business, Energy and Industrial Strategy and encourage other Secretaries of State to attend debates here in Westminster Hall.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Stephenson)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Scunthorpe (Nic Dakin) on securing the debate and the opportunity to bring everyone together on a cross-party basis to discuss this topic. As a number of his colleagues said, he is an energetic and passionate advocate for the UK steel industry and for his constituents. I am pleased that so many Members were able to attend and speak. It is clear that there is a shared understanding of the important role the steel sector plays in our communities and of its critical place as a foundation industry in the national economy. I also acknowledge that, for the first time in my memory, I am joined in Westminster Hall by a Secretary of State. I had better watch what I say.
While everyone acknowledges there are considerable challenges, we believe that great opportunities remain for the industry to secure a successful, sustainable future at the centre of British manufacturing. The announcement on 22 May that British Steel was entering insolvency has caused great concern for its employees and their families and for contractors, suppliers and customers. I understand just how important steelmaking is to the whole town of Scunthorpe and the wider area, beyond the many people with direct links to British Steel. I saw that first hand the day after the insolvency was announced, when I visited Scunthorpe with my right hon. Friend to discuss with workers, trade union officials and management.
The Government worked intensively with British Steel, Greybull Capital and lenders to seek possible solutions to the financial challenges facing the company. That included the support we provided to help it meet its environmental obligations. We also provided the official receiver with an indemnity to ensure operations could continue while they carry out the insolvency process.
We are determined that we will leave no stone unturned in our efforts to secure a suitable buyer for British Steel, safeguarding jobs across the whole of the business, and many people have spoken passionately today about the need to find a solution for the whole business. We want to keep steel coming off the production line. The official receiver has confirmed that the level of interest shown to date is encouraging, and he is in intensive discussions with the potential new owners who have submitted the strongest bids for the whole business.
Clearly, the sales process is being run by the official receiver and his special managers, who are independent of Government. However, in parallel to those commercial negotiations, the Secretary of State is in discussion with the leading bidders to better understand their proposed business plans and explore how we can support them to realise their vision for the company. Each one of British Steel’s sites has a proud record of steelmaking excellence, and the Government are determined to do all we can to ensure that that continues.
I must also pay tribute to British Steel workers, who have responded to the uncertainty with the best response possible—by producing record levels of steel and continuing to supply its customers and to win new orders. I am grateful to the hon. Member for Scunthorpe for his tireless commitment to working with Government and other stakeholders to help secure the future of the business, both in his role as a local MP and as a member of the British Steel support group, convened by my right hon. Friend. I also pay tribute to my hon. Friends the Members for Middlesbrough South and East Cleveland (Mr Clarke) and for Brigg and Goole (Andrew Percy) and the hon. Member for Redcar (Anna Turley) for the positive role they have played on the British Steel support group since it was established in May.
As the hon. Members for Newport East (Jessica Morden) and for Motherwell and Wishaw (Marion Fellows) said, steel is a foundation industry. It is important for any modern economy and plays a key role in many critical UK supply chains, including construction, automotive, defence and power generation. I have spoken to business leaders right across the manufacturing sector, who value having this expertise and capability here in the UK, and who—like all of us—want to see an innovative and sustainable steel sector that is able to compete with the best in the world.
The steel sector provides well-paid and skilled jobs in this country. The passion I have seen in Scunthorpe is replicated right across the industry, and I want to see the sector thrive and reward the staff, whose expertise and commitment is second to none. The Government have been working with the sector and trade unions to secure its future through difficult times, and we remain committed to working closely with the sector.
Since I took on this job, I have met UK Steel, Community, Tata and Liberty to understand their plans for the future and to explore the support they need to maximise the opportunities that are open to the sector. We are under no illusions that many challenges lie ahead for UK steel producers, but we should not forget, as the Opposition Front Bench spokesperson, the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), said, that there are also many opportunities for them in the UK. We have been encouraging the UK steel sector to strengthen its engagement with all existing and potential domestic steel consumers. That will help the sector benefit from the additional £3.8 billion a year by 2030 of high-value market opportunities identified in the research we published in December 2017, and it means that demand is forecast to increase by 3.1% a year in value terms.
The construction and automotive sectors offer some of the most significant opportunities, at £2.2 billion and £300 million respectively. Future demand in those sectors is likely to be for higher grade, higher strength steels, combined with innovative production methods. That raises the need to adapt current production, invest in new capital equipment and make a step change in research and development investment. As part of the automotive sector deal, the automotive sector stated its ambition to increase the share of UK content in the automotive supply chain to 50% by 2022. We have also signed a sector deal with the construction sector, and we expect steel to play an increasing part as we seek to substantially boost that sector’s productivity.
I am grateful for the opportunity to reflect on some of the challenges and opportunities that lie ahead for the sector. As we have offered through the Steel Council on a number of occasions, the Government stand ready to facilitate strategic engagement with other sectors, such as the Automotive Council UK and the Construction Industry Council, to ensure that efforts in the steel industry are targeted at the right market opportunities.
Several hon. Members have talked about research and development. Investment levels in the UK have been too low for too long. The research on future opportunities that I referred to earlier states:
“If the UK steel industry wishes to access these opportunities it will require investment to meet the new capability either from completely new mills, upgrades to existing facilities or R&D in products and services.”
As a proportion of value added in the sector, R&D expenditure has been low and below the average level in the manufacturing sector. It is vital that the level of investment is significantly increased, and we are committed to working in partnership with the industry to help to bring that about.
The Government will support the transformation of our foundation industries, including steel, by providing up to £66 million, subject to industry co-funding, through the industrial strategy challenge fund to develop radical new technologies and establish innovation centres of excellence in those sectors. The aim is to kick-start projects to make those sectors internationally competitive, securing more jobs and greater growth by 2025.
Several hon. Members raised the issue of procurement. We are working hard to ensure that UK producers of steel have the best chance of competing for and winning contracts across all Government projects. As a result of EU public procurement rules in place since 2015, which we negotiated and were the first country to implement, the social and economic impact on local communities, rather than just price and other commercial considerations, can be taken into account when the Government procure steel.
I was proud to sign UK Steel’s procurement charter on behalf of my Department to reaffirm our commitment to making sure that UK steel producers get a fair chance to secure public contracts. As the hon. Member for Scunthorpe said, I have written to the other Government Departments that procure steel to encourage them to do the same, on top of their existing obligations.
The charter is one element. For the first time this year, we published information from Departments and their arm’s length bodies on how much steel they have procured over the last financial year and how they have applied the steel procurement guidelines. Departments have confirmed that, where applicable, they have fully complied with the guidance when procuring steel for their major projects.
We have also published an update of the steel pipeline, which signals the upcoming steel requirements of national infrastructure projects. It shows how the Government plan to procure about 3 million tonnes of steel, worth about £500 million, over the next decade for infrastructure projects such as Hinkley Point C and the upgrade of the UK’s motorway network.
On industrial energy prices, which were mentioned by several hon. Members, I recognise the concern in the Chamber. The ability of our steel industry to compete globally and across Europe is a priority for the Government, and we will provide compensation and exemption support to maintain the UK’s reputation as an attractive location for businesses.
I fear I am running out of time, so, on the energy point, I will just say that, as many hon. Members know, we have supplied £295 million in compensation to energy-intensive industries since 2010, including £53 million in 2018. A £315 million industrial energy transformation fund has been announced, which my right hon. Friend the Secretary of State and I are keen to ensure British industry accesses and benefits from.
On international trade, it remains the express ambition of the Government to leave the European Union with a deal, as has been stated by the two candidates running for the leadership of the Conservative party. We will do everything we can to ensure that unfair trade practices do not adversely affect the industry.
I look forward to continuing to work with all hon. Members present to ensure the continued presence of a dynamic, modern and competitive steel industry in the UK. My right hon. Friend and I will continue to work with all hon. Members to secure a good future for British steel. I conclude by once again congratulating the hon. Member for Scunthorpe on securing the debate and giving us an opportunity to air these issues.
Nic Dakin
I thank all hon. Members for their contributions to the debate. I particularly thank the Minister for his very solid response—not that we will not continue to press him for further action, since that is our job. Steel communities observing this debate will be heartened by the level of commitment and cross-party unity of purpose: 14 MPs have spoken, and more would have done so if their diaries had not prevented the attendance from being even bigger.
In the end, we will be judged on our actions. We all need to take a lead from the Secretary of State, who has joined us at the end of our debate to put a flag in the ground and say how important the issue is not only to him personally—as the Minister who leads on this issue on behalf of the Government—but to the UK. We take a lot of encouragement from that, and we are working together behind him to ensure that we deliver for steel communities, for steel across the country and for the UK, so that the steel industry can continue to perform well into the future, as it does now and as it did in the past.
Question put and agreed to.
Resolved,
That this House has considered the future of the UK steel industry.