UK Steel Sector: Supply Chains

Lord Brady of Altrincham Excerpts

Wednesday 9th June 2021 Westminster Hall

[Sir Graham Brady (in the Chair)]

I remind hon. Members that there have been some changes to normal practice in order to support the new hybrid arrangements. Timings of debates have been amended to allow technical arrangements to be made for the next debate. There will be suspensions between debates.

I remind Members participating, physically and virtually, that they must arrive for the start of a debate in Westminster Hall and are expected to remain for the entire debate. I must also remind Members participating virtually that they are visible at all times, both to one another and to us in the Boothroyd Room. If Members attending virtually have any technical problems, they should email the Westminster Hall Clerks’ email address, which is [e-mail]. Members attending physically should clean their spaces before using them and before leaving the room. I remind Members that Mr Speaker has stated that masks should be worn in Westminster Hall. There is nobody sitting in the Public Gallery in order to speak.

[Stephen Kinnock (Aberavon) (Lab)]

I beg to move,

That this House has considered the UK steel sector and its supply chains.

It is a pleasure to serve under your chairship, Sir Graham. Hon. Members taking part in the debate today will recognise that this is not the first time that we have sought assurances from the UK Government that they are sincerely committed to supporting the British steel industry. Indeed, by my calculations, since 2015 Labour MPs have secured 19 debates and urgent questions on steel, made 51 speeches on steel, asked 54 oral questions on steel, and intervened on or responded to Ministers 103 times on the future of our steel industry. A pessimist may ask, “What’s the point?”. After all that pressure, the British steel industry still faces a range of serious challenges, and the UK Government are continually failing to provide the necessary level of support to allow the UK steel sector to compete.

In spite of those powerful headwinds, I am optimistic about the future of our steel industry, because I believe that covid-19 has completely reset the way in which the British people think about the sort of country they want to live in. The public want a Britain that can stand on its own two feet and that is more resilient to external shocks. The pandemic has exposed the weaknesses and vulnerabilities that lie at the heart of our economy and our society. The pandemic has demonstrated beyond a shadow of a doubt that if we wish to address those weaknesses and vulnerabilities, we must commit to and invest in a renaissance of modern manufacturing in our country.

British manufacturing has been in decline, dropping from 30% of GDP in the 1970s to just 9% today. The UK’s shift towards a city-centric, service-based economy means that it is now the most geographically unequal country in northern Europe. We have the richest area in the whole of northern Europe—London—but also the five least prosperous areas, with west Wales and the valleys the poorest of all.

Today, our country stands at a fork in the road, and the choice is clear. Are we going to continue to allow our manufacturing sector to wither away, constantly eroded by the sort of policies that have come to define the last decade and which are advocated in the book of the Secretary of State for Business, Energy and Industrial Strategy, “Britannia Unchained”: “Let the market rip. Let the City of London call the shots. Let globalisation and deindustrialisation ride roughshod over our communities.”? Or are we going to truly understand the pandemic as a clear and unambiguous warning that we cannot go back to business as usual and that we must strive for real enduring change; that we must stand on our own two feet by reducing our dangerous over-reliance on imports from China; that it is time to recognise that the collapse of British manufacturing is the primary cause of the grotesque inequality that exists between the wealthiest and the poorest regions of our country; and that a modern manufacturing renaissance is our only route towards a fair and just transition to a cleaner, greener future?

Our manufacturing base can be rebuilt only if it is based on a strong and healthy steel industry, because steel is a vital foundational industry that is critical for our security, prosperity and green resilience. Our economic and national security are underpinned by steel. Every military vehicle, major infrastructure project and power station requires steel. In a world where strategic competition between democracies and dictatorships is intensifying on an almost daily basis, it is crucial that as much of that steel as possible is produced here in the UK.

Our prosperity as a nation is also dependent on steel as a vital foundational industry that feeds into our entire manufacturing sector. Steel jobs are good jobs that pay an average annual salary of £36,000, which is 36% higher than the Welsh average, and the Port Talbot steelworks in my Aberavon constituency provides 4,000 such jobs, alongside thousands more through the supply chains.

Home-grown steel is also the only route to tackling climate change. Steel will play a critical role in greening our economy by building the electric cars of the future and providing vital components for solar, wind and tidal power. Moreover, British production processes have half the carbon footprint of China’s far less decarbonised steel industry, and shipping steel from the other side of the world is obviously more carbon intensive.

Whether we look at the British steel industry through the prism of our national security, regional prosperity or planetary sustainability, we draw the same conclusion: there can be no sustainable post-pandemic economic recovery without a strong and healthy steel industry. The arguments are compelling, irrefutable and over-whelming, so it is difficult to understand why the UK Government have been so slow to act, but the pandemic has put rocket boosters on the need for a modern manufacturing renaissance underpinned by the rebirth of our steel industry.

The Government must now take the following steps. First, they must reject the recommendation of the Trade Remedies Investigations Directorate regarding steel safeguards, and must ensure that all 19 of the safeguards remain in place. Those trade defence measures were put in place to guard against import surges caused by President Trump’s section 232 tariffs, and it is essential that they are retained until such time as the section 232 tariffs are dropped by the Biden Administration. The TRID’s recommendations are tantamount to dismantling the flood defences just as the tidal wave is about to hit. Will the Minister assure us that she has made the position of the steel industry, steel unions and steel MPs clear to her colleagues in the Department for International Trade?

Secondly, the Government must as a matter of urgency address the issue of our industrial energy crisis. British steelmakers pay 86% more than their German competitors and 62% more than the French. Over the past five years, that disparity has cost the UK steel industry an additional £254 million. Those additional costs represent funds that should and would have been directed towards critical capital investment, including decarbonisation projects. Will the Minister please assure us today that her Department is truly committed to tackling the root causes of the UK’s astronomical industrial energy prices, and can she set out her urgent action plan for doing so?

Thirdly, we need a patriotic procurement policy. It is absurd and inexcusable that the Ministry of Defence is buying Type 26 frigates for the Royal Navy that are built with Swedish steel. We need procurement that gives the right weighting to local value. Let us look at big opportunities such as High Speed 2, with 2 million tonnes of steel. How much of that steel is going to be British? Can the Minister assure us today that every Government Department and HS2 will be signed up to the steel charter by the end of this calendar year?

Fourthly, we need a Government who are truly committed to rebuilding our manufacturing base, and who believe in partnering with industry to do so. Some say that steel is a sunset industry, but nothing could be further from the truth—it is at the cutting edge of innovation. Indeed, the vast majority of the alloys that are used in steel these days did not even exist 10 years ago. It is absurd to have a Government who have utterly failed to support the Orb plant in Newport—I look to my hon. Friend the Member for Newport East (Jessica Morden)—which could play a major role in electric vehicles.

It seems that the left hand does not know what the right hand is doing, which is precisely why co-ordinating forums such as the Industrial Strategy Council are so important. Can the Minister please explain why the Industrial Strategy Council has been closed down by the Business Secretary, and can she please tell us whether she thinks that decision will be a help or hindrance to the future of the British steel industry?

British steelworkers are a strong, proud community of men and women who make the best steel that money can buy. They are certainly not looking for anybody’s charity, special treatment or favours. They are simply seeking the opportunity to compete without having one hand tied behind their back. They are simply asking for a level playing field. Since 2010, successive Conservative Governments have let them down by leaving the flood gates open to heavily subsidised imports from China; by failing to close the energy price gap; by declining to develop a patriotic procurement policy; and by failing to grasp the vital role that a home-grown steel industry must play in driving the green industrial revolution forward.

Receiving a fair day’s pay for a fair day’s work is as important to steelworkers as it is to every other working person across the length and breadth of our country. However, working people are motivated by far more than money. Above all, they are driven by the sense of pride and dignity that their work gives them, and steelworkers are certainly not an exception to that rule.

Steelworkers do long shifts in challenging conditions because they want to make a contribution. They are fiercely proud of the fact that steel is the basis of the houses we live in, the offices we work in and the cars we drive. They are steelworkers because they want to do their bit for their country, for their communities, and for their families. They are steelworkers because they want to be part of something bigger, but they cannot do this alone.

They need a Government who will back them to the hilt; a Government who will put policies in place that attract investment, rather than drive it away; a Government who truly believe that a country should be able to stand on its own two feet. Our steelworkers need a Government who are genuinely committed to reversing the decline of manufacturing in this country. They need a Government who are truly invested in swinging the pendulum from cities to towns, and from London and the south-east to the rest of the country. Britain needs its steel, and our steelworkers need a Government who are on their side.

[Sir Graham Brady (in the Chair)]

I should inform all participants that due to a technical problem, all those participating virtually did not catch the first three minutes of the debate. That has now been resolved, but I pass on the apologies of the staff who have been working to resolve the problem.

There are a lot of Back-Bench participants on the call list. If it is possible for them to keep to about five minutes, we should be able to get everybody in.

--- Later in debate ---

[Mark Tami (Alyn and Deeside) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Graham. Like everyone else, I thank my hon. Friend the Member for Aberavon (Stephen Kinnock) for securing this very important debate today.

This year marks the 125th year of production at Shotton steelworks on Deeside, which is a remarkable achievement. I hope and trust that we will see another 125 years. I doubt I will still be here to celebrate that, but we all live in hope. Order books are good and Shotton continues to produce high-quality value-added products, which is a great credit to the workforce and the management of the plant, yet we only have to look at Shotton’s history to understand the highs and lows that the industry faces as a whole. In 1980, more than 6,500 jobs were lost on a single day— at the time, it was the largest redundancy at a single plant in the history of western Europe. Those jobs have never come back. The plant today is still efficient and profitable, but Shotton cannot function on its own—it relies on Port Talbot for its steel—just as the industry cannot function as individual plants.

The UK steel industry has been in a fragile state for many years, seemingly lurching from one crisis to another. We have a Government who talk about their support for the industry going forward, but their actions—or, rather, lack of action—tell a very different story. Only when a plant or business is on the verge of collapse do they seem to show any interest in the steel industry, and they lose interest again when the plant either is saved in the short term or has collapsed. If steel is to have a future in the UK, we need a Government who recognise that we have to have a long-term plan to support the industry.

It is no good saying simply that steel needs to modernise or decarbonise its business, or that somehow hydrogen will save the day at some point in the future. That will not happen if we do not support and maintain a viable business today. Hydrogen might well be the future, but it is some way off and we cannot just use it as an excuse to do nothing now. That means addressing what many other colleagues have mentioned—the ludicrous situation where steel manufacturers here pay 62% more for electricity than those in France, and 86% more than those in Germany. That is not a new problem; it is something we have been banging on about year in, year out, but—shock, horror!—nothing changes, nothing happens. All we are told by the Government is to take it up with Ofgem, but we all know the answer we will get. All Ofgem says is that there is nothing it can do. I would argue that Ofgem seems intent on making the situation worse, rather than better. How can we seriously expect the industry to invest in the future when it has both hands tied firmly behind its back?

We were always told that nothing could be done and that, as with so many other things, it was all Europe’s fault. The same public procurement argument was constantly wheeled out, as a number of colleagues have said. Other European countries managed to do something, but for some unknown reason we could not. Even that excuse has gone now, however, and the UK Government need to step up to the plate.

The UK steel industry supplies only about 10% of public sector current requirements. That needs to increase dramatically. The Government need to work with the industry to make that happen. The Prime Minister talks a lot about infrastructure projects, shovel-ready projects post covid. I had the pleasure of speaking in the restoration and renewal debate the other day, and I said that this place should be the very starting point of using UK steel. UK steel must be the centre of any recovery. It must be not an afterthought, but at the very heart of such projects.

We cannot carry on as we are now. We need the Government to step up and to support our industry. It needs support now.

[Sir Graham Brady (in the Chair)]

For the guidance of Members, I intend to call the first of the Front Benchers winding up the debate at 10.23 am.