Steel Industry

Lord Beamish Excerpts

Wednesday 28th October 2015 Commons Chamber

[Ms Eagle]

My hon. Friend makes an extremely important point. The steel industry is very cyclical in nature. During the hard times and the downturns, it is very important to try to act to preserve assets of strategic importance to our country, so that we can take advantage of the upswing and the recovery when it comes.

China is currently responsible for a tsunami of cheap steel products. Last week’s Chinese state visit is over and done with, so I hope the Business Secretary will be making the case in Brussels today that we should act rapidly to stop the dumping of Chinese steel products in Europe. The scale of the new Chinese imports and the speed of their arrival is staggering. Its surplus production is nearly twice the annual production in the entire EU, and it is increasingly finding its way here. Chinese rebar has grown from having zero presence in the UK market in 2013 to comprising 37% of it a year later. There are quality concerns with some imported Chinese steel. We also know that Chinese steel production causes more environmental damage than UK production, so it is a false economy to allow it to continue.

For both those reasons, action to tackle dumping is vital and long overdue. Perhaps the Minister can tell us, when she winds up, what she managed to achieve during her recent visit to China. I can tell her that both the leader of the Labour party and I raised this issue with Premier Xi and his delegation during the recent state visit to London. Did she raise it during her visit to China? If so, what are the Government actually going to do about the huge amount of imports and the dumping? When it comes to acting on China specifically, perhaps the Government should be less interested in selling off our nuclear industry and more interested in standing up for the strategic interests of the UK.

Standing up for British steel means standing up for the high-quality skills that have built some of the UK’s, and indeed the world’s, most iconic landmarks. British steel built Canary Wharf, the new Wembley stadium and Sydney Harbour bridge, and it will be building the Freedom Tower in New York. We should all be proud of what the UK steel industry has achieved, but the Government cannot treat it as some relic of the past; it has to be a vital part of our country’s future. That is why the Government must do more—much more—to see the industry through these tough times and prepare it to seize future opportunities. The Government should publish an industrial strategy for steel and be open about how they envisage maintaining the strategic steelmaking assets in this country during hard times. It is only firm action now that will guarantee any future at all for UK production.

I commend the campaign by the Daily Mirror, which is setting out daily the compelling case to save our steel. Just in case Ministers were in any doubt about the urgency, Gareth Stace of UK Steel has today described the industry as being like a patient on the operating table “likely to die” without help.

Community, the main steel union, has called for an urgent meeting with the Business Secretary because of the ongoing threat to jobs, as it has emerged that no representative of the workforce, be it Community, the GMB or Unite, has yet been invited on to any of the working groups set up after the steel summit. [Interruption.] The Minister says there is no need to invite representatives of the workforce on to these working parties. Ministers should meet the workers from steelmaking communities, including Teesside, Lincolnshire, Yorkshire and south Wales, who are lobbying Parliament to hear at first hand, as I have, the real cost of Government inaction.

The Prime Minister claims the Government are acting on procurement. Just yesterday, the Minister told the Business, Innovation and Skills Committee:

“I would say buy British because it’s quality.”

However, the inadequacy of the Government’s response was laid bare on the very same day, when it was revealed that the Government had just spent more than £3 billion on three new Royal Navy ships and 589 Scout specialist vehicles for the Army, which will use imported Swedish steel.

[Mr Kevan Jones (North Durham) (Lab)]

The Minister is a former Defence Minister, and her own Department announced this year the new £200 million icebreaker for the polar research undertaking. I tabled a question to the Minister for Universities and Science, who could give no commitment from the Business Department that the ship, which is being built at Birkenhead, would use British steel. Is that not a great example of where the Department could put its money where its mouth is?

[Ms Eagle]

I hope we can get some progress on procurement, not least from BIS, which is contracting out the icebreaker research vessel as we speak. Otherwise, all of this is a missed opportunity. The UK steel industry needs action, not good intentions. The Government need to act much more effectively on procurement, and if they do, we will support them, but we will judge them on the contracts awarded that guarantee a future for UK steel; we will not judge them on warm words or grand but meaningless press releases.

The Government should explore the scope for acting temporarily on business rates. Failure to act is not cost-free, as the hard closure at Redcar demonstrated. With redundancy costs and employment support of £80 million and on-site clean-up costs running into hundreds of millions of pounds, it might well be that in the long run strategic support is far better value than the cost of total closure.

Last week, the Business Secretary said that the Government would

“do everything within their power to support”

the industry, and he said to our steel communities:

“We will not abandon you now, in your time of greatest need.”—[Official Report, 20 October 2015; Vol. 600, c. 815.]

The Prime Minister had previously stated that the Government would

“do everything we can to keep steelmaking in Redcar.”—[Official Report, 16 September 2015; Vol. 599, c. 1046.]

The Government then abandoned the people of Redcar by refusing to mothball the plant and save the assets, which would have kept alive the possibility of a return to steelmaking in the future. In fact, the Minister said yesterday in evidence to the Select Committee:

“It needed that awful moment in Redcar to concentrate all political minds in Government”.

So, Redcar has been sacrificed and minds have been concentrated, and now we need to know what the Government are planning to do to safeguard the future of UK steel and what is left of our steel communities. In Redcar, Scunthorpe, Clydebridge, Dalzell and Rotherham, those facing uncertainty across the midlands and Wales—men and women who have spent years developing highly specialised skills but who now have to find alternative employment in local economies shattered by steel plant closures—are waiting to see how the Government intend to deliver on their warm words.

--- Later in debate ---

[Stephen Crabb]

Forgive me for saying so, but the hon. Gentleman makes a slightly confused point. The investment going into the rail industry is creating opportunities, now and in the future—huge opportunities for the UK steel industry. The Government are determined to help the UK steel industry take advantage of those investment opportunities.

[Mr Kevan Jones]

Will the right hon. Gentleman give way on that last point?

[Stephen Crabb]

I will take an intervention later.

We are providing support for those communities and families who have been affected by recent announcements. In Redcar, we have outlined a support package worth up to £80 million. We are working with the local taskforce we have established to develop proposals to support the individuals, the local economy and the supply chain. It is worth making the point that this is not a Whitehall, top-down solution; our commitment is to work with local partners to develop the right solution for those workers, their families and the communities. In Scunthorpe, we have set up a local taskforce to look at what needs to be done to support those affected and the local economy. Funding of up to £9 million has been provided to the Scunthorpe taskforce—

[Mr Kevan Jones]

On a point of order, Madam Deputy Speaker. I thought we were having a debate on steel today, but what we have is a Minister just reading out a civil service brief to the House. It is an absolute insult that he will not take any interventions. I know that BIS is not his own Department, so he might not understand the subject but surely the Government should have sent somebody who knows something about the subject rather than someone who is simply reading out what the civil service has given him.

[Madam Deputy Speaker (Natascha Engel)]

I think the hon. Member has put his point on the record. Let the Secretary of State continue.

--- Later in debate ---

[Stephen Crabb]

I have no idea what comments the hon. Gentleman is referring to, but I do know that the noble Lord whom he mentioned has a track record of regeneration, winning support for UK industries, selling UK plc around the world and driving up growth in some of the most deprived parts of the UK to which not a single Labour Member could aspire.

All energy-intensive industries will benefit from the compensation at the earliest opportunity, and we are working with the Commission to gain approval quickly for proposals to provide additional relief for the impact of indirect low-carbon energy policy costs. The Business Secretary spoke to the Commissioner last week, and, as I said, he is in Brussels again today to make the need for urgency clear to our colleagues there. Once they are in place, these measures will save energy-intensive industries such as the steel industry hundreds of millions of pounds over the next five years.

Thirdly, we are determined to drive up the number of public contracts won by UK steel manufacturers and their partners through fair and open competition. In the last Parliament, we successfully renegotiated EU procurement rules to allow wider social and economic considerations to be taken into account, and we were the first country to put those new rules into action in February 2015.

We have identified more than 500 infrastructure projects and programmes, valued at over £400 billion and listed in National Infrastructure Pipeline, to help the industry to plan for and win contracts. Those contracts include Crossrail, which we are building with more than 50,000 tonnes of British steel, and HMS Queen Elizabeth, for which Tata provided 40,000 tonnes. We are currently embarking on the biggest programme of investment in our railways since Victorian times. Network Rail’s £38 billion, five-year investment and replacement programme includes demand for British steel worth billions of pounds, and Network Rail sources 95% of its steel from the UK.

[Mr Kevan Jones]

Will the Secretary of State give way?

[Stephen Crabb]

I will give way one last time, because I know that the hon. Gentleman likes talking about these issues.

[Mr Jones]

I thank the Secretary of State for finally giving way. The Department for Business, Innovation and Skills is sponsoring a £200 million contract for a new polar research vessel. I know that his Department is not involved, but can he guarantee that the ship, which is to be built in Birkenhead, will be produced with British steel?

[Stephen Crabb]

As I think the hon. Gentleman knows, I have had no sight of the details of that issue, but I shall try to find an answer for him by the end of the debate.

The steel procurement working group chaired by my right hon. Friend the Minister for the Cabinet Office met representatives of UK Steel last week to work out what steps need to be taken to ensure that Government projects use as much British steel as possible, and that includes considering the feasibility of more central procurement.

On 16 October, we hosted a summit with the key players from the UK steel industry to discuss where more progress could be made. The summit, which brought together industry leaders, trade unions, Members of Parliament and senior figures from the Government, created a framework for action that will help us to support steelworkers now and in the future. Progress needs to be made quickly, but we also need to find the right solutions rather than just rushing into action.

--- Later in debate ---

[Hannah Bardell]

No, as many Members wish to speak in the debate.

European-produced steel is unable to compete with such alternatives. As an illustration, according to recent data from the Steel Index, European-produced domestic hot-rolled coil at €415 a tonne is at a €53 premium compared with export prices from China. The presence of excess Chinese steel in European markets requires urgent redress, and I welcome the attention paid by the European Commission to the issue over the past year. There is some evidence that the anti-dumping duties are having some success, and there may well be a case for further action. I urge the Government to participate fully with our European partners in co-ordinating what that further action might be. However, in this endeavour I would also encourage the Government to consider carefully the impact of further anti-dumping duties on the global price competitiveness of European-produced steel.

I was pleased to note that the Secretary of State for Business, Innovation and Skills has belatedly recognised the importance of working with European partners to address the issues of dumping and overcapacity. Today’s press release from his Department triumphantly announces:

“Business Secretary to put steel top of Brussels agenda.”

While I would not wish to rain on the Secretary of State’s parade, I am sure that when he arrives in Brussels he will find the EU Commissioners quite well-versed, given that they have been taking action on these issues for over nine months. I had also hoped, given the impact on the Scottish steel industry, that the Secretary of State might accede to the request from the Scottish Government to be represented at the discussions in Europe today, and I am disappointed that the Scottish Government have once again been frozen out of fighting Scotland’s corner.

[Mr Kevan Jones]

On a point of order, Madam Deputy Speaker. I note that the Secretary of State has now left the Chamber. I might be an old-fashioned fuddy-duddy, but I thought there was a convention that a speaker should stay for at least the next two contributions before leaving the Chamber.

[Madam Deputy Speaker (Natascha Engel)]

The hon. Gentleman is absolutely right, but the Secretary of State has just told me that he has popped out to do some media and is coming straight back again. [Interruption.] As I said, the hon. Gentleman is correct, but the Secretary of State approached the Chair on this, and I said it was fine, and there is a Minister listening. At the end of the day, it is the Secretary of State’s choice.

[Mr Jones]

Further to that point of order, Madam Deputy Speaker. Is it now convention that a—

[Madam Deputy Speaker]

Order. I think we have dealt with this. I call Hannah Bardell.