UK Steel Industry

Debate between Stephen Doughty and Nia Griffith

Wednesday 3rd December 2014 Westminster Hall

[Stephen Doughty]

I wholeheartedly agree. My hon. Friend mentions the Community union, which has many members in my constituency and those of other Members present. It provided a helpful briefing for this debate and continues to speak out with a strong voice on these issues. Community estimates that the energy prices faced by UK steel producers can be 50% higher than those faced by our main European competitors, such as Germany. The Minister might not be aware of this, but green levies in the UK are two to three times higher than those faced by European competitors.

I firmly believe that we need a responsible and supported transition to a low-carbon economy, but it would be absurd if ill-fitting policies for this and other energy-intensive industries resulted in carbon leakage that leads to higher global carbon emissions. The Celsa plant in my constituency uses recycled steel in a carbon-efficient process, and it would be a tragedy if some of that production was lost to China, where the same carbon emissions standards and local environment standards would not be followed.

Earlier this year, the Chancellor said that manufacturing continues to play a key role in the UK’s economic recovery, but that the cost of energy acutely impacts on the international competitiveness of the sector, particularly for energy-intensive industries. I agree, as I am sure do many of my colleagues and the French and German Governments, but actions speak louder than words. Where the UK Government has failed to act robustly and urgently to level the playing field, others around the world have been taking action, including Germany and France. Unfortunately, that is leaving the UK at a disadvantage. As a close observer of what happens on the continent, the Minister might know that the French Senate recently debated finding a mechanism to fix the electricity cost for energy-intensive users at a maximum of €30 per megawatt-hour, compared with the €73.50 per megawatt-hour in the UK. That is a stark contrast.

The Minister might be aware that there has been extensive correspondence between the Department for Business, Innovation and Skills and me and other Members on these issues. The announcements in the Budget earlier this year on an energy-intensive industries compensation package were welcome, but many of the measures will have no immediate impact, which presents a serious risk.

My hon. Friend the Member for Newport East (Jessica Morden) mentioned this issue. I was deeply disappointed by the Chancellor’s answer today. I simply asked whether he was content with the decision—I had been told that the Minister for Business and Enterprise, the right hon. Member for West Suffolk (Matthew Hancock), would be responding to the debate, and I am disappointed that he is not here—that he and that Minister made not to bring forward that package. That decision is deeply disappointing to many of the steel producers in this country.

I am sure that the Minister has received many bulging red boxes full of cautious and bureaucratic advice from officials on the issue, but it is ultimately a political decision for Ministers to interpret European guidelines and decide whether there is a possibility of retrospective exemption and renewable sources support compensation. The bottom line for our steel producers is that in practical terms many of them are paying more taxes than they paid three years ago. They are finding themselves at a growing competitive disadvantage. The Minister’s cautious approach stands in stark contrast to the proactive and decisive one taken by Ministers in other EU member states. I am sincerely asking whether he and his ministerial colleagues will take another look at this crucial issue.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that it was the unilateral imposition of the carbon floor price at a particular rate that has caused the problems? The steel industry is not asking for charity; it is simply asking for a level playing field. We want the situation put right as soon as possible.

[Stephen Doughty]

I wholeheartedly agree with my hon. Friend’s points.

On another issue, the Minister here today will know that business rates are one of the few taxes that are non-cyclical and fixed at a level irrespective of economic or market conditions. As such, business rates are treated by industry as a fixed cost, which is given much greater prominence when making investment decisions. According to the industry, the fact that business rates are five to 10 times higher in the UK than in EU counterparts represents a significant comparative distortion that undermines the UK as a destination for investment.

Will the Minister say whether any consideration has been given to removing plant and machinery from the business rates valuations? What about alternative approaches for large-scale manufacturers, with a view to adopting a simplified model based on capital values rather than hypothetical rental values?

I come to foreign dumping, responsible sourcing and supply-chain access, huge issues for UK-based steel producers—and the environment is changing all the time. We have been shown some shocking statistics. I mentioned the reinforcing bar produced by Celsa in my constituency. Hopefully, the Minister has seen the data that show that imports from China now account for more than a third of overall UK market share, which is a dramatic increase in recent years; the figures for this year show an even greater increase. We also see problems with imports from Turkey.

There are also questions about traceability in the supply chain and the fact that the classification of such products often does not meet British standards. In the extreme, that has potentially serious implications for the future structural integrity of buildings or infrastructure projects in which non-compliant rebar or other steel products have been used.

The UK Certification Authority for Reinforcing Steels has been too slow and ineffective in its response to date. Quite frankly, the Government’s response has also been disappointingly slow, given that I understand that misclassification was raised at the steel contact group in October 2013 and again in June 2014.

[Stephen Doughty]

I thank my hon. Friend for those well made points; I wholeheartedly agree with them. On traceability and the quality of products used, the Government could do something right away: ensure that all Government or Government-backed projects have a robust, responsible sourcing requirement.

As I have said before, although the Government’s sector- by-sector approach is welcome, it must be dramatically accelerated. That would, without doubt, serve to stem some of the questions about safety and sustainability rightly coming from concerned people inside and outside the industry. Reports that Chinese rebar has been failing British standards tests coupled with the news that one third of rebar used on UK sites is Chinese should have red lights flashing on ministerial dashboards, not only in BIS but in other Departments.

[Nia Griffith]

Does my hon. Friend share my disappointment that Ministers, in their reply to the steel group, rather brushed aside any option to intervene in what CARES is doing? Will he reiterate to this Minister the need for them to look at that thoroughly?

Universal Credit (Wales)

Debate between Stephen Doughty and Nia Griffith

Tuesday 5th February 2013 Westminster Hall

[Stephen Doughty]

Absolutely, and I will come on to that point in due course.

It is not only those whom I have spoken to who have sincere worries about universal credit. As we have several times seen in the press, one Cabinet Minister has reportedly said in private:

“The information technology for the new system is nowhere near ready. It’s a disaster waiting to happen.”

Who knows whether such rumours are to be believed, but I understand that a number of Cabinet Ministers share that view, which is perhaps one reason for the delays.

What is the specific impact on Wales? Based on an analysis of the December impact assessment and some rough calculations, we estimate that a staggering 140,000 people across Wales might lose £1,600 a year. That is based on an estimate of the Welsh population that will be affected. I would be grateful if the Minister shared the Government’s figures and estimates about how many will be affected in Wales and how much they will lose. Will he provide a breakdown by local authority to help local authorities prepare for the impact of the changes?

Aside from the raw figures, which are shocking in themselves, I want to share the key fears that people have raised with me about the implementation of universal credit in Wales. First, there is the challenge of budgeting for many families; secondly, as my hon. Friend the Member for Newport East (Jessica Morden) mentioned, there is the digital divide; thirdly, there are power relationships within the home; and, finally, there are the risks posed to local authorities, housing associations and other registered social landlords.

First, on budgeting, the Secretary of State for Work and Pensions frequently appears to suggest that those of us who raise the issue are patronising our constituents. Rather than taking so entirely complacent an approach, I commend the work that organisations such as the citizens advice bureaux, the Cardiff and Vale credit union, housing associations—for example, Cadwyn in my constituency—are doing to support tenants by helping them to set up bank accounts, jam jar accounts and similar facilities in credit unions. I also commend the Welsh Government’s work to support those efforts.

Levels of financial literacy––let alone access to a bank account––are not, unlike this measure, universal, and we need to be realistic about the impact of the changes on many people. Rather than making huge assumptions, perhaps the Minister would tell us what risks he sees in relation to the problems in the area and what his Department is doing to assist. I can certainly tell him that many of the organisations that I have mentioned, let alone individual constituents, have experienced varying or little support from his Department, and that relates only to those who are aware of such support.

I want to touch on direct payments and the data from the direct payment pilots that the Department has conducted. A couple of days ago, “Inside Housing” published an article entitled, “Direct payment pilots report increased arrears”, by the journalist Carl Brown, which states:

“Landlords testing direct payment of benefit failed to collect 8 per cent of rent on average in the first four months of the six pilot projects.”

[Nia Griffith (Llanelli) (Lab)]

Will my hon. Friend also ask the Minister what assessment has been made of the effect on local councils of all those arrears, because they will have major cash-flow problems?

[Stephen Doughty]

Indeed, I absolutely agree with my hon. Friend’s point, which I will move on to later.

Mr Brown also stated:

“Data released today by the Department for Work and Pensions showed 6,220 tenants across the UK were paid directly in the first four months of the projects. Of these, 92 per cent of rent was collected on average overall, meaning arrears were around double the normal figure. A total of 316 tenants have been switched back to payment of benefit to the landlord.”

To give a figure that is specific to Wales, in relation to Bron Afon Community Housing and Charter Housing in Torfaen, 535 tenants were involved in the first payments and there have been 59 switchbacks so far, which is about 11%. Those figures are obviously of deep concern and they raise wider issues: there are deep worries about how universal credit will work in practice and about the support provided to people, and there are also major implications for organisations, whether they are local authorities or housing associations, that are supporting those tenants.

Secondly, on the digital divide, my colleague the Welsh Minister for Finance, Jane Hutt, has repeatedly warned that people with few or no IT skills might have difficulty applying for universal credit. In 2010, figures suggested that about a third of adults in Wales did not use the internet regularly, and recent figures from the Office for National Statistics suggest that about 20% have never used it.

Welfare Benefits Up-rating Bill

Debate between Stephen Doughty and Nia Griffith

Tuesday 8th January 2013 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

I object to the Government’s proposals to limit to 1% for the next three years any rise in income-maintenance benefits to low-income households, over 68% of which go to households in work, not households out of work. It is grossly unfair, hits the poorest hardest and will cause genuine hardship; it makes no economic sense whatsoever. Making real-terms cuts to low-income families will have a disastrous effect on local economies. People on low incomes and families who are struggling to make ends meet immediately, through necessity, spend what money they have and any increase they receive on basic essentials, putting that money back into the local economy. They have no choice about that. Low-income families have already been disproportionately badly hit because of rising food and fuel prices. Implementing these real-terms cuts will suck money out of the local economy, leading to more difficulties for local businesses, more shops on our high streets closing, and more job losses. This will particularly affect economically depressed areas where it is already hard to find another job, and more people unemployed means more people needing to claim benefits.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend makes an important point about jobs. The benefits bill is rising because of this Government’s failure on the economy and jobs. Does she agree that the Welsh Labour Government are showing the way with their Jobs Growth Wales fund, which is already ahead of target, in stark contrast to the failure of the Work programme, which has seen only two in 100 people put into work?

[Nia Griffith]

Indeed. What the Welsh Government are doing is absolute proof that we mean business in our motion and in saying that we need to create opportunities and make sure that people get back to work. The great thing about the Welsh Government’s programme is that they have been targeting private sector jobs having previously concentrated on public sector jobs. That is making a huge difference to the people who are able to take part.

The Bill will suck more money out of the economy. For example, House of Commons Library figures show that over the next three years the Government’s economic decisions will mean cuts in welfare benefits taking some £3.6 billion out of Wales. If we also add in the £2.4 billion in extra VAT that people will be paying, that amounts to a massive £7 billion coming out of the Welsh economy during this Government’s term of office. That is no way to foster economic growth.

It is a complete myth that people receive massive, generous amounts. Comparisons with actual living costs have consistently shown that what people receive is not generous to start with, but over the years there has at least been a recognition by Governments of all colours that allowances should be regularly upgraded to reflect inflation. As my right hon. Friend the Member for Rother Valley (Mr Barron) said, a decision to limit increases in the rate of income-maintenance benefits to below inflation for a sustained period is historically unprecedented. At a time when benefit allowances are down as a percentage of full-time earnings and prices of essential items are rising, this will lead to increased hardship and increased child poverty. House of Commons Library research shows that, as a result of these proposals, the real value of benefits and their value as a percentage of average full-time earnings will fall.

Much has been made by the Lib Dems of the raising of the personal tax threshold, but in reality this is a regressive measure. An analysis by Citizens Advice and the Resolution Foundation shows that the impact of capping benefits and tax credits will wipe out any gains from the increase in the personal tax allowance for those on low incomes—precisely the people it is meant to help.

I received a distressing letter recently from a woman who has been diagnosed with cancer that will require extensive surgery and follow-up treatment. She has been alarmed to discover the amount that she is expected to live on as statutory sick pay. She has worked all her life and made contributions. She has enough to cope with without having to worry about money. This Government’s Bill will make matters far worse for people such as her. To make a real-terms cut to statutory sick pay for one year, never mind three years, is an absolute disgrace.

This Bill will not help people on low incomes—in fact, it will make life extremely difficult for them—and neither will it help to get the economy going. What we really need is real growth strategy to get the economy going, and then we can talk about paying back the deficit.