UK Steel Industry

Alex Cunningham Excerpts

Thursday 17th September 2015 Commons Chamber

[Andrew Percy (Brigg and Goole) (Con)]

It is a pleasure to follow the hon. Member for Redcar (Anna Turley) who made a passionate speech. She will clearly be a doughty champion for her constituents, and I agree with a lot of what she had to say, although not with her comments about our membership of the European Union. In defence of the Minister for the northern powerhouse, we know how busy Ministers are, and I thought it was an unnecessary shot—[Interruption.] If Labour Members are going to make a cheap shot, they should at least be prepared for somebody to counter it in a quiet—[Interruption.] I thought we were meant to be being more respectful. Labour Members should take lessons from their leader about not shouting back and forth. Conservative Members are all very delighted about the Labour leader.

Apart from the things we disagree on, the hon. Lady made an excellent speech. I agreed with a lot of what she said—indeed, I will repeat some of it. That is no bad thing, because if something is worth saying once, it is worth saying many times, especially since the Minister for Small Business, Industry and Enterprise is present. I welcome her to the role. In previous discussions she has already given us confidence through her interest in this issue, and I know that she feels strongly about this sector of our economy and is keen to assist. I hope that that will follow through with actions, as it already has done in some respects.

This is an important issue for me and for my neighbour and friend, the hon. Member for Scunthorpe (Nic Dakin), with whom I share the Scunthorpe steelworks. The constituency boundary goes through the middle of those steelworks, although he has all the exciting, sexy plant stuff and I have a lot of the land—[Interruption.] I am not saying that he is exciting and sexy. It is a massive issue for our area, and a big employer across my constituency and Scunthorpe, and the constituency of my hon. Friend the Member for Cleethorpes (Martin Vickers).

Scunthorpe is a steel town, which we are proud of, and North Lincolnshire is a steel county. It is a massive part of the local economy, and 4,000 people are employed directly at the steelworks in Scunny, and another 4,000 to 8,000 in the supply chain across the area. This is a really big deal for us. It is the centre of our local economy and we must do everything to support it.

I apologise for speaking ahead of the hon. Member for Scunthorpe, because he will probably repeat some of the same facts, but it is important to put it on record that Scunthorpe produces 3.2 million tonnes of steel per year as semi-finished slabs, blooms and billets, as well as finished products such as plate, sections, rail and wire rod. We are grateful that the important Network Rail contract was confirmed a year or two ago. It has a fantastic workforce who are proud to work in the steel industry, particularly on the Scunthorpe site.

A lot of my constituents who work in the steel industry have contacted me in recent weeks and months because they are concerned and worried about what the future holds. As the hon. Member for Redcar said in her fine speech, the crisis in the United Kingdom steel industry is causing a lot of concern. In our area that was added to by some of the comments made by the Klesch group, which was considering purchasing part of the business. Unfortunately, when they pulled out they said a few choice words about industrial policy and the Government. I do not think that was helpful or necessarily all that informed, but it has helped to spread more concern in our area.

[Alex Cunningham (Stockton North) (Lab)]

It is great to hear a Conservative Member speak so passionately about the steel industry, and it was a large part of my life when I was a newspaper reporter. Does the hon. Gentleman support bringing forward the compensation scheme now rather than waiting until April next year?

[Andrew Percy]

I agree with the hon. Gentleman. My hon. Friend the Member for Cleethorpes and I were two Conservative Members who voted against the imposition of the carbon floor price because of the impact that it would have not just on steel but on petrochemicals, which are massively important to North Lincolnshire and east Yorkshire. We would like the compensation scheme to be brought forward, as I planned to say later in my speech.

As the hon. Member for Redcar said, the nature of the steel industry is changing, and she gave a figure for how much steel we now import, compared with in the past. The figures that I was provided with state that 90% of steel consumed in the UK in the ’70s was from domestic production, but that share is now 20%. That unfortunate decline has taken place under successive Governments over the past few decades. The UK steel industry has had to become more export focused, which is part of the problem and a challenge for Scunthorpe. The hon. Member for Scunthorpe, my hon. Friend the Member for Cleethorpes and I, together with our council leader who will shortly enter the other place, met a couple of weeks ago. We were told once again that although UK demand appeared to be picking up and doing well, the concern for Scunthorpe is the weakness in the European market, as well as other issues that I shall mention. That focus on export is a major weakness at present.

As the hon. Member for Redcar said, the sector continues to suffer from an economic crisis. The service sector-led economic recovery has left steel-consuming sectors such as construction as much as 10% below their 2007 levels. The recovery so far has been less steel-intensive than we might have hoped. In the UK, demand is 75% of pre-recession levels. Further challenges, which the hon. Lady outlined, come from Chinese dumping and currency issues. Those factors, as she accepted, are outside the control of this or any Government in Europe. The current strength of the pound is another issue to which the hon. Lady referred.

Tata has made three asks of the Government, which the hon. Lady mentioned. It is almost as if we co-ordinated our contributions. One of Tata’s requests, as the hon. Member for Middlesbrough (Andy McDonald) said in an intervention, relates to the energy-intensive industries compensation scheme. I do not need to go into detail, having said what I have said already, but if that compensation mechanism were brought forward, that would be most welcome. Energy prices, as we know, are 50% higher in the UK than for the UK steel industry’s main competitor in Germany. Companies in continental Europe are not facing the same cost pressures, nor are they awaiting a decision on state aid rules. So there are steps that can be taken by the Government to improve the situation, and I know that the Minister has heard these.