UK Steel Industry

Alex Cunningham Excerpts

Monday 29th February 2016 Commons Chamber

[Sajid Javid]

That is exactly what I meant. As I speak further, I hope that will become clearer.

[Alex Cunningham (Stockton North) (Lab)]

On the basis of what the Secretary of State has said, can we expect increased tariffs on Chinese steel in the near future?

[Sajid Javid]

We believe that under the existing rules the EU can go further, and it must.

[Alex Cunningham]

Can we expect it?

[Sajid Javid]

I will come to that in a moment. Under the lesser duty rule, if the dumping margin is 50%, but a duty of 30% is sufficient to remove the harm to industry from that dumping, then the duty is set at 30%. The tariffs recently imposed on Chinese rebar were indeed too low. I am continuing to raise the issue in my regular discussions with Brussels, as I did only last week when I met the EU Trade Commissioner in London.

--- Later in debate ---

[Marion Fellows (Motherwell and Wishaw) (SNP)]

When I was preparing for today’s debate, I wondered how I could speak on this or similar motions without repetition, deviation or hesitation, which are the famous rules of Radio 4’s “Just a Minute” programme. I will break all those rules, because I will use repetition and—not too much—deviation, while the only hesitation will be when I struggle to find words to explain what the Government say they are doing to help save the UK steel industry.

Since I attended the UK steel summit in Rotherham on 16 October, along with many other Members currently in the Chamber, in excess of 6,000 jobs have been lost across the UK. Job losses at Dalzell plate mill in my constituency and at Clydebridge in the constituency of my hon. Friend the Member for Rutherglen and Hamilton West (Margaret Ferrier) are included in that number. I will come on to describe how job losses and effective Government action differ across the UK.

Community the union has called for the UK Government to take action now, and has asked them

“to do everything in their power to safeguard the future of this vital strategic, foundation industry of fundamental importance to UK manufacturing and industrial supply chains.”

Along with UK Steel and Eurofer, Community has challenged the Government to come out positively for scrapping the lesser duty rule, which inhibits the rate of duty that can be imposed on Chinese dumped steel. It is hypocritical in the extreme for this Government to vote for anti-dumping measures on the one hand and to fight to retain the lesser duty rule on the other.

The Government support market economy status for the Chinese. Where is the sense in that? It is another example of doublespeak. Yes, the Prime Minister spoke to the Chinese about the dumping of steel, but it seems to have been a rather one-sided conversation. We have no proof that the Chinese even listened, as there has been no diminution in the problem. It is no secret that the Government need Chinese money to build nuclear power stations. Is that uppermost in their mind? It is time they put UK manufacturing interests first. The Chancellor has already trailed that further austerity is coming down the track, and where did he choose to make that announcement? Shanghai.

When pushed, the Government have pointed to the five asks put forward at the UK steel summit. They have made progress on some of them—they have managed to get agreement from Europe to implement the energy-intensive industries package ahead of April 2016, but that is of very limited help during the current financial year. As far as anti-dumping measures are concerned, I have already explained that the Government are in two minds about that, according to industry leaders. There has been no movement on competitive business rates for larger manufacturers and, given the Chancellor’s announcement about further austerity measures, it is difficult to see how and when that will happen. There has been movement on gold-plating EU regulations, but that has so far had minimal effect. Progress has been made on procurement guidelines, but that will affect future infrastructure projects and is not helping the UK steel industry at present. We are in dire times.

[Alex Cunningham]

I was brought up at Harthill, near Ravenscraig, in Lanarkshire, and I have seen the scars that still exist in those communities 20-odd years after the closure. Does the hon. Lady agree that we need to take specific action if we are to prevent such scars in other communities?

[Marion Fellows]

I absolutely agree. The former Ravenscraig site is in the centre of my constituency, and I go through it almost weekly. It is still scarred, and it is still a monument to what happens when steel businesses close down.

Each time there have been job losses in the steel industry, the Government have moved in to help. The help has been to find people other employment; there have been few timely direct measures to help keep steel plants open. The UK Government have been challenged numerous times to come up with a UK manufacturing strategy and to employ joined-up thinking to help foundation industries, including steel. That is what other European countries do.

The comparison between what the Scottish Government and the UK Government have done is stark. Within days of the announcement of the mothballing of the Scottish plants, the Scottish Government set up a Scottish steel taskforce, with a remit to find a buyer for the plants and to do everything possible to retrain and upskill the workforce to make sure they would be ready when a buyer was found. Skills Development Scotland has created the steel industry advanced manufacturing upskilling programme to provide an incentive to retain key and essential staff. That will enable a knowledgeable and skilled team to be assembled quickly when an alternative operator is found.

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

I want to concentrate my remarks on three areas: the critical role that steelmaking has in our economy; the considerable burden this energy-intensive industry faces; and the Government’s ongoing response to the crisis on Teesside, where thousands of workers lost their jobs with the demise of SSI and other plants. As others have said, steel is an important foundation industry, supplying materials to multiple strategic construction and manufacturing supply chains. Taken together, these industries represent 20% of those employed in the UK’s manufacturing sector and generate gross value added of £24.6 billion.

UK Steel reports that, despite its problems, the sector makes a £9.5 billion contribution to the UK economy, with an export value of £4.9 billion. It generates £90,000 of added value for every steelworker. It produces hundreds of high-skilled, high-value-added apprentices, vocational trainees and graduates. It is well linked to the UK’s innovation infrastructure, through partnerships with leading universities, participation in catapults and our own research and development investment, and all despite the burden it faces. I just wonder for how much longer that will be the case.

UK business rates are up to 10 times higher than those of many of our European competitors, such as France and Germany. Paul Turner-Mitchell, a business rates expert, says that property taxes in Britain are the highest, as a proportion of gross domestic product and total taxation, of all 36 OECD countries. A Select Committee on Business, Innovation and Skills report in December recommended that the Government reform business rates as they apply to manufacturing at the earliest possible opportunity, with priority being given to the removal of disincentives to invest in plant and machinery. Doing so would not need EU approval and would provide a more even playing field for UK steel producers. Exempting plant and machinery from business rates valuation would symbolise a commitment to rebalancing the economy, enhancing the UK’s attractiveness to inward investment in manufacturing and improving industry’s productivity, efficiency and competitiveness. Business rates are just one of the extra burdens suffered by our steel industry, as is the Government’s inability to act in Europe to halt the dumping of Chinese steel. In fact, our Government have helped to ensure that there is no impediment placed in the way of far east producers. Others have gone into that in detail and also mentioned the British Government’s failure to build British ships with British steel.

I want to focus a little on energy costs and the absence of a level playing field for energy-intensive industries. The damaging effects of energy taxes levied on the business in the UK, leading to UK energy costs being twice as high as those among EU peers, are well understood. This comes on top of regulatory costs charged across the EU, such as the EU emissions trading scheme. British policy measures add 26% to the typical electricity price paid by an energy-intensive consumer in the UK, with steel a major loser. Yet we have still to see the compensation package for energy-intensive industries implemented in full, and the sector is still paying 70% of the policy costs that the full package aims to address.

The EU commission provided state-aid approval for proposals to compensate the industry in relation to the costs of the renewables obligation and feed-in tariffs in December 2015. Although we await the full implementation of the first part of the compensation scheme, there remains a second application that concerns competitors of those receiving compensation. Until that second application is approved, some companies are without access to much-needed compensation and exposed to 70% of climate change policy costs. I hope the Minister can give us an update on what is happening with that second application.

Madam Deputy Speaker, you know of the closure of the SSI plant in Redcar and the loss of other steel jobs in Teesside, many of which are from my constituency. We appreciate the limited action that the Government have taken on Teesside even if the Business, Innovation and Skills Committee report criticised the Government’s initial response, which was focused on compensating those affected rather than saying what could be done to save the plant. I recognise that we need to look to the future, so I ask the Minister what hope there is for steelmaking capacity on Teesside.

I am very aware of the hundreds of millions of pounds it will cost each year just to maintain the SSI site and keep it safe. I am also aware of the proposal from Lord Heseltine to have a mayoral development company in Tees Valley run locally by local politicians and his ambition to have the SSI site invested in that new body. He and the Minister for the northern powerhouse, the hon. Member for Stockton South (James Wharton), appear to be excited by the proposal, and the development organisation is very welcome. Many of us, including some of those same local politicians, are very concerned about what it will mean. Lord Heseltine was at pains to explain to the media, including on television, that the financial buck rests firmly with the Government both for the maintenance and the redevelopment costs of that site. Time and again, he claimed that the Government had to take responsibility. Tonight, I invite the Minister to confirm that not only will there be support for steelmaking in Teesside, but that there may even be the possibility of increased activity in the future, and that the open-ended commitment made by Lord Heseltine on behalf of the Government in relation to the SSI site, and therefore in relation to Teesside, is a commitment that she recognises and will ensure is actually fulfilled.