UK Steel Industry

Andrew Percy 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.

[Martin Vickers (Cleethorpes) (Con)]

I agree entirely with all the points my hon. Friend is making. Does he recall that when we met Tata Steel, along with the hon. Member for Scunthorpe (Nic Dakin), one of its other requests was for modest support for some work that needs to be done to determine the firm’s future? Does my hon. Friend join me in hoping that the Minister will view that request sympathetically when she replies?

[Andrew Percy]

Indeed. We have communicated that request directly to the Minister. I welcome my hon. Friend’s intervention.

Business rates were mentioned by the hon. Member for Redcar. Removing plant and machinery from business rates valuation would have a massive impact, because business rates are five to 10 times higher in the United Kingdom than in Europe. That has a significant impact on Scunthorpe especially, making up 49% of the annual rates at that site or £12 million per annum. North Lincolnshire council has looked at what it can do on business rates, particularly in respect of cash flow. Expecting a small local authority such as that to take a hit on business rates, and putting it in a position where, if it provides relief, it may not be able to provide services, is not fair to North Lincolnshire council. This is an issue on which the Government need to respond.

We had a positive meeting with Tata recently, at which the council said it would see whether payments could be made every two or three months instead of monthly, which would help with cash flow at the site. I know North Lincolnshire council is looking closely at that. When lawyers get involved, these things always become more complicated and there are state aid issues, but the council has assured me that it will do everything it can to help on the cash-flow issue. However, that does not deal with the issues arising from the business rates regime in the UK, compared with elsewhere in Europe.

[Mr Bone]

I apologise to the hon. Member for Redcar (Anna Turley). I think she slightly misheard what I said. On my hon. Friend’s point about state aid for the steel industry, should we not do what we think is right and worry about the EU consequences afterwards? We seem to put the priorities the other way around.

[Andrew Percy]

I would rather not worry about the EU at all, which is something on which my hon. Friend and I agree, although I am not sure the Minister or other Members agree. My hon. Friend is right. I was going to say something about that later. We tend to interpret rules and EU legislation very precisely; the insinuation is that other countries in Europe may be more flexible about that, so we should adopt the European approach—I do not say that very often—instead of our officialdom. I think that is the point that he was making to the hon. Lady—let us do what other countries do and worry about the consequences later.

Scunthorpe has enacted a number of waste reduction strategies in recent years, resulting in well over 90% of all residue material produced across the site being subject to internal recirculation or external recovery or recycling. That is in line with the requirements for green energy and sustainability, but the incentive is still not there for companies. Last year Tata stated that it was paying around £30 million more in green taxes than its competitors in France and Germany—a point which other Members have made and will continue to make.

Capturing more value in supply chains is something that Tata is asking of the Government. Promoting local content appears to be happening in other European countries. We have talked about this a great deal in relation to other sectors of the economy and I know that Ministers in the previous Parliament were sympathetic. We all seem to be in agreement that we need to promote more local content, but getting that local content seems to be complicated. We must do more in that respect, as other EU countries do.

I shall not say much more as I will just be repeating the comments of the hon. Lady. Many hon. Members wish to speak in the debate and I have probably spoken longer than I should have done—[Interruption.] I think the Minister is encouraging me to carry on, which has not always been the case in other discussions that I have had with her.

Many Members are present today for this important debate. A country that loses its steel industry is greatly disadvantaged. The steel industry is a fantastic part of our economy, providing high-skilled jobs. Any loss of that to our local economy would be devastating. These are relatively well-paid jobs in a region that has not done as well in the past couple of decades, sadly, and has become worse off compared to the rest of the United Kingdom under Governments of both colours. Many people are inspired to work in the industry, particularly by the apprenticeship programme, and we must do everything we can to protect it, not just for North Lincolnshire or Scunthorpe, but for the for UK. It is of strategic as well as economic importance. I concur with the hon. Lady and will no doubt concur with much of what is asked by other right hon. and hon. Members this afternoon. I urge the Minister, who is engaging positively with us on the matter, to make sure that the Government get behind not only Scunthorpe, but the steel industry across the United Kingdom.

--- Later in debate ---

[Andy McDonald]

I agree entirely. Let us move on and deal with the substantive issue rather than dwelling on that matter.

[Andrew Percy]

I am pleased that the hon. Gentleman wants to move on, and I am sorry about the involvement of those on the Front Bench in this matter, but just for the record, and in fairness to the Under-Secretary of State for Communities and Local Government, my hon. Friend the hon. Member for Stockton South (James Wharton), he has said that he is on a visit to Teesside and, in even more fairness to him, the Member who criticised him for not being present is not here any more either.

[Andy McDonald]

Let us not dwell on this. My hon. Friend the Member for Stockton North (Alex Cunningham) was here and he has made his contribution. He has done us the courtesy of doing that and he has shown his commitment, so let us have none of that. Let us move on.

Teesside steel is the reason many of us are here. There would be no town of Middlesbrough without steel. I am not going to give people a history lesson but, although Teesside might have the largest blast furnace in the UK, a few years ago we had 100 blast furnaces down on the banks of the Tees. It was like Dante’s “Inferno”. The only reason we are here is steel.

The SSI furnace is fighting for survival, and its loss would spell disaster right across the Teesside constituencies for the 2,000 people directly employed there, the 1,000 contractors and the 6,000 workers in the supply chain. If the plant were to go into administration, it would have an impact on 9,000 families, which would be devastating. For example, PD Ports at Teesport has a contract with SSI and it has seen well in excess of 7 million tonnes of steel pass through its port in just three years.

We have had debate after debate about the need for high-quality apprenticeships for our young people. Our Teesside industrialists and educationists have responded brilliantly to the challenge to ensure that we have the requisite skills coming through, but if there are no jobs for our youngsters, that will critically undermine all their endeavours. The Teesside steel industry might no longer employ the 40,000 people it employed in its heyday, but if it were to fall over, it would send a seismic shock right through the region.

The UK steel industry has faced a perfect storm in recent years with challenges coming from imports, energy costs, exchange rate pressures and a weak market. Many of the problems faced by the UK steel industry are indeed global, as the Government have been quick to point out, but it is important to note that the steel industries of some of our European counterparts are not facing the same cost pressures and are able to access state aid more readily because of alternative policy choices made by their Governments. We are here today to demand that the Government make different policy decisions so that our steelworks are not consigned to the history books and will continue to play a vital role in UK industry for years to come.

The steel industry cannot wait for state aid clearance for assistance with energy costs. The Government must feed through 100% of the energy intensive industry compensation package now. Other countries have secured clearance retrospectively and so should we. The Government often state that it is their plan to rebalance our economy so that prosperity can be shared across the regions, moving away from an over-reliance on the service sector and towards manufacturing and industry. Indeed, many Governments have said the same thing, but they have rarely delivered. If the UK steel industry is the litmus test of this Government’s rhetoric, the signs do not bode too well.

I read an article this week in the Financial Times about the Secretary of State for Business, Innovation and Skills, in which it was revealed that he had a poster of Margaret Thatcher on his wall. It was not the poster that worried me, however. I was worried by his aligning himself with her attitude towards British industry. He has said that he does not like to use the term “industrial strategy”, as it would suggest that he cared about some industries more than others. As Alastair Campbell said of Tony Blair, “We don’t do God”, we now have a Business Secretary saying, “We don’t do industrial strategy”. The Minister for Small Business, Industry and Enterprise, the right hon. Member for Broxtowe (Anna Soubry) is shaking her head—