Andy McDonald
Main Page: Andy McDonald (Labour - Middlesbrough)UK Steel Industry
Andy McDonald Excerpts
Sajid Javid
The hon. Lady has made a very important point: at the end of the day, it is about work. Training can lead to work, as can retraining, so it is important to invest in it. I know that, to the people of Redcar, this seems like a drop in the ocean. When a community is built around a single industry, the death of that industry takes away more than just the jobs. I do not want to see any other steelmaking community suffer the same fate, and that is why the Government have been taking real action to support the industry.
Andy McDonald (Middlesbrough) (Lab)
Does the Secretary of State begin to appreciate how this flows into the community? A medical centre on Teesside that I visited recently lost two nurses, who had to give up their bursary-funded training programmes because their husbands lost their jobs at SSI. The consequences and the ripples spread right out. It is not 2,200 people who have lost their jobs; it is up to 9,000 people, and the Secretary of State should understand that.
Sajid Javid
The hon. Gentleman is absolutely right: there can be a devastating effect on the community that goes way beyond the actual job losses at SSI. That is why we must do everything, together, to prevent the same thing from happening to any other community, and we must support the supply chain, because, as he says, there is a ripple effect throughout the community on many, many businesses.
Stephen Kinnock
I fear that the Secretary of State has misunderstood me. I am simply saying that it is very important to be on the telephone to the customer base. [Interruption.] We on the Opposition Benches and the steelworkers of this country would like a little bit more detail. [Interruption.] Ministers must forgive us for being sceptical about what they are doing or for thinking that there may be a lack of action.
The Secretary of State talked about co-investment yesterday. Although I welcome the fact that he has belatedly converted to the fact that the Government and industry can work in partnership, I am not entirely sure what co-investment means in his terms. I agree with him that nationalisation is not a long-term solution, but what customers need to know is that, come what may, they will still be able to purchase strip products from the Tata sites. Such security can be offered only if the Government commit to keep all options on the table. Can the Secretary of State make such an assurance to the House?
The men and women working in steel and connected industries across this country are among the most highly skilled and effective people in Britain. The Port Talbot workers are already turning the business around, with improved productivity leading to tangible improvements in business and financial performance. Their skill and dedication is matched by that of Roy Rickhuss, the general secretary of Community, who was even praised by the Secretary of State yesterday.
The surprise announcement that we really needed yesterday was not that of a Conservative praising a trade union leader, but that of the Government announcing an end to their laissez-faire attitude. What we needed from the Government was a list of all the discussions that they have had with the customer base, but what we got was yet more prevarication and procrastination. What we needed from the Government was the announcement that all options were on the table, but what we got was ambiguity. What we needed from the Government was the announcement that they would put down their pom-poms and give up their role as China’s chief cheerleader in Europe; that they would end their championing of market economy status for China; and that they would end their campaign against trade defence reform, but what we got was more of the same.
Yesterday, the Secretary of State only confirmed something that we already knew—that the Government’s approach has been characterised by a dangerous combination of indifference, incompetence and a rolling out of the red carpet for Beijing.
Andy McDonald
Was my hon. Friend as surprised as I was to hear that, when the Chancellor went to China, he invited it to take part in the HS2 project and to bid for the steel? That would mean having Chinese steel in one of our major infrastructure projects.
Stephen Kinnock
I was not surprised. Let me remind the House that 80% of the Chinese steel sector is state owned. On what planet can that be considered a market economy? I leave that to the House to decide.
The Secretary of State’s claims that he has been working on these things for months simply do not stack up. Yesterday, both in this House and at the APPG meeting, he claimed to have been aware of Tata’s decision to sell before it was publicly announced. If that was the case and if he really knew what was coming, why on earth was he on the other side of the world when the board meeting was taking place? Why was he caught so unaware? If he really was in the know as he claims to have been, why did he have to rush back to the UK in a mad panic?
The Secretary of State also boasted yesterday that it was his actions and his actions alone that prevented Tata from closing rather than selling Port Talbot and the rest of its strip products division. I must admit that my jaw hit the floor when I heard that claim. I was out in Mumbai. I was there for the board meeting with Roy Rickhuss and Community. The Secretary of State was not. Tata has expressed deep disappointment and frustration with the lack of support that it has received from this Government. We have seen delayed action on energy compensation, with many companies still waiting to receive their money, and weasel words on procurement from a Government who got the steel for the latest set of Ministry of Defence frigates from Sweden. Above all, Tata saw a Government who refused to support the steel sector in tackling Chinese dumping by opposing trade defence reforms, while championing market economy status for China. Therefore, this supposedly pro-business Government's influence on Tata is very limited. What really made the difference was Community’s high profile “Save our Steel” campaign, and the fact that Labour MPs have raised the issue of steel on more than 200 separate occasions since the general election.
The clock is ticking. Tata has said that it will give the sale “all due time”. Yesterday’s news about Scunthorpe took almost nine months, and it is still not fully complete. The deal on Port Talbot and the rest of Tata’s strip operations may also take time. Let us therefore hope that today’s debate marks a step change in attitude and action by the Government. Let us hope that they work proactively to protect the entirety of the order book and that they save the future of the heavy end in Port Talbot,
Mr Iain Wright (Hartlepool) (Lab)
It is an absolute pleasure to follow my colleague on the Select Committee on Business, Innovation and Skills. I do not agree with much of what he said, but the rigour of his analysis, both in his speech and in his work on the Committee, makes the Committee much sharper in what it does, so I commend him for that.
I welcome the emergency debate, because steel industry is facing a real emergency. It has faced it for some time. The Committee found, going back 40 years, that successive Governments failed to value manufacturing and domestic steelmaking capability as the foundations of an innovative economy. Other countries—and this is in reference to an intervention from the hon. Member for Warrington South (David Mowat)—value their domestic steel industry more than we do, which makes them more resilient to the perfect storm of over-production and low steel prices affecting global steel markets.
I want to put it on the record that the challenges facing all steel manufacturers around the world are vast. China produces more steel than all other steel manufacturing nations put together. In two years China has produced more steel than we, the inventors of modern steelmaking, have produced since the start of the industrial revolution, so even if the Government were doing all they could, those challenges would remain vast.
The Government could do more, because Britain does not face a level playing field in respect of steel production. One contributing factor is the high pound. I know that the Government will not do anything to affect that, but they can intervene directly on uncompetitive energy costs and business rates, which put British-based steel manufacturers at a disadvantage.
In December we on the Business, Innovation and Skills Committee published our report on the Government response to the steel crisis. That was prompted by big turbulence, particularly the closure of SSI in Redcar in early October. It revealed the shocking absence of an effective early-warning system in Whitehall designed to detect and address mounting problems in the industry. Industry had been crying out for some time, with five asks concerning procurement, business rates and energy costs, but the Government had been deaf to such pleas. Had they been alert, they would not have had to resort to crisis management and preside over the tragic hard closure of an integrated steel facility, the second most efficient blast furnace anywhere in Europe, and the loss forever to the steel industry of jobs and skills.
The Select Committee’s report found that the Government recognised the vital importance of the steel industry, but the increased activity had not yet translated into a measurable impact on those in the industry and the communities that they sustain. Five months on from the closure of SSI, with other losses such as Caparo, and with the decision last month by Tata to sell its UK steel operations, it is difficult to avoid the conclusion that lessons have not been learned and that increased activity has not resulted in positive outcomes.
Andy McDonald
My hon. Friend talks about the absence of an early-warning system. In his capacity as Chair of the BIS Committee, does he have any concerns that there is insufficient capacity in the Department to respond to challenges as they emerge on world markets?
Mr Wright
My hon. Friend makes an important point. The Department for Business, Innovation and Skills should be looking out for the British economy, making sure that it is the Department for future economic growth. It needs the civil service capacity to do that, and the proposal for it to lose 30% to 40% of its headcount will have enormous consequences for those early-warning systems and for the expertise and knowledge of the steel industry and other key sectors that are needed to ensure that Britain can thrive.
Today and yesterday in his statement, the Secretary of State stated that he was aware that Tata was planning to hard close its steel operations in Port Talbot and elsewhere, but that he prevented that from happening. He was fully aware of the enormity of the crisis, yet he still flew to Australia rather than Mumbai. The evidence surely suggests that he was left blindsided by Tata’s decision, which again demonstrates that no effective early-warning systems were in place. The Secretary of State should have gone out with Roy Rickhuss and with my hon. Friend the Member for Aberavon (Stephen Kinnock) to the Tata board meeting to bat for British steelmaking. The fact that he subsequently went to Mumbai, days after that key board meeting, shows that he knew he had made an earlier error.
The contrast must be made with the events of 2012, when Vince Cable as Business Secretary went to New York to persuade General Motors to make a long-term commitment to the UK, despite overcapacity and loss making in car-manufacturing operations in Europe. As a result of close partnership between the Government of the day, trade unions and local management, GM closed a plant in Germany and committed to build the new Vauxhall Astra at its Ellesmere Port facility. Given the great industrial relations in steel, fantastic trade unions, exceptional steelworkers and committed local management, why cannot this model be adopted for the steel industry?
We must look to the future and ensure that we have a sustainable steel industry. I have mentioned the existential threat to British steelmaking, but it is important to recognise that steel should be seen not as an obsolete industry, but as one whose future is essential to much of British manufacturing. We should be honest about the challenges, but we should not talk the industry down, which would further hasten the signing of its death warrant. We all have a responsibility to ensure that customers do not take flight.
The Government can help significantly with that. They have brought forward welcome changes to procurement rules that should favour British-made steel and its products during the awarding of public contracts. Something similar was announced in October following the steel summit, but we have no tangible evidence in the form of new contracts flowing to British plants and mills. Not a single pound of value has been seen. I asked the Secretary of State yesterday after his statement how greater and urgent collaboration was taking place between the Government, the Steel Council and the strategic sector councils such as the Automotive Council, the Aerospace Growth Partnership and the Offshore Wind Industry Council. Will the Minister provide further clarity about that?
Steel plays a major part in the infrastructure of the country. On 23 March, six days before the Mumbai meeting, the Government published the national infrastructure delivery plan. It contains one reference to steel. Will the Government commit to talking to the Cabinet Office to make sure that more can be done? This is incredibly important for my constituency in respect of the steel pipe mills and for the future of British manufacturing. It is important that we move from warm words to tangible action to safeguard British steel.
Andy McDonald (Middlesbrough) (Lab)
I am grateful to my hon. Friend the Member for Wallasey (Ms Eagle) for securing this hugely important debate.
We on Teesside are still reeling from the Government standing by and allowing steelmaking to die at the SSI plant at Redcar. People have very long memories, and it is a shame that it has taken another six months to discover the concept of co-investment, because that has come a little bit late. However, I very much welcome the securing of the long products division, and I congratulate the unions on their initiative in progressing the discussions to such a successful conclusion.
This is the most bizarre of circumstances: we are fearing the collapse of steel production in the UK, but we have the most superb industry, with a brilliantly skilled workforce and an excellent industrial relations history. It is therefore essential that we send out the message that we have a steel industry that is very much worth fighting for. We need to instil confidence in steel customers and suppliers alike that our steel operations are very much open for business. Steel has a bright future if we can get through these next few months.
On development, I am grateful to the mightily impressive Chris McDonald of the Materials Processing Institute for pointing this out:
“Two-thirds of the steels in use today were not even invented 15 years ago, and steel remains a vital ‘economic enabler’ for UK economic growth without which our successful high-value manufacturing sector simply could not exist.”
The automotive, aerospace, defence, nuclear and rail sectors all need the development of new steels in the pursuit of ever improving productivity, and our leading companies undoubtedly benefit from research partnerships with domestic steel producers. He went on:
“If the steel industry were to disappear altogether from the UK, reliance on overseas producers would not only mean the loss of thousands of jobs, but also slow the pace of development and risk the offshoring of the whole manufacturing supply chain”.
We should therefore grasp the opportunities presented by Tata Steel’s sale offering of its assets in the UK.
The debate is about more than just Port Talbot, but that is vital. There is an overwhelmingly strong case for the continuation of steelmaking at Port Talbot, with its advanced steelmaking equipment, its experienced workforce and its capability of making world-leading, high-quality steel for the most demanding applications. Labour Members are in no doubt that the plant can not only compete, but have a highly profitable future. In addition, there is a huge opportunity for new mini-mill operations based around electric arc furnaces, utilising 100% recycled raw materials and offering a step change improvement in carbon emissions.
I plead with Ministers to include all aspects of the future of UK steel in their thinking: the exploitation of, and commitment to, innovation and research and development will undoubtedly pay rich dividends. There is a research and development proposal on the table from the MPI, TWI Ltd and the Institute of Materials, Minerals and Mining. The proposal will leverage recent and secured future investments, which have been used to upgrade materials, research and support facilities in Rotherham, Port Talbot and Cambridge, as well as on the two sites in Tees valley. I urge Ministers to look closely at that proposal. The automotive industry has been turned round to become an enormous success, and we can do the same with the steel industry.
The timescale is crucial, but it is ridiculously tight. The kindest thing to say is that the seller is incredibly ambitious to think that such a process can be undertaken in such a short space of time. Crucially, in the final analysis, the state will indeed step in. Call it temporary nationalisation, public sector stewardship or whatever we like, but let the customers, suppliers and workers know that the UK steel industry will endure, and it will not only endure but thrive.
Anna Turley (Redcar) (Lab/Co-op)
Yesterday, the Secretary of State pledged his commitment to the steel industry, which I welcome, but I would like him to spell out exactly why his Government are now willing to consider co-investment with a potential buyer for Port Talbot, when they ruled out anything like that for Redcar—at the time because they said that state-aid rules prevented their supporting SSI, and after SSI was liquidated because they refused to put any British taxpayer money into the Thai banks that owned the site. Why were the Thai banks not suitable for co-investment? It could have bought us time for a sale or enabled the mothballing of the blast furnace. I would like the Government to give us a full explanation of that decision.
In the weeks prior to closure, SSI asked the Government for a loan to enable it to restructure and keep the plant going. It was refused. I sat down with Ministers and potential investors—a company willing to run the coke ovens and run, or at least mothball, the blast furnace while a buyer was found—who did not want a single penny of Government money, but the Minister said it could not be done. What has changed? Does she now regret not listening to the people of Teesside, the unions and the companies we presented to them in order to keep steelmaking alive on Teesside? The cost of hard closure has been far greater than that of intervention would have been. I want to say something about that cost in the time available.
First, on the local economic cost, 2,200 direct jobs were lost overnight at SSI and over 900 further jobs were lost in the immediate supply chain, from those who provided the parts and maintenance to the companies that provided the gas or loaded the slab at the ports to those who cleaned the overalls and fed the workforce. Plus, there is no way of measuring the knock-on impact on local shops, hairdressers, builders, nurses—as my hon. Friend the Member for Middlesbrough (Andy McDonald) mentioned—and childminders. We know they are all feeling the pain. Unemployment in my constituency has jumped by 16.2%. We now have the tenth-highest unemployment rate in the country. The steelworks were the foundation industry for many businesses large and small across Teesside. For 175 years, that industry powered the local economy, providing jobs and security for local people and a source of immense pride, as our steel built the cities of the world.
Secondly, I want to talk about the cost to the Exchequer and the state. It is currently understood that the Government are paying over £200,000 a week to maintain the site in its unrecoverable coma status. Recovery of the land for future use is expected to cost the state well over £1 billion. As for the British steel industry itself, we have lost Europe’s second-largest blast furnace and coke ovens, in which millions of pounds had been invested and which were in very good shape.
Andy McDonald
Does my hon. Friend agree that trying to land a bill of £1.1 billion on the Teesside communities for the remediation of the site is totally unacceptable? I know that the Minister is ignoring it, but it will be a huge issue for Teesside if it is landed with that bill.
Anna Turley
My hon. Friend is absolutely right. I want a further commitment from the Government that they will maintain their support for the site as it stands, meet that cost and enable local people, businesses and representatives to decide the future of the site and how it can contribute to our local economy.
We have lost our blast furnace and coke ovens, in which millions of pounds had been invested—expensive national assets belonging to the British steel industry now laid to waste. We can add to that a loss to the Exchequer of the tax intake from those 3,000 workers; the £50 million—and it is £50 million, not £80 million—paid for retraining; and the further £30 million for redundancies and other costs. We must bear it in mind that the majority of workers are still awaiting payment of their protective award, on which I would be grateful for an update from the Minister. Finally, there is the loss to Redcar and Cleveland Council, which has already suffered a £90 million loss after six years of Tory austerity, of £10 million a year in business rates from SSI alone.
Thirdly and most importantly, I want to speak about the human cost. Six hundred workers are back in work or full-time training, according to Department for Work and Pensions figures. I pay tribute to them, my taskforce colleagues and all those in the jobcentres and colleges who have worked hard to achieve that, but 600 of over 3,000 workers six months after closure still leaves us with a lot of work to do. What about the thousands of others? They are signing on, many for the first time in their lives, and many are approaching the six-month cut-off point for contribution-based jobseeker’s allowance. Those with a partner with an income of more than £114 a week will soon lose their JSA entirely.
People are moving out of homes, cars are being given up and many are reliant on hardship funds to pay the bills. One worker can no longer afford to keep his rented house to have his children stay overnight because of the bedroom tax. He is having to be rehoused in a one-bedroom place and cannot have his children to stay. The effect on family relationships has been huge. There has been a widespread loss of identity, comradeship and pride in a skilled trade. Redcar and Cleveland Mind has seen a 91% increase in mental health referrals in the last year, and is doing a fantastic job, but many of my constituents are under the radar. One has not even left the house since he lost his job last September. Families have been destroyed and lives shattered. Our town has been through a tragedy. The financial and human cost of inaction is far higher than that of intervention would have been. I say to the Government: you let us down last year, but please do not let down any other steel town in the UK.