Angela Eagle
Main Page: Angela Eagle (Labour - Wallasey)UK Steel Industry
Angela Eagle Excerpts
Ms Angela Eagle (Wallasey) (Lab)
I beg to move,
That this House has considered Tata Steel’s decision to sell its UK steel operations; and action the Government is taking to secure the future of the UK steel industry.
Mr Speaker, may I place on the record my thanks to you for granting this debate under Standing Order No. 24? Such debates are rare, but the situation facing the steel industry cannot be categorised as anything other than an emergency. Today’s debate provides an opportunity for the Secretary of State to come to the House with a comprehensive plan to secure the future of our vital steel industry which is hanging by the thinnest of threads. Anything less from him will be an abdication of his duty.
Yesterday, the Secretary of State said he was looking at the possibility of “co- investing” on commercial terms. I hope he will take the opportunity to explain to us in more detail exactly what this means. Call it what you like—“co-investing”, “part-nationalisation”, “temporary public stewardship” or “sheltering the assets”—it is clear that circumstances might require the Government to do this. They should spare their ideological blushes and just get on with it.
It is also important that today the Business Secretary hears directly from Members of Parliament who represent steelmaking communities. Between them, they have great expertise and knowledge that I hope will inform his response to the crisis from now on. Up until now, the Government and the Secretary of State have been found wanting. They have been behind rather than ahead of events. Their response to the biggest crisis in steelmaking for a generation has been warm words but little effective action. There has been what can only be described as an ideologically driven reluctance to get involved as the crisis has deepened. It has been a mixture of indifference and incompetence.
Simon Hoare
The First Minister of Wales has called on all parties to come together to work towards a future, rather than—for want of a better phrase—political point scoring. The hon. Lady is very passionate on this issue, as we are on the Government Benches—it is vital that we have a British steelmaking sector—but will she assure the House that she and her colleagues are taking that combined political approach between the parties to secure that future, rather than trying to drive a wedge between the parties?
Ms Eagle
We will judge the Government by their actions and their achievements rather than their words.
The complete absence of either a manufacturing strategy or an industrial strategy has hampered the Government’s ability to think strategically about what is needed, and never has it been more urgent that the Business Secretary does so. This is urgent because on 29 March Tata announced it would sell its entire steelmaking operations in the UK, leaving the future of the UK steel industry hanging by a thread and putting 40,000 jobs in communities up and down our country at imminent risk.
Mr David Anderson (Blaydon) (Lab)
As someone with a Tata presence in my constituency, I wonder whether the shadow Secretary of State shares my concern that although we knew about this on 29 March—people going to Mumbai knew it was going to happen—we have not discussed it formally until today, and yet three years ago, the Prime Minister reconvened the Chamber within two days, during an Easter recess, to talk about the death of Margaret Thatcher. What does that say about the Government’s priorities?
Ms Eagle
It is regrettable that there was not a recall of Parliament, but we are where we are, and we have this debate now, thanks to you, Mr Speaker.
It is imperative to underline the fundamental importance of this industry for our economy and our country. Steel is a foundation industry. While it might make up just 1% of total manufacturing output, that output is crucial. I believe that our world-leading automotive, aerospace and defence industries and our rail and construction sector all depend on a strong and sustainable domestic steel industry.
Our manufacturing sector is already facing tough times. The Secretary of State said yesterday in the House that manufacturing was up since 2010, but Office for National Statistics figures show a different picture. Manufacturing output in the last quarter of 2015 remained frozen at the level of five years ago, while output in January was actually lower than the year before and is still 6.4% down on the same period before the global crash.
In his 2011 Budget speech, the Chancellor espoused his vision of a Britain
“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
But he has failed to match his rhetoric with reality, because since then the manufacturing sector has actually shrunk. His much promised rebalancing of our economy has in reality failed to materialise. In this context, the challenges facing the steel industry represent an existential crisis for the UK’s manufacturing sector as a whole. I do not believe we can safely allow it to shrink further. And I for one am glad that the Government appear finally to have realised this.
Now we need action. Beyond the impact on manufacturing, the crisis in the steel industry matters for the wider economy too. Much has been said about the cost of supporting our steel industry, but far too little has been said about the costs of letting it be destroyed. Recent estimates show that its collapse would lead to additional costs to the Government of £4.6 billion through reduced tax receipts and increased benefit bills. It would also suck demand out of the economy, reducing household spending by £3 billion in the next decade. There would be secondary shocks, too, especially in the steelmaking communities up and down the country. For example, Tata is the biggest business rates payer in Rotherham, with an annual bill of £3.2 million. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) pointed out today, the loss of this revenue stream to the local authority is equivalent to a 1.8% increase in council tax there.
Ian C. Lucas (Wrexham) (Lab)
Does my hon. Friend agree that the way forward was shown by the Labour Government before the 2010 general election, when they introduced the car scrappage scheme to support our automotive sector? It was supported by all parties in the House at a time of dire threat to the sector. As a result of intervention and an intelligent industrial strategy, the automotive sector was preserved and now prospers. Is not that the model we have to follow?
Ms Eagle
My hon. Friend is absolutely right. I hope that the Secretary of State is taking note.
The loss of our steel industry would worsen our already record-breaking trade deficit, which is now the worst since 1948. The value of the goods and services we import now exceeds the value of those that we export by £32.7 billion. The loss of steel and our current exports of steel combined with the need to import far more steel would make this barely sustainable record deficit even worse.
Beyond the economic cost, there would also be an intolerable social cost. There are 15,000 jobs directly at stake in the industry and a further 25,000 jobs at stake in the wider supply chain. These are the kind of high-skill, high-paid jobs of which we need to see more. The end of steelmaking in the UK would be devastating for 40,000 workers and their communities. Some people have highlighted the potential costs of intervening to save the steel industry, but I believe the costs of letting steel fail are far greater.
Richard Fuller (Bedford) (Con)
I do not want to pre-empt what the hon. Lady may say, but will she confirm that it is the policy of Her Majesty’s Opposition that the steel industry should be nationalised, and should remain in public hands until it can successfully go back into private hands?
Ms Eagle
What needs to be done is what is necessary to preserve, restructure and ensure the survival of our steel industry for the future. That is the Government’s job. We will be as supportive as we can—I shall set out some parameters later in my speech—but this is about the Government getting their act in order. The Opposition are holding the Government to account for their actions, rather than just their words. That is what this debate is about.
Mr Clive Betts (Sheffield South East) (Lab)
On that point, we heard nothing yesterday from the Secretary of State, either at the meeting of the all-party group on steel and metal-related industries or in the Chamber, about what action the Government will take on energy costs and business rates—costs that are burdening the steel industry, and on which the Government could act, yet we have seen no sign at all that they will change their policies in these vital areas.
Ms Eagle
I hope that we will have the chance to hear about concrete action from the Government in this debate.
I was talking about the costs to the community of letting steel fail. The costs to manufacturing and the economy are high, but the costs to the workers and their communities would be much higher. We very much welcome the recent commitment from the Business Secretary to do everything he can to protect steel-making and processing in the UK, but this Business Secretary has form. Warm words are all very well, but they are worthless, as the community in Redcar know to their cost, unless they are followed up with meaningful action.
Opposition Members are in no doubt that there are huge challenges facing the UK steel industry, but we believe that it can have a strong and sustainable future, and we know that decisions made by this Government now will ultimately determine whether it does. That is why I welcome the commitment the Business Secretary appeared to make in yesterday’s statement to what he called co-investment. Perhaps he will tell us whether he is considering co-investment to save the blast furnaces at Port Talbot, because we did not get an answer to that question in yesterday’s statement.
Will the Business Secretary confirm here and now that he will avoid a fire sale of these assets, and ensure that irreversible mistakes are not made in the way that they are sold? If Tata is to act as a responsible seller, it must consider only those offers that seek to maintain both upstream and downstream assets—that is, both the strip business at Port Talbot, and the specialist business based in and around Rotherham, Stocksbridge and the rest of south Yorkshire. The Government must also make sure that enough time is made available to ensure that an appropriate consideration of responsible offers can take place. It took nine months for the Scunthorpe deal to be developed, yet Tata has indicated that it wishes to exit the UK in four months. What is the Business Secretary doing to reassure the existing customer base that their current and future contracts will be fulfilled during this period of uncertainty? The plants cannot be saved if their order books disappear.
Let me turn to a number of areas where I believe the Government can make a positive difference. The most significant cause of the crisis facing the steel industry is the dumping of huge amounts of cheap Chinese steel on the market. It is priced below the cost of production; Chinese state-owned steel companies are making billions of pounds in losses, yet they continue to pour out more and more product. UK steel producers simply cannot compete with this state-subsidised unfair trade, which is threatening to destroy the European industry as well as ours. We are not calling for protectionism, but we are standing up for fair trade, and calling for quick and effective tariffs that will help to level the playing field. The Business Secretary must abandon his opposition to the abolition of the lesser duty rule and block unfair Chinese imports.
Granting market economy status to China must not be automatic. China meets only one of the five criteria that must be met if this status is to be granted, yet the UK Government support granting market economy status to China as early as the end of this year. Action to level the playing field using trade defence instruments, and on market economy status for China, would give potential buyers of Tata’s UK steel operations the surest sign that the Government stand ready to act.
On procurement, the Government should take concrete action to ensure that UK steel producers are able to benefit from large public sector contracts. The Ministry of Defence will spend £178 billion on defence equipment over the next 10 years, yet the Conservative-led coalition Government scrapped Labour’s defence industrial strategy, which made British jobs and industries the first priority in all decisions on MOD contracts. We are now in the deeply regrettable situation of an aircraft carrier, British surface ships and armoured vehicles all being manufactured in the UK with mainly imported steel, when, with more planning, our domestic industry could have supplied those needs.
The Government must also take action on infrastructure investment. Despite all the Government public relations about this, public sector net investment in the UK will in reality be lower as a percentage of gross domestic product at the end of this Parliament than at the start, and half what it was under the last Labour Government. Of the projects announced in the Government’s infrastructure pipeline, just one in five is actually under way. For the sake of our steel industry and the wider economy, Labour calls on the Government to bring forward shovel-ready projects that require a significant amount of steel, and to ensure that the changes to the procurement rules, which the Government keep boasting about, actually begin to make a difference.
Ian C. Lucas
I would like to share with my hon. Friend the fact that I received a letter from the Prime Minister yesterday praying in aid and praising an infrastructure project investment in the railway between Wrexham and Chester. However, this is being funded by the Labour Welsh Government and, unfortunately for the Prime Minister, it appears to be the only example that he could put forward of investment in rail in north Wales.
Geraint Davies (Swansea West) (Lab/Co-op)
Does my hon. Friend share my concern that certain major procurement projects, such as High Speed 2 and nuclear, are being given to the Chinese? My fear is that they will naturally want to use Chinese steel. Also, if these were British companies, they would be paying British corporation tax, national insurance and income tax, and would be developing supply chains and export capacity. Does my hon. Friend share my fear that there is no proper joined-up industrial strategy to protect our jobs and our future?
Ms Eagle
I agree with my hon. Friend, and when we see the Chancellor travelling around China and asking the Chinese to bid for all these contracts, it is hard to avoid realising what is happening.
Business rates represent a far higher cost for UK steel producers. There had been reports that the Government were planning to exempt plant and machinery from business rates, which EEF has described as a “tax on investment”. The Chancellor reportedly even costed this change with a view to including it in his now infamous Budget last month before dropping it at the last minute. It seems that the measure, which would have significantly improved the future prospects of the industry, was sacrificed in pursuit of his economically illiterate and increasingly unachievable surplus target.
I said earlier that part of the problem is ideology. Labour has been calling for a modern and intelligent industrial strategy, and I am pleased to say that in yesterday’s statement the Business Secretary actually uttered the words “industrial strategy” for the first time. Now that that Rubicon has been crossed, all we need is action to match the words. Today, let us spare a thought for the thousands of steelworkers whose futures hang in the balance. The Government ignored the warning signs for far too long, and now they must act to find a suitable buyer, and to work with the steel producers, the workforce, and the clients and customers to ensure that the industry is placed on an even keel. The cost of failure, both economically and socially, is unthinkable. We need urgent action to save our steel.