UK Steel Industry

Angus Brendan MacNeil Excerpts

Wednesday 3rd December 2014 Westminster Hall

[Mr Vaizey]

I do not wish to sound churlish, but it is said that one should be beware of Greeks bearing gifts, and one should also be beware of Labour Members, however much one admires them, bearing compliments.

The hon. Member for Cardiff South and Penarth is working hard to secure a long-term future for the steel industry in his constituency. He has been an assiduous champion for Celsa and has facilitated meetings between it and Ministers. I picked up on about nine points made by hon. Members during the course of the debate, but he left me with five or six specific questions, mostly focusing on efforts to mitigate the impact of high energy prices and of competition, which from his perspective is unfair—I hope that I am not speaking out of turn in putting it that way—and on what the Government are doing about things. He also asked about the future strategy for the steel industry.

I have quite a long speech, but the hon. Gentleman spoke rapidly, if clearly, and the time left to me is not long, especially given the level of interest in the debate. I will try to pack in as much in the short period available as he managed.

It is well known that the steel industry is cyclical, and we also know that it has faced particular difficulties in the past few years, especially with the economic downturn having a major impact on construction, leading to overcapacity and severe competition throughout the world. It is worth saying, as I did in the previous debate, that the UK remains a significant player in the global steel market. We have replaced France as Europe’s second largest producer of steel and we have overtaken Italy. It is worth remembering that we continue to manufacture to a high level in this country.

My right hon. Friends the Minister for Business and Enterprise and the Secretary of State for Wales met the hon. Member for Cardiff South and Penarth and representatives of Celsa to talk about the company’s concerns, in particular the policy issues, which it is important to note affect many other steel companies in the UK as well. The Minister for Business and Enterprise replied at the beginning of this week to the letter that was sent out by Celsa following that meeting.

The first major issue raised at the meeting and in the debate today was compensation for energy-intensive industries for the indirect costs of the European Union emissions trading scheme and the carbon price floor. The hon. Member for Cardiff South and Penarth knows that the Government are trying to compensate electricity-intensive industries for the indirect costs of the renewables obligation and the feed-in tariff. We are also seeking to exempt EIIs from the costs of the contract for difference.

The mitigation has not been brought forward, because we need to seek state aid clearance from the European Commission. It took 18 months to obtain Commission state aid clearance for the carbon price floor. The hon. Gentleman and Celsa would perhaps like to see the Government being what they might describe as more robust, but clear state aid clearance is important. As he knows, if aid is provided before state aid approval is given, technically that would be illegal and we run the risk, if approval is not given, that the company would have to pay back the state aid. That is the reason. I am sure that the Chancellor, if he could wave a magic wand, would wish to bring forward mitigation, but we have to go through the process.

The hon. Member for Cardiff South and Penarth also talked about procurement. We have greater transparency of opportunities through the publication of procurement pipelines, which now cover 19 sectors. We have a simpler public procurement system; we have abolished the pre-qualification questionnaires for low-value contracts; and we help suppliers to find contract opportunities via a single online portal. We are working with industry to map supplier capabilities. We want to quantify the opportunity that exists to maximise the economic benefit for the UK—of course we do. Where there are capability gaps, sectors will encourage domestic suppliers to expand to fill them, with support from the Manufacturing Advisory Service.

The hon. Member for Middlesbrough South and East Cleveland tried to tempt me to have a pop at the Scottish Executive over the Forth bridge. My understanding is that the approaches to the bridge are to use British Tata steel, but I cannot comment on the procurement process of the Scottish Executive—[Interruption.] Perhaps the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), commenting from a sedentary position, would like to say why the Scottish Executive procured from China, Poland and other markets.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I only wanted to ensure that the Minister knew the difference between the Executive and the Government. “The Executive” is what Labour did not have the courage to call their Government in the past; “the Government” is what exists now.

[Mr Vaizey]

We are disappearing down a particular Scottish cul-de-sac. I will leave that as an argument between the Scottish National and Labour parties.

We are working to strengthen existing supply chains by encouraging primes to adopt a collaborative and long-term approach to their suppliers. The hon. Member for Cardiff South and Penarth discussed Chinese imports of rebar. The United Kingdom Accreditation Service looked at the complaint by UK Steel and concluded that CARES had responded in an appropriate way to the concerns expressed in line with the expectations and requirements of the accreditation standard. I can tell him, however, that there has been an increase in vigilance on the part of CARES, with increased sampling and more checks. We have also been advised that, as a result of ongoing discussions between CARES and UK Steel, and of the further testing of some non-compliant imports, CARES visited the Chinese steel mill concerned. CARES conducted further sampling and testing, but it did not find evidence of stock production being non-compliant. On that basis, we genuinely think that we are doing everything possible, although we may be able to do more if the industry provides us with additional evidence of what it thinks that we should investigate.