Steel Industry

Angus Brendan MacNeil Excerpts

Wednesday 14th January 2015 Commons Chamber

[Vince Cable]

When I was in Brussels a few months ago—I do not recall the exact date—I was actively pursuing the issue of speeding up state aid clearance and I have certainly actively raised trade policy issues. We support the principle of the European Commission acting—if evidence can be acquired. As the hon. Gentleman will know, getting anti-dumping action and countervailing duty action by the Commission is not easy. Proof has to be established, but we are pressing where unfair practices can be established.

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

I thank the right hon. Gentleman for charting and laying out the facts of the decline in steel production in the UK. I have heard from a reputable source that Ravenscraig in Scotland could have been saved by being bought by a rival, but to prevent competition from other areas of the UK at the time, British Steel chose to end production at Ravenscraig. Will he look into the veracity of that statement and perhaps report back at some other time that Ravenscraig was deliberately sabotaged and ended for purposes related to other places?

[Vince Cable]

I recall that when I lived in Scotland, Ravenscraig was still producing as an integrated producer. I do not know the history of why it was closed, and I doubt the conspiracy theory. I suspect that the industry was under a great deal of pressure. The simple point to make is that the industry has been contracting over three to four decades, both under British Steel—some Labour Members might remember the name of Mr MacGregor—and subsequently under privatisation, so it was not ideological.

Before I finish the point about the historic trends, let me say that the decline in employment has been far more dramatic and far more brutal than the decline in output. It is worth recalling that, back in 1980, 155,000 people were working in the industry, and there are now 20,000. We are down to little above a 10th of the total labour force. There were two major spasms when this occurred. One was between 1979 and 1981, when the industry halved in manpower—a very difficult phase. Then, during the period of the last Government, the level of employment halved again after 1997. The question we now face is whether we can avoid another spasm of contraction as a result of the difficulties faced by several leading producers, particularly Tata.

--- Later in debate ---

[John Healey (Wentworth and Dearne) (Lab)]

I welcome this debate and I also welcome its timing, because 2015 will be a critical year for the British steel industry. At the heart of the motion is a call for the Government to recognise the importance of the industry in the UK and to work with it and the trade unions to come up with a co-ordinated plan for its future. I hope that this debate will help to achieve that aim. The general secretary of the Community union, Roy Rickhuss, captured the imperative that faces us very well when he said:

“UK steel companies and their workers need a government that is prepared to intervene to support us on areas like energy, tax and procurement, just as they do in France and Germany”.

That is what we are looking for from Ministers today.

After nearly five years of failing economic policies, Britain badly needs a successful steel industry, not only in its own right but as a foundation industry for the success of this country’s many other advanced manufacturing sectors, including the aerospace, automotive, oil and gas and renewables industries. The Secretary of State and other Ministers brag about their economic success but, in fact, we have seen a double deficit failure. We have seen failure on the fiscal deficit, with the Government promising to balance the books by this year but instead having to admit that they are borrowing £200 billion more than they planned over this Parliament. We have also seen failure on the trade deficit. Back in 2010, the Chancellor promised an

“economy where we save, invest and export”.—[Official Report, 22 June 2010; Vol. 512, c. 167.]

He failed, and we now face a trade deficit of £110 billion a year and the biggest ever trade deficit in goods.

The steel industry and our UK companies together are positive contributors in that disastrous trade balance, involving £5 billion a year of exports. In 2013, the steel industry made a positive trade contribution of £2.4 billion. Tata’s speciality steels manufacturing, which is largely based in South Yorkshire, now employs 2,250 people, 1,050 of whom are at the Rotherham site.

That steel-making in South Yorkshire is innovative, internationally competitive and successful—27% of the sales are to the UK market, with 18% going to the US and fully half to other eurozone countries—but it is under great pressure. It is hampered by high energy costs and held back by the Government not doing all they can to back this great British industry. We have been making steel in Rotherham since the early 1800s, and Tata’s steel-making, re-melting and mill processing now supplies some of the world’s highest-quality, highest-performance metals to some of the world’s biggest and best known companies.

We have come close to losing our Aldwarke plant before, and it was only because of the trade unions, working alongside the management—led by Stuart Sansome of Community union, alongside Mark Broxholme of what was then Corus Engineering Steels—that in 2009-09 we brought that company through that period. I pay tribute to them, and I was glad to hear the Business Secretary paying proper tribute to the trade unions’ role in the steel industry.

I am very short of time now. This is an internationally competitive but internationally exposed industry, clearly suffering the effects of weak eurozone demand, exchange rate changes and, above all, as a high-intensive energy user, very high comparative energy costs.

[Mr MacNeil]

Are there any estimates of the effects of austerity on the steel industry, because of a lack of demand coming from the Government, in particular?

[John Healey]

Weak demand is always a problem for an industry such as the steel industry. Although in the past year UK demand for steel has increased by 15%, most of that has been supplied by imported steel, not UK-produced steel—that is what we have to change. It is the high energy prices that pose the risk of pricing British steel-making out of business. The full cost of energy for large energy-intensive users, such as steel makers, is €77 per megawatt-hour in the UK, which compares with €49 in France, €38 in the US and €33 in Germany. Of course when high-end products go through several processes—melting, casting, re-melting, rolling and finishing—that premium and extra cost is multiplied.

We need the Secretary of State to commit his Government to bringing in, once state aid clearance is achieved, help with the cost of the renewables obligation—that is imperative. We need help and a promise to negotiate a good transatlantic trade deal which benefits the metals industry and many of its user industries and deals with some of the problems associated with restricted procurement practices arising through the “Buy America” regime. Finally, we need to see a commitment to using any local economic benefit clauses that can be put in place in public procurement. Just as there is common ground in the industry among companies and the trade unions on the future of the industry and what is needed, we need in this House, from today’s debate, common ground among the parties.