UK Steel Industry

Anna Soubry Excerpts

Thursday 17th September 2015 Commons Chamber

[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—

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

No I am not.

[Andy McDonald]

She can google the article that was in the FT a couple of days ago. Those are the words that the Secretary of State used. I put it to her that people want an industrial strategy, and that the Government should have one. I recommend it. I found that to be a baffling admission by the Secretary of State. We do, at certain times, prioritise particular industries, because they might need additional support in the short term so that we can enjoy their social and economic benefits in the long term. UK steel ought to be one such industry.

SSI is one of four major players in a hugely ambitious carbon capture and storage project which would not only deliver a massive dividend in terms of energy costs and lower carbon emissions but sustain those very industries and attract major investors into the region to join the CCS network, with all the advantages that the project entails. It is imperative that Government recognise the crucial importance of the project and give SSI and its partners every assistance and support. With a fair wind, Teesside could be on the brink of becoming the carbon capture capital of Europe, and sustaining the Redcar plant is vital to making that a reality. I plead with the Government not to take their eye of that particular ball. In addition, there are vast reserves of coal sitting off the north-east coast. The exploitation of those 400 years’ worth of energy coupled with CCS would not only guarantee the survival of our core industries and attract massive investment but make Teesside a world leader in clean energy.

The impact of steel closure on Teesside would be devastating, but I am not convinced that this Government give a tupenny fig for Teessiders. I do not think they are listening. The Minister shakes her head, but on Tuesday we debated the impact of the cuts to tax credits. This is the same community that would be affected. In the Secretary of State’s constituency, 37% of families depend on tax credits. The figure in my constituency is 81%. The cumulative impact of any closure would be devastating to an entire community. That is what is at stake, and I hope that the Minister will take my comments seriously. I will not dwell on them. I wanted to say more about that issue, but I know that other Members want to speak.

In my constituency, which depends heavily on the availability of good jobs in the steel industry, there is a backdrop of great need. I implore the Minister and the Prime Minister to convene a steel summit of the major players and decision makers to put together a rescue package for the steel industry as a matter of supreme urgency. As my hon. Friend the Member for Hartlepool (Mr Wright) suggested, I would also encourage all participants to leave no option off the table.

I know the visceral rejection that would greet any suggestion of major state intervention, and I know the abuse that is often hurled at anyone proposing such a response, but we cannot rule out renationalisation. If it is a choice between this industry falling over and taking it back under state control, I think I know what the steelworkers around this country would want the Government to do. I also think I know what many industrialists, who are committed to a strong manufacturing base in the UK, would expect the Government to do. We have only to look to Italy. On Christmas eve in 2014, the Italian Government announced that they were temporarily nationalising the Ilva steel plant to safeguard thousands of jobs and make the necessary investment before putting it up for sale. That was an enormous public commitment, and it is one that should not be unthinkable in the UK. The history books will look favourably on Alistair Darling and Gordon Brown for having taken urgent and decisive action in 2008 to save the critical banking industry. This is this Government’s RBS moment. The country is watching and it does not expect to find its Government wanting.

--- Later in debate ---

[Stephen Doughty]

I will in a moment, but let me make this point.

On the Forth road bridge, it is important that we deal with the facts. The fact is that if the Scottish Government had applied for the community benefit clauses as they originally could have done in the procurement process, it is possible that the work could have gone ahead with UK companies—Scottish Steel and SSI—involved early on. Instead, it went off to the Chinese, the Spanish and others. Now, eventually, some of the steel is being made in Scotland and on Teesside, and I welcome that, but it is important that Governments across the UK—

[Anna Soubry]

They should practise what they preach.

[Stephen Doughty]

I absolutely agree; that applies to the UK Government as well. It is important that the Scottish Government take full responsibility. I am glad that Community is seeking a meeting with the First Minister of Scotland and with the Welsh First Minister, Carwyn Jones, because it is important that we work on this together across the country .

--- Later in debate ---

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

May I begin by congratulating everyone who secured this debate? It has been excellent, with some fabulous speeches by hon. Members who have done what we should all do when we speak in this place, which is represent constituents, especially in times of great difficulty.

I pay tribute in particular to the hon. Member for Redcar (Anna Turley)—I hope I have pronounced her constituency name correctly, or I will be trouble—and to the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop). I will talk briefly about the particular problems with the steelworks in their constituencies, but I will not say too much, because this is a critical time for them, and in some ways the least said, the better. I do not want to say anything that might alter or affect the very good work that both hon. Members are doing in trying to find a solution to the problems at this difficult time. I hope that everybody will accept that and—if I may put it this way—not quiz me any further, because after this debate we will meet those union members who are in attendance, and I look forward to that.

I also pay tribute not just to all those who work in the steel industry, but to their families at this very difficult time. Many people listening to this debate or reading about it in their local newspapers are undoubtedly very worried about not just their and their family’s future, but that of their community. I get that—I thoroughly and totally understand it. I do not know whether that is because my great-grandfather began his working life as an apprentice cutler in Sheffield. I remember making the journey from Worksop to Sheffield as a teenager and a young woman and seeing the forges there. It was a fabulous sight. Indeed, I was reminded of it when I visited Celsa in the constituency of the hon. Member for Cardiff South and Penarth (Stephen Doughty). That was a truly remarkable experience, because I had never seen the fabulous process involved in the recycling of steel—I will come on to that in a moment—or the high quality and skills of the workforce. I have also visited the Port Talbot plant in the constituency of the hon. Member for Aberavon (Stephen Kinnock), which has a highly skilled workforce doing a very dangerous job. That should never be underestimated

I thoroughly echo the Prime Minister’s words in response to a question last week by the hon. Member for Scunthorpe (Nic Dakin):

“We will go on doing everything we can to support this vital industry.”—[Official Report, 9 September 2015; Vol. 599, c. 404.]

I fully agree with that. My task in my role is to champion the steel industry and do all I can, not only as a champion, but to make sure that the Prime Minister’s words are echoed right across Government and that we do not fail in doing everything we can to support this vital industry.

[Andy McDonald]

When there was a crisis in the south-west of England after the floods, I recall the Prime Minister saying that the problem would be corrected no matter what the cost. On the steel industry, he has said that he will do everything he can. Does that mean that the outcome will be secure and that he will do anything to keep the steel industry on the rails?

[Anna Soubry]

The Prime Minister said:

“We will go on doing everything we can”.

I am not looking for excuses. When she opened the debate, the hon. Member for Redcar said—I wish she was not right, but she is—that the steel industry is in crisis. The hon. Member for Aberavon has said that it is about 10 minutes to midnight. The hon. Member for Redcar went on to say that the industry is in crisis because the price of steel has collapsed as a result of over-production in China—in fact, there is over-production across the whole world—and there are allegations that China is dumping its product. The problem, as the hon. Member for Middlesbrough (Andy McDonald) knows, is that the price of slag has gone from $500 to $300 in a year.

Unfortunately, the Government cannot force other countries to stop over-producing, any more than they can force up the price of steel. We can, however, look at measures and the hon. Gentleman and other Members can be assured that I will do all I can to make the argument within Government when we are doing things that we should not be doing. I hope the hon. Gentleman understands what I mean by that. I am not an actual free marketeer. I believe there is a role for Government, which is why I was more than happy—in fact, I demanded —that we voted in favour of the anti-dumping measures on Chinese wire. There are times when Government should and do intervene. We have a system to compensate those electric-intensive industries that pay an awful lot of money for their energy bills, and that includes renewables obligations and other tariffs.

I will be completely honest: I would much rather that the price of energy were considerably lower. I struggle with the current system, whereby we put something on industries and then use taxpayers’ money to compensate them for it. I want cheaper energy. That is what I see as the solution, but we cannot have it both ways. We cannot say that we want a greener, cleaner environment and to reduce emissions and hit targets—those are all the right things to do—without recognising that the consequences are that we all have to pay more for our energy. We have to accept the realities of the situation.

[Andy McDonald]

The Minister makes a valid point, but the point I made in my speech is that the steel industry is right at the heart of securing some incredibly powerful dividends with regard to cheaper energy and climate change. If it is not allowed to persevere, it will not be able to deliver them for us.

[Anna Soubry]

I agree, but as the hon. Gentleman also knows there are very strict state aid rules. We could have a debate about whether this country should impose them at a higher, gold-plated level compared with other countries. My hon. Friend the Member for Wellingborough (Mr Bone) has said, “Everybody else tears up the rules and so should we”, but I do not agree, because we cannot complain about other people breaking state aid rules if we are doing it ourselves. I would much rather go to the European Union with clean hands so that we can say, “We’re abiding by the rules, so now you have to abide by them, too.”

The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) is not in her place, but she made demands of the Government. I hope she will forgive me, but I do not think she is aware of what the state aid rules are: they expressly prohibit the Government from giving any money to rescue and restructure a steel company in difficulty. EU state aid rules for steel permit support only for research and development, environmental protection and training, and only then within specified limits.

The hon. Members for Redcar and for Middlesbrough South and East Cleveland talked about what happened to the SSI plant when it was under the ownership of Tata and mothballed back in 2009-10. I will be corrected if I am wrong, but as I understand it that process was not supported by Government aid. I absolutely pay tribute to the unions, the workforce and everybody involved, including the local Members of Parliament and, no doubt, local councillors, who came together to work out that package, but I understand that the state aid rules forbade the Government from giving aid.

[Tom Blenkinsop]

To provide some context, at that time trade unions—with Community in the lead—alongside other helpful partners in the industry, were looking at potential buyers, such as Dongkuk, Marcegaglia and SSI, so that was not the issue. We had a destination to go to, but we needed a bridging gap. The Government provided £60 million of support funding to make sure that there was a taskforce for the area. The situation is now different, but we can talk about that in private.

[Anna Soubry]

I think we are agreed because this has affected Governments of all colours—or rather, of both colours. In all seriousness, the rules on state aid are very strict. I take the view that we should not blatantly breach those rules, because we cannot hold to account other countries that breach them, blatantly or otherwise, if we are guilty of doing the same.

[Nic Dakin]

The reality is that the universal application of the carbon floor tax in this country has had a detrimental effect on energy costs for this industry, and the mitigation package so far put in place does not fully address what needs to be done. Will the Minister make a commitment to do her very best to bring forward the mitigation from the current 2016 destination?

[Anna Soubry]

The hon. Gentleman can be assured that I will do everything I can. I think we all agreed on and voted for the financial obligations that we have put on all our industries, so there is nothing between us. I want us to be able to reduce energy prices, not just for domestic consumers—ordinary members of society—but for industry. I think that that would be a much better way forward.

I have not actually got a speech to read out, which often frightens my officials—you may be quite pleased about that, Madam Deputy Speaker—so I will just remind the House of the actions that I and the Secretary of State for Business, Innovation and Skills have taken. He will meet the all-party group on steel and metal-related industries on 26 October. I assure all hon. Members that both he and I have spoken to the Prime Minister and the Chancellor of the Exchequer. Only this morning, I bumped into the Secretary of State for Energy and Climate Change and had yet another discussion about this problem, the urgency of the situation and what we can do to provide assistance. Hon. Members should be assured that we are doing all that and having such discussions at governmental level.

I met the director of UK Steel back at the beginning of June. I have met the chief executive of Tata Steel, Karl-Ulrich Köhler, who did not flinch from explaining to me the very real difficulties that Tata faces in its operation in the United Kingdom. I pay tribute not just to the workers at Tata Steel, but to its management for all that they do. They and hon. Members can be assured that I certainly got everything he told me: Tata does not want to leave the United Kingdom. He made it very clear that it still has a huge commitment to Britain.

We had a debate on the UK steel industry in July, but it was only for 30 minutes, which, as we all know, is far too short. Since then, I have been to Port Talbot and to Celsa, and I have met the directors of SSI. I have had private conversations with the hon. Members for Redcar and for Middlesbrough South and East Cleveland, and we will meet later. Rightly and understandably, the Members who represent Rotherham—the right hon. Members for Wentworth and Dearne (John Healey) and for Rother Valley (Kevin Barron), and the hon. Member for Rotherham (Sarah Champion)—and of course the hon. Member for Scunthorpe, asked to meet me. I have met them, along with the trade unions who came with them and, in the case of Rotherham, the management of Tata. I am due to have meetings with my hon. Friends the Members for Cleethorpes (Martin Vickers) and for Brigg and Goole (Andrew Percy), as well as with those who represent Hull and Rotherham. As I have said, the Secretary of State for Business, Innovation and Skills and I are meeting the all-party group, and we will continue to hold such meetings.

I want to go through some of the very important points made about what more the Government can do. You are looking at me, Madam Deputy Speaker, as if to say, “Get on with it!” You are not wrong, but these are important matters, and I hope that you will forgive me.

The hon. Member for Redcar covered nearly all the points that other hon. Members have made. I have discussed the price of energy, especially for industries, such as steel, which use so much electricity, so I think I have dealt with that point.

Some hon. Members mentioned business rates. They made a compelling case about the fact that if businesses invest—more than £182 million was invested at Port Talbot—they find, bizarrely, that their business rates go up. Even more bizarrely, businesses pay corporation tax only if they are in profit, but whether or not they are in profit they have to pay business rates. That is another peculiarity of the system. We will have a full review of business rates, but the Chancellor has made it quite clear that the outcome must be fiscally neutral. What I would say to everyone as a caution is that if we change the rules in relation to plant and machinery, we will have to move the burden somewhere else, because it must be fiscally neutral.

On the dumping of steel, the hon. Member for Redcar will already know what I have said about the decisions that have been made. There are more decisions to be made in the European Union to make sure that we do all we can to stop steel dumping.

Several hon. Members made very good points about public procurement. It is right that the Government should practise what they preach, and that applies to local authorities as well. I would gently say to SNP Members that they must champion, as many hon. Members on both sides of the House do, the works in their constituencies. They should beat up on Ministers and on Governments—whether the Scottish Government, the Welsh Assembly or whoever they may be—to say that people must buy British.

When I went to Port Talbot, which supplies a large section of the automotive industry, a particular car company was being shown around, and I hope it will not just buy British, but buy Welsh. We have taken a number of steps to ensure that business can get the most from procurement opportunities. Current public sector contracts can be found on the contracts finder portal, which provides what we call forward pipelines of potential contract opportunities up to 2020, including more than 500 infrastructure projects. Public procurement is important, and we are looking at it. We know that Crossrail achieved 97% of UK content and that 58% of the work went to UK small and medium-sized enterprises. There is more that we can do on public procurement, and I have asked my officials to look at that.

I am looking through my notes to make sure that I deal with everything that has been raised by hon. Members. If any of them wants to remind me of anything that I have missed, I am more than happy to take interventions.

Nobody wants to intervene, so I will just say this. I am going to China next week and Members can be assured that the Secretary of State and I will not hesitate to discuss a number of matters with the Chinese Government. We want to talk to them about dumping, production and the future of their steel industry. We will not hesitate to make those representations. If there is anything in any of the speeches that I have not responded to, I will write to each and every hon. Member and answer their points.

Finally, I doubt that this matter will go to a vote. Therefore, we will get on with arranging the summit quickly. I already have a list of people whom it is obvious we should invite. It will be a cross-Government summit, I hope, that will involve the Welsh Assembly, the Scottish Parliament, all the relevant Departments and representatives of the workers and the various companies. I congratulate everybody on what has been a very good debate.