EU Referendum: UK Steel Industry

Anna Soubry Excerpts

Wednesday 13th July 2016 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mrs Gillan. I do not know whether you have had the great pleasure of chairing a steel debate before, but I know that you have family connections in Wales. The majority of the speakers in this excellent debate are from Wales—a part of the United Kingdom that is very dear to your heart—so welcome to the gang. As you will have gathered, we regularly meet here or in the main Chamber to debate this issue with all its twists and turns. It is fair to say that, the last time we debated this issue, none of us anticipated that the next time that we gathered for a debate it would be on this subject.

I pay huge tribute, as ever, to the hon. Member for Cardiff South and Penarth (Stephen Doughty) for securing this debate. I will not have time to address all of the points that have been raised, but I will try to stick to the actual topic of the debate, which is the effect of Brexit on the steel industry.

It is right, good and fair to say—I am going to be a bit partisan here—that it is very much to the credit of my party that we have avoided the uncertainty that we undoubtedly would have had if we had waited until September to elect a new leader and install a new Prime Minister. That would not have been the best thing for our country or, indeed, our economy and our steel industry. We absolutely need certainty, and my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) did everybody an enormous favour with her greatly courageous decision. We now have a new Prime Minister who can, frankly, get on and do all the things that need to be done to create certainty. She can answer many of the questions that I cannot answer, because this is a matter for the new Prime Minister and her Government.

In the words of the hon. Member for Aberavon (Stephen Kinnock), Brexit is a fact. It might hurt us but, as he rightly said, it is the will of the British people. At least we know where we are on that. We have a big task ahead of us, and I am sure nobody here is under any illusions about the scale of the complexity that we face as we withdraw from the European Union. It will take a number of years and it will be hugely complicated, but we are beginning. We will see stability and confidence return to the economy, and that will have a great impact on our steel industry.

The United Kingdom steel sector exported 6.3 million tonnes of steel last year, 3.3 million tonnes of which went to European Union member states. That is how important the EU is to the exporting of steel. Access to the single market is absolutely critical, not just for steel but for the whole of our economy.

The automotive sector has been a massive success story in recent years. We have exported a huge number of cars—many of which are made with British steel—to EU markets. I went to Nissan only the other week, and I was reminded that 45% of the steel that it uses is made here in Britain. That is the point that the hon. Member for Cardiff South and Penarth was making. I gently say to the Scottish National party and the Scottish Government that it is not just processing that is so important. It is also important that we buy British-made steel—steel that is made in Port Talbot or Scunthorpe, not Turkey.

It is important that we secure tariff-free access to the European market, not just for the steel sector but for the parts of our economy that buy British steel, such as the automotive sector. I have personally spoken to the important people at all the large automotive companies to reassure them and to tell them how critical it is that they keep putting in orders to Port Talbot, and they told me that tariff-free access is important for their sector.

[Jonathan Edwards]

The Minister mentioned the complexities following the referendum result for export strategy. What analysis have the UK Government done to date of the countries that UK-based steel producers export to? How many trade deals are now going to have to be renegotiated so those exports can continue?

[Anna Soubry]

I do not know about the actual figures, but we have looked at that with considerable care, and we will continue to do so. A special unit has been set up, and—if I can put it this way—will be beefed up by the incoming Prime Minister. Those are exactly the sort of issues and complexities that we are going to have to deal with.

Let me make it very clear that, until we actually leave the EU, we are a member of the EU. I think some people think we have left. Well, we have not left. We are still subject to all its rules and regulations—for example, the state aid rules—and we have access to the single market. Those things are incredibly important throughout the process that will now unfold. While we remain a member of the EU, we are subject to the state aid rules, the trade defence measures and so on. What replaces those rules—we may remain subject to them in return for market access—is for the new Prime Minister and her team to negotiate. Whatever my role is—I may end up on the Back Benches—[Hon. Members: “No!”] The worst nightmare of the hon. Member for Hartlepool (Mr Wright), who has been my hon. Friend on many occasions, is that I return to the Back Benches and then end up on his Select Committee.

[Mr Wright]

No, no!

[Anna Soubry]

I think we are all becoming demob happy. We are looking forward to next week when we will have a short break, but we will all continue, as we always do, to work for our constituents in the so-called recess. I think that other people sometimes forget that.

[Stephen Doughty]

The Minister is making some good jokes; however, this is a very serious point. Although we are about to go into a parliamentary recess, it is absolutely crucial that the meetings with the Steel Council and the working groups continue and that the work with the officials goes on. We cannot afford to let weeks go by in the summer when the industry is facing so many challenges.

[Anna Soubry]

I could not agree with the hon. Gentleman more. He is absolutely right, and he needs to know that the Steel Council has been working as if nothing has happened or changed ever since the referendum vote. Indeed, the UK Metals Council is meeting now—that is where I would have been had he not secured this debate. Everyone involved in the sector needs to understand that the work of the Government, Ministers and my officials has continued through this recent period and, without doubt, will continue through the summer. If I stay in my job, he can be assured that I will continue to do everything I can to work for the best interests of our steel industry; if I have a successor, that person will do exactly the same. The officials, of course, do not change. Furthermore, the determination will be as instilled in the new Prime Minister as it has been in our outgoing Prime Minister.

To deal quickly with procurement, we changed the rules, and we were the first member state of the EU to do that, commendably so. However, Opposition Members make a good point about the need now to ensure real evidence that those rules are working. We need good reporting, so that we can come back to say that we are absolutely certain that the new procurement rules are producing the results we want.

Network Rail sources 98% of its steel domestically, or 145,000 tonnes over the next five years, and there is no reason to believe that that will change. High Speed 2 will need 2 million tonnes of steel over the next 10 years —forgive me, Mrs Gillan, but I am a huge supporter of HS2 and I fear our friendship will be wobbling here. I assure you and all hon. Members that I will continue to do everything I can in Government to make the case for wonderful and important infrastructure projects to be brought forward as much as they can be, as it will be a great boost for our economy if we can do that.

I have spoken with steel makers since the referendum, although it was not the result they wanted. It was sad that 69.6% of people in Hartlepool voted out; 60% of people in Cardiff voted in, but in Sheffield, 51% voted out; in Rotherham, 67.9% voted out; even in Neath Port Talbot, 56.8% voted out; and in the constituency represented so ably by the hon. Member for Scunthorpe (Nic Dakin), nearly 70% voted out. We all have a big, big job to do—but we can talk about that on another occasion. Only last week, however, I met British Steel, and things are going well notwithstanding—I do not want to be overly confident, but it is on track to deliver its business plan.

I want to deal with the point made by the right hon. Member for Wentworth and Dearne (John Healey) and by the hon. Member for Rotherham (Sarah Champion). Yesterday, I had a good meeting to discuss—freely—the situation in Stocksbridge and Rotherham. The Secretary of State has written in response to the right hon. Gentleman’s letter, although that reply might not yet have been received. For his and the hon. Lady’s benefit, the Secretary of State wrote:

“To date, no such requests have been made by any of the potential bidders, but we would be willing to consider requests that are made in the future.”

We know that people will be interested in the speciality steels, and rightly so, because it is a cracking business, with huge potential. Hon. Members can be assured that if we get requests to enable those sales to support that side of the sector, we absolutely will do it.

[John Healey]

Will the Minister give way?

[Anna Soubry]

I will take one intervention, but quickly, or I shall be in big trouble.

[John Healey]

I thank the Minister for giving way and for her response. May I ask her to thank the Secretary of State for his response, and to let her successor, if there is one, and his successor, if there is one, know that we as South Yorkshire MPs will be holding the Government to that commitment?

[Anna Soubry]

I did not doubt that for one moment, and I thank him.

The situation with Tata and the potential deal with ThyssenKrupp has raised several issues, notably that of pensions, about which hon. Members rightly have concerns. I have to say that the Opposition spokesman—this is a matter for the Department for Work and Pensions—did not make the most supportive contribution, but more than 4,000 consultees have taken part in the Government consultation. It will take time to go through all that, but the Government have always said that we will do everything we can to support the production of steel in south Wales, which means ensuring that at least one of those blast furnaces remains open.

As ever, the clock is against me, but the usual rules apply, and I will reply by letter to any questions that have been asked but I have not been able to answer. I again congratulate the hon. Member for Cardiff South and Penarth on securing the debate, and I assure him that wherever I am in the Government I will certainly continue to fight for the British steel industry to be sustainable and to continue making steel. I want to ensure that the case is taken forward, so we have that sustainable steel industry.

The hon. Member for Hartlepool looks as if he wants some reassurance, and he can have it. I have been to Hartlepool—I have been to almost all the steel mills throughout Britain, and apparently I will get one of those “I-Spy” badges as a result, if I come to the end of my tenure. It will be a proud moment, and I will wear it with great pride. Hartlepool is another viable business and, again, we will be there when buyers come forward. If they need support or want to talk to Government, we will do everything we can. Notwithstanding the referendum result, let us put some confidence back and say that we will create—or, rather, maintain—a sustainable steel industry. I will do everything I can, wherever I might be, to support it.

[Stephen Doughty]

I thank the Minister for some of the things she said, which were confidence-boosting and provide some hopeful direction. We must all want to take her up on her suggestion—whether she is in the role or not—because that is a clear signal to send to her successor, if there is one, to the successor of the Secretary of State for Business, Innovation and Skills, if there is one, and to the new Prime Minister that this issue will not go away. It requires serious, concrete ministerial attention—not just officials—to drive it forward over the weeks and months to come. If we get distracted by everything else going on, the industry will face serious troubles.

I have three points to make, the first about energy costs, which the Minister did not get into in great detail—she is welcome to intervene, if she wants. We heard from my hon. Friend the Member for Aberavon (Stephen Kinnock) that figure of £17 per megawatt-hour differential between the energy costs faced here and across the EU. In particular, that is an issue for companies such as Celsa in my constituency, which operate throughout the European Union and see the energy costs in other countries. Perhaps the Minister will intervene or write to us, but I want to understand whether she would be satisfied for the differential to continue over any length of time.

[Anna Soubry]

I forgot this, but the hon. Gentleman makes a good point. A lot of work is still to be done on energy. A major target and piece of work for the incoming Government is to ensure that the steel industry—indeed, all the manufacturing sector—has a level playing field, and that must be achieved.

[Stephen Doughty]

I thank the Minister for her comments, which I hope she will also express clearly to the Department of Energy and Climate Change, other Departments and the new Prime Minister.

On another fundamental issue, the debate was about the impact of Brexit and the referendum decision on the steel industry, and the Minister and other colleagues who have taken part in the debate today have outlined the potential risks if we do not get the right sort of deal. Access to the single market is crucial. Some have suggested that we should invoke article 50 straightaway and rush into the negotiations, but that would be foolish—I see the Minister nodding. Even some in my own party have suggested that, but it would be wholly wrong. We need to take a very careful approach, for the sake of the industry. The deal has to be the right one; we have to secure access for our exports, and to ensure that we do not end up with punitive shocks, because even if those were only in existence for three or six months in transition from one regime to another, they could be devastating to the industry.

To conclude, I thank all colleagues who have attended today, because it shows the great concern for the steel industry in Parliament. No matter what else is going on and that we are having a change of Prime Minister today; colleagues are still willing to attend and to stand up for constituents and the steel industry throughout the UK. I thank all those in the industry, whether in the trade unions, the management or the industry bodies, who continue to fight the fight and to make the case that steel does have a future, and that the Government need to act to ensure that future.

Question put and agreed to.

Resolved,

That this House has considered the implications for the UK steel industry of the outcome of the EU referendum.