UK Steel Industry

Anna Turley Excerpts

Thursday 17th September 2015 Commons Chamber

[Anna Turley (Redcar) (Lab/Co-op)]

I beg to move,

That this House recognises the unprecedented gravity of the challenges currently facing the UK steel industry; and calls on the Government to hold a top-level summit with the key players from the steel industry to seek meaningful and urgent solutions to the crisis.

Forgive me, Mr Speaker, but I am new to this place. Should I continue?

[Mr Speaker]

The House is expectant. If the hon. Lady, beyond the formal moving, wishes to make a speech, I know that the House will be agog with attention. The Minister is there to hear her, and others. Please, proceed with your speech.

[Anna Turley]

Thank you, Mr Speaker, for allowing Back Benchers time for this crucial debate. I also thank the Backbench Business Committee for granting me the opportunity to raise this issue on the Floor of the House. This is an issue of huge significance not only to my constituents, but to the economic security of the United Kingdom and its global position in manufacturing. I thank the Minister for attending the debate. I look forward to building on the constructive conversations that we have had recently on this issue.

I am grateful to the many hon. Members who supported me in securing this debate, including the hon. Members for Rutherglen and Hamilton West (Margaret Ferrier) and for Corby (Tom Pursglove), my hon. Friends the Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Cardiff South and Penarth (Stephen Doughty), and many others who I look forward to hearing from today. We are bringing the voice of our constituents around the country into this Chamber and I hope that the Government will hear their pleas.

I am grateful to my union, Community, which represents its members and the industry as a whole with great dedication and commitment, as do our colleagues from the GMB and Unite. I pay particular tribute to the Community union’s general secretary, Roy Rickhuss, and the senior trade union representative at the Redcar steelworks, Paul Warren, who are here with us today.

Most of all, I am grateful to the generations of workers who have kept steelmaking alive on Teesside for over a century—those who dug the iron ore and forged the steel that built Canary Wharf, the Sydney harbour bridge, Wembley stadium and the Freedom Tower at the World Trade Centre—and to those proud men and women of Teesside who stand ready to fight again for its future.

UK steel is at breaking point. This is a crisis for one of the most important foundation industries in the British economy. It employs 30,000 people across the country in highly skilled jobs, often in industrial heartlands with high unemployment. The UK steel industry supports the automotive, construction and aerospace sectors, as well as a raft of supply chains, and it is vital that there is a future for steelmaking at the heart of industry in this country.

The industry is in crisis because the price of steel has collapsed from £318 per tonne to £191 per tonne. Chinese imports are flooding the market. Between 2011 and 2015, the proportion of Chinese steel entering the market has quadrupled. The strength of the pound is increasing prices by 10% and crippling exports. I accept that there is little the Government can do about those global drivers, but that should never diminish their responsibility to do what they can.

[Mark Tami (Alyn and Deeside) (Lab)]

My hon. Friend is right about the crisis facing the industry. Does she agree that energy prices are part of the problem and have been for a long time? They are certainly affecting plants such as Shotton in my seat.

[Anna Turley]

My hon. Friend is absolutely right that there has been an ongoing discussion about that issue for a long time. The Government have taken some steps, which I will mention in a moment, but there is much more that they can do and they have promised things that we are still waiting to see delivered.

I am glad to hear that the Minister is going to China next week to discuss the dumping of steel, which is affecting producers around the world. There are, however, several UK-specific issues that are having a detrimental effect on steel production in the UK and that it is within the Government’s power to resolve. Action by the Government today could give the British steel sector the chance to stay alive in this fiercely competitive global market.

Research that I have undertaken in partnership with UK Steel has shown that the steel industry in the UK is disadvantaged to the tune of £431 million a year compared with our global competitors as a result of the exchange rate, energy policy costs, air pollution targets and business rates. I am sure that the Minister would agree that we want the UK to be the place to do business and that we do not want to penalise our own manufacturers.

[Helen Goodman (Bishop Auckland) (Lab)]

What my hon. Friend says about the exchange rate is right. Of course, the exchange rate has appreciated by about 20% in recent months. Will she say whether that has made the situation worse?

[Anna Turley]

It certainly has made the situation worse. I believe it has added approximately 10% to the prices of the UK steel sector.

I come before the House to call on the Government to act on the factors that I have outlined. I will set out five key actions that the Government could agree to today to demonstrate their commitment to the British steel industry. First, they must fully implement the energy-intensive industries compensation package well ahead of the committed date of April 2016. Energy-intensive industries in the UK are exposed to far higher costs than those elsewhere and face a total cost of £430 million this year.

The package of compensation and exemption measures that were promised over the course of the last Parliament would place the UK industry on a level playing field with its EU counterparts. If the package were in place today, it would have reduced costs from £30 per megawatt-hour to £7 per megawatt-hour. Instead, with compensation available for only a small proportion of the policy costs, energy-intensive companies continue to be exposed to upwards of 70% of them. It is imperative that the spending review announcement allays those worries and confirms the budget for the package. Energy prices for UK steel producers can be more than 50% higher than for our main European competitors.

[Paul Flynn (Newport West) (Lab)]

I speak as an old lag of the steel industry, having worked in it for 30 years before they pensioned me off into a light job on these green Benches. I applaud the plea that my hon. Friend is making. The steel industry has a wonderful record of serving the country efficiently over many years. Let us all join in the plea, which I am sure all Members will do today, for the Government to take an exceptional measure to deal with what is a temporary problem in the industry, but one that could lead, if neglected, to permanent damage.

[Anna Turley]

My hon. Friend is absolutely right. This is a difficult time and there are actions that the Government could take to build resilience. There is a future for the UK steel industry. I am sure that everybody—this is certainly true of those on the Opposition Benches—agrees with that. We hope to hear from the Government that their commitment is the same.

[Huw Irranca-Davies (Ogmore) (Lab)]

Will my hon. Friend note that the failure to implement immediately, with real urgency, the whole package that will provide a level playing field could mean not only that we offshore more jobs, but that we offshore an industry that has been highly successful in the decarbonisation agenda in this country to places that emit more carbon? Let us keep them here; let us do it now.

[Anna Turley]

I commend my hon. Friend for his passion and commitment. He is absolutely right. There are things coming on stream on Teesside, such as the carbon capture and storage facility, that will struggle if we do not have the steelworks in Redcar. We stand by our climate change commitments, and the steel sector is doing its best to make a difference.

Secondly, the Government must bring business rates for capital-intensive firms in line with those for their competitors in France and Germany. UK companies currently pay between five and 10 times more than their EU competitors. UK manufacturers collectively account for 17% of UK business rates payments. That is estimated to be £4.7 billion in 2015, which would be an increase of £0.3 billion on 2014.

UK Steel wants plant and machinery to be removed from the valuation process. Plant and machinery can make up a significant proportion of a steel site’s rateable value. Under the current system, manufacturers that invest in new plant and machinery to make innovative products, improve efficiencies or meet regulatory standards are punished by the business rates regime. UK business rates therefore act as a disincentive to upgrading facilities, increasing productivity or improving environmental performance.

Thirdly, I ask the Government to consider the derogation requests from the sector on a realistic timetable to meet its increased commitments under the industrial emissions directive. Under current proposals, it is estimated that the cost of meeting the revised permits for the sector will be up to £500 million by 2019. I am sure Members will agree that that is a heavy burden.

Fourthly, the dumping of steel by China is leading to the suppression of global prices. The proportion of Chinese steel entering the UK market has quadrupled since 2011. The Minister showed her support for the steel sector by voting in favour of extending anti-dumping measures for a further five years on imports of wire rod from China into the EU. That is welcomed enormously by UK producers of wire rod.

The UK steel sector is keen for that approach to be extended to other anti-dumping proposals that come out of the European Commission, when it is shown that they can support the UK steel sector against the rapid rise in global imports. That includes the forthcoming decision by the European Commission on rebar—reinforcing bar for the construction sector—which is expected towards the end of the year. In that instance, Chinese imports into the UK market have gone from 0% of the UK market only three or four years ago to 40% of it today.

[Andy McDonald (Middlesbrough) (Lab)]

Does my hon. Friend agree that the attitudes of countries such as Spain, which take a much more rigorous and robust attitude to the import of Chinese rebar, make it more likely that if the Chinese cannot access those markets, the UK will be the next port of call? That exacerbates the problem in the UK steel industry.

[Anna Turley]

My hon. Friend is right, and we are always diligent in undertaking our European obligations. All we ask for today is a level playing field with our European competitors.

[Mr Peter Bone (Wellingborough) (Con)]

I congratulate the hon. Lady on securing this important debate. She makes the point that we are fulfilling our EU obligations but that other countries are not. Rather than trying to make those countries comply, would it be easier for us not to comply, and to protect our own national interest until the whole EU puts its house in order?

[Anna Turley]

I am afraid I disagree with the hon. Gentleman. Teesside and the north-east is wholly dependent on a huge range of support from UK business, and that is a huge part of our exports. It would be wholly detrimental for us not to be part of the European Union.

There would be a significant opportunity for the UK steel sector if the Government were to support and insist on local steel being used in major public projects and strategic operations. Locally sourced steel can have major benefits not only for the local and the wider UK economy, but as a more sustainable material than imports. Those are the national challenges for the UK steel industry and the steps that we would like the Government to take. The steel summit sought in the motion would help to set out a strategic approach for the UK industry.

Let me say something about the situation in my constituency, which brings me here today with such urgency and determination. Steelmaking in Redcar makes up 7% of the north-east’s exports, and it employs 2,000 people directly on Teesside, with another 1,000 contractors and 50 apprentices currently on site. Approximately 6,000 people are employed in the supply chains, working in the ports, carrying the coal, providing the gas, producing the parts, driving the trucks, washing the overalls, and feeding the workforce. We have already experienced the devastation of losing our plant and we cannot go through that again.

In desperation, I ask the Minister to consider the request for financial assistance from SSI UK, so that wages can continue to be paid and we can get to the 50,000 tonnes of cargo that, as we speak, is sitting on the dock a mile down the road from the blast furnace. We need such assistance so that the gas can keep pumping, the coal can load the furnace, workers can pay their mortgages and feed their families, and the proud tradition of steelmaking in Redcar can remain the beating heart of my constituency.

As I said in my maiden speech, there already is a northern powerhouse, and I am disappointed that the Under-Secretary of State for Communities and Local Government, (James Wharton), who is Minister for the northern powerhouse and a Teesside MP, is not here today. There is already a northern powerhouse—it is called Teesside. If the Government do not act today we will know that their words are hollow. In 2011 the Chancellor of the Exchequer promised

“a Britain carried aloft by the march of the makers”—[Official Report, 22 March 2011; Vol. 525, c. 966.]

Does the Minister believe in a future for UK steel? Will she act now to enable the sector to weather this storm? Can she tell the House whether the Chancellor’s “march of the makers” includes the proud makers of steel on Teesside?

--- Later in debate ---

[Mr Wright]

Absolutely. I could not agree more with my hon. Friend. He is a passionate defender of the steel industry, not just in his constituency but across the country. He is absolutely right. Industry has a part to play in that, we in Parliament have a part to play in that and the Government also have a role. Government policy is ostensibly about priorities: where to divert attention and resources relative to other things that need to be done.

Other countries recognise the role that steel plays in a modern economy. At one extreme, this can mean renationalising the steel industry, as Italy has done, to safeguard capability for the future. Other Governments try to level the playing field for their domestic industries by addressing costs, taxes, procurement policies and imports to give their domestic steel firms at least a fighting chance. I am concerned that the British Government seem to do the opposite. This is not a personal criticism of the Minister on the Front Bench, who has taken more genuine interest in the steel industry in four months than her predecessor did in four years. She is a strong champion and we welcome her to her post. However, she recognises that the steel industry is facing a perfect storm. UK-based steel firms find it increasingly difficult, if not impossible, to export their products because of overcapacity in the global market, the high valuation of sterling, and uncompetitive costs based on unilateral energy bills and disproportionate business rates. As my hon. Friend the Member for Redcar said, energy prices for UK-based steel producers are 50% higher than for our European neighbours. How can we compete on that basis?

The Government advocate a wholly open domestic market, which leaves the industry vulnerable to dumping and fails to recognise smart local procurement, undermining UK-produced steel. The steel industry has one arm tied behind its back on exports, which, because of overcapacity in the global market, is increasingly difficult, and the other arm tied behind its back on imports. It is little wonder that the industry is punch-drunk and on the verge of a knockout.

I welcome this debate and I agree with the motion’s call for a key summit, but frankly we need more urgent decisive outputs. As Roy Rickhuss, general secretary of the Community union, has said:

“The UK steel industry is at a crossroads. Either it gets the support it needs from government to give it the chance of a competitive future or it continues to be subjected to warm words from ministers in the face of increasing decline.”

I could not agree with him more. On the subject of trade unions, this House debated the Trade Union Bill on Monday. In the Second Reading debate, I said that the Bill’s provisions run the risk of a more adversarial relationship between management and unions. The UK steel industry is characterised by fantastic, positive and productive industrial relations, which we lose at our peril. The UK steel industry will decline if the Bill is passed.

[Anna Turley]

I would like to draw attention to the role played by the Community union and the workforce, when the Redcar steelworks was mothballed in 2010, in securing the plant, finding a buyer in SSI and ensuring its future. That was absolutely fantastic and is a perfect example of a great union working with all parties to secure the future of the industry.

[Mr Wright]

What my hon. Friend says is really important. Steel plays a central role in a modern economy and it is really important that we put the empirical case. In places such as Teesside and south Wales we have seen that steel is in the blood of the workers who produce the steel. There is a pride that is difficult to match elsewhere. We need to make sure it continues.

On that basis, we have a simple but fundamental question to ask. We need to decide whether, as a country, we need a steel industry. We need to evaluate whether it is vital to our future prosperity, or whether, frankly, we can let it wither on the vine and just import what we need. I hope we decide that a competitive steel industry is essential to a modern British industrial base. If we do decide that, we need decisive action from the Government now—I stress now—to help to defend its long-term future.

I have a series of asks for the Minister. I know she is keen to help the steel industry as much as she can. Will she accelerate bringing forward the energy intensive industries package to ensure energy costs are made more competitive? Will she work across Government to remove plant and machinery from the business rates valuation for manufacturers, which acts as a massive deterrent against investment in manufacturing improvements, as well as being a big fixed cost disadvantage relative to European steel plants? Will she do more to support the industry in anti-dumping cases? She has already, in her short time in the Department for Business, Innovation and Skills, done an enormous amount. I think we are, as an industry, very grateful, but will she do more and outline to the House what she intends to do? Could she capture more value in the UK supply chain by promoting local content procurement targets, which lends capacity and capability to UK-based steel firms?

My hon. Friend the Member for Redcar knows my frustration. Overlooking our constituencies is the Teesside offshore wind farm, which presents a fantastic opportunity for steel to be part of a supply chain for an exciting offshore renewable industry that can literally power our future. The wind turbines and columns need an awful lot of steel. About 10% of the steel used in that significant local project was procured abroad—not from Hartlepool or Redcar steel mills. That is a disgrace. As a country, we need to be doing more about that; not protectionism, but making sure we safeguard the efficiencies of the local supply chain so we can have a viable future.

[Anna Turley]

Just yesterday I met Forewind, the company building the Dogger Bank wind farm a bit further out from our constituencies. That will come on stream in the next couple of years. It said to me that there will be a lot of steel involved. We have everything here on Teesside: we have the infrastructure, the skills and the steel. I hope to God that in the coming years we will have a blast furnace making the steel to build those wind turbines.

[Mr Wright]

I could not agree more. These are strong 21st century jobs in our supply chain that need to be nurtured by the Government, working in partnership with the industry. We need to safeguard that long-term prosperity.

Going back to my ministerial asks, will the Minister ensure that in sectoral strategies such as aerospace, automotive and construction—areas in which British industry is strong—she emphasises the importance of integrating material supply, which offers better synergy between the prime manufacturers and their suppliers in steel, which in turn can promote process and product innovation and efficiency, which in turn makes UK steel more competitive?

When we talk about the steel industry, there is a tendency to talk about the past. We should not shy away from our strong and proud history of, frankly, inventing the global steel industry—it is something to be proud of—but this debate should not be a history lesson. This is about looking to the future. A 21st-century, modern British economy has to have manufacturing and steel at its heart. That is what we are shouting for and demanding. I hope the whole House can unite in asking how we in Britain are going to stand up for steel.

--- Later in debate ---

[Marion Fellows (Motherwell and Wishaw) (SNP)]

Thank you, Mr Deputy Speaker, for allowing me to speak in this important debate. I also want to thank the Backbench Business Committee for agreeing to find time to hold it today. I pay tribute to all those who have spoken in this debate. In particular, I pay tribute to the passion, commitment and knowledge of the hon. Member for Redcar (Anna Turley), and thank her for leading in securing the debate. I feel I have something to add, but I will also be reiterating much of what has already been said. I make no apology for that, because everything that has been said is important and cannot be reiterated too often.

My constituency has been associated with steel since John Colville created the Dalzell works in the early part of the 1870s—I apologise to my hon. Friend the Member for Rutherglen and Hamilton West (Margaret Ferrier) for saying it, but we were there first. The famous Ravenscraig integrated steel plant was located in the centre of my constituency, and its closure is still felt today. I do not want to dwell on the past in this debate, so instead I shall deal with present reality and look to the future.

Dalzell plate mill is part of the long products division of Tata Steel Europe. Tata split this part of its UK operations to form a stand-alone division, which includes the neighbouring Clydebridge heat treatment facility in my hon. Friend’s constituency and the Scunthorpe plate mill, which is situated in the constituency of the hon. Member for Scunthorpe (Nic Dakin) and, as I have also now learned, that of the hon. Member for Brigg and Goole (Andrew Percy). Tata Steel is still trying to secure the third-party contribution after the proposed deal with the Klesch Group fell apart. That makes those plants particularly vulnerable in the current economic climate affecting the UK steel industry.

Long products’ key markets include the automotive and construction industries; energy and power; rail; aerospace; and defence and security. UK Steel, Tata Steel and the Community union all agree on the basic problems that face the industry: energy costs are too high; the pressure put on supply chains from unfair practices needs to be addressed; and the dumping of Chinese steel needs to be looked at again. I welcome the Government’s backing, but more must be done. If other countries, such as Italy and Poland, can provide help for their steel industry within EU rules, it should be possible for the UK Government to do so, too.

It is vital that there is a level playing field for business rates with our European competitors. The business rates system has penalised UK steel producers for making improvements, and that surely flies in the face of common sense. Increasing the value to the UK from supply chains will create jobs. A recent CBI report highlighted that more than half a million jobs could be created across the UK if supply chains are rebuilt. The Prime Minister congratulated Nissan yesterday on its contribution to the UK economy, but where does it get its steel?

[Anna Turley]

Let me draw on a comment that was made by the hon. Lady and by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop). It is great that we are championing success in industry and engineering, particularly in the north-east, but we must also be there in times of crisis.

[Marion Fellows]

I could not agree more. I wish to see expansion in the sector to allow Scottish steel to be used in Scottish infrastructure projects in the future. The energy-intensive industries compensation package payments need to be fully implemented now; there should be no wait until April 2016.

The Government could also consider derogation requests from the sector. We need a realistic timetable to meet increased commitment under the industrial emissions directive. Great work has already been done in this regard, and again companies have been penalised. I wish to commend Community the steel union for its work with Tata Steel to minimise compulsory redundancies at Dalzell and to look for redeployment and voluntary redundancies. That is an example of the close work that it has done with Tata Steel to ensure that the steel industry still exists in my constituency, albeit in a far, far diminished way. It is clear to me and other members of the all-party group for the steel and metal-related industry that this is a vital element in the struggle to save the steel industry in the United Kingdom as well. Various hon. Members have already referred to the good work done by the unions in this regard.

The Scottish Government are fully committed to ensuring that, within their devolved powers, the steel industry remains a vital part of the Scottish economy and they will engage with it and the UK Government as a part of that commitment. John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable Growth, said:

“The Scottish Government recognises the importance of steel manufacturing to Scottish industry, particularly in the construction and growing renewable energy markets. We provide a wide range of practical advice and support to companies”.

There have been talks between Fergus Ewing the Scottish Energy Minister and Tata in Motherwell and discussions also with Community. I understand that Tata, Community, Scottish Enterprise and Government officials will be sitting down shortly to discuss a plan for the future to ensure due diligence in safeguarding the Scottish plants.

The UK Government have also expressed concern at the challenges facing the steel industry in the UK, but it is now time for action. The motion for this debate says that

“this House recognises the unprecedented gravity of the challenges currently facing the UK steel industry; and calls on the Government to hold a top-level summit with the key players from the steel industry to seek meaningful and urgent solutions to the crisis.”

I urge the Government to hold that meeting as a matter of urgency and to act quickly thereafter to address the industry’s concerns, thus safeguarding a vital industry and well paid jobs in both Motherwell and Wishaw, Rutherglen and throughout the UK. We in Motherwell and Wishaw know the heartache of steel closure and would not wish that fate on others elsewhere in the UK.

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[Anna Turley]

I want briefly to say a huge thank you to everybody who has participated in the debate. As a new Member, I have been moved by the passion, commitment, diligence and depth of knowledge, and by the willingness of people to work together to do something that is in the interests of all our constituents. We have heard powerful voices from around the country—from Scotland, Wales and across England—come together to fight for jobs, opportunities and the British economy.

I thank the Minister. I appreciate her commitment to hold the summit. We will, of course, continue to press her for action on the specific matters that we have put before her. I look forward to meeting her after the debate. There was no need for her to list all the activities that she has undertaken as Minister, because she has been a breath of fresh air. I hope that she has felt the strength of feeling from colleagues on the Opposition Benches, because we appreciate her constructiveness and willingness to engage. She said, to use her words, that she gets it. We get that she gets it and we look forward to working with her on the delivery.

I thank the Minister for the tone that she used when talking about the issues with SSI in my constituency. It is a delicate situation and we have been dealing with it for days, weeks and months. I want to put it on the record that I object to the comments of the Under-Secretary of State for Communities and Local Government, the hon. Member for Stockton South (James Wharton), regarding today’s debate. Trust me, if anyone wanted to showboat, we could have done so. We have worked hard and constructively behind the scenes, and have tried not to put any pressure on anybody who is involved in the situation because we understand how delicate it is. Today is about bringing the issues to the fore and making sure that there is action to back up the work that is being done behind the scenes. I make no apology for bringing the debate to the House today. I am proud to have done so and to have worked with my colleagues on it.

The Minister said that the Chancellor’s plans have to be fiscally neutral. As my hon. Friend the Member for Middlesbrough (Andy McDonald) said, sometimes money is no object. In a crisis such as this, I beseech the Chancellor and the Government to—

[Stephen Kinnock]

Be bold.

[Anna Turley]

As my hon. Friend says, they should be bold and look at everything that they can do. It is in their hands to see where the money can be found. We have heard the strength of the feeling today—the money must be found and action must be taken.

I thank everybody who has contributed. When my hon. Friend the Member for Middlesbrough was speaking so passionately about the history and heritage of steelmaking on Teesside, I remembered a word that is held dear on Teesside: “Erimus”, which means, “We shall be”. That word came about on Teesside when steelmaking was coming to the fore, and our whole area was built upon it. It is about our destiny and our future. I do not want steelmaking to be about our past; I want it to be our future, so please tell us once again that it will be.

Question put and agreed to.

Resolved,

That this House recognises the unprecedented gravity of the challenges currently facing the UK steel industry; and calls on the Government to hold a top-level summit with the key players from the steel industry to seek meaningful and urgent solutions to the crisis.