2015 Steel Summit Commitments

Anna Turley Excerpts

Tuesday 10th July 2018 Westminster Hall

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

I beg to move,

That this House has considered progress on 2015 steel summit commitments.

It is a pleasure, as always, to serve under your chairmanship, Sir David. I am pleased to have secured this debate, which comes almost three years on from the 2015 steel summit. At that summit, in the midst of the steel crisis, steel producers, steelworkers, trade unions and parliamentarians came together with Government to discuss the challenges facing the industry and the support needed to at least level the playing field. We were not looking for special favours or advantages, just a fair environment so that British steel makers were not fighting against state-subsidised steel from east Asia or excessive energy costs compared with our competitors in Europe.

My constituents in Redcar felt the sharp end of that battle when the SSI steelworks and coke ovens were closed. Cheap Chinese steel had put the works under strain from falling prices, but it was Government inaction, in the face of pleas from parliamentarians, industry and the Community trade union, that left the works in a battle for survival. The closure wiped out 3,000 jobs and many more in the supply chain, rippling across our local economy.

Redcar is resilient and we are fighting back, but many families continue to struggle, working on lower wages in insecure jobs, working away or not working at all. Many come to my surgeries or visit the local citizens advice bureau, struggling with mortgages and personal debt. I do not repeat that story to dwell on the past, but to highlight why it is so important that the steel industry gets the support it needs to thrive. We cannot countenance any more reductions in steelmaking capacity in the UK after the loss of 175 years of steelmaking on Teesside. We cannot be complacent, as before, about the loss of any more steel jobs.

To return to the 2015 summit, there was a united request in the form of five asks, or five areas where the industry was struggling to remain sustainable, often because we were at a disadvantage compared with our competitors around the world. We were playing fair, but the playing field was tilted against us. I am speaking in the past tense, but sadly not enough progress has been made on those asks since 2015. The playing field is still uneven and tilted against British steel. While the existential urgency of the 2015 crisis may have passed, my town stands as a warning of what can happen if complacency sets in and the industry is not given the support it needs to survive.

[Stephen Kinnock (Aberavon) (Lab)]

On the point my hon. Friend has made about what happened in Redcar, does she agree that the closure of the blast furnace and coke ovens there was an act of industrial vandalism that led to the loss of a strategic asset for our country? Does she also agree that the steel industry needs to be seen as a strategic asset and in the context of our national security?

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[Anna Turley]

My hon. Friend is right. It was the second-largest blast furnace in Europe and the coke ovens were fantastic; they were capable of producing much more, including foundry coke, for which there was a huge market. It had a huge role still to play in the British steel sector, and we did not have a strategic nationwide approach to looking at those assets and preserving the value they had for our economy and for the future. I know many hon. Friends here want to contribute and share their thoughts and experiences, so I will not take too much time, but I will just give an overview of where we were and where we are now.

First, I will start with electricity costs. We asked for help with bringing the cost of electricity in line with that of our EU counterparts. In 2015, the Government introduced compensation for energy-intensive industries a few months earlier than planned, but a large disparity between electricity prices in the UK and the EU still remains. It translates into a total additional cost to UK steel producers of around £43 million per year, or around 17% of the sector’s net earnings, which is a significant margin to be losing in excessive energy costs. Europe offers many examples of acceptable state aid solutions to the energy challenge, but the Government have not given any serious consideration to what we can do.

Secondly, I come to business rates, which irk sectors across the UK, not just steel. The sector has put forward a number of proposals, such as removing plant and machinery from business rates calculations or offsetting previous trading losses against future business rates, but change in this area has been met by resistance, even though the sector has committed to reinvesting any savings, which would have a huge impact on local steel-producing regions. That feels like a short-sighted approach from the Government, ignoring a powerful tool for incentivising capital investment, increasing the productivity of the sector and helping to deliver a northern powerhouse boost.

Thirdly, public procurement is another area where the UK has so much potential to support UK steel makers, especially through large infrastructure projects such as HS2 and the Heathrow expansion. I know that British Steel in my constituency has aspirations to win contracts on those projects, and many other colleagues will have similar ambitions for their areas. There has been a close working relationship between the sector and Government on procurement.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

Does my hon. Friend agree that the Government have missed a real opportunity for UK plc generally, and for steel in particular, with their decision to refuse the Swansea Bay tidal lagoon?

[Anna Turley]

My hon. Friend makes a vital point, not just in terms of opportunities in that area for the creation of jobs and the boosting of the local economy, but in terms of the huge implications for the steel industry that we know such major infrastructure projects have in keeping that pipeline going.

The publication of an annual steel pipeline to provide early sight of such opportunities for UK producers has revealed over 4 million tonnes of steel requirements in the coming years. The publication of the procurement policy note on procuring steel in major projects has also helped to encourage a more holistic and proactive approach to steel procurement. Despite these steps forward, the benefits of this relatively low-cost way of subsidising UK steel and jobs are not being maximised. The guidance is interpreted differently by different Departments and organisations, and information sharing is still far too limited. Clearer and more detailed data on the amount of UK steel in public projects would be a welcome improvement, to track progress and to ensure it is held up to the light of public scrutiny. Introducing a baseline for levels of steel in UK projects would also help to maximise the benefits to domestic steel production.

Fourthly, trade remedies have been an incredibly important defence mechanism in the battle against state-subsidised steel, which is flooding the market and forcing down prices.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Does my hon. Friend agree that, in the light of the American steel tariffs, there is a real danger that steel that has hitherto been going to the US will be diverted and dumped on to the British market, and that the current UK policy is going in the wrong direction, unlike that of the European Union, which is going in the correct direction?

[Anna Turley]

My hon. Friend is absolutely right; I know colleagues have raised that issue a number of times with the Secretary of State for International Trade. The implications of the steel tariffs that President Trump has announced are not just a direct existential challenge to our steel industry here; the knock-on effect of further dumping from the Chinese market and others into our market is a real crisis coming down the line.

Such unfair trading practices put UK steel at a disadvantage for trading fairly without a single bit of state support. Thanks to work within the EU, dumping methodology has been reformed and a modernised regime has had a big impact in reducing the levels of dumped steel in the EU market. It is a real worry that, when we leave the EU, the UK will not endorse the same kinds of protection and the UK steel market could be in danger of being swamped. The UK Government’s unexplainable opposition to the modernisation package within Europe suggests that they will not introduce the same approach in the UK system post-Brexit. The proposals so far suggest there could be a much more difficult and drawn-out process for initiating defence measures, by which time the damage would have been done.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I congratulate my hon. Friend on securing the debate. As someone from a ceramics area, the issues she is talking about resonate with the industries I talk to. Does she share my concern that not only do the Government seem not to want to commit to the European calculations for dumping, but the introduction of an economic interest test and a public interest test gives further opportunities for Ministers to take away the protections, even if they were to update the methodology themselves?

[Anna Turley]

My hon. Friend is right. It is vital that we all contribute, and that the Government listen to the debate as we produce the legislation and look to leave the EU.

Our fifth ask was on environmental regulations, which is one area where there has been positive progress, allowing more time for specific sites to meet the requirements of the industrial emissions directive. However, one fully completed promise and some minimal progress on others is not a great record, almost three years on from the steel summit.

[Nic Dakin (Scunthorpe) (Lab)]

I congratulate my hon. Friend on securing the debate. Listening to her analysis, a balanced scorecard on the Government’s performance would not show a terribly high score. Does she agree that, three years on from that steel summit, it would probably be a good idea for the Government to convene a steel summit to review how the industry is doing now and set us fair for the future?

[Anna Turley]

My hon. Friend makes an important point. Three years on, it is vital that we look at the crisis we were in, where we are now and the impact of any measures brought in. He is right to put that suggestion forward. I remember his raising it on the Floor of the House at the height of the steel crisis and being met with guffaws and laughter, as if a steel summit would be an irrelevance and meaningless. It actually acted and secured some outcomes. He is absolutely right that three years on is the time for an update and to pull the sector and the industry together to look at what more we need to do.

Our key asks have been put forward again and again in applications for a steel sector deal. This process started in 2016, and we are still waiting. The issue appears to have been kicked into the long grass, and the complete absence of progress on a sector deal in the last 10 months has meant no improvements in levelling the playing field for UK steel makers. The longer we delay bringing forward a sector deal, the more time we lose to prepare the industry for the future challenges.

Those challenges are already emerging, such as in Donald Trump’s decision to impose tariffs on steel and aluminium imports into the US. That underlines what my hon. Friend said about this being an important time to come together and take stock of the implications of the new world that we are in. The tariffs will cause the UK to lose out not just in the direct hit to our exports but, as my hon. Friend the Member for West Bromwich West (Mr Bailey) said, from the diversionary effect as global steel makers look for another market to sell to.

I will finish by talking about why this matters. There are some, including in government, who continue to view steel as a sunset industry that has had its day, and which they would prefer to see in managed decline. That is a short-sighted and pessimistic view of an industry that should be at the heart of the UK’s ambitions for the future. Steel—especially many of the specialist types that the UK manufactures—is a crucial component for so many areas of Britain’s industrial landscape. It underpins our industries, from aerospace to automotive.

Steel has huge future potential. For instance, the Materials Processing Institute in my constituency is working to develop new specialist steels that will form part of the future export market. The industry is crucial to our industrial and manufacturing competitiveness. We have to value domestic production, not through protectionism but by empowering it with a fair playing field.

I secured the debate because progress in supporting British steel has stalled. My constituents and I know too well what complacency can mean for steel jobs in the UK. I hope Ministers will listen and take a renewed interest in backing our steel industry.

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[Anna Turley]

I appreciate the Minister’s response to that question and her update on the steel council; I am glad that it is meeting regularly. I just want to go back to the point made by my hon. Friend the Member for Scunthorpe (Nic Dakin), in his first intervention in the debate, about the option of putting together another steel summit. I feel that the time for that is now. Particularly if the sector deal is struggling, getting everyone together and getting everything on the table might just help to facilitate it.

[Claire Perry]

In my closing remarks, I was going to address the hon. Lady’s point on that, because I think we have made progress in ensuring a sustainable and competitive future for UK steel. However, we cannot be complacent. We know that there are global challenges that affect the sector dramatically. We have made progress on improving the competitiveness and innovation of the industry, and it is really heartening to see that we have these brilliant companies wanting to do the R&D and innovation in the UK. With global or European companies, that has not always been the case: they have made decisions to make certain sorts of products here, but to keep the R&D and intellectual capital elsewhere.

We will continue to work in partnership with the steel sector. This involves not just the companies, but the unions, the devolved Administrations and other stakeholders—in particular, the local communities. I will raise with the Under-Secretary the question of whether the time is right for another steel summit, particularly in the light of international events. Ideally, it would be when we have some progress to report back from the conversations that we are having at a diplomatic level.

I close by thanking sincerely the hon. Members present for raising these issues once again and by assuring them that there is no complacency and we are all dedicated to this vital strategic industry.

Question put and agreed to.