EU Referendum: UK Steel Industry

Bill Esterson Excerpts

Wednesday 13th July 2016 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Gillan, in this debate on an incredibly important subject. I congratulate my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) and all my hon. Friends who have spoken in the debate. They have represented their constituents superbly over the last weeks, months and—in some cases—years to try to protect the vitally important strategic industry of steel.

I also congratulate the trade unions on their work representing their members and the communities that they live in, in these incredibly difficult times. We have seen examples of the benefits of partnership working between local politicians, the devolved Governments, local Government and the representatives of working people in those communities.

[Stephen Doughty]

My hon. Friend is absolutely right to pay tribute to the trade unions and all those who have worked in partnership. Will he join me in paying tribute to the work of the Daily Mirror and its “Save our Steel” campaign? It has kept a focus on the issue, even today in the midst of everything else that is going on, to make sure that we all pay attention to what is happening in the steel industry.

[Bill Esterson]

My hon. Friend is quite right to draw attention to the fine work of the Daily Mirror. Its campaign has raised awareness among the wider public of just how important steel is to the whole country.

We express regret that the Government did not act in a stronger way to try to save Redcar and that there was not greater engagement earlier on Redcar and elsewhere, but we have to focus on where the steel industry is and what can be done now, not least given the challenges following the vote to leave the European Union.

Steel has faced a profound crisis for quite some time. Plants that had been in profitable production for decades have closed. In Redcar, that brought to an end a century or more of steelmaking on the site. For other plants, the potential changes of ownership have been the source of considerable uncertainty and, of course, Brexit has piled uncertainty on top of what was already a very worrying situation.

Britain’s relationship to the EU and the rest of the world is now more unsettled than it has been for many generations. We have seen the immediate impact of the vote not just in the steel industry, but in this industry we have seen the planned sale of the Port Talbot steelworks put on hold. An estimated 15,000 jobs are directly at stake, with another 40,000 immediately affected through the supply chain. Then there are the risks, which my hon. Friends have raised, from the impact on the British Steel pension fund—that threatens the prosperity of more than 130,000 workers, and of course there is the threatened loss of a vital strategic industry. The time is now for decisive Government action to secure as much stability and certainty as possible.

Before the leave vote, the Government had started to act and to recognise, quite rightly, the strategic importance of the steel industry in this country. That recognition had included the potential for the Government to take a stake in the Port Talbot works—the Business Secretary had dropped his previous opposition to responsible ownership and had, at last, understood the importance of Government intervention in industry. As part of any deal, however, he was proposing to switch the indexing of British Steel pensions from the retail prices index measure of inflation to the far lower consumer prices index measure. Over time that would have amounted to a 15% cut in pensions being paid, and, as well as affecting the prosperity of British Steel pensioners, it suggested opening the door to similar pension raids in other sectors.

The proposal has quite rightly been resisted by the unions and also, notably, by other Government Departments. Addressing the crisis in steel at the expense of pensioners is simply not acceptable. Supporting our steel industry will require the Government to follow best practice from north America and Europe, and to develop an effective industrial strategy to support the industry. It will require willingness from the Government to support the pension fund.

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

I apologise for not being here at the start of the debate. My hon. Friend talked about pensioners. Shotton steelworks is in my constituency, and there are a lot of pensioners because the steelworks used to be far bigger. Many still live in the area, so the change in spending power over time will affect not only them but the whole area. We have to think about that as well.

[Bill Esterson]

Absolutely. Any money taken away from pensioners affects the rest of the economy, including other businesses and the livelihoods of many other people. My hon. Friend is quite right that those considerations need to be carefully taken into account.

In his excellent speech, my hon. Friend the Member for Cardiff South and Penarth said that the vote to leave the European Union has been a body blow that has put uncertainty on top of the existing difficulties. I will remind the Minister of some of my hon. Friend’s questions. He wanted to know what the Government will do differently now and made the point that time is of the essence—the steel industry simply cannot wait for the new Prime Minister to take time to act. As my hon. Friend said, the Government need to continue working, and to step up that work, with local MPs, the devolved Assembly, local government and the unions. They need to move away from the laissez-faire approach we have seen in previous times. When my hon. Friend was making that point, the Minister was waving her hand dismissively, as she is sometimes wont to do. That is simply not the response that is needed on this critical issue.

My hon. Friend also said that access to the single market is essential. We heard in an intervention about the importance for Members of all parties of retaining that access. That is true not just for steel but for businesses in many other industries, too—not least those that are part of the steel supply chain, whether in manufacturing, construction or defence. We need to know what the options are for retaining that support. What action will the Government take to ensure that the supply chain will continue to be supported by UK steel production? What action will they take to ensure that raw material prices are not adversely affected, and that there is not the impact that my hon. Friend talked about?

My hon. Friend mentioned exchange rates and said that the benefits will be offset by import costs. He and a number of my hon. Friends mentioned energy costs. My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) talked about the impact of the carbon price floor changes. We heard about the impact of business rates and the need for action on energy costs more generally. Will the Minister tell us exactly what she or her potential successor will do to take action on those points?

On the issue of procurement, the steel for the Aberdeen bypass—it was a £12 million contract—was made in Turkey, not Scotland or elsewhere in the UK.

[Jonathan Edwards]

I was not going to make any tribal statements, but the Western Mail, the national paper of Wales, last month exposed the fact that the Welsh Government have been using rebar steel from Germany for a road project—the Eastern Bay link road in Cardiff—less than a mile from where rebar is produced by Celsa in the Cardiff South and Penarth constituency.

[Bill Esterson]

That is the first I have heard of that.

[Jonathan Edwards]

You should read the Western Mail.

[Bill Esterson]

Unfortunately, the Western Mail does not find its way to Merseyside very often.

[Jonathan Edwards]

It is a fine paper.

[Bill Esterson]

I am sure it is a fine paper.

My hon. Friend the Member for Cardiff South and Penarth asked about the Steel Council. Will the Minister confirm what discussions are taking place and what work it is continuing to do after the Brexit vote? It has a critical role in the next few weeks and months.

I am conscious that the Minister has a lot to respond to, but I want to reiterate the importance of what my hon. Friend said. Government action is needed now. The steel industry, the workers, the supply chain, the businesses directly affected and the rest of the economy cannot wait weeks or months for action. Steel is crucial to our economy, our strategic needs and our communities. The Minister or her successor needs to make sure the Government do whatever it takes to save our steel.