UK Steel Industry

Bill Esterson Excerpts

Monday 29th February 2016 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

Again, we are debating the crisis in the steel industry in the context of thousands of job losses, closures of steel plants, and an industry hanging by a thread, with the livelihoods of 20,000 workers, their families and communities under threat, and all that in an industry worth £9.5 billion to the UK economy and which ran a trade surplus in 14 of the last 17 years. The problem we face now is that of the dumping of cheap Chinese steel on the global market. The challenge is how we defend highly skilled British jobs and the future of a vital industry, and safeguard an important source of exports in the face of this crippling and difficult situation. We must support the wider economy by taking a strategic view of what is in the national interest.

We have heard excellent contributions from my hon. Friends the Members for Hartlepool (Mr Wright), for Newport West (Paul Flynn), for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Stockton North (Alex Cunningham), for Neath (Christina Rees), for Aberavon (Stephen Kinnock), for Newport East (Jessica Morden), for Scunthorpe (Nic Dakin), for Cardiff South and Penarth (Stephen Doughty), for Redcar (Anna Turley), for Ellesmere Port and Neston (Justin Madders), for Alyn and Deeside (Mark Tami), for Huddersfield (Mr Sheerman), for Middlesbrough (Andy McDonald), for Ogmore (Huw Irranca-Davies), and for Stoke-on-Trent North (Ruth Smeeth).

The steel industry and the thousands of people that it employs are looking to Parliament and to the Government for support. The industry has come to the Government with five key asks to help to protect jobs and exports. Although there has been some belated progress, the Government’s response overall shows that they are not prepared to take an active role in protecting the steel industry. As my hon. Friend the Member for Hartlepool said when commenting on the excellent BIS Committee report, we must do more at European Union level. The Government claim that four out of five asks have been delivered, but on procurement no orders have been received in steel plants since those changes were made.

My hon. Friend told us that cheap Chinese steel needs effective international action if it is to be tackled. China is responsible for four times the combined production of the next biggest four steel producers, and unless there is co-ordinated, concerted effort internationally to combat illegal dumping, nothing will change. We were told that the British steel industry faces an existential threat through the grossly distorted market, and my hon. Friend’s plea, and that of members of his Committee, was for a co-ordinated approach.

The industry needs swift action on tariffs that protects steel produced in the UK and other EU countries against Chinese dumping, yet our Government have played a role in blocking that. The Prime Minister’s office opposed the idea of fairer tariffs on the grounds that it was protectionism—something confirmed a number of times throughout the Secretary of State’s speech today. Ensuring that we have a level playing field to protect our workers and businesses from a situation that threatens to destroy an entire industry is not protectionism. On the contrary, it is common sense and it is right. As Gareth Stace, the director of UK Steel, said:

“Anti-dumping measures in the EU do not currently have the teeth to halt this tsunami of dumped steel”.

The Government must support the lifting of the lesser duty rule, because otherwise steel manufacturing will be lost in the UK and across Europe. It is a simple ask, and one that is supported by other EU countries, yet the UK Government have failed to stand by their own country’s industries, not just in steel but in ceramics and other energy-intensive industries.

The Government have also shown little action on changing business rates for large manufacturers. I sat in Committee last week with the Minister for Small Business, Industry and Enterprise and heard of her commitment to an overhaul of rates. When it comes to it, however, the review first announced in 2011 is still to start and the industry continues to pay twice when it comes to rates on investment in plant and machinery. The industry was told that helping plant and machinery manufacturers was unaffordable. The Government review rumbles on as we wait to hear what they will do to support investment in plant and machinery. Will they tackle existing competitive disadvantages suffered by UK steel sites on plant and machinery, which account for up to 50% of their business rates?

Serious challenges have coalesced around the steel industry: a glut of global supply, energy costs, high business rates and a strong pound. The industry did not expect the Government to offer a silver bullet. What it rightly expected was for the Government to play their role in what should be a partnership. The most successful economies are characterised by partnership between government, industry and the workforce. For partnership to be effective, the Government have to play their part. Businesses and workers, through the trade unions, have played their part, but what of the Government? The situation demanded that the Government see the long-term strategic value of steel production and act accordingly to protect high-skill jobs and the future of a key strategic industry. The Government, however, failed to intervene to save the Redcar coke ovens. My hon. Friend the Member for Middlesbrough rightly described that lack of support as an act of industrial vandalism.

An industrial strategy is nothing more than a Government’s willingness to enter into a partnership with business and workers: to match their ambitions by looking beyond election cycles and investing in the infrastructure and the training they need to flourish; to see the long-term value of strategic industries; and to take the necessary steps to support and safeguard them. If the Secretary of State and his Ministers want to be a true partner to the steel industry, there are few clearer steps that the Government must take now. [Interruption.] If the Lord Chancellor had been here earlier, he would have heard my hon. Friend the Member for Wallasey (Ms Eagle) saying that.

The Government must block the unfair trading of steel by supporting EU trade defence instruments, allowing the swift implementation of defensive tariffs. The Secretary of State must throw his support behind tariffs and ensure they are set at a level that would protect UK steel. He and his colleagues should support the EU countries that have supported a level of tariffs that will help our industry and our economy. Remember that at one stage it looked as though the Secretary of State accepted the need for change. He signed a letter with counterparts from France, Italy, Germany, Poland, Belgium and Luxembourg demanding that the European Commission use every means available and take strong action in response to unfair trade practices. Sadly, a week later he told the Business, Innovation and Skills Committee that he was opposed to that very action, something he confirmed this evening when he said he was against removing the lesser duty rule. UK Steel director Gareth Stace described the U-turn as “galling” and said that

“government must support the lifting of the lesser duty rule, otherwise steel manufacturing will be lost in the UK and Europe.”

We need to take an active role in tackling Chinese steel dumping and need action on business rates for key industries and capital-intensive firms to level the field for UK steel by pursuing reform of tariffs at EU level. This is what the industry needs. It is what workers and their families need. It is what communities need, and it is what the wider economy needs. Until the Government take these steps, and until the Business Secretary begins to engage with a long-term industrial strategy to defend and promote UK businesses and workers, belated supportive words will be seen as nothing more than empty rhetoric.