EU Referendum: UK Steel Industry

Cheryl Gillan Excerpts

Wednesday 13th July 2016 Westminster Hall

[John Healey (Wentworth and Dearne) (Lab)]

I congratulate my hon. Friend on securing this debate. He poses a question about the additional uncertainty and the Government action that is required. Is he aware that, as part of the reaction to the uncertainty, south Yorkshire-based Speciality Steels will be sold, fast-tracked and separately, despite the pause on the sale of Tata’s main strip business? He will have seen Monday’s written statement from the Secretary of State for Business, Innovation and Skills, which made no mention of whether the Government are willing to help on financing, energy costs or research and development support. One of the things we require from the Minister today is surely a commitment that the Government will stand by the pledges they have made to support steelworkers, steel communities and the future of steelmaking, including in south Yorkshire at Rotherham and Stocksbridge.

[Mrs Cheryl Gillan (in the Chair)]

Order. Mr Healey, I remind you that interventions are supposed to be short.

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[Several hon. Members rose—]

[Mrs Cheryl Gillan (in the Chair)]

Order. As you can see, many Members want to speak. I am entirely in your hands. If I impose an informal limit of five minutes on each of you, that will leave enough time for those on the Front Benches to sum up. But if I find that that is slipping, I am afraid I will have to impose a limit on the number of speakers.

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[Marion Fellows]

Let me say that we do not manufacture steel in Scotland, but that goes back to when the Tories closed Ravenscraig in 1992. We roll steel in Scotland; we deal with plate. [Interruption.] The hon. Gentleman is chuntering from a sedentary position; I hope I can continue.

[Mrs Cheryl Gillan (in the Chair)]

Order. He is indeed chuntering. If he wants to intervene, he must make it a lot clearer than that.

[Marion Fellows]

From the start of the steel crisis, the Scottish Government have exhibited tremendous leadership and collective decision making. That demonstrates what is possible when a Government have the will to intervene and have the interests of the workers at heart, but most of all when there is clear leadership and a coherent plan. Following the result of the EU referendum, it is entirely apparent that there was no plan from the UK Government for how to deal with a leave vote. In fact, we are still waiting for the change of Prime Minister today, and we still do not know who will be in charge of the business of steel next week, or even tomorrow. There are also real difficulties in the Opposition, who are still in-fighting rather than moving forward, but I pay complete and sincere tribute to those Opposition Members who have been fighting day and night for their constituents and their steel industry. I cannot say strongly enough what I have learned from them about how best to achieve things and move forward the steel industry in Scotland, half of which is based in my constituency.

No doubt the hon. Member for Aberavon (Stephen Kinnock) will speak on Tata Steel’s problems later. There are real issues there, and all this uncertainty is making the whole situation in Port Talbot much more difficult than it needs to be. I implore the Minister to try to move things forward and to actually make a difference to the steel industry. The Government have had to be pushed, prodded and shoved to get anything done, and there are still serious difficulties with energy costs, rates and all the other things that were causing difficulties a year ago.

I commend the Government, and the Scottish Government, for moving forward on procurement, which is essential and a real priority, but procurement is about the future. For steel in the UK overall, we need action now.

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[Several hon. Members rose—]

[Mrs Cheryl Gillan (in the Chair)]

Order. I am very pleased with the timekeeping. I think I have four speakers left and I hope to start the wind-ups at half past 10, so I hope those speakers will divide their remaining time up accordingly.

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[Sarah Champion (Rotherham) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Gillan. I also give heartfelt congratulations to my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who not only secured this debate, but has championed at every level the steel industry in his constituency and across the UK. I am very grateful for that.

The result of the EU referendum has led to unparalleled economic and political uncertainty. For the British steel industry, it has come at the worst possible time. We must not allow it to impede the work that has been done and still needs to be done to secure a sustainable future for steel. What steel needs has been explained to the Government time and time again: address the high energy costs; tackle business rates that continue to leave the industry hamstrung; commit to favouring British-produced steel in procurement; and act on the cheap dumped steel that has contributed to the severity of the crisis.

The Brexit vote may have reduced our ability to act, but we must commit to working with our European partners to ensure a co-ordinated and credible response. Tata Steel’s recent change of course in strategy for its British business in light of the referendum vote presents dangers and opportunities, particularly for Speciality Steels, which is based in Rotherham and Stocksbridge. It is a tremendous asset to the British economy.

There is an unfortunate tendency to view the British steel industry as a relic—an industrial throwback to a different economic age. That could not be further from the truth for the whole industry, but especially for Speciality Steels. Speciality Steels is a world-leading business at the cutting edge of technology and expertise. It produces steel for the most complex roles, from aerospace to motorsports. Members may have watched the British grand prix, where the cars had steel from Rotherham and Stocksbridge in them. The division’s list of customers speaks for itself, running from Rolls-Royce to Lockheed Martin and from Boeing to BAE. Rotherham also houses Tata’s research centre, which continues to develop world-leading advances in steel production and technology to meet the most difficult demands.

However, that vibrant and dynamic business cannot continue to lead the world with one hand tied behind its back. We must act on the underlying problems the industry faces as a whole. Tata’s announcement that the division is to be sold separately is cautiously welcomed. Speciality Steels is a great asset, and I am sure a number of bidders will be forthcoming, but we must make certain that the right buyer and not just any buyer is found to allow the business to continue to thrive. This can be no fire sale. I understand from press reports that there has already been some interest from potential buyers for the business. Given the new circumstances, I would appreciate it if the Minister updated us on the implications that the latest move by Tata will have on Speciality Steels in south Yorkshire.

Tata’s Speciality Steels unit could be a fantastic investment opportunity for someone. As well as producing some of the best steel in the world and being at the cutting edge of innovative and highly profitable steel products such as powdered steel, it has a highly regarded workforce in Stocksbridge and Rotherham. It will have a tremendous future with the right investment. Training and support for staff needs to be provided where necessary. Support to enable the business to weather any short-term turbulence that may result from the sale is also needed. What commitments can the Minister give to support the sale process of Speciality Steels and ensure that it is managed effectively and in a timely manner? The written ministerial statement from the Secretary of State on Monday hinted at providing financial support to help the process. Will the Minister provide details of any possible support? Also, will she place on record today that the Government stand by their commitments made on 21 April 2016, which detailed hundreds of millions of pounds of support in a package for potential buyers of Tata’s UK business?

Madam Gillan, another area of great concern has been the sizeable pension liabilities, especially the old British Steel liabilities. [Interruption.] Sorry.

[Mrs Cheryl Gillan (in the Chair)]

Order. I quite like “Madam Gillan”. [Laughter.]

[Sarah Champion]

Okay—I ask Members to follow that.

Does the Minister envisage separate solutions for these liabilities? Can she give Members any details of what support the Government may offer any potential buyer of Speciality Steels? It is well known that, for Speciality Steels to maintain its dominant market position, significant capital investment is needed to move up the value chain. Can the Government offer any support or loans to potential buyers of Speciality Steels to ensure that investment in innovation, and in research and development, continues at its current pace or, indeed, is increased?

Speciality Steels has a bright future, and I am confident that the right buyer will quickly come forward. I know that the city region and Sheffield and Rotherham councils are determined to do whatever they can to help the business. The Government have repeatedly claimed to be committed to steel. That commitment must not slip, despite the economic obstacles we face. With the right support and nurturing, British steel can continue to lead the world in quality and technology with a dedicated, experienced and well trained workforce. The Government must not take their eye off the ball at this critical time. I join with my colleagues in urging them to act, and act now, to safeguard a viable, sustainable and successful future for British steel production.

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[Christina Rees (Neath) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Gillan. I thank my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) for securing this important debate.

It is widely accepted that steel and the steel industry are essential to Wales and its economy, which is particularly the case for my constituency and the people of Neath. Tata steelworks in Port Talbot and Trostre are places where hundreds of my constituents go to work every day. As products of the industrial revolution, both coal and steel have been the beating heart of Neath for more than a century, defining its communities and those who have had their lives touched by those industries.

Of the 1,050 jobs lost in the UK steel industry since the year began, 750 have been lost from Port Talbot—and on top of the 400 jobs lost in 2014. The extent of this decline could have been slowed, shrunk or even prevented had the Tory Government taken up the offers of support that have come from Europe. The forerunner of the European Union, the European Coal and Steel Community, was set up not only to cement peace, but to help economic growth by pooling resources and preventing unnecessary competition. Such planning and collaboration saw the UK steel industry become world leading not only in size but in quality.

The latest industrial revolution taking place in China may be the biggest of all. In 2013, China produced 779 million tonnes of steel, or 48% of worldwide output. The UK produced 12 million tonnes. But as members of a strong European Union, we were in a position to embody the very reason for the EU in the first place: strength in numbers, collective planning, a common purpose. Had the UK Government allowed, we could have installed anti-dumping tariffs on Chinese steel. We could have lifted the lesser duty tariff and applied for crucial EU funds, which would have shored up the industry during these difficult times.

More than half of UK steel exports are to the European single market. What will happen to those exports as a result of the recent referendum? I fear that the impact of tariffs or an elongated trade agreement may signal the death knell of an industry already fighting to compete on a level global playing field. The UK steel industry has declined by 42% between 1990 and 2014 in real terms. Economic output in 1990 was £2.7 billion compared with £1.7 billion in 2014. How can we halt this decline without the support of our European partners, automatic access to a ready-made single market, or the potential of additional funding to tackle rising energy costs and environmental commitments?

We also have organisations that innovate and produce high-tech products that are changing the way we view steel. Neath Port Talbot is home to a company called SPECIFIC—Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings—which uses Tata coated steel to make world-leading, innovative technologies that produce, store and release energy. SPECIFIC is hugely concerned about the prospect of leaving Europe, not least because of the essential funding it has received, without which it probably would not exist, but also because of the potential loss of a market where it could promote and sell its products. And let us not forget the steel that we import from the EU, which makes up 69% of our imports: it is not made in the UK, but is vital to many key industries that produce specialised products, infrastructure and new construction projects.

It is not a matter of whether Brexit will have implications for the UK steel industry, but the extent of them. Exports will be hit hard, output will be slashed, jobs will be lost and communities will be forsaken. I fear for the future of the UK steel industry in a UK outside the European Union, and I call on the Minister and the Government to do all that they can to protect it.

[Mrs Cheryl Gillan (in the Chair)]

Thank you. We will now move to the wind-ups.