UK Steel Sector: Supply Chains

Christina Rees Excerpts

Wednesday 9th June 2021 Westminster Hall

[Christina Rees (Neath) (Lab/Co-op) [V]]

It is always a pleasure to see you in the Chair, Sir Graham. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) for securing this important debate.

Steel is a foundational sector across the UK and never more so than in Neath Port Talbot county borough. Upon these strong foundations, economies and supply chains are created. Port Talbot’s steelworks reaches all the surrounding communities. Thousands of Neath constituents have worked there, know someone who works there, or work in its supply chain—my father did. To say it has been a difficult few years for the steelworkers in Neath Port Talbot would be an understatement. Competing in a global market, the absence of anti-dumping tariffs, the lifting of lesser duty rates and rising UK energy process have conspired to create uncertainty and fear. Over 2,000 local jobs have been lost since 2014. Steel and the steel industry are vital to Wales and its economy.

The idea that the steel sector does not have a future is unthinkable, but our steelworkers are as robust as the steel they make. They have bounced back from every adversity so far—but the situation is about to get much worse. The recent Trade Remedies Investigations Directorate recommendations on the existing steel safeguards could be catastrophic for the UK steel sector. Only 10 out of 19 product categories are recommended to have safeguards extended, leaving sites in Llanelli, Cardiff, Gateshead, Sheffield and many more without the protection to limit sudden increases in imports. The lifting of safeguards would open up UK markets to trade diversion and have a negative impact on the remaining measures. The interconnected nature of UK steel means that a threat to one product category will have consequences for the others.

Steel imports increased by 25% between 2013 and 2017, before the original EU steel safeguards were introduced. The current circumstances of global overcapacity and import restrictions in other countries make it highly probable that steel imports will again escalate should safeguards be removed. It is probable that the EU and the US will continue to provide safeguards for their industries and place measures on UK steel imports. It is astounding that the UK Government would provide open access to our steel market. The market remains volatile and delicate during the continuing pandemic, which has seen steel demand drop by 16% during 2020. The steel sector needs stability to recover and to adapt to a post-covid world. Safeguards are crucial to provide stability. The steel sector will continue to face many challenges—decarbonisation, subsidy regulation post Brexit, public sector procurement, energy price disparity—but it is the removal of steel safeguards that poses the biggest existential challenge, given the interconnectivity across the sector.

This is the first major trading test for the UK in post-Brexit times, and the UK Government must establish a fair trading environment for the UK steel industry and our communities. In contrast, the Welsh Labour Government have been standing up for steel, making an £8 million commitment to help secure a £30 million power plant at Port Talbot; offering £17 million of support for skills development; investing in energy efficiency; planning to reduce carbon emission; and offering research and development funding for new product development. At critical times, the Welsh Labour Government have provided direct financial support to sites right across Wales, protecting our jobs and communities.