Steel Industry

David Mowat Excerpts

Wednesday 28th October 2015 Commons Chamber

[Ms Eagle]

My hon. Friend represents many constituents directly affected by the closure in Redcar, as does my hon. Friend the Member for Redcar (Anna Turley), and he demonstrates his knowledge of the problems faced by the British steel industry. It is a pity the Chancellor of the Exchequer did not acknowledge those problems when he came up with that policy.

[David Mowat (Warrington South) (Con)]

rose—

[David T. C. Davies]

rose—

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[Ms Eagle]

I agree with my hon. Friend, whose constituents are particularly badly affected by the hard closure at Redcar. That hard closure will come to be seen as a folly of the highest order committed on this Government’s watch.

[David Mowat]

Will the hon. Lady give way?

[Ms Eagle]

I will give way one more time. This is a short debate and a lot of colleagues want to get in, so I hope Members will forgive me if I get on.

[David Mowat]

The hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) is right: the carbon tax floor is a bad tax and a tax on manufacturing, but so, too, is it true that in every one of the five or six occasions in the previous Parliament when we debated energy prices, Labour Members voted for higher energy prices. In particular, in December 2012 they were led through the Lobby to vote for the accelerated closure of the British coalfields in advance of anything happening in Europe. The carbon price floor is a unilateral tax, because the EU abandoned the emissions trading system and left us acting unilaterally in this regard.

[Ms Eagle]

In this Parliament, we always have to remember the issue of tackling climate change, but we have to balance that with the cost that that puts on our energy-intensive industries. We have to ensure that we get the balance right.

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[Stephen Crabb]

We are taking action to tackle unfair trading practices. We have already supported and voted for the renewal of anti-dumping measures at an EU level and lobbied for an investigation into cheap imports of reinforcing steel bar. We lobbied the EU because the steel industry raised its concerns with us; when the industry provides us with evidence, we act on its behalf. We will continue to do that by pressing the European Commission for firmer, faster action against unfair trade practices, and that is exactly what my right hon. Friend the Secretary of State for Business, Innovation and Skills is doing at this moment in Brussels.

[David Mowat]

A few moments ago, my right hon. Friend referred to the pre-arrangements in Germany, by which its steel industry pays 4p for a unit of electricity and its consumers pay between 10p and 15p a unit. That was pre-arranged, but it cannot be right that the state-aid rules do not apply to those circumstances, while everything we try to do falls foul of those rules. That simply cannot be right; it may well be an EU rule, but it is not adequate.

[Stephen Crabb]

I agree with my hon. Friend about the price differential. We recognise that very significant differential, and we are determined to take action, but I do not agree that we fall foul of state-aid rules all the time. We are committed to doing what we can within the rules, to which not just the British Government but the UK steel industry have signed up.

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[David Mowat (Warrington South) (Con)]

Unlike the hon. Member for Rotherham (Sarah Champion), I do not have a direct constituency interest in the steel industry, but 25 years ago I visited the blast furnace at Port Talbot, where I was working. It is one of those memories that stays with you, seeing a blast furnace in full flight. It is clearly a tragedy that the blast furnace at Redcar will no longer operate.

I wish to focus on energy prices. We have heard about Chinese dumping, business rates and so on and, of course, Chinese dumping is a major issue. However, as far as I am aware countries such as Germany and France are not closing blast furnaces or announcing major job losses. One reason is that the steel industry in Germany and France pays 4p per unit for electricity and the steel industry in this country pays 9p per unit for electricity. What matters is how big a proportion of the costs that difference makes up. No matter how efficient the guys watching us from the Gallery are, overcoming such an impediment is impossible. Energy makes up 15% to 20% of steel input costs, so we can work out that the cost in the end is something like 5% of the differential on the product. That is the margin that places such as SSI make on their product, and that is enough to make a difference.

We have an example of what happens when we do not pay attention to these things. Ten years ago, the aluminium industry in our country had three major primary smelters. That is now decreased by 90% and there is only one left, which is in Scotland. It is only left because it has its own hydropower and therefore has no need to deal with the electricity issues. Not only have we seen the demise of aluminium and steel, but this is true also across what we call the foundation industries, including ceramics and chemicals. Chemicals are a big industry and, unless we act on energy prices, we will be in the Chamber discussing chemical plant closures. The industries employ about 900,000 people and I make the point to those on both Front Benches that in this place we have Ministers responsible for banking, for digital, for farming and for sport, but we do not have a Minister responsible for the foundation industries. Perhaps we should.

I shall return to climate change. When I intervened on the shadow Secretary of State, she immediately closed the point down by saying that we have to be aware of climate change issues. That is true, but we cannot be aware unilaterally. No other country in the world has signed up for an 80% reduction by 2050—nobody has done it. It may be that we are right—that we are the only country in the world that will fix our 1.5% of global emissions—but the cost is the stock stuff that we are talking about now, and we all need to be aware of that. As I said in an intervention, when this issue is discussed in Parliament the Labour party and the Scottish National party always take the side of going further and faster on green stuff. Even in the Chamber this week, there were two examples of what I would describe as virtue signalling on this issue by Opposition Members, saying how green they are compared with the guys over here on the Government Benches. That is because we understand the impact of such measures, and we know that unless we act to close that energy price differential, we will be here discussing more industries in future.