UK Steel Industry

David T C Davies Excerpts

Tuesday 12th April 2016 Commons Chamber

[Sajid Javid]

I will move on to the subject of Tata in a moment, but the hon. Gentleman is right to identify pensions as an issue, and we are considering all possible solutions.

Let me say a little about the action that we have already taken. We have taken action on power: £76 million has already been paid to steelmakers to compensate for high energy bills, and we expect to pay more than £100 million in the current financial year alone. In the autumn statement, just five months ago, we announced that we would go further. Energy-intensive industries will be exempted from renewable policy costs—a move that will save the steel industry more than £400 million by the end of this Parliament.

[David T. C. Davies (Monmouth) (Con)]

Surely my right hon. Friend agrees that, rather than compensating businesses for a tax that we levied, it would be far more sensible and logical to scrap the tax.

[Sajid Javid]

Given what my hon. Friend has said, I presume that our move towards exemption rather than compensation is exactly what he wants to see.

--- Later in debate ---

[David T. C. Davies (Monmouth) (Con)]

I, too, want to thank you, Mr Speaker, for granting this important debate. Steel is a huge part of the economy of my home town of Newport. In fact, my first job was at British Steel. I declare an interest as a British Steel pension holder, although what that pension will be worth after all this, I do not know.

Members on both sides of the House have spoken very well. The hon. Member for Hartlepool (Mr Wright) made the point that the fundamental problem is the vast amount of steel that has been coming into the marketplace from China since about 2008, and the fact that the demand for it is just not there. In reality, as he says, nobody can do anything about that fundamental problem, but there are certainly things the Government could do to help. Tata was losing about £1 million a day—we had the figures a few weeks ago. Frankly, the Government are not doing enough to help; I will not mince my words today.

One problem is that there has been a lack of consistency on both sides of the House. We need to ask ourselves a fundamental question: do we want heavy manufacturing industries in this country? Of course, people say the answer is yes, and I think the answer is yes, but if it is, one has to ask why, over the last few years, Governments of all parties—this Government, the coalition Government and certainly the Labour Government—have enacted policies that have made it much harder for heavy industry to continue.

Those Governments swallowed lock, stock and barrel the idea that carbon dioxide is a pollutant that is causing runaway global warming, and they enacted a series of policies that made things very expensive for any industry that emits CO₂, and made it expensive for heavy manufacturers to buy in energy. We have brought in renewables obligations and carbon floor prices, and as a result, we now have the highest energy costs in Europe. That point was made to us on the Welsh Affairs Committee by manufacturers and the unions. Dealing with the issue may not resolve the fundamental question, of course, but it could make the difference between an industry that is profitable in some areas and one that is not. It could also make the difference to companies such as Tata when they are deciding whether to maintain a plant here or in the Netherlands.

It is important that we think about things consistently. To be honest, I do not buy the argument that carbon dioxide is causing runaway global warming. I have spoken about this before, and I cannot deal with the issue in the next two minutes, but there is simply no correlation with the tiny increase we have had in temperature. Therefore, the Government need to rethink their policy.

Instead of deciding to get rid of the carbon taxes and energy taxes that helped to create the problem in the first place—taxes supported by Governments and MPs of all parties—the Government have brought forward a compensation package. The package is all right as far as it goes, although it had to go through a great big bureaucratic steeplechase in the European Union, which Members on both sides also support, and which I certainly do not. However, having got there in the end, and with the first cheques going out as we speak, what have we actually done? We levied a huge tax on an industry, and now we will give some of that money back, because the tax is having exactly the impact we thought it would, which is to punish the industry. I put it to the right hon. Member for Don Valley (Caroline Flint) that it would surely be much more sensible to scrap the carbon taxes in the first place. There is not much point having a tax if one has to compensate people for its effect.

[Mr Bone]

My hon. Friend is making a powerful speech. Will he explain how our industry is supposed to compete with the industries in continental Europe when we pay twice the energy price they do?

[David T. C. Davies]

My hon. Friend makes an important point. However, if Members on both sides truly believe that carbon dioxide is a pollutant and is causing runaway global warming, they should stand up, take a bow and explain to steelworkers that those workers losing their jobs is a price worth paying to stop the minute increases we have seen in temperatures—although, in fact, we have not seen any increase in about 17 years. The whole thing is absolute nonsense.

We should say that of course we want heavy manufacturing industries in this country. It is not just steel that is threatened; this is also not just about Tata. The Minister for Small Business, Industry and Enterprise will be aware that one other steel manufacturer in south Wales has said that it may face severe economic problems unless something is done about high energy prices. Sanjeev Gupta, a constituent who is head of Liberty House, has said that we need to scrap the carbon floor price. As I said, this is not just about steel; it is about glass, chemicals, cement and all sorts of other heavy manufacturing industries. If hon. Members truly believe that these industries are polluting the atmosphere and causing a great increase in temperature, although we have not actually seen any evidence of that for 17 years, they are doing exactly the right thing. However, I happen to think that all of them, and this Government, are doing the wrong thing.

It is high time we stopped trying to tax our manufacturing industries, stopped taxing companies that could be profitable, and stopped handing the money to expensive wind farms that generate electricity at two or three times market rates, particularly when the wind farm companies involved are not even willing to buy steel from this country, and import it all instead. In the Committee, the Minister described the policy as barmy, and she was right, although she was probably being far too polite.

I have no problem at all with CO₂ being emitted. I want a viable heavy manufacturing industry in this country, and I want to see lots of jobs and low taxation. I am perfectly relaxed about CO₂ emissions.