Steel Industry

Debate between Baroness Laing of Elderslie and Nia Griffith

Wednesday 14th January 2015 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

Like many other Members, I would like to pay tribute to all those in the steel industry, including the trade unions, who are working hard to adapt, move, modernise and do everything they can to ensure that we are as efficient and competitive as possible. Diversity is key, as my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) pointed out, and in my constituency we have a Tata plant that makes all shapes and sizes of cans, along with holographic wrapping paper, which people might not realise is a steel product.

Procurement at all levels of government is vital to the steel industry. One key point that has been made time and again is that low demand is one of the biggest problems facing the steel industry. That is where the Government can step in and do things straight away. Why on earth did they not continue with construction projects in 2010? Why did they slash, for example, the plans for rail electrification to south Wales, meaning that we had to go through a whole process to get them reinstated? If we had pressed ahead with construction projects much faster, it would have been much better for the steel industry there and then. However, it is not too late now for the Government to turn around and push forward all the promised infrastructure projects, of which very few have been started. We need to start immediately, to provide a market for the steel industry.

Of course, we should use UK supply chains. That is possible, because community benefit clauses can be used. Other EU countries do it and get around the EU rules in that way, so we should push the boat out and be brave. We should explore the limits of what we can do and ensure that we bring home jobs for the UK. Why do we want to procure here in the UK? First, safeguarding jobs locally is vital for us, as is safeguarding the future of our industry and ensuring that we do the right thing for our balance of payments. Procuring in the UK is also environmentally better, because it means that we are not bringing products thousands of miles. We have higher standards of energy use than other countries, and carbon leakage occurs when we import from elsewhere. In other words, other countries produce more carbon in making the products than we do.

It is much like energy security—if we get rid of our foundation industries, we are for ever dependent on imports. That is why it is vital not only to keep current jobs but to create future jobs, and to keep the skills base and ensure that we always have products such as steel readily available. We will always want rail infrastructure and construction work, and we will always want to build power stations, wind turbines or whatever, so we should have steel products and the steel industry here.

We need to rebalance the economy away from financial services to the foundation industries. It is also true that the foundation industries are found more in the areas of Britain where there has been less economic development—in other words, outside the south-east of England. Rebalancing towards foundation industries helps us all across the UK.

Let me turn to research and development. In the autumn statement the Chancellor stopped raw materials qualifying for R and D credits. That decision needs to be reversed, so will the Minister ask the Chancellor to do that? Enhanced capital allowances need to be used where they will have a real impact. It is also vital that we do not shilly-shally with lots of nonsense about a referendum on staying in the EU, and put companies such as Tata in an impossible position where they would be far more likely to invest in IJmuiden than Llanelli. It is vital to send the message that we will stay in the EU. We do not want to lose the industry; it wants to be on mainland Europe where it knows it will have the market.

We need a much more proactive industrial strategy in which what we want is clear. Long-term investment is vital to steel. It cannot work, day to day, year to year; it works in decades. Energy policy has already been mentioned. Why on earth did anyone bring in a carbon floor price at that level? It was a ridiculous idea. Now, with the state aid difficulties with the energy-intensive package, we have to sort it out. It would have been far better not to have set the price that high in the first place. We were punishing ourselves, unilaterally, when we belong to a perfectly good mechanism in the EU, and our Ministers should be in there, negotiating the next stage so that the steel industry is not disadvantaged.

I fully support my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on the issue of CARES, and I am horrified at the complacency I have seen from the Government. That steel needs to be sorted so we can ensure that—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order.