Steel Industry

Gill Furniss Excerpts

Thursday 3rd November 2016 Westminster Hall

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Betts. I begin by congratulating my hon. Friends the Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley) on securing this vital debate. I also congratulate all my hon. Friends who have spoken. I welcome the new Minister to his place. The irony is not lost on me: I am a daughter of a steelworker addressing a Minister who has a family link with steelmaking. I think I heard that at the beginning of the debate.

The number of Members who have spoken today speaks volumes about the importance of the issue. It is a pleasure to be among this dedicated group who have been fighting for the future of the steel industry with such determination for many months and years. We must pay tribute to the all-party group. I am sure we are all awaiting the forthcoming report. I also thank the trade unions and their officials for their hard work representing their members and supporting them and the wider communities that rely on steel in incredibly uncertain times. Both they and the manufacturers have approached the situation constructively. I thank the Daily Mirror for its ongoing “Save Our Steel” campaign, which has done so much to keep the issue on the political agenda and to raise wider awareness of how crucial the steel industry is to the economy.

The last time Parliament debated the crisis in the steel industry was at the beginning of July, shortly after the EU referendum and David Cameron’s announcement that he would be standing down as Prime Minister. Members were grappling with the consequences of those things for the future of the steel industry. There were a lot of questions, but few solid answers.

Four months on, very little has changed. We have seen the chairman of Tata replaced by his predecessor, but the future of Tata steelworks across the country is no clearer than it was previously. Thanks to the drop in the pound’s value, a slight rise in steel prices globally and, not least, the dedication of our steelworks, there has been a slight improvement over the past few months. However, we must not let an uptick distract us from the fact that the industry is still in a deep existential crisis—it is hanging by a thread.

The industry has had plenty of warm words from both the old Prime Minister and the new, but so far there has been little in the way of practical policy. Although the new Prime Minister has spoken about strategically important industries needing Government support, steel manufacturers are crying out for the rhetoric to be matched by action. We have seen that Ministers are prepared to support industries in need—just look at their recent deal with Nissan. As much as we would all love to know what the deal entails, I appreciate that this may not be the debate in which to discuss it. Nevertheless, I am grateful to the Government for ensuring the continuing presence of Nissan in the UK, not least because the automotive sector is of critical importance to steel. It does, though, prompt the question: if Nissan and the automotive industry can be supported, why not steel?

With all the uncertainty hanging over the steel sector, workforce morale is understandably low. Workers are casting about for alternative careers, and once they have taken their expertise with them, they cannot be easily replaced. They need reassurance that their jobs and their industry have a viable future, and they need that reassurance now. Uncertainty also means a steady shrinking of customer confidence, and there is no surer way to undermine the steel industry than to allow its customers to think that it has no future.

Both the workforce and the manufacturers are united in calling for the Government to take a number of concrete steps. Members have highlighted those key asks this afternoon, and I want to reiterate them to the Minister and ask how his Department will respond to each of them.

The first issue is energy prices. The price of electricity in the UK for extra large users is the highest in the EU, to such an extent that it undermines our competitiveness. The difference means that UK steel manufacturers pay nearly £17 more per megawatt-hour than Germany—the next most expensive—costing the UK steel industry nearly £1 million every week. Industry has put forward a number of proposals to balance that disparity, such as a review of National Grid’s transmission charging regime and a review of the impact of the carbon price floor. However, the response from the new Department for Business, Energy and Industrial Strategy has so far been silence. Now that business, industry and energy are all under one departmental roof, I shall be interested to hear what discussions the Minister has had with his colleagues on the matter.

[Mr Bone]

The hon. Lady is making a very interesting speech. I would like to know—this goes to the heart of some of the problems with energy costs—the Opposition’s view on what should be done on energy prices.

[Gill Furniss]

We have to look throughout Europe and find examples of best practice that we can adopt in this area of work, which is clearly important.

Secondly, there is the issue of business rates. By including plant and machinery in business rate calculations, we are not only at variance with but less competitive than France and Germany, where business rates are as much as 10 times less than ours. We are also creating a disincentive for manufacturers to increase productivity and are effectively taxing investment. Perhaps the best example is in Port Talbot, where Tata invested £185 million in a new blast furnace only to find £400,000 added to their business rates. Our current one-size-fits-all regime for business rates is a hangover from the days when manufacturing dominated our economy. That has not been the case for decades, and we need a tax regime that reflects that change.

[Tom Pursglove]

Does the hon. Lady agree that a balance has to be struck on taxes? Taking her back to the energy point, one of my concerns is that in the past, the right balance has perhaps not been struck between green taxes and levies and making sure that the needs of our energy-intensive industries are properly reflected in policy. What does she make of that? Is she concerned about the green taxes and levies?

[Gill Furniss]

The hon. Gentleman makes a very good point, but a lot of work needs to be done in the green energy industries to start with, because we really are missing a bit of a home goal by suddenly putting them on the sidelines. I am sure we will pursue that.

[Tom Blenkinsop]

On green taxes, I remind the House that the Opposition voted against the unilateral introduction of the carbon price floor by the previous Chancellor of the Exchequer. That was brought in without any conversation with the industry and without the EU’s prior knowledge. When the then Government attempted to reverse that, they were prevented from doing so by European legislation. My hon. Friend will also be aware that as well as opposing the CPF, we also put forward business cases for the industry.

[Gill Furniss]

I thank my hon. Friend for that point. Thirdly, I want to give credit where credit is due and thank the Government for the guidance published in October last year, which has put some emphasis on supporting British steel in major procurement projects. However, despite the good intentions behind that move, we are still seeing major contracts going to foreign steel manufacturers, most famously the new Trident submarines, which are being built with French steel. Had a British firm been engaged to supply the steel, more than 1,000 jobs would have been supported, but alas, that is not the case. Will the Minister commit to ending the exemption from the guidance of tenders funded through contracts for difference? Will he look at strengthening the guidance better to reflect the social and economic consequences of current procurement decisions? Will he follow the examples set by the Scottish and Welsh Governments and publish future pipelines of projects so that British steel manufacturers can prepare themselves to fulfil future demand?

Fourthly, there is the issue of trade defence mechanisms and Chinese dumping. Whatever else Brexit may mean, it is absolutely vital for the industry that we avoid any sort of punitive restrictions on access to the European market. Last year, more than two thirds of our steel exports went to EU countries and our own steel industry is closely bound up with the Dutch plant at IJmuiden. Our trade defence mechanisms depend so much on what the final Brexit deal looks like, but whether or not we find ourselves bound by the rules of the single market, it is critical that the UK stands up for fair trade globally. While we still have a voice in the European Commission, we should be throwing our weight behind the scrapping of the lesser duty rule, which is hamstringing all efforts to counteract Chinese dumping, and opposing China’s application for market economy status, which will kill those efforts stone dead. Free trade does not mean fair trade and until the Government wake up to that reality, the steel industry will never have the level playing field it is asking for.

On the industrial strategy, the difficulties that the steel industry has with energy prices, business rates, procurement problems and unfair global trading practices are all issues that the Government need to address immediately. There are swords dangling over the industry’s head, but if British steel is going to not just survive but thrive, it needs a proper long-term industrial strategy to put it on the right track for the future. I am glad that the Department for Business, Energy and Industrial Strategy has commissioned research into the future capacity and capability of the steel industry. I and no doubt all of us here are looking forward to its findings next year.

Every job in steel supports three in the supply chain and the industry really is the cutting edge of UK manufacturing. Most of the types of steel being produced were not even in existence 15 years ago. Steel will play a central role in our transition to a low carbon economy if we manage it correctly and it can continue to lead the world in terms of quality and innovation. Will the Minister reassure us that BEIS will put steel at the heart of its industrial strategy?

Steel is not a dying industry. It is not a relic of a bygone era. It may be a proud part of our industrial past, but it also has the potential to be a dynamic part of our economic future. Without it, we will not only have lost an industry—make no mistake—we will have lost our entire manufacturing base. No one is asking for special treatment; we are asking for a level playing field that will allow the industry to move forward with confidence. Four months on since we last debated this issue, the steel industry is still in crisis. I urge the Minister to show more energy than his predecessors and do what it takes to save our steel.

[Mr Clive Betts (in the Chair)]

If the Minister would just allow a few minutes at the end for the wind-up speech, that would be appreciated.