British Steel

Gill Furniss Excerpts

Tuesday 21st May 2019 Commons Chamber

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

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the discussions he has had with British Steel regarding its future.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Stephenson)]

My Department is in regular conversation with a wide range of companies, including those in the steel industry. As the House will be aware, the Government entered into a commercial agreement with British Steel on 24 April, valued at £120 million, relating to the company’s obligations under the EU emissions trading system. The Secretary of State updated the House on that agreement in an oral statement on 1 May—the first available opportunity after market-sensitive elements of the resulting transaction were concluded. The commercial agreement reached with British Steel ensured that the company was able to meet its 2018 EU ETS obligations under a deed of forfeiture. It also ensured that the company did not incur an EU ETS non-compliance fine which, coupled with 2018 ETS liabilities, would have equated to a financial pressure of over £600 million—a sum that would have put the company under significant financial strain.

The speculation regarding the future of British Steel will no doubt be creating uncertainty for those employed by the company. As shown through the ETS agreement, the Government have been willing to act. We have been in ongoing discussions with the company, and I am sure the House will understand that we cannot comment in detail at this stage. We will update the House when more information is available. I can, however, reassure the House that, subject to strict legal bounds, the Government will leave no stone unturned in their support of the steel industry.

Yesterday I signed up to the UK steel charter. We want to acknowledge and support the initiative from the industry, and the charter is one element of that. We have been also been encouraging the UK steel sector to strengthen its engagement with all existing and potential domestic steel consumers, maximising opportunities to benefit from the £3.8 billion a year of high market value opportunities that we have identified by 2030. We recognise that global economic conditions continue to be challenging for the industry, which is why the Government are working with the sector, unions and the devolved Administrations to support a sustainable, productive and modern UK steel sector.

[Gill Furniss]

It goes without saying that the UK steel industry is critical to our manufacturing base and that protecting the industry should be of paramount importance to the Government. The industry provides over 30,000 highly skilled, well-paid jobs in the UK, and British Steel directly employs around 4,500 in Scunthorpe, with a further 20,000 down the supply chain. Does the Minister agree the Government should be doing everything in their power to prevent British Steel from entering administration?

It is reported that British Steel had initially asked the Government for a £75 million loan in emergency financial support and subsequently reduced that request to around £30 million following negotiations with the Department. Will the Minister outline the asks of British Steel throughout the negotiations? Have the discussions included just financial support or a wider package of measures to support the site in Scunthorpe and the steel industry more widely?

Will the Minister confirm the status of the negotiations and why they are reported to have stalled in recent days? It has been reported that one of the reasons was the Department’s frustration with Greybull Capital’s apparent unwillingness to put money on the table. Will the Minister confirm whether that is the case? What impact did the company’s decision to acquire Ascoval last week have on the negotiations? If no deal can be reached with Greybull, have the Government considered any other options, such as bringing British Steel into public ownership?

Finally, the steel sector is facing myriad issues, from the value of sterling and the uncertainty around future trading with the EU through to US trade tariffs, and the Government could have taken steps to address them, such as greater procurement of UK steel, agreeing a sector deal, as the industry was requesting, and taking action on energy prices. Does the Minister accept that this Government have simply failed to take the steps necessary to ensure that UK steel remains competitive?

[Andrew Stephenson]

I pay tribute to the hon. Lady for the commitment that she and her family have shown to the steel sector over many years. I represent the constituency of Pendle, which is dominated by manufacturing, and I share her passion for the steel sector. I will leave no stone unturned, and neither will the Secretary of State for Business, Energy and Industrial Strategy, in supporting the UK steel sector.

As the House will know, we can only act within the strict bounds of what is legally possible under domestic and European law. I can assure the House that we will continue to do whatever is in our power to support the UK steel industry and those who work in the sector. We are working with the sector, the unions and the devolved Administrations to support all aspects of the UK steel sector.

The Government have taken a number of important longer-term steps, including ensuring that social and economic factors can be taken into account in public sector steel procurement, and providing more than £291 million in compensation to the steel sector since 2013 to make energy costs more competitive. We have also published a pipeline of upcoming national infrastructure projects every year to enable steel businesses to plan for future demand.

As I mentioned earlier, I signed the UK steel charter yesterday, and I will be encouraging other hon. Members and Government Departments to do the same. We want to acknowledge the importance of this industry.