UK Steel Sector: Supply Chains

Holly Mumby-Croft Excerpts

Wednesday 9th June 2021 Westminster Hall

[Holly Mumby-Croft (Scunthorpe) (Con)]

It is a pleasure to serve under your chairmanship today, Sir Graham. I thank the hon. Member for Aberavon (Stephen Kinnock) for securing this important debate. As I am a fellow steel MP, I agree with him on many of the issues that he has raised this morning.

The steel sector has seen tough times and this Government have been proactive. In Scunthorpe, we put in hundreds of millions of pounds to keep our blast furnaces going. I myself come from a steel family, so I know that when times get tough, it is not only the steelworks that are threatened but the steelworkers— people like my granddad, who worked in Scunthorpe steelworks for 30 years—and the 20,000 supply chain jobs in my area, as well as the towns that grow up around the industry.

Steel is, indeed, a foundation industry that is crucial to national security. Our ability to manufacture and produce steel is critical in ensuring that we are self-reliant and insulated from global steel shortages. The Minister will recognise that there is competition between Governments in providing the best environment for a steel industry to thrive and there is much that we can do to provide a better competitive environment for UK steelmakers.

Rather than continuing to provide support in times of crisis, as this Government have undoubtedly done, we need to continue to look further and harder at long-term steel measures. Indeed, the glaring flaw in the preliminary recommendation by the Trade Remedies Investigations Directorate is that it did not make a sufficient industry-led assessment. Our steelworks produce many products across the categories assessed by TRID. These products are linked back to the production of crude steel and steelworks need a certain base level of production to be profitable. An increase in imports in an unprotected category could affect the viability of another steel product, and there is a real risk that the UK will be increasingly vulnerable to imports if steel safeguards are removed. I urge the Minister to work with her colleagues from the Department for International Trade to prevent that from happening.

We must also address the high cost of energy prices. Our steelworks currently pay almost twice as much for energy as French and German steelworks. On steel procurement, there has been progress and many in the industry have welcomed the overarching principles of the Government’s recent paper. The central tenets, especially on considering the overall social value of procurement and providing more flexibility for decision making, are absolutely right. The procurement of steel from the UK generates social value for our communities. Steel does indeed create well-paid jobs and has a part to play in levelling up areas such as Scunthorpe as manufacturing and logistics powerhouses.

However, challenges remain and I hope that the Minister will consider them. Steel procurement often involves an internal supply chain process. A contracting authority for an airport, for example, may appoint different subcontractors for different parts of the project. Each subcontractor may then appoint a sub-subcontractor on smaller bits and the sub-subcontractor may in turn, given their much smaller brief, procure the steel they need for their section of the development from an overseas producer without a tender—for example, one they have an existing relationship with.

That means that the same steelmaker may have to pursue, through multiple channels, contracts that are ultimately for the same project. That also makes reporting of the origins of steel difficult, which flies in the face of another fantastic tenet of the Government’s procurement proposals, which is transparency. Most importantly, in our national projects, this situation could cost the taxpayer more, due to the fragmented supply chain, the administration, the bureaucracy, the increase in supply lead times and the margin that each level of the steel supply chain commands.

We will see whether the proposals go deep enough and I hope that the Minister will say how she will work with her colleagues in the Cabinet Office to ensure that sub-sub-subcontractors uphold the high standards that the Government are looking to set for contracting authorities.

I believe that the British people want to see the Government use British-made steel in large-scale Government projects such as HS2. They want to see every bit of steel that we have the capability to produce being produced here in the UK. Indeed, I hope the Minister will consider what she can do with the traditional supply chain to explore whether contracting authorities can make steel procurement a separate tender, so that our steelworks can bid for large parts of the steel required in a steel-intensive national project.

That not only fulfils the core tenets of the Government’s procurement proposals but makes commercial sense. Our steelworks are well equipped to deal with the different products needed and have dedicated supply teams to provide technical management and supply chain steel expertise. I hope that the Minister can explore this approach with her colleagues in the Cabinet Office.

I come from Scunthorpe. I was brought up so close to the steelworks that we could hear them making steel when we lay in bed at night. This matter is personal to me and to many of my constituents. The hon. Member for Aberavon is absolutely right—none of us could live a single day of our lives without steel. This Government have a proud record in supporting the steel industry in places such as Scunthorpe. I look forward to hearing from the Minister and working with her on behalf of our world-class steelmakers.