UK Steel Industry

Huw Merriman Excerpts

Monday 29th February 2016 Commons Chamber

[Huw Merriman (Bexhill and Battle) (Con)]

Thank you, Mr Deputy Speaker, for calling me to speak in this important debate on the UK steel industry.

I would be the first to acknowledge that the constituency of Bexhill and Battle has not, to the best of my knowledge, made a large contribution to the steel industry. However, as my name suggests, my father and those who came before him hailed from south Wales, where the industry has always loomed large. It was because of my background that I put in to speak and, in so doing, I wish to express my support for an industry that the Prime Minister recently referred to as “vital”. It is with sadness that I have watched events unfold in Redcar, Scunthorpe, Scotland and south Wales. In parts of the country that rely on a specific industry, the impact is felt not just by those who are directly employed, but by the many people whose jobs and incomes rely on it indirectly.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

The hon. Gentleman has referred to a number of areas of the country, but as my hon. Friend the Member for Alyn and Deeside (Mark Tami) mentioned, there are also plants in north-west Wales and north-west England that rely on the industry. Does the hon. Gentleman recognise that there is a wider impact, with some 2,000 jobs relying directly or indirectly on the Shotton plant alone, and that it is important to take a holistic view?

[Huw Merriman]

I accept that point. This issue extends to the whole of the UK, including the constituency that I serve.

The steel industry has experienced challenges that are, as the Financial Times put it recently, akin to a perfect storm. First, since 2000, there has been massive growth in the volume of steel that is produced internationally, particularly by China. Secondly, the recent slowing of global growth, particularly in China, has meant that steel production has outstripped consumption. Thirdly, the surplus steel has been exported, again largely from China, which has pushed the price down for British producers. There is a similar theme in other sectors, such as our oil industry. Accordingly, British steel is being sold at a much reduced price, and because British industry has higher overheads, that has hit our steel industry hard.

That leads us to the question of what the Government can do in the face of global market events. I am pleased that they have voiced their support for the industry and are already working on the action requested in the motion in the following ways. First, they are pressing with some success, as we have heard today, for more vigorous anti-dumping and anti-subsidy measures across the EU to prevent Chinese firms from selling steel at sub-market rates across Europe.

Secondly, the Government are taking the lead in public procurement to ensure that, where possible within EU state aid rules, the Government buy British steel. To that end, I was pleased to hear the Secretary of State mention that public procurement contracts can take into consideration not just the specific costs but the wider socioeconomic benefits of buying British steel.

Thirdly, the Government are encouraging British private industry, such as our burgeoning auto trade, to buy British. Fourthly, they are assessing the tax and regulatory costs and what the industry can do to drive up its competitiveness. The Government have taken a lead in doing that with the industry.

Finally, the Government are driving discussions in the European Council on taking similar action at EU level, as the EU is the second largest producer of steel globally, albeit at about 25% of total Chinese production. I hope that those levers, which the Government and industry are pulling, will reach fruition and assist our steel producers and those who work in the industry.

I would like to respond to some of the points that have emanated from the Opposition Benches. I fully understand why they have been made but, being a Government Member, it would be remiss of me not to comment on them. It is not realistic for the Government to step in and effectively underpin the steel price by pumping money into the industry, for two obvious reasons. First, EU state aid rules mean that the UK is largely prohibited from providing financial assistance that could distort prices between producers within the EU.

[Anna Turley]

Will the hon. Gentleman give way?

[Huw Merriman]

I will not, because I am coming to a conclusion.

Secondly, at a time when our health service is having to find £22 billion of efficiencies in addition to the £10 billion that the Government are pumping in, we have difficult choices to make on behalf of the country about where Government spending goes.

I welcome the many initiatives that the Government have launched, which meet many of the requests in the motion. I hope that they will support our steel industry through this time of market turbulence.