Tata Steel

Iain Wright Excerpts

Thursday 16th October 2014 Commons Chamber

[Mr Iain Wright (Hartlepool) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Innovation and Skills if he will make a statement on the proposal for Tata Steel to sell its long products division, and the resulting effect on the economy, manufacturing capability and employment in the United Kingdom.

[The Minister for Business and Enterprise (Matthew Hancock)]

Tata Steel yesterday announced that it is in negotiations to sell its long products division based in Scunthorpe. At the same time, it has committed to invest further in its Port Talbot strip products business as it focuses its European business on strip products. I can understand that any announcement of this sort brings uncertainty, and we will do all we reasonably can to support the companies in ensuring a competitive future for the business.

Hon. Members will know that, over the past four years, we have seen steel production restart in Redcar, we have introduced support for energy-intensive industries and steel production in the UK is higher now than it was in 2010. The steel industry has an important role to play in generating future economic growth. It underpins a number of key advanced manufacturing sectors, and sustains the livelihoods of many local communities.

Decisions on company ownership are of course commercial matters for the companies involved. Nevertheless, we are working with the metals sector to develop further our metals industrial strategy. The Government believe that there is a sustainable long-term future for the steel industry in the UK.

We have already taken the following actions. We are in contact with both companies to work to secure the future of the business. In India this week, my right hon. Friend the Secretary of State for Business, Innovation and Skills met the global head of Tata, who re-affirmed his commitment to the British steel industry. The national infrastructure plan identifies a pipeline of more than 500 projects—costing about £250 billion to 2015—almost all of which need steel. That includes £1.4 billion in railway infrastructure, and 95% of the steel for the UK’s rail network will come from Tata Steel for the next five to 10 years. We have of course reduced energy costs, including through a £7 billion package for energy-intensive industries.

After decades of decline, steel production in the UK is rising, and we will not rest in our determination to ensure that manufacturing, including steel, has a strong future in our country. I commend this statement to the House.

[Mr Wright]

Thank you for granting this urgent question, Mr Speaker. The House will appreciate the uncertainty and anxiety, as the Minister said, that yesterday’s announcement by Tata Steel will have caused for thousands of steelworkers, their families, affected communities and firms throughout the manufacturing supply chain.

I want the Minister to respond on four issues. First, steel is a vital foundation for much of the UK’s manufacturing supply chain. The UK is the leading global player in industrial sectors such as aerospace, automotives, construction and energy. The production of steel in the UK underpins—the Minister himself used that word—much of that competitiveness. Britain’s largest steel manufacturer is preparing to sell half its capacity, so what contingencies have been put in place to maintain and enhance the skills and manufacturing capability in this industry, and to ensure that they are not permanently lost to the UK?

Linked to that first point, what commitments have the Government obtained from the potential new owner on the maintenance of existing sites and industrial capability, the safeguarding of jobs, and additional investment? How binding are any of those commitments? Is the Minister concerned by the unions’ criticism of the absence of any consultation or communication with the work force so far, and what will the Government do about that?

Thirdly, the sale affects sites not just in Scunthorpe, but throughout England and Scotland. What discussions have the Government had with their counterparts in Scotland to ensure that there is a co-ordinated and united response for the good of the steel industry in the United Kingdom?

Finally, what will happen if the negotiations on the sale break down? It is clear that Tata wishes to divest itself of its long products division. What active role are the Government taking in the maintenance of the UK’s long products capability for the long term? What are the implications for the Government’s so-called “march of the makers”, which places high-value manufacturing at the heart of the economy? Should not an effective industrial strategy consider, identify and mitigate such risks? It is not good enough for the Government to say, “Let’s wait and see. This is a purely commercial consideration.” They need to show that they are prepared to act for the long-term good of the steel industry and UK manufacturing.

[Matthew Hancock]

First, may I say that there is a remarkable amount on which the three main parties agree? I will go through the hon. Gentleman’s questions in turn.

The hon. Gentleman is right that steel underpins, quite literally, a huge amount of manufacturing and construction activity in the UK. We have taken strides to strengthen the skills provision for manufacturing, not least by strengthening and expanding the apprenticeships programme, but also more broadly. Should there be changes in employment, we will be there to ensure, as we do everywhere in the country, that people have the opportunity to reskill. However, that is not the situation at the moment because this is a sale.

On the hon. Gentleman’s point about the sale, we are consulting on strengthening the takeover code, as he knows, to ensure that the assurances that are given are binding. He talked about consultation and communication with the work force. Of course, the sale was announced yesterday, hence that is when the consultation and communication started. Although we are at an early stage, with the memorandum of understanding having just been announced, I would point out that the proposed purchaser brought a long products plant in Italy back into operation last year. We will, of course, be in constant communication with the proposed purchaser and Tata, as well as with the Scottish Government when devolved issues are concerned.

Finally, on the big picture of the long-term future of the steel industry, the Government have overseen an increase not just in the amount of steel that is produced, but in employment in the steel industry. Far from the fall of 8 million tonnes of steel that we saw between 1997 and 2010, there has been an increase under this Government. Clear action is being taken and we will not rest. While we will support all those who may be affected by this decision, that is by no means the path down which we are going. We will keep working to expand manufacturing, as we have done over the past four years.