Iain Wright
Main Page: Iain Wright (Labour - Hartlepool)UK Steel Industry
Iain Wright Excerpts(8 years, 10 months ago)
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Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship, Mr Walker, for what seems the umpteenth time. My mother sends her regards again—private joke.
I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this important debate. The situation in his constituency at Port Talbot is grave, with devastating consequences for the community he represents, the prosperity of his local economy and the entire Welsh economy. It is also another body blow for the UK steel industry, which has suffered punch after punch in recent months. Since August last year, the industry has seen 5,000 job losses. One in six of all jobs in British steel have been lost in less than six months and there have been major site closures. We have seen redundancies and reductions in capacity in Redcar, Scunthorpe and Lanarkshire, as well as further job losses this week at Port Talbot, Corby, Sheffield Forgemasters, and in my constituency at the Tata Steel pipe mill.
In response to the acute crisis facing the steel industry, in autumn 2015, the Select Committee on Business, Innovation and Skills conducted an inquiry into the Government’s response. We published our report just before Christmas, saying that at the time of publication, and as a result of site closures and job losses, the steel industry was on the verge of terminal decline. The announcements this week make a serious matter even worse and run the risk of pushing British steel over the edge and facing a truly existential threat in a matter of weeks or months.
The Committee found that although the Government identified the steel industry as being of vital importance—a point that the Minister established and reiterated during her evidence—they were not alert to the many warning systems being raised by the industry and issues that had been raised for years. We found a lack of action at EU level and a failure by UK Governments to push for a co-ordinated EU approach. Other countries have safeguarded their steel industries against the onslaught of cheap Chinese imports in recognition of the strategic importance of their domestic steel making capability. The UK has not done that, leaving this country and its steel industry particularly exposed.
Anna Turley
My hon. Friend is making some extremely important points about the role of the EU in this crisis. As the situation was unfolding in Redcar, the Government made great play of saying they could do nothing to intervene because of state aid rules. My hon. Friend will share my concern that we have had agreement from the European Commission that research and development, developing innovation, supporting training and, crucially, employment, and protecting and enhancing the environment are all grounds on which our Government could have intervened. The Government have done too little, too late for Redcar, but I hope that for other areas they will step up and use those opportunities to get through the state aid rules they hid behind in Redcar.
Mr Wright
My hon. Friend has been a fantastic champion of the steel industry generally, and particularly in fighting for SSI and for it to be retained. She will know that EU state aid rules are often a smokescreen for lack of political will. An excellent programme on BBC 1 this week, “Inside Out North East and Cumbria”, looked at the plant closures here and compared them with how the Italian Government could keep steel plants open. There is a lack of political will, because that could have been done. SSI could have been at least mothballed.
Anna Soubry
Yes, I was. Does the hon. Gentleman agree that the Italian steel plant was not a blast furnace? The blast furnace had been mothballed.
Mr Wright
I will come to mothballing of blast furnaces, because that is another key finding by the BIS Committee. We found that job losses, plant closures and factors that have worsened since we published our report just before Christmas mean that the prospect of any future growth in the steel sector had been irrevocably damaged. We regretted that Ministers were unable to prioritise preserving existing capability and retaining skills in the steel sector in particular.
The Minister talks about a blast furnace. The blast furnace at Redcar was one of the most efficient in Europe. My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) talks about it as having been second only to Dunkirk, and he knows more about steel than anyone else I know. However, it has now been lost forever to the British manufacturing base. Why was it not considered for mothballing rather than cold closure? The cost of cleaning up the site is destined to be in the region of half a billion pounds, and that is likely to fall to the taxpayer. It is an absolute disgrace, and our manufacturing base has been forever undermined as a result.
Huw Irranca-Davies
What are my hon. Friend’s thoughts about the fact that there was a vote in the European Parliament last Tuesday, when a Labour motion was passed, thank goodness, to look at reviewing the effect on steel of European state aid rules, whereas last December when there was a similar motion—looking at the European state aid rules, but also at the dumping of Chinese steel—Conservative Members of the European Parliament voted it down? What is going on? Why are we catching up? What does it say about the Government that they say one thing here and another in Europe?
Mr Wright
That is an absolute disgrace. We should all, regardless of where we sit and to which party we belong, be identifying steel as a major and important foundation industry for the British manufacturing base and having a co-ordinated approach to ensure that we can safeguard and retain those assets and, crucially, those skills as much as possible. If we are moving towards the high-value-steel end, where we are producing steel, metals, and materials that are stronger, more flexible and lighter, we need the skills to be able to do that. The 2,000 people in Redcar are not coming back to the steel industry. The 750 people in Port Talbot will in all likelihood not come back to the steel industry. And the hundreds of jobs in the steel industry that have been lost in my constituency will not come back. That is to the detriment of the British manufacturing base and the future competitiveness of the UK steel industry.
Tom Blenkinsop
My hon. Friend the Member for Aberavon (Stephen Kinnock) has said that if I was ever on “Mastermind”, my specialist subject would of course be blast furnaces, given that I dealt with the mothballing of the Redcar blast furnace back in 2010. That was mainly down to the expertise of the area and people such as Dave Cox, who is a constituent of my hon. Friend the Member for Redcar (Anna Turley). The real issue now—this sticks in the throat of most people—is the costs of having to maintain that site, which are about a quarter of a million pounds a week. Over the period of a year, that would have been approximately the same amount of money as it would have taken to pay for the three grades of coke that were sitting on a vessel just outside Teesport and which could have been brought in to save the Redcar coke ovens.
Mr Wright
Despite the fact that my hon. Friend says that his specialist subject would be blast furnaces, he is still a great colleague to go for a pint with. He makes a very important point, and I do worry about this. It is not just this Government but successive Governments who have placed short-term cost considerations over long-term value for our economy and society. That is incredibly important. For an industry that has been deemed to be strategic by the Minister, who has been a champion of this sector, the process seems to be one of chaotic yet managed decline. Can the Minister outline how much further she thinks the British steel industry will slide and what, for a strategic industrial sector such as steel, the right level of employment, capability and production is, both now and in the future?
We on the Select Committee acknowledged that the Government had recently woken up to the crisis and begun to take action, but today, exactly a month after the publication of our report and over three months after the closure of SSI and the steel summit on 16 October, no concrete steps have been taken. I am not suggesting that a silver bullet—or a steel bullet—could be fired to withstand the massive global forces affecting world steel demand and production, but swift action on the five asks from the steel industry could have provided a buffer for British-based steelmaking plants. I therefore have specific questions for the Minister with regard to some of the five asks. Can she outline how much extra cash has been provided to steel firms since the steel summit, in the light of the decision made on energy-intensive industries compensation? If steel is a strategic industry, why can a special exemption not be given for steel manufacturers in relation to business rates to retain some capacity?
Mr Wright
If the Minister will allow me to continue, why can investment in plant and machinery not be exempt for an uplift in valuation? On the issue of procurement, the Minister issued new guidelines in the immediate aftermath of the steel summit. Three months on, can she outline the value of the contracts that have been awarded to British-based steel firms as a result of those changes? Has work actually been put into steel plants as a result? What has the Minister done to talk to sectoral groups, such as the Aerospace Growth Partnership and the Automotive Council, to maximise the proportion of British steel used in successful industrial sectors such as aerospace and automotives? I am very pleased to see a Sunderland MP, my hon. Friend the Member for Sunderland Central (Julie Elliott), with us today. We on the Select Committee were told during our inquiry that Nissan in Sunderland—a great example of cost-efficient car production anywhere in Europe, if not the world—uses 75% British-sourced steel in the production of its Juke model. If Nissan can do that, why cannot others? What is the Minister doing to cajole others within supply chains?
Mr Wright
No, talk to them in a strategic manner rather than force them.
When it comes to moving research and development into new technologies, renewables are a great way to secure a real, viable UK steel industry for the future, yet the Government seem hell-bent on ensuring that we cannot do anything. One example is carbon capture and storage. Real help could have been provided, certainly for steel on Teesside, yet that has not been provided. That is a shame. What can the Minister do to ensure real co-ordination for what is meant to be a strategic industry?
I want to finish on constituency matters. This week in Hartlepool, 62 job losses were confirmed at Tata’s steel plant. That is on top of the 80 jobs lost at the end of October, when Caparo Industries’ Hartlepool forging plant went into administration. Although Caparo, the national group, has been sold, the factory in my constituency remains closed. Unemployment in Hartlepool rose in December, and the jobless rate is two and a half times the national average. In Hartlepool, we simply cannot afford to lose these jobs and these skills from our strong manufacturing base.
I understand that the redundancies affecting Hartlepool are not on the same scale as those affecting Redcar and Port Talbot, but as I have just outlined to the House, the employment situation in Hartlepool is precarious. Given the real problem with the global price of oil going down to something like $28 a barrel and given that the Tata Steel plant in Hartlepool is a provider, in the supply chain, to the oil and gas industry, we are going to see even more problems, so what is the Minister doing to be alert to these warning signs in order to retain capacity? I have previously written to her, asking whether the same level of support could be provided to Hartlepool workers affected by Caparo’s closure as was the case with SSI. The Minister replied that that could not be granted, but I ask now, in the light of this week’s redundancies affecting Hartlepool, whether that decision by the Minister can be looked at again.
Jonathan Edwards
I congratulate the hon. Gentleman on his speech. He has come up with some very interesting ideas and spoken with great passion. What would be his advice to his colleagues in the Welsh Government, who are deliberating on these issues now? If he was a Member of the Welsh Government—of course, a Labour Government—what things would he be directly calling for now?
Mr Wright
One thing that strikes me about these issues is this. As I said, these are global forces. The price of steel has halved. However, there seems to be a remarkable consensus from industry, unions, MPs and devolved Administrations about what could be provided as a buffer to help to safeguard the steel industry. The five asks from the industry are achievable and realistic and could be provided, but they have not been provided. It is a case of finding out from the Minister in her winding-up speech whether that will be the case.
The British steel industry is incredibly important as a foundation sector for much added value throughout our manufacturing base. If we lose the steel sector, we lose a large part of manufacturing. We cannot allow it to slide any further. We need to be acting. We needed to act years ago; we needed to act in the aftermath of SSI; and we certainly need to act now, in the light of further real trauma in the steel industry this week.
Kevin Brennan
We are very grateful, despite that slight slip on your part, Mr Rosindell—it was very uncharacteristic—that you are chairing our proceedings today. You are very welcome in this Welsh-majority debate. I know that you were left off the list of English MPs the other night when we had the first vote under the execrable new English votes for English laws arrangements in the House of Commons. I hope you feel you are receiving a warm welcome from your Welsh colleagues, who would like to be on an equal basis with you as MPs. Perhaps we can change that ridiculous rule in the future.
Let us get to the debate. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock), who made an excellent start in kicking off the debate. He speaks from great knowledge, given the location of the Port Talbot steelworks in his constituency. He described the Government’s approach to this issue as “warm words” and “frozen actions”. He made a powerful case, I thought, on the Government’s failure to act on dumping and on market economy status for China. He challenged the Minister to say how close we were to midnight in terms of the future of the steel industry, and we would very much like to hear her response.
We also had a contribution from my hon. Friend the Member for Scunthorpe (Nic Dakin), who pointed out that the situation facing the industry has got much worse since the steel summit on 16 October. He listed all the jobs lost in the steel industry since then. He speaks with tremendous expertise on the industry, and he should be listened to.
We had a contribution from the hon. Member for Brigg and Goole (Andrew Percy). In making a political speech, he seemed to be criticising politics being carried out in the House of Commons. When he expressed shock, or feigned shock, about politics occurring in this place, he reminded me a bit of Captain Renault in “Casablanca” complaining about gambling at Rick’s establishment. The hon. Gentleman, however, has a close constituency interest in the subject and, when we are not jousting across the Chamber, he works closely and across parties with colleagues in the interests of his local steelworks.
The next speech was a passionate one by my hon. Friend the Member for Ogmore (Huw Irranca-Davies). He will be a great loss to this place when, we hope, he becomes the Assembly Member for Ogmore in the near future. He spoke well about why the Government had not introduced the necessary mitigating measures at the same time as the carbon tax. They should have been introduced at the same time, and he outlined the scale of the consequences if market economy status is awarded to China without any attempt to leverage from the Chinese an end to the dumping of steel in European markets.
My hon. Friend the Member for Newport East (Jessica Morden) sent a note to me, as she did to you, Mr Rosindell, saying that she could not stay for the whole debate. She is the Member of Parliament for the Llanwern steelworks and she, too, spoke passionately. She mentioned the work of the Community trade union and Roy Rickhuss, whom I first worked with many years ago on the Allied Steel and Wire pension problems when I first became a constituency MP. She also mentioned the work being undertaken by the Welsh Government.
The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) made an important point about the small 9% tariff that the European Union appears to be planning in relation to rebar. That is too little and too late. I saw the Minister nodding when the hon. Gentleman made that criticism, so I hope she will tell us what the Government are doing to persuade the Commission that it has not done enough on those short-term measures. At the same time it would be nice to hear about what is really going on with the long-term reform of trade defence mechanisms and what the UK Government’s game is in that. The Minister shakes her head from time to time, but the Government have been involved in organising a blocking minority in the European Union on the long-term reform of trade defence mechanisms. If we are to have a future for our steel industry, that reform will be vital.
We also heard from the excellent Chair of the Business, Innovation and Skills Committee, my hon. Friend the Member for Hartlepool (Mr Wright), whose excellent report is available at £10 from good bookshops and Her Majesty’s Stationery Office. [Interruption.] I am sure he will tell us it is also free online. He spoke with tremendous knowledge, expertise and passion about the failure of the UK Government to push for a co-ordinated European Union approach, and about the failure to retain blast furnace capacity at Redcar, which has been lost, as he pointed out, because of the lack of effort by the Government. [Interruption.] From a sedentary position, the Minister suggests that she is considering nationalising the steel industry to achieve these aims.
Nationalisation is not necessary. This is not a choice between inaction and a laissez-faire approach to the steel industry and the full-scale command economy ownership of all of the means of production in the steel industry. It is about an active industrial policy and Ministers using all the levers at their disposal, including their influence and every Government Department, including the Treasury, and using their imaginations in working with industry to bring about the saving of the capacity of this country to produce steel. That is what is at the heart of this debate. There is a question that the Minister will have to answer at some point about the Government’s view on the minimum strategic capacity that they believe they can allow the industry to go no further beyond. However, I will come to that question further into my remarks.
My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) talked about blast furnaces. If there was a professorship of the blast furnace, he would be the professor. He raised very appropriate questions about what industry is doing. In his remarks, which bear reading and studying, he showed a real vision for the future of the British steel industry that the Minister would do well to listen to.
My hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who is also my neighbour, who is literally a doughty defender of his constituents, rightly referred to the tragedy at the Celsa plant and the deaths of two of the workers there. He also raised the big question about the strategic level at which the British steel industry should be protected. My hon. Friend the Member for Bridgend (Mrs Moon) spoke well and with clarity and passion, as always, about the human impact of the job losses at Port Talbot, and the hon. Member for Motherwell and Wishaw (Marion Fellows) spoke with sincerity about her constituents and about the impact the changes will have on them. Also, perhaps not purposefully, she showed the importance of the UK for the future of the steel industry, because for us to have a strategic steel industry there has to be a certain level of scale and integration, as my hon. Friend the Member for Middlesbrough South and East Cleveland pointed out.
Now, who have I missed out? [Interruption.] I think only one Conservative spoke and I have referred to him.
Like many people here—anyone from south Wales probably has links to the steel industry—I come from a family whose life chances were pretty much determined by and strongly influenced by the steel industry. My father was part of the group of people who helped to build Llanwern steelworks in 1962. On my birth certificate, his occupation is listed as a platelayer. He was involved in bringing the railway line that was necessary for an integrated steel plant into Llanwern steelworks, and then he stayed there and got employment at the new steelworks for the rest of his working life. Indeed, before I went to university, I had an opportunity to work at Llanwern steelworks for six months, where I worked mainly in the steel plant, but also as a platelayer, which was a rather nice rounded end to that period of my life—as a platelayer, replacing and maintaining railway lines within the steelworks at Llanwern. That is why we hear—I know the Minister understands this—the passion that comes from my hon. Friends and colleagues. They understand how steel underpinned their life chances and the life chances of their constituents and their communities. The availability of well-paid, stable employment in their areas was the foundation of the creation of the life chances of many of my hon. Friends here today.
Kevin Brennan
My hon. Friend is absolutely right. I know that the Minister understands this, but it is important to make it clear why Members feel so passionately about the importance of maintaining the steel industry both as a strategic asset to the country, and as the underpinning foundation of many of the communities we represent.
Mr Iain Wright
My hon. Friend is making an incredibly eloquent and moving point about how steel is in his blood, as it is in the blood of other hon. Members. Both my grandfathers were steelworkers in Hartlepool, so this is important for me personally, as well as for my local community. However, can we not fall into the trap of talking about the British steel industry as somehow in the past? It is vital to ensure that we have a vibrant and competitive steel industry for the future to make sure that we remain competitive in the world markets for manufacturing and much of our supply chain.
Kevin Brennan
My hon. Friend is absolutely right. One of my central points is that the British steel industry is competitive. I freely admit that the British steel industry of the past often was not competitive, often had poor industrial relations and weak management, and sometimes had, in the distant past, very low productivity. However, over the years, it has become one of the most efficient industries anywhere, with some of the best working relationships between workers and employers, because of their understanding of the common interests that bind them together, and because of the workforce’s desire to ensure that the British steel industry has a future, with them often prepared to make real sacrifices to enable that to happen. That is why we have such a competitive steel industry. The only sense in which it is not competitive is because of the issue raised by many Members today: Chinese dumping of steel at well below what it costs China to produce.
China’s steelmakers, 70% of which are state owned, are not profitable, and, according to our UK Steel briefing, are believed to lose close to $34 per tonne on all crude steel produced in China. In 2015, they produced 441 million tonnes more steel than China itself consumed. China’s 101 biggest steel firms lost $11 billion in the first 10 months of 2015. In 2003, China exported 7.2 million tonnes of steel, which was 5% of the steel trade between the main global regions; by 2015, total export levels from China had exceeded 107 million tonnes.
It is impossible for the highly competitive and efficient British steel industry to compete with a state entity of that size—the country contains one in five of the world’s population—that is determined to use that capacity to kill off its competitors and to destroy the British steel industry. That was what was going on while Ministers were talking to Chinese officials when they were over in the autumn. At the same time as its officials are smiling and talking about future trade deals, China is pursuing a policy of deliberately killing off the British steel industry.
Anna Soubry
In a moment.
I want to put something on record. I do not know whether it is significant, but my great-grandfather worked as a cutler in Sheffield. He then became a teacher, and then music teacher. In fact, he was knighted, but those are matters that do not concern us.
Anna Soubry
Just like the shadow Minister, apparently, although not if he wants a future in his party, if he holds a pro-Trident view and is at odds with his leader on many other matters.
Anna Soubry
I can do better than that, and I intend to.
My grandmother came from south Wales. We do not know much about her history, but we believe that her family also worked in the steelworks. Many of us can draw on our family experience, which is perhaps why I have a passion for securing the future of the steel industry, as does my Prime Minister. When I was appointed in May, one of the things that he asked me to do, apart from effectively being the Cabinet representative for small businesses, was to help to support and assist the steel industry in difficult times.