Tees Valley Inward Investment Initiative

Iain Wright Excerpts

Wednesday 15th June 2016 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Lord Heseltine’s report “Tees Valley: Opportunity Unlimited” was written to explore the possibilities of transforming the SSI steelworks site and attracting internal investment into Teesside. Unfortunately, I do not believe it offers the comprehensive plan that was promised. Instead, it recycles many proposals that have already been published or suggested by the combined authority and the local enterprise partnership. I hope the Government will pay more attention to those aspirations now that they have been endorsed by the former deputy leader of Conservative party, but few marks can be given for originality.

As we all know, the SSI steelworks closed in autumn 2015, and as a result 5,000 jobs were lost directly or indirectly. Government inaction over the Chinese dumping of cheap steel in the UK market, high energy costs and a lack of infrastructure helped contribute to the steel crisis that made the report necessary. From reading it, however, we would think that the economic impact of the closure had all but been dealt with. Specifically, Lord Heseltine claims that employment levels have recovered since the closure of the steelworks. Not in my constituency: unemployment has increased by 23%. In the constituency of Redcar, where the steelworks were located, unemployment has increased by a staggering 43% since September 2015. It is not acceptable to ignore those facts, or to deny the reality that many of my constituents are facing in trying to find a job. I believe it is right that Lord Heseltine paints a positive picture of Teesside’s future, but he cannot gloss over the fact that the heart of Teesside’s economy, the steelworks at Redcar, has stopped beating on this Government’s watch. Nor must we forget Caparo in Hartlepool or Air Products or the many redundant offshore workers returning to the Teesside conurbation.

Lord Heseltine’s report talks about the steel industry solely in the past tense, as if it was some relic rather than the industry with huge potential that we know it to be. Thankfully, the remaining steel mills in Teesside, including Skinningrove in my constituency, still produce high-quality long products. With the right Government backing, the steel industry has a genuinely long-term future on Teesside and in the UK.

Unfortunately, the report offers no serious recommendations to secure the future of the steel industry in Teesside and the UK, and this at a time when the future of the 25, 42 and 84-inch tube mill in Hartlepool is still uncertain. The Government are now finally attempting to respond to the steel crisis, in part due to the hard work of Teesside MPs. I hope that the remaining steel mills on Teesside that still have uncertain futures are not neglected by the Government in the way the works in Redcar were, and I urge Government action to secure the long-term future of the remaining works, despite the fact that the report fails to suggest any.

[Mr Iain Wright (Hartlepool) (Lab)]

I pay tribute to my hon. Friend for the fantastic work that he has done to ensure a viable future for the steel industry. He was kind enough to mention the pipe mills in my constituency. Can he reassure me that we will be talking up the steel industry in the north-east to make sure that it has a viable future we can be proud of as part of a modern, dynamic manufacturing supply chain?

[Tom Blenkinsop]

I thank my hon. Friend for raising that point. The Greybull deal for long products, which covered Skinningrove in my constituency, the beam mill in Redcar and of course Scunthorpe, took 18 months of hard work and negotiations to help the Government help the industry come to a deal. It meant assisting Tata in releasing the assets so that we could get not just a buyer but a responsible buyer. As we know, the initial purchaser was seen in a suspicious light in Government circles, as well as in Opposition circles, but eventually, given time, we were able to get Greybull in and formulate a new British steel company. Something similar needs to be done for strip and speciality steels as well as for tubes, for Hartlepool and, further down the road, for Corby. There has to be a national strategy that interacts with local agencies.

Although SSI TCP has gone through a hard closure, much related industrial expertise remains in the region. Specifically, the Materials Processing Institute in Grangetown uses world-leading research to develop innovative approaches in the materials processing and energy sector. Last week, the MPI welcomed representatives from the Slovakian steel industry who wanted to learn how to improve and innovate in their steel industry. That came after recent similar visits from Swedish and German Government representatives.

Another institute harnessing the UK’s expertise in this area is TWI, which not only exports knowledge and experience but trains more than 25,000 students each year in testing and researching welding and inspection technologies. Those are, of course, linked to the tube mills. TWI has offices around the UK, including in Middlesbrough. If the Government were to invest to unite and strengthen those institutes, steel in the UK could leap ahead of our global competitors. I have previously advocated the Department for Business, Innovation and Skills taking advantage of that expertise as a way to secure investment and harness expertise to give our industries the edge over competitors, which would make the term “northern powerhouse” more than just words.

I turn to the site itself. Lord Heseltine recommends that responsibility for it be passed to the mayoral development corporation as soon as possible. There are significant costs associated with reclaiming the site, and I am concerned that without additional funding from central Government, much of the corporation’s budget will be consumed by those costs. The clean-up costs at previous sites, such as Ravenscraig and Corby, ran into the tens of millions. I note that the report requests that Her Majesty’s Treasury pay for any further assessment needed on the site. Will the Minister outline what the Government contributions to the costs of regenerating the site will be? A cast-iron guarantee of long-term regeneration funding from the Government is necessary to secure private and commercial investment in the site.

We also need funding for an investigation into whether the existing blast furnace has a future—that has to be nailed down—and into the existing mills on the SSI site, whether the continuous casting plant or the basic oxygen steelmaking plant, because those assets could be reused. At the moment, under the official receiver, their future is unclear. For example, I know from local knowledge that the locos on the site, without which nothing can be moved on a 3 square mile site, have been cut up and sold off. We want a potential buyer to come forward to reuse the site for industrial purposes—hopefully steel, but we are not choosy as long as it is used for some form of industry. Removing the assets, cutting them up and selling them off undermines its ability to be resurrected.

That leads me on to the future use of the site. Helpfully, a large part of the former steelworks, earmarked for a second blast furnace and plate mill in the 1970s, is still empty and relatively clean. In my view, the prairie, as it is known, should be earmarked for job-creating development early in the process.  With good access and links to the still existing deep-water terminal, it could be a prime area for warehousing and distribution. Indeed, it could have a manufacturing dimension if the Government were to revisit an earlier but rejected proposal by the combined authority, which was for the whole area around Teesport, including the SSI site, to be designated as a free port. That could mean tax-free status for the land, allowing the importing of raw or semi-finished materials that could then be fashioned into final products for possible re-export. The idea was turned down flat, as I understand it, by Her Majesty’s Revenue and Customs. If there is the will, it is one suggestion that the Chancellor could prioritise.

I turn to the recommendations that Lord Heseltine makes about boosting investment in the Tees valley. He rightly highlights the importance of transport to building the economy, but Government action does not seem to be aligned with his thinking. In answer to my question on the report’s recommendation to extend the trans-Pennine electrification scheme to include the Northallerton to Teesport line, the Minister confirmed that the line would not be included in the scheme and that its electrification would not be considered until after 2022. On top of that, on the day after the report’s publication, a clause was added to the Government’s Bus Services Bill limiting the ability of councils to run their own bus services, despite the fact the report states explicitly that local leadership is the key to boosting transport infrastructure.

We are therefore presented with the absurd situation of a Conservative Lord publishing a review commissioned by the Department for Business, Innovation and Skills, which makes proposals on transport, yet within days the Department for Transport contradicting or ignoring the report. I hope the Minister and the Department for Transport will present a united response to the report that provides Teesside with the infrastructure it needs to boost investment.

On the energy economy, Lord Heseltine rightly praises the work done so far to build the industry in Teesside. I hope that the Department of Energy and Climate Change will continue to work with local partners, in line with the approach outlined in the devolution deal. Lord Heseltine also rightly asks the Government to clarify their position on the carbon capture and storage industry. Their decision not to proceed with the CCS commercialisation competition has left a lot of uncertainty about the future of the industry. I asked for clarification of that point in April, and my hon. Friend the Member for Stockton North (Alex Cunningham) received an answer as recently as 1 June stating that the Government would set out their approach to CCS “in due course”. That is not good enough for Lord Heseltine; it is not good enough for me and my constituents; and it is certainly not good enough for potential CCS investors in Teesside, including existing energy-intensive industries. I hope a statement on the Government’s approach to the industry, which will only grow in importance in my constituency, will be presented soon.

I will finally highlight areas that I believe are vital to Teesside but are not touched upon by the report. As on steel, the report fails to make serious recommendations on mining, which employs hundreds of people in my constituency. Unfortunately, at one mine in my constituency, up to 250 of the 1,000 strong workforce were made unemployed at the beginning of this year. People are losing jobs that are vital to the east Cleveland economy, leading to some terrible and tragic consequences, with redundancy processes happening in the lead-up to Christmas last year. There is nothing in the report to help those people or to promote investment in a new mine, despite the fact that new mining locations are being developed by Sirius, for example. Logistics is another growing industry based around Teesport that is neglected in the report. I hope that Government action will extend to supporting that sector, too.

Put simply, the report is not good enough. It asks the Government to “consider”, to “make assessment for” and to “take account of” all sorts of things, but it does not call for clear action and Government support to keep our steel industry alive, regenerate the SSI site and make us the world leader that we know we can be. Without the action that is needed, I am afraid that under this Government and with these empty recommendations, the Hercules of Teesside will remain an infant.

Perhaps the Minister will be able to assuage my fears and commit the Government to the following: providing additional resources to the mayoral development corporation to ensure that its role in not limited to maintaining the SSI site but includes renewing its potential; re-evaluating the free port proposal for an area including the SSI site; acting to support the remaining works in Teesside and actively exploring how skills in institutes such as the MPI can give the industry a secure footing; setting money aside to fund an additional road crossing over the Tees; re-examining the proposal to include the electrification of the Northallerton to Teesport line in the trans-Pennine scheme; prioritising the Tees valley in the roll-out of the national teaching service, given Lord Heseltine’s criticism of educational establishments in the area—that should include addressing parity of school funding not just for Teesside schools, but for schools throughout the north that are not receiving as much as those in the south; continuing to commit resources and support from the Department of Energy and Climate Change to the energy sector in Teesside; and developing a new plan to support carbon capture and storage in the Tees valley.

If the Government cannot even commit themselves to implementing the recommendations in the report, it will have been a complete waste of time and money. Can the Minister tell us how much it has cost the taxpayer to produce a report that is full of proposals on which, apparently, the Government do not currently wish to act?

I hope that the review, and the comments that I have made today, will not be forgotten as a result of their proximity to next week’s referendum. Whatever choice the people of the Tees valley make on the European Union, Teessiders will need to see more action from their Government than they have seen so far.

[The Parliamentary Under-Secretary of State for Communities and Local Government (James Wharton)]

I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on the broad thrust of his speech. I think we can all agree that Teesside is a wonderful place that provides incredible opportunities, and that we should now focus on how those opportunities can best be delivered.

The Tees valley has many great strengths. Teesside contributes more than £12 billion to the national economy each year. Its rate of new business creations is higher than the UK average, and unemployment has fallen from about 31,400 in December 2014 to 27,000 in December 2015. However, that does not mean that it has not faced real challenges, of which the hon. Gentleman gave specific examples. He also gave us his thoughts on both the work that has been done and the work that still needs to be done to overcome some of the difficulties that our economy has faced.

The Tees valley economy has been growing for some years, but it has certainly faced difficulties. We must now focus on what is great about the area—what we can sell and what we can talk about, and how we can promote the economy to those who might wish to invest in it—but also on how we can gain the maximum benefit, and unlock the potential that exists. There is some good news. In February, Lord Heseltine and I attended PD Ports’ launch of its new £35 million redevelopment and expansion. In March, Cavitech opened its new office. Nifco, a company in my constituency, has expanded into two new facilities over the past four years. On Friday I opened the new offices of Odyssey Systems in Stockton, which means the provision of IT services, the creation of jobs, and investment in the Tees valley. There is, in fact, a great deal of good news, but there are also those challenges, which still need to be addressed.

Lord Heseltine’s report is an important part of the process. It is an important step in the journey towards both identifying opportunities and addressing them when we are able to do so. It is an independent report: although it was commissioned by the Government, it does not set out the Government’s position any more than it sets out the position of the local authorities, businesses and universities that contributed to its production. It contains a wide range of recommendations, many of which have been broadly welcomed, although there is, of course, debate about how some of the challenges that it identifies should be addressed. That debate is welcome.

The hon. Gentleman made clear his views about what night be done in future. I shall be happy to work with anyone who has the best interests of Teesside and the Tees valley at heart, to consider any specific recommendations and work with the Government to establish whether they should be delivered, and, if we conclude that they should, to ensure that that happens whenever possible.

Teesside has a complex local economy. We have experienced the great shock of the loss of SSI in Redcar and its impact on the economy—not just the impact on those who were directly employed, but the impact on those in the supply chain. We are left with a site which is in itself challenging, given the need for remediation, investment and support to bring employment back to the area, but which is also part of a bigger picture along the banks of the Tees, speaking not just to a glorious industrial past but to the incredible potential for a brighter future. That is why I very much welcome and support the establishment of the mayoral development corporation in its current shadow form. It is populated by some well-informed and capable business people and the leaders of our local authorities. It is bringing together many of those who want to make a contribution to the future of the Tees valley economy, and it has a remit that stretches further than the SSI site, which looks down the banks of the Tees, to what can and needs to be done.

The hon. Gentleman is right that a great deal needs to be done. We are still in the early stages of dealing with the official receiver, who has a job to do. Government and the board and the GovCo that sits under the Department for Business, Innovation and Skills are talking to the official receiver about the best way through the process, to give us the best chance of making a success of the site that is left at the end of those discussions and, at the end of that, when it is handed over fully to Government. We are in talks with local businesses about identifying opportunities, and work needs to be done to understand the needs of that site and to understand the clean-up, the infrastructure potential and the opportunities to attract investment. That stands at the heart of the issue we are here to discuss today: the investment we want to attract to Teesside.

In Lord Heseltine’s work in the Tees valley in recent months, he has worked with UK Trade & Investment to identify where Government can assist in bringing investment to the area, and to identify those potential investments that will help to drive regeneration and create jobs. I welcome that work and I know he is looking to support it where he can, and I have had discussions with a number of potential international company investors who could bring jobs and work to the Tees valley. I know that work will need to continue if we are to ensure employment is brought to that former site and into the broader area over which the development corporation will operate. This will go hand in hand with the Government’s programme of devolution.

Tees valley is at the forefront of the devolution agenda and will be one of the first areas to have elected a new metro-mayor, in May next year. It has agreed a deal with Government, but I want it to go further—to agree more, to take more control and to take more powers from central Government so they can be exercised closer to the people who are affected by the decisions the new mayor would be able to make for that local economy. None the less, it is on that journey and those talks are under way.

The hon. Gentleman spoke of areas of industry that he felt needed more attention than they have perhaps been given in the past. I can assure him I have had numerous meetings with Sirius to talk about the mining potential not just from its investment in north Yorkshire, but also through into the Tees valley, and the difference that can make to our economy locally and the jobs it can create.

The hon. Gentleman talked about logistics, which offer a huge opportunity for the Tees valley. The port is a great asset, is one of the largest and most successful in terms of tonnage in this country, and it is already making a significant contribution, but I have no doubt that it can do more and should be supported to do so.

[Mr Iain Wright]

The Minister mentions industries and sectors and I want to mention two more in which we have comparative advantage: the processing chemicals industries, with NEPIC leading; and the great potential in the offshore wind supply chain cluster. What tangible steps will the Minister and Government take to ensure we can accentuate the positive and fulfil the potential of these industrial sectors?

[James Wharton]

The hon. Gentleman makes an important point. Teesside is of course internationally respected for the chemical processing industry; not just NEPIC but CPI and the work done in that sector provide good jobs, long-term investment and real opportunity to attract more. We always want to continue to support that. As part of the process of looking for international investors, we are looking to support those organisations to see where more investment can be brought in. The chemicals and processing industry will form part of the story going forward of the sites that the MDC will become responsible for and the work it is doing.