EU Referendum: UK Steel Industry

Iain Wright Excerpts

Wednesday 13th July 2016 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Gillan.

I congratulate my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on securing this debate. He has been a strong and doughty champion of the steel industry. [Interruption.] Mrs Gillan, I’ll get my coat.

In my contribution, I will focus on the events and the circumstances regarding the pipe mills at Hartlepool. Last week, Tata announced its intention to sell off its Speciality Steels business, including the Hartlepool pipe mills but excluding the 20-inch tube mill. As we have already heard, this is happening in the context of Tata Steel looking to explore the feasibility of strategic collaboration with other European steel operators, perhaps with a joint venture.

In many respects, that is a positive move. The Hartlepool pipe mills are a profitable business unit within Tata. The Minister has seen the operations there for herself. She has seen that the mills have a skilled and committed local workforce that produce high-quality and value-added products for use in a variety of sectors, such as oil and gas, construction and infrastructure. It is little wonder, therefore, that several bidders have already shown an interest in buying Tata’s Speciality Steels business.

However, there is still uncertainty. A sales process of this nature is never straightforward, especially one where a part of a larger group is being divested, so what guarantees can the Minister give to ensure that we can continue operations at the Hartlepool site and that this sales process, which may be lengthy and complex, is concluded successfully?

The Minister has answered questions about this issue before; she knows its importance. However, it is vital that guarantees are given to boost confidence, not only among the workforce about their jobs but in terms of the order book, and in terms of customers and suppliers, to ensure that they continue to trade with the Hartlepool pipe mills; it is important to consider customers and suppliers, too. What can the Government do to increase confidence during this sales process?

In addition, what work has been done, or what assessment has been carried out, in respect of the Hartlepool steelworkers’ pensions? Will they be coming out of the Tata Steel pension scheme? It will be far more difficult to make a much smaller scheme, perhaps one based on Speciality Steels, a viable one. What work is the Minister doing with regard to the pension scheme? In this period of uncertainty, it would be very helpful if she could provide some sort of guarantees or confidence to allow this sales process to be carried out in a successful manner.

In the time I have left, I shall just touch on several broader issues; they have already been referred to in the debate but are incredibly important. There is still an unlevel playing field between ourselves and European operations. Energy costs remain a concern; there is a disparity in energy costs of something like £17 per MWh, even after the energy-intensive industries compensation scheme is taken into account. That means that UK steel producers and manufacturers face an additional cost to make steel, relative to their European rivals, of around £1 million a week. What will be done to level that playing field?

The second point that I will emphasise is the importance of business confidence and capital investment in the wake of Brexit. The vote on 23 June has produced enormous uncertainty, and as a result businesses—quite reasonably and logically—might want to pause their investment plans. They will think, “Let’s just wait until the next quarter, or the quarter after that, before we invest in new plant and machinery.” If we are in a global race for economic progress, we cannot afford to pause for a quarter or two; we will be left behind and consequently our competitiveness will be eroded.

What are the Government doing to ensure that the steel industry can be provided with as much clarity as possible? Can the annual investment allowance scheme, which has been excellent, be extended and widened? Will business rates be reformed? On the Business, Innovation and Skills Committee, we saw how illogical it is that manufacturers, such as steel manufacturers, are being punished by the Government. Manufacturers want to improve their competitiveness by improving their plant and machinery, but if they do so they will be slapped with an additional tax bill. That cannot be good economic sense. I know that the Department for Business, Innovation and Skills did not win the argument with the Treasury about this, but I ask the Minister and indeed the new Government to push further on it to provide the clarity that is needed.

My hon. Friend the Member for Cardiff South and Penarth has already talked about the importance of progress with procurement. Achieving such progress remains frustratingly slow. Government policy in this area was changed in October 2015 and again in April, which was welcome, but we need to see the new policy being translated into ongoing orders and activities for steel producers and manufacturers. I ask the Government to step up a gear, to ensure that the policy is not only changed but is active, energetic and vigorous in ensuring that local steel content can be used in all public projects.

This sounds flippant, although it is not meant to, but in many respects we no longer need to worry about state aid, so we can use this period as an opportunity to champion British steel and to ensure that we have a steel industry that is necessary and valuable for the economy, and that has a real future in the years to come.

[Several hon. Members rose—]

--- Later in debate ---

[Anna Soubry]

I do not know about the actual figures, but we have looked at that with considerable care, and we will continue to do so. A special unit has been set up, and—if I can put it this way—will be beefed up by the incoming Prime Minister. Those are exactly the sort of issues and complexities that we are going to have to deal with.

Let me make it very clear that, until we actually leave the EU, we are a member of the EU. I think some people think we have left. Well, we have not left. We are still subject to all its rules and regulations—for example, the state aid rules—and we have access to the single market. Those things are incredibly important throughout the process that will now unfold. While we remain a member of the EU, we are subject to the state aid rules, the trade defence measures and so on. What replaces those rules—we may remain subject to them in return for market access—is for the new Prime Minister and her team to negotiate. Whatever my role is—I may end up on the Back Benches—[Hon. Members: “No!”] The worst nightmare of the hon. Member for Hartlepool (Mr Wright), who has been my hon. Friend on many occasions, is that I return to the Back Benches and then end up on his Select Committee.

[Mr Wright]

No, no!

[Anna Soubry]

I think we are all becoming demob happy. We are looking forward to next week when we will have a short break, but we will all continue, as we always do, to work for our constituents in the so-called recess. I think that other people sometimes forget that.