Ian C. Lucas
Main Page: Ian C. Lucas (Labour - Wrexham)UK Steel Industry
Ian C. Lucas Excerpts
Ms Eagle
It is regrettable that there was not a recall of Parliament, but we are where we are, and we have this debate now, thanks to you, Mr Speaker.
It is imperative to underline the fundamental importance of this industry for our economy and our country. Steel is a foundation industry. While it might make up just 1% of total manufacturing output, that output is crucial. I believe that our world-leading automotive, aerospace and defence industries and our rail and construction sector all depend on a strong and sustainable domestic steel industry.
Our manufacturing sector is already facing tough times. The Secretary of State said yesterday in the House that manufacturing was up since 2010, but Office for National Statistics figures show a different picture. Manufacturing output in the last quarter of 2015 remained frozen at the level of five years ago, while output in January was actually lower than the year before and is still 6.4% down on the same period before the global crash.
In his 2011 Budget speech, the Chancellor espoused his vision of a Britain
“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
But he has failed to match his rhetoric with reality, because since then the manufacturing sector has actually shrunk. His much promised rebalancing of our economy has in reality failed to materialise. In this context, the challenges facing the steel industry represent an existential crisis for the UK’s manufacturing sector as a whole. I do not believe we can safely allow it to shrink further. And I for one am glad that the Government appear finally to have realised this.
Now we need action. Beyond the impact on manufacturing, the crisis in the steel industry matters for the wider economy too. Much has been said about the cost of supporting our steel industry, but far too little has been said about the costs of letting it be destroyed. Recent estimates show that its collapse would lead to additional costs to the Government of £4.6 billion through reduced tax receipts and increased benefit bills. It would also suck demand out of the economy, reducing household spending by £3 billion in the next decade. There would be secondary shocks, too, especially in the steelmaking communities up and down the country. For example, Tata is the biggest business rates payer in Rotherham, with an annual bill of £3.2 million. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) pointed out today, the loss of this revenue stream to the local authority is equivalent to a 1.8% increase in council tax there.
Ian C. Lucas (Wrexham) (Lab)
Does my hon. Friend agree that the way forward was shown by the Labour Government before the 2010 general election, when they introduced the car scrappage scheme to support our automotive sector? It was supported by all parties in the House at a time of dire threat to the sector. As a result of intervention and an intelligent industrial strategy, the automotive sector was preserved and now prospers. Is not that the model we have to follow?
Ms Eagle
My hon. Friend is absolutely right. I hope that the Secretary of State is taking note.
The loss of our steel industry would worsen our already record-breaking trade deficit, which is now the worst since 1948. The value of the goods and services we import now exceeds the value of those that we export by £32.7 billion. The loss of steel and our current exports of steel combined with the need to import far more steel would make this barely sustainable record deficit even worse.
Beyond the economic cost, there would also be an intolerable social cost. There are 15,000 jobs directly at stake in the industry and a further 25,000 jobs at stake in the wider supply chain. These are the kind of high-skill, high-paid jobs of which we need to see more. The end of steelmaking in the UK would be devastating for 40,000 workers and their communities. Some people have highlighted the potential costs of intervening to save the steel industry, but I believe the costs of letting steel fail are far greater.
Ms Eagle
I hope that we will have the chance to hear about concrete action from the Government in this debate.
I was talking about the costs to the community of letting steel fail. The costs to manufacturing and the economy are high, but the costs to the workers and their communities would be much higher. We very much welcome the recent commitment from the Business Secretary to do everything he can to protect steel-making and processing in the UK, but this Business Secretary has form. Warm words are all very well, but they are worthless, as the community in Redcar know to their cost, unless they are followed up with meaningful action.
Opposition Members are in no doubt that there are huge challenges facing the UK steel industry, but we believe that it can have a strong and sustainable future, and we know that decisions made by this Government now will ultimately determine whether it does. That is why I welcome the commitment the Business Secretary appeared to make in yesterday’s statement to what he called co-investment. Perhaps he will tell us whether he is considering co-investment to save the blast furnaces at Port Talbot, because we did not get an answer to that question in yesterday’s statement.
Will the Business Secretary confirm here and now that he will avoid a fire sale of these assets, and ensure that irreversible mistakes are not made in the way that they are sold? If Tata is to act as a responsible seller, it must consider only those offers that seek to maintain both upstream and downstream assets—that is, both the strip business at Port Talbot, and the specialist business based in and around Rotherham, Stocksbridge and the rest of south Yorkshire. The Government must also make sure that enough time is made available to ensure that an appropriate consideration of responsible offers can take place. It took nine months for the Scunthorpe deal to be developed, yet Tata has indicated that it wishes to exit the UK in four months. What is the Business Secretary doing to reassure the existing customer base that their current and future contracts will be fulfilled during this period of uncertainty? The plants cannot be saved if their order books disappear.
Let me turn to a number of areas where I believe the Government can make a positive difference. The most significant cause of the crisis facing the steel industry is the dumping of huge amounts of cheap Chinese steel on the market. It is priced below the cost of production; Chinese state-owned steel companies are making billions of pounds in losses, yet they continue to pour out more and more product. UK steel producers simply cannot compete with this state-subsidised unfair trade, which is threatening to destroy the European industry as well as ours. We are not calling for protectionism, but we are standing up for fair trade, and calling for quick and effective tariffs that will help to level the playing field. The Business Secretary must abandon his opposition to the abolition of the lesser duty rule and block unfair Chinese imports.
Granting market economy status to China must not be automatic. China meets only one of the five criteria that must be met if this status is to be granted, yet the UK Government support granting market economy status to China as early as the end of this year. Action to level the playing field using trade defence instruments, and on market economy status for China, would give potential buyers of Tata’s UK steel operations the surest sign that the Government stand ready to act.
On procurement, the Government should take concrete action to ensure that UK steel producers are able to benefit from large public sector contracts. The Ministry of Defence will spend £178 billion on defence equipment over the next 10 years, yet the Conservative-led coalition Government scrapped Labour’s defence industrial strategy, which made British jobs and industries the first priority in all decisions on MOD contracts. We are now in the deeply regrettable situation of an aircraft carrier, British surface ships and armoured vehicles all being manufactured in the UK with mainly imported steel, when, with more planning, our domestic industry could have supplied those needs.
The Government must also take action on infrastructure investment. Despite all the Government public relations about this, public sector net investment in the UK will in reality be lower as a percentage of gross domestic product at the end of this Parliament than at the start, and half what it was under the last Labour Government. Of the projects announced in the Government’s infrastructure pipeline, just one in five is actually under way. For the sake of our steel industry and the wider economy, Labour calls on the Government to bring forward shovel-ready projects that require a significant amount of steel, and to ensure that the changes to the procurement rules, which the Government keep boasting about, actually begin to make a difference.
Ian C. Lucas
I would like to share with my hon. Friend the fact that I received a letter from the Prime Minister yesterday praying in aid and praising an infrastructure project investment in the railway between Wrexham and Chester. However, this is being funded by the Labour Welsh Government and, unfortunately for the Prime Minister, it appears to be the only example that he could put forward of investment in rail in north Wales.
Sajid Javid
I can tell the right hon. Lady that no stone remains unturned in our efforts to help sell as much British steel as possible. The hon. Member for Torfaen (Nick Thomas-Symonds) asked about the lesser duty rule, and this point is raised repeatedly by Labour Members, but Labour had no problem whatever with the rule when it was in government. Scrapping the rule altogether would cost British shoppers dear. It would raise prices on everyday items that we rely on. For example, the rule saves British shoppers £130 million on footwear in one year alone. However, I told the House yesterday that I would be more than happy to look at any ways of specifically helping the steel industry, and I hope that Members will come up with ideas during the debate. I will, of course, be listening.
Ian C. Lucas
I referred earlier to the Labour Government’s intervention on car scrappage before the 2010 election. They stepped up to the plate to support the industry at that time. May I suggest that the Secretary of State approach the aerospace and automotive sectors and ask the Automotive Council and the Aerospace Growth Partnership to place on their agenda ways in which they could assist the UK steel industry by stepping up to the plate at this time of great difficulty for the industry?
Sajid Javid
As the hon. Gentleman will know, we have sector councils for both those industries, and we meet regularly and have a regular dialogue. This is exactly the kind of thing that those sector councils are designed to focus on, and it is exactly the kind of work that they are doing. I hope that the hon. Gentleman will welcome that.