Thamesteel

Ian Swales Excerpts

Wednesday 21st March 2012 Westminster Hall

[Ian Swales (Redcar) (LD)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate, and the right hon. Member for Wolverhampton South East (Mr McFadden) and my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) on their encyclopaedic exposition of the situation at Thamesteel. I intend not to repeat the comments that have already been made, but to talk more generally about the steel industry.

The Teesside Cast Products plant is in my constituency of Redcar and we are still celebrating the fact that Sahaviriya Steel Industries took over the site a year last Monday. The fact that the plant has not yet made steel is testament to SSI’s investment in and refurbishment work on the site and its long-term commitment to steelmaking in the UK. The plant will soon start—within days—to make steel and it will be a world-class site again.

I commend the work force for their constructive attitude towards SSI’s proposed new culture at the site. We have had only one black spot—namely, a dispute between Balfour Beatty and others over certain trades. I am not taking sides in that disagreement, but 20,000 working hours have been lost and I hope that it will be resolved as soon as possible. Our Thai friends are surprised that that has affected them in an area in which jobs are so badly needed and that has such a passion for steelmaking.

Overall, this has been a great story, with 700 jobs protected, more than 1,000 people recruited and at least another 1,000 in related jobs. The local community is right behind it and the effects are already being felt: there is a spring in people’s step and Mary Portas’s recent report to the Prime Minister even singled out Redcar high street as bucking the national trend. That is the effect that such developments can have on local communities.

As well as SSI, I have Tata’s heavy beam mill in my constituency. It makes beams of outstanding quality—nine of the 10 tallest buildings in the world use them—but the mill has been affected by the construction downturn. The Government are doing many welcome things, such as support for manufacturing and apprenticeships, and the regional growth fund, from which SSI benefited to help with training.

The Government also want to invest in infrastructure, in which we have a great tradition on Teesside. In fact, I have a picture on my wall of Lambeth bridge lying in pieces in Middlesbrough before being shipped down here. There have also been announcements on green technology. However, we need a lot more drive on such issues. In particular, we need to ensure that public procurement represents best value for the UK, not just best price. In relation to how we deal with green technology, that includes where transactions might seem to be company to company, but there are actually huge underlying public subsidies in some projects.

Finally, I want to mention energy costs. I and a few other MPs, some of whom are here today, started the all-party group on energy-intensive industries in early 2011. We have had great support from at least 10 industries, but the No. 1 affected sector is, of course, steel. Tata says that its sites in the UK pay 25% to 50% more for their electricity than its sites elsewhere in Europe. In the autumn statement, the Government acknowledged the threat to competitiveness that that poses for UK industries such as steel. The £250 million mitigation measures announced in the autumn statement are welcome, but the mechanisms are still unclear and address only the additional future changes without dealing with the cost gap that already exists between the UK and Europe.

The delay and uncertainty surrounding that are deeply unhelpful. Companies cannot adequately plan for the future in a business where long-term planning is the norm. Uncompetitive business rates also have the potential to drive steel making out of the UK. Again, Tata compared rates payable at two of its sites—one in the Netherlands and one in the UK—and found a gap of approximately £10 million a year. That differential needs to be closed. Those costs are significantly out of line with those in the rest of Europe and are a threat to the ability of companies to invest and be competitive. At a time when the Government are trying to revitalise UK manufacturing industry, we should be doing all we can to support industries such as steel making by creating a level playing field on which it can compete.

I hope that the Minister will say more about the plans to support energy-intensive industries, especially steel. The UK still has a steel industry that is vital for our future security and prosperity, and I hope that the Government will do everything they can to back it.