Energy-intensive Industries

Jessica Morden Excerpts

Wednesday 24th November 2021 Westminster Hall

[Jessica Morden (Newport East) (Lab)]

I congratulate the hon. Member for Stoke-on-Trent South (Jack Brereton) on securing this debate and on a very good opening speech, in which he has talked about the ceramics industry. I hope that his speech demonstrates the call for greater Government support for energy-intensive industries, including steel, which I will be talking about today, representing Llanwern steelworks and Liberty Steel in Newport East. I hope that shows that this is a truly non-partisan, cross-party campaign that we can all agree with.

I declare an interest today as a proud member of the Community and GMB trade unions, which—along with Unite—so ably represent steelworkers in my constituency and across the UK. Those campaigning unions, along with the industry trade body UK Steel and hon. Members of different parties, have long banged the drum about the need to reduce eye-watering energy prices, which hold back our steel sector. I make no apologies for doing so again today, as this is an issue that has not gone away; in fact, it has got much worse over the last year.

Even before the pandemic hit, industrial energy prices were hitting our steel producers to the tune of £50 million a year. In the five years that UK Steel has been monitoring the costs, they have cost the UK sector £0.25 billion more than what is paid by French and German producers. UK steel producers—we always quote this fact, but it is worth doing so again—still pay 86% more than German competitors and 62% more than those in France. As the hon. Member for Stoke-on-Trent South said earlier, wholesale prices are now at record highs, with electricity costs peaking in October. To put that into context on the ground, energy costs for medium-sized steel rolling mills in south Wales and across the UK have almost quadrupled over the past year. One manufacturer said to me that it was paying £130,000 a week, which has now gone up to over £500,000 a week in some cases.

There is nothing inevitable about this, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones) said in Wales questions last week. Other countries have acted swiftly to ensure that energy costs are less of a burden on steel producers. The hon. Member for Stoke-on-Trent South mentioned the Portuguese Government. The Spanish and Portuguese Governments have taken decisive steps, including reducing the extraordinary profits made by energy companies, cutting special electricity tax rates for steel, and introducing a minimum 30% reduction in network charges for industrial users. Although every economy and every country is different, such steps represent Governments making a tangible show of support for their steel sectors—an example that the UK Government should follow.

The reasons why we support our steel sector fall into even sharper focus following COP26. Indeed, there was welcome acknowledgement at the summit that the world cannot decarbonise without steel—whether it is for use in wind turbines, electric cars, energy-efficient buildings, infrastructure and much more. That is why it was all the more disappointing that nothing of note for steel was in the Budget, which UK Steel rightly called a “missed opportunity” and a “triumph of complacency”, particularly on support to help the industry to decarbonise. For example, there was nothing on industrial energy costs, even though we know that the move towards decarbonisation will require even more energy-intensive methods of steel production.

I asked the Prime Minister about this last week but did not get much of an answer, so I will put the question to the Minister: what is happening with the clean steel fund that the industry was promised? It was absent from recent announcements and last month’s net zero strategy paper, and when my hon. Friend the Member for Blaenau Gwent (Nick Smith) raised the issue in the main Chamber recently, he was referred to the industrial energy transformation fund, which is two years older than the proposed clean steel fund. It really feels like the Government do not know what is happening to it, and its absence risks adding to the growing gap between what is needed to decarbonise the sector and what is available in support.

We have also heard little from the Government on improving the procurement of UK steel—a move that would support jobs and livelihoods, benefit our economy, provide value to the taxpayer, and lower our carbon footprint. The latest Government data on how much steel is sourced for the UK includes only 160 tonnes of British steel, which is somewhat lower than the estimated 800,000 to 900,000 tonnes that the forward-looking pipeline indicated. It is not good enough, and it is about time the Government took steps to ensure the maximum economic value of public money to be spent on steel in the coming years.

It is worth saying again that the Government talk the talk on net zero and industrial strategy, but it is really not worth anything if steel is not at its core, as my hon. Friend the Member for Aberavon (Stephen Kinnock) will agree. When the Community union launched the “We Need Our Steel” campaign, the “We” it referred to was not just our world-class, highly skilled steelworkers, or communities such as mine, with industry at their heart, and all those in the supply chain. It also referred to government at all levels harnessing the potential of steel and using it to build back the economy after the pandemic, and to power a green industrial revolution.

[Stephen Kinnock (Aberavon) (Lab)]

My hon. Friend is giving an excellent speech. It appears that some Members on the Government Benches seem to see steel as a sunset industry. In fact, nothing could be further from the truth. It is at the cutting edge of innovation. New alloys are being developed all the time. We need to emphasise the fact that this is a future-facing industry.

[Jessica Morden]

I thank my hon. Friend. It is absolutely true to say that steel is a future-facing industry, which will help us build back the economy after the pandemic and help us power a green industrial revolution. That is as true now as ever.