UK Steel Industry

Jessica Morden Excerpts

Monday 14th September 2020 Commons Chamber

[Jessica Morden (Newport East) (Lab)]

I am grateful to have the opportunity tonight to talk about some of the challenges and the opportunities facing our steel sector, both as co-chair of the all-party parliamentary group on steel and metal related industries along with the hon. Member for Scunthorpe (Holly Mumby-Croft) and the secretary, my hon. Friend the Member for Aberavon (Stephen Kinnock), and on behalf of my constituents who work in Tata’s Llanwern site and Liberty Steel in Newport East.

I pay tribute to all those who work in the UK steel industry. They are a dedicated and highly skilled workforce, making world-class products.

[Holly Mumby-Croft (Scunthorpe) (Con)]

I am proud to have spent eight hours in our local steelworks in Scunthorpe in the recess. Choosing to do it on the hottest day of the year was perhaps not my finest move, but I agree with the hon. Member that our steelworkers are incredibly hard-working, dedicated people, and it is hot and difficult work. I hope that she will join me this evening in calling for the Minister to consider setting targets for the amount of UK steel used in public projects; for steel specifications to be published using UK norms; for the long overdue steel public procurement pipeline to be published consistently; to push for other Departments to sign the UK steel charter and for Government-linked projects such as HS2—

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I suspect that there might be quite a few interventions in the debate. It is only half an hour, and it is the debate of the hon. Member for Newport East (Jessica Morden). I hope that any interventions will be short.

[Jessica Morden]

I thank the hon. Member for Scunthorpe for her intervention and wholeheartedly agree with what she said. I will go on to say more about that later.

Our steelmakers have a pride in and passion for making steel, despite the sacrifices they have made in difficult times—and there have been some. During the pandemic, some steelworkers have had to be furloughed as demand has dropped.

[Ruth Jones (Newport West) (Lab)]

I commend my hon. Friend and neighbour for bringing this important debate to the Chamber tonight. Does she agree that the UK Government must do all they can to ensure that the jobs of steelworkers across the UK are protected as we come out of the furlough scheme?

[Jessica Morden]

That is important for so many sectors and jobs, including the steel industry in our city.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on bringing the debate to the Chamber. This will be a short intervention. Is she aware that Northern Ireland has a strong steel industry based on many individual contractors and that consideration must also be given to supporting the subsidiary jobs and industry throughout the United Kingdom? It is not just Wales; it is Northern Ireland, Scotland and England.

--- Later in debate ---

[Jessica Morden]

It is the UK steel industry. The hon. Member makes an important point, and I hope the Minister will address it later.

Some steelworkers have had to be furloughed as demand dropped in their parts of the business, but others have continued to make the essential steel we have needed in this crisis for the beds in the Nightingale hospitals, the urgent hospital extensions, the food and drink industry and more. As hon. Members here tonight with an interest in steel know—I am pleased to see so many here tonight at this late hour, including on the Front Bench—steel is everywhere and fundamental to our lives. Steel must play a crucial part in the UK’s post-pandemic recovery. Our plants stand ready to play their part in that with the right Government support, and that is what we ask for tonight.

Like almost every other sector of the economy, the UK steel industry has been hard hit by the pandemic, with steel producers reporting that orders have fallen by around 50% since March. At the start of the pandemic, the Chancellor promised the British public that they would not face the crisis alone and that the Government would undertake unprecedented measures for unprecedented times. However, as of today, only one company has received vital emergency funding. There has been much talk of Project Birch, but little news. I know that the Government have been in ongoing talks with steel companies in the last month about liquidity support.

[Mark Tami (Alyn and Deeside) (Lab)]

The issue is that the steel industry was not in a great place before covid, and the danger is that if we get steel being dumped by China or other countries, then we really are on the brink.

[Jessica Morden]

I absolutely agree and will come on to say more about that later. I know that hon. Members would appreciate an update from the Minister about how that is going and the plan to secure jobs and the future of our plants.

The UK steel sector employs about 32,000 people directly and 41,000 more through supply chains. It is estimated that these jobs pay 28% higher than the average salary. In steel strongholds like south Wales and Yorkshire, this increases to about 46% higher than the average wage. These are better-paid jobs in communities that really need them. The impact of the pandemic on our steel industry has consequences not only on a local level but on a national level. UK steel contributes a combined £5.5 billion to the UK economy and £3.2 billion to mitigating the national trade deficit through exports produced. That is because steel is a foundation industry for many other sectors: engineering, construction, transport and renewable energy, to name just a few. Steel forms the backbone of our manufacturing sector, and the industry stands ready to supply the world-class steel that will help us to build back better. This is the key message of the “Britain, we need our steel” campaign, which has been launched by the Community, Unite and GMB trade unions, to which I pay I tribute for the work they do to stand up for our steel industry in this country. I hope that all hon. Members here tonight will be actively supporting this campaign.

We need the Government to ensure that all Government Departments now sign up to the UK steel charter. I am pleased that the Welsh Government were one of the first signatories. This would commit the Government to prioritise UK steel in procurement for infrastructure projects. Back in June, the Prime Minister said that the Government will

“do absolutely everything we can…to ensure that UK steel manufacturers are at the front of the queue for the great projects that we are going to construct.”—[Official Report, 24 June 2020; Vol. 677, c. 1311.]

We will hold the Prime Minister to that.

Getting procurement right is key. There are concerns, which some of my constituents share, that any benefits from HS2 will not be greatly felt in our communities in south Wales or, indeed, those outside striking distance of the proposed route. The APPG’s “Steel 2020” report argued that Government procurement and other incentives should be used to increase domestic steel content in manufacturing and construction, as there is clearly a market opportunity. A study of future demand by the Department for Business, Energy and Industrial Strategy shows that UK consumption will climb from 9.5 million tonnes of steel to 11 million tonnes by 2030—a £4 billion a year opportunity for UK producers if the right measures are in place. Currently, less than 50% of steel used in Government-funded projects is British-made. This simply must change going forward: there is much, much more to do. Phases 1 and 2 of the HS2 project combined will require 2 million tonnes of steel, including for tracks, train components, bridges, tunnels, gantries, wire and more. UK steel producers could and should provide 90% of the steel needed for HS2. This is steel that should be made here and not imported.

The broader steps for the UK Government are set out in the UK Steel paper, “Covid-19—Restart and Recovery”. Will the Minister tell us what steps the Government are taking to ensure that all major infrastructure projects set minimum targets for UK steel content, and that all Government-funded projects establish a clear preference for sourcing steel from domestic producers? Will he outline the actions that he has undertaken to encourage all Government Departments to sign up to the steel charter? The Government must do what they can to create the right environment for UK steelmakers in the long term, including a UK sector deal to sit alongside the existing deals for manufacturing industries such as aerospace, construction and automotive, all of which are inherently linked to steel.

[Matt Western (Warwick and Leamington) (Lab)]

My hon. Friend is making some very important points. On the automotive sector in particular, we need to concentrate on the supply of electrical steels from the Orb plant, which is of course mothballed. I understand that with £50 million of investment support from the Government, it could be resurrected in a matter of months.

[Jessica Morden]

My hon. Friend makes an important point about the Orb steelworks, which closed recently. I will expand on that at the end of my speech, if that is okay.

Change is needed to help UK businesses compete internationally, particularly on energy costs, which I and other colleagues on the APGG have been banging the drum on for a number of years now. This significant challenge for UK steel producers has not gone away. British steel producers pay the highest electricity prices in Europe—80% more for energy than their French counterparts and 62% more than German companies. This creates an enormous additional cost burden on the UK steel sector every year and hampers productivity. Will the Minister update the House on what the Department is doing to extend the indirect carbon price compensation scheme for energy-intensive industries, which is currently due to expire at the end of the year?

In response to parliamentary questions, Ministers have said that the ability of industries to compete across Europe and globally is a priority. It is now time to back up those words with action. It is vital to the sector to maintain current trade flows with key markets. A central concern for the steel industry as we get closer to January is trade with Europe.

[Stephen Kinnock (Aberavon) (Lab)]

My hon. Friend is making a powerful speech. On the issue of safeguards to ensure that we can continue to sell our steel into the EU, does she agree that the UK Government should now be making a unilateral offer to suspend all trade dumping measures against EU steel coming into this country, so that we can unlock the stalemate around the trade defence measures?

[Jessica Morden]

I do indeed. I believe that would be a generous offer to unblock the current stalemate. On the treatment of EU exports and EU safeguards, an estimated 70% of UK steel exports—some 2.6 million tonnes a year—go to EU countries. That is 1,400 trucks and six trains a week, making it the largest export market for steel. As UK Steel has highlighted, it is crucial for our industry that the UK Government demonstrate as early as possible that they are taking steps to positively resolve the issue with UK trading partners. What progress has the Minister made on EU and UK steel safeguards? An update from him on that is urgently needed tonight.

There is also a lack of clarity about what is happening in the US-UK free trade agreement negotiations on the removal of section 232 tariffs on steel projects. Since 2018, UK steel exports to the US have fallen by 32%, so can the Minister update us on those talks too?

Finally, do we want to be a country that manufactures goods or one that just imports them? The Government’s strategy must address the present and future needs of the industry. That means providing the UK steel industry with the vital liquidity support that it needs to protect businesses.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

The hon. Lady is absolutely right to say that steel has a future in the UK. I recently visited Stocksbridge steelworks in my constituency, and some of its work is absolutely cutting-edge and high-tech. Steel is not just an industry of the past and our heritage; it is vital for our future, our research and development, and all that makes Britain a great trading nation.

[Jessica Morden]

I thank the hon. Member for that intervention and agree entirely.

There are significant opportunities for UK steel as we begin to build back greener. The Prime Minister spoke earlier this year of a new age of opportunity in making the UK a world leader in, for example, electric vehicles. Steel will also play a vital role in the production of other green technologies, such as wind turbines, rail electrification, renewable projects, solar panels and more. If the Prime Minister wishes for the UK to be a world leader in those things, we must have an industrial strategy that puts steel at its centre.

Before its tragic closure earlier this year, Tata’s Orb steelworks in Newport was the only manufacturer of electrical steel in the UK. With the right strategy and the right investment, Orb could and should have played an instrumental part in a move to electric vehicles. We need vision from the Government to work with the industry to do that. While it may be too late for Orb, it is not too late for the Government to produce a Budget that incentivises automotive demand, so that the plants at Llanwern, with world-class steel for the automotive sector, can get involved. Steel that is manufactured in Britain also enjoys a significantly lower carbon footprint than imported steel. Not only does imported steel take more carbon dioxide than sourcing a tonne of steel domestically, but steel produced in Britain is subject to higher environmental standards than steel produced abroad.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I absolutely agree with that point. Does my hon. Friend agree that offshoring carbon emissions to China, Turkey and Iran is exactly the way we do not want to go, when we can make that steel in this country in green ways?

[Jessica Morden]

My hon. Friend is absolutely right, and I agree entirely.

It is also vital that the Government recognise developments such as Liberty’s Greensteel hub in Newport, which uses renewable and low-carbon energy to recycle scrap steel to meet the challenges of decarbonisation and growing consumption of steel globally.

Steel can play a vital part in rebuilding Britain after the pandemic. Despite the significant challenges posed by coronavirus, the Government have a unique opportunity to create a 21st-century manufacturing sector that has a revitalised steel sector at its core, so that we can build back. However, the Government must act—something that they have been slow to do in the past. I look forward to the Minister’s comments tonight.