UK Steel Sector: Supply Chains

Jessica Morden Excerpts

Wednesday 9th June 2021 Westminster Hall

[Jessica Morden (Newport East) (Lab)]

Well done to my hon. Friend the Member for Aberavon (Stephen Kinnock) for securing this important debate. He is both the Member for Port Talbot and our chair of the all-party parliamentary group for steel and metal related industries. He gave an excellent analysis, setting out the issues yet again.

My hon. Friend mentioned that we have had 19 debates on steel in this House over recent years. I feel I have been there with him in many of those, making the same points over and over again. I do so because steel has always been at the very heart of the community that I represent, with many workers in both the steel industry in Newport East and down the road in Port Talbot, and in supply chains, making world-class automotive steel for BMW, Jaguar Land Rover and other projects at Tata Llanwern. We also have the Celsa site in the constituency of my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), which is one of the largest producers of rebar; and Liberty, which produces hot rolled coil for domestic and export markets for use in construction and is at the cutting edge of modern steel technology. On that note, I know that we all want the future of all Liberty Steel businesses secured, including Newport, and I know that hon. Members for steel constituencies will hold Liberty and the Government to account and make sure that we uphold that commitment to the workforce and our industry going forward.

On behalf of that industry, those businesses, those workers and the unions in my constituency, I say again what steel MPs have been saying here for many years: steel should be a cornerstone of a comprehensive, forward-looking industrial strategy in this country. It has an absolutely pivotal role to play in our recovery from the pandemic. The economic value of the steel sector cannot be overstated. The industry makes a £2.8 billion direct contribution to GDP and supports a further £3.6 billion through its supply chains, while the average salary is around 36% higher than the regional average in steel heartlands such as south Wales and Yorkshire. If the Government are really serious about levelling up across the UK, they should look to steel as a foundation to build on.

In his response to me at Business, Energy and Industrial Strategy questions last month, the Secretary of State said that the Government were

“committed to a strategic presence of steel in the UK.”—[Official Report, 25 May 2021; Vol. 696, c. 233.]

Although I welcome that assurance, it is now time that the Government backed it up with meaningful action to support the industry.

As others have said, we need a change of direction on procurement. The Community union, plus Unite, GMB and others—I pay tribute to them for all the work they do on behalf of their members—have campaigned for decades for contracting authorities to effectively deploy social and environmental clauses in tendering processes in order to support domestic jobs in industry, just as they do in France and Germany, but little has changed in practical terms since 2016, when there were a few measures, and home-grown steel companies are continuing to miss out on important contracts, despite rhetoric from the Prime Minister about being at the front of the queue. The most recent Government data on how much steel is sourced in the UK includes only 160,000 tonnes, which is somewhat less than the estimated 800,000 to 900,000 tonnes of steel that their forward-looking pipeline indicates is used by central Government each year. As my hon. Friend the Member for Aberavon said, we need a patriotic procurement policy.

The case for sourcing UK steel is overwhelming. Every 1,000 tonnes of UK steel used in a public project delivers 4.5 jobs in the steel industry, and 10 jobs when the supply chain is included. As others have said, in addition to the economic boost that that provides, there are real environmental benefits from not importing steel from the EU or China respectively.

Energy prices are a prevalent problem. Ministers may have grown tired of steel MPs banging the drum about this over the years, but it remains critical for our industry. The oft-quoted evidence s is stark: UK steel producers pay 86% more for electricity than their competitors in Germany and 62% more than is paid in France. That is a £54-million-a-year cost burden to the UK steel sector and a huge competitive disadvantage. The targeted charging review led by Ofgem is set to make matters worse, as the review’s proposals would leave our producers paying 156% more in energy costs. Obviously, that would be devastating. I urge Ministers to do what they can on that, too.

As others have said, we need Ministers to work urgently to prevent the Trade Remedies Investigations Directorate from slashing our steel safeguards in half. The case was excellently argued by my hon. Friend the Member for Sefton Central (Bill Esterson). The safeguards are vital to providing a stable environment for the sector and protecting against unprecedented import surges, especially at a time when we are seeing significant global overcapacity in steel.

I also specifically ask the Minister to look again at the issue of bonded warehouses, which effectively undercut UK producers by waiving duty on cheap foreign imports. My hon. Friend the Member for Blaenau Gwent (Nick Smith) has led on this issue, and both of us have written to Ministers to convey our concerns and the concerns of unions and management in Newport and in Tredegar at Liberty. Will the Minister here today look into the matter?

As my hon. Friend has said, we saw the cost of doing nothing at the Orb works: we lost the only plant making electrical steels in the UK at a time when we are going to need electrical steels. The Government should have stepped in then. Orb steelworkers knew what was at stake, and I was proud to stand alongside them and their unions in the fight to save steel jobs.

As a country, we just cannot go on making huge strategic mistakes when it comes to our steel and manufacturing sectors. We need to utilise our steel assets and invest in our greatest strength, which is the indomitable, passionate and highly skilled steelworkers we have. We need the industry to have a level playing field. We need to have the right backing to drive this forward. We ask again for the Government to step up, to address the issues raised again today and to come up with a viable long-term plan to protect our industry.