UK Steel Sector: Supply Chains

Jim Shannon Excerpts

Wednesday 9th June 2021 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I, too, thank the hon. Member for Aberavon (Stephen Kinnock) for securing this debate. I remember his debate in the old Westminster Hall—perhaps I should say we are in the new Westminster Hall. I supported him then and I am back to support him again. The title of the debate is “UK Steel Sector: Supply Chains”, and I want to give the Northern Ireland perspective. It is always a pleasure to follow the hon. Member for Newport West (Ruth Jones). I thank her and the hon. Member for Newport East (Jessica Morden) for their contributions. Newport West and Newport East are well represented here today.

The issue is of great interest to me because, over the past month to six weeks, the supply chains and the construction sector in particular have been an issue for my constituency of Strangford. I have lived in the Ards peninsula for a long time, and many of the companies there are small and medium-sized businesses. Those companies employ people locally and are very important to the local economy. The supply chain of steel has become critical for them. Others have referred to the high price of materials, and steel has been mentioned to me by two companies that contract to build homes. They price for £150 per square foot of finished steel, but are now looking at an increase of a third, up to £200 per square foot. This will cripple the construction industry, undoubtedly having an impact not only upon the construction sector and those small and medium-sized businesses in my constituency, but on jobs, so it is very important.

In 2020, the UK steel sector contributed £2 billion in gross value added to the UK economy, equivalent to 0.1% of total UK economic output and 1.2% of manufacturing output. There are some 1,100 businesses in the UK steel industry, and the industry supported 33,400 jobs in the UK in 2019—0.1% of all the jobs in that sector, which is quite substantial. On top of that, there all the other construction sectors which are tied into it. The construction companies told me that it was not just the price of steel, but the prices of wood of piping that were an issue for them. However, steel is critical for the strategy going forward, especially as we come out of the coronavirus pandemic.

In 2019, the UK produced 7 million tonnes of steel, whereas China produced 996 million tonnes, and the EU produced some 157 million tonnes—8% of the world total. The UK was the eighth largest steel producer at that time. The differential and degree of reliance is clear, and this must be what we work to change. Our great nation, which was once the industrial force of the world, must return to self-reliance. To do this, our Government—the Minister in particular—must invest to enable us to produce our own steel. Government contracts must be at the top of this, bound to buy only British steel. Earlier, the hon. Member for Aberavon referred to the Ministry of Defence contract for Swedish steel to build ships. Why was it not our steel? That is the question that he asked, and it is a question I ask as well.

We know that covid has a role to play in terms of shipping and raw materials, with shipping companies raising prices massively. The cost of shipping a 40-foot container from Asia to northern Europe, for example, soared from £1,061 in the summer of 2020 to more than £5,873 in May 2021. The increases are astronomical, even more than a third. It is a significant, and sometimes unbearable, factor. The questions must be asked: where are the containers and is this price rise justifiable in the long term? I do not believe it is, which is why I look to the Minister and my Government to address this issue. I put it to the Minister that in any strategy considered, looking into the increase in shipping which is affecting every product on the shelves and every product on the construction sites must be a priority. I would be interested to gauge the Minister’s opinion on what the Government is doing to tackle the cost, which is putting small businesses into bother at a time when we must be rebuilding.

One builder said to me,

“How can we rebuild after covid, Jim, when I literally can’t afford the rebuilding materials— what happens to my team members whilst I renegotiate contracts with developers to cover the astronomical price rises?”

These costs are going to hit the construction sector. These false prices will have to fall, and there will be some crash when they do. House prices in my constituency have risen by 20%. We are seeing at first hand the cost of relying on others when once we had the finest steel industry in the world. We can, and indeed must, return to this, providing jobs and a quality product. It is time for the Government to once again put steel into our backbone and to back our own right here in the great United Kingdom of Great Britain and Northern Ireland—better together.

--- Later in debate ---

[Jim Shannon]

It is important that we have steel for offshore wind power and so on, but it is also important that we have steel available at competitive prices for the construction sector. What can the Minister do to assure me on that?

[Amanda Solloway]

I will, of course, pass on the hon. Gentleman’s question.

I will move on to Liberty Steel. The hon. Member for Newport East rightly highlighted its importance to many Members and their constituents, and its recent financial difficulties, which were also raised by the hon. Member for Rotherham. As the Secretary of State reaffirmed to the Business, Energy and Industrial Strategy Committee in an oral evidence session, we continue to monitor the situation closely and engage with the company, trade unions, local MPs and the wider steel industry. Liberty is important.