Steel Industry

Kevin Brennan Excerpts

Tuesday 20th October 2015 Commons Chamber

[Kevin Brennan (Cardiff West) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Innovation and Skills if he will make a statement on the action the Government are taking to secure the future of the steel industry.

[The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)]

The steel industry across Europe and around the world is facing challenges on a scale unprecedented in recent history, and today we have had further devastating news of redundancies, this time at Tata. So let me begin by saying something to the people of Scunthorpe and Redcar and anyone else living in a community where the local economy is built on steel. I know that the current situation is unbearably difficult and that you are deeply worried about your future and the future of your families, but I assure you that the Government are doing and will continue to do everything within their power to support you in the weeks, months and years ahead. For decades, the United Kingdom has prospered on the back of your industry. We will not abandon you now, in your time of greatest need.

There is no straightforward solution to any of the complex issues involved, but the Government have no intention of simply standing by. We have already announced a package worth up to £80 million to support people who have lost their jobs as a result of SSI’s liquidation and to mitigate the impacts on the local economy; we have asked Amanda Skelton, chief executive of Redcar and Cleveland Council, to chair a local taskforce; we have ensured that money reaches workers’ pockets quickly via the redundancy payments service; we have brought workers and opportunities together at a jobs fair at which more than 1,000 vacancies were showcased by more than 50 local employers; we have provided additional flexibilities to local further education colleges to allow people to take up training to enhance their job prospects; and we have set aside money to fund those proposals from the taskforce that will make an immediate and lasting impact on the local economy.

We will do what we can to soften the blow of any further redundancies among steelworkers—including, of course, those in Scunthorpe. Jobcentre Plus and rapid response support will naturally be available, and we are setting up a taskforce that Liz Redfern of North Lincolnshire council has agreed to chair. I will carefully consider what the taskforce proposes by way of additional support that may be necessary.

Alongside our immediate help for individuals who are laid off, we are taking steps to ensure a future for Britain’s steel industry in an exceptionally difficult market. Excess capacity in global steel is enormous—more than 570 million tonnes last year, almost 50 times the UK’s annual production. The price of steel slab has halved in the past year alone. In the three years since SSI restarted production at Redcar, the plant has lost more than £600 million.

There are limits to what the Government can do in response. No Government can change the price of steel in the global market; no Government can dictate foreign exchange rates; and no Government can simply disregard international regulations on free trade and state aid—regulations that are regularly used to protect British workers and British industry.

To identify where progress can be made, I hosted on Friday a top-level summit with key players from the UK steel industry. Bringing together industry leaders, trade unions, Members of Parliament and senior figures from government, the summit created a framework for action that will help us to support steelworkers now and in the future.

First, we will drive up the number of public procurement contracts won by UK steel manufacturers and their partners through fair and open competition. This Government are committed to a major programme of infrastructure spending. I am determined that the UK steel industry should play a central role in its delivery. The new public contracts regulations give us more scope to offer greater flexibility around how we include social and environmental considerations in our procurement activities. We intend to help other departments and business to take full advantage of these flexibilities, building on what we learned from projects such as Crossrail.

Secondly, we will consider what lessons can be learned from other countries in the EU and beyond. This will include the resilience of the steel sector in competitor countries and market share of national manufacturers.

Thirdly, we will look at what government can do to boost productivity and cut production costs. This includes addressing energy and environmental costs, regulation, skills and training. An extensive review of business rates is already under way, and the Government will look very closely at all proposals.

These steps will come on top of the action we have already taken. For example, we have paid out more than £50 million in compensation to energy-intensive industries in the steel sector. We also plan to offer further compensation in respect of feed-in tariffs and the renewables obligation. This constitutes state aid, which must be approved by the European Commission. The approval process is under way, but it is taking longer than anticipated, and longer than I would like. My Department is working closely with the Commission to answer its concerns and impress upon it the importance of prompt approval. I also plan to meet European Commissioners next week to reinforce our concerns about unfair trade issues and gain their support for urgent action. We have already voted to support extensions of duties on wire rod. We will demand action wherever there is evidence of unfair trade.

Since Victorian times, British steel has helped to make Britain great. In 2015, it is vital that all of Britain comes together to forge a stronger future for the men and women to whom this country owes so much.

[Mr Speaker]

Order. Before we proceed, let me gently say to the Secretary of State that although on a one-to-one basis I always think him a very civil fellow, it is a considerable discourtesy or incompetence—or both—for a Secretary of State to take twice the length of time allocated for answering an urgent question. If the right hon. Gentleman judges that he has more material that he wishes to share with the House, which of itself could be very helpful, that is fine—but the implication of that is blindingly obvious: the right hon. Gentleman should offer to deliver an oral statement of up to 10 minutes. What he should not do is fail to communicate with me in advance, ignore the convention and greatly exceed his allotted time. It is, I am afraid, discourteous and incompetent—and it must not happen again.

[Kevin Brennan (Cardiff West) (Lab)]

We would have welcomed a statement from the Secretary of State. Today he has brought more devastating news for British steelworkers at Cambuslang, Motherwell and Scunthorpe and concerns for workers employed by Caparo, following the devastating news of the hard closure of the Redcar plant last week. May I, on behalf of the Opposition, convey our solidarity with those who have been affected—the individuals concerned, their trade unions, their families and their communities—and ask the Government to do all they can to work with every agency and jurisdiction to support them?

Let me say first to the Secretary of State that it does not help him to continue the spin about the £80 million. The Minister for Small Business, Industry and Enterprise admitted last week that it was £50 million, and even that is questionable. Spinning does not help the workers one little bit.

Let me further say to the Secretary of State that all Opposition Members understand the real and difficult problems facing the steel industry. Some of us have worked in the industry ourselves, or have family members involved in it. We know about the heat of the steel plant and the whiff of the coke ovens. We understand all too well that the industry faces huge challenges, not least as a result of not being allowed to operate on a level playing field. No one is trying to minimise those challenges. What we cannot understand is why Ministers do not appear even to have a view on what represents a minimum credible steelmaking capacity in Britain’s long-term strategic interests.

The overwhelming impression given by the Secretary of State and his colleagues is that, despite their high-flown rhetoric about northern powerhouses and the march of the makers, they seem content to allow Britain’s entire steelmaking capacity to disappear in the face of blatant Chinese dumping. Will the Secretary of State tell the House—and we need a direct answer to this, so I hope the Minister will stop chuntering—whether he believes that the price of the Chinese steel that is being dumped on our shores reflects the true cost of producing it? If not, what is he doing about it? Even if the workers producing steel plate at Scunthorpe offered to work for nothing, that Chinese price could not be matched.

While the Chinese President is riding down the Mall in a gilded state coach, British workers are being laid off because our Government are not standing up for them. What is the Secretary of State doing to ensure a level playing field so that the British steel industry can have a future? Will he immediately carry out the five emergency actions for which the industry called at the steel summit? He mentioned three actions in his statement, but I fear that they may be too little, too late. Why has he so far been so reluctant to defend the British steel industry during this crisis, when it is so important to our strategic national interests? Will he tell us now whether the Government even have a position on what represents the minimum credible steelmaking capacity in Britain’s strategic interests? If they do, what is it?

Notwithstanding the Secretary of State’s well-advertised laissez-faire views, will he now reverse his refusal even to accept that the Government need an industrial strategy, and stand up for Britain?

[Sajid Javid]

It is a shame that the shadow Minister has taken this attitude. He has decided that he wants to play politics with a very, very serious situation, and that is a real shame. I could stand here and talk about the massive job losses—thousands—during Labour’s time in government. I could talk about the decline in manufacturing. But that would be wrong, because now is a time when people in the industry—producers, manufacturers, trade unions and others—want to see politicians come together and deal with long-standing challenges to the industry.

The shadow Minister asked a number of questions. First, he asked whether we would do everything we could for the workers and their families who are affected. Of course we will. We have already announced a support package for the workers in Redcar, and I have talked about the taskforce that is being set up in Scunthorpe. We will listen to local people and locally led taskforces who come forward with proposals and ideas about what more we can do to support those areas, and any other area that may be affected.

The shadow Minister talked about China, and I referred to overcapacity. China is obviously one of the main countries with overcapacity in the market, but there are others. A recession in Brazil is leading to more steel in the market and there is overcapacity in Russia, Turkey and many other countries. The problem goes much wider than just China and requires EU-wide action. We have already voted for action and we will do so again whenever we are presented with evidence. As I said earlier, next week I will go to Brussels to meet the relevant Commissioners and push for much quicker urgent action. I am sure that the shadow Minister supports that.

The hon. Gentleman also talked about the industry’s suggested actions. UK Steel has five key suggestions and when we had the summit on Friday with many members of the industry—producers, manufacturers, trade unions, Members of Parliament, local leaders and others—we went through each of the actions one by one and set out exactly what we can do. I hope that the shadow Minister can take the same attitude that people took in the summit and understand that although there are some things that the British Government can do, and that where we can we are doing them right away, there are other things, such as action against unfair trade, state aid issues and so on, on which we must work with our partners in the EU. We cannot be a country that sets out to break the rules. I know that the shadow Minister is not suggesting that we break international obligations and rules, but I hope that he has had an opportunity to reflect on his attitude so that he can work much more constructively.