British Steel Industry

Kwasi Kwarteng Excerpts

Tuesday 10th March 2020 Westminster Hall

[The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)]

I am delighted to conduct and take part in this debate under your chairmanship, Sir Charles. I will not see 5.53 pm as a challenge; I will speak to the points that were made, and I would like to make some of the points that we really should air as a Government. I think there has been a bit of misrepresentation—a suggestion that somehow we are not doing anything, and I want to say a few words about that. First, however, I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing this timely and important debate. It is timely because it comes the day after the important announcement by Jingye and British Steel—I know that the British Steel is not situated in Port Talbot, but it is a big part of the story of steel in this country—and the day before the Budget, which we all eagerly anticipate. I am sure there will be more in that Budget about some of the support that we are providing to industry generally.

Hon. Members will have seen the announcement on the sale of British Steel to Jingye yesterday. The sale secured British Steel’s sites in Scunthorpe, in Skinningrove and Teesside, and it is to be welcomed. I know that the Secretary of State has worked tirelessly to ensure that a deal was on the cards. I also pay tribute to his predecessor as Secretary of State, my right hon. Friend the Member for South Northamptonshire (Andrea Leadsom), who also worked tirelessly so that we could reach this point and celebrate the fact that the deal has been done.

Many hon. Members here have suggested that we have not done anything, or we are not doing enough, to support the sector. I notice that the hon. Member for Motherwell and Wishaw (Marion Fellows) suggested that it was—I paraphrase—“the evil Tories” who were doing nothing. That is a grotesque characterisation. I point out that in many areas, this Government have provided finance and support and engaged eagerly with the sector. That sort of partisanship—“The Scottish Government do things so much better”—is beneath the level of this debate.

[Marion Fellows]

I do not generally intervene on Ministers when they are responding, but in 2015, when the steel industry was at crisis point yet again, the Scottish Government saved the Dalzell works, while many, such as Redcar, went to the wall. If a small nation with a devolved Administration such as Scotland can do so much, perhaps the Government should think again about what steps they are taking. Fine words will not do. We have had them many times in the past.

[Kwasi Kwarteng]

I am grateful to the hon. Lady for allowing me to continue. I will not get into a debate as to who is better or what the Scottish or British Governments have done. All I will say is that we have policies and have given funds to support the sector. We are completely aware of the strategic importance of the steel industry and remain committed to it. I will say a few words, to emphasise what has been done.

[Jessica Morden]

rose—

[Kwasi Kwarteng]

If the hon. Lady will forgive me, I have already given way, and I would like to make a few points before I give way again.

We have provided more than £300 million to the steel sector since 2013. We have tried to make energy costs more competitive in the sector. We are acutely conscious that steel manufacturers in Europe have slightly lower—in some cases, considerably lower—electricity costs, but then again, the other side of that coin is that consumers in those countries have much higher electricity costs than consumers in this country. There is a debate to be had about how that pricing structure should work.

Looking forward, we have announced the £315 million industrial energy transformation fund, which will give steel manufacturers finance towards using clean energy in their manufacturing processes. We also have a £250 million clean steel fund, which is also supporting the sector’s transition from fossil fuel-burning dirty energy to low-carbon technologies. These initiatives and funds have all been announced and funded in the past few years. We continue to support the steel industry, and we engage with it through the Steel Council set up by my right hon. Friend the Member for Bromsgrove (Sajid Javid) when he was Business Secretary, so it is not true to say that the Government are doing nothing, or that we do not regularly engage with the industry.

[Alexander Stafford]

High-end steel engineering at Kiveton Park Steel in Rother Valley produces steel for aircraft, industry and precision engineering requirements, and is exported widely to Brazil, Mexico, India and China. How can we ensure that our trading relationships are enhanced by the benefit of British manufacturing and British steel products?

[Kwasi Kwarteng]

Exports are at the centre of our industrial base, which is one reason why we support the industry in the way I described. I mentioned the funds and actual policy engagement; we see leaders in the steel sector often. I am pleased that my hon. Friend raisd this issue; it makes a change from fracking, which he often raises with me. However, this is of fundamental importance not only to our industrial strategy but for jobs. I have been struck and impressed by the human stories and the passion with which many MPs here have fought for their industry, their constituents and for the country as well, because we recognise that steel is an absolutely strategic sector.

On prices and the business environment, business rates come up as an challenge that steel companies have to deal with, but they are not alone; across our economy, business rates are often raised. In that vein, the Treasury is committed to reviewing business rates—we hear what people are saying. We want to see what mitigations we can introduce to make the business environment even more benign, to allow companies to thrive.

One extraordinary moment in this debate was the hon. Member for Motherwell and Wishaw quoting Ben Houchen’s writing in The Spectator. That was quite an interesting development. I speak to Ben Houchen, the Mayor of Tees Valley, regularly. He knows that he has many friends and associates within BEIS who are always willing to listen to him on these issues, as they relate not only to the Tees Valley but to the wider steel sector and our industrial base generally. I am proud of engaging with him on this, and I am sure that he understands and recognises that we support the sector and that we are thoroughly and absolutely committed to the steel industry in this country.

My hon. Friend the Member for Rother Valley (Alexander Stafford) mentioned exports. My Department works constantly with the Department for International Trade to ensure that the UK has a suitable trade regime. Naturally, we have not concluded a free trade agreement with the United States as of today, but when we are in the process of doing so, the potential and real damage inflicted on our workers by steel tariffs will be a subject of debate. I am sure that everything will be dealt with in that round of conversation.

[Stephen Kinnock]

I welcome the Minister’s recognition of the deeply damaging impact of the section 232 tariffs on our highly competitive steel industry, which is not state-subsidised, unlike China’s. Does he agree that the point of maximum leverage is now? If the United States wants to enter into trade talks with the UK in a spirit of good faith and trust, surely it would be at the very least a gesture of goodwill to fire the starting gun on the talks by giving the UK an exemption from the tariffs.

[Kwasi Kwarteng]

The hon. Gentleman is tempting me down a rabbit hole. I am not here to talk about the specifics of our trade deal with the United States; perhaps he should call for another Westminster Hall debate on that. Certainly conversations around any trade agreement with the United States will centre in no small degree on our industrial base and on the nature of our relationship in terms of steel. He will understand that we are now in the process of negotiating a free trade agreement with the EU. We have not started the American trade talks, and I think it would be prejudicial to them—that is my own view—to start making demands in that round of conversations before we start the formal negotiation.

Procurement is important, and we have many projects that rely on UK-made steel, as the hon. Gentleman knows. I do not know whether he has visited Hinkley Point, but I had the honour and privilege of doing so only four or five weeks ago. When I was there, I was told that 100% of the construction steel and rebar for Hinkley Point C was procured in Wales. Port Talbot was an essential part of the construction of Hinkley Point, which they were very proud of. I had the honour of going round the site and seeing the extremely effective and impressive amount of steel that had been imported across the river from Port Talbot to Hinkley Point. That is a classic and very good example of how major infrastructure projects are, even today, reliant on production in Port Talbot.

HS2 was also raised, so it is quite right to talk about the rail network in connection with domestically produced steel. The good news is that 93% of the steel used to maintain our rail network is made in the UK. Does that mean that we have the perfect procurement policy, using UK-manufactured steel? No. However, it is wrong to say that we have not made some progress or that we are not reliant on UK-manufactured steel in our infrastructure and our building, and through Government persuasion, intervention, agitation and conversing with the industry, we can improve the proportion of UK-manufactured content in our infrastructure.

The picture for the steel industry is challenging. Many of the concerns that hon. Members have raised about pricing and the geopolitical environment are out of our hands. I remember the biggest fact in the steel industry from the time, many years ago, when I was an analyst in this sector. In 2000, I was struck by the fact that China produced only 15% of global steel. Today, that figure is 50%. The hon. Member for Aberavon and others will know that Chinese steel is strongly supported by China’s Government, and there is a history of dumping. The pricing framework has been under a lot of pressure from Chinese production. We must deal with that, and we want to, but it is a serious pressure that we should all be conscious of.

It is wrong to say that the Government have not done anything in this regard. We have plenty of investment and funds. Not only do we have resources and money, but we engage with the industry, for example through the British Steel Council, which never happened before. My right hon. Friend the Member for Bromsgrove introduced that in 2016. We have worked with the industry. We signed up to the UK steel procurement charter, which shows our commitment to ensuring that UK steel producers get a fair, good chance of securing public contracts.

I think the hon. Member for Motherwell and Wishaw mentioned the EU. No debate in this House has passed without mention of the EU in the past four years. This is a classic example where we will no longer be tied by the state aid rules of the EU, so there is ample opportunity for Governments to provide some measure of comfort to the industry, as well as support, as we intend to do.

I am pleased to have spoken in this debate. I have left some time for the hon. Member for Aberavon to sum up, Sir Charles.