UK Gas Market

Debate between Kwasi Kwarteng and Stephen Kinnock

Monday 20th September 2021 Commons Chamber

[Kwasi Kwarteng]

As my hon. Friend knows and has expressed, there are geopolitical elements to this in terms of the reliance of a large part of Europe on Russian gas. I am here to reassure people about a common misconception. We are not dependent at all on Russian gas. The gas sources are as I have described—50% are local, 30% are from Norway and about 18% are from LNG, which comes from all around the world—so I want to minimise the notion that we are somehow at the mercy of Russian gas policy.

[Stephen Kinnock (Aberavon) (Lab)]

This crisis is causing steelmakers across the country to suspend their operations during periods of the day when the costs of power are peaking at thousands of pounds per megawatt-hour. Can the Secretary of State assure the House that he is engaging with the steel industry to ensure that this crisis does not end up crippling our steel industry, which of course underpins our entire manufacturing sector?

[Kwasi Kwarteng]

The hon. Member knows that I am constantly engaging with the steel sector—in fact, I resuscitated the Steel Council as one of my first acts when I was appointed Secretary of State—and I am always in ongoing conversations with it. I have, I feel, made a contribution to making sure that we can have this industry on a sustainable basis, but I am very happy to talk to the hon. Member, among other colleagues.

UK Steel Production: Greensill Capital

Debate between Kwasi Kwarteng and Stephen Kinnock

Thursday 25th March 2021 Commons Chamber

[Kwasi Kwarteng]

I assure my hon. Friend that we are committed to the steel industry in the UK. That is why, last week, we published the industrial decarbonisation strategy, which I was very pleased to commission as energy Minister. I look forward to speaking to him about the next steps forward for this industry.

[Stephen Kinnock (Aberavon) (Lab) [V]]

British steelworkers make the best steel that money can buy, but they are having to compete with one hand tied behind their back because electricity costs our steel companies 86% more than in Germany and 62% more than in France, an issue I raised with the Secretary of State when he met steel MPs on 3 February. On 22 February, the Prime Minister told me from the Dispatch Box that

“we must indeed address the discriminatory costs of energy.”—[Official Report, 22 February 2021; Vol. 689, c. 647.]

What progress has the Secretary of State made in addressing this critical issue since our 3 February discussion, and does he think that the Chancellor understands that there can be no post-pandemic recovery without a strong and healthy steel industry?

[Kwasi Kwarteng]

My right hon. Friend the Chancellor is fully aware of the importance of the sector. The hon. Gentleman will know—I think he attended the Steel Council where this issue was raised—that we have commissioned work to see what can be done to redress the balance he alludes to.

British Steel Industry

Debate between Kwasi Kwarteng and Stephen Kinnock

Tuesday 10th March 2020 Westminster Hall

[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.

Trade, Exports, Innovation and Productivity

Debate between Kwasi Kwarteng and Stephen Kinnock

Wednesday 13th January 2016 Commons Chamber

[Kwasi Kwarteng]

That is an excellent point. It is clear that if domestic demand in those countries has been sharply contracting, their capacity and ability to buy our exports has diminished commensurably, and that has unquestionably made life much more difficult for our exporters. I believe, however, that when it comes to British exports and our trade missions, the most fundamental thing that any exporter or manufacturing concern will seek is a degree of economic stability in the home market, along with a degree of visibility and a degree of responsibility on the part of the Government to ensure that there is some economic stability, and that our problems are being dealt with in respect of such matters as fiscal consolidation and deficits.

Those who speak to businesses, as I do in my constituency and as I am sure many other Members do in theirs, will hear from them that, broadly, the Government’s policy, although not perfect, has been conducive to a degree of economic stability. Policies such as those on apprenticeships and the significant reduction in corporation tax have made life easier, or more attractive, for exporters and business-people in general. When we tackle a debate of this nature, it is very difficult to divorce the issues of trade, the current account and innovation from the general economic strategy the Government are pursuing. It is clear that although many challenges lie ahead a large section of people feel comfortable that the Government are taking the right approach to the economic management of this country. That is an important point to make at the beginning.

As I have noticed in this debate, we talk about abstract concepts such as exports and trade deficits as though we were living in the 1960s or earlier. This language evolved in a period when Britain was the industrial motor of the world—the factory of the world—and it was very much a Victorian model of the economy, which arguably persisted until 1939. But in the economy of 2016 it is very difficult to disaggregate exports in goods from exports in services and from hybrid exported products that are manufactured but have a degree of service element to them. The hon. Member for Hartlepool (Mr Wright) referred to the trade deficits of the 1960s which he had learned from his reading brought Governments down. Every day in the 1960s people looked at the trade figures; that was the big number. The model of the economy today, however, is completely different from that of 1967 or 1970, yet many of our debates are couched in the language, and reflect the concerns, of a bygone era. It has been almost 50 years since the 1967 devaluation and it is crazy for us to conduct this debate as if nothing has happened in the last 50 years.

We should consider the British economy—how wealth is created and distributed, the role of exports, the role of manufacturing. It is true that manufacturing has diminished, for instance, but I would argue that that is in large part a function of the evolving nature of the British economy. The economic history of Britain shows we have gone through lots of different phases. The phase of industry in which we manufactured huge amounts has gone, sadly.

The hon. Member for Sefton Central (Bill Esterson) mentioned the steel industry and said how terrible it was that the Government had not subsidised and protected it. Wolfgang Eder is head of Worldsteel. Current capacity in Europe is about 200 million tonnes, and he says that for it to be sustainable it should be halved. There is overcapacity among European steelmakers. The idea that we can somehow subsidise things endlessly on an unproductive basis is simply wrong.

[Stephen Kinnock]

Nobody is asking for subsidies. The UK steel industry is asking for a level playing field. We are seeing the massive dumping of heavily subsidised Chinese steel—70% of Chinese steelmakers are state owned—dragging down the price of steel and crippling the British steel industry. This is not about subsidies but about smart regulation, proactive Government intervention and taking action and answering questions afterwards. I am seeking reassurances that the Government will not support China’s application for market economy status, because that would completely undermine any anti-dumping efforts. This is about proactive regulation and intervention, not subsidies.

[Kwasi Kwarteng]

I accept the hon. Gentleman’s intervention, and he makes a good point about China’s export practices, but I was making the general point that the steel industry believes there is overcapacity in Europe. This is not a British but a European problem. No Government action in the world will push water uphill or militate against that broad trend.

I digress from my main point. This has been a helpful and interesting debate, but my main concern is that we are not taking into account the different nature of the British economy. In terms of the phraseology, the context of the debate, and the words in the motion, we are reflecting circumstances that have not existed for two generations.