Steel Industry
Debate between Lee Anderson and Chris McDonald(1 month, 1 week ago)
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Chris McDonald (Stockton North) (Lab)
It is, as always, a pleasure to serve under your chairmanship, Mrs Harris, and I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing the debate. As many hon. Members will know, I have a background in the steel industry, so, rather than recite all of my interests, I simply refer people to my entry in the Register of Members’ Financial Interests.
I listened very carefully to the speech from the hon. Member for Boston and Skegness. There were a few points of difference, but, actually, there was much on which I agreed, so I look forward to him and his colleagues coming forward and supporting the Government’s steel strategy in due course.
Turning to the position in which we find ourselves in the steel industry, the Government have an unenviable task as a result of the legacy that we were left by the previous Government. I listened when the hon. Member for Brigg and Immingham (Martin Vickers) talked about the changes to tariffs made by the previous Government. They did make those changes, but they stuck rigidly to a suite of policies that denied the possibility of private sector capital investment coming into the UK’s steel industry by making it unviable. I know that well from the international investors I worked with in the industry. They were very keen to invest in the UK, but we could never get an appropriate rate of return as a direct result of policies pursued by that Government.
The Conservative Government knew that well; they knew it when the Redcar blast furnace closed in 2015 and when they stood back and let it fail for the want of the purchase of some coal. At the time, it was the most productive and efficient blast furnace in Europe. The hon. Member for Brigg and Immingham mentioned Scunthorpe; prior to 2020, the Conservative Government poured £1 billion into Scunthorpe but did not invest any of that money in transitioning to new technology that would have actually created a great future for people in Scunthorpe, and a return for the taxpayer, too. Instead, they sold the plant off cheaply.
Therefore, I do not envy the position of my hon. and right hon. colleagues in the Department for Business and Trade, who are wrestling with this legacy. Essentially, they are putting out the fires of the previous Government, and we will see, when the steel strategy has been brought forward, how we can create a bright future for the industry. We need to do that, and I support the calls to do it, but I think that the challenge is not actually about adherence to net zero; it is about adherence to a different ideology, which has been to assume that the steel industry operates in a free market and that we can treat it as such. It does not. Other countries around the world support their steel industries, so we need to create a level playing field for investment in our steel industry, too. If we do that then we can attract billions of pounds of private sector investment into our industry, as countries such as Austria, Sweden, Germany, France and so on do.
Over the past 10 years we have seen the UK steel industry collapse to the same size as Belgium’s. Surely the UK should have the ambition to at least be as good as Belgium and have a steel industry that can serve us as well as the Belgian steel industry serves its country. Of course, we can do that to compete globally and to create the products that we need for our green transition. The previous Government knew that quite well: a report on confidence and capabilities, which I co-authored, can be found on the Government website from 2017. It identified gaps in plate steels for offshore wind, seamless tubes for nuclear power and other areas as well. The previous Government made no effort to fill those gaps because, of course, they turned their back on private sector investment.
It is important that the steel strategy is brought forward in a way that will attract private sector investment and enable us to accelerate the green transition of our steel industry. Here I come to the point of difference with Opposition Members: the green transition is not an ideology, it is an economic imperative. We need to move away from blast furnaces because they are unproductive compared with the latest steel technologies. Steel plants operating electric arc furnaces are five times more productive than those operating blast furnaces.
Chris McDonald
The hon. Member chunters about it, but the most productive steel plant in the world is based in the USA. It is entirely privately funded and produces the same quality of steel as Port Talbot at the same quantity with one fifth of the workforce, because it is automated and it uses electric arc furnaces. If we get energy prices right, we can make that investment here and we can produce those steels too.
The UK is the second largest exporter of scrap in the world. That is a valuable natural resource that we could use in the UK, but we do need primary steelmaking and we need it to use the most efficient technologies. I am afraid, for those people who adhere to blast furnace technology, that that is not the blast furnace. I look forward to my hon. Friend the Minister bringing forward the steel strategy, and to supporting it and debating it further. I look forward to a bright future for steel in the UK.