Update on the UK Steel Industry

Lord Lawson of Blaby Excerpts

Monday 11th April 2016 Lords Chamber

[Baroness Neville-Rolfe]

My Lords, I welcome the comments made by the party opposite, particularly in relation to the role of the unions, the staff and the First Minister of Wales.

To answer the point made by the noble Lord, Lord Stoneham, we have been doing a great deal. Some of the things that have been said today are a travesty of the truth. The Secretary of State and the Business Minister have been working day and night on the steel issue for many months. Without our intervention, we believe that Tata would have moved to shut Port Talbot. Now it is up for sale on a basis that gives us the prospect of success.

On the attitude of Tata, we have been in discussion with it over many months and it has made it clear that it will be a responsible seller. We are working with it to find a sustainable solution.

The pension arrangements are extremely important and we have made it clear that they are part of the discussions we are having. Both the UK and the Welsh Governments—because they are working together in relation to Port Talbot—stand ready to engage with commercial investors to help provide a package of support on commercial terms to help ensure the long-term future of our steel industry. We will consider support in the area of pensions but also of plant and power supply, and any other areas for which potential buyers believe the Governments can provide support. We need a solution on pensions not only to help any buyer but to help the steel workers.

The noble Lord, Lord Stevenson, asked about intellectual property. Certainly, since that is an area for which I have ministerial responsibility, I will think further about that. Procurement is one of a number of areas where this Government have tried to change the situation fundamentally. We have moved to change the future procurement rules so that it will be much easier to buy British. We have a splendid supply chain of possible steel projects: not only HS2 but we are now finishing the Elizabeth line; there is the Intercity Express Hitachi factory in Newton Aycliffe; and 98% of the steel used by Network Rail is from the UK. Then, obviously, there is defence and aircraft carriers. The noble Lord rightly drew attention to the success of our industries, which brings me on to the question of industrial strategy.

The key point about industrial strategy is to promote growth and innovation and to get the country back on its feet. The Government have done that. Car production has flourished, up 60% since 2010; manufacturing is up 18.7%; and we are now working well with the supply chain. We have a Steel Council, which is bringing together all the different stakeholders involved and keeping in contact with customers. As the noble Lord said, we need to give the supply base confidence for the future, as I know from being in business.

[Lord Lawson of Blaby (Con)]

My Lords, the Statement repeated by my noble friend said that we have taken action on power—and, indeed, the Government have taken action on power. To boast that they are leading the world in the battle against climate change, they have deliberately introduced an energy policy designed to push up the price of electricity in this country so that it is far higher than in any of our major competitors. This is a major reason for the difficulties of the British steel industry today. The Statement also says that the Government have paid some compensation to the steel industry partially to offset their own policies, which have pushed energy and electricity prices up so high. Might it not be more sensible to abandon that energy policy and to cease pushing up energy prices deliberately as an active policy? We have seen, with the problems of the steel industry, precisely what the result of that is.

[Baroness Neville-Rolfe]

I have some sympathy with the points made by my noble friend but we are where we are. Of course, the majority of the measures were taken when the party opposite was in power. The steel industry has found it very difficult, which is why we have made the substantial compensation payments to which my noble friend referred, including £50 million to Tata since 2013, £9 million of it in the past three months, with tens of millions more in the pipeline. More importantly, however, the Chancellor announced in the Autumn Statement that we will exempt energy-intensive industries from renewable policy costs, saving them an estimated £400 million up to 2020. This is a difficult area and we have sought to find a way through.