UK Steel Industry

Lord Vaizey of Didcot Excerpts

Wednesday 3rd December 2014 Westminster Hall

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

It is a pleasure to see you in the Chair, Mr Davies, if a little disconcerting. I look forward to participating in the debate under your chairmanship.

I congratulate the hon. Member for Cardiff South and Penarth (Stephen Doughty) on securing the debate, which is the second one I have done on British steel. It is always reassuring to see the passion and knowledge of the Labour Members in the Chamber, who represent many different steel interests in their constituencies.

I hope that the House will not take it amiss if I also thank in person once again the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who was kind enough in a previous debate to mention my late father’s work, “The History of British Steel”, because it is the 40th anniversary of the publication of that seminal work.

[Mr Iain Wright (Hartlepool) (Lab)]

Will it be reprinted?

[Mr Vaizey]

It will be if this level of interest in the House is maintained. This year is also the 30th anniversary of my father’s death, and it is nice that he can be mentioned in Hansard, because he was a Member of the other place, thanks to Harold Wilson.

[Stephen Doughty]

The Minister mentioned that this was the second time that he had had to respond to a steel debate. I appreciate that his family has a strong tradition in such matters—I enjoyed hearing about it in a previous debate—but where is the Minister responsible for the issue today and why has he not been present now at two such debates?

[Mr Vaizey]

Hansard has on the record the reason why my right hon. Friend the Minister for Business and Enterprise could not attend the previous debate. I gather that today he is assisting the Chancellor with the autumn statement, because his brief covers a wide range of issues. Indeed, Mr Davies, you are an expert on the working relationship between the Chancellor and the Minister for Business and Enterprise.

[Nic Dakin]

Are we to understand that the Minister is now the Minister for steel, because he has shown far more steel on the issue than the Minister to whom he was just referring?

[Mr Vaizey]

I do not wish to sound churlish, but it is said that one should be beware of Greeks bearing gifts, and one should also be beware of Labour Members, however much one admires them, bearing compliments.

The hon. Member for Cardiff South and Penarth is working hard to secure a long-term future for the steel industry in his constituency. He has been an assiduous champion for Celsa and has facilitated meetings between it and Ministers. I picked up on about nine points made by hon. Members during the course of the debate, but he left me with five or six specific questions, mostly focusing on efforts to mitigate the impact of high energy prices and of competition, which from his perspective is unfair—I hope that I am not speaking out of turn in putting it that way—and on what the Government are doing about things. He also asked about the future strategy for the steel industry.

I have quite a long speech, but the hon. Gentleman spoke rapidly, if clearly, and the time left to me is not long, especially given the level of interest in the debate. I will try to pack in as much in the short period available as he managed.

It is well known that the steel industry is cyclical, and we also know that it has faced particular difficulties in the past few years, especially with the economic downturn having a major impact on construction, leading to overcapacity and severe competition throughout the world. It is worth saying, as I did in the previous debate, that the UK remains a significant player in the global steel market. We have replaced France as Europe’s second largest producer of steel and we have overtaken Italy. It is worth remembering that we continue to manufacture to a high level in this country.

My right hon. Friends the Minister for Business and Enterprise and the Secretary of State for Wales met the hon. Member for Cardiff South and Penarth and representatives of Celsa to talk about the company’s concerns, in particular the policy issues, which it is important to note affect many other steel companies in the UK as well. The Minister for Business and Enterprise replied at the beginning of this week to the letter that was sent out by Celsa following that meeting.

The first major issue raised at the meeting and in the debate today was compensation for energy-intensive industries for the indirect costs of the European Union emissions trading scheme and the carbon price floor. The hon. Member for Cardiff South and Penarth knows that the Government are trying to compensate electricity-intensive industries for the indirect costs of the renewables obligation and the feed-in tariff. We are also seeking to exempt EIIs from the costs of the contract for difference.

The mitigation has not been brought forward, because we need to seek state aid clearance from the European Commission. It took 18 months to obtain Commission state aid clearance for the carbon price floor. The hon. Gentleman and Celsa would perhaps like to see the Government being what they might describe as more robust, but clear state aid clearance is important. As he knows, if aid is provided before state aid approval is given, technically that would be illegal and we run the risk, if approval is not given, that the company would have to pay back the state aid. That is the reason. I am sure that the Chancellor, if he could wave a magic wand, would wish to bring forward mitigation, but we have to go through the process.

The hon. Member for Cardiff South and Penarth also talked about procurement. We have greater transparency of opportunities through the publication of procurement pipelines, which now cover 19 sectors. We have a simpler public procurement system; we have abolished the pre-qualification questionnaires for low-value contracts; and we help suppliers to find contract opportunities via a single online portal. We are working with industry to map supplier capabilities. We want to quantify the opportunity that exists to maximise the economic benefit for the UK—of course we do. Where there are capability gaps, sectors will encourage domestic suppliers to expand to fill them, with support from the Manufacturing Advisory Service.

The hon. Member for Middlesbrough South and East Cleveland tried to tempt me to have a pop at the Scottish Executive over the Forth bridge. My understanding is that the approaches to the bridge are to use British Tata steel, but I cannot comment on the procurement process of the Scottish Executive—[Interruption.] Perhaps the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), commenting from a sedentary position, would like to say why the Scottish Executive procured from China, Poland and other markets.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I only wanted to ensure that the Minister knew the difference between the Executive and the Government. “The Executive” is what Labour did not have the courage to call their Government in the past; “the Government” is what exists now.

[Mr Vaizey]

We are disappearing down a particular Scottish cul-de-sac. I will leave that as an argument between the Scottish National and Labour parties.

We are working to strengthen existing supply chains by encouraging primes to adopt a collaborative and long-term approach to their suppliers. The hon. Member for Cardiff South and Penarth discussed Chinese imports of rebar. The United Kingdom Accreditation Service looked at the complaint by UK Steel and concluded that CARES had responded in an appropriate way to the concerns expressed in line with the expectations and requirements of the accreditation standard. I can tell him, however, that there has been an increase in vigilance on the part of CARES, with increased sampling and more checks. We have also been advised that, as a result of ongoing discussions between CARES and UK Steel, and of the further testing of some non-compliant imports, CARES visited the Chinese steel mill concerned. CARES conducted further sampling and testing, but it did not find evidence of stock production being non-compliant. On that basis, we genuinely think that we are doing everything possible, although we may be able to do more if the industry provides us with additional evidence of what it thinks that we should investigate.

[Tom Blenkinsop]

The issue of whether it was a Scottish Government or an Executive who sold steelworkers in Motherwell and the rest of the UK down the Yangtse is irrelevant. The real issue is whether the Secretary of State for Business, Innovation and Skills has an ongoing inquiry. If so, is it looking at the steel products that are sitting on dockyards or in warehouses for more than 12 months at a time, rusting away and undermining any usage in a construction project, because of health and safety?

[Mr Vaizey]

I will take that specific point back to the Secretary of State. As I said, there have been discussions between UK Steel, UKAS and CARES. The Government take an interest in such issues. We will go back to those organisations if there is appropriate additional information.

Let me comment on anti-dumping quickly, because time is running out. We have been in contact with the European Commission on a number of occasions over the past year. We have had face-to-face meetings and we have asked the Commission to look at the case for launching an anti-dumping investigation into Chinese rebar imports. The problem is simply that Chinese rebar is only being exported, as I understand it, to the UK market and anti-dumping actions are taken at the European level, which presents serious legal difficulties for the Commission. We think, however, that the Commission is genuinely trying to find a way round the problems. We check regularly with it on progress and encourage it to take action, but at this stage a more aggressive approach might be unproductive.