UK Steel Sector: Supply Chains

Marion Fellows Excerpts

Wednesday 9th June 2021 Westminster Hall

[Marion Fellows (Motherwell and Wishaw) (SNP)]

It is a pleasure to serve under your chairmanship, Sir Graham. My congratulations to the hon. Member for Aberavon (Stephen Kinnock) on securing this important and timely debate.

I was first elected to this place in 2015 and have since lost track of the number of debates I have taken part in and the questions I have asked regarding the UK and Scottish steel industry on behalf of the Scottish National party. In the Motherwell and Wishaw constituency, we produced steel. Motherwell was known as Steelopolis and Motherwell FC is nicknamed The Steelmen, but all that is left is the Dalziel works, which rolls steel. Ravenscraig, our integrated steel mill, was closed in 1992 as part of the deindustrialisation of Scotland under the Tory Government led by Maggie Thatcher. Now this Tory Government are determined to see steel production suffer all over the UK as a consequence of a Brexit deal that Scotland did not vote for.

At the end of 2020, the UK transitioned the EU steel safeguards retaining vital protection against trade diversion and import surges for 19 different steel products produced in the UK. The preliminary decision by the Department for International Trade is to remove a large number of safeguards designed to protect domestic producers from a flood of cheap imports. According to UK Steel, that

“needs to be urgently rethought.”

The Trade Remedies Investigations Directorate recommended extending the measures on 10 categories of imports for three years from next month. It also suggested that measures on nine categories be revoked. These plans are being described by UK Steel as “a hammer blow” that risks damaging the sector long term. That is exactly what they are. UK Steel has also said that the UK would become

“a magnet for huge volumes of steel imports…It is beyond worrying to consider the damage this could do to the UK steel sector and its long-term viability.”

The main union of steelworkers, Community, has said:

“This is the first test of the Government’s commitment to our steel industry post-Brexit and they’re failing it.”

UK Steel said the removal of the protections will have an adverse impact on the manufacture of steel across the UK, as attested to by hon. Members representing steel-producing constituencies across England and—it has to be said—mainly in Wales. The original safeguarding measures were designed to protect the viability of an entire industry, not individual production lines.

The Scottish National party is clear that the UK Government must extend steel safeguards beyond their current June 2021 expiry date. If the UK Conservative Government unilaterally remove the measures, they will open our market to import surges as the sector recovers from covid-19 and, crucially, at a time when our exports to the EU and US will still be subject to tariffs and quotas.

If the UK is serious about global Britain, it must remove the £54 million extra in energy costs that UK companies pay compared with companies in Germany. Over the past five years, that has cost the UK steel sector £254 million or 130% of annual capital investment. Consistently higher UK electricity prices increase production costs, reduce available capital and deter inward investment.

It is time for the UK Government to put forward a bold programme of support for the sector to level the playing field, as the all-party parliamentary group for steel and metal related industries has been continually calling for. Time and again, UK Tory Governments have failed to understand manufacturing. They talk about plans that they do not follow through; they do not even seem to realise that their vision of global Britain will never become a reality if we let down a foundation industry such as steel over and over again.

Scottish Government action in supporting GFG’s steel and smelter operations shows commitment to those sectors in Scotland. The Scottish Government helped Liberty Steel reopen Dalzell in my constituency and direct job numbers have recovered. In Lochaber, direct jobs have been saved. The Scottish Government and Scottish Enterprise supported Liberty’s acquisition; the UK Government must support UK steel industries across the board.

Scottish Enterprise recognises the challenging environment for businesses in Scotland right now and the significant economic benefit Liberty Steel brings in jobs, the supply chain and future safeguarding of Scotland’s steel industry. The Scottish Government work hard to protect jobs and promote Scotland as a place to do business. Indeed, Scotland has bucked the trend and the amount of foreign direct investment in Scotland is growing as international investors increasingly see Scotland as a welcoming place in which to invest. An EY survey of 570 international business decision makers found 15% ranked Scotland as the most attractive part of the UK in which to establish operations, behind London, but with a huge shift in the past two years. London’s vote as most attractive region had almost halved since 2019, while Scotland’s had more than doubled. That is what happens when a Government believe in their people, not just their friends and cronies.

Following the initial decision on safeguards, the Secretary of State for International Trade must decide whether to accept or reject the measures by the end of June. A rejection can only be made on the grounds that the Government believe the recommendation is not in the economic or public interests of the UK. A rejection would mean that the entirety of the safeguards would expire. Removing safeguards may see UK steel consumers receive some modest price reduction in the short term, but that will not last. This Tory Government must understand what is at stake. They must continue safeguards and actively support steelmaking in the UK, or they risk the UK being unable to supply its most basic steel needs in the future.