Protecting Britain’s Steel Industry

Marion Fellows Excerpts

Monday 21st June 2021 Commons Chamber

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

I was eager to take part in this debate, as steel is a subject close to my heart. I have a steel plant in my constituency: Dalzell Steelworks in Motherwell, which was saved by the Scottish Government in 2016 when it was sold on by Tata Steel. At that time, I was a member of two steel taskforces, one organised and led by the UK Conservative Government, and the second by the SNP Scottish Government. The UK steel taskforce talked a lot about the importance of steel and what it would like to do to help the industry. Despite that, Redcar steelworks and other locations closed, and approximately 20,000 steel jobs have been lost over the years.

We were told it was the fault of the EU, and there was nothing we could do about the high cost of energy or to stop the imports of cheap steel that were so dangerous to our industry in the UK. Well, here we are in 2021, and what has happened? A recent report from UK Steel shows the significant electricity price disparity the UK steel sector still faces compared with its European counterparts, paying an extra £54 million in energy costs compared with German steelmakers. Over the past five years, the price disparity has cost the sector £254 million, or 130% of annual capital investment.

The report, “Closing the Gap”, shows the huge structural barrier facing the UK steel sector as it faces the core challenges of adapting to a trading environment outside the EU and trying to recover in the aftermath of the pandemic, and embarks on the major challenge of decarbonisation. The report makes a powerful argument for the UK Government to put forward a bold programme of support for the sector, to level the playing field. Consistently higher UK electricity prices increase production costs, reduce available capital and deter inward investment, severely reducing the sector’s ability to invest. Gareth Stace, UK Steel’s director, said:

“Our new report plainly demonstrates UK steelmakers face systemic disadvantages in higher electricity prices than our competitors… Electricity is one of the biggest costs for the steel industry, it undermines our competitiveness and it damages our ability to invest… And the issue is becoming even more urgent with the growing need to rapidly decarbonise”.

UK Steel says the UK Government need to be “bold and decisive”. It would be hard to describe this Government as such in relation to steel.

Scotland did not vote for Brexit, yet the Tories are using it to remove vital protections from our steel industry. At the end of last year, the UK transitioned the EU’s steel safeguards, retaining vital protection against trade diversion and import surges for 19 steel products produced in the UK. Over the course of the past six months, as we have heard, the Trade Remedies Investigations Directorate has been reviewing the measures to see whether they should be extended. Now, the preliminary decision by the Department for International Trade is to remove a large number of products from so-called import safeguards designed to protect domestic producers from a flood of cheap imports. According to UK steel, this needs to be urgently rethought. Under Tory plans, the Trade Remedies Investigations Directorate —an arm’s length body of the Department for International Trade—recommended extending the measures on 10 categories of imports for three years from next month and suggested that measures on nine categories be revoked. The British steel industry has hit out at these plans—these are the folk who make steel, Minister—describing them as a “hammer blow” that risks damaging the sector long term. It said:

“The UK will 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”.

Alasdair McDiarmid, operations director of the steelworkers’ union Community 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 that the removal of protections will have an adverse impact on the manufacture of steel sections across the country. It added that the measures were designed to protect the

“viability of an entire industry, not individual production lines”.

[Jonathan Edwards]

Once again, the hon. Lady is making a fantastic speech in defence of the steel industry. The key point seems to be that the US and the EU are maintaining their safeguards. We know that there is a massive oversupply of steel being produced around the world; I think the figure in 2019 was 514 million tonnes. If the British state removes our safeguards, it does not take a brain surgeon to work out where some of that steel is going to be arriving.

--- Later in debate ---

[Marion Fellows]

I thank the hon. Gentleman for his intervention. He actually did the next part of my speech, so I can move on and let more Back Benchers in.

It is quite hard to talk about global Britain when a UK foundation industry, such as steel, is being put to the wall by a Government who seem not only not to understand manufacturing but to think that it is okay to allow a foundation industry to try to compete with both hands tied behind its back. The UK Government said that they wanted to “take back control” from bureaucrats, but they are allowing the TRA, an unelected body, to make shattering decisions on the steel sector. This is a Government just like Thatcher’s Government, who closed Ravenscraig in my constituency. The UK Government have the power to protect steel jobs, but they are actively undermining steelworkers and the steel sector and risking jobs. Boris Johnson is finishing off Thatcher’s mission to destroy Scotland and the rest—

[Madam Deputy Speaker (Dame Rosie Winterton)]

The hon. Lady should not really refer to the Prime Minister by name; she should say “Prime Minister”.

[Marion Fellows]

I am sorry—the Prime Minister is finishing off Thatcher’s mission to destroy Scotland and the rest of the UK’s industrial base.

Contrast that with what the Scottish National party Scottish Government have done for steel in Scotland. The Scottish steel taskforce was set up at the same time as the UK taskforce, or a few months later, to save the Dalzell works and the Clydebridge plant. From day one, the focus was on making these plants productive again. The Lanarkshire steelworks had closed in 2015 and the Fort William smelter was poised to close before the Scottish Government interventions in 2016. The Scottish Government helped Liberty Steel to reopen Dalzell, and direct job numbers have recovered. In Lochaber, 165 direct jobs have been saved—not many, but in Lochaber, that is a huge number of jobs—and 44 new jobs were created by the GFG Alliance.

The Scottish Government and Scottish Enterprise supported Liberty’s acquisition of Dalzell and Clydebridge steelworks. Scottish Enterprise provided support through a £7 million commercial loan to Liberty Steel and the business has successfully re-entered the heavy steel plate market. Scottish Enterprise recognises the challenging environment for businesses in Scotland right now and the significant economic benefit that Liberty Steel brings in terms of jobs, the supply chain and the future safeguarding of Scotland’s steel industry. Scottish Enterprise is in discussion with Liberty Steel on repayment of the loan funding, and, of course, debt forbearance is not uncommon in the current market.

The GFG Alliance has said that its Scottish businesses are performing strongly and have access to sufficient resources for their current needs. There has been no call on the Government guarantee and the Government receive a fee from the business for providing the guarantee, and the guarantee is backed by security over its assets. In Scotland, there is political will to support the steel industry. Where is that will in the UK Government? It appears that this UK Government are happy to give a hand to their cronies, but are willing to allow steel, a foundation industry, to founder under unfair competition and high energy prices. There is a reluctance to help an industry that provides decent, well-paid jobs and that could supply steel for the green energy industry and infrastructure for recovery after this coronavirus pandemic.

Finally, will the Minister be added to the list of his predecessors who talked a good game, but refused to actually help the steel sector? Minister, we are waiting.