Steel Industry: Contribution to the UK Economy

Mark Pritchard Excerpts

Wednesday 25th January 2023 Westminster Hall

[Several hon. Members rose—]

[Mark Pritchard (in the Chair)]

I will not set a firm time limit at the moment, but we have quite a few speakers. Speeches of around five minutes would fit perfectly to allow all the Front Benchers to have their full 10 minutes.

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[Jim Shannon]

It is a pleasure to speak in this debate. I commend the hon. Member for Newport East (Jessica Morden) for setting the scene so well. I do not have a steel factory in my constituency, or an industry that it is dependent on help from Government, but I do have a strong construction sector that depends on the British steel that comes from the factories in the areas others have spoken about, so it is important for me to put on the record why I support what the hon. Members for Newport East and for Scunthorpe (Holly Mumby-Croft) and others said in their introductions, and what others will say.

I remember the last Westminster Hall debate on steel. The hon. Member for Newport East spoke then as well, and I think the hon. Member for Aberavon (Stephen Kinnock) led the debate. We can see that he is in the main Chamber—his name is up there on the screen—and he cannot be in two places at one time, although I venture sometimes to try. The only reason he is not here is that he has obligations in the main Chamber; otherwise, he would be here.

I have listened with great interest to the contributions of Members today, and I agree with much of what has been said. I have long been outspoken about the need for us to bring manufacturing home to purpose-built, modern, green factories that give local people jobs and produce the renowned high-quality steel for which we are famed. I absolutely support what the hon. Member for Newport East and others have said.

You will know, Mr Pritchard, because your knowledge of the issue is every bit as good as mine, that a major issue for my constituents—many will be able to say it with me—is the Northern Ireland protocol. Why do I mention that now? Let me explain. Some of the Members here will be aware—I suspect that you are one of them, Mr Pritchard—that last August His Majesty’s Revenue and Customs informed steel producers of a 25% tariff on some GB steel imports into Northern Ireland. The steel sector is important to me, and it seems that we are being penalised more than anybody else. The tariff is directly related to the Northern Ireland protocol—it is one of the issues apparent between the UK Government and the EU, to which Northern Ireland has no representation—and the rule changes in relation to steel imports. Some of those steel imports reasons relate to Russia’s invasion of Ukraine; we understand that.

There are big factors that are impacting UK steel, and Northern Ireland in particular, as expert Sam Lowe has outlined. As has been reported:

“Essentially, steel from Great Britain had been able to enter Northern Ireland without a tariff because it was covered by a tariff rate quota (TRQ) for UK exports to the EU. A TRQ allows a certain amount of a product to enter a customs territory without a tariff being paid, but once a set limit is reached tariffs apply.”

So we in Northern Ireland are being penalised to the tune of 25% for our British steel—our own steel—in our own country. The report continues:

“However, when sanctions were applied to Russia EU businesses could no longer buy steel from there. So at that time the EU scrapped country-specific TRQs for the UK and others in favour of one TRQ for Ukraine and another TRQ covering all ‘other countries’.”

The Northern Ireland protocol means that Northern Ireland continues to follow EU customs rules, and therefore suffers disadvantage, pain and cost factors. It is hard to comprehend. The tariff-free limit for supplies from Great Britain to Northern Ireland is set to be reached quickly. The UK previously had access to its own country-specific quota, which it could rely on to accommodate steel moving from Great Britain to Northern Ireland, but now such movements will be covered by the “other countries” quota, which could fill up much more quickly, given that the entire world has access to it.

What does that mean in practice? It means a 25% tariff on British steel moving from Great Britain to Northern Ireland. It means that, while European manufacturers can supply the UK with no tariff, the same does not apply to businesses in my constituency of Strangford. We want to use British steel from Newport, Scunthorpe and elsewhere, as we have in the past. It means that the local steel supplier just two minutes from my office in Newtownards is wondering how, with a 25% tariff increase, he can continue to be involved with construction industry clients that are already teetering on the edge of bankruptcy because of increased prices. It means that my steel importers—my British steel importers—cannot supply the suppliers of other Members in this Chamber. It means that all right hon. and hon. Members should stand and join with me in actively opposing the Northern Ireland protocol, not as a Northern Ireland problem but as a UK problem that affects their local economies and mine. I support the steel industry wholeheartedly, and I ask that every Member in this Chamber recognises my position as the Member for Strangford and does the same for Northern Ireland against this insidious protocol.

[Mark Pritchard (in the Chair)]

Before I call the Front-Bench spokespeople, who will have 10 minutes each, I am afraid that I will have to set a time limit of four minutes for our final three speakers.

[Dame Nia Griffith (Llanelli) (Lab)]

The steel industry—or tin-plate industry, as we call it—is vital to my constituency of Llanelli, where we take the steel from Port Talbot and make it into a range of products that subsequently become tins for food or cans for aerosols. I congratulate my hon. Friend the Member for Newport East (Jessica Morden) on securing the debate, which comes at a crucial time for the steel industry.

In the interests of saving time, I will not repeat the excellent points that my hon. Friend made on the energy issue. Energy costs are not just an immediate challenge. Now is very much decision time for the future of the steel industry. The US Inflation Reduction Act and President Biden’s determination to tackle climate change have undoubtedly accelerated global interest in decarbonisation, which poses huge challenges for the steel industry. Our steelmaking capacity is ageing, and now is crunch time for steel manufacturers, which must decide where they will invest for the future—whether it will be the UK or elsewhere.

We know that blast furnaces cannot simply be replaced by electric arc furnaces. Yes, they have a role, and could clearly be run on electricity generated from renewable sources, but the real challenge is to decarbonise the blast furnace process of making steel from iron ore. That requires huge investment in research and innovation to develop the technologies of the future. The UK Government need to make the conditions right for companies to choose the UK. We need a clear vision from the UK Government, and determination to ensure that the UK gets ahead of the game and develops the technologies. We have to be prepared to take the risk in order to reap the gains. If the UK can lead the way, we will have not only a flourishing steel industry, but the opportunity to export our steel and our technologies.

We need a clear industrial strategy, from research and innovation through development to establishing production; as well as confidence that there will be a level playing field on issues such as energy costs and confidence, and a commitment to use UK-produced steel in public procurement. The only way we will attract companies to invest in the steel industry of the future is with a proper strategy. The alternative is the demise of our industry. If we are overtaken by countries producing cleaner, cheaper steel, we will be left behind. It is not just the steel industry that needs certainty; all the associated industries need to know whether to invest.

The horrors that have unfolded in Ukraine have reminded us just how important it is that we have our own steel industry—for our security of supply and to support a range of other industries, including defence. The situation has made us refocus on the importance of our own sovereign defence capability and the need to have the materials and the skilled workforce to be able to scale up production if necessary. There is strong cross-party support for sanctions against Putin’s Russia, but as my hon. Friend the Member for Newport East explained, there are loopholes. I understand that the Government may have plans to close the loopholes, but I would be grateful if the Minister confirmed this and indicated when we can expect it to happen.

We need a level playing field when it comes to UK steel having to compete against imports. When there are distortions in the marketplace, with steel arriving at our ports from countries that give massive state subsidies to the steel industry, taking action should be well within World Trade Organisation rules, and is essential to protect our steel industry against unfair competition—all the more so given that both the US and EU protect their steel industries in this way. Without such protection, we risk losing production and workers facing redundancy, and ultimately a lack of future investment in the industry.

Despite that, in both summer 2021 and summer 2022, the UK Government made very last-minute decisions about the extension of the existing steel safeguards. This does nothing to reassure the industry. If we want future investment in the UK steel industry, companies need to know that there is strong political will to protect the industry, and that they can rely on the UK Government to protect them from being undermined by artificially cheap imports. I understand that the Department for International Trade is looking to reform the way the Trade Remedies Authority works. We need a system that really works for the industry—that can respond speedily, carry out investigations and act to protect our industry. The UK Government would do well to look at some of UK Steel’s suggestions to achieve this.

First, we need clear Government policy on how we deal with countries such as China and Russia. Secondly, given that in March 2022 we needed additional legislation to give the Secretary of State call-in powers, consideration needs to be given to how those powers could be part of the system so that the Secretary of State can use them in an initial investigation. Thirdly, reform of the way in which the economic interest test works is needed—

[Mark Pritchard (in the Chair)]

Order. I call Tim Farron.

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[Christina Rees (Neath) (Ind)]

It is always a pleasure to serve under your chairmanship, Mr Pritchard. I am grateful to my hon. Friend the Member for Newport East (Jessica Morden) for so eloquently leading on this very important debate. I speak today as a member of the Unite and GMB trade unions.

Steel is a foundational sector across the UK, never more so than in Neath Port Talbot county borough. On such strong foundations, economies and supply chains are created. Port Talbot steelworks reaches all the surrounding communities. Thousands of Neath constituents have worked there, or know someone who works there or in its supply chain, as my father did. To say it has been a difficult few years for the steelworkers in Neath Port Talbot would be an understatement. Competing in the global market, the absence of anti-dumping tariffs, the lifting of lesser duty rates and rising UK energy prices have conspired to create uncertainty and fear.

Over 2,000 local jobs have been lost since 2014. Steel and the steel industry are vital to Wales and its economy. The idea that the steel sector does not have a future is unthinkable, but our steelworkers are as robust as the steel they make. They have so far bounced back from every adversity, but the situation is about to get much worse. Of the top 10 economies in the world, the UK’s is the only one with a declining steel industry. The UK Government should immediately sit down with Tata Steel and other businesses to do a deal on green steel for the sake of the future of our workforce.

The steel sector is a crucial aspect of the partnership between the public and private sectors. The UK Government should look to set indicative targets for the amount of domestically produced steel that we put into Government-funded projects. That would enable us to make, buy and sell more steel in this country. My hon. Friend the Member for Aberavon (Stephen Kinnock), who is chair of the all-party parliamentary group for steel and metal related industries, of which I am a vice chair, cannot be with us today because he has duties in the main Chamber, but he has spoken in Westminster Hall many times about the importance of the steel sector to the UK, to his constituency and to Wales.

Floating offshore wind has the potential to transform the economy and jobs market in my hon. Friend’s Aberavon constituency and across south Wales, but it will happen only if floating offshore wind substructures and other components are manufactured and assembled locally. The public know we need a Britain that can stand more firmly on its own two feet, and they recognise the need for foundational industries to thrive if Britain is to prosper. Indeed, in one recent poll, 80% of those surveyed declared steel to be a strategically important industry that we must maintain in the UK. That is why the Labour party’s green prosperity plan will marry the quest for sustainable growth and jobs on which people can raise a family with the need for resilience. Net zero should be seen not as a hindrance, but as an opportunity for growth and prosperity. Labour’s proposed green steel renewal fund will secure the future of the steel industry for my hon. Friend’s constituents and mine, who live in Neath and work at Tata Steel. By greening our steel processing, Labour will ensure that our steelmakers can compete in a world in which global steel demand is on the rise. Britain needs its steel as a foundation of the modern manufacturing renaissance that Labour will deliver.

Time is running out for the future of our steel industry. I know that the Minister, who is a very magnanimous person, is working around the clock to familiarise herself with her new brief. I am grateful that she has already met the members of the all-party group for steel and metal-related industries, and I hope that she will stay a while in her new role. I urge her, however, to impress on the Treasury the importance of investing in decarbonisation of the UK steel industry, and particularly Tata Steel in Port Talbot. Without serious UK Government investment now, I fear that Tata Steel in Port Talbot is on the cliff edge.

[Mark Pritchard (in the Chair)]

Thank you to all our speakers for being on time; that allows each Front-Bench spokesperson to have 10 minutes.

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[Ms Ghani]

I was with the unions yesterday and in front of the APPG today.

I am going to run out of time, so I will quickly touch on the carbon border adjustment mechanism. We are aware of the risk of carbon leakage, which a number of Members highlighted, and we have been monitoring the EU CBAM proposal with interest. As I said to the APPG this morning, once the consultation is out, it is absolutely vital that we put in the best submission. I have agreed to come back to the APPG to ensure we do that constructively.

Public procurement is a key focus of mine. I am trying to get over the negotiations at the moment, and I will reflect on what more we can do with procurement. We are looking at the BEIS steel procurement taskforce, and we will also reflect on what is happening in the United States.

On trade, Members know my positions on countries such as China and Russia, as double sanctionees. I know how important it is to ensure we are resilient in the UK. We work very closely with the Department for International Trade to put together the best packages for trade. I absolutely understand the points made about Russia. We are doing everything we can to ensure that that steel is not arriving here, but I will go back and see whether we can push back any further. I will do everything I can to ensure that happens.

My hon. Friend the Member for Scunthorpe was keen to reflect on the steel safeguards. We have agreed an extensive solution to the US section 232 tariffs to significantly increase US market access for UK firms.

I am anxious that I am going to run out of time, so I will respond to Members in writing. I reiterate my commitment to the sector and to appearing in front of the APPG as soon as possible to ensure we are putting together a good package and are able to lobby No. 10 and No. 11 collectively.

[Mark Pritchard (in the Chair)]

I call Jessica Morden to wind up. You have 20 seconds.

[Jessica Morden]

I thank all Members for coming along. We have agreed that this is a critical time for steel. I welcome the new steel Minister to her role. I welcome the talks; I think they are a step in the right direction. I also support Community’s call for steel companies to reconsider any plans for restructuring while those talks are ongoing and before we know what future support there might be. I say to the Minister that we need more data on procurement, so perhaps she can provide that—

[Mark Pritchard (in the Chair)]

Order.

Motion lapsed (Standing Order No. 10(6)).