Steel Industry: Contribution to the UK Economy

Mark Tami Excerpts

Wednesday 25th January 2023 Westminster Hall

[Jessica Morden]

I thank my hon. Friend, who is a champion for steel in his constituency, where Celsa is based. I wholeheartedly agree that we have been going on about energy prices for so long—it is a theme that I will come to later in my speech—and I thank him for his contribution.

[Mark Tami (Alyn and Deeside) (Lab)]

First, I apologise for being a minute late. My hon. Friend’s last point is crucial. All these pots of money that are available are obviously welcome, but for Shotton and the whole steel industry, we need a long-term plan with long-term investment. There is a lot of talk about companies investing, but they will invest only if they can see a future, and if all we are doing all the time is just buying a bit of time here and there, until steel drops out of the news again, that is not a plan. We really need a long-term plan.

[Jessica Morden]

I thank my right hon. Friend for that intervention. Yet again, I agree wholeheartedly with him. He is a fantastic advocate for Shotton, and he is exactly right: we need a long-term plan for steel.

--- Later in debate ---

[Jessica Morden]

My hon. Friend makes an excellent point—I cannot top it, really. I hope the Minister has heard it.

Procurement policies also need to be updated. For every 1,000 tonnes of steel produced in the UK, 4.2 direct jobs are created, with a further 6.6 jobs created in the supply chain. It is understandable, then, that Make UK found that 68% of the UK public think that public infrastructure projects should prioritise the use of UK-made steel wherever possible, yet the Government have a pretty poor track record in this area. The most recent example was last month’s announcement that a £1.6 billion contract for steel for three fleet solid support vehicles was awarded to a Spanish consortium. That is just one case, but there have been too many missed opportunities for the steel industry. We cannot let that carry on.

As I mentioned earlier, green infrastructure projects will need literally millions of tonnes of steel by the end of the decade. The UK Government’s own steel public procurement pipeline data, released last June, states that offshore wind projects alone will require some 5.3 million tonnes of steel within five years. We need the Government to commit now to maximising the procurement of British steel for all those upcoming projects, a move that Make UK estimates could boost the UK economy by as much as £4 billion and support 11,000 British jobs in steel companies and their supply chains. As the Community union’s general secretary Roy Rickhuss has rightly said,

“The green energy revolution presents a huge opportunity to build a robust British supply chain based on the supply of top-quality domestic steel.”

The events of the past two years tell us that Britain cannot rely on fragile global supply networks for strategic goods, and that if we want to go green, it is nonsensical to transport steel from the other side of the world.

On that point, I welcome that the Government themselves have acknowledged that, in the area of energy supply, the country has

“drifted into dependence on foreign sources”.

We agree, and I echo Roy Rickhuss by calling on Ministers to not make the same mistake when it comes to steel, a sector of such vital strategic importance to our sovereign capability and our national security. Alun Davies, a stalwart of Community in south Wales, puts it succinctly:

“There is a clear choice facing this Government—either they back our workforce and our industries or they choose to offshore thousands of good jobs to other countries.”

[Mark Tami]

The industry really is at a cliff edge. I have said that in meetings. That is not crying wolf; this is not a made-up situation. It really is at the 11th hour. Unless we really step up to the mark and invest, will we lose not only the industry but the confidence of the supply chain and the customers, who will start questioning whether some of these plants will be around this time next year. Something has to change now.

[Jessica Morden]

My right hon. Friend is exactly right: the steel industry is at a particularly precarious point and the purpose of this debate is to highlight to the Minister the need to act quickly.

On procurement, it is high time that the UK Government started setting more ambitious targets for the use of UK steel in public projects and for all initiatives and schemes supported by public funds. Ultimately, they must devise policies to deliver those projects and grow the economy. Other countries have shown that they are not afraid to support their manufacturing sectors in the green transition. For example, in the USA, the Biden Administration’s Inflation Reduction Act uses the tax system to reward American manufacturers that invest in and use American manufacturing supply chains.

If this Government will not take action, the next Labour Government will. I am pleased that my party is committed to asking every public body to give more contracts to British firms, big and small. We will use stretching social, environmental and labour clauses in contract design to raise standards, and we will spend and make more in Britain. We are committing to making, buying and selling more in Britain. We will lead a culture change in Government, putting the growth of local industries and economies first and reviewing the pipeline for all major infrastructure projects to explore how to increase the materials made in Britain. We will also upskill workers to get the jobs for the future. That is the kind of vision that industries such as steel and our country need.

It is worth flagging up the continued risk of melted and poured Russian steel entering the UK via third countries. Although the UK has banned finished-steel imports from Russia and placed a 35% tariff on semi-finished steel from Russia, loopholes in the sanctions means that Russian steel that is re-rolled in the EU or Turkey and exported into the UK is reclassified as EU or Turkish-origin material, circumventing the ban and the tariff. That means UK consumers, including public projects, are unwittingly importing and using Russian steel. It is wrong as a point of principle and it has damaging consequences for the UK market. I echo UK Steel’s call for the Government to tackle that by applying sanctions on all steel that is melted and poured in Russia, regardless of whether it has been re-rolled in a third country.

At the Dispatch Box earlier in the month, the Prime Minister told the hon. Member for Scunthorpe that the Government

“remain committed to a thriving UK steel industry.”—[Official Report, 11 January 2023; Vol. 725, c. 557.]

Steel workers and steel communities throughout the country will understandably have taken that with a heavy pinch of salt. For our steel industry, the past decade has been characterised by neglect and a lack of vision for the future. The loss of skilled jobs at the SSI plant in Redcar and the Orb works in my constituency of Newport East were tragic cases in point. Orb was the last steel plant in the UK producing electrical steel, and it needed investment of about £50 million to be saved. The Government did not listen and did not let it be saved, and the opportunity was lost. That is heartbreaking. The next decade must be different, not just for our steel industry but for our energy security and a greener economy, both of which are utterly dependent on a healthy steel sector.

We need answers today. I hope the Minister will update us on her engagement with Tata, British Steel, Liberty Steel and Celsa Steel. I hope she will acknowledge that the current level of support for UK steelmakers in respect of energy costs and decarbonisation is not enough, and I hope the Government will commit to doing much more. The era of warm words has bitten the dust and the time for meaningful strategic action has come. Just like levelling up, the industrial strategy part of the Department for Business, Energy and Industrial Strategy’s title should not just be a handy buzz phrase; it should be a central, defining mission of the Government.

Instead of sticking plasters, we need a long-term plan. If the Conservative party is not up to the challenge, Labour stands ready to fill the gap and ensure that the steel industry has the bright future it needs and deserves.