British Steel Industry

Mark Tami Excerpts

Tuesday 10th March 2020 Westminster Hall

[Stephen Kinnock]

My hon. Friend is absolutely right. We need a patriotic procurement policy. We need procurement that gives the right weighting to local value. Let us look at big opportunities such as HS2—2 million tonnes of steel. How much of that steel will be British? Let us ensure that every single Government Department and HS2 are signed up to the steel charter.

The UK economy cannot stand up without a backbone made of steel. It certainly will not be able to level up if is not able to stand up. Steel underpins our everyday lives, from the houses we live in to the offices we work in; the trains, buses and cars we travel in; and the major infrastructure projects, such as HS2 and the possible Heathrow expansion. It is crucial for our defence industry and to our national security. I hear people say that steel is a sunset industry. Nothing could be further from the truth. It is not a sunset industry; it is an industry of the present and of the future. It underpins our entire manufacturing base, from automotive to construction, aerospace and so much more.

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

My hon. Friend is making a powerful case. Does he agree that we cannot just carry on managing decline and that we must invest for the long term? Once a plant goes, it is gone; very rarely do they come back into operation.

[Stephen Kinnock]

My right hon. Friend is absolutely right. Of course, we saw the tragedy of Redcar: once the blast furnace is turned off, that is it. In my opinion, that was an act of industrial vandalism. We must ensure that we take into account the cost of doing nothing. The cost to the Government and the British taxpayer of closing these businesses down is astronomical, so let us have a proactive industrial policy based on investment, and let us use tomorrow’s Budget to deliver that.

[Stephen Kinnock]

My hon. Friend is absolutely right. This is about having a policy environment that is conducive to driving investment. Businesses are looking for a partnership with the Government. As she rightly says, the cost of energy in this country compared with what the French and the Germans pay means that our steelworkers are competing with one hand tied behind their back. They need a British Government who are on their side.

Let us not forget the tremendous value that the steel industry generates for the British economy. It produces 7.3 million tonnes of steel a year, which is around 65% of the UK’s annual requirement. It employs 32,600 people directly in the UK and supports a further 41,000 through the supply chain. It makes a £2.8 billion direct contribution to UK GDP and supports a further £3.6 billion through the supply chain, and it makes a £2.5 billion direct contribution to our balance of trade. Steel is also integral to the greening of our economy. It is used in wind turbines, tidal lagoons and electric vehicles, and of course it is far cleaner to make our own steel here than to import it from places such as China, where steel production is much dirtier and the carbon footprint of transportation is huge.

Although we can be immensely proud of the contribution that our industry and its workers make, we must reflect on the sector’s recent struggles. UK manufacturing has been in decline, dropping from 30% of GDP in the 1970s to just 9% today, and the UK’s shift towards a city-centric, service-based economy means it is now the most geographically unequal country in northern Europe. We have the richest area in the whole of northern Europe—London—but also the five least prosperous, with west Wales and the valleys the poorest of all.

Let us not forget that steel jobs are good jobs, paying an average salary of £36,000, which is 36% higher than the regional average in Wales. Port Talbot provides 4,000 such jobs. The wider supply chain benefits are even greater, and the sense of local pride that our community feels in providing the very backbone of the UK economy is immeasurable. However, since 2010 our steel industry has been abandoned by the UK Government, leaving us trying to compete with one hand tied behind our back. After 10 years of Tory austerity, our community has also been left to fend for itself as a result of the money that has been taken out of our local economy.

The lowest ebb for our local steelworks in Port Talbot came in 2016, which marked the height of the steel crisis. A number of market forces combined to set the hares running: the UK had some of the highest electricity prices in Europe, which have gone on to cost the sector £200 million since 2016; business rates were through the roof, five to 10 times higher than in France, Germany and the Netherlands; and there was increased Chinese dumping in European markets to undercut European steelworkers. At one point, the UK Government blocked the EU from taking stricter action against the Chinese.

With such little support from the Government, all that came to a head. Leading the march for steelworkers as they always do, Community and other steel unions flew a delegation to Mumbai, which I was fortunate enough to be part of. In the midst of a crisis that nearly led to the loss of 4,000 jobs in Port Talbot, our community fought tooth and nail to make Tata Steel recognise that these were real people with real families to look after, not just numbers on a spreadsheet.

[Mark Tami]

There is an important point here: these are not workers who have refused to change; in fact, they are quite the reverse. They have been at the cutting edge. They want to do everything to make the plants as efficient as possible, but with all these other factors counting against them, there has to be a point where something changes.

[Stephen Kinnock]

I fully agree. British steelmakers make the best steel that money can buy; of that, there is no doubt whatsoever. Look at the flexibility they showed over the divestment of the pension scheme, when many steelworkers thought not about themselves but about their families—their sons and daughters, and their grandsons and granddaughters. That shows the passion and commitment of our steelworkers and their willingness to be flexible. I pay tribute to the steel unions, and to Roy Rickhuss and Community for their leadership in making that happen.

Our endeavour at the time paid off. Tata Steel decided against closing or selling the business, and in exchange the workforce showed incredible sacrifice by voting for the divestment of the pension scheme. In return, Tata Steel put forward a substantial investment plan and promised that there would not be a single compulsory redundancy in the coming years.

Fast-forward four years and we are stuck at square one. While electricity prices and business rates continue to be a thorn in the side of our steel sector, Brexit and Donald Trump’s section 232 steel tariffs are combining to create a hostile policy and market environment once again. Some 70% of UK steel exports go to the EU, and a basic trade agreement with the EU could cost the industry £70 million a year through additional border checks. Although Trump’s tariffs were aimed at punishing China for illegal dumping, they ended up severely damaging the UK’s US exports, which have dropped by 30%. Exports of long products such as rods, bars, rails and construction materials were hit particularly hard, falling by as much as 60%. I am sure the hon. Member for Scunthorpe (Holly Mumby-Croft) will wish to say something about that.

These are tough times. It is important for steelworkers in my constituency and across the country that Tata Steel keeps its part of the bargain by continuing to invest in the long-term future of UK steel making. Our steelworkers, who make the best steel that money can buy, are crying out for UK Government support. It is time the Government put their money where their mouth is and backed this essential British industry. We need a Budget for steel—a Budget that really does level up.

First, the Government must take specific action to reduce UK industrial energy prices in order to move the steel sector’s costs in line with its European competitors. The Government’s energy intensive compensation scheme barely touches the surface; it deals with the symptoms but not the cause of the problem. UK steelmakers still pay 80% more for energy than their French counterparts, and 62% more than German companies.

Will the Minister commit to studying and delivering on the nine recommendations in UK Steel’s “The Energy Price Gap” report? They include providing 100% compensation for the indirect costs of the carbon price support mechanism, enabling energy-intensive industries to buy energy collectively, and providing an exemption from capacity market costs. It is worth noting that any savings on electricity prices would be reinvested in the recently announced clean steel fund and would deliver £750 million of investment in the sector over the next decade.

Secondly, the Government must back business rates reform to drive capital investment in industry. Will the Minister commit to removing plant and machinery from rates calculations? Thirdly, the Government must maximise opportunities for UK steel in major infrastructure projects by introducing measures to increase the amount of UK steel purchased by those projects. Will the Minister back calls for HS2 to sign UK Steel’s steel charter, and will he recognise the potential for the Government’s steel pipeline to support 6,000 new steelworker jobs and contribute £3.3 billion to the economy if every Government project used British steel?

Fourthly, will the Minister commit to using the estimated £200 million in returned moneys from the EU research fund for coal and steel post Brexit to boost UK steel sector innovation? Fifthly, will the Minister commit to removing Donald Trump’s section 232 tariffs from day one of the UK-US trade negotiations? Finally, will the Minister commit to delivering on a sector deal for steel? Aerospace, automotive and construction all have sector deals, yet the industry that underpins our entire manufacturing base—the steel industry—does not. That really is a travesty.

Steel is very much a 21st century industry that forms the backbone of the British economy. That fact must be reflected in tomorrow’s Budget. The Community union is set to launch a new campaign called “Britain, we need our steel”, because Community knows that the UK relies on UK steel every bit as much as its members and the steelworkers in my constituency do.

My constituents and their families, and steelworkers and their families across the length and breadth of our country, are not asking for charity; they are asking for a fair crack of the whip. They are men and women of steel who want the opportunity to compete without one hand tied behind their back and a chance to continue to serve their country by producing more of the best steel around for generations to come. I truly hope that the UK Government share that vision and will stand up for steel in the Budget tomorrow.