Steel Industry

Martin Vickers Excerpts

Wednesday 16th October 2024 Westminster Hall

[Martin Vickers (Brigg and Immingham) (Con)]

It is a pleasure to see you in the Chair, Mrs Harris. I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing this timely debate.

Part of the British steel site at Scunthorpe falls within my Brigg and Immingham constituency, so needless to say I take a keen interest in its future. The site is known across the country and further afield for the steel it produces, which is top-quality virgin steel made from raw materials. This method of production results in products used for rail tracks and tyre wire, all the way to cruise ships and the Shard. British steel can be found all over the world. The steelworkers who make this world-class product are understandably proud of the skills they possess.

There is widespread, cross-party agreement that steel is incredibly important for everything we do, from defence to growth, which the hon. Member for Newport East (Jessica Morden) mentioned. If anything can be defined as a core industry—one of genuine strategic importance—it must be steel.

Workers and their families in my constituency and across northern Lincolnshire are incredibly concerned. They have heard rumours and seen press reports in recent weeks that suggest an early end to the imports of coke, the imminent closure of blast furnaces and escalating plans to import steel from the other side of the world to replace the products they make. Understandably, they want to know once and for all whether the rumours are true. They want certainty on whether the plan is to keep the blast furnaces running at least until electric arc furnaces are fully operational—does that still stand?

Prior to the election, Labour candidates stood on a platform of support for the UK steel industry, and billions of pounds were pledged. My constituents have not forgotten what they were told. They want to know where those billions are going and they want to see them spent in Scunthorpe. Will the Minister level with workers at the Scunthorpe site and set out exactly what this Government’s intentions are? Do they want to keep a domestic steel industry, like many countries around the world, or do they not?

The absolute least that the workforce at Scunthorpe deserve is for the Government to be completely frank with them on this issue. Do the Government value the work of steelmakers in Scunthorpe? Do they value the strategic capability of our nation to make our own steel? Do they want to keep domestic steel production for use in infrastructure and defence? How and when are they going secure that? If they cannot answer yes to those questions, can they explain what is so exceptional about the UK that means we cannot aspire to maintain a steel industry? The reality is that maintaining a steel industry will always demand support from the public purse. Without a steel industry, we are in effect admitting that we no longer aspire to be a major manufacturing nation and accepting that we do not value the defence industry.

In discussions on steel there are those who like to criticise the efforts of the previous Government. Although I do not want to spend the short time I have on political point scoring, I do think it is worth setting out some of the realities. The Conservative Government extended trade tariffs on steel products twice in the last Parliament; they did this having listened to MPs and businesses. It is a fact that they brought forward measures to help energy costs, and that they paid workers’ wages at Scunthorpe for many months to maintain jobs, skills and the site itself during the sale of the business five years ago. These were tangible, proactive decisions made by a Government who understood the importance of steel to our nation.

The former Member for Scunthorpe, Holly Mumby-Croft, mentioned steel over 200 times in questions and debates during her time in the House. I recognise that the current hon. Member for Scunthorpe (Sir Nicholas Dakin) is a Minister, meaning, I presume, that he supports the Government’s policies in relation to the steel industry. If his mailbag is similar to mine, he will know the scale of anxiety across the whole area. Just last week he was calling for a deal at Scunthorpe similar to the one in south Wales, where thousands of workers are set to lose their jobs. I want to see a policy that supports jobs, produces top-quality steel and supports the whole supply chain, which Scunthorpe relies on.

Under the last Labour Government, steel production and jobs halved in the UK. Will the Minister reassure workers at the Scunthorpe site that this Labour Government do not intend to repeat that legacy? I understand that the Minister is involved in current negotiations and will not be able to share all the detail the discussions. If that is the case, can she at least give the workers some clarity on when she expects there to be an announcement on the future of the site? Will she also reassure residents that she is working with North Lincolnshire council’s leader Rob Waltham, who proactively travelled to China a few weeks ago to meet the owners in person? He is taking a front-and-centre role in putting together a masterplan for the site to ensure that jobs and opportunities are brought to the area. He must be fully supported by the Government in that work; will the Minister confirm that that support will be offered?

I am conscious that there are those who will challenge the continuation of blast furnace steelmaking on environmental grounds, but it is quite clear that ending the production of virgin steel in the UK, and then importing virgin steel from abroad, would simply be offshoring our own emissions and adding the emissions involved in the transport of the steel to the UK. We should certainly not consider patting ourselves on the back for making environmental improvements if the Government’s plan is simply to allow the same or worse levels of emissions to be created elsewhere and for the steel then to be brought to the UK on diesel ships.

[Lee Anderson (Ashfield) (Reform)]

The hon. Member is making a great speech and makes a great point. Does he agree that if we are going to go down this road of net zero madness and make our steel more expensive, we should ban steel and steel products from other countries that are made in blast furnaces?

[Martin Vickers]

There would certainly be a case for the point the hon. Member makes. I gently point out that net zero is actually crucial to the economy of northern Lincolnshire, which I represent—I am thinking of the Humber Zero project and similar schemes.

I think you are urging me to come to a conclusion, Mrs Harris, so I will miss the next two or three pages out. I will say that whatever deal is reached now is in this Government’s hands. This an industry that, if lost, will be lost forever. I call on the Minister to redouble her efforts to secure the future of steelmaking in Scunthorpe and throughout the country. It is hard to exaggerate how crucial this is to Scunthorpe, to northern Lincolnshire and to the UK as a whole. We must bring this situation to a conclusion speedily to avoid the anxiety that workers are currently experiencing.

--- Later in debate ---

[Sarah Jones]

I think I was fairly clear. We have been in opposition. We want to produce primary steel in this country; the previous Government got us to a point where that is almost impossible without huge investment. We are supplying £2.5 billion of investment and looking, quite rightly, at the best way to spend that to create a viable steel future for this country. We are looking at direct reduced iron as part of our steel strategy, which the previous Government did not do.

The UK’s ambition is to ramp up investment. Many hon. Members talked of the need to procure British steel in this country, and we are now in a situation where 95% of the steel procured by the UK Government for infrastructure is British, if the necessary type of steel is made in the UK. The issue is that we do not produce all the different and right types of steel, so we need to ensure that we use the Procurement Act 2023 as much as we can to drive economic growth in steel.

I disagree with the hon. Member for Boston and Skegness on whether the green agenda can drive up jobs—we think that it can. For example, the Korean company SeAH is building a factory in Teesside that will build monopiles, which are the big structures that go into the ocean and anchor wind turbines. It is currently building that structure with 30,000 tonnes of steel from British Steel. We want to get to a point where we are not only building those kinds of factories in this country but using British steel where we can to make the infrastructure.

At the moment, we do not have a factory that makes turbines on the scale that we need for floating offshore wind, but SeAH is building that factory because it has an agreement with RWE, which will be running the turbines that it builds in future. That green job development into wind and renewable energy is driving our ability to build a factory in Teesside to create hundreds of jobs to build those monopiles, and we are using British steel. That is the kind of future that we want to see through the steel strategy; we are looking at those opportunities to bring new steel companies into this country and to find ways to drive up production in this country.

I should address the issues holding us back, as they were mentioned in the debate. China and excess capacity is a huge issue that we should not underplay. China is now the biggest steel producer in the world and its unfair subsidies have led to massive steel over-production, which fuels global overcapacity and drives down prices. That is a global issue with local consequences that makes profitable steel production here in the UK much harder. That key global situation is helping to shape our future steel strategy and we will need to tackle that problem through things like the carbon border adjustment mechanism—CBAM—and ensure that we are working with a level playing field.

Energy prices were mentioned by many Members, and for too long British energy-intensive industries, including the steel sector, have been held back by high electricity costs. Again, I disagree with the hon. Member for Boston and Skegness: electricity prices are set by global gas prices and the problem is our dependence on fossil fuels, as well as the fact that we did not mitigate for that situation in this country at all. When all the prices shot up with the war in Ukraine, we were in a worse position than many countries around the world.

The British industry supercharger that the previous Government developed, which the hon. Member for Brigg and Immingham (Martin Vickers) mentioned, will bring down electricity costs for the UK’s most energy intensive industries, but we know that we need to go further. It brings down only 60% of costs and there is still a disparity. We believe that, in an unstable world, cheap home-grown green energy is the future. That is what will drive down prices, reduce our exposure to the volatile fossil fuel market, protect bill payers and strengthen our energy independence. Fundamentally, that is what will bring down costs in the long term.

Members also mentioned the challenges of decarbonisation. Tata and British Steel’s plans to invest in electric arc furnaces are driven by market conditions and the desire to reduce their carbon footprint—customers want greener steel. The UK is going to have a CBAM. If we were producing steel in the UK with blast furnaces, we would be massively inhibited because the EU is bringing in a CBAM, so the cost of exporting to the EU would be much higher. We have to deal with the world as we find it, which again is where we disagree with the hon. Member for Boston and Skegness. We cannot look back and try to re-create the past; we have to deal with the world as we find it, which means that we have to move towards those more efficient and greener energies.

The EU, where 78% of our steel exports went in 2023—that is worth pointing out—will bring in its carbon border adjustment mechanism in 2027. We rely on exporting a lot of the steel we produce to the EU, and we would be at a massive disadvantage were we to carry on producing steel from blast furnaces. We have committed to a UK carbon border adjustment mechanism, which will give UK businesses the confidence that, when they invest in decarbonisation and electrification, they will not be at a disadvantage. That is important.

On other issues mentioned by hon. Members, I should touch on Scunthorpe, because that is at the forefront of everyone’s mind. No one wants to see any job losses, and everyone wants to see the steel industry thrive. Through our strategy, that is what we want to do. For commercially confidential reasons, which I am sure hon. Members understand, I cannot talk about our conversations with the owners, but I reassure Members that we are having conversations all the time and that we are working unbelievably hard to get a solution for Scunthorpe and to give the certainty that the hon. Member for Brigg and Immingham talked about. I completely understand the issue with the instability of the current situation, but all I can say to him is that we are doing all we can to work with the company on what the future will be.

[Martin Vickers]

The Minister and I share a desire to see a thriving steel industry. On a couple of occasions in her reply, she mentioned wanting to halt its decline, as well as the production of the steel strategy in the spring. Can she give any sort of assurance that there will be no job losses at Scunthorpe until the strategy is produced? Then we can then work together to plan the way forward.

[Sarah Jones]

The hon. Gentleman will understand that I am not in a position to define what commercial companies do. While we are trying to do what we can, I cannot do anything other than say that we are working incredibly hard with the owners to ensure that we get to a point that we want to get to.

The hon. Member for Strangford (Jim Shannon) mentioned Harland and Wolff, and the same situation is true there. We are working hard to understand the situation and we are hoping for a resolution relatively soon.