UK Steel Industry

Martin Vickers Excerpts

Thursday 17th September 2015 Commons Chamber

[Andrew Percy]

I agree with the hon. Gentleman. My hon. Friend the Member for Cleethorpes and I were two Conservative Members who voted against the imposition of the carbon floor price because of the impact that it would have not just on steel but on petrochemicals, which are massively important to North Lincolnshire and east Yorkshire. We would like the compensation scheme to be brought forward, as I planned to say later in my speech.

As the hon. Member for Redcar said, the nature of the steel industry is changing, and she gave a figure for how much steel we now import, compared with in the past. The figures that I was provided with state that 90% of steel consumed in the UK in the ’70s was from domestic production, but that share is now 20%. That unfortunate decline has taken place under successive Governments over the past few decades. The UK steel industry has had to become more export focused, which is part of the problem and a challenge for Scunthorpe. The hon. Member for Scunthorpe, my hon. Friend the Member for Cleethorpes and I, together with our council leader who will shortly enter the other place, met a couple of weeks ago. We were told once again that although UK demand appeared to be picking up and doing well, the concern for Scunthorpe is the weakness in the European market, as well as other issues that I shall mention. That focus on export is a major weakness at present.

As the hon. Member for Redcar said, the sector continues to suffer from an economic crisis. The service sector-led economic recovery has left steel-consuming sectors such as construction as much as 10% below their 2007 levels. The recovery so far has been less steel-intensive than we might have hoped. In the UK, demand is 75% of pre-recession levels. Further challenges, which the hon. Lady outlined, come from Chinese dumping and currency issues. Those factors, as she accepted, are outside the control of this or any Government in Europe. The current strength of the pound is another issue to which the hon. Lady referred.

Tata has made three asks of the Government, which the hon. Lady mentioned. It is almost as if we co-ordinated our contributions. One of Tata’s requests, as the hon. Member for Middlesbrough (Andy McDonald) said in an intervention, relates to the energy-intensive industries compensation scheme. I do not need to go into detail, having said what I have said already, but if that compensation mechanism were brought forward, that would be most welcome. Energy prices, as we know, are 50% higher in the UK than for the UK steel industry’s main competitor in Germany. Companies in continental Europe are not facing the same cost pressures, nor are they awaiting a decision on state aid rules. So there are steps that can be taken by the Government to improve the situation, and I know that the Minister has heard these.

[Martin Vickers (Cleethorpes) (Con)]

I agree entirely with all the points my hon. Friend is making. Does he recall that when we met Tata Steel, along with the hon. Member for Scunthorpe (Nic Dakin), one of its other requests was for modest support for some work that needs to be done to determine the firm’s future? Does my hon. Friend join me in hoping that the Minister will view that request sympathetically when she replies?

[Andrew Percy]

Indeed. We have communicated that request directly to the Minister. I welcome my hon. Friend’s intervention.

Business rates were mentioned by the hon. Member for Redcar. Removing plant and machinery from business rates valuation would have a massive impact, because business rates are five to 10 times higher in the United Kingdom than in Europe. That has a significant impact on Scunthorpe especially, making up 49% of the annual rates at that site or £12 million per annum. North Lincolnshire council has looked at what it can do on business rates, particularly in respect of cash flow. Expecting a small local authority such as that to take a hit on business rates, and putting it in a position where, if it provides relief, it may not be able to provide services, is not fair to North Lincolnshire council. This is an issue on which the Government need to respond.

We had a positive meeting with Tata recently, at which the council said it would see whether payments could be made every two or three months instead of monthly, which would help with cash flow at the site. I know North Lincolnshire council is looking closely at that. When lawyers get involved, these things always become more complicated and there are state aid issues, but the council has assured me that it will do everything it can to help on the cash-flow issue. However, that does not deal with the issues arising from the business rates regime in the UK, compared with elsewhere in Europe.