UK Steel Industry

Matt Western Excerpts

Monday 14th September 2020 Commons Chamber

[Jessica Morden]

I absolutely agree and will come on to say more about that later. I know that hon. Members would appreciate an update from the Minister about how that is going and the plan to secure jobs and the future of our plants.

The UK steel sector employs about 32,000 people directly and 41,000 more through supply chains. It is estimated that these jobs pay 28% higher than the average salary. In steel strongholds like south Wales and Yorkshire, this increases to about 46% higher than the average wage. These are better-paid jobs in communities that really need them. The impact of the pandemic on our steel industry has consequences not only on a local level but on a national level. UK steel contributes a combined £5.5 billion to the UK economy and £3.2 billion to mitigating the national trade deficit through exports produced. That is because steel is a foundation industry for many other sectors: engineering, construction, transport and renewable energy, to name just a few. Steel forms the backbone of our manufacturing sector, and the industry stands ready to supply the world-class steel that will help us to build back better. This is the key message of the “Britain, we need our steel” campaign, which has been launched by the Community, Unite and GMB trade unions, to which I pay I tribute for the work they do to stand up for our steel industry in this country. I hope that all hon. Members here tonight will be actively supporting this campaign.

We need the Government to ensure that all Government Departments now sign up to the UK steel charter. I am pleased that the Welsh Government were one of the first signatories. This would commit the Government to prioritise UK steel in procurement for infrastructure projects. Back in June, the Prime Minister said that the Government will

“do absolutely everything we can…to ensure that UK steel manufacturers are at the front of the queue for the great projects that we are going to construct.”—[Official Report, 24 June 2020; Vol. 677, c. 1311.]

We will hold the Prime Minister to that.

Getting procurement right is key. There are concerns, which some of my constituents share, that any benefits from HS2 will not be greatly felt in our communities in south Wales or, indeed, those outside striking distance of the proposed route. The APPG’s “Steel 2020” report argued that Government procurement and other incentives should be used to increase domestic steel content in manufacturing and construction, as there is clearly a market opportunity. A study of future demand by the Department for Business, Energy and Industrial Strategy shows that UK consumption will climb from 9.5 million tonnes of steel to 11 million tonnes by 2030—a £4 billion a year opportunity for UK producers if the right measures are in place. Currently, less than 50% of steel used in Government-funded projects is British-made. This simply must change going forward: there is much, much more to do. Phases 1 and 2 of the HS2 project combined will require 2 million tonnes of steel, including for tracks, train components, bridges, tunnels, gantries, wire and more. UK steel producers could and should provide 90% of the steel needed for HS2. This is steel that should be made here and not imported.

The broader steps for the UK Government are set out in the UK Steel paper, “Covid-19—Restart and Recovery”. Will the Minister tell us what steps the Government are taking to ensure that all major infrastructure projects set minimum targets for UK steel content, and that all Government-funded projects establish a clear preference for sourcing steel from domestic producers? Will he outline the actions that he has undertaken to encourage all Government Departments to sign up to the steel charter? The Government must do what they can to create the right environment for UK steelmakers in the long term, including a UK sector deal to sit alongside the existing deals for manufacturing industries such as aerospace, construction and automotive, all of which are inherently linked to steel.

[Matt Western (Warwick and Leamington) (Lab)]

My hon. Friend is making some very important points. On the automotive sector in particular, we need to concentrate on the supply of electrical steels from the Orb plant, which is of course mothballed. I understand that with £50 million of investment support from the Government, it could be resurrected in a matter of months.

[Jessica Morden]

My hon. Friend makes an important point about the Orb steelworks, which closed recently. I will expand on that at the end of my speech, if that is okay.

Change is needed to help UK businesses compete internationally, particularly on energy costs, which I and other colleagues on the APGG have been banging the drum on for a number of years now. This significant challenge for UK steel producers has not gone away. British steel producers pay the highest electricity prices in Europe—80% more for energy than their French counterparts and 62% more than German companies. This creates an enormous additional cost burden on the UK steel sector every year and hampers productivity. Will the Minister update the House on what the Department is doing to extend the indirect carbon price compensation scheme for energy-intensive industries, which is currently due to expire at the end of the year?

In response to parliamentary questions, Ministers have said that the ability of industries to compete across Europe and globally is a priority. It is now time to back up those words with action. It is vital to the sector to maintain current trade flows with key markets. A central concern for the steel industry as we get closer to January is trade with Europe.