Steel Industry

Nicholas Dakin Excerpts

Wednesday 14th January 2015 Commons Chamber

[Mr Wright]

My hon. Friend, who has been a real champion on this issue, has pre-empted one of my later remarks. His clarification about the contract is absolutely right. This £790 million contract for 37,000 tonnes of steel for the Forth bridge project would have been really helpful in making sure that we had a vibrant long-term steel industry in Scotland, but all the steel came from China and Europe, and certainly none of it came from Scotland. How can that be allowed if we have a real industrial policy? I do not believe in protectionism or bailing out obsolete industries, but Governments of any complexion working with industry and the supply chain to ensure their viability is the key to a modern, innovative economy. Other countries are doing that and so should we.

[Nic Dakin (Scunthorpe) (Lab)]

My hon. Friend is making a powerful argument. Did he notice how the Italian Government stepped forward before Christmas to ensure that their steel industry could carry on into the future and be in a strong position to compete in Europe and the world?

[Mr Wright]

My hon. Friend is absolutely right. Governments, in conjunction with industry, can look at the global steel market, consider where they want to fit into the value chain and how they can exploit it, and work together in a co-ordinated way on research, development, innovation and skills to ensure that they fulfil the potential.

What has happened with long products provides a good example. It is important that this country continues to have a long products capability for domestic and international reasons. It is important that we remain a key player in that area. That is not about helping obsolete, old-fashioned industries; it is about thinking about the future and about how we can exploit the opportunities. Just because a single company, albeit one as strong and as important to this country as Tata, makes a strategic decision to divest itself of its long products division, which comprises about 50% to 60% of its steel operations, this country should not lose that capability. Should not such matters be considered in an effective industrial strategy? As I said, it is not about bailing out obsolete industries, but about identifying the parts of the value chain where we can make inroads and receive dividends in the future.

--- Later in debate ---

[Nic Dakin (Scunthorpe) (Lab)]

The Olympic stadium, the Shard, Jodrell Bank, Sydney harbour bridge, the rails on which our trains run: those are just some of the world-class products produced by UK steelmakers in Scunthorpe and elsewhere. This debate represents a fantastic opportunity for all of us in this Chamber to unite behind those working in UK steelmaking and respond to the clarion call from the Community union and others that we stand up for steel today.

The UK’s demand for steel is currently at 74% of the 2007 level, and that should cause the Government real concern. Worse still, much of the demand is met by an increase in foreign imports. Alarm bells should be ringing in Government ears and action should be taken. Since the global crash of 2008, the Scunthorpe works has experienced many challenges. Work force and management have delivered everything that Tata has asked of them. That is why the valuable Network Rail contract was won—justification for the significant investment in advanced rail manufacturing at Scunthorpe. To Tata’s credit, it has continued to invest, with record numbers of apprentices being taken on, year on year, and the multimillion pound relining of the Queen Anne blast furnace.

However, Tata’s decision to divest itself of the long products division and embark on a due diligence process to sell to Klesch Group has meant that 2015 begins with uncertainty about the future ownership of a huge amount of the UK’s steelmaking capacity. Some 6,500 people are directly employed in long products in the UK, 4,000 at Scunthorpe. In reality, far more than that—32,000 to 33,000 workers—are directly employed through contractors and the supply chain. These are good jobs providing good livings and making a crucial contribution to the UK’s economic well-being. UK Steel, in its “Charter for Sustainable British Steel”, states:

“Exports of British steel were worth £4.9 billion in 2013 and contributed £2.4bn to the UK’s balance of trade. The sector’s overall contribution to the UK economy is worth around £9.5bn a year.”

There needs to be a successful partnership between Government and the industry to respond to the urgent, critical challenges that we face. I take the Secretary of State at his word—I do think he cares—but I was disappointed that at times he appeared rather complacent. He needs to put his shoulder to the wheel to make sure that these difficult things are really delivered on. We need a co-ordinated, active industrial strategy for steel to secure its long-term future. It is a credit to the UK metals industry that it is working to produce the very first industrial strategy for metals in the UK. Will the Minister provide assurances that the Government will work with the industry to take forward the metals strategy?

As many Members have said, we need a level playing field on energy. Quite frankly, the Government’s carbon price floor tax fiasco has made things worse and given all the wrong messages on energy prices. It is good that they made a commitment on mitigation in relation to the renewables obligation, but we are in 2015 and will have to wait until 2016 for that. Come on—try to bring it forward.

As my hon. Friend the Member for Newport East (Jessica Morden) said, business rates in the UK are five or six times more expensive than our European competitors’, which is surely something at which the Government can look imaginatively. We need action to ensure that local content is pursued in the procurement process, so that if, as we hope, the renewables industry takes off in the Humber and elsewhere, UK taxpayers and energy bill payers are not funding jobs outside the UK, but securing jobs in the UK, as we would wish. We also need support, with the Government putting their shoulder to the wheel, on innovation and skills.

This debate is an opportunity for the House to say very clearly that we see steel as a foundation of the UK economy, and that we are all proud to stand behind it to ensure that it delivers a prosperous and successful UK economy in the future. I am proud to stand alongside the steelworkers in my constituency and in my community, and to stand up for steel here today.