UK Steel Industry

Nicholas Dakin Excerpts

Thursday 17th September 2015 Commons Chamber

[Mr Iain Wright (Hartlepool) (Lab)]

The debate opened with strong, passionate and eloquent speeches from my hon. Friend the Member for Redcar (Anna Turley) and the hon. Member for Brigg and Goole (Andrew Percy), characterising what is good about the UK steel industry. Their speeches were measured and consistent, showing the overall picture of the future British economy.

We have been here before. We had an Opposition day debate in January on the future of the UK steel industry, in which I stated that we need to focus on the long-term competitiveness of the UK economy and that, as my hon. Friend the Member for Redcar said, manufacturing should be central to our vision for a modern, dynamic and innovative economy. I also said that steel matters as literally the foundation of a 21st century innovative economy, providing high skills and well paid jobs to parts of the country that often suffer in the larger economic picture, and offering a vital role in the supply chain of key sectors such as automotives, aerospace, construction and transport. It is such a significant foundation industry that other parts of our valued economy will build on. The Government need to recognise its importance and work in partnership with it to secure its long-term prosperity.

I am worried, however, that since the debate in January the scale of the crisis facing the industry has become ever more grave and urgent. My hon. Friend the Member for Redcar and the hon. Member for Brigg and Goole outlined the urgent national issues facing the industry, but I want to reiterate some of them. My hon. Friend mentioned the urgent situation facing the SSI plant in Redcar. In the months since we debated the issue in January, we have faced the prospect of the first national steel strike in 30 years. Last month, Tata announced the mothballing of a steel plant in south Wales, risking 250 jobs. The fall in the oil price has put on hold projects in the oil and gas extraction industry, meaning that Tata plants making world-class pipes—such as the pipe mill in my own constituency—and other steel plants face diminishing order books.

The hon. Member for Brigg and Goole mentioned Gary Klesch, who has abandoned his plans to buy Tata’s Long Products Division, including the great plant in Scunthorpe. He said to the Financial Times last month that workers in the UK steel industry were

“being led to the slaughterhouse”

by the Government’s failure to tackle high energy costs and Chinese imports. He asked:

“What is the industrial policy when it comes to the massive dumping of Chinese steel?”

As the hon. Gentleman says, we should doubt some of Mr Klesch’s motives in pursuing industrial assets, and those comments are emotive and provocative, but his comments on industrial policy do smack of some truth and we need to investigate that still further.

[Nic Dakin (Scunthorpe) (Lab)]

The real problem with Mr Klesch’s comments, when he withdrew his interest in Tata Long Products, is the impact they have had on confidence in steel. Does my hon. Friend agree that there is a big job for the Government to do to act to restore that confidence?

[Mr Wright]

Absolutely. I could not agree more with my hon. Friend. He is a passionate defender of the steel industry, not just in his constituency but across the country. He is absolutely right. Industry has a part to play in that, we in Parliament have a part to play in that and the Government also have a role. Government policy is ostensibly about priorities: where to divert attention and resources relative to other things that need to be done.

Other countries recognise the role that steel plays in a modern economy. At one extreme, this can mean renationalising the steel industry, as Italy has done, to safeguard capability for the future. Other Governments try to level the playing field for their domestic industries by addressing costs, taxes, procurement policies and imports to give their domestic steel firms at least a fighting chance. I am concerned that the British Government seem to do the opposite. This is not a personal criticism of the Minister on the Front Bench, who has taken more genuine interest in the steel industry in four months than her predecessor did in four years. She is a strong champion and we welcome her to her post. However, she recognises that the steel industry is facing a perfect storm. UK-based steel firms find it increasingly difficult, if not impossible, to export their products because of overcapacity in the global market, the high valuation of sterling, and uncompetitive costs based on unilateral energy bills and disproportionate business rates. As my hon. Friend the Member for Redcar said, energy prices for UK-based steel producers are 50% higher than for our European neighbours. How can we compete on that basis?

The Government advocate a wholly open domestic market, which leaves the industry vulnerable to dumping and fails to recognise smart local procurement, undermining UK-produced steel. The steel industry has one arm tied behind its back on exports, which, because of overcapacity in the global market, is increasingly difficult, and the other arm tied behind its back on imports. It is little wonder that the industry is punch-drunk and on the verge of a knockout.

I welcome this debate and I agree with the motion’s call for a key summit, but frankly we need more urgent decisive outputs. As Roy Rickhuss, general secretary of the Community union, has said:

“The UK steel industry is at a crossroads. Either it gets the support it needs from government to give it the chance of a competitive future or it continues to be subjected to warm words from ministers in the face of increasing decline.”

I could not agree with him more. On the subject of trade unions, this House debated the Trade Union Bill on Monday. In the Second Reading debate, I said that the Bill’s provisions run the risk of a more adversarial relationship between management and unions. The UK steel industry is characterised by fantastic, positive and productive industrial relations, which we lose at our peril. The UK steel industry will decline if the Bill is passed.

--- Later in debate ---

[Nic Dakin (Scunthorpe) (Lab)]

Let me join everybody in paying tribute to the work of my hon. Friend the Member for Redcar (Anna Turley) and others in securing this timely and important debate. While we are on tributes, it is important that I pay tribute to everybody who is working in the steel industry across the UK, particularly those in my constituency. A number of things have happened this summer: job losses in south Yorkshire; job losses in south Wales; the withdrawal of Klesch from the interest in Tata; and the struggle for survival at SSI in Teesside. All that bears witness to a fact: we have, as UK Steel, a sober, understated organisation, says in the preface to its letter to the Minister, a “Steel Sector Crisis”. Sadly, that is where we are today. We are facing questions about how we ensure the future of this vital, strategic, foundation industry for the UK. My hon. Friend the Member for Hartlepool (Mr Wright), who chairs the Select Committee, rightly said that this should be about the future—we can build on the past but this is about the future, because that is what matters. No modern economy looking to the future can go forward with confidence about this industry unless it has that at its heart.

That is why my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), in an impassioned and incredibly moving contribution to this debate, was right to say that we know all the arguments, because they have been rehearsed time and again in this stadium—[Laughter.] It is not exactly a stadium, but we have built many stadiums with steel and I am sure there will be much steel in here. We have rehearsed those arguments time and again in this Chamber and in this Palace of Westminster. We know the arguments. We know what this is about. We know that it is about energy prices, business taxes, capital investment, procurement policy, Chinese imports and the strength of the pound. We know what the context is, and we can go round and round in all that detail, but what signally matters at the moment is the political will to do something. This is about politicians—us, across this House—people outside this House and, most importantly, Governments, be they the Scottish Government or the UK Government. It is about the decisions they make on procurement, be it procuring steel for the Forth road bridge, sourcing new auxiliary ships for the Royal Air Force through Korea rather than through the UK or deciding whether we buy our new police cars from Peugeot or from the UK. There are procurement decisions where the Government can step up to the mark; this is about looking forward, and we need to make sure that we have the political will.

That is why I asked the Prime Minister at last week’s Prime Minister’s questions to have a steel summit. A steel summit is about saying to everybody that steel is crucial for the UK and it matters, now and in the future. That is why the Prime Minister and this Government need to step up to the plate, and put together a steel summit and respond to the feeling both inside and outside this House that that is important. The Prime Minister gave us warm words. To be fair to him, I believe he does care about the steel industry and he does always give us warm words. For the first time since I was elected in 2010, we have in this Minister a Minister for the steel industry who cares about the steel industry. She has shown honest endeavour and I believe she will continue to do so. But warm words and honest endeavour in themselves will not take us where we need to be. We need clear actions, movements and directions in the future to make the future bright and bold.

My constituency has 4,000 jobs in the local steel industry, with people directly employed, and 25,000 jobs dependent on steel—that picture is magnified across the country. Steel is a crucial industry, for now and for the future. I call on the Minister, who is very good, to move from being very good to being exceptional, to make a difference and to respond to the desire for a steel summit by letting us have one. That will allow us to send the message to investors looking to make a difference to our steel industry and work alongside us in partnership that this Government will stand up for steel and will make sure that steel is there for the future, so that we have a bright future and we can be as proud of our steel industry in 50 years’ time looking back as we are now looking back at the past 100 years of our steel industry. This Minister is going to step up to the mark and deliver for this nation on the steel industry.

--- Later in debate ---

[Anna Soubry]

I think we are agreed because this has affected Governments of all colours—or rather, of both colours. In all seriousness, the rules on state aid are very strict. I take the view that we should not blatantly breach those rules, because we cannot hold to account other countries that breach them, blatantly or otherwise, if we are guilty of doing the same.

[Nic Dakin]

The reality is that the universal application of the carbon floor tax in this country has had a detrimental effect on energy costs for this industry, and the mitigation package so far put in place does not fully address what needs to be done. Will the Minister make a commitment to do her very best to bring forward the mitigation from the current 2016 destination?

[Anna Soubry]

The hon. Gentleman can be assured that I will do everything I can. I think we all agreed on and voted for the financial obligations that we have put on all our industries, so there is nothing between us. I want us to be able to reduce energy prices, not just for domestic consumers—ordinary members of society—but for industry. I think that that would be a much better way forward.

I have not actually got a speech to read out, which often frightens my officials—you may be quite pleased about that, Madam Deputy Speaker—so I will just remind the House of the actions that I and the Secretary of State for Business, Innovation and Skills have taken. He will meet the all-party group on steel and metal-related industries on 26 October. I assure all hon. Members that both he and I have spoken to the Prime Minister and the Chancellor of the Exchequer. Only this morning, I bumped into the Secretary of State for Energy and Climate Change and had yet another discussion about this problem, the urgency of the situation and what we can do to provide assistance. Hon. Members should be assured that we are doing all that and having such discussions at governmental level.

I met the director of UK Steel back at the beginning of June. I have met the chief executive of Tata Steel, Karl-Ulrich Köhler, who did not flinch from explaining to me the very real difficulties that Tata faces in its operation in the United Kingdom. I pay tribute not just to the workers at Tata Steel, but to its management for all that they do. They and hon. Members can be assured that I certainly got everything he told me: Tata does not want to leave the United Kingdom. He made it very clear that it still has a huge commitment to Britain.

We had a debate on the UK steel industry in July, but it was only for 30 minutes, which, as we all know, is far too short. Since then, I have been to Port Talbot and to Celsa, and I have met the directors of SSI. I have had private conversations with the hon. Members for Redcar and for Middlesbrough South and East Cleveland, and we will meet later. Rightly and understandably, the Members who represent Rotherham—the right hon. Members for Wentworth and Dearne (John Healey) and for Rother Valley (Kevin Barron), and the hon. Member for Rotherham (Sarah Champion)—and of course the hon. Member for Scunthorpe, asked to meet me. I have met them, along with the trade unions who came with them and, in the case of Rotherham, the management of Tata. I am due to have meetings with my hon. Friends the Members for Cleethorpes (Martin Vickers) and for Brigg and Goole (Andrew Percy), as well as with those who represent Hull and Rotherham. As I have said, the Secretary of State for Business, Innovation and Skills and I are meeting the all-party group, and we will continue to hold such meetings.

I want to go through some of the very important points made about what more the Government can do. You are looking at me, Madam Deputy Speaker, as if to say, “Get on with it!” You are not wrong, but these are important matters, and I hope that you will forgive me.

The hon. Member for Redcar covered nearly all the points that other hon. Members have made. I have discussed the price of energy, especially for industries, such as steel, which use so much electricity, so I think I have dealt with that point.

Some hon. Members mentioned business rates. They made a compelling case about the fact that if businesses invest—more than £182 million was invested at Port Talbot—they find, bizarrely, that their business rates go up. Even more bizarrely, businesses pay corporation tax only if they are in profit, but whether or not they are in profit they have to pay business rates. That is another peculiarity of the system. We will have a full review of business rates, but the Chancellor has made it quite clear that the outcome must be fiscally neutral. What I would say to everyone as a caution is that if we change the rules in relation to plant and machinery, we will have to move the burden somewhere else, because it must be fiscally neutral.

On the dumping of steel, the hon. Member for Redcar will already know what I have said about the decisions that have been made. There are more decisions to be made in the European Union to make sure that we do all we can to stop steel dumping.

Several hon. Members made very good points about public procurement. It is right that the Government should practise what they preach, and that applies to local authorities as well. I would gently say to SNP Members that they must champion, as many hon. Members on both sides of the House do, the works in their constituencies. They should beat up on Ministers and on Governments—whether the Scottish Government, the Welsh Assembly or whoever they may be—to say that people must buy British.

When I went to Port Talbot, which supplies a large section of the automotive industry, a particular car company was being shown around, and I hope it will not just buy British, but buy Welsh. We have taken a number of steps to ensure that business can get the most from procurement opportunities. Current public sector contracts can be found on the contracts finder portal, which provides what we call forward pipelines of potential contract opportunities up to 2020, including more than 500 infrastructure projects. Public procurement is important, and we are looking at it. We know that Crossrail achieved 97% of UK content and that 58% of the work went to UK small and medium-sized enterprises. There is more that we can do on public procurement, and I have asked my officials to look at that.

I am looking through my notes to make sure that I deal with everything that has been raised by hon. Members. If any of them wants to remind me of anything that I have missed, I am more than happy to take interventions.

Nobody wants to intervene, so I will just say this. I am going to China next week and Members can be assured that the Secretary of State and I will not hesitate to discuss a number of matters with the Chinese Government. We want to talk to them about dumping, production and the future of their steel industry. We will not hesitate to make those representations. If there is anything in any of the speeches that I have not responded to, I will write to each and every hon. Member and answer their points.

Finally, I doubt that this matter will go to a vote. Therefore, we will get on with arranging the summit quickly. I already have a list of people whom it is obvious we should invite. It will be a cross-Government summit, I hope, that will involve the Welsh Assembly, the Scottish Parliament, all the relevant Departments and representatives of the workers and the various companies. I congratulate everybody on what has been a very good debate.