EU Referendum: UK Steel Industry

Nicholas Dakin Excerpts

Wednesday 13th July 2016 Westminster Hall

[Nic Dakin (Scunthorpe) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Gillan, and I congratulate my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on securing this timely and important debate.

I thank the Minister for Small Business, Industry and Enterprise for championing, in her own way, the steel industry. We have not always agreed and we have both been combative, but she has been the best champion and the best voice for steel within the Government, and I hope that will continue in some way in the new Government. The challenge that we face after the outcome of the European referendum is keeping steel up there as an issue to be addressed, so that it is not pushed out by other issues. We need to continue building the momentum to deliver a steel strategy for the UK—we have already started to build that momentum.

I was pleased that the new Prime Minister—she is not yet the Prime Minister, but she is incoming—has made it very clear that she believes in an industrial strategy. I very much welcome that commitment from her, but, as my hon. Friend the Member for Hartlepool (Mr Wright) has just pointed out, there needs to be an active and even interventionist industrial strategy that delivers for steel and for manufacturing. If she provides that type of strategy, I will be the first to lead the hurrahs for her.

In Scunthorpe, we recognise the bright future for the steel industry that my hon. Friend the Member for Cardiff South and Penarth talked about, because there is already a bright future in Scunthorpe, thanks to the work of Paul McBean, Ian Smith and Martin Foster, who are on the trade union side and who work with the leadership of British Steel locally. In fact, we were able to launch the new British Steel on 1 June and things are going very well. However, for things to continue to go very well, the steel industry needs the active support of the Government. Progress in a positive way will not just happen, and it will not happen at all unless the Government step up to the plate, which I hope is their intention.

The issues are well known—my hon. Friends have already referred to them. We need to do something about business rates. It is important that they are brought into line with those of European competitors. Currently, British Steel pays around £14 million per annum in business rates and the business rate system does not incentivise investment. In the modern age, that is madness and needs to be dealt with. Business rates for our capital-intensive industries need to be brought into line with those paid by their competitors, by removing plant and machinery from business rate calculations. The new Government need to do that urgently.

There are also electricity charges to consider. The UK steel industry pays double what the German steel industry pays for electricity, which increases its costs at every stage. Again, that needs to be addressed. Something needs to be done to tackle the high energy costs that still exist, either by innovation; by bringing production of energy closer to plants, which can be achieved by incentivising it; or by doing something else.

Much has already been said about procurement, which is vital for the steel industry. The procurement opportunity of leaving the EU needs to be taken advantage of and we also need to ensure that measurement systems are in place to ensure procurement of UK steel for public sector projects. I refer again to the opportunity for the development of offshore wind in the North sea, which is being led by DONG Energy. DONG Energy is being heavily incentivised by subsidies from the British taxpayer, so it would be outrageous if the steel required for that investment came from anywhere other than the UK.

We need to ensure that a pipeline of procurement is clearly in place. That issue must be addressed properly by the Government, so that we know what needs to be developed in terms of steel capacity, and so that we can ensure that the capacity is there in the UK to deliver for the future. That is what we need—a planning process to instil confidence, so that investment can deliver into the future.

I should mention the British Steel pension scheme, because it is incredibly important to my community. It needs to be addressed, sorted and given certainty so that the steel industry as a whole and pensioners in my community have confidence in the future. I would be very concerned if the impact of all the noise and the insistence on dealing properly with the challenge of the outcome of the EU referendum is to push aside the need for a sensible, solid approach to the British Steel pension scheme that puts it on a sustainable footing into the future.

I close by reminding the Minister, who has been a good Minister, that her final job in her role should be to drive things forward from whatever position she has and ensure that whoever succeeds her has the same passion and dynamism that she has shown from time to time and delivers for our steel industry.