UK Steel Industry

Nic Dakin Excerpts

Tuesday 9th July 2019 Westminster Hall

[Nic Dakin (Scunthorpe) (Lab)]

I beg to move,

That this House has considered the future of the UK steel industry.

It is a real pleasure to serve with you chairing, Mr Hollobone. Two thirds of the types of steel around today were not around 15 years ago— proof positive that steel is a highly innovative, flexible and recyclable product that we need to make in the UK if we are serious about having our defence and infrastructure security in our own hands. The strongest economies have strong steel sectors: the USA, China and Japan are first, second and third in the steel league table, with Germany coming in at seventh, while the UK lags behind in 30th position. If we are serious about our place in the world, it is high time we took steps to move up that table. Scunthorpe and Port Talbot provide the UK’s independent steelmaking capacity for long and strip steel products, and we need both for our future security.

[Nick Thomas-Symonds (Torfaen) (Lab)]

I congratulate my hon. Friend warmly on securing this debate on such an important issue. Does he agree that one of the obvious steps to take to get up that league table would be for the Government to commit to have the Royal Navy fleet solid support ships built purely out of UK steel?

[Nic Dakin]

Procurement is a real challenge for the Government, and my hon. Friend makes an excellent point. I am sure that the Minister has picked it up, and I will return to it later in my speech.

[Stephanie Peacock (Barnsley East) (Lab)]

I congratulate my hon. Friend on securing this important debate. On the issue of procurement, does he agree that we need more regional support? In response to a written question, the Government admitted to me that defence spending is only £40 a head in Yorkshire, which compares with £1,000 a head in the south-west. Surely such spending should be spread much more evenly across the north and the south.

[Nic Dakin]

My hon. Friend makes an important point. Certainly, steelmaking is predominantly in the north, and better investment in procurement pipelines would help to address the inadequacies to which she draws attention.

Sadly, British Steel is in liquidation, and Tata is determining the direction of its UK business in the light of the failure to progress the merger with Thyssenkrupp. We face serious questions about the sector’s future. Other steelmakers, such as Celsa and Liberty, also look to the Government to confirm their commitment to the steel industry.

[Melanie Onn (Great Grimsby) (Lab)]

I congratulate my hon. Friend on securing this important debate, which affects many of my constituents, who are just along the A180 from his constituency. Has he had any discussions about the impact of losing the steel industry in Scunthorpe and about the wider impact across the south bank, which has many of the jobs in the supply chain?

[Nic Dakin]

My hon. Friend makes an important point: there are 5,000 direct jobs in the Scunthorpe area, in Teesside and elsewhere in the UK, but also 20,000 jobs in the supply chain. Steel is a significant employer, as well as a significant strategic asset for the UK. All the work that everyone is doing is to ensure that the whole business progresses under a new owner, which is the direction we all need to remain focused on, across the House and across the country.

The British Steel workforce in Scunthorpe, the north-east and elsewhere has responded brilliantly at a time when everyone working for the company sees their future in the balance. Workers, trade unions, the management team and the supply chain must be congratulated on keeping the show on the road in such difficult times. The magnificent outputs that they are achieving show what a sound business this is, still producing world-class steel day after day. British Steel has a strong strategic plan in place, externally validated by top-tier management consultancy McKinsey.

The Government have made all the right noises. The Secretary of State and the Minister showed real leadership in putting in place the indemnity that allows the business to continue as a going concern. When local cross- party MPs met the Prime Minister, she made clear her Government’s commitment to finding a sustainable future. The Secretary of State’s chairing of the British Steel support group’s weekly meetings is valued by all stake- holders. However, we are now reaching a crunch time, when warm words need to be matched with further actions to close the deal with prospective buyers.

Assurances may need to be given about the environmental liability—a no-brainer, as the liability is likely to fall to the Crown anyway if the business fails. On future carbon credits, the Government will need to show the flexible thinking that they have already shown in their dealings with Greybull Capital. Other things for the Government to look at might include loans to support investment and so on. To be helpful, will the Minister confirm that the Government, while being mindful of the need to act within the law, will do all they can proactively to close the deal with those bidders the official receiver believes can take the business forward?

Over the past few years, we have bounced from one steel challenge to another. Too often, steel policy responds to the urgent needs of the now, but fails to set out a strategic future path for this crucial foundation industry. In 2015, Sahaviriya Steel Industries in Redcar closed, meaning that the UK’s strategic steelmaking assets there are now lost forever. The cost of cleaning up the site, alongside the human cost of huge job losses at the heart of the northern powerhouse, will be with us for a very long time.

Instead of lurching from one crisis to another, the UK needs a Government that will put a plan for steel in place by responding positively to the five strategic asks made by steel MPs, trade unions and employers with one loud, consistent voice. First, the threat of a no-deal exit from the European Union is what sparked the current crisis, and anyone who talks blithely of a no-deal exit risks steel jobs and livelihoods throughout the supply chain—no deal risks no steel—so we need a positive new relationship with the EU to give certainty on the timely provision of UK-specific quotas within the EU steel safeguards. That should be a major first priority for the new Prime Minister when he takes up his post.

[Stephen Kinnock (Aberavon) (Lab)]

I thank my hon. Friend for securing this vital debate. I also pay tribute to him for his absolutely outstanding work as chair of the all-party group on steel and metal-related industries. He shows real leadership in this area. On the subject of the steel quotas, he rightly pointed out that, in the case of a no-deal Brexit, we potentially have the disastrous situation of UK steel being subject to EU dumping regulations. What steps should the Government take specifically to ensure that we are given those quotas, which UK Steel has said are the No. 1 priority in the short term?

[Nic Dakin]

It is about talking to the EU about the necessity of having UK-specific quotas. That could be part of a deal; it is a deal that can be done, and one that the new Prime Minister needs to put high on his list of priorities. That needs to happen, because steel is a strategic industry that is important not only to us in steel communities, but to the UK if it is serious about its place in the world. Ensuring that we get those quotas is therefore the first ask.

Secondly, a level playing field is still needed on electricity prices for UK steel. It is not good enough for the Government to say that they have given some of the “higher than our competitors” energy taxes back; we need some innovative approaches to level the energy-costs playing field. For example, we could put measures in place to maximise the level of relief on renewables levies, which is allowable under state aid rules, we could bring in German or French-style network cost reductions, or we could provide an exemption from the capacity market levy, as the Polish Government are doing. Those things happen in our competitor countries and, given the political will, they could happen here.

Thirdly, something needs to be done to tackle the much larger level of business taxes on steel in the UK compared with our competitors. It is bonkers that the site in Scunthorpe has higher business rates than the equivalent site, which is twice the size, at IJmuiden in the Netherlands. That is not a level playing field under anyone’s rules.

Fourthly, more could be done to maximise public procurement of steel, as my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) indicated. Progress on Government policy note 11/16 on procuring steel in major projects remains patchy. I was pleased to see the previous Minister with responsibility for the steel industry, the hon. Member for Watford (Richard Harrington), begin trying to make Departments accountable, but we have a long way to go to get real, effective traction, and we are three years on since the Government put that policy guideline in place. In answer to my written questions asking Departments if they have signed up to the steel charter, all confirmed that the current Minister is on the case and has written to them—but, in the main, the answers were hesitant and generic. The honourable exceptions were the Ministry of Justice and the Department for Work and Pensions, both of which confirmed that they will sign the charter. The next step for them will be implementation.

[Andrew Percy (Brigg and Goole) (Con)]

I thank the hon. Gentleman—my constituency neighbour—for securing this debate; he is a genuine champion of our local area and for steelworkers in particular. Would he encourage more local authorities to sign up to the steel charter? Last week, North Lincolnshire Council’s leader got the first London authority—Bexley, I believe—to sign up. It is really important that more councils sign up to that charter.

[Nic Dakin]

The hon. Gentleman is absolutely right; to its credit, North Lincolnshire Council has shown strong cross-party unity and leadership on this issue by signing up to the procurement of UK steel. A number of local authorities across the country have done so, but many more could follow that lead, and he is right to call for that action.

All Government Departments, bodies and infrastructure projects that purchase large quantities of steel should sign up to the UK steel charter, committing to specific, ambitious actions to increase the amount of UK steel used in public projects. The guidelines should be extended to cover all major public procurement and infrastructure projects. The good practice exemplified by Network Rail and Heathrow airport should be the rule, not the exception.

The fifth ask is to use the UK’s €250 million share of the research fund for coal and steel, which is paid for by industry levies and will be returned after we leave the EU, to secure an ambitious programme of innovation for the UK steel sector. A practical use for that money would be investment in our steel sector’s future. The previous Steel Minister made a commitment on behalf of the Government to convene a steel summit to consider how to realise a steel sector deal that would take the industry, its supply chain and the country forward. Will the Minister confirm that the Government will take forward that commitment? Will he respond positively to the practical suggestions I have made about how the Government can act to back steelworkers, steelmakers and UK plc?

[Several hon. Members rose—]

--- Later in debate ---

[Nic Dakin]

I thank all hon. Members for their contributions to the debate. I particularly thank the Minister for his very solid response—not that we will not continue to press him for further action, since that is our job. Steel communities observing this debate will be heartened by the level of commitment and cross-party unity of purpose: 14 MPs have spoken, and more would have done so if their diaries had not prevented the attendance from being even bigger.

In the end, we will be judged on our actions. We all need to take a lead from the Secretary of State, who has joined us at the end of our debate to put a flag in the ground and say how important the issue is not only to him personally—as the Minister who leads on this issue on behalf of the Government—but to the UK. We take a lot of encouragement from that, and we are working together behind him to ensure that we deliver for steel communities, for steel across the country and for the UK, so that the steel industry can continue to perform well into the future, as it does now and as it did in the past.

Question put and agreed to.

Resolved,

That this House has considered the future of the UK steel industry.