Steel Industry

Nick Hurd Excerpts

Thursday 3rd November 2016 Westminster Hall

[The Minister for Climate Change and Industry (Mr Nick Hurd)]

I will certainly do that, Mr Betts. It is a pleasure to serve under your chairmanship and to welcome the new shadow Minister, the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), to her place.

It has been a really good debate. I know I am meant to say that, but I mean it. Anyone listening to or reading the debate whose livelihood depends directly or indirectly on this critically important sector will be in no doubt about the passion felt for the sector by their elected representatives, on both sides of the House, who have championed their interests, and none more so than the hon. Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley), who made this debate happen and who have spoken so effectively.

I do not think that I or anyone will ever give the hon. Member for Redcar full satisfaction on an explanation for the past, but she knows from the meeting that she had with me and the Secretary of State that we are determined to do everything we can, on top of the support for the taskforce, to support and engineer a beautiful rebirth of the site to the best of our ability. I repeat my offer to visit at whatever point is appropriate and valuable. The hon. Member for Middlesbrough South and East Cleveland gave a masterful speech. It was extremely well informed and constructive, and contained a good mix of challenge both for his party’s Front Bench and for the Government.

Out of respect for the debate, I am going to resist what was already a weak urge to simply unload a section of prose prepared by civil servants. I will do my best to try to respond to the debate. First, I must do something important, which is to register our complete understanding of the frustration about the uncertainty, which various Members have expressed. That is entirely understandable. I will go further and say that the Government share that frustration, because we are deeply worried, as I will come on to say, about the deep structural difficulties that the sector faces in both the long and short term.

As most Members who know more about this industry than I do will recognise, those underlying issues are extremely complicated, and therefore the solutions that the Government can implement that would have a long-term, sustained impact—that is what we should be about—are not that straightforward. I will be very frank: we are also frustrated about the pace and speed at which decisions are being taken in the private sector. I give full assurance to the Members who probed on that point that, although we might be in a slightly different age, when the steel industry is not necessarily on the front page of the newspapers, the Government are deeply aware that the difficulties have not gone away. We are fully engaged at all levels—ministerial, Secretary of State and official—to stay as close as we can to all the complex conversations that are going on. Our message to everyone is that we are here to support a long-term, sustainable future for the sector.

I refute and push back on the suggestion that underlay a number of speeches: that the Government’s eye is somehow off the ball. That is not true. We absolutely share the view expressed in the debate—I heard the Secretary of State say this directly to the chief executives of the industry—that this is not an industry with a past or a sunset industry, as the hon. Member for Hartlepool (Mr Wright) called it, that we should look at through a lens of nostalgia. We are interested in working together with the sector, stakeholders, the all-party parliamentary group, the Select Committee and everyone else who wants to shape the industry, to present a story around the sector of growth and seizing some of the very real opportunities that are out there. We are entirely sincere in that view and in that determination.

It is worth restating that that is not just because of the importance of the sector, which employs 31,000 people, or because of the huge weight and importance it has to the fundamental identity of many towns across the country represented here today, its value in terms of exports, or the fabulous opportunities that we see for it to be positioned as a dynamic component in an invaluable supply chain, supporting some of the industries where we see big opportunities for growth—the hon. Member for Hartlepool mentioned a couple of those, such as the automotive industry and offshore wind. It is not just for those reasons, but, as the hon. Member for Middlesbrough South and East Cleveland and other Members described, because we see it as a foundation sector underpinning the infrastructure of this country. It is, in that respect, strategic. We are determined—I echo the words of my long-standing hon. Friend the Member for Wellingborough (Mr Bone)—that this sector has got to have a future. We must collectively shape that.

In that context, we totally understand that, even though there may have been some short-term improvement in trading conditions, we cannot be deceived. The Secretary of State and I had a meeting with the chief executives of most of the major companies last week, and they were very clear that trading performance is improving in some ways, but they do not trust that to be sustainable. The overwhelming, crushing issue is that the picture of overcapacity in the industry has not changed, despite some shifts at the margins. Demand remains weak, the volatility of raw material prices is an issue, particularly for coke, prices remain a problem and the spread remains a concern. In conclusion, the situation remains very difficult. We have no illusions about that.

Some of the rhetoric has been: “The Government are all talk. It’s all words.” I am not complacent about this, but I need to state categorically, and to echo the words of my hon. Friend the Member for Corby (Tom Pursglove), that although the work is not done, action has been taken in some critical areas. We are aware that energy costs—specifically industrial electricity costs—remain a significant problem, but since 2013 more than £120 million- worth of public resource has been effectively reallocated to the steel sector to mitigate these problems. To anyone who describes that as limited, I say that my constituents would not consider £120 million to be small change. I know that is appreciated by the industry, and anyone who says that it is just words on this issue is wrong.

[Nic Dakin]

I am not surprised that the Minister pointed to that, but does he accept that the support was very slow in coming? It took about three years from being promised to being delivered. We do not want that sort of sloth from the Minister and the Government now.

[Mr Hurd]

I hope I have never been associated with sloth—my mother might disagree. I do not know the background to it fully enough, but the more substantive point is that, despite that weight of money, more clearly needs to be done. We have not solved the issue. The pace may be important, but the fundamental challenge for us all is that we have not cracked the problem.

[Angela Smith]

I am pleased to hear that last comment, because the wholesale costs of energy are also of major concern, not just for steel but for the chemicals industry and all other energy-intensive industries, so the Government need to move on the reform of the wholesale energy market.

[Mr Hurd]

I will come on to that issue. The point I am trying to make is that the Government have not been all talk: we have taken action on energy.

I refute the allegation that the UK has been a fundamental obstacle on dumping. We have pressed for anti-dumping measures, specifically on wire rod, seamless tubes, rebar and cold rolled products. The EU now has 39 trade defence measures in place, and imports have fallen significantly as a result. We are an active member of the G20, which, as hon. Members know, set up a forum to look at the issue of dumping. The lesser duty rule is an issue; I do not know whether there is party division on that. Our position is that measures taken against dumping need to be proportionate because we have to balance the interests of consumers, the industry and businesses. We have been and will continue to be a very active voice on dumping.

My hon. Friend the Member for Corby rightly talked about procurement. Again, the UK has been the leader in the EU on responding to the new flexibilities, and new guidelines are in place. The feedback from the chief executives at the meeting last week was that they did not really want to talk about procurement because they recognised that action had been taken and other issues were more important to them, not least business rates, which I acknowledge continue to be an issue. The Government have reformed business rates in a way that is designed to present a net benefit to the UK economy. Steel companies will benefit from that reform. Does it go as far as the steel industry wants? No. Are there big complexities, not least around the affordability and doability of what the steel industry wants? Yes, but we will continue to try to work through them.

On the strategic direction, the Government have stepped up and offered to fund the capability study and work with the sector to identify the capabilities that are needed—that was the point made by the hon. Member for Penistone and Stocksbridge (Angela Smith)—and growth opportunities for the future. There has been action, but we are clear that our work is not done. There is no room for complacency, given the pressures on this critically important industry.

We are looking at all the options for energy. They are complicated, because what we have got to do is legal and, as the hon. Member for Middlesbrough South and East Cleveland said, a consensus has to be built on who pays. If the steel industry pays less, the chances are that someone else is going to have to pay more. Our instinct is to focus on a strategic, sustainable approach; we have to move on from the sticking-plaster approach. I am glad hon. Members are nodding.

I am going to accelerate to fulfil my pledge. Of course Brexit brings tremendous uncertainties. As hon. Members know, we have not even started the negotiation process, let alone finished it, but I say to them what I said to the chief executives last week: this Department is your liaison point. It is our responsibility to listen very carefully to the sector to make sure that the issues you face are totally understood by the Government. In that respect, the steel sector is the same as the automotive sector and other sectors. Our responsibility is to listen to the sector and understand the granularity of the issues it faces so my Secretary of State, who is at the table with the decision makers in this process, is fully informed and able to represent the industry.

[Stephen Kinnock]

The Minister is making a comprehensive speech. On the topic of Brexit and inter-departmental co-operation, I draw his attention to the remarks made by the Secretary of State for International Trade. He said:

“We must turn our backs on those that tell us: ‘It’s OK, you can protect bits of your industry, bits of your economy and no one will notice.’ It is untrue…We must be unreconstructed, unapologetic free traders.”

Does the Minister think that, under his right hon. Friend’s guidance and as we leave the European Union, our ability to deploy trade defence instruments against the dumping of Chinese steel will be strengthened or weakened?

[Mr Hurd]

I am going to accelerate now. We are clearly being proactive about championing both free and fair trade, and we are very active with the EU on measures about that. As my hon. Friend the Member for Corby made clear, Brexit may in theory present us with some opportunities and freedoms that we do not have at the moment, but all that is to be decided. It all needs to be agreed as a result of very full engagement with the sector.

My final point is about industrial strategy, which is where everything comes together. I will simply say what we said to the industry leaders: we want to work together to move the story of the sector away from any suggestion of sunset, failure or survival to talk of exciting growth. We need to work together on that to understand where the opportunities for growth are, where the capabilities are and where Government can provide support by ensuring that Brexit is right, by levelling the playing field and by helping with the innovation that is critical. We are absolutely serious in that determination. With that, I leave the Floor open to the sponsors of the debate.