Steel Industry

Richard Tice Excerpts

Wednesday 16th October 2024 Westminster Hall

[Richard Tice (Boston and Skegness) (Reform)]

I beg to move,

That this House has considered the steel industry.

It is a pleasure to serve under your chairmanship, Mrs Harris. I want you to imagine that you are standing at a railway station in deepest rural India. You look down at the tracks on the ground and you see those immortal words “Sheffield Steel 1895”. That happened to me six and a half years ago. It sent a complete shiver down my spine—a shiver of pride in what we have given to the world, what we have created, what we have achieved. For 130 years, those railway tracks have been there, yet fast-forward to today and we face what I believe is a potential catastrophe.

Let us just take stock of where we are. I think we are potentially within six to 12 months of having zero general steel-making capacity in the United Kingdom. Just think about that. I fear that the blast furnaces at Scunthorpe, owned by British Steel, part of the Chinese group Jingye, are very likely to close, and that would be an absolute disaster. Steelmaking, manufacturing, in the United Kingdom has halved in the last 10 years or so. We would be left as a complete rump. Think about it: we would be the only G20 nation without a blast furnace except Saudi Arabia and the only G20 nation with no general steel-making capacity whatever. I think there is a lesson in that.

Perhaps it is not so smart to lose all our steel-making capacity at a time when 71% of all steel manufactured around the world is made in blast furnaces. Even if all the electric arc furnaces that have been announced are built, which of course they will not be, we will only get to a balance, in 2050, of about 50-50. The majority of all new steel-making capacity around the world being built as we speak comes from blast furnaces. There is a reason for that. And here in the UK, imports of steel from the likes of China, India and Vietnam are soaring. Hang on—I thought we were supposed to be world leaders in steel, but 66% of all steelmaking around the world happens in nations that either have no net zero targets or have targets that are general and way beyond 2050.

Now that the truth has been told to us, which is that electricity prices in the United Kingdom are the highest in the developed world—in the House of Commons the other week, the Secretary of State for Business and Trade admitted to me that there was an issue with industrial electricity prices—my real fear is that the electric arc furnaces that have been promised down at Port Talbot, and potentially promised in Scunthorpe if the blast furnaces there close, will not actually be viable. If something is not viable and we are asking a firm to invest hundreds of millions of pounds in it, they will not build it—and that is before National Grid informs us, “Oh, in Scunthorpe we can’t get you a grid connection for the electricity that you need to run an electric arc furnace.” You genuinely could not make some of this stuff up. Because our electricity prices are so high, these electric arc furnaces are quite likely to be less viable than is the case when it comes to concerns about the viability of blast furnaces.

Five and a half years ago, I gave a press conference in Scunthorpe. I said back then that the Conservative Government should not sell British Steel to the Chinese. They ignored my advice—not for the first time and probably not the last—but we are where we are. We face catastrophe, for three critical reasons. The first is that steel is a strategic national interest. After food and water, steel is the third most important component of a modern civilisation. Without steel, we would have no internet, no cars, no buildings, no infrastructure—nothing. We would be back to mud huts; I do not call that progress. It is strategically important to be able to make the strongest steel. There are genuine concerns that if we have no blast furnaces, we will not be able to make primary steel. Some say that with new technology and direct reduced iron, the strength of steel produced in electric arc furnaces may, give or take, equal what can be produced in blast furnaces, but we cannot take the risk. We must have that capacity.

Hon. Members may say, “Well, why not have a bit of each?” My late grandmother, when faced with a choice of desserts, would say, “I’ll have a bit of each.” There is nothing wrong with that, but we cannot have nothing. For someone who likes desserts, there is nothing worse than having no dessert at all.

Four years ago, in the middle of 2020, we nearly ran out of paracetamol, which is pretty important. Why? Because it is all made in India. We make no paracetamol in the United Kingdom and the sun was not shining in mid-2020, as we all remember. It is all very well those who believe in free markets and globalisation to the detriment of everything saying, “Well, you can just buy it from elsewhere,” but what happens if the sun is not shining? What happens if there is some terrible event in the world and we cannot buy steel elsewhere? That exposes us, because steel is strategically important, so we must be able to produce it here in the UK.

The second reason why I think a potential catastrophe is facing us is the economic interest. There is a thing called the multiplier effect: if we make and manufacture things here in the United Kingdom with our own jobs and money, the wealth we create circulates around the economy. I call it bubble-up economics: when we create and make things, it bubbles up from the lowest point, and the money circulates around the economy. That is hugely powerful at a time when everyone is desperately talking about the need for growth. We will not get growth if we export all our jobs and money. We might buy the good that arrives here, but we do not benefit from the multiplier effect, and therefore we lose the power of growth.

Some will say, “Hang on. Tata lost lots of money over the last 10 years or so. It’s not viable.” Well, let us just take a look at its losses, shall we? Leave aside the one-in-100-year event of 2020, cumulatively, in the overall scheme of things—relative to the multiplier effect—its losses frankly amount to a decent round of drinks. Let us call it £100 million a year, give or take. Compare that to the size of the economy and the importance of the multiplier effect.

I would suggest to the House that it is vital that we keep steel manufacturing going in a sizeable way in the United Kingdom. Not to do so would cause a self-inflicted wound, driven by the main two political parties’ obsession with net zero. That is the reality. Net zero, and the increase in renewable energy capacity, is directly linked to the increase in our electricity prices, and to the fact that we are becoming ever more uncompetitive. The Tories started it, and now under the new net zero zealot-in-chief—the new Secretary of State for Energy—it is being accelerated.

We are promised that the bills will come down, but I was at an event last week with someone who is advising the World Economic Forum and the G20 nations about renewable projects, and he admitted—in a defining moment for me—that without subsidies and Government intervention, renewables cannot be viable. That means, by definition, that they are more expensive and that those who are obsessed with them in this country will not bring the bills down. At some point, there will be a day of reckoning.

The third reason why this is a catastrophe is what I call the community interest. We saw the devastation in the coal-mining communities in the 1980s; when I have been campaigning, I still hear people talk about that. That was absolutely devastating. The oil and gas industry is under huge threat at the moment because of net zero, which is again devastating. There is a huge loss of the multiplier effect, skills are disappearing and families are concerned.

In Port Talbot and Scunthorpe, there are not thousands but tens of thousands of jobs directly and indirectly dependent on this industry, which could disappear within 12 months. It is not just the jobs; it is the families, the partners, the spouses, the wives, the children. That makes hundreds of thousands of people devastated by this. These are seriously well paid jobs: the average value of a steel job is about 50% more than the average salary in the local area.

It is all very well saying that people can retrain, but if someone earning up there retrains and all of a sudden is earning down there, I do not call that progress—I call that going backwards. The truth is that this issue will have a devastating impact on those communities. I feel that the unions have let down their members and betrayed them.

A year ago, I wanted to go and talk to more than a thousand steelworkers in Port Talbot. I met a couple of brave union leaders in secret in a quiet room. I said I wanted to talk to everybody and tell them about the madness of what is going on but, oh no. The union leaders banned me from talking to the steelworkers and telling them the truth.

Here we are today, with thousands of jobs sacrificed on the altar of net zero in Port Talbot, with the risk facing Scunthorpe in front of us. Lots of people say, “Don’t worry, Richard. We’ll be a world leader in this stuff.” Really—a world leader? I suggest that the only things we will be a world leader in are naivety, stupidity and negligence. The truth is that behind our backs, other countries making steel, growing their economies and enjoying cheap energy are laughing at us. They cannot believe how foolish we are. They cannot believe that we are serious about destroying some of our finest manufacturing industries, but they will take it. They are benefiting and we are losing.

This is an absolute disaster. One might ask, “What can we do about it?” I have a plan and most of it is achievable by this Government. The first thing is that the Business Secretary has promised us a new steel strategy next March. I happen to know that that strategy is basically drafted and written, with just a few i’s to dot and t’s to cross. I have been told that that draft is very much there.

[The Minister for Industry (Sarah Jones)]

indicated dissent.

[Richard Tice]

The Minister indicates that I may be wrong. This is urgent and we cannot wait six to 12 months. We cannot run the risk of civil servants saying, “I’m sorry, but we haven’t got it done by March; it will be the summer.” I urge the Minister and her team to say, “Let’s get this out before Christmas.”

My five-point plan is first to take a strategic stake in British Steel to guarantee that the blast furnaces in Scunthorpe will not close. We cannot run that risk. Otherwise, if the electric arc furnaces are not built, we have nothing—niente, zip. The second part of my plan is to scrap the carbon taxes and the potential carbon border adjustment mechanism.

The third thing is to stop the dumping of cheap imports from nations such as China. That requires, if necessary, appropriate tariffs and protectionism. America is doing it to protect its own steel industry and we should do the same. Unbelievably, according to the House of Commons Library, which helpfully produced a 50-page report yesterday, just two weeks ago, far from increasing tariffs we had to reduce tariffs on imported steel because Port Talbot has closed. Seriously, you couldn’t make this up. It is absolute insanity that we are now reducing tariffs in order to import steel. With the long-term planning that should have happened under the Conservative Government, we could have worked out that if we shut Port Talbot we would be short of rolled steel. What are we going to do about it? That is what has gone on. So that is the third part of my plan.

The fourth part is to buy British. The Secretary of State for Energy Security and Net Zero wants more and more wind turbines, but as I understand it not a single bit of British steel is used in all those turbines, which all come from overseas. If we want more turbines—some people do; some do not—maybe we should make it a condition that we use British steel to grow our own economy with more jobs and more money. Those four things plus the fifth thing are all deliverable by this Government. That is what I urge the Minister to consider.

The fifth thing is the right thing to do. I accept that it is not going to happen, but if we want cheaper electricity and to be more competitive, the fastest way to do it is to scrap net zero. That would bring down prices. It would stop us wasting tens of billions of pounds and stop blighting our countryside with thousands and thousands of pylons, including in my constituency. The first four components of my five-point plan the Government can and should do to protect our steel industry, which is strategically vital. Not to do so is negligent to the point of criminality.

[Carolyn Harris (in the Chair)]

I remind Members that they should bob if they wish to be called.

--- Later in debate ---

[Richard Tice]

I am grateful, Mrs Harris, for the opportunity to wind up the debate. I thank all the hon. Members who have made contributions to the debate, and I thank the Minister for her closing remarks.

It seems to me that there is a sense of unity about the ambition—we have to protect our critically important steel industry in the United Kingdom. The Government are probably correct that they have been handed a bit of a hospital pass on this vital issue. They understand that. However, the truth is that I am an impatient guy, so I will not resile from asking the Minister and the Department to move at incredible pace to secure the industry and the jobs, and—as the hon. Member for Brigg and Immingham (Martin Vickers) said—to reduce the uncertainty.

This debate has enabled all of us to highlight the risks ahead. We cannot be here in a year’s time hearing that Jingye has said, “It can’t be done, we’ve got to shut the blast furnace, it’s going to shut”, and the Government are not ready for that. I think that is what this debate has done; it has highlighted the serious risks out there. I understand that the Minister cannot share the details of commercial conversations that are clearly going on, but that is what we must be prepared for. I have asked for a commitment, and I believe that the best way to secure that commitment in Scunthorpe is to have some form of commercial stake.

Where I think we differ is that there is a confidence within the Government—the hon. Member for Stockton North (Chris McDonald) referred to this specifically—that the electric arc furnaces will be attractive and commercially viable for Tata and Jingye. However, there is a serious risk that that will not be the case. Electric arc furnaces are much more viable in the United States because, as the hon. Member referred to, the electricity price in the US is between a quarter and a third of ours. The reason for that is completely the opposite of what the Minister said. It is because the US has cheap gas—its own gas, which is shale gas—that allows it to produce cheap electricity.

We have identified the risks and we share many of the same ambitions. We differ on certain issues, but it is absolutely critical that the Government lose no time at all and push forward hard. I am encouraged by the ambition to increase capability and the ambition to ramp up investment, but we have to understand something. I do not see how we can get more investment if we cannot get electricity prices down. That is the critical objective and the Government have that responsibility.

Question put and agreed to.

Resolved,

That this House has considered the steel industry.