Sajid Javid
Main Page: Sajid Javid (Conservative - Bromsgrove)UK Steel Industry
Sajid Javid Excerpts
The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)
The whole House will have been deeply concerned by the crisis that has affected the global steel industry over the past year. The facts are familiar, but they bear repetition. Around the world, steelmaking capacity is about 35% higher than demand. In China alone, excess steel capacity is 25 times the United Kingdom’s entire annual production. Demand has slumped in China as its economy grows, and demand here in Europe has yet to return to pre-crash levels.
That surge in supply, coupled with a fall in demand, has inevitably led to a large fall in prices, and the knock-on effect for steelworkers around the world has been, quite simply, devastating. Here in the UK, we have sadly seen the closure of the SSI plant in Redcar after its Thai parent company ran up unsustainable losses. Across Europe, some 70,000 steelworkers have been laid off since 2008. Last week we heard that the United States Steel Corporation, the biggest steelmaker in the United States, was laying off a quarter of its non-union workforce, and earlier this month, the owner of one of the two heavy steel mills left in Australia went into voluntary administration.
This is, of course, about more than just numbers. It is a human tragedy. When we talk about job losses in the abstract, it is easy to forget that each of them represents a person: a hard-working, highly skilled man or woman. Many of those men and women will have husbands, wives, children and other dependants to support, or there will be local businesses that rely on their custom, and the same pattern will be repeated throughout the supply chain. That is why, when job losses have happened in Britain, we have done everything we can to support the communities affected.
Mr Anderson
The Secretary of State said that we must not forget. I assure him that there are people in this House who do not forget. I am one of the people whom his Government did this to some 30 years ago, when they closed the coal mines. They looked at the economics, and they did not care about the social cost, which destroyed areas like mine. The Secretary of State needs to bear that in mind during this debate.
Sajid Javid
I am sure the hon. Gentleman agrees with me that when there are job losses and the Government can help, of course they must do so.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Will the Secretary of State give way?
Sajid Javid
I will plough on, but I will give way in a moment. I am about to speak about Redcar, and I know that the hon. Gentleman is interested in that as well. We have committed up to £80 million to helping people affected by SSI’s closure. That includes more than £16 million to help local firms to employ former SSI workers, and a further £16 million to support firms in the SSI supply chain and the wider Tees valley. Millions more are paying for retraining at local colleges. For example, there was a £1.7 million package to help former SSI apprentices to remain in employment, education or training.
Tom Blenkinsop
The Secretary of State said that the Government would do everything possible for the communities and people affected. As he knows, on the day of the liquidation at Redcar, he announced an £80 million total package—
Tom Blenkinsop
Not so long ago, at that Dispatch Box, the Secretary of State changed the figure to £50 million. Moneys on top of that have only been acquired because the Community trade union claimed a protective award from the tribunal to ensure that the workforce got what they were entitled to. The Government could have fast-tracked that some seven months ago.
Sajid Javid
I thought I heard the hon. Gentleman say “up to £90 million”. What we have always said is “up to £80 million”, and that has not changed. I agree that there is a long way to go, but so far, in respect of Redcar, nearly 700 jobs have been created, safeguarded or supported, and only a quarter of the more than 2,000 workers at SSI were claiming jobseeker’s allowance at the end of February.
Anna Turley (Redcar) (Lab/Co-op)
I do not want to take up too much time, because I shall be speaking later, but the figure of 600 jobs relates to those who are in work or full-time training, not just those who are in work. That is important, because it is work that will be vital at the end of the training.
Sajid Javid
The hon. Lady has made a very important point: at the end of the day, it is about work. Training can lead to work, as can retraining, so it is important to invest in it. I know that, to the people of Redcar, this seems like a drop in the ocean. When a community is built around a single industry, the death of that industry takes away more than just the jobs. I do not want to see any other steelmaking community suffer the same fate, and that is why the Government have been taking real action to support the industry.
Andy McDonald (Middlesbrough) (Lab)
Does the Secretary of State begin to appreciate how this flows into the community? A medical centre on Teesside that I visited recently lost two nurses, who had to give up their bursary-funded training programmes because their husbands lost their jobs at SSI. The consequences and the ripples spread right out. It is not 2,200 people who have lost their jobs; it is up to 9,000 people, and the Secretary of State should understand that.
Sajid Javid
The hon. Gentleman is absolutely right: there can be a devastating effect on the community that goes way beyond the actual job losses at SSI. That is why we must do everything, together, to prevent the same thing from happening to any other community, and we must support the supply chain, because, as he says, there is a ripple effect throughout the community on many, many businesses.
Geraint Davies
The Secretary of State may know that I worked very hard with Members on both sides of the House to secure a proper pension for the Visteon pensioners from Ford when it had short-changed them. Given that Tata has almost fully paid up its pension fund, will the Government socialise that fund, so that the pensioners can be secure in the knowledge that they will have a pension in future, and so that prospective buyers need not be concerned about that?
Sajid Javid
I will move on to the subject of Tata in a moment, but the hon. Gentleman is right to identify pensions as an issue, and we are considering all possible solutions.
Let me say a little about the action that we have already taken. We have taken action on power: £76 million has already been paid to steelmakers to compensate for high energy bills, and we expect to pay more than £100 million in the current financial year alone. In the autumn statement, just five months ago, we announced that we would go further. Energy-intensive industries will be exempted from renewable policy costs—a move that will save the steel industry more than £400 million by the end of this Parliament.
David T. C. Davies (Monmouth) (Con)
Surely my right hon. Friend agrees that, rather than compensating businesses for a tax that we levied, it would be far more sensible and logical to scrap the tax.
Sajid Javid
Given what my hon. Friend has said, I presume that our move towards exemption rather than compensation is exactly what he wants to see.
Mr Betts
Does the Secretary of State accept that the support that the Government are giving our steel industry in respect of energy costs is only a fraction of the support that Germany and other countries are giving their steel industries? It will still leave our industry with much higher energy costs than those of other European Union countries. Is the Secretary of State not prepared to consider going further to help our industry when it is in such a difficult position?
Sajid Javid
By calling it a fraction, the hon. Gentleman underplays the help that this support is providing to the industry. The manufacturers in the industry see this as a big game-changer in how they account for the cost of power. I can agree with the hon. Gentleman, however, in that I think there is still more to look at in this area, particularly with regard to Tata and securing a buyer.
Alex Cunningham (Stockton North) (Lab)
In a meeting with the Industrial Communities Alliance, which represents traditional industrial areas in the UK, the EU Commission reiterated its commitment to change the trade defence instruments, which would tackle the cheap steel issue. We are in line and the Commission is in line. Will the Secretary of State get in line to ensure that we can make these changes?
Sajid Javid
I will come on to trade defence instruments in just a moment.
I want to talk about the delivery of a new flexibility on emissions regulations. This was asked for by the industry and we have delivered, potentially saving the industry hundreds of millions of pounds. We have also taken action on procurement, and we have become the first country anywhere in Europe to take advantage of EU rules to make it easier for the public sector to buy British. That is on top of our proud record of procuring British steel.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The Secretary of State makes much of the changes he is making on procurement. The Minister for Defence Procurement, the hon. Member for Ludlow (Mr Dunne), who is sitting next to him, told me in answer to a recent question that the Ministry of Defence did not even have full records of where it was getting its steel from for UK defence projects. How can we be sure that the Secretary of State will follow through on his commitment on procurement when Government Departments are not even keeping records and when so many UK defence projects are being made in Korea, China and elsewhere?
Sajid Javid
The hon. Gentleman might hear more from the Minister for Defence Procurement in the coming days, but I can tell him that the two new Queen Elizabeth class aircraft carriers are being built with almost 100,000 tonnes of British steel, that Crossrail, the biggest construction project in Europe, is using almost exclusively British steel for its 26 miles of tunnels, and that 96% of Network Rail’s spending on steel rail goes directly to British firms. It buys 1,500 miles of steel rail every year from Tata in Scunthorpe. That is enough to build a two-track line from London to Edinburgh.
Nic Dakin (Scunthorpe) (Lab)
I certainly agree that Network Rail provides a case study in how to do procurement, and it is to be commended. However, we need to ensure that the DONG energy contract for developing the North sea wind farm, which will be the second biggest in the world, will use UK steel. What progress is the Secretary of State making with his colleagues to ensure that that happens?
Sajid Javid
We have had meetings with that particular company and many others in a similar situation. The hon. Gentleman will know that many of them are private companies and therefore not subject to all the rules around procurement, but there are ways of trying to encourage them to invest more in British steel, and that is exactly what is happening.
The question of trade defence instruments was raised earlier, and the hon. Member for Wallasey (Ms Eagle) mentioned the point as well. We have been working hard on this issue at EU level, and that work began long before this crisis broke. I hear a lot in this House about ideology, but I am just interested in one thing: what actually works. When evidence shows that tariffs against unfair trade will make a difference without harming British businesses or British consumers, I will always support them. That is why last July the UK voted to impose a 16% tariff on wire rod; since those duties were imposed, imports from China have fallen by as much as 90%.
In November, we voted to impose a 28% tariff on seamless pipes; since those duties were imposed, imports from China have gone down 80%. In January, we voted to impose an 11% tariff on rebar, and since then, imports of that particular steel product have fallen by a massive 99%. In February, we voted for a 15% tariff on cold rolled flat products, and that move has already reduced imports from China to almost nothing. This is real action with real tariffs and they are making a difference for British steelworkers.
Nick Thomas-Symonds (Torfaen) (Lab)
The European Steel Association’s spokesperson, talking about the change to the lesser duty rule, has said that
“the fact that the UK continues to block it means that when the government says it’s doing everything it can to save the steel industry in the UK and also in Europe, it’s not.”
Is not that the truth about the Secretary of State’s efforts?
Caroline Flint (Don Valley) (Lab)
I thank the Business Secretary for taking my intervention. I hope that he will also answer the question that my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) has just asked him. On the question of procurement in relation to energy, the Government are intervening more than ever before in the energy market through contracts for difference. Has the Secretary of State looked into ensuring that when those often very generous contracts are negotiated, they contain a requirement to buy British-made steel?
Sajid Javid
I can tell the right hon. Lady that no stone remains unturned in our efforts to help sell as much British steel as possible. The hon. Member for Torfaen (Nick Thomas-Symonds) asked about the lesser duty rule, and this point is raised repeatedly by Labour Members, but Labour had no problem whatever with the rule when it was in government. Scrapping the rule altogether would cost British shoppers dear. It would raise prices on everyday items that we rely on. For example, the rule saves British shoppers £130 million on footwear in one year alone. However, I told the House yesterday that I would be more than happy to look at any ways of specifically helping the steel industry, and I hope that Members will come up with ideas during the debate. I will, of course, be listening.
Ian C. Lucas
I referred earlier to the Labour Government’s intervention on car scrappage before the 2010 election. They stepped up to the plate to support the industry at that time. May I suggest that the Secretary of State approach the aerospace and automotive sectors and ask the Automotive Council and the Aerospace Growth Partnership to place on their agenda ways in which they could assist the UK steel industry by stepping up to the plate at this time of great difficulty for the industry?
Sajid Javid
As the hon. Gentleman will know, we have sector councils for both those industries, and we meet regularly and have a regular dialogue. This is exactly the kind of thing that those sector councils are designed to focus on, and it is exactly the kind of work that they are doing. I hope that the hon. Gentleman will welcome that.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I have read some very interesting statistics in the past week. There has been a 43% decline in the foundation industries across the United Kingdom since 2000, but the figure across the other OECD countries is only 21%. Why does the Secretary of State think the decline across the UK since 2000 has been twice that of the other OECD countries?
Sajid Javid
I do not know where the hon. Gentleman gets his numbers from, but this brings me to a useful point. The hon. Member for Wallasey said earlier that I had stated yesterday that manufacturing output in this country had gone up since 2010; she suggested that that was somehow incorrect. I can tell her that manufacturing output has gone up 2.2% in real terms since 2010 and that it is up 18.7% in current prices. Those are the official numbers, and manufacturing employment is also up. If she wants to hear about when manufacturing output actually fell, I can tell her that it was during the last Labour Government, when it fell from 18% of GVA to about 10%.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Steel companies are seriously concerned that the granting of market economy status to China will severely jeopardise their ability to take Chinese and other companies to court for steel dumping. What assessment has the Secretary of State made of that threat?
Sajid Javid
First, that will be a decision for the EU. We will, of course, have an input, but it will be a collective decision. Secondly, if any country wants market economy status, it must earn it. Whatever the country, it must show that it is behaving in a responsible way. Thirdly, we must remember that even when countries get market economy status, tariffs can still be imposed. Russia and the United States would be good examples.
Sir Edward Leigh (Gainsborough) (Con)
Does the Secretary of State accept that many on this side of the House believe that it is for this House and this Government to decide when a country such as China is dumping? We should decide whether to impose tariffs. Indeed, many of us think that if we had been outside the EU months ago, we would have imposed tariffs on Chinese dumping and would have solved the problem.
Sajid Javid
We have led the way in taking action, which has resulted in the right tariffs, which have helped the steel industry while protecting producers and consumers. My hon. Friend will agree that when action is taken through tariffs, we want to ensure that they are at the necessary level to help the industry without hurting consumers and producers.
Stephen Doughty
While we are still on tariffs, the Secretary of State mentioned the tariff on rebar and the drop in production. Increasing the tariff in that industry is obviously crucial, but other facts are at play. Rebar exports shunted up production before the tariffs came in, so we may have seen a drop-off due to that; there are also the exchange rate differentials. Does the Secretary of State still think that the rebar tariffs are high enough or should they be even higher to deal with the changes going on in that industry due to other factors?
Sajid Javid
We should always be driven by the evidence. The 99% fall in imports year on year, resulting from the tariff, suggests that it is effective, but we should always keep the situation under review and ensure that it remains effective.
Richard Fuller
My right hon. Friend mentioned the action that the Government have taken on procurement and their response on tariffs and power. Yesterday, he talked about Government co-investment. Will he please take this opportunity to clarify what is meant by that?
Sajid Javid
My hon. Friend will know that that comment related to Tata’s decision to sell its strip products business. What I said was really to show that when the Government say that we will consider all options to help create a long-term, viable business with a commercial operator, that would be such an option. The key point is that any co-investment would have to be on commercial terms. Investment can take a variety of forms, such as debt, but what I said was a demonstration of all the options that the Government are considering. I will move on to say a little more about Tata strip products in a moment.
Sajid Javid
Not now.
The action taken on tariffs, energy costs and procurement has sent a powerful message to investors around the world that the British Government are standing up for UK steel. That commitment is not new; I have been working with the steel industry from my very first day as Business Secretary, long before the current crisis made it on to the front pages. As I told the House yesterday, Tata contacted me several weeks ago to warn that it planned to sell parts of its strip business and to close its Port Talbot site immediately. Thanks to the groundwork laid by my team and colleagues over the past year, we were able to secure a reprieve while a buyer is found. I am leading the Government’s efforts to help to find a buyer for the strip business, and we will update the House on progress as soon as possible.
When that buyer is found, the Government stand ready, as I have said, to support it in any way we can to help to get the deal done. We have already set out some of the ways in which we can help. It would not be prudent to go into the detail, but the goal is to find a commercial buyer, with the Government helping to secure that transaction and a long-term, viable future for the business.
Tom Blenkinsop
I understand where the Secretary of State is coming from but, taking a broader view of co-investment, one option is R and D. The steel sector does not have Catapult status. Will the Secretary of State look at that as a potential route for co-investment in the steel sector, particularly in respect of organisations such as the Materials Processing Institute, to get an R and D link with our domestic steel industry?
Sajid Javid
The hon. Gentleman makes an interesting point. He will know that Catapult centres are a partnership between Government, business and academia. If that can help the steel sector, I am more than happy to look into it if a proposal comes forward.
Christina Rees (Neath) (Lab)
Hundreds of apprentices at the Port Talbot works receive on-the-job training while attending local colleges and universities. Swansea University has approximately £40 million in active grants to support research and innovation in the steel industry at the Materials Research Centre. If the steel-making facilities are removed and sponsorship is subsequently lost, future generations will be deprived and the UK will miss out on the potential to be at the forefront of materials development.
Sajid Javid
The hon. Lady makes a key point about the importance of skills and training, and I can assure her that we are already working with the Welsh Government on that. I have already started discussions with both the Minister for Universities and Science and the Minister for Skills to ensure that the issue remains front of mind.
We heard yesterday about the deal between Tata and Greybull Capital, and we will do everything we can to help finalise that transaction for Tata’s long products division. Yesterday’s announcement has also helped safeguard almost 5,000 jobs; alongside Liberty House’s acquisition of steelworks in Scotland and the west midlands, it is a real vote of confidence in Britain’s steel industry.
I would not have been able to do this work alone and I want to praise my right hon. Friend the Minister for Small Business, Industry and Enterprise, who has been absolutely tireless over the past year in her efforts to protect steel, as has my right hon. Friend the Secretary of State for Wales. I have also had the pleasure of working closely with the First Minister of Wales and the leader of the Welsh Conservatives in the Assembly. They have both proved to be positive, constructive allies in the fight to save Port Talbot. The steel unions, particularly Community, have been equally constructive, consistently coming forward with solutions rather than complaints. For that, I thank them once again.
Investors everywhere know that British steel is the best in the world and that British steelworkers are the hardest working in the world. They know that the British Government stand with the steel industry. We will do whatever we can to support it and to help it become more competitive. The challenges we face are great and the crisis facing the steel industry is global, but I am fighting for Britain’s steelworkers every hour of the day. I was fighting for them long before this crisis hit the headlines and will go on fighting for them as long as it takes. Britain’s steelworkers are the best in the world, and they deserve no less.
Stephen Kinnock (Aberavon) (Lab)
I wish to start today by thanking both the shadow Secretary of State, my hon. Friend the Member for Wallasey (Ms Eagle), for securing this debate, and you, Mr Speaker, for granting it.
I also thank the Secretary of State for his statements yesterday and today and for attending the special meeting of the all-party group on steel yesterday afternoon. However, although I am grateful to him, l regret to say that those meetings and statements have done little to address investor and customer confidence, which are of paramount importance at this time. Alongside the efforts the Government need to make to find and support a commercial operator, the priority at the moment should be securing the order book.
Erosion of the customer base is the most pressing issue facing the British steel industry. If the customer base goes, it will not come back. Unless the order book is secured, it does not matter what else happens. No one will buy a business if it has no customers—it is as simple as that. That is why I was so deeply concerned by the Secretary of State’s response to my question at the APPG yesterday, when I asked him to outline the specific actions he was taking in that regard. He said that he would be happy to engage with customers as and when they approached him. That is simply not good enough. The Secretary of State should be on the phone. He should be reaching out to the chief executive officers of Honda, Nissan, Jaguar Land Rover and others, making it clear that production of the world class steel that they have come to expect and to rely on will continue, come hell or high water.
This House and every steelworker in the country now looks to the Secretary of State to take action. He should set out precisely, and in specific detail, the representations that he intends to make in the coming days and weeks to the companies that comprise the customer base, which is the lifeblood of the British steel industry.
Sajid Javid
The hon. Gentleman makes an important point about the companies in the supply chain and the customers, and he is absolutely right to do so. What I have said to him and to others is that we are engaging with many of those organisations—I know that the Secretary of State for Wales is, too—but what he must understand is that much of this is commercially sensitive. Many of those suppliers would not like us to discuss who we are talking to and what their concerns are. I hope that he understands that it would be quite improper for us to divulge that information.
Stephen Kinnock
I fear that the Secretary of State has misunderstood me. I am simply saying that it is very important to be on the telephone to the customer base. [Interruption.] We on the Opposition Benches and the steelworkers of this country would like a little bit more detail. [Interruption.] Ministers must forgive us for being sceptical about what they are doing or for thinking that there may be a lack of action.
The Secretary of State talked about co-investment yesterday. Although I welcome the fact that he has belatedly converted to the fact that the Government and industry can work in partnership, I am not entirely sure what co-investment means in his terms. I agree with him that nationalisation is not a long-term solution, but what customers need to know is that, come what may, they will still be able to purchase strip products from the Tata sites. Such security can be offered only if the Government commit to keep all options on the table. Can the Secretary of State make such an assurance to the House?
The men and women working in steel and connected industries across this country are among the most highly skilled and effective people in Britain. The Port Talbot workers are already turning the business around, with improved productivity leading to tangible improvements in business and financial performance. Their skill and dedication is matched by that of Roy Rickhuss, the general secretary of Community, who was even praised by the Secretary of State yesterday.
The surprise announcement that we really needed yesterday was not that of a Conservative praising a trade union leader, but that of the Government announcing an end to their laissez-faire attitude. What we needed from the Government was a list of all the discussions that they have had with the customer base, but what we got was yet more prevarication and procrastination. What we needed from the Government was the announcement that all options were on the table, but what we got was ambiguity. What we needed from the Government was the announcement that they would put down their pom-poms and give up their role as China’s chief cheerleader in Europe; that they would end their championing of market economy status for China; and that they would end their campaign against trade defence reform, but what we got was more of the same.
Yesterday, the Secretary of State only confirmed something that we already knew—that the Government’s approach has been characterised by a dangerous combination of indifference, incompetence and a rolling out of the red carpet for Beijing.