Sector Deal for Steel

Sarah Champion Excerpts

Tuesday 19th December 2017 Westminster Hall

[Sarah Champion (Rotherham) (Lab)]

It is a real pleasure to serve under your chairmanship, Sir Henry, but it is somewhat dispiriting to find myself rising to speak yet again about the importance of Government getting behind our steel industry.

I am grateful to my hon. Friend the Member for Aberavon (Stephen Kinnock) for calling this debate. Time and again I, and many of my hon. Friends here today, have explained the importance of British steel and offered clear advice on practical measures the Government could take to champion this crucial strategic industry. Many of those requests remain unfulfilled. The Government respond with warm words but, to be honest, little practical support.

I am pleased, however, that despite this lack of commitment from Government, the future looks a little brighter for British steel, as my hon. Friends have said. In my own constituency, the takeover of Tata’s speciality steels division by Liberty House has been completed. Speciality Steels is a world-leading business with a global reputation, and its products are found in everything from airliners to Formula 1 cars. Far from the relic of caricature, this is a dynamic and growing business of which Britain should be rightly proud. Liberty has recognised this huge potential and we have received the welcome news that not only have existing jobs been secured, but investment will lead to a further 300 new jobs, the first of which are already being recruited. Liberty should be commended for its commitment to sustaining and growing British steel.

While the investment from Liberty is hugely positive, Tata’s main UK research and development centre, Swinden House in my constituency of Rotherham, faces uncertainty. Staff there have an uncertain future, with the facility scheduled to relocate to Warwick. Tata must make every effort to allow those who wish to relocate to do so, and to support those who do not.

The existential crisis that the industry has faced in recent years may have begun to subside, but many of the long-term issues that led the industry to the precipice remain. The steel sector’s proposals to the Government have their roots in that crisis, and discussions between the sector and Government have been ongoing for some time. With the huge uncertainty of Brexit looming, the Government must act now to safeguard steel’s long-term future. It was therefore hugely disappointing that the steel sector’s proposals to renew and support the industry have not been included in the group of frontrunners for individual sector deals.

That failure is just the latest in a long line of Government failures to safeguard the industry’s future. In particular, the continued lack of action on high energy costs leaves the steel industry with one hand tied behind its back. Despite British steel’s wealth of experience, skill and expertise, it simply cannot compete while it continues to face energy costs far in excess of those faced by its European and international competitors. British producers pay, on average, £17 more per megawatt-hour than competitors in France and Germany do. Over the course of a year, that means a massive £50 million. This colossal burden leaves British producers struggling to compete. We are not talking about handouts; all we want is a level playing field, which the Government have consistently failed to provide.

Energy intensive industries compensation was a start, but until the Government address and commit to reducing the vast burden on our industry these problems will continue to hold British steel back. The Government have claimed that state aid rules prevent them from taking action, yet they refuse to introduce measures already in place in the likes of France and Germany, such as allowing exemption from renewables costs up to the value of a company’s gross value added. Now is the time to take such steps and to support British steel’s recovery and growth as the cornerstone to a sector deal.

Business rates also continue to punish steel producers and penalise their investment in new facilities. Removing new plant and machinery from calculations would encourage much-needed inward investment. That problem, too, has been raised with the Government repeatedly, but they have consistently failed to act.

Requests to favour British steel in Government procurement continue to receive, at best, a lukewarm response from the Government. UK steel has the skills and capacity to deliver on large-scale infrastructure projects such as High Speed 2. Although it is welcome that the Government have stated that they expect 95% of HS2 to utilise British steel, they have stopped short of absolutely guaranteeing that figure. That commitment must be much clearer and stronger.

Britain’s exit from the European Union also leaves the industry vulnerable to further dumping of cheap Chinese-produced steel. The British Government have consistently opposed the introduction of stronger tariffs within the European Union. With the removal of that opposition post-Brexit, it is likely that the EU will pursue far stronger tariffs and domestic protections. The chief executive of UK Steel has expressed concern about the seemingly complacent attitude displayed by Government officials who have refused to commit to strengthening Britain’s own protections in line with those of our neighbours. Should the UK find itself bordering a European Union with far stronger protections than our own, the impact upon our industry could be catastrophic.

Furthermore, the Government’s failure to properly consider the impact of Brexit on the industry risks plunging steel into a new crisis. Not releasing an impact study on the effect of Brexit on steel was frustrating, but the revelation that they may not even have conducted an industry-specific study is simply staggering. It is the Government’s duty to ensure that the industry is as prepared as it can be to weather the inevitable turmoil that Brexit will bring, but they seem to be asleep at the wheel.

Although we must do everything that we can to secure the steel industry’s long-term future, we must also recognise that changes to the British Steel pension scheme have left many scheme members facing financial uncertainty and difficult choices. Disappointingly, my constituents tell me that they have not received sufficient advice and support. There are reports that in the absence of detailed, clear advice, scheme members have been targeted by unscrupulous advisers and might have been mis-sold unsuitable financial products. It is vital that we protect scheme members, provide appropriate guidance and support and ensure that they are not left behind as casualties of the crisis faced by the industry.

The UK steel industry can and should be central to a resurgence in British industry, but progress towards a comprehensive resolution to these problems has been painfully slow. The failure to progress towards an individual sector deal for steel is just the latest example of the Government offering warm words and little else. The industry’s proposals are clear and practical, and would lead to significant and sustained investment in British steel, with £1.5 billion invested over five years and a huge increase in production capacity from 10 million to more than 14 million tonnes. What the industry wants in return is for the Government to match its commitment and work with it to address the structural problems preventing UK steel from reaching its potential.

This is an opportunity for the Government to offer more than talk. They must engage positively with the industry and do everything they can to ensure that British steel once again leads the world.