Steel Industry: Contribution to the UK Economy

Sarah Champion Excerpts

Wednesday 25th January 2023 Westminster Hall

[Sarah Champion (Rotherham) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Pritchard—for the first time, I think. It is a pleasure to speak in this debate secured by my hon. Friend the Member for Newport East (Jessica Morden), who outlined the broader picture so well. I speak today as a member of Unite.

As others have said, the UK steel industry makes a vast contribution to our economy. It employs 34,500 people directly in the UK and supports a further 43,000 in supply chains. The industry makes a £2.4 billion direct contribution to UK GDP, and the supply chains it supports add another £3.1 billion each year. It offers skilled, well-paid employment, with a median salary that is almost 60% higher than the average in Yorkshire. But it is an industry that continues to be chronically undervalued by the Government, its needs neglected and its concerns ignored. That has consequences.

One hundred and eighty five of my constituents were recently told that their jobs would likely go as part of 440 redundancies across Liberty Steel’s UK businesses. Just before Christmas, in a speech I have made countless times, I warned that unless the Government acted on the underlying issues that face the industry, steel production in the UK would wither. For years, steel MPs from all parties have called on successive Business Ministers to listen to the industry, value its contribution to the economy and help to create an environment in which it can thrive. Our pleas have fallen on deaf ears, and our constituents are losing their jobs as a consequence.

Rotherham is a steel town. The industry is at the core of our identity and local economy. The job losses will affect not only the 185 workers and their families but businesses up and down Liberty’s supply chain and throughout our local economy. Many businesses move to Rotherham specifically because of our steel industry, including those on the advanced manufacturing park. The job losses will have a catastrophic impact on our town and communities.

Liberty has cited soaring energy costs as a major factor behind its decision, and the fact that its announcement came only days after the Government announced the scaling back of support for businesses struggling with high energy costs should surprise no one. If the Government are serious about delivering economic growth, they cannot stand idly by while industries that should be at the heart of our growth are pushed to the brink.

Our energy markets have placed British steelmakers at a profound disadvantage for decades. British steel manufacturers have been left struggling to compete due to the Government’s failure to act to address energy costs that for years have been vastly greater than those of our European competitors.

In its 2021 report, “Liberty Steel and the Future of the UK Steel Industry”, the BEIS Committee argued that:

“If additional support is not forthcoming, high electricity prices will continue to have a pernicious effect on the UK steel industry, resulting in long-term decline and future crises.”

Well, here we are. The Minister, as a member of that Committee at the time, will no doubt recall that the report went on to recommend:

“At a minimum, the price disparity should be brought down to within £1/MWh of the total cost faced by key competitors in France and Germany”.

I could not agree with the Minister more. But since that report, the only thing that has changed is her job title.

The Government have taken no meaningful action to address the crippling pressure on the industry. It is not only the cost of energy that continues to burden British steel producers: the industry has been prevented from investing in its future due to punitive business rates that penalise capital investment. Yet again, nothing has been done to reform a system that continually hamstrings our domestic steel industry.

Most damningly, public procurement procedures continue to fail to prioritise steel from British manufacturers. What was the point of Brexit if not to better support our own industries? That simple step, entirely within the Government’s control, could go a long way to stabilising the industry and laying the groundwork for future growth.

I believe that at the heart of the Government’s failure on steel has been a fundamental misunderstanding of our industry. It is not some relic of an industrial past but a dynamic, world-leading industry, vital to both Britain’s economic future and its security, that has been ignored, to the Government’s eternal shame.

The Government must now engage proactively with Liberty and the trade unions to work to limit job losses, and they must ensure that a comprehensive support package is in place for the affected workers. If the Government fail to act—and act with urgency—the redundancies announced in my constituency will sadly not be the last.

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[The Minister for Industry and Investment Security (Ms Nusrat Ghani)]

It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate the hon. Member for Newport East (Jessica Morden) on securing the debate and raising the incredibly important issue of the contribution that the steel industry makes to the UK economy. We seem to be spending a lot of time with each other, and I want to put on the record that, while we are from different political parties, we are all aligned on doing what we can for the sector.

I am slightly anxious that everyone keeps pointing out that I am the 12th or 13th Minister—I am not sure if that is the kiss of death or not. As well as getting through my speech, I want to respond to all the contributions because I know how important that is for all the MPs who need to go home to their constituencies this weekend and explain what they have done on behalf of the steel sector.

I thank the hon. Member for Rotherham (Sarah Champion)—life comes at you fast when your own Select Committee report is read out to you in a debate. I thank the hon. Member for Neath (Christina Rees) for setting out the importance of the steel sector to the Welsh economy; the hon. Member for Cardiff South and Penarth (Stephen Doughty), whose points I will respond to very shortly; and the hon. Members for Llanelli (Dame Nia Griffith), for Westmorland and Lonsdale (Tim Farron) and for Strangford (Jim Shannon). I will cover the Northern Ireland protocol briefly, if time allows.

Of course, I thank the Chair of the Welsh Affairs Committee, my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). Freeports were in my Maritime 2050 plan—launched when I was previously maritime Minister—which is backed by the Associated British Ports. I am not sure what more I can say, other than I do love freeports and ABP is a pretty good organisation; hopefully, that is enough said.

I thank my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft)—our lady of steel—to whom I am indebted for the support she provides when I constantly ask for bits of information to ensure that my Department is absolutely on the right path in delivering for the steel sector. I also thank the hon. Member for Motherwell and Wishaw (Marion Fellows). I will try my very best to get to the points she raised as well.

As we know, steel contributed £3.8 billion to the UK economy in 2021. It is crucial to many downstream sectors, such as construction, automotive and our green energy revolution, all of which sit in BEIS. I take care of automotive, aviation, maritime and construction, so it is critical to the rest of my brief. The industry provides a critical foundation that underpins our manufacturing, energy and infrastructure sectors, with a proud history forged in our United Kingdom.

In 2021, the steel sector supported 39,000 well-paid jobs in steel production and a further 59,000 jobs across the UK economy. Although my hon. Friend the Member for Scunthorpe does not get political on steel, I thought she landed a good point in saying that jobs and production halved under Labour. However, we are trying to be collective in our support of the steel sector, so I will not dwell on that too much. We know that for many constituencies, steel is the lifeblood of the local economy and a real source of local pride. I pay particular tribute to the hard-working steel workers who have contributed much to our steel industry over the years.

However, as we have heard today, we have to recognise that there are global pressures. The sector is under stress everywhere. This is not just a UK issue; there are global challenges exacerbated by global overcapacity and the need to decarbonise. The hon. Member for Cardiff South and Penarth asked about the oversupply issue. Through the global forum on steel excess capacity, the G20 and other interested nations agreed important policy principles and recommendations to tackle the unfair subsidies that we believe are the cause of overcapacity, and we continue to work together to find solutions to this challenge.

We are disappointed that not all major steelmaking economies are taking part in these discussions, and I call on all players to come back to the table—in particular China, which represents more than half of all steelmaking capacity in the world. There are also great opportunities in how we can use steel as we transition to a zero-emission economy and help our other great industries to transition as well.

Challenges are particularly acute at the moment. Unfortunately, over the past couple of weeks we have learned of the potential redundancies being made at Liberty Steel, including in the constituency of the hon. Member for Newport East. Obviously, these are commercial decisions, and I am working incredibly hard with these businesses and the Department for Work and Pensions to ensure we are doing what we can to support every worker and give them the support they need. We spend most of our time working on that, to ensure they have opportunities to be trained up and get the support they need. There are a lot of challenges that the Government are facing, but it is not just us in the UK.

I want to cover some of the support that the Government have provided, which is substantial and has been in place for some time. More than £800 million has been made available to the steel sector alone since 2013. There has always been a discrepancy between the price of energy here and in Germany, which is quoted quite often, but £800 million is a substantial amount of support. We have created new, competitive funds, with more than £1.5 billion made available. The lead Member for this debate, the hon. Member for Newport East, reported that that funding covers not just steel, but a number of other industries, but I am keen to ensure that the steel sector gets the support it needs. I promised the hon. Lady that I would go through the funds so that she would be able to share that information back home in her constituency.

The hon. Lady mentioned the CCUS infrastructure fund. Each site is at a different stage when it comes to decarbonising, but that is £1 billion. There is funding of £240 million through the net zero hydrogen fund, which I know is important to many Members present; £55 million through the industrial fuel switching fund; £20 million through the Industrial Decarbonisation Research and Innovation Centre, which provides capital funding to projects that support fuel switching to hydrogen on industrial sites; £289 million through the industrial energy transformation fund to help businesses with high energy use, including steel; and £66 million as part of the industrial strategy challenge fund. Those budgets are in place to help the steel sector in the long term. They are not short-term sticking plasters, but substantial amounts of money.

[Sarah Champion]

I recognise and am grateful for all the support the Government have given and will give to steel, but those are like little Lego bricks. There is not the joined-up strategy that we need to have confidence in our industry. Will the Minister please come forward with a proper national plan to save this vital sector?

[Ms Ghani]

We need to put in place all the budgets that are available. I will quickly touch on procurement, which gives confidence in what we are hoping to do in the long-term for the sector; it does put together a plan.

As I said when I was at the APPG earlier, since I have been in post I have been focused on the issues that we are facing right now—with Liberty, for example. I cannot comment on the negotiations because they are live. I said to the APPG that, once we have got over that moment, I hope to sit down, do a refresh and look at everything we can provide the sector in the long term. What is happening in the United States is a game-changer, so we can try to push back on some of the challenges we have had on procurement previously. We can try to see what more we can do.

I am anxious that I have only four minutes left. On the £18 billion of energy relief, Gareth Stace, director general of UK Steel, said that the energy bills discount scheme provides

“important certainty and stability for steel producers’ production costs”.

We have legislated for the full range of tools allowed under the WTO rules so that the UK can tackle the threat of unfair trading practices and injuries.

Furthermore, in financial year 2020-21, the Government procured UK-produced steel worth £268 million for major UK projects—an increase of £160 million on the previous year. When I was the High Speed 2 Minister, before I realised I might get the steel brief, I always used to bang on to HS2 about not procuring more British steel. I hope to go back and reflect on procurement again, especially because it was in the BEIS Committee report—I want to say that before the hon. Member for Rotherham pushes that and reminds me of what I committed to.

About 8.4 million tonnes of steel is required for infrastructure projects in the UK, including 5.5 million tonnes for contracts for difference, which are not always considered public procurement, so there is huge scope for more procurement to take place in the UK. I will try to address that too.

There has been a huge level of engagement. The hon. Member for Sefton Central (Bill Esterson) said that it should be at Secretary of State level, but I have been meeting with the unions. I have kept every appointment that has been asked of me.

Oral Answers to Questions

Sarah Champion Excerpts

Tuesday 17th January 2023 Commons Chamber

[Grant Shapps]

I think the answer is three yeses. My hon. Friend is absolutely right to highlight the importance of that hydrogen technology; it is one of the reasons the UK has a global lead. I am looking very closely at how off-road hydrogen vehicles could also be a big part of our decarbonisation strategy.

[Sarah Champion (Rotherham) (Lab)]

Some 440 redundancies have just been announced across Liberty Steel, including 185 in Rotherham. It cites soaring energy costs as a major factor behind the decision. It is no surprise that its announcement comes just days after the Government said that they were going to start withdrawing support for business energy costs, and inflated energy markets have placed British steelmakers at a profound disadvantage. When will Ministers step up and address this, as our competitors’ Governments do?

[Grant Shapps]

As the hon. Lady will know, I am of course very concerned about the Liberty Steel position, and I am working very closely with it and everyone else involved. There has been £18 billion of support to business, and we have just announced a further £5.5 billion specifically on energy bills. On energy-intensive industries, there is further support through an 85% measure, which we are also reviewing to take up to 100%. We will work very closely with the company, and I will undertake to work, with my Ministers, with her as well.

Strikes (Minimum Service Levels) Bill

Sarah Champion Excerpts

2nd reading
Monday 16th January 2023 Commons Chamber

[Sarah Champion (Rotherham) (Lab)]

I rise to speak as a proud trade unionist. I have been a member of a trade union all my working life, so I completely fail to understand the division that Government Members are trying to draw between union members and workers. The general public are not buying it either.

Our nurses, teachers, doctors, paramedics, rail workers and firefighters have all worked consistently hard over the past decade, particularly since covid, yet they face real cuts in their pay and drastically worse working conditions. NHS nurses are earning £5,000 a year less in real terms than in 2010; for midwives and paramedics, the drop is more than £6,000. We need to retain workers in those professions, but instead they are being driven away by the Tories running our public services into the ground. Instead of trying to resolve the issue at the heart of these strikes, this Government are undermining workers’ basic right to strike and are trying to turn the public against them. It is not working.

I am deeply concerned by the sweeping powers in the Bill, which will allow the Government to dictate what the minimum level of service should be in a given industry, with only a meaningless requirement for the Secretary of State to “consult” whoever they consider “appropriate”. It is disgraceful that employers will have the ability to pick and choose which individuals will be compelled to work and forced to cross a picket line or be sacked. That is not a balanced or fair approach, nor will it resolve any of the core issues that workers are trying to raise through these strikes.

There are already more restrictions on strikes than ever before, and they are being followed to the letter, so the strikes that are going ahead have already met the legal requirements. Steve Rice, the head of the GMB union’s ambulance committee, recently wrote to the Prime Minister to call out his dangerous claims that ambulance workers are putting lives at risk. Surely the Prime Minister knows that unions have been working with NHS trusts to guarantee emergency cover during the strike action; if he does not, that is really quite damning. In reality, on 21 December, when GMB ambulance workers undertook industrial action, the proportion of patients delayed for over an hour actually dropped significantly, so where is the evidence that striking essential workers are not already providing the minimum level of service? It is not there.

I understand any fears that the public may have of not being able to access emergency healthcare when they need it, but the Government should be honest with constituents rather than demonising hard-working staff who want to be able to provide the best service possible. Better yet, the Government should meet workers to negotiate and understand their concerns instead of dismissing them. It is not striking workers who are causing the crisis in the NHS; it is a decade of Tory mismanagement.

Britain’s Industrial Future

Sarah Champion Excerpts

Tuesday 15th November 2022 Commons Chamber

[Sarah Champion (Rotherham) (Lab)]

At its heart, Rotherham is an industrial town. Coal, steel and glassmaking have been at the core of our identity since the industrial revolution. Although coal may have gone, my constituency still houses a substantial glass manufacturing business, in Beatson Clark, and steel production, in Liberty Steel. As energy-intensive industries, both have been severely impacted by the current colossal increase in the cost of energy. In August, the average UK wholesale price of energy was a staggering £370 per megawatt-hour, as against a pre-crisis level of £50 per megawatt-hour.

Alongside that exponential rise, UK carbon prices have reached historic highs, costing the steel industry an estimated £125 million in compliance costs this year. That not only harms the competitiveness of the sector, but reduces the capital available to the industry to invest in decarbonisation. Capping energy prices for businesses for six months was broadly welcomed by the energy-intensive industries. However, that remains a short-term solution. Industries are understandably fearful of a cliff edge when the support ends. It must be recognised that both steel and glass manufacturing do not operate in a vacuum. The German Government have confirmed the introduction of a scheme running for the entirety of 2023 that caps power prices for industry at £110 per megawatt-hour, which is more than £100 cheaper than the UK price cap scheme. That offers German steel producers not merely cheaper energy costs than UK competitors, but the stability needed to plan for the long term. In contrast, we have heard only deafening silence from the Government on what comes next.

The rising cost of energy is, of course, unprecedented, but the problem of an uncompetitive UK energy market is not new. Even before the current crisis, the costs associated with UK glass manufacturing were 62% higher than those in Turkey. Similarly, UK steel has, for years, faced considerably higher energy costs than European competitors. This has been brought to the Government’s attention time and again, but their approach has been to listen, offer warm words and then do precisely nothing.

UK Steel recently published its five priorities for the new Government. To anyone who has followed debates on the steel industry for the past decade, these are surprisingly familiar. They call for competitive energy prices, a net zero strategy aimed at delivering a green, modern industry, action on dumping of cheap subsidised steel, a commitment to use UK steel in public infrastructure projects and the creation of a UK steel innovation fund—not so new or ground-breaking, but not done by this Government.

We cannot afford to waste another decade repeating the same practical, sensible demands to a Government who have shown neither the willingness nor the ability to deliver solutions. But that is consistent with the broader failure in the Government’s industrial policy. In my 10 years as Rotherham MP, I have called repeatedly, as have my colleagues, for the Government to work with the industry to develop a clear, forward-thinking industrial strategy. The inclusion of “industrial strategy” in the name of a Government Department is not what I had in mind.

The current crisis must be a wake-up call. UK industries cannot hope to compete internationally if they continue to be hamstrung by a Government whose so-called industrial strategy is based entirely on inertia. It is simply not good enough for Government Ministers to stand at the Dispatch Box and tell this House how important these industries are, to recognise their contributions to the UK economy, but then hang them out to dry with their actions—or lack of actions.

I have heard it all before. My constituents have heard it all before. I urge the Minister to reflect on his Government’s record of failure with the industrial sector and work with these industries to deliver the vital support that they need to weather the current storm, and also to provide a policy environment that allows them to play their crucial part in driving our economy in the years to come.

Carer's Leave Bill

Sarah Champion Excerpts

Committee stage
Wednesday 9th November 2022 Public Bill Committees

[Dame Caroline Dinenage (Gosport) (Con)]

It is a delight to be a member of this Bill Committee. I congratulate the hon. Member for North East Fife on bringing the Bill, and I am absolutely delighted that the Government are supporting it.

Unusually, we find ourselves in violent agreement on the reasons behind the Bill. Prior to the pandemic, it was calculated that about 4.9 million people across the country were juggling some kind of unpaid care with paid work. As the hon. Lady said, it is almost impossible to quantify that work because so many carers do not identify themselves as such and often go without the support and help they need. We know that such caring work has an almost unquantifiable impact on their lives and causes undue stress. As a result, those people may find that they have to leave the workforce.

Many of us never consider that we might become unpaid carers, but Carers UK has calculated that two thirds of us will end up fulfilling that role at some stage in our lives. I saw that for myself when my mum was an unpaid carer for my nan. At the time, we were running our family business, and as I had just had my first child, my mum was part of that sandwich generation that my hon. Friend the Member for Cities of London and Westminster spoke about. Of course, the responsibility for caring so often falls to women, which is why so many fall out of the workforce. I saw the impact that those caring responsibilities had on my mum, on her professional life and on every aspect of her own health and wellbeing.

Staying in work while providing such care can be incredibly challenging. That is why the Bill is so important. I am honoured to chair the all-party parliamentary group on carers, which is proud to support the Bill. We know that, in prioritising someone else’s health and care needs, carers up and down the country are not prioritising their own, which can have a massive impact. People do it not for reimbursement or money, but almost entirely out of love and responsibility, and we must recognise that.

As our population ages and changes, and as the way we work changes, we need to ensure that we change with them, because the number of people juggling work and care will only ever increase. We already lag behind other countries when it comes to workplace rights for carers. Many advanced and further ageing economies—including Japan, Canada, the US, Germany, Ireland and France—have some form of carer’s leave in place.

Leave entitlement for carers was a Conservative manifesto commitment for the 2019 general election, so it is disappointing that it has not been introduced by a Conservative Government, but I am grateful to the hon. Member for North East Fife for doing so. I am pleased, however, that the Conservative Government recognise that the right for unpaid carers take up to a week of leave could make a real difference between somebody staying or leaving the workforce.

It would be a good thing for employers, too, as my hon. Friend the Member for Eastbourne said. We always talk about the productivity gap, the skills gap and retaining excellent and experienced staff, but people’s caring responsibilities often kick in during the second half of their working lives, when they are at their most experienced and have the most expertise. Businesses face the enormous financial burden not only of losing them and their expertise at that stage, but of the ensuing recruitment costs. I am pleased that the key definitions and parameters that are built into the Bill align with existing provisions for other family leave, making them easier for employers to implement. That is important because we want to minimise the burden on employers and make arrangements easier for employees to understand.

I think this is an excellent piece of legislation. Carers have done so much for our country—they save the NHS and our social care system so much money—so this is the best thing we can do to give something back. That is why I wholeheartedly support the Bill.

[Sarah Champion (Rotherham) (Lab)]

It is always a pleasure to see you in the Chair, Mr Paisley. I wholeheartedly congratulate the hon. Member for North East Fife, who has fought a serious campaign on this subject. She speaks from her heart, and from her constituents’ experience, which is the best place from which to try to make a change.

I also congratulate the Government on listening, and on agreeing to this Bill, but I will challenge them a little towards the end of my speech, if that is okay. The Bill is indeed a crucial step forward. It is important partly because it is recognition of what carers do and bring to this country. They do an enormous amount, and the services that they provide save the Government a lot, but as the Bill recognises, that comes at enormous personal cost to the carer. In 2019, over half of respondents to the Multiple Sclerosis Society’s family and friends survey said that they did not have the support they needed, and more than one in three had given up work altogether to care for someone with MS. It is not right and not productive that an average of 600 people a day leave work to care for someone.

Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2022

Sarah Champion Excerpts

Monday 31st January 2022 General Committees

[Sarah Champion (Rotherham) (Lab)]

It is always a pleasure to serve under your chairship, Mrs Miller. I thank my hon. Friend the Member for Southampton, Test for encapsulating the issues we are facing.

It is extremely fortunate for me that I am on the Committee considering this piece of secondary legislation, because it is so pertinent to one of the oldest businesses in my constituency—one that I am extremely nervous may be thrown into considerable, if not terminal, economic problems because of the situation with the emissions trading scheme, among other things.

The rationale behind the UK emissions trading scheme and its predecessor, the EU ETS, was to encourage investment in decarbonising by charging industrial emitters of CO₂ for the pollution they were causing. The system placed a legal requirement on polluters to purchase CO₂ or carbon allowances from the state and surrender them to match the quantum of emissions emitted by an industrial installation on an annual basis, with strict penalties for non-compliance or failure to surrender allowances. It was designed to reduce the availability of CO₂ allowances over time, thereby pushing CO₂ allowance prices up, as decarbonisation technology developed and became an investable alternative to paying for emission allowances.

It was recognised that the scheme could have a negative effect on competitiveness and lead to production being moved to countries where costs were lower and operators did not face carbon emissions controls—what is called carbon leakage. To protect against this, businesses deemed at risk of carbon leakage received a percentage of free allowances to assist in minimising the risk. The logic behind the system appears sound, but sadly, as happens in so many cases, the reality does not match the theory.

Beatson Clark in my constituency is a small UK-owned glass manufacturer that has operated from the same site in my constituency since 1751. It employs 351 direct employees, as well as supporting many local businesses throughout its supply chain. It produces glass containers for the food, drinks and pharmaceutical markets, and is the only remaining producer of amber pharmaceutical glass in the UK. Beatson Clark has led the way in reducing its CO₂ emissions by increasing the levels of recycled materials in the glass it produces. It has invested millions of pounds in its own recycling plant in order to secure recycled materials for its glass furnaces. It is the only UK glass manufacturer that actually owns and operates its own recycling plant. Basically, Beatson Clark is a green, recycling business that the UK should be proud of; but, due to both commercial and physical factors, it is unable to reduce emissions further.

Glass can be melted using electrical energy, but the infrastructure to deliver sufficient energy to the site is not in place, and the costs associated with it would be prohibitive. It would also take years to implement. The switch from melting using natural gas to using electricity would add between £4 million and £5 million in costs—costs that were calculated before the current energy price spike. These additional costs would increase to around £30 million in electricity energy against gas at the peak of the current crisis. It would simply not be commercially viable to switch, even if the infrastructure were in place.

The UK market is now being offered glass at prices below the UK production costs. Increasingly, these imports are coming from the middle east and Turkey. Beatson Clark asked British Gas to conduct an assessment of the production costs and CO₂ impact associated with glass produced in Turkey. It established that shipping glass produced there to the UK—and no doubt bringing it from ferries to the actual sites on lorries—resulted in a 36% increase in CO₂ emissions. However, the cost of manufacturing in Turkey was around 39% lower. As a result of both lower energy costs, and the fact that there is no carbon allowance burden, such glass is made considerably cheaper than anything that can be produced in the UK.

In the last year, the UK ETS allowance prices, like the energy prices, have increased beyond what could have been anticipated by industry. When the first auction of UK allowances took place in May 2021, the reserve was set at £22 per tonne. The actual sale price was £43.99 per tonne. Prices have continued to rise over the year to around £80 per tonne. The equivalent EU CO₂ allowance price has also risen, but on average the cost of a UK allowance is around £4 a tonne more expensive.

[The Chair]

May I encourage the hon. Member to talk about operational improvements in respect of the UK ETS? I am sure she was about to come on to that.

[Sarah Champion]

Thank you, Mrs Miller; I will do so. I know what a good Chair you are, so I know that I am pushing my luck.

As a result, Beatson Clark, like many other essential UK businesses, has seen its carbon compliance costs triple. It cannot reduce its emissions further without significant investment in energy infrastructure. Even if the infrastructure were in place, the cost of alternative energy would be prohibitive. It is therefore in a Catch-22; it wishes to further decarbonise, but there is no commercially viable method of doing so. It feels that it is trapped, leaving the purchase of allowances simply as a tax on business. It also has concerns that some of the increase in the CO₂ allowance is being driven by speculators.

The Government have made over £4.5 billion from the sale of carbon allowances since May 2021. While the Treasury is enjoying the windfall as a result of higher carbon prices, UK obligated companies and institutions are suffering. Businesses need stability. They cannot realistically plan for all the unforeseeable circumstances, such as the massive increases in energy and carbon costs that we have seen over the past six months. The current system and policies are failing companies that want to do the right thing, and I fear that we may see businesses closing as a consequence.

The impact assessment published alongside the design of the UK ETS in June 2020 did not envisage the present situation. Can I therefore ask the Minister, at the very least, to recommission the impact assessment to bring it line with the current reality? More broadly, will the Minister commit to a total review of energy, energy policies, energy taxation and environmental policies? This would ensure that the Government are focused on levelling up costs across Europe, protecting against carbon leakage from beyond Europe and allowing sustainable CO₂ reduction while maintaining affordable production in the UK.

Finally, I say to the Minister: Beatson Clark is an absolutely fantastic example of how a business can support a local community and local suppliers. I know that it would really welcome a visit if the Minister is passing.

[The Chair]

Before I bring in the next Member, I would like to remind everybody that Delegated Legislation Committees are tightly focused on the measure in front of us. We really do need to focus on the issue in question: the operational improvements of the UK ETS.

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[Greg Hands]

I thank all Members for participating in this debate. The hon. Member for Southampton, Test mentioned the trouble with the lift opposite the Strangers’ Bar. It can sometimes be confusing, taking a lift directly outside a bar. I have to say that I took one of the two lifts there and came up without any difficulty. To be fair, he may well have taken the other lift, and it may well also not stop at the first floor. I am sure that the House authorities will want to have a look at it. Perhaps they might also find an explanation for the SNP’s failure to attend the Committee, which may also have its origin in that interesting feature of the House as it has been reconstructed.

The hon. Gentleman said that the draft order was not controversial, and I agree. He described the evolution of the affirmative SI that we are considering today, and he is correct that it is generated out of the 2020 order. One set of changes is subject to the negative procedure, and one set is subject to the affirmative procedure—particularly those changes that create new offences, which is what is before us today.

The hon. Gentleman asked two questions about the UK ETS system in general. Its intention, as he sees it, is to shadow the EU ETS. I do not think that is the right way to describe it. Its original features were based on the EU’s ETS scheme. He is right that our prices have been higher, but I would not say drastically so; as the hon. Member for Rotherham pointed out, they have been around 5% higher. We never said that the prices—or, indeed, the eligible elements within the scheme—would necessarily track, but the hon. Member for Southampton, Test is right that there is a common origin.

In terms of linking mechanisms, we are open to dialogue with the European Union in consideration of linking to the EU scheme. That follows our commitments in the trade and co-operation agreement. The two sides updated each other at the trade specialised committee on 12 October.

The hon. Gentleman also asked about the EU carbon border adjustment mechanisms. As he will know, that is an EU proposal that has not yet been legislated for. In my previous ministerial role at the Department for International Trade, the UK was well aware of that proposal, and we continue to watch it very closely. The two things that I would say in relation to it are that it needs to be World Trade Organisation compliant, and that we must make sure it does not discriminate against genuine developing countries. I know that the hon. Member for Rotherham, in her role as Chair of the International Development Committee, will take a strong interest in that point as well.

It is always good to hear about the practical impact that Government decisions and policies can have on successful small and medium-sized enterprises such as Beatson Clark in the constituency of the hon. Member for Rotherham, which has been there since 1751—a remarkable achievement in its own right. We want to make sure that, having been around for 271 years, that company might have a future for the next 271 years, so I will pass on the information about it to the Minister for Industry, my hon. Friend the Member for North East Derbyshire (Lee Rowley), who is more directly involved with the glass sector.

To respond to the points that the hon. Lady raised, we are in daily contact with energy-intensive industry stakeholders regarding ongoing concerns over energy markets. Ministers and officials continue to engage with industry to further understand the impacts of high global gas prices. Our priority is to ensure that costs are managed and supplies of energy are maintained. We are committed to minimising energy costs for businesses, which is vital. In 2020, relief to energy-intensive industries for electricity policy costs alone was worth over £470 million.

[Sarah Champion]

In debates like this I am normally arguing for steel, which I also have in my constituency. I know that Liberty Steel was a beneficiary of those grants, but I do not think that glass is getting the same support as steel. If the Minister could look into that issue, I would be extremely grateful.

[Greg Hands]

I will certainly look into that in conjunction with the Minister for Industry; I will make sure that he is aware of the issue that the hon. Lady raises. As she rightly pointed out in her speech, allowances were allocated freely in 2021. The 2022 free allocation amounted to 42 million allowances, as it did the year before, and will be issued by 28 February 2022, in advance of the 2021 compliance deadline of 30 April 2022. There is good continuity of approach there.

By putting a price on carbon emissions, the UK ETS incentivises market participants to find the most cost-effective solutions to decarbonising. We understand, of course, that there is a risk of carbon leakage, which we mentioned just a moment ago in relation to the EU’s approach. The UK ETS authority, which is the four Governments in the United Kingdom together, will consult in the coming months on the trajectory of the scheme’s cap, particularly to keep it aligned to our net zero obligation. As part of that consultation, we intend to review our free allocation in the UK ETS, for which we will start a call for evidence in the spring. Energy prices, policy and taxes are all things that we keep under constant review—particularly taxes—so I can assure the hon. Lady that we already have a total review.

Turning to the points made by the hon. Member for Swansea West, in terms of Drax, it is important to recognise that policies are not specific to any particular company. Currently, installations that use only biomass are out of the scope of the ETS, but I can take away the points that he made and follow up on them. He mentioned British Airways flying in Australian sheep; I think he might have meant sheepmeat or lamb meat, rather than the sheep themselves. Having negotiated the Australian trade deal, I am pretty sure that the movement of sheep themselves would not be within scope.

Reducing Costs for Businesses

Sarah Champion Excerpts

Tuesday 11th January 2022 Commons Chamber

[Sarah Champion (Rotherham) (Lab)]

Today, Rotherham businesses are facing an economic crisis. Prices across the board are skyrocketing. Last year saw the fastest ever rise in production costs. Staff retention and recruitment is harder than ever. Inflation is at a 10-year high, and taxes on people and businesses have reached a 70-year high. It is no wonder that consumer confidence is down and that, according to Make UK, two thirds of UK manufacturers are worried about further cost increases in the coming year. Why is this happening? Because the Government have lost control and because they have not got a plan. Ministers seem more interested in protecting the Prime Minister than in protecting British businesses, and more interested in saving their own jobs than in saving those of our constituents.

The warning signs were clear. Even before the pandemic, costs for businesses were at record levels, thanks in no small part to the Government’s failure to deliver a working Brexit, and nowhere was that clearer than in the energy-intensive industries. For nine years, I have been sounding the alarm on energy prices, but time and again the Government have failed, despite pledges of support. Warm words will not forge steel, but action to bring down production costs might. Our steelmakers pay 61% more for electricity than competitors in Germany and 51% more than those in France. Similarly, glass producers such as Beatson Clark in Rotherham face unsustainable energy costs thanks to a 400% increase in wholesale gas prices. Costs of that kind cannot be sustained.

Where this Government step back, however, Labour steps up. We propose a contingency fund to support firms through hard times, including energy-intensive industries such as steel and glass. Labour would freeze business rates and replace them with a system fit for purpose that would ensure a level playing field between the online giants and physical shops, and Labour proposes a patriotic commitment to buy British.

Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) (No. 2) Regulations 2021

Sarah Champion Excerpts

Wednesday 27th October 2021 General Committees

[Paul Scully]

[Sarah Champion (Rotherham) (Lab)]

[Paul Scully]

--- Later in debate ---

[Paul Scully]

[Sarah Champion]

[Paul Scully]

Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) (No. 2) Regulations 2021

Sarah Champion Excerpts

Wednesday 27th October 2021 General Committees

[Paul Scully]

These are an extension of the existing provisions, which are specifically for covid-related debts.

The third and final criterion is that a company winding-up petition cannot be presented in respect of commercial rent until the end of March 2022. I should say that the point of the petition is not to stop companies that have accrued debt being wound up; it should be to allow the creditor the full rights to be able to do so. We are trying to give temporary relief to businesses that are otherwise hard-pressed, specifically because of the pandemic.

The Committee will be aware that the Department for Levelling Up, Housing and Communities has announced an extension of the moratorium on the forfeiture of commercial tenancies until 25 March 2022. That is to allow time for the implementation through primary legislation of a rent arbitration scheme to help industry deal with the significant amount of commercial rental debts that have accrued during the national restrictions period.

The restrictions in the commercial rent arrears recovery scheme have been similarly extended. That measure serves not to undermine the proposed rent arbitration scheme before it is implemented, so commercial landlords will continue to operate under the previous restrictions for petitioning to wind up a company in respect of debts until the end of March 2022. We recognise that that measure might mean a further period of uncertainty for commercial landlords, who themselves might be struggling as a result of the pandemic. However, the rent arbitration scheme will deliver certainty to both the landlord and the tenant, where an agreement to pay down lockdown rent arrears has been unachievable.

[Sarah Champion (Rotherham) (Lab)]

I am looking for clarity. I think the Minister said that this does not cover rent. Is that right? Could he give an example of the sort of debt that would be specific to this new extended legislation? Are we talking about a supplier not paying for goods that they have taken—that sort of thing? How is it proved that it is a covid-related debt under this legislation?

[Paul Scully]

I do not want to pre-empt deliberations on this, but if a business has been closed and is unable to trade, that would be more likely to be eligible. However, the commercial debt that was within the period that we have packaged and kept aside—effectively, from the beginning to the end of lockdown—has been bundled up and will be dealt with in the next set of legislation on mandatory arbitration, which we hope we will not need.

We hope that between now and completion of that legislation a lot of companies will be able to have those conversations between tenants and landlords, knowing that otherwise they will be forced into mandatory arbitration. We want people to be able to settle their own debts and have their own discussions. The rent debts that were accrued during lockdown are ring-fenced for the purpose of that arbitration scheme, but all commercial rents that are owed after 19 July 2021 should be paid in full, as and when they fall due.

In conclusion, these new targeted criteria demonstrate that the Government have listened to the concerns raised about the potential for a cliff edge for insolvencies, once the Government’s regulatory and fiscal support has ended. The new targeted criteria represent a balance between the rights of creditors and the further protections needed by the businesses most affected by the trading restrictions placed on them. The new criteria reinforce the Government’s clear message that discussion is absolutely crucial between creditors and the debtors, who should continue to negotiate where possible. If successful, those negotiations can result in both creditors and debtors achieving the same long-term goals of continued trading, repayment of debts and a return to profits, in turn bringing benefits to themselves, their employees and the wider economy. I commend the regulations to the Committee.

Question proposed,

That the Committee has considered the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) (No. 2) Regulations 2021 (S.I. 2021, No. 1091).—(Paul Scully.)

--- Later in debate ---

[Sarah Champion]

I do not know about these sorts of courts. I know about all the other courts, which have a massive backlog at the moment. Has the Minister estimated how long it would actually take to take this to court, and therefore how realistic the timeframe of the instrument is?

[Paul Scully]

Not in terms of the court cases themselves, but it is about the issuing of winding up. If someone starts issuing demands and then winding-up petitions, that blows a hole in the confidence of other suppliers and customers for businesses. It is the process of the petition itself, which can be done with paperwork, rather than the court hearing, which may come some way down the line, that is really key in the protection here. That is why we need to get it operative very quickly. We have all highlighted the importance of tapering the effects of the instrument, and ensuring that businesses can trade with confidence, and the certainty that we are living with covid.

UK Steel Sector: Supply Chains

Sarah Champion Excerpts

Wednesday 9th June 2021 Westminster Hall

[Sarah Champion (Rotherham) (Lab) [V]]

It is always a pleasure to serve under your chairmanship, Sir Graham. I am very frustrated that we are here once again; I hope my speech will explain why. The British steel industry has huge potential, but the long-term failures of the Government to address the underlying issues continues to hold it back. Since I was first elected in 2012, steelworkers in my constituency have faced a seemingly endless cycle of crises with lingering uncertainty, not only for them but for all those throughout Rotherham, where the local economy and people’s livelihoods depend on the sector. That uncertainty has continued with Liberty’s announcement that it is selling its speciality steels division, which includes the narrow strip mill at Brinsworth in my constituency.

Throughout the recent difficulties at Liberty, the Government have promised much but, to date, delivered little in the way of practical support. That cannot continue as the sale progresses. Any sale must safeguard the long-term future of the plant and must hold Sanjeev Gupta true to his word that no plant will close on his watch. Liberty must run a transparent sales process and engage with all concerned parties, including the trade unions. The Government must carefully scrutinise any deal and ensure that it includes clear safeguards for the future of both the plant and the steel jobs. They are crucial assets to our economy and they cannot be lost as the result of a fire sale to secure finances for GFG’s other businesses.

While the sale of speciality steel is concerning, Liberty’s ongoing commitment to its Aldwarke plant in Rotherham is encouraging. The plant can lead the way in our drive to decarbonise our steel industry. Decarbonisation presents challenges but also offers huge opportunities to grow our economy and create new green jobs, but that would take sustained support from the Government and a viable long-term plan—something that, to date, has been lacking.

I urge the Government to recognise this opportunity to work with the industry to create the greener future we all want to see. None of that can happen while the Government continue to shy from confronting the sector’s underlying issues—issues that are well understood, but remain unaddressed. The Government had long argued that EU rules prevented state aid for the steel sector. Those rules no longer apply, and it is high time that the Government developed their own system to regulate subsidies and support investment.

The public sector is British Steel’s largest single customer. Tendering processes must consider the impact on domestic jobs, as already seen in France and Germany. I see no reason why this Government’s procurement process cannot favour UK-produced steel, not least because it is the best in the world.

With British Steel paying an average of 86% more for electricity than its competitors in Germany, action on damaging high energy costs is essential if the industry is to hope to compete on an even footing. We must also defend our industry from being overwhelmed by cheap foreign imports. It is deeply disappointing that the Trade Remedies Investigations Directorate is arguing to slash safeguards on nine out of 19 product categories, which runs the risk of cutting the industry off at the knees. I urge the Secretary of State to reject its recommendations.

The steel industry can have a bright future if the Government engage with these issues and work with the industry to provide the support that it needs to grow and thrive. However belatedly, I really hope the Minister will listen and that the Government will act to protect our steel industry.