Steel Industry: Contribution to the UK Economy

Debate between Sarah Champion and Nusrat Ghani

Wednesday 25th January 2023 Westminster Hall

[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.