Steel Industry

Stephen Crabb Excerpts

Wednesday 28th October 2015 Commons Chamber

[The Secretary of State for Wales (Stephen Crabb)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“is concerned by the impact that recent redundancies in the steel sector could have on local communities and welcomes Government support for affected people in those communities; recognises the unprecedented global challenges currently facing the UK steel industry and agrees that all parties, including Government, opposition parties and the industry need to work together to secure a sustainable future for UK steel; and notes that the Government is in regular dialogue with the industry, including hosting a recent Steel Summit, and is taking urgent action to address both the industry's short-term and long-term concerns, including energy costs, unfair trade, the Industrial Emissions Directive and long-term procurement opportunities for the industry so as to ensure that the UK steel industry has a sustainable future.”.

I should perhaps explain to the House that I am responding to this debate on behalf of my right hon. Friend the Secretary of State for Business, Innovations and Skills who is in Brussels right now having urgent and important discussions with European Commissioners to address the crisis that the steel industry faces all across Europe.

I wish to start by saying that I have total respect for constituency Members who represent steel communities and who have come here this afternoon to speak passionately and earnestly on behalf of the workers and their families who are affected by this crisis. What has been really disappointing about the debate so far is the way that the Labour party has tried to turn this into a political football. I look across at the Opposition Benches to the faces of Members who were here before 2010 and I do not recall a single one of them coming to this place and standing up to speak up for steelworkers during Labour’s term of office, when the number of steelworkers in the UK fell by a half and the volume of steel production fell by a half. I think, therefore, that the Labour party needs to show some humility on this issue.

[Several hon. Members rose—]

[Stephen Crabb]

As we debate this crisis today—[Interruption.]

[Madam Deputy Speaker (Natascha Engel)]

Order. I think hon. Members need to calm down a little. If the right hon. Gentleman is not giving way, Members must sit down. If he is giving way, he will say so.

[Stephen Crabb]

I am happy to give way to the hon. Member for Penistone and Stocksbridge (Angela Smith).

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I thank the Secretary of State for giving way. I was in this House from 2005, and Labour Members repeatedly made representations to the then Prime Minister, who listened to what we had to say. Before 2010, we did not have the carbon price floor. It is now damaging the steel industry significantly and this Government are doing nothing about it.

[Stephen Crabb]

I am not going to engage in a tit-for-tat on this. Let us just say that the record of the previous Labour Government on steel and on manufacturing was not a stellar one.

[David T. C. Davies]

Does my right hon. Friend agree that Labour Members ought to do him the courtesy of listening to what he has to say? Does he agree that it was they who started bringing in the carbon taxes that have caused problems for manufacturing and that it is this Government who have tried to hold those taxes down?

--- Later in debate ---

[Stephen Crabb]

As we debate this crisis today, we rightly make the thousands of workers in the steel industry and their families, who have faced devastating news about their jobs, and the many more who are working with the cloud of uncertainty hanging over the industry at this time, the central and primary focus of our concerns. When an individual loses their job, the pressures it creates can be a tragedy for their family and themselves. When whole communities are affected by large-scale job losses, the impact can be devastating—I completely recognise that.

[Nic Dakin (Scunthorpe) (Lab)]

I am pleased that the Secretary of State is now looking forward, because I, along with my colleagues on the other side of the House, have been talking about the needs of the steel industry in our community since being elected to Parliament in 2010. We need to look forward together and work together to build a better future. It just so happens that it is his Government who can make decisions now, not anybody else.

[Stephen Crabb]

I completely take the hon. Gentleman’s points and I pay tribute to the work he does on behalf of his constituents.

[Andrew Percy (Brigg and Goole) (Con)]

I wish to make a similar point to that made by the hon. Member for Scunthorpe (Nic Dakin). Although the Secretary of State is right to point out that the steel industry halved under the last Labour Government, does he agree that it would be a cruel deception for anybody to suggest that the solution to this crisis is wholly in the hands of any one Government, be they the British Government or even the European Union? Does he also agree that the best way forward is to have as much political consensus as we can across the House, just as we do in north Lincolnshire? That is the only way of ensuring that we do as much as possible at the national level and at EU level to deal with a crisis where, sadly, many of the factors are outside the control of any of those Governments?

[Stephen Crabb]

My hon. Friend makes an essential point about two things: the global nature of the crisis, which I shall discuss a little further during my remarks; and the need for political consensus, where it is possible. Opposition Members and Conservative Members who know me from Wales know that that is exactly the kind of approach I like to take, but it does require two sides to play—

[Several hon. Members rose—]

[Stephen Crabb]

I will take one more intervention and then I will make some progress.

[Emma Reynolds (Wolverhampton North East) (Lab)]

Jobs in my constituency are at risk at Caparo in Wolverhampton. I am asking, on behalf of the people there: when did the Government first see the signs of this crisis? Why has it taken them so long to do something about it? Those are the kinds of questions that my constituents are asking, because their jobs are at risk. This is not a party political thing; this is a practical thing about job losses that may be happening in my constituency and elsewhere.

[Stephen Crabb]

There is continuous engagement with the steel industry and there has been for a long time; we have been discussing concerns with the industry since the beginning of the coalition Government in 2010. A Labour Member made the point earlier that this crisis has been around for a long time, but the phenomenon that the hon. Member for Wallasey (Ms Eagle) described as a “tsunami” of cheap Chinese steel is very recent, and it has completely changed the global dynamics of the steel industry.

[Several hon. Members rose—]

[Stephen Crabb]

I am not going to take any more interventions for the time being.

The steel industry across Europe and around the world is in the midst of a crisis, the magnitude of which has not been seen in at least a generation. Chronic global overcapacity has squeezed prices to the extent that the price of certain products has halved in recent times and is expected to fall further still. European demand is still about 30% below pre-crisis levels. The Chinese economy, which has until recently been the driver behind global steel demand, is slowing down. The world is awash with cheap steel looking for markets. For some products, cheap Chinese imports have gone from accounting for 0% of the market to representing 37% of the UK market share within 18 months—that is an extraordinary growth in a very short period. Chinese steel exports roughly doubled between 2011 and 2014. That is the extremely challenging backdrop to the current crisis facing our steelworkers. It has been described as a “perfect storm” in terms of the configuration of different events and phenomena that are affecting the global steel industry, but that is why the Government remain absolutely committed to doing everything in our power to support steelworkers across Britain in the weeks, months and years ahead.

[Geraint Davies]

Does the right hon. Gentleman accept that giving the contract on HS2 to the Chinese will increase the probability that they will use Chinese steel? Moreover, if we had given that contract to a British consortium, those companies would have paid British corporation tax, British national insurance and British income tax, and they would have supported British supply chains and built British capacity for the future. Is not his laissez-faire approach, which has neglected British steel and British industry, at the root of this problem—or a large part of it at least?

[Stephen Crabb]

Forgive me for saying so, but the hon. Gentleman makes a slightly confused point. The investment going into the rail industry is creating opportunities, now and in the future—huge opportunities for the UK steel industry. The Government are determined to help the UK steel industry take advantage of those investment opportunities.

[Mr Kevan Jones]

Will the right hon. Gentleman give way on that last point?

[Stephen Crabb]

I will take an intervention later.

We are providing support for those communities and families who have been affected by recent announcements. In Redcar, we have outlined a support package worth up to £80 million. We are working with the local taskforce we have established to develop proposals to support the individuals, the local economy and the supply chain. It is worth making the point that this is not a Whitehall, top-down solution; our commitment is to work with local partners to develop the right solution for those workers, their families and the communities. In Scunthorpe, we have set up a local taskforce to look at what needs to be done to support those affected and the local economy. Funding of up to £9 million has been provided to the Scunthorpe taskforce—

[Mr Kevan Jones]

On a point of order, Madam Deputy Speaker. I thought we were having a debate on steel today, but what we have is a Minister just reading out a civil service brief to the House. It is an absolute insult that he will not take any interventions. I know that BIS is not his own Department, so he might not understand the subject but surely the Government should have sent somebody who knows something about the subject rather than someone who is simply reading out what the civil service has given him.

[Madam Deputy Speaker (Natascha Engel)]

I think the hon. Member has put his point on the record. Let the Secretary of State continue.

[Stephen Crabb]

Madam Deputy Speaker, the hon. Member for North Durham (Mr Jones) was one of those Members I mentioned earlier who were here before 2010 and sat in silence while employment and manufacturing plummeted and UK steel production plummeted.

Moving on, we are also supporting the Scottish Government’s taskforces in Dalzell and Clydebridge. We will work with them and also continue to monitor the situation in the black country to make sure that necessary support is provided for communities and families affected by the Caparo Wire announcements.

The House understands that there are no easy solutions in the face of what are, unquestionably, incredibly difficult market conditions right now. Excess capacity in global steel is enormous—about 570 million tonnes last year, almost 50 times the UK’s entire annual production. The price of steel slab has fallen by a half in the past year alone, while fluctuating exchange rates have added further pressures.

[Tom Blenkinsop]

The right hon. Gentleman makes an interesting point about production, but what we have in the home UK economy is 3 million tonnes of scrap steel, which we export to Turkey and China, and it comes back here in slab. Will the Government look at developing a potential strategy for electric arc furnaces on sites such as Redcar to use to create a new home market to supply the British market rather than exporting to Turkey and China?

[Stephen Crabb]

That is a useful and constructive point. It is, of course, the model that Celsa Steel uses in Cardiff. At the moment, we are looking at all aspects of the steel industry to identify future growth opportunities.

[Mr David Hanson (Delyn) (Lab)]

The Secretary of State talks about what he cannot do, so can he talk about what he can do, which is in the area of procurement? What proposals do the Government have to procure British steel products in the next 12 months to keep this business open and flourishing?

[Stephen Crabb]

I am coming on to exactly those issues. We all have to acknowledge and be honest about the fact that there are limits to what we can do in response to the economic realities facing the steel industry. I see Opposition Members shaking their heads, but I make the point again—they need to step back and be honest about the realities of a global steel crisis that is affecting steel manufacturers across north America and all across Europe.

[Nick Thomas-Symonds (Torfaen) (Lab)]

I grew up in a steel-working family and have constituents who work in Llanwern. Will the right hon. Gentleman accept what is being said to me—that there is not an acceptance that the Government have done enough? There are social as well as economic consequences. There are huge problems in the global steel industry currently, but is this not the very moment for protecting our foundation steel industry and keeping it for the future?

[Stephen Crabb]

I do not disagree with the hon. Gentleman’s point. That is exactly why my right hon. Friend the Business Secretary is talking to European Commissioners right now and exactly why we have set up a programme of working groups to look at all aspects of how the UK steel industry functions to identify future growth opportunities and help the UK industry to take advantage of them. Where we can, we want to protect, as the hon. Gentleman describes it, the foundation of a strong UK steel sector.

We cannot influence the price of steel and we cannot fix foreign exchange rates. The rules governing state aid to the steel sector are very strict. The UK steel industry signed up to those state-aid rules for a very good reason: the rules help secure a level playing field for UK steel within Europe. Within those strictures, we have done—and we are doing—all we can to help the steel industry at this very difficult time.

[Mr Peter Bone (Wellingborough) (Con)]

I am grateful for the way in which the Secretary of State is conducting his speech and not making party political points. That is good news.

On this specific point, the Government believe they can introduce compensation; the Prime Minister said that from the Dispatch Box today. If we believe that is within state-aid rules, let us just get on and do it—even if the European Union says no. We can worry about that consequence afterwards.

[Stephen Crabb]

We are pushing for a quick decision on the state-aid decision. Labour Members have referred to the German example. I have looked at it: Germany had a pre-existing scheme set up. When the new state-aid rules kicked in, that prevented other European countries from implementing a scheme on their own prior to seeking state-aid rules. That is why we have gone to get state-aid approval prior to bringing forward the compensation package.

[Stephen Doughty]

rose—

[Stephen Crabb]

The hon. Gentleman represents a steel constituency, so I give way to him.

[Stephen Doughty]

The Secretary of State is well aware of these issues, as I raised the issue of state-aid clearance with him and Celsa on 11 November last year. Will he confirm whether the state-aid clearance for the steel industry, which the Government say has been a top priority, has actually been at the top of the UK Government’s state-aid clearance priorities at any point in the last 12 to 24 months—and is it now? It is all very well talking about what the Secretary of State is doing today, but has that been at the top of the priority list for the last 12 months?

[Stephen Crabb]

We have absolutely been pushing for state-aid clearance on this. It is really important. As my right hon. Friend the Prime Minister made clear today, as soon as that state-aid clearance is given, we will start paying the compensation to steel companies. It is worth pointing out that we have already paid out £50 million to a number of steel companies to compensate them for additional energy costs arising from environmental and climate change policies, a lot of which were imposed by a previous Labour Government.

[Several hon. Members rose—]

[Stephen Crabb]

We are taking action to tackle unfair trading practices. We have already supported and voted for the renewal of anti-dumping measures at an EU level and lobbied for an investigation into cheap imports of reinforcing steel bar. We lobbied the EU because the steel industry raised its concerns with us; when the industry provides us with evidence, we act on its behalf. We will continue to do that by pressing the European Commission for firmer, faster action against unfair trade practices, and that is exactly what my right hon. Friend the Secretary of State for Business, Innovation and Skills is doing at this moment in Brussels.

[David Mowat]

A few moments ago, my right hon. Friend referred to the pre-arrangements in Germany, by which its steel industry pays 4p for a unit of electricity and its consumers pay between 10p and 15p a unit. That was pre-arranged, but it cannot be right that the state-aid rules do not apply to those circumstances, while everything we try to do falls foul of those rules. That simply cannot be right; it may well be an EU rule, but it is not adequate.

[Stephen Crabb]

I agree with my hon. Friend about the price differential. We recognise that very significant differential, and we are determined to take action, but I do not agree that we fall foul of state-aid rules all the time. We are committed to doing what we can within the rules, to which not just the British Government but the UK steel industry have signed up.

[Sammy Wilson (East Antrim) (DUP)]

If we go down the road of looking for EU approval for changes to state-aid rules, does the right hon. Gentleman accept that the situation will not be resolved quickly? When it came to corporation tax in Northern Ireland, it took four years, and when it comes to the aggregates levy, we are still fighting on the issue after eight years. Does he accept that by the time the EU gets round to making a decision, the steel industry is likely to be well gone?

[Stephen Crabb]

I do not accept that the European or the British steel industry will be “well gone”, to use the hon. Gentleman’s phrase, but I think he is right when he talks about the length of time it takes to get state-aid clearance on these issues. This is one aspect of the overall issue that we are pushing for. My right hon. Friend the Minister for Small Business, Industry and Enterprise has had some discussions about this herself. This is a matter on which we are determined to take action—and not with respect only to the issue of state-aid approval that we are seeking at the moment, because we are concerned about the overall process for speeding up state-aid applications generally.

My right hon. Friend the Prime Minister discussed this issue with President Xi of China during the important state visit last week. President Xi recognised the UK’s concerns and will be taking action to address Chinese overcapacity. The working group on international comparisons in the steel industry, chaired by the Minister for Small Business, Industry and Enterprise, met last week and is looking at how we can speed up cases within the EU by working with other member states facing similar issues and working with the industry to speed up its provision of evidence on dumping, which would mean that we could then take action.

[Andrew Gwynne]

rose—

[Stephen Crabb]

Secondly, we are addressing the impact on intensive energy users such as the steel industry of policies to reduce the negative impacts of climate change.

As I said a moment ago, we have already given more than £50 million of support to the steel industry. We were the first EU country to pay compensation for indirect costs of the EU emissions trading system to energy intensives in 2013, we started to pay compensation for the costs of the carbon price support mechanism as soon as the European Commission gave state clearance in 2014, and we exempted the metallurgical industry from the climate change levy in the same year. As my right hon. Friend the Prime Minister has announced, we will provide further compensation for climate change policies, with payments starting as soon as state aid is approved and continuing throughout the current Parliament.

[Andrew Gwynne]

Will the Secretary of State give way?

[Stephen Crabb]

The hon. Gentleman has been very persistent, so I will.

[Andrew Gwynne]

We must remember that behind all this are communities, and individuals living in those communities, who are facing a very uncertain future. Will the Secretary of State take this opportunity to dissociate himself and the Government from the views of his noble Friend Lord Heseltine, who has said that now is as good a time as any to lose a job? Is it not time that he found himself a different job too?

[Stephen Crabb]

I have no idea what comments the hon. Gentleman is referring to, but I do know that the noble Lord whom he mentioned has a track record of regeneration, winning support for UK industries, selling UK plc around the world and driving up growth in some of the most deprived parts of the UK to which not a single Labour Member could aspire.

All energy-intensive industries will benefit from the compensation at the earliest opportunity, and we are working with the Commission to gain approval quickly for proposals to provide additional relief for the impact of indirect low-carbon energy policy costs. The Business Secretary spoke to the Commissioner last week, and, as I said, he is in Brussels again today to make the need for urgency clear to our colleagues there. Once they are in place, these measures will save energy-intensive industries such as the steel industry hundreds of millions of pounds over the next five years.

Thirdly, we are determined to drive up the number of public contracts won by UK steel manufacturers and their partners through fair and open competition. In the last Parliament, we successfully renegotiated EU procurement rules to allow wider social and economic considerations to be taken into account, and we were the first country to put those new rules into action in February 2015.

We have identified more than 500 infrastructure projects and programmes, valued at over £400 billion and listed in National Infrastructure Pipeline, to help the industry to plan for and win contracts. Those contracts include Crossrail, which we are building with more than 50,000 tonnes of British steel, and HMS Queen Elizabeth, for which Tata provided 40,000 tonnes. We are currently embarking on the biggest programme of investment in our railways since Victorian times. Network Rail’s £38 billion, five-year investment and replacement programme includes demand for British steel worth billions of pounds, and Network Rail sources 95% of its steel from the UK.

[Mr Kevan Jones]

Will the Secretary of State give way?

[Stephen Crabb]

I will give way one last time, because I know that the hon. Gentleman likes talking about these issues.

[Mr Jones]

I thank the Secretary of State for finally giving way. The Department for Business, Innovation and Skills is sponsoring a £200 million contract for a new polar research vessel. I know that his Department is not involved, but can he guarantee that the ship, which is to be built in Birkenhead, will be produced with British steel?

[Stephen Crabb]

As I think the hon. Gentleman knows, I have had no sight of the details of that issue, but I shall try to find an answer for him by the end of the debate.

The steel procurement working group chaired by my right hon. Friend the Minister for the Cabinet Office met representatives of UK Steel last week to work out what steps need to be taken to ensure that Government projects use as much British steel as possible, and that includes considering the feasibility of more central procurement.

On 16 October, we hosted a summit with the key players from the UK steel industry to discuss where more progress could be made. The summit, which brought together industry leaders, trade unions, Members of Parliament and senior figures from the Government, created a framework for action that will help us to support steelworkers now and in the future. Progress needs to be made quickly, but we also need to find the right solutions rather than just rushing into action.

[Several hon. Members rose—]

--- Later in debate ---

[Stephen Crabb]

We have working groups from the summit who will now supply evidence and recommendations to the Department for Business, Innovation and Skills. The subjects will include driving up the number of public procurement contracts won by UK steel manufacturers, the lessons that can be learnt from other countries in the EU and beyond—

[Several hon. Members rose—]

[Nic Dakin]

Minister!

[Stephen Crabb]

—and what more the Government can do to boost productivity and help steel manufacturers to cut production costs.

[Nic Dakin]

Minister!

[Stephen Crabb]

The UK’s steel industry is part of the foundation of many of the nation’s great, world-beating supply chains—

[Nic Dakin]

Minister!

[Madam Deputy Speaker (Natascha Engel)]

Order. The Secretary of State has indicated that he is not giving way. Shouting “Minister!” from a sedentary position is not going to help anyone.

Let me also say that Members who are included in a very long list of speakers and who make constant interventions will not be called. We shall not be able to fit everyone in as it is, but if the interventions are kept to a minimum, we may have a chance of getting a little way down the list.

[Stephen Crabb]

This is a very important debate, and loads of Members want to speak in it. I think that I have been quite generous with interventions, and I shall now bring my remarks to a close.

As I was saying, the UK’s steel industry is part of the foundation of many of the nation’s great, world-beating supply chains: automotive, aerospace, construction and energy, to name just four. The Government therefore remain committed to a healthy and growing steel industry in the UK. That is essential if we are to increase productivity and thereby raise standards of living for everyone in the country. However, during what is an extremely difficult time for the UK steel industry, we must do as much as we can to support the families of those affected by these changes, as well as supporting the UK steel industry, here and abroad, so that it can compete on a level playing field.

[Madam Deputy Speaker]

Before I call the hon. Member for Livingston (Hannah Bardell)—on whose speech a time limit will not be imposed—I must inform Members that there will be a time limit of four minutes for Back-Bench speeches. I hope that that will enable us to get everyone in.