UK Steel Industry

Stephen Doughty Excerpts

Thursday 17th September 2015 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

It is a great pleasure to take part in the debate. I congratulate my hon. Friend the Member for Redcar (Anna Turley) on securing the debate from the Backbench Business Committee, and for leading it. I also congratulate the chair and vice-chair of the all-party parliamentary group on steel and metal related industries, my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) and the hon. Member for Corby (Tom Pursglove). It is a privilege to follow such passionate speakers.

This matter clearly affects the entire country, but if Members from areas such as Scotland, south Wales and Scunthorpe will forgive me, I shall focus on Teesside. Let me begin by saying something that relates to what was said earlier by my hon. Friend the Member for Middlesbrough South and East Cleveland about the Under-Secretary of State for Communities and Local Government, the hon. Member for Stockton South (James Wharton)—the “Minister for the northern powerhouse”.

I was a little reluctant to be too critical of the Minister, having heard what was said by the hon. Member for Brigg and Goole (Andrew Percy) about Ministers being busy. They are busy, and we should not forget that. People may also be ill: there are all manner of reasons why they sometimes cannot be here. However, when I hear of a tweet from the Minister saying that his Teesside colleagues are here in the Chamber “showboating”, I think that it is an absolute disgrace. It is about time that that Minister grew up and started to pay attention to some of the serious issues that affect his constituents and mine, and those of my hon. Friends from Teesside.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I am reluctant to do this, but I think it important for Members to know what has been said in the course of the debate. The Minister who has been mentioned was responding to an ITV journalist, and what he said was this:

“On my way up to Teesside actually doing things rather than showboating.”

That is in stark contrast to the approach of the Minister who is present today, and with the approach of other Conservative Members who are present today and who, to their credit, are standing up for the industry. I think my hon. Friend will agree that it is not appropriate language to use about a parliamentary debate.

[Andy McDonald]

I agree entirely. Let us move on and deal with the substantive issue rather than dwelling on that matter.

--- Later in debate ---

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

I would like to put on record the fact that it I am delighted to be able to participate in the debate today, having been one of the lead Members to make representations to the Backbench Business Committee, along with the hon. Member for Redcar (Anna Turley). I would like to thank all those who supported the application, and all those who are attending and contributing today. I, too, am glad to see that we have a Minister here today who is listening to us on this issue.

I know all too well the challenges facing the steel industry. Tata Steel’s Clydebridge plant lies in my constituency, and its sister plant, Dalzell, is in the neighbouring constituency of Motherwell and Wishaw. Those two plants are part of the Tata Steel long products business.

As many Members will be aware, the history of the steelworkers industry in Scotland, in particular in north and south Lanarkshire, is extensive. The Clydebridge steelworks was first opened in 1887, and throughout the years it has had the status of being one of the giants of industrial Scotland. The steel plates it made were used in many of the most famous ships ever built, such as the Lusitania, Mauretania, Queen Mary, Queen Elizabeth and the QE2.

From 1786 to 1978, the Clyde ironworks lay adjacent to Clydebridge and supplemented the work of the steelworks. In the Clyde ironworks, the hot-blast process was invented in 1828 by James Beaumont Neilson. This one invention led to a rapid increase in iron manufacture, and the growth of industries made Scotland a world leader in manufacturing.

Established under the Iron and Steel Act 1967, nationalisation tried to rationalise steel production and made the biggest changes to the British steel industry ever seen. Some 90% of UK steelmaking came together under the one single business, the British Steel Corporation.

Clyde ironworks was to be enlarged, and this led to the establishment of the Ravenscraig steelworks in 1954. It was based in Motherwell and had the title of being the steel capital of Scotland, and the skyline was dominated by the gas holders and cooling towers of the plant. Ravenscraig became the heart of the nationalised industry’s Scottish operations and produced its own iron in blast furnaces fuelled by Scottish coal. Iron ore was imported via a purpose-built pier terminal at Hunterston, and lime flux came from its own works in Westmorland. Ravenscraig became western Europe’s largest producer of hot-strip steel and produced slab steel for the Dalzell works, which is still there today.

On the watch of Margaret Thatcher’s Conservative Government, British Steel was privatised in 1988, a move that has left a legacy of decimation. With the privatisation came high manufacturing costs, the free market, overseas competition and a downturn in shipbuilding. This led to the closure of Ravenscraig in 1992, ending the large-scale steel making industry in Scotland. That was widely regarded as one of the biggest social and economic disasters to have ever occurred throughout the UK, and the steel industry has never been able to recover from this hammer blow.

The closure resulted in the loss of 770 jobs and another 10,000 jobs directly and indirectly linked. Ravenscraig at one point was regarded as the largest brownfield site in Europe. Fortunately, however, the Dalzell and Clydebridge plants have remained in operation under the ownership of Tata Steel Europe.

The UK steel sector currently employs about 20,000 people directly, which is just a tenth of the number who worked in it during the 1970s. Tata currently employs around 17,000 of them, down from 25,000 in 2008.

When Tata Steel suffers, the UK steel industry suffers. Tata Steel posted a pre-tax loss of £768 million in the year to the end of March, double that of the previous year. Its revenues fell, down 7.3% to £4.2 billion, and production was down to 8.2 million tonnes, due to “operational issues” at plants. Tata Steel’s liquid steel has this year declined by 2.5%.

Tata’s European branch took a heavy hit when its Indian branch lost £314 million from restructuring and impairments. Tata Steel has been slashing costs since 2007, and 1,000 staff and agency jobs have been lost since last year alone. It has been stated that these losses have been the result of high taxes and energy costs, the strong pound and cheap Chinese imports, along with other external factors.

The Chinese Government have devalued their domestic currency several times throughout the year and this move has improved the competitiveness of Chinese exports. About half of the 1.6 billion tonnes of steel made worldwide each year comes from China, which is now exporting around 100 million tonnes a year as its economy slows.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I pay tribute to the hon. Lady for securing this debate, along with other Members, and she is making a powerful case for her constituents. It is important, however, that we look at the role Governments play in procurement. She talks about Chinese exports and Chinese steel, but did not the Scottish Government choose Chinese steel to build the new Forth road bridge? Has she made any representations to her own colleagues in Holyrood about that crucial issue, because this is an issue for all of us in Governments across these islands?

[Margaret Ferrier]

The hon. Gentleman is incorrect. There was a bid process, and that was the result. [Interruption.] Yes, the Chinese won that process.

--- Later in debate ---

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Let me start by thanking the Backbench Business Committee for granting this important debate and enabling Members across the House to stand up for steelmaking across the UK. I thank the hon. Members for Corby (Tom Pursglove) and for Rutherglen and Hamilton West (Margaret Ferrier) and, most particularly, my hon. Friend the Member for Redcar (Anna Turley), alongside other Members from all parties, for working so hard to secure the debate. I also thank Roy Rickhuss and his team at Community union for their work. I thank Paul Simmonds, the Community representative at Celsa in my constituency, and all those in UK Steel and other bodies that are standing up, making the arguments and supporting us all in our efforts to secure a sustainable future for steel in this country.

This debate comes at an absolutely crucial time for the steel industry and for the country. As Community has said, we are at an historic crossroads. Decisions taken in the months ahead by the Minister and others in the Government will be crucial in determining whether there is a sustainable future for steel in this country. From Shotton to Cardiff, from Skinningrove to Llanelli, from Scunthorpe to Middlesbrough, and from Newport to Redcar, steel producers are facing clear and present dangers that show no sign of abating.

I want to pay tribute to a number of outstanding contributions made in today’s debate. My hon. Friend the Member for Middlesbrough (Andy McDonald) spoke powerfully about the potential risks that the current challenges pose not only to the steel industry on Teesside, but to incredible projects such as the Teesside Collective. I attended a meeting with the Teesside Collective the other day, and the work it is planning to pioneer in carbon capture and storage could be seriously at risk. The hon. Member for Corby spoke about the history of steelmaking in his constituency and its importance to his constituents.

My hon. Friend the Member for Newport East (Jessica Morden) spoke powerfully about the constructive role that workers in plants across the country have played at a very difficult time for the industry, and she spoke about the reality of job losses and relocations and the impact on families and individuals.

My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) made an outstanding speech that was powerful, passionate and personal and drew upon his own experience. We can be very factual in this Chamber, as we should be at times, but sometimes it is important to hear the passion and frustration that so many of us feel that these issues, which need to be dealt with urgently, are continuing unabated. We also heard a powerful speech from the hon. Member for Brigg and Goole (Andrew Percy). I am glad he agrees that we should bring forward the energy intensive industries scheme in full.

In an excellent speech, my hon. Friend the Member for Hartlepool (Mr Wright), the Chair of the Select Committee, made the key point that manufacturing matters to our economy and that these foundation industries are absolutely crucial. He rightly praised the Minister for the work that she has undertaken, but challenged her in some areas. He rightly praised the co-operation of trade unions and their members and their effort in trying to stand up for communities and workers across the country.

It would be unfair not to praise the excellent opening speech by my hon. Friend the Member for Redcar, who made a powerful case for the impressive projects that the Teesside steel plant has supported and described the deep difficulties that are facing the SSI plant in her constituency. In highlighting some of the crucial factors, she talked about the £431 million a year cumulative disadvantage for the UK steel industry. That is fundamental to this debate. We have to deal with those disadvantages to move forward.

My hon. Friend the Member for Scunthorpe (Nic Dakin) made an excellent speech in which he paid a powerful tribute to his local workers. My hon. Friend the Member for Neath (Christina Rees) also spoke, as did my hon. Friend the Member for Aberavon (Stephen Kinnock). Steelmaking is at the heart of his constituency, as in mine. He made an important point about the contribution that steel makes to defence and the importance of resolving the issues of state aid.

We also heard important contributions by my hon. Friend the Member for Newport East, my hon. Friend the Member for Ogmore (Huw Irranca-Davies), my hon. Friend the Member for Bishop Auckland (Helen Goodman), and the hon. Member for Motherwell and Wishaw (Marion Fellows), among others.

I want to turn to the comments made by Scottish nationalist party Members—the hon. Member for Rutherglen and Hamilton West, the hon. Member for Motherwell and Wishaw, and the hon. Member for North Ayrshire and Arran (Patricia Gibson). [Interruption.] They are saying “Scottish National party”. I know that is its formal title, but it is a nationalist party, as its Members state themselves—a separatist party. Although I am glad that they share the consensus of concern across this House, and that they are here with us to express that, it is also important—I say this to the Government in Wales as well—that there is a consensus of responsibility among all Governments across these islands, including the Scottish Government.

Unfortunately there is a tendency for Scottish National party Members always to be blaming somebody else—it is always somebody else’s fault. On the Forth Road bridge—

[Marion Fellows]

Will the hon. Gentleman give way?

[Stephen Doughty]

I will in a moment, but let me make this point.

On the Forth road bridge, it is important that we deal with the facts. The fact is that if the Scottish Government had applied for the community benefit clauses as they originally could have done in the procurement process, it is possible that the work could have gone ahead with UK companies—Scottish Steel and SSI—involved early on. Instead, it went off to the Chinese, the Spanish and others. Now, eventually, some of the steel is being made in Scotland and on Teesside, and I welcome that, but it is important that Governments across the UK—

[Anna Soubry]

They should practise what they preach.

[Stephen Doughty]

I absolutely agree; that applies to the UK Government as well. It is important that the Scottish Government take full responsibility. I am glad that Community is seeking a meeting with the First Minister of Scotland and with the Welsh First Minister, Carwyn Jones, because it is important that we work on this together across the country .

[Marion Fellows]

Does the hon. Gentleman agree that it is a real pity that he is summing up this entire debate with an attack on the Scottish Government, given that there had been consensus? Members of the APPG and the Scottish National party have worked really hard to get this debate. Will he apologise?

[Stephen Doughty]

No, I will not, because it is entirely right that in this Chamber we scrutinise all comments made. As I said, it is wonderful that we have a consensus of concern, but we also need a consensus of responsibility. I am not going to shy away from raising concerns about Governments across this country. I will turn to the UK Government now.

After I was elected in November 2012, one of the first issues I raised with the Government was the high energy prices facing energy-intensive industries, including steel. Since then, Ministers have come and gone, but the fundamentals affecting the industry remain, and are advancing unabated. Whether it is energy prices, taxation, foreign dumping, uncertain future ownership, or a lack of clarity in the UK’s industrial and infrastructure strategies, which I raised with the Secretary of State in BIS questions yesterday, warm words at various stages have not, I am afraid, been matched with sufficiently robust or urgent action. The coming months are absolutely critical. Action by this Government will define whether steel has a sustainable future.

I say in all sincerity that I welcome the Minister’s actions on the anti-dumping measure—I hope she will take action on further such measures—as well as the constructive way in which she has approached dialogue with steel MPs and their constituents and the way she has talked about a whole series of issues. I understand that she is to visit China. I would be interested to know what she will raise during that visit and what she expects to get out of it. These are all welcome steps.

However, I must say to the whole Treasury Bench—the Prime Minister, the Chancellor, the Business Secretary and others, not just this Minister—that the time for delay is over. If there is one thing we must leave this debate with, it is the need for urgent action. We cannot delay for months and years into the future. This crisis has been building up for the past 18 months to two years, or even longer, and we have to take action now.

Let me turn to the key issues that I want the Government to address. First, on energy compensation, while I firmly believe we must drive a responsible and urgent transition to a low-carbon economy, it is completely counter-productive if we pursue policies that result in carbon leakage and higher carbon emissions globally. That simply offshores the issue to other countries. That is particularly important in relation to companies such as Celsa in my constituency and SSI, which are pioneering some of the most environmentally and energy-efficient policies and processes. It is unacceptable that that could eventually end up being offshored to places such as China.

Energy prices for UK steel producers can be more than 50% higher than for our main European competitors. While other EU countries, including Germany and France, are providing additional help to their energy-intensive industries to level the playing field, we have not had the same clarity from this Government. The Chancellor announced that he would bring forward part of the energy compensation package for steel and energy-intensive industries, which is waiting on state aid clearance. However, as UK Steel has said, the steel industry in this country is still paying 70% of the policy cost that that package sought to address. No doubt the Minister will say that the Government are providing millions of pounds in exemptions related to the taxes and levies, but the fact is that in 2015 the steel industry will pay a record level of taxes and levies. Will she confirm whether mitigating measures can be brought forward immediately, as many Members have asked? What discussions has she had with the Chancellor and the Prime Minister about reviewing the entire regime, which gets to the absolute nub of the issue? Are there other exemptions that can be considered in VAT and other areas?

Secondly, there are the foreign threats. We have heard about the massive increase in the import of unsustainably produced carbon rebar and other products over the past two years, of which Ministers are well aware. Over-production and dumping are at the heart of the issue. As I said, I will be interested to hear what the Minister hopes to achieve in China. Many non-EU countries such as China and Turkey are increasing their market share, often using anti-competitive practices with scant regard for environmental standards. I want to hear more from her on that.

UK steel companies are subject to business rates that are much higher than those paid by competitors in other European countries—in some cases up to 11 times more. What does the Minister propose to do about that? What discussions has she had with the devolved Administrations? We cannot simply wait for the wider business rates review; is there action that can be taken now?

I draw attention to the charter for sustainable British steel, launched by UK Steel and other producers, and urge support for its straightforward and very reasonable demands. Where does the Minister stand on that? Are the Government supporting it? We have heard some warm words, but can we have categorical assurances?

It is important to look at all ongoing construction and redevelopment projects. I hope that the parliamentary authorities are thinking about the steel that is being used in reconstruction and building projects here. Madam Deputy Speaker, will you pass on that message to the parliamentary authorities?

Any one of the issues raised by me and other hon. Members across the House is enough to put serious strain on any business. The Minister should be left in no doubt that the risks are real and the threats to the British national interest are intensifying. The UK steel industry needs a crucial injection of confidence, urgent and robust action, and ultimately crisis support if necessary, but let us hope that we do not get to that point.

Steelworkers and their families do not want special treatment. They do not want to posture or erect barriers to free trade in an increasingly globalised world, or to protect the industry from fair competition; they simply want to level the playing field. It is worth bearing in mind that the UK steel industry and its associated metal sector encompasses more than 24,000 enterprises, which directly employ 330,000 people and are worth more than £45.5 billion to the UK economy. If that capacity is lost, it may be lost for ever, with dark consequences not only for the employees and our communities and economy, but for our critical infrastructure and construction supply chains. The time for action is now.