Steel Industry

Stephen Doughty Excerpts

Wednesday 14th January 2015 Commons Chamber

[Mr Wright]

My hon. Friend is right. I would like to class him as a good friend, and I take great pleasure in pointing out that West Hartlepool was a thriving industrial port at a time when his area was just sand dunes. I appreciate, however, that his area was later nicknamed “Ironopolis” and was an important part of the iron and steel industry in the 19th century. He makes an important point—why would we remove assets, both physical and intangible? Why do we not exploit the real talents that lie within the trade union movement and the work force to ensure that we have a real future for the steel industry?

With regard to the ownership of the long products division, the Government say, “Let the market decide”. However, they are intervening in other areas, producing an uneven playing field for British-based producers, to the detriment of the UK steel industry’s competitiveness. Nowhere is that more acute than in the field of energy costs, as has been pointed out time and again, including by my hon. Friends the Members for Alyn and Deeside (Mark Tami), for Middlesbrough South and East Cleveland, for Scunthorpe, for Newport East (Jessica Morden) and for Llanelli (Nia Griffith).

The future of the steel industry should prioritise low carbon and sustainability, and the task of an industrial policy is to assist the sector in the transition. It should not happen in a way that forces UK steel producers out of business or away from these shores. We should not get into a ludicrous situation where there are higher global carbon emissions because we are importing more and more of our steel requirements from countries with reduced regulation.

Steel costs more to manufacture in the UK than in European neighbours, often by as much as 25% to 50%, because the French and German Governments have prioritised the steel industry as being vital for manufacturing, have not imposed cost burdens on it and have worked to mitigate any pressures quickly. In contrast, the UK Government’s response has been half-hearted and slow, reflecting the lack of priority that they give to the steel industry.

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

Does my hon. Friend agree that it would be an absolute absurdity were steel production to end up being offshored to places such as China, where processes are far less carbon-efficient and carbon emissions will be higher, and where there are serious concerns about quality standards and environmental degradation?

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[Stephen Doughty]

I am slightly disappointed by the Secretary of State’s painting of this rosy picture that the Government are doing everything listed in the motion. Certainly from conversations I have had with his Department, Ministers and others, including with the steel industry in my constituency, I am aware of a cautious, sit-back approach. Letters I have received identify that, particularly in respect of action taken at the European level. When was the last time the Secretary of State raised with the European Commission the issue of countries such as China and Turkey dumping into UK markets?

[Vince Cable]

When I was in Brussels a few months ago—I do not recall the exact date—I was actively pursuing the issue of speeding up state aid clearance and I have certainly actively raised trade policy issues. We support the principle of the European Commission acting—if evidence can be acquired. As the hon. Gentleman will know, getting anti-dumping action and countervailing duty action by the Commission is not easy. Proof has to be established, but we are pressing where unfair practices can be established.

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

The steel industry has a proud history in Cardiff South and Penarth, particularly in the community where I live: Splott and Tremorfa. Although East Moors steelworks was closed in 1978, Cardiff remains a major centre for steel production, especially the reinforcing bar that is used in construction and infrastructure projects—such as Crossrail—across the UK.

I am proud that my constituency is home to Celsa Steel, a family owned company. It has an EU-wide footprint with 7,000 directly employed workers and more than 30,000 indirect employees. That company puts sustainability at the core of its business plan, using a modern electric arc furnace to process 100% UK scrap, with a melt shop that ranks among the top 10% most efficient in terms of carbon emissions in the EU. I pay particular tribute to the Celsa work force and the constructive working relationship between the managing director of Celsa, Luis Sanz, and his team, including James Ellis, and also to the trade union representatives, including the Community representative, Roy Rickhuss, and the senior representative at Celsa in Cardiff, Paul Simmonds.

There is a united view in the company, and from hundreds of employees who have written to me over the past few months, as well as trade union and local Labour representatives, that much more needs to be done to back the steel industry in Cardiff and across the UK, but warm words must be backed up with substantive action. I praise the Community union Stand up for steel campaign which is being launched today. It could not be more timely.

Let me be clear: Celsa and the UK steel industry are not asking for special treatment; they are asking simply for decisive and urgent action by the Government to level the playing field. They want action not to posture or erect barriers to free trade in our globalised world, or to protect the industry from fair competition, but simply to level the playing field where damaging distortions are growing to our disadvantage. Despite countless representations, meetings and letters to the Secretary of State for Business, Innovation and Skills, the Secretary of State for Energy and Climate Change, the Minister responsible for steel, the Secretary of State for Wales—I am disappointed that he was not here today—and many others, I am sorry to say that to date those have been met with dither, delay, paralysing caution and bureaucratic handwringing.

Let me raise some key issues. The point about energy and compensation essentially boils down to a simple question: would it be crazy if steel rebar currently used in British construction and infrastructure, and made by Celsa in my constituency using state-of–the-art low-carbon technology, was instead produced elsewhere in the world where there is no such regard for emissions or the environment? Other EU countries, including Germany and France, are providing additional help to their energy-intensive industries to level the global playing field, but what has been this Government’s approach? They promised mitigation for the carbon floor price from April 2013, but that was delayed and put in place only from March 2014. Although the Chancellor announced a package of compensation for the renewables obligation in last year’s Budget, as we heard, that is not due to start until April 2016.

We now understand that the Government are heading for a significant underspend in their much-trumpeted £250 million compensation package for the energy-intensive industries in 2013-15. I was intrigued by the Secretary of State’s comments on the real reasons for the delays in the programme. I would be very interested to find out further from the Minister what is really going on. Will the Government urgently reconsider bringing forward the mitigating measures? They are needed and they are needed now.

On foreign imports, rebar from countries such as China and Turkey—this has been discussed—now occupies a third of the market. Non-EU imports have increased tenfold in the past two years. Those are extraordinary statistics. The fact is that many of those products are produced using large amounts of finite raw materials before being shipped to the UK. In contrast, places such as Celsa in my constituncy have an efficient recycling process. We have heard how overall steel imports have risen by a quarter in 2014 and now make up a massive 60% of the UK market. As has been discussed, serious questions are being raised about some of those imports from a quality perspective and a lack of traceability in the supply chain. I believe that the certifying authority for steel products, the Certification Authority for Reinforcing Steels, has been too slow and ineffective in its response to date, and so have the Government. I would like clarity from the Government on this issue.

I want to draw specific attention to the charter for sustainable British steel, which has been launched today by UK Steel and producers such as Celsa. I urge support for its reasonable and straightforward demands, urging consumers in the UK to purchase carbon steel reinforcement from vendors that adhere to the framework standard for responsible sourcing, BES 6001.

Any one of the issues I have outlined is enough to put serious strain on any business. The Minister, and the Ministers involved in this industry, should be left in no doubt that the risks are real and intensifying. They require urgent and robust action from the UK Government. If capacity is lost it may be lost for ever, with dire consequences not only for employees but our economy and infrastructure supply chains.