UK Steel Industry

Stephen Doughty Excerpts

Monday 29th February 2016 Commons Chamber

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

Does my hon. Friend agree that the Government have also been asleep at the wheel when it comes to the crucial issue of procurement? Will she join me in commending the Daily Mirror for its Save Our Steel campaign, which has been shining a light on defence procurement, in particular, and found that Swedish steel is being used in the Navy’s newest warships?

[Ms Eagle]

I certainly agree with my hon. Friend’s observations and share his surprise that Swedish steel is being used in Ministry of Defence contracts in quite that way. I note that it appears to be a Conservative donor company that was doing that work. I join him in commending the Daily Mirror for its fantastic Save Our Steel campaign, which has highlighted the very real effects of the current crisis on steel communities up and down the country. Long may it continue to help us campaign to save this vital industry.

In the light of all that, why has the Government’s response to the steel crisis been so complacent and ineffective to date? Perhaps it is because we have a Business Secretary who is ideologically indisposed to taking any worthwhile action as he does not actually believe in the concept of Government action at all. Perhaps it is because we have a Business Secretary who has read far too much Ayn Rand and thinks that markets should somehow just be left to look after themselves. Perhaps it is because we have a Business Secretary who will not let the phrase “industrial strategy” even pass his lips.

--- Later in debate ---

[Ms Eagle]

I am just getting the idea of a mixed rugby team out of my mind so that I can address the hon. Gentleman’s point. I think that it rather makes the point that the Government need to do more than just change technical criteria. They need to take a root-and-branch look at what is actually happening in our steel industry, and an industrial strategy would assist them in doing that. We need to do what we can to ensure that any blockages are removed so that we can give our steel communities the best chance to take maximum advantage of the procurement opportunities available in this country.

[Stephen Doughty]

That is absolutely crucial. Does my hon. Friend agree that there is a pattern of behaviour here? We have seen foreign steel used in the Tide class tankers, in the scout vehicles and in the aircraft carriers, we have no commitments on the frigates, and we have also heard about Swedish steel being used. That pattern of behaviour across all defence procurement needs to be investigated.

[Ms Eagle]

My hon. Friend makes a perfectly fair point. The Government should leave no stone unturned in order to maximise the chances of British steel companies bidding for these contracts successfully.

--- Later in debate ---

[Sajid Javid]

No, I do not, because, as I have said, the lesser duty rule is there to create a level trading field. As I have also said, under the existing rule, tariffs can be higher, and in many cases should be higher. However, they were not set too low because of the lesser duty rule. The problem was the time period used by the Commission in its calculation.

[Stephen Doughty]

The Secretary of State specifically mentioned rebar. As he knows, that is a major product produced by Celsa in my constituency. It is a very high-quality product that has been used in Crossrail and many other projects. Does he expect that tariffs on rebar, specifically, will be higher against the unfairly traded Chinese steel—yes or no?

[Sajid Javid]

The hon. Gentleman is right that it is suggested that tariffs should be higher to right the detriment. We agree; that is what our analysis shows. That is exactly what we are pushing with the EU Commission, as I did only last week when I met the Trade Commissioner while she was in London.

--- Later in debate ---

[Sajid Javid]

If the hon. Lady means what she has just said, which is that she wants a level playing field, we are in agreement, but the entire argument she made moments ago was for punitive tariffs, which would drive up prices for businesses and consumers and risk potentially ruinous retaliation from other nations. Artificially over-inflating the price of imported steel would have a hugely damaging effect on British companies further up the manufacturing chain. Of course, I would like to see such companies using British steel rather than cheaper, lower quality imports, and let me take this opportunity to urge them to do so. However, forcing them to buy British steel by making imported steel prohibitively expensive is not the way to make that happen. Higher duties on imports of raw materials eventually mean higher prices paid by manufacturers and consumers alike, putting countless more jobs at risk.

[Stephen Doughty]

This crucial point is at the heart of this debate. Nobody is calling for punitive measures; we are asking for a level playing field. If we do not level the playing field when other countries, such as the US, are willing to put up their tariffs, this country will get a double dose of the dumping. The effect will be increased if we do not take action. We do not want a trade war; this is simply about levelling the playing field for the British industry.

[Sajid Javid]

That is exactly what we are delivering on and what the current framework allows us to do.

--- Later in debate ---

[Sajid Javid]

That is an excellent question, and that was the second ask from the industry. Let me address the first ask, and I will come right back to that point.

The first ask was for lower energy bills. We will shortly be paying compensation on renewable energy costs, and we are in the process of securing agreement to exempt energy-intensive industries from such costs. The second ask was for more British steel to be used in public building projects. We have issued updated procurement guidance to all Departments to make it clear that they can now take into account wider socioeconomic considerations, as well as cost, when making purchasing decisions. We are the first member of the European Union to be able to use those new rules. We have also mapped rough estimates of steel that could be used for major projects including High Speed 2, new nuclear and offshore wind. We have shared those estimates with industry and will continue to keep it updated.

[Stephen Doughty]

It is interesting to hear what the Secretary of State is saying about the procurement guidance being given to Departments. The Ministry of Defence has told me in answer to a written question that

“the Ministry of Defence (MOD) does not hold a complete, centralised record of steel procurement for projects and equipment, either in terms of quantity or country of origin”.

Can the Minister explain why that is, and does he think that it is satisfactory? How will we ensure that Departments meet the procurement guidelines that he has set out for them if the MOD is not even keeping records? I am not talking about specific projects, but it needs to keep records; otherwise we cannot tell whether it is doing what he says it should be doing.

[Sajid Javid]

The hon. Gentleman will be pleased to know that we are working with all Departments, including the Ministry of Defence, to make sure that they do whatever needs to be done to make maximum use of the new procurement rules.

The third ask from the industry was greater flexibility on EU emissions legislation. We have successfully negotiated longer lead-in times for the implementation of emissions regulations. The fourth ask was for action on unfair trading practices. As I said a few moments ago, we have led the EU in securing provisional duties on unfair imports of rebar steel and cold rolled flat steel. We have welcomed new investigations into unfair imports of hot rolled flat products, heavy plate and large seamless pipes. We continue to pressure the European Commission for further action against unfair trading, including the use of the registration procedure where appropriate.

--- Later in debate ---

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

As always, it is a privilege to speak about an issue that is so important, not only for my constituents but for the future of the whole UK steel industry and manufacturing industry, as my hon. Friend the Member for Oldham West and Royton (Jim McMahon) has said. I pay tribute to the Celsa workforce in my constituency; to those who work for Tata and the rest of the steel industry in south Wales; to the Welsh Labour Government, who are doing so much for the steel industry in Wales; and to trade unions such as Community, whose union reps are standing up and working with the management to try to find solutions and get through these incredibly challenging times for the industry.

I do not want to repeat many of the arguments that have been made. This is the umpteenth debate we have had on this issue, and the Minister is well aware of the wider circumstances and challenges facing the industry, so I just want to zero in on some specific concerns.

The Secretary of State was slightly disingenuous when he tried to present us as protectionists who want to foment trade wars in the world. That is not what we want. I reiterate that this is about levelling the playing field so that we relieve the pressure on the industry that is the result of dumping and unfair production.

I was pleased to hear what the Secretary of State said about rebar. If he moves in that direction, it will be welcome, but the industry will want to know at what level he really thinks the tariffs should be set and when that will happen. We can also discuss why that did not happen earlier, and why he did not fight earlier for those changes in Europe. The Secretary of State for Wales and I met many months ago and discussed those issues, and we were well aware of the concerns. If the Secretary of State for Business, Innovation and Skills is moving in that direction, will he tell us when will it happen and at what level the tariffs will be set? He made a convoluted argument about the lesser duty rule, but that will not wash with the industry. The industry wants to know what action the Government will take and when.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Does my hon. Friend agree that if a decision is made to impose tariffs as an anti-dumping measure, the whole point is that they have to be at a level that makes a significant difference to the price? Otherwise, the danger is that it becomes a token gesture.

[Stephen Doughty]

My right hon. Friend is absolutely right. As I said, if we do not put those tariffs up and other countries do, our industry will end up with double or triple dumping, with all its consequences.

The Minister has talked on many occasions about the compensation package. It has been long in coming, and its announcement was welcome, but the reality is that a lot of that compensation has simply not yet been paid. I have spoken to Celsa, in my constituency, in recent days. Can the Minister tell us how much compensation has been paid out and what difference it is making today? I am not talking about promises for the future; I want to know what difference it is making today.

I want to bring the Minister’s attention back to the charter for British steel, which we have discussed on several occasions. It laid out a clear set of arguments about sustainability, quality in procurement, and the sort of steel that we can produce, which we should be using in our construction and infrastructure projects. BS 6001 certification shows that steel has been manufactured in a sustainable and responsibly sourced manner and that, crucially, it can be traced back to its raw materials. In defence infrastructure projects or projects such as Crossrail—in which Celsa rebar has been used—we want to ensure that we use high-quality British steel that can be traced, and which has high carbon standards and high-quality standards, so that we can be sure it will be there for the long term.

There are some wider questions that I would like the Minister to answer. I turn briefly to procurement, because I think the Government have been somewhat disingenuous in claiming that the whole thing is done and dusted and that action has been taken. There have been welcome statements from the Minister and others about the guidance that is being given. I am concerned, however, about the fact that although we are asking Departments what they are doing, the Ministry of Defence has said that it is not keeping the records. The Secretary of State said earlier that his Department will be helping other Departments. He needs to get in there and ensure that the MOD keeps the records in the first place, as well as driving and advertising opportunities for procurement. Look at the list of projects: the Tide class tankers, the Scouts—now Ajax—and the frigates—[Interruption.] The Minister is absolutely right to say that we do not make the steel for Ajax, but other parts of the programme could be sourced from UK steel. There is still no answer on the customisation of the Tide class tanker, which was made in Korea. Those are the real questions.

The Minister was chuntering earlier about doing down the industry. We can produce that high-quality steel in the UK, and we should get to the bottom of why British companies are not bidding for or securing some of those projects. The Department for Business, Innovation and Skills should do all it can, with other Departments, to facilitate that market—[Interruption.] The Minister says that the Department does so, but the facts do not add up.

Finally, I want to talk about our role in Europe. I am glad that the Minister agrees that our place is in the EU, and it is a pleasure to have her supportive messages on social media about that. I am glad that we agree. I firmly believe that we achieve more for the steel industry working together across Europe than we would alone, but the Government have to be in there, fighting for the UK steel industry. I know that the Minister has done that on several occasions.

The reality is that the Government were warned years and years ago about the pressures facing the industry. A company such as Celsa in my constituency faces 70% higher energy costs than companies in Germany, as well as the dumping that the Government have been warned about so many times. If Ministers do not deal with those concerns, there is no possibility of pan-European co-operation. Why did it take so long for the Secretary of State to get out there and make that case in Brussels? Will she give us the absolute assurance that, during the next crucial months for the industry, she and he be will out there making that case on the duties, procurement and cross-European infrastructure? Only by doing that will we achieve the benefits for the steel industry that all of us across Europe want.

I want to see a future for the steel industry. I am glad that the Government are being pulled, kicking and screaming, on some of the issues. We need action and for it to keep coming, and we must ensure that we have a future for the steel industry in south Wales and across the whole of the UK.

[Several hon. Members rose—]