Stephen Doughty
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Tom Blenkinsop
I thank the hon. Gentleman for his contribution. I have been chair of the all-party group on steel and metal related industries for five years and we have tried to reiterate the arguments for the steel industry. In 2012, when I first mentioned a debate about Thames Steel Services in Kent in the south-east of England, which is obviously not in my constituency but is part of the steel family, we did not get much of a hearing from the Government. Following that, we had further debates on the impending crisis, which we could see coming because of dumping from Chinese markets and other repercussions of Government policy. Ministers from the Department for Culture, Media and Sport responded. They were not even Ministers from the Department for Business, Innovation and Skills. I kindly suggest that the hon. Gentleman looks at the record of the last few years. Colleagues in this Chamber who are members of the all-party group from other parties are well aware of that history.
The Government must stop dodging the issue and start to work on a strategy to protect and boost the industry across the UK. A real concern is the amount of time that Tata Steel is allowing for the sales process and that an arbitrary deadline will be imposed that is too soon for credible investors to develop a viable bid. Tata allowed time for the sale of its long products business to a credible investor. It should provide the same opportunity to bidders for the rest of its UK business as it allowed in every contemporary example, including SSI back in 2010 and Greybull Capital now—and, indeed, as was allowed in Tata’s own acquisition of Corus back in 2006.
The story is lost to some extent, but Tata achieved its purchase of Corus in competition mainly with a Brazilian company, and it achieved it only because in 2002 Tony Pedder, who headed up Corus at the time, was in competition with the same Brazilian company to create a merger, which then failed. Four years elapsed to allow Tata to purchase it. Some would argue that it paid an expensive share price, but that time elapsed and both competitors ratcheted up the share price because they thought the British assets were so key and vital, as they still are.
Public sector steel contracts must specifically consider UK steel, but I and my colleagues are concerned about recent reports that British steel is not being used in vital upcoming manufacturing projects—for example, Ajax vehicles. The Defence Minister, the right hon. Earl Howe, revealed in answer to a parliamentary question that 40% of the work building those vehicles will be carried out in Spain and a majority of the supplied steel will come from Sweden. This came after the Prime Minister hailed the deal as a boost for British manufacturing. Another example is the Aberdeen city bypass. Negotiations on a £12 million contract for 10,000 tonnes of rebar for the bypass have been reported as being at an advanced stage with Turkey.
Legislation and warm words are not enough to guarantee the viability and sustainability of a UK steel industry. The Government must act now to ensure that British steel is used in every public sector manufacturing contract and that British jobs are protected.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend has made some important points about procurement and the defence industry. His example of Aberdeen is particularly concerning, not least because rebar is one of the main products produced by the Celsa plant in my constituency. It has been used very successfully in projects such as Crossrail and elsewhere. Does he think it is time the Scottish Government fully explained their reasons? They said they would do everything they could to save steel jobs, but that seems to be falling down at the first hurdle.
Tom Blenkinsop
Indeed. In a spirit of cross-party politics, we want a positive response from the Scottish Government on revisiting that issue, looking at the contract and looking to British-sourced rebar steel, made in Britain by British workers, so that our British steel industry can thrive.
It is important to remember that, as my hon. Friend the Member for Aberavon (Stephen Kinnock) has said, lack of customer confidence is the surest way to undermine the steel industry. The Government must work with Tata to ensure the continuity of client contracts. I know that a lot of work has been done on that in the background. It is essential to preserve the commercial viability of any sale. Retaining essential skills and competencies is vital for the future of the business. The highly skilled workforce cannot be allowed to fragment or disappear. Indeed, in 2010, £60 million was set aside by the then Labour Government to retain the existing workforce at Teesside Cast Products in Redcar. Not one hard redundancy was endured over a 22-month period among core Corus workers, to ensure that a purchase could allow a new owner to retain those workers. To avoid a fire sale and irreversible mistakes, the Government must demonstrate to all stakeholders in the industry that they are taking a proactive approach to ensuring the continuity of operations.
This is a time for leadership by the Government and no issue is more important for them to lead on than the lesser duty tariff. Europe currently uses the lesser duty rule to impose the lowest possible duties on unfairly traded products that have been dumped in European markets and exported at prices below those in the home market. Duties introduced by Europe are usually way below the actual margin of dumping, the result of which is that dumping continues and unfairly traded products are allowed to compete in European markets and depress prices.
The US does not follow the lesser duty rule, which means it can implement much tougher sanctions reflecting the margin of dumping. For example, it recently imposed duties of 236% on a particular grade of Chinese steel.
Tom Blenkinsop
First, I would like to congratulate and welcome my new hon. Friend the Member for Ogmore (Chris Elmore) and say how privileged and happy I am to have him intervene during my speech. I believe that this is the first time he has spoken in the House, so I am very honoured that he has taken this opportunity, but I am even more impressed by the fact that he has got straight into the job and is representing his constituents in a very steadfast way.
The US Government are in the process of introducing new laws that will enable the US to take even tougher action against Chinese dumping and which will make Europe an even more attractive target for dumping. However, there is hope, as it has become widely recognised in Europe that the lesser duty rule is killing our industry. The European Commission has proposed that it should be scrapped, and that has been supported by the European Parliament. The European Commission is demonstrating the very reform and flexibility that the Prime Minister kept banging on about wanting to see in the European Union, so why will he and his Government not support the European Commission in that action?
I would be very happy if the Minister responded to that question, because that is the type of reform we want. When the facts and the market change, the mechanisms need to change. In my opinion, the reason why the lesser duty tariff has lasted so long is that the level of dumping was previously nowhere near the levels it has been at in the last four years. When the facts change, our trade defence mechanisms need to change in order to support our industry, yet even now the UK Government continue to lead the charge among the small group of nations blocking the scrapping of the lesser duty rule. Our own Government are arguing that end users of steel need access to cheap Chinese product.
Despite all the rhetoric, the UK Government are failing to stand up for our steel industry. They say they have delivered on four of the five industry asks, including
“backing EU-level action on anti-dumping measures”,
but the Government’s opposition to scrapping the lesser duty rule exposes the enormous gap between rhetoric and reality. Furthermore, on 5 February, the Secretary of State signed a heavily publicised letter to the Commission calling for Europe to
“use every means available and take strong action”
on Chinese dumping. That letter is simply not consistent with the Government’s position on the lesser duty rule.
Even more importantly over the coming weeks, the EU will make decisions that will impact on the granting of market economy status to China. It has become increasingly clear that Chinese dumping poses an existential threat to the UK and European steel industry. Despite that, the UK Government continue to act as a cheerleader for China in Europe in its bid for MES, whether we remain in the European Union or not. Market economy status for China would be a complete disaster, as it would make it even harder for European producers to gain protection from unfairly traded Chinese imports. That issue is becoming more urgent, as the Commission must take a decision on it by December of this year, and the European Parliament votes on it tomorrow. I do not know, but I have heard that Tory MEPs are being whipped to vote that through. That has serious implications yet again, in terms of what the Government say and what the Government are prepared to do.
Stephen Doughty
I thank my hon. Friend for being generous with his time and giving way again. He makes an extremely important point about market economy status, and I absolutely agree. He highlights, aptly, that the crucial point in this is what the UK Government and Tory MEPs do in Europe and not, as some have suggested, that the European Union in some way putting the kibosh on the steel industry. Does my hon. Friend agree that it is misleading for Brexit campaigners to suggest that the steel industry in the UK would be better off if we left? The truth is that leaving the EU would be a body blow to the steel industry.
Tom Blenkinsop
I thank my hon. Friend for that intervention. I know that the Minister will agree with this. What would we be saying, as a nation, to Greybull or the seven potential buyers of strip and tubes in Britain if we removed ourselves from the European Union? They are purchasing, obviously, in the context of our being a member of the European Union. The implications of removing a pillar of the deal that has just happened—it took more than 12 months in relation to long products and Greybull—would be so massive that it does not bear thinking about, but then again, the Brexit campaign is more politically led than economically led. I make that quite clear because the matter is that important, and not just for steel. The Chemical Industries Association has come out very strongly for remaining within the European Union, as have trade unions in the manufacturing sector, because it is the only practical option if we are to retain any form of manufacturing in this country.
Another matter is business rates. This one cannot be immediately resolved, but it needs looking into. The review of business rates that concluded in advance of the Budget did not go far enough to deliver savings for UK producers. Business rates in the UK are up to 10 times higher than those paid by competitors in France and Germany. The Government should act now to level the playing field by removing plant and machinery from business rate calculations. Including plant and machinery in the calculations is anti-investment and anti-industry. Tata Steel recently invested £185 million in the construction of a new blast furnace in its Port Talbot steelworks and, in return for that investment, received a £400,000 increase in business rates. That is patently uncompetitive and ridiculous.
Back in March 2012, I gave a speech in relation to the closure of Thamesteel in Kent. That just goes to show how long we steel MPs in this place have been fighting, not just for our constituencies but for our countries’ steelworks, our steel culture, our steel families and our people. I want to repeat what I said that day, quoting a Teesside man of steel:
“When I see a blast furnace, I see a thing of beauty...I see something that has given thousands and thousands of people a way of life, a good, honest wage, the ability to pay their mortgages, go on holidays and bring up their families. That to me is fabulous, that is a beautiful thing. When you come to Middlesbrough and see that skyline...That blast furnace is the heart of Teesside. As long as it pumps, there is life in Teesside.”
It was not just a Teessider’s fairy tale when we saved TCP. The men and women from Kent, Stocksbridge, Rotherham, Hartlepool, Corby, Port Talbot, Shotton, Llanwern and Trostre all have the same view of their steelworks, as does every single steel community. It is a story for all steelworkers in Britain. There is a way to save our steel sites and UK steel if the Government do something to facilitate the process and lend their support, so the question for the Minister is: will you follow through on those promises, because now is the time for action?
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
It is an honour to serve under your chairship, Mrs Moon. I thank the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) for securing this important debate. His commitment to our steel industry is unwavering, and it is a pleasure to work alongside him and all the other members of the all-party group on steel.
With a steel finishing plant in my constituency, much of my parliamentary time since becoming a Member has been dedicated to this subject. Fortunately, the future of that plant, and the plant in the constituency of my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows), is known. I once again put on record my appreciation of the unions, the workers and the Scottish Government, and also of Tata and Liberty House. The task of saving Scottish steel was not an easy one, but we on the Scottish steel taskforce rose to it. The future of the industry in the rest of the UK, although not a certainty, looks more promising than it did a number of weeks ago. With seven bidders now interested in taking over Tata Steel’s operations, I hope that colleagues around this room will soon be celebrating the saving of industry and jobs in their constituencies.
Stephen Doughty
I am glad to hear those words of support for the steel industry in the rest of the UK, but obviously we need action as well. Can the hon. Lady explain the apparently advanced stage of negotiations with Turkey for 10,000 tonnes of rebar and a £12 million contract for the Aberdeen bypass? That rebar could be bought from UK suppliers. Does she have any information on that, and does she agree that we need to do everything possible to ensure that UK suppliers are used?
Margaret Ferrier
More than £115 million has already been awarded to subcontractors based in Scotland, and with an estimated £60 million of subcontracts still to be advertised during the construction phase through the Public Contracts Scotland website, there is still plenty of opportunity for other UK-based companies to bid.
As Members will no doubt be aware, however, the celebration will be short-lived. The steel industry still faces some fairly hefty challenges, and it is up to us to continue piling pressure on the Government to ensure that the correct measures are taken, to safeguard the industry and protect jobs. It would be remiss of me not to recognise the measures that the Government have so far taken. Efforts have been made to help steel and other energy-intensive industries, for which we are all grateful. More undeniably remains to be done, and it is not only about taking action; it is about a shift in the Government’s thinking. In Scotland, the approach is to view steel as a vital strategic asset. The Scottish Government have outlined their vision for the industry and, in doing so, their commitment to it. As resilient as our centuries-old steel industry has been, it will survive only with the proper support. That means taking steps to address the unfair playing field of the global market. The industry wants the anti-dumping investigation process to be hastened—it is much more rapid in the United States than in the EU. I would like the UK Government to take UK Steel’s recommendation on board and, through the European Council, work with the Commission to set out a clear action plan and timetable for changes to speed up the process.
Action must also be taken on the lesser duty rule. We are clearly at an impasse between what industry has been calling for and what the Government are prepared to do. UK Steel has made pragmatic suggestions of ways to change how tariffs are calculated without necessarily scrapping the rule. I would like the Government to engage with it to find a steel sector solution that will ensure that future duties are robust enough to tackle unfair imports.
As I have mentioned many times, we continue to head towards market economy status for China, without properly addressing the dumping issue. The industry has issued grave warnings that that could lead to serious job losses across many sectors, and I would like a proper response from the Minister about how China can be given market economy status while the effectiveness of the EU’s trade defence instruments is preserved. I would also like to know more about what further action has been taken on energy costs. We are at a disadvantage compared with other European countries, and I should like a full and frank response on how wholesale costs are to be brought down.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mrs Moon. I praise my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) for leading the debate with such knowledge, passion and authority, as he always does.
There have been some excellent contributions so far, and I will focus on a few specific points, rather than reiterating things I have previously said in our many debates on steel. As always, I pay tribute to the Celsa workforce and management in my constituency, and to the work of Community, GMB, the other trade unions and UK Steel. I praise Carwyn Jones, the First Minister, for his leadership in recent months. He has worked constructively with the UK Government on these issues. His leadership was head and shoulders above the others’, and it is deeply concerning to hear in the last 10 minutes that apparently the Conservatives, Plaid Cymru and UKIP have voted together to block his reappointment as First Minister, which is quite extraordinary when we need a First Minister in Wales to get back on with addressing crises such as the steel crisis.
I reiterate my point about the EU. We are approaching the referendum, which is a crucial decision for the country, but it is also a crucial decision for the steel industry, the engineering industry, the automotive sector and all those other sectors about which my hon. Friends have spoken. It would be a body blow to the steel industry for us to come out of the EU, particularly given the single market and the lack of clarity on what sort of market we would have were we to come out. The Minister knows my views about market economy status and the lesser duty rule, and all I would ask is what the Government will do in the European Parliament and at the Foreign Affairs Council on 13 May on the issue of China. Will they continue to press the issue in Europe? Ultimately, it is what the UK Government do on this in Europe that matters. We can achieve more for the steel industry by working together across the continent.
Briefly, on net energy costs, which are particularly important to Celsa as it uses an electric arc furnace, UK Steel rightly points out that:
“electricity costs make up 11% of an integrated steel plant’s marginal costs and 20% for an electric arc furnace.”
Yet we are still seeing prices that are uncompetitive. Despite the energy intensive industries compensation package, we are still seeing prices that are in the region of 25% higher than in Germany. What consideration has been given to any further review of the carbon price floor and the climate tax impact? What about network costs and wholesale costs? Are there additional measures that could be taken there?
Finally, on procurement, worrying information about the Ajax vehicles was shared in the Daily Mirror, which has been leading the way in campaigning on steel. The majority of the steel for those vehicles will come from Sweden, and 489 hulls will be built in Spain before being brought over to Merthyr Tydfil. Surely that cannot be right. Can the Minister provide any assurances about the new Type 31 frigates? Indeed, can she update us on whether the Ministry of Defence is keeping accurate records? Obviously, if we do not know what the records are, we do not know where the steel is coming from and we cannot take the necessary action.