UK Steel Industry

Stephen Kinnock Excerpts

Monday 29th February 2016 Commons Chamber

[Stephen Kinnock (Aberavon) (Lab)]

I am grateful that we have been able to secure this debate. Ever since last month’s announcement of 750 job losses at the Port Talbot steelworks, I have been calling for a full and comprehensive debate on the future of British steel. The Tata steelworks in Port Talbot is the beating heart of my Aberavon constituency. These job losses, and those that are sure to follow along the supply chain, are a devastating blow.

The Secretary of State will be aware that following that announcement, Tata has been working on a rescue plan, which will be discussed by the Tata board in Mumbai at a critically important meeting at the end of next month. I implore the Government to give their full support to the rescue plan by, for example, ensuring that there is proper investment support to improve the plant’s premium product capabilities. Such support could help in converting the continuous annealing process line into a galvanising line, thereby better serving the automotive market. Can the Minister confirm that she will urge the Chancellor to give a firm and positive commitment on enhanced capital allowance, to allow the Welsh Government Tata taskforce to move forward in establishing an enterprise zone in Port Talbot?

I will now focus on what the Government should be doing at national and European level. It is well known that this Government operate inside a fog of laissez-faire ideology. Their modus operandi is to pray to the gods of the free market and hope for the best. But it is fascinating to observe that this steel crisis is cutting through that fog, and forcing the Tories to understand a very simple truth—that when the market fails, Government should intervene.

The market economy can function effectively only if it is regulated. Just as a game of football requires the offside rule to ensure fair competition, so the British steel industry requires the right regulatory framework, so that it can be given a fighting chance, on a level playing field. The impact of the market failure, and of the Government’s failure to intervene to fix it, is being felt around the country by the thousands of steelworkers and their families. They are victims of the Government’s laissez-faire doctrine. They are the victims of the Government’s failure to stand up for British steel.

All of us here today will be aware of the five industry asks. The Government like to boast of delivering on four of those five asks, but a cursory glance at the scorecard demonstrates how disingenuous that claim is. Take the compensation package for energy-intensive industries. Five years after the Chancellor accepted the need for it, the money still has not arrived. Perhaps the cheque got lost in the Christmas post. And what about procurement? There is no tangible evidence of any change. If there were, why on earth is the MOD’s latest order for a set of Royal Navy frigates going to be based on Swedish steel? Why would a Government seriously committed to supporting the Welsh steel industry still be flip-flopping on the Swansea Bay tidal lagoon?

Most disingenuous of all is surely the Government’s claim that they are acting against the dumping of anti-competitive subsidised Chinese steel. If anyone doubts the acute impact of Chinese steel dumping, they should just look at rebar. From almost no market share in 2011 today, Chinese rebar accounts for almost half the UK market. That is the cost of five years of Conservative Government, five years in the fog of laissez-faire dogma and inaction, five years of watching the storm clouds gather on the horizon and refusing to strengthen the flood defences, five Tory years of rolling out the red carpet for Beijing, rather than standing up for the men and women who form the backbone of the British economy. May I therefore implore those on the Conservative Benches to resist the temptation to blame Labour? The exponential growth in Chinese market share has taken place since 201l, on their watch. Let us accept that fact and move on.

The growth in Chinese market share is possible only because of Beijing’s subsidies and market distortion—70% of Chinese steelmakers are state owned. In the light of this fact alone, who in all seriousness could possibly see China as a market economy? I’ll tell you who: the British Government. Yes, our very own Government have taken it upon themselves to become some sort of outpost of the Chinese PR machine. UK Steel, Tata and Community have all stated unequivocally that the granting of market economy status to China would probably be the last nail in the coffin for UK steelmaking, yet the Prime Minister and his Government are actively lobbying in Brussels and across Europe, for China to be granted that status. The decision on this will be taken in December. There is still time for the Government to change their mind. There is still time for the Government to be a cheerleader for Britain, rather than a lobbyist for Bejing.

But market economy status is not the only area where the Government are actively undermining the British steel industry. It has become widely recognised in Europe that the lesser duty rule is killing our industry. Indeed, the European Commission proposal that it be scrapped was supported by the European Parliament. Yet the UK continues to be the ringleader in blocking the scrapping of the lesser duty rule. I have grown used to warm words being matched with frozen actions, but this is much worse. On trade defence and the lesser duty rule, this Government have publicly declared their undying commitment to British steel, while behind closed doors they have consciously conspired to undermine the British steel industry. The gaping chasm between their words and their deeds needs to be explained. I hope that they will do so in the near future.

We need a Government who are committed to a long-term industrial strategy and who are more committed to Britain than they are to Beijing, not spinning a line in public while agitating for the opposite behind closed doors. We need a Government who will stand up for British steel.