National Security and Investment Bill

Stephen Kinnock Excerpts

2nd reading & 2nd reading: House of Commons
Tuesday 17th November 2020 Commons Chamber

[Charlotte Nichols (Warrington North) (Lab)]

It is a pleasure to follow the right hon. Member for Wokingham (John Redwood), who is my dad’s Member of Parliament. Considering the number of Conservative MPs who are self-isolating, I am glad to see Minister in his place. May I take this opportunity to wish good health to the hon. Member for Warrington South (Andy Carter), who is also self-isolating?

I welcome this Bill and I am glad that the Government are at last addressing the important issue of protecting important assets when foreign acquisitions threaten national security. However, I fear that they have dragged their feet on this matter and that that has led to paralysis rather than strategic planning in several sectors, most notably civil nuclear power.

In 2016, the then Prime Minister, the right hon. Member for Maidenhead (Mrs May), delayed approval of Hinkley Point C because of fears of the potential for a controlling influence by the Chinese state firm China General Nuclear Power Group. While approval was subsequently granted, that illustrates the governmental hesitation that has beset this vital industry—an industry that depends on long-term certainties—for years now.

It has taken more than four years for the Government to bring forward the proposals in the Bill to allay those fears. In that time, the nuclear sector, which offers both reliable low-carbon energy and high-skilled, well-paid, unionised jobs, has suffered paralysis. Our fleet of nuclear power stations is ageing and needs renewing. The Government promised an energy White Paper in summer 2019, which has been delayed and delayed ever since. In that time, we have seen Hitachi withdraw from its planned investment in a nuclear plant at Wylfa because of the Government’s hesitation in agreeing a funding agreement. The whole sector, and thousands of people in quality jobs, including almost 4,500 civil nuclear workers in my constituency, are still waiting to hear a clear plan and direction from the Government. We must not lose those jobs, and the planet cannot afford stalling over this green energy sector.

We know that part of the reason for the delay has been fear of foreign influence in our strategic assets. Dozens of Conservative MPs have even formed an internal lobbying faction called the China Research Group to focus on the threats that they perceive from China. That led to the banning of Huawei from our 5G network back in July. That makes it all the more extraordinary that it has taken so long for the Bill to be brought forward. Labour has called consistently for tougher powers on takeovers since 2012. I hope that now this legislation is finally here, the Government will have no more excuses not to act to give the assurances and firm grounding that nuclear firms reasonably request.

Alongside the Bill, I look forward to early publication of an energy White Paper that lays out the groundwork for nuclear energy that is environmentally and economically secure, and where the UK’s national interest and national security are protected.

[Stephen Kinnock (Aberavon) (Lab)]

My hon. Friend is making an excellent speech. Does she agree that the fact that 57 items of our critical national infrastructure—including, of course, nuclear, but also other energy and airports—are reliant on Chinese supply chains demonstrates the abject failure of this Government to bring forward a proper industrial strategy?

[Charlotte Nichols]

I agree that, given the national security risks posed by actions being taken by the Chinese state, including what our military refers to as sub-threshold activity, we should, as a nation, make sure that we have a Bill that ensures that our national security is protected from the Chinese state and anyone else, anywhere in the world, who seeks to damage our national security.

Developing a robust takeover regime is essential if we want firms in our key sectors to grow and provide good jobs here in the UK, and this Bill is a key part of that. I worry, though, that it misses the opportunity to go much further in strengthening powers that prevent damage to the UK’s national economic interest, as well as our national security, as in the case I have outlined. I therefore hope that the Government will consider amendments in Committee to widen the scope of what constitutes national security.

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[Stephen Kinnock (Aberavon) (Lab)]

It is such a pleasure to follow the hon. Member for Beckenham (Bob Stewart), and I genuinely hope that your naughty finger will not be pointing towards me at any point in my remarks, Madam Deputy Speaker.

We on the Opposition Benches will not oppose the Bill, because it is a step in the right direction. It is good to see the Government finally recognising the need to put national security at the heart of how we deal with foreign investment. However, the Bill fails to address the broader issue of how takeovers and acquisitions should be regulated to promote our broader national and economic interests and, indeed, the interests of British workers and their families across the length and breadth of our country. In that sense, it draws a false distinction between national security and economic security, because it is absolutely clear that the two are intrinsically linked.

In order to properly reflect on the effectiveness of this legislation, we therefore need to go back to first principles and ask ourselves this single basic question: what is the economy actually for? It is only by reaching consensus on that fundamental point that we shall be in a position to assess the extent to which the Bill will make a positive contribution to the lives and livelihoods of our constituents.

The British economy is unbalanced, it is unstable and it is therefore profoundly lacking in resilience. It is too reliant on the financial services sector at the expense of manufacturing—our manufacturing sector has collapsed since the 1970s from 30% of GDP then to just 9% now. It is too London-centric, thus failing to harness the talents of so many people from other areas of our country; it is too inward-looking, with persistent trade deficits; it is too unequal, pushing the proceeds of growth to the wealthiest 1%, and it is too short-sighted, constantly aiming for the fast buck rather than long-term, sustainable prosperity driven by patient capital.

Every piece of legislation that is brought forward by the Department for Business, Energy and Industrial Strategy should be relentlessly focused on fixing those faulty foundations of our economy—those fundamental weaknesses—and every step that the Business Secretary takes should be a step towards an active industrial strategy that is designed to drive a modern manufacturing renaissance. He should be focused on home-grown industry, home-grown investment and home-grown technology. Those critical steps will help to build that sense of purpose and resilience into the UK economy that we are so desperately missing.

The culture of the UK’s corporations is also in urgent need of change. The prevailing business strategies are driven by short-termism, with the delivery of fast buck profits to shareholders taking precedence over all other considerations. Addressing that will require a new deal between shareholders, companies and their workforces, and between the public and private sectors. Far too many of the corporations listed in the FTSE 500 are characterised by a transactional, rootless form of ownership, which militates against the investment in R&D, innovation, skills development, new technology, plant and machinery that is desperately needed if we are to put our economy on to a more balanced and sustainable footing.

The Government’s laissez-faire approach makes a major contribution to this short-termist culture, because it opens the door to acquisitions by foreign companies, resulting in the UK’s having by far the highest number of successful hostile takeover bids of any advanced economy in the world. Time after time since 2010 we have seen our strategic national assets being flogged off to the highest bidder. Let us just look at the case of Arm, a jewel in the crown of the British tech industry, which is in the process of being sold to Nvidia, or Cadbury’s, an iconic British brand, sold to Kraft without any proper consideration of what that would mean for the long-term sustainability of the business.

Moreover, our sovereign capability is profoundly undermined by the fact that much of our critical infrastructure is not in our own hands. In fact, 57 of our critical national infrastructure supply chains depend on China, from our energy suppliers to our airports, our pharmaceuticals and our personal protective equipment. The repercussions of that overexposure have been felt during the pandemic. Our lack of capacity to produce PPE has cost the UK taxpayer an eye-watering amount of money; a breaking story today shows that a Spanish businessman has pocketed £21 million of British taxpayers’ money simply for acting as a broker between the Government and overseas suppliers—a potent symbol of systemic failure.

Let me be clear that many of these so-called private takeovers and infrastructure investments are carried out by companies and investment vehicles that are a front for authoritarian state actors who have wider political and national security agendas and whose values are at odds with our commitment to democracy, liberty and the rule of law.

The crucial point here is that our values should not be for sale.

The most obvious and pressing case, of course, is the Chinese Government, who are relentlessly expanding their influence economically, politically and militarily. We need only recall the case of Imagination Technologies, which was recently the target of a hostile takeover attempt by an investment vehicle with direct links to the Chinese state. Of course, there are also substantial Chinese stakes in Hinkley Point and other sizeable chunks of our critical national infrastructure.

Successive Conservative Governments since 2010 have been naive and complacent in their approach to China, exemplified by David Cameron and George Osborne’s disastrous “golden era” strategy. It is time for this Government, this House and, indeed, the entire country to wake up to the reality of these matters and to come to the realisation that, while we must always seek constructive engagement with China, we must take a clear-sighted, hard-headed approach to defending our national interest and our sovereign capability.

I also take this opportunity to raise another more specific way in which the Government’s lethargic tendencies have proved costly to British business and weakened the economy as a result. The Government have been naive about the deliberate attempts to weaken UK businesses through market distortion by the undermining of competition laws. The most obvious example of that is the deliberate over-production of steel way beyond global demand and the subsequent illegal dumping of that steel on European markets.

The result of those illegal uncompetitive practices combined with Conservative inertia has been the weakening of UK steel companies and the opportunity for foreign investors, many of whom come from countries that are the origin of the dumping in the first place, to buy up our strategically and nationally important asset. Some 80% of China’s steel industry is state owned, and the key point is that the illegal dumping of products from those state-owned industries into European markets is an example of the practices that are undermining the international rules-based order.

That in turn has a damaging and direct impact on our industrial base and on our communities and their families—the workforces that are directly impacted. It is a perfect example of how the global is truly local. We need a level playing field, and this legislation should be about—this is everything that the BEIS Department should be about—developing that level playing field so that our workforce is not competing with one hand tied behind its back against a system that is rigged against it from the word go.

This Bill is a big missed opportunity to strengthen the UK’s wider industrial strategy and for the Government to show that they are committed to building an economy of purpose and resilience. Moreover, it fails to reflect the impact of coronavirus on UK businesses and the increased vulnerability in the face of vulture capitalists and state-backed actors that are waiting to pounce. This legislation only really seeks to protect the UK’s national security and appears to do little to support the UK’s wider national interest, such as the need to protect jobs and support communities in this time of national emergency.

Focusing on the all-too-narrow scope of the Bill, I also have genuine concerns about the process for arriving at a decision on whether to block a takeover. Currently, the plan is that the process sits firmly within BEIS. That is an issue, first, because such a decision would have huge cross-departmental impact, so it would surely be better to create a multi-agency taskforce to rule on key decisions. Such a taskforce would include the Treasury, the Home Office, the Foreign, Commonwealth and Development Office, the intelligence and security services, and the Ministry of Defence. It could follow a similar model to the Committee on Foreign Investment in the United States. All the signs were that BEIS was a cheerleader for the Huawei deal, when it was clearly against our national interest to go ahead with that deal. That does not augur well for its ability to police the effective implementation of the Bill.

Secondly, handing all the decision-making power to the Business Secretary could lead to problems further down the line, should a future incumbent—I am in no way implying that such a fate would befall the current Business Secretary—be influenced by political or commercial interests in this country or overseas.

[Sir John Hayes]

I had not intended to intervene again in the debate, except that I want to emphasise, and perhaps amplify, the point that the hon. Gentleman has just made. The legislation brings us into line with other Five Eyes players—the intelligence community with which we work directly—but he is right to say that the mechanisms that they use are different, in some cases, from the ones employed in the Bill in exactly the way he describes. Will the Minister look at those mechanisms and see what more we can learn from them as the Bill is improved during its passage through the House?

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[Stephen Kinnock]

The right hon. Member has pointed to the fact that it is such a broad, cross-departmental issue that it requires more than just one pair of eyes—if he will excuse the pun—to look at it.

Time and again, we have seen that the takeover regime is not fit for purpose. It is welcome that we are finally coming into line with other countries on national security, but we are still behind on takeovers that would harm the national interest more broadly. Protecting our national security is only one element of protecting, nurturing and developing the vital sectors of the future that we know are crucial for our economy.

Given the economic dislocation and potential corporate vulnerability caused by coronavirus, the case for action is stronger than ever. I will support the Bill, but we need to see improvements and further regulation to protect British business and the broader national interest.

UK Steel Industry

Stephen Kinnock Excerpts

Monday 14th September 2020 Commons Chamber

[Jessica Morden]

My hon. Friend makes an important point about the Orb steelworks, which closed recently. I will expand on that at the end of my speech, if that is okay.

Change is needed to help UK businesses compete internationally, particularly on energy costs, which I and other colleagues on the APGG have been banging the drum on for a number of years now. This significant challenge for UK steel producers has not gone away. British steel producers pay the highest electricity prices in Europe—80% more for energy than their French counterparts and 62% more than German companies. This creates an enormous additional cost burden on the UK steel sector every year and hampers productivity. Will the Minister update the House on what the Department is doing to extend the indirect carbon price compensation scheme for energy-intensive industries, which is currently due to expire at the end of the year?

In response to parliamentary questions, Ministers have said that the ability of industries to compete across Europe and globally is a priority. It is now time to back up those words with action. It is vital to the sector to maintain current trade flows with key markets. A central concern for the steel industry as we get closer to January is trade with Europe.

[Stephen Kinnock (Aberavon) (Lab)]

My hon. Friend is making a powerful speech. On the issue of safeguards to ensure that we can continue to sell our steel into the EU, does she agree that the UK Government should now be making a unilateral offer to suspend all trade dumping measures against EU steel coming into this country, so that we can unlock the stalemate around the trade defence measures?

[Jessica Morden]

I do indeed. I believe that would be a generous offer to unblock the current stalemate. On the treatment of EU exports and EU safeguards, an estimated 70% of UK steel exports—some 2.6 million tonnes a year—go to EU countries. That is 1,400 trucks and six trains a week, making it the largest export market for steel. As UK Steel has highlighted, it is crucial for our industry that the UK Government demonstrate as early as possible that they are taking steps to positively resolve the issue with UK trading partners. What progress has the Minister made on EU and UK steel safeguards? An update from him on that is urgently needed tonight.

There is also a lack of clarity about what is happening in the US-UK free trade agreement negotiations on the removal of section 232 tariffs on steel projects. Since 2018, UK steel exports to the US have fallen by 32%, so can the Minister update us on those talks too?

Finally, do we want to be a country that manufactures goods or one that just imports them? The Government’s strategy must address the present and future needs of the industry. That means providing the UK steel industry with the vital liquidity support that it needs to protect businesses.

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[Nadhim Zahawi]

It certainly is and I hope that I can cover that in the time that I have left to me.

Both officials and Ministers invested considerable time and effort in closing the deal with Jingye and the planned £1.2 billion investment that will go into the operations of British Steel. I hope the hon. Lady agrees that this represents a huge vote of confidence in the UK steel industry and the high-quality steel produced here in the United Kingdom. Notwithstanding this positive outcome for British Steel prior to the pandemic, the global steel industry was already facing significant headwinds. This included demand slowing across developed economies and persistent global excess production capacity, which depresses prices and harms the profitability of UK steel producers.

In the past few days, Tata Steel has published its accounts, which show a challenging position across its UK and European operations. While it is not appropriate for Ministers to comment on the performance of individual companies, I wish to reassure the hon. Lady that we continue to work very closely with the entire UK steel sector and the trade unions, and that we understand the challenges facing the industry in the UK.

While the coronavirus has come at a challenging time for the industry, we have been working intensively over this period to ensure that the UK steel industry has been able to access the support that it needs since the start of the covid-19 pandemic The Government have set out a far-reaching package of support to protect jobs, incomes and businesses across every part of the economy. Those working in the steel industry have been among the 9.6 million individuals across the country who have been able to access the job retention scheme. The scheme has protected people’s livelihoods in the industry and ensured that steel manufacturers have been able to retain high-skilled staff while managing the impact of reduced demand caused by the pandemic.

Importantly, we have worked closely with the steel industry representatives over this period to ensure that the furlough scheme—the job retention scheme—was sufficiently flexible to accommodate some of the real key asks from the industry and from the unions to meet the changing requirements of the industry as the wider situation evolved. I have been engaging personally on a regular basis with companies, trade associations, and, of course, the trade unions to gather their feedback. Direct input from the steel sector has helped to shape a number of our covid-19 support schemes. The coronavirus large business loan interruption scheme, the tax deferrals and the trade credit reinsurance scheme, which we launched with £10 billion, clearly came through as a result of that particular engagement with the industry. They were developed rapidly in response to that particular challenge faced by companies in the industry.

In addition to those far-reaching economy-wide schemes, we have committed to consider bespoke support on a last-resort basis where a viable company of strategic importance has exhausted all other options available to it. The House will be aware—the hon. Member for Newport East mentioned it—that such circumstances apply to Celsa Steel, which is a critical supplier to our construction industry. Government support in that case secured over 1,000 jobs, including 800 positions at the company’s principal site in south Wales. Commercial confidentiality prevents me from setting out further details on that case, or indeed from commenting on any discussions we have had with individual steel companies over this period. However, I hope that hon. Members agree that that is a clear signal from the Government of our continued commitment to the UK steel industry and the 30,000 individuals who are employed in the sector.

[Stephen Kinnock]

The support to Celsa was absolutely welcome and we certainly appreciate that, but what about Tata Steel? The Minister says he is looking for strategic importance and a viable business that will play a critical role in the future of our manufacturing sector. Surely, Tata Steel qualifies on all three counts?

[Nadhim Zahawi]

The hon. Gentleman will know, because he is deeply involved with Tata Steel in his constituency, that that is absolutely right with regard to the strategic importance of Tata Steel. I hope he will forgive the fact that I will be unable to go any further at this stage because of the need to protect commercial confidentiality. Suffice to say that he is absolutely right that it ticks all those boxes.

As we transition from managing the immediate challenges presented by covid-19 to securing the long-term recovery of the UK economy, we will continue to work with representatives of the steel industry, the unions and the devolved Administrations to address the strategic challenges faced by the sector. We are committed to working collectively with those partners to shape a steel industry that is sustainable, productive and innovative. To that end, we are taking action in key areas. I want to outline a few of the priorities for UK steel companies, including on energy prices, procurement, research and innovation, and international trade.

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[Nadhim Zahawi]

I will come back to anti-dumping at the end of my remarks.

To finish my point on innovation, another £250 million —a quarter of a billion pounds—of clean steel fund will support the sector’s transition to new low-carbon technologies and processes. A £100-million low-carbon hydrogen production fund will support the deployment of low-carbon hydrogen in industry to help decarbonise a range of sectors, including steel.

[Stephen Kinnock]

Will the Minister give way?

[Nadhim Zahawi]

I want to make some headway. If there is time at the end, I will come back to the hon. Gentleman.

The hon. Member for Newport East rightly mentioned procurement. It is a priority for the Government to ensure that UK steel producers have the best possible chance of competing for and winning the contracts associated with our domestic infrastructure investment. We have published a steel pipeline on national infrastructure projects worth about £500 million over the next decade. For the first time, we have also published data on public sector steel procurement, which will be refreshed in the coming weeks and on an annual basis thereafter. That information serves as a testament to our ambitious plans for UK-sourced steel within our pipeline of major infrastructure projects. It will also serve as an accountability mechanism. We will work with the sector to achieve this shared aim.

We recently welcomed the commencement of construction work on the largest of these infrastructure projects, which the hon. Lady mentioned—HS2. We are keenly aware of the opportunity it represents for our domestic steel sector. The Department’s steel pipeline update from last year indicated that HS2 will require more than 2 million tonnes of steel over phases 1 and 2.

We are mindful that there are mechanisms by which we can actively support the sector to realise this opportunity and future ones within the parameters of our legal framework. To take just one example, the Department for Business, Energy and Industrial Strategy has signed up to the UK steel charter, which has been mentioned several times tonight. We recognise it as an important initiative, developed by industry, and we are actively encouraging other Departments to sign up. We look forward to making continued progress on the issue of procurement over the coming months.

International trade and EU exit, which were both mentioned in the debate, are huge areas of strategic significance for the UK steel industry. Overcapacity in steel production remains a global systemic challenge for the sector. We continue to work as part of the G20 global forum on steel excess capacity to address this problem. Unfair market-distorting practices have been partly to blame for the situation. We want all countries to act on and implement the recommendations agreed by G20 Ministers, and we will maintain pressure on them to do so.

In preparation for the end of the transition period, the Government have legislated for the full suite of tools permitted under the WTO to address unfair trading practices. We are working closely with the Department for International Trade to ensure that the UK has a suitable trade remedies system in place for the future to maintain the protection of our steel industry. We are also engaging with our European Commission colleagues to discuss how the steel safeguards should operate after the transition period, with the aim of preserving traditional trade flows and providing as much continuity to the industry as possible. We are committed to transitioning the definitive safeguard measures on those steel products and categories where there is a UK interest. We continue to make a strong case to the EU on behalf of the UK steel sector to ensure that appropriate tariff rate quotas are provided to UK exporters as soon as is practicably possible following the end of the transition period.

These are unprecedented times and the challenge for the UK steel industry is big. I have half a minute left, but I will take the hon. Gentleman’s intervention.

[Stephen Kinnock]

Will the Minister underline our commitment to blast furnaces as a central part of the steel-making process? With the right investment, we can make the transition to hydrogen and so on, but blast furnace production is absolutely central.

[Nadhim Zahawi]

The hon. Gentleman is absolutely right that we have to make sure that, as a foundation industry, steel continues to innovate. Whether it is electric arc or other emerging technologies, such as hydrogen, which we are seeing the adoption of, we are absolutely committed to that.

Oral Answers to Questions

Stephen Kinnock Excerpts

Tuesday 16th June 2020 Commons Chamber

[Alok Sharma]

I pay tribute to my hon. Friend for all the work that she did as shipping Minister. We have made the commitment to £22 billion a year by 2025. That is the biggest increase in public funding of R&D, and no doubt, as projects come forward from that sector, we will look at them.

[Stephen Kinnock (Aberavon) (Lab)]

I had the pleasure and privilege of sharing an office with Jo Cox for almost a year before she was so brutally taken from us, and our thoughts are with Brendan and the family today. On the issue of steel, the Secretary of State will be aware that the French and German steel industries received vital Government-backed loans within 10 days of their respective lockdowns starting. Here, months since the start of ours, the British steel industry has yet to receive a penny. Does the Secretary of State think that that is acceptable?

[Alok Sharma]

We are working with the steel sector, as the hon. Member will know, and we continue to work closely with it. Of course I absolutely remain committed to supporting a sustainable UK steel sector. We have increased the amount of borrowing that can take place under the larger CBIL scheme but, as I said to the right hon. Member for Doncaster North (Edward Miliband) in answer to an earlier question, when individual companies approach us, we will of course enter into direct discussions with them.

Corporate Insolvency and Governance Bill

Stephen Kinnock Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 3rd June 2020 Commons Chamber

[Stephen Kinnock (Aberavon) (Lab)]

May I say what a pleasure it is to follow the hon. Member for Heywood and Middleton (Chris Clarkson), who has paid a passionate and upbeat tribute to his constituency? It is the tradition in this House that when one gives a maiden speech, one is usually surrounded by one’s colleagues in a so-called doughnut. I congratulate the hon. Gentleman on giving the first ever maiden speech with a socially distanced doughnut.

Let me begin by saying that I support wholeheartedly the aims of the Corporate Insolvency and Governance Bill. This is a welcome response and a much-needed one in the crisis times in which we find ourselves. However, the changes are and must be just a small part of the rescue and recovery package that will be required in the long term. This Bill will provide short-term relief from overbearing creditors and give necessary protections, but to avoid a wave of insolvencies as we come off the back of this crisis and those protections begin to recede—a situation that would profoundly damage livelihoods and might have just as many damaging public health consequences as the immediate effects of the crisis—we need to have a plan for the long term that will enable our economy to bounce back in a sustainable manner. This means that the Government must go further and they must go faster.

These needs for ambition and urgency are particularly relevant to the steel industry. It is the largest employer in my Aberavon constituency, with 4,000 well-paid jobs directly employed in the Tata steelworks in Port Talbot, but with many thousands more in the supply chain. Nationwide, the UK steel industry employs 32,000 people and contributes £3.2 billion to mitigating our balance of trade deficit through the exports that are produced. It contributes £5.5 billion to the economy directly and through supply chains, and each job pays on average 28% higher than the average UK job. Indeed, steel is the very backbone of our whole manufacturing sector—from defence to transport to infrastructure—and there can and will be no post-pandemic economic recovery for our country without a strong and healthy steel industry.

As my right hon. Friend the Member for Doncaster North (Edward Miliband), the shadow Business Secretary, has rightly said, the support to the steel industry has been far too slow, and it finds itself now teetering on the edge of the abyss. I do not understand why the French and German steel industries received the liquidity injections they required, backed by their respective Governments, within 10 days of their respective lockdowns starting, yet not a single penny of Government liquidity has been made available to the British steel industry to date. I think we do need an explanation of why it has been so slow.

My worry was that the reason might be that some on the Government Benches have given up on the steel industry. I do not believe that to be the case. I do truly believe and hope that the silver lining from this dark coronavirus cloud may be that the UK Government finally recognise the need to support industries of vital strategic, foundational importance, such as the steel industry, and also that they will begin to acknowledge the value of more localised and shorter supply chains.

What we need, coming off the back of this crisis, is nothing short of a manufacturing renaissance in our country. If we are to grow the economy to meet the challenges presented by climate change, by the social care crisis and by the need to rebuild our economy post-pandemic in a serious, sustainable and balanced manner, we must significantly boost our manufacturing sector. It is currently languishing at 9% of GDP. I would strongly recommend that the Government set an ambitious target of boosting manufacturing to 15% of GDP by the end of this Parliament. We know that the Government like to chase targets. Let us have a target that can actually pull our economy together and rebuild it on the basis of a manufacturing renaissance.

Boosting manufacturing is a win-win-win in so many areas. Our economy is currently dangerously skewed towards consumption and debt. Manufacturing is about production, and that is the kind of shift that we need to make. It would boost productivity, and it is far easier to make productivity wins in manufacturing than in the services sector. It would rebalance the economy and correct the massive geographical gap that exists between the wealthiest region in our country—London and the south-east—and the poorest regions. It would reduce our reliance on China. Just look at the issues around PPE: 40% of the world’s PPE is manufactured in China. We surely cannot go back to having strategic dependence on a country such as China, which so patently does not share our democratic values and ideals.

The steel industry must underpin this manufacturing renaissance. Successive Conservative Governments have unfortunately failed to support the steel industry sufficiently over the past 10 years. For instance, UK steelmakers pay 80% more for their electricity than their French counterparts, and 62% more than their counterparts in Germany. Now, during the pandemic, the Government have failed to come up with the size of loan and liquidity for the cash-flow crisis that Tata Steel, the owner of the Port Talbot steelworks in my constituency, is facing. It is the UK’s biggest steelmaker. It asked the Government for a loan—I stress that it would be a loan, which the company would of course be contractually obliged to repay—to cover the £500 million cash flow black hole that has been caused by coronavirus for the company. The Government recently increased their large business interruption loan scheme to a £200 million cap, but that still falls well short of what the company requires to plug that temporary gap in its cash flow. What a contrast, as I say, with the French and German Governments’ actions. Within 10 days, their steel industries had the liquidity injection that they required.

The Government have now introduced Project Birch, which aims to support those larger companies that did not fall within the parameters of the business loan interruption scheme. However, we know very little about how Project Birch is going to work. Yet again, I am concerned that coming forward with a new initiative could set back the work that has been done under the framework of the previous initiative. It almost feels like we are back to square one. With every day that goes by, the British steel industry teeters closer to the abyss, so I urge the Government to make this their top priority. We need to see the action that is required happening with the greatest possible urgency. My right hon. Friend the Member for Doncaster North and my hon. Friend the Member for Manchester Central (Lucy Powell) have recently written to the Government demanding more action on UK steel, and I thank them for their efforts.

The Government must also urgently recognise that the cost of doing nothing is so much greater to the UK taxpayer than the cost of intervening. Previous research from the IPPR think-tank suggests that the loss of 4,000 well-paid steel jobs could cost the Exchequer almost £1 billion over 10 years, and that is before we count the astronomical capital expenditure cost of decommissioning the blast furnaces and steelworks. The structural cost of putting thousands of well-paid workers on to benefits, combined with the capital expenditure costs of decommissioning, would be absolutely astronomical for the British taxpayer. It would be the definition of a false economy.

The British steel industry is a 21st century industry. It builds the offices we work in, the cars we drive and the homes we live in. It is a cutting-edge industry that is doing so much to promote green growth. There is a project involving Tata Steel and Swansea University just next to my constituency called SPECIFIC, which is creating photovoltaic cells on the basis of a steel-based film, which could turn every home and office in our country into a power station. That is a steel-based product. We are not talking about metal bashing; we are talking about cutting-edge technology and manufacturing. We need to support the backbone of our manufacturing sector that is the British steel industry. We cannot afford to let that backbone break at this crucial time.

The legislation has also missed other opportunities. The Government should be bringing forward long-awaited reforms of corporate governance. I fully support my hon. Friend the Member for Bristol North West (Darren Jones), the Chair of the BEIS Committee, who I congratulate on his recent election to that position. We should ensure that directors do not focus only on profit. They must also focus on people and planet. There needs to be a triple bottom line reporting structure, and the first step is to amend section 172 of the Companies Act 2006. We need companies to adopt a much broader responsibility, not only to narrow shareholder needs and aims, but to a much broader-based stakeholder approach in setting their corporate objectives and mission.

On that note, I commend the work of my right hon. Friend the Member for Doncaster North (Edward Miliband) in his role as shadow BEIS Secretary. He has made it clear that we need a green, sustainable recovery by creating, in his words, an army of zero-carbon workers by retraining and redeploying those who cannot work into different industries. That churn will be essential as we enter the new paradigm of the post-pandemic economy and could apply in areas from home insulation to wind turbine manufacture. These are the opportunities that we see.

My right hon. Friend has also rightly pointed out that those companies that receive state support through this crisis owe obligations to the taxpayer. Those registered in tax havens who want support should come onshore before they get it. Multinationals that plan to pay dividends to shareholders while claiming the Government resources do not need to be doing that. We could also be more creative. In the long term, the Government should consider turning Project Birch into a sovereign wealth fund of the type that has boosted the prosperity of countries such as Singapore and Norway.

Let us ensure that we use this recovery to form a new partnership between Government and business—a partnership that will benefit the whole economy. Let us use this crisis as an opportunity to rethink, redesign and rebuild the British economy. However, the urgent, No. 1 priority now must be to protect the backbone of our economy, our UK steel industry; because without a strong and healthy steel industry, there can be no post-pandemic economic recovery.

[Mr Deputy Speaker (Mr Nigel Evans)]

It is always good to hear Swansea University get a good mention—yes, I went there.

British Steel Industry

Stephen Kinnock Excerpts

Tuesday 10th March 2020 Westminster Hall

[Stephen Kinnock (Aberavon) (Lab)]

I beg to move,

That this House has considered the future of the British steel industry.

It is a pleasure to serve under your chairmanship, Sir Charles. I am pleased to have secured this debate, particularly ahead of the Budget tomorrow, and at what feels like a critical juncture for our industry, and for the entire manufacturing sector that our industry underpins. The Budget is the first major fiscal event since 2018 and the first test of the Government’s promises to the British people, particularly to all their new voters from industrial areas. Today we will make the case to the Government that now is the moment to offer that long-overdue commitment to the steel industry, in order for that 21st century foundation industry to continue delivering for Britain.

[Nick Thomas-Symonds (Torfaen) (Lab)]

I congratulate my hon. Friend on securing this debate. Does he agree that what is required is long-term planning? Following the mothballing of Orb in December, we are in a situation where an electrical steel producer is not producing steel that would be ideal for the green industrial revolution?

[Stephen Kinnock]

My hon. Friend is absolutely right; it is completely absurd to have a Government who on the one hand are committed to decarbonising our economy, but who on the other hand are failing to support Orb, which could play a major role in electric vehicles, which play a major role in decarbonising our economy. It seems that the left hand does not know what the right hand is doing.

The Government must recognise the strategic importance of steel to our country’s future. They must also recognise that steel must be front and centre of their so-called levelling-up agenda if they are at all serious about tackling regional inequalities.

[Stephanie Peacock (Barnsley East) (Lab)]

I congratulate my hon. Friend on securing the debate. Liberty Steel recently announced the loss of 350 jobs in south Yorkshire, due to a “challenging” market circumstances. Does he agree that is concerning, because those are traditionally well-paid manufacturing jobs, in comparison with the low-wage sectors that tend to dominate the local economy?

[Stephen Kinnock]

My hon. Friend is absolutely right. I have to mention today’s very bad news of 500 job losses announced by Tata Steel, which shows that we are back at square one. We do not seem to have learned anything from previous years. Industries need a Government who will proactively work in partnership to produce a policy environment and market environment conducive to investment and to those businesses thriving.

[Nick Smith (Blaenau Gwent) (Lab)]

The excellent “Steel 2020” report contains a brilliant quote, on page 28:

“Government procurement and other incentives should be used to increase domestic steel content in manufacturing and construction…there is clearly a significant market opportunity.”

Is tomorrow’s Budget not a brilliant opportunity to support steel?

--- Later in debate ---

[Stephen Kinnock]

My hon. Friend is absolutely right. We need a patriotic procurement policy. We need procurement that gives the right weighting to local value. Let us look at big opportunities such as HS2—2 million tonnes of steel. How much of that steel will be British? Let us ensure that every single Government Department and HS2 are signed up to the steel charter.

The UK economy cannot stand up without a backbone made of steel. It certainly will not be able to level up if is not able to stand up. Steel underpins our everyday lives, from the houses we live in to the offices we work in; the trains, buses and cars we travel in; and the major infrastructure projects, such as HS2 and the possible Heathrow expansion. It is crucial for our defence industry and to our national security. I hear people say that steel is a sunset industry. Nothing could be further from the truth. It is not a sunset industry; it is an industry of the present and of the future. It underpins our entire manufacturing base, from automotive to construction, aerospace and so much more.

[Mark Tami (Alyn and Deeside) (Lab)]

My hon. Friend is making a powerful case. Does he agree that we cannot just carry on managing decline and that we must invest for the long term? Once a plant goes, it is gone; very rarely do they come back into operation.

[Stephen Kinnock]

My right hon. Friend is absolutely right. Of course, we saw the tragedy of Redcar: once the blast furnace is turned off, that is it. In my opinion, that was an act of industrial vandalism. We must ensure that we take into account the cost of doing nothing. The cost to the Government and the British taxpayer of closing these businesses down is astronomical, so let us have a proactive industrial policy based on investment, and let us use tomorrow’s Budget to deliver that.

[Ruth Jones (Newport West) (Lab)]

I thank my hon. Friend for securing such an important debate. The uncertainty about steel production in Newport, with the closure of Orb and the ongoing nervousness at Llanwern and Liberty, has had a huge impact on jobs in my city and the surrounding areas. Does he agree that we need to secure a level playing field for UK steel producers by addressing the energy price disparity, preventing steel dumping and investing in research and development, so that the British steel sector can thrive globally?

[Stephen Kinnock]

My hon. Friend is absolutely right. This is about having a policy environment that is conducive to driving investment. Businesses are looking for a partnership with the Government. As she rightly says, the cost of energy in this country compared with what the French and the Germans pay means that our steelworkers are competing with one hand tied behind their back. They need a British Government who are on their side.

Let us not forget the tremendous value that the steel industry generates for the British economy. It produces 7.3 million tonnes of steel a year, which is around 65% of the UK’s annual requirement. It employs 32,600 people directly in the UK and supports a further 41,000 through the supply chain. It makes a £2.8 billion direct contribution to UK GDP and supports a further £3.6 billion through the supply chain, and it makes a £2.5 billion direct contribution to our balance of trade. Steel is also integral to the greening of our economy. It is used in wind turbines, tidal lagoons and electric vehicles, and of course it is far cleaner to make our own steel here than to import it from places such as China, where steel production is much dirtier and the carbon footprint of transportation is huge.

Although we can be immensely proud of the contribution that our industry and its workers make, we must reflect on the sector’s recent struggles. UK manufacturing has been in decline, dropping from 30% of GDP in the 1970s to just 9% today, and the UK’s shift towards a city-centric, service-based economy means it is now the most geographically unequal country in northern Europe. We have the richest area in the whole of northern Europe—London—but also the five least prosperous, with west Wales and the valleys the poorest of all.

Let us not forget that steel jobs are good jobs, paying an average salary of £36,000, which is 36% higher than the regional average in Wales. Port Talbot provides 4,000 such jobs. The wider supply chain benefits are even greater, and the sense of local pride that our community feels in providing the very backbone of the UK economy is immeasurable. However, since 2010 our steel industry has been abandoned by the UK Government, leaving us trying to compete with one hand tied behind our back. After 10 years of Tory austerity, our community has also been left to fend for itself as a result of the money that has been taken out of our local economy.

The lowest ebb for our local steelworks in Port Talbot came in 2016, which marked the height of the steel crisis. A number of market forces combined to set the hares running: the UK had some of the highest electricity prices in Europe, which have gone on to cost the sector £200 million since 2016; business rates were through the roof, five to 10 times higher than in France, Germany and the Netherlands; and there was increased Chinese dumping in European markets to undercut European steelworkers. At one point, the UK Government blocked the EU from taking stricter action against the Chinese.

With such little support from the Government, all that came to a head. Leading the march for steelworkers as they always do, Community and other steel unions flew a delegation to Mumbai, which I was fortunate enough to be part of. In the midst of a crisis that nearly led to the loss of 4,000 jobs in Port Talbot, our community fought tooth and nail to make Tata Steel recognise that these were real people with real families to look after, not just numbers on a spreadsheet.

[Mark Tami]

There is an important point here: these are not workers who have refused to change; in fact, they are quite the reverse. They have been at the cutting edge. They want to do everything to make the plants as efficient as possible, but with all these other factors counting against them, there has to be a point where something changes.

[Stephen Kinnock]

I fully agree. British steelmakers make the best steel that money can buy; of that, there is no doubt whatsoever. Look at the flexibility they showed over the divestment of the pension scheme, when many steelworkers thought not about themselves but about their families—their sons and daughters, and their grandsons and granddaughters. That shows the passion and commitment of our steelworkers and their willingness to be flexible. I pay tribute to the steel unions, and to Roy Rickhuss and Community for their leadership in making that happen.

Our endeavour at the time paid off. Tata Steel decided against closing or selling the business, and in exchange the workforce showed incredible sacrifice by voting for the divestment of the pension scheme. In return, Tata Steel put forward a substantial investment plan and promised that there would not be a single compulsory redundancy in the coming years.

Fast-forward four years and we are stuck at square one. While electricity prices and business rates continue to be a thorn in the side of our steel sector, Brexit and Donald Trump’s section 232 steel tariffs are combining to create a hostile policy and market environment once again. Some 70% of UK steel exports go to the EU, and a basic trade agreement with the EU could cost the industry £70 million a year through additional border checks. Although Trump’s tariffs were aimed at punishing China for illegal dumping, they ended up severely damaging the UK’s US exports, which have dropped by 30%. Exports of long products such as rods, bars, rails and construction materials were hit particularly hard, falling by as much as 60%. I am sure the hon. Member for Scunthorpe (Holly Mumby-Croft) will wish to say something about that.

These are tough times. It is important for steelworkers in my constituency and across the country that Tata Steel keeps its part of the bargain by continuing to invest in the long-term future of UK steel making. Our steelworkers, who make the best steel that money can buy, are crying out for UK Government support. It is time the Government put their money where their mouth is and backed this essential British industry. We need a Budget for steel—a Budget that really does level up.

First, the Government must take specific action to reduce UK industrial energy prices in order to move the steel sector’s costs in line with its European competitors. The Government’s energy intensive compensation scheme barely touches the surface; it deals with the symptoms but not the cause of the problem. UK steelmakers still pay 80% more for energy than their French counterparts, and 62% more than German companies.

Will the Minister commit to studying and delivering on the nine recommendations in UK Steel’s “The Energy Price Gap” report? They include providing 100% compensation for the indirect costs of the carbon price support mechanism, enabling energy-intensive industries to buy energy collectively, and providing an exemption from capacity market costs. It is worth noting that any savings on electricity prices would be reinvested in the recently announced clean steel fund and would deliver £750 million of investment in the sector over the next decade.

Secondly, the Government must back business rates reform to drive capital investment in industry. Will the Minister commit to removing plant and machinery from rates calculations? Thirdly, the Government must maximise opportunities for UK steel in major infrastructure projects by introducing measures to increase the amount of UK steel purchased by those projects. Will the Minister back calls for HS2 to sign UK Steel’s steel charter, and will he recognise the potential for the Government’s steel pipeline to support 6,000 new steelworker jobs and contribute £3.3 billion to the economy if every Government project used British steel?

Fourthly, will the Minister commit to using the estimated £200 million in returned moneys from the EU research fund for coal and steel post Brexit to boost UK steel sector innovation? Fifthly, will the Minister commit to removing Donald Trump’s section 232 tariffs from day one of the UK-US trade negotiations? Finally, will the Minister commit to delivering on a sector deal for steel? Aerospace, automotive and construction all have sector deals, yet the industry that underpins our entire manufacturing base—the steel industry—does not. That really is a travesty.

Steel is very much a 21st century industry that forms the backbone of the British economy. That fact must be reflected in tomorrow’s Budget. The Community union is set to launch a new campaign called “Britain, we need our steel”, because Community knows that the UK relies on UK steel every bit as much as its members and the steelworkers in my constituency do.

My constituents and their families, and steelworkers and their families across the length and breadth of our country, are not asking for charity; they are asking for a fair crack of the whip. They are men and women of steel who want the opportunity to compete without one hand tied behind their back and a chance to continue to serve their country by producing more of the best steel around for generations to come. I truly hope that the UK Government share that vision and will stand up for steel in the Budget tomorrow.

--- Later in debate ---

[Jessica Morden (Newport East) (Lab)]

I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on setting out the challenges facing the UK steel industry so effectively and forensically. Like him, I am a long-term member of the all-party group on steel and metal related industries, which I have the pleasure of co-chairing with the hon. Member for Scunthorpe (Holly Mumby-Croft). In our group, alongside the Community and Unite unions and UK Steel, which represents the industry, we have been clear for a long time about the strategy we want the Government to follow to save our steel industry. That has never been more important than it is now, when we see a number of global and UK-specific factors aligning to create a uniquely challenging set of circumstances for steelmakers in this country.

Just this week, Tata wrote to its staff to say that its financial position was serious. This will be another critical year. The Government must act now to help the environment at home for business and our trading relationships, whether they lie in the EU, the US or elsewhere. We have heard those asks repeated again today, on the eve of the Budget, which offers the Government a major opportunity to do the right thing and provide the sector with the strong foundations it needs to weather the current downturn and be in a position to ride the next upturn when it comes.

That is why, as other hon. Members have said, we need action on electricity prices. It is a fact often quoted, but still unresolved, that the UK’s energy intensive industry pays some of the highest industrial electricity prices in Europe. UK steel plants, as my hon. Friend said, paid 62% more than their German and 80% more than their French counterparts last year. We need a level playing field with our European competitors. As he also said—I do not apologise for giving the same messages, because our group has been relaying them to the Government for some time—plant and machinery need to be removed from business rate calculations to drive that capital investment.

As others have said, we must maximise the opportunities for UK steel in major infrastructure projects. According to the last tranche of data from the Department for Business, Energy and Industrial Strategy, 42% of the steel that was procured was sourced from outside the UK. That is still not good enough. Projects such as HS2 give us an opportunity to do better and finally get properly behind the steel charter. We need to use the money that is returned to us from the EU research fund for coal and steel to boost steel sector innovation.

Finally, we must prioritise our steel industry in upcoming trade negotiations. Some 40% of all UK steel is exported, and it is very vulnerable to any deterioration in our trading relationships with Europe and the rest of the world. As my hon. Friend said, we have seen the impact of the Trump tariffs on our exports. Many of us feel as though we have been firefighting for the last five years. The completion of the sales process for British Steel is good news for the company and some of its workforce, given the huge uncertainty and the setbacks that there have been along the way, but we need the Government to be proactive, not reactive. The Government need to decide whether they value making things in this country and whether we want to become an importer of steel, not a maker of steel.

[Stephen Kinnock]

My hon. Friend is giving a powerful speech. Does she agree that following Jingye’s takeover of the plant at Scunthorpe, there is a risk that the Government may say, “Box ticked—that’s sorted. The short-term issue is resolved, and we can walk away and think about something else”? Does she agree that it is vital that that does not happen, and that we still have to address the structural problems that we are discussing?

[Jessica Morden]

My hon. Friend is absolutely right. We cannot be reactive; we have to look holistically at achieving a long-term strategic vision. Help for British Steel is, of course, welcome, but we need help for the whole steel industry in the UK, including the Welsh steel industry.

Just before Christmas, Tata’s Orb steelworks in Newport—the only producer of electrical steels in the UK—was mothballed. It needed investment, but with investment it could have provided the steel for the electric vehicle industry, in which the Prime Minister has repeatedly said that he wants us to be a leader. Last week, we found out that no Government support was forthcoming, that no suitable buyer had been found for the works and that Tata was now considering other uses for the site. No help or good news was forthcoming.

There is a human cost to the closure. As my hon. Friend said, the steelworks provided well-paid, highly-skilled jobs in an area that needs them, but the closure also represents the loss of a strategic industry at a time when we need it. We are going to need electrical steels like those made at Orb, so either we will have to import them or someone will have to go out and build another plant. How did we allow that to happen? We need this steel Minister to take a holistic approach, rather than a piecemeal and reactive one.

I am honoured to represent a constituency that has a proud steel tradition, which includes the Llanwern steelworks. The automotive galvanised steel produced at the Zodiac plant in Llanwern is renowned for its quality across the world and is used by manufacturers in the automotive sector, which is closely linked to the steel sector, to make more fuel-efficient and lightweight cars. I have mentioned Orb, but there is also Liberty Steel, which produces hot rolled steel coils and floorplate coils for the construction sector. Sadly, in January that company announced job losses in Newport, which is a reflection of the clouds of uncertainty that still hover over the sector.

Steelworkers in my constituency take huge pride in what they produce. There is a real passion for the industry, and that is why we fight so hard for it. Reflecting on that, I want to mention Paul Horton, who worked at the Orb steelworks for 37 years. He was the main union rep for Community and did an excellent job, alongside other reps from Unite. He attended a debate on the future of Orb in this Chamber just a few months ago, when he sat in the Gallery. In that debate, I highlighted the contribution of workers past and present at Orb, and that of the trade union representatives from Community and Unite who fought so hard for everyone there.

Paul clocked up 12,849 days of work at the site and, although he was reaching the end of his own time at Orb, he knew it would be a tragedy for Newport and for south-east Wales to lose such a strategically important works. Sadly, on new year’s day—the day after he finished work after 38 years—Paul passed away. He was a wonderful man and a passionate advocate for our steel industry. In mentioning him today, I want to reflect on the passion and dedication of those who work in the steel industry, and to honour his memory by carrying on the fight to save our steel.

--- Later in debate ---

[Kwasi Kwarteng]

Exports are at the centre of our industrial base, which is one reason why we support the industry in the way I described. I mentioned the funds and actual policy engagement; we see leaders in the steel sector often. I am pleased that my hon. Friend raisd this issue; it makes a change from fracking, which he often raises with me. However, this is of fundamental importance not only to our industrial strategy but for jobs. I have been struck and impressed by the human stories and the passion with which many MPs here have fought for their industry, their constituents and for the country as well, because we recognise that steel is an absolutely strategic sector.

On prices and the business environment, business rates come up as an challenge that steel companies have to deal with, but they are not alone; across our economy, business rates are often raised. In that vein, the Treasury is committed to reviewing business rates—we hear what people are saying. We want to see what mitigations we can introduce to make the business environment even more benign, to allow companies to thrive.

One extraordinary moment in this debate was the hon. Member for Motherwell and Wishaw quoting Ben Houchen’s writing in The Spectator. That was quite an interesting development. I speak to Ben Houchen, the Mayor of Tees Valley, regularly. He knows that he has many friends and associates within BEIS who are always willing to listen to him on these issues, as they relate not only to the Tees Valley but to the wider steel sector and our industrial base generally. I am proud of engaging with him on this, and I am sure that he understands and recognises that we support the sector and that we are thoroughly and absolutely committed to the steel industry in this country.

My hon. Friend the Member for Rother Valley (Alexander Stafford) mentioned exports. My Department works constantly with the Department for International Trade to ensure that the UK has a suitable trade regime. Naturally, we have not concluded a free trade agreement with the United States as of today, but when we are in the process of doing so, the potential and real damage inflicted on our workers by steel tariffs will be a subject of debate. I am sure that everything will be dealt with in that round of conversation.

[Stephen Kinnock]

I welcome the Minister’s recognition of the deeply damaging impact of the section 232 tariffs on our highly competitive steel industry, which is not state-subsidised, unlike China’s. Does he agree that the point of maximum leverage is now? If the United States wants to enter into trade talks with the UK in a spirit of good faith and trust, surely it would be at the very least a gesture of goodwill to fire the starting gun on the talks by giving the UK an exemption from the tariffs.

[Kwasi Kwarteng]

The hon. Gentleman is tempting me down a rabbit hole. I am not here to talk about the specifics of our trade deal with the United States; perhaps he should call for another Westminster Hall debate on that. Certainly conversations around any trade agreement with the United States will centre in no small degree on our industrial base and on the nature of our relationship in terms of steel. He will understand that we are now in the process of negotiating a free trade agreement with the EU. We have not started the American trade talks, and I think it would be prejudicial to them—that is my own view—to start making demands in that round of conversations before we start the formal negotiation.

Procurement is important, and we have many projects that rely on UK-made steel, as the hon. Gentleman knows. I do not know whether he has visited Hinkley Point, but I had the honour and privilege of doing so only four or five weeks ago. When I was there, I was told that 100% of the construction steel and rebar for Hinkley Point C was procured in Wales. Port Talbot was an essential part of the construction of Hinkley Point, which they were very proud of. I had the honour of going round the site and seeing the extremely effective and impressive amount of steel that had been imported across the river from Port Talbot to Hinkley Point. That is a classic and very good example of how major infrastructure projects are, even today, reliant on production in Port Talbot.

HS2 was also raised, so it is quite right to talk about the rail network in connection with domestically produced steel. The good news is that 93% of the steel used to maintain our rail network is made in the UK. Does that mean that we have the perfect procurement policy, using UK-manufactured steel? No. However, it is wrong to say that we have not made some progress or that we are not reliant on UK-manufactured steel in our infrastructure and our building, and through Government persuasion, intervention, agitation and conversing with the industry, we can improve the proportion of UK-manufactured content in our infrastructure.

The picture for the steel industry is challenging. Many of the concerns that hon. Members have raised about pricing and the geopolitical environment are out of our hands. I remember the biggest fact in the steel industry from the time, many years ago, when I was an analyst in this sector. In 2000, I was struck by the fact that China produced only 15% of global steel. Today, that figure is 50%. The hon. Member for Aberavon and others will know that Chinese steel is strongly supported by China’s Government, and there is a history of dumping. The pricing framework has been under a lot of pressure from Chinese production. We must deal with that, and we want to, but it is a serious pressure that we should all be conscious of.

It is wrong to say that the Government have not done anything in this regard. We have plenty of investment and funds. Not only do we have resources and money, but we engage with the industry, for example through the British Steel Council, which never happened before. My right hon. Friend the Member for Bromsgrove introduced that in 2016. We have worked with the industry. We signed up to the UK steel procurement charter, which shows our commitment to ensuring that UK steel producers get a fair, good chance of securing public contracts.

I think the hon. Member for Motherwell and Wishaw mentioned the EU. No debate in this House has passed without mention of the EU in the past four years. This is a classic example where we will no longer be tied by the state aid rules of the EU, so there is ample opportunity for Governments to provide some measure of comfort to the industry, as well as support, as we intend to do.

I am pleased to have spoken in this debate. I have left some time for the hon. Member for Aberavon to sum up, Sir Charles.

[Stephen Kinnock]

I thank the Minister for his remarks. I welcome anything the Government have done and can do to support our industry, but we have not really made much progress on the specifics, and the devil is in the detail. There is a crazy disparity between energy costs in this country and in France and Germany. That is the simple fact of the matter. We need policy intervention to give us that level playing field. It seems absurd to have an energy-intensive industry compensation package paying for the symptoms rather than addressing the causes. I urge some detailed responses to my questions, specifically about energy policy.

It is great to hear that the Government are reviewing business rates, but this crisis has lasted for five years. It seems incredible to me that we are still reviewing something when we know what the answer is: take plant and machinery out of business rates. On trade, a gesture of good will from the United States would be a welcome way to start those negotiations. I recognise that the Minister will not be in the room for those negotiations, but it is his job to champion the steel industry across Westminster and Whitehall. I hope he will be the voice of the steel industry in those trade negotiations. On procurement, there was a specific question: will the HS2 vehicle that runs that project sign the steel charter tomorrow? There is no reason why it cannot do that.

I welcome the Minister’s constructive response, but the devil is in the detail. I would welcome detailed progress on those points, because otherwise it feels like we are using a sticking plaster over a gaping wound. Our British steel industry is the pride of this country and the foundation of our manufacturing sector. It is the pride of communities such as the one I represent and those represented by colleagues around the Chamber. I hope we will see that proactive response from the Government in the very near future.

Question put and agreed to.

Resolved,

That this House has considered the future of the British steel industry.

British Steel

Stephen Kinnock Excerpts

Wednesday 24th July 2019 Commons Chamber

[Greg Clark]

My experience from conversations with the bidders for British Steel is that there is a recognition in the steel industry—not just in this country, but around the world—that the move to cleaner and greener production is happening globally. Actually, there is an opportunity to get ahead of that, as investing in improved energy efficiency and reducing carbon emissions will have to be done everywhere. Again, one of the purposes of the industrial strategy is to advance ourselves as a place where this has been done well and reliably and has been well supported. That, it seems to me, is best for the long-term future of steel making and other manufacturing, rather than attaching ourselves to a model that will be increasingly costly around the world. The future depends on being more energy efficient and greener.

[Stephen Kinnock (Aberavon) (Lab)]

The UK exports 2.6 million tonnes of steel to the European Union every year. It is estimated that a no-deal Brexit would add £70 million of additional administration costs and costs relating to border checks. Does the Secretary of State therefore agree that a no-deal Brexit represents an existential threat to the British steel industry, and will he be conveying that message loud and clear to his successor and to the incoming Prime Minister?

[Greg Clark]

I gently say to the hon. Gentleman that that message should be conveyed to all Members of the House who did not vote for a deal that would have provided, as British steel advised, the ability to trade in that way. My views on the desirability—in fact, the imperative—of having a good deal that allows us to trade without introducing barriers and frictions are well known to the House, and indeed beyond. What I will say is that at this time, when potential purchasers are considering British steel, actually it is not the case that the steel industry would not have a future in the event of different forms of Brexit. It is very important to convey to prospective buyers the fact that the industry that exists, with its opportunities domestically and internationally, and with the quality of its workforce and of its steel production, is attractive in itself and will not be trumped by the Brexit settlement. It is important that those prospective buyers have confidence, as some of them have having done their due diligence, that this is a good investment in all circumstances.

UK Steel Industry

Stephen Kinnock Excerpts

Tuesday 9th July 2019 Westminster Hall

[Nic Dakin]

My hon. Friend makes an important point: there are 5,000 direct jobs in the Scunthorpe area, in Teesside and elsewhere in the UK, but also 20,000 jobs in the supply chain. Steel is a significant employer, as well as a significant strategic asset for the UK. All the work that everyone is doing is to ensure that the whole business progresses under a new owner, which is the direction we all need to remain focused on, across the House and across the country.

The British Steel workforce in Scunthorpe, the north-east and elsewhere has responded brilliantly at a time when everyone working for the company sees their future in the balance. Workers, trade unions, the management team and the supply chain must be congratulated on keeping the show on the road in such difficult times. The magnificent outputs that they are achieving show what a sound business this is, still producing world-class steel day after day. British Steel has a strong strategic plan in place, externally validated by top-tier management consultancy McKinsey.

The Government have made all the right noises. The Secretary of State and the Minister showed real leadership in putting in place the indemnity that allows the business to continue as a going concern. When local cross- party MPs met the Prime Minister, she made clear her Government’s commitment to finding a sustainable future. The Secretary of State’s chairing of the British Steel support group’s weekly meetings is valued by all stake- holders. However, we are now reaching a crunch time, when warm words need to be matched with further actions to close the deal with prospective buyers.

Assurances may need to be given about the environmental liability—a no-brainer, as the liability is likely to fall to the Crown anyway if the business fails. On future carbon credits, the Government will need to show the flexible thinking that they have already shown in their dealings with Greybull Capital. Other things for the Government to look at might include loans to support investment and so on. To be helpful, will the Minister confirm that the Government, while being mindful of the need to act within the law, will do all they can proactively to close the deal with those bidders the official receiver believes can take the business forward?

Over the past few years, we have bounced from one steel challenge to another. Too often, steel policy responds to the urgent needs of the now, but fails to set out a strategic future path for this crucial foundation industry. In 2015, Sahaviriya Steel Industries in Redcar closed, meaning that the UK’s strategic steelmaking assets there are now lost forever. The cost of cleaning up the site, alongside the human cost of huge job losses at the heart of the northern powerhouse, will be with us for a very long time.

Instead of lurching from one crisis to another, the UK needs a Government that will put a plan for steel in place by responding positively to the five strategic asks made by steel MPs, trade unions and employers with one loud, consistent voice. First, the threat of a no-deal exit from the European Union is what sparked the current crisis, and anyone who talks blithely of a no-deal exit risks steel jobs and livelihoods throughout the supply chain—no deal risks no steel—so we need a positive new relationship with the EU to give certainty on the timely provision of UK-specific quotas within the EU steel safeguards. That should be a major first priority for the new Prime Minister when he takes up his post.

[Stephen Kinnock (Aberavon) (Lab)]

I thank my hon. Friend for securing this vital debate. I also pay tribute to him for his absolutely outstanding work as chair of the all-party group on steel and metal-related industries. He shows real leadership in this area. On the subject of the steel quotas, he rightly pointed out that, in the case of a no-deal Brexit, we potentially have the disastrous situation of UK steel being subject to EU dumping regulations. What steps should the Government take specifically to ensure that we are given those quotas, which UK Steel has said are the No. 1 priority in the short term?

[Nic Dakin]

It is about talking to the EU about the necessity of having UK-specific quotas. That could be part of a deal; it is a deal that can be done, and one that the new Prime Minister needs to put high on his list of priorities. That needs to happen, because steel is a strategic industry that is important not only to us in steel communities, but to the UK if it is serious about its place in the world. Ensuring that we get those quotas is therefore the first ask.

Secondly, a level playing field is still needed on electricity prices for UK steel. It is not good enough for the Government to say that they have given some of the “higher than our competitors” energy taxes back; we need some innovative approaches to level the energy-costs playing field. For example, we could put measures in place to maximise the level of relief on renewables levies, which is allowable under state aid rules, we could bring in German or French-style network cost reductions, or we could provide an exemption from the capacity market levy, as the Polish Government are doing. Those things happen in our competitor countries and, given the political will, they could happen here.

Thirdly, something needs to be done to tackle the much larger level of business taxes on steel in the UK compared with our competitors. It is bonkers that the site in Scunthorpe has higher business rates than the equivalent site, which is twice the size, at IJmuiden in the Netherlands. That is not a level playing field under anyone’s rules.

Fourthly, more could be done to maximise public procurement of steel, as my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) indicated. Progress on Government policy note 11/16 on procuring steel in major projects remains patchy. I was pleased to see the previous Minister with responsibility for the steel industry, the hon. Member for Watford (Richard Harrington), begin trying to make Departments accountable, but we have a long way to go to get real, effective traction, and we are three years on since the Government put that policy guideline in place. In answer to my written questions asking Departments if they have signed up to the steel charter, all confirmed that the current Minister is on the case and has written to them—but, in the main, the answers were hesitant and generic. The honourable exceptions were the Ministry of Justice and the Department for Work and Pensions, both of which confirmed that they will sign the charter. The next step for them will be implementation.

Oral Answers to Questions

Stephen Kinnock Excerpts

Tuesday 11th June 2019 Commons Chamber

[Kelly Tolhurst]

My officials are in regular contact with the Treasury and MHCLG to represent the views of business. Last week, we welcomed the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Rossendale and Darwen (Jake Berry), to BEIS so he now holds ministerial roles in this Department and in MHCLG, as Minister for the northern powerhouse and local growth. This further strengthens our relationship. We look forward to continuing to work together to support these businesses and make proper representations to the Treasury.

[Stephen Kinnock (Aberavon) (Lab)]

T8. British steel companies pay twice as much as their French competitors for energy and 50% more than German companies. What action will the Government take to enable the British steel industry to compete without having one hand tied behind its back?

British Steel

Stephen Kinnock Excerpts

Tuesday 21st May 2019 Commons Chamber

[Andrew Stephenson]

All support that is provided for businesses has to be compliant with UK domestic law and EU law. It has to pass various commerciality tests to be legal and compliant with state aid rules. We always stand ready to work with UK businesses to protect UK interests and jobs, but any support that we provide has to be legal.

[Stephen Kinnock (Aberavon) (Lab)]

It is almost three years to the day since we were battling to save the entire Tata operation throughout the United Kingdom. It beggars belief that we are here having the same conversation and asking the same questions. The fact is that the fundamental problem is that the British steel industry is not able to compete on a level playing field because of the Government’s complete failure to have an industrial strategy to support it. When will the Government stop leaving stones unturned and give the steel industry the sector deal it urgently needs?

[Andrew Stephenson]

I know the hon. Gentleman is incredibly passionate about this issue. I met representatives of Tata Steel yesterday, and we discussed many issues relating specifically to the Port Talbot site. Rather than a bleak picture, they painted a positive picture of how that site has grown over recent years. There has been significant investment and the company wishes to invest more. The Government will work with Tata Steel to support it in any way possible, and we will certainly work with colleagues in the Welsh Assembly to ensure that if any support is required it is delivered. Across the board, we are working to support the UK steel sector.

British Steel: EU Emissions Trading Compliance

Stephen Kinnock Excerpts

Wednesday 1st May 2019 Commons Chamber

[Greg Clark]

I agree with that. My hon. Friend gives me an opportunity to respond to what the SNP spokesman, the hon. Member for Kilmarnock and Loudoun (Alan Brown) referred to and I neglected to comment on. My hon. Friend is absolutely right that there is the opportunity for energy-intensive industries that are significant emitters to capture that carbon. We have a competition, which is being run at the moment, and sites such as Teesside have put in very impressive and attractive bids. I and my colleagues in Government want Britain not just to be one of the leading developers of the technology of CCUS, but to implement it to the advantage of our energy-intensive industries.

[Stephen Kinnock (Aberavon) (Lab)]

The term “cliff edge” is probably overused, but there is no doubt that British Steel was taken to the cliff edge on this one, with incredibly last-minute deals and negotiations. What steps will be taken to ensure that lessons are learned from this experience? Could the political declaration on the future relationship be amended to secure a commitment to the ETS? If not, we will end up at another cliff edge at the end of the transition period.

[Greg Clark]

The hon. Gentleman talks about taking us to the cliff edge. It is a legal responsibility on the part of each emitter to comply with its requirements to surrender allowances. Notice was given, and as some of my hon. Friends pointed out, every other company acted on that. We were presented late in the day with a choice I described as unenviable. We responded to that pragmatically, and I detect in the hon. Gentleman’s tone a recognition that this is the right step. To avoid repetition of this situation, the advice from the company and the industry is clear: the House needs to come together, long before 31 October, and agree a withdrawal agreement that would result automatically in the ability to release allowances, not only for this year but for the following year too.