UK Steel Industry
Debate between Stephen Kinnock and Jonathan Edwards
Stephen Kinnock
I was not surprised. Let me remind the House that 80% of the Chinese steel sector is state owned. On what planet can that be considered a market economy? I leave that to the House to decide.
The Secretary of State’s claims that he has been working on these things for months simply do not stack up. Yesterday, both in this House and at the APPG meeting, he claimed to have been aware of Tata’s decision to sell before it was publicly announced. If that was the case and if he really knew what was coming, why on earth was he on the other side of the world when the board meeting was taking place? Why was he caught so unaware? If he really was in the know as he claims to have been, why did he have to rush back to the UK in a mad panic?
The Secretary of State also boasted yesterday that it was his actions and his actions alone that prevented Tata from closing rather than selling Port Talbot and the rest of its strip products division. I must admit that my jaw hit the floor when I heard that claim. I was out in Mumbai. I was there for the board meeting with Roy Rickhuss and Community. The Secretary of State was not. Tata has expressed deep disappointment and frustration with the lack of support that it has received from this Government. We have seen delayed action on energy compensation, with many companies still waiting to receive their money, and weasel words on procurement from a Government who got the steel for the latest set of Ministry of Defence frigates from Sweden. Above all, Tata saw a Government who refused to support the steel sector in tackling Chinese dumping by opposing trade defence reforms, while championing market economy status for China. Therefore, this supposedly pro-business Government's influence on Tata is very limited. What really made the difference was Community’s high profile “Save our Steel” campaign, and the fact that Labour MPs have raised the issue of steel on more than 200 separate occasions since the general election.
The clock is ticking. Tata has said that it will give the sale “all due time”. Yesterday’s news about Scunthorpe took almost nine months, and it is still not fully complete. The deal on Port Talbot and the rest of Tata’s strip operations may also take time. Let us therefore hope that today’s debate marks a step change in attitude and action by the Government. Let us hope that they work proactively to protect the entirety of the order book and that they save the future of the heavy end in Port Talbot,
Jonathan Edwards
The hon. Gentleman will know that his colleagues in the Welsh Government have spent £80 million on a conference centre in Newport and £58 million on the airport in Cardiff. Does he think that the £60 million allocated to Tata in Port Talbot is sufficient?
UK Steel Industry
Debate between Stephen Kinnock and Jonathan Edwards(8 years, 10 months ago)
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Stephen Kinnock
My hon. Friend makes an excellent point. He will be aware that a debate is taking place in the Labour party, but I can assure him of which side of that debate I fall on. There are a number of reasons why I fall on that side of the debate, but saving our manufacturing industry—up to 20,000 jobs rely on the nuclear programme to which he refers—is critical. I will certainly contribute forcefully to the debate in our party from that perspective.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I congratulate the hon. Gentleman on securing the debate. The estimated capital cost of Trident could be up to £165 billion. Is he seriously saying that if the UK Government redirected that amount of capital investment, we would be able to produce only 20,000 jobs?
Mr Charles Walker (in the Chair)
Order. I am not allowing Members to get into a debate on Trident. Mr Kinnock, can you continue, please?
Stephen Kinnock
The hon. Gentleman mentioned the important issue of the power plant at Port Talbot, which has a green light for its planning. I understand that construction of the plant and its operation would save between £25 million and £30 million a year on energy bills for the Port Talbot plant, so it would be a huge saving and a great boost to the plant. Does he agree that it would be welcome if the UK Government and the Welsh Government came together in a dialogue, pooled resources and gave some support to Tata Steel, both financial and in kind, to facilitate construction of that plant?
Jonathan Edwards
I fully agree with the hon. Gentleman. That was the point I was endeavouring to make. A one-off capital cash injection could have tangible benefits and would be a huge vote of confidence in Tata at Port Talbot and the communities of south Wales.
I challenged the Prime Minister yesterday about the huge contradiction in cheerleading the case for China to have World Trade Organisation market economy status, which would make it impossible to impose tariffs on steel, while at the same time belatedly calling for unfair price tariffs against China. Many hon. Members have spoken about that so I will move on to my next point.
The UK Government have a defining choice. Do they put the interests of the City first and deliver their wish that London becomes a centre for trading in the Chinese currency, or do they protect manufacturing workers? I hope that, for once, they will put the communities I serve before the City of London.
Port Talbot, Trostre and most of the supply chain are in a tier 1 European Union assisted area. As I told the Minister during the debate on a statement last week, the UK Government should be looking at innovative operating aids to reduce employment costs, such as a national insurance contributions holiday. State aid is permissible under EU law if there is unfair competition or market failure, as is the case in this instance. We should be taking action now and pressuring the European Commission for a derogation. We cannot afford to wait years for a decision.
Similar to what the Welsh Government are doing, the UK Government should be looking at its procurement policies to ensure that domestic steel is used in large infrastructure projects. The hon. Member for Aberavon made a valid point about EDF.
The difficulties facing the industry are not, of course, confined to Wales. The UK Government should introduce a temporary reduction in business rates for steel in England. That would trigger consequential funding for Wales, Scotland and Northern Ireland to help their industries within the devolved Government areas.
At European level, the Commission must wake up and smell the coffee. China is producing steel, selling it at below production cost and dumping it on the European market. It is a purely aggressive strategy aimed at decimating steel production in the EU. The Commission’s job is to act. We can contrast that with the response of the US Government who, according to Bloomberg, are taking steps to impose a 265% tariff on Chinese steel. As I have said, it is the UK Government’s job to press the Commission. If they refuse, my party’s call for the Welsh Government to have a direct role in EU decision-making processes to protect Welsh interests will become a battering ram.
The Commission’s investigations into Chinese steel dumping are taking far too long and its recommendations have been pitiful. For reinforced bar steel products, it recommended a measly tariff of only 9%. It is estimated that an investigation into coiled steel, which is made at Port Talbot, will take a year. The US—I am not usually a cheerleader for the US Government—takes only 45 days to conclude such investigations.
While European bureaucrats dither, Welsh workers are losing their jobs and the pace of action is simply not good enough. To those who argue that a Brexit is the solution to my complaint, I respond by telling them to look at what happened to the coal industry—we would be leaving the steel industry in the hands of a Westminster Government.
In reality, the steel industry in Wales faces massive challenges. I am informed that Tata in Port Talbot does not produce specialised products and therefore faces the brunt of the exports from China and other economies. The transition to a more modernised production system creating specialised steel will not be easy. It will require significant capital investment, but if we are serious about securing a future for steel production in Wales and across the UK, we need a range of temporary interventions to create breathing space for the necessary investment to be delivered.
In conclusion, this has been a deeply troubling week for Wales and our economy. The ongoing problems have been highlighted for a long time, yet the Labour-run Administration in Cardiff seem to stand passively by and do precious little, apart from blaming the UK Government. The Tory Westminster Government seem more interested in helping their friends in the City than in helping the working communities that I represent.