Steel Industry

Tom Blenkinsop Excerpts

Wednesday 11th May 2016 Westminster Hall

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I beg to move,

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

Before I begin, I would like to congratulate the steel football club of Middlesbrough on re-entering the premier league this weekend. I congratulate the chairman, Steve Gibson, who yet again has shown what a great model can be provided by a fantastic chair over many years. It is high time he was given a knighthood for his services to football.

Today is about the British steel industry. I want to reiterate that the British steel industry has a future. It is not a sunset industry; it is not a basket case. We, as steel MPs, have hammered home the well-versed arguments of industry and Community, the steelworkers’ trade union, that the Government have not provided the will to back trade defence mechanisms, especially in the case of the lesser duty tariff; that Chinese and Russian dumping is causing chaos in the world, European and British steel markets; that an imposition of the carbon floor price on energy-intensives has had significant repercussions; and that compensation for the carbon price floor and the EU emissions trading system has been slow to non-existent, despite continuous British ministerial promises. Business rates also need fundamental reform.

Despite all that, only this week we saw seven potential buyers come forward with the intention of purchasing the remaining Tata assets. Those assets across the UK—from Port Talbot to Shotton, Trostre, Llanwern and Hartlepool—are manufacturing different products at different levels of the stream of steel production. Prior to that, Dalzell and Clydebridge were purchased by Liberty House. Various Caparo sites previously in administration were also purchased by Liberty. Long product sites such as the Teesside beam mill, Skinningrove and the integrated works at Scunthorpe were all purchased by Greybull Capital, with the intention of significant investment. That is not evidence of a sunset industry. Those are serious players with real desires to invest and make money.

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

While those boons are obviously welcome, I am worried that we see it in the press that somehow everything is okay now. It is not. There is still a great deal of worry out there. I am particularly concerned about people who are leaving the industry to get jobs elsewhere because they do not see security for them and their families.

[Tom Blenkinsop]

I thank my hon. Friend for bringing up that issue, because skills retention is key. There are historical precedents that the Government could look to—not very old ones, but from the previous Labour Government in 2010—for how to use facilities and Government finance in order to retain skills. I will get on to that a little later.

What could have been for the Teesside Cast Products site in Redcar, the second most efficient plant in Europe, if it had been given time and the Government had committed to step in and co-invest, instead of the miserable inaction of a Government paralysed by dogma? It was saved once, but the lessons of how that was achieved were ignored.

Our British steel industry is a world beater. Investors desire to own it. International market conditions are changing right now. Indeed, indicators regarding strip in the UK are far more positive. As world demand increases and Chinese steel sites are closed due to international pressure, we are well placed to capitalise on that, but only if we now rally hard behind our British steel industry.

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

On the international situation, does my hon. Friend agree that a real acid test for the Government is their position on market economy status for China, which would be wholly illogical given the Chinese Government’s control over their native industry?

[Tom Blenkinsop]

My hon. Friend makes an excellent point; I want to come to that later. Indeed, I believe the European Parliament is voting tomorrow on whether or not to grant China MES. Ultimately, the European Commission will have its say later in the year, but the implications for energy-intensive industries—not only steel, but manufacturing per se—go way beyond what anyone has talked about in any depth. That has been ignored to a certain extent—or, rather, quietly allowed to go under the radar—but the consequences for British manufacturing are profound.

[Nic Dakin (Scunthorpe) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he agree that we have seen some tremendous leadership from both the Community union, leading the trade unions, and UK Steel leading the employers? That leadership and inspiration should be matched by the Government in taking us forward and ensuring a bright future for steel, as well as a very good past.

[Tom Blenkinsop]

I thank my hon. Friend for mentioning Community, which is my union and former employer. Community has shown the positive role that trade unions can perform in partnership with employers. Mutual co-operation between employees and employers is necessary in order to get an industry through a difficult period, whether through a short-time working agreement, negotiating pensions or trying to find buyers for a steel site. Community is an exemplar in the trade union movement—I would say that, as a present Community trade union member and a member for many years, but there is a lot that the union movement can learn from it.

[Chris White (Warwick and Leamington) (Con)]

Can we also talk about the purchase of British steel? Does the hon. Gentleman agree that local authorities and national Government can learn from the example set by North Lincolnshire Council, which has agreed a resolution that fully embeds the Public Services (Social Value) Act 2012, enabling the use of UK steel in its procurement policies and committing to using British steel in its construction projects wherever possible?

[Tom Blenkinsop]

I applaud that council for doing that; it is exactly what we wanted. The all-party parliamentary group on steel and metal related industries called upon our local authorities, or any authority at any tier, to support British manufacturing, in particular steel, via the EEF. We worked with UK Steel and the trade unions in order to push that. It is good to see a local example of that.

We now need to rally hard behind our British steel industry. As I have said, examples of purchasers coming forward are clear. We now have seven buyers that have shown an intention to purchase the remaining strip/tube and the remaining assets. However, as I have said before, I do not think Tata has completely left the field. I suggest that there are potentially eight players on the field at present. It will be interesting to hear what the Minister says about Tata’s position and whether she believes it has completely left the field. I do not think it has, and it will be interesting to see in the coming days and weeks what Tata may or may not do.

The main issue, though, is how Tata continues to behave and whether it wants to be viewed in the full glare of the world’s media spotlight behaving in a sensible, rational and responsible manner. It remains incumbent upon the Government to provide the necessary oversight to ensure that Tata does exactly that, so that we can ensure current British steel capacity, ensure our defence and civil capability and demonstrate internationally that the UK values and wishes to protect an industry it leads the world in.

That brings me to the steel sector materials catapult and international competitiveness. The UK has some of the best expertise available globally for innovation in steel. As a result of its extensive expertise in both materials and energy, the Materials Processing Institute has been approached to join a national Swedish initiative to transform the steel industry in that country from coal-based to hydrogen and renewable energy over the next 20 years. At the end of this month, the institute will receive a delegation from the German steel industry, which has an interest in transitioning to more recycled and electric steelmaking.

Meanwhile, the UK has the opportunity, through the materials catapult proposal, to take advantage of our home expertise and leap ahead of our European competitors, yet the proposal has still not been taken up by the Department for Business, Innovation and Skills. I believe that could be achieved with a minimum of £5 million and could secure the research and development aspect that is vital to an industry moving forwards and developing. Again, that exposes the lack of an integrated industrial strategy on materials and materials research.

Tata clearly states that it has refused bids from cherry-pickers. However, the Government must remain vigilant. A total buy-out does not prevent a sudden, total closure of UK sites, so that a purchaser can retrench the position of, say, an integrated works in Holland—I can think of one such company, but I will not mention which. The Government must maintain that key watch role. Indeed, now is an ideal time for them, while potentially laying out a 25% equity stake, to specifically design a fully integrated industrial strategy to demonstrate to key investors what future they envisage for British steelmaking, not only to retain and maintain what capacity we already have, but to point to key investment opportunities so that we can hold our ground and increase our capacity and world market share. This is where the nation needs to leverage existing national excellence.

At the same time as the UK’s leading steel manufacturing institutes have come together to propose the materials catapult, it is understood that the Department for Business, Innovation and Skills is considering other, less suitable innovation providers to develop proposals to support the steel and wider metals industry. The danger is that public money will be used to duplicate and crowd out existing world-class providers. Instead, the Government should take up the materials catapult proposal, which is widely supported by the industry. It would build on our world-leading expertise, offer best value for money and have immediate nationwide benefits. Furthermore, a purely social response is that the Materials Processing Institute, part of the materials catapult bid, is situated in the borough of Redcar and Cleveland, footsteps from the edge of the former south bank coke ovens and the Teesside Cast Products integrated works, which no longer exist. An assurance of investment in the catapult would not only benefit the UK steel sector, but directly help an area so badly damaged by the loss of Sahaviriya Steel Industries in autumn last year.

My trade union, Community, is the leading union in the Save our Steel campaign to secure a sustainable future for the UK steel industry. As the sales process for the divestment of Tata Steel UK’s business proceeds, it is vital that the Government focus on the future of the UK steel industry. In answer to every question about an industrial strategy for the UK, the Secretary of State for Business has dismissed it as semantics, stating that the existence of the Steel Council demonstrates an industrial policy or approach that achieves the same outcomes. This is simply not the same as or comparable with a long-term coherent industrial strategy and does not ensure the future of the industry. The Government must stop dodging the issue now.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I am grateful to the hon. Gentleman for introducing this important debate. Will he concede that the difficulties in the steel industry started in 1994, when 35,000 people were employed in the industry? The number stabilised around 2010 and has been stable since. Would it not be more sensible to have a cross-party constructive discussion to solve these problems?

[Tom Blenkinsop]

I thank the hon. Gentleman for his contribution. I have been chair of the all-party group on steel and metal related industries for five years and we have tried to reiterate the arguments for the steel industry. In 2012, when I first mentioned a debate about Thames Steel Services in Kent in the south-east of England, which is obviously not in my constituency but is part of the steel family, we did not get much of a hearing from the Government. Following that, we had further debates on the impending crisis, which we could see coming because of dumping from Chinese markets and other repercussions of Government policy. Ministers from the Department for Culture, Media and Sport responded. They were not even Ministers from the Department for Business, Innovation and Skills. I kindly suggest that the hon. Gentleman looks at the record of the last few years. Colleagues in this Chamber who are members of the all-party group from other parties are well aware of that history.

The Government must stop dodging the issue and start to work on a strategy to protect and boost the industry across the UK. A real concern is the amount of time that Tata Steel is allowing for the sales process and that an arbitrary deadline will be imposed that is too soon for credible investors to develop a viable bid. Tata allowed time for the sale of its long products business to a credible investor. It should provide the same opportunity to bidders for the rest of its UK business as it allowed in every contemporary example, including SSI back in 2010 and Greybull Capital now—and, indeed, as was allowed in Tata’s own acquisition of Corus back in 2006.

The story is lost to some extent, but Tata achieved its purchase of Corus in competition mainly with a Brazilian company, and it achieved it only because in 2002 Tony Pedder, who headed up Corus at the time, was in competition with the same Brazilian company to create a merger, which then failed. Four years elapsed to allow Tata to purchase it. Some would argue that it paid an expensive share price, but that time elapsed and both competitors ratcheted up the share price because they thought the British assets were so key and vital, as they still are.

Public sector steel contracts must specifically consider UK steel, but I and my colleagues are concerned about recent reports that British steel is not being used in vital upcoming manufacturing projects—for example, Ajax vehicles. The Defence Minister, the right hon. Earl Howe, revealed in answer to a parliamentary question that 40% of the work building those vehicles will be carried out in Spain and a majority of the supplied steel will come from Sweden. This came after the Prime Minister hailed the deal as a boost for British manufacturing. Another example is the Aberdeen city bypass. Negotiations on a £12 million contract for 10,000 tonnes of rebar for the bypass have been reported as being at an advanced stage with Turkey.

Legislation and warm words are not enough to guarantee the viability and sustainability of a UK steel industry. The Government must act now to ensure that British steel is used in every public sector manufacturing contract and that British jobs are protected.

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

My hon. Friend has made some important points about procurement and the defence industry. His example of Aberdeen is particularly concerning, not least because rebar is one of the main products produced by the Celsa plant in my constituency. It has been used very successfully in projects such as Crossrail and elsewhere. Does he think it is time the Scottish Government fully explained their reasons? They said they would do everything they could to save steel jobs, but that seems to be falling down at the first hurdle.

[Tom Blenkinsop]

Indeed. In a spirit of cross-party politics, we want a positive response from the Scottish Government on revisiting that issue, looking at the contract and looking to British-sourced rebar steel, made in Britain by British workers, so that our British steel industry can thrive.

It is important to remember that, as my hon. Friend the Member for Aberavon (Stephen Kinnock) has said, lack of customer confidence is the surest way to undermine the steel industry. The Government must work with Tata to ensure the continuity of client contracts. I know that a lot of work has been done on that in the background. It is essential to preserve the commercial viability of any sale. Retaining essential skills and competencies is vital for the future of the business. The highly skilled workforce cannot be allowed to fragment or disappear. Indeed, in 2010, £60 million was set aside by the then Labour Government to retain the existing workforce at Teesside Cast Products in Redcar. Not one hard redundancy was endured over a 22-month period among core Corus workers, to ensure that a purchase could allow a new owner to retain those workers. To avoid a fire sale and irreversible mistakes, the Government must demonstrate to all stakeholders in the industry that they are taking a proactive approach to ensuring the continuity of operations.

This is a time for leadership by the Government and no issue is more important for them to lead on than the lesser duty tariff. Europe currently uses the lesser duty rule to impose the lowest possible duties on unfairly traded products that have been dumped in European markets and exported at prices below those in the home market. Duties introduced by Europe are usually way below the actual margin of dumping, the result of which is that dumping continues and unfairly traded products are allowed to compete in European markets and depress prices.

The US does not follow the lesser duty rule, which means it can implement much tougher sanctions reflecting the margin of dumping. For example, it recently imposed duties of 236% on a particular grade of Chinese steel.

[Jessica Morden (Newport East) (Lab)]

My hon. Friend kindly mentioned Llanwern steel works. I also have Cogent Power Orb works in my constituency, which manufactures a very specialised steel product that is unique for Tata and profitable due to great management and a fantastic workforce. When I visited Cogent Orb in the last two weeks, I was told that in January as much steel came into Europe as in October, November and December 2015. Is it not clear that this is an ongoing problem and that we have not seen enough action yet?

[Tom Blenkinsop]

Most of the changes in the market have been market reaction, not a result of regulations. Trade defence mechanisms are sitting there waiting to be used. They could vastly improve the situation very quickly and help to prop up and support the industry. It is hard to know why those instruments have not been used, and I am certain that steelworkers find it excruciating that there are mechanisms and levers that the Government could use to at least sustain the situation during a period of dumping.

[Chris Elmore (Ogmore) (Lab/Co-op)]

Does my hon. Friend agree that, as many of my constituents in Ogmore have told me, there has been real leadership from Carwyn Jones and the Welsh Labour Government in the package they have put in place, within the powers they have, and that it is about time the UK Government stepped up to the plate and used the facilities and options available to them?

[Tom Blenkinsop]

First, I would like to congratulate and welcome my new hon. Friend the Member for Ogmore (Chris Elmore) and say how privileged and happy I am to have him intervene during my speech. I believe that this is the first time he has spoken in the House, so I am very honoured that he has taken this opportunity, but I am even more impressed by the fact that he has got straight into the job and is representing his constituents in a very steadfast way.

The US Government are in the process of introducing new laws that will enable the US to take even tougher action against Chinese dumping and which will make Europe an even more attractive target for dumping. However, there is hope, as it has become widely recognised in Europe that the lesser duty rule is killing our industry. The European Commission has proposed that it should be scrapped, and that has been supported by the European Parliament. The European Commission is demonstrating the very reform and flexibility that the Prime Minister kept banging on about wanting to see in the European Union, so why will he and his Government not support the European Commission in that action?

I would be very happy if the Minister responded to that question, because that is the type of reform we want. When the facts and the market change, the mechanisms need to change. In my opinion, the reason why the lesser duty tariff has lasted so long is that the level of dumping was previously nowhere near the levels it has been at in the last four years. When the facts change, our trade defence mechanisms need to change in order to support our industry, yet even now the UK Government continue to lead the charge among the small group of nations blocking the scrapping of the lesser duty rule. Our own Government are arguing that end users of steel need access to cheap Chinese product.

Despite all the rhetoric, the UK Government are failing to stand up for our steel industry. They say they have delivered on four of the five industry asks, including

“backing EU-level action on anti-dumping measures”,

but the Government’s opposition to scrapping the lesser duty rule exposes the enormous gap between rhetoric and reality. Furthermore, on 5 February, the Secretary of State signed a heavily publicised letter to the Commission calling for Europe to

“use every means available and take strong action”

on Chinese dumping. That letter is simply not consistent with the Government’s position on the lesser duty rule.

Even more importantly over the coming weeks, the EU will make decisions that will impact on the granting of market economy status to China. It has become increasingly clear that Chinese dumping poses an existential threat to the UK and European steel industry. Despite that, the UK Government continue to act as a cheerleader for China in Europe in its bid for MES, whether we remain in the European Union or not. Market economy status for China would be a complete disaster, as it would make it even harder for European producers to gain protection from unfairly traded Chinese imports. That issue is becoming more urgent, as the Commission must take a decision on it by December of this year, and the European Parliament votes on it tomorrow. I do not know, but I have heard that Tory MEPs are being whipped to vote that through. That has serious implications yet again, in terms of what the Government say and what the Government are prepared to do.

[Stephen Doughty]

I thank my hon. Friend for being generous with his time and giving way again. He makes an extremely important point about market economy status, and I absolutely agree. He highlights, aptly, that the crucial point in this is what the UK Government and Tory MEPs do in Europe and not, as some have suggested, that the European Union in some way putting the kibosh on the steel industry. Does my hon. Friend agree that it is misleading for Brexit campaigners to suggest that the steel industry in the UK would be better off if we left? The truth is that leaving the EU would be a body blow to the steel industry.

[Tom Blenkinsop]

I thank my hon. Friend for that intervention. I know that the Minister will agree with this. What would we be saying, as a nation, to Greybull or the seven potential buyers of strip and tubes in Britain if we removed ourselves from the European Union? They are purchasing, obviously, in the context of our being a member of the European Union. The implications of removing a pillar of the deal that has just happened—it took more than 12 months in relation to long products and Greybull—would be so massive that it does not bear thinking about, but then again, the Brexit campaign is more politically led than economically led. I make that quite clear because the matter is that important, and not just for steel. The Chemical Industries Association has come out very strongly for remaining within the European Union, as have trade unions in the manufacturing sector, because it is the only practical option if we are to retain any form of manufacturing in this country.

Another matter is business rates. This one cannot be immediately resolved, but it needs looking into. The review of business rates that concluded in advance of the Budget did not go far enough to deliver savings for UK producers. Business rates in the UK are up to 10 times higher than those paid by competitors in France and Germany. The Government should act now to level the playing field by removing plant and machinery from business rate calculations. Including plant and machinery in the calculations is anti-investment and anti-industry. Tata Steel recently invested £185 million in the construction of a new blast furnace in its Port Talbot steelworks and, in return for that investment, received a £400,000 increase in business rates. That is patently uncompetitive and ridiculous.

Back in March 2012, I gave a speech in relation to the closure of Thamesteel in Kent. That just goes to show how long we steel MPs in this place have been fighting, not just for our constituencies but for our countries’ steelworks, our steel culture, our steel families and our people. I want to repeat what I said that day, quoting a Teesside man of steel:

“When I see a blast furnace, I see a thing of beauty...I see something that has given thousands and thousands of people a way of life, a good, honest wage, the ability to pay their mortgages, go on holidays and bring up their families. That to me is fabulous, that is a beautiful thing. When you come to Middlesbrough and see that skyline...That blast furnace is the heart of Teesside. As long as it pumps, there is life in Teesside.”

It was not just a Teessider’s fairy tale when we saved TCP. The men and women from Kent, Stocksbridge, Rotherham, Hartlepool, Corby, Port Talbot, Shotton, Llanwern and Trostre all have the same view of their steelworks, as does every single steel community. It is a story for all steelworkers in Britain. There is a way to save our steel sites and UK steel if the Government do something to facilitate the process and lend their support, so the question for the Minister is: will you follow through on those promises, because now is the time for action?

--- Later in debate ---

[Tom Blenkinsop]

In winding up, I would like to say that the critical point about Tata being the eighth player remains fundamental. We still want to know what Tory MEPs will do tomorrow in relation to the market economy status vote. We need to see a legislative framework going from paper to actual action in terms of policy and an industrial strategy. The Government do have an industrial strategy, but we have to bear it in mind that in the past 12 months we have only seen action and promises made as a result of the tragedy at Redcar and a Prime Minister faced by Welsh elections and the European referendum.

Motion lapsed (Standing Order No. 10(6)).