UK Steel Industry

Tom Blenkinsop Excerpts

Wednesday 3rd December 2014 Westminster Hall

[Stephen Doughty]

I wholeheartedly agree with my hon. Friend’s points.

On another issue, the Minister here today will know that business rates are one of the few taxes that are non-cyclical and fixed at a level irrespective of economic or market conditions. As such, business rates are treated by industry as a fixed cost, which is given much greater prominence when making investment decisions. According to the industry, the fact that business rates are five to 10 times higher in the UK than in EU counterparts represents a significant comparative distortion that undermines the UK as a destination for investment.

Will the Minister say whether any consideration has been given to removing plant and machinery from the business rates valuations? What about alternative approaches for large-scale manufacturers, with a view to adopting a simplified model based on capital values rather than hypothetical rental values?

I come to foreign dumping, responsible sourcing and supply-chain access, huge issues for UK-based steel producers—and the environment is changing all the time. We have been shown some shocking statistics. I mentioned the reinforcing bar produced by Celsa in my constituency. Hopefully, the Minister has seen the data that show that imports from China now account for more than a third of overall UK market share, which is a dramatic increase in recent years; the figures for this year show an even greater increase. We also see problems with imports from Turkey.

There are also questions about traceability in the supply chain and the fact that the classification of such products often does not meet British standards. In the extreme, that has potentially serious implications for the future structural integrity of buildings or infrastructure projects in which non-compliant rebar or other steel products have been used.

The UK Certification Authority for Reinforcing Steels has been too slow and ineffective in its response to date. Quite frankly, the Government’s response has also been disappointingly slow, given that I understand that misclassification was raised at the steel contact group in October 2013 and again in June 2014.

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

My hon. Friend is making an excellent point about the importance of manufacturing to his constituency. We know that Celsa was built under the tenure of the previous Labour Government, much like the blast furnace at the Redcar steelworks near my constituency that was built under the Callaghan Labour Government. We are potentially on the verge of putting 46% of Britain’s steel making in limbo. We need strong opposition from the Government in relation to Celsa as well as Scunthorpe’s four-blast-furnace operation. We need clear direction and a clear message from the Government about what steel production will look like in the future.

[Stephen Doughty]

I thank my hon. Friend for those well made points; I wholeheartedly agree with them. On traceability and the quality of products used, the Government could do something right away: ensure that all Government or Government-backed projects have a robust, responsible sourcing requirement.

As I have said before, although the Government’s sector- by-sector approach is welcome, it must be dramatically accelerated. That would, without doubt, serve to stem some of the questions about safety and sustainability rightly coming from concerned people inside and outside the industry. Reports that Chinese rebar has been failing British standards tests coupled with the news that one third of rebar used on UK sites is Chinese should have red lights flashing on ministerial dashboards, not only in BIS but in other Departments.

--- Later in debate ---

[Stephen Doughty]

My hon. Friend makes a crucial point about not just the industry, but the crucial infrastructure projects, especially in transport, that it supports. It is crucial that we get that right.

I mentioned Celsa’s contribution to the Crossrail project. The only responsible sourcing scheme in the UK that guarantees cradle-to-grave traceability for construction steel products is BS 6001, which was crucial to Crossrail. Will the Minister say whether the Government intend to ensure that all public projects apply the same standard in a timely fashion?

Ultimately, each of the issues and concerns that we have raised can be considered on its own, but there is an increasingly apparent need for a detailed, workable industrial strategy for metals, including steel. The Minister might jump to his feet in a moment and cite the development of a UK metals strategy as showing that the Government are on the case, but by all accounts, that is still in its early development stages and is not even guaranteed to receive official backing, despite being funded by BIS.

Indeed, we are more than four and a half years into a Government who chose not to include the metals industry among their sector-specific industrial strategy and who now, quite frankly, are playing catch-up. We have talked about procurement and other investment decisions, but the UK cannot afford to lose out on major public infrastructure projects, as Community made clear was the case with the £790 million contract to supply steel for the new Forth road bridge. Tata steel’s plant just down the road could have supplied more than one third of the required steel, but instead the contract went to producers in China, Poland and Spain.

[Tom Blenkinsop]

The Minister will probably also agree that that was primarily the responsibility of the Scottish Executive, who did not play their part in trying to support the local Scottish industry. It would be interesting to hear the Minister’s response on what the UK Government said to the Scottish Government at a time of trying to support UK steel rather than Chinese imports.

[Stephen Doughty]

My hon. Friend makes a strong point and I would be interested to know the answer to that question as well. Many steelworkers and those who work in related industries throughout the UK want to see the Government standing up and backing the steel and metals industries here—not seeing major projects that could be generating wealth, jobs and opportunities in this country all ending up with Chinese products. I have already raised concerns about the quality and traceability of some of those products.

In conclusion, I will ask the Minister a few questions on which I would appreciate answers. I mentioned dumping by China and Turkey. Will he outline what representations Ministers at BIS have made to other EU member states, the European Commission and the Council on support for an anti-dumping measure?

Will the Minister outline whether there have been discussions on a UK Government responsible-sourcing requirement? Would he be willing to facilitate a meeting between the Chancellor of the Exchequer and colleagues concerned about these issues to discuss the use of steel in UK infrastructure projects and how procurement can drive the future of the industry?

Will the Minister clarify what assessment the Department has made of reports that Chinese rebar has failed British standards tests, given that much of the steel used in the past year on UK sites has been Chinese? Has he had discussions with other Departments about any risks to the future structural integrity of building and other infrastructure projects?

As I said earlier, will the Minister, with his colleagues, be generous and look again at the decision not to bring forward compensation packages to January 2015? That is crucial. Will he detail what discussions there have been in BIS on that and why it was decided not, for example, to make an encouraging announcement on that today in the autumn statement?

We have mentioned China and Turkey. Will the Minister give an assessment of reports that India is now also looking at subsidising its steel industry to compete with cheaper Chinese imports? What assessment has been made of the US Department of Commerce’s decision to impose anti-dumping and anti-subsidy duties on imports of carbon and alloy steel wire rod from China in reaction to a massive increase in its shipment?

Any one of the issues that I have outlined, in addition to those that I have not had time to mention, is enough to put serious strain on any business, but the cumulative effect is a matter of grave concern to the British steel industry. The risks are real and the threats are intensifying, so urgent and robust action is required from the Government. If capacity is put at risk, that could have serious consequences not only for the jobs and communities that depend on those industries, but for UK infrastructure priorities. I hope that today the Minister will give some encouragement to UK steel producers and their employees.

--- Later in debate ---

[Mr Vaizey]

We are disappearing down a particular Scottish cul-de-sac. I will leave that as an argument between the Scottish National and Labour parties.

We are working to strengthen existing supply chains by encouraging primes to adopt a collaborative and long-term approach to their suppliers. The hon. Member for Cardiff South and Penarth discussed Chinese imports of rebar. The United Kingdom Accreditation Service looked at the complaint by UK Steel and concluded that CARES had responded in an appropriate way to the concerns expressed in line with the expectations and requirements of the accreditation standard. I can tell him, however, that there has been an increase in vigilance on the part of CARES, with increased sampling and more checks. We have also been advised that, as a result of ongoing discussions between CARES and UK Steel, and of the further testing of some non-compliant imports, CARES visited the Chinese steel mill concerned. CARES conducted further sampling and testing, but it did not find evidence of stock production being non-compliant. On that basis, we genuinely think that we are doing everything possible, although we may be able to do more if the industry provides us with additional evidence of what it thinks that we should investigate.

[Tom Blenkinsop]

The issue of whether it was a Scottish Government or an Executive who sold steelworkers in Motherwell and the rest of the UK down the Yangtse is irrelevant. The real issue is whether the Secretary of State for Business, Innovation and Skills has an ongoing inquiry. If so, is it looking at the steel products that are sitting on dockyards or in warehouses for more than 12 months at a time, rusting away and undermining any usage in a construction project, because of health and safety?

[Mr Vaizey]

I will take that specific point back to the Secretary of State. As I said, there have been discussions between UK Steel, UKAS and CARES. The Government take an interest in such issues. We will go back to those organisations if there is appropriate additional information.

Let me comment on anti-dumping quickly, because time is running out. We have been in contact with the European Commission on a number of occasions over the past year. We have had face-to-face meetings and we have asked the Commission to look at the case for launching an anti-dumping investigation into Chinese rebar imports. The problem is simply that Chinese rebar is only being exported, as I understand it, to the UK market and anti-dumping actions are taken at the European level, which presents serious legal difficulties for the Commission. We think, however, that the Commission is genuinely trying to find a way round the problems. We check regularly with it on progress and encourage it to take action, but at this stage a more aggressive approach might be unproductive.