Tees Valley Inward Investment Initiative

Tom Blenkinsop Excerpts

Wednesday 15th June 2016 Commons Chamber

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

Lord Heseltine’s report “Tees Valley: Opportunity Unlimited” was written to explore the possibilities of transforming the SSI steelworks site and attracting internal investment into Teesside. Unfortunately, I do not believe it offers the comprehensive plan that was promised. Instead, it recycles many proposals that have already been published or suggested by the combined authority and the local enterprise partnership. I hope the Government will pay more attention to those aspirations now that they have been endorsed by the former deputy leader of Conservative party, but few marks can be given for originality.

As we all know, the SSI steelworks closed in autumn 2015, and as a result 5,000 jobs were lost directly or indirectly. Government inaction over the Chinese dumping of cheap steel in the UK market, high energy costs and a lack of infrastructure helped contribute to the steel crisis that made the report necessary. From reading it, however, we would think that the economic impact of the closure had all but been dealt with. Specifically, Lord Heseltine claims that employment levels have recovered since the closure of the steelworks. Not in my constituency: unemployment has increased by 23%. In the constituency of Redcar, where the steelworks were located, unemployment has increased by a staggering 43% since September 2015. It is not acceptable to ignore those facts, or to deny the reality that many of my constituents are facing in trying to find a job. I believe it is right that Lord Heseltine paints a positive picture of Teesside’s future, but he cannot gloss over the fact that the heart of Teesside’s economy, the steelworks at Redcar, has stopped beating on this Government’s watch. Nor must we forget Caparo in Hartlepool or Air Products or the many redundant offshore workers returning to the Teesside conurbation.

Lord Heseltine’s report talks about the steel industry solely in the past tense, as if it was some relic rather than the industry with huge potential that we know it to be. Thankfully, the remaining steel mills in Teesside, including Skinningrove in my constituency, still produce high-quality long products. With the right Government backing, the steel industry has a genuinely long-term future on Teesside and in the UK.

Unfortunately, the report offers no serious recommendations to secure the future of the steel industry in Teesside and the UK, and this at a time when the future of the 25, 42 and 84-inch tube mill in Hartlepool is still uncertain. The Government are now finally attempting to respond to the steel crisis, in part due to the hard work of Teesside MPs. I hope that the remaining steel mills on Teesside that still have uncertain futures are not neglected by the Government in the way the works in Redcar were, and I urge Government action to secure the long-term future of the remaining works, despite the fact that the report fails to suggest any.

[Mr Iain Wright (Hartlepool) (Lab)]

I pay tribute to my hon. Friend for the fantastic work that he has done to ensure a viable future for the steel industry. He was kind enough to mention the pipe mills in my constituency. Can he reassure me that we will be talking up the steel industry in the north-east to make sure that it has a viable future we can be proud of as part of a modern, dynamic manufacturing supply chain?

[Tom Blenkinsop]

I thank my hon. Friend for raising that point. The Greybull deal for long products, which covered Skinningrove in my constituency, the beam mill in Redcar and of course Scunthorpe, took 18 months of hard work and negotiations to help the Government help the industry come to a deal. It meant assisting Tata in releasing the assets so that we could get not just a buyer but a responsible buyer. As we know, the initial purchaser was seen in a suspicious light in Government circles, as well as in Opposition circles, but eventually, given time, we were able to get Greybull in and formulate a new British steel company. Something similar needs to be done for strip and speciality steels as well as for tubes, for Hartlepool and, further down the road, for Corby. There has to be a national strategy that interacts with local agencies.

Although SSI TCP has gone through a hard closure, much related industrial expertise remains in the region. Specifically, the Materials Processing Institute in Grangetown uses world-leading research to develop innovative approaches in the materials processing and energy sector. Last week, the MPI welcomed representatives from the Slovakian steel industry who wanted to learn how to improve and innovate in their steel industry. That came after recent similar visits from Swedish and German Government representatives.

Another institute harnessing the UK’s expertise in this area is TWI, which not only exports knowledge and experience but trains more than 25,000 students each year in testing and researching welding and inspection technologies. Those are, of course, linked to the tube mills. TWI has offices around the UK, including in Middlesbrough. If the Government were to invest to unite and strengthen those institutes, steel in the UK could leap ahead of our global competitors. I have previously advocated the Department for Business, Innovation and Skills taking advantage of that expertise as a way to secure investment and harness expertise to give our industries the edge over competitors, which would make the term “northern powerhouse” more than just words.

I turn to the site itself. Lord Heseltine recommends that responsibility for it be passed to the mayoral development corporation as soon as possible. There are significant costs associated with reclaiming the site, and I am concerned that without additional funding from central Government, much of the corporation’s budget will be consumed by those costs. The clean-up costs at previous sites, such as Ravenscraig and Corby, ran into the tens of millions. I note that the report requests that Her Majesty’s Treasury pay for any further assessment needed on the site. Will the Minister outline what the Government contributions to the costs of regenerating the site will be? A cast-iron guarantee of long-term regeneration funding from the Government is necessary to secure private and commercial investment in the site.

We also need funding for an investigation into whether the existing blast furnace has a future—that has to be nailed down—and into the existing mills on the SSI site, whether the continuous casting plant or the basic oxygen steelmaking plant, because those assets could be reused. At the moment, under the official receiver, their future is unclear. For example, I know from local knowledge that the locos on the site, without which nothing can be moved on a 3 square mile site, have been cut up and sold off. We want a potential buyer to come forward to reuse the site for industrial purposes—hopefully steel, but we are not choosy as long as it is used for some form of industry. Removing the assets, cutting them up and selling them off undermines its ability to be resurrected.

That leads me on to the future use of the site. Helpfully, a large part of the former steelworks, earmarked for a second blast furnace and plate mill in the 1970s, is still empty and relatively clean. In my view, the prairie, as it is known, should be earmarked for job-creating development early in the process.  With good access and links to the still existing deep-water terminal, it could be a prime area for warehousing and distribution. Indeed, it could have a manufacturing dimension if the Government were to revisit an earlier but rejected proposal by the combined authority, which was for the whole area around Teesport, including the SSI site, to be designated as a free port. That could mean tax-free status for the land, allowing the importing of raw or semi-finished materials that could then be fashioned into final products for possible re-export. The idea was turned down flat, as I understand it, by Her Majesty’s Revenue and Customs. If there is the will, it is one suggestion that the Chancellor could prioritise.

I turn to the recommendations that Lord Heseltine makes about boosting investment in the Tees valley. He rightly highlights the importance of transport to building the economy, but Government action does not seem to be aligned with his thinking. In answer to my question on the report’s recommendation to extend the trans-Pennine electrification scheme to include the Northallerton to Teesport line, the Minister confirmed that the line would not be included in the scheme and that its electrification would not be considered until after 2022. On top of that, on the day after the report’s publication, a clause was added to the Government’s Bus Services Bill limiting the ability of councils to run their own bus services, despite the fact the report states explicitly that local leadership is the key to boosting transport infrastructure.

We are therefore presented with the absurd situation of a Conservative Lord publishing a review commissioned by the Department for Business, Innovation and Skills, which makes proposals on transport, yet within days the Department for Transport contradicting or ignoring the report. I hope the Minister and the Department for Transport will present a united response to the report that provides Teesside with the infrastructure it needs to boost investment.

On the energy economy, Lord Heseltine rightly praises the work done so far to build the industry in Teesside. I hope that the Department of Energy and Climate Change will continue to work with local partners, in line with the approach outlined in the devolution deal. Lord Heseltine also rightly asks the Government to clarify their position on the carbon capture and storage industry. Their decision not to proceed with the CCS commercialisation competition has left a lot of uncertainty about the future of the industry. I asked for clarification of that point in April, and my hon. Friend the Member for Stockton North (Alex Cunningham) received an answer as recently as 1 June stating that the Government would set out their approach to CCS “in due course”. That is not good enough for Lord Heseltine; it is not good enough for me and my constituents; and it is certainly not good enough for potential CCS investors in Teesside, including existing energy-intensive industries. I hope a statement on the Government’s approach to the industry, which will only grow in importance in my constituency, will be presented soon.

I will finally highlight areas that I believe are vital to Teesside but are not touched upon by the report. As on steel, the report fails to make serious recommendations on mining, which employs hundreds of people in my constituency. Unfortunately, at one mine in my constituency, up to 250 of the 1,000 strong workforce were made unemployed at the beginning of this year. People are losing jobs that are vital to the east Cleveland economy, leading to some terrible and tragic consequences, with redundancy processes happening in the lead-up to Christmas last year. There is nothing in the report to help those people or to promote investment in a new mine, despite the fact that new mining locations are being developed by Sirius, for example. Logistics is another growing industry based around Teesport that is neglected in the report. I hope that Government action will extend to supporting that sector, too.

Put simply, the report is not good enough. It asks the Government to “consider”, to “make assessment for” and to “take account of” all sorts of things, but it does not call for clear action and Government support to keep our steel industry alive, regenerate the SSI site and make us the world leader that we know we can be. Without the action that is needed, I am afraid that under this Government and with these empty recommendations, the Hercules of Teesside will remain an infant.

Perhaps the Minister will be able to assuage my fears and commit the Government to the following: providing additional resources to the mayoral development corporation to ensure that its role in not limited to maintaining the SSI site but includes renewing its potential; re-evaluating the free port proposal for an area including the SSI site; acting to support the remaining works in Teesside and actively exploring how skills in institutes such as the MPI can give the industry a secure footing; setting money aside to fund an additional road crossing over the Tees; re-examining the proposal to include the electrification of the Northallerton to Teesport line in the trans-Pennine scheme; prioritising the Tees valley in the roll-out of the national teaching service, given Lord Heseltine’s criticism of educational establishments in the area—that should include addressing parity of school funding not just for Teesside schools, but for schools throughout the north that are not receiving as much as those in the south; continuing to commit resources and support from the Department of Energy and Climate Change to the energy sector in Teesside; and developing a new plan to support carbon capture and storage in the Tees valley.

If the Government cannot even commit themselves to implementing the recommendations in the report, it will have been a complete waste of time and money. Can the Minister tell us how much it has cost the taxpayer to produce a report that is full of proposals on which, apparently, the Government do not currently wish to act?

I hope that the review, and the comments that I have made today, will not be forgotten as a result of their proximity to next week’s referendum. Whatever choice the people of the Tees valley make on the European Union, Teessiders will need to see more action from their Government than they have seen so far.

--- Later in debate ---

[James Wharton]

The hon. Gentleman makes an important point. Teesside is of course internationally respected for the chemical processing industry; not just NEPIC but CPI and the work done in that sector provide good jobs, long-term investment and real opportunity to attract more. We always want to continue to support that. As part of the process of looking for international investors, we are looking to support those organisations to see where more investment can be brought in. The chemicals and processing industry will form part of the story going forward of the sites that the MDC will become responsible for and the work it is doing.

[Tom Blenkinsop]

The Minister mentions CPI and its importance to the local and national economy. Can he comment on my question about MPI and the steel catapult: do the Government intend to go forward with that? In our area we have the capability of R and D closely associated with the former blast furnace. That could provide the inward investment necessary to get that industry going again in our locality.

[James Wharton]

I will come on to talk about that. I just want to address the second part of the question from the hon. Member for Hartlepool (Mr Wright). He asked about offshore wind, and significant approvals have been given for offshore wind not far off the coast of Teesside. This will present a real opportunity to bring investment to our area. I know that live discussions are taking place with companies in the Tees valley about how they can be part of that supply chain and bring jobs and investment to our area through being part of the processes of delivering that potential driver of our economy. I have had discussions with some of those local companies, and I am supporting them as far as I can. Some of the discussions are of course commercially sensitive, but I also want to extend a direct offer, particularly to the hon. Gentleman, given his constituency’s interest in the matter. If there is something specific that a company in his constituency would like to see done, if there is a meeting that it would like the Government to attend, or if there is any assistance that I can give, he need only call on me to arrange it. If the Government can support or help, I will join him and do everything I reasonably can to persuade people to take the right decisions.

The hon. Member for Middlesbrough South and East Cleveland asked about the Materials Processing Institute. There is a bid from that organisation for a catapult similar to the one we have already mentioned, but my understanding is that that bid is not sufficiently strong at this time. However, despite that having been the initial decision and recommendation by officials, it is my intention to ask the Secretary of State for Business, Innovation and Skills to look personally at that and to ask officials whether improvements or changes could be made that would enable that to be delivered.

The Government have to take these decisions on a sound basis, and they have to assess things fairly, wherever in the country they might be, but if there is potential and opportunity, it is important that we ensure that that has been explored to the fullest degree. If there is something that can deliver benefits and improvements to our area and bring investment and jobs to our communities, I want to see it explored and every avenue considered—certainly before any negative decision is made—in the hope that a positive decision might be forthcoming. I am happy to give a commitment to ask for that work to be undertaken, and I will do so following the debate this evening. I do not know what the outcome will be, but whatever happens with the individual projects of which we have spoken and with the individual recommendations in Lord Heseltine’s report on the economy of the Tees valley, we have great potential and I am confident that we have a great future.

The Evening Gazette newspaper is running an Invest in Teesside campaign, recognising that the more we talk up our area and highlight the opportunities that exist there, the more we can jointly achieve and drive forward for the benefit of its economy. I look forward to working with hon. Members across the House—indeed, I have little choice other than to make that offer in relation to the Tees valley. I look forward to working with the Evening Gazette, with local businesses, with the local enterprise partnership, with the new combined authority and with the mayor—when they are elected next year with the exciting range of powers that they will have, whoever they might be—to drive forward investment in Teesside.

Our area is very well placed to profit from many of the exciting things that are happening in the world and from the great skills of the people who live in our communities. We have a duty to work together to deliver on that, but that does not mean that the Government will acquiesce in every request, or that we will do everything that is asked of us immediately. It means that we will properly assess and consider the situation, and think long and hard about the right approach to take. We will build a broad consensus on what can be done for the good of the economy of our area. That work is well under way, as we can see in the mayoral development corporation and in the devolution deal that has been agreed. I hope we can also see that in the tone of this evening’s debate.

[Tom Blenkinsop]

I repeat a question I asked in my speech about an investigation into the remaining assets on site at SSI, including the continuous casting and basic oxygen steelmaking equipment. I also asked whether there would be an investigation into the blast furnace itself. This is important because it would enable us to establish the degree to which the assets might be redeemable or saleable. It would also give the official receiver an instruction about how those assets could be used in future.

[James Wharton]

Given the specific nature of the hon. Gentleman’s question, I will seek to address it. The site is in the hands of the official receiver, and the Government are talking to them. We are working to ensure that the site is handed over in the best possible circumstances that can be achieved, given its sad recent history, and when that happens we will of course seek to maximise the use of all the site’s assets and the land, including any assets that remain on it. That will primarily be channelled through the development corporation, which will drive that process. It is in all our interests that that proper work is done in the appropriate way and at the appropriate time.

I am absolutely confident that the Tees valley has a bright future ahead of it. We have the most incredible people, businesses and opportunities. Given the things those people and businesses are doing and the way in which the leadership in the private and public sectors is pulling together in the interests of the broader local economy, these could be exciting times. We have faced a difficult year, but I hope that by working together we can ensure a brighter future for all our constituents.

Question put and agreed to.