EU Referendum: UK Steel Industry

Tom Blenkinsop Excerpts

Wednesday 13th July 2016 Westminster Hall

[Stephen Doughty]

I share the hon. Gentleman’s concern about the future of all the steel industry in south Wales. I have no doubt that we will shortly be hearing from my hon. Friend the Member for Aberavon (Stephen Kinnock) on that subject. Additional uncertainty is being created by the news that we have heard in the past few days, and I am interested to hear the Minister’s perspective.

It is now more vital than ever that the Government continue to work with us, with the steel industry, with the steel trade unions—particularly Community, GMB and Unite—and with other partners to instil confidence that we will all work together to create the right business environment, which particularly applies to the devolved Administrations. The Welsh Government, following their re-election and the reappointment of Carwyn Jones as First Minister, have reiterated their commitment to doing everything they can to support the Welsh steel industry. We want that co-operative relationship, which has been in the interest of the industry, to continue.

Crucially, the steel industry is a question for the incoming Prime Minister. Will she take the kind of laissez-faire approach that we have seen from the current Prime Minister? There is no industrial strategy, and his idea was that we should not be intervening—the series of interventions in the steel industry came quite late, however welcome many of the steps taken by the Minister herself have been. Will the new Prime Minister form a Cabinet that is going to take decisive action in the national interest? That is the fundamental expectation of people in the steel industry. We need a proper industrial strategy, and we need tough action, particularly in relation to the Chinese.

I have a number of questions for the Minister on the uncertainty created by the referendum, particularly on the different trade options that might be on the table and their many implications for the steel industry. Like many others, I would argue that retaining access to the single market is crucial. There is a Celsa plant in my constituency. Celsa is a European company based in Catalonia that has plants all over Europe. Almost 100% of its trade is within the EU, so if we lost the ability to trade in that single market on the kind of terms we currently have, the additional cost of punitive tariffs, or other tariffs, could be devastating.

We also have questions about the future of the state aid rules under any regime. Let us not forget that it was often suggested during the referendum campaign that, somehow, everything was the EU’s fault, but actually the EU has taken many steps to support the steel industry across Europe. The reality is that there are rules that would apply under European economic area and World Trade Organisation trading arrangements. What does the Minister have to say about the different options on the table? What would be the best one for our steel industry?

Other uncertainties might be created in any transitional period. Let us not forget that this is not just about exports. Raw materials are imported, whether it is scrap, as with Celsa in my constituency, or other raw materials. There could be an impact both on the steel industry’s inputs and its exports. The other implication is for exchange rates. Some would argue that the fall in the pound provides a benefit to the steel industry, but of course that benefit is potentially offset by the changes in input costs. I can see no positive net benefit from the current currency situation. Indeed, any short-term marginal benefit will definitely be offset by the much wider risks. What is the Minister’s perspective on that?

UK Steel, which has done an excellent job of representing the interests of the industry as a whole and is working together with the different producers, has made it clear that we need to remove the unilateral energy costs; increase the procurement of UK steel; address unfair trade provisions; provide funding mechanisms for energy efficiency projects; and set out a clear direction for the investment and support required by the industry in the long term.

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

One of the unilateral cost increases for the industry was the carbon price floor, which was a unilateral tax introduced by the British Government without any foresight. They then had to request permission from the EU to try to provide a compensation scheme. Post-Brexit, will the Government reconsider that measure in the immediate future to give more space to the steel industry on costs?

[Stephen Doughty]

I absolutely agree. Given that the facts of our relationship have changed so substantially, what people want to know today is what completely new and different things the Government are willing to do with the levers they control, to respond to the wider uncertainty being created.

That is even more important because in a post-Brexit Britain the self-sufficiency and security of the steel supply is of even greater strategic and economic importance for our construction industry, our defence industry and all the other parts of our economy in which the steel industry and other foundation industries play such a crucial role. In any circumstances, the steel industry is of national importance, but with Britain going alone that will be even more the case, which is why we need that action.

I have already mentioned procurement. I am still deeply disappointed that we do not seem to have seen anything concrete. We have heard a lot of good words about the guidance that has been issued to Departments, but I have yet to see any concrete projects to provide certainty to the industry. When I asked the Minister for Defence Procurement shortly after we returned from the referendum recess, there were a lot of warm words but no clarity on which defence, construction or infra- structure projects are to enjoy increased supply of UK steel. Indeed, this is not just a responsibility of the UK Government. As we have discussed in this place before, it is deeply disappointing that the Aberdeen bypass, for example, is being produced using Turkish steel. This is the responsibility of all the devolved Administrations, as well as the UK Government.

As a Welsh MP I would do this, but I mentioned the support that the Welsh Government have been providing. Quite rightly, everybody is concerned about the Tata situation in particular, which I know my hon. Friend the Member for Aberavon will speak on, but the Welsh Government have made it absolutely clear that they are committed to supporting the sales process and the communities involved, and that they will continue to put every resource they can to that purpose. As far as I understand, their offer of support definitely remains on the table, but obviously there needs to be clarity on the bidders and the plans coming forward. I would be very interested to hear what discussions the Minister and her officials have had with the Welsh Government over the last few days.

There is a crucial broader point to make. We have seen discussions going on with the steel council and the various working groups, but I am concerned and would be interested to hear the Minister clarify whether those discussions and that dialogue have continued, whether the steel council and the working groups have met and whether her officials have continued working on it, or whether everybody’s attention has simply been diverted by the implications of the referendum and the switch in Prime Minister and Government. We cannot afford to be diverted. Diversion of attention for a few weeks or a month could be absolutely devastating. I would like some assurances from the Minister about what is happening.

I want to allow as much time as possible for other Members to speak, because I know many want to. Let me end by saying that we have all made the arguments before and we know what they are: they are on energy, trade terms, procurement and the wider business conditions. We have seen progress on some of those areas from the Minister—I acknowledge that—but not enough. This decision is so fundamental in changing the terms for this business and its future that we need to know what is happening that is new, that is different and that will give that certainty, reassurance and hope to the industry for the months and years ahead. As I said, this industry has a future. It can play a vital strategic role in post-Brexit Britain, but it will only do that if we see decisive Government intervention to ensure that it survives and is able to compete on a global stage. I thank you, Mrs Gillan, and every Member who has attended today to show their support.