Steel Industry

Debate between Tom Blenkinsop and Jessica Morden

Wednesday 11th May 2016 Westminster Hall

[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.

Steel Industry

Debate between Tom Blenkinsop and Jessica Morden

Tuesday 14th October 2014 Westminster Hall

[Tom Blenkinsop]

My hon. Friend has been banging that drum since he was elected in May 2010. My fear is that we are reaching a critical point where not only the steel industry but all energy-intensive industries are begging for help. They are trying to compete in the world as best they can, with the best forms of technology, and they are driving costs down as much as they possibly can. However, when Government policies make it harder and harder for them to exist on UK soil, it is no surprise that there have been reconfigurations in the steel industry across the European market.

[Jessica Morden (Newport East) (Lab)]

I agree with all the points that my hon. Friend has made. In constituencies such as mine, where Tata Steel and its employees have worked incredibly hard over the past few years to become more efficient and weather the storms, we would like the Government to appreciate that the economic environment is still very challenging in the UK and internationally. We do not want the Government to think that things are getting better; there must be more focus and no complacency, so that we can continue to look at issues such as energy.

[Tom Blenkinsop]

The Government need to understand not only that the industry has had to adapt, but that the work force has had to adapt for long periods of time. Before I entered the House, I was a trade union officer for Community, formerly known as the Iron and Steel Trades Confederation, which represents workers in the production side of the steel industry. I am still a member of that union, and that is a declarable interest. Since 2008, those men and women have been on short-time working, have accepted changes to their terms and conditions and, in some cases, have accepted pension changes. They have done so in the hope of maintaining an industry in their community, whether in south Wales, the central belt of Scotland, south Yorkshire, Sheffield, Corby, the east midlands, the north-east of England or Scunthorpe. The workers have all taken such penalties to help to maintain an industry, so that their sons and daughters have jobs in the future. Until Government policy recognises and matches the daily sacrifices made by individuals on the ground, those hurdles will not be overcome. I stood by that opinion as a trade union officer, and I stand by it now as an elected Labour MP.

To be slightly more parochial, the north-east is, per capita, the most energy-intensive region in the UK. All the while, UK generation capacity is decreasing rapidly, and the margin of spare capacity has not been this low for decades. However, the north-east enjoys an embarrassment of riches in the energy sector, from offshore wind to coal, electric vehicles, energy from waves, carbon capture and storage, coal gasification, biomass and biofuels. The list goes on and on. Competitive energy prices and secure energy supplies are vital to the future of the steel sector in the UK. Inaction and uncertainty only put off investors and limit job creation.

It is not all doom and gloom. The UK steel industry continues to be a proud and important part of the industrial backbone on which our economy was built and on which it will almost certainly rely as it adapts for the future. Steel is a vital foundation for many of the UK’s strategic supply chains. The UK leads the world in sectors such as automotive, energy, construction and aerospace, and UK steel is integral to all those sectors. Will the Minister comment on any contingencies that the state has put in place in case our supply chain is undermined or put in jeopardy? Security of supply and UK expertise are vital for infrastructure delivery, especially —I cannot emphasise this enough—for projects that require large and unique product types. Outsourcing is unsustainable if we are to have the ability reliably to deliver major programmes, and in terms of the logistical impact on the UK.

The steel industry has an important role to play in clean production technologies. Wind energy is a good example, because every part of a wind turbine depends on steel. The indirect benefits of the sector are significant with, for example, two to three jobs in the broader economy dependent on each job in the metal sector. Realistically, it is the truest form of a balanced economy, because its impact is spread across the UK, and is significant outside London and the south-east. To ignore not only the role steel has played in the development of our nation but its potential to secure our nation’s future, would be shameful.

As I mentioned at the beginning of my speech, steel has a proud history. I believe that it has a strong future, but that will not be the case unless the Government do everything they can to back the industry. The Minister’s own father was a great advocate of the steel industry and wrote an excellent text on the matter. My predecessor, the late Dr Ashok Kumar, remarked that it was probably the best book ever written on the steel industry. I hope that the Minister’s response will be as good as his father’s text.

Steel Industry (Carbon Floor Pricing)

Debate between Tom Blenkinsop and Jessica Morden

Wednesday 23rd March 2011 Westminster Hall

[Jessica Morden]

I welcome my right hon. Friend’s intervention. Steel making is an incredibly beautiful process. His point is that we must ensure balance and that the new tax does not drive heavy industry out of this country.

Steel is a high-carbon industry in its production, but an essential product for a low-carbon economy. Surely we all want the UK’s low-carbon economy to be built with steel produced in the UK, not imported from China, Russia, Ukraine and other steel-producing countries that do not face the same regulatory restraints.

The industry would say that there is consensus for some regulation in this area, but that current policies are complex and over-burdensome. As I have said, if carbon floor pricing goes ahead, there will be four prices on carbon—the carbon floor price, the climate change levy, the carbon reduction commitment emissions trading scheme, and the renewable subsidies—but no consistent way of measuring carbon as between those. The industry argues that if the Government are to price carbon, they must make it simpler for everybody involved.

The major issue, to which the hon. Member for Redcar (Ian Swales) alluded, is competitiveness. The debate takes place in the context of escalating costs for UK steel producers from existing UK and EU climate policies that are eroding their international competitiveness. Nobody else in Europe or the world will face those costs, which is a threat to UK steel. The Government are asking the private sector, especially manufacturing, to create jobs, but that will not happen if we impose certain conditions and have carbon leakage. Manufacturers will choose to go to parts of the world where they can get away with less stringent conditions. They will be able to produce steel with the same amount of emissions and we will have lost the industry. Where is the sense in that? That applies not only to some developing countries, but, most worryingly, to Europe. No other EU Government are making similar proposals, and many have taken steps to reduce the impact on trade-exposed industries precisely to avoid the problem.

The figures are quite stark. Tata Steel estimates that by 2020 the cost of carbon floor pricing will add at least an extra £20 million per year to its energy bill. I also draw the Minister’s attention to the Waters Wye report, which documents the cumulative impact of all climate change policies on heavy energy users.

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

My hon. Friend has secured a very important debate and she is making an excellent argument for the steel industry. Is she aware that we now have a 14-month high in the inflation rate, with the retail prices index running at 5.5%? That is pushing sterling to a much higher rate than previously. Coupled with current commodity prices, particularly for coke and iron ore, there is already a strain on the industry.

[Jessica Morden]

My hon. Friend makes a valid point, which I am sure the Minister will address. My hon. Friend is, of course, quite an expert in this field.

Tata’s submission to the consultation on carbon floor pricing also questions the effectiveness of the measure, claiming that it will have only a limited impact on reducing carbon emissions, even though its cost is real and direct. Tata’s submission suggests better ways to achieve lower emissions, which I will not go into now, but I draw the Minister’s attention to the submission and ask that further consultation with the industry be pursued.

I also ask the Minister to address several other points. It would be helpful if he outlined how the Department for Business, Innovation and Skills has worked with the Treasury and the Department of Energy and Climate Change to limit the impact on intensive energy users of the proposals for carbon floor pricing and of the wider electricity market reform. Does he accept that the Government’s proposals will have a serious impact on the competitiveness of key industries? If so, does he understand how such an impact will directly conflict with the Government’s policies on private sector growth and an export-led recovery?

How do the Government intend to ensure that these measures do not impact on the competitiveness of UK manufacturers? Given that there was only a very short time for consultation—I believe it was about six to eight weeks over Christmas—will the Government at least commit to carrying out a comprehensive assessment of the impact on energy-intensive industries of their proposals for electricity market reform and a carbon floor price? Many organisations raised fears about the proposals during the consultation, including the Engineering Employers Federation, the CBI, the TUC and the Energy Intensive Users Group. Has the Minister taken their views on board and are the Government listening?

Finally, in fairness to the steel industry, I must say that I believe that it is continuously looking for ways to improve its CO₂ performance through improvements to processes, products and investment, particularly in research and development. The UK steel industry wants to be part of the solution to climate change, but it needs the Government to understand that it must compete on a level playing field around the world to do so. Otherwise, we will face a situation where companies could make long-term investment decisions based on the Government’s policies and take their investment plans abroad. As an MP with a steel interest, I certainly do not want that to happen, so let us make our steel industry part of the solution to climate change. I look forward to the Minister’s response.