Steel Industry

Debate between Vince Cable and Mark Tami

Wednesday 14th January 2015 Commons Chamber

[Vince Cable]

In the remaining part of my speech, I shall explain exactly how we will deal with the problems faced by the steel companies, but it is right to be realistic about those problems. The companies are losing money, and we shall need to understand why they are losing money before we embark on policy action.

Fourthly, there is the fundamental problem of competition and high-productivity competitors. It is all very well to complain about unfair competition, and there may be some, but the most productive steel plants in the world are in Japan, Korea and, potentially, China. For decades there has been massive under-investment in the British steel industry. Tata has invested in blast furnaces in south Wales, but there has nevertheless been chronic under-investment, which is why there is a productivity issue in relation to overseas competition.

[Mark Tami]

Does the Secretary of State not accept that, as I said at the beginning of the debate, it is possible to become far more efficient, but, no matter how much efficiency is improved, there will still be a massive gap between energy costs.

[Vince Cable]

I had already begun to deal with the cost issue. Let me explain how we are trying to offset it. Among our competitors, the French have a nuclear power industry, and the marginal cost of nuclear power is extremely low. The Germans use a lot of thermal power, but, under European rules, they have been able to grandfather the support that they have given to their industry. We have not overlooked the problem; there are very specific reasons for it.

I have dealt with the problems. Let me now deal with the major areas of opportunity, as I have rightly been asked to do. What is beginning to emerge is that successful British producers—notably Tata—are finding markets in two particular areas. One is high-quality production—alloy steels, light vehicles, aerospace—using sophisticated steels. That is where the market is beginning to consolidate and where companies are making significant margins to stay in business. The second area—again, I am very surprised the Opposition spokesman did not mention it—is exports. Within the last three to four years, exports have been growing rapidly. Tata Steel has won contracts in Singapore. We are working with it to win business in Qatar and Iraq on pipelines and other things. The future increasingly lies in export. The SSI plant, which is the big success for Redcar, has been based entirely on export production. Rather than focusing just on the problems created by import competition, let us think about this as a global industry in which good British producers have significant markets.

Those are the two areas of specialisation where British steel producers are doing well, so let me now turn to the areas of policy where the hon. Member for Hartlepool (Mr Wright) is asking us to do more: energy costs; the industrial strategy; and imports and certification.

On energy costs, I completely agree with Members on both sides of the House who argue that it is completely counter-productive to drive away energy-intensive British producers who simply pollute somewhere else. Carbon leakage is not sensible policy, so we should stop it.

We fully recognise that where British producers enjoy a cost disadvantage because of high energy costs they should be compensated, and we have agreed to compensate to the scale of £3 billion, which in an environment of fiscal pressure is by no means insignificant. In respect of one area of extra cost—the EU emissions trading scheme—compensation has already been paid; the cheques have gone out. In respect of the carbon price floor and the renewables obligations, we are in the process of trying to secure EU agreement on state aid. We have been waiting 18 months. If Opposition Front Benchers were familiar with what is happening in the European Commission, they would know that there is a major bottleneck in getting state aid clearance, not just for the UK but across the EU. It is important to reflect a little on that, because Opposition Members proclaim they believe in the EU—a belief which I happen to share—but the EU has as part of its operation something we support: strict state aid disciplines. When we are dealing with very complex problems, such as the approval for Hinkley or the approval we have recently obtained for the British business bank, those strict state aid disciplines take a great deal of time. We would be happy to bring forward compensation, subject to financial priorities, if state aid clearance could be obtained, but we are still waiting for it.

Jobs and Business

Debate between Vince Cable and Mark Tami

Friday 10th May 2013 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I am delighted to be able to introduce the section of the debate on the Queen’s Speech that relates to economic matters, particularly jobs and business. We will be talking primarily about Bills dealing with national insurance reductions for companies, consumer protection, and the protection of intellectual property, particularly design, as well as some of the carry-over Bills that will have significant implications in relation to banking, workplace change and reform, and shared parental leave and flexible working, which still have to be legislated for. We will also discuss some of the important social measures that have major economic implications, particularly the reforms of pensions and social care, about which my colleague the Secretary of State for Work and Pensions will speak. Of course, these are social changes, but they will have major economic consequences, notably incentivising saving and thereby contributing to long-term economic growth.

It is perhaps useful to focus on some of the comments that business groups made about this agenda. The Federation of Small Businesses responded by saying that it welcomes

“the focus on a stronger economy and measures to help small businesses to create jobs.”

The British Chambers of Commerce said:

“On balance, businesses will welcome the limited package of legislation announced in the Queen’s Speech.”

The CBI was more critical, but made this perfectly valid point, which will be at the heart of the debate:

“You cannot legislate your way to economic growth”.

Indeed, and that is why, in essence, this debate will be about economic policy rather than legislation.

We need to start with the basic economic context in which we operate. When we are writing the economic history of the past two decades, the story will be one of a spectacular boom and a spectacular bust—15 years of remarkable continued economic growth followed by the worst crash since after the first world war, the two things being intimately connected. The first requirement in approaching this subject is a certain degree of humility. We are in unprecedented conditions, and it is important to acknowledge that there is no simple or easy answer to many of the difficult issues that we have to grapple with. Risks are associated with fiscal consolidation that is too fast and risks are associated with fiscal consolidation that is too slow. There are genuine debates about the best mix of monetary and fiscal policy. There are also serious debates on how we deal with the banks in such a way that they rediscover their appetite for risk but do not do so in a way that destabilises the banking system as before. I hope that everybody in this debate, particularly the Opposition, will approach these very tricky issues recognising the very difficult context in which we operate.

Let me address a few of the questions that the Leader of the Opposition asked in his response to the Queen’s Speech. He asked about jobs, the link between jobs and wages, the very emotive but important issue of migration, and the banking system, which is at the heart of the problems we are dealing with. I will start with jobs.

We have unemployment of about 7.8% or 7.9%. That is about a third of what it was in the great depression of the 1930s, a rather comparable period in our history, but none the less worryingly high. It is useful, however, to make some apt comparisons. In the United States, which has recovered from the crisis much better than any other western country, except possibly Australia, the unemployment rate is slightly less, at about 7.6%. In France, which has had the benefit, if such it is, of a socialist Government, the unemployment rate is 10.6%. In Sweden, which is an interesting case—it is not in any sense shackled by the eurozone and it has had probably the most enlightened welfare and labour market policies of any European country—unemployment is significantly higher than in the UK, at about 8.8%.

Under this Government—perhaps even in the rather partisan atmosphere in which we debate things in this House, we should get a little credit for this—we have seen the creation of 1.2 million private sector jobs; the expansion of manufacturing employment, now at 82,000 after a period of Labour Government in which it collapsed from 4 million to 2.5 million; and private sector employment increasing six times as fast as public sector employment declined.

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

The Government talk a lot about the growth in private sector jobs. If jobs are being created, why is the economy showing no signs of growth and just bumping along the bottom? Surely we should be producing more and the economy should be growing.

[Vince Cable]

That is an extraordinarily naive question in the wake of the phenomenal financial crash that we have had. I do not know whether the hon. Gentleman is familiar with the economic literature, but the econometric data suggest that after the banking crash that Britain experienced we should have lost about 50% of our GDP. We have done well to avert that. We face a difficult set of circumstances. It is a remarkable success story that in an economy that is still recovering from such a long economic heart attack, we are generating significant private sector employment growth. That is positive. Alongside that, we have seen the growth of about 250,000 new businesses, which will be the source of employment growth.

Department for Business, Innovation and Skills (Performance)

Debate between Vince Cable and Mark Tami

Wednesday 2nd February 2011 Commons Chamber

[Vince Cable]

I am glad to hear it acknowledged that we began by having to sort out a mess. That is a good starting point for discussion.

Let me now deal with the further education sector, in which I became engaged, with the Minister for Further Education, Skills and Lifelong Learning. We began visiting further education colleges, many of which were utterly demoralised and unable to fulfil their function because their capital work had been stopped as a result of a process of utter incompetence. They had been authorised to spend nine times the amount that was actually available.

Let us examine the underlying trends, to which the motion refers. In the last five years of the Labour Government, adult learning—involving people over 19—fell by 1.1 million to 3.5 million. At a time when Government money was being thrown at problems, the Government’s priorities were such that a key area was neglected and declined. We have sought to refocus that energy on apprenticeships, with the consequences that I have already described.

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

May I return the Secretary of State to the subject of manufacturing? My right hon. Friend the Member for Southampton, Itchen (Mr Denham) raised the issue of Airbus at the Business, Innovation and Skills Committee. There is great concern about the fact that key workers who are vital to the future of the business will be prevented from entering the United Kingdom under tier 2 of the points-based system. I know that the Secretary of State is concerned about that as well, but what is he going to do about it?

[Vince Cable]

The right hon. Member for Southampton, Itchen made a wholly wrong assertion. The system of immigration for skilled workers was substantially modified to remove intra-company transfers from immigration control. If there are particular cases involving particular companies, I shall be happy to pursue them. As it happens, I met Mr Gallois yesterday and the issue was not raised, but I will happily pursue any specific cases.

Let me now deal with another issue. A few moments ago, I received a challenge. Why, I was asked, did we not move away from some of the messes that we had inherited, and concentrate on the issues relevant to business growth? Let me start with an issue that is absolutely critical but does not merit even a word in the motion—regulation.

We inherited a system in which five new regulations were introduced every day, at a cost to the business sector that was independently assessed at £80 billion— about 5% of GDP. A few days ago the Minister of State, Cabinet Office discovered a book, only one copy of which is in circulation, of all the regulations that had been accumulated. Some 22,800 were bearing on businesses and adding enormously to their costs—

Oral Answers to Questions

Debate between Vince Cable and Mark Tami

Thursday 18th November 2010 Commons Chamber

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

In response to my hon. Friend the Member for Wrexham (Ian Lucas) and my right hon. Friend the Member for Leicester East (Keith Vaz), the Secretary of State gave vague assurances on intra-company transfers, particularly those that are vital to the future of Toyota on Deeside. When will he finally end the uncertainty that still hangs over this issue?

[Vince Cable]

The Home Secretary will announce the results of the consultation very soon, and I am sure that it will give the hon. Gentleman the assurances that he wants on inter-company transfers.

Oral Answers to Questions

Debate between Vince Cable and Mark Tami

Thursday 14th October 2010 Commons Chamber

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

On Tuesday, Tata Steel announced its intention to close its Living Solutions business in Shotton, with the loss of some 180 jobs. This is a hammer blow to all those employees and their families, as well as to the local economy. Will the Secretary of State join me in pressing the company to reconsider its decision, and also look at the future of the whole modular construction business?

[Vince Cable]

I am always happy to meet Opposition Members who have local difficulties with local companies; I have already done so and I am happy to talk to the hon. Gentleman about this. I do not know the details of the case, and I have to say at the outset that we are not in a position to make available large amounts of public money, but if we can help in other ways, we will.

Industry (Government Support)

Debate between Vince Cable and Mark Tami

Wednesday 16th June 2010 Commons Chamber

[Vince Cable]

Yes, indeed; we are looking at all the projects in a completely practical way. As I said, some of them are good, and some of them are not. It is as simple as that.

[Mark Tami]

The Government are obviously fond of reviews. We are about to have a defence review, which will involve the 400M military transport aircraft project. That will have an important effect on all wing production in the UK. How long does the right hon. Gentleman’s Department think that review will take? Clearly, those companies could make the choice to site the work elsewhere, which would have a dramatic impact on the work force in this country.

[Vince Cable]

That was not part of this exercise. The A400M is clearly a very important project, and we are looking at it using the same kind of criteria—value for money, affordability—and decisions will be made on that, but it was not part of this review.