Uk Steel Industry

Part of the debate – in the House of Commons at 2:08 pm on 12 April 2016.

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Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee, Chair, Education, Skills and the Economy Sub-Committee, Chair, Business, Innovation and Skills Committee 2:08, 12 April 2016

It is an absolute pleasure to follow my colleague on the Select Committee on Business, Innovation and Skills. I do not agree with much of what he said, but the rigour of his analysis, both in his speech and in his work on the Committee, makes the Committee much sharper in what it does, so I commend him for that.

I welcome the emergency debate, because steel industry is facing a real emergency. It has faced it for some time. The Committee found, going back 40 years, that successive Governments failed to value manufacturing and domestic steelmaking capability as the foundations of an innovative economy. Other countries—and this is in reference to an intervention from David Mowat—value their domestic steel industry more than we do, which makes them more resilient to the perfect storm of over-production and low steel prices affecting global steel markets.

I want to put it on the record that the challenges facing all steel manufacturers around the world are vast. China produces more steel than all other steel manufacturing nations put together. In two years China has produced more steel than we, the inventors of modern steel making, have produced since the start of the industrial revolution, so even if the Government were doing all they could, those challenges would remain vast.

The Government could do more, because Britain does not face a level playing field in respect of steel production. One contributing factor is the high pound. I know that the Government will not do anything to affect that, but they can intervene directly on uncompetitive energy costs and business rates, which put British-based steel manufacturers at a disadvantage.

In December we on the Business, Innovation and Skills Committee published our report on the Government response to the steel crisis. That was prompted by big turbulence, particularly the closure of SSI in Redcar in early October. It revealed the shocking absence of an effective early-warning system in Whitehall designed to detect and address mounting problems in the industry. Industry had been crying out for some time, with five asks concerning procurement, business rates and energy costs, but the Government had been deaf to such pleas. Had they been alert, they would not have had to resort to crisis management and preside over the tragic hard closure of an integrated steel facility, the second most efficient blast furnace anywhere in Europe, and the loss forever to the steel industry of jobs and skills.

The Select Committee’s report found that the Government recognised the vital importance of the steel industry, but the increased activity had not yet translated into a measurable impact on those in the industry and the communities that they sustain. Five months on from the closure of SSI, with other losses such as Caparo, and with the decision last month by Tata to sell its UK steel operations, it is difficult to avoid the conclusion that lessons have not been learned and that increased activity has not resulted in positive outcomes.