[Relevant documents: First Report from the Business, Innovation and Skills Committee, on the UK Steel Industry: Government response to the crisis, HC 546, the Government response, HC 861, and oral evidence taken before the Welsh Affairs Committee on
I beg to move,
That this House
notes the crisis in the UK steel industry;
calls on the Government to support tougher EU action to ensure a level playing field and prevent the dumping of Chinese steel, to support scrapping the lesser duty rule which prevents higher tariffs being imposed that reflect the actual margin of dumping and to examine the implications of granting China Market Economy Status for the EU’s ability to tackle unfair trade;
and further calls on the Government to publish a full industrial strategy which includes a procurement policy which commits to using British steel wherever possible for publicly-funded infrastructure projects and which supports industrial supply chains across the UK.
Britain’s steel industry is in crisis, and despite the warning signs flashing red, the Tories have had to be dragged kicking and screaming to come up with any kind of response. So far, it has been far too little and far too late. More than 5,000 UK steel jobs have been lost over the past 12 months. Redcar has been abandoned, the blast furnace and the coke ovens destroyed by this Government’s shameful complacency and inaction. Tata Steel has announced the loss of 1,050 jobs this year alone, and there are worrying signs that the entire industry in the UK is hanging by a thread.
This is a vital foundation industry for the UK which, after all, was the world’s first industrial nation. Our steel communities are looking to Parliament to support them in their hour of need and we must not let them down. Steel production is worth £9.5 billion to our economy, £5 billion of that in exports, at a time when we have a deteriorating trade deficit.
The hon. Lady speaks of this time of need. I grew up just a few miles from Port Talbot steelworks and played very poor rugby as a scrum half at a school close by. At this time, is it not better that all parties work together for the good of the British steel industry, rather than making party political points, when it is pretty obvious that the steel industry globally has changed not only in the past year, but over the past two decades?
I will be the first to work with Government Members, and I hope that by the time we have listened to the Business Secretary’s reply we will have something that we can all cheer.
The British Chambers of Commerce recently found that export growth continued to slow at the end of 2015, with manufacturers struggling in particular. In the words of a former Conservative Trade Minister, the Government’s own export target is “a big stretch”. The Government have obviously been asleep at the wheel. Ahead of the Budget next month, the Government must acknowledge that on their watch domestic structural weaknesses in the UK economy have been allowed to persist and that they are now in danger of holding Britain back.
Does my hon. Friend agree that the Government have also been asleep at the wheel when it comes to the crucial issue of procurement? Will she join me in commending the Daily Mirror for its Save Our Steel campaign, which has been shining a light on defence procurement, in particular, and found that Swedish steel is being used in the Navy’s newest warships?
I certainly agree with my hon. Friend’s observations and share his surprise that Swedish steel is being used in Ministry of Defence contracts in quite that way. I note that it appears to be a Conservative donor company that was doing that work. I join him in commending the Daily Mirror for its fantastic Save Our Steel campaign, which has highlighted the very real effects of the current crisis on steel communities up and down the country. Long may it continue to help us campaign to save this vital industry.
In the light of all that, why has the Government’s response to the steel crisis been so complacent and ineffective to date? Perhaps it is because we have a Business Secretary who is ideologically indisposed to taking any worthwhile action as he does not actually believe in the concept of Government action at all. Perhaps it is because we have a Business Secretary who has read far too much Ayn Rand and thinks that markets should somehow just be left to look after themselves. Perhaps it is because we have a Business Secretary who will not let the phrase “industrial strategy” even pass his lips.
Is my hon. Friend concerned that the Business Secretary will write letters supporting the need to deal with dumping and to increase tariffs, but, when it comes to reality rather than rhetoric, is part of a Government who are one of the ring leaders in the EU Council preventing any increase in tariffs?
I thank my hon. Friend for that observation. I think that in this debate Opposition Members will want to explore the gap between the Government’s rhetoric and the reality of their actions, because all too often we find that the gap is far too wide.
Today in Defence Questions it was said that British steel companies had not tendered for defence contracts—for example, for the building of frigates. If it is unattractive for British companies to tender, is it not important that the Government explore what is happening in our contracting? There is a problem there—a gap between what is said and reality—that should be explored.
The Government should certainly be leaving no stone unturned in encouraging UK steel to tender for any contract, especially as they boast about changing the procurement rules—in my experience, one has to do a lot more than that to make a real difference.
I thank the hon. Lady, who is being generous in giving way—I believe in mixed rugby teams, so she is welcome on the pitch anytime. It so happens that 26 British companies were asked to tender for the offshore patrol vessels to which Mrs Moon referred, but only one did, so only 20% of the steel for those vessels will be British. Surely she agrees that it is not for the Government, or indeed for the Opposition, to promote and market individual steel companies, whether British or not; it is for those companies to market themselves, and it is for the Government to set the framework in which they can do the business.
I am just getting the idea of a mixed rugby team out of my mind so that I can address the hon. Gentleman’s point. I think that it rather makes the point that the Government need to do more than just change technical criteria. They need to take a root-and-branch look at what is actually happening in our steel industry, and an industrial strategy would assist them in doing that. We need to do what we can to ensure that any blockages are removed so that we can give our steel communities the best chance to take maximum advantage of the procurement opportunities available in this country.
That is absolutely crucial. Does my hon. Friend agree that there is a pattern of behaviour here? We have seen foreign steel used in the Tide class tankers, in the scout vehicles and in the aircraft carriers, we have no commitments on the frigates, and we have also heard about Swedish steel being used. That pattern of behaviour across all defence procurement needs to be investigated.
My hon. Friend makes a perfectly fair point. The Government should leave no stone unturned in order to maximise the chances of British steel companies bidding for these contracts successfully.
On investment in steel, does my hon. Friend recognise that there is an opportunity to invest in a catapult centre in my constituency and in that of my hon. Friend Anna Turley? That would be a major investment that would take steel forward. That opportunity ought to be embraced, but it is being dismissed out of hand—[Interruption.] The Minister for Small Business, Industry and Enterprise says from a sedentary position that it is not, so I am glad that she is embracing the concept.
My hon. Friend has anticipated a point that I plan to make later in my speech. I certainly hope that there will be some good news on the catapult centre in the Budget, because we would certainly support that.
I agree with the hon. Lady; we need a streel industry and there needs to be cross-party working to try to find the way forward. What does she think the Government could do to try to get more steel orders? The main problem is that there just is not enough British steel being bought.
One of the first things we have to do is stop the tsunami of unfairly traded and dumped Chinese steel, which is preventing fair trade and competition in the market at the moment.
The Opposition have had to drag this Government kicking and screaming to the House on no fewer than 12 occasions since 2014 to try to force them to turn their warm, sympathetic words on steel, which we all recognise they use, into effective action. Today, here we are doing so once again. The Opposition motion calls on the Government to stop using the European Union as an excuse for their own inaction. It asks them to support a more effective response to the dumping of Chinese steel, which threatens to decimate UK steel production. It calls on the Government to take tougher action to secure a level playing field for our industry.
Far be it from me to suggest that the Government should operate outside EU state aid rules; I simply do not think that they are being sufficiently inventive or creative with the rules as they are at the moment. Had they been more interested, perhaps we would not have had to drag them to the House 14 times to keep the pressure on.
I apologise for my voice—I shall have to whisper.
I have been on the doorstep with steelworkers in my constituency, and, in a spirit of working across these Benches, all I want to be able to say to them is that the Minister has been to Brussels and demanded the highest possible tariffs—the sort of tariffs the Americans have. Then I can say that, in line with the proposals being put forward by the Welsh Government, we are doing everything we can to make sure we have a steel industry in this country—this year, in five years, in 10 years and in 50 years. Does my hon. Friend agree that if we do not have those tariffs, we risk losing the steel industry?
Again, I agree. In this moment, we all have to do the most we can to preserve a future for the UK steel industry.
Our motion calls on the Government to take tougher action to secure a level playing field for our industry by working in partnership with our European neighbours. As part of the largest economic bloc in the world, Britain is in a much stronger position to stand up to those who refuse to play by the rules of the game, damaging our future economic prosperity and putting at risk the jobs and livelihoods of families in our close-knit steel communities. We need a Government who are willing to make that case by standing up to China.
I am coming to that later in my remarks, but my hon. Friend is exactly right: all energy-intensive industries are affected, and ceramics is one of them.
If they are accurate, I welcome the media reports from today’s European Union Competitiveness Council, which appears to have agreed that the Commission should accelerate anti-dumping action. I look forward to much more detail from the Secretary of State when he responds to the debate on what that will mean in practice. Until then, we must judge the Government on their actions to date.
Our motion calls on the Government to stop blocking reform of EU trade defence instruments, which would enable defensive tariffs to be imposed much more quickly and at a level that would actually prevent imports of unfairly traded steel products from China. The Government should support the scrapping of the lesser duty rule, which is preventing tariffs from being set at a level that will actually deal with the problem. After months of agitation and a massive increase in Chinese imports, especially to the UK, the European Union has finally set its tariff on a particular product—Chinese rebar—between 9.2% and 13%. Meanwhile, the USA has introduced defensive tariffs of 66%, and they were operating 45 days after the start of its investigation. To work, tariffs have to be high enough to deal with the problem—the EU tariffs are not.
It is important to make it crystal clear that we are objecting to blatant and unfair dumping, not to free trade, which the Opposition support.
I am interested in what the hon. Lady is saying, but does she not feel the chill wind of the 1930s, which saw the infringement of free trade as people eagerly moved to impose tariffs? Over the last 10 years, China’s share of world trade in steel has grown from 30% to more than 50%, so whatever the tariff, there will be further calls for higher tariffs, with consequential disadvantages for all.
I was trying to make it very clear that we are talking about unfair trade—dumping. We are not talking about fair trade.
My hon. Friend is absolutely right. The point is that this is not an example of free trade. China is in breach of World Trade Organisation rules, and it is exploiting export subsidies to such an extent that the Americans are looking at tariffs of more than 200% on Chinese steel. That is not unprecedented: back in 2004, the Bush Administration brought in similar tariffs of about 25% on European steel.
My hon. Friend is exactly right: we have to distinguish between free trade, fair trade and unfair trade, and what we face with Chinese steel imports is clearly unfair. Dumping is unfair, and it is threatening the very existence of the UK steel industry. Everyone in the House knows that once steel facilities have gone, they cannot easily be put back. We have to protect our industry’s capacity to exist, and perhaps to do better in future, when world conditions have changed. If we do not bear that in mind, we will lose the lot, and we will regret it.
The hon. Lady will find that there is a lot of understanding across the House of the point she makes. My point is just that, over the past 20 or 30 years, we have become reliant on China producing many things, and Ruth Smeeth mentioned ceramics. My concern—perhaps Ms Eagle can address this—is about where we make the distinction in terms of the tariffs we impose. Does she not have the slightest concern that a series of such issues may come up in sector after sector because of the growing reliance over the last few years on Chinese exports?
We need to have an industrial strategy, and we have to ensure that imports into this country are appropriately priced and fairly traded.
My hon. Friend is setting out her stall very clearly. Does she not agree that it is particularly important that there is fair trade when a strategic foundation industry that is important to manufacturing, defence and other core activities is being challenged in this way?
My hon. Friend is exactly right. I could not agree more about the strategic importance of foundation industries, of which steel is a key one.
Shotton steelworks, which produces “galv” and coated products, relies on Port Talbot for its supply of steel. Although Shotton is a profitable plant, if Port Talbot were to go, it would not be easy to find a good-quality supplier of steel at the drop of a hat.
Exactly. My hon. Friend supports his constituents, and he knows exactly what is at stake if the Government fail to protect the fundamentals of this foundation industry.
I am grateful to the hon. Lady, who has been extremely generous in giving way, and I am more than happy to support the motion. Is she aware of the work of the devolved Government of Wallonia in Belgium, who have a strategy to protect their steel industry, encompassing an investment fund, an innovative research plant and clear protective measures for steelworkers? Should the Labour Welsh Government pursue a similar strategy?
The hon. Gentleman has pointed out that, in some places in Europe, there may exist an industrial strategy, and we could do with one in this country.
Far from fighting for the UK’s interests, as they would have us believe they are doing, the Government are actually a leading part of a group of EU countries that have moved to block reform of the lesser duty rule. Let us look at the record to date. The European Commission proposed strengthening trade defence instruments in April 2013 to protect Europe from Chinese dumping. That was endorsed by the European Parliament in February 2014. It was then blocked in the Trade Council in November 2014. It was the UK Government who successfully assembled a group of 15 other EU countries to oppose that crucial reform. The Government objected primarily to the abolition of the lesser duty rule and to giving the Commission the ability to initiate anti-dumping proceedings on its own. Perhaps the Business Secretary will let us know whether today’s apparent agreement changes that stance? If it did, that would be most welcome, and it would certainly be a departure from the recent past.
When the Business Secretary was asked, in evidence to the Business, Innovation and Skills Committee recently, about the Government’s blocking of reform, he said:
“If duties are applied that are disproportionate, it would have an impact, in Britain and elsewhere”.
However, Chinese dumping is having a devastating impact in Britain now. We do not need disproportionate tariffs; we need tariffs that will be effective and duties that will prevent the damage caused by illegal dumping. The Government should be arguing for such duties, not conniving with 15 other EU countries to block them.
On granting market economy status to China as part of its ongoing acceptance into the World Trade Organisation, the Chinese Government regard this as an automatic thing, but it certainly should not be. In fact, as many in this House will know, this status is granted only when the economic conditions in the country concerned have developed in such a way that it can be shown that prices and costs are genuine and can therefore be used to determine trade defence disputes. China currently meets only one of the five criteria required for this status to be granted, and yet the UK Government support granting market economy status to China as early as the end of this year.
Why is this? We already know that the Chancellor continues to be almost embarrassingly desperate to be China’s new best friend, but he must not pursue his infatuation so far that it excuses its unfair trade practices. Granting market economy status to China in the absence of important safeguards would significantly diminish the capacity of the EU to guard against Chinese dumping, which has the potential to destroy the UK steel industry, so it must not be granted until the criteria are objectively met. Will the Secretary of State tell us more about why the Government appear to have made their mind up already on this important issue in advance of the forthcoming assessment by the EU Commission? Surely they are not so intent on cosying up to China that they have left all judgment behind.
The Opposition motion calls on the Government to publish a full industrial strategy that is designed to support and grow our manufacturing sector, not just stand by as it is threatened by unfair competition. This should include a proactive procurement policy committed to using British steel wherever possible for publicly funded infrastructure projects and supporting industrial supply chains across the UK. Nothing less will do. In the forthcoming Budget, Labour would support the Government doing more on business rates and exempting new industrial equipment. An industrial strategy must be forward-looking and support our wider industrial base and its supply chains. That is why Labour would also support the Government in going further to develop a materials catapult to drive early-stage investment in this crucial area—an idea that has support from industry and business organisations such as the CBI. Labour Members certainly support it, and I hope that come the Budget we will hear from the Government that they support it too.
The Government are always keen on asserting that they have changed the procurement rules as one of the five steel industry asks that the Minister for Small Business, Industry and Enterprise blithely asserted during the recent urgent question on
The Conservatives have left our economy insufficiently resilient to global threats and not in a high enough state of readiness to seize on future opportunities. If they are to lay solid foundations for our future prosperity as a nation, they have to support our foundation industries. Decisions taken now will chart our economic fortunes for the decades to come. The UK steel industry does not need warm words from this Government: it needs effective action. Our steel communities need it, our economy needs it, and Labour Members demand it.
There is no doubt that the past few months have been absolutely devastating for Britain’s steel industry and, more importantly, for the skilled, dedicated people who work in it. It is also clear that the global steel industry is facing an unprecedented set of challenges with multiple factors beyond the control of any one national industry or Government.
The facts are familiar, but they bear repeating. Around the world, production of steel is 30% higher than demand. In China alone, excess steel capacity is 25 times the UK’s entire annual production. Demand here in Europe has yet to return to pre-crash levels. As a result, the international price of steel has halved over the past 18 months, and the impact on Britain’s steelworkers has been all too clear. I have travelled to Redcar and to Port Talbot and seen for myself the challenges the situation has created, and the good work being done on the ground to help the communities cope.
Labour Members want us to demand the removal of the lesser duty rule so that the EU can impose tariffs on all Chinese steel. They apparently fail to recognise that the lesser duty rule does not prevent the imposition of tariffs, nor is it a bar to effective action against unfair trading: it simply ensures that duties are set at a level that removes the harm caused by dumping, and no higher.
When the Secretary of State wrote to the Commission and said that it
“should make full and timely use of the full range of EU trade policy instruments to tackle unfair trade, including anti subsidy measures, to ensure a global level playing field”, did he mean that he was going to take action on behalf of our steel industry?
I will come to that in a moment. Under the lesser duty rule, if the dumping margin is 50%, but a duty of 30% is sufficient to remove the harm to industry from that dumping, then the duty is set at 30%. The tariffs recently imposed on Chinese rebar were indeed too low. I am continuing to raise the issue in my regular discussions with Brussels, as I did only last week when I met the EU Trade Commissioner in London.
Before my right hon. Friend makes any more progress, it is worth putting on the record the £50 million of support that he and the Minister have already put in place. Will he bring us up to speed on where the negotiations with the EU stand and what sort of timescale he is looking at?
No, I do not, because, as I have said, the lesser duty rule is there to create a level trading field. As I have also said, under the existing rule, tariffs can be higher, and in many cases should be higher. However, they were not set too low because of the lesser duty rule. The problem was the time period used by the Commission in its calculation.
The Secretary of State specifically mentioned rebar. As he knows, that is a major product produced by Celsa in my constituency. It is a very high-quality product that has been used in Crossrail and many other projects. Does he expect that tariffs on rebar, specifically, will be higher against the unfairly traded Chinese steel—yes or no?
The hon. Gentleman is right that it is suggested that tariffs should be higher to right the detriment. We agree; that is what our analysis shows. That is exactly what we are pushing with the EU Commission, as I did only last week when I met the Trade Commissioner while she was in London.
I hope that the hon. Gentleman respects that it is not for us or any other state to say what the tariff should or should not be. These are European-wide tariffs. Under the existing rules, it is possible to have higher tariffs, and that should certainly be the case if the dumping does not stop.
I realise that there will be a negotiation process. As somebody who has been involved in European negotiations in a different sphere, I know that it is perfectly within the Secretary of State’s gift to tell us what the UK’s negotiating position is. What should the tariffs on the different products be, and when is he arguing for them to be imposed?
When it comes to the steel industry, there are many different types of products and there is no one single tariff that we are looking at. Where appropriate, we are pushing the EU Commission where we think it has not applied the existing rules properly, not just for higher tariffs, but for much speedier action.
Does the Secretary of State not understand that the clock is ticking and the industry does not have long left? Millions of pounds are being lost each day and it is no good him standing there saying, “Well, I’ve said this and that about next week and the week after.” There may not be a week after.
The hon. Gentleman makes an important point, but he should also accept that if the entire debate on trade and trade protection in the EU becomes about the lesser duty rule, it will take away from the time and effort required to use the existing rules more effectively.
If Tata Steel, UK Steel—the umbrella body—and the Community union are all calling for the Government to take action on the lesser duty rule, surely the Secretary of State can see that it is in his gift to give that to the steel industry, which is crying out in desperation for his help.
The hon. Lady will know that that is not in the gift of any single Government in the EU; the issue is EU-wide. As I have explained, it is important to use the existing rules effectively, and we support taking further action where the tariffs are not imposed quickly or if they are not high enough.
Let me say more about tariffs and then I will take some more interventions. Punitive tariffs and sky-high duties always seem like a nice, easy solution, but the truth is that excessive, protectionist trade tariffs simply do not work. Although they provide a short-term boost for the protected sector, they inevitably cause long-term harm to the wider economy. They drive up prices.
We are not calling for protectionism; we are calling for tariffs that prevent unfair trade. When the right hon. Gentleman talks about protectionism, it is important that he distinguishes between dumped and unfairly traded products—which must have high tariffs so that they can be blocked before they destroy our industry—and fairly traded products. We agree with him. We are not against free and fair trade.
If the hon. Lady means what she has just said, which is that she wants a level playing field, we are in agreement, but the entire argument she made moments ago was for punitive tariffs, which would drive up prices for businesses and consumers and risk potentially ruinous retaliation from other nations. Artificially over-inflating the price of imported steel would have a hugely damaging effect on British companies further up the manufacturing chain. Of course, I would like to see such companies using British steel rather than cheaper, lower quality imports, and let me take this opportunity to urge them to do so. However, forcing them to buy British steel by making imported steel prohibitively expensive is not the way to make that happen. Higher duties on imports of raw materials eventually mean higher prices paid by manufacturers and consumers alike, putting countless more jobs at risk.
This crucial point is at the heart of this debate. Nobody is calling for punitive measures; we are asking for a level playing field. If we do not level the playing field when other countries, such as the US, are willing to put up their tariffs, this country will get a double dose of the dumping. The effect will be increased if we do not take action. We do not want a trade war; this is simply about levelling the playing field for the British industry.
There is undoubtedly anguish in the industries and sectors affected by the impact of change on the steel industry, but does my right hon. Friend agree that, over the past 30 years, global free trade has had the best impact on jobs, wellbeing and living standards, and that he has a responsibility not to indulge in tit for tat retaliatory measures on tariffs in pursuit of a good cause, because of the consequential impacts on other aspects of trade?
My hon. Friend is absolutely right. That does not mean that it is not possible to have tariffs; of course they are possible when there is unfair trading, and that is exactly what we support. That is what the current set of rules used by the EU allows.
There is nothing more cruel to steelworkers, many thousands of whom I am proud to represent, than suggesting that all of the solutions to this crisis are in the hands of the British Government. For the record again, will the Secretary of State make it absolutely clear whether the British Government can unilaterally impose the tariffs? If not, will he confirm that it is for the European Union to make that decision? On top of that, is he pushing the EU for higher tariffs than those that have been imposed? It is simple—that is what steelworkers want to hear.
I can confirm all that to my hon. Friend, who makes his point very well. The rules are applied to all members of the European Union. The tariffs are set after an evidence-gathering process by the EU Trade Commissioner. Clearly, we all want them to be based on evidence so that it can be used to create the level playing field that we all want. My hon. Friend is correct to say that no single country can choose to change a tariff; we must work collectively through the EU rules.
Removing the lesser duty rule would have an impact. We want to address the impact of unfair trade without imposing disproportionate costs on the wider economy. We want to create that level playing field rather than a protectionist barrier. As I have already said—I am happy to say it again—where the evidence suggests it, I want to see the highest appropriate duties imposed. On rebar, which Stephen Doughty mentioned earlier, the UK industry is asking for tariffs of 20% to 30%. We support that and think that the evidence backs it, but I will never call for any action that could damage British business and hurt British consumers.
Ms Eagle called for an examination of the implications of granting market economy status to China. The Commission has not yet published its proposals, but, even if China is granted market economy status, the EU will still be able to take action on unfair trade practices and impose anti-dumping measures. After all, Russia has market economy status, and the EU has taken anti-dumping measures against Russia. Nor would market economy status affect the EU’s ability to tackle Chinese subsidies through anti-subsidy actions. In fact, the Commission has said that it wants to make it easier to tackle subsidies through trade defence measures.
It is clear that the Commission can do more within the existing rules, and I am doing everything I can to make sure it does so. That is why the UK has led the way in calling for more effective action. It was the UK that demanded and secured an extraordinary meeting of the Competitiveness Council to agree a European-wide approach to the crisis. It was also the UK that lobbied for an investigation into rebar dumping. We have been pressing the Commission to speed up its investigations into dumping so that appropriate steps can be taken as soon as possible. We have written to the Commission with specific proposals. We have voted to take action on seamless pipes and tubes, wire rod and cold rolled products. We have supported the Commission’s investigations into hot rolled flat products, and just last week I personally raised the issue with China’s Commerce Minister when he was in the United Kingdom.
If what the Secretary of State says is true, why does the director general of Eurofer, Axel Eggart, state:
“By blocking the lifting of the Lesser-Duty-Rule, these Member States”— including the UK—
“deliberately deprive the European steel sector of the chance to receive effective and legitimate remedy against massive dumping”?
Why does the Secretary of State think that the representative of the entire steel industry in the European Union says that?
I think I have already answered that question. We have been working closely with the industry to deliver as much support as possible. At October’s steel summit, the industry had five asks of the Government. Today, I am pleased to say that we have already delivered on four of them. Let me take this opportunity to thank my colleagues the Minister for the Cabinet Office, the Minister for Small Business, Industry and Enterprise, and the Commercial Secretary to the Treasury for their unstinting work.
That is an excellent question, and that was the second ask from the industry. Let me address the first ask, and I will come right back to that point.
The first ask was for lower energy bills. We will shortly be paying compensation on renewable energy costs, and we are in the process of securing agreement to exempt energy-intensive industries from such costs. The second ask was for more British steel to be used in public building projects. We have issued updated procurement guidance to all Departments to make it clear that they can now take into account wider socioeconomic considerations, as well as cost, when making purchasing decisions. We are the first member of the European Union to be able to use those new rules. We have also mapped rough estimates of steel that could be used for major projects including High Speed 2, new nuclear and offshore wind. We have shared those estimates with industry and will continue to keep them updated.
“the Ministry of Defence (MOD) does not hold a complete, centralised record of steel procurement for projects and equipment, either in terms of quantity or country of origin”.
Can the Minister explain why that is, and does he think that it is satisfactory? How will we ensure that Departments meet the procurement guidelines that he has set out for them if the MOD is not even keeping records? I am not talking about specific projects, but it needs to keep records otherwise we cannot tell whether it is doing what he says it should be doing.
The hon. Gentleman will be pleased to know that we are working with all Departments, including the Ministry of Defence, to make sure that they do whatever needs to be done to make maximum use of the new procurement rules.
The third ask from the industry was greater flexibility on EU emissions legislation. We have successfully negotiated longer lead-in times for the implementation of emissions regulations. The fourth ask was for action on unfair trading practices. As I said a few moments ago, we have led the EU in securing provisional duties on unfair imports of rebar steel and cold rolled flat steel. We have welcomed new investigations into unfair imports of hot rolled flat products, heavy plate and large seamless pipes. We continue to pressure the European Commission for further action against unfair trading, including the use of the registration procedure where appropriate.
I appreciate what the Secretary of State has said about levelling the playing field; that is all the Opposition ask for. I want to take him back to the point about the lesser duty rule. The European Commission states that the dumping margin for rebar is 66%, but the lesser duty rule puts it at 9%. That has a huge impact. The Minister must acknowledge that 66% levels the playing field.
I know the hon. Lady feels passionately about the matter, but it is important to get the facts right. On rebar, the European Commission has so far come up with tariffs of between 9% and 13%. The industry is asking for 20% to 30%, and we support that. I hope she will also support that.
The fifth and final ask was lower business rates. A Treasury review of those is ongoing, and I hope that it will be concluded ahead of next month’s Budget.
I think those numbers are right. Well over 90% of the steel was British, and that is exactly what we want to see. National Rail is using 98% British steel in major infrastructure projects, and more than 95% of the products used in the Crossrail project—the largest infrastructure project in Europe—are British. That is exactly what we all want to see.
The question of how the tariffs are calculated is intriguing. China is in such breach of the WTO rules that the calculation has to be based on Turkey as a model. Whether the tariff is 20% or 30%, the figure of 66% is a guesstimate, and the true number is probably far larger. It would be interesting if the Secretary of State could have dialogue with his European counterparts about that. We are talking about a problem that is far larger than the calculations suggest, and there is no information available because China is in such breach of WTO rules.
That is why we need to use whatever evidence is available. That means working closely with the industry, listening to it and taking note of its evidence. If the industry is saying that the right level is 20% to 30%, it is worth listening to that.
We have provided support packages worth up to £90 million for communities affected by plant closures in Scunthorpe, Redcar and Rotherham. The help on offer includes retraining, support for local companies that want to take on former steelworkers, and emergency help for workers who find themselves in a financial crisis. Earlier this month, Lord Heseltine announced the creation of an interim body for managing the former SSI site in Redcar, to ensure that it reaches its full potential. Lord Heseltine is also conducting a review of inward investment in the Tees valley, as well as looking at how to enhance education, employment and skills in the area.
As for the plants that are still operating, we continue to work with the Scottish and Welsh Governments and with individual companies on their specific needs. For example, we have repeatedly made it clear that we want the blast furnaces to carry on at Port Talbot, and we are working with Tata and the Welsh Assembly Government to help to make that happen. Although this remains an uncertain time, it is encouraging that Tata Steel Europe has announced that Greybull Capital is its preferred bidder for the purchase of the Tata long products business. That is a positive step. The negotiations are a matter for the companies involved, but we remain in regular contact with Tata about its future plans. If it is successful, the sale is likely to involve some element of state financial support, on commercial terms, for the new owner.
We have set up a joint Government and industry steel council to take remaining actions forward and to work through the conclusions of an independent study into the competitiveness of the UK steel sector. I will co-chair the first meeting of the steel council on Wednesday.
I hope that my right hon. Friend will take note of the Tata support fund that has been launched in north Lincolnshire for those in the supply chain. On the question of likely state support for the Greybull sale, which we are all behind, will he go into a little more detail about what that might look like and at what level it might be set?
I fully understand why my hon. Friend has asked about that, but the discussions are commercially sensitive at this point. I am happy to reassure him that we are in deep discussions with Greybull, Tata and others, and that where we are able to help by providing support on commercial terms, we most certainly will do so.
The hon. Member for Wallasey has called for us to offer greater support to manufacturing supply chains across the UK. The Government are absolutely committed to British manufacturing. That is why we are investing in infrastructure across the country, and that is why, for example, we are totally committed to building four Successor submarines for our nuclear deterrent. Building the Trident replacement will secure our nation and secure thousands of skilled manufacturing jobs. Sadly, it was no surprise to see the Leader of the Opposition leading a demonstration against it this Saturday. Senior members of the GMB union called that
“armchair generals playing student politics”.
The crisis facing the British and European steel industry is grave indeed, but the charge that this Government are not doing all we can simply does not stick. We cannot simply increase the global price of steel or reduce the level of production in other countries.
My right hon. Friend does not accept the charge that the Government are not doing all they can, but does he not agree that if we were not in the European Union, the Government would be able to do a heck a lot more?
Even if that were the case, we would still be bound by WTO rules and it is possible that we would be far more open to retaliation by other countries as well.
If the Welsh Government had listened to the leader of the Conservative party, they would have been in a far better position to help the steel industry locally.
There are things we simply cannot do—we cannot simply increase the global price of steel or reduce the level of production in other countries—but we have done everything possible and we will continue to do so as long as such action is needed. We will leave no one behind in this one nation.
When I was preparing for today’s debate, I wondered how I could speak on this or similar motions without repetition, deviation or hesitation, which are the famous rules of Radio 4’s “Just a Minute” programme. I will break all those rules, because I will use repetition and—not too much—deviation, while the only hesitation will be when I struggle to find words to explain what the Government say they are doing to help save the UK steel industry.
Since I attended the UK steel summit in Rotherham on
Community the union has called for the UK Government to take action now, and has asked them
“to do everything in their power to safeguard the future of this vital strategic, foundation industry of fundamental importance to UK manufacturing and industrial supply chains.”
Along with UK Steel and Eurofer, Community has challenged the Government to come out positively for scrapping the lesser duty rule, which inhibits the rate of duty that can be imposed on Chinese dumped steel. It is hypocritical in the extreme for this Government to vote for anti-dumping measures on the one hand and to fight to retain the lesser duty rule on the other.
The Government support market economy status for the Chinese. Where is the sense in that? It is another example of doublespeak. Yes, the Prime Minister spoke to the Chinese about the dumping of steel, but it seems to have been a rather one-sided conversation. We have no proof that the Chinese even listened, as there has been no diminution in the problem. It is no secret that the Government need Chinese money to build nuclear power stations. Is that uppermost in their mind? It is time they put UK manufacturing interests first. The Chancellor has already trailed that further austerity is coming down the track, and where did he choose to make that announcement? Shanghai.
When pushed, the Government have pointed to the five asks put forward at the UK steel summit. They have made progress on some of them—they have managed to get agreement from Europe to implement the energy-intensive industries package ahead of April 2016, but that is of very limited help during the current financial year. As far as anti-dumping measures are concerned, I have already explained that the Government are in two minds about that, according to industry leaders. There has been no movement on competitive business rates for larger manufacturers and, given the Chancellor’s announcement about further austerity measures, it is difficult to see how and when that will happen. There has been movement on gold-plating EU regulations, but that has so far had minimal effect. Progress has been made on procurement guidelines, but that will affect future infrastructure projects and is not helping the UK steel industry at present. We are in dire times.
I was brought up at Harthill, near Ravenscraig, in Lanarkshire, and I have seen the scars that still exist in those communities 20-odd years after the closure. Does the hon. Lady agree that we need to take specific action if we are to prevent such scars in other communities?
I absolutely agree. The former Ravenscraig site is in the centre of my constituency, and I go through it almost weekly. It is still scarred, and it is still a monument to what happens when steel businesses close down.
Each time there have been job losses in the steel industry, the Government have moved in to help. The help has been to find people other employment; there have been few timely direct measures to help keep steel plants open. The UK Government have been challenged numerous times to come up with a UK manufacturing strategy and to employ joined-up thinking to help foundation industries, including steel. That is what other European countries do.
The comparison between what the Scottish Government and the UK Government have done is stark. Within days of the announcement of the mothballing of the Scottish plants, the Scottish Government set up a Scottish steel taskforce, with a remit to find a buyer for the plants and to do everything possible to retrain and upskill the workforce to make sure they would be ready when a buyer was found. Skills Development Scotland has created the steel industry advanced manufacturing upskilling programme to provide an incentive to retain key and essential staff. That will enable a knowledgeable and skilled team to be assembled quickly when an alternative operator is found.
The hon. Lady is going through the work that the devolved Administrations can do. Does she share my disappointment, however, that from the decks of the 94% British steel-built Queen Elizabeth aircraft carriers can be seen a bridge that the Scottish Government are building with foreign steel?
May I ask the hon. Gentleman to excuse me if I move on? That old canard has been dealt with in previous debates on steel. The Scottish Government are now moving on. [Interruption.] I will move on with my speech, if the Minister for Small Business, Industry and Enterprise will stop chuntering from a sedentary position—I think I have that wording correct.
The Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy laid the snappily titled statutory instrument 2016 No. 120, Rating and Valuation, the Non-Domestic Rates (Steel Sites) (Scotland) Regulations 2016, on
There have also been discussions with the chief assessor in relation to the 2017 revaluation of rates in Scotland, to look at special measures for steel plants. The Scottish Environment Protection Agency has been in touch with the present owners regarding any work that needs to be done in relation to the sites, and Tata has been working closely with Scottish Enterprise to find schemes and other ways to reduce running costs, which will also help any new owner. At each meeting of the taskforce, there is a positive energy and a commitment to retaining the plants for Scotland’s economic future.
“The Action Plan is based on a commitment to raising productivity through increased investment and innovation”.
It is a road map to success for Scottish industry. As part of the action plan, the Scottish Government have established a joint centre of excellence for manufacturing and skills academy.
The Scottish Government have shown what is severely lacking here at Westminster: a strong political will to help the steel sector and other manufacturing industries boost inclusive growth and exports. The UK Government are so busy with their hands-off approach to vital foundation industries that their mantra of the UK being a world player is at serious risk. This is a country that wants to strut the world stage, but if it is not careful, it will lag so far behind in manufacturing that it will not be able to manufacture the necessities its citizens need.
I ask the Government to look seriously at the mixed messages they are sending out, to get behind the scrapping of the lesser duty rule, to steer away from giving China market economy status and to start investing in foundation industries in the UK. We need to spend more on industry and less on bailing out bankers. In closing, may I just say that another Radio 4 comedy programme comes to mind when I think of the Government’s policies on steel and manufacturing? It is my favourite programme.
Quite right: “I’m Sorry I Haven’t a Clue”. My favourite game is “One song to the tune of another”. I ask the Government to stop indulging in that. They should come out strongly for manufacturing industries, be unequivocal in the EU, get rid of the lesser duty rule, prevent dumping by China and vote against giving China market economy status, which would truly spell the death knell for UK steel.
Order. We will start with a seven-minute limit. If Members stick to that, everybody should get in and have the same amount of time.
Thank you, Mr Deputy Speaker, for calling me to speak in this important debate on the UK steel industry.
I would be the first to acknowledge that the constituency of Bexhill and Battle has not, to the best of my knowledge, made a large contribution to the steel industry. However, as my name suggests, my father and those who came before him hailed from south Wales, where the industry has always loomed large. It was because of my background that I put in to speak and, in so doing, I wish to express my support for an industry that the Prime Minister recently referred to as “vital”. It is with sadness that I have watched events unfold in Redcar, Scunthorpe, Scotland and south Wales. In parts of the country that rely on a specific industry, the impact is felt not just by those who are directly employed, but by the many people whose jobs and incomes rely on it indirectly.
The hon. Gentleman has referred to a number of areas of the country, but as my hon. Friend Mark Tami mentioned, there are also plants in north-west Wales and north-west England that rely on the industry. Does the hon. Gentleman recognise that there is a wider impact, with some 2,000 jobs relying directly or indirectly on the Shotton plant alone, and that it is important to take a holistic view?
I accept that point. This issue extends to the whole of the UK, including the constituency that I serve.
The steel industry has experienced challenges that are, as the Financial Times put it recently, akin to a perfect storm. First, since 2000, there has been massive growth in the volume of steel that is produced internationally, particularly by China. Secondly, the recent slowing of global growth, particularly in China, has meant that steel production has outstripped consumption. Thirdly, the surplus steel has been exported, again largely from China, which has pushed the price down for British producers. There is a similar theme in other sectors, such as our oil industry. Accordingly, British steel is being sold at a much reduced price, and because British industry has higher overheads, that has hit our steel industry hard.
That leads us to the question of what the Government can do in the face of global market events. I am pleased that they have voiced their support for the industry and are already working on the action requested in the motion in the following ways. First, they are pressing with some success, as we have heard today, for more vigorous anti-dumping and anti-subsidy measures across the EU to prevent Chinese firms from selling steel at sub-market rates across Europe.
Secondly, the Government are taking the lead in public procurement to ensure that, where possible within EU state aid rules, the Government buy British steel. To that end, I was pleased to hear the Secretary of State mention that public procurement contracts can take into consideration not just the specific costs but the wider socioeconomic benefits of buying British steel.
Thirdly, the Government are encouraging British private industry, such as our burgeoning auto trade, to buy British. Fourthly, they are assessing the tax and regulatory costs and what the industry can do to drive up its competitiveness. The Government have taken a lead in doing that with the industry.
Finally, the Government are driving discussions in the European Council on taking similar action at EU level, as the EU is the second largest producer of steel globally, albeit at about 25% of total Chinese production. I hope that those levers, which the Government and industry are pulling, will reach fruition and assist our steel producers and those who work in the industry.
I would like to respond to some of the points that have emanated from the Opposition Benches. I fully understand why they have been made but, being a Government Member, it would be remiss of me not to comment on them. It is not realistic for the Government to step in and effectively underpin the steel price by pumping money into the industry, for two obvious reasons. First, EU state aid rules mean that the UK is largely prohibited from providing financial assistance that could distort prices between producers within the EU.
I will not, because I am coming to a conclusion.
Secondly, at a time when our health service is having to find £22 billion of efficiencies in addition to the £10 billion that the Government are pumping in, we have difficult choices to make on behalf of the country about where Government spending goes.
I welcome the many initiatives that the Government have launched, which meet many of the requests in the motion. I hope that they will support our steel industry through this time of market turbulence.
The UK steel industry should be identified as a significant strategic sector of the British economy to help to secure our manufacturing strength and to retain the capability and capacity within the supply chain for our vital and productive industrial sectors such as aerospace, automotives and construction.
Given the industry’s importance and the crisis in recent months, with one in six jobs lost since the autumn, the Business, Innovation and Skills Committee made this issue the topic of our first report of the Parliament. We found that the Government were not sufficiently alert to the warning bells being sounded by the UK steel industry. Although the Government had identified the sector as vital, Whitehall did not have effective warning systems in place. The loss of job, skills and capacity in this vital industry is nothing short of a national tragedy. That has spanned more than 40 years, but on their watch, this Government should have been much more proactive in considering the retention of the existing steel capability and employment levels, rather than redeploying hard-working and skilled people to alternative jobs that are often less productive and lower earning, and losing forever these key industrial assets.
The Select Committee also found that UK Governments needed to do more at an EU level to prevent the dumping of Chinese steel—an issue that has rightly been mentioned throughout the debate and that is explicitly mentioned in the motion. It is of central importance and I shall return to it later.
At the steel summit in October, industry made five reasonable policy requests on matters such as energy costs, business rates, procurement, anti-dumping measures, and the industrial emissions directive. In the letter to me that accompanied the Government’s response to the Select Committee’s report, the Minister for Small Business, Industry and Enterprise stated:
“We have delivered on four of the five asks of UK steel and on Business rates we await the conclusions of the Chancellor’s review”.
In his opening remarks, the Secretary of State said virtually the same thing. In the body of the Government response to our report, the Government said that it has been
“unceasing in its efforts to deliver” on those five asks, and pledged to
“continue to do all it can in the coming weeks and months to ensure a healthy and sustainable future for UK steel.”
Those are powerful words and phrases, yet I regret that they are untrue, and it is wrong—disingenuous, even—to say that the Government have delivered on four out of five asks.
For example, on procurement it is true and very welcome that the Government have changed the guidelines to allow for more local content. However—unless the Minister can correct me—no orders have yet been received in steel plants on the back of that change to the guidelines, and they also fail to include so-called publicly enabled procurement projects. That means that Hinkley Point, one of the largest construction projects that this country has ever seen, which requires more than 200,000 tonnes of steel, more than 600,000 embedment plates, and large quantities of structural steelwork, is not subject to the guidelines; and nor is the massive rolling stock programme. Will the Minister outline any new orders won on the back of those changes? Will she commit to looking at whether publicly enabled procurement projects can be considered within those guidelines?
The biggest issue regarding not only the viability of the UK steel industry but the survival of the entire global steel industry is that of cheap Chinese steel being unleashed on the rest of the world. The Committee’s report acknowledged that the scale of the problem should not be underestimated. We fully accept that even if the Government were able to deliver immediately and in full on all the other asks, the future of the UK steel industry would remain in doubt unless effective action at an international level to withstand the onslaught of cheap Chinese steel could be taken.
China has far too much supply in the face of sharply shrinking domestic demand. Total Chinese steel production is 1.17 billion tonnes, which is more than double that of the four next largest producers—Japan, India, the US and Russia—combined. Chinese surplus capacity in steelmaking is bigger than the entire steel production of the United States, Germany and Japan combined. Despite the rhetoric of Chinese leaders about reducing surplus capacity, Chinese steel production increased last year.
Why would China want to reduce steel output? The closure of local steel mills will throw something like 400,000 steelmakers out of work, putting at risk social order and the ability of the Chinese party apparatus to control matters. Steel mills in China are concerned that they will lose market share and have to spend increased capital to start production again. It is far easier to keep operations going now. Chinese banks are urging mills to keep going so that they do not have to make provision for bad loans. Therefore, when considered in terms of the geopolitical situation and the domestic environment, the risk to the Chinese political, social and banking systems as a result of reducing steel capacity means that it is naive of policymakers in the west to believe that the Chinese will allow it to happen willingly. It is therefore imperative that policymakers in the west undertake a concerted and co-ordinated effort to withstand this illegal Chinese dumping. This is not protectionism. The steel market does not have effective competition, and it is being distorted to the point of destruction by a powerful monopolistic power that is immune to the normal pressures of market forces.
Some of us want a proper relationship with the Chinese economy and concede that partnership in some things is very valuable. However, this is about the power of the Chinese economy, and even though my constituency does not depend on British steel, our leading agricultural chemical companies in the world, such as Syngenta, are being taken over—overnight it seems—by a Chinese conglomerate that is really the Chinese Government strategically plotting a course worldwide.
My hon. Friend is right, and that point was mentioned earlier in the debate. This is about commodities in general, not just steel, and the enormous surplus capacity in other things such as phosphates is incredibly important. It is therefore vital that we have tougher EU action to ensure a level playing field, support scrapping the lesser duty rule, and carefully consider China’s market economic status. Given the Government’s rhetoric that they will be “unceasing” in their efforts and
“continue to do all it can” to safeguard UK steel, those steps are the very least one could expect.
The Committee’s report acknowledged the Minister’s success in changing the UK’s stance to vote in favour of the extension on wire rod, but lifting the lesser duty rule has been ruled out by the Government. In Committee earlier this month, the Secretary of State will recall that I asked whether he would change the UK Government’s position within the Commission on the lesser duty rule, to safeguard the British steel industry as much as possible. He replied that he would not, and he has repeated that tonight, stating that he needs to consider the “impact overall” on British industry and British jobs, particularly in terms of duties imposed.
Nobody would want a protectionist arms race to escalate throughout the economy, but the Minister and the Secretary of State must surely realise that the British steel industry—alongside many other European steel producers—faces an existential threat that is based on a grossly distorted and failing market. This is not about imposing additional duties or tariffs elsewhere on British manufacturing; it is a request, a plea, for a co-ordinated response. The UK steel industry is on its knees. This proud sector, which should be powering the future of British manufacturing, is pleading with the Government to help and to make sure that we have a sustainable future for the steel industry in this country.
It is a pleasure to follow the Chair of the Business, Innovation and Skills Committee who made a well informed contribution, and it is a privilege to serve on that Committee with him. I commend the hon. Members for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Llanelli (Nia Griffith), and for Scunthorpe (Nic Dakin), my hon. Friend Andrew Percy and many other Members across the House whose employees or constituents are affected directly or indirectly by the tremendous challenges faced by the steel industry. Their constituents can know that their Members of Parliament are doing the best they can to get the best deal for their constituents, and they are doing it in the most effective way in Parliament. They are a tribute to their constituents.
The steel industry is undoubtedly facing massive changes. As my hon. Friend Huw Merriman mentioned, the growth of the Chinese steel industry—initially to serve the international market but over the last decade to serve its own domestic market—has created tremendous challenges for the rest of the world economy at a time of reduced demand both in China and internationally. It is fair to say that mistakes were made by the coalition Government and the preceding Labour Government in preparing the steel industry for those changes.
For example, if Members read about energy prices on page 12 of the Select Committee report, they will see that the big change in energy prices for the United Kingdom relative to our European competitors came under the Labour Government in 2005-06. In retrospect, we concede that that was an unsupportable burden for our energy intensive industries, and the Government were at fault not to assess that. Equally, the coalition Government were at fault in not responding to the pressures placed on them by Members of Parliament to make subsequent changes.
I heard what the Secretary of State said about business rates, but I hope that he and the Chancellor will look again at what can be done with that, not just in the steel sector but more broadly in industry and retail. Business rates seem to me a tax that is very relevant for change.
The hon. Gentleman mentioned 2006, but in that period Corus was bought by Tata because of the economic signals, and it thought that it was a good purchase. Celsa in south Wales refitted the electric arc. Judging by the indicators, including energy prices, industry at that time thought that Britain was a good investment.
The hon. Gentleman’s intervention was timely because I am about to talk about industrial strategy. As he pointed out, mistakes can be made, and when the Committee had a vote on whether we should mention the industrial strategy, I was the only member of the Committee to vote against that. Personally, I believe that Governments’ industrial strategies are a nonsense, a mirage, a deceit, or, too often, a failure. Governments can take actions, they can spend money and they can show their preferences and priorities. All of that I accept, but an industrial strategy becomes a straitjacket that limits our actions and can set us up for big problems in international trade.
Finally, the core of what we are discussing today are duties. The Secretary of State was absolutely right to point to our responsibilities under the WTO with regard to tariffs, and the fact that that sets a framework for us to respond. He is making those calculations in a careful way. It was interesting and I think welcome to many that he believes further changes on tariffs could be made within those rules. He is also right to say that changes to the lesser duty rule are not appropriate at this time.
As I mentioned in an intervention on the shadow Secretary of State, I am fearful of what the tariff and counter-tariff arguments can do. Many Members have talked about what the United States is doing and that we should therefore do more, but this is where the breakdown of global trade begins: tariff and counter-tariff, competitive devaluation, recession and slump. When we perceive that a change in tariffs is fair and not about trade but about dumping, I would say to hon. Members that just because we may believe that that is the case does not mean that that is how it is perceived by those on whom those tariffs are imposed. The consequence of the Chinese economy having a retaliatory effect on the United Kingdom and other countries is where the breakdown in global trade can begin. Free trade is a global good.
Does the hon. Gentleman not accept that we are in exceptional times, and that by suspending the lesser harm rule and presenting the Chinese Government—most Chinese heavy steel plants are state-owned—with a major fait accompli, we might force negotiations on China to restructure its steel industry, whereas if we just proceed piecemeal we will not resolve anything?
If I may, I would like to address that point directly in a few minutes.
Free trade is a global good. It enriches us. It broadens choice. Free trade, by bringing people of the world together, makes us safer. We have a responsibility, even in these difficult and straitened times, as the hon. Gentleman says, to protect free trade. Those of us here in the United Kingdom have a special responsibility to protect free trade, because we have been one of the major proponents of free trade over the past century and a half. That is something worth protecting and worth bearing in mind at all times.
George Kerevan asked whether we should, essentially, toughen up in these special times with China. I think we are seeing indications that China understands it needs to toughen up as well. China has said—I am not an apologist for China; trust me, I like the other china—that it wishes to reduce its productive capacity, with one quarter of its production being taken out of commission. It is planning to reduce employment in this sector by 400,000 jobs. China is taking steps that indicate that it sees a responsibility to satisfy not just its own consumption and demand but its responsibilities in the global economy. Members should bear those thoughts in mind as they come to their conclusions.
My hon. Friend’s defence of free trade is admirable, but he is not suggesting, is he, that the Government are wrong to look at various ways of mitigating the problems that the steel sector is facing, in particular with regard to energy and on procurement?
My hon. Friend is exactly correct. That was outlined by the Secretary of State in his speech and is, I think, warmly welcomed on both sides of the House.
I commend the shadow Secretary of State for an excellent start to the debate, and for her clarification of her continuing support for free trade. That is an important message to be heard on both sides of the House at this difficult time. She understands, as I think many other hon. Members do, that there is a very special concern for the people affected by the steel industry. I think she also understands that there is a broader responsibility for the community as a whole to uphold free trade. I am sure she would recognise that the task for her opposite number, the actual Secretary of State for Business, is that he has to make those very difficult judgments now. He has to listen to representations from Members of Parliament about the impact on their constituents. He also has a responsibility to ensure that the United Kingdom remains a strong voice for free trade, ensuring that the right penalties are placed on dumping and that the broader interests of the economy of the United Kingdom are upheld. I believe he is doing an excellent job.
The gulf in understanding between those on the two sides of the House is rarely more obvious than when we talk of heavy industry. It is clear that the Government, with all the good will they may have towards the industry, are in alien territory. The best they have been able to produce today is not a man or a woman of steel, but someone who lived within sight of a steelworks. I speak with a little authority on this, because I started working in the steel industry in 1955 and was still there 30 years later.
There is a feeling of grief about the terrible destruction of the steel industry. People have talked about the scars on the countryside. It is painful to see areas that were once breathing fire and steam—where there was life, prosperity and energy—now wastelands of rubble and brambles. The real suffering is felt by those who worked there. They suddenly find that their often unique skills, the scrap of dignity around which they built their self-regard and their life, have been stripped away. They live the final years of their lives lacking that sense of self-respect, their ability to have the prosperity they expected torn away. I am very proud, with my hon. Friend Jessica Morden, to represent Newport, which relied on the steel industry for 150 years. It has suffered terrible losses.
I want to make a point about different attitudes. It is extraordinary how the Government have been seduced by Chinese communists, and how they are allowing the future of our industry to be colonised by the Chinese. It is unbelievable. We look back with amazement to see what we have done. We have mortgaged the future of our nuclear industry in perpetuity to a Chinese company. So that we can have the Hinkley sprat, we have given them the mackerel of Bradwell and the other power stations of the future. Something has happened with Hinkley Point and it is about time the House woke up to it. A former Secretary of State for Energy has written a book. He said on the “Today” programme this morning that Hinkley Point is a dinosaur. In the past fortnight, articles in the Financial Times and The Economist have said that it does not make sense to proceed. It is a basket case. It is a disaster in the making. All the sensible investors, including Centrica, which invested £200 million, have gone, and all that is left is this cheap, Chinese money and EDF.
Where is EDF? EDF had a debt of £37 billion, and if it were not a nationalised company, it would be bankrupt. It is pulling away because the technology planned for Hinkley Point is a dinosaur—it has never worked anywhere. The EPR reactor in Finland should have been producing electricity seven years ago, but it is not, and there is no sign of it doing anything. It is the same with the Flammanville EPR. It has a major fault; there is a split in the steel in the vessel. The whole thing might never happen. These huge sums are at stake, yet the Government go blindly on in their belief in nuclear power. There is another side to this, too.
I would rather not give way; too many people want to speak.
One man has a belief in a different kind of energy. Mr Sanjiv Gupta recently rescued hundreds of jobs in the constituency of my hon. Friend the Member for Newport East. He believes in tidal energy. His company is without any debts and is free to spend its money anywhere. It has already saved jobs and it plans to create at least 1,000 new jobs, and the investment is based on tidal energy, not on the myths of Hinkley Point that will never happen, but on the tide, which flows up and down, washing the walls of Hinkley Point and our constituencies. It is the second highest rise and fall of tide in the world, with massive untapped power. It is clean, British and the source of power is freely available to us. It is entirely predictable and it is virtually eternal: it will go on for all of human time. The power is vast. If it is combined with pump storage schemes, when the tide is producing energy that is not required, it can be used to pump water up to the valleys, so it can become entirely demand responsive.
There are two views on the issue. We know that the problem with the steel industry now and in the future is that it needs prodigious quantities of energy, and until we get entrepreneurs with imagination who believe in the practicalities of life, there will be little chance of progress.
Let me make one final point. I was somewhat provoked to make it when I heard that the farmer Andrew R. T. Davies, who is the Opposition spokesman in the Welsh Assembly, has announced that he wants us to come out of Europe. The only advantage I can see of coming out of Europe is that it would allow us to look at the subsidies that all the farmers get, averaging £220,000 per year per farmer in Wales. If we come out of Europe, the question must be asked how we could possibly go on investing 30% to 40% of the total budget of the European Union in an industry that produces less than 2% of our gross national product—an industry that is in serious trouble, and is not competitive. Yet what is the attitude of the Government? They want to save it, and they will put through any kind of subsidy. It will be unlimited, because this is a party in which farmers are grossly over-represented and from which steelworkers are entirely absent.
How do you follow that? What I would say is that in describing as a “dinosaur” something that would be Britain’s biggest single construction project and would create 25,000 jobs west of Bristol, it comes as no surprise to me that one party is in danger of becoming extinct in the whole of the south-west peninsula.
Why, as the MP for Torbay, which has no direct steel links, have I come along to this debate? It is because the issues raised in this debate impact on us all. I look at some of the firms starting to expand around Torquay, exporting high-tech, high-quality manufactured products, and realise that if China is starting to move into those markets as it modernises its economy, we could be debating those types of products in a few years’ time and seeing what China might do.
I am interested in the impacts of what we are talking about on the ground. Some concepts can sound rather odd—the idea of a “lesser duty rule”, for example, and the impact it might or might not have in this area. There is a debate to be had about how the European Union can modernise some of its trade defence practices, so that where issues such as this come up, they can be responded to more quickly.
Given the numbers provided by Mr Wright, it is clear why it is so important that we work as part of 28 states. In view of the sheer scale of China and what it is doing, if we were trying to operate as 28 separate individual states, we would face the danger of each of us being picked off individually, as happened in the 1930s. That would be most worrying for us. It will therefore come as no great surprise to hear that I am one of the remain voters among Conservative Members, and I view it as absolutely right to bring a united front to this issue. We should bear it in mind, however, that not so long ago the European Union was busy dumping surplus agricultural products into the markets of, for instance, African countries. When we request other countries not to dump into our markets, we must also ensure that we in the European Union practise what we preach, and do not inflict on other countries what we are complaining about in relation to some of our own industries. I accept that the lesser duty rule is not making a direct impact in this instance. I am talking about the principle of how the correct tariffs are created and decided, on the basis of advice from industry.
The Government should also think about the way in which our procurement works. I was interested by the response to my intervention on the speech of Marion Fellows, but I think it is worth pointing out that from the decks of the Queen Elizabeth aircraft carriers in Rosyth, 94% of which were constructed with British steel, it is possible to see a major construction project that is being built with steel from elsewhere in the world.
At the beginning of the hon. Gentleman’s speech, he asked what he was doing here. Perhaps his purpose was to be the proponent of misinformation. I can confirm to him that during the procurement process to secure fabricated steel for the new Forth crossing, no company from Scotland, or from the United Kingdom as a whole, made a bid for the contract. A further sub-contract for steel fabrication was awarded to Cleveland Bridge in Darlington, and raw steel was supplied by Tata in both Scunthorpe and Motherwell. I hope that that clarifies the position, and that the hon. Gentleman now stands corrected.
The hon. Gentleman has been making some interesting points. However, I believe that the contract for the bridge was originally given to a Spanish firm, which had to pull out. Cleveland Bridge came back in, and made sure that the contract used Tata steel from Motherwell and Dalzell. Those two plants are on the verge of closure, but they also make the sonar-specific plate that will be used for the renewal of the four Trident submarines. The contract is integral to both sites.
What the hon. Gentleman has said proves yet again that there is not just a massive security argument in favour of building the four Successor submarines, but a considerable economic justification. In south Devon, I can look at the site in Plymouth where the submarines are currently being refitted. [Interruption.] It is always lovely to have an accompaniment from the Opposition Benches. I hear it regularly, and I thoroughly enjoy it.
The hon. Gentleman’s intervention has made clear why it is so vital to build those submarines. I look forward to his joining me in the Lobbies when we vote on the issue, although we know that the people whose jobs rely on the Trident contract can expect absolutely no support from the Scottish National party.
We can do a great deal more when it comes to procurement. The Hinkley Point project, for instance, will create a huge number of jobs in the south-west. We need to create an infrastructure that will meet the demand. I hope that a significant amount of British steel will also be used in the construction of the Stonehenge road tunnel.
It has been interesting to take part in the debate, and to listen to some of the comments that have been made. I find it particularly interesting to hear demands for unilateral action from those who, like me, argue for us to remain in the European Union. Membership of the EU has many advantages, but unilateral action on tariffs is not one of them. However, 28 of us, working together, can make more of a difference.
I shall not be supporting the Opposition motion, which will probably not come as a huge surprise, given some of the arguments that we have heard. I think it is right that the Government are playing a proactive role in the European Union to prompt action and to modernise their own procurement rules to ensure that we can defend our own industries, but also to ensure that, for our own projects, we buy as much British steel as we possibly can, respecting the fact that our country would not believe in state aid even if we were committed to it under European rules.
There are a lot of issues that we could talk about today, including the Government’s unilateral introduction of the carbon price floor tax on energy intensive industries, but I will not go into that now. I have beaten that drum many times in this House. We could also talk about procurement contracts or business rates, but the two elements that I want to focus on are the lesser duty rule and Chinese market economy status. Those two issues are of primary concern to the UK steel industry.
Today at the Competitiveness Council in Brussels, industry Ministers from across the EU are discussing actions to actively support the European steel industry, to enable the sector to compete on a fair and level playing field within the global market. This meeting follows the extraordinary Council meeting on steel that was held on
This brings me to the primary point at issue. In order to retain virgin steel production in blast furnaces in the UK, we must deal with two immediate threats if our nation’s steel industry is even to stand still. Those threats are the lesser duty rule and Chinese market economy status. Europe currently uses the lesser duty rule to impose the lowest possible duties on unfairly traded products that have been dumped in European markets. That means that duties introduced by Europe are usually way below the actual margin of dumping. The result is that the dumping continues and unfairly traded products are allowed to compete in European markets and depress prices.
The United States does not follow the lesser duty rule, which means that it can implement much tougher sanctions that reflect the actual margin of dumping. For example, the US recently imposed duties of 236% on a particular grade of Chinese steel. Furthermore, the US Government are in the process of introducing new laws that will enable the US to take even tougher action against Chinese dumping. The consequence for Europe, and for the UK in particular, if we do not take action as a European Union and if the Government actively prevent the EU from improving our standing, will be to exacerbate the amount of Chinese dumping in our domestic market and in our own EU market. It will actually affect our own exports, never mind our ability to look after ourselves.
The director-general of EUROFER, Axel Eggert, has stated:
“By blocking the lifting of the lesser duty rule, these member states deliberately deprive the European steel sector of the chance to receive effective and legitimate remedy against massive dumping. It is member states with steel production and jobs that continue blocking an agreement within the EU Council to remove this outdated rule.”
He goes on to state:
“It is most notably the UK”.
I think that the hon. Gentleman and I have a substantial disagreement on this point. Is he not worried that if the European Union were to follow America in imposing very high tariffs, the United States would impose even higher tariffs? Would we not get into a situation of ever-higher tariffs being imposed by either side, which would reduce global trade?
In 2004, the Bush Administration imposed tariffs of more than 20% on European steel going into the US market. That level was eroded through negotiation. At this moment, China imposes tariffs on our products—British and European—that are already going into its market. So that tit-for-tat has already started. China already imposes huge tariffs on EU products going into its market. Why we are not protecting our own market and the European market—which, I might add, is the largest in the world—is beyond comprehension. I repeat that this is not about protectionism. It is about levelling the playing field to give British steel a domestic safe place to trade, within the European Union and externally. At this time, however, China is not abiding by World Trade Organisation rules, which must surely affect its future market economy status, which will be debated by the European Union.
This brings me to the point about market economy status. Currency manipulation by China has also acted as a subsidy to its exports to EU member states and other countries, while China reciprocates by taxing EU exports. This, along with direct export subsidies, support policies and the rapid growth of planned investments in leading and pillar industries in China’s five-year development plans, has led to sustained, deliberate overproduction and substantial excess capacity throughout Chinese manufacturing.
Even without MES, China has dramatically increased its exports to Europe by a remarkable 11.1% annual rate over the past 15 years—they rose from €74.6 billion-worth to €359.6 billion-worth in 2015. Put simply, the Government support Chinese MES, whether Britain is within the EU or outside it. I would argue that we may negotiate internally or externally, but we are in a far more difficult position as a population of 70 million than as the largest economic bloc in the world. The forecasts suggest that whether this is done inside or outside the EU, Chinese imports will rocket by between 25% to 50% in the next three to five years if MES is granted. That is devastating for not only steel, but every other industrial manufacturing sector. I come from the Teesside area and we do not just make steel there. We must not write off steel in our area, because we still have the beam mill in Redcar, Skinningrove in my constituency—
We have Hartlepool tube mill. We have a fantastic story to tell and we want further investment there. By granting MES, we are putting at risk not only steel, but our vast chemical processing industry in the Tees area. Energy-intensives, be they ceramics, chemicals or steel, are at real risk. We cannot afford to be duplicitous on any potential contract, be it a defence, construction or export one, but that requires a Government to make policy that defends their own British steel industry.
I want to concentrate my remarks on three areas: the critical role that steelmaking has in our economy; the considerable burden this energy-intensive industry faces; and the Government’s ongoing response to the crisis on Teesside, where thousands of workers lost their jobs with the demise of the SSI and other plants. As others have said, steel is an important foundation industry, supplying materials to multiple strategic construction and manufacturing supply chains. Taken together, these industries represent 20% of those employed in the UK’s manufacturing sector and generate gross value added of £24.6 billion.
UK Steel reports that, despite its problems, the sector makes a £9.5 billion contribution to the UK economy, with an export value of £4.9 billion. It generates £90,000 of added value for every steelworker. It produces hundreds of high-skilled, high-value-added apprentices, vocational trainees and graduates. It is well linked to the UK’s innovation infrastructure, through partnerships with leading universities, participation in catapults and our own research and development investment, and all despite the burden it faces. I just wonder for how much longer that will be the case.
UK business rates are up to 10 times higher than those of many of our European competitors, such as France and Germany. Paul Turner-Mitchell, a business rates expert, says that property taxes in Britain are the highest, as a proportion of gross domestic product and total taxation, of all 36 OECD countries. A Select Committee on Business, Innovation and Skills report in December recommended that the Government reform business rates as they apply to manufacturing at the earliest possible opportunity, with priority being given to the removal of disincentives to invest in plant and machinery. Doing so would not need EU approval and would provide a more even playing field for UK steel producers. Exempting plant and machinery from business rates valuation would symbolise a commitment to rebalancing the economy, enhancing the UK’s attractiveness to inward investment in manufacturing and improving industry’s productivity, efficiency and competitiveness. Business rates are just one of the extra burdens suffered by our steel industry, as is the Government’s inability to act in Europe to halt the dumping of Chinese steel. In fact, our Government have helped to ensure that there is no impediment placed in the way of far east producers. Others have gone into that in detail and also mentioned the British Government’s failure to build British ships with British steel.
I want to focus a little on energy costs and the absence of a level playing field for energy-intensive industries. The damaging effects of energy taxes levied on the business in the UK, leading to UK energy costs being twice as high as those among EU peers, are well understood. This comes on top of regulatory costs charged across the EU, such as the EU emissions trading scheme. British policy measures add 26% to the typical electricity price paid by an energy-intensive consumer in the UK, with steel a major loser. Yet we have still to see the compensation package for energy-intensive industries be implemented in full, and the sector is still paying 70% of the policy costs that the full package aims to address.
The EU commission provided state-aid approval for proposals to compensate the industry in relation to the costs of the renewables obligation and feed-in tariffs in December 2015. Although we await the full implementation of the first part of the compensation scheme, there remains a second application that concerns competitors of those receiving compensation. Until that second application is approved, some companies are without access to much-needed compensation and exposed to 70% of climate change policy costs. I hope the Minister can give us an update on what is happening with that second application.
Madam Deputy Speaker, you know of the closure of the SSI plant in Redcar and the loss of other steel jobs in Teesside, many of which are from my constituency. We appreciate the limited action that the Government have taken on Teesside even if the Business, Innovation and Skills Committee report criticised the Government’s initial response, which was focused on compensating those affected rather than saying what could be done to save the plant. I recognise that we need to look to the future, so I ask the Minister what hope there is for steelmaking capacity on Teesside.
I am very aware of the hundreds of millions of pounds it will cost each year just to maintain the SSI site and keep it safe. I am also aware of the proposal from the noble Lord Heseltine to have a mayoral development company in Tees Valley run locally by local politicians and his ambition to have the SSI site invested in that new body. He and the Minister for the northern powerhouse, James Wharton, appear to be excited by the proposal, and the development organisation is very welcome. Many of us, including some of those same local politicians, are very concerned about what it will mean. Lord Heseltine was at pains to explain to the media, including on television, that the financial buck rests firmly with the Government both for the maintenance and the redevelopment costs for that site. Time and again, he claimed that the Government had to take responsibility. Tonight, I invite the Minister to confirm that not only will there be support for steelmaking in Teesside, but that there may even be the possibility of increased activity in the future, and that the open-ended commitment made by Lord Heseltine on behalf of the Government in relation to the SSI site, and therefore in relation to Teesside, is a commitment she recognises and will ensure is actually fulfilled.
Steel and the steel industry are vital to Wales, particularly to south Wales and my constituency of Neath. The Tata steel plant in Port Talbot is in the neighbouring constituency of my hon. Friend Stephen Kinnock and the Trostre plant is roughly half an hour away in the constituency of my hon. Friend Nia Griffith. Both Aberavon and Llanelli are places in which hundreds of my constituents from Neath work every day.
The fact that, this year, 1,050 jobs have been lost in the UK steel industry, 750 of which are in Port Talbot, shows the Government’s complete lack of action in saving the UK steel industry. Time and again, the Government have been dragged to the House by the Opposition to answer urgent questions on their plans to save the steel industry, but all they have offered are warm words, which are of no help to an industry that is in desperate need of action.
Many options are available to the Government, including a large amount of readily available EU funding to shore up the industry. The Government could also take action against the large amount of Chinese steel being dumped on to UK markets.
Does the hon. Lady agree that, although we must express real concern about the job losses and the impact on the UK economy, we must also express concern about the quality of the imports. For instance, when it comes to the defence industry, the plate that comes from China is not of the same quality. How can we leave our defence forces at such a disadvantage when it comes to our submarines and ships?
The hon. Gentleman makes a very good point. Chinese steel is far inferior to UK steel.
The Government could also take action against the large amount of Chinese steel being dumped on to EU markets, yet, again and again, they have left all such options to the side. The statistics speak of the importance of the steel industry in Wales. There are more than 6,300 jobs in Wales, over 4,500 of which are in Port Talbot and Trostre. Of that 4,500, almost a quarter are filled by people who live in my constituency of Neath. At this time, my constituents still do not know who will lose their jobs. For many, the plants in Port Talbot and Trostre are a way of life and have been for generations. Not knowing whether they will have a job in a month or two is absolutely unbearable for them. I know personally of the community that has grown up around the plants. My father worked at the Abbey, which later became the Steel Company of Wales and then Tata. When I was a schoolchild, I played hockey for the steel company. It was the centre of the community; SCOW put food on our plates at home and contributed enormously to our social and sporting lives. The same sense of community applies today to the 4,500 workers and their families that still work at and depend on the plants. The threat of the closure of Trostre and Port Talbot is more than I can contemplate, given the devastating effect on communities.
The Minister insists that the Government are doing all they can to help the industry, but that requires action rather than the warm words that they are offering. There is so much that the Government can do, especially about the dumping of Chinese steel on the market. The prospective change in dumping calculation methodologies away from the analogue method towards local Chinese prices and costs could result in the direct loss of at least 310,000 jobs in EU industries already badly hit by dumped Chinese exports. That is in addition to the hundreds of thousands of indirect jobs that would be at stake. Surely, rather than the Chancellor moving ever closer to the Chinese, he should not grant market economy status to China until it fulfils all five EU technical criteria and not before a thorough EU-wide impact assessment, including a full public consultation.
It is important to tackle the dumping of steel because our current anti-dumping measures cannot counter the massive blow caused by Chinese steel import surges. Lifting the lesser duty rule would remove the cap on anti-dumping and anti-subsidy levels, simultaneously bringing the EU in line with everybody else, but the Government have chosen to be the main player in blocking those changes. Will the Minister assure the House that the Government are doing all they can, including reversing the decision to impose low-level duties on Chinese rebar and supporting the steel industry by supporting the lifting of the lesser duty rule? Even the former European CEO of Tata agrees. He has said that as long as trade defence protections are not introduced, the dumping of steel below its cost of production will continue.
The UK steel industry had 280,000 jobs in 1970, but now it has only 30,000. That is 250,000 jobs lost in less than 50 years. When will the Government wake up and pay attention? Will they pay attention before it is too late? EU options are also available to us. Why are the Government not moving forward and allowing the modernisation of EU trade defence instruments that would stop it taking a year and a half from complaint to definitive anti-dumping measures?
Many regions in the world are more effective in providing a level playing field for their industries and deploy trade defence tools faster and more effectively. As a consequence, dumped goods find their way on to the European market much more easily. The Government would prefer to argue with themselves over the issue of the EU than to use our membership of it to save the UK’s steel industry and the jobs of my constituents in Neath.
The president of the European Steel Association, EUROFER, has said that if we do not use the trade defence instruments available to us there is a substantial risk we will see more plant closures and job losses. Given the wide number of options available, why are the Government not standing up for UK steel in the EU and arguing for modernisation? Over and over again the Government have missed their chance to save the UK steel industry. The Minister for Small Business, Industry and Enterprise has told the House that the steel industry is vital for the UK, yet the Government are treating it with contempt and playing fast and loose with the livelihoods of the tens of thousands of workers in the industry.
The Welsh Government are doing all they can within their power to help the affected communities in Wales. They are working tirelessly to provide support to the industry, but, as the First Minister has said, the fundamental question facing steel production in Wales goes far beyond the devolved responsibilities of the Welsh Government. He has said that the UK Government must step up and play their part.
I am grateful that we have been able to secure this debate. Ever since last month’s announcement of 750 job losses at the Port Talbot steelworks, I have been calling for a full and comprehensive debate on the future of British steel. The Tata steelworks in Port Talbot is the beating heart of my Aberavon constituency. These job losses, and those that are sure to follow along the supply chain, are a devastating blow.
The Secretary of State will be aware that following that announcement, Tata has been working on a rescue plan, which will be discussed by the Tata board in Mumbai at a critically important meeting at the end of next month. I implore the Government to give their full support to the rescue plan by, for example, ensuring that there is proper investment support to improve the plant’s premium product capabilities. Such support could help in converting the continuous annealing process line into a galvanising line, thereby better serving the automotive market. Can the Minister confirm that she will urge the Chancellor to give a firm and positive commitment on enhanced capital allowance, to allow the Welsh Government Tata taskforce to move forward in establishing an enterprise zone in Port Talbot?
I will now focus on what the Government should be doing at national and European level. It is well known that this Government operate inside a fog of laissez-faire ideology. Their modus operandi is to pray to the gods of the free market and hope for the best. But it is fascinating to observe that this steel crisis is cutting through that fog, and forcing the Tories to understand a very simple truth—that when the market fails, Government should intervene.
The market economy can function effectively only if it is regulated. Just as a game of football requires the off-side rule to ensure fair competition, so the British steel industry requires the right regulatory framework, so that it can be given a fighting chance, on a level playing field. The impact of the market failure, and of the Government’s failure to intervene to fix it, is being felt around the country by the thousands of steelworkers and their families. They are victims of the Government’s laissez-faire doctrine. They are the victims of the Government’s failure to stand up for British steel.
All of us here today will be aware of the five industry asks. The Government like to boast of delivering on four of those five asks, but a cursory glance at the scorecard demonstrates how disingenuous that claim is. Take the compensation package for energy intensive industries. Five years after the Chancellor accepted the need for it, the money still has not arrived. Perhaps the cheque got lost in the Christmas post. And what about procurement? There is no tangible evidence of any change. If there were, why on earth is the MOD’s latest order for a set of Royal Navy frigates going to be based on Swedish steel? Why would a Government seriously committed to supporting the Welsh steel industry still be flip-flopping on the Swansea Bay tidal lagoon?
Most disingenuous of all is surely the Government claim that they are acting against the dumping of anti-competitive subsidised Chinese steel. If anyone doubts the acute impact of Chinese steel dumping, they should just look at rebar. From almost no market share in 2011 today, Chinese rebar accounts for almost half the UK market. That is the cost of five years of Conservative Government, five years in the fog of laissez-faire dogma and inaction, five years of watching the storm clouds gather on the horizon and refusing to strengthen the flood defences, five Tory years of rolling out the red carpet for Beijing, rather than standing up for the men and women who form the backbone of the British economy. May I therefore implore those on the Conservative Benches to resist the temptation to blame Labour? The exponential growth in Chinese market share has taken place since 201l, on their watch. Let us accept that fact and move on.
The growth in Chinese market share is possible only because of Beijing’s subsidies and market distortion—70% of Chinese steelmakers are state owned. In the light of this fact alone, who in all seriousness could possibly see China as a market economy? I’ll tell you who: the British Government. Yes, our very own Government have taken it upon themselves to become some sort of outpost of the Chinese PR machine. UK Steel, Tata and Community have all stated unequivocally that the granting of market economy status to China would probably be the last nail in the coffin for UK steelmaking, yet the Prime Minister and his Government are actively lobbying in Brussels and across Europe, for China to be granted that status. The decision on this will be taken in December. There is still time for the Government to change their mind. There is still time for the Government to be a cheerleader for Britain, rather than a lobbyist for Bejing.
But market economy status is not the only area where the Government are actively undermining the British steel industry. It has become widely recognised in Europe that the lesser duty rule is killing our industry. Indeed, the European Commission proposal that it be scrapped was supported by the European Parliament. Yet the UK continues to be the ringleader in blocking the scrapping of the lesser duty rule. I have grown used to warm words being matched with frozen actions, but this is much worse. On trade defence and the lesser duty rule, this Government have publicly declared their undying commitment to British steel, while behind closed doors they have consciously conspired to undermine the British steel industry. The gaping chasm between their words and their deeds needs to be explained. I hope that they will do so in the near future.
We need a Government who are committed to a long-term industrial strategy and who are more committed to Britain than they are to Beijing, not spinning a line in public while agitating for the opposite behind closed doors. We need a Government who will stand up for British steel.
I would like to thank Labour Members who are responsible for the allocated Opposition debate time being used to bring this issue to the forefront again. It was with an incredibly heavy heart that I learned of the planned closure of the Clydebridge steel treatment mill in my constituency. Although the site employs far fewer people than the rolling mill in the constituency of my hon. Friend Marion Fellows, or sites represented by other Members in the Chamber today, the closure and the associated jobs losses are just as devastating. The work of the trade unions on the ground in my constituency is to be commended, and I am sure that sentiment will be echoed across the UK.
The human cost is sometimes secondary to the loss of industry in media coverage, and it would serve us all well to remember that thousands of jobs have already been lost and many more are at risk. Each one of those jobs represents mortgage and rent payments, food on the table, electricity and other utility bills, clothing, council tax, and all the other outgoings that steelworkers and their families face. The crisis facing the industry is causing crises in the homes of steelworkers the length and breadth of Britain. Every job loss holds its own unique story and its own heart-breaking strain on families. Every job loss is a hammer blow to local economies and communities, and it puts more jobs at risk along the supply chain.
I have heard Government Ministers say too often that they are taking action to protect jobs, but reality betrays that assertion. The industry is haemorrhaging jobs. It is an industry on life support. I make no apology for saying that the Government have simply not acted swiftly or decisively enough. The Tory manifesto claimed that they are “the party of working people”. Rhetoric is all well and good, but the steelworkers in Clydebridge are some of the hardest-working people I know, and they deserve to be supported properly.
First Minister Nicola Sturgeon moved swiftly to establish the Scottish steel taskforce. As a member, I have been impressed by how much that multi-agency body has achieved. Its approach has resulted in real interest from alternative operators, with the possibility remaining that both mills can be kept operational by a new owner. If that is the case—I hope it is—the new operator will be able to resume production swiftly due to the Scottish Government’s steelworkers retention plan.
Action has been taken on business rates, in addition to new public procurement guidance on steel. A new action plan, “A Manufacturing Future for Scotland”, specifically singles out the steel industry as a vital strategic asset in the Scottish economy, while acknowledging the particular pressures it faces. It also details further specific measures to help steel and other energy-intensive industries, such as a new expert advice and support service, which will work with operators to develop feasible and cost-effective business plans to implement energy saving opportunities.
The measures taken by the Scottish Government are bold and forward-thinking. We need to see some of that from the UK Government. I welcome the measures taken thus far and appreciate that the Government have listened and taken some action, but they need to keep going, as there is more to be done. The crisis facing the steel industry still exists, and we need to face it down.
It is nothing short of a disgrace that the UK Government are blocking proposals to raise tariffs on Chinese steel. The lesser duty rule must be lifted, and the Government must act to support that. That is the kind of bold action that is needed in order to start levelling the playing field. Excuses for not doing so have been incredibly flimsy and sufficiently lacking in backbone to be classified almost as invertebrate. The scales are currently weighted against us—tipped unfairly by massive amounts of subsided Chinese product. Unless we force a rebalancing, the situation will not change. I do not see that happening; indeed, the opposite seems to be true, as we move towards a situation where China will gain market economy status, as advocated by our ever willing Chancellor.
In short, an already dire situation looks set to get worse. In years to come, I do not want to be in the position of saying, “I told you so.” I want the UK to act like the superpower whose image the Government are so desperate to project to the rest of the world. We will do that by ensuring that this vital strategic asset is protected, not by making absurd concessions to make friends, and certainly not through utter intransigence.
Who will respect us if we hand our centuries-old industry to our bigger, cheaper rivals? We owe it to our rich history, to our steel towns and cities, and most importantly to our hard-working steelworkers throughout the UK to stand up now and take the bold action that is so desperately needed.
As I make my contribution, I am mindful of the fact that steelworkers in my constituency will soon find out whether they still have a job, because the consultants doing the job matching will soon finish their work. Up to 750 jobs will be lost in south Wales, with the losses in Llanwern, in my constituency, very much wrapped up in the announcement of the job losses at Port Talbot. Although the Tata press release talked about Port Talbot, it is hugely important to workers and their families in Newport, not to mention in the wider economy, that we remember Llanwern, because the effects are being keenly felt there.
Before the debate, I asked Newport steelworkers what comments they would like me to make to the Minister—I know other hon. Members do that before steel debates—and they said, “Please just keep saying what you said last time: that our industry needs help now. Please remind the Government that we are here.”
Time and time again, we have come to this Chamber asking for real action from the Government for the steel industry, but despite the debates, the questions and the summits, the industry and the unions tell us that not enough tangible progress has been made. That message came out loud and clear from the recent Welsh Affairs Committee hearing on the problems in the steel industry in Wales. In evidence to the Committee, Tata’s director of strip products, Stuart Wilkie, talked about the three things the business needed to survive in Wales and counteract the perfect storm it faces: increased efficiency, reduced costs and Government support.
On efficiencies, Tata has already made major inroads into downsizing the business’s production capacity, and my constituents know only too well the effect that that has had, be that on the pickle line or the mothballed hot mill.
We have seen the reduction of costs over the years in Newport, including job losses, as Llanwern has reduced in size. Only last year there were 97 contractors on site, and now they have gone. We must remember that behind every job loss figure is an individual and a family.
On the third element—the support the industry gets from the Welsh Government and the UK Government—the Welsh Government taskforce has been well received. It is proactive, and it is welcome that there is a voice for steelworker representatives. The taskforce does what it can with the levers it has at its disposal. From the Welsh Affairs Committee session, I know that Tata and the unions say that the dialogue with the Welsh Government and the assistance from them are exceptionally good.
In the case of Westminster, the industry says that there has been progress, but it has not been speedy enough, and there has been little bottom-line impact so far. We have had to take the job losses and the efficiencies, but we need tangible help to make sure that there is a strong plan to move us through the next two years. I cannot reiterate enough that that really matters for flex plants such as Llanwern.
On energy, companies will not see the money from phase 2 of the energy-intensive industries package until March, and they have waited two years for action. On dumping, the Government say they are doing something, and they are making supportive noises, yet they oppose the scrapping of the lesser duty rule, as we have heard many times today, and they support the granting of market economy status to China.
On procurement, more could be done to bring the Government together with companies to find out what is needed and how it can be supplied. Good work is going on in infrastructure projects in Wales. The Government say they have produced their guidance, but, as my hon. Friend Ms Eagle asked, what practical impact has it had so far? The message repeated relentlessly at the Welsh Affairs Committee hearing was the need for more speed and more action, and the need to monitor our industry for the longer term to try to see what is coming—to anticipate and look ahead.
Steelworkers in my constituency have seen major restructuring over the years, and I know of the under- standable fear, worry and concern that that breeds. As my hon. Friend said, our steel communities are looking to the Government in this hour of need. The Government need to put their warm, sympathetic words into action, because those working in steel feel that they have been far too slow to act. On behalf of the workers in my constituency, I call on the Government to support the steel industry far more proactively in the Budget.
It is a pleasure to follow my hon. Friend Jessica Morden, who speaks with great passion about the impact of the steel industry on her constituents. It is very much the same for my constituents, who are currently going through 900 job losses. Coming down here this morning, I found myself on the same train as Ian Smith and Paul McBean, the leaders of the Community union in Scunthorpe. I pay tribute to them for the work that they have done, alongside Martin Foster of Unite and, indeed, all the steelworkers and their families in Scunthorpe, in going through this very difficult time and leading the way forward. It is good that there are ongoing discussions with Greybull Capital about the future of the works. I commend everybody who is supporting those discussions, including those in Government. These are difficult times and we will face a very difficult future, whatever it is, so it is important that those discussions are successful.
I want to give a sort of half-term report on the Government’s progress so far on the industrial asks. The Minister, for whom I have a lot of regard, is fond of saying, “We have delivered, largely, on these asks”, but I think she will recognise, along with me, that it is a job started but still to be finished. First, on business rates, the Minister herself recognises that there has been little progress, but points us with a mischievous twinkle in her eye to the forthcoming Budget. I hope that twinkle bears dividends in the end and we see some movement on business rates.
Secondly, on energy costs, it has taken over three years for us to get delivery on the mitigation for the carbon floor tax, which the Government unilaterally applied. As my hon. Friend said, the money is still not in the coffers of the steel makers. On energy costs, I would appreciate it if the Government looked at the flawed EU emissions trading system proposal to see what can be done about it. It needs to be offset against indirect carbon costs, because otherwise it will do further damage to the UK steel industry through carbon leakage to other parts of the world and will fail to deliver what it is intended to do.
Thirdly, the Government are to be congratulated on bringing forward new procurement guidelines, but frankly, guidelines are not worth the paper they are written on unless they have an impact on how the Government and their contractor base deliver. There are a few tests we can apply. We can look at what is going on in defence; many Members have alluded to the issues there. I was pleased that a Defence Minister said today that there was a desire to push the guidelines down the procurement pipeline, but the Government need to push hard to make the difference that we need. I commend to them looking at the work that Network Rail does, because we have there a pipeline of best practice that needs to be matched in other industries.
On renewables, DONG Energy has just got the contract for developing Hornsea Project One. However, the test will be whether UK taxpayers, through the very generous contract for difference deal, and UK energy bill payers, are financing the delivery of renewable wind farms built with UK steel or with other steel. The Government need to keep their eye on that, because it is a real test of their procurement rules.
The job has begun and it is, in theory, going in the right direction, but unless it has an impact it will be worth nothing. I know that the Minister wants to see impacts, so I will be interested to hear how she is going to ensure that the great expectation she has given us is delivered on.
This has been a fascinating debate. Members might ask why an MP from Oldham is present in a debate about steel—we do not have a steel industry to speak of—but I have seen the demise of manufacturing in my community. When we talk about numbers in this place, we have to relate them back to the families affected. Communities are destroyed when industry disappears. We have heard time and again about the interventions that could be made, and my hon. Friend has made a fantastic point about them, but does he have any faith in this Government to deliver on them?
It is the Government’s duty to deliver, and we have to work with them to make that happen. As my hon. Friend Ms Eagle said right at the beginning of the debate, they have been dragged kicking and screaming towards delivery. We need them to deliver faster, because our communities, the steelworkers and their families do not have the time to wait. That is why the Government need to step up to the steel plate and deliver before it is too late.
The fourth issue is communist Chinese dumping. If I had said 20 years ago that a Government would be in hock to communist China in undermining our manufacturing base, people would have said, “That’s what you’d expect from the Labour party,” but it is a Conservative Government who are doing it, which is remarkable—they are in hock to communist China. We need to take action on the lesser duty rule. The Secretary of State said that the Government can take action in other ways, but we need more details of how they will take action against Chinese dumping, to make sure that there is a fair and level playing field. Nobody wants benefits; all we are asking for, on behalf of our industries, is a fair playing field, and that is what acting on the lesser duty rule will achieve.
Many Members have spoken at great length about market economy status. During Foreign Office questions last week, I was pleased to hear the Foreign Secretary repeat the commitment that market economy status would be determined and seen through the prism of steel. I would be grateful if the Minister could confirm that unless China delivers on steel in the way that it should, it will not get market economy status.
In conclusion, my constituents are very keen on this debate and want the Government to do even more to deliver so that my constituents and my community can have good jobs and a good future.
As always, it is a privilege to speak about an issue that is so important, not only for my constituents but for the future of the whole UK steel industry and manufacturing industry, as my hon. Friend Jim McMahon has said. I pay tribute to the Celsa workforce in my constituency; to those who work for Tata and the rest of the steel industry in south Wales; to the Welsh Labour Government, who are doing so much for the steel industry in Wales; and to trade unions such as Community, whose union reps are standing up and working with the management to try to find solutions and get through these incredibly challenging times for the industry.
I do not want to repeat many of the arguments that have been made. This is the umpteenth debate we have had on this issue, and the Minister is well aware of the wider circumstances and challenges facing the industry, so I just want to zero in on some specific concerns.
The Secretary of State was slightly disingenuous when he tried to present us as protectionists who want to foment trade wars in the world. That is not what we want. I reiterate that this is about levelling the playing field so that we relieve the pressure on the industry that is the result of dumping and unfair production.
I was pleased to hear what the Secretary of State said about rebar. If he moves in that direction, it will be welcome, but the industry will want to know at what level he really thinks the tariffs should be set and when that will happen. We can also discuss why that did not happen earlier, and why he did not fight earlier for those changes in Europe. The Secretary of State for Wales and I met many months ago and discussed those issues, and we were well aware of the concerns. If the Secretary of State for Business, Innovation and Skills is moving in that direction, will he tell us when will it happen and at what level the tariffs will be set? He made a convoluted argument about the lesser duty rule, but that will not wash with the industry. The industry wants to know what action the Government will take and when.
Does my hon. Friend agree that if a decision is made to impose tariffs as an anti-dumping measure, the whole point is that they have to be at a level that makes a significant difference to the price? Otherwise, the danger is that it becomes a token gesture.
My right hon. Friend is absolutely right. As I said, if we do not put those tariffs up and other countries do, our industry will end up with double or triple dumping, with all its consequences.
The Minister has talked on many occasions about the compensation package. It has been long in coming, and its announcement was welcome, but the reality is that a lot of that compensation has simply not been paid yet. I have spoken to Celsa, in my constituency, in recent days. Can the Minister tell us how much compensation has been paid out and what difference it is making today? I am not talking about promises for the future; I want to know what difference it is making today.
I want to bring the Minister’s attention back to the charter for British steel, which we have discussed on several occasions. It laid out a clear set of arguments about sustainability, quality in procurement, and the sort of steel that we can produce, which we should be using in our construction and infrastructure projects. BS 6001 certification shows that steel has been manufactured in a sustainable and responsibly sourced manner and that, crucially, it can be traced back to its raw materials. In defence infrastructure projects or projects such as Crossrail—in which Celsa rebar has been used—we want to ensure that we use high-quality British steel that can be traced, and which has high carbon standards and high quality standards, so that we can be sure it will be there for the long term.
There are some wider questions that I would like the Minister to answer. I turn briefly to procurement, because I think the Government have been somewhat disingenuous in claiming that the whole thing is done and dusted and that action has been taken. There have been welcome statements from the Minister and others about the guidance that is being given. I am concerned, however, about the fact that although we are asking Departments what they are doing, the Ministry of Defence has said that it is not keeping the records. The Secretary of State said earlier that his Department will be helping other Departments. He needs to get in there and ensure that the MOD keeps the records in the first place, as well as driving and advertising opportunities for procurement. Look at the list of projects: the Tide class tankers, the Scouts—now Ajax—and the frigates—[Interruption.] The Minister is absolutely right to say that we do not make the steel for Ajax, but other parts of the programme could be sourced from UK steel. There is still no answer on the customisation of the Tide class tanker, which was made in Korea. Those are the real questions.
The Minister was chuntering earlier about doing down the industry. We can produce that high-quality steel in the UK, and we should get to the bottom of why British companies are not bidding for or securing some of those projects. The Department for Business, Innovation and Skills should do all it can, with other Departments, to facilitate that market—[Interruption.] The Minister says that the Department does so, but the facts do not add up.
Finally, I want to talk about our role in Europe. I am glad that the Minister agrees that our place is in the EU, and it is a pleasure to have her supportive messages on social media about that. I am glad that we agree. I firmly believe that we achieve more for the steel industry working together across Europe than we would alone, but the Government have to be in there, fighting for the UK steel industry. I know that the Minister has done that on several occasions.
The reality is that the Government were warned years and years ago about the pressures facing the industry. A company such as Celsa in my constituency faces 70% higher energy costs than companies in Germany, as well as the dumping that the Government have been warned about so many times. If Ministers do not deal with those concerns, there is no possibility of pan-European co-operation. Why did it take so long for the Secretary of State to get out there and make that case in Brussels? Will she give us the absolute assurance that, during the next crucial months for the industry, she and he be will out there making that case on the duties, procurement and cross-European infrastructure? Only by doing that will we achieve the benefits for the steel industry that all of us across Europe want.
I want to see a future for the steel industry. I am glad that the Government are being pulled, kicking and screaming, on some of the issues. We need action and for it to keep coming, and we must ensure that we have a future for the steel industry in south Wales and across the whole of the UK.
I am very grateful for the opportunity to speak in this debate, but I am afraid that I contribute to debates on steel with a heavy heart and a bitter taste in my mouth. I led such debates back in September to plead with the Government to intervene and to save the steel works in Redcar, but I now stand in the Chamber to represent over 3,000 people who have lost their livelihoods and their identity, and to represent a barren, silent industrial giant of a blast furnace, which still dominates the skyline of Redcar and is a visible daily reminder of this Government’s abandonment. I stand here to represent a community that feels let down, cheated and bereft. It is a tragedy that, despite representing a constituency that forged the steel that built the bridges and skyscrapers of the world in the 20th century, I stand here now, in a debate about British steelmaking, to represent a constituency that no longer makes steel. However, I am here because I owe it to my constituents, and those who fought so hard and with such dignity for our own steelworks.
I and my Labour colleagues will keep battling and fighting for steelworkers throughout the country and for the future of this vital industry. At this point, I want to pay tribute to others who are fighting so hard to save our steel—the steelworkers who have taken their campaigns to Brussels and around this country, and particularly the Community union and the Daily Mirror newspaper for their fantastic campaigns. We have to keep fighting to ensure that Britain is a country that still makes things; to make sure that our homes, our ships, our railways and our submarines are built with British steel; and to make sure that our industrial engineers have jobs and that our young people have a future where they make something more meaningful than a latte or a Subway sandwich.
Steelmaking would be an industry with a future if only it had a Government that believed in it. Steel is integral to the long-term success of our advanced manufacturing, particularly in relation to the automotive, aerospace and rail sectors and to our sovereign capability in the defence and nuclear industries. Steelmaking can be competitive in this country, and we on Teesside can still play a role. We just need the Government to take action. Teesside still has the potential to be a hub for developing new technologies, and to lead the way in the circular economy—re-engineering waste, recycling and energy recovery. Where once we may have produced carbon, now we can capture and store it or even reuse it. Where once we forged steel, we may yet be able to recycle it with electro-arc furnaces. We just need a Government who believe in us.
That is why I will continue to press the Minister—I hope that she will, in turn, press Innovate UK and, ahead of the Budget, the Chancellor—for the establishment of a materials catapult for research and innovation on Teesside, focusing on the early stage of metals development.
Does my hon. Friend share my concern that the Chancellor seems to spend a disproportionate amount of time speaking to the Chinese about investment to fund the northern powerhouse investment pitch book—of course, to appeal to parts of the UK that other potential Conservative leadership candidates cannot possibly reach—than supporting our own industry? Will she join me in warning Conservative Members that if our industry dies, Britain dies too?
My hon. Friend makes an extremely important point. There is no greater testament to the lack of progress of the northern powerhouse so far than the devastating loss of steelmaking on Teesside. If the northern powerhouse means anything at all, it means jobs, industry and growth on Teesside, and on that count the Government have failed.
With the materials catapult for Teesside—the existing research and development hub, which is the materials processing industry in my constituency—the Government have the perfect opportunity to put right some of their wrongs and to help some kind of steel phoenix to rise from the ashes in Teesside. Teesside can build on its industrial strength and once more play a vital role in driving the UK’s industrial and high-tech economy of the future.
But we need a Government that will support us, a Government that will commit to an industrial strategy and a Government that, dare I say it, will invest. What we do not need are a Government that fail to play their role on the global stage, but that is what we have seen. The Chancellor has been out in China, and I can only imagine how grateful it is to him that his Government have actively blocked our European colleagues’ efforts to increase tariffs on Chinese steel in the EU by scrapping the lesser duty rule. I can only imagine how grateful it is to him that his Government are such cheerleaders for China in seeking market economy status, which would give the green light to Chinese steel flooding. President Obama has pledged aggressive action through the trade Bill in Congress, and the US recently imposed duties of 236% on a particular grade of Chinese steel.
I, for one, am fed up with the Government and Government Members pretending that membership of the EU is the reason they cannot act. Instead, I want them to work with our European partners to impose tariffs and tackle dumping. I am frankly embarrassed that it is the UK that is leading a small group of nations in opposing higher tariffs on China because of the Tories’ ideological obsession with a market economy that sees jobs, communities and entire industries as a price worth paying for their kind of laissez-faire, unfettered global market.
We have heard it from the Government Benches tonight.
We will keep fighting and holding the Government’s feet to the fire. No more job losses, no more closures—we need the Government to act. We want the Government to stand up for Britain. We want the Government to save our steel.
It is a pleasure and a privilege to bring up the rear, so to speak, in such an important debate. If I may be light-hearted for a moment, Ms Eagle was challenged to a rugby match at the beginning of the debate, so I am pleased to inform her that I took part in the first mixed rugby match recently, representing the MPs and Lords. I even scored a try. [Hon. Members: “Hooray!”]
The number of debates we have had on this issue and the number of times we have returned to it show the strength of feeling not just across this House, but across the nations of the United Kingdom. It is a pleasure to follow my hon. Friends the Members for Rutherglen and Hamilton West (Margaret Ferrier) and for Motherwell and Wishaw (Marion Fellows), who spoke passionately about their constituencies, as did Members from across the House. My colleagues have been involved in the Scottish taskforce and have done extensive work in engaging with their respective local communities on the future of the steel industry in Scotland and in standing up for their rights and interests. As they said, the steel industry has been at the heart of their constituencies for generations. Our thoughts continue to be with the many towns and communities across the UK that are at the mercy of the volatility in the global steel market and the glut of steel production, as well as the UK Government’s lack of commitment and action.
I pay tribute to the work of everyone on the Scottish steel taskforce, including the union representatives. I am particularly pleased that they have been included in the Scottish taskforce, by contrast with the situation at the outset south of the border. They were at the heart of our discussions and engagement from the very beginning.
Fergus Ewing MSP, my colleague in the SNP Government, is the Minister for Business, Energy and Tourism. He faces many challenges, but he and his colleagues in the Scottish Government and Parliament, including Clare Adamson MSP, who is from a steelworking family, continue to work tirelessly to keep the Dalzell and Clydebridge steel plants open. They are committed to finding a buyer for the sites, continuing commercial production and keeping as many jobs as possible onsite and in Scotland.
The strategic importance of the plants to Scotland and the UK cannot be overstated. It is apparent in the specialist skills and knowledge and the innovative approach that are inherent in Clydebridge and Dalzell. According to UK Steel, the Dalzell plant is the only plant in the UK capable of rolling and processing the steel that is used in the Ministry of Defence’s special armour plate and for certain requirements of the offshore oil and gas industry. The Clydebridge plant specialises in producing difficult-to-make high-strength steels that are used in some of the most challenging environments in the world. We truly have a world-class industry that we in Scotland believe is worth fighting for.
However, when the UK Government are faced with an opportunity to fix the issues, they are flat-footed and seem to shy away. A case in point is the issue of tariffs, which has been discussed extensively this evening. It is shameful that the UK Government have actively blocked the proposals to raise tariffs on Chinese steel. The UK Government confirmed in mid-February that they had blocked proposals from EU members to block the dumping of cheap steel products in the EU by China. The Government’s blocking of the proposal came after the Secretary of State signed a joint letter from European Ministers, pledging
“to use every means available and take strong action” against China and Russia. He has the means at his fingertips, but he chooses not to use them.
The UK Government must work harder with their European partners to address the dumping of cheap steel in European markets, which is, as we all know, undermining UK steel production. Although 2% of UK steel demand was met by Chinese imports in 2011, that figure has been forecast to rise to 8% this year and next. We are all keen to hear from the Minister on that point.
The message is clear: there are vital skills, innovative approaches, and a unique and distinct heritage in Scotland and the UK steel industry, but how far will the Government go to save it? When I was doing research for this debate, I came across an article in the Scunthorpe Telegraph:
A spokesman for the Community union said:
“The Prime Minister himself has said that steel making is ‘vital’ to the UK economy, so these are ill-judged remarks from Mr Javid.”
I could not agree more.
The UK Government have the money, political will and determination to bail out the banks, but they cannot find it in their heart, or indeed their pockets, to support an industry that is of vital strategic importance to our economy. I am not, of course, calling for the nationalisation of steel production assets, but I simply suggest that the Government are short on political will and creativity in supporting the steel industry in its time of need.
Again, we are debating the crisis in the steel industry in the context of thousands of job losses, closures of steel plants, and an industry hanging by a thread, with the livelihoods of 20,000 workers, their families and communities under threat, and all that in an industry worth £9.5 billion to the UK economy, and which ran a trade surplus in 14 of the last 17 years. The problem we face now is that of the dumping of cheap Chinese steel on the global market. The challenge is how we defend highly skilled British jobs and the future of a vital industry, and safeguard an important source of exports in the face of this crippling and difficult situation. We must support the wider economy by taking a strategic view of what is in the national interest.
We have heard excellent contributions from my hon. Friends the Members for Hartlepool (Mr Wright), for Newport West (Paul Flynn), for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Stockton North (Alex Cunningham), for Neath (Christina Rees), for Aberavon (Stephen Kinnock), for Newport East (Jessica Morden), for Scunthorpe (Nic Dakin), for Cardiff South and Penarth (Stephen Doughty), for Redcar (Anna Turley), for Ellesmere Port and Neston (Justin Madders), for Alyn and Deeside (Mark Tami), for Huddersfield (Mr Sheerman), for Middlesbrough (Andy McDonald), for Ogmore (Huw Irranca-Davies), and for Stoke-on-Trent North (Ruth Smeeth).
The steel industry and the thousands of people that it employs are looking to Parliament and to the Government for support. The industry has come to the Government with five key asks to help to protect jobs and exports. Although there has been some belated progress, the Government’s response overall shows that they are not prepared to take an active role in protecting the steel industry. As my hon. Friend the Member for Hartlepool said when commenting on the excellent BIS Committee report, we must do more at European Union level. The Government claim that four out of five asks have been delivered, but on procurement no orders have been received in steel plants since those changes were made.
My hon. Friend told us that cheap Chinese steel needs effective international action if it is to be tackled. China is responsible for four times the combined production of the next biggest four steel producers, and unless there is co-ordinated, concerted effort internationally to combat illegal dumping, nothing will change. We were told that the British steel industry faces an existential threat through the grossly distorted market, and my hon. Friend’s plea, and that of members of his Committee, was for a co-ordinated approach.
The industry needs swift action on tariffs that protects steel produced in the UK and other EU countries against Chinese dumping, yet our Government have played a role in blocking that. The Prime Minister’s office opposed the idea of fairer tariffs on the grounds that it was protectionism—something confirmed a number of times throughout the Secretary of State’s speech today. Ensuring that we have a level playing field to protect our workers and businesses from a situation that threatens to destroy an entire industry is not protectionism. On the contrary, it is common sense and it is right. As Gareth Stace, the director of UK Steel, said:
“Anti-dumping measures in the EU do not currently have the teeth to halt this tsunami of dumped steel”.
The Government must support the lifting of the lesser duty rule, because otherwise steel manufacturing will be lost in the UK and across Europe. It is a simple ask, and one that is supported by other EU countries, yet the UK Government have failed to stand by their own country’s industries, not just in steel but in ceramics and other energy-intensive industries.
The Government have also shown little action on changing business rates for large manufacturers. I sat in Committee last week with the Minister for Small Business, Industry and Enterprise and heard of her commitment to an overhaul of rates. When it comes to it, however, the review first announced in 2011 is still to start and the industry continues to pay twice when it comes to rates on investment in plant and machinery. The industry was told that helping plant and machinery manufacturers was unaffordable. The Government review rumbles on as we wait to hear what they will do to support investment in plant and machinery. Will they tackle existing competitive disadvantages suffered by UK steel sites on plant and machinery, which account for up to 50% of their business rates?
Serious challenges have coalesced around the steel industry: a glut of global supply, energy costs, high business rates and a strong pound. The industry did not expect the Government to offer a silver bullet. What it rightly expected was for the Government to play their role in what should be a partnership. The most successful economies are characterised by partnership between government, industry and the workforce. For partnership to be effective, the Government have to play their part. Businesses and workers, through the trade unions, have played their part, but what of the Government? The situation demanded that the Government see the long-term strategic value of steel production and act accordingly to protect high-skill jobs and the future of a key strategic industry. The Government, however, failed to intervene to save the Redcar coke ovens. My hon. Friend Andy McDonald rightly described that lack of support as an act of industrial vandalism.
An industrial strategy is nothing more than a Government’s willingness to enter into a partnership with business and workers: to match their ambitions by looking beyond election cycles and investing in the infrastructure and the training they need to flourish; to see the long-term value of strategic industries; and to take the necessary steps to support and safeguard them. If the Secretary of State and his Ministers want to be a true partner to the steel industry, there are few clearer steps that the Government must take now. [Interruption.] If the Lord Chancellor were here earlier, he would have heard my hon. Friend Ms Eagle saying that.
The Government must block the unfair trading of steel by supporting EU trade defence instruments, allowing the swift implementation of defensive tariffs. The Secretary of State must throw his support behind tariffs and ensure they are set at a level that would protect UK steel. He and his colleagues should support the EU countries that have supported a level of tariffs that will help our industry and our economy. Remember that at one stage it looked as though the Secretary of State accepted the need for change. He signed a letter with counterparts from France, Italy, Germany, Poland, Belgium and Luxembourg demanding that the European Commission use every means available and take strong action in response to unfair trade practices. Sadly, a week later he told the Business, Innovation and Skills Committee that he was opposed to that very action, something he confirmed this evening when he said he was against removing the lesser duty rule. UK Steel director Gareth Stace described the U-turn as “galling” and said that
“government must support the lifting of the lesser duty rule, otherwise steel manufacturing will be lost in the UK and Europe.”
We need to take an active role in tackling Chinese steel dumping and need action on business rates for key industries and capital-intensive firms to level the field for UK steel by pursuing reform of tariffs at EU level. This is what the industry needs. It is what workers and their families need. It is what communities need, and it is what the wider economy needs. Until the Government take these steps, and until the Business Secretary begins to engage with a long-term industrial strategy to defend and promote UK businesses and workers, belated supportive words will be seen as nothing more than empty rhetoric.
I begin by paying tribute to all those who work in our steel industry. As the Prime Minister describes it, it is indeed a vital British industry. Those workers are without doubt hard working, skilled and dedicated. I would like to take this opportunity to congratulate the Community trade union leader, Roy Rickhuss. It is pleasure to do business with him; we do not always agree, but he undoubtedly leads a fine band of men and women. Of course, we also have to remember and recognise all those who have so unfortunately been made redundant in recent times. Our thoughts are indeed with them, their loves ones and their families.
I pay tribute to all hon. Members of all parties who have spoken in the debate. Let me explain the simple truth, which is a harsh fact and reality, as Anna Turley knows. I was slightly disappointed in her speech, although it has sometimes been a great pleasure to work with her. She well knows that SSI was losing £600 million in just three years, and we all know the huge scale of Tata’s losses. Those are the harsh realities, and no Government can alter the price of steel. In some sectors of steel, prices have halved over a year, while consumption across the world has yet to reach the levels of 2008.
This is not a Government who have stepped back and not done anything. On the contrary, we have seized this nettle and got on with it. We had a steel summit, and the industry made five specific asks of us—and we have delivered on four of those asks. The fifth, which is rates—[Interruption.] As I was saying, on rates, we hope to be able to deliver in the way that I and my right hon. Friend the Secretary of State would like—but we have delivered. It is strange because every time we deliver as we are asked, what do the Opposition do? They just shift the goalposts.
Let us go through the asks and start by looking at procurement. We have changed the rules of procurement, and I was disappointed to hear the hon. Member for Redcar saying that these were only minor and technical changes. Far from it. As my hon. Friend Kevin Foster said, these are good and valuable changes; they include skills for the supply chain, which are just some of the new factors. Yes, we will evaluate them and make sure that Departments deliver because these are not guidelines—they are mandatory.
Marion Fellows says that the Government should do more, but she has not told us whether the SNP in Scotland have changed their procurement rules. We know that they have not. On energy costs, we were asked to take action and we have taken action. We have got compensation and gone further than the ask made of us, and in relation to two of those significant charges, we are going to make sure that these are properly and fully compensated and effectively removed from next year.
Flexibility on the EU emissions directive is another ask on which we have delivered, and then we come to the issue of the dumping of steel by China. It is not just China, if I may say so; it is a number of countries, and that needs to go on the record. I take particular exception to some of the comments made by Labour Members, because in July we voted for the first time for tariffs on wire rod—of some 24% by way of charge. Then we voted again in November.
It is the lesser duty rule that has been so effective. Let me provide an example of the work we have done. On rebar, if we did not have the lesser duty rule, the charge would have been some 66%. In fact, what the industry wanted was a charge of about 20% to 30%. We have worked tirelessly to achieve that. The EU has set the figure at 9% to 13%, and it is this Secretary of State who took that argument and led the charge. We continue to do that with tubes and on cold rolled steel as well. That is the work that this Government have been doing, and I am proud of our record, and we will continue to fight when it comes to tariffs on Chinese and other countries’ steel.
Let me make something clear about the lesser duty rule. What it does is effectively ensure that the right balance is struck so that it is not overly protective, but tariffs are there at the right level to do the right thing by British steel. All that I will say about China and market economy status is that Russia has market economy status, and that has not prevented the European Union from imposing tariffs on it—and rightly so. I suggest that that is another very large red herring tossed in by the Opposition because we have delivered on asks that the industry and the unions have made of us.
What have we done? What has the Secretary of State gone and done? He went to Europe and called an extraordinary meeting of the Competitiveness Council. Far from sitting back in the European Union, we are now taking the lead, and that is why the Competitiveness Council met today. Unfortunately, I have not enough time to go through all the things that have already been achieved because of the action that we have taken in the European Union in order to deliver. For the first time, we are hearing language in the EU that heartens Conservative Members, although I think that Opposition Members simply do not understand it. The statement that was issued today mentions an absolute desire to ensure that competitiveness is at the heart of the future of the steel industry: a desire to reduce regulatory costs, to reduce regulation, and to look at the issues of illegal subsidies and, most important, electricity prices.