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With permission, Mr Speaker, I will make a statement on Britain’s steel industry.
We are all familiar with the perfect storm of factors that led to the global price of steel collapsing during 2015, but for all the economic challenges that we face, the real tragedy is a human one. Over the past 11 months I have visited steelmaking communities across the UK. They are very different plants in very different places, but one thing that unites them is the pride and dedication of the highly skilled people that I met. All they want is to carry on doing what they do so well, and I am doing everything I can to help them do that.
I will speak first about Port Talbot. Since becoming Business Secretary I have been in frequent contact with the senior management of Tata, which included several meetings with the group’s chairman last year and this. Several weeks ago, Tata told me in confidence that it was seriously considering an immediate closure of Port Talbot—not a sale, a closure. That could have meant thousands of hard-working men and women already out of a job, and thousands more facing a very bleak future. I was not prepared to let that happen, and in the days that followed, I worked relentlessly to convince Tata—[Interruption.]
Order. The statement must be heard. The record shows that the Chair always facilitates a full and thorough interrogation, and although the Secretary of State would expect nothing less, he is entitled to the courtesy of being heard.
Thank you, Mr Speaker.
In the days that followed, I worked relentlessly to convince Tata that it was in everyone’s interest to keep the plant open and find a new buyer. I also made clear that the Government are totally committed to supporting and facilitating that process. That work has paid off. Last month Tata announced its intention to sell the plant and its wider UK assets, rather than to close it. Since then, I have continued to meet its executives here and in Mumbai, and I was joined in that by my right hon. Friends the Secretary of State for Wales and the Minister for Small Business, Industry and Enterprise. We have secured assurances that Tata will be a responsible seller and allow appropriate time to find a buyer.
The formal sales process begins today. I have been in contact with potential buyers, making clear that the Government stand ready to help. That includes looking at the possibility of co-investing with a buyer on commercial terms, and we have appointed EY as financial advisers on behalf of the Government. Commercial confidentiality means that I cannot go into detail about ongoing discussions. However, I will update the House as soon as it is appropriate to do so. Let me also take this opportunity to thank the First Minister of Wales for all his hard work so far. His support in these talks has been invaluable.
I shall turn now to Tata’s long products division. I am sure that all Members will join me in welcoming today’s news of a conditional agreement between Tata and Greybull. That agreement will protect jobs and minimise the cost to taxpayers. We have been closely involved in the sales process from day one, including making a commercial offer on financing if required, and we will continue to work with those involved to make sure that this deal gets done.
Moving on to Scotland, on Friday we saw Liberty House receiving the keys to two Tata mills, in Motherwell and Cambuslang. That is a great result for the people of Scotland, and the Scottish Government deserve thanks for helping to secure it.
Since January, the global price of steel has started to recover but it is still a long way from its pre-crisis peak. So there has been some positive news for Britain’s steelmakers, but our support for the industry and the supply chain continues. The Steel Council, which met for the first time early last month, is bringing together Government and industry to find solutions. We have also been working closely with the unions, and let me take this opportunity to thank Community in particular for its positive and constructive approach.
We have also taken action on power, and £76 million has already been paid to steelmakers to compensate for high energy bills. We expect to pay more than £100 million this year alone. We have also taken action on procurement. New rules will make it easier for the public sector to buy British, and we are leading calls for EU action against unfair trading practices. We voted in favour of anti-dumping measures on wire rod and on steel pipes in July and October last year, and we voted in favour of measures on rebar and cold rolled products in February this year. These measures are already having a real effect, with rebar imports down 99%. However, we are still looking at ways of improving the EU tariff mechanism so that we can help the steel industry without harming other sectors, and I am happy to hear any suggestions from hon. Members on that front. Let me be very clear on this: we have repeatedly demanded and voted for tariffs on unfairly traded Chinese steel and we will continue to do so.
I would love to stand here today and declare that this crisis is over, and to say that not one more job will be lost in Britain’s steel industry. That is not a promise that I or anyone else in this Chamber can make, but this Government have consistently done all we can to support Britain’s steel industry and I can promise that we will continue to do so. We know that there are no easy answers and that the challenges facing the industry are vast.
Too many jobs have already been lost, but where that has happened, we have worked to ensure that nobody is left behind. For example, we committed up to £80 million to help those affected by the closure of Redcar and we stand ready to support steel communities facing redundancies, wherever they might be. However, that is something that I will do everything in my power to prevent, because Britain’s steel industry is a vital part of our economy. I want to secure its long-term future and to see “Made in Britain” stamped on steel that is used around the world. I want to protect the jobs of the skilled men and women who work in the industry because the people of Port Talbot, of Scunthorpe and of the steelmaking communities across the UK deserve nothing less. I commend this statement to the House.
I thank the Secretary of State for his statement and for giving me advance sight of it. I also welcome the good news today on the sale of the long products division at Scunthorpe after nine months of negotiations. I note that the Business Secretary is claiming this as a Government success. In fact, it is down to the hard work of the steel unions and the plant management, one of whom has said:
“We needed massive help from the Government and that has not been forthcoming”.
Since the House rose for the Easter recess, the problems in the UK steel industry have turned into a full-blown existential crisis, and the Government and this Business Secretary have been found wanting. When I met workers at Port Talbot on
Where was the Business Secretary at this crucial moment? Was he fighting tooth and nail to ensure the future of a UK foundation industry? He was not. We all now know that he was on his way to Australia to fulfil a few pleasant engagements down under, outrageously leaving his junior Minister to take all the flak back home. It is this laissez-faire approach—this incompetence, this inaction—that has characterised his response to the crisis from the beginning. He has claimed he was caught unaware by Tata’s decision to sell its entire UK steelmaking operations, putting at risk up to 40,000 UK jobs, but Labour Members have been warning for months that there was a gathering emergency and that it was coming to a head. Labour MPs have raised steel issues no fewer than 200 times since the general election a year ago and we have been fobbed off with warm words and no effective action month after month. The Business Secretary’s indifference destroyed the prospect of future steelmaking in Redcar, an act of industrial vandalism that will not be forgiven in the north-east for a very long time.
The Government have been accused of “floundering” and issuing “contradictory and meaningless statements”, and that is by one of their own Back Benchers, Mr Bone. Since the steel crisis made the front pages, we have had a sudden shift from torpor to hyperactivity. From an ideological disinclination to get involved because of their free market dogma, there appears at last to be a recognition by the Government that this could be an existential moment for the whole of the UK manufacturing base. I welcome the long overdue admission from the Government that it is their duty to help to find a future for UK steelmaking. I just hope it is not a case of too little, too late. If the Business Secretary is now finally telling the House that he has suddenly overcome his ideological distaste for Government action, then we say, “About time.”
Given that the Scunthorpe deal took nine months, can the Secretary of State tell the House how long Tata is willing to keep the Port Talbot plant operational while a buyer is found? Will he confirm that it is the Government’s intention to ensure that any sale is of integrated operations? Does the Secretary of State agree that if jobs and skills are to be retained in the industry, it is crucial that the UK retains the capacity to make as well as recycle and process steel? What steps will he now take, therefore, to ensure that the blast furnaces at Port Talbot will remain in operation under a new owner? What support are the Government willing to make available to assist in securing a successful sale to a responsible owner?
If he has not already done so, will the Secretary of State undertake today to contact all those in the current customer base and reassure them that the plants have a viable future and will remain open for business, so that they can be confident enough to continue placing orders? What is the Government’s plan B for UK steelmaking if no responsible buyer can be found in the timeframe immediately available? The Business Secretary has previously ruled out temporary nationalisation, but his junior Minister has not. Which is it?
On the dumping of Chinese steel, will the Secretary of State now urgently reconsider his opposition to the repeal of the lesser duty rule? Will he do so especially in the light of the tariffs that the Chinese have provocatively imposed on some EU-produced specialist steel?
Finally, on procurement, the coalition Government scrapped the defence industrial strategy, which made British jobs and industries the first priority in all decisions on Ministry of Defence contracts. With a £178 billion MOD budget for defence equipment over the next 10 years, will the Government now change that and ensure that this investment supports the British steel industry?
It is a shame that the hon. Lady has taken this attitude. Instead of working together, she seems much more interested in taking cheap political shots—at the process, rather than the substance. I suggest she learns from her friend the First Minister of Wales, who has been nothing but constructive and positive in his approach.
The hon. Lady talks about Labour’s long-running concern for the steel industry, so let us look at the facts. During Labour’s last term in office between 1997 and 2010, 40,000 jobs were lost in the British steel industry, with output more than halved. During those 13 years, Ms Eagle mentioned the word ‘steel’ twice in the House of Commons, while the current Leader of the Opposition did not manage to mention that word once during that period. The hon. Lady talks about her long-running concern, but in the last Parliament, how many times did the then Leader of the Opposition, the shadow Chancellor and the shadow Business Secretary between them manage to mention the word ‘steel’? Not once—not once in five years. I suggest once again that the hon. Lady should end the cheap political shots and work in a constructive manner with this Government because the hard-working people in this industry deserve nothing less.
The hon. Lady talks about an industrial strategy. We have dozens of sector councils and we set up the steel council. We are interested not in picking winners, but in doing what works—not ideology, but what actually works. Since 2010, manufacturing is up, exports are up and employment is up. For example, our auto and aerospace industries, both users of British steel, are having their best years ever. I suggest that the hon. Lady spend a little less time obsessing about whether this support is called a strategy or a policy and spend a little more time celebrating the stunning success of British industry.
The hon. Lady asked about the actions we have taken so far. Action has been taken on energy costs and compensation for energy-intensive industries, which will now be moving towards a policy of exemption. We have provided flexibility on emissions regulations, and we have changed procurement policies, which now apply to all parts of the public sector. We have taken action on unfair trading, which the hon. Lady has asked for. A total of 37 measures are in place at the moment, 16 of which concern China. When it comes to trade measures, we are interested in measures that actually work. If we look at the measures on rebar, we find Chinese imports down 99%; on wire rod, they are down 90% and on seamless tubes and pipes, they are down 80%.
In determining what works, we will be driven by the evidence. The evidence is clear that so far, the way in which the EU has acted works, but we want it to act faster. As I said in my statement and say again, we are not interested in rewriting the whole rulebook for trade; when it comes to steel, we are interested in taking action that works. If the hon. Lady and others have suggestions that are focused on steel, I will of course listen.
The hon. Lady talked about timing in respect of the Tata strip sale. We have had discussions with Tata. The key discussion was the one that took place in Mumbai where Tata said that, although it does not have an unlimited amount of time, which is something that we of course understand, it is not putting a set timeframe in place, and it will work to ensure that a reasonable amount of time is made available to find a buyer. Today, it will release more information on the sales process. I believe that Tata’s actions will reflect that.
The hon. Lady asked about the support that the Government are willing to provide in order to secure a sale. The Government have been working on this for weeks. Because the decision by Tata was commercially very sensitive, we were not able to discuss it in Parliament earlier. As I have made clear, the Government are looking at a number of areas, including power supply, pensions, plant and infrastructure. In doing so, we will work with the unions, the trustees of the pension plan and the Welsh Government to come forward with the best offer we possibly can.
The hon. Lady asked about nationalisation. Let me be clear: we have not ruled anything out. I have been clear about that. We are also clear, however, that the best steel operators in the world are commercially and privately run and that nationalisation is rarely the answer. We are working towards finding a commercial buyer to ensure the long-term future of Port Talbot and all the other parts of Tata Steel.
I could not be clearer in saying that steelmaking is a vital industry for the UK. It is important for our economic security and our national security. I do not want to live in a country that relies on importing all its steel. None of us wants to do that. That is why we will do everything we can to secure a future for steel, because the hard-working men and women in this industry deserve nothing less.
Does my right hon. Friend agree that Tata is an excellent company that has made a great success of Jaguar Land Rover, turning it into one of the finest car companies in Europe, something that defeated every Government when it was a nationalised industry? Does not the fact that Tata cannot make a go of British steel demonstrate the seriousness of the problems that my right hon. Friend is facing?
Will my right hon. Friend continue to reject the simplistic solutions that are on offer, such as tariff wars on China regardless of whether there is dumping, subsidy competition with Italy in breach of the EU rules on which we have always insisted, and nationalising Tata on the basis that we just carry on paying for the losses, pour billions of pounds into the liabilities at the taxpayer’s expense, and seek to prevent anything from changing? Given that we all want to see the good news in Port Talbot that we have just seen in Scunthorpe, will my right hon. Friend continue to search for a reputable, sensible investor who understands steel, has a proper business plan, and can give a credible future to the best products of parts of this business, which could no doubt have a long-term future if we had the right business plan for it?
I agree wholeheartedly with my right hon. and learned Friend, who speaks with a great deal of experience. Tata—beyond steel, but, of course, including it—has shown itself to be a responsible investor in this country. When I have talked to the work force, the unions and others at Port Talbot and elsewhere in the Tata group, they have had nothing but good things to say about Tata, its responsibility and its values.
I agree with what my right hon. and learned Friend said about tariffs and being careful to strike the right balance. I also agree with what he said about nationalisation. The way forward must involve a commercial operator: that is how the best companies in the world are run, and that is how we want to see British steel companies being run.
I thank the Business Secretary for giving me advance sight of his statement.
I welcome the news that Tata appears to have found a buyer for its operations in Scunthorpe. I hope that that will prove to be good news, and I hope that the same can be done for Port Talbot and other sites, although there is concern about possible erosions of workers’ terms and conditions as a result of the deal. Let us be clear, however, that this has happened in spite of the Government’s shameful approach to the crisis. They have done as little as possible—as little as they thought they could get away with. The fact that the Business Secretary was literally on the other side of the world at the height of the crisis provides a perfect metaphor, and a perfect personification of the Tory approach to the steel industry.
That contrasts starkly with the proactive, professional and diligent way in which the Scottish Government approached the crisis facing the Scottish plants at Clydebridge and Dalzell. Nicola Sturgeon said that her Government would leave no stone unturned to save a crucial industry, and that is exactly what happened. Liberty House has now bought the sites to maintain a crucial industry in Scotland, and I welcome the Business Secretary’s commendation of those efforts.
SNP Members stand in solidarity with the steelworkers of England and Wales. We hope that the UK Government will now work more proactively and co-operatively with EU colleagues on anti-dumping measures, energy costs and other issues that face the industry, so that there can be a long-term future for a crucial part of the manufacturing sector. Imagine what could have been achieved had the Prime Minister spent the last year touring European capitals and pressing for action on steel, rather than testing the patience of European counterparts and colleagues with his EU referendum gamble.
Will the Business Secretary now publish details of all meetings, phone calls, visits and correspondence involving the steel industry in which he, the Prime Minister, the Chancellor and other members of the Cabinet have engaged with EU and international trade counterparts in the last year? If he has done the work that he claims to have done, he has nothing to hide, and publishing those details may well repair his tarnished reputation.
As I said in my statement, I commend the Scottish Government for what has been done in respect of the two mills in Scotland, but I hope the hon. Gentleman recognises that the scale of the problem in the rest of the UK is a great deal larger, and I hope he can find it within himself to appreciate the challenge that the industry faces throughout the UK in particular.
I think that the hon. Gentleman is wholly wrong to suggest that the Government have not taken action already in providing help for the industry. I gave a number of examples in my statement, but the action on energy prices is making a big difference, and the action on procurement is also making a difference. I urge the hon. Gentleman to work with his colleagues in Edinburgh to see whether they can change their procurement rules to help not only Scotland, but the UK.
I can give that commitment to my right hon. Friend, who speaks with a great deal of experience both of Wales and of business. He is right to identify energy as an issue. I do not believe that the constraints are coming from the EU, and we have demonstrated that there is action that we can take, but there is more that we can do. My right hon. Friend has good ideas and I look forward to discussing them with him further.
To secure a long-term, sustainable, profitable future for the British steel industry, the focus needs to be on developing high-value, niche downstream products in particular sectors or for particular technologies, collaborating closely with customers in product development and design. Parts of Tata Steel, such as the Hartlepool pipe mill and facilities in Corby, do that, but they are not part of the potential sales process with Greybull Capital or Liberty House, so how will the Secretary of State ensure that the downstream capability in Hartlepool and elsewhere is maintained while a potential buyer is found?
In the Secretary of State’s response to the shadow Business Secretary, he mentioned sector groups. What specific work has he facilitated with industrial strategic sector groups, such as the Automotive Council and oil, gas and offshore wind industrial councils, to ensure closer collaboration with customers and the supply chain in order to provide a great future for British steel?
First, I thank the hon. Gentleman for his approach to this matter, in particular through his chairmanship of the Business, Innovation and Skills Committee. He is right to say that Hartlepool, Corby and other parts of the downstream steel business are where the high-value product is. Tata has made it clear in its approach to the sale that it will not cherry-pick. It knows that the downstream process is important to any potential buyer, so it will ensure that any buyer can purchase the whole group, which is an important commitment that we have managed to secure.
The long-established sector councils cover many different sectors. I mentioned earlier the automotive and aerospace sectors, both of which use British steel. We are working with them on the general supply chain to see how British products, including steel, can be used. We will continue that work.
I know from my hon. Friend’s work on the Business, Innovation and Skills Committee that she takes an interest in this. She is absolutely right that none of us wants to be back in this situation in one, two or three years from now. We want to find a long-term buyer that will invest in the business. That requires Government support and we are ready to work with that buyer.
Before I start, I want to pay tribute to the 13 steelworkers who are in the Public Gallery today along with the outstanding general secretary of the Community union, Roy Rickhuss. I also want to join the Secretary of State in paying tribute to Carwyn Jones, who has been doing a fantastic job. What a contrast to the British Government. Within days, Carwyn Jones had put £60 million on the table, so he is someone who is actually closing the gap—[Interruption.]
I hope that the UK Government will take note of the fact that the Welsh Assembly Government so rapidly put £60 million on the table.
The Secretary of State asked for some focused suggestions and questions, so here are three for him. First, what are the Government doing to secure the customer base—key clients such as Honda, Nissan, Jaguar Land Rover? I hope he and his colleagues are picking up the phone to those customers and ensuring that we retain the integrity of the order book. Secondly, on the blast furnaces, I would like to follow up on what was asked by my hon. Friend the shadow Secretary of State. Does the Secretary of State believe that the blast furnaces in Port Talbot should continue as an integral part of the UK steelmaking industry? Thirdly, can he explain why the British Government continue to block the scrapping of the lesser duty rule? The entire industry and the European Commission repeatedly tell us that by scrapping that rule we would give the anti-dumping measures real teeth to deal with the dumping of Chinese steel. Perhaps the reason is that the UK Government would rather cosy up to Beijing than stand up for British steelworkers.
First, let me say that this is obviously a very difficult situation for the hon. Gentleman’s constituents. I am working with him, and I stand ready to work in any way I can to help him and to listen to what he has to say. The meeting I have already had with him was very useful, but I look forward to many more as we jointly try to help with this situation. He asked three questions, one of which was about the customer base. One of the most important things we can do—and we are doing it—is provide confidence that we can help to find a buyer that will secure the long-term interest of the steelworks, because that is what the customer base is going to want. We are in touch with many parts of the customer base—I talked earlier about the auto and aerospace industries—and providing that confidence is going to be key to reassuring them that they do not need to look elsewhere.
The hon. Gentleman asked about the blast furnaces, which I went to see in action just last week. They are hugely important, but I do not think I am in a position to say exactly what the structure of the business should be going forward. We will work with all parties to make sure that we can secure as many jobs as possible and that steelmaking continues. Lastly, he asked about the lesser duty rule. I point out to him that it has been the long-standing view of the previous Labour Government and this Government that in general the lesser duty rule gets the right balance in terms of the interests of industry and consumers. The last two British Trade Commissioners that were sent to Brussels, both appointed by Labour and both Labour peers, strongly supported that rule. As I said earlier, what I am interested in is what actually works to help the industry and what we have seen so far is that the tariffs imposed actually work, leading to massive reductions in Chinese imports.
Labour’s Front-Bench interest in steel production is a new phenomenon; in the last Parliament, the current Leader of the Opposition mentioned steel three times, but only in relation to Trident. Given the recent grandstanding by certain elements of Welsh Labour, does my right hon. Friend agree that this contributes absolutely nothing to assisting the many Tata Port Talbot steelworkers who live in my neighbouring constituency of Gower?
I was pleased that my hon. Friend and I were able to talk in the past few days to discuss his constituents’ concerns. I agree with what he said, but I would like also to take this opportunity to reassure him that we will work closely with him and other Members to bring confidence to constituents that we truly are doing everything we can to help.
There is a real danger that the Secretary of State is at times presenting the idea that everything has been done and that he has done everything in his power. Let us look at the issues facing the industry as a whole. On energy, we still see prices that are 89% higher than those of European competitors. On procurement, the Ministry of Defence is not even keeping records of where its steel comes from; and on tariffs, he says he will do everything, but, as we have just heard, he will not take action to scrap the lesser duty rule and to change it, and this country is being seen as the ringleader on this in Europe. What is he going to change in those industry fundamentals that will prevent us from seeing crisis after crisis after crisis in the steel industry?
Let me pick up on one of the three important issues affecting the industry that the hon. Gentleman has identified—energy costs. One reason why those costs are higher for energy-intensive industries in Britain—in fact, it is the key reason—is the Climate Change Act 2008, which he would have supported and which was introduced by the last Labour Government. [Interruption.] The Conservatives did support it, but ever since we have been working on mitigating some of the problems it created for industry. I would have thought the hon. Gentleman supported that.
We should be under no misapprehension that the future of the global steel industry will be brutally competitive for many years to come. If my right hon. Friend is successful in finding safe harbour for the Motherwell, Scunthorpe and Port Talbot steelworks, that will be a significant accomplishment, but he must do that while upholding the lesser duty rule. The rule is an underpinning of free trade and it secures jobs in many other sectors of our economy. Regarding tariffs, some hon. Members have talked about the Americans imposing a 200% tariff, but that that was done solely because the Chinese, on that one issue, provided no information in defence. By the way, in that same instrument, the Americans put a 50% tariff on UK steel manufactured by Tata.
I always listen carefully to what my hon. Friend has to say. He is a respected member of the BIS Committee and he has deep experience in business. He is right to highlight tariffs. The concern for any Government is always to strike the right balance in taking action where there is clear evidence of dumping and unfair trading, but not going any further than that, because the people who pay the cost are consumers. Such measures are like a tax; they are hardly progressive and the poorest are hit the hardest.
Steelworkers watching this debate—including those from Llanwern and Orb in Newport, who have travelled here today as they have many times to press the Government for more action to help the industry—are asking that their businesses, with full order books and assets such as the Zodiac line in Newport, remain saleable in this crisis; that the Government act on the pension fund; and that there is a long-term industrial strategy to give potential buyers confidence. The Secretary of State’s statement has not made clearer what practical measures he will take to do that. Please will he expand on that now?
The hon. Lady is right to raise her and her constituents’ concerns. I reassure her that we are looking at everything. I think she is aware of much of the action we have taken, but I am sure she understands that there is no magic wand here. No Government can make these problems go away overnight. These are international challenges—just in the last few days we have heard about problems in the US, Australia and many other developed economies. If she respects that, she will work with us on trying to find long-term solutions.
I commend the Government on their plans to roll out guidance on procurement practice to the entire public sector. What is my right hon. Friend doing to ensure that UK steel companies are aware of all the bidding opportunities and how they can get in the best possible place to win the contracts?
We were the first EU country to change our procurement rules to take advantage of new flexibility to take into account economic and social factors. We have now extended that to the entire public sector—not just central Government. We are working on the visibility of the pipeline. We have £300 billion of infrastructure planned over the next five years—a huge amount of British business for British steel—and we are working with the industry and groups including UK Steel to ensure maximum visibility.
Last year, the Secretary of State and even the Prime Minister said they were doing everything they could to keep steelmaking on Teeside. Despite knowing for months that SSI was in trouble, nothing was done. Three thousand jobs were lost, 175 years of steelmaking were gone and a town was dealt a devastating blow. So when the Secretary of State says again that he is doing everything he can to help, why should the workers of Port Talbot and anywhere else in the country believe a single word he says?
The hon. Lady has fought hard for her constituents and is still doing a lot to help workers who lost their job. I and my right hon. Friend the Minister for Small Business, Industry and Enterprise have met her and we will continue to work with those who have lost their job—of course we will—but she will also know that the situation at Redcar is not directly comparable with that at Port Talbot and Tata Steel. The business was not viable after hundreds of millions of pounds of investment and no commercial buyers were coming forward. I know it is difficult news, but the hon. Lady knows that. If we look at today’s news about Tata long products, however, we see that it is possible to find a commercial buyer.
I have no doubt that the Business Secretary is focusing on the key issues for potential investors in Port Talbot, including the pension fund and energy costs. As for a bright, long-term future for steel from Wales, may I encourage him to have early discussions with the Chancellor and the Secretary of State for Energy and Climate Change about an announcement on the chair of the marine energy review, particularly regarding the proposed tidal lagoons in south Wales, which would be an enormous boost, both to morale and in practice, to the producers of steel in south Wales?
My hon. Friend makes a good point. Energy is a big issue, and will remain so for all our energy-intensive industries. The tidal lagoon is an important issue. We have begun a feasibility study, and my Department is in discussions with the Department of Energy and Climate Change and the Treasury on that very issue.
May I make it absolutely clear to the House that this is not just an issue relating to Wales or Port Talbot? It is a UK problem, and the Secretary of State will agree that it is a national issue. The 900 steel workers in my constituency whose jobs are on the line expect him to guarantee that he will do whatever it takes to give them the future that they deserve. There was an optimistic note in what he said. He mentioned co-investment. Will he explain to the House what that is, and whether it guarantees that the Government are willing to intervene and do whatever is necessary to save our industry?
The hon. Lady is absolutely right: this is a UK-wide problem. We have discussed Scotland and, of course, Wales, but it also affects south Yorkshire, Corby and many other parts of the UK so she is right to bring that to the attention of the House. On co-investment, I said that to demonstrate that when I say that we will look at all options, we really will do so. It is possible—I do not know at this point, because the sale process has only just formally begun—that someone might come forward and ask for investment or funds from Government in lots of different ways. That has to be done on commercial terms, but that demonstrates how far the Government can go to make sure that this deal is successful.
My right hon. Friend will be only too aware that customer confidence, which was mentioned by Stephen Kinnock, is crucial. Will my right hon. Friend assure the House that he, his ministerial colleagues and officials are doing all that they can regarding existing customers for British steel to assure them entirely and conclusively that the British Government are committed to a long-term future for British-made steel in this country, and that they can feel safe and secure about placing future orders?
I can give my hon. Friend that assurance. He is absolutely right to point out the confidence that customers and, equally, the supply chain need. Suppliers need confidence that there is a long-term business, so we are working with both suppliers and customers to provide that reassurance.
To help prospective buyers, may I ask the Secretary of State whether the UK Government will take on the pension liability of £15 billion for 130,000 Tata workers and former workers, and will they redress the imbalance caused by the reduction of the workforce over many years, as more people now take money out of the scheme than pay into it?
The hon. Lady is right to raise the issue of pensions. I have said before that it is likely that any buyer who comes forward will want some kind of pension solution. It will be a challenge, but I can reassure her that we are looking carefully at that. We are in discussions with pension trustees, and we want to come up with something that will back the members and help to find a buyer.
I am proud of British manufacturing, and I was proud last night when Yorkshire golfer Danny Willett pulled on his green jacket at Augusta, as the cloth in that jacket was woven and dyed in my constituency, on the outskirts of Huddersfield. I am also proud of the HS2 infrastructure project. Will the Business Secretary confirm that he can do everything he can, with the full support of the House, to put British steel at the heart of the transformational HS2 project?
I am sure the whole House congratulates Danny Willett on his victory. On my hon. Friend’s question about HS2, projects by National Rail have used 98% British steel and Crossrail has used 95% British steel. Aircraft carriers procured by the Government have used over 90% British steel, and we will do everything we can to make sure that British steel is used in HS2.
In his statement the Secretary of State admitted that UK Government Ministers knew in advance about Tata’s intentions for Port Talbot, and a Welsh Government Minister recently boasted in the Financial Times that the Welsh Government knew before Christmas, yet neither Government were present at the crisis meeting in Mumbai when the fate of the plants was determined. That does not contrast particularly well with the decisive action of the Scottish Government, who nationalised Tata’s operations in Scotland to facilitate a private sale. Is it a case, once again, of the Welsh economy and the Welsh workforce being let down by a careless Tory Government here in Westminster and by a complacent Labour Government in Wales?
The hon. Gentleman’s comments could not be further from the truth. The meeting in Mumbai that he refers to was a board meeting to decide whether to accept the decision that was being made by the executive management of Tata Steel from the CEO downwards. If the British Government had waited for that meeting and just turned up at that time, it would have been too little, too late. Action was required weeks before that, so when we first heard about closure, we took action. I am sure the hon. Gentleman would agree that a sales process that has the ability to secure the workers’ future is far better than outright closure.
Last week I had a meeting with constituents in Suffolk who are heavily involved in the steel industry. We spoke about now, but we also spoke about the future and how to use innovation more effectively in the sector. Will my right hon. Friend meet me and my constituents with a view to extending research and development credits to the steel sector to support the 21st-century steel industry that Members across the House have been talking about?
My hon. Friend makes a very good point. In some parts of the UK where steel plants are based there are enhanced credits and capital allowances through enterprise zones. She makes an interesting suggestion about R and D tax credits that could help the industry more widely, so of course I will meet her.
When the Secretary of State comes to the Dispatch Box, he has to be careful about what he says. In his statement he referred to the £80 million promised to Redcar. I would dispute that figure in relation to what has been delivered in our area in the past six months. Today in our all-party parliamentary group meeting the Secretary of State did not rule out the option of Tata potentially remaining in situ at all steel sites, not just in relation to strip products. What type of co-investment plans can he put forward to the House so that we can discuss on the Floor of the House the options available for UK steel?
I know that the hon. Gentleman means well and has fought hard for his constituents, but I am sure he understands that in trying to secure a deal, it would not be in the interests of such a deal if the commercial terms were discussed on the Floor of the House. When buyers approach us or approach Tata, many aspects will be commercially sensitive. Some potential buyers will not even want to reveal that they are in discussions, and we must respect that or we risk losing a deal. I hope the hon. Gentleman can respect that too.
Surely the only way to secure a long-term future for the British steel industry is to stop Chinese dumping. The Americans have imposed a 266% tariff on Chinese products. The British Government cannot do so because we are in the EU. Does the Business Secretary agree that it would be in the interests of the British steel industry if the Government imposed a 266% tariff now and worried about the EU later?
I know what my hon. Friend means by that, but I think that what he is really interested in, as I am, is tariffs that actually work. The right level has to be the level that actually works. The Americans might have imposed higher tariffs, but if they are too high they will hurt the rest of industry and consumers and they will cost thousands of jobs down the supply chain. Where the EU has imposed tariffs, driven by evidence, the results have been a massive fall in imports. In rebar, for example, a 13% tariff led to a 99% fall.
The European Commission wants to move away from the lesser duty rule. Quite simply, the problem is that when it is in place the duty that can be imposed will always be far less than the margin of the dumping. Can the Secretary of State be clear: was the Eurofer spokesman right when he said that the UK Government were “certainly the ringleader” in blocking its reform?
The first thing to say about the lesser duty rule is that the duty that it leads to is either one that stops the dumping or one that rights the injury caused to industry. That is how the tariff is actually calculated. Again, all the evidence suggests that it actually leads to results, and what the hon. Gentleman really wants is results. He is absolutely wrong to suggest that it is the British Government who are blocking this. He will know that no single Government can block it, because a blocking minority at least would be needed. As I have said, if he has a suggestion that is particularly targeted at steel, I am willing to listen.
My right hon. Friend quite rightly began his statement by saying that the collapse in the global steel price is a human tragedy. Will he update the House on the measures that are being taken to support workers in our steel communities?
My hon. Friend makes a good point. Where there have been job losses—we talked about Redcar earlier—the Government have worked with local councils and others to try to secure further investment for the area, both domestically and from abroad, to try to replace those lost jobs. We have introduced other measures, such as skills training, reskilling workers so that they are ready to take new jobs. There are probably many more things that we can do. We are often led by the local areas, because each area is different, and we will continue to do that. That will be a priority.
The hon. Gentleman is absolutely right that time is key. That is why I was keen to meet Tata last week in Mumbai and to try to get those reassurances. I believe that I have got those reassurances. Again, ultimately the control of time will be with the seller, but I have every reason to believe that Tata will be a responsible seller.
I thank the Secretary of State for his statement and commend the Minister for Small Business, Industry and Enterprise for her tireless work in keeping me and my neighbouring colleagues in north Lincolnshire up to date about the Scunthorpe situation. I also commend the workforce at Scunthorpe for the extremely responsible approach that they have taken. Will my right hon. Friend elaborate on how he will ensure that public sector infrastructure and construction projects actually use British-manufactured steel?
I join my hon. Friend in welcoming the news today about Scunthorpe and Tata long products. That is 4,000 jobs secured, which is obviously hugely welcome news and a vote of confidence in the British steel industry. He asks about the pipeline and procurement and how we can ensure that more of it is British. The changes that we have already made to procurement rules, where economic and social factors can be taken into account, will help to achieve just that. At the same time, with the large industrial infrastructure projects down the line, we can also help by giving steel manufacturers a lot more visibility, and that is exactly what we are looking at through the steel council.
Business rates on plant and machinery are effectively a tax on investment, and they have comprised a very significant element of the cocktail of costs that have so seriously undermined the steel industry. It was rumoured before the last Budget that plant and machinery would be made exempt. Can the Secretary of State confirm that that was so and explain why it did not happen? Will that be reconsidered in putting together a package for any future buyer of Port Talbot?
The hon. Gentleman is right to raise the issue of business rates, because that has come up time and again from the industry, so it is right to look at it. One of the issues is that a change in business rates could be a rather blunt instrument, especially in the steel industry, if we look at the total cost of making that change and at just how little of that would flow down to the industry. There might be better and more focused ways of doing that. Having said that, where there are large steel operations, such as Port Talbot in Wales, there might be something that could be done. As he will know, business rates are devolved, but we are talking about this issue with the Welsh Government.
I was pleased to hear the Secretary of State acknowledge a few minutes ago the part that high electricity prices—caused in part by the Climate Change Act 2008—have played in the unfortunate situation with steel and other energy-intensive industries. I am very concerned that the carbon price floor in the UK, at £18.08 per tonne, adds to the £5.30 per tonne in the EU, placing a burden on UK energy-intensive industries that is four and a half times that of our European neighbours. I know that he has done a lot to alleviate this burden with direct assistance, but does he agree that now might be a good time to look again at reducing the carbon price floor?
My hon. Friend is right that energy costs are a very important issue for the industry, especially when compared with other countries in Europe. He is right to point out the action that we have taken, with compensation now moving to exemption. There are other ways to help, and we are actively looking at them. One way is to look at more renewable power sources, which are exempt from many of the costs—a colleague mentioned the tidal lagoon earlier. There are certainly other ways that we can help, and we are looking at all those options.
I have submitted two freedom of information requests and numerous written parliamentary questions to see the Secretary of State’ s secretive BIS 2020 plan. Well, now we know why he has wanted to keep the plan secret, because it proposes cutting more than 4,000 jobs and 40% of the Insolvency Service’s staff, who have been working flat out since the steel crisis began to unfold. These proposals go far beyond what the Chancellor has asked the Secretary of State for from his Department. Given the deepening crisis, will the Secretary of State go back to the drawing board and rethink those ill-thought-through plans that will make his job so much harder?
Well, that is a matter—[Interruption.] Order. That is a matter of interpretation, and the right hon. Gentleman is perfectly entitled so to interpret.
I welcome the steps that my right hon. Friend is taking in the face of very challenging global trends in the steel sector. I am also very grateful for the work that he has been doing to help pharmaceutical science across the UK to be repurposed and revitalised in the face of very challenging global trends. Does he agree that there are lessons there that could be passed on to the steel sector?
I agree with my hon. Friend. Where jobs are sadly lost in any industry, especially on a large scale, we should look at ways of regenerating the local area. We talked earlier about the sad loss of jobs in Redcar. One of the pieces of work that Lord Heseltine is leading on is how we can attract more inward investment and what tools we can use to regenerate such areas and create more jobs.
May I pay tribute to all the people who have worked hard in the Scunthorpe area and elsewhere to put in place the sale subject to contract that we have today? I pay particular tribute to the trade unions, the workforce, the management team and the suppliers, in addition to Tata and Greybull—it has taken a lot of hard work over nine months to get where we are today. In his statement, the Secretary of State referred to “a commercial offer on financing if required”. My understanding is that there are three things subject to contract that need dealing with, and one of those is financing. Will he make it unequivocally clear that the Government will do everything necessary to make sure that that is not a barrier to the deal going ahead, and will he also tackle the other UK-based issue of the caveat that is still in place?
Let me join the hon. Gentleman in welcoming the news about Tata long products and Scunthorpe; it is very encouraging, and I am sure it will bring some relief to him and his constituents. I also join him in congratulating not only Tata and Greybull on working together to secure a deal, but the unions, the pension trustees and the others involved in making it happen. He asked specifically about financing, and the Government’s involvement in it. As I mentioned earlier, we have been involved in the transaction from day one, and we have put on the table an offer of Government financing on commercial terms. That offer stands; should it need to be drawn down, it is clearly there to help make this deal happen.
Having taken part in a cross-party visit to the Corby site last week—I am grateful to the Minister for Small Business, Industry and Enterprise for coming along as well—I am very confident in the plan that has been drawn up to secure the site’s future. However, implementing it will require not only time but investment, and the business rate system at the moment penalises that very investment. What will the Secretary of State do to put a stop to that and to send a crucial sign of confidence from the Government?
I commend my hon. Friend for how he has approached this issue, which is hugely important to him and his constituents. I hope the Business Minister’s visit last week helped to build confidence and to show that the Government are looking at a variety of ways to help. My hon. Friend mentions business rates, which are an important part of costs, and we have looked at them before. All I can say at this point is that we will continue to keep all taxes under review, particularly in the steel sector, to see what other ways we can help.
Yes, I can assure the hon. Gentleman of that. Again, let me say that the approach of the unions has been very constructive and positive, and it is absolutely key. I highlighted earlier the involvement of the Community union—probably the union I have had most to do with on this issue—with Tata strip. The people who run the union, and its members, understand that there is a role for everyone, and we will of course share information with them.
May I thank my right hon. Friend for his statement today? More broadly, may I also thank my right hon. Friend the Secretary of State for Wales and the Labour First Minister in Wales for working constructively with the Community union and for looking at everything we can do for Tata Steel in south Wales? The Government are absolutely right to support anti-dumping measures at EU level with our EU neighbours and partners. Will my right hon. Friend confirm that those measures are starting to have a very real effect?
First, let me, too, commend the First Minister in Wales for his constructive approach. Let me also commend Andrew R. T. Davies, the leader of the Conservative group in Wales, on his approach in making sure that he and his team help in every way they can. On tariffs and measures against dumping, what matters most is measures that actually work, and that is what we have seen so far, but we want to make sure that that continues.
I do not know where the hon. Gentleman gets that idea from. I talked earlier about the action that we have led. The UK Government have led the way, asking the EU to work even faster. Back in November, for example, I called for—and went to—an extraordinary meeting of the Competitiveness Council so that it could take more action. That will not change.
I appreciate all the work the Secretary of State is doing to work with steelworkers, and he should be commended for that. I also welcome the fact that he is already looking at what more can be done to relocate some of the employees who might end up needing to find new jobs. As he will know, we have a shortage of engineers and manufacturers in the west of England. Given that I was at Rolls-Royce last week, and the Department for Business, Innovation and Skills has worked with that company and other companies before to relocate employees who have lost their employment, will he make a commitment today to do the same if employment is lost at Tata Steel in Wales?
I am very positive, and I think that if all of us—the Government, the unions, Tata, the Welsh Government and others—work together, we can have a successful conclusion. Of course, my hon. Friend is right to think about the possibility that, even then, we could have some job losses. In such cases, we will do everything we can, first, to regenerate the area, but also to make sure that where there are skills shortages in nearby areas—certainly those within travelling distance—we can be clever and bring the two issues together.
May I press the Minister further on pensions, particularly the legacy pensions paid under the British Steel pension scheme? If companies taking over Tata assets are unwilling—wholly or in part—to take over the existing funding of the pensions, or if Tata’s main board in India is unwilling, as seems likely, to maintain the fund at its necessary strength, will the Government step in? If that is precluded under current EU rules, will they upfund the national Pension Protection Fund to ensure that it can step in?
We are looking at options and potential solutions around pensions if there is a buyer that, as I think is likely, does not want to take on some of the legacy costs. I can tell the hon. Gentleman that I do not think EU rules are an issue here. There are other challenges, of course, but we are looking creatively at solutions. I would not want to say too much about that now, but I want to reassure him that this issue is front-of-mind as we deal with this challenge.
May I congratulate my right hon. Friend and his team on acting decisively and quickly to do all they can to safeguard this national industry? Does he agree that part of the solution lies in bringing forward some of the large infrastructure projects that are planned in, for example, the transport sector? Will he update the House on what future opportunities there are in that regard?
My hon. Friend is absolutely right: we have set out an infrastructure pipeline of more than £300 billion in investment—the largest in any five-year period—and many of the projects have been announced. With the changes in procurement rules and those investment plans, we can make a difference like never before and do everything we can in every project to make sure that British steel is used.
I am sure the Secretary of State’s civil servants in the Department for Business, Innovation and Skills have been working extremely hard to try to safeguard the 40,000 Welsh steel and supplier jobs that are at immediate risk, just as the staff at the Insolvency Service were critical in ensuring that the Redcar workers got their redundancy payments. Will he therefore reassure my constituents that the hundreds of BIS jobs losses at the critical Insolvency Service in Cardiff, which were outlined in his McKinsey report, will not happen, adding to the misery of Welsh workers?
What I can assure the hon. Lady of is that any job reductions that are, sadly, taking place in BIS or any other Department—there are more Departments involved in this than just BIS, although, of course, we are the lead Department—will not have an impact on our ability to help and to handle the steel crisis.
The UK-wide impact of the issue was demonstrated by last week’s statement by the Torbay Tourism Association, which indicated the likely impact on the bay of job losses in south Wales, given the number of people we welcome from that area each year. Does the Secretary of State therefore agree that it is vital that the Government keep all options on the table so that an attractive option can be made available to a purchaser of the plants under threat, and our steel industry can have a long-term and viable package?
My hon. Friend rightly highlights the fact that the jobs at risk are not just the obvious ones in the steel industry itself; there is a knock-on impact on tourism, as he has said, and on other jobs in the supply chain, which was mentioned earlier. I reassure him that we are genuinely looking at all options, and we will absolutely continue to do so.
The Secretary of State says that the issue of pensions is at the front of his mind. Will he reassure me further by saying what guarantees on pensions he is seeking from Tata as part of the sale, and can he guarantee that none of the pensioners in my constituency who have given their lives to Tata over many years will be worse off as a result of the sale?
What I can tell the right hon. Gentleman is that Tata is fully aware of its obligations, both legal and otherwise, on the pension scheme. I hope it will say more about that when it publishes its information memorandum. I am very much focused on making sure that the challenges of the pension scheme do not become an issue with regard to finding and securing a buyer. That is why we are talking to the trustees, to try to work together to make sure that the members’ interests are looked after and, at the same time, that we have the best chance of securing a sale.
Given the Secretary of State’s new-found robustness in his attitude towards China, can he assure us that he will no longer block the EU’s attempts to ensure that China is not granted market economy status, which would not only affect the steel industry to the tune of thousands of jobs, but cost up to 2,500 jobs in my own constituency?
The decision on market economy status is for the EU collectively to make. I am sure that the hon. Lady will agree that any country, including China, that wants market economy status has to earn it. To do so, China says it is cutting overcapacity, and I think that the EU would want to see evidence of that. Let me further reassure her that even when countries do have market economy status, such as Russia, that does not stop the EU taking defensive action, including on dumping.
The Secretary of State rightly gives credit to the Scottish Government, and I am proud to say that Scottish steel has a bright future, thanks to the diligence of our First Minister and Fergus Ewing, our Minister for Business, Energy and Tourism. What lessons have been learned from the process in Scotland, and will a solid commitment be given today to provide proper support in the interim period until an alternative operator can be found for plants in England and Wales?
As I have said, I am very pleased about the fact that the mills in Scotland have been saved and that those jobs have been secured, but I hope the hon. Lady will agree that the reason those mills have a very bright and secure future is the strength of the British economy. Had Scotland been independent, I think the outlook would be very different. The hon. Lady wants reassurance that we will do everything we can for steel businesses in other parts of the UK, and that is exactly what we will do.
Tata Steel has invested hundreds of millions of pounds in Port Talbot in recent years. Along with Swansea University, it has developed multi-layered steel that generates its own electricity and that therefore has a negative carbon footprint when it clads buildings. Will the Secretary of State consider the possibility of minority equity share- holding in Tata Steel, to show that we are all in it together and to get a margin from Government procurement? At the very least, will he match Tata Steel on any offer he gives to prospective buyers, including help with the pension funds?
I know that the hon. Gentleman has worked hard on this issue and he has suggested some other good ideas. When I visited Port Talbot for the third time last week, I saw the power plant as well as the blast furnaces. I saw how they worked together and also learned about some of the recent investment that has taken place and the efficiency it provides. He is absolutely right to highlight that. On the question of whether we would consider investing alongside others, I said earlier that we would look at co-investment. I am trying to make it clear that no option is off the table.
Labour has repeatedly called for an industrial strategy to support UK steel and manufacturing. Given the current crisis, which has grown under the Secretary of State’s watch, does he agree that that is now essential?
We have an industrial strategy. People can choose to focus on the semantics—they can call it an industrial strategy or an industrial policy—or they can actually look at the results. As I said earlier, one of the reasons that manufacturing output, sales, employment and exports are all up in the last five years is that this Government have a successful industrial policy.
Hundreds of Tata long products jobs in design consultancy in York will be saved on completion of the Greybull Capital project. However, we are concerned about the wider productivity plan, in particular with regard to wider support for the supply chain and maintaining confidence in it. What is the Secretary of State doing to support that?
My right hon. Friend the Secretary of State for Wales has had some recent discussions on this issue. I think the hon. Lady is aware of that. She is right to raise the issue of productivity more generally. I do not think it is an issue of productivity in our steel industry. If we look at the output of our workers in the British steel industry, we will see that they are second to none in terms of their productivity. We should take this opportunity to commend the hard work of those men and women. Productivity more generally in the UK economy has been a long-running issue. The supply chain is one of the ways to deal with that, especially with regard to import substitution. I think that is where steel has a big role to play, because there are still too many steel imports and I think that a lot of that steel can be purchased here at home.
Given the issue’s importance to the UK economy, the Government ought to have recalled Parliament in the same way that the Welsh Assembly was recalled to debate this very important topic. Given that the Chinese have the capacity to destroy British steel through a double whammy of dumping cheap steel from China and placing exorbitant tariffs on British steel in China, will the Government think again about their approach to the European Union’s lesser duty rule? Will they also have a serious think about granting market economy status to China, which would be unacceptable, given the current situation with British steel?
When it comes to tariffs, what I am interested in is what actually works. I encourage the hon. Gentleman to study the results—to look at the action the EU has taken and to then look at the result of that action. He will find that, in almost every case, there has been a reduction in imports of more than 80% and sometimes, as I mentioned earlier with regard to rebar, some 99%. As I have said, and I will say it again, if the hon. Gentleman has a particular idea that is focused on steel—because that is the real issue in British industry right now, and that is what I and he want to focus on— I am willing to listen to him.
More than half of UK steel exports go to the European Union. Does the Secretary of State, who is now a fervent Europhile, I think, agree that exit from the European Union would be devastating to the industry?
Where I agree with the hon. Gentleman is that we have to do everything we can to help British industry and British manufacturing, and I think that the long-term interest of the British economy is to remain in the EU.