Whitsun Adjournment

Part of the debate – in the House of Commons at 2:50 pm on 23rd May 2019.

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Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons) 2:50 pm, 23rd May 2019

My hon. Friend makes an excellent point. Already, during my short contribution to the debate, we see the way in which the steel industry connects with people in a way that some other industries do not. People know that this industry is a throbbing heart of the country. We need it if we are to be a proud, strong country, and closures such as the one she mentions have a detrimental impact on not only communities but the nation.

I called on then Prime Minister David Cameron to convene a steel summit in October 2015, which brought together unions, steelmakers, partners in the industry, key stakeholders and Government. At the summit, we focused on five asks. While applauding the Secretary of State for his urgent action, I am critical of the Government for not progressing those fundamental asks more strongly. There has been some movement, but not as much as we would like. Those asks need to be addressed to get the industry on to a level playing field, so that we can be not 30th in the league but battling for the top spot.

The first of the five asks was energy costs. Energy costs for the UK steel industry are much higher than those in Europe and elsewhere, and we still need to do something about that. There was mitigation through the carbon price floor tax, but it took about three years to come in. There is still a gap, and the energy required to support our steel industry is still far more expensive than elsewhere in Europe. We need to work on that if our steel industry is to move on to a level playing field where it can have a sustainable and strong future in the lifeblood of our nation.

The second ask was about procurement. The Government have taken some steps on procurement. In 2016, they brought in new procurement guidelines. It has been a struggle to make sure that that those public procurement guidelines bite and are effective. It is one thing to have something that is nice on a piece of paper, but it needs to have some traction in terms of action. Earlier this year, the Government published their analysis of where we are on that, and their own figures show that only 43% of the £158 million of procurement by the UK Government last year was produced in the UK.

Obviously, there is still work that can be done there. I am thinking of things such as the Royal Fleet Auxiliary, and would it not be good if that was all made with UK steel? I am thinking of things such as Heathrow, and I would like to commend Heathrow for the commitment it has made throughout to using UK steel wherever possible in its procurement processes, while of course meeting proper procurement guidelines. Heathrow has had the best practice in the way it has approached this, as indeed has Network Rail if we look at its performance. HS2 is another public procurement programme that could strengthen the messages it is putting out on procurement.

I was pleased on Monday to sign the steel charter, which is the work of steelmakers and the steel unions, and that the Government have also signed the charter. The charter points out that the UK Government steel procurement pipeline has been analysed as amounting to over 3 million tonnes over the next decade. That is a lot of steel: 3 million tonnes of steel is worth upwards of £2.5 billion in value. That shows the opportunity of steelmaking, and it also shows the degree of risk and vulnerability we will be exposed to if we do not have our own steelmaking capacity. I was very pleased to sign the charter, and I was pleased that the Under-Secretary of State for Business, Energy and Industrial Strategy, Andrew Stephenson, also signed it. The Secretary of State has made it very clear that the Government intend to push forward with doing everything they can to improve performance on procurement.

The third ask was about business rates. The plant in Scunthorpe—this goes back to the point made by my hon. Friend the Member for Glasgow North East about the size of these industrial sites—it is actually about the size of the town of Scunthorpe itself, and is bigger than the Borough of Chelsea and Kensington, so this is a big bit of land. The site in IJmuiden in the Netherlands, its sister site when we were part of Tata, is even larger—I think it is about three times as big—but the site in the Netherlands pays lower business rates than we do here in the UK. The playing field is not level, and we need to level this playing field. Despite the actions of North Lincolnshire Council to try to ensure the most effective business rates regime, the current framework of business rates means that the penalty for steelmakers is still very high.

Again, I come back to the point I made earlier about how these are businesses and industries that are in places: we cannot move the asset around the world to dodge taxes. That makes it easy for them to be taxed, but, frankly, why should these businesses be paying more of a burden than companies such as Amazon, Google and Facebook, which are fleeter of foot because their assets are of a different nature and they are not place-bound? That is a challenge, and it is one we still have. This playing field needs to be level.

The fourth ask was to take action to make sure that steel could not be dumped in the UK from markets where it is being produced at below the rate of production. To be fair, the UK Government did support the European Union in putting stronger tariffs and stronger defence instruments in place to protect steel from coming in—particularly from China, but from elsewhere as well—and that has had an effect. However, as we come out of the European Union, it is important that the Trade Remedies Authority remains vigilant on dumping, and that the current 40-plus trade defence instruments in place in Europe move across to protect our steel industry. That is particularly the case given the actions we see being taken in the United States and the problem of steel displacement, with steel that would be going to the United States trying to come into the UK and Europe.

My fifth ask was about research and development, and the environmental improvements that are needed. The Government have done some things on that, but they could do more. It is important that our steel industry is efficient compared with steelmaking elsewhere in the world. Indeed, it must become ever more efficient so that it can be part of a future green industry, and contribute to our future in an effective way.

After the new Government were elected, in 2016 they created—to applause from Opposition Members and, I hope, from Government Members—a Department that included the phrase “industrial strategy” in its title, and recognised the need for such a strategy. I had hoped for fast progress on a sector deal for steel to address some of the underlying issues, but sadly, such progress was not as brisk as one would have wished. We are still talking about the need to progress a sector deal for steel, and we now have this crisis in our midst. Had we had such a deal to address some of the underlying issues, I am optimistic that we would have been less likely to have this crisis. The Secretary of State needs everybody’s support and commendation for his efforts to ensure a positive outcome to the current crisis, but I hope that he and his team will also move forward with work toward a proper sector deal, so that the fundamental issues can be addressed.

Let me conclude by considering the current crisis and challenges. British Steel is a sound and effective business, and it has made a lot of progress over the past three years since the change of ownership. It has become much slicker. Steel is a cyclical business—enough money must be made when at the top of the cycle to get through the bottom of the cycle, but the business will make money. Steelmaking also needs a lot of investment to keep it at the edge of best production. It is a hungry business, but it is a good business.

The uncomfortable truth is that this current crisis would not have happened if we had not decided to leave the European Union, and then made a mess by not getting on with it. That has created uncertainty, in particular with the threat of a no-deal exit, which everyone in steelmaking agrees would be bad news for our ability to keep our steel industry in good shape. I shall not linger on that, however, because the important point is to focus on where we go next.

Other questions probably need to be asked. For example, people have raised various questions about whether Greybull Capital has acted as a good steward of the business, and there are concerns about why the UK appears to find it more difficult than some of our European neighbours to provide support within the state aid rules. Those questions have been raised, and the Business, Energy and Industrial Strategy Committee might wish to consider them, as that would be the appropriate vehicle to look into and scrutinise those issues.

Now is not the time for looking backwards; now is the time to look forwards. British Steel has a team in place from the official receiver to run it, and we need to keep the business going until new owners are found. From listening to the Secretary of State yesterday, I understand that his interest is to take this business forward as a going concern into the future. The management team, trade unions and the Government are working urgently with the receiver to ensure that this business goes forward strongly. Leadership at a local level is provided by the management team, led by Gerald Reichmann. The unions have also provided support, and Paul McBean, Ian Smith, Martin Foster and other colleagues have made a real difference in taking forward a difficult situation, and building a determination to ensure that this business, this industry, has a positive future.

The last thing I want to say is that I would like to thank all the people who have contacted me and the steelworkers, locally and in the supply chain, to express their support and solidarity from across the country and across the community. That means a lot to people. It means a huge amount to people that everybody cares. And because everybody cares, I am confident about our future: I am confident about steelmaking in Scunthorpe, in Teesside, in Skinningrove, in the United Kingdom in the future. The emblem on Scunthorpe Borough Council’s mast was “The heavens reflect our labours”. Let us hope the heavens are on our side as well.