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British Steel - Statement

– in the House of Lords at 3:28 pm on 21st May 2019.

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Photo of Lord Henley Lord Henley Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 3:28 pm, 21st May 2019

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given earlier today in another place to an Urgent Question, which asked my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy whether he will make a Statement on the discussions he has held with British Steel regarding its future. The Statement is as follows:

“As the business department, my department is in regular conversation with a wide range of companies, including those in the steel industry. As the House will be aware, on 24 April the Government entered into a commercial arrangement with British Steel, valued at £120 million, relating to the company’s obligations under the EU Emissions Trading Scheme. The Secretary of State updated the House on this agreement in an Oral Statement on 1 May—the first available opportunity after market-sensitive elements of the resulting transaction were concluded. The commercial agreement reached with British Steel ensured that the company was able to meet its 2018 EU ETS obligations under a deed of forfeiture. It also ensured that the company did not incur EU ETS non-compliance fines, coupled with 2018 ETS liabilities, which would have equated to a financial pressure of over £600 million on the company, a sum which would have put the company under significant financial strain.

The speculation regarding the future of British Steel will no doubt be creating uncertainty for those employed by the company. As shown through the ETS agreement, the Government have been willing to act. We have been in ongoing discussions with the company and I am sure the House will understand that we cannot comment in detail at this stage. We will, however, update the House when there is more information available. I can, however, reassure the House that, subject to strict legal bounds, the Government will leave no stone unturned in their support of the steel industry. Yesterday I signed up to the UK steel charter. We want to acknowledge and support this initiative from industry and the charter is one element of that. We have been also been encouraging the UK steel sector to strengthen its engagement with all existing and potential domestic steel consumers, maximising opportunities to benefit from the £3.8 billion a year by 2030 high market-value opportunities that we have identified.

We recognise that global economic conditions continue to be challenging for the industry, which is why the Government are working with the sector, unions and the devolved Administrations to support a sustainable, productive and modern UK steel sector”.

My Lords, that concludes the Statement.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords) 3:30 pm, 21st May 2019

My Lords, I am grateful to the Minister for repeating the Answer given in the other place, although it was curious because it did not seem to address any of the points that could bear on the Question which the Secretary of State was asked.

British Steel is our second biggest steel maker and one of only two integrated steel-making sites in the UK. As the only UK steel plant which produces rails used in our tracks, it provides almost all those procured by Network Rail, as well as supplying ScotRail, TfL and Translink in Northern Ireland. It also exports a large volume of products across Europe. Given these facts, your Lordships might well have expected the department to have a very detailed knowledge of the workings of British Steel, which I assume is at the heart of our industrial strategy. For instance, as we heard only last week, and in the Statement, it put £120 million into the company as part of the ETS bailout. Is that money now at risk? Are we to believe that if the company goes into administration tomorrow—as it may do—the money will not actually come back to taxpayers, as was stated? Did the Minister agree with the company’s acquisition of a company based in France, for £42 million, only last week? These things do not suggest a company in trouble, yet we hear today that it needs between £30 million and £75 million to survive.

In order to get some answers, I will ask some specific questions. How much is the company actually asking for? Press reports today range between £30 million and £75 million. What is the figure? What is the current status of the negotiations? There are rumours circulating in the press that the discussions have stalled. Have they? If the company does go into administration tomorrow, what plans do the Government have to support the 4,000 or so people employed directly and the 20,000 or so in the supply chain?

Photo of Lord Henley Lord Henley Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, I do not think I can take the noble Lord very far on this. His first question was whether the ETS £120 million was at risk. I assure him that that is not the case. That was made clear by the various guarantees that my right honourable friend announced when he made the Statement on 1 May this year. I did offer to repeat that Statement in the House but that was declined. That money is secure. The noble Lord asked a number of other questions about how much British Steel was asking for and what our further plans were. As my honourable friend made clear in the Statement, it would be wrong at this stage to say much more, because detailed discussions with the company have been going on and will continue. As my honourable friend made clear, we will update the House as soon as possible and bring further information to another place and this House when it is appropriate.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

My Lords, I thank the Minister for repeating the Statement. Like the noble Lord, Lord Stevenson, I am disappointed by the absence of any actual information. Clearly, there is no point in pressing on those issues, since the Minister either does not know or will not say, but in the Statement the Government say that they are working to strengthen engagement with customers. The steel industry has stated that the uncertainty surrounding Brexit is causing real problems with its customers. The Statement also says that the Government will leave no stone unturned, so perhaps the Minister can stand up and say that he agrees with the Chancellor of the Exchequer that a no-deal Brexit would be catastrophic, both for the steel industry and for the rest of British manufacturing.

Photo of Lord Henley Lord Henley Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, the noble Lord says that I either do not know or will not say. The fact is that it is not appropriate to say anything at the moment. That is very important and, as my honourable friend made clear in another place, he or my right honourable friend the Secretary of State will come before another place at the appropriate moment and let the House know what is necessary to know at that stage. He went on to make various remarks about Brexit. I appreciate his concerns about the element of uncertainty that is affecting a number of people. All I can recommend is that all parties rally round and support the Prime Minister’s deal, get that deal through another place and let us get on with life.

Photo of The Bishop of Winchester The Bishop of Winchester Bishop

My Lords, among the 4,500 British Steel jobs at risk are many apprenticeship trainees and students enrolled on degree apprenticeships. What action will the Government take to ensure that these apprentices will not lose their training or have their training disrupted, but will be able to continue their training elsewhere in another steel-based firm, or have an equivalent apprenticeship in another place?

Photo of Lord Henley Lord Henley Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, the right reverend Prelate is quite right to draw attention to the uncertainty facing apprentices in the steelworks at Scunthorpe and the other places where British Steel is based, but also to draw attention to the concerns of all those who are employed by British Steel and the uncertainty they face. I can offer him an assurance that my right honourable friend will be talking to government colleagues in other departments to make sure that all appropriate help and support can be given by the Government, particularly, as the right reverend Prelate drew attention to, to those who are in the middle of apprenticeships with British Steel. It is right to remember at this stage that we have an economy that is providing virtually full employment. We have seen employment grow to levels that we have not seen for a very long time, we have seen unemployment continue to fall and we want to continue that process.

Photo of Lord Carlile of Berriew Lord Carlile of Berriew Crossbench

My Lords, I ask my question as the father-in-law of somebody employed in the steelworks at Scunthorpe. Does the Minister accept that there is a sense of panic and despair among the ordinary population of Scunthorpe, a town totally dominated by the steel industry? Will he confirm that discussions with the Government are going on hour by hour to try to secure an outcome? Will the Government bear in mind that what is being asked for at the moment is simply bridging finance to get through a crisis period, not something more permanent than that?

Photo of Lord Henley Lord Henley Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I am very grateful to the noble Lord for bringing to the attention of the House his concerns and those of his family. Obviously, we all have Scunthorpe in our minds at the moment because a very large number of jobs in one area are at risk. The Government are active and will continue to be active in doing all we can to offer whatever appropriate help it is possible to offer, but the noble Lord will appreciate that at this stage it would not be appropriate for me to go much further. I repeat that my right honourable friend has made it clear he will come before the House to make a further Statement.

Photo of Lord Davies of Stamford Lord Davies of Stamford Labour

The Minister has refused to answer a whole raft of questions this afternoon on the grounds that discussions are continuing with the company concerned. That may be a perfectly good excuse so far as matters related purely to gifts or subsidies to British Steel are concerned, but it is not a reason for the noble Lord to avoid answering questions on a fundamental government policy. I ask him again— and I hope for an answer this time—whether he believes that leaving the European Union, and leaving the customs area of the European Union, is conducive to the future prosperity of the steel industry in this country.

Photo of Lord Henley Lord Henley Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, the most important thing is to get my right honourable friend the Prime Minister’s deal through, and for the noble Lord and others to sign up to it, to get the certainty that we need. This relates not just to the steel industry but to all parts of the economy, and we will continue to work for that.

Photo of Baroness Altmann Baroness Altmann Conservative

My Lords, will my noble friend relay from these Benches the deep concern that if we proceed on a no-deal Brexit basis, this may be just the beginning of the demise of a significantly successful manufacturing industry in this country? The money that has been spent on planning for no deal could be considered in the context of the bridging loan that is required to save these precious jobs in Scunthorpe.

Photo of Lord Henley Lord Henley Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, I do not think I can take my noble friend further than I have already done when commenting on Brexit and the desirability of getting my right honourable friend’s deal through.