[Mr Charles Walker in the Chair] — Backbench Business — UK Steel Industry

Part of the debate – in Westminster Hall at 2:25 pm on 21st January 2016.

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It is a huge pleasure to serve under your chairmanship, Mr Walker, and to follow some of the excellent speeches we have had this afternoon, not least the very passionate speech we heard from Huw Irranca-Davies. If he succeeds in his ambition of gaining the seat in the Assembly for his constituency, he will be a great loss to this place, although I understand his aspirations to return home to the motherland once and for all.

We face two distinct choices as policy makers: first, do we just accept that the days of the domestic steel industry are over, that production in the UK cannot compete with cheaper production elsewhere, and that, in a global market, only the fittest will survive? Or secondly, do we stand firm in the belief that steel production is a vital strategic industry in Wales and in the UK and that all options must be explored and taken to save the industry, much in the same way that the Treasury responded to the banking crisis in 2008?

Plaid Cymru and I are firmly of the second view, because it is difficult to comprehend the impact on the Welsh economy if steel production was to cease in our communities. Tata and its supply chain supports nearly 20,000 jobs in south Wales and, according to the Welsh economy research unit at Cardiff University, its operations are worth £3.2 billion annually to the Welsh economy.

The industry is undoubtedly facing a perfect storm of a glut of cheap imports from China, Turkey and Russia, as well as falling prices and rising energy costs. Reuters recently reported that Chinese imports of reinforcement bar steel has increased from zero to 250,000 tonnes a year since 2012—a quarter of the market, directly undermining Celsa in Cardiff which specialises in that product. I think Stephen Kinnock mentioned the figure of 45%, which is 20% more than the figure that I mentioned. That just shows the impact of dumping by Chinese steel producers.

We need action, as Jessica Morden said, at all tiers of Government—at Welsh, UK and European levels—if we are serious about saving the industry. The Welsh Government are probably in the best place to move swiftly, and I welcome the establishment of the taskforce, although I hope it will be more about coming up with ideas as opposed to being seen to do something.

Employment costs are obviously one major cost for steel producers. Tata contributes £30 million in business rates across its three Welsh sites, with 40% being measured on plant and machinery. Business rates are devolved and a Welsh Government-funded business rate relief scheme based on plant and machinery is one obvious possibility, saving around £12 million. The choice is quite simply a 40% hit on business rates from Tata on a temporary basis or a 100% hit if its Welsh plants go.

Secondly, the Welsh Government should be considering a Welsh public stake in Tata’s Welsh steel operations. I notice that a similar policy is Labour’s UK answer to the difficulties of the industry, yet at a Welsh level, the First Minister has ruled that option out. I do not particularly want to make partisan political points today, but if Labour is not prepared to pursue that policy in Wales where it has the power to do so, why should anyone take their UK policy position seriously? Our position, which we have put forward this week in the Welsh media, has been supported by Gerry Holtham, a member of the Labour party and perhaps the closest to a rock-star economist that we have in Wales.

A public-private partnership to develop the planned power plant at Tata’s Port Talbot site would be a huge vote of confidence in the plant, making it more sustainable. The planning process would need to be streamlined—perhaps the hon. Member for Aberavon will want to talk about that when he winds up, given the discussion we had privately a few days ago.

I notice that the UK Government are willing to loan £400 million to Greybull Capital, a private equity firm, to help it purchase Tata’s Scunthorpe site. The UK Government should be looking at similar support for Tata in Port Talbot—or to the Welsh Government, or on a combined basis. That sort of intervention would constitute an environmental improvement and therefore, in my understanding, would be legal under state aid rules. If the UK Government do not pursue that idea, many in Wales will be left wondering why they are willing to support steel plants in England and not in Wales.

The Welsh Government must radically change their procurement policy to promote domestic steel—I disagree somewhat on that with the hon. Member for Newport East. They have by far the worst record of the Governments of the UK. Again, state aid rules should not be used as an excuse. Domestic producers are competing against heavily subsidised and state-owned Chinese steel. In other words, it is not a fair and open competitive market in the first place.

At UK Government level, we need a clear indication that Ministers are on the side of the industry. I note that only one Conservative Back-Bencher is present, none from the Liberal Democrats, some from the Scottish National party and Plaid Cymru, and many from the Labour party. If there were a groundswell of support for the industry from Government Back Benchers in a debate such as this, I can imagine what effect it would have on the Government’s mindset.