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Steel Industry — [Mrs Madeleine Moon in the Chair]

Part of the debate – in Westminster Hall at 3:02 pm on 11th May 2016.

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Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon 3:02 pm, 11th May 2016

I congratulate my hon. Friend Tom Blenkinsop on securing the debate. There are many familiar faces here, which is no surprise as Labour Members have raised the issue of steel in the House well over 220 times since last May. The Save our Steel campaign has been exerting real pressure for more than a year. The work of Community and other unions and, most importantly, the thousands of steelworkers around the country, has been remarkable. Still, when crunch time came, the Secretary of State was caught unawares in Australia, and the Prime Minister was in the Canary Islands. Only when the situation became a public relations disaster did the Government start to wake up.

The announcement that the Government would take an equity stake and provide other forms of support was, of course, welcome. We know how much that must have hurt the Secretary of State, and we salute him for crossing the Rubicon and finally acknowledging that the Government have a role in building a well-functioning industrial base. Who knows, having had that damascene conversion, he may even be ready to utter the words “industrial strategy” now. Stranger things have happened. Unfortunately, that realisation came too late for the people of Redcar, as my hon. Friend Anna Turley so movingly described a few weeks ago. It is a betrayal for which the Government shall not be forgiven—a betrayal that deserves no forgiveness.

The Government now have the opportunity to ensure that they do not make the same mistake twice. I have some simple questions. The first is on energy costs. The compensation package is of course welcome, but much more can be done. At Port Talbot, large amounts of gas, particularly from the coke ovens, are recycled and used as energy. It is, by definition, a form of renewable energy. Why, therefore, can we not receive renewables obligation certificates for it?

In addition to the plans for a new generator, Tata has submitted an investment package of £130 million, which would upgrade equipment and deliver massive energy efficiencies and cost savings. I understand that the Department for Business, Innovation and Skills has carried out the technical investigation, but has yet to give the project the green light. Can the Minister explain why there has been such a delay in giving the green light?

It is possible that state aids are an issue but I have been in contact with Commissioner Vestager and, in a letter to me, she quite clearly stated that she remains

“ready to work with the UK authorities on how best to make use of the possibilities offered by EU State aid rules to support energy intensive industries.”

The offer of help is there. Why do we not use it?

Secondly, for Port Talbot, Trostre and Llanwern, business rates are devolved, so a co-operative approach between Westminster and Cardiff is needed. Tata strip, speciality and bar pay £28 million a year in business rates. Meanwhile, the IJmuiden plant in the Netherlands pays £2.5 million a year in business rates. How can we possibly justify UK business rates that are more than 11 times those in the Netherlands?

I understand the Government’s concerns and fears about setting a precedent on business rates and about the broader implications that would have. However, that is simply a matter of sitting down and sorting it out. The Government could set a tapered ceiling by saying that the only businesses where plant and machinery could be exempted are those with, for example, capital expenditure of more than £30 million or those with more than 3,000 employees. They could specify that only companies fitting those criteria would be exempt.

Thirdly, on procurement, the Government have trumpeted their changes to procurement guidelines, and they should be congratulated on those changes. However, as we learned on Monday with the news that the latest set of British Ajax battle tanks would largely be built in Spain with Swedish steel, those changes are utterly toothless. That news seriously questions the Government’s commitment not only to British steel, but to British industry more broadly.

The Secretary of State has spoken of his desire for a new industrial revolution. Well, steel is central to that. Earlier this week, Nick Reilly, the former head of GM Europe, said:

“If we lose the steel industry in this country...There is a high risk that maybe one of the manufacturers—maybe Vauxhall, maybe Toyota, maybe Nissan—will move out of the country if they cannot source steel locally. The real risk then is that that could snowball and the majority of the manufacturers go.”

That is a key consumer of steel making it clear that the end of British steel will be the end of much more. As Mr Reilly concluded:

“What we are then talking about is not the 30,000 to 40,000 jobs at risk in the steel industry, but hundreds of thousands of jobs across British industry.”

The situation could not be more urgent. I implore the Minister to answer the questions as specifically as possible, and that that answer is not more committees, working groups and warm words with frozen actions. I implore that we actually start to see some real action on the issues of energy, procurement and the dumping of Chinese steel, so that we can finally give some confidence to the future of the British steel industry.