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Steel Industry — [Mrs Madeleine Moon in the Chair]

Part of the debate – in Westminster Hall at 3:31 pm on 11th May 2016.

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Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth 3:31 pm, 11th May 2016

It is a pleasure to serve under your chairmanship, Mrs Moon. I praise my hon. Friend Tom Blenkinsop for leading the debate with such knowledge, passion and authority, as he always does.

There have been some excellent contributions so far, and I will focus on a few specific points, rather than reiterating things I have previously said in our many debates on steel. As always, I pay tribute to the Celsa workforce and management in my constituency, and to the work of Community, GMB, the other trade unions and UK Steel. I praise Carwyn Jones, the First Minister, for his leadership in recent months. He has worked constructively with the UK Government on these issues. His leadership was head and shoulders above, and it is deeply concerning to hear in the last 10 minutes that apparently the Conservatives, Plaid Cymru and UKIP have voted together to block his reappointment as First Minister, which is quite extraordinary when we need a First Minister in Wales to get back on with addressing crises such as the steel crisis.

I reiterate my point about the EU. We are approaching the referendum, which is a crucial decision for the country, but it is also a crucial decision for the steel industry, the engineering industry, the automotive sector and all those other sectors about which my hon. Friends have spoken. It would be a body blow to the steel industry for us to come out of the EU, particularly given the single market and the lack of clarity on what sort of market we would have were we to come out. The Minister knows my views about market economy status and the lesser duty rule, and all I would ask is what the Government will do in the European Parliament and at the Foreign Affairs Council on 13 May on the issue of China. Will they continue to press the issue in Europe? Ultimately, it is what the UK Government do on this in Europe that matters. We can achieve more for the steel industry by working together across the continent.

Briefly, on net energy costs, which are particularly important to Celsa as it uses an electric arc furnace, UK Steel rightly points out that:

“electricity costs make up 11% of an integrated steel plant’s marginal costs and 20% for an electric arc furnace.”

Yet we are still seeing prices that are uncompetitive. Despite the energy intensive industries compensation package, we are still seeing prices that are in the region of 25% higher than in Germany. What consideration has been given to any further review of the carbon price floor and the climate tax impact? What about network costs and wholesale costs? Are there additional measures that could be taken there?

Finally, on procurement, concerning information about the Ajax vehicles was shared in the Daily Mirror, which has been leading the way in campaigning on steel. The majority of the steel for those vehicles will come from Sweden, and 489 hulls will be built in Spain before being brought over to Merthyr Tydfil. Surely that cannot be right. Can the Minister provide any assurances about the new Type 31 frigates? Indeed, can she update us on whether the Ministry of Defence is keeping accurate records? Obviously, if we do not know what the records are, we do not know where the steel is coming from and we cannot take the necessary action.