EU Referendum: UK Steel Industry — [Mrs Cheryl Gillan in the Chair]

– in Westminster Hall at 9:30 am on 13th July 2016.

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Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth 9:30 am, 13th July 2016

I beg to move,

That this House
has considered the implications for the UK steel industry of the outcome of the EU referendum.

It is a pleasure to serve under your chairmanship, Mrs Gillan. A number of Welsh Members are here today and, especially as you were previously the Secretary of State for Wales, I know you will take a keen interest in this debate.

Many of us have debated this subject in Westminster Hall and in the main Chamber many times, and we have tabled many questions. I lose track of the number of times that my colleagues and I have faced the Minister, but the facts remain the same. The steel industry faces immense challenges. There is a bright future for the industry, its workforce, its products and its role in our economy, but only if the Government take decisive action to respond to the challenges that the industry faces, which is even more important in the aftermath of the EU referendum. I argued a few weeks before the referendum that a vote to leave the EU would be a body blow to the industry, and I am sorry to say that the information I have had from producers, from UK Steel, from the Community union and from many others involved in the industry is that all the referendum has resulted in is yet more uncertainty and challenges for an industry that already faces significant difficulties.

The crucial question that I want the Minister to answer today, and indeed that many of my colleagues will be addressing, is this: what will the Government do differently—not only from their approach before the referendum, but in light of that decision—to offset the additional uncertainties, risks and challenges now facing the industry?

Photo of John Healey John Healey Labour, Wentworth and Dearne

I congratulate my hon. Friend on securing this debate. He poses a question about the additional uncertainty and the Government action that is required. Is he aware that, as part of the reaction to the uncertainty, south Yorkshire-based Speciality Steels will be sold, fast-tracked and separately, despite the pause on the sale of Tata’s main strip business? He will have seen Monday’s written statement from the Secretary of State for Business, Innovation and Skills, which made no mention of whether the Government are willing to help on financing, energy costs or research and development support. One of the things we require from the Minister today is surely a commitment that the Government will stand by the pledges they have made to support steelworkers, steel communities and the future of steelmaking, including in south Yorkshire at Rotherham and Stocksbridge.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Conservative, Chesham and Amersham

Order. Mr Healey, I remind you that interventions are supposed to be short.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

My right hon. Friend makes a crucial point. The industry, its workers and all of us want to hear categorical assurances from the Minister today about action. We do not want to hear more platitudes and warm words. Particularly with the uncertainty, there is a real danger that the answer to our many questions will be, “We don’t know. Wait for the new Prime Minister and the new Government.” Well, the steel industry cannot afford to wait. It could not afford to wait before, and we now need real assurances. This is a matter of national significance.

Photo of Nick Thomas-Symonds Nick Thomas-Symonds Labour, Torfaen

It is a pleasure to serve under your chairmanship, Mrs Gillan. I warmly congratulate my hon. Friend Stephen Doughty on securing this debate. He is rightly talking about securing concrete action from the Government. Does he agree that one idea would be for the Government to redouble their efforts to ensure that British steel is used in procurement projects, both in the supply chain and in headline contracts?

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

I absolutely agree. The fundamentals of this debate have not changed. It is about the action being taken on energy costs, on the UK steel industry’s terms of trade, on unfair dumping, on the additional risks now being created by the uncertainty about our future trading relationships and, indeed, on the crucial question of procurement.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

I congratulate the hon. Gentleman on his work on this issue. Does he agree that an indication of the uncertainty is the announcement in Mumbai this week that Tata and ThyssenKrupp are now talking about a merger? That can only mean consolidation of the two plants in Holland and Germany. The Government need to step in and stop that merger.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

I share the hon. Gentleman’s concern about the future of all the steel industry in south Wales. I have no doubt that we will shortly be hearing from my hon. Friend Stephen Kinnock on that subject. Additional uncertainty is being created by the news that we have heard in the past few days, and I am interested to hear the Minister’s perspective.

It is now more vital than ever that the Government continue to work with us, with the steel industry, with the steel trade unions—particularly Community, GMB and Unite—and with other partners to instil confidence that we will all work together to create the right business environment, which particularly applies to the devolved Administrations. The Welsh Government, following their re-election and the reappointment of Carwyn Jones as First Minister, have reiterated their commitment to doing everything they can to support the Welsh steel industry. We want that co-operative relationship, which has been in the interest of the industry, to continue.

Crucially, the steel industry is a question for the incoming Prime Minister. Will she take the kind of laissez-faire approach that we have seen from the current Prime Minister? There is no industrial strategy, and his idea was that we should not be intervening—the series of interventions in the steel industry came quite late, however welcome many of the steps taken by the Minister herself have been. Will the new Prime Minister form a Cabinet that is going to take decisive action in the national interest? That is the fundamental expectation of people in the steel industry. We need a proper industrial strategy, and we need tough action, particularly in relation to the Chinese.

I have a number of questions for the Minister on the uncertainty created by the referendum, particularly on the different trade options that might be on the table and their many implications for the steel industry. Like many others, I would argue that retaining access to the single market is crucial. There is a Celsa plant in my constituency. Celsa is a European company based in Catalonia that has plants all over Europe. Almost 100% of its trade is within the EU, so if we lost the ability to trade in that single market on the kind of terms we currently have, the additional cost of punitive tariffs, or other tariffs, could be devastating.

We also have questions about the future of the state aid rules under any regime. Let us not forget that it was often suggested during the referendum campaign that, somehow, everything was the EU’s fault, but actually the EU has taken many steps to support the steel industry across Europe. The reality is that there are rules that would apply under European economic area and World Trade Organisation trading arrangements. What does the Minister have to say about the different options on the table? What would be the best one for our steel industry?

Other uncertainties might be created in any transitional period. Let us not forget that this is not just about exports. Raw materials are imported, whether it is scrap, as with Celsa in my constituency, or other raw materials. There could be an impact both on the steel industry’s inputs and its exports. The other implication is for exchange rates. Some would argue that the fall in the pound provides a benefit to the steel industry, but of course that benefit is potentially offset by the changes in input costs. I can see no positive net benefit from the current currency situation. Indeed, any short-term marginal benefit will definitely be offset by the much wider risks. What is the Minister’s perspective on that?

UK Steel, which has done an excellent job of representing the interests of the industry as a whole and is working together with the different producers, has made it clear that we need to remove the unilateral energy costs; increase the procurement of UK steel; address unfair trade provisions; provide funding mechanisms for energy efficiency projects; and set out a clear direction for the investment and support required by the industry in the long term.

Photo of Tom Blenkinsop Tom Blenkinsop Labour, Middlesbrough South and East Cleveland

One of the unilateral cost increases for the industry was the carbon price floor, which was a unilateral tax introduced by the British Government without any foresight. They then had to request permission from the EU to try to provide a compensation scheme. Post-Brexit, will the Government reconsider that measure in the immediate future to give more space to the steel industry on costs?

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

I absolutely agree. Given that the facts of our relationship have changed so substantially, what people want to know today is what completely new and different things the Government are willing to do with the levers they control, to respond to the wider uncertainty being created.

That is even more important because in a post-Brexit Britain the self-sufficiency and security of the steel supply is of even greater strategic and economic importance for our construction industry, our defence industry and all the other parts of our economy in which the steel industry and other foundation industries play such a crucial role. In any circumstances, the steel industry is of national importance, but with Britain going alone that will be even more the case, which is why we need that action.

I have already mentioned procurement. I am still deeply disappointed that we do not seem to have seen anything concrete. We have heard a lot of good words about the guidance that has been issued to Departments, but I have yet to see any concrete projects to provide certainty to the industry. When I asked the Minister for Defence Procurement shortly after we returned from the referendum recess, there were a lot of warm words but no clarity on which defence, construction or infra- structure projects are to enjoy increased supply of UK steel. Indeed, this is not just a responsibility of the UK Government. As we have discussed in this place before, it is deeply disappointing that the Aberdeen bypass, for example, is being produced using Turkish steel. This is the responsibility of all the devolved Administrations, as well as the UK Government.

As a Welsh MP I would do this, but I mentioned the support that the Welsh Government have been providing. Quite rightly, everybody is concerned about the Tata situation in particular, which I know my hon. Friend the Member for Aberavon will speak on, but the Welsh Government have made it absolutely clear that they are committed to supporting the sales process and the communities involved, and that they will continue to put every resource they can to that purpose. As far as I understand, their offer of support definitely remains on the table, but obviously there needs to be clarity on the bidders and the plans coming forward. I would be very interested to hear what discussions the Minister and her officials have had with the Welsh Government over the last few days.

There is a crucial broader point to make. We have seen discussions going on with the steel council and the various working groups, but I am concerned and would be interested to hear the Minister clarify whether those discussions and that dialogue have continued, whether the steel council and the working groups have met and whether her officials have continued working on it, or whether everybody’s attention has simply been diverted by the implications of the referendum and the switch in Prime Minister and Government. We cannot afford to be diverted. Diversion of attention for a few weeks or a month could be absolutely devastating. I would like some assurances from the Minister about what is happening.

I want to allow as much time as possible for other Members to speak, because I know many want to. Let me end by saying that we have all made the arguments before and we know what they are: they are on energy, trade terms, procurement and the wider business conditions. We have seen progress on some of those areas from the Minister—I acknowledge that—but not enough. This decision is so fundamental in changing the terms for this business and its future that we need to know what is happening that is new, that is different and that will give that certainty, reassurance and hope to the industry for the months and years ahead. As I said, this industry has a future. It can play a vital strategic role in post-Brexit Britain, but it will only do that if we see decisive Government intervention to ensure that it survives and is able to compete on a global stage. I thank you, Mrs Gillan, and every Member who has attended today to show their support.

Several hon. Members:


Photo of Dame Cheryl Gillan Dame Cheryl Gillan Conservative, Chesham and Amersham

Order. As you can see, many Members want to speak. I am entirely in your hands. If I impose an informal limit of five minutes on each of you, that will leave enough time for those on the Front Benches to sum up. But if I find that that is slipping, I am afraid I will have to impose a limit on the number of speakers.

Photo of Marion Fellows Marion Fellows SNP Whip 9:43 am, 13th July 2016

Thank you, Mrs Gillan. It is a pleasure to serve under your chairmanship. I thank Stephen Doughty and congratulate him on securing this debate. I am sorry if I repeat anything but, as he said, we have all been repeating and repeating ourselves about the state of the British steel industry, certainly since I came to Parliament.

We have had good news in Scotland: we had a Scottish steel taskforce and the former Tata plants are now in the hands of Liberty Steel, which at the moment is recruiting for new workers. That is a fairly good news story from Scotland, but it is only thanks to the fact that the Scottish Government have put steel at the heart of their industrial strategy and have an industrial plan.

The situation we now face is probably one of the most difficult in our post-war history, and what we do now will have serious consequences for our future. The pound is plummeting and investment is going elsewhere. The experiment with an EU referendum to satisfy Tory Back Benchers has completely backfired and it is now apparent that there is no plan—not only no industrial strategy, but no plan for going forward with Europe. Where will the UK be in terms of its European status? Will we completely Brexit? Will we be part of the European Free Trade Association? What will happen? We do not know, but I know that there is a serious plan in Scotland and the First Minister is working tirelessly with her Cabinet and with Scottish officials to speak to European partners because, as we all know, Scotland voted to stay in and we want to be in Europe—we are European to our very core.

I want to completely refute what has been said about the Aberdeen western peripheral route. I can inform the Chamber that the subcontract for steel reinforcement was recently awarded to BRC, which is situated just outside my constituency and which is the UK’s largest supplier of steel reinforcement. The steel for that contract is produced in Newport; some of it requires cutting, and that process is undertaken in Newhouse, which has a postal address in Motherwell but unfortunately is not in my constituency—it is in the constituency of Airdrie and Shotts. Indeed, all steel for the Aberdeen western peripheral route project has so far been procured and processed from suppliers based in the UK. More generally, more than £350 million in subcontracts has been awarded for the Aberdeen western peripheral route project, of which £115 million has been sourced in Scotland itself.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

I find that information very helpful, but will the hon. Lady say where the steel was actually manufactured—not where it was processed but where it was actually created?

Photo of Marion Fellows Marion Fellows SNP Whip

Let me say that we do not manufacture steel in Scotland, but that goes back to when the Tories closed Ravenscraig in 1992. We roll steel in Scotland; we deal with plate. [Interruption.] The hon. Gentleman is chuntering from a sedentary position; I hope I can continue.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Conservative, Chesham and Amersham

Order. He is indeed chuntering. If he wants to intervene, he must make it a lot clearer than that.

Photo of Marion Fellows Marion Fellows SNP Whip

From the start of the steel crisis, the Scottish Government have exhibited tremendous leadership and collective decision making. That demonstrates what is possible when a Government have the will to intervene and have the interests of the workers at heart, but most of all when there is clear leadership and a coherent plan. Following the result of the EU referendum, it is entirely apparent that there was no plan from the UK Government for how to deal with a leave vote. In fact, we are still waiting for the change of Prime Minister today, and we still do not know who will be in charge of the business of steel next week, or even tomorrow. There are also real difficulties in the Opposition, who are still in-fighting rather than moving forward, but I pay complete and sincere tribute to those Opposition Members who have been fighting day and night for their constituents and their steel industry. I cannot say strongly enough what I have learned from them about how best to achieve things and move forward the steel industry in Scotland, half of which is based in my constituency.

No doubt Stephen Kinnock will speak on Tata Steel’s problems later. There are real issues there, and all this uncertainty is making the whole situation in Port Talbot much more difficult than it needs to be. I implore the Minister to try to move things forward and to actually make a difference to the steel industry. The Government have had to be pushed, prodded and shoved to get anything done, and there are still serious difficulties with energy costs, rates and all the other things that were causing difficulties a year ago.

I commend the Government, and the Scottish Government, for moving forward on procurement, which is essential and a real priority, but procurement is about the future. For steel in the UK overall, we need action now.

Photo of Nia Griffith Nia Griffith Labour, Llanelli 9:50 am, 13th July 2016

I am pleased to see the Minister in her place. I hope she is going to advocate and fight for us under the new Prime Minister.

Business needs certainty. Investment depends on certainty about access to the markets and about the stability of the currency. We need clarity on the timetable and process for Brexit. We need to know what sort of deal the Government intend to seek and we need very close dialogue between them and the steel industry so that steel companies know exactly what they are facing.

It is a particularly difficult time for the steel industry, so it is vital that steel companies are given every possible guarantee of support and confidence so that they keep the industry here in the UK. We need the Government to make safeguarding the steel industry a top priority. With all the uncertainty of the future—uncertainty about access to the markets and the price that we could have to pay for imported steel—it is vital that we keep our own steel industry here, both for security and to support our manufacturing industry.

Those advocating Brexit spoke of the opportunities it would offer to set our own conditions, but with that comes responsibility. The Government can no longer blame the EU. We need a Government who create the most favourable conditions possible for our steel manufacturers. They are now in direct competition with steel manufacturers around the world, so it must be made better for them to invest here in the UK than anywhere else.

We need urgent action on energy prices. As has been mentioned, the carbon floor tax could be dealt with straightaway. It was unilaterally imposed, but we then sought state aid to offset its effects. We can do something about that instantly, but more than that I support the request by my hon. Friend Stephen Doughty for innovation. We need much more direct investment in innovative projects wherein the energy plant is linked directly to the steel plant, thereby keeping energy costs right down. We need Government help and intervention to make that happen.

We need speedy and targeted protection against Chinese imports. If we see that something is in direct competition with one of our products, let us act immediately so that we can protect our production lines. We also need much clearer incentives for research and development and for improvements to plant. We need a system of capital allowances and business rates that does not penalise plants that are trying to improve, increase their energy efficiency and be future leaders in their sector.

We need a really clear industrial strategy for the wider opportunities for the steel industry. We need to know exactly why we are producing the steel, what it is for and how it links into our manufacturing chain. In order to protect that chain, we need to keep steel production in the UK. We have heard warm words about public procurement, but we have yet to see real delivery. We need our supply chains to go directly into the projects that have been mentioned, many of which have not yet started.

I have particular fears for Tata Steel, which has a plant in my constituency, one in Port Talbot, and others throughout the UK. We are very worried indeed about what might happen in the talks with ThyssenKrupp. It is a very large conglomerate, and we have previously seen it decide that it just does not want to do certain things anymore and then pull out of certain sectors and close down all the factories. We have seen that happen with some of its car plants. I can easily imagine a scenario in which ThyssenKrupp simply hoovers us up, then closes us down and moves all its steel manufacturing to continental Europe. The Welsh Government will do their best to provide support, but I implore the Minister to make sure that it is an absolutely no-doubt decision for ThyssenKrupp to keep its UK sites open, or that we have other options to explore for keeping our steel manufacturing here.

It is vital that every potential obstacle is removed and that the best conditions are provided to encourage investment in our steel industry—investment for the future that will last. We need to ensure that we have a steel industry and a manufacturing industry, that we use our steel for procurement, and that we have the security of producing our own steel.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Equality) 9:54 am, 13th July 2016

It is a pleasure to serve under your chairmanship, Mrs Gillan. I rise to support Stephen Doughty and commend him for the excellent way he introduced this debate on British steel. I wanted to add a contribution from a Member of Parliament from Northern Ireland. We do not have a steel industry in Northern Ireland, but we are very supportive of British steel, what it does, the jobs it creates and the fact that it is British. We are, of course, very much a British part of the United Kingdom of Great Britain and Northern Ireland and wish to continue to be so.

I have a couple of quick comments to make in the short time I have. A collection of economic factors causing negativity in the UK steel market have put increasing pressure on steelworks—I am well aware of that, as are other Members. Demand for steel in the UK has never recovered from the financial crisis of some years ago, remaining 30% lower than pre-2008 levels. Energy costs are a massive issue for us in Northern Ireland, as they are for the British steel industry. Business rates and environmental taxes have squeezed the industry that wee bit more.

We have also had problems with the Chinese steelmakers. It is estimated that they lost millions—indeed, probably billions—of dollars in 2015 as domestic demand slowed but GDP targets remained stubborn. As a result, steel exports from China to Europe have more than doubled since 2013, helping to send the price of the metal down to roughly half of 2011 levels. The EU could have introduced tariffs to address the problem, yet failed to do so. People sometimes say that tariffs are self-defeating, but I do not subscribe to that view. They can encourage our industry, and I believe we should introduce them. The US, for example, has a heavy tariff on Chinese steel imports of a whopping 236%. If the USA can do it, I do not see why we cannot do it here. Perhaps the Minister can explain.

Brexit is now over and the decision has been made. For the record, I was very much in favour of the campaign to leave the EU and I am very pleased that the people of the United Kingdom of Great Britain and Northern Ireland decided to do that. Let us move forward together collectively and positively to see what we can do for British industry. The problems with the EU were real. It would have taken all 28 member states to agree to a tariff, so it was never going to be a possibility.

Let us look at some examples of where problems still exist in Europe. Take Belgium, for example, home to—I say this facetiously—the circus HQ. The EU has called for Belgium to recover €211 million of state aid that was used to prop up the steelmaker Duferco, while an investigation has been launched into Italy’s support for Ilva. The Belgian support was considered illegal because

“you could not find a market investor that would give them the kinds of loans they got from the authorities”.

Belgium and Italy tried to do it, but the EU pulled them back. Now that we are out of Europe, we can be free of the shackles we once wore and move forward. There is an opportunity for the new UK Administration, under a new leader, to make the difference and make changes.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

Surely if we stay in the single market in some way, shape or form, we will still be subject to its rules and regulations.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Equality)

There is much to be discussed after Brexit, and that is one aspect. I am very keen for the debates to start. Let us move forward and be positive—the glass is half full. We are looking forward to supporting our industry and making sure that we can deliver for it.

Let us be positive and upbeat. We now have the power, at least in principle, for the Government to take the necessary steps to ensure that the 11,000 jobs at Port Talbot in particular are kept safe, as well as those throughout the whole United Kingdom, in Scotland and elsewhere. We have to remain positive and consider the new possibility of offering tailor-made Government support. Steel prices are rising, which means that Tata Steel will be in much less of a hurry to sell up and get out of the UK than it once was.

Let us give credit where credit is due: the Government have worked hard and the Minister has been industrious. She has responded to several debates and made very clear, positive comments. I know she is committed to British steel, but we need to see more practical changes. Although the pressure on Tata to sell has been reduced by the array of slightly more positive factors, it is imperative that the Government have in place the contingency plans needed for all possible outcomes.

It is encouraging to see the Business Secretary take such an active and positive role, but we must remember the livelihoods and families at stake. The deliberations on the issue, and the eventual strategies that are delivered, must deliver a British steel industry that succeeds and is here into the infinite future. We must retain the jobs and our position as a manufacturer.

Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee, Chair, Education, Skills and the Economy Sub-Committee 9:59 am, 13th July 2016

It is a pleasure to serve under your chairmanship, Mrs Gillan.

I congratulate my hon. Friend Stephen Doughty on securing this debate. He has been a strong and doughty champion of the steel industry. [Interruption.] Mrs Gillan, I’ll get my coat.

In my contribution, I will focus on the events and the circumstances regarding the pipe mills at Hartlepool. Last week, Tata announced its intention to sell off its Speciality Steels business, including the Hartlepool pipe mills but excluding the 20-inch tube mill. As we have already heard, this is happening in the context of Tata Steel looking to explore the feasibility of strategic collaboration with other European steel operators, perhaps with a joint venture.

In many respects, that is a positive move. The Hartlepool pipe mills are a profitable business unit within Tata. The Minister has seen the operations there for herself. She has seen that the mills have a skilled and committed local workforce that produce high-quality and value-added products for use in a variety of sectors, such as oil and gas, construction and infrastructure. It is little wonder, therefore, that several bidders have already shown an interest in buying Tata’s Speciality Steels business.

However, there is still uncertainty. A sales process of this nature is never straightforward, especially one where a part of a larger group is being divested, so what guarantees can the Minister give to ensure that we can continue operations at the Hartlepool site and that this sales process, which may be lengthy and complex, is concluded successfully?

The Minister has answered questions about this issue before; she knows its importance. However, it is vital that guarantees are given to boost confidence, not only among the workforce about their jobs but in terms of the order book, and in terms of customers and suppliers, to ensure that they continue to trade with the Hartlepool pipe mills; it is important to consider customers and suppliers, too. What can the Government do to increase confidence during this sales process?

In addition, what work has been done, or what assessment has been carried out, in respect of the Hartlepool steelworkers’ pensions? Will they be coming out of the Tata Steel pension scheme? It will be far more difficult to make a much smaller scheme, perhaps one based on Speciality Steels, a viable one. What work is the Minister doing with regard to the pension scheme? In this period of uncertainty, it would be very helpful if she could provide some sort of guarantees or confidence to allow this sales process to be carried out in a successful manner.

In the time I have left, I shall just touch on several broader issues; they have already been referred to in the debate but are incredibly important. There is still an unlevel playing field between ourselves and European operations. Energy costs remain a concern; there is a disparity in energy costs of something like £17 per MWh, even after the energy-intensive industries compensation scheme is taken into account. That means that UK steel producers and manufacturers face an additional cost to make steel, relative to their European rivals, of around £1 million a week. What will be done to level that playing field?

The second point that I will emphasise is the importance of business confidence and capital investment in the wake of Brexit. The vote on 23 June has produced enormous uncertainty, and as a result businesses—quite reasonably and logically—might want to pause their investment plans. They will think, “Let’s just wait until the next quarter, or the quarter after that, before we invest in new plant and machinery.” If we are in a global race for economic progress, we cannot afford to pause for a quarter or two; we will be left behind and consequently our competitiveness will be eroded.

What are the Government doing to ensure that the steel industry can be provided with as much clarity as possible? Can the annual investment allowance scheme, which has been excellent, be extended and widened? Will business rates be reformed? On the Business, Innovation and Skills Committee, we saw how illogical it is that manufacturers, such as steel manufacturers, are being punished by the Government. Manufacturers want to improve their competitiveness by improving their plant and machinery, but if they do so they will be slapped with an additional tax bill. That cannot be good economic sense. I know that the Department for Business, Innovation and Skills did not win the argument with the Treasury about this, but I ask the Minister and indeed the new Government to push further on it to provide the clarity that is needed.

My hon. Friend the Member for Cardiff South and Penarth has already talked about the importance of progress with procurement. Achieving such progress remains frustratingly slow. Government policy in this area was changed in October 2015 and again in April, which was welcome, but we need to see the new policy being translated into ongoing orders and activities for steel producers and manufacturers. I ask the Government to step up a gear, to ensure that the policy is not only changed but is active, energetic and vigorous in ensuring that local steel content can be used in all public projects.

This sounds flippant, although it is not meant to, but in many respects we no longer need to worry about state aid, so we can use this period as an opportunity to champion British steel and to ensure that we have a steel industry that is necessary and valuable for the economy, and that has a real future in the years to come.

Several hon. Members:


Photo of Dame Cheryl Gillan Dame Cheryl Gillan Conservative, Chesham and Amersham

Order. I am very pleased with the timekeeping. I think I have four speakers left and I hope to start the wind-ups at half past 10, so I hope those speakers will divide their remaining time up accordingly.

Photo of Nicholas Dakin Nicholas Dakin Labour, Scunthorpe 10:05 am, 13th July 2016

It is a pleasure to serve under your chairmanship, Mrs Gillan, and I congratulate my hon. Friend Stephen Doughty on securing this timely and important debate.

I thank the Minister for Small Business, Industry and Enterprise for championing, in her own way, the steel industry. We have not always agreed and we have both been combative, but she has been the best champion and the best voice for steel within the Government, and I hope that will continue in some way in the new Government. The challenge that we face after the outcome of the European referendum is keeping steel up there as an issue to be addressed, so that it is not pushed out by other issues. We need to continue building the momentum to deliver a steel strategy for the UK—we have already started to build that momentum.

I was pleased that the new Prime Minister—she is not yet the Prime Minister, but she is incoming—has made it very clear that she believes in an industrial strategy. I very much welcome that commitment from her, but, as my hon. Friend Mr Wright has just pointed out, there needs to be an active and even interventionist industrial strategy that delivers for steel and for manufacturing. If she provides that type of strategy, I will be the first to lead the hurrahs for her.

In Scunthorpe, we recognise the bright future for the steel industry that my hon. Friend the Member for Cardiff South and Penarth talked about, because there is already a bright future in Scunthorpe, thanks to the work of Paul McBean, Ian Smith and Martin Foster, who are on the trade union side and who work with the leadership of British Steel locally. In fact, we were able to launch the new British Steel on 1 June and things are going very well. However, for things to continue to go very well, the steel industry needs the active support of the Government. Progress in a positive way will not just happen, and it will not happen at all unless the Government step up to the plate, which I hope is their intention.

The issues are well known—my hon. Friends have already referred to them. We need to do something about business rates. It is important that they are brought into line with those of European competitors. Currently, British Steel pays around £14 million per annum in business rates and the business rate system does not incentivise investment. In the modern age, that is madness and needs to be dealt with. Business rates for our capital-intensive industries need to be brought into line with those paid by their competitors, by removing plant and machinery from business rate calculations. The new Government need to do that urgently.

There are also electricity charges to consider. The UK steel industry pays double what the German steel industry pays for electricity, which increases its costs at every stage. Again, that needs to be addressed. Something needs to be done to tackle the high energy costs that still exist, either by innovation; by bringing production of energy closer to plants, which can be achieved by incentivising it; or by doing something else.

Much has already been said about procurement, which is vital for the steel industry. The procurement opportunity of leaving the EU needs to be taken advantage of and we also need to ensure that measurement systems are in place to ensure procurement of UK steel for public sector projects. I refer again to the opportunity for the development of offshore wind in the North sea, which is being led by DONG Energy. DONG Energy is being heavily incentivised by subsidies from the British taxpayer, so it would be outrageous if the steel required for that investment came from anywhere other than the UK.

We need to ensure that a pipeline of procurement is clearly in place. That issue must be addressed properly by the Government, so that we know what needs to be developed in terms of steel capacity, and so that we can ensure that the capacity is there in the UK to deliver for the future. That is what we need—a planning process to instil confidence, so that investment can deliver into the future.

I should mention the British Steel pension scheme, because it is incredibly important to my community. It needs to be addressed, sorted and given certainty so that the steel industry as a whole and pensioners in my community have confidence in the future. I would be very concerned if the impact of all the noise and the insistence on dealing properly with the challenge of the outcome of the EU referendum is to push aside the need for a sensible, solid approach to the British Steel pension scheme that puts it on a sustainable footing into the future.

I close by reminding the Minister, who has been a good Minister, that her final job in her role should be to drive things forward from whatever position she has and ensure that whoever succeeds her has the same passion and dynamism that she has shown from time to time and delivers for our steel industry.

Photo of Sarah Champion Sarah Champion Labour, Rotherham 10:10 am, 13th July 2016

It is a pleasure to serve under your chairmanship, Mrs Gillan. I also give heartfelt congratulations to my hon. Friend Stephen Doughty, who not only secured this debate, but has championed at every level the steel industry in his constituency and across the UK. I am very grateful for that.

The result of the EU referendum has led to unparalleled economic and political uncertainty. For the British steel industry, it has come at the worst possible time. We must not allow it to impede the work that has been done and still needs to be done to secure a sustainable future for steel. What steel needs has been explained to the Government time and time again: address the high energy costs; tackle business rates that continue to leave the industry hamstrung; commit to favouring British-produced steel in procurement; and act on the cheap dumped steel that has contributed to the severity of the crisis.

The Brexit vote may have reduced our ability to act, but we must commit to working with our European partners to ensure a co-ordinated and credible response. Tata Steel’s recent change of course in strategy for its British business in light of the referendum vote presents dangers and opportunities, particularly for Speciality Steels, which is based in Rotherham and Stocksbridge. It is a tremendous asset to the British economy.

There is an unfortunate tendency to view the British steel industry as a relic—an industrial throwback to a different economic age. That could not be further from the truth for the whole industry, but especially for Speciality Steels. Speciality Steels is a world-leading business at the cutting edge of technology and expertise. It produces steel for the most complex roles, from aerospace to motorsports. Members may have watched the British grand prix, where the cars had steel from Rotherham and Stocksbridge in them. The division’s list of customers speaks for itself, running from Rolls-Royce to Lockheed Martin and from Boeing to BAE. Rotherham also houses Tata’s research centre, which continues to develop world-leading advances in steel production and technology to meet the most difficult demands.

However, that vibrant and dynamic business cannot continue to lead the world with one hand tied behind its back. We must act on the underlying problems the industry faces as a whole. Tata’s announcement that the division is to be sold separately is cautiously welcomed. Speciality Steels is a great asset, and I am sure a number of bidders will be forthcoming, but we must make certain that the right buyer and not just any buyer is found to allow the business to continue to thrive. This can be no fire sale. I understand from press reports that there has already been some interest from potential buyers for the business. Given the new circumstances, I would appreciate it if the Minister updated us on the implications that the latest move by Tata will have on Speciality Steels in south Yorkshire.

Tata’s Speciality Steels unit could be a fantastic investment opportunity for someone. As well as producing some of the best steel in the world and being at the cutting edge of innovative and highly profitable steel products such as powdered steel, it has a highly regarded workforce in Stocksbridge and Rotherham. It will have a tremendous future with the right investment. Training and support for staff needs to be provided where necessary. Support to enable the business to weather any short-term turbulence that may result from the sale is also needed. What commitments can the Minister give to support the sale process of Speciality Steels and ensure that it is managed effectively and in a timely manner? The written ministerial statement from the Secretary of State on Monday hinted at providing financial support to help the process. Will the Minister provide details of any possible support? Also, will she place on record today that the Government stand by their commitments made on 21 April 2016, which detailed hundreds of millions of pounds of support in a package for potential buyers of Tata’s UK business?

Madam Gillan, another area of great concern has been the sizeable pension liabilities, especially the old British Steel liabilities. [Interruption.] Sorry.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Conservative, Chesham and Amersham

Order. I quite like “Madam Gillan”. [Laughter.]

Photo of Sarah Champion Sarah Champion Labour, Rotherham

Okay—I ask Members to follow that.

Does the Minister envisage separate solutions for these liabilities? Can she give Members any details of what support the Government may offer any potential buyer of Speciality Steels? It is well known that, for Speciality Steels to maintain its dominant market position, significant capital investment is needed to move up the value chain. Can the Government offer any support or loans to potential buyers of Speciality Steels to ensure that investment in innovation, and in research and development, continues at its current pace or, indeed, is increased?

Speciality Steels has a bright future, and I am confident that the right buyer will quickly come forward. I know that the city region and Sheffield and Rotherham councils are determined to do whatever they can to help the business. The Government have repeatedly claimed to be committed to steel. That commitment must not slip, despite the economic obstacles we face. With the right support and nurturing, British steel can continue to lead the world in quality and technology with a dedicated, experienced and well trained workforce. The Government must not take their eye off the ball at this critical time. I join with my colleagues in urging them to act, and act now, to safeguard a viable, sustainable and successful future for British steel production.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon 10:16 am, 13th July 2016

I pay tribute to my hon. Friend Stephen Doughty for securing today’s debate. I also pay tribute to the fantastic workforce of steelworkers across the country, many of whom are represented here with us today. It is an honour to have those gentlemen here.

The past few weeks have been characterised by uncertainty, particularly since the referendum result: economic uncertainty with the pound falling, investment put on hold and jobs at risk; party-political uncertainty; and governmental uncertainty and paralysis. That uncertainty has been particularly acute for the steel industry. When Tata announced on Friday that it was putting the sale of Strip Products UK on the back burner as it explored the possibility of forming a joint venture with ThyssenKrupp, the workforce and their families clearly reacted with a degree of scepticism and concern. The announcement compounded existing uncertainties. ThyssenKrupp has long expressed interest in Tata’s Dutch plant, but until last week there was no convincing evidence of any interest in Tata Steel’s UK operations. The central concern around the joint venture proposal, particularly with Britain outside the EU, is that the UK operations, including Port Talbot in my constituency, might not receive the support and investment they require. Clear assurances are required from the Government, Tata and ThyssenKrupp that the mooted joint venture will in no way diminish Port Talbot and the rest of the Strip Products UK division.

The uncertainties of the sale process have been compounded by Brexit and the resulting Whitehall paralysis. What we need now, on the day that a new Prime Minister enters No. 10, is a Government truly committed to the industry and its future. Like the Minister, I was a passionate campaigner for remain, but the British people voted to leave, and we must now deliver on and make the most of the mandate they have given us. To do that, we must urgently clarify the nature of our trading relationship with the EU27. I hope that the incoming Prime Minister will fully engage with the industry and parties on both sides of the House when determining the approach to Brexit negotiations.

The top priority is surely energy costs, which have been cited by leading figures in the industry as the No. 1 challenge facing British steel competitiveness. At present, there is a £17 per megawatt-hour differential between the energy costs for Germany and Britain, and that is after the energy compensation package is taken into account. Energy costs in this country are quite simply astronomical, and the Government should and must act.

At the Steel Council on 8 June, the Secretary of State was receptive to the industry proposals, with the Department for Business, Innovation and Skills and the Department of Energy and Climate Change pledging to come back with “urgency” on energy costs. Well, we are still waiting. Will the Minister do all she can, in whatever time she has left in her post, to expedite the process? What the industry cannot take is more delay and uncertainty. Steel is a foundation industry, critical to the houses in which we live, the offices in which we work, the cars we drive and the bridges we cross. It is the beating heart of economies and communities such as the one that I represent. That is why we need a resilient steel industry that can compete on a level playing field with our global competitors and that serves our entire economy and our communities. The referendum has compounded the existing uncertainties facing our industry, but that means the Government must act decisively and quickly. Brexit is a fact. The will of the British people must be enacted. If the Government act with purpose, we can make sure they work for the steel industry and for our communities.

Photo of Christina Rees Christina Rees Labour, Neath 10:20 am, 13th July 2016

It is a pleasure to serve under your chairmanship, Mrs Gillan. I thank my hon. Friend Stephen Doughty for securing this important debate.

It is widely accepted that steel and the steel industry are essential to Wales and its economy, which is particularly the case for my constituency and the people of Neath. Tata steelworks in Port Talbot and Trostre are places where hundreds of my constituents go to work every day. As products of the industrial revolution, both coal and steel have been the beating heart of Neath for more than a century, defining its communities and those who have had their lives touched by those industries.

Of the 1,050 jobs lost in the UK steel industry since the year began, 750 have been lost from Port Talbot—and on top of the 400 jobs lost in 2014. The extent of this decline could have been slowed, shrunk or even prevented had the Tory Government taken up the offers of support that have come from Europe. The forerunner of the European Union, the European Coal and Steel Community, was set up not only to cement peace, but to help economic growth by pooling resources and preventing unnecessary competition. Such planning and collaboration saw the UK steel industry become world leading not only in size but in quality.

The latest industrial revolution taking place in China may be the biggest of all. In 2013, China produced 779 million tonnes of steel, or 48% of worldwide output. The UK produced 12 million tonnes. But as members of a strong European Union, we were in a position to embody the very reason for the EU in the first place: strength in numbers, collective planning, a common purpose. Had the UK Government allowed, we could have installed anti-dumping tariffs on Chinese steel. We could have lifted the lesser duty tariff and applied for crucial EU funds, which would have shored up the industry during these difficult times.

More than half of UK steel exports are to the European single market. What will happen to those exports as a result of the recent referendum? I fear that the impact of tariffs or an elongated trade agreement may signal the death knell of an industry already fighting to compete on a level global playing field. The UK steel industry has declined by 42% between 1990 and 2014 in real terms. Economic output in 1990 was £2.7 billion compared with £1.7 billion in 2014. How can we halt this decline without the support of our European partners, automatic access to a ready-made single market, or the potential of additional funding to tackle rising energy costs and environmental commitments?

We also have organisations that innovate and produce high-tech products that are changing the way we view steel. Neath Port Talbot is home to a company called SPECIFIC—Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings—which uses Tata coated steel to make world-leading, innovative technologies that produce, store and release energy. SPECIFIC is hugely concerned about the prospect of leaving Europe, not least because of the essential funding it has received, without which it probably would not exist, but also because of the potential loss of a market where it could promote and sell its products. And let us not forget the steel that we import from the EU, which makes up 69% of our imports: it is not made in the UK, but is vital to many key industries that produce specialised products, infrastructure and new construction projects.

It is not a matter of whether Brexit will have implications for the UK steel industry, but the extent of them. Exports will be hit hard, output will be slashed, jobs will be lost and communities will be forsaken. I fear for the future of the UK steel industry in a UK outside the European Union, and I call on the Minister and the Government to do all that they can to protect it.

Photo of Dame Cheryl Gillan Dame Cheryl Gillan Conservative, Chesham and Amersham

Thank you. We will now move to the wind-ups.

Photo of Hannah Bardell Hannah Bardell Shadow SNP Westminster Group Leader (Business, Innovation and Skills) 10:25 am, 13th July 2016

It is a pleasure to serve under your chairship, Mrs Gillan. I want to start on a conciliatory note and very much congratulate Stephen Doughty on securing this debate. I have spoken a number of times on this issue. I congratulate Members of all parties on the work they have done, including the Minister who has been working in very difficult circumstances. However, without recycling too many of the arguments, it is important that we focus on what we can do as a result of the Brexit vote. It is important to point out, as my hon. Friend Marion Fellows did, that we voted differently in Scotland and are looking to protect Scotland’s place in Europe. Our First Minister, Nicola Sturgeon, and the Scottish steel taskforce have been working very hard on that, and I pay tribute to all the steelworkers across the country who have lost their jobs as a result of the challenges facing the industry.

Some Members have picked up on the issue of pensions. We have seen various businesses, including the likes of BHS, do significant damage to our reputation as a country in terms of what they have done with pensions. It is very important that the steelworkers have their pensions protected and that in any negotiations the Government are a great champion of that.

I want to bust a couple of myths that the hon. Member for Cardiff South and Penarth mentioned. My hon. Friend the Member for Motherwell and Wishaw rebutted the comment on the Aberdeen western peripheral route, but it is important to remember, as the hon. Gentleman and other Labour Members will, the tragedy of the closure of Ravenscraig and what that did. I hope the hon. Gentleman will recognise the shoulders on which he stands and the work done by Labour members in Scotland, by the SNP and those across the political spectrum who fought to keep that plant open, but were not successful. That plant, until it was closed in 1992 by a Conservative Government, was the largest hot strip steel mill in western Europe. It is because of that closure that we are not able to produce the kind of steel that we would like to. That is a great tragedy. I hope the hon. Gentleman recognises that.

As I said, I want to be conciliatory in this debate because a huge amount of work has been done. For us in Scotland, there was concern about the potential closure of the Dalzell and Clydebridge plants, which was going to cost us more than 270 jobs. However, the Scottish Government established the Scottish steel taskforce, which brought together people from across sectors: local authorities, trade unions, the UK Government, Scottish Enterprise and more. It is also important to note the involvement and engagement that the Scottish Government had with the unions from an early stage, by contrast, I am afraid to say, with the UK Government. The First Minister said at the time of the sale to Liberty House, which is to be congratulated on its involvement and enthusiasm in taking over the steel plants in Scotland, that if there was any learning and experience that we could share with Port Talbot, we would be happy to do so. I hope Stephen Kinnock, who has been a significant champion for his constituency, will take up that offer.

Nia Griffith spoke about energy prices and the impact on her constituency. Jim Shannon, who is a regular feature and I believe one of the greatest contributors in Westminster Hall debates, spoke passionately. Although he does not have a steel industry in his constituency, he wants to offer support and takes a glass-half-full approach. It is important that we take such an approach. There are many issues and challenges and it will be interesting to hear the Minister’s view. We do not know how long she may have left in her current role, but how does she see the negotiations with Europe going for the UK and what kind of trade agreements can we expect to see? As we know, the pound has fallen, which means that UK steel will be cheaper to foreign buyers, and that could boost demand. On the other hand, a lower pound means that imports will be more expensive. Imported coal and iron ore are used in some of Tata’s UK operations, so that is a concern. I would be particularly interested to hear the Minister’s thoughts on what will be done in that regard.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

I am very interested in the point that, theoretically, the fall in sterling in normal economic times would help exports. The big issue is uncertainty—uncertainty in economics is toxic. Surely now we need an urgent statement from the Government that we will go for EEA status, to preserve our status within the single market. That would be one way of securing investment in steel.

Photo of Hannah Bardell Hannah Bardell Shadow SNP Westminster Group Leader (Business, Innovation and Skills)

I could not agree more with the hon. Gentleman. He will know that joining the EEA and taking on those agreements would also include accepting the free movement of people. Most of us in the Opposition parties would agree that that would be positive, but, as we know, there are many on the Government Benches who disagree. This is a time of great uncertainty. It is simply unacceptable that there was no plan—as we read in the newspapers, things were thought about but not written down—and I think that everybody in British industry will be looking at that situation in shock.

Sarah Champion spoke about action on cheap, dumped steel and what can be done on tariffs, which a number of other hon. Members also raised. The hon. Lady also raised the issue of pension liabilities and her concerns for her constituents.

It would be remiss of me not to pay tribute to the work done by the unions and the devolved Administrations. Many workers are looking on, wondering what is going to happen to their jobs. At a time such as this, it is very important that we find consensus where we can. There will be differences of opinions and policies across the House, but we must work together to find consensus and to secure these jobs for Britain—to find a long-term economic and industrial plan, and to make sure that we secure as many jobs as possible.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy) 10:32 am, 13th July 2016

It is a pleasure to serve under your chairmanship, Mrs Gillan, in this debate on an incredibly important subject. I congratulate my hon. Friend Stephen Doughty and all my hon. Friends who have spoken in the debate. They have represented their constituents superbly over the last weeks, months and—in some cases—years to try to protect the vitally important strategic industry of steel.

I also congratulate the trade unions on their work representing their members and the communities that they live in, in these incredibly difficult times. We have seen examples of the benefits of partnership working between local politicians, the devolved Governments, local Government and the representatives of working people in those communities.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

My hon. Friend is absolutely right to pay tribute to the trade unions and all those who have worked in partnership. Will he join me in paying tribute to the work of the Daily Mirror and its “Save our Steel” campaign? It has kept a focus on the issue, even today in the midst of everything else that is going on, to make sure that we all pay attention to what is happening in the steel industry.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy)

My hon. Friend is quite right to draw attention to the fine work of the Daily Mirror. Its campaign has raised awareness among the wider public of just how important steel is to the whole country.

We express regret that the Government did not act in a stronger way to try to save Redcar and that there was not greater engagement earlier on Redcar and elsewhere, but we have to focus on where the steel industry is and what can be done now, not least given the challenges following the vote to leave the European Union.

Steel has faced a profound crisis for quite some time. Plants that had been in profitable production for decades have closed. In Redcar, that brought to an end a century or more of steelmaking on the site. For other plants, the potential changes of ownership have been the source of considerable uncertainty and, of course, Brexit has piled uncertainty on top of what was already a very worrying situation.

Britain’s relationship to the EU and the rest of the world is now more unsettled than it has been for many generations. We have seen the immediate impact of the vote not just in the steel industry, but in this industry we have seen the planned sale of the Port Talbot steelworks put on hold. An estimated 15,000 jobs are directly at stake, with another 40,000 immediately affected through the supply chain. Then there are the risks, which my hon. Friends have raised, from the impact on the British Steel pension fund—that threatens the prosperity of more than 130,000 workers, and of course there is the threatened loss of a vital strategic industry. The time is now for decisive Government action to secure as much stability and certainty as possible.

Before the leave vote, the Government had started to act and to recognise, quite rightly, the strategic importance of the steel industry in this country. That recognition had included the potential for the Government to take a stake in the Port Talbot works—the Business Secretary had dropped his previous opposition to responsible ownership and had, at last, understood the importance of Government intervention in industry. As part of any deal, however, he was proposing to switch the indexing of British Steel pensions from the retail prices index measure of inflation to the far lower consumer prices index measure. Over time that would have amounted to a 15% cut in pensions being paid, and, as well as affecting the prosperity of British Steel pensioners, it suggested opening the door to similar pension raids in other sectors.

The proposal has quite rightly been resisted by the unions and also, notably, by other Government Departments. Addressing the crisis in steel at the expense of pensioners is simply not acceptable. Supporting our steel industry will require the Government to follow best practice from north America and Europe, and to develop an effective industrial strategy to support the industry. It will require willingness from the Government to support the pension fund.

Photo of Mark Tami Mark Tami Opposition Pairing Whip (Commons)

I apologise for not being here at the start of the debate. My hon. Friend talked about pensioners. Shotton steelworks is in my constituency, and there are a lot of pensioners because the steelworks used to be far bigger. Many still live in the area, so the change in spending power over time will affect not only them but the whole area. We have to think about that as well.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy)

Absolutely. Any money taken away from pensioners affects the rest of the economy, including other businesses and the livelihoods of many other people. My hon. Friend is quite right that those considerations need to be carefully taken into account.

In his excellent speech, my hon. Friend the Member for Cardiff South and Penarth said that the vote to leave the European Union has been a body blow that has put uncertainty on top of the existing difficulties. I will remind the Minister of some of my hon. Friend’s questions. He wanted to know what the Government will do differently now and made the point that time is of the essence—the steel industry simply cannot wait for the new Prime Minister to take time to act. As my hon. Friend said, the Government need to continue working, and to step up that work, with local MPs, the devolved Assembly, local government and the unions. They need to move away from the laissez-faire approach we have seen in previous times. When my hon. Friend was making that point, the Minister was waving her hand dismissively, as she is sometimes wont to do. That is simply not the response that is needed on this critical issue.

My hon. Friend also said that access to the single market is essential. We heard in an intervention about the importance for Members of all parties of retaining that access. That is true not just for steel but for businesses in many other industries, too—not least those that are part of the steel supply chain, whether in manufacturing, construction or defence. We need to know what the options are for retaining that support. What action will the Government take to ensure that the supply chain will continue to be supported by UK steel production? What action will they take to ensure that raw material prices are not adversely affected, and that there is not the impact that my hon. Friend talked about?

My hon. Friend mentioned exchange rates and said that the benefits will be offset by import costs. He and a number of my hon. Friends mentioned energy costs. My hon. Friend Tom Blenkinsop talked about the impact of the carbon price floor changes. We heard about the impact of business rates and the need for action on energy costs more generally. Will the Minister tell us exactly what she or her potential successor will do to take action on those points?

On the issue of procurement, the steel for the Aberdeen bypass—it was a £12 million contract—was made in Turkey, not Scotland or elsewhere in the UK.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

I was not going to make any tribal statements, but the Western Mail, the national paper of Wales, last month exposed the fact that the Welsh Government have been using rebar steel from Germany for a road project—the Eastern Bay link road in Cardiff—less than a mile from where rebar is produced by Celsa in the Cardiff South and Penarth constituency.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy)

Unfortunately, the Western Mail does not find its way to Merseyside very often.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy)

I am sure it is a fine paper.

My hon. Friend the Member for Cardiff South and Penarth asked about the Steel Council. Will the Minister confirm what discussions are taking place and what work it is continuing to do after the Brexit vote? It has a critical role in the next few weeks and months.

I am conscious that the Minister has a lot to respond to, but I want to reiterate the importance of what my hon. Friend said. Government action is needed now. The steel industry, the workers, the supply chain, the businesses directly affected and the rest of the economy cannot wait weeks or months for action. Steel is crucial to our economy, our strategic needs and our communities. The Minister or her successor needs to make sure the Government do whatever it takes to save our steel.

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills 10:43 am, 13th July 2016

It is a pleasure to serve under your chairmanship, Mrs Gillan. I do not know whether you have had the great pleasure of chairing a steel debate before, but I know that you have family connections in Wales. The majority of the speakers in this excellent debate are from Wales—a part of the United Kingdom that is very dear to your heart—so welcome to the gang. As you will have gathered, we regularly meet here or in the main Chamber to debate this issue with all its twists and turns. It is fair to say that, the last time we debated this issue, none of us anticipated that the next time that we gathered for a debate it would be on this subject.

I pay huge tribute, as ever, to Stephen Doughty for securing this debate. I will not have time to address all of the points that have been raised, but I will try to stick to the actual topic of the debate, which is the effect of Brexit on the steel industry.

It is right, good and fair to say—I am going to be a bit partisan here—that it is very much to the credit of my party that we have avoided the uncertainty that we undoubtedly would have had if we had waited until September to elect a new leader and install a new Prime Minister. That would not have been the best thing for our country or, indeed, our economy and our steel industry. We absolutely need certainty, and my hon. Friend Andrea Leadsom did everybody an enormous favour with her greatly courageous decision. We now have a new Prime Minister who can, frankly, get on and do all the things that need to be done to create certainty. She can answer many of the questions that I cannot answer, because this is a matter for the new Prime Minister and her Government.

In the words of Stephen Kinnock, Brexit is a fact. It might hurt us but, as he rightly said, it is the will of the British people. At least we know where we are on that. We have a big task ahead of us, and I am sure nobody here is under any illusions about the scale of the complexity that we face as we withdraw from the European Union. It will take a number of years and it will be hugely complicated, but we are beginning. We will see stability and confidence return to the economy, and that will have a great impact on our steel industry.

The United Kingdom steel sector exported 6.3 million tonnes of steel last year, 3.3 million tonnes of which went to European Union member states. That is how important the EU is to the exporting of steel. Access to the single market is absolutely critical, not just for steel but for the whole of our economy.

The automotive sector has been a massive success story in recent years. We have exported a huge number of cars—many of which are made with British steel—to EU markets. I went to Nissan only the other week, and I was reminded that 45% of the steel that it uses is made here in Britain. That is the point that the hon. Member for Cardiff South and Penarth was making. I gently say to the Scottish National party and the Scottish Government that it is not just processing that is so important. It is also important that we buy British-made steel—steel that is made in Port Talbot or Scunthorpe, not Turkey.

It is important that we secure tariff-free access to the European market, not just for the steel sector but for the parts of our economy that buy British steel, such as the automotive sector. I have personally spoken to the important people at all the large automotive companies to reassure them and to tell them how critical it is that they keep putting in orders to Port Talbot, and they told me that tariff-free access is important for their sector.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

The Minister mentioned the complexities following the referendum result for export strategy. What analysis have the UK Government done to date of the countries that UK-based steel producers export to? How many trade deals are now going to have to be renegotiated so those exports can continue?

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills

I do not know about the actual figures, but we have looked at that with considerable care, and we will continue to do so. A special unit has been set up, and—if I can put it this way—will be beefed up by the incoming Prime Minister. Those are exactly the sort of issues and complexities that we are going to have to deal with.

Let me make it very clear that, until we actually leave the EU, we are a member of the EU. I think some people think we have left. Well, we have not left. We are still subject to all its rules and regulations—for example, the state aid rules—and we have access to the single market. Those things are incredibly important throughout the process that will now unfold. While we remain a member of the EU, we are subject to the state aid rules, the trade defence measures and so on. What replaces those rules—we may remain subject to them in return for market access—is for the new Prime Minister and her team to negotiate. Whatever my role is—I may end up on the Back Benches—[Hon. Members: “No!”] The worst nightmare of Mr Wright, who has been my hon. Friend on many occasions, is that I return to the Back Benches and then end up on his Select Committee.

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills

I think we are all becoming demob happy. We are looking forward to next week when we will have a short break, but we will all continue, as we always do, to work for our constituents in the so-called recess. I think that other people sometimes forget that.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

The Minister is making some good jokes; however, this is a very serious point. Although we are about to go into a parliamentary recess, it is absolutely crucial that the meetings with the Steel Council and the working groups continue and that the work with the officials goes on. We cannot afford to let weeks go by in the summer when the industry is facing so many challenges.

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills

I could not agree with the hon. Gentleman more. He is absolutely right, and he needs to know that the Steel Council has been working as if nothing has happened or changed ever since the referendum vote. Indeed, the UK Metals Council is meeting now—that is where I would have been had he not secured this debate. Everyone involved in the sector needs to understand that the work of the Government, Ministers and my officials has continued through this recent period and, without doubt, will continue through the summer. If I stay in my job, he can be assured that I will continue to do everything I can to work for the best interests of our steel industry; if I have a successor, that person will do exactly the same. The officials, of course, do not change. Furthermore, the determination will be as instilled in the new Prime Minister as it has been in our outgoing Prime Minister.

To deal quickly with procurement, we changed the rules, and we were the first member state of the EU to do that, commendably so. However, Opposition Members make a good point about the need now to ensure real evidence that those rules are working. We need good reporting, so that we can come back to say that we are absolutely certain that the new procurement rules are producing the results we want.

Network Rail sources 98% of its steel domestically, or 145,000 tonnes over the next five years, and there is no reason to believe that that will change. High Speed 2 will need 2 million tonnes of steel over the next 10 years —forgive me, Mrs Gillan, but I am a huge supporter of HS2 and I fear our friendship will be wobbling here. I assure you and all hon. Members that I will continue to do everything I can in Government to make the case for wonderful and important infrastructure projects to be brought forward as much as they can be, as it will be a great boost for our economy if we can do that.

I have spoken with steel makers since the referendum, although it was not the result they wanted. It was sad that 69.6% of people in Hartlepool voted out; 60% of people in Cardiff voted in, but in Sheffield, 51% voted out; in Rotherham, 67.9% voted out; even in Neath Port Talbot, 56.8% voted out; and in the constituency represented so ably by Nic Dakin, nearly 70% voted out. We all have a big, big job to do—but we can talk about that on another occasion. Only last week, however, I met British Steel, and things are going well notwithstanding—I do not want to be overly confident, but it is on track to deliver its business plan.

I want to deal with the point made by John Healey and by Sarah Champion. Yesterday, I had a good meeting to discuss—freely—the situation in Stocksbridge and Rotherham. The Secretary of State has written in response to the right hon. Gentleman’s letter, although that reply might not yet have been received. For his and the hon. Lady’s benefit, the Secretary of State wrote:

“To date, no such requests have been made by any of the potential bidders, but we would be willing to consider requests that are made in the future.”

We know that people will be interested in the speciality steels, and rightly so, because it is a cracking business, with huge potential. Hon. Members can be assured that if we get requests to enable those sales to support that side of the sector, we absolutely will do it.

Photo of John Healey John Healey Labour, Wentworth and Dearne

I thank the Minister for giving way and for her response. May I ask her to thank the Secretary of State for his response, and to let her successor, if there is one, and his successor, if there is one, know that we as South Yorkshire MPs will be holding the Government to that commitment?

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills

I did not doubt that for one moment, and I thank him.

The situation with Tata and the potential deal with ThyssenKrupp has raised several issues, notably that of pensions, about which hon. Members rightly have concerns. I have to say that the Opposition spokesman—this is a matter for the Department for Work and Pensions—did not make the most supportive contribution, but more than 4,000 consultees have taken part in the Government consultation. It will take time to go through all that, but the Government have always said that we will do everything we can to support the production of steel in south Wales, which means ensuring that at least one of those blast furnaces remains open.

As ever, the clock is against me, but the usual rules apply, and I will reply by letter to any questions that have been asked but I have not been able to answer. I again congratulate the hon. Member for Cardiff South and Penarth on securing the debate, and I assure him that wherever I am in the Government I will certainly continue to fight for the British steel industry to be sustainable and to continue making steel. I want to ensure that the case is taken forward, so we have that sustainable steel industry.

The hon. Member for Hartlepool looks as if he wants some reassurance, and he can have it. I have been to Hartlepool—I have been to almost all the steel mills throughout Britain, and apparently I will get one of those “I-Spy” badges as a result, if I come to the end of my tenure. It will be a proud moment, and I will wear it with great pride. Hartlepool is another viable business and, again, we will be there when buyers come forward. If they need support or want to talk to Government, we will do everything we can. Notwithstanding the referendum result, let us put some confidence back and say that we will create—or, rather, maintain—a sustainable steel industry. I will do everything I can, wherever I might be, to support it.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth 10:55 am, 13th July 2016

I thank the Minister for some of the things she said, which were confidence-boosting and provide some hopeful direction. We must all want to take her up on her suggestion—whether she is in the role or not—because that is a clear signal to send to her successor, if there is one, to the successor of the Secretary of State for Business, Innovation and Skills, if there is one, and to the new Prime Minister that this issue will not go away. It requires serious, concrete ministerial attention—not just officials—to drive it forward over the weeks and months to come. If we get distracted by everything else going on, the industry will face serious troubles.

I have three points to make, the first about energy costs, which the Minister did not get into in great detail—she is welcome to intervene, if she wants. We heard from my hon. Friend Stephen Kinnock that figure of £17 per megawatt-hour differential between the energy costs faced here and across the EU. In particular, that is an issue for companies such as Celsa in my constituency, which operate throughout the European Union and see the energy costs in other countries. Perhaps the Minister will intervene or write to us, but I want to understand whether she would be satisfied for the differential to continue over any length of time.

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills

I forgot this, but the hon. Gentleman makes a good point. A lot of work is still to be done on energy. A major target and piece of work for the incoming Government is to ensure that the steel industry—indeed, all the manufacturing sector—has a level playing field, and that must be achieved.

Photo of Stephen Doughty Stephen Doughty Labour/Co-operative, Cardiff South and Penarth

I thank the Minister for her comments, which I hope she will also express clearly to the Department of Energy and Climate Change, other Departments and the new Prime Minister.

On another fundamental issue, the debate was about the impact of Brexit and the referendum decision on the steel industry, and the Minister and other colleagues who have taken part in the debate today have outlined the potential risks if we do not get the right sort of deal. Access to the single market is crucial. Some have suggested that we should invoke article 50 straightaway and rush into the negotiations, but that would be foolish—I see the Minister nodding. Even some in my own party have suggested that, but it would be wholly wrong. We need to take a very careful approach, for the sake of the industry. The deal has to be the right one; we have to secure access for our exports, and to ensure that we do not end up with punitive shocks, because even if those were only in existence for three or six months in transition from one regime to another, they could be devastating to the industry.

To conclude, I thank all colleagues who have attended today, because it shows the great concern for the steel industry in Parliament. No matter what else is going on and that we are having a change of Prime Minister today; colleagues are still willing to attend and to stand up for constituents and the steel industry throughout the UK. I thank all those in the industry, whether in the trade unions, the management or the industry bodies, who continue to fight the fight and to make the case that steel does have a future, and that the Government need to act to ensure that future.

Question put and agreed to.


That this House
has considered the implications for the UK steel industry of the outcome of the EU referendum.