I beg to move,
That this House
has considered the future of the British steel industry.
It is a pleasure to serve under your chairmanship, Sir Charles. I am pleased to have secured this debate, particularly ahead of the Budget tomorrow, and at what feels like a critical juncture for our industry, and for the entire manufacturing sector that our industry underpins. The Budget is the first major fiscal event since 2018 and the first test of the Government’s promises to the British people, particularly to all their new voters from industrial areas. Today we will make the case to the Government that now is the moment to offer that long-overdue commitment to the steel industry, in order for that 21st century foundation industry to continue delivering for Britain.
I congratulate my hon. Friend on securing this debate. Does he agree that what is required is long-term planning? Following the mothballing of Orb in December, we are in a situation where an electrical steel producer is not producing steel that would be ideal for the green industrial revolution?
My hon. Friend is absolutely right; it is completely absurd to have a Government who on the one hand are committed to decarbonising our economy, but who on the other hand are failing to support Orb, which could play a major role in electric vehicles, which play a major role in decarbonising our economy. It seems that the left hand does not know what the right hand is doing.
The Government must recognise the strategic importance of steel to our country’s future. They must also recognise that steel must be front and centre of their so-called levelling-up agenda if they are at all serious about tackling regional inequalities.
I congratulate my hon. Friend on securing the debate. Liberty Steel recently announced the loss of 350 jobs in south Yorkshire, due to a “challenging” market circumstances. Does he agree that is concerning, because those are traditionally well-paid manufacturing jobs, in comparison with the low-wage sectors that tend to dominate the local economy?
My hon. Friend is absolutely right. I have to mention today’s very bad news of 500 job losses announced by Tata Steel, which shows that we are back at square one. We do not seem to have learned anything from previous years. Industries need a Government who will proactively work in partnership to produce a policy environment and market environment conducive to investment and to those businesses thriving.
The excellent “Steel 2020” report contains a brilliant quote, on page 28:
“Government procurement and other incentives should be used to increase domestic steel content in manufacturing and construction…there is clearly a significant market opportunity.”
Is tomorrow’s Budget not a brilliant opportunity to support steel?
My hon. Friend is absolutely right. We need a patriotic procurement policy. We need procurement that gives the right weighting to local value. Let us look at big opportunities such as HS2—2 million tonnes of steel. How much of that steel will be British? Let us ensure that every single Government Department and HS2 are signed up to the steel charter.
The UK economy cannot stand up without a backbone made of steel. It certainly will not be able to level up if is not able to stand up. Steel underpins our everyday lives, from the houses we live in to the offices we work in; the trains, buses and cars we travel in; and the major infrastructure projects, such as HS2 and the possible Heathrow expansion. It is crucial for our defence industry and to our national security. I hear people say that steel is a sunset industry. Nothing could be further from the truth. It is not a sunset industry; it is an industry of the present and of the future. It underpins our entire manufacturing base, from automotive to construction, aerospace and so much more.
My hon. Friend is making a powerful case. Does he agree that we cannot just carry on managing decline and that we must invest for the long term? Once a plant goes, it is gone; very rarely do they come back into operation.
My right hon. Friend is absolutely right. Of course, we saw the tragedy of Redcar: once the blast furnace is turned off, that is it. In my opinion, that was an act of industrial vandalism. We must ensure that we take into account the cost of doing nothing. The cost to the Government and the British taxpayer of closing these businesses down is astronomical, so let us have a proactive industrial policy based on investment, and let us use tomorrow’s Budget to deliver that.
I thank my hon. Friend for securing such an important debate. The uncertainty about steel production in Newport, with the closure of Orb and the ongoing nervousness at Llanwern and Liberty, has had a huge impact on jobs in my city and the surrounding areas. Does he agree that we need to secure a level playing field for UK steel producers by addressing the energy price disparity, preventing steel dumping and investing in research and development, so that the British steel sector can thrive globally?
My hon. Friend is absolutely right. This is about having a policy environment that is conducive to driving investment. Businesses are looking for a partnership with the Government. As she rightly says, the cost of energy in this country compared with what the French and the Germans pay means that our steelworkers are competing with one hand tied behind their back. They need a British Government who are on their side.
Let us not forget the tremendous value that the steel industry generates for the British economy. It produces 7.3 million tonnes of steel a year, which is around 65% of the UK’s annual requirement. It employs 32,600 people directly in the UK and supports a further 41,000 through the supply chain. It makes a £2.8 billion direct contribution to UK GDP and supports a further £3.6 billion through the supply chain, and it makes a £2.5 billion direct contribution to our balance of trade. Steel is also integral to the greening of our economy. It is used in wind turbines, tidal lagoons and electric vehicles, and of course it is far cleaner to make our own steel here than to import it from places such as China, where steel production is much dirtier and the carbon footprint of transportation is huge.
Although we can be immensely proud of the contribution that our industry and its workers make, we must reflect on the sector’s recent struggles. UK manufacturing has been in decline, dropping from 30% of GDP in the 1970s to just 9% today, and the UK’s shift towards a city-centric, service-based economy means it is now the most geographically unequal country in northern Europe. We have the richest area in the whole of northern Europe—London—but also the five least prosperous, with west Wales and the valleys the poorest of all.
Let us not forget that steel jobs are good jobs, paying an average salary of £36,000, which is 36% higher than the regional average in Wales. Port Talbot provides 4,000 such jobs. The wider supply chain benefits are even greater, and the sense of local pride that our community feels in providing the very backbone of the UK economy is immeasurable. However, since 2010 our steel industry has been abandoned by the UK Government, leaving us trying to compete with one hand tied behind our back. After 10 years of Tory austerity, our community has also been left to fend for itself as a result of the money that has been taken out of our local economy.
The lowest ebb for our local steelworks in Port Talbot came in 2016, which marked the height of the steel crisis. A number of market forces combined to set the hares running: the UK had some of the highest electricity prices in Europe, which have gone on to cost the sector £200 million since 2016; business rates were through the roof, five to 10 times higher than in France, Germany and the Netherlands; and there was increased Chinese dumping in European markets to undercut European steelworkers. At one point, the UK Government blocked the EU from taking stricter action against the Chinese.
With such little support from the Government, all that came to a head. Leading the march for steelworkers as they always do, Community and other steel unions flew a delegation to Mumbai, which I was fortunate enough to be part of. In the midst of a crisis that nearly led to the loss of 4,000 jobs in Port Talbot, our community fought tooth and nail to make Tata Steel recognise that these were real people with real families to look after, not just numbers on a spreadsheet.
There is an important point here: these are not workers who have refused to change; in fact, they are quite the reverse. They have been at the cutting edge. They want to do everything to make the plants as efficient as possible, but with all these other factors counting against them, there has to be a point where something changes.
I fully agree. British steelmakers make the best steel that money can buy; of that, there is no doubt whatsoever. Look at the flexibility they showed over the divestment of the pension scheme, when many steelworkers thought not about themselves but about their families—their sons and daughters, and their grandsons and granddaughters. That shows the passion and commitment of our steelworkers and their willingness to be flexible. I pay tribute to the steel unions, and to Roy Rickhuss and Community for their leadership in making that happen.
Our endeavour at the time paid off. Tata Steel decided against closing or selling the business, and in exchange the workforce showed incredible sacrifice by voting for the divestment of the pension scheme. In return, Tata Steel put forward a substantial investment plan and promised that there would not be a single compulsory redundancy in the coming years.
Fast-forward four years and we are stuck at square one. While electricity prices and business rates continue to be a thorn in the side of our steel sector, Brexit and Donald Trump’s section 232 steel tariffs are combining to create a hostile policy and market environment once again. Some 70% of UK steel exports go to the EU, and a basic trade agreement with the EU could cost the industry £70 million a year through additional border checks. Although Trump’s tariffs were aimed at punishing China for illegal dumping, they ended up severely damaging the UK’s US exports, which have dropped by 30%. Exports of long products such as rods, bars, rails and construction materials were hit particularly hard, falling by as much as 60%. I am sure Holly Mumby-Croft will wish to say something about that.
These are tough times. It is important for steelworkers in my constituency and across the country that Tata Steel keeps its part of the bargain by continuing to invest in the long-term future of UK steel making. Our steelworkers, who make the best steel that money can buy, are crying out for UK Government support. It is time the Government put their money where their mouth is and backed this essential British industry. We need a Budget for steel—a Budget that really does level up.
First, the Government must take specific action to reduce UK industrial energy prices in order to move the steel sector’s costs in line with its European competitors. The Government’s energy intensive compensation scheme barely touches the surface; it deals with the symptoms but not the cause of the problem. UK steelmakers still pay 80% more for energy than their French counterparts, and 62% more than German companies.
Will the Minister commit to studying and delivering on the nine recommendations in UK Steel’s “The Energy Price Gap” report? They include providing 100% compensation for the indirect costs of the carbon price support mechanism, enabling energy-intensive industries to buy energy collectively, and providing an exemption from capacity market costs. It is worth noting that any savings on electricity prices would be reinvested in the recently announced clean steel fund and would deliver £750 million of investment in the sector over the next decade.
Secondly, the Government must back business rates reform to drive capital investment in industry. Will the Minister commit to removing plant and machinery from rates calculations? Thirdly, the Government must maximise opportunities for UK steel in major infrastructure projects by introducing measures to increase the amount of UK steel purchased by those projects. Will the Minister back calls for HS2 to sign UK Steel’s steel charter, and will he recognise the potential for the Government’s steel pipeline to support 6,000 new steelworker jobs and contribute £3.3 billion to the economy if every Government project used British steel?
Fourthly, will the Minister commit to using the estimated £200 million in returned moneys from the EU research fund for coal and steel post Brexit to boost UK steel sector innovation? Fifthly, will the Minister commit to removing Donald Trump’s section 232 tariffs from day one of the UK-US trade negotiations? Finally, will the Minister commit to delivering on a sector deal for steel? Aerospace, automotive and construction all have sector deals, yet the industry that underpins our entire manufacturing base—the steel industry—does not. That really is a travesty.
Steel is very much a 21st century industry that forms the backbone of the British economy. That fact must be reflected in tomorrow’s Budget. The Community union is set to launch a new campaign called “Britain, we need our steel”, because Community knows that the UK relies on UK steel every bit as much as its members and the steelworkers in my constituency do.
My constituents and their families, and steelworkers and their families across the length and breadth of our country, are not asking for charity; they are asking for a fair crack of the whip. They are men and women of steel who want the opportunity to compete without one hand tied behind their back and a chance to continue to serve their country by producing more of the best steel around for generations to come. I truly hope that the UK Government share that vision and will stand up for steel in the Budget tomorrow.
Thank you for giving me the chance to speak in this important debate, Sir Charles. It is a pleasure to speak under your chairmanship. I congratulate Stephen Kinnock on securing the debate just before the Budget, which is the right time to discuss this important issue. He is right to highlight that the steel industry plays a crucial role in our economy; that cannot be argued against. It is also important to note steel’s regional impact. Steel is particularly important in south Wales. The Tata steelworks provide a massive economic boost beyond the Aberavon constituency in which it resides. People live and work in Tata from right across south Wales, including my constituency of Bridgend.
Wales is the UK region that employs the second largest number of people in the steel industry, and it has been reported that Tata pumps about £200 million a year into the Welsh economy in wages alone. That does not take account of the wider effects on local businesses and the local supply chain, many of which link their success to the presence of Tata in south Wales.
A recent study by Cardiff University found that the total economic impact of Tata in Wales was approximately £3.2 billion. We must remember why that is important. Many communities in Bridgend and the neighbouring constituencies are among the poorest in the country. Any industry with such a dramatic economic footprint deserves our full attention and support. Our prosperity relies on thriving businesses big and small, so we must do all we can to keep them there.
The steel industry in Wales and right across the UK has gone through some real difficulties in the past few years. The hon. Member for Aberavon mentioned the decline and the difficult years, including the 32% fall we saw in 2016—the largest fall since 2008. While the economy as a whole may have recovered since the 2008 crash, steel has not kept pace. UK steel certainly requires more support.
One of the biggest challenges currently facing the UK steel industry is over-supply in the market, driven mostly by China. The figures speak for themselves: China produces about 928 million tonnes of steel, compared to just 7 million tonnes in the UK. The most notable effect of that is to drive down the price and make it more difficult for British companies to be competitive in the marketplace. I am therefore pleased that the UK Government supported anti-dumping measures to address cheap Chinese steel imports, ensuring that British steel, which, as we all know, is the highest quality steel in the marketplace, can remain competitive.
Another vote of confidence in the UK steel industry is the recent sale of British Steel to Jingye, which will protect 3,200 jobs in the Scunthorpe and Teesside areas. I put on record my congratulations to the UK Government for the work they undertook to finalise that sale, which is a vote of confidence in the UK steel industry. Britain and the world will always need high-quality steel and there are tremendous opportunities over the coming years. The opportunities for growth are substantial, with the potential for £3.8 billion of domestic sales for UK producers.
The UK Government have also taken wide-ranging action to support the industry, including: more than £300 million of relief for electricity costs since 2013; public procurement guidelines, with annual reports on the proportion of public sector steel bought from British firms; and details of a steel pipeline on national infrastructure projects worth around £500 million over the next decade.
Although I hope that the future is bright for the UK steel industry, particularly in Wales, we always can and should do more. I hope that the Government, as well as Members across the House, will work to ensure that British steel companies are at the front of the line for national infrastructure projects such as High Speed 2, and that British steel is at the heart of the Government’s levelling up agenda as well as our international trade deals so that the whole world can access the high-quality steel that only the UK can produce.
I congratulate my hon. Friend Stephen Kinnock on setting out the challenges facing the UK steel industry so effectively and forensically. Like him, I am a long-term member of the all-party group on steel and metal related industries, which I have the pleasure of co-chairing with Holly Mumby-Croft. In our group, alongside the Community and Unite unions and UK Steel, which represents the industry, we have been clear for a long time about the strategy we want the Government to follow to save our steel industry. That has never been more important than it is now, when we see a number of global and UK-specific factors aligning to create a uniquely challenging set of circumstances for steelmakers in this country.
Just this week, Tata wrote to its staff to say that its financial position was serious. This will be another critical year. The Government must act now to help the environment at home for business and our trading relationships, whether they lie in the EU, the US or elsewhere. We have heard those asks repeated again today, on the eve of the Budget, which offers the Government a major opportunity to do the right thing and provide the sector with the strong foundations it needs to weather the current downturn and be in a position to ride the next upturn when it comes.
That is why, as other hon. Members have said, we need action on electricity prices. It is a fact often quoted, but still unresolved, that the UK’s energy intensive industry pays some of the highest industrial electricity prices in Europe. UK steel plants, as my hon. Friend said, paid 62% more than their German and 80% more than their French counterparts last year. We need a level playing field with our European competitors. As he also said—I do not apologise for giving the same messages, because our group has been relaying them to the Government for some time—plant and machinery need to be removed from business rate calculations to drive that capital investment.
As others have said, we must maximise the opportunities for UK steel in major infrastructure projects. According to the last tranche of data from the Department for Business, Energy and Industrial Strategy, 42% of the steel that was procured was sourced from outside the UK. That is still not good enough. Projects such as HS2 give us an opportunity to do better and finally get properly behind the steel charter. We need to use the money that is returned to us from the EU research fund for coal and steel to boost steel sector innovation.
Finally, we must prioritise our steel industry in upcoming trade negotiations. Some 40% of all UK steel is exported, and it is very vulnerable to any deterioration in our trading relationships with Europe and the rest of the world. As my hon. Friend said, we have seen the impact of the Trump tariffs on our exports. Many of us feel as though we have been firefighting for the last five years. The completion of the sales process for British Steel is good news for the company and some of its workforce, given the huge uncertainty and the setbacks that there have been along the way, but we need the Government to be proactive, not reactive. The Government need to decide whether they value making things in this country and whether we want to become an importer of steel, not a maker of steel.
My hon. Friend is giving a powerful speech. Does she agree that following Jingye’s takeover of the plant at Scunthorpe, there is a risk that the Government may say, “Box ticked—that’s sorted. The short-term issue is resolved, and we can walk away and think about something else”? Does she agree that it is vital that that does not happen, and that we still have to address the structural problems that we are discussing?
My hon. Friend is absolutely right. We cannot be reactive; we have to look holistically at achieving a long-term strategic vision. Help for British Steel is, of course, welcome, but we need help for the whole steel industry in the UK, including the Welsh steel industry.
Just before Christmas, Tata’s Orb steelworks in Newport—the only producer of electrical steels in the UK—was mothballed. It needed investment, but with investment it could have provided the steel for the electric vehicle industry, in which the Prime Minister has repeatedly said that he wants us to be a leader. Last week, we found out that no Government support was forthcoming, that no suitable buyer had been found for the works and that Tata was now considering other uses for the site. No help or good news was forthcoming.
There is a human cost to the closure. As my hon. Friend said, the steelworks provided well-paid, highly-skilled jobs in an area that needs them, but the closure also represents the loss of a strategic industry at a time when we need it. We are going to need electrical steels like those made at Orb, so either we will have to import them or someone will have to go out and build another plant. How did we allow that to happen? We need this steel Minister to take a holistic approach, rather than a piecemeal and reactive one.
I am honoured to represent a constituency that has a proud steel tradition, which includes the Llanwern steelworks. The automotive galvanised steel produced at the Zodiac plant in Llanwern is renowned for its quality across the world and is used by manufacturers in the automotive sector, which is closely linked to the steel sector, to make more fuel-efficient and lightweight cars. I have mentioned Orb, but there is also Liberty Steel, which produces hot rolled steel coils and floorplate coils for the construction sector. Sadly, in January that company announced job losses in Newport, which is a reflection of the clouds of uncertainty that still hover over the sector.
Steelworkers in my constituency take huge pride in what they produce. There is a real passion for the industry, and that is why we fight so hard for it. Reflecting on that, I want to mention Paul Horton, who worked at the Orb steelworks for 37 years. He was the main union rep for Community and did an excellent job, alongside other reps from Unite. He attended a debate on the future of Orb in this Chamber just a few months ago, when he sat in the Gallery. In that debate, I highlighted the contribution of workers past and present at Orb, and that of the trade union representatives from Community and Unite who fought so hard for everyone there.
Paul clocked up 12,849 days of work at the site and, although he was reaching the end of his own time at Orb, he knew it would be a tragedy for Newport and for south-east Wales to lose such a strategically important works. Sadly, on new year’s day—the day after he finished work after 38 years—Paul passed away. He was a wonderful man and a passionate advocate for our steel industry. In mentioning him today, I want to reflect on the passion and dedication of those who work in the steel industry, and to honour his memory by carrying on the fight to save our steel.
It has been a huge pleasure, during the early weeks of my time in this place, to work with Opposition Members on steel-related issues. It is clear that all who are involved care deeply for the workers in their constituencies and across the country, and for the steel industry. We have had excellent news in Scunthorpe this week, with the buy-out of British Steel by Jingye Group. We are conscious of the fact that there have, sadly, been job losses, and our thoughts are with all who are affected.
I echo the comments made by my hon. Friend Dr Wallis, who spoke incredibly eloquently and mentioned the Scunthorpe deal. I will not repeat the excellent points he made. I put on record my thanks to the Government for the support they have shown to British Steel since last May. Without that support, frankly, we would not have a steel plant in Scunthorpe; it is as simple as that.
It has been a pleasure to begin to work together with colleagues who are here today. We need to be clear that not one person in this country could go a single day without steel. The industry is incredibly important for our nation, and I look forward to increased support from the Government.
As someone more famous than me said, this is
vu all over again.”
Since I came to this House in 2015, I have been involved in a number of steel debates. As a proud member of the all-party parliamentary group on steel and metal related industries, I pay tribute to the work that the group has done over the past five years.
I am the Member for Motherwell and Wishaw, where we have one steel plant left, which was saved by the Scottish Government in 2015-16. When many other steel plants in the UK are teetering on the brink, it gives me no great pleasure to say that. The UK Government must stand up for the steel industry and deliver a sector deal. President Trump’s decision to impose tariffs on steel imports from the EU has hurt the sector in Scotland and across the UK. Although the tariffs are aimed at blocking highly subsidised Chinese steel, they have adversely impacted steel manufacturers in Scotland and across the UK. Trump’s tariffs also pose threats to the whisky industry, which is ours and ours alone.
Around 10% of UK steel exports went to the US in 2017, but that fell to 7% in 2018 and 8% in 2019 after the tariffs were introduced. The steel industry is not a nice-to-have aspect of the manufacturing sector; it is crucial to all aspects of infrastructure projects in these isles. It supports a huge number of jobs—well-paid jobs, in the main—and feeds a supply chain that contributes even more to employment and economic prosperity. Further support for the sector could open significantly more opportunities for employment and growth.
It is time for the UK Government to match the ambitions of the SNP Scottish Government and get on with the sector deal, to deliver tangible support on energy procurement and all the industry’s other asks. The hon. Member for Aberavon went over those asks eloquently, and I will not repeat them, but they are things that UK Steel, the all-party group and I have been requesting since at least 2015 from a succession of BEIS Ministers. That is not good enough. It is time that the Tory Government took action, saved the steel industry and showed it a really good future.
Does the hon. Lady agree that the steel industry goes wider than just steel manufacturers? For instance, last Friday I visited Lincoln Electric, a high-quality welding company that specialises in welding together all sorts of things, including steel plates. We need those auxiliary industries, which benefit the steel industry, to support more to happen in our country.
I really did not think I would be in such agreement with the hon. Gentleman, but I am pleased to say that on this topic, I am.
After a study into the industry, the UK Government encouraged the steel industry, as part of a planned industrial strategy, to come forward with a proposal for a sector deal, and it did. The industry made serious commitments on its side and asked for a list of commitments from the UK Government, which they have refused to sign up to—in particular, to decreasing energy costs for the steel industry. The industry sees that as vital if it is to compete with steel producers on the continent. The £50 million per annum electricity price disparity that the sector asked the UK Government to eliminate in autumn 2017 is now about £70 million per annum.
No one from the Opposition has actually said that, but this is what he says:
“It has become a sticking plaster. Oh, British Steel’s fallen over, how do we rescue it? Oh, now south Wales is in trouble, how do we rescue it?”
He says there is too much worrying about failure and not enough planning for success:
“It’s never: what do we want the steel industry to look like? What can we do as a developed nation when we’re having to compete with places like China?”
I have agreed with two Tories in one speech. This is something of a record, Sir Charles.
Thank you, Sir Charles; I am just about to wind up. The SNP Government have fought for threatened jobs wherever and whenever there has been a chance to save them. Unlike successive Westminster Governments, the SNP will never turn our back on Scottish industry. I am proud that they saved Dalzell works in my constituency; Sanjeev Gupta, the chair of Liberty House, said that he was very impressed with the efforts of the Scottish Government and the Scottish Steel Task Force to save that plant. No such commitment has ever been shown by a UK Tory Government.
I have taken on board the fact that I need to wind up, Sir Charles, but I just want to say one more thing. Brexit is only going to make all this worse, but in the past the UK Government have used our membership of the EU as a shield that prevented them from doing anything about the UK steel industry’s asks, which it has repeated time and time again. Will the Minister confirm that he can do even more now that this Government have dragged us out of the EU against Scotland’s will?
It is a pleasure to serve under your chairpersonship, Sir Charles. I congratulate my hon. Friend Stephen Kinnock on securing this important and timely debate. As a long-serving member of the steel APPG, he has been at the forefront in fighting for the future of the steel industry and communities that rely on plants across the UK. I also pay tribute to all the members and former members of the APPG who have kept steel high on the Government’s agenda.
The steel industry in the UK has faced many challenges in recent decades, particularly in the past few years. High energy costs and business rates, uncertainty among international buyers about Britain’s future trading relationship with the EU and USA, and the need for certainty about Government procurement have all contributed to increasing concern within the steel sector. Despite those challenges, the steel sector is adaptive and passionate and, with the right amount of support, will prosper.
Over the past three years, I have met steel companies, trade unions and trade bodies. They have all had the same consistent message about what the steel sector needs to succeed. We have been waiting since the launch of the industrial strategy White Paper in 2017 for a steel sector deal to be implemented by the Government. It is time that the Government brought that forward to deal with the many challenges that the industry continues to face.
I will try to skip through most of my speech, because it is important that the Minister answers a lot of the points that have been made. I will just reflect briefly on reducing energy prices. That has been a major ask, and many of our APPG members here, particularly my hon. Friend Jessica Morden, have spoken eloquently about the need to deal with it. The high business rates are just ridiculous. We need plant and machinery removed from business rates; that would boost investment and bring the UK into line with international practice.
Large-scale infrastructure projects provide vast opportunities for steel. Projects such as HS2 contribute towards the 3.8 million tonnes of steel identified in the 2019 steel pipeline. The UK steel sector can and should play a significant role in providing that steel. Investment would secure 6,000 new jobs and an additional contribution of £3.3 billion to the UK economy. The Treasury should sign the UK steel charter and commit to maximising the supply opportunities for steel producers.
The section 232 tariffs imposed by President Trump should be at the forefront of any future trade talks with the USA. It is important that we ensure that the British steel sector is exempt from the punitive tax that was intended to prevent Chinese dumping. British jobs should not be put at risk because of Trump’s trade war.
In July 2019, the Under-Secretary of State for BEIS committed to providing £66 million to support foundation industries, including steel, through the industrial strategy challenge fund. Will the Minister update us on the progress made on that, and when the tangible benefits should be felt by the steel sector?
The concerns of UK steel manufacturers and parliamentarians must be heard and addressed. The long-awaited steel sector deal must be published without delay, to allow the industry to plan for the future with confidence, so I ask the Minister when he will publish a comprehensive sector deal that addresses the concerns of steel manufacturers and parliamentarians. Our steelworkers are well-paid, highly-skilled professionals, well placed to deliver the green revolution that our planet badly needs. I beg the Minister to give them the support they need to help us to do just that.
I am delighted to conduct and take part in this debate under your chairmanship, Sir Charles. I will not see 5.53 pm as a challenge; I will speak to the points that were made, and I would like to make some of the points that we really should air as a Government. I think there has been a bit of misrepresentation—a suggestion that somehow we are not doing anything, and I want to say a few words about that. First, however, I congratulate Stephen Kinnock on securing this timely and important debate. It is timely because it comes the day after the important announcement by Jingye and British Steel—I know that the British Steel is not situated in Port Talbot, but it is a big part of the story of steel in this country—and the day before the Budget, which we all eagerly anticipate. I am sure there will be more in that Budget about some of the support that we are providing to industry generally.
Hon. Members will have seen the announcement on the sale of British Steel to Jingye yesterday. The sale secured British Steel’s sites in Scunthorpe, in Skinningrove and Teesside, and it is to be welcomed. I know that the Secretary of State has worked tirelessly to ensure that a deal was on the cards. I also pay tribute to his predecessor as Secretary of State, my right hon. Friend Andrea Leadsom, who also worked tirelessly so that we could reach this point and celebrate the fact that the deal has been done.
Many hon. Members here have suggested that we have not done anything, or we are not doing enough, to support the sector. I notice that Marion Fellows suggested that it was—I paraphrase—“the evil Tories” who were doing nothing. That is a grotesque characterisation. I point out that in many areas, this Government have provided finance and support and engaged eagerly with the sector. That sort of partisanship—“The Scottish Government do things so much better”—is beneath the level of this debate.
I do not generally intervene on Ministers when they are responding, but in 2015, when the steel industry was at crisis point yet again, the Scottish Government saved the Dalzell works, while many, such as Redcar, went to the wall. If a small nation with a devolved Administration such as Scotland can do so much, perhaps the Government should think again about what steps they are taking. Fine words will not do. We have had them many times in the past.
I am grateful to the hon. Lady for allowing me to continue. I will not get into a debate as to who is better or what the Scottish or British Governments have done. All I will say is that we have policies and have given funds to support the sector. We are completely aware of the strategic importance of the steel industry and remain committed to it. I will say a few words, to emphasise what has been done.
If the hon. Lady will forgive me, I have already given way, and I would like to make a few points before I give way again.
We have provided more than £300 million to the steel sector since 2013. We have tried to make energy costs more competitive in the sector. We are acutely conscious that steel manufacturers in Europe have slightly lower—in some cases, considerably lower—electricity costs, but then again, the other side of that coin is that consumers in those countries have much higher electricity costs than consumers in this country. There is a debate to be had about how that pricing structure should work.
Looking forward, we have announced the £315 million industrial energy transformation fund, which will give steel manufacturers finance towards using clean energy in their manufacturing processes. We also have a £250 million clean steel fund, which is also supporting the sector’s transition from fossil fuel-burning dirty energy to low-carbon technologies. These initiatives and funds have all been announced and funded in the past few years. We continue to support the steel industry, and we engage with it through the Steel Council set up by my right hon. Friend Sajid Javid when he was Business Secretary, so it is not true to say that the Government are doing nothing, or that we do not regularly engage with the industry.
High-end steel engineering at Kiveton Park Steel in Rother Valley produces steel for aircraft, industry and precision engineering requirements, and is exported widely to Brazil, Mexico, India and China. How can we ensure that our trading relationships are enhanced by the benefit of British manufacturing and British steel products?
Exports are at the centre of our industrial base, which is one reason why we support the industry in the way I described. I mentioned the funds and actual policy engagement; we see leaders in the steel sector often. I am pleased that my hon. Friend raisd this issue; it makes a change from fracking, which he often raises with me. However, this is of fundamental importance not only to our industrial strategy but for jobs. I have been struck and impressed by the human stories and the passion with which many MPs here have fought for their industry, their constituents and for the country as well, because we recognise that steel is an absolutely strategic sector.
On prices and the business environment, business rates come up as an challenge that steel companies have to deal with, but they are not alone; across our economy, business rates are often raised. In that vein, the Treasury is committed to reviewing business rates—we hear what people are saying. We want to see what mitigations we can introduce to make the business environment even more benign, to allow companies to thrive.
One extraordinary moment in this debate was the hon. Member for Motherwell and Wishaw quoting Ben Houchen’s writing in The Spectator. That was quite an interesting development. I speak to Ben Houchen, the Mayor of Tees Valley, regularly. He knows that he has many friends and associates within BEIS who are always willing to listen to him on these issues, as they relate not only to the Tees Valley but to the wider steel sector and our industrial base generally. I am proud of engaging with him on this, and I am sure that he understands and recognises that we support the sector and that we are thoroughly and absolutely committed to the steel industry in this country.
My hon. Friend Alexander Stafford mentioned exports. My Department works constantly with the Department for International Trade to ensure that the UK has a suitable trade regime. Naturally, we have not concluded a free trade agreement with the United States as of today, but when we are in the process of doing so, the potential and real damage inflicted on our workers by steel tariffs will be a subject of debate. I am sure that everything will be dealt with in that round of conversation.
I welcome the Minister’s recognition of the deeply damaging impact of the section 232 tariffs on our highly competitive steel industry, which is not state-subsidised, unlike China’s. Does he agree that the point of maximum leverage is now? If the United States wants to enter into trade talks with the UK in a spirit of good faith and trust, surely it would be at the very least a gesture of goodwill to fire the starting gun on the talks by giving the UK an exemption from the tariffs.
The hon. Gentleman is tempting me down a rabbit hole. I am not here to talk about the specifics of our trade deal with the United States; perhaps he should call for another Westminster Hall debate on that. Certainly conversations around any trade agreement with the United States will centre in no small degree on our industrial base and on the nature of our relationship in terms of steel. He will understand that we are now in the process of negotiating a free trade agreement with the EU. We have not started the American trade talks, and I think it would be prejudicial to them—that is my own view—to start making demands in that round of conversations before we start the formal negotiation.
Procurement is important, and we have many projects that rely on UK-made steel, as the hon. Gentleman knows. I do not know whether he has visited Hinkley Point, but I had the honour and privilege of doing so only four or five weeks ago. When I was there, I was told that 100% of the construction steel and rebar for Hinkley Point C was procured in Wales. Port Talbot was an essential part of the construction of Hinkley Point, which they were very proud of. I had the honour of going round the site and seeing the extremely effective and impressive amount of steel that had been imported across the river from Port Talbot to Hinkley Point. That is a classic and very good example of how major infrastructure projects are, even today, reliant on production in Port Talbot.
HS2 was also raised, so it is quite right to talk about the rail network in connection with domestically produced steel. The good news is that 93% of the steel used to maintain our rail network is made in the UK. Does that mean that we have the perfect procurement policy, using UK-manufactured steel? No. However, it is wrong to say that we have not made some progress or that we are not reliant on UK-manufactured steel in our infrastructure and our building, and through Government persuasion, intervention, agitation and conversing with the industry, we can improve the proportion of UK-manufactured content in our infrastructure.
The picture for the steel industry is challenging. Many of the concerns that hon. Members have raised about pricing and the geopolitical environment are out of our hands. I remember the biggest fact in the steel industry from the time, many years ago, when I was an analyst in this sector. In 2000, I was struck by the fact that China produced only 15% of global steel. Today, that figure is 50%. The hon. Member for Aberavon and others will know that Chinese steel is strongly supported by China’s Government, and there is a history of dumping. The pricing framework has been under a lot of pressure from Chinese production. We must deal with that, and we want to, but it is a serious pressure that we should all be conscious of.
It is wrong to say that the Government have not done anything in this regard. We have plenty of investment and funds. Not only do we have resources and money, but we engage with the industry, for example through the British Steel Council, which never happened before. My right hon. Friend the Member for Bromsgrove introduced that in 2016. We have worked with the industry. We signed up to the UK steel procurement charter, which shows our commitment to ensuring that UK steel producers get a fair, good chance of securing public contracts.
I think the hon. Member for Motherwell and Wishaw mentioned the EU. No debate in this House has passed without mention of the EU in the past four years. This is a classic example where we will no longer be tied by the state aid rules of the EU, so there is ample opportunity for Governments to provide some measure of comfort to the industry, as well as support, as we intend to do.
I am pleased to have spoken in this debate. I have left some time for the hon. Member for Aberavon to sum up, Sir Charles.
I thank the Minister for his remarks. I welcome anything the Government have done and can do to support our industry, but we have not really made much progress on the specifics, and the devil is in the detail. There is a crazy disparity between energy costs in this country and in France and Germany. That is the simple fact of the matter. We need policy intervention to give us that level playing field. It seems absurd to have an energy-intensive industry compensation package paying for the symptoms rather than addressing the causes. I urge some detailed responses to my questions, specifically about energy policy.
It is great to hear that the Government are reviewing business rates, but this crisis has lasted for five years. It seems incredible to me that we are still reviewing something when we know what the answer is: take plant and machinery out of business rates. On trade, a gesture of good will from the United States would be a welcome way to start those negotiations. I recognise that the Minister will not be in the room for those negotiations, but it is his job to champion the steel industry across Westminster and Whitehall. I hope he will be the voice of the steel industry in those trade negotiations. On procurement, there was a specific question: will the HS2 vehicle that runs that project sign the steel charter tomorrow? There is no reason why it cannot do that.
I welcome the Minister’s constructive response, but the devil is in the detail. I would welcome detailed progress on those points, because otherwise it feels like we are using a sticking plaster over a gaping wound. Our British steel industry is the pride of this country and the foundation of our manufacturing sector. It is the pride of communities such as the one I represent and those represented by colleagues around the Chamber. I hope we will see that proactive response from the Government in the very near future.
Question put and agreed to.
That this House
has considered the future of the British steel industry.