UK Steel Sector: Supply Chains — [Sir Graham Brady in the Chair]

– in Westminster Hall on 9th June 2021.

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Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee 9:25 am, 9th June 2021

I remind hon. Members that there have been some changes to normal practice in order to support the new hybrid arrangements. Timings of debates have been amended to allow technical arrangements to be made for the next debate. There will be suspensions between debates.

I remind Members participating, physically and virtually, that they must arrive for the start of a debate in Westminster Hall and are expected to remain for the entire debate. I must also remind Members participating virtually that they are visible at all times, both to one another and to us in the Boothroyd Room. If Members attending virtually have any technical problems, they should email the Westminster Hall Clerks’ email address, which is westminsterhallclerks@parliament.uk. Members attending physically should clean their spaces before using them and before leaving the room. I remind Members that Mr Speaker has stated that masks should be worn in Westminster Hall. There is nobody sitting in the Public Gallery in order to speak.

Photo of Stephen Kinnock Stephen Kinnock Shadow Minister (Foreign and Commonwealth Affairs) 9:26 am, 9th June 2021

I beg to move,

That this House
has considered the UK steel sector and its supply chains.

It is a pleasure to serve under your chairship, Sir Graham. Hon. Members taking part in the debate today will recognise that this is not the first time that we have sought assurances from the UK Government that they are sincerely committed to supporting the British steel industry. Indeed, by my calculations, since 2015 Labour MPs have secured 19 debates and urgent questions on steel, made 51 speeches on steel, asked 54 oral questions on steel, and intervened on or responded to Ministers 103 times on the future of our steel industry. A pessimist may ask, “What’s the point?”. After all that pressure, the British steel industry still faces a range of serious challenges, and the UK Government are continually failing to provide the necessary level of support to allow the UK steel sector to compete.

In spite of those powerful headwinds, I am optimistic about the future of our steel industry, because I believe that covid-19 has completely reset the way in which the British people think about the sort of country they want to live in. The public want a Britain that can stand on its own two feet and that is more resilient to external shocks. The pandemic has exposed the weaknesses and vulnerabilities that lie at the heart of our economy and our society. The pandemic has demonstrated beyond a shadow of a doubt that if we wish to address those weaknesses and vulnerabilities, we must commit to and invest in a renaissance of modern manufacturing in our country.

British manufacturing has been in decline, dropping from 30% of GDP in the 1970s to just 9% today. The UK’s shift towards a city-centric, service-based economy means that 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 areas, with west Wales and the valleys the poorest of all.

Today, our country stands at a fork in the road, and the choice is clear. Are we going to continue to allow our manufacturing sector to wither away, constantly eroded by the sort of policies that have come to define the last decade and which are advocated in the book of the Secretary of State for Business, Energy and Industrial Strategy, “Britannia Unchained”: “Let the market rip. Let the City of London call the shots. Let globalisation and deindustrialisation ride roughshod over our communities.”? Or are we going to truly understand the pandemic as a clear and unambiguous warning that we cannot go back to business as usual and that we must strive for real enduring change; that we must stand on our own two feet by reducing our dangerous over-reliance on imports from China; that it is time to recognise that the collapse of British manufacturing is the primary cause of the grotesque inequality that exists between the wealthiest and the poorest regions of our country; and that a modern manufacturing renaissance is our only route towards a fair and just transition to a cleaner, greener future?

Our manufacturing base can be rebuilt only if it is based on a strong and healthy steel industry, because steel is a vital foundational industry that is critical for our security, prosperity and green resilience. Our economic and national security are underpinned by steel. Every military vehicle, major infrastructure project and power station requires steel. In a world where strategic competition between democracies and dictatorships is intensifying on an almost daily basis, it is crucial that as much of that steel as possible is produced here in the UK.

Our prosperity as a nation is also dependent on steel as a vital foundational industry that feeds into our entire manufacturing sector. Steel jobs are good jobs that pay an average annual salary of £36,000, which is 36% higher than the Welsh average, and the Port Talbot steelworks in my Aberavon constituency provides 4,000 such jobs, alongside thousands more through the supply chains.

Home-grown steel is also the only route to tackling climate change. Steel will play a critical role in greening our economy by building the electric cars of the future and providing vital components for solar, wind and tidal power. Moreover, British production processes have half the carbon footprint of China’s far less decarbonised steel industry, and shipping steel from the other side of the world is obviously more carbon intensive.

Whether we look at the British steel industry through the prism of our national security, regional prosperity or planetary sustainability, we draw the same conclusion: there can be no sustainable post-pandemic economic recovery without a strong and healthy steel industry. The arguments are compelling, irrefutable and over-whelming, so it is difficult to understand why the UK Government have been so slow to act, but the pandemic has put rocket boosters on the need for a modern manufacturing renaissance underpinned by the rebirth of our steel industry.

The Government must now take the following steps. First, they must reject the recommendation of the Trade Remedies Investigations Directorate regarding steel safeguards, and must ensure that all 19 of the safeguards remain in place. Those trade defence measures were put in place to guard against import surges caused by President Trump’s section 232 tariffs, and it is essential that they are retained until such time as the section 232 tariffs are dropped by the Biden Administration. The TRID’s recommendations are tantamount to dismantling the flood defences just as the tidal wave is about to hit. Will the Minister assure us that she has made the position of the steel industry, steel unions and steel MPs clear to her colleagues in the Department for International Trade?

Secondly, the Government must as a matter of urgency address the issue of our industrial energy crisis. British steelmakers pay 86% more than their German competitors and 62% more than the French. Over the past five years, that disparity has cost the UK steel industry an additional £254 million. Those additional costs represent funds that should and would have been directed towards critical capital investment, including decarbonisation projects. Will the Minister please assure us today that her Department is truly committed to tackling the root causes of the UK’s astronomical industrial energy prices, and can she set out her urgent action plan for doing so?

Thirdly, we need a patriotic procurement policy. It is absurd and inexcusable that the Ministry of Defence is buying Type 26 frigates for the Royal Navy that are built with Swedish steel. We need procurement that gives the right weighting to local value. Let us look at big opportunities such as High Speed 2, with 2 million tonnes of steel. How much of that steel is going to be British? Can the Minister assure us today that every Government Department and HS2 will be signed up to the steel charter by the end of this calendar year?

Fourthly, we need a Government who are truly committed to rebuilding our manufacturing base, and who believe in partnering with industry to do so. Some say that steel is a sunset industry, but nothing could be further from the truth—it is at the cutting edge of innovation. Indeed, the vast majority of the alloys that are used in steel these days did not even exist 10 years ago. It is absurd to have a Government who have utterly failed to support the Orb plant in Newport—I look to my hon. Friend Jessica Morden—which could play a major role in electric vehicles.

It seems that the left hand does not know what the right hand is doing, which is precisely why co-ordinating forums such as the Industrial Strategy Council are so important. Can the Minister please explain why the Industrial Strategy Council has been closed down by the Business Secretary, and can she please tell us whether she thinks that decision will be a help or hindrance to the future of the British steel industry?

British steelworkers are a strong, proud community of men and women who make the best steel that money can buy. They are certainly not looking for anybody’s charity, special treatment or favours. They are simply seeking the opportunity to compete without having one hand tied behind their back. They are simply asking for a level playing field. Since 2010, successive Conservative Governments have let them down by leaving the flood gates open to heavily subsidised imports from China; by failing to close the energy price gap; by declining to develop a patriotic procurement policy; and by failing to grasp the vital role that a home-grown steel industry must play in driving the green industrial revolution forward.

Receiving a fair day’s pay for a fair day’s work is as important to steelworkers as it is to every other working person across the length and breadth of our country. However, working people are motivated by far more than money. Above all, they are driven by the sense of pride and dignity that their work gives them, and steelworkers are certainly not an exception to that rule.

Steelworkers do long shifts in challenging conditions because they want to make a contribution. They are fiercely proud of the fact that steel is the basis of the houses we live in, the offices we work in and the cars we drive. They are steelworkers because they want to do their bit for their country, for their communities, and for their families. They are steelworkers because they want to be part of something bigger, but they cannot do this alone.

They need a Government who will back them to the hilt; a Government who will put policies in place that attract investment, rather than drive it away; a Government who truly believe that a country should be able to stand on its own two feet. Our steelworkers need a Government who are genuinely committed to reversing the decline of manufacturing in this country. They need a Government who are truly invested in swinging the pendulum from cities to towns, and from London and the south-east to the rest of the country. Britain needs its steel, and our steelworkers need a Government who are on their side.

Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee

I should inform all participants that due to a technical problem, all those participating virtually did not catch the first three minutes of the debate. That has now been resolved, but I pass on the apologies of the staff who have been working to resolve the problem.

There are a lot of Back-Bench participants on the call list. If it is possible for them to keep to about five minutes, we should be able to get everybody in.

Photo of Holly Mumby-Croft Holly Mumby-Croft Conservative, Scunthorpe 9:39 am, 9th June 2021

It is a pleasure to serve under your chairmanship today, Sir Graham. I thank Stephen Kinnock for securing this important debate. As I am a fellow steel MP, I agree with him on many of the issues that he has raised this morning.

The steel sector has seen tough times and this Government have been proactive. In Scunthorpe, we put in hundreds of millions of pounds to keep our blast furnaces going. I myself come from a steel family, so I know that when times get tough, it is not only the steelworks that are threatened but the steelworkers— people like my granddad, who worked in Scunthorpe steelworks for 30 years—and the 20,000 supply chain jobs in my area, as well as the towns that grow up around the industry.

Steel is, indeed, a foundation industry that is crucial to national security. Our ability to manufacture and produce steel is critical in ensuring that we are self-reliant and insulated from global steel shortages. The Minister will recognise that there is competition between Governments in providing the best environment for a steel industry to thrive and there is much that we can do to provide a better competitive environment for UK steelmakers.

Rather than continuing to provide support in times of crisis, as this Government have undoubtedly done, we need to continue to look further and harder at long-term steel measures. Indeed, the glaring flaw in the preliminary recommendation by the Trade Remedies Investigations Directorate is that it did not make a sufficient industry-led assessment. Our steelworks produce many products across the categories assessed by TRID. These products are linked back to the production of crude steel and steelworks need a certain base level of production to be profitable. An increase in imports in an unprotected category could affect the viability of another steel product, and there is a real risk that the UK will be increasingly vulnerable to imports if steel safeguards are removed. I urge the Minister to work with her colleagues from the Department for International Trade to prevent that from happening.

We must also address the high cost of energy prices. Our steelworks currently pay almost twice as much for energy as French and German steelworks. On steel procurement, there has been progress and many in the industry have welcomed the overarching principles of the Government’s recent paper. The central tenets, especially on considering the overall social value of procurement and providing more flexibility for decision making, are absolutely right. The procurement of steel from the UK generates social value for our communities. Steel does indeed create well-paid jobs and has a part to play in levelling up areas such as Scunthorpe as manufacturing and logistics powerhouses.

However, challenges remain and I hope that the Minister will consider them. Steel procurement often involves an internal supply chain process. A contracting authority for an airport, for example, may appoint different subcontractors for different parts of the project. Each subcontractor may then appoint a sub-subcontractor on smaller bits and the sub-subcontractor may in turn, given their much smaller brief, procure the steel they need for their section of the development from an overseas producer without a tender—for example, one they have an existing relationship with.

That means that the same steelmaker may have to pursue, through multiple channels, contracts that are ultimately for the same project. That also makes reporting of the origins of steel difficult, which flies in the face of another fantastic tenet of the Government’s procurement proposals, which is transparency. Most importantly, in our national projects, this situation could cost the taxpayer more, due to the fragmented supply chain, the administration, the bureaucracy, the increase in supply lead times and the margin that each level of the steel supply chain commands.

We will see whether the proposals go deep enough and I hope that the Minister will say how she will work with her colleagues in the Cabinet Office to ensure that sub-sub-subcontractors uphold the high standards that the Government are looking to set for contracting authorities.

I believe that the British people want to see the Government use British-made steel in large-scale Government projects such as HS2. They want to see every bit of steel that we have the capability to produce being produced here in the UK. Indeed, I hope the Minister will consider what she can do with the traditional supply chain to explore whether contracting authorities can make steel procurement a separate tender, so that our steelworks can bid for large parts of the steel required in a steel-intensive national project.

That not only fulfils the core tenets of the Government’s procurement proposals but makes commercial sense. Our steelworks are well equipped to deal with the different products needed and have dedicated supply teams to provide technical management and supply chain steel expertise. I hope that the Minister can explore this approach with her colleagues in the Cabinet Office.

I come from Scunthorpe. I was brought up so close to the steelworks that we could hear them making steel when we lay in bed at night. This matter is personal to me and to many of my constituents. The hon. Member for Aberavon is absolutely right—none of us could live a single day of our lives without steel. This Government have a proud record in supporting the steel industry in places such as Scunthorpe. I look forward to hearing from the Minister and working with her on behalf of our world-class steelmakers.

Photo of Sarah Champion Sarah Champion Chair, International Development Committee, Chair, International Development Committee 9:45 am, 9th June 2021

It is always a pleasure to serve under your chairmanship, Sir Graham. I am very frustrated that we are here once again; I hope my speech will explain why. The British steel industry has huge potential, but the long-term failures of the Government to address the underlying issues continues to hold it back. Since I was first elected in 2012, steelworkers in my constituency have faced a seemingly endless cycle of crises with lingering uncertainty, not only for them but for all those throughout Rotherham, where the local economy and people’s livelihoods depend on the sector. That uncertainty has continued with Liberty’s announcement that it is selling its speciality steels division, which includes the narrow strip mill at Brinsworth in my constituency.

Throughout the recent difficulties at Liberty, the Government have promised much but, to date, delivered little in the way of practical support. That cannot continue as the sale progresses. Any sale must safeguard the long-term future of the plant and must hold Sanjeev Gupta true to his word that no plant will close on his watch. Liberty must run a transparent sales process and engage with all concerned parties, including the trade unions. The Government must carefully scrutinise any deal and ensure that it includes clear safeguards for the future of both the plant and the steel jobs. They are crucial assets to our economy and they cannot be lost as the result of a fire sale to secure finances for GFG’s other businesses.

While the sale of speciality steel is concerning, Liberty’s ongoing commitment to its Aldwarke plant in Rotherham is encouraging. The plant can lead the way in our drive to decarbonise our steel industry. Decarbonisation presents challenges but also offers huge opportunities to grow our economy and create new green jobs, but that would take sustained support from the Government and a viable long-term plan—something that, to date, has been lacking.

I urge the Government to recognise this opportunity to work with the industry to create the greener future we all want to see. None of that can happen while the Government continue to shy from confronting the sector’s underlying issues—issues that are well understood, but remain unaddressed. The Government had long argued that EU rules prevented state aid for the steel sector. Those rules no longer apply, and it is high time that the Government developed their own system to regulate subsidies and support investment.

The public sector is British Steel’s largest single customer. Tendering processes must consider the impact on domestic jobs, as already seen in France and Germany. I see no reason why this Government’s procurement process cannot favour UK-produced steel, not least because it is the best in the world.

With British Steel paying an average of 86% more for electricity than its competitors in Germany, action on damaging high energy costs is essential if the industry is to hope to compete on an even footing. We must also defend our industry from being overwhelmed by cheap foreign imports. It is deeply disappointing that the Trade Remedies Investigations Directorate is arguing to slash safeguards on nine out of 19 product categories, which runs the risk of cutting the industry off at the knees. I urge the Secretary of State to reject its recommendations.

The steel industry can have a bright future if the Government engage with these issues and work with the industry to provide the support that it needs to grow and thrive. However belatedly, I really hope the Minister will listen and that the Government will act to protect our steel industry.

Photo of Mick Whitley Mick Whitley Labour, Birkenhead 9:49 am, 9th June 2021

It is a pleasure to serve under your chairmanship, Sir Graham. I thank my hon. Friend Stephen Kinnock for securing this important debate, and I draw attention to my entry in the Register of Members’ Financial Interests.

British steel was once the envy of the world. From Newport to north Lanarkshire, steel making supported hundreds of thousands of jobs and inspired a fierce and well-earned pride in all involved. In January 1980, the Thatcher Government provoked a strike at the British Steel Corporation—the first national strike in the industry for more than 50 years—to break the union and pave the way for privatisation and under-investment. We are paying the price for that today, as the future of the industry hangs in the balance. Unable to compete on the international stage, the economic output of British steel fell by a staggering 30% in 2016 alone, and last year the Government’s brazen refusal to step in and save the Orb steelworks in Newport led to the historic site closing after 122 years in operation.

Now, the crisis at Liberty Steel threatens not only the livelihoods of the steelworkers themselves but those of more than 3,000 workers in the wider supply chain. Some argue that the British steel industry is doomed to terminal decline—just another in a long line of industries sacrificed to deindustrialisation. I could not disagree more. If we made the right investment now, I believe we can not only secure work for generations to come but re-establish the UK as a world leader in sustainable steel production. Technological advances, such as direct reduced iron technology and hydrogen power, have the potential to transform the industry. It currently accounts for about a quarter of all UK industrial emissions, but it can be part of the green industrial revolution and once again become a force to be reckoned with.

None of that is possible without direct Government support. There have been many encouraging steps so far, such as the re-establishment of the UK Steel Council, the creation of the £250 million clean steel fund and the commitment to founding two industrial clusters by the mid-2020s. Very good, but I fear that we are failing to go far or fast enough in decarbonising the sector. Hydrogen-based steel making is already being piloted in at least 23 sites across Europe, so the UK risks being left far behind by our European neighbours. Whether it is Scunthorpe or Port Talbot, these are the very communities that the Government promised to level up, yet they will be the ones that pay the price.

The British steel industry faces a stark choice: decarbonise or wither away. That is why I call on the Government to heed the calls of the industry leaders and environmental groups and begin trials of hydrogen steel without delay, with a view to fully decarbonising the sector by 2035, as recommended by the Climate Change Committee. That is an enormous challenge, but without that scale of ambition, we cannot possibly hope to compete with our international competitors.

This is not just about decarbonising steel. If we are going to revive this vital industry, the Government also need to take advantage of our departure from the EU’s regulatory framework and ensure that the procurement policy actively benefits British steelmakers. Over the next 10 years, an estimated 7.6 million tonnes of steel will be needed for public infrastructure projects. The Prime Minister must honour his promise and ensure that British steelworkers are at the very front of the queue.

Photo of Bill Esterson Bill Esterson Shadow Minister (International Trade) 9:52 am, 9th June 2021

I congratulate my hon. Friend Stephen Kinnock on securing this debate and on his excellent analysis of the challenges facing the steel industry. He, Holly Mumby-Croft and my hon. Friend Sarah Champion referred to the problems of trade defence measures, and that is what I will concentrate my remarks on.

Last month, the Trade Remedies Investigations Directorate published a draft recommendation to withdraw half of all trade remedies on steel. If that happens, the consequences could be disastrous. During the Committee stage of the Trade Act 2021, I argued that there should be an independent body to make recommendations on trade remedies, which would also take into account domestic economic considerations, but the recent recommendations by TRID show that the regulations that were set out in its mandate, which now also govern the newly established Trade Remedies Authority, are simply not fit for purpose.

Steel manufacturing is a critical national asset. Steel produced in Britain is used to make ships for the Royal Navy and wind turbines to meet our climate obligations. The construction of a nuclear power station at Hinkley Point C is using Welsh steel, and 1.3 million tonnes of steel are required for the construction of High Speed 2. The sector directly employs more than 30,000 people, supports a further 41,100 jobs in high-value supply chains, makes a £2.8 billion direct contribution to UK GDP and supports a further £3.6 billion in its supply chains. Steel is a vital asset—we must protect it in the national interest. However, in making its draft recommendation, TRID failed to take into account the reality of the steel supply chain.

The full spectrum of measures is designed to protect the viability of steel as a whole, not just individual production lines. Removing safeguards would mean that the manufacture of steel sections, tubes, wire rods and plates in the UK becomes unviable. It seems almost certain that the European Union will retain its section 232 tariffs beyond 30 June, meaning that any global overproduction of steel will likely flood the UK, crush domestic supply and have potentially catastrophic consequences for the industry and communities here in Britain.

That existential threat to the industry is a strong argument for maintaining all existing trade defence measures for steel, but TRID, and now the TRA, is forced to prioritise the unimpeded functioning of a global market because that is what it says in the regulations which direct their decision making. The regulations do not envisage the maintenance of the safeguards that domestic producers should be able to expect from their Government—these take second place for our trade remedies body. Hence the recommendation by them for the removal of some safeguards. The economic tests which TRID and the TRA must apply, according to their own regulations, do not provide the Secretary of State for International Trade with the ability to take into account wider factors of strategic national interest when deciding whether or not to reject a recommendation from them. The Business Secretary said he was

“committed to a strategic presence of steel in the UK.”—[Official Report, 25 May 2021; Vol. 696, c. 233.]

The International Trade Secretary said that she will do

“whatever it takes to protect our steel industry.”

The two Secretaries of State must keep their promises and allow the safeguards to remain beyond 30 June while the weaknesses and trade remedies regulations are fixed—they promised to do this. Members on all sides will work with the Government to support jobs and communities. The existential threat of lifting half of the safeguards means there may be just 21 days to save British steel.

Photo of Christina Rees Christina Rees Labour/Co-operative, Neath 9:57 am, 9th June 2021

It is always a pleasure to see you in the Chair, Sir Graham. I congratulate my hon. Friend Stephen Kinnock for securing this important debate.

Steel is a foundational sector across the UK and never more so than in Neath Port Talbot county borough. Upon these strong foundations, economies and supply chains are created. Port Talbot’s steelworks reaches all the surrounding communities. Thousands of Neath constituents have worked there, know someone who works there, or work in its supply chain—my father did. To say it has been a difficult few years for the steelworkers in Neath Port Talbot would be an understatement. Competing in a global market, the absence of anti-dumping tariffs, the lifting of lesser duty rates and rising UK energy process have conspired to create uncertainty and fear. Over 2,000 local jobs have been lost since 2014. Steel and the steel industry are vital to Wales and its economy.

The idea that the steel sector does not have a future is unthinkable, but our steelworkers are as robust as the steel they make. They have bounced back from every adversity so far—but the situation is about to get much worse. The recent Trade Remedies Investigations Directorate recommendations on the existing steel safeguards could be catastrophic for the UK steel sector. Only 10 out of 19 product categories are recommended to have safeguards extended, leaving sites in Llanelli, Cardiff, Gateshead, Sheffield and many more without the protection to limit sudden increases in imports. The lifting of safeguards would open up UK markets to trade diversion and have a negative impact on the remaining measures. The interconnected nature of UK steel means that a threat to one product category will have consequences for the others.

Steel imports increased by 25% between 2013 and 2017, before the original EU steel safeguards were introduced. The current circumstances of global overcapacity and import restrictions in other countries make it highly probable that steel imports will again escalate should safeguards be removed. It is probable that the EU and the US will continue to provide safeguards for their industries and place measures on UK steel imports. It is astounding that the UK Government would provide open access to our steel market. The market remains volatile and delicate during the continuing pandemic, which has seen steel demand drop by 16% during 2020. The steel sector needs stability to recover and to adapt to a post-covid world. Safeguards are crucial to provide stability. The steel sector will continue to face many challenges—decarbonisation, subsidy regulation post Brexit, public sector procurement, energy price disparity—but it is the removal of steel safeguards that poses the biggest existential challenge, given the interconnectivity across the sector.

This is the first major trading test for the UK in post-Brexit times, and the UK Government must establish a fair trading environment for the UK steel industry and our communities. In contrast, the Welsh Labour Government have been standing up for steel, making an £8 million commitment to help secure a £30 million power plant at Port Talbot; offering £17 million of support for skills development; investing in energy efficiency; planning to reduce carbon emission; and offering research and development funding for new product development. At critical times, the Welsh Labour Government have provided direct financial support to sites right across Wales, protecting our jobs and communities.

Photo of Jessica Morden Jessica Morden Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Shadow Vice Chamberlain of HM Household (Whip) 10:02 am, 9th June 2021

Well done to my hon. Friend Stephen Kinnock for securing this important debate. He is both the Member for Port Talbot and our chair of the all-party parliamentary group for steel and metal related industries. He gave an excellent analysis, setting out the issues yet again.

My hon. Friend mentioned that we have had 19 debates on steel in this House over recent years. I feel I have been there with him in many of those, making the same points over and over again. I do so because steel has always been at the very heart of the community that I represent, with many workers in both the steel industry in Newport East and down the road in Port Talbot, and in supply chains, making world-class automotive steel for BMW, Jaguar Land Rover and other projects at Tata Llanwern. We also have the Celsa site in the constituency of my hon. Friend Stephen Doughty, which is one of the largest producers of rebar; and Liberty, which produces hot rolled coil for domestic and export markets for use in construction and is at the cutting edge of modern steel technology. On that note, I know that we all want the future of all Liberty Steel businesses secured, including Newport, and I know that hon. Members for steel constituencies will hold Liberty and the Government to account and make sure that we uphold that commitment to the workforce and our industry going forward.

On behalf of that industry, those businesses, those workers and the unions in my constituency, I say again what steel MPs have been saying here for many years: steel should be a cornerstone of a comprehensive, forward-looking industrial strategy in this country. It has an absolutely pivotal role to play in our recovery from the pandemic. The economic value of the steel sector cannot be overstated. The industry makes a £2.8 billion direct contribution to GDP and supports a further £3.6 billion through its supply chains, while the average salary is around 36% higher than the regional average in steel heartlands such as south Wales and Yorkshire. If the Government are really serious about levelling up across the UK, they should look to steel as a foundation to build on.

In his response to me at Business, Energy and Industrial Strategy questions last month, the Secretary of State said that the Government were

“committed to a strategic presence of steel in the UK.”—[Official Report, 25 May 2021; Vol. 696, c. 233.]

Although I welcome that assurance, it is now time that the Government backed it up with meaningful action to support the industry.

As others have said, we need a change of direction on procurement. The Community union, plus Unite, GMB and others—I pay tribute to them for all the work they do on behalf of their members—have campaigned for decades for contracting authorities to effectively deploy social and environmental clauses in tendering processes in order to support domestic jobs in industry, just as they do in France and Germany, but little has changed in practical terms since 2016, when there were a few measures, and home-grown steel companies are continuing to miss out on important contracts, despite rhetoric from the Prime Minister about being at the front of the queue. The most recent Government data on how much steel is sourced in the UK includes only 160,000 tonnes, which is somewhat less than the estimated 800,000 to 900,000 tonnes of steel that their forward-looking pipeline indicates is used by central Government each year. As my hon. Friend the Member for Aberavon said, we need a patriotic procurement policy.

The case for sourcing UK steel is overwhelming. Every 1,000 tonnes of UK steel used in a public project delivers 4.5 jobs in the steel industry, and 10 jobs when the supply chain is included. As others have said, in addition to the economic boost that that provides, there are real environmental benefits from not importing steel from the EU or China respectively.

Energy prices are a prevalent problem. Ministers may have grown tired of steel MPs banging the drum about this over the years, but it remains critical for our industry. The oft-quoted evidence s is stark: UK steel producers pay 86% more for electricity than their competitors in Germany and 62% more than is paid in France. That is a £54-million-a-year cost burden to the UK steel sector and a huge competitive disadvantage. The targeted charging review led by Ofgem is set to make matters worse, as the review’s proposals would leave our producers paying 156% more in energy costs. Obviously, that would be devastating. I urge Ministers to do what they can on that, too.

As others have said, we need Ministers to work urgently to prevent the Trade Remedies Investigations Directorate from slashing our steel safeguards in half. The case was excellently argued by my hon. Friend Bill Esterson. The safeguards are vital to providing a stable environment for the sector and protecting against unprecedented import surges, especially at a time when we are seeing significant global overcapacity in steel.

I also specifically ask the Minister to look again at the issue of bonded warehouses, which effectively undercut UK producers by waiving duty on cheap foreign imports. My hon. Friend Nick Smith has led on this issue, and both of us have written to Ministers to convey our concerns and the concerns of unions and management in Newport and in Tredegar at Liberty. Will the Minister here today look into the matter?

As my hon. Friend has said, we saw the cost of doing nothing at the Orb works: we lost the only plant making electrical steels in the UK at a time when we are going to need electrical steels. The Government should have stepped in then. Orb steelworkers knew what was at stake, and I was proud to stand alongside them and their unions in the fight to save steel jobs.

As a country, we just cannot go on making huge strategic mistakes when it comes to our steel and manufacturing sectors. We need to utilise our steel assets and invest in our greatest strength, which is the indomitable, passionate and highly skilled steelworkers we have. We need the industry to have a level playing field. We need to have the right backing to drive this forward. We ask again for the Government to step up, to address the issues raised again today and to come up with a viable long-term plan to protect our industry.

Photo of Mark Tami Mark Tami Opposition Pairing Whip (Commons) 10:09 am, 9th June 2021

It is a pleasure to serve under your chairmanship, Sir Graham. Like everyone else, I thank my hon. Friend Stephen Kinnock for securing this very important debate today.

This year marks the 125th year of production at Shotton steelworks on Deeside, which is a remarkable achievement. I hope and trust that we will see another 125 years. I doubt I will still be here to celebrate that, but we all live in hope. Order books are good and Shotton continues to produce high-quality value-added products, which is a great credit to the workforce and the management of the plant, yet we only have to look at Shotton’s history to understand the highs and lows that the industry faces as a whole. In 1980, more than 6,500 jobs were lost on a single day— at the time, it was the largest redundancy at a single plant in the history of western Europe. Those jobs have never come back. The plant today is still efficient and profitable, but Shotton cannot function on its own—it relies on Port Talbot for its steel—just as the industry cannot function as individual plants.

The UK steel industry has been in a fragile state for many years, seemingly lurching from one crisis to another. We have a Government who talk about their support for the industry going forward, but their actions—or, rather, lack of action—tell a very different story. Only when a plant or business is on the verge of collapse do they seem to show any interest in the steel industry, and they lose interest again when the plant either is saved in the short term or has collapsed. If steel is to have a future in the UK, we need a Government who recognise that we have to have a long-term plan to support the industry.

It is no good saying simply that steel needs to modernise or decarbonise its business, or that somehow hydrogen will save the day at some point in the future. That will not happen if we do not support and maintain a viable business today. Hydrogen might well be the future, but it is some way off and we cannot just use it as an excuse to do nothing now. That means addressing what many other colleagues have mentioned—the ludicrous situation where steel manufacturers here pay 62% more for electricity than those in France, and 86% more than those in Germany. That is not a new problem; it is something we have been banging on about year in, year out, but—shock, horror!—nothing changes, nothing happens. All we are told by the Government is to take it up with Ofgem, but we all know the answer we will get. All Ofgem says is that there is nothing it can do. I would argue that Ofgem seems intent on making the situation worse, rather than better. How can we seriously expect the industry to invest in the future when it has both hands tied firmly behind its back?

We were always told that nothing could be done and that, as with so many other things, it was all Europe’s fault. The same public procurement argument was constantly wheeled out, as a number of colleagues have said. Other European countries managed to do something, but for some unknown reason we could not. Even that excuse has gone now, however, and the UK Government need to step up to the plate.

The UK steel industry supplies only about 10% of public sector current requirements. That needs to increase dramatically. The Government need to work with the industry to make that happen. The Prime Minister talks a lot about infrastructure projects, shovel-ready projects post covid. I had the pleasure of speaking in the restoration and renewal debate the other day, and I said that this place should be the very starting point of using UK steel. UK steel must be the centre of any recovery. It must be not an afterthought, but at the very heart of such projects.

We cannot carry on as we are now. We need the Government to step up and to support our industry. It needs support now.

Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee

For the guidance of Members, I intend to call the first of the Front Benchers winding up the debate at 10.23 am.

Photo of Ruth Jones Ruth Jones Shadow Minister (Environment, Food and Rural Affairs) 10:14 am, 9th June 2021

It is a pleasure to serve under your chairmanship, Sir Graham. I will start my remarks as others have, by paying tribute to my hon. Friend Stephen Kinnock for calling this debate and for making such an important opening speech, in which he gave voice to many of the concerns felt by so many colleagues here. I thank him for that.

The fact that so many colleagues from across Wales are speaking in this debate demonstrates the strength of feeling that local people back home have when it comes to steel, the future of steel and the steel industry more generally. Like other colleagues, I am concerned about the recent recommendation on steel safeguards from the Trade Remedies Investigations Directorate—now called the Trade Remedies Authority. I totally agree that it represents a potentially hugely damaging decision for the UK’s steel sector. Let us not forget that that sector provides jobs, fuels our country’s economic success and showcases British skill, talent and expertise.

As has been mentioned by others, the Trade Remedies Authority has recommended extending the UK safeguard measures on just 10 out of 19 product categories. That would, or at least could, open the UK’s markets to significant levels of trade diversion and undermine the effectiveness of the measures that remain in place. Divergence appears to be the rule of thumb from this Government. I urge Ministers to remember the age-old adage: if it ain’t broke, don’t fix it. They would do well to keep that in mind.

The United Kingdom has had steel safeguards since 2018 as a result of our then membership of the EU, and those protections were transitioned and carried over into UK law in January 2021. The measures were introduced to limit further increases in imports because of a dysfunctional global trading environment for steel—namely, global overcapacity of steel, trade diversions resulting from the US introduction of steel tariffs, and the increased use of trade defence measures globally. It is clear that the Biden Administration, and indeed our friends and neighbours in Europe, will probably retain those equivalent measures if the United Kingdom unilaterally removes or weakens its measures. That will open our market to import surges as the sector recovers from the impact of covid-19 and, crucially, at a time when our exports to the EU and US will still be subject to tariffs and quotas. This is the first test for the UK as an independent trading nation, and is an opportunity to demonstrate that the UK will use its new-found trade policy independence to provide a fair trading environment for the UK steel industry. People in all parts of the United Kingdom will be looking to see if the promises made by the Tory Ministers are put into practice.

No steel industry in the world can manage the transition to net zero production without substantial Government support, but a recent report by the Energy and Climate Intelligence Unit revealed that while 23 hydrogen steel projects are either planned or under way across Europe, none is currently in progress in the UK. Will the Minister comment in her wind-up speech on whether she thinks that is a satisfactory state of affairs?

Steel production has been largely lost from my constituency of Newport West, so I am here today to make sure we do not lose it from the constituency of my hon. Friend Jessica Morden and from other parts of Wales. I am also here to stand up for my constituents who work in the steel production industry across south Wales. I am grateful to my hon. Friend the Member for Aberavon for securing the debate today and grateful to have had the opportunity once again to pay tribute to the steelworkers who keep Britain’s steel industry thriving. This is an important debate and I am glad that steel is once more before the House.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 10:18 am, 9th June 2021

I, too, thank Stephen Kinnock for securing this debate. I remember his debate in the old Westminster Hall—perhaps I should say we are in the new Westminster Hall. I supported him then and I am back to support him again. The title of the debate is “UK Steel Sector: Supply Chains”, and I want to give the Northern Ireland perspective. It is always a pleasure to follow Ruth Jones. I thank her and Jessica Morden for their contributions. Newport West and Newport East are well represented here today.

The issue is of great interest to me because, over the past month to six weeks, the supply chains and the construction sector in particular have been an issue for my constituency of Strangford. I have lived in the Ards peninsula for a long time, and many of the companies there are small and medium-sized businesses. Those companies employ people locally and are very important to the local economy. The supply chain of steel has become critical for them. Others have referred to the high price of materials, and steel has been mentioned to me by two companies that contract to build homes. They price for £150 per square foot of finished steel, but are now looking at an increase of a third, up to £200 per square foot. This will cripple the construction industry, undoubtedly having an impact not only upon the construction sector and those small and medium-sized businesses in my constituency, but on jobs, so it is very important.

In 2020, the UK steel sector contributed £2 billion in gross value added to the UK economy, equivalent to 0.1% of total UK economic output and 1.2% of manufacturing output. There are some 1,100 businesses in the UK steel industry, and the industry supported 33,400 jobs in the UK in 2019—0.1% of all the jobs in that sector, which is quite substantial. On top of that, there all the other construction sectors which are tied into it. The construction companies told me that it was not just the price of steel, but the prices of wood of piping that were an issue for them. However, steel is critical for the strategy going forward, especially as we come out of the coronavirus pandemic.

In 2019, the UK produced 7 million tonnes of steel, whereas China produced 996 million tonnes, and the EU produced some 157 million tonnes—8% of the world total. The UK was the eighth largest steel producer at that time. The differential and degree of reliance is clear, and this must be what we work to change. Our great nation, which was once the industrial force of the world, must return to self-reliance. To do this, our Government—the Minister in particular—must invest to enable us to produce our own steel. Government contracts must be at the top of this, bound to buy only British steel. Earlier, the hon. Member for Aberavon referred to the Ministry of Defence contract for Swedish steel to build ships. Why was it not our steel? That is the question that he asked, and it is a question I ask as well.

We know that covid has a role to play in terms of shipping and raw materials, with shipping companies raising prices massively. The cost of shipping a 40-foot container from Asia to northern Europe, for example, soared from £1,061 in the summer of 2020 to more than £5,873 in May 2021. The increases are astronomical, even more than a third. It is a significant, and sometimes unbearable, factor. The questions must be asked: where are the containers and is this price rise justifiable in the long term? I do not believe it is, which is why I look to the Minister and my Government to address this issue. I put it to the Minister that in any strategy considered, looking into the increase in shipping which is affecting every product on the shelves and every product on the construction sites must be a priority. I would be interested to gauge the Minister’s opinion on what the Government is doing to tackle the cost, which is putting small businesses into bother at a time when we must be rebuilding.

One builder said to me,

“How can we rebuild after covid, Jim, when I literally can’t afford the rebuilding materials— what happens to my team members whilst I renegotiate contracts with developers to cover the astronomical price rises?”

These costs are going to hit the construction sector. These false prices will have to fall, and there will be some crash when they do. House prices in my constituency have risen by 20%. We are seeing at first hand the cost of relying on others when once we had the finest steel industry in the world. We can, and indeed must, return to this, providing jobs and a quality product. It is time for the Government to once again put steel into our backbone and to back our own right here in the great United Kingdom of Great Britain and Northern Ireland—better together.

Photo of Marion Fellows Marion Fellows SNP Whip, Shadow SNP Spokesperson (Disabilities) 10:23 am, 9th June 2021

It is a pleasure to serve under your chairmanship, Sir Graham. My congratulations to Stephen Kinnock on securing this important and timely debate.

I was first elected to this place in 2015 and have since lost track of the number of debates I have taken part in and the questions I have asked regarding the UK and Scottish steel industry on behalf of the Scottish National party. In the Motherwell and Wishaw constituency, we produced steel. Motherwell was known as Steelopolis and Motherwell FC is nicknamed The Steelmen, but all that is left is the Dalziel works, which rolls steel. Ravenscraig, our integrated steel mill, was closed in 1992 as part of the deindustrialisation of Scotland under the Tory Government led by Maggie Thatcher. Now this Tory Government are determined to see steel production suffer all over the UK as a consequence of a Brexit deal that Scotland did not vote for.

At the end of 2020, the UK transitioned the EU steel safeguards retaining vital protection against trade diversion and import surges for 19 different steel products produced in the UK. The preliminary decision by the Department for International Trade is to remove a large number of safeguards designed to protect domestic producers from a flood of cheap imports. According to UK Steel, that

“needs to be urgently rethought.”

The Trade Remedies Investigations Directorate recommended extending the measures on 10 categories of imports for three years from next month. It also suggested that measures on nine categories be revoked. These plans are being described by UK Steel as “a hammer blow” that risks damaging the sector long term. That is exactly what they are. UK Steel has also said that the UK would become

“a magnet for huge volumes of steel imports…It is beyond worrying to consider the damage this could do to the UK steel sector and its long-term viability.”

The main union of steelworkers, Community, has said:

“This is the first test of the Government’s commitment to our steel industry post-Brexit and they’re failing it.”

UK Steel said the removal of the protections will have an adverse impact on the manufacture of steel across the UK, as attested to by hon. Members representing steel-producing constituencies across England and—it has to be said—mainly in Wales. The original safeguarding measures were designed to protect the viability of an entire industry, not individual production lines.

The Scottish National party is clear that the UK Government must extend steel safeguards beyond their current June 2021 expiry date. If the UK Conservative Government unilaterally remove the measures, they will open our market to import surges as the sector recovers from covid-19 and, crucially, at a time when our exports to the EU and US will still be subject to tariffs and quotas.

If the UK is serious about global Britain, it must remove the £54 million extra in energy costs that UK companies pay compared with companies in Germany. Over the past five years, that has cost the UK steel sector £254 million or 130% of annual capital investment. Consistently higher UK electricity prices increase production costs, reduce available capital and deter inward investment.

It is time for the UK Government to put forward a bold programme of support for the sector to level the playing field, as the all-party parliamentary group for steel and metal related industries has been continually calling for. Time and again, UK Tory Governments have failed to understand manufacturing. They talk about plans that they do not follow through; they do not even seem to realise that their vision of global Britain will never become a reality if we let down a foundation industry such as steel over and over again.

Scottish Government action in supporting GFG’s steel and smelter operations shows commitment to those sectors in Scotland. The Scottish Government helped Liberty Steel reopen Dalzell in my constituency and direct job numbers have recovered. In Lochaber, direct jobs have been saved. The Scottish Government and Scottish Enterprise supported Liberty’s acquisition; the UK Government must support UK steel industries across the board.

Scottish Enterprise recognises the challenging environment for businesses in Scotland right now and the significant economic benefit Liberty Steel brings in jobs, the supply chain and future safeguarding of Scotland’s steel industry. The Scottish Government work hard to protect jobs and promote Scotland as a place to do business. Indeed, Scotland has bucked the trend and the amount of foreign direct investment in Scotland is growing as international investors increasingly see Scotland as a welcoming place in which to invest. An EY survey of 570 international business decision makers found 15% ranked Scotland as the most attractive part of the UK in which to establish operations, behind London, but with a huge shift in the past two years. London’s vote as most attractive region had almost halved since 2019, while Scotland’s had more than doubled. That is what happens when a Government believe in their people, not just their friends and cronies.

Following the initial decision on safeguards, the Secretary of State for International Trade must decide whether to accept or reject the measures by the end of June. A rejection can only be made on the grounds that the Government believe the recommendation is not in the economic or public interests of the UK. A rejection would mean that the entirety of the safeguards would expire. Removing safeguards may see UK steel consumers receive some modest price reduction in the short term, but that will not last. This Tory Government must understand what is at stake. They must continue safeguards and actively support steelmaking in the UK, or they risk the UK being unable to supply its most basic steel needs in the future.

Photo of Seema Malhotra Seema Malhotra Shadow Minister (Business, Energy and Industrial Strategy) 10:30 am, 9th June 2021

It is a pleasure to serve under your chairship, Sir Graham. May I begin by thanking my hon. Friend Stephen Kinnock for securing this important debate and for his powerful opening speech on the future of this vital foundation industry, which is important to our history and our economy? I congratulate him and colleagues across the House on their work through the all-party parliamentary group for steel and metal related industries.

I also congratulate all hon. Members who have spoken powerfully in the debate, including my hon. Friends the Members for Neath (Christina Rees), for Birkenhead (Mick Whitley), for Newport West (Ruth Jones), for Newport East (Jessica Morden), for Rotherham (Sarah Champion)—particularly on working with Liberty Steel on the sale of the Stocksbridge and Brinsworth plants—and for Alyn and Deeside (Mark Tami), as well as Jim Shannon and Marion Fellows, who made a powerful speech.

UK steel is at a turning point. A lack of strategic focus from successive Conservative Governments has inevitably resulted in reduced resilience against external shocks and fierce international competition. Our shared goal must be a sustainable future for UK steel and its supply chains, and we need the Government leadership that that demands. Steelmaking must decarbonise, and the long-term future of the industry is in supporting green jobs at the core of low-carbon economy. Steelmaking is a highly-skilled industry and a national asset, and it has a clear opportunity for continued growth, with procurement policies that could also help to increase the contribution of UK steel to UK manufacturing, products and infrastructure.

Currently, 60% of steels are imported, and there is no assessment of the carbon footprint of those imports. Across the UK, there are around 1,100 businesses in steel and around 75,000 jobs, whether directly supported or in the supply chain. Those jobs are at the centre of our economies. In my speech, I will say a few words about supporting our steel industry today, about the need for a vision and plan for the future, and about ensuring a fair and just transition.

The Labour party and the UK steel industry have been united in rejecting the recent draft recommendations of the Trade Remedies Investigations Directorate to remove almost half the safeguard measures currently protecting UK steel producers from the surges in imports that threaten the sector. We hope that the Trade Remedies Authority will listen to the reasoned explanations as to why all current safeguards must stay in place beyond their June expiry date, not least in the light of the other huge pressures faced by the industry at this difficult time.

UK Steel’s criticisms of those recommendations have highlighted a failure to recognise the interconnectedness of the steel industry. One part of the supply chain cannot be damaged without damaging the industry as a whole. As an example, Celsa Steel UK has 28 product categories, with much interconnection between them, but 10 of those have been affected by the revocation of safeguards, while 18 have not—a situation that is inexplicable to Celsa and others. UK Steel has put together significant evidence to challenge the data used by TRID in producing its recommendations. I would be grateful for the Minister’s assessment of that industry evidence.

The process has exposed a worrying gap in Ministers’ ability to act in the national interest, and has illustrated the flaws that the Labour party warned about during the process to establish the UK’s post-Brexit trade remedies regime. We also warned about the lack of representation of UK producers in unions such as Unite and Community, and the risk that it would exacerbate those failings. Worryingly, the current legislation does not allow the Secretary of State to retain existing safeguards or introduce new ones against the advice of the Trade Remedies Authority, even if to do so would be overwhelmingly in the public interest.

The fate of large parts of the steel industry and of thousands of jobs currently lies in the hands not of elected representatives, but of an unelected body that cannot be overruled. Even if the TRA reverses the original recommendations this month, we cannot find ourselves in this position again. We are therefore willing to work constructively on a cross-party basis to amend the trade remedies legislation to allow for a wider range of public interest tests to be applied in these decisions. In the interim, we call on the Government to do everything necessary and permissible within the law to extend all the current steel safeguards. The Minister must also make those intentions public at the earliest opportunity to provide the UK steel industry with the certainty that it badly needs.

We urgently need a truly ambitious vision for the sector that puts the UK at the cutting edge of green steel-making technology, and we need a plan to go with it. We need to see better progress on the industrial decarbonisation strategy and the acceleration of the clean steel fund. That £250 million fund was announced in 2019, but the spend from it is not set to start until 2023. I would be grateful for clarity from the Minister about why there is a delay.

The UK seeks to decarbonise by 2050, but blast-furnace investments operate on a 20 to 25-year timescale, so we need a clean steel innovation programme now. As the Materials Processing Institute highlights, delaying until 2024 shows a lack of co-ordination between the Government’s timetable and the reality of the industry’s investment cycles.

Although we accept that it is necessary that UK steel continues using coking coal for the next decade until technology is in place to provide for decarbonised steel, with the right strategy, investment in renewable technologies can create three times as many jobs as those in fossil fuel industries—jobs that are long term, highly skilled and high wage. Hydrogen could also play a huge part. Trials of direct reduced iron technology are already happening in Germany, Sweden and China. The Government should act quickly to prevent the UK from being left behind with this technology too.

As the price of energy hinders progress, we need a clear industrial plan. We have heard how the gap between German and UK electricity prices is placing an extra £54 million a year additional cost on the UK steel sector. As the sector seeks to decarbonise, the price disparity is a major barrier to transitioning. All low-carbon options available are much more energy intensive. The Government have always said that the EU is a barrier to action. Now that we have left, they must take decisive action to address that price disparity.

We also need a plan for capital investment for future productivity. Plants that I have visited have demonstrated that they have a set of clear transformation business plans ready, with detailed assessments of returns on investment and alignments of goals with national priorities. In the short term, the challenge of working capital also remains. Viable businesses with multi-year order books, such as Stocksbridge, need urgent support to be able to purchase the supplies they need and get the products that are demanded by their customers into production now.

Priorities for a fair and responsible transition to low-carbon steel making must include long-term planning, as the Centre for Sustainable Work and Employment Futures, Community union and Prospect have begun to outline. Protecting jobs and steel communities also means that transition must seek to retain our capabilities and high skills, include retraining and avoid hard redundancies.

Our manufacturing renaissance, infrastructure and green economic recovery depend on steel. In 2015, the Business, Innovation and Skills Committee argued that the relative decline of UK steel production was partly down to the fact that other European countries have better valued their domestic steel industry. That has to change. Labour is determined to safeguard the UK’s steel industry, and with industry operating on the basis of lengthy investment cycles, the future of industry is dependent on investment now to support our green transition. We need a strong steel industry fit for the 21st century that can compete on a level playing field, with the capability to make a full range of steels over the long term.

The Government have said that they are committed to supporting and securing a future for UK steel, but recent events do not back that up. It is vital that the Government do more now to bring forward a long-term plan to support our proud British steel sector and the UK manufacturers that are their customers. We must secure this industry in our national interest, to protect jobs, livelihoods and our economy.

Photo of Amanda Solloway Amanda Solloway Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 10:39 am, 9th June 2021

It is a great pleasure to serve under your chairmanship, Sir Graham. I thank Stephen Kinnock for securing the debate and giving us the opportunity to discuss this incredibly important topic. It is encouraging to see so many hon. Friends and hon. Members participating. I am delighted to see the passion demonstrated by everyone this morning. That is a true reflection of the role that the steel sector plays in communities, and its importance as a foundation industry in the national economy.

Although ministerial colleagues and I are consistent and passionate advocates for the steel industry—hon. Members will know that I have a background in manufacturing—the topic of the debate is not within my policy portfolio. Should I fail to answer specific questions, I will ensure that they are responded to in writing by relevant Ministers or officials.

I thank the hon. Member for Aberavon for high- lighting safeguard measures. Hon. Members might be aware that the Trade Remedies Authority will make a recommendation on whether to extend or revoke the UK’s steel safeguard measures that are due to expire on 30 June 2021. The TRA is an independent body and the recommendation will be based on evidence, following consultation with interested parties from the steel sector.

As mentioned, the Secretary of State for International Trade can accept or reject the recommendation but not modify or partially accept it. She cannot extend the measures if the TRA does not recommend that. If the Secretary of State rejects the recommendation, then all the measures will expire. As my hon. Friend Holly Mumby-Croft highlighted, my Department is working closely with the Department for International Trade on the issue.

Bill Esterson spoke of the regulations governing the TRA. The Secretary of State for International Trade has spoken about her plans to review whether the UK’s trade remedies framework should be strengthened. I fully recognise that the global economic conditions continue to be challenging for the steel industry. Global overcapacity in the sector is a significant issue, and was estimated at 625 million tonnes in 2020 by the Organisation for Economic Co-operation and Development. The excess in capacity produced globally depresses prices and harms UK steel producers’ profitability.

Jessica Morden raised the topic of bonded warehouses. The Secretary of State has agreed to meet the management teams at Liberty Newport and Tredegar. As referred to by the hon. Member for Aberavon, the covid-19 pandemic has clearly had a disruptive impact on the steel sector. Recent supply shortages of steel have temporarily increased its price. However, that is unlikely to be sustained as the markets readjust.

Although the economic context is challenging, hon. Members should be in no doubt that the Government are committed to the UK steel industry, as the Secretary of State has reaffirmed on numerous occasions, and to a sustainable future, supporting local economic growth and our levelling-up agenda. To that end, our unprecedented package of covid-19 support is still available to the sector, to protect jobs and ensure that producers have the right support during this challenging time.

Beyond covid, the hon. Member for Aberavon mentioned the Industrial Strategy Council. The Secretary of State for Business, Energy and Industrial Strategy and the Chancellor have outlined how we are taking forward its best elements in the plan for growth. I can reassure the hon. Gentleman and other hon. Members that the Government are working closely with industry and trade unions to understand how together we can create a sustainable steel sector in the UK. On 19 May, the Secretary of State co-chaired the second meeting of the UK Steel Council, which he reconvened in March this year. The council provides a forum for Government, industry and the unions to work in partnership, to develop a plan to support the sector’s transition to a competitive, sustainable and low-carbon future.

The second meeting of the joint industry and BEIS steel procurement taskforce was held yesterday afternoon. That was first launched in March and is chaired by Lord Grimstone. It explores what Government and industry can do to address the challenges the sector has reported when competing for and securing public contracts. I would like to reassure Sarah Champion that work is continuing to develop on the subsidy control regime.

Hon. Members, including Mick Whitley, have rightly focused on climate change, with welcome passion. In addition to our continuing close engagement with the sector, I can reassure Ruth Jones that we are taking action across a broad range of policy areas, including decarbonisation, energy prices, international trade and procurement. These actions aim to boost the sector’s competitiveness in the short term and to support long-term investment and transformational change that will increase efficiency while aligning with our goal of a net zero economy by 2050.

To reach our ambitious net zero target, we will need the UK steel sector to decarbonise. Our new industrial decarbonisation strategy sets out for the first time the Government’s comprehensive assessment of how industry, including the steel sector, can decarbonise in line with net zero in a way that supports both competitiveness and clean growth. The strategy includes a commitment to work with the UK Steel Council to examine the implications of the Climate Change Committee’s recommendation to set targets for ore-based steelmaking to reach near zero emissions by 2035.

In 2019, we announced a £250 million clean steel fund to support the sector to transition to low-carbon iron and steel production through the new technologies and processes, which could potentially include supporting hydrogen-based steelmaking. Other recent and ongoing work to support the sector includes the £350 million industrial energy transformation fund, which aims to support businesses with high energy use to cut their bills and reduce carbon emissions. As part of the industrial strategy challenge fund, we are also providing up to £66 million to help the key foundation industries, such as steel, develop innovative technology to reduce energy and resource use.

The hon. Member for Birkenhead made an important point about technology. Science and innovation have been made a priority by the UK Government, in recognition of the strong economic benefits of public investment in science and innovation and the capacity to leverage private investment. That is why we will increase R&D investment to £22 billion per year by 2024-25. We plan to establish a net zero hydrogen fund, with £240 million of capital co-investment until 2024-25. That will support at-scale hydrogen production projects, allowing steel producers the potential to access suppliers of low-cost hydrogen.

As we support the UK steel industry’s decarbonisation, we must do so in a way that enables us to compete globally and across Europe. Several hon. Members have raised the issue of industrial energy prices. We of course recognise that they are currently higher in the United Kingdom than in other competitive economies.

The hon. Member for Newport East mentioned the Ofgem targeted charging review. As she will know, network charging is a matter for Ofgem as the independent regulator, and decisions on its targeted charging review are for it to make. However, the Government continue to engage with Ofgem in order to inform our understanding of the reforms’ policy implications. We have provided more than £500 million in relief to the steel sector since 2013, in order to make electricity costs more competitive.

Finally, I turn to procurement and supply chains. I welcome the point made by my hon. Friend the Member for Scunthorpe. We are working hard to ensure that UK steel producers have the best possible chance of competing for, and winning, contracts across Government projects. I previously mentioned the steel procurement taskforce, but I can also assure the hon. Member for Rotherham that the Government have recently consulted on an ambitious package of major procurement reforms, with the aim of creating a simpler and more flexible regime that works much better for British businesses, including our steel businesses.

The Government are also working the with industry to ensure that Departments and other sector organisations follow guidance to account for social and environmental benefits when buying steel. That includes publishing details of upcoming national public infrastructure projects every year, so that steel businesses can plan for future demand.

The steel pipeline shows how the Government plan to procure 7.6 million tonnes of steel over the next decade for infrastructure projects such as the expansion of the offshore wind infrastructure, the construction of Hinkley Point C, as has been mentioned, and the maintenance and upgrading of the UK’s motorway network.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

It is important that we have steel for offshore wind power and so on, but it is also important that we have steel available at competitive prices for the construction sector. What can the Minister do to assure me on that?

Photo of Amanda Solloway Amanda Solloway Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I will, of course, pass on the hon. Gentleman’s question.

I will move on to Liberty Steel. The hon. Member for Newport East rightly highlighted its importance to many Members and their constituents, and its recent financial difficulties, which were also raised by the hon. Member for Rotherham. As the Secretary of State reaffirmed to the Business, Energy and Industrial Strategy Committee in an oral evidence session, we continue to monitor the situation closely and engage with the company, trade unions, local MPs and the wider steel industry. Liberty is important.

Photo of Seema Malhotra Seema Malhotra Shadow Minister (Business, Energy and Industrial Strategy)

Does the Minister appreciate that there is a need to work to support plants that are viable—such as Stocksbridge and Brinsworth, which purchase their supplies from Rotherham—and provide the working capital that is needed for orders that are there and products that are there to be made?

Photo of Amanda Solloway Amanda Solloway Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I thank the hon. Member for her contribution. Again, I will pass that on, with the passion that she has shown, to the relevant places.

I return to Liberty Steel. We continue to monitor the situation closely and to engage with the company, trade unions, local MPs and the wider steel industry. Liberty is an important supplier of steel and provides highly skilled jobs. The Government believe that Liberty sites can be viable and we remain hopeful that the commercial issues can be resolved to ensure future success.

It is, however, first and foremost the company’s responsibility to manage commercial decisions for the future of the organisation, and we welcome the dedicated efforts being made by Liberty to find solutions. I hope that I have reassured hon. Members, who have displayed sincere empathy for our steel sector today, that the Government are working tirelessly with the industry to secure its future through difficult times.

Focusing specifically on Tata Steel—I know that that is of great interest to the hon. Member for Aberavon, and I have saved discussion of it for my summing up—I can assure Members that the Government will continue to work closely with the company and the unions as they shape the business strategy to support the future of high-quality steelmaking in Port Talbot.

I have set out a wide range of actions that demonstrate that the Government fully understand the vital role that steel plays for communities, for our economy and as a foundation supplier for our manufacturing base. UK industry will continue to need high-quality steel, and British steel is among the best steel in the world. As we level up our country, we are actively considering where there is scope to go further to support our steel industry.

We are committed to sustainable decarbonisation, decarbonising a globally competitive future steel industry in the United Kingdom, and I look forward to working with Members towards achieving that goal.

Photo of Stephen Kinnock Stephen Kinnock Shadow Minister (Foreign and Commonwealth Affairs) 10:52 am, 9th June 2021

I thank all hon. Members present for a really constructive and useful debate.

I thank the Minister for her response, but there is a chasm between the rhetoric that the Government are deploying and the tangible actions that we need to see. Safeguards are now of the utmost urgency, but we are in an absurd situation whereby the Secretary of State for International Trade is not being given the option of modifying the recommendations that we have discussed; it is simply, “Take it or leave it”. If the decision is to reject the recommendations in their entirety, all the safeguards will fall. That would lead to a massive import surge, which could be crippling for our industry. I urge the Minister to go back to the Department for International Trade with the greatest urgency. The recommendations appear to be based on a fundamental misunderstanding about how the steel industry actually works, as Holly Mumby-Croft so eloquently set out.

On procurement, we need concrete actions. We need targets for how much of the steel in public infrastructure projects should be British steel, and we need clear supply chain plans so that procurers are obliged to set out precisely how they will maximise the input of British steel. We have been calling for this for years, and we need to see specific actions.

On price disparity, we should be looking at the French-German model for network cost reductions, increasing the renewable levy exemptions and providing exemptions from capacity market costs. Again, those are all things that we have been calling for over several years.

Finally, on the green transition, a recent report by a think-tank, the Energy and Climate Intelligence Unit, showed that there are 23 hydrogen steel projects happening across the European Union, but absolutely none in this country. It feels as though we could be behind the curve in that regard. Politics is about choices, and I urge the Government to make choices that actually favour our British steel industry.

Motion lapsed (Standing Order No. 10(6)).

Sitting suspended.