UK Steel Industry: 15th July 2015

The Minister for Small Business, Industry and Enterprise (Anna Soubry)
It is a pleasure to serve under your chairmanship, Mr Chope. I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate. If there was a criticism to make, it would be that it is unfortunate that ​it is only a 30-minute debate. If anyone is interested in my views on this, I think it ought to be a 90-minute debate, and I would have it in the main Chamber.

It is important that we discuss the problems and difficulties that face our steel industry. I am particularly interested in looking at solutions. I want people to come forward with ideas about how we solve the many problems that we know our steel industry faces. There is no debate; we absolutely agree about the value of having a good, strong British steel industry for all the reasons the hon. Gentleman identifies.

It is right to say that we agree on the problems. We know that we have huge overproduction across the world and that that has been a real challenge for the British steel industry. We also know that there has been a marked reduction in demand. We can discuss and debate why that might be, but the harsh reality is that that reduction has taken place. I am confident, given the economic success that we have had, that demand will rise in this country. Unfortunately our economic success has not been reflected across the globe, but there will be an upturn, which is why it is important to keep steady. It will come good, even though we have overproduction, because demand will rise.

We also agree that we have a problem with the cost of energy. The steel industry is a very high consumer of electricity. We have overly high electricity prices for our industries, particularly the electricity-intensive industries, that are so heavily reliant. We call them EIIs in the Department for Business, Innovation and Skills, and the hon. Gentleman and others will be familiar with them. The cost of electricity is a serious problem for our steel industry. We must look at that, but when we do so we must understand that someone would have to pick up the bill if we were to make a move on costs to EIIs, and that may not be an attractive proposition. However, I completely understand the burden the current electricity pricing system places on EIIs—I get it.

The other matter, which was raised by the hon. Member for Aberavon (Stephen Kinnock), is business rates. I know that concerns the hon. Member for Hartlepool (Mr Wright) as well, because he was nodding with great vigour from a sedentary position, and rightly so. It is a problem. It is hugely ironic, as the hon. Member for Aberavon said, that in Port Talbot people invest huge amounts of money and bizarrely get clobbered for doing the right thing by the huge rise in business rates on the other side. Sheffield Forgemasters International in Sheffield is paying £1 million a year in business rates.

As we all know, the difficulty is that if we were to do something about business rates for our steel industry, people would ask: why not do so for all the other industries? They would all be queuing up. We are reviewing business rates. We want to listen to everyone, which is why I am happy to work with the new Chair of the Select Committee on Business, Innovation and Skills—I congratulate the hon. Member for Hartlepool on his election. We know we must do something about business rates. I want us to take a radical approach.
 
Mr Iain Wright
Those who were Members of the last Parliament will know that the new Minister is a breath of fresh air when it comes to passion for and commitment to the steel industry. In the last Parliament, the Government ​were working with industry to publish a UK metals strategy. Can she update the House on that work? Is the strategy ready for publication and consideration by the House?

Anna Soubry
I have some words on that. I have abandoned my speech, which will get me into terrible trouble with my officials, but I will read the next bit out rather than ad lib, because then I know it will be right.

I am pleased that the metals sector, including the steel industry, is developing a new national metals strategy. That has been facilitated through the Metals Forum, a grouping of 12 trade associations, including UK Steel, with which BIS has regular dialogue. The publication of the strategy will bring metals into line with other important foundation sectors, such as electronics and chemicals, which have led and developed their own strategies. We have been pleased to be able to fund some of the work, both for the strategy itself and for the initial scoping study, and we have seen some of the output that has emerged, which is of high quality. The public document is nearing completion and is likely to be published in early autumn. We expect it to provide a framework for our work with this sector in the future.

Hopefully that answers the hon. Gentleman’s question. It may not give the detail, but that document will be published in early autumn. I will just put on the record that I am, of course, more than happy to meet the groups that have been established to discuss how we can help our steel industry.

Mr Chope, how long have I got? Am I to go to 11.30 am, or are other Members able to make speeches? I think the answer is no. I am thinking of the hon. Member for Llanelli (Nia Griffith), who is on the Opposition Front Bench. Does she get a speech?
 
Mr Christopher Chope (in the Chair)
No.

Anna Soubry
I am sorry about that. I will happily take interventions, but the hon. Member for Middlesbrough South and East Cleveland will want to sum up in any event.

Andy McDonald
I do not know whether the Minister intends to cover this point, but I will ask her now: should the UK Government follow the lead of the Welsh Assembly by endorsing the charter for sustainable steel?

Anna Soubry
The short answer is that I need to make more inquiries about that issue, and of course I will write to the hon. Gentleman about it.

Yesterday I met Karl Köhler, the chief executive officer of Tata Steel. It is absolutely clear that his company will face huge challenges in the future; he has been very up front about that, and I understand that. My attitude—which hopefully was demonstrated last week, as has already been identified—is that this Government will and must do all we can to help the sustainability of the steel industry.

That is why I was so keen that we vote as we did about the threat of certain Chinese imports of certain steel products where there is good evidence that—unfortunately —China has been dumping. It is right that the EU should take the measures we are taking. I was so keen that we vote in favour of those measures that when the vote from the UK delegate was cast in favour of what ​many will say is a protectionist measure, although I do not have a problem with it, apparently it was necessary to go back to make sure, because it was the first time that it had happened and people were so shocked by it. I hope that the message goes out to all involved in the steel industry that I take this matter incredibly seriously.

The steel industry is a very important part of our manufacturing sector, it is important to our country and we have to do everything we can for it. However, the challenges are enormous and we should be under no illusions about that, and of course it is not only Tata but all the other steel companies that face real difficulties.

I will return to my speech—in fact, I will start it, or rather jump into the middle of it. The best way that the Government can support UK steel companies is through a successful economy and successful steel-using industries. That is why I take the view that we should stick with the plan that we started under the last Government. We will continue with it. Our ambition is to create the right business environment for free enterprise and to remove barriers to productivity and growth within sectors, including by deregulation, promoting fair competition and simplifying the business landscape. The Government work closely with the steel industry on a large number of issues, and that will continue.

Nia Griffith (Llanelli) (Lab)
Yesterday in the main Chamber, I thanked the Minister for her work on the anti-dumping measures. On supply chains for Government projects, we know that it is possible without breaking EU rules to, let us say, make it a bit easier for our supply chains to get the work. What will she do to get the Government to encourage and help the supply chains to make the necessary bids for the expected Government projects?

Anna Soubry
The hon. Lady makes a very good point and I thank her. I will certainly go back to my officials about that issue and discuss what can be done. Obviously, I would wildly encourage anyone within the supply chains to buy British-made steel; that is incredibly important for all the obvious reasons and because the steel is of such high quality.

In his opening remarks, the hon. Member for Middlesbrough South and East Cleveland talked about the skilled workforce. It may be that we have to revisit that issue, to ensure that apprenticeships are encouraged and that younger people are brought into the industry. However, the workforce in the steel industry are highly skilled.

Of course, there are certain niche sectors of the steel industry where we do particularly well and we rightly have a worldwide reputation. However, I will come back to the hon. Lady. Perhaps I will write to her about what more we can do, because the state aid rules are a real problem for us.

Tom Pursglove (Corby) (Con)
I am obviously very grateful, as are all members of the all-party group, to Ministers for their willingness to talk to us and engage on the issues that we are discussing. However, I would be interested to know a little about the up-to-date thinking on carbon taxation and the support available to businesses that are tackling that big problem.

Anna Soubry
I think I have made my own views very clear. I am hugely aware of the difficulties that the problem causes, because it is undoubtedly the case that our electricity costs are some of the highest in the whole of Europe, if not the world, so we have to look at them. However, we cannot simply get rid of these things; everything comes with a cost, the burden of which may have to be borne by somebody else somewhere along the line. Nevertheless, we are actively looking at that issue.

Anna Turley (Redcar) (Lab/Co-op)
I really appreciate the Minister’s openness, her willingness to engage with us on this issue and her positivity towards the UK steel industry, but on the point that my colleague the hon. Member for Corby (Tom Pursglove) raised, one of the most immediate and positive solutions that the Government could adopt, which would send a good message to the steel industry, is to commit to implementing the outstanding parts of the energy-intensive industries compensation scheme. Can the Government confirm when they will deliver that compensation scheme, which has already been promised and announced, and will they consider bringing forward compensation for the renewables obligation?

Anna Soubry
As I say, we are having a debate between different Departments, as the hon. Lady might imagine. I thank her for her contribution and I hope that we can solve what is undoubtedly a problem, but even if we were to do the right thing with the cost of electricity, that would not solve all the problems for the steel industry; the cost of electricity is just one of the problems. I want people to come forward with solutions to help me in my job, to ensure that we do everything we can to help our steel industry and to grow it in certain areas, because, as I said, we do extremely well in many niche markets.

As I said earlier, yesterday I met Dr Karl Köhler, the chief executive officer of Tata Steel. I am looking forward to meeting Luis Sanz of Celsa, which is obviously another big player in this industry, and last month I had the pleasure of meeting Gareth Stace of UK Steel, who did not hold back in giving his assessment and some parts of his wish-list. As hon. Members know, and as I have already alluded to, EU state aid rules limit the direct help that can be offered to steel companies. Research and development, environmental protection and some training can be supported, but we cannot provide operational aid; I think that we are all aware of that. Nevertheless, we work within those strictures to provide all the support that we can reasonably provide to ensure a competitive future for the UK steel industry.

Mr Chope, we really ought to have 90 minutes to debate this issue. I will reiterate that I am more than happy to meet hon. Members and discuss it further, and I congratulate the hon. Member for Middlesbrough South and East Cleveland on securing this debate today, which he will now sum up, and let us hope that we get a longer debate on this issue next time.