UK Steel Industry: 29th February 2016

Anna Turley
My hon. Friend makes an extremely important point. There is no greater testament to the lack of progress of the northern powerhouse so far than the devastating loss of steelmaking on Teesside. If the northern powerhouse means anything at all, it means jobs, industry and growth on Teesside, and on that count the Government have failed.

With the materials catapult for Teesside—the existing research and development hub, which is the materials processing industry in my constituency—the Government have the perfect opportunity to put right some of their wrongs and to help some kind of steel phoenix to rise from the ashes in Teesside. Teesside can build on its industrial strength and once more play a vital role in driving the UK’s industrial and high-tech economy of the future.

But we need a Government that will support us, a Government that will commit to an industrial strategy and a Government that, dare I say it, will invest. What we do not need are a Government that fail to play their role on the global stage, but that is what we have seen. The Chancellor has been out in China, and I can only imagine how grateful it is to him that his Government have actively blocked our European colleagues’ efforts to increase tariffs on Chinese steel in the EU by scrapping the lesser duty rule. I can only imagine how grateful it is to him that his Government are such cheerleaders for China in seeking market economy status, which would give the green light to Chinese steel flooding in. President Obama has pledged aggressive action through the trade Bill in Congress, and the US recently imposed duties of 236% on a particular grade of Chinese steel.​

I, for one, am fed up with the Government and Government Members pretending that membership of the EU is the reason they cannot act. Instead, I want them to work with our European partners to impose tariffs and tackle dumping. I am frankly embarrassed that it is the UK that is leading a small group of nations in opposing higher tariffs on China because of the Tories’ ideological obsession with a market economy that sees jobs, communities and entire industries as a price worth paying for their kind of laissez-faire, unfettered global market.

The Minister for Small Business, Industry and Enterprise (Anna Soubry)
You know that’s not true.

Anna Turley
We have heard it from the Government Benches tonight.

We will keep fighting and holding the Government’s feet to the fire. No more job losses, no more closures—we need the Government to act. We want the Government to stand up for Britain. We want the Government to save our steel.

Hannah Bardell (Livingston) (SNP)
It is a pleasure and a privilege to bring up the rear, so to speak, in such an important debate. If I may be light-hearted for a moment, the hon. Member for Wallasey (Ms Eagle) was challenged to a rugby match at the beginning of the debate, so I am pleased to inform her that I took part in the first mixed rugby match recently, representing the MPs and Lords. I even scored a try. [Hon. Members: “Hooray!”]

The number of debates we have had on this issue and the number of times we have returned to it show the strength of feeling not just across this House, but across the nations of the United Kingdom. It is a pleasure to follow my hon. Friends the Members for Rutherglen and Hamilton West (Margaret Ferrier) and for Motherwell and Wishaw (Marion Fellows), who spoke passionately about their constituencies, as did Members from across the House. My colleagues have been involved in the Scottish taskforce and have done extensive work in engaging with their respective local communities on the future of the steel industry in Scotland and in standing up for their rights and interests. As they said, the steel industry has been at the heart of their constituencies for generations. Our thoughts continue to be with the many towns and communities across the UK that are at the mercy of the volatility in the global steel market and the glut of steel production, as well as the UK Government’s lack of commitment and action.

I pay tribute to the work of everyone on the Scottish steel taskforce, including the union representatives. I am particularly pleased that they have been included in the Scottish taskforce, by contrast with the situation at the outset south of the border. They were at the heart of our discussions and engagement from the very beginning.

Fergus Ewing MSP, my colleague in the SNP Government, is the Minister for Business, Energy and Tourism. He faces many challenges, but he and his colleagues in the Scottish Government and Parliament, including Clare Adamson MSP, who is from a steelworking family, continue to work tirelessly to keep the Dalzell and Clydebridge steel plants open. They are committed ​to finding a buyer for the sites, continuing commercial production and keeping as many jobs as possible onsite and in Scotland.

The strategic importance of the plants to Scotland and the UK cannot be overstated. It is apparent in the specialist skills and knowledge and the innovative approach that are inherent in Clydebridge and Dalzell. According to UK Steel, the Dalzell plant is the only plant in the UK capable of rolling and processing the steel that is used in the Ministry of Defence’s special armour plate and for certain requirements of the offshore oil and gas industry. The Clydebridge plant specialises in producing difficult-to-make high-strength steels that are used in some of the most challenging environments in the world. We truly have a world-class industry that we in Scotland believe is worth fighting for.

However, when the UK Government are faced with an opportunity to fix the issues, they are flat-footed and seem to shy away. A case in point is the issue of tariffs, which has been discussed extensively this evening. It is shameful that the UK Government have actively blocked the proposals to raise tariffs on Chinese steel. The UK Government confirmed in mid-February that they had blocked proposals from EU members to block the dumping of cheap steel products in the EU by China. The Government’s blocking of the proposal came after the Secretary of State signed a joint letter from European Ministers, pledging

“to use every means available and take strong action”

against China and Russia. He has the means at his fingertips, but he chooses not to use them.

The UK Government must work harder with their European partners to address the dumping of cheap steel in European markets, which is, as we all know, undermining UK steel production. Although 2% of UK steel demand was met by Chinese imports in 2011, that figure has been forecast to rise to 8% this year and next. We are all keen to hear from the Minister on that point.

The message is clear: there are vital skills, innovative approaches, and a unique and distinct heritage in Scotland and the UK steel industry, but how far will the Government go to save it? When I was doing research for this debate, I came across an article in the Scunthorpe Telegraph:

“Scunthorpe’s main steel union Community has slammed Business Secretary Sajid Javid for stating the UK steel industry could not expect to be to bailed out in the same way as the banks.”

A spokesman for the Community union said:

“The Prime Minister himself has said that steel making is ‘vital’ to the UK economy, so these are ill-judged remarks from Mr Javid.”

I could not agree more.

The UK Government have the money, political will and determination to bail out the banks, but they cannot find it in their heart, or indeed their pockets, to support an industry that is of vital strategic importance to our economy. I am not, of course, calling for the nationalisation of steel production assets, but I simply suggest that the Government are short on political will and creativity in supporting the steel industry in its time of need.

Bill Esterson (Sefton Central) (Lab)
Again, we are debating the crisis in the steel industry in the context of thousands of job losses, closures of steel plants, and an industry hanging by a thread, with the livelihoods of ​20,000 workers, their families and communities under threat, and all that in an industry worth £9.5 billion to the UK economy and which ran a trade surplus in 14 of the last 17 years. The problem we face now is that of the dumping of cheap Chinese steel on the global market. The challenge is how we defend highly skilled British jobs and the future of a vital industry, and safeguard an important source of exports in the face of this crippling and difficult situation. We must support the wider economy by taking a strategic view of what is in the national interest.

We have heard excellent contributions from my hon. Friends the Members for Hartlepool (Mr Wright), for Newport West (Paul Flynn), for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Stockton North (Alex Cunningham), for Neath (Christina Rees), for Aberavon (Stephen Kinnock), for Newport East (Jessica Morden), for Scunthorpe (Nic Dakin), for Cardiff South and Penarth (Stephen Doughty), for Redcar (Anna Turley), for Ellesmere Port and Neston (Justin Madders), for Alyn and Deeside (Mark Tami), for Huddersfield (Mr Sheerman), for Middlesbrough (Andy McDonald), for Ogmore (Huw Irranca-Davies), and for Stoke-on-Trent North (Ruth Smeeth).

The steel industry and the thousands of people that it employs are looking to Parliament and to the Government for support. The industry has come to the Government with five key asks to help to protect jobs and exports. Although there has been some belated progress, the Government’s response overall shows that they are not prepared to take an active role in protecting the steel industry. As my hon. Friend the Member for Hartlepool said when commenting on the excellent BIS Committee report, we must do more at European Union level. The Government claim that four out of five asks have been delivered, but on procurement no orders have been received in steel plants since those changes were made.

My hon. Friend told us that cheap Chinese steel needs effective international action if it is to be tackled. China is responsible for four times the combined production of the next biggest four steel producers, and unless there is co-ordinated, concerted effort internationally to combat illegal dumping, nothing will change. We were told that the British steel industry faces an existential threat through the grossly distorted market, and my hon. Friend’s plea, and that of members of his Committee, was for a co-ordinated approach.

The industry needs swift action on tariffs that protects steel produced in the UK and other EU countries against Chinese dumping, yet our Government have played a role in blocking that. The Prime Minister’s office opposed the idea of fairer tariffs on the grounds that it was protectionism—something confirmed a number of times throughout the Secretary of State’s speech today. Ensuring that we have a level playing field to protect our workers and businesses from a situation that threatens to destroy an entire industry is not protectionism. On the contrary, it is common sense and it is right. As Gareth Stace, the director of UK Steel, said:

“Anti-dumping measures in the EU do not currently have the teeth to halt this tsunami of dumped steel”.

The Government must support the lifting of the lesser duty rule, because otherwise steel manufacturing will be lost in the UK and across Europe. It is a simple ask, and one that is supported by other EU countries, ​yet the UK Government have failed to stand by their own country’s industries, not just in steel but in ceramics and other energy-intensive industries.

The Government have also shown little action on changing business rates for large manufacturers. I sat in Committee last week with the Minister for Small Business, Industry and Enterprise and heard of her commitment to an overhaul of rates. When it comes to it, however, the review first announced in 2011 is still to start and the industry continues to pay twice when it comes to rates on investment in plant and machinery. The industry was told that helping plant and machinery manufacturers was unaffordable. The Government review rumbles on as we wait to hear what they will do to support investment in plant and machinery. Will they tackle existing competitive disadvantages suffered by UK steel sites on plant and machinery, which account for up to 50% of their business rates?

Serious challenges have coalesced around the steel industry: a glut of global supply, energy costs, high business rates and a strong pound. The industry did not expect the Government to offer a silver bullet. What it rightly expected was for the Government to play their role in what should be a partnership. The most successful economies are characterised by partnership between government, industry and the workforce. For partnership to be effective, the Government have to play their part. Businesses and workers, through the trade unions, have played their part, but what of the Government? The situation demanded that the Government see the long-term strategic value of steel production and act accordingly to protect high-skill jobs and the future of a key strategic industry. The Government, however, failed to intervene to save the Redcar coke ovens. My hon. Friend the Member for Middlesbrough rightly described that lack of support as an act of industrial vandalism.

An industrial strategy is nothing more than a Government’s willingness to enter into a partnership with business and workers: to match their ambitions by looking beyond election cycles and investing in the infrastructure and the training they need to flourish; to see the long-term value of strategic industries; and to take the necessary steps to support and safeguard them. If the Secretary of State and his Ministers want to be a true partner to the steel industry, there are few clearer steps that the Government must take now. [Interruption.] If the Lord Chancellor had been here earlier, he would have heard my hon. Friend the Member for Wallasey (Ms Eagle) saying that.

The Government must block the unfair trading of steel by supporting EU trade defence instruments, allowing the swift implementation of defensive tariffs. The Secretary of State must throw his support behind tariffs and ensure they are set at a level that would protect UK steel. He and his colleagues should support the EU countries that have supported a level of tariffs that will help our industry and our economy. Remember that at one stage it looked as though the Secretary of State accepted the need for change. He signed a letter with counterparts from France, Italy, Germany, Poland, Belgium and Luxembourg demanding that the European Commission use every means available and take strong action in response to unfair trade practices. Sadly, a week later he told the Business, Innovation and Skills ​Committee that he was opposed to that very action, something he confirmed this evening when he said he was against removing the lesser duty rule. UK Steel director Gareth Stace described the U-turn as “galling” and said that

“government must support the lifting of the lesser duty rule, otherwise steel manufacturing will be lost in the UK and Europe.”

We need to take an active role in tackling Chinese steel dumping and need action on business rates for key industries and capital-intensive firms to level the field for UK steel by pursuing reform of tariffs at EU level. This is what the industry needs. It is what workers and their families need. It is what communities need, and it is what the wider economy needs. Until the Government take these steps, and until the Business Secretary begins to engage with a long-term industrial strategy to defend and promote UK businesses and workers, belated supportive words will be seen as nothing more than empty rhetoric.

The Minister for Small Business, Industry and Enterprise (Anna Soubry)
I begin by paying tribute to all those who work in our steel industry. As the Prime Minister describes it, it is indeed a vital British industry. Those workers are without doubt hard working, skilled and dedicated. I would like to take this opportunity to congratulate the Community trade union leader, Roy Rickhuss. It is pleasure to do business with him; we do not always agree, but he undoubtedly leads a fine band of men and women. Of course, we also have to remember and recognise all those who have so unfortunately been made redundant in recent times. Our thoughts are indeed with them, their loves ones and their families.

I pay tribute to all hon. Members of all parties who have spoken in the debate. Let me explain the simple truth, which is a harsh fact and reality, as the hon. Member for Redcar (Anna Turley) knows. I was slightly disappointed in her speech, although it has sometimes been a great pleasure to work with her. She well knows that SSI was losing £600 million in just three years, and we all know the huge scale of Tata’s losses. Those are the harsh realities, and no Government can alter the price of steel. In some sectors of steel, prices have halved over a year, while consumption across the world has yet to reach the levels of 2008.

This is not a Government who have stepped back and not done anything. On the contrary, we have seized this nettle and got on with it. We had a steel summit, and the industry made five specific asks of us—and we have delivered on four of those asks. The fifth, which is rates—[Interruption.] As I was saying, on rates, we hope to be able to deliver in the way that I and my right hon. Friend the Secretary of State would like—but we have delivered. It is strange because every time we deliver as we are asked, what do the Opposition do? They just shift the goalposts.

Let us go through the asks and start by looking at procurement. We have changed the rules of procurement, and I was disappointed to hear the hon. Member for Redcar saying that these were only minor and technical changes. Far from it. As my hon. Friend the Member for Torbay (Kevin Foster) said, these are good and valuable changes; they include skills for the supply chain, which are just some of the new factors. Yes, we will evaluate them and make sure that Departments deliver because these are not guidelines—they are mandatory.​

The hon. Member for Motherwell and Wishaw (Marion Fellows) says that the Government should do more, but she has not told us whether the SNP in Scotland have changed their procurement rules. We know that they have not. On energy costs, we were asked to take action and we have taken action. We have got compensation and gone further than the ask made of us, and in relation to two of those significant charges, we are going to make sure that these are properly and fully compensated and effectively removed from next year.

Flexibility on the EU emissions directive is another ask on which we have delivered, and then we come to the issue of the dumping of steel by China. It is not just China, if I may say so; it is a number of countries, and that needs to go on the record. I take particular exception to some of the comments made by Labour Members, because in July we voted for the first time for tariffs on wire rod—of some 24% by way of charge. Then we voted again in November.

It is the lesser duty rule that has been so effective. Let me provide an example of the work we have done. On rebar, if we did not have the lesser duty rule, the charge would have been some 66%. In fact, what the industry wanted was a charge of about 20% to 30%. We have worked tirelessly to achieve that. The EU has set the figure at 9% to 13%, and it is this Secretary of State who took that argument and led the charge. We continue to do that with tubes and on cold rolled steel as well. That is the work that this Government have been doing, and I am proud of our record, and we will continue to fight when it comes to tariffs on Chinese and other countries’ steel.

Let me make something clear about the lesser duty rule. What it does is effectively ensure that the right balance is struck so that it is not overly protective, but tariffs are there at the right level to do the right thing by British steel. All that I will say about China and market economy status is that Russia has market economy status, and that has not prevented the European Union from imposing tariffs on it—and rightly so. I suggest that that is another very large red herring tossed in by the Opposition because we have delivered on asks that the industry and the unions have made of us.

What have we done? What has the Secretary of State gone and done? He went to Europe and called an extraordinary meeting of the Competitiveness Council. Far from sitting back in the European Union, we are now taking the lead, and that is why the Competitiveness Council met today. Unfortunately, I have not enough time to go through all the things that have already been achieved because of the action that we have taken in the European Union in order to deliver. For the first time, we are hearing language in the EU that heartens Conservative Members, although I think that Opposition Members simply do not understand it. The statement that was issued today mentions an absolute desire to ensure that competitiveness is at the heart of the future of the steel industry: a desire to reduce regulatory costs, to reduce regulation, and to look at the issues of illegal subsidies and, most important, electricity prices.

Anyone who wants to help out the British steel industry will support Trident, but where was the Leader of the Opposition on Saturday? On a Campaign for Nuclear Disarmament march.