DRAFT National Minimum Wage (Amendment) REGULATIONS 2017

Stephen Kinnock Excerpts

Tuesday 14th March 2017 General Committees

[Margot James]

That is a fact—I am sorry if it displeases the hon. Gentleman. I accept what he says about the future projections—I am not going to start arguing with the OBR—but I am afraid that if he has his way and brings in a national minimum wage of £10 an hour overnight, that will result in more unemployment, which would set people’s chances back.

[Stephen Kinnock (Aberavon) (Lab)]

Will the Minister give way?

[Margot James]

I am sorry; I am going to carry on.

I want to deal with the extra £2 an hour, which is the same point as the one about raising the national living wage to almost £10 an hour. The hon. Member for Walthamstow made a very powerful speech. I completely accept that £2 an hour would make a big difference to people’s lives at the lowest end of the income scale. We want to get there as quickly as we can. The UK’s lowest earners have at least received the fastest pay rise in the last 20 years and their earnings have grown faster than other people’s further up the wage scale. More than 6% is the largest increase among the low paid for the last 20 years. Those figures are independent of Government.

I fear that one of the reasons why every Labour Government in history, I think, always leaves office with unemployment higher than when they entered office is that they want to escalate the pay rates before the country has earned it. I am afraid that is a recipe for more unemployment, which is a price that this Government are not prepared to pay. We would rather listen to the independent advice of the Low Pay Commission and put in place national living wage rates that protect employment, respect economic growth and what it is capable of paying people, and give the lower paid at least the best increase that they have had in the last 20 years. I want it to be more and I hope we will get to that point in future years—it could not come soon enough for me. I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft National Minimum Wage (Amendment) Regulations 2017.

Steel: Preserving Sustainable Jobs and Growth in Europe

Stephen Kinnock Excerpts

Tuesday 7th February 2017 General Committees

[Stephen Kinnock (Aberavon) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Wilson. The UK steel industry is of vital national interest. The importance of steel to the maintenance of resilient supply chains and to the strength of our key defence, automotive, construction and rail industries cannot be overstated. As steel is so important, and as the UK steel industry faces major challenges, the European Scrutiny Committee recommended this communication from the European Commission for debate in April 2016. The communication sets out a wide range of proposals intended to ensure that the European steel sector can overcome its short and long-term challenges.

As we prepare to leave the European Union, the development of an effective policy framework to ensure the long-term viability of the UK steel sector becomes even more important. The European framework and rules will continue to apply to the UK until the moment of Brexit, but we need some idea of UK policy thereafter. It is obviously deeply disappointing that despite our repeated reminders, the debate has been delayed for so long. Our frustration at the failure to schedule the debate at a time of crisis in the steel industry led us to arrange a joint evidence session with the Committee on Energy and Climate Change, the Committee on Welsh Affairs, and the Committee on Business, Innovation and Skills in July 2016. Despite that session, a number of fundamental questions raised by the European Scrutiny Committee at the outset remain unanswered, and they assume greater significance given events since then. I hope that the Minister will shed light on those questions today.

The first question is about trade defence. We have asked the Government why they oppose the removal of the lesser duty rule in the face of a continuing flow of cheap steel from China. The long-standing deadlock on that in Brussels was broken in December, and it now looks likely that the application of the rule will be subject to significant limits. What approach will the Government take to the UK’s future trade defence regime to ensure that our steel industry is no less protected than that of the EU?

The second issue that the European Scrutiny Committee raised relates to market economy status for China. We have repeatedly asked the Minister for the Government’s position and analysis on granting MES to China, and about whether there were any links between their opposition to limiting the lesser duty rule and wider UK-China trade and investment relations. We asked, in particular, whether bilateral and multilateral discussions thus far had had any success in addressing the challenge of overcapacity and unfair trading practices.

The third area is investment for innovation, modernisation and training. The communication highlights a number of EU funds that are available to strengthen competitiveness, innovation and training. The Committee asked the Government what steps they were taking to encourage industry to avail itself of funding opportunities and to address underutilisation. Although the Government have confirmed that the Treasury will guarantee EU funding obtained before we leave the EU, we asked them what arrangements they would put in place to ensure that the UK steel industry had access in the longer term to funds to support new technologies and modernisation, and, in other cases, to support workers facing structural change and redundancy.

Related to that is the question of state aid. In response to the Committee’s questions on what reforms or additional flexibility the Commission might be considering in respect of state aid to the steel sector, and whether the Government would support those, the Minister informed us in late October that the UK has secured state aid compensation for UK energy-intensive industries for the impact of renewables and climate change policy on electricity costs. It is pertinent to ask, then, what approach the Government plan to take to support for the steel sector once the UK is no longer bound by state aid rules.

Finally, the communication on steel highlights energy prices, the emissions trading scheme and the circular economy package, which deals with recycling. There has been much talk in the House of the effects of high energy prices on energy-intensive industries; I will leave that point to other Members to raise. The Committee asked the Minister whether the Government envisaged any short-term amendments to the ETS to address challenges faced by the steel industry. The then Minister informed us in July that the Government were not planning any amendments to the ETS in the short term, and that they were working closely with industry towards an approach that better targets the available free allowances at the sectors that need them most.

The Minister informed us in his last communication that the UK remains an active participant in the latest phase of ETS negotiations, and was hopeful that a general approach could soon be agreed. I look forward to the Minister’s briefing on the progress of those negotiations, to his comments on the approach that the Government plan to take in this area following our withdrawal from the EU, and to an informed and lively debate.

[The Chair]

I call the Minister to make an opening statement. I remind the Committee that interventions are not allowed.

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[Mr Hurd]

I thank the hon. Lady for that constructive suggestion. Engagement with devolved Administrations is an incredibly important part of what we do, and I am more than happy to engage with her if she has specific ideas about how I should follow up her suggestion.

[Stephen Kinnock]

I thank the Minister for his comprehensive answers. The question that needs to be addressed is about the impact of Brexit and what sort of Brexit we are looking at. The Prime Minister said in her Lancaster House speech that she thinks that no deal would be better than a bad deal. That seems to indicate an openness to a WTO-type of Brexit, in which we resort to WTO rules. That is combined with an apparent ambition to get the article 50 negotiations and the future comprehensive trading relationship done within a two-year period, which seems to be a heroic assumption, to say the least.

In that light, does the Minister agree that the impact of a WTO type of Brexit would be catastrophic for the British steel industry, not so much because of the tariffs on steel, which at WTO levels look to be about 2% to 3%, but because of the automotive sector, whose fundamental role as the customer base of so much of this country’s steel industry would be wrecked by a 10% tariff on every car we are trying to export into the European Union? Will he assure us that he will press the Prime Minister and other key colleagues as hard as possible to ensure we do not have that form of Brexit?

[Mr Hurd]

I thank the hon. Gentleman for his question, which I will answer in two parts. First, although I do not blame him for this, the situation we are in precludes any Minister responding to speculation about what the outcome is likely to be. We are embarking on a negotiation, which has to play out. The Prime Minister made it clear in her speech that we are aiming to maximise access and minimise friction—the friction point has been important in the conversations I have had with the industry.

That leads me to my second point. I represent the Department for Business, Energy and Industrial Strategy. A large part of our job is to listen to business and ask two questions, the first of which is: what are your priorities and concerns in relation to Brexit, in terms of both risk and opportunity? The second question, in relation to the industrial strategy, is: what is the most pressing and important issue supporting and underpinning the competitiveness of your sector, and your ability to create good jobs and pay better wages? Those are the conversations we are having at the moment.

It is no secret that tariffs are fundamental to the auto sector, which the hon. Gentleman rightly identified as being extremely important to the dynamic growth potential that we want in the steel sector. It was absolutely fundamental to the conversations that the Secretary of State and I had with Nissan. He knows that, and it is entirely clear why. It is our job as a Department to do two things: first, to ensure that that is properly understood by those leading the negotiations—it is—and, secondly, to reassure large, important companies such as Nissan and give them confidence in the fact that we are going to do everything we can to support the competitiveness of the car industry and the industries that supply it. Nissan made its decision, which everyone welcomed, and there is a series of ongoing conversations with other companies in the same vein. Their concerns are understandable. It is our job to listen to them and do what we can to reassure them, because significant jobs are at stake as a result of the investment decisions they make.

[Stephen Kinnock]

I thank the Minister for that response. I have one humble suggestion, which is that a push for an interim deal—a transitional arrangement—to smooth the transition into the new form of our relationship with the EU will be absolutely critical to avoid the cliff edge.

I have a specific question on energy and some more generic points. The specific question is this. The Minister rightly pointed out that the Government agreed to provide compensation to energy-intensive industries. That was cleared by the European Commission, in terms of state aid, which was very welcome. We also know that the period of time for that energy-intensive industry compensation package expired last month. The Government put in place no contingency measures, and nothing has been done to secure a permanent exemption for our energy-intensive industries, in terms of being able to provide that aid without having to keep going back to the Commission for approval. Will he give us a specific assurance that our steel industry will not face a cliff edge in April, when the compensation package ceases, with no transition to a new arrangement, which would be disastrous? That is the specific point.

On the more general point, the APPG report was mentioned earlier—I am sure that the Minister has read it closely. I encourage him to accept our recommendations, such as publishing an annual comparison of UK steel industry energy prices with those of our competitors; completing the energy-intensive industry compensation exemption package I just mentioned; looking at wholesale costs and developing mechanisms for UK steel producers to access lower-price wholesale energy, which is a critical issue; looking at network and transition costs, which are far too high in this country; and considering aid to energy efficiency—there are fantastic opportunities, such as the off-grid generator in Port Talbot, which would use gases from the blast furnace. What are his views in that context?

Another recommendation was to do with reform of the EU emissions trading scheme, because there is a real problem around what happens in 2021. What will we do to get long-term reform? There is also the broader issue of the remodelling of our energy model. Far too much pain seems to be concentrated in our manufacturing sector. There must be a better way of distributing the costs under climate change policy, which we all welcome. The costs are far too concentrated in our manufacturing and energy-intensive industries. The Minister has said that the Government are looking to reform the energy industry, so I suggest he uses our APPG report as a starting point for that process.

[Mr Hurd]

I thank the hon. Gentleman for his suggestions. He opened with a humble suggestion—experienced Ministers know that those are the most dangerous. I will, in the same spirit, take what he said on board and feed it to my Secretary of State, whom I am seeing after this Committee, because we have a meeting with the steel sector trade unions. I make that undertaking.

On the energy costs, the assurance the hon. Member for Aberavon is seeking is one that I gave on the Floor of the House at departmental questions the other day. As he knows, we have made a commitment on compensation. We have made it quite clear that we want to move to an exemption-type scheme. He knows because he is well informed, but that process is taking longer than we expected and wanted. We will therefore continue with compensation until that is worked through. I have made that undertaking on the Floor of the House and it stands, because we totally understand the need for consistency and visibility. I hope that that is reasonably clear.

On the broader challenge, I genuinely welcome the APPG report. As the hon. Gentleman knows, it feeds into what I hope is quite a deep collaborative set of conversations between Government and leaders of the steel sector about its future. Those leaders have embraced the challenge we have set, which was that we need to move on from the language of survival, sticking plasters and muddling through, to a situation in which we have politicians and society recognising the steel sector for what it needs to be, which is an incredibly important foundation sector and part of a dynamic and valuable national supply chain. They bind to that, and the process that we are working through is informed by the capability study we funded and input such as the APPG report. That will all feed into, I hope—if the right spirit and rigour are in place—some form of sector deal in which Government and industry can set out their mutual commitment to some form of agreed common goal. That is an exciting process and I hope he welcomes it. We welcome his contribution.

In that context, and going back to what I was saying, the hon. Gentleman and the report are quite right to identify that the issue of energy costs is now a complex one. We have to move from where we are now. After a lot of sticking plasters have been applied, we still have a gap. As he said, the factors determining that are complex and relate to wholesale energy costs, our energy mix and network costs. They also relate in part to ongoing policy commitments. We need to take a bit of time and work with people who have an interest and expertise in this area, so that we thoroughly investigate all our options.

As the hon. Gentleman might expect, the Department has done a lot of work in this area, but it needs to be sweated a bit harder. Our commitment is to publishing a road map later this year to show what our strategy is. That will be informed by the review that we are setting up, which is, in part, an external challenge relating to our processes and work. This issue is of such importance that it requires a structure and process around it that leads to a strategy that is more long term than the sticking-plaster approach we have taken until now. That has not got us to where we need to be, in respect of having a level playing field for this sector and others—this is not just about the steel sector—that are, quite rightly, pushing us hard.

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[Stephen Kinnock]

On behalf of the European Scrutiny Committee, I thank the Minister for his time today. To follow up on the additional challenges made by my hon. Friend the Member for Sheffield, Brightside and Hillsborough, we have not really talked enough today about the long-term future of the industry in respect of research and development and skills. I commend to the Minister the all-party group’s report, in which we make a number of recommendations such as establishing tripartite public-private partnerships that also involve the trade unions, to identify capability gaps so that we have the right skills for a future-facing industry.

We need low-cost loans to support R and D and innovation. We want the Government to consider intervening more in incidents of corporate failure, particularly with soft loans and with the financial underpinning that is required for things like mothballing, which needs to be far more carefully and strategically managed. We feel that there is a real need to look at the opportunity of creating a national bank for industry that would give the kind of short and long-term financial assistance that is required for research and development.

Fundamentally, it comes down to primary steel making in this country. If we are committed to primary steel making, we have to ensure that we have a blast furnace capability that is fit for the future, has maximum efficiency and is able to make as broad as possible a portfolio of products to keep the British steel industry at the cutting edge. That will require support from the Government, and it will require industry to step up, along with our friends in the trade union movement.

Oral Answers to Questions

Stephen Kinnock Excerpts

Tuesday 31st January 2017 Commons Chamber

[Greg Clark]

I thank my hon. Friend for his contribution to the consultation. We are very clear that we need to see infrastructure investment in all parts of the country. It is one reason why we have created institutions such as Transport for the North to be able to take those decisions locally.

[Stephen Kinnock (Aberavon) (Lab)]

The Government’s industrial strategy has sector deals for a number of sectors, which is welcome. Given the vital cross-cutting foundational nature of the steel industry, will the Minister now commit to a sector deal for steel?

[Greg Clark]

I can tell the hon. Gentleman that I have already been having discussions with the steel industry with precisely that purpose in mind.

Industrial Strategy Consultation

Stephen Kinnock Excerpts

Monday 23rd January 2017 Commons Chamber

[Stephen Kinnock (Aberavon) (Lab)]

Given the vital nature of steel as a foundation industry, it is pretty astonishing that it gets only one passing mention on about page 100 of this Green Paper. May I commend to the Secretary of State the report “Steel 2020”, which was produced by the all-party group on steel and metal-related industries? May I ask him to read it and perhaps come to a future meeting of the all-party group so that he can explain why steel has not been given a sector deal in the Green Paper, and why it seems to have been airbrushed out of the strategy so far?

[Greg Clark]

I am afraid that the hon. Gentleman talks nonsense. I have had very cordial and successful meetings with the steel industry, and it is excited about the prospects of working strategically for its future. I have had the pleasure of attending meetings of the all-party group in the past, and I look forward to doing so again.

Oral Answers to Questions

Stephen Kinnock Excerpts

Tuesday 13th December 2016 Commons Chamber

[Margot James]

Earlier this year, the Prime Minister commissioned Matthew Taylor to carry out an independent review of modern employment practices, such as in my hon. Friend’s example, as part of ensuring that our economy works for everyone. I am sure that my right hon. Friend the Secretary of State for Work and Pensions will also consider my hon. Friend’s suggestion.

[Stephen Kinnock (Aberavon) (Lab)]

The energy-intensive industries compensation scheme is due to end in April 2017. The Government have promised to bring forward legislation to exempt energy-intensive industries from renewable obligations and feed-in tariffs, but we are still waiting for that to happen. As things stand, the steel industry is therefore looking down the barrel of having to go back to the crippling energy costs it faced until the compensation package was introduced. Will the Secretary of State assure us that measures will be put in place before April 2017 to ensure that we do not go back to that situation?

[Greg Clark]

The discussions we have had with the steel sector emphasise the importance of energy costs, and our commitment is to work with the sector to bring them down.

Tidal Lagoons and UK Energy Strategy

Stephen Kinnock Excerpts

Tuesday 6th December 2016 Westminster Hall

[Stephen Kinnock (Aberavon) (Lab)]

Thank you very much, Mr Paisley, for calling me to speak. It is a great pleasure to serve under your chairmanship and I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing the debate.

My constituency of Aberavon, along with that of my hon. Friend the Member for Swansea East (Carolyn Harris), a neighbouring constituency, would be the home of the Swansea bay tidal lagoon project, which would be the first such project in the world. Tidal lagoon power is an idea whose time has come. The Swansea bay tidal lagoon would produce enough energy to power 150,000 Welsh homes for 120 years, meeting 11% of Welsh energy needs with clean, green, reliable and sustainable energy, saving almost a quarter of a million tonnes of carbon during each year of operations. It would directly sustain over 2,000 construction and manufacturing jobs in Wales, and support as many as 311 UK industrial and manufacturing businesses along the supply chain. Crucially for my Aberavon constituency, the project will require more than 100,000 tonnes of steel, much of which will come through the Port Talbot steelworks. Tidal Lagoon Power has committed to procuring as much steel as possible from UK suppliers and it should be commended for making that pledge and held to it.

As the project will be the first of its kind in the world, it is estimated that, in its first year, 200,000 people will visit the lagoon to see the national boating centre and other facilities. That will mean £8 million in tourism revenue, including £2 million from the oyster-shaped visitor centre, £500,000 from the national boating centre and almost £1 million from the elite performance sports centre. The project has the support of almost 90% of local stakeholders and it was included in the manifesto upon which every major party stood at the last general election. In sum, the Government are fast running out of excuses for delaying a positive decision.

A final decision will, of course, be made following consideration of the Hendry review. That was supposed to have been received before the autumn statement, but we understand that the Government asked for the report to be delayed, in the light of the possible ramifications of other announcements. Can the Minister please inform us what impact, if any, the autumn statement has had on the review?

We now understand that the review is expected to be submitted to the Secretary of State this afternoon. Can the Minister please inform the House whether the review has already been submitted? If not, when will it be submitted? Will he commit to his Department publishing the Hendry review publicly?

Members of this House, our constituents and local businesses should see the review and the case presented by Hendry either for or against tidal lagoon power. There are live investment decisions that need to be made or at least planned imminently. For the decisions to go forward, investors need at the very least a clear sense of the decision-making and implementation process. Will the Minister please make clear what the formal decision-making process will be and when we can expect a public decision? Will we have to wait until the Budget? Will the Secretary of State make a statement in the coming months either as a separate stand alone statement or as part of his national industrial strategy statement? Will the Government also make it clear what the timescale and process will be for implementation of any decision following the Hendry review? Investors, business and our communities need an end to the uncertainty. All major parties made clear manifesto commitments to tidal lagoons and in particular to the Swansea bay tidal lagoon. It is about time we fulfilled those commitments and delivered jobs, energy and opportunity to the Swansea bay region.

Oral Answers to Questions

Stephen Kinnock Excerpts

Tuesday 8th November 2016 Commons Chamber

[Jesse Norman]

Yes, that has been widely suggested. It is fair to say that the issues being addressed by the review are complex and relate to a new and untried technology—potentially, a place-specific technology. The Government will need to look closely at the review’s specific conclusions and how far they can be generalised as part of a wider strategy.

[Stephen Kinnock (Aberavon) (Lab)]

The future of the British steel industry depends on the approval of vital cutting-edge projects such as the Swansea bay tidal lagoon. Will the Secretary of State please now call time on the two years of prevarication, commit to a timely and positive decision, and ensure that that decision is included in the autumn statement on 23 November?

[Jesse Norman]

Of course, in the context of the steel industry, it is important to recognise the commitment that the Government have made to Hinkley Point C—a major industrial commitment of their own. I recognise the hon. Gentleman’s point, but we are not going to be railroaded into going beyond the timetable that has already been described. An orderly process is in place, a highly respected former Minister is running the thing, and we will be looking at the issue with the care and consideration that it deserves.

Steel Industry

Stephen Kinnock Excerpts

Thursday 3rd November 2016 Westminster Hall

[Tom Pursglove (Corby) (Con)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Davies. It is always a pleasure to follow the other Tom, the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who is a passionate advocate for our steel industry and with whom I very much enjoy working. People out there in the country often take a dim view of the proceedings they see in Parliament, but I believe strongly that the work of the all-party parliamentary group on steel and metal related industries is incredibly important and crosses party lines, which have nothing whatever to do with our work. We all work together for what is best for our steel industry. All Members here this afternoon can be proud of that.

I welcome the Minister to his place. I have great regard for him. He is one of the hardest-working Ministers in the Government. I am also delighted that we have a Secretary of State from good, steelmaking stock, which brings a lot to this debate. He completely understands what is at stake, given his family background. I welcome both Ministers to their new positions and look forward very much to working with them.

It would be remiss of me not to thank the previous ministerial team for its efforts. The right hon. Member for Broxtowe (Anna Soubry) and I regularly disagree on certain matters, particularly in relation to the European Union, but I have enormous respect and admiration for her work and her engagement with Members who have steel-related industries in their constituencies. She went around the country visiting our steelworks and talking to employees, unions and site managers about the steps that needed to be taken. She should be given a lot of credit for that.

I pay tribute to the Community union and Roy Rickhuss, whom I enjoy working with. He is a real advocate for our steel industry. Roy’s representatives on the ground do much to ensure that the views of steelworkers throughout our steel sites are heard as part of these debates. Great credit should be paid to him.

I am proud of much of what the Government have sought to do to try to help our steel industry. We have moved the debate on energy compensation along and have a package in place. We have made great strides forward on procurement, and I will come to that. Although there is more work to be done on dumping, I, for one, have appreciated Ministers’ efforts to raise directly with the Chinese the consequences of what is happening.

The big concern in Corby—I visit the steelworks regularly to talk to the site management, unions and employees—is that there seems to be a bit of a vacuum. Not much information is coming from Tata on where we are, and this is at a time when we have had some positive announcements about other sites, such as Scunthorpe, where the workforce now have real certainty about the future. We need further certainty about Tata’s existing portfolio. I know that discussions are ongoing with ThyssenKrupp, but I urge that the message from this Chamber this afternoon is that Tata should say publicly as much as it can about the current state of play, which hangs like a cloud over our steel towns that are Tata sites. We must try to put an end to that uncertainty as quickly as possible and to do the right thing for our steelworkers.

There are three areas where Government leadership will be key in the coming weeks, months and years. The first is EU exit. I campaigned to leave the European Union and I am pleased that the British people’s verdict was that we should leave, but I accept that other people have sincerely held views to the contrary. Exit offers a real opportunity to our steel sector, but engagement will be crucial to getting it right, and we must thoroughly engage with the unions, the companies and the workforce to get the policy absolutely right. We need to understand the requirements, needs and aspirations of our steel sector for the years ahead.

I believe that when we leave the European Union we will have more tools at our disposal, but it is important to get that right. The Government will be able to act directly on dumping and state aid rules; they have had to go through Brussels in the past. We all agonised over the difficult few months when Ministers were going to Brussels and making the case for the energy compensation package, only to see the can kicked down the road. We eventually got to the right place, but it is welcome that in future the British Government will be able to put those things in play.

[Stephen Kinnock (Aberavon) (Lab)]

The hon. Gentleman is making a very insightful speech, but the fact is that the way in which state aid and the European Commission work is that national Governments must provide the Commission with a list of their priority cases. It is a matter of record, however, that this Government consistently failed to put the energy-intensive industries package at the top of that list. The Commission was dealing with cases as they came from our Government, so it was the failure of our Government to make that a priority. Only thanks to the pressure that we put on them did they suddenly put the energy-intensive industries compensation package to the top of the list, and the case was then resolved within three months.

[Tom Pursglove]

My understanding was that British Ministers were going over to Brussels regularly to make the argument for the energy compensation package. I remember having numerous conversations with Government colleagues about the importance of that, and they were certainly relaying the significance and severity of the delay and its impact on the industry. Again, I commend them for those efforts.

Another point is that outside the European Union the British Government would be in a position, if they wanted to, to emulate the sorts of tariffs that we have seen in the United States. We would be able to do that if we felt that it was in our national interest. Whereas before we would have had to try to enact it through Brussels, we would be able to do it directly. I think that we should look at all these things.

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[Angela Smith]

I completely agree with my hon. Friend. His point relates entirely to the situation with shale gas. My hon. Friend made an impassioned case for the shale gas industry earlier this afternoon, and I entirely support him in that. I support the signing of the memorandum of understanding by Community and by the GMB. We all know that the domestic supply of shale gas will help not only the steel industry, but a range of industries in the UK, because it will provide valuable feedstock for the chemicals industry, for example.

Are the Government continuing to support the development of the relevant steelmaking capacity to ensure, for instance, that UK steel will be used in developing the new industry? There have been difficulties in ensuring that the UK steel market can provide that capacity, but we know that work is ongoing, in partnership with the oil and gas industry, to get over those obstacles and make it possible for the UK steelmaking capacity to deliver the steel that the shale gas industry needs. That relates entirely to the point my hon. Friend made: will we ensure this time that we do not miss an opportunity to expand the UK steel industry and exploit new opportunities that become available, such as shale gas?

The same can be said of the Swansea bay tidal lagoon. Is the Minister providing input on the process to the so-called Hendry review? That is critically important. There are huge advantages for the UK steel industry from that project, if it goes ahead.

[Stephen Kinnock (Aberavon) (Lab)]

My hon. Friend is giving a passionate speech, as always. It is also important to note that the Swansea bay tidal lagoon is just the first in a number of projects. The economies of scale coming out of that could deliver lagoons in various places around the country—far larger, in fact, than at Swansea bay—so the potential for steel and steelmaking from lagoon projects is enormous.

[Angela Smith]

I completely agree. Potentially, this is an exciting new industry for the UK that would provide reliable baseload energy to meet the nation’s needs. The steel necessary for building those tidal energy projects will come not just from south Wales, but from Firth Rixson and Forgemasters in Sheffield. It will involve some of the best and most technologically sophisticated steelmaking available in the UK. Is the Minister absolutely committed to ensuring that the voice of the steel industry is heard at the heart of Government in looking at whether we give the project the go-ahead? Can we look forward to hearing something specific about that in the autumn statement?

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[Stephen Kinnock (Aberavon) (Lab)]

Diolch yn fawr, Mr Davies. It is a pleasure to serve under your chairmanship. I thank my hon. Friends the Members for Redcar (Anna Turley) and for Middlesbrough South and East Cleveland (Tom Blenkinsop) for securing this debate, and for their contributions. I welcome the Minister and shadow Minister to their places.

A year on from the closure of Redcar, our steel industry is still in crisis. Make no mistake: we are still staring into the abyss. My constituency is built around the town of Port Talbot, which is living under a cloud. We are a steel town. The steelworks is the blazing heart of our economy, our community and our lives, and we do not know whether it has a long-term future. Our steel industry and the communities built around it face a perfect storm: a long-term declining British manufacturing base; an economy facing fundamental challenges, particularly in light of the referendum; and a Government who are quick with excuses but glacial when it comes to solutions or strategy.

That perfect storm comes together to create an uncertainty with a real, lived effect. It is not only hitting the order book—running down the short-term prospects of our industry, without which there can be no long term—but affecting people’s lives. I have constituents who cannot get mortgages or loans, because there is no guarantee that they will have a job in six months; constituents who do not know whether they will be able to help their kids through university or college; constituents who, simply put, do not know whether they and our town of Port Talbot have a future.

That existential uncertainty has been dragging on for a year. Just three months after Redcar closed, we learned of 1,000 steel job losses across Wales, 750 of them in Port Talbot. The men and women of Port Talbot, Llanwern and the rest of Tata in Wales were left in limbo for more than two months, unsure whether theirs would be the jobs that went. Then, about a month later, came the potentially devastating news that Tata wanted to sell. From a fire sale we got the slow burn, which somehow morphed into the joint venture in July. Today we are no clearer.

We are told that the joint venture is still the option, but what that means is not clear. What does it mean for primary steelmaking, investment and jobs? Is Tata’s British arm even part of the joint venture plans? Apparently not, unless there is a resolution on pensions. But any further delay has a real impact, because there are very practical decisions that have to be made now if the industry is to continue, such as relining the second blast furnace at Port Talbot, without which there is no sustainable future for primary steelmaking in this country.

The Government, along with both companies, must set out clearly what the joint venture really means and must give us the cast-iron guarantees that Roy Rickhuss of the union Community called for just this week on jobs, investment and the long-term future of Port Talbot and the rest of the business. Although we do not know the reality, our fear is that this joint venture is little more than a smokescreen for cutting Tata Steel UK loose to consolidate the business on the continent. ThyssenKrupp has never shown much real or active interest in Tata’s UK operations; we know that the joint venture is right at the bottom of its priority list, beneath its internal restructuring, domestic jobs guarantee and ongoing negotiations with the German union IG Metall. When that is added to Tata’s complex internal dynamics, which we saw in the changes in Mumbai, the result is a sword of Damocles, forged by an inept Government with dumped Chinese steel, hanging over the heads of people in Port Talbot.

[Mr Clive Betts in the Chair]

The situation is even more precarious given the vote to leave the European Union. Brexit poses real challenges for our industry. More than half of our exports go to the continent, so it is essential that the Government act to protect the steel industry throughout the Brexit process and negotiations. First, they must ensure continued access to the single market and continued membership of the customs union. Those matter because they will allow us to avoid tariffs that would devastate the industry and because they strengthen our hand in fighting Chinese dumping. The Minister should confirm today that his Government will strain every sinew to ensure unfettered tariff-free single market access for British steel and the tariff protections that come from standing with a market of half a billion consumers. Secondly, they must act to protect the steel supply chain. Around half the steel used by UK carmakers comes from Tata and Port Talbot; the automotive and steel industries are inextricably bound together, and each needs the other to stay in the UK in order to be successful. Last week’s news about Nissan was welcome, but the Government must commit to offering the same terms to other automotive producers such as GM, Toyota, Ford and JLR to ensure that they remain in Britain.

Those are just two of the actions that the Government must take to ensure the future of the steel industry. However, it is the Government themselves who are the greatest cause of uncertainty for our communities. For years, we have seen an approach characterised by indifference and incompetence, and now we can throw in complacency. The Government act as if the weakness of the pound is a knight in shining armour, riding to the rescue of the steel industry, but it is really a Trojan horse attacking our industry from within. In the short term, the 15% drop in the value of the pound has helped UK steel exports, but come the new year the penny will soon drop. The cost of the raw materials that we have to import—coke, coal, iron ore—and of energy will shoot up. Those costs will have a huge impact on the bottom line, as they already do for those who process scrap, who buy month to month or week to week. As Bimlendra Jha put it two weeks ago,

“you can’t make a business profitable on currency, we have to make it profitable on a structural basis.”

The reality is that the industry does not see the structural problems being fixed, because we have a Government who can talk a good game but who are sitting on their hands. It is straightforward to change that, but the Government must take concrete action in a number of areas. First, will they guarantee that the co-investment and soft loans offered last April still stand? Secondly, 12 months on from Redcar, will they finally make progress on the five asks? Thirdly, will they protect the steel industry from further Chinese dumping by voting against market economy status for China? This month, the European Commission will decide its position on this question, ahead of the December vote at the World Trade Organisation. Let us be clear: a China with market economy status is a China that can and will keep dumping with impunity. Will the Minister let us know how the UK Commissioner will be mandated on MES? Will the Commissioner vote in accordance with the European Parliament and the clear will of this House?

The autumn statement gives the Government other opportunities to give steel a fighting chance by removing plant and machinery from the calculation of business rates in a way that also compensates local authorities and, crucially, by acting on energy prices. I have no doubt that the Minister will point to the compensation package and talk about energy efficiency. That is fine, but it should be the icing on the cake. We need the actual cake first. Our prices are £17 per megawatt-hour higher than Germany’s. That is 40% to 45% more expensive, and it is killing the competitiveness of our industry. We cannot save 45% through energy efficiency alone.

The Government are motivated by tactics, not strategy. They are more interested in producing a political fig leaf to keep us quiet than in solving the problem—but we will not be silent, the industry and the workforce will not be silent and our communities will not be silent. We know that our futures depend on solving this problem and we know that the Government can and must do better.

To quote Bimlendra Jha again,

“while there has been a turnaround…we are still not out of the woods.”

Mr Jha also said that

“whether you drown one foot under the water or 10 foot, you still drown.”

That is why we need a proper industrial strategy for the steel industry. The Government’s future capabilities assessment is a welcome baby step towards that, but it is no industrial strategy. However, the Government will have some help from us with that, because next month the all-party group on steel and metal related industries will produce our industrial strategy document. Our document will show how an active and engaged Government, motivated by strategic and economic rather than tactical and political thinking, can build the environment for our industry to thrive, creating a level playing field on cost and trade, connecting up supply and demand, building enforceable procurement rules and forging a new model of partnership for growth and progress.

Just as iron needs oxygen in order to be transformed into steel, our industry needs a strategic and engaged state, working in partnership with the industry, unions and workforce. The future of steelmaking in the United Kingdom is hanging in the balance. The future of the thousands of steel workers and their families and communities in Aberavon and throughout the country is hanging by a thread. We can overcome the uncertainty and build a bright and secure future, but only if we act—and we must act now.

--- Later in debate ---

[Christina Rees (Neath) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) and my hon. Friend the Member for Redcar (Anna Turley) on obtaining the debate. I welcome the Minister to his place, and want to compliment my hon. Friend the Member for Aberavon (Stephen Kinnock) on his great speech. His constituency is adjacent to mine, and I assure the House that he and I are working together for the people who live in our constituencies and work at Tata Steel.

To say it has been a difficult year for the steelworkers of Neath and Port Talbot would be an understatement. The challenge of competing in a global market, the absence of anti-dumping tariffs, the lifting of the lesser duty rate and Brexit all conspire to create a world of uncertainty and fear. Of the 1,050 jobs lost in the UK steel industry since the year began, 750 of them have been lost from Port Talbot. That was on top of the 400 jobs lost in 2014.

Steel and the steel industry are essential to Wales and its economy, and that is particularly the case for my constituency and the people of Neath. The notion that it does not have a future is simply unthinkable. There are 575 businesses making up the steel industry, employing 31,000 people across the UK. More than 50% of those jobs are based in Yorkshire and Humberside or in Wales. However, between 1997 and 2014, iron production in Wales fell by 3,210 kilotonnes—or by more than 50%. Steel production has fallen by 25% during the past 40 years. Nevertheless, last year was a record-breaking one for Tata Port Talbot, with the plant producing 3.2 million tonnes of steel.

Decline and uncertainty are things that our steelworkers have had to deal with for many years and, being as robust as the steel that they make, they have bounced back every time, working through it all to keep our country supplied with the finest steel in the world. However, the uncertainty has taken on a new form in the shape of Brexit. The European Union accounts for more than 40% of direct British steel sales— and more, when the exports of British manufacturers are considered. Post-Brexit tariffs on British steel or an elongated trade agreement might signal the death knell of an industry already fighting to compete on a level global playing field.

I remind Members that the forerunner of the European Union, the European Coal and Steel Community, was set up not only to cement peace but to help economic growth by pooling resources and preventing unnecessary competition. Its architects would be astonished at the current state of affairs and the UK Government’s inability to work with our European partners to prevent unnecessary competition from across the world. The latest industrial revolution taking place in China may well be the biggest of all. In 2015, the Chinese produced 804 million tonnes of steel, or 50% of the total worldwide output. The UK produced 11 million tonnes during the same year. It is a matter of not whether there will be implications for the UK steel industry as a result of Brexit but what their extent will be. If the Government do not do all they can, exports will be hit hard, output will be slashed, jobs will be lost and communities will be forsaken.

The picture painted may be bleak compared with a golden past, but I firmly believe that steel in Wales and the UK has a strong future. A future for any industry is all about adapting to change and turning threats into opportunities. The future of the steel industry is clearly about innovation, and technological innovation is in its business model. Beyond the heavy end of steel production that we all know so well, we also have organisations that innovate and produce high-tech products that are changing the way we view steel.

Neath Port Talbot is home to a company called Specific, which uses coated steel to make world-leading, innovative technologies that produce, store and release energy. At the heart of its work is Swansea University’s bay campus, which straddles the constituencies of Neath and Aberavon. Specific is hugely concerned about our leaving Europe, not only because of the essential funding it has received from the EU—without which it probably would not exist—but because of the potential loss of a market in which it could promote and sell its products. It is that sort of high-level innovation that needs to be harnessed and nurtured if we want to see a future for our steel industry.

[Stephen Kinnock]

My hon. Friend is making an excellent and comprehensive speech. It is important to underline the fact that the quality of the steel is possible only through primary steelmaking. It must be produced on the basis of a process that starts right up the chain with a blast furnace, not with an electric arc furnace. If we are going to take steel into the 21st century and as high up the value chain as we can, we must retain primary steelmaking in this country.

[Christina Rees]

I thank my hon. Friend for making that important point.

An innovative product is only one part of the story; we must also use the current crisis as an opportunity to change the way we do business so that a structure can be established to protect the steel industry for many years to come. What about a management-workforce buy-out at Tata Port Talbot, and perhaps elsewhere? It could be set up in the shape of a co-operative and take advantage of the benefits of a tripartite model of delivery that would also involve investment from the public and private sectors. There are many such examples from across Wales and the UK, including Tower Colliery, John Lewis, Welsh Water and hundreds of credit unions. Welsh Water’s slogan is “For Wales, not for profit”; we could apply the same principle to our other key industries, which for Wales means steel.

Co-operation, consensus and community are the founding principles of not only co-operatives but the Labour party. It is on those shared values that figures from across the Labour movement have led the development of organisations that have anchored communities during difficult times and helped to create a buffer against global economic shifts. Let us consider the possibility of doing the same in communities such as Neath, Port Talbot and elsewhere. I urge the Government to play their part in this endeavour.

--- Later in debate ---

[Mr Hurd]

I will come on to that issue. The point I am trying to make is that the Government have not been all talk: we have taken action on energy.

I refute the allegation that the UK has been a fundamental obstacle on dumping. We have pressed for anti-dumping measures, specifically on wire rod, seamless tubes, rebar and cold rolled products. The EU now has 39 trade defence measures in place, and imports have fallen significantly as a result. We are an active member of the G20, which, as hon. Members know, set up a forum to look at the issue of dumping. The lesser duty rule is an issue; I do not know whether there is party division on that. Our position is that measures taken against dumping need to be proportionate because we have to balance the interests of consumers, the industry and businesses. We have been and will continue to be a very active voice on dumping.

My hon. Friend the Member for Corby rightly talked about procurement. Again, the UK has been the leader in the EU on responding to the new flexibilities, and new guidelines are in place. The feedback from the chief executives at the meeting last week was that they did not really want to talk about procurement because they recognised that action had been taken and other issues were more important to them, not least business rates, which I acknowledge continue to be an issue. The Government have reformed business rates in a way that is designed to present a net benefit to the UK economy. Steel companies will benefit from that reform. Does it go as far as the steel industry wants? No. Are there big complexities, not least around the affordability and doability of what the steel industry wants? Yes, but we will continue to try to work through them.

On the strategic direction, the Government have stepped up and offered to fund the capability study and work with the sector to identify the capabilities that are needed—that was the point made by the hon. Member for Penistone and Stocksbridge (Angela Smith)—and growth opportunities for the future. There has been action, but we are clear that our work is not done. There is no room for complacency, given the pressures on this critically important industry.

We are looking at all the options for energy. They are complicated, because what we have got to do is legal and, as the hon. Member for Middlesbrough South and East Cleveland said, a consensus has to be built on who pays. If the steel industry pays less, the chances are that someone else is going to have to pay more. Our instinct is to focus on a strategic, sustainable approach; we have to move on from the sticking-plaster approach. I am glad hon. Members are nodding.

I am going to accelerate to fulfil my pledge. Of course Brexit brings tremendous uncertainties. As hon. Members know, we have not even started the negotiation process, let alone finished it, but I say to them what I said to the chief executives last week: this Department is your liaison point. It is our responsibility to listen very carefully to the sector to make sure that the issues you face are totally understood by the Government. In that respect, the steel sector is the same as the automotive sector and other sectors. Our responsibility is to listen to the sector and understand the granularity of the issues it faces so my Secretary of State, who is at the table with the decision makers in this process, is fully informed and able to represent the industry.

[Stephen Kinnock]

The Minister is making a comprehensive speech. On the topic of Brexit and inter-departmental co-operation, I draw his attention to the remarks made by the Secretary of State for International Trade. He said:

“We must turn our backs on those that tell us: ‘It’s OK, you can protect bits of your industry, bits of your economy and no one will notice.’ It is untrue…We must be unreconstructed, unapologetic free traders.”

Does the Minister think that, under his right hon. Friend’s guidance and as we leave the European Union, our ability to deploy trade defence instruments against the dumping of Chinese steel will be strengthened or weakened?

[Mr Hurd]

I am going to accelerate now. We are clearly being proactive about championing both free and fair trade, and we are very active with the EU on measures about that. As my hon. Friend the Member for Corby made clear, Brexit may in theory present us with some opportunities and freedoms that we do not have at the moment, but all that is to be decided. It all needs to be agreed as a result of very full engagement with the sector.

My final point is about industrial strategy, which is where everything comes together. I will simply say what we said to the industry leaders: we want to work together to move the story of the sector away from any suggestion of sunset, failure or survival to talk of exciting growth. We need to work together on that to understand where the opportunities for growth are, where the capabilities are and where Government can provide support by ensuring that Brexit is right, by levelling the playing field and by helping with the innovation that is critical. We are absolutely serious in that determination. With that, I leave the Floor open to the sponsors of the debate.

Fourth Industrial Revolution

Stephen Kinnock Excerpts

Thursday 8th September 2016 Commons Chamber

[Stephen Kinnock (Aberavon) (Lab)]

I join colleagues in thanking the hon. Member for Havant (Mr Mak) and my hon. Friend the Member for Hove (Peter Kyle) for all their work to secure the debate. I declare an interest: for three years, from 2009 and 2012, I worked at the World Economic Forum.

The subject of today’s debate was the subject of this year’s Davos meeting: the fourth industrial revolution, an industrial revolution that will be characterised by new forms of renewable energy and the exponential outward expansion of technological innovations, driven by the internet. It is a revolution that will take place as we face severe challenges to our economic future: seemingly ever-increasing inequality; the worst productivity crisis and trade deficit in our country’s history; greatly reduced job security; over-concentration on London as the predominant source of wealth and growth, at the expense of other regions; and over-reliance on the services industries, with manufacturing accounting for an unprecedentedly low share of GDP. Manufacturing is crucial to broadly shared wealth, but we have seen manufacturing as a share of GDP drop from over 30% 40 years ago to under 10% now. That lies at the heart of many of the difficulties—the unbalanced nature of the British economy.

In the aftermath of the EU referendum, each of those challenges is exacerbated by the uncertainty that our economy faces as we negotiate Brexit, given that we do not know what our trading relationship with our largest market will be, and likely will not know for some time. In that difficult context, the fourth industrial revolution, which will completely transform the way we live, will be a defining period for our economy. Will the technology at its heart, left unfettered, entrench the challenges we face, threatening jobs, driving inequality and reducing exportable products as the economy is further limited to services, and further place all the risks and insecurity of the economy on the worker; or will we use the fourth industrial revolution to transform and brighten our economic future for all our people? Can its fusion of digital technology, intelligence and connectivity shape a new economy, with new models of manufacturing, labour relations and skills development that create jobs, raise living standards and allow us to trade with the world in new ways?

Can creating this new economy help us realise our values in society and in our everyday lives?

The answer to those questions is what we make it. We must shape and lead the fourth industrial revolution so that it delivers the society and economy we want for people all across our country. That requires a Government with a vision of what a fourth industrial revolution must look like in order to deliver the outcomes we need and a Government who have an industrial strategy that helps us get there. It requires a Government who take action and take control of our future.

This will require a strategy and plan that rebuilds a new manufacturing sector based on the internet of things, and that creates world-leading products but also delivers a more sustainable form of labour relations. It will require us to take long-term decisions that back British ingenuity and ideas. It will require us matching or exceeding OECD levels of investment in research and development, which is the source of future growth and industry.

As part of this, we must continue Horizon 2020 funding, which does so much to catalyse university research and innovation and transform it into market products. The Government have currently promised to match Horizon funding until 2020, yet even in a fastest possible Brexit scenario that is only one year of matched funding. We must commit for much longer to give universities and innovators the confidence they need, especially in the face of Brexit-fuelled uncertainty, to develop the ideas and intellectual property that will inspire and drive our future in the fourth industrial revolution.

As well as providing this foundation for the catalysts of the fourth industrial revolution, Government must also protect its fruits: British IP, business, manufacturing and supply chains. We simply cannot afford to be hands-off and allow a world-class tech business such as ARM Holdings to be sold to the Japanese. We cannot run a successful, growing economy and secure the investment it needs if we allow our crown jewels to be sold off.

Just in the last year, I have seen the huge difference in impact between a hands-off approach to government and one that is active. The British steel industry, so important to my constituency, has been failed time again by our Government. The Government did not act to block the dumping of state-subsidised Chinese steel, when they could have done. The Government did not encourage investment or profitability by keeping a regressive business rates regime and uncompetitive energy prices. Yet when the Government and the state do step up to shape our future and provide a foundation for our success, British talent can deliver great results.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Gentleman mentioned the sale of ARM Holdings to SoftBank. Yesterday we saw the announcement of Micro Focus, a UK business, buying a significant business of Hewlett Packard. Does he think that we should be able to buy businesses internationally, but not be able to sell them internationally?

[Stephen Kinnock]

In my view, we need to reform the Companies Act, placing a clear national interest clause and a method of monitoring and executing that clause, so that we move away from situations such as we saw with Pfizer attempting to take AstraZeneca. I am very thankful that the previous Leader of the Opposition did a great job in preventing that from happening, but it is very ad hoc and we need a national strategy to protect our national assets, particularly where they play such a key role in the research and development that drives the entire economy, and indeed the fourth industrial revolution.

In Aberavon, we have a remarkable company called SPECIFIC that works to turn buildings into power stations. It is developing steel-based coatings for buildings—roofs, walls, glass and so on—which can generate and store their own electricity, and it works. We already have an industrial site in Port Talbot that has been generating all its heat through solar power like this for three years. All of this is done thanks to a partnership between business, universities, industry and, yes, the state. The SPECIFIC project is a living, breathing example of the fourth industrial revolution in action, and it required the proactive support of Government. Without the support of Innovate UK, the EU and the Welsh Assembly Government, this project would not have got off the ground. We will be able to make every region of the UK a leader in the fourth industrial revolution only if the Government see building launch pads for our people and businesses as part of their role, in order to allow them to succeed.

I close by quoting my old boss at the World Economic Forum, Professor Klaus Schwab. He said:

“In its most pessimistic, dehumanized form, the Fourth Industrial Revolution may indeed have the potential to ‘robotize’ humanity and thus to deprive us of our heart and soul. But as a complement to the best parts of human nature—creativity, empathy, stewardship—it can also lift humanity into a new collective and moral consciousness based on a shared sense of destiny.”

That is the prize of the fourth industrial revolution, but only if we make it so.