Steel Industry

Debate between Clive Betts and Angela Smith

Wednesday 11th May 2016 Westminster Hall

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on his brilliant speech, and Middlesbrough football club on getting to the premiership. It is good to see another Yorkshire team in the premiership.

[Mr Clive Betts (Sheffield South East) (Lab)]

Are we going to join them?

[Angela Smith]

It would be even better if another Yorkshire team, Sheffield Wednesday, joined Middlesbrough in a few weeks’ time. It is another steel football team.

I want to start by underscoring and supporting the points made by my hon. Friend the Member for Middlesbrough South and East Cleveland about business rates, energy prices, Chinese dumping, skills retention and procurement, which are all very important. I will just add that the sales process that Tata is undertaking needs to hold to a deadline that allows for a sale that delivers responsible ownership for the future. There is a lack of confidence in the current deadline. The feeling is that it is not the right deadline, not the right timetable, so comments on that from the Government would be welcome.

In the previous debate on this issue, in the main Chamber, I spoke about speciality in my constituency. I talked about Tata in Stocksbridge and I will simply reiterate the point that we make some of the best steel in the world and we do that with the best workforce one could ask for. I will leave it at that. My key aim today is not to reiterate the comments that I made then, but to make the point that we have a responsibility not to lose that capacity, especially in such a strategically important industry, so in the rest of my speech, I will focus on making just two key points.

First, the role of the Government in the current situation demands leadership, as my hon. Friend pointed out. The Government have at last shown a willingness to engage, and we are obviously all very relieved about that. They have also demonstrated, I think and hope, that they will be pragmatic in their approach. However, we need the Government to fulfil a much more powerful role, that of strategic lead in ensuring that the Tata sales process is placed firmly in the context of how the industry needs to develop in the long term to secure its sustainability. We need that role to be taken on by the Government now with no more delays or prevarication. Will the Minister please give us that direction? Will she give us concrete actions that demonstrate confidence in the future of steel in the UK?

My second point relates to the importance of innovation in delivering sustainability, and I echo entirely the comments made by my hon. Friend. Innovation in manufacturing improves productivity and secures its future, and there is no better example of that than the steel city, Sheffield. Huntsman developed the crucible process in Sheffield and Harry Brearley developed stainless steel there. Bessemer built the first commercial application of the converter process in Sheffield, and that technology revolutionised steel making, improving its quality while lowering costs significantly, leading to a far wider range of applications for steel products. The steel city became the biggest steel producer in the world, mainly because of Bessemer and his process.

All Sheffielders are immensely proud of our city’s history and achievements. Steel is in the DNA of Sheffield. It is in our blood. We are also passionate about reasserting the fact that steel making is an industry of the future, not of the past. The impact that Bessemer’s technology had on steel making demonstrates entirely that that future depends on investment in research and development.

The Minister should put investment in innovation at the heart of her support for the steel industry and place it at the heart of the much needed industrial strategy for steel. I can think of no better way of doing that than by announcing, as a matter of urgency, that some of the £500 million allocated to the Higher Education Funding Council for England will be brought forward to ensure a timely response to the needs of an industrial, rather than an academic, timetable. Whichever way the Minister does it, she should do it.

The Government need to signal quickly that they understand the importance of innovation to steel and manufacturing. By so doing, they will help to underpin the search for a new long-term ownership and sustainable future for Tata Steel, and they will underpin and make more robust the long-term prospects for the whole steel-making capacity of the UK.

Financial Sustainability (Local Government)

Debate between Clive Betts and Angela Smith

Tuesday 7th January 2014 Westminster Hall

[Mr Clive Betts (Sheffield South East) (Lab)]

I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing the debate. Reference has been made to the Local Government Authority’s position. It is a good idea to take notice of those who, day to day, have to deal with the problems we are discussing and make decisions in local government. Sir Merrick Cockell, the Conservative leader of the LGA, which has a Conservative majority, has said clearly that the position of local Government finance is not sustainable. I happen to agree with him, and there is cross-party agreement in the LGA. That comes about because, as my hon. Friend has said, local government has been asked to make twice the level of cuts demanded of central Government Departments. Local government services are more important than that, and the extent to which local government services have been singled out for disproportionate cuts is unacceptable.

We can argue about which authorities have had the worst deal, and I certainly argue that those with the greatest needs and traditionally the highest level of grants have had the biggest cuts in their grant. That is not questionable—the figures are there to back it up. Local government generally has a good record on efficiency savings. It has coped with the cuts so far quite well, but we have already seen across the country cuts to community services such as libraries and changes to eligibility criteria for adult social care that are affecting communities and individuals in local authorities of all political persuasions.

We cannot continue on that basis, because it is not sustainable. Cuts that are made one year cannot be simply repeated and enhanced the following year. Every year it becomes more difficult because there is less room for manoeuvre and a lower percentage of discretionary spend that can be cut. That is not a steady state, because more pressure is being put on spending for adult social care all the time. The graph of doom that the hon. Member for Southport (John Pugh) referred to is already there. As cuts are made in spending availability and extra demands are made on adult social care, the amount left for other local government services is squeezed until it becomes non-existent. Adult social care and care for looked-after children ultimately benefit a minority of people, important though those services are, and the rest of the population do not know what they get from local councils because virtually nothing is left. That undermines local democracy, which is very worrying.

The hon. Member for Bromley and Chislehurst (Robert Neill) is absolutely right that we have to look towards the longer term. The Government have done some good things, such as abolishing ring-fencing, moving a little on business rates—I would like to see more—and introducing city deals. The most significant thing they have done, however, is to undermine the basis of local government finance in this country to such an extent that a future Government simply will not be able to come back and build on what was there before.

There has to be a fundamental and radical change. There was a good contribution to the debate from the LGA with the “Rewiring Public Services” document. There was a good contribution from the London Finance Commission. The Communities and Local Government Committee is to conduct an inquiry into local and inter-city financing and how city governance affects other parts of the country. Important elements have been raised for discussion, and I hope we can take that debate forward.

In the meantime, what will the Minister do when a local authority gets into real difficulties? The National Audit Office has been highly critical that the Government have not done an impact assessment on the cumulative impact of cuts to local councils. The LGA has said that 56 councils will spend 15% above their income by 2015-16. What happens if one of those councils gets into serious financial difficulties? Would the Government insist on a council having a referendum if it needed to raise council tax by 20% to make ends meet and to deliver its statutory service? Will the public vote for an increase in a referendum if they know that the Government have section 31 powers—civil servants and Ministers revealed them to the Committee—to step in at any point and give councils extra grant to stop them from going bust? Where do we stand when an authority gets into serious difficulty, whether that authority is Conservative, Labour or Lib Dem, rural or urban, a city authority or a district council? What action will the Government take if a council gets into difficulty, which seems to me to be almost inevitable?

[Angela Smith]

rose—

Sheffield Forgemasters

Debate between Clive Betts and Angela Smith

Wednesday 21st July 2010 Commons Chamber

[Mr Betts]

Normally when a Member speaks in an Adjournment debate at this time of night, they stand in the Chamber in splendid isolation. It is obviously pleasing to see so many right hon. and hon. Friends here tonight, particularly four other Sheffield MPs, my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), and my hon. Friends the Members for Penistone and Stocksbridge (Angela Smith), for Sheffield, Heeley (Meg Munn) and for Sheffield Central (Paul Blomfield). It is also pleasing to see my right hon. Friend the Member for Rotherham (Mr MacShane) and many other colleagues.

This issue affects not merely Sheffield—it has touched a nerve across the nation—but forging and forgemasters are very important in the history of Sheffield. As a child growing up in the city, the pounding of the drop forges down in the Don valley, which is now part of my constituency, was like the very heart of the city beating.

However, this debate is not only about the history of industry in Sheffield, but about its future. In 2005, when the company was part of the Aitchison group, there were major financial difficulties. Eventually, the company was saved by a management buy-out led by chief executive Graham Honeyman, who by putting his own money in saved the firm, its workers’ jobs, debts to suppliers and, with the help of the pension protection fund, the workers’ pensions. Despite initial problems with cash flow and rising energy prices, the company became profitable and increased in size to 700 employees, taking on 70 new apprentices. The company has full order books and 80% of its work is for export, and it has a turnover of £100 million. All the company’s profits to date have been reinvested.

Two or three years ago, the company saw a major opportunity in the nuclear industry. With £150 million of investment, it could buy a 15,000 tonne forging press. However, as that was larger than the company’s total annual turnover, it needed additional help. It went to my friend, the previous Member for Sheffield Central, Richard Caborn, who deserves a great deal of credit for the help he gave at that time.

That package would have created 400 jobs. The Government were approached and over a two-year period, very detailed negotiations were held. Eventually, an £80 million loan was agreed as part of a package involving private investment, including support from Westinghouse, loans and equity release. There was a full appraisal by Department for Business, Innovation and Skills officials and Treasury officials. It was confirmed in parliamentary answers that the independent Industrial Advisory Board gave its assessment, and that Deloitte and Allen & Overy looked at market opportunities and additionality, and at cost-benefit and commercial considerations. After all that, it was concluded that a loan of £80 million was the right way to go as part of an overall package. The loan was also part of an industrial strategy with a nuclear research centre and the Advanced Manufacturing Park. I do not think that France and Germany would have such a dilemma about what to do about investing in such a company.

After the election, we were told that there would be a review. Funnily enough, most of the reviews that took place actually approved schemes that were in train, so let us examine what the review of the Forgemasters loan amounted to. There was no new cost-benefit analysis and no new external advice was sought. Indeed, the Government did not get back to the original advisers. There was no contact with Forgemasters. The first time the company learned anything of the review was when the chief executive got a phone call from a Minister, who said, “Your loan has been withdrawn.” That is no way to carry out a review. The kindest thing I can say is that it was a virtual review; the worst thing I could say is that it was an absolute sham.

Since then, various reasons have been given for the refusal of the loan, including that the directors would not dilute shares. The Deputy Prime Minister and the Prime Minister said that, but the former has had to write to the chief executive to apologise for making inaccurate statements, although he did not apologise today in the House.

Private funding was involved via an element of equity release, but the company would not continue with extra equity release to the point at which control passed back to an absentee owner—the very sort of owner that nearly bankrupted the company in 2005 when the workers and management had to save it.

It was said that commercial options were available. Indeed, the Lib Dem leader of Sheffield city council, Councillor Paul Scriven, said that the commercial markets would provide the money. Will the Minister confirm that at a meeting with Forgemasters and his officials the other day, it was agreed that there were no straightforward commercial options without the loan?

We have been told that there is no money, and that this is unaffordable, but we are talking about an £80 million loan, not a grant. It would have been repaid with interest, making a repayment of £110 million, plus additional money from equity warrants if the investment had been successful, plus the tax revenue from those employed by Sheffield Forgemasters and by companies in the supply chain such as Davie Malcolm, Siemens and Rolls-Royce. This loan would actually have made a profit for the Treasury. The Business Secretary almost admitted as much to the Select Committee the other day.

We were also told that the loan had been a pre-election bribe to buy up a few votes at the general election, but the negotiations had been going on for between 18 and 24 months before the election. So what was the real reason for this decision?

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I have here correspondence released following a freedom of information request. It indicates that Andrew Cook, of William Cook Holdings, wrote to the Government to urge the cancellation of the loan. Does my hon. Friend agree that this approach from a major donor to the Tory party seems to provide the only basis for the Government’s decision to cancel the loan?