UK Steel Industry

Huw Irranca-Davies Excerpts

Thursday 21st January 2016 Westminster Hall

[Stephen Kinnock]

I am surprised. I believe that the Secretary of State had to look up Brussels on a map to work out how to get there last year.

The critical point is that the European Union sets the rules of the game, and it is up to the member states to invoke those rules and deploy defensive trade instruments. I would like to share something with my hon. Friend. I read a very interesting interview from 2012, which was posted on Twitter by Laura Kuenssberg. She interviewed the then managing director of Tata Steel in Port Talbot—[Interruption.] I know my hon. Friend is well acquainted with it. I apologise for that connection; I assure him that it was completely coincidental. Guess what the managing director of Tata Steel asked for? He asked for action on anti-dumping, on high energy costs, on public procurement and on business rates. We have had four years of inaction, and here we are again. It is like a nightmare version of “Groundhog Day”.

[Huw Irranca-Davies (Ogmore) (Lab)]

I commend my hon. Friend for securing this debate and for the way he is outlining the practical things that can be done. May I draw Members’ attention to the House of Commons Library assessment of the state aid interventions by other European countries, which are within the rules? We are allowed to do that. Germany’s bona fide support—it is not giving handouts—for its industry is twice the level of the UK’s. Does my hon. Friend agree that we are not doing what we can for the steel industry?

[Stephen Kinnock]

I agree entirely. I feel that our Government are not acting as they should because they are driven by a dogmatic, laissez-faire ideology that has nothing to do with standing up for British steel, British industry and the British economy. That laissez-faire ideology will never enable us to act as we should.

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[Huw Irranca-Davies (Ogmore) (Lab)]

May I commend my hon. Friend the Member for Aberavon (Stephen Kinnock) and other hon. Members for their contributions? The speech made by the hon. Member for Brigg and Goole (Andrew Percy) in defence of the Government was very bold; it was also very wrong. I do not say that politically, however. Every word I say today is based on the importance of the steel industry for not only the United Kingdom and south Wales, but the constituents of my hon. Friend the Member for Aberavon and those in Neath, Bridgend and Ogmore. The industry is important for not simply those directly employed by it but, as my hon. Friend knows from his area, those who are indirectly employed by it in the supply chain, which is around 1,200 people in our area. It is also important for every café owner, pub owner, plumber, electrician and tradesman who relies on the steel pound.

Do not accuse me today of making political points for the sake of it. I will speak from the heart, and I will speak on behalf of constituents who are very worried at this moment in time. I want to put that on record. The hon. Member for Brigg and Goole said that politics was being played, but I am not playing politics. I believe in the future of a viable, vibrant steel industry and the importance of that for the United Kingdom. I know he does as well, and while we may argue, we will do so on the basis that we firmly believe in the future of a steel industry.

The Minister has been credited in this debate and others as being doughty, feisty and a fighter with real capability. I agree, but I say to her quite directly that her important role in battling for the steel industry looks at the moment like an impotent one. I am sorry to say that, because there have been many good words spoken, and taskforces have been set up, belatedly.

The Government recognised late in the day that when they imposed carbon taxes three or four years ago—I say this as a strong environmentalist—they did not put in place the mitigation measures needed for energy-intensive industries. That should have been done at the same time for not only the steel industry, but ceramics, the paper industry and others. A thinking Chancellor would have worked that out and not waited three years. The approach has damaged the steel industry, and we need to put it right.

[Stephen Doughty]

My hon. Friend made an incredibly important point about environmental matters and carbon efficiency. Would it not be absolutely absurd for the UK’s highly carbon-efficient steel industry—whether in my own constituency, Port Talbot or elsewhere—to see its jobs offshored to the less carbon-efficient China?

[Huw Irranca-Davies]

Indeed; my hon. Friend makes a wise point. I commend the Government for their high-level negotiations at COP21 in Paris—tremendous. The UK led the high-level coalition of ambition. The EU led as well, and yet we could end up in a situation in which we are not only offshoring jobs, but offshoring them to countries that do not have the same standards of energy efficiency that we have at Tata Steel in Port Talbot and throughout the UK. It is in the interests of the climate to keep those jobs here in this country.

[Tom Blenkinsop]

There is another interesting factor here because if we look at Tata’s profits right up until the financial year 2007-08, nearly every slab coming off each site that Tata owned was being absorbed by the world market. China was consuming so much steel during the 12% to 13% growth period that the argument that China has been eroding British jobs over the past 20 or 30 years is false. This is a very recent phenomenon—it is in the past four years—and measures need to be taken now.

[Huw Irranca-Davies]

Indeed. I believe that if any Government Minister could batter down doors and argue for a fully engaged, fully proactive and serious strategy that looks at the steel industry five, 10 and 20 years hence, this Minister could do it. I sense she is trying to do her best, but I suspect she is having some arguments thrown back in her face by others.

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

indicated dissent.

[Huw Irranca-Davies]

The Minister will shake her head and say, “No, of course we’re all lined up on this, ” but the Government need to lay out the industrial strategy for steel, and lay it out with urgency, setting the timescale in which a range of measures will be delivered. The hon. Member for Brigg and Goole was absolutely right that no one measure will do this. There should be a package of measures on the table right now, and that includes at a European Union level. I know, as a former Minister who used to go to Europe, how difficult it is to negotiate out there.

My hon. Friend the Member for Aberavon and others outlined the issue of market economy status for China. In an open letter to the Minister, the general secretary of the steelworkers’ union Community, Roy Rickhuss, wrote:

“senior industry figures…have told me that if China does achieve Market Economy Status it will be a catastrophe for our industry and most likely the final nail in the coffin for UK steelmaking.”

The Minister does not want to see that, and I do not want to see that. In that case, we need to get this absolutely right. I need to hear—all of our constituents need to hear—from the Minister the approach of the UK Government to that matter.

The reality of granting China MES status was outlined in a study by the Washington-based Economic Policy Institute that was published last September. It stated:

“an EU decision to unilaterally grant MES to China would put between 1.7 million and 3.5 million EU jobs at risk”

by curbing the ability to impose any interventions on those dumped goods. That is the scale of risk, so we have the situation that we are already dealing with, and then we have that.

I know that the Government have been accused of being a cheerleader for China. Let me put it in a different way. Unless we hear something different from the Minister today, it will seem to many people that the Government either are proactively encouraging the opening up of markets at all costs, without any regard for not only steel but other industries, or are simply failing to realise—for whatever reason, whether ideological or otherwise—the importance of the steel industry to this country and our communities.

Let me close on this point. The steel industry has to be more competitive, as we know. When I was a little toddler in shorts, my grandfather would take me to the Baldwins steelworks in Gowerton. It was the most outdated steelworks—crikey! I remember the smell and the smoke, and the danger and the excitement of it. Those works are long gone, but Tata Steel Port Talbot and the other plants throughout the UK should have a future. They need an actively engaged Government who say, “Not only do we believe in the industry, and not only do we have the words, but here are the five or six measures that the industry, unions and the steel group of MPs are calling for.” Just do it, and we will throw our weight behind you.

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[Mr Wright]

I will come to mothballing of blast furnaces, because that is another key finding by the BIS Committee. We found that job losses, plant closures and factors that have worsened since we published our report just before Christmas mean that the prospect of any future growth in the steel sector had been irrevocably damaged. We regretted that Ministers were unable to prioritise preserving existing capability and retaining skills in the steel sector in particular.

The Minister talks about a blast furnace. The blast furnace at Redcar was one of the most efficient in Europe. My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) talks about it as having been second only to Dunkirk, and he knows more about steel than anyone else I know. However, it has now been lost forever to the British manufacturing base. Why was it not considered for mothballing rather than cold closure? The cost of cleaning up the site is destined to be in the region of half a billion pounds, and that is likely to fall to the taxpayer. It is an absolute disgrace, and our manufacturing base has been forever undermined as a result.

[Huw Irranca-Davies]

What are my hon. Friend’s thoughts about the fact that there was a vote in the European Parliament last Tuesday, when a Labour motion was passed, thank goodness, to look at reviewing the effect on steel of European state aid rules, whereas last December when there was a similar motion—looking at the European state aid rules, but also at the dumping of Chinese steel—Conservative Members of the European Parliament voted it down? What is going on? Why are we catching up? What does it say about the Government that they say one thing here and another in Europe?

[Mr Wright]

That is an absolute disgrace. We should all, regardless of where we sit and to which party we belong, be identifying steel as a major and important foundation industry for the British manufacturing base and having a co-ordinated approach to ensure that we can safeguard and retain those assets and, crucially, those skills as much as possible. If we are moving towards the high-value-steel end, where we are producing steel, metals, and materials that are stronger, more flexible and lighter, we need the skills to be able to do that. The 2,000 people in Redcar are not coming back to the steel industry. The 750 people in Port Talbot will in all likelihood not come back to the steel industry. And the hundreds of jobs in the steel industry that have been lost in my constituency will not come back. That is to the detriment of the British manufacturing base and the future competitiveness of the UK steel industry.

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[Mrs Moon]

My hon. Friend has stolen my best line. That is exactly where I was going in my speech. The dumping is helping China in the short term to keep a workforce going, but let us be honest: it has a long-term agenda of destabilising not only the British but the European steel industry. We are our own worst enemies, because we are allowing that to happen. It is time we were realistic and said no. There are opportunities that we can take, and there is a simple one: we can say no to the Chinese market economy status. We can say that; we can do that; we can fight for that. I do not understand why we are not doing it.

[Huw Irranca-Davies]

I referred in my speech to the Washington-based Economic Policy Institute, which looked at the scale on which jobs would be lost if we gave pure unilateral market economy status to the Chinese. The work also showed that the impact could be as much as 1% or 2% of GDP across the European Union. If that is not cause for Ministers to go out and argue and play hardball, what is? It is a question of jobs and economic growth—all of that. There is a time when we must stand up. If we agree that the issue is strategically important, we fight for it tooth and nail.

[Mrs Moon]

What is inspiring today is the fact that we are all here doing that—fighting tooth and nail. I know the Minister. We have worked together on defence matters and have a history of sparring across the Chamber, but we also have a history of working together constructively. I hope we are able to carry that on, because there is an unfairness of status in this situation. China can ignore climate change in a way we cannot. It is not bound by the high cost of energy, because it subsidises its companies in the use of energy. It has quadrupled its output of steel since 2000, so its plan has been quite a long-term one. We must deal with the market distortion and think about how we protect our own industries.

The wonderful Business, Innovation and Skills Committee report points out that over the past four decades production in the UK has fallen behind production in France, Spain, Italy and Germany, and that, in those countries, support within the European rules has protected their critical steelmaking skills and industries, helping them to withstand some of the global competition much more efficiently and effectively than we have in the UK. It is important that we look at the five asks. Those are not the Labour party’s five asks. They are the steel industry’s five asks. The issue is not a party political one. The steel industry says, “Give us these, and we have the opportunity to move forward.”

On business rates I want to raise one issue. I was deeply concerned about this at the statement on Monday. My hon. Friend the Member for Blaenau Gwent (Nick Smith) and I both raised the issue of assistance in terms of business rates. The Minister replied, saying, in relation to the Welsh Assembly: “They wanted that”—business rates—

“as part of their devolution settlement, of course. There is a good argument that if one gets what one asks for, one has to take the consequences.”—[Official Report, 18 January 2016; Vol. 604, c. 1144.]

Well, the Welsh Assembly cannot make the changes to business rates that will bring the exemption for plant, equipment and machinery, which is what we are asking for, and therefore we need the Minister to address that issue and take it forward constructively.

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[Anna Soubry]

Hang on. When Opposition Members, such as the hon. Member for Scunthorpe (Nic Dakin), have said to me, “I need to talk to you about the steelworks,” I have absolutely no problem. If the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who made a good speech, and the hon. Member for Redcar (Anna Turley) want to speak to me, that is no problem. If the hon. Member for Motherwell and Wishaw (Marion Fellows) wanted to speak to me immediately, it would not be a problem. My door is open to everyone, whatever their political party.

[Huw Irranca-Davies]

Will the Minister give way?

[Anna Soubry]

No, because I want to make some progress and to address all the points that have been made.

I do get agitated because I know the five asks regarding the steel industry. We have delivered on four and as for the fifth, which is business rates, the review continues. I hope that the Chancellor will agree with my view, for what it is worth, that rates should not rise after investments in plant and machinery which, as I have said many times, is bonkers. I hope that the representations that the Secretary of State, BIS and I make on behalf of all businesses affected by that peculiarity will advance that argument and that the Chancellor will agree with us.

Let us be honest, however, and recognise the problem: the price of steel has been tumbling. The price of slab has almost halved in 12 months. Production across the world—this is not just China—has increased, but consumption has fallen and is yet to return to pre-2008 crisis levels, so what is the Government’s priority? I will not put a figure on it, but the priority is to secure the production of steel at Scunthorpe and Port Talbot. I want to pay tribute to everybody who works in the steel sector, especially to all those workers who have so far found themselves being made redundant. We will not forget the more than 2,000 workers at SSI in Redcar and the many more in the supply chain. I and all my Conservative colleagues do not need to be patronised by being told about the huge impact that redundancies have on communities and right across the workforce, because we understand that. I pay tribute to all those who work at Scunthorpe and Port Talbot, and to those who have lost their jobs, while also remembering what is happening at Forgemasters.

Forgemasters makes steel particularly well. It effectively has a contract with the Ministry of Defence, but it is not with the MOD, in that it supplies the steel for Trident. If Opposition Members want to secure Forgemasters’ future, they need to ensure that they support Trident—that is an absolute fact.

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[Tom Blenkinsop]

rose—

[Huw Irranca-Davies]

rose—

[Anna Soubry]

I will give way to the hon. Gentleman first and then to the hon. Member for Middlesbrough South and East Cleveland; no problem.

[Huw Irranca-Davies]

May I ask the Minister whether those same concerns are why France and Germany have not yet come to a conclusion? Should they come to the conclusion that they share the concerns expressed today, will she swing the weight of the UK Government behind them to oppose full status?

[Anna Soubry]

I have made it absolutely clear: the decision will be taken by the European Union. As I have said, if China wants to be in the game, it has got to prove that it can play by the rules. To be clear, let me repeat: MES will not preclude future tariffs.