Steel Industry

John Healey Excerpts

Wednesday 14th January 2015 Commons Chamber

[Vince Cable]

My Department has been engaged in active discussions with the Treasury about the implications of the carbon price floor and other environmental measures. I was going to make the point that the principle of trying to change incentives through the tax system to discourage carbon-intensive production was inspired by the Leader of the Opposition when he held this role in government, and we have maintained that green principle in taxation. Of course, that has costs for energy users, and we have sought to deal with that through a compensation mechanism, which so far has made commitments of £3 billion. I shall explain in a moment the progress we have made on implementing that.

[John Healey (Wentworth and Dearne) (Lab)]

The Business Secretary is urging a balanced approach. Is he aware that the shadow Business Secretary has said that trade unions at their best are wealth creators for this country? We never hear that from the Prime Minister or the Chancellor. Can we hear that, along with a tribute to trade unions, from the Business Secretary?

[Vince Cable]

I have no inhibitions about doing that. I am always happy to engage with the trade union movement, either at the TUC level or a community union level. On this whole issue, they have been very constructive, so I have no problem agreeing with the right hon. Gentleman.

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[John Healey (Wentworth and Dearne) (Lab)]

I welcome this debate and I also welcome its timing, because 2015 will be a critical year for the British steel industry. At the heart of the motion is a call for the Government to recognise the importance of the industry in the UK and to work with it and the trade unions to come up with a co-ordinated plan for its future. I hope that this debate will help to achieve that aim. The general secretary of the Community union, Roy Rickhuss, captured the imperative that faces us very well when he said:

“UK steel companies and their workers need a government that is prepared to intervene to support us on areas like energy, tax and procurement, just as they do in France and Germany”.

That is what we are looking for from Ministers today.

After nearly five years of failing economic policies, Britain badly needs a successful steel industry, not only in its own right but as a foundation industry for the success of this country’s many other advanced manufacturing sectors, including the aerospace, automotive, oil and gas and renewables industries. The Secretary of State and other Ministers brag about their economic success but, in fact, we have seen a double deficit failure. We have seen failure on the fiscal deficit, with the Government promising to balance the books by this year but instead having to admit that they are borrowing £200 billion more than they planned over this Parliament. We have also seen failure on the trade deficit. Back in 2010, the Chancellor promised an

“economy where we save, invest and export”.—[Official Report, 22 June 2010; Vol. 512, c. 167.]

He failed, and we now face a trade deficit of £110 billion a year and the biggest ever trade deficit in goods.

The steel industry and our UK companies together are positive contributors in that disastrous trade balance, involving £5 billion a year of exports. In 2013, the steel industry made a positive trade contribution of £2.4 billion. Tata’s speciality steels manufacturing, which is largely based in South Yorkshire, now employs 2,250 people, 1,050 of whom are at the Rotherham site.

That steel-making in South Yorkshire is innovative, internationally competitive and successful—27% of the sales are to the UK market, with 18% going to the US and fully half to other eurozone countries—but it is under great pressure. It is hampered by high energy costs and held back by the Government not doing all they can to back this great British industry. We have been making steel in Rotherham since the early 1800s, and Tata’s steel-making, re-melting and mill processing now supplies some of the world’s highest-quality, highest-performance metals to some of the world’s biggest and best known companies.

We have come close to losing our Aldwarke plant before, and it was only because of the trade unions, working alongside the management—led by Stuart Sansome of Community union, alongside Mark Broxholme of what was then Corus Engineering Steels—that in 2009-09 we brought that company through that period. I pay tribute to them, and I was glad to hear the Business Secretary paying proper tribute to the trade unions’ role in the steel industry.

I am very short of time now. This is an internationally competitive but internationally exposed industry, clearly suffering the effects of weak eurozone demand, exchange rate changes and, above all, as a high-intensive energy user, very high comparative energy costs.

[Mr MacNeil]

Are there any estimates of the effects of austerity on the steel industry, because of a lack of demand coming from the Government, in particular?

[John Healey]

Weak demand is always a problem for an industry such as the steel industry. Although in the past year UK demand for steel has increased by 15%, most of that has been supplied by imported steel, not UK-produced steel—that is what we have to change. It is the high energy prices that pose the risk of pricing British steel-making out of business. The full cost of energy for large energy-intensive users, such as steel makers, is €77 per megawatt-hour in the UK, which compares with €49 in France, €38 in the US and €33 in Germany. Of course when high-end products go through several processes—melting, casting, re-melting, rolling and finishing—that premium and extra cost is multiplied.

We need the Secretary of State to commit his Government to bringing in, once state aid clearance is achieved, help with the cost of the renewables obligation—that is imperative. We need help and a promise to negotiate a good transatlantic trade deal which benefits the metals industry and many of its user industries and deals with some of the problems associated with restricted procurement practices arising through the “Buy America” regime. Finally, we need to see a commitment to using any local economic benefit clauses that can be put in place in public procurement. Just as there is common ground in the industry among companies and the trade unions on the future of the industry and what is needed, we need in this House, from today’s debate, common ground among the parties.

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

I welcome this debate. As has been rehearsed already today, the importance of steel to the UK economy cannot be underestimated, and neither can its importance to my local economy in south Yorkshire.

Tata’s speciality steels operation, which was referred to by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), is headquartered at Stocksbridge in my constituency. As my right hon. Friend the Member for Wentworth and Dearne (John Healey) pointed out, it nearly went under in 2008. He paid tribute to the trade unions and the management of Tata in Stocksbridge for pulling the plant around. I also want to pay tribute to my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), who as Minister of State worked hard, alongside the unions and Members, to secure the future of the plant.

[John Healey]

And the local councils.

[Angela Smith]

Indeed, the local councils in Sheffield and Rotherham were also involved. Of course, the plants at Sheffield and Rotherham, which work in partnership, survived. They are now back to the employment levels that they had in 2007-08. I have been told that every third plane that flies over the United Kingdom has a component that was made in Stocksbridge, which is a record to be proud of.

[John Healey]

And Rotherham.

[Angela Smith]

That’s cars.

What has happened at Stocksbridge has not happened everywhere. In October 2014, Tata announced that it was selling its long products division. We stand together. People in Stocksbridge do not want the plants in Teesside, Scotland and Scunthorpe to be sold off to Klesch. My uncle worked for 20 years at Appleby-Frodingham in Scunthorpe, but was made redundant after the steel strike. We do not want to see that happen again. We do not want to see steel plants in the UK placed in jeopardy. I am pleased that the national trade union steel co-ordinating committee, which includes Community, the GMB and Unite, has hired the consultants Syndex to look at the alternatives. What are the Government doing to support Syndex in its work, and what will they actively do to ensure that the UK retains a long products capability?

Sheffield was once the world’s biggest producer of steel. At one point, it made more steel than the rest of the world put together. We are proud of that legacy. We have heard a lot today about family backgrounds. I come from four generations of steelworkers, if not more. Not only that, but my grandmother was a steelworker who drew wires at Arthur Lee, along with all her sisters. We in south Yorkshire are very proud of that legacy, and the future of our industry matters. It matters economically, but it is also a matter of pride.

The Secretary of State spoke about the consolidation and the way in which the industry went into decline in the early ’80s. In Sheffield, we know that all too well. The memory of it is painful. We do not want to hear the history of the steelmaking industry rehearsed in the Chamber time and time again. What we want to hear is what the Government are going to do about the future of the steel industry. That matters to Sheffield. We want to see Ministers standing up for steel and, in doing so, standing up for Sheffield, Teesside, Scunthorpe, Rotherham and Scotland.

What needs to happen to ensure the future of our steel industry? There are three key things, and the Secretary of State, to give him his due, pointed out clearly what they were: dealing with Chinese imports; developing an industrial strategy, although we heard precious little about what that would be and what the Government would do to deliver it; and creating a level playing field in energy costs and so on. A lot has been said about energy costs, and I will not rehearse the same arguments, but I will mention business rates.

Business rates are five to 10 times higher in the UK than elsewhere in Europe, and complaints about the rates facing the steel industry are beginning to reach my ears in Stocksbridge on a regular basis. The review is not due to report until 2016, but the problem is pressing, so I want to hear what interim measures the Minister is prepared to deliver to relieve the steel industry. Will he consider removing plant and machinery from business rates valuation as a short-term measure?

The steel industry matters. It is a foundation industry, and our automotive and aerospace sectors rely on its future. What are the Minister and the Government going to do to secure its future?