Steel Industry

Jonathan Edwards Excerpts

Wednesday 28th October 2015 Commons Chamber

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The steel industry is a vital component in the Welsh economy, not only providing thousands of people with employment, but contributing heavily to Wales’s GDP and export base. The activities of Tata Steel alone reportedly support 18,000 jobs in Wales, and its operations are worth £3.2 billion annually to the Welsh economy.

However, the steel industry in Wales is under significant pressure. In the second quarter of this year alone, the value of Wales’s exports of iron and steel was down by almost £120 million. Thousands of tonnes of cheap steel is being imported every week from Turkey, Russia and China, flooding the UK market and undercutting Welsh-produced steel.

Protecting the steel industry from the volatility of the markets should be a priority for the UK Government, and it should be pursued with the same vigour as we saw when the banks were bailed out in 2008. It is vital that both the UK and Welsh Governments strengthen internal supply chains and procurement practices to ensure that demand for domestic steel is maintained, and Plaid Cymru’s policy of increasing infrastructure expenditure by 1% of GDP is one obvious way to increase demand.

Tata Steel has previously cited the high cost of business rates and high energy costs as causes of recent redundancies. Why do the UK Government not establish an emergency business rates relief scheme targeted specifically at the steel industry? Given that business rates in Wales are the responsibility of the Welsh Government, such a scheme at UK level would trigger consequential funding for Wales, which could be used by the Welsh Government to create their own scheme to protect this key sector in our country. Creating such a scheme would be more affordable than the reduction in tax receipts and the increase in out-of-work benefits to which the decline of the industry will ultimately lead. Also, as Aditya Chakrabortty writes in The Guardian today, why not access the European Commission’s globalisation adjustment fund?

Another key difficulty that British steelmakers face is the extraordinarily high cost of energy across the UK. The UK is one of the most expensive places in Europe for energy. Despite Wales being a net exporter of electricity, energy is even more expensive there than in other parts of the UK. Is it not time that the UK Government broke the monopoly of the big six and followed the example of Sweden and France by creating state-owned energy companies? Many of my constituents will be receiving energy bills from EDF, an energy company almost entirely owned by the French state. The money they pay to EDF effectively subsidises energy bills for French consumers. Similarly, profits made by Vattenfall in its UK operations effectively assist the Swedish Treasury in funding upgrades to Sweden’s energy infrastructure, and the same can be said for Statkraft and Norway.

Cutting the cost of energy would have a significant bearing on the future of the steel industry, but we need to do so sustainably, without threatening the future energy security by killing off the renewables industry. Is it not time to take profits out of the equation? Is it not time for the UK Government to adopt Plaid Cymru’s policy and establish an arm’s length, state-owned and not-for-dividend-profit energy company to serve the needs of industry and citizens?