Steel Industry

Debate between Kevin Hollinrake and Tom Blenkinsop

Wednesday 11th May 2016 Westminster Hall

[Tom Blenkinsop]

I applaud that council for doing that; it is exactly what we wanted. The all-party parliamentary group on steel and metal related industries called upon our local authorities, or any authority at any tier, to support British manufacturing, in particular steel, via the EEF. We worked with UK Steel and the trade unions in order to push that. It is good to see a local example of that.

We now need to rally hard behind our British steel industry. As I have said, examples of purchasers coming forward are clear. We now have seven buyers that have shown an intention to purchase the remaining strip/tube and the remaining assets. However, as I have said before, I do not think Tata has completely left the field. I suggest that there are potentially eight players on the field at present. It will be interesting to hear what the Minister says about Tata’s position and whether she believes it has completely left the field. I do not think it has, and it will be interesting to see in the coming days and weeks what Tata may or may not do.

The main issue, though, is how Tata continues to behave and whether it wants to be viewed in the full glare of the world’s media spotlight behaving in a sensible, rational and responsible manner. It remains incumbent upon the Government to provide the necessary oversight to ensure that Tata does exactly that, so that we can ensure current British steel capacity, ensure our defence and civil capability and demonstrate internationally that the UK values and wishes to protect an industry it leads the world in.

That brings me to the steel sector materials catapult and international competitiveness. The UK has some of the best expertise available globally for innovation in steel. As a result of its extensive expertise in both materials and energy, the Materials Processing Institute has been approached to join a national Swedish initiative to transform the steel industry in that country from coal-based to hydrogen and renewable energy over the next 20 years. At the end of this month, the institute will receive a delegation from the German steel industry, which has an interest in transitioning to more recycled and electric steelmaking.

Meanwhile, the UK has the opportunity, through the materials catapult proposal, to take advantage of our home expertise and leap ahead of our European competitors, yet the proposal has still not been taken up by the Department for Business, Innovation and Skills. I believe that could be achieved with a minimum of £5 million and could secure the research and development aspect that is vital to an industry moving forwards and developing. Again, that exposes the lack of an integrated industrial strategy on materials and materials research.

Tata clearly states that it has refused bids from cherry-pickers. However, the Government must remain vigilant. A total buy-out does not prevent a sudden, total closure of UK sites, so that a purchaser can retrench the position of, say, an integrated works in Holland—I can think of one such company, but I will not mention which. The Government must maintain that key watch role. Indeed, now is an ideal time for them, while potentially laying out a 25% equity stake, to specifically design a fully integrated industrial strategy to demonstrate to key investors what future they envisage for British steelmaking, not only to retain and maintain what capacity we already have, but to point to key investment opportunities so that we can hold our ground and increase our capacity and world market share. This is where the nation needs to leverage existing national excellence.

At the same time as the UK’s leading steel manufacturing institutes have come together to propose the materials catapult, it is understood that the Department for Business, Innovation and Skills is considering other, less suitable innovation providers to develop proposals to support the steel and wider metals industry. The danger is that public money will be used to duplicate and crowd out existing world-class providers. Instead, the Government should take up the materials catapult proposal, which is widely supported by the industry. It would build on our world-leading expertise, offer best value for money and have immediate nationwide benefits. Furthermore, a purely social response is that the Materials Processing Institute, part of the materials catapult bid, is situated in the borough of Redcar and Cleveland, footsteps from the edge of the former south bank coke ovens and the Teesside Cast Products integrated works, which no longer exist. An assurance of investment in the catapult would not only benefit the UK steel sector, but directly help an area so badly damaged by the loss of Sahaviriya Steel Industries in autumn last year.

My trade union, Community, is the leading union in the Save our Steel campaign to secure a sustainable future for the UK steel industry. As the sales process for the divestment of Tata Steel UK’s business proceeds, it is vital that the Government focus on the future of the UK steel industry. In answer to every question about an industrial strategy for the UK, the Secretary of State for Business has dismissed it as semantics, stating that the existence of the Steel Council demonstrates an industrial policy or approach that achieves the same outcomes. This is simply not the same as or comparable with a long-term coherent industrial strategy and does not ensure the future of the industry. The Government must stop dodging the issue now.

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

I am grateful to the hon. Gentleman for introducing this important debate. Will he concede that the difficulties in the steel industry started in 1994, when 35,000 people were employed in the industry? The number stabilised around 2010 and has been stable since. Would it not be more sensible to have a cross-party constructive discussion to solve these problems?

[Tom Blenkinsop]

I thank the hon. Gentleman for his contribution. I have been chair of the all-party group on steel and metal related industries for five years and we have tried to reiterate the arguments for the steel industry. In 2012, when I first mentioned a debate about Thames Steel Services in Kent in the south-east of England, which is obviously not in my constituency but is part of the steel family, we did not get much of a hearing from the Government. Following that, we had further debates on the impending crisis, which we could see coming because of dumping from Chinese markets and other repercussions of Government policy. Ministers from the Department for Culture, Media and Sport responded. They were not even Ministers from the Department for Business, Innovation and Skills. I kindly suggest that the hon. Gentleman looks at the record of the last few years. Colleagues in this Chamber who are members of the all-party group from other parties are well aware of that history.

The Government must stop dodging the issue and start to work on a strategy to protect and boost the industry across the UK. A real concern is the amount of time that Tata Steel is allowing for the sales process and that an arbitrary deadline will be imposed that is too soon for credible investors to develop a viable bid. Tata allowed time for the sale of its long products business to a credible investor. It should provide the same opportunity to bidders for the rest of its UK business as it allowed in every contemporary example, including SSI back in 2010 and Greybull Capital now—and, indeed, as was allowed in Tata’s own acquisition of Corus back in 2006.

The story is lost to some extent, but Tata achieved its purchase of Corus in competition mainly with a Brazilian company, and it achieved it only because in 2002 Tony Pedder, who headed up Corus at the time, was in competition with the same Brazilian company to create a merger, which then failed. Four years elapsed to allow Tata to purchase it. Some would argue that it paid an expensive share price, but that time elapsed and both competitors ratcheted up the share price because they thought the British assets were so key and vital, as they still are.

Public sector steel contracts must specifically consider UK steel, but I and my colleagues are concerned about recent reports that British steel is not being used in vital upcoming manufacturing projects—for example, Ajax vehicles. The Defence Minister, the right hon. Earl Howe, revealed in answer to a parliamentary question that 40% of the work building those vehicles will be carried out in Spain and a majority of the supplied steel will come from Sweden. This came after the Prime Minister hailed the deal as a boost for British manufacturing. Another example is the Aberdeen city bypass. Negotiations on a £12 million contract for 10,000 tonnes of rebar for the bypass have been reported as being at an advanced stage with Turkey.

Legislation and warm words are not enough to guarantee the viability and sustainability of a UK steel industry. The Government must act now to ensure that British steel is used in every public sector manufacturing contract and that British jobs are protected.