Sajid Javid
Main Page: Sajid Javid (Conservative - Bromsgrove)UK Steel Industry
Sajid Javid Excerpts(8 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)
There is no doubt that the past few months have been absolutely devastating for Britain’s steel industry and, more importantly, for the skilled, dedicated people who work in it. It is also clear that the global steel industry is facing an unprecedented set of challenges with multiple factors beyond the control of any one national industry or Government.
The facts are familiar, but they bear repeating. Around the world, production of steel is 30% higher than demand. In China alone, excess steel capacity is 25 times the UK’s entire annual production. Demand here in Europe has yet to return to pre-crash levels. As a result, the international price of steel has halved over the past 18 months, and the impact on Britain’s steelworkers has been all too clear. I have travelled to Redcar and to Port Talbot and seen for myself the challenges the situation has created, and the good work being done on the ground to help the communities cope.
Labour Members want us to demand the removal of the lesser duty rule so that the EU can impose tariffs on all Chinese steel. They apparently fail to recognise that the lesser duty rule does not prevent the imposition of tariffs, nor is it a bar to effective action against unfair trading: it simply ensures that duties are set at a level that removes the harm caused by dumping, and no higher.
Nic Dakin
When the Secretary of State wrote to the Commission and said that it
“should make full and timely use of the full range of EU trade policy instruments to tackle unfair trade, including anti subsidy measures, to ensure a global level playing field”,
did he mean that he was going to take action on behalf of our steel industry?
Sajid Javid
That is exactly what I meant. As I speak further, I hope that will become clearer.
Alex Cunningham (Stockton North) (Lab)
On the basis of what the Secretary of State has said, can we expect increased tariffs on Chinese steel in the near future?
Sajid Javid
We believe that under the existing rules the EU can go further, and it must.
Sajid Javid
I will come to that in a moment. Under the lesser duty rule, if the dumping margin is 50%, but a duty of 30% is sufficient to remove the harm to industry from that dumping, then the duty is set at 30%. The tariffs recently imposed on Chinese rebar were indeed too low. I am continuing to raise the issue in my regular discussions with Brussels, as I did only last week when I met the EU Trade Commissioner in London.
Mark Spencer
Before my right hon. Friend makes any more progress, it is worth putting on the record the £50 million of support that he and the Minister have already put in place. Will he bring us up to speed on where the negotiations with the EU stand and what sort of timescale he is looking at?
Sajid Javid
I thank my hon. Friend for reminding us of that. As I progress, I will answer his question.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Will the Minister put on the record whether he supports the lifting of the lesser duty rule?
Sajid Javid
No, I do not, because, as I have said, the lesser duty rule is there to create a level trading field. As I have also said, under the existing rule, tariffs can be higher, and in many cases should be higher. However, they were not set too low because of the lesser duty rule. The problem was the time period used by the Commission in its calculation.
Stephen Doughty
The Secretary of State specifically mentioned rebar. As he knows, that is a major product produced by Celsa in my constituency. It is a very high-quality product that has been used in Crossrail and many other projects. Does he expect that tariffs on rebar, specifically, will be higher against the unfairly traded Chinese steel—yes or no?
Sajid Javid
The hon. Gentleman is right that it is suggested that tariffs should be higher to right the detriment. We agree; that is what our analysis shows. That is exactly what we are pushing with the EU Commission, as I did only last week when I met the Trade Commissioner while she was in London.
Huw Irranca-Davies
I apologise for having to whisper again. On rebar and other important products in south Wales, what tariff is the Secretary of State pushing for and when does he want it imposed?
Sajid Javid
I hope that the hon. Gentleman respects that it is not for us or any other state to say what the tariff should or should not be. These are European-wide tariffs. Under the existing rules, it is possible to have higher tariffs, and that should certainly be the case if the dumping does not stop.
Huw Irranca-Davies
I realise that there will be a negotiation process. As somebody who has been involved in European negotiations in a different sphere, I know that it is perfectly within the Secretary of State’s gift to tell us what the UK’s negotiating position is. What should the tariffs on the different products be, and when is he arguing for them to be imposed?
Sajid Javid
When it comes to the steel industry, there are many different types of products and there is no one single tariff that we are looking at. Where appropriate, we are pushing the EU Commission where we think it has not applied the existing rules properly, not just for higher tariffs, but for much speedier action.
Mark Tami
Does the Secretary of State not understand that the clock is ticking and the industry does not have long left? Millions of pounds are being lost each day and it is no good him standing there saying, “Well, I’ve said this and that about next week and the week after.” There may not be a week after.
Sajid Javid
The hon. Gentleman makes an important point, but he should also accept that if the entire debate on trade and trade protection in the EU becomes about the lesser duty rule, it will take away from the time and effort required to use the existing rules more effectively.
Anna Turley (Redcar) (Lab/Co-op)
If Tata Steel, UK Steel—the umbrella body—and the Community union are all calling for the Government to take action on the lesser duty rule, surely the Secretary of State can see that it is in his gift to give that to the steel industry, which is crying out in desperation for his help.
Sajid Javid
The hon. Lady will know that that is not in the gift of any single Government in the EU; the issue is EU-wide. As I have explained, it is important to use the existing rules effectively, and we support taking further action where the tariffs are not imposed quickly or if they are not high enough.
Sajid Javid
Let me say more about tariffs and then I will take some more interventions. Punitive tariffs and sky-high duties always seem like a nice, easy solution, but the truth is that excessive, protectionist trade tariffs simply do not work. Although they provide a short-term boost for the protected sector, they inevitably cause long-term harm to the wider economy. They drive up prices.
Ms Angela Eagle
We are not calling for protectionism; we are calling for tariffs that prevent unfair trade. When the right hon. Gentleman talks about protectionism, it is important that he distinguishes between dumped and unfairly traded products—which must have high tariffs so that they can be blocked before they destroy our industry—and fairly traded products. We agree with him. We are not against free and fair trade.
Sajid Javid
If the hon. Lady means what she has just said, which is that she wants a level playing field, we are in agreement, but the entire argument she made moments ago was for punitive tariffs, which would drive up prices for businesses and consumers and risk potentially ruinous retaliation from other nations. Artificially over-inflating the price of imported steel would have a hugely damaging effect on British companies further up the manufacturing chain. Of course, I would like to see such companies using British steel rather than cheaper, lower quality imports, and let me take this opportunity to urge them to do so. However, forcing them to buy British steel by making imported steel prohibitively expensive is not the way to make that happen. Higher duties on imports of raw materials eventually mean higher prices paid by manufacturers and consumers alike, putting countless more jobs at risk.
Stephen Doughty
This crucial point is at the heart of this debate. Nobody is calling for punitive measures; we are asking for a level playing field. If we do not level the playing field when other countries, such as the US, are willing to put up their tariffs, this country will get a double dose of the dumping. The effect will be increased if we do not take action. We do not want a trade war; this is simply about levelling the playing field for the British industry.
Sajid Javid
That is exactly what we are delivering on and what the current framework allows us to do.
Richard Fuller
There is undoubtedly anguish in the industries and sectors affected by the impact of change on the steel industry, but does my right hon. Friend agree that, over the past 30 years, global free trade has had the best impact on jobs, wellbeing and living standards, and that he has a responsibility not to indulge in tit for tat retaliatory measures on tariffs in pursuit of a good cause, because of the consequential impacts on other aspects of trade?
Sajid Javid
My hon. Friend is absolutely right. That does not mean that it is not possible to have tariffs; of course they are possible when there is unfair trading, and that is exactly what we support. That is what the current set of rules used by the EU allows.
Andrew Percy (Brigg and Goole) (Con)
There is nothing more cruel to steelworkers, many thousands of whom I am proud to represent, than suggesting that all of the solutions to this crisis are in the hands of the British Government. For the record again, will the Secretary of State make it absolutely clear whether the British Government can unilaterally impose the tariffs? If not, will he confirm that it is for the European Union to make that decision? On top of that, is he pushing the EU for higher tariffs than those that have been imposed? It is simple—that is what steelworkers want to hear.
Sajid Javid
I can confirm all that to my hon. Friend, who makes his point very well. The rules are applied to all members of the European Union. The tariffs are set after an evidence-gathering process by the EU Trade Commissioner. Clearly, we all want them to be based on evidence so that it can be used to create the level playing field that we all want. My hon. Friend is correct to say that no single country can choose to change a tariff; we must work collectively through the EU rules.
Removing the lesser duty rule would have an impact. We want to address the impact of unfair trade without imposing disproportionate costs on the wider economy. We want to create that level playing field rather than a protectionist barrier. As I have already said—I am happy to say it again—where the evidence suggests it, I want to see the highest appropriate duties imposed. On rebar, which the hon. Member for Cardiff South and Penarth (Stephen Doughty) mentioned earlier, the UK industry is asking for tariffs of 20% to 30%. We support that and think that the evidence backs it, but I will never call for any action that could damage British business and hurt British consumers.
The hon. Member for Wallasey (Ms Eagle) called for an examination of the implications of granting market economy status to China. The Commission has not yet published its proposals, but, even if China is granted market economy status, the EU will still be able to take action on unfair trade practices and impose anti-dumping measures. After all, Russia has market economy status, and the EU has taken anti-dumping measures against Russia. Nor would market economy status affect the EU’s ability to tackle Chinese subsidies through anti-subsidy actions. In fact, the Commission has said that it wants to make it easier to tackle subsidies through trade defence measures.
It is clear that the Commission can do more within the existing rules, and I am doing everything I can to make sure it does so. That is why the UK has led the way in calling for more effective action. It was the UK that demanded and secured an extraordinary meeting of the Competitiveness Council to agree a European-wide approach to the crisis. It was also the UK that lobbied for an investigation into rebar dumping. We have been pressing the Commission to speed up its investigations into dumping so that appropriate steps can be taken as soon as possible. We have written to the Commission with specific proposals. We have voted to take action on seamless pipes and tubes, wire rod and cold rolled products. We have supported the Commission’s investigations into hot rolled flat products, and just last week I personally raised the issue with China’s Commerce Minister when he was in the United Kingdom.
Tom Blenkinsop
If what the Secretary of State says is true, why does the director general of Eurofer, Axel Eggart, state:
“By blocking the lifting of the Lesser-Duty-Rule, these Member States”—
including the UK—
“deliberately deprive the European steel sector of the chance to receive effective and legitimate remedy against massive dumping”?
Why does the Secretary of State think that the representative of the entire steel industry in the European Union says that?
Sajid Javid
I think I have already answered that question. We have been working closely with the industry to deliver as much support as possible. At October’s steel summit, the industry had five asks of the Government. Today, I am pleased to say that we have already delivered on four of them. Let me take this opportunity to thank my colleagues the Minister for the Cabinet Office, the Minister for Small Business, Industry and Enterprise, and the Commercial Secretary to the Treasury for their unstinting work.
John Redwood
Will the Secretary of State tell us what he and his colleagues in Government can do to ensure that in big public sector procurement programmes in defence, railway engineering or construction, we get the maximum British content for the steel industry?
Sajid Javid
That is an excellent question, and that was the second ask from the industry. Let me address the first ask, and I will come right back to that point.
The first ask was for lower energy bills. We will shortly be paying compensation on renewable energy costs, and we are in the process of securing agreement to exempt energy-intensive industries from such costs. The second ask was for more British steel to be used in public building projects. We have issued updated procurement guidance to all Departments to make it clear that they can now take into account wider socioeconomic considerations, as well as cost, when making purchasing decisions. We are the first member of the European Union to be able to use those new rules. We have also mapped rough estimates of steel that could be used for major projects including High Speed 2, new nuclear and offshore wind. We have shared those estimates with industry and will continue to keep it updated.
Stephen Doughty
It is interesting to hear what the Secretary of State is saying about the procurement guidance being given to Departments. The Ministry of Defence has told me in answer to a written question that
“the Ministry of Defence (MOD) does not hold a complete, centralised record of steel procurement for projects and equipment, either in terms of quantity or country of origin”.
Can the Minister explain why that is, and does he think that it is satisfactory? How will we ensure that Departments meet the procurement guidelines that he has set out for them if the MOD is not even keeping records? I am not talking about specific projects, but it needs to keep records; otherwise we cannot tell whether it is doing what he says it should be doing.
Sajid Javid
The hon. Gentleman will be pleased to know that we are working with all Departments, including the Ministry of Defence, to make sure that they do whatever needs to be done to make maximum use of the new procurement rules.
The third ask from the industry was greater flexibility on EU emissions legislation. We have successfully negotiated longer lead-in times for the implementation of emissions regulations. The fourth ask was for action on unfair trading practices. As I said a few moments ago, we have led the EU in securing provisional duties on unfair imports of rebar steel and cold rolled flat steel. We have welcomed new investigations into unfair imports of hot rolled flat products, heavy plate and large seamless pipes. We continue to pressure the European Commission for further action against unfair trading, including the use of the registration procedure where appropriate.
Anna Turley
I appreciate what the Secretary of State has said about levelling the playing field; that is all the Opposition ask for. I want to take him back to the point about the lesser duty rule. The European Commission states that the dumping margin for rebar is 66%, but the lesser duty rule puts it at 9%. That has a huge impact. The Minister must acknowledge that 66% levels the playing field.
Sajid Javid
I know the hon. Lady feels passionately about the matter, but it is important to get the facts right. On rebar, the European Commission has so far come up with tariffs of between 9% and 13%. The industry is asking for 20% to 30%, and we support that. I hope she will also support that.
The fifth and final ask was lower business rates. A Treasury review of those is ongoing, and I hope that it will be concluded ahead of next month’s Budget.
Richard Graham (Gloucester) (Con)
Before my right hon. Friend comes to his last point, in answer to the question raised earlier about MOD procurement, my understanding is that on the two Queen Elizabeth class aircraft carriers, 77,000 out of 82,000 tonnes of steel was UK-sourced. Will he confirm that figure?
Sajid Javid
I think those numbers are right. Well over 90% of the steel was British, and that is exactly what we want to see. National Rail is using 98% British steel in major infrastructure projects, and more than 95% of the products used in the Crossrail project—the largest infrastructure project in Europe—are British. That is exactly what we all want to see.
Tom Blenkinsop
The question of how the tariffs are calculated is intriguing. China is in such breach of the World Trade Organisation rules that the calculation has to be based on Turkey as a model. Whether the tariff is 20% or 30%, the figure of 66% is a guesstimate, and the true number is probably far larger. It would be interesting if the Secretary of State could have dialogue with his European counterparts about that. We are talking about a problem that is far larger than the calculations suggest, and there is no information available because China is in such breach of WTO rules.
Sajid Javid
That is why we need to use whatever evidence is available. That means working closely with the industry, listening to it and taking note of its evidence. If the industry is saying that the right level is 20% to 30%, it is worth listening to that.
We have provided support packages worth up to £90 million for communities affected by plant closures in Scunthorpe, Redcar and Rotherham. The help on offer includes retraining, support for local companies that want to take on former steelworkers, and emergency help for workers who find themselves in a financial crisis. Earlier this month, Lord Heseltine announced the creation of an interim body for managing the former SSI site in Redcar, to ensure that it reaches its full potential. Lord Heseltine is also conducting a review of inward investment in the Tees valley, as well as looking at how to enhance education, employment and skills in the area.
As for the plants that are still operating, we continue to work with the Scottish and Welsh Governments and with individual companies on their specific needs. For example, we have repeatedly made it clear that we want the blast furnaces to carry on at Port Talbot, and we are working with Tata and the Welsh Assembly Government to help to make that happen. Although this remains an uncertain time, it is encouraging that Tata Steel Europe has announced that Greybull Capital is its preferred bidder for the purchase of the Tata long products business. That is a positive step. The negotiations are a matter for the companies involved, but we remain in regular contact with Tata about its future plans. If it is successful, the sale is likely to involve some element of state financial support, on commercial terms, for the new owner.
We have set up a joint Government and industry steel council to take remaining actions forward and to work through the conclusions of an independent study into the competitiveness of the UK steel sector. I will co-chair the first meeting of the steel council on Wednesday.
Andrew Percy
I hope that my right hon. Friend will take note of the Tata support fund that has been launched in north Lincolnshire for those in the supply chain. On the question of likely state support for the Greybull sale, which we are all behind, will he go into a little more detail about what that might look like and at what level it might be set?
Sajid Javid
I fully understand why my hon. Friend has asked about that, but the discussions are commercially sensitive at this point. I am happy to reassure him that we are in deep discussions with Greybull, Tata and others, and that where we are able to help by providing support on commercial terms, we most certainly will do so.
The hon. Member for Wallasey has called for us to offer greater support to manufacturing supply chains across the UK. The Government are absolutely committed to British manufacturing. That is why we are investing in infrastructure across the country, and that is why, for example, we are totally committed to building four Successor submarines for our nuclear deterrent. Building the Trident replacement will secure our nation and secure thousands of skilled manufacturing jobs. Sadly, it was no surprise to see the Leader of the Opposition leading a demonstration against it this Saturday. Senior members of the GMB union called that
“armchair generals playing student politics”.
The crisis facing the British and European steel industry is grave indeed, but the charge that this Government are not doing all we can simply does not stick. We cannot simply increase the global price of steel or reduce the level of production in other countries.
Mr Christopher Chope (Christchurch) (Con)
My right hon. Friend does not accept the charge that the Government are not doing all they can, but does he not agree that if we were not in the European Union, the Government would be able to do a heck a lot more?
Sajid Javid
Even if that were the case, we would still be bound by WTO rules and it is possible that we would be far more open to retaliation by other countries as well.
Jonathan Edwards
As the Secretary of State knows, the leader of the Conservative party in the National Assembly has said that he will vote for a Brexit. Would that help or hinder the steel industry in Wales?
Sajid Javid
If the Welsh Government had listened to the leader of the Conservative party, they would have been in a far better position to help the steel industry locally.
There are things we simply cannot do—we cannot simply increase the global price of steel or reduce the level of production in other countries—but we have done everything possible and we will continue to do so as long as such action is needed. We will leave no one behind in this one nation.