[Mrs Madeleine Moon in the Chair]
I beg to move,
That this House has considered the future of the UK steel industry.
Before I begin, I would like to congratulate the steel football club of Middlesbrough on re-entering the premier league this weekend. I congratulate the chairman, Steve Gibson, who yet again has shown what a great model can be provided by a fantastic chair over many years. It is high time he was given a knighthood for his services to football.
Today is about the British steel industry. I want to reiterate that the British steel industry has a future. It is not a sunset industry; it is not a basket case. We, as steel MPs, have hammered home the well-versed arguments of industry and Community, the steelworkers’ trade union, that the Government have not provided the will to back trade defence mechanisms, especially in the case of the lesser duty tariff; that Chinese and Russian dumping is causing chaos in the world, European and British steel markets; that an imposition of the carbon floor price on energy-intensives has had significant repercussions; and that compensation for the carbon price floor and the EU emissions trading system has been slow to non-existent, despite continuous British ministerial promises. Business rates also need fundamental reform.
Despite all that, only this week we saw seven potential buyers come forward with the intention of purchasing the remaining Tata assets. Those assets across the UK—from Port Talbot to Shotton, Trostre, Llanwern and Hartlepool—are manufacturing different products at different levels of the stream of steel production. Prior to that, Dalzell and Clydebridge were purchased by Liberty House. Various Caparo sites previously in administration were also purchased by Liberty. Long product sites such as the Teesside beam mill, Skinningrove and the integrated works at Scunthorpe were all purchased by Greybull Capital, with the intention of significant investment. That is not evidence of a sunset industry. Those are serious players with real desires to invest and make money.
While those boons are obviously welcome, I am worried that we see it in the press that somehow everything is okay now. It is not. There is still a great deal of worry out there. I am particularly concerned about people who are leaving the industry to get jobs elsewhere because they do not see security for them and their families.
I thank my hon. Friend for bringing up that issue, because skills retention is key. There are historical precedents that the Government could look to—not very old ones, but from the previous Labour Government in 2010—for how to use facilities and Government finance in order to retain skills. I will get on to that a little later.
What could have been for the Teesside Cast Products site in Redcar, the second most efficient plant in Europe, if it had been given time and the Government had committed to step in and co-invest, instead of the miserable inaction of a Government paralysed by dogma? It was saved once, but the lessons of how that was achieved were ignored.
Our British steel industry is a world beater. Investors desire to own it. International market conditions are changing right now. Indeed, indicators regarding strip in the UK are far more positive. As world demand increases and Chinese steel sites are closed due to international pressure, we are well placed to capitalise on that, but only if we now rally hard behind our British steel industry.
On the international situation, does my hon. Friend agree that a real acid test for the Government is their position on market economy status for China, which would be wholly illogical given the Chinese Government’s control over their native industry?
My hon. Friend makes an excellent point; I want to come to that later. Indeed, I believe the European Parliament is voting tomorrow on whether or not to grant China MES. Ultimately, the European Commission will have its say later in the year, but the implications for energy-intensive industries—not only steel, but manufacturing per se—go way beyond what anyone has talked about in any depth. That has been ignored to a certain extent—or, rather, quietly allowed to go under the radar—but the consequences for British manufacturing are profound.
I congratulate my hon. Friend on securing this important debate. Does he agree that we have seen some tremendous leadership from both the Community union, leading the trade unions, and UK Steel leading the employers? That leadership and inspiration should be matched by the Government in taking us forward and ensuring a bright future for steel, as well as a very good past.
I thank my hon. Friend for mentioning Community, which is my union and former employer. Community has shown the positive role that trade unions can perform in partnership with employers. Mutual co-operation between employees and employers is necessary in order to get an industry through a difficult period, whether through a short-time working agreement, negotiating pensions or trying to find buyers for a steel site. Community is an exemplar in the trade union movement—I would say that, as a present Community trade union member and a member for many years, but there is a lot that the union movement can learn from it.
Can we also talk about the purchase of British steel? Does the hon. Gentleman agree that local authorities and national Government can learn from the example set by North Lincolnshire Council, which has agreed a resolution that fully embeds the Public Services (Social Value) Act 2012, enabling the use of UK steel in its procurement policies and committing to using British steel in its construction projects wherever possible?
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.
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?
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.
My hon. Friend has made some important points about procurement and the defence industry. His example of Aberdeen is particularly concerning, not least because rebar is one of the main products produced by the Celsa plant in my constituency. It has been used very successfully in projects such as Crossrail and elsewhere. Does he think it is time the Scottish Government fully explained their reasons? They said they would do everything they could to save steel jobs, but that seems to be falling down at the first hurdle.
Indeed. In a spirit of cross-party politics, we want a positive response from the Scottish Government on revisiting that issue, looking at the contract and looking to British-sourced rebar steel, made in Britain by British workers, so that our British steel industry can thrive.
It is important to remember that, as my hon. Friend the Member for Aberavon (Stephen Kinnock) has said, lack of customer confidence is the surest way to undermine the steel industry. The Government must work with Tata to ensure the continuity of client contracts. I know that a lot of work has been done on that in the background. It is essential to preserve the commercial viability of any sale. Retaining essential skills and competencies is vital for the future of the business. The highly skilled workforce cannot be allowed to fragment or disappear. Indeed, in 2010, £60 million was set aside by the then Labour Government to retain the existing workforce at Teesside Cast Products in Redcar. Not one hard redundancy was endured over a 22-month period among core Corus workers, to ensure that a purchase could allow a new owner to retain those workers. To avoid a fire sale and irreversible mistakes, the Government must demonstrate to all stakeholders in the industry that they are taking a proactive approach to ensuring the continuity of operations.
This is a time for leadership by the Government and no issue is more important for them to lead on than the lesser duty tariff. Europe currently uses the lesser duty rule to impose the lowest possible duties on unfairly traded products that have been dumped in European markets and exported at prices below those in the home market. Duties introduced by Europe are usually way below the actual margin of dumping, the result of which is that dumping continues and unfairly traded products are allowed to compete in European markets and depress prices.
The US does not follow the lesser duty rule, which means it can implement much tougher sanctions reflecting the margin of dumping. For example, it recently imposed duties of 236% on a particular grade of Chinese steel.
My hon. Friend kindly mentioned Llanwern steel works. I also have Cogent Power Orb works in my constituency, which manufactures a very specialised steel product that is unique for Tata and profitable due to great management and a fantastic workforce. When I visited Cogent Orb in the last two weeks, I was told that in January as much steel came into Europe as in October, November and December 2015. Is it not clear that this is an ongoing problem and that we have not seen enough action yet?
Most of the changes in the market have been market reaction, not a result of regulations. Trade defence mechanisms are sitting there waiting to be used. They could vastly improve the situation very quickly and help to prop up and support the industry. It is hard to know why those instruments have not been used, and I am certain that steelworkers find it excruciating that there are mechanisms and levers that the Government could use to at least sustain the situation during a period of dumping.
Does my hon. Friend agree that, as many of my constituents in Ogmore have told me, there has been real leadership from Carwyn Jones and the Welsh Labour Government in the package they have put in place, within the powers they have, and that it is about time the UK Government stepped up to the plate and used the facilities and options available to them?
First, I would like to congratulate and welcome my new hon. Friend the Member for Ogmore (Chris Elmore) and say how privileged and happy I am to have him intervene during my speech. I believe that this is the first time he has spoken in the House, so I am very honoured that he has taken this opportunity, but I am even more impressed by the fact that he has got straight into the job and is representing his constituents in a very steadfast way.
The US Government are in the process of introducing new laws that will enable the US to take even tougher action against Chinese dumping and which will make Europe an even more attractive target for dumping. However, there is hope, as it has become widely recognised in Europe that the lesser duty rule is killing our industry. The European Commission has proposed that it should be scrapped, and that has been supported by the European Parliament. The European Commission is demonstrating the very reform and flexibility that the Prime Minister kept banging on about wanting to see in the European Union, so why will he and his Government not support the European Commission in that action?
I would be very happy if the Minister responded to that question, because that is the type of reform we want. When the facts and the market change, the mechanisms need to change. In my opinion, the reason why the lesser duty tariff has lasted so long is that the level of dumping was previously nowhere near the levels it has been at in the last four years. When the facts change, our trade defence mechanisms need to change in order to support our industry, yet even now the UK Government continue to lead the charge among the small group of nations blocking the scrapping of the lesser duty rule. Our own Government are arguing that end users of steel need access to cheap Chinese product.
Despite all the rhetoric, the UK Government are failing to stand up for our steel industry. They say they have delivered on four of the five industry asks, including
“backing EU-level action on anti-dumping measures”,
but the Government’s opposition to scrapping the lesser duty rule exposes the enormous gap between rhetoric and reality. Furthermore, on 5 February, the Secretary of State signed a heavily publicised letter to the Commission calling for Europe to
“use every means available and take strong action”
on Chinese dumping. That letter is simply not consistent with the Government’s position on the lesser duty rule.
Even more importantly over the coming weeks, the EU will make decisions that will impact on the granting of market economy status to China. It has become increasingly clear that Chinese dumping poses an existential threat to the UK and European steel industry. Despite that, the UK Government continue to act as a cheerleader for China in Europe in its bid for MES, whether we remain in the European Union or not. Market economy status for China would be a complete disaster, as it would make it even harder for European producers to gain protection from unfairly traded Chinese imports. That issue is becoming more urgent, as the Commission must take a decision on it by December of this year, and the European Parliament votes on it tomorrow. I do not know, but I have heard that Tory MEPs are being whipped to vote that through. That has serious implications yet again, in terms of what the Government say and what the Government are prepared to do.
I thank my hon. Friend for being generous with his time and giving way again. He makes an extremely important point about market economy status, and I absolutely agree. He highlights, aptly, that the crucial point in this is what the UK Government and Tory MEPs do in Europe and not, as some have suggested, that the European Union in some way putting the kibosh on the steel industry. Does my hon. Friend agree that it is misleading for Brexit campaigners to suggest that the steel industry in the UK would be better off if we left? The truth is that leaving the EU would be a body blow to the steel industry.
I thank my hon. Friend for that intervention. I know that the Minister will agree with this. What would we be saying, as a nation, to Greybull or the seven potential buyers of strip and tubes in Britain if we removed ourselves from the European Union? They are purchasing, obviously, in the context of our being a member of the European Union. The implications of removing a pillar of the deal that has just happened—it took more than 12 months in relation to long products and Greybull—would be so massive that it does not bear thinking about, but then again, the Brexit campaign is more politically led than economically led. I make that quite clear because the matter is that important, and not just for steel. The Chemical Industries Association has come out very strongly for remaining within the European Union, as have trade unions in the manufacturing sector, because it is the only practical option if we are to retain any form of manufacturing in this country.
Another matter is business rates. This one cannot be immediately resolved, but it needs looking into. The review of business rates that concluded in advance of the Budget did not go far enough to deliver savings for UK producers. Business rates in the UK are up to 10 times higher than those paid by competitors in France and Germany. The Government should act now to level the playing field by removing plant and machinery from business rate calculations. Including plant and machinery in the calculations is anti-investment and anti-industry. Tata Steel recently invested £185 million in the construction of a new blast furnace in its Port Talbot steelworks and, in return for that investment, received a £400,000 increase in business rates. That is patently uncompetitive and ridiculous.
Back in March 2012, I gave a speech in relation to the closure of Thamesteel in Kent. That just goes to show how long we steel MPs in this place have been fighting, not just for our constituencies but for our countries’ steelworks, our steel culture, our steel families and our people. I want to repeat what I said that day, quoting a Teesside man of steel:
“When I see a blast furnace, I see a thing of beauty...I see something that has given thousands and thousands of people a way of life, a good, honest wage, the ability to pay their mortgages, go on holidays and bring up their families. That to me is fabulous, that is a beautiful thing. When you come to Middlesbrough and see that skyline...That blast furnace is the heart of Teesside. As long as it pumps, there is life in Teesside.”
It was not just a Teessider’s fairy tale when we saved TCP. The men and women from Kent, Stocksbridge, Rotherham, Hartlepool, Corby, Port Talbot, Shotton, Llanwern and Trostre all have the same view of their steelworks, as does every single steel community. It is a story for all steelworkers in Britain. There is a way to save our steel sites and UK steel if the Government do something to facilitate the process and lend their support, so the question for the Minister is: will you follow through on those promises, because now is the time for action?
Several hon. Members rose—
Order. Given the number of hon. Members standing, some of whom have not notified the Chair of their wish to speak, I am imposing a five-minute limit on speeches. That may be reduced, depending on how the time goes and interventions.
I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on his brilliant speech, and Middlesbrough football club on getting to the premiership. It is good to see another Yorkshire team in the premiership.
Are we going to join them?
It would be even better if another Yorkshire team, Sheffield Wednesday, joined Middlesbrough in a few weeks’ time. It is another steel football team.
I want to start by underscoring and supporting the points made by my hon. Friend the Member for Middlesbrough South and East Cleveland about business rates, energy prices, Chinese dumping, skills retention and procurement, which are all very important. I will just add that the sales process that Tata is undertaking needs to hold to a deadline that allows for a sale that delivers responsible ownership for the future. There is a lack of confidence in the current deadline. The feeling is that it is not the right deadline, not the right timetable, so comments on that from the Government would be welcome.
In the previous debate on this issue, in the main Chamber, I spoke about speciality in my constituency. I talked about Tata in Stocksbridge and I will simply reiterate the point that we make some of the best steel in the world and we do that with the best workforce one could ask for. I will leave it at that. My key aim today is not to reiterate the comments that I made then, but to make the point that we have a responsibility not to lose that capacity, especially in such a strategically important industry, so in the rest of my speech, I will focus on making just two key points.
First, the role of the Government in the current situation demands leadership, as my hon. Friend pointed out. The Government have at last shown a willingness to engage, and we are obviously all very relieved about that. They have also demonstrated, I think and hope, that they will be pragmatic in their approach. However, we need the Government to fulfil a much more powerful role, that of strategic lead in ensuring that the Tata sales process is placed firmly in the context of how the industry needs to develop in the long term to secure its sustainability. We need that role to be taken on by the Government now with no more delays or prevarication. Will the Minister please give us that direction? Will she give us concrete actions that demonstrate confidence in the future of steel in the UK?
My second point relates to the importance of innovation in delivering sustainability, and I echo entirely the comments made by my hon. Friend. Innovation in manufacturing improves productivity and secures its future, and there is no better example of that than the steel city, Sheffield. Huntsman developed the crucible process in Sheffield and Harry Brearley developed stainless steel there. Bessemer built the first commercial application of the converter process in Sheffield, and that technology revolutionised steel making, improving its quality while lowering costs significantly, leading to a far wider range of applications for steel products. The steel city became the biggest steel producer in the world, mainly because of Bessemer and his process.
All Sheffielders are immensely proud of our city’s history and achievements. Steel is in the DNA of Sheffield. It is in our blood. We are also passionate about reasserting the fact that steel making is an industry of the future, not of the past. The impact that Bessemer’s technology had on steel making demonstrates entirely that that future depends on investment in research and development.
The Minister should put investment in innovation at the heart of her support for the steel industry and place it at the heart of the much needed industrial strategy for steel. I can think of no better way of doing that than by announcing, as a matter of urgency, that some of the £500 million allocated to the Higher Education Funding Council for England will be brought forward to ensure a timely response to the needs of an industrial, rather than an academic, timetable. Whichever way the Minister does it, she should do it.
The Government need to signal quickly that they understand the importance of innovation to steel and manufacturing. By so doing, they will help to underpin the search for a new long-term ownership and sustainable future for Tata Steel, and they will underpin and make more robust the long-term prospects for the whole steel-making capacity of the UK.
I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate. There are many familiar faces here, which is no surprise as Labour Members have raised the issue of steel in the House well over 220 times since last May. The Save our Steel campaign has been exerting real pressure for more than a year. The work of Community and other unions and, most importantly, the thousands of steelworkers around the country, has been remarkable. Still, when crunch time came, the Secretary of State was caught unawares in Australia, and the Prime Minister was in the Canary Islands. Only when the situation became a public relations disaster did the Government start to wake up.
The announcement that the Government would take an equity stake and provide other forms of support was, of course, welcome. We know how much that must have hurt the Secretary of State, and we salute him for crossing the Rubicon and finally acknowledging that the Government have a role in building a well-functioning industrial base. Who knows, having had that damascene conversion, he may even be ready to utter the words “industrial strategy” now. Stranger things have happened. Unfortunately, that realisation came too late for the people of Redcar, as my hon. Friend the Member for Redcar (Anna Turley) so movingly described a few weeks ago. It is a betrayal for which the Government shall not be forgiven—a betrayal that deserves no forgiveness.
The Government now have the opportunity to ensure that they do not make the same mistake twice. I have some simple questions. The first is on energy costs. The compensation package is of course welcome, but much more can be done. At Port Talbot, large amounts of gas, particularly from the coke ovens, are recycled and used as energy. It is, by definition, a form of renewable energy. Why, therefore, can we not receive renewables obligation certificates for it?
In addition to the plans for a new generator, Tata has submitted an investment package of £130 million, which would upgrade equipment and deliver massive energy efficiencies and cost savings. I understand that the Department for Business, Innovation and Skills has carried out the technical investigation, but has yet to give the project the green light. Can the Minister explain why there has been such a delay in giving the green light?
It is possible that state aids are an issue but I have been in contact with Commissioner Vestager and, in a letter to me, she quite clearly stated that she remains
“ready to work with the UK authorities on how best to make use of the possibilities offered by EU State aid rules to support energy intensive industries.”
The offer of help is there. Why do we not use it?
Secondly, for Port Talbot, Trostre and Llanwern, business rates are devolved, so a co-operative approach between Westminster and Cardiff is needed. Tata strip, speciality and bar pay £28 million a year in business rates. Meanwhile, the IJmuiden plant in the Netherlands pays £2.5 million a year in business rates. How can we possibly justify UK business rates that are more than 11 times those in the Netherlands?
I understand the Government’s concerns and fears about setting a precedent on business rates and about the broader implications that would have. However, that is simply a matter of sitting down and sorting it out. The Government could set a tapered ceiling by saying that the only businesses where plant and machinery could be exempted are those with, for example, capital expenditure of more than £30 million or those with more than 3,000 employees. They could specify that only companies fitting those criteria would be exempt.
Thirdly, on procurement, the Government have trumpeted their changes to procurement guidelines, and they should be congratulated on those changes. However, as we learned on Monday with the news that the latest set of British Ajax battle tanks would largely be built in Spain with Swedish steel, those changes are utterly toothless. That news seriously questions the Government’s commitment not only to British steel, but to British industry more broadly.
The Secretary of State has spoken of his desire for a new industrial revolution. Well, steel is central to that. Earlier this week, Nick Reilly, the former head of GM Europe, said:
“If we lose the steel industry in this country...There is a high risk that maybe one of the manufacturers—maybe Vauxhall, maybe Toyota, maybe Nissan—will move out of the country if they cannot source steel locally. The real risk then is that that could snowball and the majority of the manufacturers go.”
That is a key consumer of steel making it clear that the end of British steel will be the end of much more. As Mr Reilly concluded:
“What we are then talking about is not the 30,000 to 40,000 jobs at risk in the steel industry, but hundreds of thousands of jobs across British industry.”
The situation could not be more urgent. I implore the Minister to answer the questions as specifically as possible, and that that answer is not more committees, working groups and warm words with frozen actions. I implore him: let us start to see some real action on the issues of energy, procurement and the dumping of Chinese steel, so that we can finally give some confidence to the future of the British steel industry.
It is an honour to serve under your chairmanship, Mrs Moon. I commend my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who, as always, is bang on the money regarding the British steel industry. He brings his incredible experience and insight to the debate and I am proud to sit alongside him on these Benches.
I welcome the positive news about the number of potential buyers for Tata sites. The people of Teesside will be pleased to hear that positive news for steel communities around the UK. As my hon. Friend said, that is testament to the fact that the argument is, at last, being won. Steel is not a sunset industry and has a vital long-term role in the future of British manufacturing. It is also a positive statement that Britain can be a global leader in steel with the right support and, as other hon. Members have said, a serious industrial strategy from the Government. I am glad that the Government seem to have learnt their lesson, albeit at a terrible cost to us on Teesside.
I have spoken before about the anger still felt in Redcar that nothing was done to save our steel making from closure. We have never had answers to the questions I posed in the previous debate on the topic, when I asked why European state aid rules were a barrier to co-investing with Sahaviriya Steel Industries but are not for the companies now coming forward for the Tata sites, and why the private sector options that we put before the Minister—which would have kept the coke ovens going and mothballed the blast furnace, rather than losing our national assets for good—were not taken up. I also asked why the Government said that they could not put British taxpayers’ money into Thai banks. Why are they any different from the investors coming forward now? There is still a justified sense of anger on Teesside when people see the Government pulling out all the stops now, and feel that nothing was done for us, but I do not want to keep looking back. We must rebuild and get back on our feet, and we are doing that.
I start, as my hon. Friend did, by congratulating everyone at Middlesbrough football club—the chairman, Steve Gibson, the manager, Aitor Karanka, all the players, the staff and, of course, the fans—for a well-deserved promotion to the premier league. We are back where we belong as a premier league club in a premier league town. We now have to build on this opportunity for our global brand to show the world once again that Teesside is a great place to live, work, play and invest. Just as steel was the driving force of our former industrial might, so it can still play a vital role in our future regeneration.
I welcome the fact that the shadow board for the South Tees development corporation met for the first time yesterday. It is a strong board with a great deal of local experience and expertise, and I look forward to working with the development corporation on the future of the SSI site. That site can play a major role in job creation and the economic regeneration of the area.
I want to briefly set out two key areas where I think steel can play a key role in driving the regeneration of Teesside. The first is in relation to steel and the circular economy. While we may never be able to forge steel again without our blast furnace, there is a great opportunity on Teesside to lead the way in metal remanufacturing, refurbishment and recycling. The second area is in research and development. Like my hon. Friend the Member for Middlesbrough South and East Cleveland, I urge the Minister to give a high priority to the benefit of the materials catapult on Teesside at the Materials Processing Institute. The MPI pilot-scale electric arc furnace in Redcar is the only example of its kind in the UK and offers innovation, process development and future opportunities in the adoption of electric arc furnace technology.
I could not agree more with what the hon. Lady is saying about catapult centres, but, for firms like Mettalis in my constituency, it would be better to incentivise R&D credits across the piece and also look at the other method of driving innovation, which would be to make the enterprise investment scheme applicable to steel as well.
Order. It is inappropriate for the hon. Lady to arrive part-way through the debate and then make an immediate intervention.
I appreciate the hon. Lady’s point because I do not think it should be an either/or: we can work together on investing seriously in research and development in steel.
On the MPI facility, no other such facility in Europe possesses equal capability. Support for a materials catapult on Teesside will give British steel making the cutting edge in research and development, encouraging greater investment and resilience for the industry. The MPI, as my hon. Friend the Member for Middlesbrough South and East Cleveland has said, has had a direct approach from Sweden. We have also got experts coming from Germany, Australia and Holland. If foreign Governments and commercial operators are engaging with our researchers in the UK to future-proof their steel sectors, can the Minister explain why it is such a struggle to convince officials in the British Government? Do they know something that industry and innovation experts do not?
So those two areas show the potential that we have on Teesside for steel to play a key role in our economic regeneration. It must not be forgotten that we have a thriving chemicals industry and a dynamic port. We have the potential for more investment in energy from waste, carbon capture and storage, carbon dioxide conversion and potash mining. When oil and gas recovers, that can also play a vital role in our economy. I thank the Government for making Redcar College one of its spokes for national colleges for oil and gas. We have great opportunities. Boro have done their bit to get us in the premier league; now it is time for all of us to step up.
It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this important debate today. I rise to speak not because I have a major steel manufacturer in my constituency, but because I have more foundries than any other constituency in the country. I want to emphasise the strategic importance of the steel industry to the metals industry throughout the country. Quite rightly, the focus has been on the immediate impact of the steel industry’s demise on employees and the communities surrounding steel production, but the knock-on effect will spread throughout manufacturing and the key manufacturing regions in this country. The west midlands, particularly the black country, is hugely significant in that respect.
The foundry industry in the black country is absolutely crucial to two other manufacturing success stories in this country: automobile manufacturing and civil aviation. Anything that reduces the capacity of those two industries to be successful and to drive our exports will have implications far beyond the immediate closure of the steel industry.
I want to compliment the West Midlands Economic Forum, a research group, and its steel taskforce, which is trying to bottom out the implications for local industry of the demise of the steel industry and act as a mouthpiece for it in securing alternative supplies. We must be clear that there is a real threat to companies. We know that some are already seeking alternative suppliers of steel, quite rightly, because they need continuity and certainty for their forward business planning. If they cannot rely on the British steel industry surviving, then for their own survival, they have to look elsewhere. That vicious circle has implications for our native steel industry. Even if we get it up and running—I believe it has a great future if we do—it could lose some of its future market share as a result of the decisions made during this period of uncertainty.
It is absolutely essential that we have more from the Government than just the benign warm words about the industry that we have heard. My hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) emphasised that we need a proactive declaration that will generate confidence not just among the steel-producing industry but among the thousands of small businesses that depend on it for their future. That means seeing what measures are being taken in Europe within the very tight rules that I admit the EU applies to ensure that there is not unfair and uncompetitive practice. Other Governments in the EU have successfully done that in support of their industry.
Finally, I will cite investment in research and development. In France, there is investment of €20 million to €30 million a year, leveraging further private investment; €l9.1 million has been given to the German Salzgitter company for innovative new steel processes; and there is long-standing relief in Germany for energy costs worth up to an estimated €8 billion a year. If they can do it in Germany, we should be able to do it here. We look to our Government to say that they are willing to implement such measures, to provide the necessary reassurance and confidence that our steel industry will survive and that its role in manufacturing will continue.
It is an honour to serve under your chairship, Mrs Moon. I thank the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) for securing this important debate. His commitment to our steel industry is unwavering, and it is a pleasure to work alongside him and all the other members of the all-party group on steel.
With a steel finishing plant in my constituency, much of my parliamentary time since becoming a Member has been dedicated to this subject. Fortunately, the future of that plant, and the plant in the constituency of my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows), is known. I once again put on record my appreciation of the unions, the workers and the Scottish Government, and also of Tata and Liberty House. The task of saving Scottish steel was not an easy one, but we on the Scottish steel taskforce rose to it. The future of the industry in the rest of the UK, although not a certainty, looks more promising than it did a number of weeks ago. With seven bidders now interested in taking over Tata Steel’s operations, I hope that colleagues around this room will soon be celebrating the saving of industry and jobs in their constituencies.
I am glad to hear those words of support for the steel industry in the rest of the UK, but obviously we need action as well. Can the hon. Lady explain the apparently advanced stage of negotiations with Turkey for 10,000 tonnes of rebar and a £12 million contract for the Aberdeen bypass? That rebar could be bought from UK suppliers. Does she have any information on that, and does she agree that we need to do everything possible to ensure that UK suppliers are used?
More than £115 million has already been awarded to subcontractors based in Scotland, and with an estimated £60 million of subcontracts still to be advertised during the construction phase through the Public Contracts Scotland website, there is still plenty of opportunity for other UK-based companies to bid.
As Members will no doubt be aware, however, the celebration will be short-lived. The steel industry still faces some fairly hefty challenges, and it is up to us to continue piling pressure on the Government to ensure that the correct measures are taken, to safeguard the industry and protect jobs. It would be remiss of me not to recognise the measures that the Government have so far taken. Efforts have been made to help steel and other energy-intensive industries, for which we are all grateful. More undeniably remains to be done, and it is not only about taking action; it is about a shift in the Government’s thinking. In Scotland, the approach is to view steel as a vital strategic asset. The Scottish Government have outlined their vision for the industry and, in doing so, their commitment to it. As resilient as our centuries-old steel industry has been, it will survive only with the proper support. That means taking steps to address the unfair playing field of the global market. The industry wants the anti-dumping investigation process to be hastened—it is much more rapid in the United States than in the EU. I would like the UK Government to take UK Steel’s recommendation on board and, through the European Council, work with the Commission to set out a clear action plan and timetable for changes to speed up the process.
Action must also be taken on the lesser duty rule. We are clearly at an impasse between what industry has been calling for and what the Government are prepared to do. UK Steel has made pragmatic suggestions of ways to change how tariffs are calculated without necessarily scrapping the rule. I would like the Government to engage with it to find a steel sector solution that will ensure that future duties are robust enough to tackle unfair imports.
As I have mentioned many times, we continue to head towards market economy status for China, without properly addressing the dumping issue. The industry has issued grave warnings that that could lead to serious job losses across many sectors, and I would like a proper response from the Minister about how China can be given market economy status while the effectiveness of the EU’s trade defence instruments is preserved. I would also like to know more about what further action has been taken on energy costs. We are at a disadvantage compared with other European countries, and I should like a full and frank response on how wholesale costs are to be brought down.
It is a pleasure to serve under your chairmanship, Mrs Moon. I thank my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), a great parliamentary champion of steel, for securing this all too crucial debate. I also thank him for giving evidence to the Select Committee on Business, Innovation and Skills on 28 April, during its inquiry on the UK steel industry, as a follow-up to our December report. Yet again he gave the Committee his valuable insight and wisdom about, and experience of, the industry. Steelworkers and the steel industry could not be better represented in this place than by my friend and colleague.
Reference has already been made to trade defence instruments and market economy status, and I will not dwell on them. I want to focus on three things: time, confidence and Government action. On the question of time, I do not think anyone can be any doubt that, given the scale and relative complexity of the operations, the sale of Tata’s steel business will not be a straightforward or quick process. Such sales take years to plan and execute. Although it is welcome that there are seven bidders expressing an interest, and a firm offer is needed sometime after 23 June, due diligence and negotiations on matters such as the pension scheme will take time. Bimlendra Jha, the chief executive officer of Tata Steel in the UK, said to the Select Committee that with the kind of losses that Tata is enduring,
“urgency is important. We cannot continue to bleed.”
He would not commit to a definite timescale, nor to keeping all steel facilities in the UK open and all jobs safeguarded within those facilities until such time as a buyer is found and a deal formally done.
That being the case, the role of Government is crucial. What can the Government do to safeguard assets, capability and employment during this potentially lengthy sales process? Will the Minister articulate further the nature of any co-investment? Would the Government provide bridging finance and other help to cover the transition between Tata ownership and the new owners of the business?
Does my hon. Friend share my view that it would be helpful if the Government set out some of the criteria that they are considering in relation to co-investment and support?
That is crucial. Any such commitment would provide much needed confidence in our steel industry, as well. It is a foundation industry that is strategic in its importance to the economy and vital to our manufacturing base.
That brings me on to my second point: confidence. I have pushed the Minister and the Secretary of State on the matter, because it is of central importance. The Minister heard that for herself from the local management and workforce when she visited the Hartlepool pipe mill a couple of weeks ago. Suppliers and customers have the perception that the Tata steel business will not be there in a couple of months’ time, as it might have been pushed into administration. Suppliers, certainly in our part of the country, have had their fingers burned with the closure of SSI. They do not want to be an unsecured creditor in an administration situation, with the likelihood of receiving no money and being out of pocket, and the possibility that their own business will come under threat.
Customers for Tata’s steel products, especially in sectors such as energy, infrastructure and oil and gas, have very long-term horizons in their requirements. They want to be certain that their orders will be there. If they are not, they will look elsewhere. That is not in the long-term interests of the UK steel industry or the viability of Tata’s successors. Credit lines and insurance are being withdrawn, and I cannot stress how important that is. What else can the Minister do—I know that she has worked hard behind the scenes—to provide extra reassurance, further commitments and definite indicators of confidence? Perhaps that would include the public sector placing orders with Tata Steel.
That brings me to my third point, which is about Government action. Procurement is one of the industry’s requests for Government action, and that theme flows through my other points. The Minister must be aware that she has not delivered in full what could be provided for the steel industry. Everyone is aware of the massive global forces at work, with steel prices and overcapacity, but Mr Jha told the Business, Innovation and Skills Committee that UK steel manufacturers suffer from structural weakness—business rates, energy costs and procurement. What is the Minister going to do about that? We should not be looking to the past. Although we should celebrate our steel past, we should look to a future with steel as a massively important part of a modern manufacturing industry.
Several hon. Members rose—
Order. Despite the generosity of the Scottish National party spokesman in offering to reduce his speech time, I am going to have to reduce the time to three minutes.
It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this most important debate.
Steel and the steel industry are vital to the UK, Wales and my constituency. The Tata steel plant in Port Talbot is in the neighbouring constituency of Aberavon and the Trostre plant is in the nearby constituency of Llanelli. Hundreds of my constituents go to work in those places every day. I have personal knowledge of the community that has grown up around the plants. My father worked at the site of the Steel Company of Wales, which is now Tata Steel. When I was at Cynffig Comprehensive School I played hockey for the Steel Company of Wales. It was the centre of the community. The plant put food on our plates at home and contributed enormously to our social and sporting lives. The same sense of community is felt today by the 4,500 workers and their families who still work at and depend on the plants.
A constituent of mine, Andrew, started as a technical apprentice at British Steel, Port Talbot, in 1994 and worked his way up to the role of laboratory manager. Having spent his entire working life at Port Talbot, Andrew is passionate about steel and the steel industry and is committed to its future in the local community, often championing the company and the apprenticeship schemes. Andrew has made a great many friends over the years, and many of these friendships are forged in a way that cannot happen in other industries; 12-hour shifts in a challenging environment pull people together in a way that makes them feel more like family, and when pain is felt by their colleagues it is felt by all.
Does my hon. Friend share my view that when a community is hit by a tragedy such as this, it is incumbent on all of us—Government, Members of Parliament and everyone—to make sure that the community sticks together and that people are supported through a difficult time?
I wholeheartedly agree with my hon. Friend. It is time to work together. The uncertainty over the past 12 months has been greater than at any time in Andrew’s 21-year career. Owing to the cyclical nature of the steel industry, there have always been highs and lows. Andrew told me about his personal experience of the past few months:
“Back at the end of 2015 I wondered how we can continue with the losses being incurred. Time and time again, Tata asked the Government for help with trade restrictions, yet, month after month we were informed that our losses were huge.”
From initial despair to waves of hope, the plant continued to operate under the most trying of circumstances.
I have asked questions in the Chamber, but I wish to press the point again. Will the Government use the current threat to the UK steel industry as an opportunity to change the way we do things, so that innovations and a thought-through structure can be established that will protect the steel industry for many years to come? Innovation is already taking shape in Neath Port Talbot. SPECIFIC—the sustainable product engineering centre for innovative functional industrial coatings—is an academic and industrial consortium led by Swansea University, involving several strategic partners, and funded by the Engineering and Physical Sciences Research Council, Innovate UK and the European regional development fund via the Welsh Government. SPECIFIC’s vision is to deliver buildings that generate, store and release their own energy, which is an example of a radical and transformative energy solution using buildings as energy systems. Steel is a key element of that, and SPECIFIC is working with Port Talbot steelworks and its downstream operations to develop functional coatings for steel, which rely on high quality steel. Together, they are creating a pipeline of products for the future that will help to ensure that we have a sustainable and competitive steel industry.
SPECIFIC and Tata are working on innovation in construction, and those products and systems, such as solar integrated roofing products and new forms of heating system, are already entering the marketplace. Steel from Port Talbot is being turned into systems in Shotton. No matter what the asset base or ownership of any future UK steel model, technology and innovation are critical, and it is equally critical that such technology and innovation are in close proximity to the major steel-making sites.
It is a pleasure to serve under your chairmanship, Mrs Moon. I praise my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) for leading the debate with such knowledge, passion and authority, as he always does.
There have been some excellent contributions so far, and I will focus on a few specific points, rather than reiterating things I have previously said in our many debates on steel. As always, I pay tribute to the Celsa workforce and management in my constituency, and to the work of Community, GMB, the other trade unions and UK Steel. I praise Carwyn Jones, the First Minister, for his leadership in recent months. He has worked constructively with the UK Government on these issues. His leadership was head and shoulders above the others’, and it is deeply concerning to hear in the last 10 minutes that apparently the Conservatives, Plaid Cymru and UKIP have voted together to block his reappointment as First Minister, which is quite extraordinary when we need a First Minister in Wales to get back on with addressing crises such as the steel crisis.
I reiterate my point about the EU. We are approaching the referendum, which is a crucial decision for the country, but it is also a crucial decision for the steel industry, the engineering industry, the automotive sector and all those other sectors about which my hon. Friends have spoken. It would be a body blow to the steel industry for us to come out of the EU, particularly given the single market and the lack of clarity on what sort of market we would have were we to come out. The Minister knows my views about market economy status and the lesser duty rule, and all I would ask is what the Government will do in the European Parliament and at the Foreign Affairs Council on 13 May on the issue of China. Will they continue to press the issue in Europe? Ultimately, it is what the UK Government do on this in Europe that matters. We can achieve more for the steel industry by working together across the continent.
Briefly, on net energy costs, which are particularly important to Celsa as it uses an electric arc furnace, UK Steel rightly points out that:
“electricity costs make up 11% of an integrated steel plant’s marginal costs and 20% for an electric arc furnace.”
Yet we are still seeing prices that are uncompetitive. Despite the energy intensive industries compensation package, we are still seeing prices that are in the region of 25% higher than in Germany. What consideration has been given to any further review of the carbon price floor and the climate tax impact? What about network costs and wholesale costs? Are there additional measures that could be taken there?
Finally, on procurement, worrying information about the Ajax vehicles was shared in the Daily Mirror, which has been leading the way in campaigning on steel. The majority of the steel for those vehicles will come from Sweden, and 489 hulls will be built in Spain before being brought over to Merthyr Tydfil. Surely that cannot be right. Can the Minister provide any assurances about the new Type 31 frigates? Indeed, can she update us on whether the Ministry of Defence is keeping accurate records? Obviously, if we do not know what the records are, we do not know where the steel is coming from and we cannot take the necessary action.
It is a pleasure to serve under your chairmanship, Mrs Moon. I am grateful for the opportunity to speak this afternoon. I will address the two key issues of business rates and dumping—I raised the latter earlier at Prime Minister’s questions. Clearly, firmer action needs to be taken on both issues. Very little progress has been made on business rates. The opening remarks of the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) were relevant, and the Government should consider exempting the steel industry from those charges.
The point I made at Prime Minister’s questions related to dumping, which is key to this debate. I had a good meeting yesterday with the Industrial Communities Alliance, which raised its concerns in the strongest possible terms. Clearly, when we look around the world, other countries are taking robust action on Chinese dumping. The Obama Administration, with which I disagree on a lot of issues, has taken strong action, and rightly so. We have seen duties of 288% imposed. What consideration have the Government given to such steps as part of the international comparison group? That group has met, and we should learn lessons from around the world where we can.
I am also aware that the lesser duty rule will be discussed at the June European Council meeting, so it would be interesting to know whether the Government have any scope to review their position in advance. The key debate in Corby at the moment, however, is on the future of the Corby Tata site. People are rightly worried about what the future holds, and it is encouraging that considerable interest is being shown in obtaining the portfolio, but it must be the right deal. Confidence will be key to that. Ministers have been right to talk about the importance of confidence for buyers and suppliers. We need more of that confidence, and we need more of that work. We need the Government to wade in and make the case.
Long term, the future of the industry will depend on strong action on dumping and more work on the other asks. In particular, bringing forward the energy exemption package might help. I am grateful to the Minister for coming along with me to the Tata site in Corby a few weeks ago. We met the excellent Labour leader of the council, who has been very good on this issue, on which we work closely—it is important that we put party differences to one side and work together. The message was clear: the industry, and the Corby site in particular, needs time and investment. We have a strong plan in place, and we need the opportunity to see it through. Anything the Minister can do to help us achieve that would be hugely appreciated by me and my constituents.
It is a pleasure to serve under your chairmanship, Mrs Moon. I start by paying tribute to the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) not only for securing this debate and for his robust speech but for his stout defence of the steel industry during his time in Parliament and previously as a regional trade union organiser. I also pay tribute to Community and the other unions for their work and drive to save the steel industry in Scotland and elsewhere.
We have heard some useful contributions today, including from the hon. Gentleman, and the message that stands out to me is that the steel industry has a future. It is not a basket case. I absolutely agree, and that is the fundamental base from which we must approach the issue and upon which it must be grounded. We must talk up the industry as he did, not talk it down as others have in the past.
The hon. Gentleman and almost every other speaker in this debate posed serious questions to the Minister regarding the lesser duty rule and tomorrow’s vote on Chinese market economy status, to which I hope she will respond. We have heard contributions from the hon. Members for Scunthorpe (Nic Dakin), for Torfaen (Nick Thomas-Symonds), for Alyn and Deeside (Mark Tami), for Warwick and Leamington (Chris White), for Newport East (Jessica Morden), for Ogmore (Chris Elmore), for Aberavon (Stephen Kinnock), for Penistone and Stocksbridge (Angela Smith), for Thirsk and Malton (Kevin Hollinrake), for Bury St Edmunds (Jo Churchill), for Redcar (Anna Turley), for West Bromwich West (Mr Bailey), for Cardiff South and Penarth (Stephen Doughty), for Hartlepool (Mr Wright), for Neath (Christina Rees) and for Corby (Tom Pursglove) and from my hon. Friend the Member for Rutherglen and Hamilton West (Margaret Ferrier). The very good debate we have had, to which they all contributed, and the turnout for it are a tribute to the industry.
It is worth stating on the record again that the Scottish National party Scottish Government have worked determinedly to find a new operator for the Dalzell and Clydebridge steel plants, and to maintain industrial steel production in Scotland. We said that we would leave no stone unturned and that is exactly what we did. It is also vital that the UK Government now work more co-operatively with the EU on anti-dumping measures, and bring forward a credible strategy—
Will the hon. Gentleman give way?
I have given a commitment that my speech will be very brief, to allow steel MPs to have their say, so for that reason I will not take interventions.
The Government must bring forward a credible strategy for heavy industry in the UK and take similar concerted action to save steel plants, steel jobs and steel communities in England and Wales. There have been job losses at UK steel plants for a number of years, especially as a result of Chinese steel, as has been outlined. The warning signs were there for the industry. The UK Government have been slow to act in the face of these challenges.
We urge the UK Government to work with trade unions and potential investors as the Scottish Government have done, to find a future for the workers at the English and Welsh steel plants. In the short term, it is critical that strong anti-dumping measures are secured with our EU partners. Whereas the EU imposed a tariff of up to 16% on dumped Chinese cold-rolled steel, the US recently fixed duties on it at 266%. As the hon. Member for Corby said at Prime Minister’s questions earlier today and indeed in this debate, we wonder whether the Prime Minister’s recent meetings with the US President, Barack Obama, allowed him to learn from the way that the US has acted in this regard.
The Business Secretary was reportedly the ringleader in blocking the EU’s attempts to regulate Chinese steel entering Europe—that is according to a spokesperson for the European Steel Association. That would be indefensible. Moreover, the Scottish Government have been excluded from talks on steel dumping, which is also outrageous, despite our request to be involved because of our interest in Scottish plants.
I take the opportunity again to pay tribute to and congratulate the hon. Member for Middlesbrough South and East Cleveland on securing this debate, and I offer our support and solidarity as he and others in this House work to deliver a bright future for the steel industry in this country.
It is a pleasure to serve under your chairpersonship for the first time, Mrs Moon.
I too congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), both on securing this debate and on the promotion of Middlesbrough Football Club. I am just sorry that it is not Cardiff City being promoted this year. One of the proudest moments I ever had was being awarded the man of steel award by his union, Community, when I was first a Member of this House and campaigned on the Allied Steel and Wire pension scheme, but he is absolutely a man of steel. What he does not know about the steel industry is simply not worth knowing.
I also congratulate my other hon. Friends and other hon. Members for their contributions, including my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith), who mentioned Bessemer Road in Sheffield. As an example of the links between different steel communities, there is also a Bessemer Road in the constituency of my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), bordering on my constituency. That just emphasises the links and the sense of community and solidarity between different steel communities.
I also congratulate my hon. Friends the Members for Aberavon (Stephen Kinnock) and for Redcar (Anna Turley) on their contributions. She has defended her constituents with incredible passion and energy, and I just want to express our solidarity with her and her constituents over what has happened in Redcar. My hon. Friend the Member for West Bromwich West (Mr Bailey) reminded us of the wider economic impact of steel making, particularly in his region, the midlands.
Although I welcome the expressions of solidarity from the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier), I must say that I thought what she said about the Aberdeen bypass, after an intervention by my hon. Friend the Member for Cardiff South and Penarth, was staggeringly complacent. It was a breath-taking answer that did not practically express the solidarity with steelworkers in Wales, England and other parts of the United Kingdom in the way that we had expected. There needs to be some more reflection on the importance of that solidarity being expressed right across the United Kingdom.
I also congratulate my hon. Friend the Member for Hartlepool (Mr Wright), the Chairman of the Business, Innovation and Skills Committee, who is doing incredible work on this subject in that role. My hon. Friend the Member for Neath (Christina Rees) again spoke with passion about the importance of the steel industry in her community.
My hon. Friend the Member for Cardiff South and Penarth told us the incredible news that the Conservative party, Plaid Cymru and the UK Independence party have just formed an alliance in the Welsh Assembly to block the appointment of the Labour First Minister. They have no mandate to do that, and to do it at a time when we are in crisis over the steel industry is the kind of game-playing politics that will not be forgotten in our steel communities in the future.
I also congratulate the hon. Member for Corby (Tom Pursglove), who represents a very important steel-making community in this House, and the hon. Member for Airdrie and Shotts (Neil Gray), who spoke for the Scottish National party at the end of the debate, on their contributions.
I will not speak for too long because I want the Minister to have a chance to respond to the debate and I also want my hon. Friend the Member for Middlesbrough South and East Cleveland to have at least a brief opportunity to respond to her remarks. However, we are in a situation now where we can see the impact on our economy of what is happening in the steel industry. Manufacturing crawled ahead with 0.1% growth in March, barely reversing the 0.9% decline we saw in February, and output in the sector is 1.9% below what it was a year ago. Those are the worst figures for the last three years. The recovery is not happening in manufacturing.
“The march of the makers”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
is not occurring in manufacturing. We know that the plight of UK steel, drowning under the flood of Chinese steel, has contributed to that, as well—obviously—as the uncertainty over the Brexit referendum and so on and the impact that is having on our industries.
We are seeing the impact in things such as the closure—the unnecessary closure—of the Redcar steel plant. Basic iron and steel manufacturing is down 37.3% a year on from the figures in March 2015. That is the sort of impact that this situation is having. I will quote Lee Hopley, the chief economist of EEF, the manufacturers organisation. I think the Minister criticised me for quoting the EEF in a previous debate, but Lee Hopley said:
“There isn’t too much in the data to lift economic spirits as a small increase in manufacturing output in March doesn’t change the picture of an overall weak start to the year.”
That is the economic background to today’s debate. We cannot afford to let the steel industry in this country die, because if it does the impact will go far beyond the steel-making communities that we have heard so much about today.
I will just reiterate the key points that the Minister needs to address, following this annus horribilis that we have had in the steel industry under this Government’s leadership. It is not all the fault of the Government, but it is their responsibility to respond, and to respond quickly and effectively.
As my hon. Friend the Member for Middlesbrough South and East Cleveland said, the insufficient action on trade defence mechanisms is the first charge against the Government—their slow response. More important is the lesser duty rule, which my hon. Friend also mentioned. Why are the Government still resisting getting rid of or reforming the lesser duty rule, but instead leading the opposition in Europe? Why are the Government not moving ahead with the reform of business rates that has been mentioned by so many speakers today?
There has been a failure to provide the bridge to the future in Redcar. We know what the implications of that failure are. We also know that the steel industry is not a dying industry. As my hon. Friend said, seven potential buyers have come forward to show interest in purchasing the remaining Tata/SSI assets. However, my hon. Friend also said there is a possibility that Tata itself might still be interested in this situation. What is the Minister’s response to that? Is that a serious possibility? Can she tell us anything about that?
Also, can the Minister tell us whether the Government will now swallow their pride and admit that they need to have an industrial strategy and to call it an industrial strategy, and to set it out clearly for us? Can she also answer the points that my hon. Friend made about the catapult and the importance to the UK steel sector and to research and development for the future, if we are going to have a future for our steel industry?
Will my hon. Friend give way?
I will not give way, because it would be unfair of me not to leave enough time for the Minister and my hon. Friend the Member for Middlesbrough South and East Cleveland to respond to the debate. However, I note the presence of yet another Sheffield MP here in debate.
As I said, the Business Secretary should swallow his pride over an industrial strategy. What assurances can the Government give us that there will be sufficient time for the sale? None of us is convinced that the current timetable is necessarily achievable. What more will the Minister do on procurement, on making sure that the customer base is preserved, on making sure the highly skilled workforce are not lost and on taking action on tariffs? Finally, will she recognise the danger for our industries of market economy status being granted to China?
On that point, and to allow the Minister and my hon. Friend the Member for Middlesbrough South and East Cleveland sufficient time to respond to the debate, I conclude my remarks.
It is an absolute joy and pleasure to serve under your chairmanship this afternoon, Mrs Moon. As ever, it has been a very good debate. I nearly said that we have had the full set that we always have in a debate on steel, but we are missing from the Public Gallery the excellent Mr Roy Rickhuss, who leads the outstanding Community union. I am sure he will be following these events and reading about them in Hansard.
As ever, I pay tribute to the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) for securing this debate. I also pay tribute to all those who work in our steel industry—management and workers—and to all those, including the unions, who have been playing such an outstanding role in this incredibly difficult past 12 months. I make it very clear that I want to make a complaint about the hon. Gentleman, because I think he had a quick look at my speech. I thought it was brilliant that he opened on that very positive note. I wanted to do that in my speech.
Unusually for me, I will read certain things out, including quite a few facts and figures, because I want to make it absolutely clear that there is no disagreement among us on this: we all believe that steel genuinely has a future in the United Kingdom. There is no debate either about the quality of the steel we make here and the outstanding quality of the workforce.
We know that it is important—“vital”, in the words of the Prime Minister—that we have a strong British steel sector. In economic terms, steel was worth some £1.7 billion in 2014, representing 0.1% of the total UK economy. At that time—sadly, it is not the case now—it employed 34,500 people. As so many Members on both sides of the House know, the steel industry is a critical, integral part of many places and communities. The Government are clear that the steel industry has a viable long-term future in the United Kingdom, and that is why we have taken unprecedented action.
I have to chide Opposition Members. My hon. Friend the Member for Corby (Tom Pursglove) praised his local Labour leader because he does not care what party they represent; they are working together and fighting in the right way in the interests of everyone at Corby. I am sometimes a little saddened that Opposition Members never give some credit for the outstanding work that this Government have done in relation to the future of the steel industry.
Don’t push it!
I will push it now, because I always like a challenge.
Will the Minister give way?
In a moment. I am happy to allow the hon. Gentleman a quick name check, but I want to make this point first: this Government have taken unprecedented action and given unprecedented support for our steel industry. This Conservative Government have said that we are willing for a potential buyer to look at investing hundreds of millions of pounds of taxpayers’ money by way of debt financing. That includes looking at power plants, notably at Port Talbot, so that we can keep those blast furnaces open. We are also looking to take up to a 25% stake or share in that new company. That comes from a Conservative Government. If anyone had said that 12 months ago, they would have been laughed at. That is how seriously the Government take the importance of the steel industry, and that is what we are prepared to do.
We know that there is a bright future for the UK steel industry. Just look at what has happened in the past few months. Not only has Liberty House bought Tata’s Scottish plate mills at Dalzell and Clydebridge—I was delighted to be there when Tata literally handed the keys over to Liberty—but it has also brought most of the Caparo assets out of administration. We think that that might have saved up to 1,000 jobs. The continuing sale to Greybull of Tata’s long products division based in Scunthorpe is further evidence that the industry has a viable future.
The Government are committed to the record infrastructure investment programme. That is only possible because we continue to take the difficult decisions to keep the economy strong. HS2, Crossrail, the new aircraft carriers and the unprecedented procurement rule changes for publicly funded projects that we have made in recent months mean that the United Kingdom’s steel industry can compete and will win major public contracts.
I very much agree with the hon. Member for Cardiff South and Penarth (Stephen Doughty). I was very pleased to visit the outstanding Celsa steel plant based in his constituency just a few months after my appointment last year. He levelled criticism at the SNP in Scotland and the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier). It really is not on. If I said, “Go and check out a website,” I would rightly be derided by Opposition Members, and properly so. The Scottish Government have to put their money where their mouth is and change the procurement rules. They have to copy and learn from what the United Kingdom Government have done and ensure that that steel in Aberdeen is going to British plants. There are no excuses now for that not happening. I am very proud of what we do.
Something else that the Government can do is deal with the problem of energy costs for the UK industry. They are 85% higher than the costs for the German industry. Is the Minister going to act on that?
We have acted. Not only have we now got the compensation package up and running—we are paying out tens of millions of pounds—but from 2017 energy intensive industries will find themselves exempt.
Eighty five per cent higher!
The hon. Gentleman can keep on shouting, and I will start to fall out with him. I am happy to say that I will be visiting his constituency and the steelworks there. As he knows, he will get an invitation, just as everyone always does. In Sheffield, we have good examples of outstanding steel makers and ability. Some 50,000 tonnes of Celsa’s UK steel has been used in Crossrail—the biggest construction project in Europe, built almost exclusively using British steel. Some 95,000 tonnes of British steel was used in the construction of the new Elizabeth aircraft carriers, and Network Rail sources 98% of its steel rail from the United Kingdom—as we all know, it comes mainly from Scunthorpe.
On the point about Ajax, a large part of that steel was unfortunately not made in this country. The remainder was certainly going through a UK buyer. There is of course more that we could do, but we are mapping out indicative quantities of steel for key projects in the infrastructure and Government construction pipelines, including HS2, new nuclear and offshore wind. One piece of work that I am determined to carry on doing relates to fracking. There is a huge job that can be done that will have huge benefits for our steel industry. I will speak bluntly: we have to get on with fracking. I met representatives of that industry only recently. We know that fracking could have real benefits for our steel industry. It was a great joy and pleasure to go to the plant in Hartlepool, which also has excellent unions, good management and an outstanding workforce and is hugely important for that community. They make an outstanding product. They do not make the seamless pipes that have to be used for fracking, but I do not see why we cannot look at making their pipes absolutely compliant so that they can be used.
I had another great visit going up to Rotherham to meet Members who represent the steelworks there. It also has an excellent workforce, outstanding unions and good management with a credible plan and a long-term future. I am proud, as we all should be, of the fact that one third of all landing gear apparently has a component made in Stocksbridge. I was also told that every aeroplane in the world has at least one component made from steel from Stocksbridge.
Of course. It is important to say that it is Rotherham and Stocksbridge steelworks. Those are just some of the examples of our outstanding and world-leading steel sector. We can talk about Rolls-Royce engines and Formula 1 cars. Tata Steel has supplied more than half a million tonnes of strip steel to leading companies in the UK’s auto sector, including BMW, Mini, Jaguar Land Rover, Vauxhall and many others.
Unfortunately, the clock is against me, and I have not addressed all the points that the hon. Member for Middlesbrough South and East Cleveland made. I know that he wants to talk to me about the Materials Processing Institute, which officials visited yesterday, and I think we are making real movement there. Mrs Moon, forgive me; I have not been able to deal with all the excellent points and speeches that have been made. The hon. Member for Penistone and Stocksbridge (Angela Smith) makes good points about research. She knows that we continue to talk on that. I cannot say much more about the process with Tata, but we take all those points, and we work unstintingly. I pay credit to the Secretary of State and the officials for the work they are doing to secure a viable future for our outstanding steel industry.
In winding up, I would like to say that the critical point about Tata being the eighth player remains fundamental. We still want to know what Tory MEPs will do tomorrow in relation to the market economy status vote. We need to see a legislative framework going from paper to actual action in terms of policy and an industrial strategy. The Government do have an industrial strategy, but we have to bear it in mind that in the past 12 months we have only seen action and promises made as a result of the tragedy at Redcar and a Prime Minister faced by Welsh elections and the European referendum.
Motion lapsed (Standing Order No. 10(6)).