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British Steel

Volume 660: debated on Tuesday 21 May 2019

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the discussions he has had with British Steel regarding its future.

My Department is in regular conversation with a wide range of companies, including those in the steel industry. As the House will be aware, the Government entered into a commercial agreement with British Steel on 24 April, valued at £120 million, relating to the company’s obligations under the EU emissions trading system. The Secretary of State updated the House on that agreement in an oral statement on 1 May—the first available opportunity after market-sensitive elements of the resulting transaction were concluded. The commercial agreement reached with British Steel ensured that the company was able to meet its 2018 EU ETS obligations under a deed of forfeiture. It also ensured that the company did not incur an EU ETS non-compliance fine which, coupled with 2018 ETS liabilities, would have equated to a financial pressure of over £600 million—a sum that would have put the company under significant financial strain.

The speculation regarding the future of British Steel will no doubt be creating uncertainty for those employed by the company. As shown through the ETS agreement, the Government have been willing to act. We have been in ongoing discussions with the company, and I am sure the House will understand that we cannot comment in detail at this stage. We will update the House when more information is available. I can, however, reassure the House that, subject to strict legal bounds, the Government will leave no stone unturned in their support of the steel industry.

Yesterday I signed up to the UK steel charter. We want to acknowledge and support the initiative from the industry, and the charter is one element of that. We have been also been encouraging the UK steel sector to strengthen its engagement with all existing and potential domestic steel consumers, maximising opportunities to benefit from the £3.8 billion a year of high market value opportunities that we have identified by 2030. We recognise that global economic conditions continue to be challenging for the industry, which is why the Government are working with the sector, unions and the devolved Administrations to support a sustainable, productive and modern UK steel sector.

It goes without saying that the UK steel industry is critical to our manufacturing base and that protecting the industry should be of paramount importance to the Government. The industry provides over 30,000 highly skilled, well-paid jobs in the UK, and British Steel directly employs around 4,500 in Scunthorpe, with a further 20,000 down the supply chain. Does the Minister agree the Government should be doing everything in their power to prevent British Steel from entering administration?

It is reported that British Steel had initially asked the Government for a £75 million loan in emergency financial support and subsequently reduced that request to around £30 million following negotiations with the Department. Will the Minister outline the asks of British Steel throughout the negotiations? Have the discussions included just financial support or a wider package of measures to support the site in Scunthorpe and the steel industry more widely?

Will the Minister confirm the status of the negotiations and why they are reported to have stalled in recent days? It has been reported that one of the reasons was the Department’s frustration with Greybull Capital’s apparent unwillingness to put money on the table. Will the Minister confirm whether that is the case? What impact did the company’s decision to acquire Ascoval last week have on the negotiations? If no deal can be reached with Greybull, have the Government considered any other options, such as bringing British Steel into public ownership?

Finally, the steel sector is facing myriad issues, from the value of sterling and the uncertainty around future trading with the EU through to US trade tariffs, and the Government could have taken steps to address them, such as greater procurement of UK steel, agreeing a sector deal, as the industry was requesting, and taking action on energy prices. Does the Minister accept that this Government have simply failed to take the steps necessary to ensure that UK steel remains competitive?

I pay tribute to the hon. Lady for the commitment that she and her family have shown to the steel sector over many years. I represent the constituency of Pendle, which is dominated by manufacturing, and I share her passion for the steel sector. I will leave no stone unturned, and neither will the Secretary of State for Business, Energy and Industrial Strategy, in supporting the UK steel sector.

As the House will know, we can only act within the strict bounds of what is legally possible under domestic and European law. I can assure the House that we will continue to do whatever is in our power to support the UK steel industry and those who work in the sector. We are working with the sector, the unions and the devolved Administrations to support all aspects of the UK steel sector.

The Government have taken a number of important longer-term steps, including ensuring that social and economic factors can be taken into account in public sector steel procurement, and providing more than £291 million in compensation to the steel sector since 2013 to make energy costs more competitive. We have also published a pipeline of upcoming national infrastructure projects every year to enable steel businesses to plan for future demand.

As I mentioned earlier, I signed the UK steel charter yesterday, and I will be encouraging other hon. Members and Government Departments to do the same. We want to acknowledge the importance of this industry.

On Friday I had one of my regular catch-ups at the Tata steelworks in Corby, and we specifically talked about support for the steel charter. I was obviously pleased to see the Minister at yesterday’s event, but will he both adopt the charter and action it as quickly as possible so that the industry can rapidly feel the benefit of the course it advances?

My hon. Friend is a huge champion of the steel sector. I was pleased to meet representatives of Tata yesterday, and I have regular engagements with companies across the steel sector to talk about these issues. The UK steel charter is a really good initiative, and I am proud to have signed it on behalf of my Department. I will be encouraging other Departments to do the same.

It was left to the SNP Scottish Government to secure a future for Scottish steel with the transfer of the Dalzell and Clydebridge plants to Liberty. Although Liberty still expects operations at British Steel to continue as normal for the time being, it is preparing and taking the necessary measures to protect the business from a potential shortage of slab, which would affect the Liberty works. Will the support shown to British Steel, not to mention Nissan, be given to any Scottish firms affected? British Steel needed a loan earlier this month to pay its £100 million Brexit fine. Given that British Steel is clear that Brexit-related issues are taking the firm to the brink, how many more jobs will Westminster sacrifice before it gets the message that Brexit must be stopped?

I am very keen to work with the devolved Administrations to support the UK steel sector. Only this week I met the Secretary of State for Wales and a Welsh steel company to talk about support for the steelworks in that part of the United Kingdom. I am very keen to work with the Scottish Government to ensure that we have a thriving steel sector in Scotland as well.

Will my hon. Friend undertake to avoid halving both output and employment? That is what the last Labour Government achieved.

We have taken decisive action to support the UK steel sector. There are more things we could do, and I am keen to explore with industry what more we can do, but I agree that the challenges here have been going on for a number of years. This Government see the steel sector as fundamentally important to British industry, and we will continue to leave no stone unturned in supporting the sector.

Steelworkers and their families in my constituency and across the country are anxious, as the Minister has recognised. Pragmatic decisions in the coming days could still avert another industrial disaster. I have spoken to the trade unions, which are clear from the messages they are getting that there is still a deal to be done. It is important that, across the House and outside the House, we all work to make sure this delivers positively for the future of the British steel industry. Does the Minister agree that the stakes are too high for the Government, for us, to fail?

I thank the hon. Gentleman for his comments; we have discussed this issue over the past few days. When we are in a position to update the House with more information, we will do so. I hope that he will acknowledge that the Secretary of State is one of the most diligent Ministers in coming to the Dispatch Box as soon as information is readily available. At this stage, however, I cannot comment on specifics.

In the past two years, I had the pleasure of dealing with the steel industry in my capacity as Minister at the Department for Business, Energy and Industrial Strategy. I can certainly confirm that the Secretary of State and the ministerial team are very much behind the steel industry.

Does the Minister agree that one of the problems affecting firms such as British Steel, which has an excellent business plan and very good management, is the uncertainty about the trading relationship with the European Union and outside it? Nonsense is talked about World Trade Organisation rules and other things, under which there may be a 20% tariff. Will the Minister, at the Dispatch Box, please ask the Opposition and Members on the Government side who voted against the Prime Minister’s deal to change their minds and get Brexit sorted out very quickly? That will help the steel industry more than anything.

I echo the comments of my predecessor, whose shoes I am still trying to fill only six weeks into the job. All Members should reflect on the real-world impacts of the decisions—or lack of them—that they make in this place on businesses, and how that can affect thousands of jobs and whole towns across the United Kingdom.

The Government have presided over the decline of the UK steel industry: the closure of Redcar in 2016; the lack of assurances obtained from Greybull when it took over British Steel; the chaotic handling of Brexit; and the failure to agree a sector deal with the steel industry, which it has been crying out for. The Government now have a chance to right some of those wrongs. I urge the Minister to do everything in his power to protect jobs, investment and our vital manufacturing base in our steel sector.

In this role, I want to do everything that I can to support the UK steel sector. We were the first country in Europe to take account of socioeconomic factors in public sector procurement. We have provided more than £291 million in compensation for high energy costs in the UK. We have provided and published a pipeline of upcoming national infrastructure projects, and last year I signed the UK steel charter. We are doing a lot as a Government, although there is more that we can do. I stand ready to help the sector in any way I can.

I welcome the Minister’s answers today and appreciate that there are limitations on what he can say at this time. I thank him and his team at the Department for all the work I know they are doing to deliver a sustainable future for British Steel. I urge him to impress on Greybull Capital its moral and legal responsibility to the hundreds of men and women, in my constituency and elsewhere, to deliver a sustainable future for the industry.

My hon. Friend is a champion of steelworkers in his constituency. We will, of course, update the House when we have more information on any specific discussions with any steel company. That is all I can say.

Today we are rightly talking about British Steel and the strong action needed to save the company. Surely the Minister understands that the situation makes it even more crucial that we have a robust and positive industrial strategy, with steel as a key part, and a sector deal. That is what steelworkers at Orb, Llanwern and Liberty in my constituency want. When will the Government act?

We have a robust industrial strategy and remain open to a steel sector deal. Since I have been appointed, I have been meeting steel industry representatives and discussing that, along with other issues. I have mentioned the steel pipeline, support on energy costs and a range of things that the Government are already doing. We need to see through the steel sector deal whether we can take that further.

As the Minister knows, part of the Scunthorpe site and probably the lion’s share of workers at Scunthorpe live in my constituency. I thank him and the Secretary of State, on my behalf and that of the hon. Member for Scunthorpe (Nic Dakin), for their frequent communication with us over the past week or so.

Certainty is very important to the industry. That is why, with some reservations, I have consistently supported the Prime Minister’s deal, to end the Brexit uncertainty, and I will continue to do so. I hope that other colleagues will also do that, as British Steel has asked it of Members of Parliament.

Will the Minister confirm that, if the company were nationalised, it would be subject to the same rules on Government investment had it remained in private ownership?

Delivering a negotiated deal from the EU remains the Government’s top priority, and I hope Members will vote for the deal. My hon. Friend is exactly correct: nationalisation is not the solution. If the business were nationalised, the exact same domestic and European laws would apply.

According to the BBC, 95% of the rail used by Network Rail comes from the Scunthorpe plant. Instead of bailing out what is essentially a private equity firm, will the British Government not consider taking a direct equity share in the company, or, if it goes into administration, creating an arm’s length publicly owned company to take over the plant?

Any support for any business in the steel sector has to be commercial, to fulfil state aid rules. Whatever support is provided to any steel company has to stack up on that basis. However this is done, and whether we take a stake in the company or not, this has to be done on a commercial basis.

The union convenor from British Steel’s Scunthorpe plant came to Parliament last week and told us that 25% of its order book had been lost through Brexit uncertainty. He summed up their plight as “No deal, no British Steel”. Does the Minister agree that resolving Brexit uncertainty by voting for the Bill next month would offer a lifeline to the company and other manufacturing businesses?

Delivering a deal negotiated with the EU remains the Government’s top priority. It remains the best way to provide security for the future of British jobs and businesses.

Redcar steelworks was closed by the Government three and a half years ago, with the loss of 3,100 jobs. After that biggest act of industrial vandalism, everybody came together and said, “Never again!” The Minister has said that he will leave no stone unturned, but is he willing to accept that if the worst should happen and the company goes into administration, the Government will step in to secure the asset this time—not let it go to waste so that it is still sitting there three and a half years later—and secure the workforce and their livelihoods?

The Government have been willing to act. We provided a £120 million bridging facility to the company earlier this month, which shows that we are fleet of foot and responsive to businesses that approach us with their concerns. I cannot comment on any current negotiations with this or any other company, but the Government are responsive, and, when it comes to this specific company, we have already shown our willingness to act, with that £120 million.

I was born in 1974: in my entire lifetime, unemployment has never been lower than it is today. Should we not remember that picture? It is based not on policies such as renationalisation but on maintaining pro-business policies that keep us attractive and open to inward investment.

I see the steel sector as fundamentally important to the British economy, and we are keen to do everything we can to support it. However, as I have already said and the House will know, we can only act within the strict bounds of what is legally possible under domestic and European law.

It is now nearly two years since the Helm review, yet British steel producers are paying 50% more for energy than their competitors in Germany and nearly twice as much as those in France. Does the Minister accept that that disparity has to be removed? If so, what action will he take to remove it and when will he take that action?

We have already provided £291 million in compensation to the steel sector since 2013, including £53 million in 2018, to make energy costs more competitive. I am particularly keen to see the steel sector benefit from the industrial energy transformation fund, which is backed by an additional £315 million of investment. I have already had discussions with UK Steel about how firms across the sector can make the most use of this transformative funding.

I thank the Government for the action they are taking. Does the Minister agree that, just as our agriculture sector is vital for the national interest in food security, our steel sector is vital for the national interest in defence and manufacturing security?

I wholeheartedly agree with my hon. Friend. His Stafford constituency has, like mine, significant numbers of people who work in manufacturing, and we all know how important the UK steel sector is. In my role as Minister I will do everything I can to support the sector.

British Steel’s service centre for Ireland is located at Lisburn in my constituency, and those jobs are vital for our local economy. I echo the comments of other right hon. and hon. Members in encouraging the Government to look more closely at a sector deal for the steel industry. As the hon. Member for Stafford (Jeremy Lefroy) said, the sector is vital for the UK economy, and we encourage the Government to go the extra mile.

I remain open to discussions on a sector deal with the steel industry, and I have already met companies. I will certainly do everything I can to ensure that such a deal is reached without delay.

I congratulate my hon. Friend on the way in which he is handling himself and the Department, having come into his new post with such an issue to deal with. This is a serious matter, but we must remember that steel is an internationally competitive and traded commodity. The industry currently faces the challenge of the US-China trade war and tariffs being imposed on it. Will my hon. Friend inform the House what measures the Government can take to seek to provide some protection from the dumping of Chinese steel in this country?

My right hon. Friend is correct that this is a global issue. The 33 countries that are members of the G20 global forum on steel excess capacity have agreed important policy principles and recommendations to tackle unfair subsidies and practices. It is important that all G20 global forum members act on that agreement and are held to account for unfair practices.

People in Barnsley whose jobs depend on industrial supply chains will be astounded if the Government let the owners of British Steel walk away with tens of millions while they suffer the consequences of administration. Will the Minister guarantee that that will not happen?

I cannot be drawn on the specifics, but through our industrial strategy the Government want to work with all businesses, large and small, to ensure the success of British industry. I see the British steel industry as an important part of that and we need to work together to ensure its long-term success.

Scunthorpe produces the long products that are vital for major infrastructure projects such as High Speed 2. Will the Minister assure the House that projects such as HS2 will use British steel? Will he ensure that he does everything possible to ensure that British-manufactured steel is used in major infrastructure projects?

The Government have worked hard to produce a pipeline of the steel products being used in the public sector, and the details were published for the first time this year. Many other large construction projects in the UK, such as Hinkley Point C, are contributing significantly to new orders and future business for the steel sector. We hope that our transparency will lead to better public procurement, and we will work with the industry to ensure that it uses the data to ensure further support and orders for the British steel sector.

The Minister talks about the steel pipeline, but only half the steel that the UK Government buy is from the UK. What steps will the Government take to increase dramatically the share of UK steel that is used in Government projects?

We were the first EU country to implement socioeconomic and environmental factors in public procurement rules on the purchase of steel. For the first time ever, we have published information for not only Departments but their arm’s length bodies on how much steel they have procured over the past financial year and how they have applied the steel procurement guidance. I hope that that will allow greater transparency in the sector so that we can see exactly where steel is coming from and ensure that we can increase the proportion that is bought from UK suppliers.

Some 88% of structural steel used in the Queen Elizabeth aircraft carrier programme was sourced from UK producers. Does my hon. Friend agree that the UK steel industry is vital to our nation’s defence security, and will he do all he can to support it?

UK steel is incredibly important, not only to our defence sector but to other sectors. The published details on the upcoming steel requirements for national infrastructure projects show that the Government plan to use more than 3 million tonnes of steel, until 2021, for infrastructure projects such as Hinkley Point and for the maintenance and upgrading of the UK’s motorway network. Steel is important not just to defence but across a range of sectors, which is why the Government stand ready to support the UK steel sector.

British Steel has made it clear that Brexit uncertainty is scaring customers away and is a major cause of its problems. There is a simple solution: stop Brexit and stem the flow of job losses and relocations. If the Minister is not willing to take such action, will the Government instead look into the idea of setting up a Brexit support fund, which could be used, where appropriate, to support businesses and sectors that have been damaged by Brexit?

British Steel has been clear that Members of this House should vote for the deal, which I have voted for three times. All Members should reflect on the real-world impacts of the decisions that we make in this place, or the lack thereof, on businesses and the people we represent.

The Minister is right to consider jobs at risk, particularly when they relate to what are hopefully relatively short-term Brexit uncertainties, but to be fair Greybull did buy the business after the referendum and therefore might have expected some volatility ahead. Will the Minister confirm to the House that if he decides to support the business, it will be an isolated case, rather than an ongoing policy of supporting failing businesses?

All support that is provided for businesses has to be compliant with UK domestic law and EU law. It has to pass various commerciality tests to be legal and compliant with state aid rules. We always stand ready to work with UK businesses to protect UK interests and jobs, but any support that we provide has to be legal.

It is almost three years to the day since we were battling to save the entire Tata operation throughout the United Kingdom. It beggars belief that we are here having the same conversation and asking the same questions. The fact is that the fundamental problem is that the British steel industry is not able to compete on a level playing field because of the Government’s complete failure to have an industrial strategy to support it. When will the Government stop leaving stones unturned and give the steel industry the sector deal it urgently needs?

I know the hon. Gentleman is incredibly passionate about this issue. I met representatives of Tata Steel yesterday, and we discussed many issues relating specifically to the Port Talbot site. Rather than a bleak picture, they painted a positive picture of how that site has grown over recent years. There has been significant investment and the company wishes to invest more. The Government will work with Tata Steel to support it in any way possible, and we will certainly work with colleagues in the Welsh Assembly to ensure that if any support is required it is delivered. Across the board, we are working to support the UK steel sector.

The Minister talked about public sector procurement; my understanding is that around 50% of the steel used in public sector procurement is produced here in the United Kingdom. Why is the proportion not higher?

That is a good question. We were the first EU country to implement socioeconomic and environmental factors in public procurement rules, which means we can take into account the impact on carbon emissions and on local communities. This is the first year in which that information has been published and made readily available. Now that it has been published, I have asked my officials to look into how we can consider not only that information but the steel pipeline, to ensure that we support British companies as much as we can. If British companies need to transform some of their processes to supply a greater proportion of UK domestic demand, I am sure my Department will do whatever it can to support them but, as I have said several times, any support that we provide to any businesses in the steel sector has to be compliant with UK domestic law and EU state aid law.

The forthcoming Government project to build the Royal Navy fleet solid support ships will clearly use enormous amounts of steel. Quite simply, why can the Minister not ensure that those ships are built of UK steel?

We are working with industry on a range of projects to ensure that a higher proportion of the UK domestic need for steel is supplied by British companies. As I have mentioned before, the steel pipeline has identified those projects, which means that steel companies can see when the demand is coming many years ahead. Hopefully, we can ensure that a much higher proportion of our domestic steel requirement is supplied from British Steel projects.

To say that the Government have left no stone unturned is, frankly, an insult to an industry that has been sent to the back of the queue when it comes to a sector deal. When will it get the sector deal for which it has been crying out for month after month after month? I ask the Minister to give us a very specific date.

Sector deals are not about value signalling. We are not doing sector deals randomly across the board. We are doing sector deals where we believe that they can deliver a transformation in productivity and enhance production in any sector. The UK steel sector, like the global steel sector, is challenged by global economic conditions, oversupply and a range of other factors. We have taken firm action on sorting out energy costs. We are supplying millions of pounds in compensation. We have launched the industrial energy transformation fund and we have the industrial strategy challenge fund. There is the steel pipeline and now the steel charter. This Government are dong an awful lot to help the UK steel sector.

I wonder whether the Minister might respond to the point raised by my hon. Friend the Member for Scunthorpe (Nic Dakin), who said that the stakes are too high to fail for this vital national industry as well as for the regional economy in the Humber area.

The closure of any steel blast furnace or steel mill would have a significant impact on the locality. All the sites across the United Kingdom employ large numbers of people, which is why we are very keen to support all sites across the country. However, as I have said, the Government are willing to take action and intervene where we can. We supplied the £120 million bridging facility to British Steel recently, which I hope shows the level of commitment from this Government. We will work with all companies across the sector to support them, but any support we provide to any business has to be judged against British and European law.

As my hon. Friend the Member for Redcar (Anna Turley) said, the Tory Government have form in failing to support this steel industry. Ministers turned their backs on Teesside in particular when we lost the country’s most efficient blast furnace, leaving thousands of people out of work. Now, more Teesside steel workers face an uncertain future. We need Ministers to act to save those jobs that we have left, but also to accelerate the investment on Teesside to create the well-paid jobs that have been promised but not delivered. When will we get these jobs?

The Government are working to support the sector. As I have just mentioned, a £120 million bridging facility has been supplied to British Steel to support its EU emissions trading system compliance, which demonstrates that graphically. In the past few weeks, we have been working with the sector on high energy costs, we are working with the sector to reduce its carbon emissions and we are working across the board to support all regions of the United Kingdom.

What reassurance can the Minister offer to the many apprentices who work at the Scunthorpe plant from my Great Grimsby constituency and to the colleges that arrange those apprenticeships in the event that the Government’s intervention is not sufficient?

Media speculation about this site and about the financial future of this site is unhelpful. If we have anything to say we will update the House when there is more information available.

Last week, Martin Foster, a loyal long-serving steel worker and the Unite union convenor from Scunthorpe, told Parliament: no deal, no British Steel. In urging, as he did, that a deal be done with a strong customs union at its heart, does the Minister agree that he is right and that British Steel is right? Does he also agree that those who think that we can crash out of the European Union without a deal and rely on World Trade Organisation terms just do not live on the same planet as those Scunthorpe steel workers whose whole future is now threatened?

British Steel wrote to local MPs in the Scunthorpe area to urge them to vote for the Prime Minister’s deal. I have voted for it three times. How many times has the hon. Gentleman voted for it?

Primary steel making in Scotland ended in 1992 with the closure of Ravenscraig, but the two remaining secondary steel plants that process plate are heavily reliant on the Scunthorpe blast furnaces, which supply them with steel and, in turn, the shipbuilding industry in Glasgow. Not only have we seen this Government leading efforts to block action against Chinese dumping at the European Commission, but we have seen them diluting efforts to ensure maximised content for British manufactured products in renewables projects. We have seen them move the goalposts from 60% of manufactured content to 60% of through-life content. When will the Minister understand the reality of the impact that these damaging decisions are having on the British steel industry and reverse them?

We are working with the G20 global forum on steel. There are currently 46 EU trade defence measures in place to protect UK steel producers from unfair trade imports. As we move to leave the EU and operate a trade policy, the UK will continue to champion free trade, but will also take a proportionate approach to trade remedies.