A Sector Deal For The Steel Industry

During a debate on industrial strategy, I called on the Government to start delivering a sector deal for the steel industry. It would be a massive boost for the steel works in my Aberavon constituency and for the wider steel making industry, turning it from surviving to thriving. The Government needs to come clean and let us know whether they are giving up on the steel industry or when they will approve the sector deal for steel. 

The British economy can best be described by the saying “all that glitters is not gold.” At first glance, things appear relatively rosy with modest growth, unemployment down and moderately stable consumer confidence. However, if we scratch just below the surface, a deeply troubling picture emerges, and it is a story of a productivity crisis, precipitous personal debt, a dangerous overreliance on financial services, and a gaping chasm between London and the rest of the country.

I was therefore pleasantly surprised when the Prime Minister announced, in that fateful speech on the steps of 10 Downing Street, her intention to develop an industrial strategy. Wherever we look in the world, the successful countries are the ones with a Government who been an active partner of business, using their scale, and convening capability and financial firepower, to create long-term platforms for national success. If we are to succeed as a country, we need a Labour vision of government. We need a Government who enable people and businesses to make the most of their talents, who are a true and proactive partner of business and industry, who are prepared to address the structural weaknesses of the UK economy, and who are ready to tackle the causes of the malaise, rather than simply tinker with the symptoms.

There can be no doubt that the most important single cause of the huge imbalances that afflict our economy is the shrinking of our manufacturing base. In the 1970s, manufacturing accounted for around 30% of our GDP; today it stands at barely 10%. The knock-on effects of that decline have been profound. Thanks to the erosion of our manufacturing base, we have seen wealth and resources sucked into the services sector, which has been great for London and the south-east and devastating for the rest of the country.​

We have seen a wholesale shift from production into consumption. We have seen a catastrophic collapse of our productivity. We have seen a massive increase in our trade deficit. And, perhaps most damaging of all for the future of our country and our politics, we have seen a fundamental sense of the communities in our industrial heartlands being left behind.

A proper industrial strategy should focus relentlessly on redressing those dangerous and deeply damaging imbalances. A comprehensive, broad-based strategy would spark a modern manufacturing renaissance across the length and breadth of our country, but what we have seen from this Government is an approach to industrial strategy that is set to entrench rather than address the imbalances. Rather than committing to a broad-based industrial strategy that supports our foundation industries and puts the foundational building blocks in place for the manufacturing base, our Government are instead intent on focusing on going into the stratosphere of space research and life sciences.

Research from Sheffield Hallam’s centre for regional economic and social research shows that the focus of the Government’s industrial strategy challenge fund is on sectors that disproportionately benefit London and the south-east. By focusing R&D on an exceptionally narrow range of sectors—healthcare and medicine, robotics and artificial intelligence, batteries, self-driving vehicles and space tech—we will end up only really benefiting the so-called golden triangle of London, Oxford and Cambridge. That is a blatant and outrageous abdication of the Government’s responsibility for the entire economy, not just for those sectors that may have certain pockets of political support.

Exhibit A in the Government’s failing strategy is its approach to the steel industry. The town I represent is the hub of our steel industry, and the Port Talbot steelworks is the beating heart of my community in Aberavon. Last September—almost eight months ago—the Government received the steel sector deal, a comprehensive plan for how we can turn the British steel industry from one that is surviving into one that is thriving. The plan would involve an additional £1.5 billion of investment over the next five years, increasing production by 40%, creating 2,000 more jobs, training 200 more apprentices a year and increasing investment in R&D. The plan has the support of companies and unions, but it has sat on a shelf, gathering dust, for eight months.

I implore the Secretary of State to confirm today when the steel sector deal will be approved, and I urge him to stop treating us like children or idiots. If the Government are giving up on the sector deal, and on the steel industry, Ministers should come clean today and say that from the Dispatch Box.

A successful industrial strategy cannot do everything for everyone, but it must do something for everyone. As things stand, this industrial strategy fails that test. If the Government really want a broad-based industrial strategy, they have to start with a broad-based manufacturing renaissance, and that starts with delivering a sector deal for the steel industry.