Steel: Preserving sustainable jobs and growth in Europe

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Five committees (Business, Innovation & Skills, Energy & Climate Change, European Scrutiny, Welsh Affairs, and Work & Pensions) grilled Anna Soubry on steel and the impact of a Brexit. Topics included the lesser duty rule, steel exports to Europe, Chinese dumping, state aid, and the pension scheme going into the pension protection fund.

You can read my contribution to the debate below:

Q1. Stephen Kinnock: Specifically, on our position now in the Council of Ministers on this issue—and perhaps also more broadly, but this is an illustration of where we are—do you think there will be an increase in the number of times the United Kingdom now abstains in votes in the Council of Ministers and particularly around the lesser duty rule? The political reality is that people will stop listening to us. I know we are still a member of the European Union until the negotiations are completed, but what is your perspective on the political reality of where we are in Brussels now?

Anna Soubry: Mr Kinnock, you make a very good point. Say you were a member of an organisation and you chose to leave it, but you had to wait until you could actually exit it and in that time were still going along to it. For example, if you were running your local football club—or whatever it may be—and you were not able to leave it, but you wanted to go along and influence it, obviously your ability to influence it would be much diminished because everybody would know that you were going to clear off as soon as you possibly could. That is a big problem for us. I fear that our influence, as we remain until we exit, will be diminished. If I am still in this job in September, I will certainly continue to do everything I can to support our steel industry. I cannot say how we will vote or whatever. We should continue to do the best thing by British business and the British economy.

Q23. Stephen Kinnock: Thank you, Chair, and thank you, Minister. The state aid and competition regulations of the European Union are obviously a very important part of the single market. They guarantee that we do not have unfair state subsidies and, of course, if we are going to deal with China in the way we have just been discussing, we have to practise what we preach. However, we are now looking at an industry in crisis and it has been for some time. Given the vote to leave the European Union, do you see any possibility of greater flexibility in aid that the British Government can provide to the British steel industry?

Anna Soubry: It is going to be interesting. While we are still members of the European Union we play by the rules, as we properly should do. We do not know when the time will come when we actually leave. If we want access to the single market, it may well be that we cannot have our own rules when it comes to state aid.

I do not know of any country that has access to the single market but is not bound by state aid rules; I do not know of any country that enjoys that status. I cannot imagine that the EU would allow us access to the single market but not make us party to the state aid rules. These are the decisions that we have to make as a nation. If we do not want to be bound by state aid rules, then we may not be able to have access to the single market. Then we get into some very difficult, choppy water, in my view. Everybody forgets—I dare not say to Sir Bill because he might take some offence—

Chair: I very much doubt it, Minister.

Anna Soubry: Excellent. You and I are old enough—I am nearly old enough—to remember that what pre-dated the European Union and the old common market out of the Second World War were all those rules on state aid to bind both the steel and the coal industries. I am from Worksop, by the way—pop that one on the record—so I also have some knowledge.

Chair: I used to play cricket against Worksop.

Anna Soubry: My great-grandfather was master cutler in Sheffield.

Chair: There we are.

Anna Soubry: So, you see, we were bound. One of the questions I have asked of the Solicitor General is whether or not the treaty that bound us in coal and steel became part of the 1972 Act; we think so. If we leave the European Union, would we also have to deal with that agreement and all that flowed from that back in the 50s with state aid and steel and coal? We do not know the answer.

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Q24 Stephen Kinnock: The European Coal and Steel Community?

Anna Soubry: Yes, the old European coal and steel agreement, which was the Forefather of state aid rules.

Q27 Stephen Kinnock: Not wishing to tempt fate but we do have to go into the current situation with our eyes open. We know that Tata has suspended the sale process. The industry is broadly described as hanging by a thread. If the sale process were to collapse and if Tata Steel were to decide that it was not in, would you see temporary nationalisation of the British steel industry as a viable option?

Anna Soubry: As I and the Prime Minister have always said: all options. I am obviously bound by stuff that I know that I cannot share with this Committee, Sir William; I just absolutely cannot. We know that Tata are meeting on Thursday to Friday; I do not know if you are going. The Secretary of State may well go out to Mumbai, because they are meeting later this week. Given the relationship that we have with Tata, we should not be pessimistic, Mr Kinnock. We should not be pessimistic. We have really created a very good relationship with them. We have certainly turned them round from the position that they were in back in March, which was that they were going to close Port Talbot.

Q35 Stephen Kinnock: To go back to the issue of pensions, Minister, you kindly shared with us that you have had about 4,000 pieces of feedback to the pension’s consultation. It is safe to assume that the majority of those will be saying that the scheme must remain outside the PPF. That is an assumption; I am sure you will shrug your shoulders—

Anna Soubry: I do not know; I have not seen any of them.

Q36 Stephen Kinnock: The position of the trustees and of the workforce as articulated by Community union and the steel unions has been unanimous in the view that putting the scheme into the PPF would be a very negative step. One assumes then that most people who have given you responses will be saying the same. If there is a clear majority view in the consultation that the scheme should not go into the PPF, will the Government respond accordingly and guarantee that the scheme does not go into the PPF?

Anna Soubry: It is incredibly important to understand that I have not seen any of the responses. I imagine that there will be a number of responses that will be very concerned about doing something special for one pension scheme and whether or not you would be setting a dangerous precedent, given that so many pension schemes face difficulties. That is what I would say. That is really important. I should imagine that that is a big feature of it and a big consideration. That is what we have to do. We have to make sure we get the balance right. What was the position of your Front Bench in relation to our plans? From memory, it was not very supportive.

Chair: Which Front Bench?

Anna Soubry: Not yours.

Chair: No, I meant the Labour Front Bench; it changes quite a lot.

Stephen Kinnock: I can tell you what my position is. I am my own Front Bench at the moment.

Anna Soubry: I know; I am having great fun. When Angela Eagle, who is very able, was shadow Secretary of State, in my understanding—Mr Mackenzie will know better than I—the Labour Party’s official submission was not very supportive.

Stephen Kinnock: In conversations that I have had with Angela, she was of the view that it should stay out of the PPF. Angela’s position on Section 67, which was on the table, was that it could work, but she wanted to explore other options as well.

Anna Soubry: I made a mistake. It was not Angela Eagle.

Chair: They change so much.

Anna Soubry: It was not that. It was DWP, not BIS.

Stephen Kinnock: The DWP wants it right in the PPF.

Anna Soubry: Your DWP team was not supportive

Chair: Tom wants to ask one last question, and then we are going to move on to the energy aspects of things.

Anna Soubry: I cannot help you with energy. I do not know why you are going to ask me questions about that.

Chair: They are environmentally related. We will ask the questions and you can say you cannot answer them.

Anna Soubry: I do not see the point of it, then.

Chair: Let’s wait to hear what the questions are, shall we?

Q38 Stephen Kinnock: Have the Government done an assessment of the risk of industrial action if the pension scheme goes into the PPF?

Anna Soubry: We have not done a risk assessment but we have certainly discussed it. I am due to speak to Roy Rickhuss at the conclusion of this session, because I have not spoken to him for a week. I need to do that. I speak very much in favour of this workforce; it is outstanding. The responsibility and the attitude of the Community union in particular are outstanding. To me, it is a model trade union. It is just what it should be. It represents its workers but is reasonable, realistic, firm, absolutely fair. God, I hope I do not come to regret those words. It is an absolute pleasure to work with.

Craig Mackinlay: Sorry, Minister, energy is probably an area you did not wish to tread.

Anna Soubry: I am not an Energy Minister; that is why.

Q60 Stephen Kinnock: Minister, you mention that you have been up in the north-east speaking with the industry there. I am assuming the automotive industry was part of your conversation. We know that the British automotive industry is the lifeblood of the customer base, particularly for Port Talbot. We supply something like 50% of the sheet steel for Nissan.

Anna Soubry: I think it is 45%, actually. I would love to take it up, but I just told Mr Blenkinsop it is 45%.

Q61 Stephen Kinnock: It is the local MP’s extra 5%, which we are always allowed. We know that WTO tariffs on automotive would be approximately 10%. Therefore, what I am essentially saying is that we have a fundamental piece of the customer base for the British steel industry; if it were no longer there, that would be the end of Port Talbot. It is such an important part of the market. There is an umbilical cord between Nissan, Jaguar Land Rover and Port Talbot. Could you give us an assessment of what you think the impact of potentially having to pay tariffs on automotive would be on the customer base for our steel industry?

Anna Soubry: We have to be very honest about this. Because of where its export market is, there would be not as much concern at JLR about 10% WTO tariffs, but people should be under no illusions whatsoever that other car manufacturers would be concerned. It is not just Nissan; there is Toyota and Honda. There is a huge amount of export. I think the figure for Nissan is 70%. Honda might even be higher.

I cannot remember Honda; I have just been speaking to the Member of Parliament for Swindon. These are amazing workplaces that employ thousands of people and even more in the supply chain. I am old enough to remember British Leyland and the dark, dreadful days of the 70s. We should be so proud of what we have achieved in the automotive sector.

10% WTO tariffs? Get real. If you are some multinational company, you are not going to make it in Britain if you can make it in the European Union to sell in the European Union, free of tariffs. My big, strong message is that I will continue to fight like a tiger, as I know my Prime Minister will, to make sure that we do everything we can to support our automotive sector in particular, so that we keep it tariff-free, so that we keep it continuing to produce cars and being such a fabulous British success story.

 

 

Whole debate: http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/european-scrutiny-committee/steel-preserving-sustainable-jobs-and-growth-in-europe/oral/35038.pdf