Warm Words But Frozen Actions

 I beg to move, That this House has considered the future of the UK steel industry.

Stephen Kinnock (Aberavon) (Lab): I beg to move, That this House has considered the future of the UK steel industry.

It is a pleasure to serve under your chairmanship, Mr Walker. I thank the Backbench Business Committee for granting this important debate. I also thank the Minister and all my colleagues for coming to support it—it is a fantastic turnout.

As we all know, this has been a big week for the British steel industry—but, unfortunately, for all the wrong reasons. Yesterday, jobs were lost at Sheffield Forgemasters, and the week began with Tata Steel’s announcement of more than 1,000 job losses across the country. That was bad news for everybody, but it was particularly devastating for my constituency, where the Port Talbot steelworks are located. Some 750 people who woke up with a job at the Tata steelworks in Port Talbot on Monday morning no longer have a job. The steelworks are the beating heart of the economy and the community in Port Talbot, and the job losses will affect not just those being made redundant, or those in connected industries, but their families, their friends and the entire community.

What immediate action will the Government take to support those who have been made redundant? There will need to be training and support so that they can make the transition into other jobs, and the local community will need help to support those affected and their families, as well as those in connected businesses. If the Government do not act, my community will pay the price for generations to come.

However, this is not just about Monday’s announcement. The Government must act to support the steel industry and to prevent further job losses, and they must do so now. There are a number of things that I, my colleagues inside and outside this Chamber and, most notably, the Community union and Tata Steel itself want to know. We want to know why the Government have done nothing. They have talked a big game, but their warm words have been matched by frozen actions.

First, we have called for changes in UK business rates, which are up to 10 times higher than those of many of our European competitors. Will the Minister commit to consulting the Welsh Government and other devolved bodies on cutting business rates for capital-intensive industries such as steel by removing plant and machinery from business rate calculations?

Secondly, the promised Government compensation for energy-intensive industries has still not materialised. In the light of Monday’s announcement, will the Minister commit the Government to the more rapid implementation of measures on energy-intensive industries and to a deadline by which moneys will actually be available? We cannot have more of the cheque being lost in the post.

Thirdly, on procurement, we asked the Government to introduce guidelines that properly recognise social issues, local value for money and local content in projects with a major steel component. However, all that their November procurement policy note says is that steel requirements should be “openly advertised” to allow UK firms to compete. Will the Minister explain why they will not go further in using Government procurement to support the British steel industry?

Paul Flynn (Newport West) (Lab): Can my hon. Friend begin to understand what got into the Government’s mind when they handed over the nuclear industry in perpetuity to the Chinese? Because of their infatuation with them, they are allowing them to prosper, while our industry crumbles. We have a policy of deindustrialisation, with our industry being colonised by the Chinese.

Stephen Kinnock: I pay tribute to my hon. Friend’s long and illustrious history in the steel industry. He was a steelworker himself, so he speaks with particular experience and expertise. I absolutely agree with his point about the nuclear industry. I would bring everybody’s attention to the outrage of EDF telling a well-known British steel producer that it was not allowed to tender to make turbines that it is absolutely qualified to provide, thus denying it the opportunity of a multimillion-pound contract. The idea that this country’s procurement policies are somehow changing is a myth, and that experience of EDF and that steel maker is a case in point.

Andy McDonald (Middlesbrough) (Lab): While my hon. Friend is on the issue of procurement, will he say whether he is as dismayed as I am that the Ministry of Defence is commissioning steel hardware from Scandinavian plants? Does that not speak to a lack of joined-up thinking and a lack of Government focus on innovation, and on research and development, into new products needed by the MOD?

Stephen Kinnock:My hon. Friend makes an excellent point. What is interesting about the MOD angle is that we are talking about national security. The steel industry plays a critical role as a foundation industry, whether we are talking about the homes we live in, the offices we work in, the knives and forks we use to eat our meals or the incredibly important contribution the industry makes to our armed forces across the world. This is, therefore, not just an issue of the economy or of pounds, shillings and pence. Our national security is at stake.

John Woodcock (Barrow and Furness) (Lab/Co-op): I, too, congratulate my hon. Friend on securing this important debate. Is he aware of the contribution that steel makes to the submarine supply chain? That led the Community union to argue forcefully that the Labour party should continue to support it. Furthermore, Graham Honeyman, the managing director of Sheffield Forgemasters, is clear that the company cannot survive if it loses the order for the Successor submarine programme.

WH_Future_Of_Steel_Industry_Montage.jpg

Stephen Kinnock: My hon. Friend makes an excellent point. He will be aware that a debate is taking place in the Labour party, but I can assure him of which side of that debate 

I fall on. There are a number of reasons why I fall on that side of the debate, but saving our manufacturing industry—up to 20,000 jobs rely on the nuclear programme to which he refers—is critical. I will certainly contribute forcefully to the debate in our party from that perspective.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): I congratulate the hon. Gentleman on securing the debate. The estimated capital cost of Trident could be up to £165 billion. Is he seriously saying that if the UK Government redirected that amount of capital investment, we would be able to produce only 20,000 jobs?

Mr Charles Walker (in the Chair): Order. I am not allowing Members to get into a debate on Trident. Mr Kinnock, can you continue, please?

Stephen Kinnock: Thank you, Mr Walker. I defer to your better judgment, but I would be more than happy to continue that debate outside the Chamber.
In the light of what we are discussing, will the Minister explain why the Government will not go further in using Government procurement to support the British steel industry? It is one thing to put in place procurement guidelines, but driving the message home across Government, let alone the private sector as well, is another matter. Words are easy, but actions are far more difficult, and those actions require leadership. With Hinkley Point B, the Government have a real chance to show leadership by using procurement to support British industry. However, they seem to be squandering that opportunity, with no British steel due to be used on the project.

I would also like to ask the Government about the Swansea bay tidal lagoon. First, they need to get on and approve the project—each day of delay is costing months or years of progress on it. However, I also ask them to show some leadership and to commit to sourcing all the steel for the turbines, or as much of it as possible, from the United Kingdom steel industry. The tidal lagoon not only provides the entire Swansea bay area with job opportunities, which are desperately needed in the light of Monday’s announcement, but supports local jobs at the Port Talbot Tata Steel plant.

British steel is among the highest-quality steel in the world, and we should make better use of it. British-based certifiers have among the most robust standard regimes, particularly on environmental and social impact, so it is unusual to say the least that the Government appear to favour BES 6001, rather than the far more robust BS 8902, as the standard for reinforcing steel. No Chinese steel meets the stringent quality and sourcing criteria of BS 8902, so its adoption as the Government standard would help to protect against Chinese steel dumping and support high-quality British steel.

The fourth area on which we have repeatedly called on the Government to act is the dumping of Chinese steel on the British market, which is the greatest challenge facing the British steel industry. The Secretary of State for Business, Innovation and Skills is no fan of the European Union, but he seems to be a fan of hiding behind it. The Secretary of State and the Minister know that far more can be done to support the steel industry without the Government’s breaching state aid rules. The Government must work with Europe to deal with the issue of Chinese steel dumping. Last year, China produced 441 million tonnes of steel more than it consumed, much of which was dumped in the UK.

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): My hon. Friend is making an extremely strong speech. I congratulate him on securing this debate. Given that a number of us have been raising the issue of Chinese dumping and providing detailed statistics and examples for years, not just months, is he surprised that the Government have taken so long to take action?

Stephen Kinnock: I am surprised. I believe that the Secretary of State had to look up Brussels on a map to work out how to get there last year.
The critical point is that the European Union sets the rules of the game, and it is up to the member states to invoke those rules and deploy defensive trade instruments. I would like to share something with my hon. Friend. I read a very interesting interview from 2012, which was posted on Twitter by Laura Kuenssberg. She interviewed the then managing director of Tata Steel in Port Talbot—[Interruption.] I know my hon. Friend is well acquainted with it. I apologise for that connection; I assure him that it was completely coincidental. Guess what the managing director of Tata Steel asked for? He asked for action on anti-dumping, on high energy costs, on public procurement and on business rates. We have had four years of inaction, and here we are again. It is like a nightmare version of “Groundhog Day”.

Huw Irranca-Davies (Ogmore) (Lab): I commend my hon. Friend on securing this debate and on the way he is outlining the practical things that can be done. May I draw Members’ attention to the House of Commons Library assessment of the state aid interventions by other European countries, which are within the rules? We are allowed to do that. Germany’s bona fide support—it is not giving hand-outs—for its industry is twice the level of the UK’s. Does my hon. Friend agree that we are not doing what we can for the steel industry?

Stephen Kinnock: I agree entirely. I feel that our Government are not acting as they should because they are driven by a dogmatic, laissez-faire ideology that has nothing to do with standing up for British steel, British industry and the British economy. That laissez-faire ideology will never enable us to act as we should.

Kevin Brennan (Cardiff West) (Lab): It is worse than standing still. Over the past few years, the British Government have led a blocking minority on further reform of trade defence mechanisms. They are still doing so, despite Ministers’ denials in the Chamber. The Minister should explain to the House and the country why they are doing that.

Stephen Kinnock: An explanation would be very much in order. My hon. Friend makes a very interesting point about something I will come to shortly: market economy status for China. How is it possible for the Government to justify on the one hand saying, “We are standing up for British steel and British industry”, and on the other being China’s chief cheerleader in Europe and actively agitating for it to have market economy status? I look forward to the Minister’s explanation of that entirely illogical and unjustifiable position.

Louise Haigh (Sheffield, Heeley) (Lab): I want to reflect on the fact that Ministers are so terrified of the EU state aid rules, but seem to have breached EU public procurement rules by failing to tender for Hinkley Point C. Will my hon. Friend reflect on that discrepancy?

Stephen Kinnock: My understanding is that a very prominent and well-known producer of British steel has been informed by EDF that they are not allowed to tender on the basis of what appear to be spurious health and safety grounds. I encourage the Government immediately to carry out an independent evaluation of why that producer was not allowed to tender. Let us hear it from an independent evaluator, because at the moment it is somebody’s word against somebody else’s. It is the Government’s responsibility to step in once again and stand up for British industry, rather than sell it off to foreign bidders.
The rise in the market share of Chinese rebar, which went from zero four years ago to 45% of the UK market now, can be explained only by Beijing’s distortion of the market. Some 70% of Chinese steel makers are state-owned, and the remaining 30% benefit from tax rebates that amount to a state subsidy. We are asking the Government not for special treatment for British steel, but for a level playing field and action to correct the market distortions. We are seeing not the forces of supply and demand working away, but a marketplace that has been hijacked by subsidised Chinese state steel that has been dumped in a previously perfectly well-functioning marketplace.

The Government should take action and show leadership, but they have been asleep at the wheel. Will the Minister explain what action the Government will take against Chinese dumping? Specifically, can she tell us whether the British Government support China’s being granted market economy status? A yes or no answer will do fine.

Just over a week ago, the Foreign Secretary said on the Floor of the House that

“it is through the prism of steel”—[Official Report, 12 January 2016; Vol. 604, c. 694.]

that Chinese market economy status should be judged. On that basis, we should say a clear and resounding no to market economy status for China. Time and again, the Government have acted as China’s chief cheerleaders in Europe—particularly on market economy status. They know that MES will cost British jobs and limit our ability to impose tariffs on dumped goods, but they are more interested in cosying up to China and making Britain, in the Chancellor’s words, “the western hub” for Chinese trading.

Andy McDonald: I am grateful to my hon. Friend for giving way yet again; he is being very generous. Does he share my concerns about the prospects for HS2? We hear that the Chancellor has had active discussions with the Chinese about the steel that will be used in that project.

Stephen Kinnock: I have heard the Minister and many of her colleagues assure us on the Floor of the House that a large portion of the steel used in the HS2 project will be British. I can only go on the Minister’s words. We shall see, as we have seen before, whether the Government’s words and actions match up.

Nic Dakin (Scunthorpe) (Lab): Does my hon. Friend agree that, to ensure that UK steel is in a position to gain such contracts in the future, it is important that skills and new technologies are in place? There is a role for Government in that, too.

Stephen Kinnock: I agree entirely. There are two elements to this crisis. One is the short-term perfect storm that we are facing. The lack of Government support for building the industry’s resilience is a major contributing factor to that. The other element is equally worrying in many ways: the complete absence of a long-term strategy—nothing on research and development and innovation, nothing on investment, nothing on building our skills base and nothing on the long-term sustainability of such a foundation industry. As long as that long-term strategy is missing, short-term action will simply be treading water and running to stand still. We are in desperate need of a Secretary of State for Business, Innovation and Skills who is prepared to use the words “industrial strategy” and then to do something about it. The issue of market economy status for China is a chance for the Government to stand up for British jobs, for British industry and for Britain.

Finally, all those failures clearly come together into a single issue, to which my hon. Friend referred: the absence of a long-term industrial strategy for the steel industry, with a commitment to strategic investment in skills, infrastructure, energy, and R and D. Why have the Minister and her Department still not produced such a strategy—a strategy to save British steel, to save British jobs and to save communities such as mine? In the first half of 2015, the Minister almost never appeared in public without talking about her Government’s “long-term economic plan”. She now has the chance to show that that was not all hot air. Now is the time for the Government to produce a long-term plan for steel.

Back in October I said it was 10 to midnight for the British steel industry. I finish by asking the Minister what time she thinks it is now.