That this House has considered the contribution of the steel industry to the UK economy.
It is a pleasure to serve under your chairmanship, Mr Pritchard, and to lead today’s debate. My hon. Friend the Member for Aberavon (Stephen Kinnock), a Welsh Labour colleague, secured the debate and was due to lead it, but he has been waylaid by his Front-Bench duties on the Economic Crime and Corporate Transparency Bill. He is an excellent chair of the all-party parliamentary group for steel and metal related industries. He represents the UK’s biggest steelworks—in Port Talbot—and I know that he will take a keen interest in today’s debate and wishes that he was here. Before I begin, I declare an interest: I am a member of the Community and GMB trade unions, both of which represent steelworkers in my constituency so ably, as does Unite. I refer Members to my declaration in the Register of Members’ Financial Interests.
I am incredibly proud to represent a steel constituency; for well over a century, the industry has been at the heart of the communities that I serve, and of constituencies represented by Members present. It is good to see interest from Members on both sides of the House. The contribution of the steel industry to the UK economy is the title of the debate, but the immense contribution of this vital strategic industry is, in a sense, undebatable. Our steel sector employs 34,500 people directly in the UK and supports a further 43,000 in supply chains. Steel salaries are 45% higher than the UK national average and 59% higher than the regional median in Wales, Yorkshire and Humberside. It goes without saying, then, that the steel industry should be at the heart of any levelling-up agenda worth the paper it is written on.
The workforce is a winning combination of highly skilled, experienced workers who have honed their expertise over decades of dedicated work, and a healthy influx of younger steelworkers eager to work in an industry that is at the cutting edge of innovation. Even in the face of the considerable challenges that the industry faces, which I will talk about today, steel still has enormous pulling power for young workers who are looking to build up skills that will last them a lifetime. That is clear to see at Tata’s Llanwern steelworks in my constituency, where the average age of the workforce has fallen from 53 to 32 in recent years. There is a new generation of workers who, like so many before them, are hugely proud to be steelworkers. We must look after them.
Directly and through supply chains, the steel sector adds £5.5 billion to UK GDP and makes a £2.4 billion direct contribution to the UK’s balance of trade. It underpins our entire manufacturing base, and steel is an essential material for the construction, energy, aerospace, defence, engineering and packaging sectors. Some 96% of Network Rail’s steel is sourced from British Steel in Scunthorpe; 250,000 tonnes of steel from Celsa in Cardiff will support the building of Hinkley C nuclear power station; and Liberty Steel produces critical parts for aircraft engines and wind turbine gears. Nearly all 1p, 2p, 5p and 10p coins originate from steel made at Tata in Port Talbot, and Tata Llanwern produces world-class automotive steel for the likes of Jaguar Land Rover and BMW.
My hon. Friend is making an excellent speech. She rightly mentions the Celsa plant in my constituency and the critical role that steel plays in so many of our industries and in manufacturing. Does she share my frustration that we seem to have been going round the houses for the last 10 years, particularly on the critical issue of competitive energy pricing? We have seen something like 12 steel Ministers during that time. That is not to disparage the current Minister, whom I like immensely on a personal level, but we need consistency and action on the critical issue of energy prices.
I thank my hon. Friend, who is a champion for steel in his constituency, where Celsa is based. I wholeheartedly agree that we have been going on about energy prices for so long—it is a theme that I will come to later in my speech—and I thank him for his contribution.
First, I apologise for being a minute late. My hon. Friend’s last point is crucial. All these pots of money that are available are obviously welcome, but for Shotton and the whole steel industry, we need a long-term plan with long-term investment. There is a lot of talk about companies investing, but they will invest only if they can see a future, and if all we are doing all the time is just buying a bit of time here and there, until steel drops out of the news again, that is not a plan. We really need a long-term plan.
I thank my right hon. Friend for that intervention. Yet again, I agree wholeheartedly with him. He is a fantastic advocate for Shotton, and he is exactly right: we need a long-term plan for steel.
I am grateful to the hon. Lady for giving way; she is being very generous with her time. She made the very important point a few moments ago that steel is at the heart of many of our growth industries. Does she agree that a growth industry for the future is green energy, and that whether we are talking about floating offshore wind or other forms of marine renewables, steel will be at the heart of them? To that end, does she welcome the agreement struck between RWE and Tata to explore the use of Welsh steel in the nascent floating offshore wind industry? Does she also agree that we need Government to be part of the discussion of how we support the growth of new green industries and ensure that British-made steel is at the heart of them?
I thank the right hon. Member for that intervention. I wholeheartedly agree; I am agreeing with all the interventions! He anticipates my next point, because I was about to say that steel will be integral part of the UK’s journey to reach net zero. Without a thriving steel industry, there can be no transition to a low-carbon economy that supports a range of industries, from automotive to nuclear and renewables, which he mentioned.
I am very grateful to the hon. Lady for giving way; she is being very kind in taking interventions. There have been suggestions that a closed-loop cycle could be created in south Wales, whereby floating offshore wind is used not only for electricity but to make green hydrogen for heavy industry in the area, including, of course, steel production. Contracts for difference could be used to support such a relationship. Will she join me in asking the Minister to clarify how the contracts for difference scheme could be adjusted, so that it supports renewable energy hubs that use multiple technologies, and to assess how such projects could be linked? The important words there are “multiple technologies”.
I thank the right hon. Member for that very important intervention. She gave an example, as did the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), of how we can use our steel in these projects, and I hope that the Minister will refer directly to that point when she responds to the debate.
These interventions prove that we simply cannot decarbonise the economy without decarbonising steel. As Tata has highlighted, almost every aspect of the UK’s decarbonisation plan is steel-intensive, with 10 million tonnes of steel being required over the coming years for offshore wind, solar, nuclear, hydrogen, and carbon capture and utilisation storage projects. The “Britain, we need our steel” campaign was launched by the Community trade union and union partners in 2020. It is not just a slogan; it is a statement of fact.
Today’s debate comes in the context of the recent worrying news from Liberty Steel, which has announced that it will idle its steel plants in my constituency and at the Tredegar site in the constituency of my hon. Friend the Member for Blaenau Gwent (Nick Smith). The primary production plant in the constituency of my hon. Friend the Member for Rotherham (Sarah Champion), who is also an excellent advocate for steel in her area, and the Performance Steel supplier in the constituency of the hon. Member for West Bromwich East (Nicola Richards), are among the other sites affected.
In a written response to me last week, the Secretary of State for Wales mentioned that he had spoken to Cabinet colleagues about the situation at Liberty and what it means for the workforce, and said that the Government stood ready to provide support. Any updates on that written response that the Minister can provide would of course be welcome to us and, more importantly, all those working at the plants, who are worried about the future. We must not underestimate the uncertainty that they will feel following the news about Liberty.
Of course Liberty has its specific issues, and the Community union is seeking answers from the company about how the latest announcement squares with previous commitments to invest in the business and ramp up production in Newport, Tredegar and elsewhere. It is clear, however, that there is a wider context, and that Liberty’s announcement again demonstrates the precarious outlook for the steel industry more widely. Indeed, the company specifically cited energy costs as a factor in the decision that it made this month.
I thank my hon. Friend for her generosity in giving way again. I should also put on record my membership of the GMB, and past interests involving the GMB and Community.
On the subject of that transition to green steel, my hon. Friend will know that the Celsa plant uses an electric arc furnace—it is producing green steel from scrap. Does she agree that if we are switching to scrap-made steel, we need to ensure not only that there are adequate supplies of scrap in the UK, but that we do not suddenly all start producing the same product? Celsa predominantly produces rebar; we also need the flats, the sections, and all the other products that the UK currently provides so excellently.
My hon. Friend makes an excellent point—I cannot top it, really. I hope the Minister has heard it.
Procurement policies also need to be updated. For every 1,000 tonnes of steel produced in the UK, 4.2 direct jobs are created, with a further 6.6 jobs created in the supply chain. It is understandable, then, that Make UK found that 68% of the UK public think that public infrastructure projects should prioritise the use of UK-made steel wherever possible, yet the Government have a pretty poor track record in this area. The most recent example was last month’s announcement that a £1.6 billion contract for steel for three fleet solid support vehicles was awarded to a Spanish consortium. That is just one case, but there have been too many missed opportunities for the steel industry. We cannot let that carry on.
As I mentioned earlier, green infrastructure projects will need literally millions of tonnes of steel by the end of the decade. The UK Government’s own steel public procurement pipeline data, released last June, states that offshore wind projects alone will require some 5.3 million tonnes of steel within five years. We need the Government to commit now to maximising the procurement of British steel for all those upcoming projects, a move that Make UK estimates could boost the UK economy by as much as £4 billion and support 11,000 British jobs in steel companies and their supply chains. As the Community union’s general secretary Roy Rickhuss has rightly said,
“The green energy revolution presents a huge opportunity to build a robust British supply chain based on the supply of top-quality domestic steel.”
The events of the past two years tell us that Britain cannot rely on fragile global supply networks for strategic goods, and that if we want to go green, it is nonsensical to transport steel from the other side of the world.
On that point, I welcome that the Government themselves have acknowledged that, in the area of energy supply, the country has
The industry really is at a cliff edge. I have said that in meetings. That is not crying wolf; this is not a made-up situation. It really is at the 11th hour. Unless we really step up to the mark and invest, will we lose not only the industry but the confidence of the supply chain and the customers, who will start questioning whether some of these plants will be around this time next year. Something has to change now.
My right hon. Friend is exactly right: the steel industry is at a particularly precarious point and the purpose of this debate is to highlight to the Minister the need to act quickly.
On procurement, it is high time that the UK Government started setting more ambitious targets for the use of UK steel in public projects and for all initiatives and schemes supported by public funds. Ultimately, they must devise policies to deliver those projects and grow the economy. Other countries have shown that they are not afraid to support their manufacturing sectors in the green transition. For example, in the USA, the Biden Administration’s Inflation Reduction Act uses the tax system to reward American manufacturers that invest in and use American manufacturing supply chains.
If this Government will not take action, the next Labour Government will. I am pleased that my party is committed to asking every public body to give more contracts to British firms, big and small. We will use stretching social, environmental and labour clauses in contract design to raise standards, and we will spend and make more in Britain. We are committing to making, buying and selling more in Britain. We will lead a culture change in Government, putting the growth of local industries and economies first and reviewing the pipeline for all major infrastructure projects to explore how to increase the materials made in Britain. We will also upskill workers to get the jobs for the future. That is the kind of vision that industries such as steel and our country need.
It is worth flagging up the continued risk of melted and poured Russian steel entering the UK via third countries. Although the UK has banned finished-steel imports from Russia and placed a 35% tariff on semi-finished steel from Russia, loopholes in the sanctions means that Russian steel that is re-rolled in the EU or Turkey and exported into the UK is reclassified as EU or Turkish-origin material, circumventing the ban and the tariff. That means UK consumers, including public projects, are unwittingly importing and using Russian steel. It is wrong as a point of principle and it has damaging consequences for the UK market. I echo UK Steel’s call for the Government to tackle that by applying sanctions on all steel that is melted and poured in Russia, regardless of whether it has been re-rolled in a third country.
I will not set a firm time limit at the moment, but we have quite a few speakers. Speeches of around five minutes would fit perfectly to allow all the Front Benchers to have their full 10 minutes.
Holly Mumby-Croft (Scunthorpe) (Con)
It is a pleasure to serve under your chairmanship, Mr Pritchard. I thank the hon. Member for Newport East (Jessica Morden) for securing the debate. I know from our work together on the APPG for steel and metal related industries that we agree on many things and have the interests of the steel industry jointly at heart. I also thank my hon. Friend the Minister for the level of focus that the steel industry is receiving at the moment. I am heartened by that and want to put my thanks on the record.
Steel is something that I never tire of mentioning in Parliament. My home town of Scunthorpe has one of the biggest steelworks in the country. I care about the local jobs because I understand the impact that it would have on our local community and on individuals and families were those jobs to be lost, but we can never say enough times the impact that it would also have on us as a nation and our position in the world were we ever to lose our ability to make our own steel.
Not only does the steelworks provide thousands of jobs that pay roughly 45% more than the average job in Yorkshire and Humberside, but its impact ripples throughout our entire local economy, supporting an ecosystem of businesses that sustain countless livelihoods. I have been told that it supports 20,000 jobs in our area, and I believe that to be the case. People who work in the steelworks in Scunthorpe are people I went to school with. They are people whose children went to school with my daughter. They are my neighbours. They are members of my family—my granddad made his living and raised his family through his work at the steelworks. It is a source of great pride to him and to many people in Scunthorpe and the surrounding area that the work our town has put in has helped to build this country.
We heard figures from the hon. Member for Newport East on the value of the output of steelmakers here in Britain, but it is almost impossible to truly quantify the impact that steel has throughout the wider economy and every sector and, just as importantly, the loss we would face were we not able to produce our own steel.
I congratulate the hon. Member for Newport East (Jessica Morden) on securing this debate, which is very important for not just steel but ceramics. Refractory ceramics are vital for the steelmaking industry, and particularly energy-intensive industries such as steel and ceramics need additional support to transition and invest in energy efficiency measures. Does my hon. Friend agree that we need additional support from the Government that is easier to access so that these industries can invest in energy efficiency measures?
Holly Mumby-Croft
My hon. Friend is absolutely right. He and I have worked together on many of the issues that affect energy-intensive industries. Ceramics play a crucial role in the steel industry, lining the blast furnaces that we use to make steel and, of course, we like to have a cup of tea in a ceramic mug as well.
I cannot say enough times how important it is that we never, ever become the only country in the G20 that is not able to make its own steel. That would leave us at the mercy of steel producers around the world, who would be in full knowledge that we were not able to make our own steel, with the prices and challenges that would come with that. I hope the Minister agrees that steel truly is a vital strategic industry. Nobody can go a single day in their lives, from the moment they get up to the moment they go to bed, without needing to use steel.
A dependable supply of high-quality steel—that is a crucial point: in this country we make some of the finest steel money can buy anywhere in the world—will underpin our every endeavour as we tackle the problems of the 21st century and the issues that we grapple with in this place. It is vital for everything from growth to defence, and Russia’s invasion of Ukraine has served only to highlight the challenges and the importance of that. I truly believe that the public have a fantastic understanding of how important this is and instinctively know it is crucial that we are always able to make our own steel.
I have seen the support in recent years, including the £800 million of energy support and the two occasions when the Government took the brave step of extending the steel safeguards. That was a challenging time for us, so I congratulate the Government on doing that, because it was really important. Had we not done that, I am not sure we would be here now having this conversation—it was absolutely right. In Scunthorpe, we remember how the Government paid workers’ wages in 2019 and into early 2020 when the buy-out happened.
We have all seen the press reports about British Steel and Tata negotiating with the Government. I know that is a live negotiation and we cannot talk about it, but I will do everything I can, as I know other Members will, to help and assist all parties involved to reach a good outcome and secure the future of steelmaking in Scunthorpe. My own view is that, should a deal be reached, we must look at this as a pivotal moment. We must get a deal done and then the next day wake up and start straight away with the steps we need to take to allow steel to thrive into the future. We must immediately start discussions at pace about carbon border adjustments, so that we do not find ourselves falling behind the EU. We must look at the emissions trading scheme and the perverse incentive that it is possible to create whereby we can see loss-making production—carbon-producing production—incentivised by a scheme initially designed to prevent excess carbon production. We must also address all the issues relating to energy costs.
It is a pleasure to serve under your chairmanship, Mr Pritchard—for the first time, I think. It is a pleasure to speak in this debate secured by my hon. Friend the Member for Newport East (Jessica Morden), who outlined the broader picture so well. I speak today as a member of Unite.
As others have said, the UK steel industry makes a vast contribution to our economy. It employs 34,500 people directly in the UK and supports a further 43,000 in supply chains. The industry makes a £2.4 billion direct contribution to UK GDP, and the supply chains it supports add another £3.1 billion each year. It offers skilled, well-paid employment, with a median salary that is almost 60% higher than the average in Yorkshire. But it is an industry that continues to be chronically undervalued by the Government, its needs neglected and its concerns ignored. That has consequences.
One hundred and eighty five of my constituents were recently told that their jobs would likely go as part of 440 redundancies across Liberty Steel’s UK businesses. Just before Christmas, in a speech I have made countless times, I warned that unless the Government acted on the underlying issues that face the industry, steel production in the UK would wither. For years, steel MPs from all parties have called on successive Business Ministers to listen to the industry, value its contribution to the economy and help to create an environment in which it can thrive. Our pleas have fallen on deaf ears, and our constituents are losing their jobs as a consequence.
Rotherham is a steel town. The industry is at the core of our identity and local economy. The job losses will affect not only the 185 workers and their families but businesses up and down Liberty’s supply chain and throughout our local economy. Many businesses move to Rotherham specifically because of our steel industry, including those on the advanced manufacturing park. The job losses will have a catastrophic impact on our town and communities.
Liberty has cited soaring energy costs as a major factor behind its decision, and the fact that its announcement came only days after the Government announced the scaling back of support for businesses struggling with high energy costs should surprise no one. If the Government are serious about delivering economic growth, they cannot stand idly by while industries that should be at the heart of our growth are pushed to the brink.
When I came to this debate I was not planning to make a contribution—I was planning just to make an intervention about green industries and the role that British Steel can play in them—but having listened to some of the contributions I would like to make two broad points, one looking backwards and one looking forwards.
My backward looking point is in response to the remarks made by the hon. Member for Newport East (Jessica Morden). She made a very good speech and I agreed with a lot of the important points she made, but I want to challenge the Opposition narrative that over the last 12 years the UK Government have pursued a deliberate policy of neglect of the steel industry.
I had the privilege of serving as a Minister in 2012, and it was not just Liberal Democrats fighting for steel at that time: many Conservative Ministers were fighting for the steel industry. I was in the Wales Office, putting together working groups and roundtables of energy-intensive industries, meeting officials at BEIS’s predecessor Department and looking at the energy costs of intensive energy users. There was a big focus on the needs of steel, particularly from us in the Wales Office because steel is so important to the Welsh economy and to our identity. Some of the contributions made by Members from other parts of the UK testify to that point in relation to their own communities.
There was a focus on steel in the early years of the coalition Government, and I believe that has continued until the present day. I do not remember a time when Ministers were sitting on their hands when it came to discussions about steel. I remember, during my short stint at the Department for Work and Pensions, being lobbied by Tata to sort out its pension problems and offload its obligations to British Steel pension holders.
It is almost like we have bounced from crisis to crisis in terms of discussing steel, but at no point did I honestly detect that the Government were asleep at the wheel. There have been a succession of different BEIS Ministers, Chancellors and Prime Ministers, but steel has always been a subject that has been able to attract attention from the top of Government, including from the Prime Minister’s office.
There may have been discussions about steel but there was very little by way of action. Will the right hon. Member acknowledge the huge disparity between what we pay for our energy and the way that other European countries help? There has been no action to address that.
I accept that point. I remember bringing representatives of Celsa Steel from the constituency of the hon. Member for Cardiff South and Penarth (Stephen Doughty) to meet various Ministers at different points during that period of government. Celsa was incredibly open about opening its books and showing costs to Ministers. The point that Celsa made, when we put in place the support scheme for energy-intensive users, was about the disparity with competitor countries. That is a valid point that the Government should address. We are in an intensely competitive steel-production environment.
I come back to my point. Some Opposition Members hope to be in Government in a couple of years’ time as Ministers. They will have a string of companies knocking on their doors continuously asking for support and help. The trade-offs they will need to make, with regard to responsibility to taxpayers and the public finances, will be difficult. Difficult decisions need to be made. In the case of steel, at times the global challenges have felt so big that the amount of support being sought was almost unlimited. Ministers need to make difficult decisions, but I accept the point made by the hon. Member for Newport East that we need to look at the disparity with international competitors.
Holly Mumby-Croft
My right hon. Friend is making an interesting speech. He reflected on previous Governments’ approach to steel. He knows, as we all do, that under the last Labour Government steel jobs and steel production halved. The point he makes about fairness is an important one, and I thank him for making it.
I thank my hon. Friend for that contribution. My other argument is about looking forward. I reiterate my remarks about the importance of new green technologies and green industries for the UK economy in the years and decades ahead. British steel has a crucial role to play in that, but that will not happen by accident; it will require deliberate choices on the part of Ministers. We will not capture the full economic value of these new industries by accident. To ensure that we maximise local domestic content and supply chains will require a plan and deliberate choices by Ministers. To that end, I want to talk about the bid by Port Talbot, one of the UK’s most important steelmaking communities.
There is a joint bid by Port Talbot and Milford Haven in my constituency for a freeport—a Celtic freeport that will be used as a platform to help launch a new industry of floating offshore wind. We hope that Welsh Steel will play a key part in the supply chain. I do not expect the Minister to comment on a live bidding process, but I wanted to put that on record. If the hon. Member for Aberavon (Stephen Kinnock) were here, I know he would make the same point. That is a very exciting freeport proposal, with real projects and economics behind it, and I hope the Government will look favourably on it.
It is a pleasure to speak in this debate. I commend the hon. Member for Newport East (Jessica Morden) for setting the scene so well. I do not have a steel factory in my constituency, or an industry that it is dependent on help from Government, but I do have a strong construction sector that depends on the British steel that comes from the factories in the areas others have spoken about, so it is important for me to put on the record why I support what the hon. Members for Newport East and for Scunthorpe (Holly Mumby-Croft) and others said in their introductions, and what others will say.
I remember the last Westminster Hall debate on steel. The hon. Member for Newport East spoke then as well, and I think the hon. Member for Aberavon (Stephen Kinnock) led the debate. We can see that he is in the main Chamber—his name is up there on the screen—and he cannot be in two places at one time, although I venture sometimes to try. The only reason he is not here is that he has obligations in the main Chamber; otherwise, he would be here.
I have listened with great interest to the contributions of Members today, and I agree with much of what has been said. I have long been outspoken about the need for us to bring manufacturing home to purpose-built, modern, green factories that give local people jobs and produce the renowned high-quality steel for which we are famed. I absolutely support what the hon. Member for Newport East and others have said.
You will know, Mr Pritchard, because your knowledge of the issue is every bit as good as mine, that a major issue for my constituents—many will be able to say it with me—is the Northern Ireland protocol. Why do I mention that now? Let me explain. Some of the Members here will be aware—I suspect that you are one of them, Mr Pritchard—that last August His Majesty’s Revenue and Customs informed steel producers of a 25% tariff on some GB steel imports into Northern Ireland. The steel sector is important to me, and it seems that we are being penalised more than anybody else. The tariff is directly related to the Northern Ireland protocol—it is one of the issues apparent between the UK Government and the EU, to which Northern Ireland has no representation—and the rule changes in relation to steel imports. Some of those steel imports reasons relate to Russia’s invasion of Ukraine; we understand that.
Before I call the Front-Bench spokespeople, who will have 10 minutes each, I am afraid that I will have to set a time limit of four minutes for our final three speakers.
The steel industry—or tin-plate industry, as we call it—is vital to my constituency of Llanelli, where we take the steel from Port Talbot and make it into a range of products that subsequently become tins for food or cans for aerosols. I congratulate my hon. Friend the Member for Newport East (Jessica Morden) on securing the debate, which comes at a crucial time for the steel industry.
In the interests of saving time, I will not repeat the excellent points that my hon. Friend made on the energy issue. Energy costs are not just an immediate challenge. Now is very much decision time for the future of the steel industry. The US Inflation Reduction Act and President Biden’s determination to tackle climate change have undoubtedly accelerated global interest in decarbonisation, which poses huge challenges for the steel industry. Our steelmaking capacity is ageing, and now is crunch time for steel manufacturers, which must decide where they will invest for the future—whether it will be the UK or elsewhere.
We know that blast furnaces cannot simply be replaced by electric arc furnaces. Yes, they have a role, and could clearly be run on electricity generated from renewable sources, but the real challenge is to decarbonise the blast furnace process of making steel from iron ore. That requires huge investment in research and innovation to develop the technologies of the future. The UK Government need to make the conditions right for companies to choose the UK. We need a clear vision from the UK Government, and determination to ensure that the UK gets ahead of the game and develops the technologies. We have to be prepared to take the risk in order to reap the gains. If the UK can lead the way, we will have not only a flourishing steel industry, but the opportunity to export our steel and our technologies.
We need a clear industrial strategy, from research and innovation through development to establishing production; as well as confidence that there will be a level playing field on issues such as energy costs and confidence, and a commitment to use UK-produced steel in public procurement. The only way we will attract companies to invest in the steel industry of the future is with a proper strategy. The alternative is the demise of our industry. If we are overtaken by countries producing cleaner, cheaper steel, we will be left behind. It is not just the steel industry that needs certainty; all the associated industries need to know whether to invest.
It is an honour to serve under your chairmanship, Mr Pritchard. I congratulate the hon. Member for Newport East (Jessica Morden) and all those who have contributed in this important debate.
I will focus on the role of steel in making Britain a sustainable economy. Steel plays a massively significant role in our ability to extend the railways, to ensure we have the green technology to build zero-carbon homes, and to make best use of the natural resources in this country—wind and particularly hydro power, which I will talk about in a moment. But while it is vital to the greening of our economy, we cannot ignore the fact that steel produced with coal is a major contributor to climate change. The steel industry contributes 5% of the EU’s carbon emissions and 7% of global carbon emissions, equivalent to the entire aviation industry. To cut to the chase, the good news is that the amount of steel produced using coal is now down to 70% and that produced by renewable means, in particular using electric arc furnaces, is up to 30% and rising. Increasingly, customers for steel are demanding that it be produced in green and renewable ways: for example, Volvo is now committed to building 100% of its trucks in a fossil-free environment.
I make these remarks because of my engagement with a great controversy in my county of Cumbria, where the Government recently gave the green light to the first coalmine for 30 years, ostensibly to support the steel industry. It is clear that 83% of the coal produced by West Cumbria Mining will be exported and not support the UK steel industry. Both Tata and British Steel have been clear that they have no plans to make use of that coal. British Steel has been clear that it is the wrong sort of coal with the wrong sulphur content, so it will be next to no use whatever to the production of steel.
Numerous people, including the hon. Member for Newport East, have mentioned the Government’s recent comments about the green switch and supporting Tata with £600 million to help move towards electric furnaces. Perhaps we will hear more detail from the Minister. Tata says that it will cost £3 billion. We also know that Salzgitter in Germany, which produces about as much steel as the entire British steel industry produces in a year, will be completely fossil-free within 10 years, so my fear is that we are not being ambitious enough.
It is always a pleasure to serve under your chairmanship, Mr Pritchard. I am grateful to my hon. Friend the Member for Newport East (Jessica Morden) for so eloquently leading on this very important debate. I speak today as a member of the Unite and GMB trade unions.
Steel is a foundational sector across the UK, never more so than in Neath Port Talbot county borough. On such strong foundations, economies and supply chains are created. Port Talbot steelworks reaches all the surrounding communities. Thousands of Neath constituents have worked there, or know someone who works there or in its supply chain, as my father did. To say it has been a difficult few years for the steelworkers in Neath Port Talbot would be an understatement. Competing in the global market, the absence of anti-dumping tariffs, the lifting of lesser duty rates and rising UK energy prices have conspired to create uncertainty and fear.
Over 2,000 local jobs have been lost since 2014. Steel and the steel industry are vital to Wales and its economy. The idea that the steel sector does not have a future is unthinkable, but our steelworkers are as robust as the steel they make. They have so far bounced back from every adversity, but the situation is about to get much worse. Of the top 10 economies in the world, the UK’s is the only one with a declining steel industry. The UK Government should immediately sit down with Tata Steel and other businesses to do a deal on green steel for the sake of the future of our workforce.
The steel sector is a crucial aspect of the partnership between the public and private sectors. The UK Government should look to set indicative targets for the amount of domestically produced steel that we put into Government-funded projects. That would enable us to make, buy and sell more steel in this country. My hon. Friend the Member for Aberavon (Stephen Kinnock), who is chair of the all-party parliamentary group for steel and metal related industries, of which I am a vice chair, cannot be with us today because he has duties in the main Chamber, but he has spoken in Westminster Hall many times about the importance of the steel sector to the UK, to his constituency and to Wales.
I am extremely grateful to have this opportunity to speak, Mr Pritchard, and I thank the hon. Member for Newport East (Jessica Morden) and all the other Members who have spoken.
I do not want to be too downbeat or to go back too far, but ever since I came into this place in 2015, we have been in a steel crisis. In my constituency, we have Dalzell works, which does not produce steel; there is no steel production as such in Scotland. However, we use the steel produced mainly in Scunthorpe and roll it to a very high standard. The Scottish Government managed to save that mill in 2016. However, in all the time that I have been here, I have talked to a succession of Ministers—I welcome the new Minister, and I apologise for not meeting her this morning—and nothing has fundamentally changed. We have had steel charters, which Ministers signed —we all signed the steel charter—and we have talked about how the UK must produce its own steel, or otherwise we would be in grave danger. We are the only member of the G7, the G20 or whoever that might not produce steel in the future. That is not the way forward in the 21st century.
I was very proud when the Scottish Government stepped in and managed the deal that saved Dalzell works. In a constituency such as mine, which has a proud tradition of steelmaking, that was really important, not just because it is an iconic industry, but for the future. A lot of the work that is done in Dalzell ends up on wind turbines. Scottish renewables, as far as the Scottish Government are concerned, are one of the ways forward for Scotland to thrive as an independent country.
We are in the very lucky position of having lots of wind power, although we have had attempts to block the renewables industry. We wanted a carbon capture and storage unit and to reduce the price of steel by reducing the price of energy. We want to move things forward, so the Scottish Government actually have a plan. That has always been missing in the UK. I appreciate that the Minister wants to help in the latest crisis, as have all her predecessors. That is what has happened: they have helped in each succeeding crisis but we just keep stumbling from crisis to crisis, kicking the can down the road without actually implementing a proper, forward-looking strategy that would take the entire UK steel industry forward.
As always, Mr Pritchard, it is a pleasure to see you in the Chair. My hon. Friend the Member for Newport East (Jessica Morden) has set out a fantastically well-crafted case for the UK steel industry. The sense of the whole debate has been about the strategically important role that steel has to play in the UK—it is probably fair to say that everybody who has spoken has accepted that point, and indeed made that point. I dare say that in a few minutes’ time, the Minister will do so as well.
The economic and national security value of steel made in the UK is incredibly important. We have seen in recent times why it is so important that we have strong domestic supply chains in our core industries—that has been underlined by Putin’s invasion—and steel is at the forefront of the issue. Throughout the debate, a number of Members have made the case that it is dangerous to rely on imports, as well as for the importance of demonstrating confidence in the steel industry and a long-term commitment to it, the key role it has in the transition to low carbon, and its importance to regional economic success, jobs and communities.
My hon. Friend the Member for Rotherham (Sarah Champion) rightly spoke about the 185 workers whose jobs are at risk in her constituency alone, out of 440 redundancies at Liberty. Can we honestly see a future for this country where steel for civil aircraft made by Boeing and Airbus is not being produced by Liberty Steel? This issue is strategically important for our domestic supply chains, and Liberty is producing that steel for incredibly important customers. The impact on the workers, the families and the communities is a point that my hon. Friend made extremely strongly.
My hon. Friend the Member for Llanelli (Dame Nia Griffith) reminded us about the last-minute U-turn—it was so late that I think it was a last-second U-turn—on tariffs last summer. I am afraid that that U-turn is typical of what we have seen over 13 years of this Government when it comes to the steel industry. It is typical of their approach to many other aspects of the economy as well.
The Minister says from a sedentary position that I am making out that her role is not important enough. I am not doing that at all—I think it is a very important role. It is important that steel Ministers have longevity in the role, but it is also important that there is a strategic role at Cabinet level. That was the point I was making; it was certainly not my intention to undermine the Minister. I hope she will take back to the Secretary of State the points made in writing by the trade unions.
Returning to the Government’s late response, I hope it is not as a result of the announcements at Liberty that we are suddenly seeing press reports of hundreds of millions of pounds potentially being available. I know that the Minister will not be able to confirm that today, because of ongoing negotiations. But I do hope that the press reports come to fruition. When she was Prime Minister, the right hon. Member for Maidenhead (Mrs May) promised £250 million for a green steel fund, but that did not happen. I am afraid that our memory of what Government have previously promised the steel industry is still strong.
I gently say to Government Back Benchers that what sounds like blaming the last Labour Government for 13 years of Conservative policy does not wash with people. The figures show that steel industry production in this country has declined by half since the global financial crisis. Thirteen of those 15 years have been under a Conservative or coalition Government. We have fallen from 17th to 25th in the world for steel production since this Government came to office. Of course, this is at a time when China and India have dramatically increased their steel production and every other steel-producing nation has experienced decline—it is just that the decline has been higher in this country over the past 13 years. As Members have pointed out, of the top 10 steel-producing countries, we are the only country currently in decline. We have to address that. We can and should go through the history, as long as we learn from it. As long as we apply the lessons from history, we will be in the right place.
The hon. Gentleman mentioned the contract for warships. In Belfast, Harland and Wolff has benefited from that, but the disadvantage is that if it wants to buy British steel and bring it over to the Northern Ireland, it will be 25% more expensive. Again, that is a conflict of the Northern Ireland Protocol Bill.
The hon. Gentleman is absolutely right that we need to sort out the Northern Ireland protocol. That is a slightly longer and wider debate, but it is an important point for him to raise as a Northern Ireland MP.
I want to remind the Minister about the problem with Russian steel, which my hon. Friend the Member for Newport East mentioned. It cannot be right that melted and poured Russian steel can be diverted via a third country and then imported into this country. Sanctions have to apply to all Russian-produced steel. We have had the Government announcements, media reports and lots of talk over the past 13 years from 12 Ministers. What we need is a proper strategic approach. Labour is putting forward an industrial strategy and plans for a green steel fund of £3 billion. That is the kind of strategic long-term commitment that will deliver the confidence and certainty to the industry that is needed. We have a plan. We have proposed a billion-pound fund for energy-intensive industries and it could help right now. The Government can adopt our plan if they want to. It is there in writing in the public domain. They can adopt that plan or come up with their own, but it has to be at a strategic level—no more sticking plasters. We need a strategic long-term answer for the future of this vital strategic industry.
It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate the hon. Member for Newport East (Jessica Morden) on securing the debate and raising the incredibly important issue of the contribution that the steel industry makes to the UK economy. We seem to be spending a lot of time with each other, and I want to put on the record that, while we are from different political parties, we are all aligned on doing what we can for the sector.
I am slightly anxious that everyone keeps pointing out that I am the 12th or 13th Minister—I am not sure if that is the kiss of death or not. As well as getting through my speech, I want to respond to all the contributions because I know how important that is for all the MPs who need to go home to their constituencies this weekend and explain what they have done on behalf of the steel sector.
I thank the hon. Member for Rotherham (Sarah Champion)—life comes at you fast when your own Select Committee report is read out to you in a debate. I thank the hon. Member for Neath (Christina Rees) for setting out the importance of the steel sector to the Welsh economy; the hon. Member for Cardiff South and Penarth (Stephen Doughty), whose points I will respond to very shortly; and the hon. Members for Llanelli (Dame Nia Griffith), for Westmorland and Lonsdale (Tim Farron) and for Strangford (Jim Shannon). I will cover the Northern Ireland protocol briefly, if time allows.
Of course, I thank the Chair of the Welsh Affairs Committee, my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). Freeports were in my Maritime 2050 plan—launched when I was previously maritime Minister—which is backed by the Associated British Ports. I am not sure what more I can say, other than I do love freeports and ABP is a pretty good organisation; hopefully, that is enough said.
I thank my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft)—our lady of steel—to whom I am indebted for the support she provides when I constantly ask for bits of information to ensure that my Department is absolutely on the right path in delivering for the steel sector. I also thank the hon. Member for Motherwell and Wishaw (Marion Fellows). I will try my very best to get to the points she raised as well.
I recognise and am grateful for all the support the Government have given and will give to steel, but those are like little Lego bricks. There is not the joined-up strategy that we need to have confidence in our industry. Will the Minister please come forward with a proper national plan to save this vital sector?
We need to put in place all the budgets that are available. I will quickly touch on procurement, which gives confidence in what we are hoping to do in the long-term for the sector; it does put together a plan.
As I said when I was at the APPG earlier, since I have been in post I have been focused on the issues that we are facing right now—with Liberty, for example. I cannot comment on the negotiations because they are live. I said to the APPG that, once we have got over that moment, I hope to sit down, do a refresh and look at everything we can provide the sector in the long term. What is happening in the United States is a game-changer, so we can try to push back on some of the challenges we have had on procurement previously. We can try to see what more we can do.
I am anxious that I have only four minutes left. On the £18 billion of energy relief, Gareth Stace, director general of UK Steel, said that the energy bills discount scheme provides
“important certainty and stability for steel producers’ production costs”.
We have legislated for the full range of tools allowed under the WTO rules so that the UK can tackle the threat of unfair trading practices and injuries.
Furthermore, in financial year 2020-21, the Government procured UK-produced steel worth £268 million for major UK projects—an increase of £160 million on the previous year. When I was the High Speed 2 Minister, before I realised I might get the steel brief, I always used to bang on to HS2 about not procuring more British steel. I hope to go back and reflect on procurement again, especially because it was in the BEIS Committee report—I want to say that before the hon. Member for Rotherham pushes that and reminds me of what I committed to.
About 8.4 million tonnes of steel is required for infrastructure projects in the UK, including 5.5 million tonnes for contracts for difference, which are not always considered public procurement, so there is huge scope for more procurement to take place in the UK. I will try to address that too.
I was with the unions yesterday and in front of the APPG today.
I am going to run out of time, so I will quickly touch on the carbon border adjustment mechanism. We are aware of the risk of carbon leakage, which a number of Members highlighted, and we have been monitoring the EU CBAM proposal with interest. As I said to the APPG this morning, once the consultation is out, it is absolutely vital that we put in the best submission. I have agreed to come back to the APPG to ensure we do that constructively.
Public procurement is a key focus of mine. I am trying to get over the negotiations at the moment, and I will reflect on what more we can do with procurement. We are looking at the BEIS steel procurement taskforce, and we will also reflect on what is happening in the United States.
On trade, Members know my positions on countries such as China and Russia, as double sanctionees. I know how important it is to ensure we are resilient in the UK. We work very closely with the Department for International Trade to put together the best packages for trade. I absolutely understand the points made about Russia. We are doing everything we can to ensure that that steel is not arriving here, but I will go back and see whether we can push back any further. I will do everything I can to ensure that happens.
My hon. Friend the Member for Scunthorpe was keen to reflect on the steel safeguards. We have agreed an extensive solution to the US section 232 tariffs to significantly increase US market access for UK firms.
I am anxious that I am going to run out of time, so I will respond to Members in writing. I reiterate my commitment to the sector and to appearing in front of the APPG as soon as possible to ensure we are putting together a good package and are able to lobby No. 10 and No. 11 collectively.
I thank all Members for coming along. We have agreed that this is a critical time for steel. I welcome the new steel Minister to her role. I welcome the talks; I think they are a step in the right direction. I also support Community’s call for steel companies to reconsider any plans for restructuring while those talks are ongoing and before we know what future support there might be. I say to the Minister that we need more data on procurement, so perhaps she can provide that—
The same is true for British Steel in Scunthorpe, which is paying nearly £1 million a day for electricity, the cost of electricity having risen tenfold since 2021. There is still real uncertainty about the situation of British Steel, and I am sure that the hon. Member for Scunthorpe (Holly Mumby-Croft), who is here, will speak about that shortly. I hope that the Minister can provide updates. It is imperative that talks between the company and the Government continue, and reach a successful outcome that ensures that steelmaking at Scunthorpe continues and decarbonises.
As Community has highlighted, the cost of Government inaction, in terms of job losses, employment support, and the loss of a vital strategic foundation site, is incalculable. The sky-high energy costs facing the steel sector are by no means a new issue, as my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) said. It is one that I and other Members representing steelmaking constituencies have raised with 12 different steel Ministers since 2010, including six in the last three years alone. It is difficult to establish a long-term relationship when our steel Ministers change so often. I also like the Minister personally, but I make that point.
Over recent years, Opposition Members will have lost track of the number of times we have had to highlight the energy cost disparity, which remains a blight on the competitiveness of UK steel producers compared with their continental counterparts, particularly those in France and Germany. Indeed, UK Steel research shows that British steel producers paid twice as much for electricity last year as German counterparts, hitting competitiveness.
The UK Government’s response to this over the years can be described as piecemeal at best. The energy bills discount scheme announced by the Treasury earlier this month confirmed that there would be at least a continuation of energy price support for businesses until April 2024, removing fears of a March cliff edge—an uncertainty that the Government allowed to fester through the tail end of last year.
However, it is important to note that the support for energy-intensive industries outlined by the Exchequer Secretary to the Treasury falls far short of that provided by competitor countries. That is the point. For example, the German Government have guaranteed their steel industry an electricity price of €130 per MWh for 2023. In contrast, the Treasury’s announcement on non-domestic energy support earlier this month provides our steel industry with a discount only to electricity prices higher than £185 per MWh. That means that UK steelmakers will stump up an estimated 63% more than their German counterparts for electricity.
UK Steel has rightly been critical of what the UK Treasury has on offer, saying that its
“reforms significantly narrow the help that Government will provide”,
and that Ministers are
“betting on a calm and stable 2023 energy market, in a climate of unstable global markets, with the scheme no longer protecting against extremely volatile prices.”
For a decade, British steelmakers have continually been asked to compete with one hand tied behind their back. That is why Labour’s £1 billion contingency fund to help energy-intensive industries, such as steel, deal with energy costs is crucial. It goes far further than this Government’s proposals and is vital.
The £800 million toward energy costs that the Minister mentioned in previous meetings is not all for the steel sector. In any case, it is not a new package of support. It relates to a package introduced under the coalition Government between 2013 and 2015, which was pushed largely by the Liberal Democrat-operated Department for Business, Innovation and Skills. In any case, the support referenced is significant less than the £1 billion contingency fund that Labour has suggested.
We need a Government who will support the industry in a move towards decarbonisation. We have read the reports of the £600 million that the Government have pledged, or are reported to have pledged, to Tata and British Steel this week to help with lower-emissions technology. I trust that we will get more details on this from the Minister later. I hope the negotiations continue and progress with urgency, and that any plan to decarbonise will be fully consulted on and agreed with the unions to ensure a just transition for the workforce. However, it is important to note that the support arrived significantly later than the support for other European countries did, and is significant lower. For example, the German Government have already spent €8.5 billion towards greening their domestic steel industry, and the French Government have spent €2.2 billion. British Steel Scunthorpe’s multi-union chair, Paul McBean, put it well in his recent interview with TheYorkshire Post, saying:
“We are the only country being told to go green and (with) no help.”
I look forward to the Minister’s response on that point about the adequacy of what is on offer.
It is clear that the steel sector is committed to the transition to net zero, but needs a long-term policy framework to make that a reality without penalising steelmakers with gargantuan carbon prices in the interim years. As things stand, rising carbon costs are eating into any available capital that steel companies may have to invest in decarbonisation. That is completely counterproductive, and we need the Minister to act on it. That is a key point.
The Government have spoken about a roughly £1.5 billion package of support schemes for the industry. However, it is important to note that those schemes are spread across many industries, so £1.5 billion does not translate into very much direct capital support for the steel sector. In particular, the £1 billion carbon capture, utilisation and storage infrastructure fund is not money provided to steel companies to support CCUS on site, but investment in pipelines and storage that may at some point be used by steel companies—it is far from a certainty. For example, Welsh steel plants will not be using that infrastructure even if they opt for carbon capture, as it is all for the North sea. Let us not forget the £250 million clean steel fund promised by the Government led by the right hon. Member for Maidenhead (Mrs May), which disappeared without trace.
Labour’s proposed £3 billion green steel fund represents a potential way forward—not a sticking-plaster emergency bail-out, but a plan to work with industry, investing alongside it over the next 10 years. If this Government will not take action, we will.
I also urge the Minister to look at proposals for a carbon border adjustment mechanism. The costs of the UK’s emissions trading system have spiralled over the past two years. Compliance costs for the sector reached £120 million last year, which is equivalent to 60% of the average annual capital investment of the sector, and are set to get much worse. A carbon border adjustment mechanism would create a level playing field by applying carbon prices at the border equivalent to those faced by domestic producers, ensuring that imported steel does not have a price advantage. The Community union has highlighted that such a mechanism would also support the decarbonisation of steel production, as it would allow steelmakers to produce low-emission steel without being out-competed by high-emission, lower-cost imported steel.
“drifted into dependence on foreign sources”.
We agree, and I echo Roy Rickhuss by calling on Ministers to not make the same mistake when it comes to steel, a sector of such vital strategic importance to our sovereign capability and our national security. Alun Davies, a stalwart of Community in south Wales, puts it succinctly:
“There is a clear choice facing this Government—either they back our workforce and our industries or they choose to offshore thousands of good jobs to other countries.”
At the Dispatch Box earlier in the month, the Prime Minister told the hon. Member for Scunthorpe that the Government
“remain committed to a thriving UK steel industry.”—[Official Report, 11 January 2023; Vol. 725, c. 557.]
Steel workers and steel communities throughout the country will understandably have taken that with a heavy pinch of salt. For our steel industry, the past decade has been characterised by neglect and a lack of vision for the future. The loss of skilled jobs at the SSI plant in Redcar and the Orb works in my constituency of Newport East were tragic cases in point. Orb was the last steel plant in the UK producing electrical steel, and it needed investment of about £50 million to be saved. The Government did not listen and did not let it be saved, and the opportunity was lost. That is heartbreaking. The next decade must be different, not just for our steel industry but for our energy security and a greener economy, both of which are utterly dependent on a healthy steel sector.
We need answers today. I hope the Minister will update us on her engagement with Tata, British Steel, Liberty Steel and Celsa Steel. I hope she will acknowledge that the current level of support for UK steelmakers in respect of energy costs and decarbonisation is not enough, and I hope the Government will commit to doing much more. The era of warm words has bitten the dust and the time for meaningful strategic action has come. Just like levelling up, the industrial strategy part of the Department for Business, Energy and Industrial Strategy’s title should not just be a handy buzz phrase; it should be a central, defining mission of the Government.
Instead of sticking plasters, we need a long-term plan. If the Conservative party is not up to the challenge, Labour stands ready to fill the gap and ensure that the steel industry has the bright future it needs and deserves.
I urge the Government to go as far and as fast as they can on those issues, and to do everything they can to give the industry confidence that ours really is the Government that will put in place the measures that will secure the future of the steel industry. I believe they are, and I urge the Government to give the steel industry that confidence.
Our energy markets have placed British steelmakers at a profound disadvantage for decades. British steel manufacturers have been left struggling to compete due to the Government’s failure to act to address energy costs that for years have been vastly greater than those of our European competitors.
In its 2021 report, “Liberty Steel and the Future of the UK Steel Industry”, the BEIS Committee argued that:
“If additional support is not forthcoming, high electricity prices will continue to have a pernicious effect on the UK steel industry, resulting in long-term decline and future crises.”
Well, here we are. The Minister, as a member of that Committee at the time, will no doubt recall that the report went on to recommend:
“At a minimum, the price disparity should be brought down to within £1/MWh of the total cost faced by key competitors in France and Germany”.
I could not agree with the Minister more. But since that report, the only thing that has changed is her job title.
The Government have taken no meaningful action to address the crippling pressure on the industry. It is not only the cost of energy that continues to burden British steel producers: the industry has been prevented from investing in its future due to punitive business rates that penalise capital investment. Yet again, nothing has been done to reform a system that continually hamstrings our domestic steel industry.
Most damningly, public procurement procedures continue to fail to prioritise steel from British manufacturers. What was the point of Brexit if not to better support our own industries? That simple step, entirely within the Government’s control, could go a long way to stabilising the industry and laying the groundwork for future growth.
I believe that at the heart of the Government’s failure on steel has been a fundamental misunderstanding of our industry. It is not some relic of an industrial past but a dynamic, world-leading industry, vital to both Britain’s economic future and its security, that has been ignored, to the Government’s eternal shame.
The Government must now engage proactively with Liberty and the trade unions to work to limit job losses, and they must ensure that a comprehensive support package is in place for the affected workers. If the Government fail to act—and act with urgency—the redundancies announced in my constituency will sadly not be the last.
The hon. Member for Newport East made an important point, which I kind of agree with, about overall industrial policy. Going back even further to when Labour was in Government, we have not been good enough as a nation at protecting domestic supply chains and local content, and that point extends to the steel industry.
There are big factors that are impacting UK steel, and Northern Ireland in particular, as expert Sam Lowe has outlined. As has been reported:
“Essentially, steel from Great Britain had been able to enter Northern Ireland without a tariff because it was covered by a tariff rate quota (TRQ) for UK exports to the EU. A TRQ allows a certain amount of a product to enter a customs territory without a tariff being paid, but once a set limit is reached tariffs apply.”
So we in Northern Ireland are being penalised to the tune of 25% for our British steel—our own steel—in our own country. The report continues:
“However, when sanctions were applied to Russia EU businesses could no longer buy steel from there. So at that time the EU scrapped country-specific TRQs for the UK and others in favour of one TRQ for Ukraine and another TRQ covering all ‘other countries’.”
The Northern Ireland protocol means that Northern Ireland continues to follow EU customs rules, and therefore suffers disadvantage, pain and cost factors. It is hard to comprehend. The tariff-free limit for supplies from Great Britain to Northern Ireland is set to be reached quickly. The UK previously had access to its own country-specific quota, which it could rely on to accommodate steel moving from Great Britain to Northern Ireland, but now such movements will be covered by the “other countries” quota, which could fill up much more quickly, given that the entire world has access to it.
What does that mean in practice? It means a 25% tariff on British steel moving from Great Britain to Northern Ireland. It means that, while European manufacturers can supply the UK with no tariff, the same does not apply to businesses in my constituency of Strangford. We want to use British steel from Newport, Scunthorpe and elsewhere, as we have in the past. It means that the local steel supplier just two minutes from my office in Newtownards is wondering how, with a 25% tariff increase, he can continue to be involved with construction industry clients that are already teetering on the edge of bankruptcy because of increased prices. It means that my steel importers—my British steel importers—cannot supply the suppliers of other Members in this Chamber. It means that all right hon. and hon. Members should stand and join with me in actively opposing the Northern Ireland protocol, not as a Northern Ireland problem but as a UK problem that affects their local economies and mine. I support the steel industry wholeheartedly, and I ask that every Member in this Chamber recognises my position as the Member for Strangford and does the same for Northern Ireland against this insidious protocol.
The horrors that have unfolded in Ukraine have reminded us just how important it is that we have our own steel industry—for our security of supply and to support a range of other industries, including defence. The situation has made us refocus on the importance of our own sovereign defence capability and the need to have the materials and the skilled workforce to be able to scale up production if necessary. There is strong cross-party support for sanctions against Putin’s Russia, but as my hon. Friend the Member for Newport East explained, there are loopholes. I understand that the Government may have plans to close the loopholes, but I would be grateful if the Minister confirmed this and indicated when we can expect it to happen.
We need a level playing field when it comes to UK steel having to compete against imports. When there are distortions in the marketplace, with steel arriving at our ports from countries that give massive state subsidies to the steel industry, taking action should be well within World Trade Organisation rules, and is essential to protect our steel industry against unfair competition—all the more so given that both the US and EU protect their steel industries in this way. Without such protection, we risk losing production and workers facing redundancy, and ultimately a lack of future investment in the industry.
Despite that, in both summer 2021 and summer 2022, the UK Government made very last-minute decisions about the extension of the existing steel safeguards. This does nothing to reassure the industry. If we want future investment in the UK steel industry, companies need to know that there is strong political will to protect the industry, and that they can rely on the UK Government to protect them from being undermined by artificially cheap imports. I understand that the Department for International Trade is looking to reform the way the Trade Remedies Authority works. We need a system that really works for the industry—that can respond speedily, carry out investigations and act to protect our industry. The UK Government would do well to look at some of UK Steel’s suggestions to achieve this.
First, we need clear Government policy on how we deal with countries such as China and Russia. Secondly, given that in March 2022 we needed additional legislation to give the Secretary of State call-in powers, consideration needs to be given to how those powers could be part of the system so that the Secretary of State can use them in an initial investigation. Thirdly, reform of the way in which the economic interest test works is needed—
Steel is utterly vital. I think about my constituency, where we need a passing loop on the Lakes line to dual the capacity of the railway line that takes people to Britain’s second busiest and biggest visitor destination after London. We desperately need zero-carbon affordable homes, and we need steel for that, too. We need to make more use of wind, and although the British Isles have a higher tidal range than any other country on planet Earth apart from Canada, we are using next to none of it, and steel is vital to the wind turbine and the wave turbine. The barrage is another way in which we could make use of tidal and wave power.
Steel is vital to our green economy. As Britain decarbonises with new infrastructure based on steel, let us make sure that we also decarbonise the processes we use to make that steel.
Floating offshore wind has the potential to transform the economy and jobs market in my hon. Friend’s Aberavon constituency and across south Wales, but it will happen only if floating offshore wind substructures and other components are manufactured and assembled locally. The public know we need a Britain that can stand more firmly on its own two feet, and they recognise the need for foundational industries to thrive if Britain is to prosper. Indeed, in one recent poll, 80% of those surveyed declared steel to be a strategically important industry that we must maintain in the UK. That is why the Labour party’s green prosperity plan will marry the quest for sustainable growth and jobs on which people can raise a family with the need for resilience. Net zero should be seen not as a hindrance, but as an opportunity for growth and prosperity. Labour’s proposed green steel renewal fund will secure the future of the steel industry for my hon. Friend’s constituents and mine, who live in Neath and work at Tata Steel. By greening our steel processing, Labour will ensure that our steelmakers can compete in a world in which global steel demand is on the rise. Britain needs its steel as a foundation of the modern manufacturing renaissance that Labour will deliver.
Time is running out for the future of our steel industry. I know that the Minister, who is a very magnanimous person, is working around the clock to familiarise herself with her new brief. I am grateful that she has already met the members of the all-party group for steel and metal-related industries, and I hope that she will stay a while in her new role. I urge her, however, to impress on the Treasury the importance of investing in decarbonisation of the UK steel industry, and particularly Tata Steel in Port Talbot. Without serious UK Government investment now, I fear that Tata Steel in Port Talbot is on the cliff edge.
We have talked a lot about the value of steel, but we should also look at the supply chain and all the other industries and all the other parts of the economy that benefit from having a really good steel industry. For example, when the Scottish Government put out tenders for offshore wind, applicants for the ScotWind leasing, which took place recently, were required to submit a supply chain development strategy that set out the level and location of supply chain impacts throughout the lifetime of products. That goes back to what I talked about—signing the steel charter. We now have the ridiculous situation where in the UK, High Speed 2 suppliers and contractors were not mandated to use UK steel. That is basic stuff: it would not happen anywhere else, and it is really important that it should not happen here.
I do not want to take up too much time, but I want to plead with the Minister to look at energy costs, which is another huge issue faced by energy-intensive industries such as steel, as well as ceramics. I recognise most of the Members present from my long-standing membership of the APPG for steel and metal-related industries. For the whole time I have been in this place, all of those Members —the hon. Member for Aberavon (Stephen Kinnock) has also been mentioned—have been fighting to save either their local plant or the industry in general. We have seen huge increases in tariffs from the US and cheap Chinese steel flooding into the country, so again, I go back to the major point I want to make: could the Minister please give us an indication of the way forward, with a steel plan for the next few years? We should be looking 20 years ahead, not stumbling from crisis to crisis.
I am not shy about saying that the Scottish Government look at things, consult and try, using their limited powers, to do stuff that helps Scottish industry—in this case, steel. We need the same commitment from the UK Government; we need something like mandated use of UK steel in projects across the UK, because without that, we are leaving the business open. Brexit has had an awful effect on steel as well, because we can no longer access markets in Europe in the same way. We cannot go back to the drawing board, because there has not been a drawing board on which a steel strategy has been written. Can I please have some sort of assurance that the UK Government will look at energy prices, among other things, and create a proper industrial strategy that includes steel, making sure that the UK is still a steel producer in five years’ time?
That is not the only late response we have seen. We saw it with SSI and the blast furnace in Redcar, which at that time was one of the leading examples of carbon capture, utilisation and storage in the steel industry anywhere in the world. The Government did not intervene, and by the time Ministers became increasingly involved, talking to the steel industry and unions in 2016, it was too late.
I know that the Minister has met the steel unions, but I hope she will impress on her boss, the Business Secretary, the importance of talking to the trade unions in the steel industry. As this is a strategically important industry, there should be interest at Cabinet level, as well as at the Minister of State level. I hope I am right in thinking that she is the Minister of State; otherwise, I have just promoted her.
My hon. Friend the Member for Neath (Christina Rees) made a heartfelt contribution about the value to communities of the steel industry, using her own family history to make the point about how vital it is to the Welsh economy. Indeed, she was one of the Members who made the point about this country being the only one of the top 10 steel-producing nations where the industry is in decline. The question is: what are we going to do about it? We have to address the challenge of our energy prices. The prediction for this year’s energy prices is that in Germany, steel-producing companies will pay £107 per kWh for electricity and in this country it will be £174. This cannot continue. The Government must take action on the emissions trading scheme. Members have explained the significant cost to the industry—£120 million amounts to 60% of capital investment in the steel industry. These are the challenges the Government must take on in a strategic way, not by using yet another sticking-plaster approach to a problem in the economy.
The Government can and must do more on procurement. Environmental, social and labour clauses are at the heart of Labour’s plan for procurement. It is beyond belief that this country is the only major country that would even dream of giving a contract for warships to an overseas company. There is no guarantee that the Spanish consortium awarded that £1.6 billion contract will use UK-made steel in producing those fleet solid support ships. Other countries take a more strategic approach. The United States has the Inflation Reduction Act, with strong commitments to the transition to low-carbon steel production at its heart. Such a commitment has also been made by other countries whose investments are years ahead of what is going on in this country, including Canada, Spain, Belgium and Germany. They are committed to low-carbon steel production.
As we know, steel contributed £3.8 billion to the UK economy in 2021. It is crucial to many downstream sectors, such as construction, automotive and our green energy revolution, all of which sit in BEIS. I take care of automotive, aviation, maritime and construction, so it is critical to the rest of my brief. The industry provides a critical foundation that underpins our manufacturing, energy and infrastructure sectors, with a proud history forged in our United Kingdom.
In 2021, the steel sector supported 39,000 well-paid jobs in steel production and a further 59,000 jobs across the UK economy. Although my hon. Friend the Member for Scunthorpe does not get political on steel, I thought she landed a good point in saying that jobs and production halved under Labour. However, we are trying to be collective in our support of the steel sector, so I will not dwell on that too much. We know that for many constituencies, steel is the lifeblood of the local economy and a real source of local pride. I pay particular tribute to the hard-working steel workers who have contributed much to our steel industry over the years.
However, as we have heard today, we have to recognise that there are global pressures. The sector is under stress everywhere. This is not just a UK issue; there are global challenges exacerbated by global overcapacity and the need to decarbonise. The hon. Member for Cardiff South and Penarth asked about the oversupply issue. Through the global forum on steel excess capacity, the G20 and other interested nations agreed important policy principles and recommendations to tackle the unfair subsidies that we believe are the cause of overcapacity, and we continue to work together to find solutions to this challenge.
We are disappointed that not all major steelmaking economies are taking part in these discussions, and I call on all players to come back to the table—in particular China, which represents more than half of all steelmaking capacity in the world. There are also great opportunities in how we can use steel as we transition to a zero-emission economy and help our other great industries to transition as well.
Challenges are particularly acute at the moment. Unfortunately, over the past couple of weeks we have learned of the potential redundancies being made at Liberty Steel, including in the constituency of the hon. Member for Newport East. Obviously, these are commercial decisions, and I am working incredibly hard with these businesses and the Department for Work and Pensions to ensure we are doing what we can to support every worker and give them the support they need. We spend most of our time working on that, to ensure they have opportunities to be trained up and get the support they need. There are a lot of challenges that the Government are facing, but it is not just us in the UK.
I want to cover some of the support that the Government have provided, which is substantial and has been in place for some time. More than £800 million has been made available to the steel sector alone since 2013. There has always been a discrepancy between the price of energy here and in Germany, which is quoted quite often, but £800 million is a substantial amount of support. We have created new, competitive funds, with more than £1.5 billion made available. The lead Member for this debate, the hon. Member for Newport East, reported that that funding covers not just steel, but a number of other industries, but I am keen to ensure that the steel sector gets the support it needs. I promised the hon. Lady that I would go through the funds so that she would be able to share that information back home in her constituency.
The hon. Lady mentioned the CCUS infrastructure fund. Each site is at a different stage when it comes to decarbonising, but that is £1 billion. There is funding of £240 million through the net zero hydrogen fund, which I know is important to many Members present; £55 million through the industrial fuel switching fund; £20 million through the Industrial Decarbonisation Research and Innovation Centre, which provides capital funding to projects that support fuel switching to hydrogen on industrial sites; £289 million through the industrial energy transformation fund to help businesses with high energy use, including steel; and £66 million as part of the industrial strategy challenge fund. Those budgets are in place to help the steel sector in the long term. They are not short-term sticking plasters, but substantial amounts of money.
There has been a huge level of engagement. The hon. Member for Sefton Central (Bill Esterson) said that it should be at Secretary of State level, but I have been meeting with the unions. I have kept every appointment that has been asked of me.