I remind hon. Members that there have been some changes to normal practice in order to support the new hybrid arrangements. Timings of debates have been amended to allow technical arrangements to be made for the next debate. There will be suspensions between debates.
I remind Members participating, physically and virtually, that they must arrive for the start of a debate in Westminster Hall and are expected to remain for the entire debate. I must also remind Members participating virtually that they are visible at all times, both to one another and to us in the Boothroyd Room. If Members attending virtually have any technical problems, they should email the Westminster Hall Clerks’ email address, which is westminsterhallclerks@parliament.uk. Members attending physically should clean their spaces before using them and before leaving the room. I remind Members that Mr Speaker has stated that masks should be worn in Westminster Hall. There is nobody sitting in the Public Gallery in order to speak.
That this House has considered the UK steel sector and its supply chains.
It is a pleasure to serve under your chairship, Sir Graham. Hon. Members taking part in the debate today will recognise that this is not the first time that we have sought assurances from the UK Government that they are sincerely committed to supporting the British steel industry. Indeed, by my calculations, since 2015 Labour MPs have secured 19 debates and urgent questions on steel, made 51 speeches on steel, asked 54 oral questions on steel, and intervened on or responded to Ministers 103 times on the future of our steel industry. A pessimist may ask, “What’s the point?”. After all that pressure, the British steel industry still faces a range of serious challenges, and the UK Government are continually failing to provide the necessary level of support to allow the UK steel sector to compete.
In spite of those powerful headwinds, I am optimistic about the future of our steel industry, because I believe that covid-19 has completely reset the way in which the British people think about the sort of country they want to live in. The public want a Britain that can stand on its own two feet and that is more resilient to external shocks. The pandemic has exposed the weaknesses and vulnerabilities that lie at the heart of our economy and our society. The pandemic has demonstrated beyond a shadow of a doubt that if we wish to address those weaknesses and vulnerabilities, we must commit to and invest in a renaissance of modern manufacturing in our country.
British manufacturing has been in decline, dropping from 30% of GDP in the 1970s to just 9% today. The UK’s shift towards a city-centric, service-based economy means that it is now the most geographically unequal country in northern Europe. We have the richest area in the whole of northern Europe—London—but also the five least prosperous areas, with west Wales and the valleys the poorest of all.
I should inform all participants that due to a technical problem, all those participating virtually did not catch the first three minutes of the debate. That has now been resolved, but I pass on the apologies of the staff who have been working to resolve the problem.
There are a lot of Back-Bench participants on the call list. If it is possible for them to keep to about five minutes, we should be able to get everybody in.
9:39 am
Holly Mumby-Croft (Scunthorpe) (Con)
It is a pleasure to serve under your chairmanship today, Sir Graham. I thank the hon. Member for Aberavon (Stephen Kinnock) for securing this important debate. As I am a fellow steel MP, I agree with him on many of the issues that he has raised this morning.
The steel sector has seen tough times and this Government have been proactive. In Scunthorpe, we put in hundreds of millions of pounds to keep our blast furnaces going. I myself come from a steel family, so I know that when times get tough, it is not only the steelworks that are threatened but the steelworkers— people like my granddad, who worked in Scunthorpe steelworks for 30 years—and the 20,000 supply chain jobs in my area, as well as the towns that grow up around the industry.
Steel is, indeed, a foundation industry that is crucial to national security. Our ability to manufacture and produce steel is critical in ensuring that we are self-reliant and insulated from global steel shortages. The Minister will recognise that there is competition between Governments in providing the best environment for a steel industry to thrive and there is much that we can do to provide a better competitive environment for UK steelmakers.
Rather than continuing to provide support in times of crisis, as this Government have undoubtedly done, we need to continue to look further and harder at long-term steel measures. Indeed, the glaring flaw in the preliminary recommendation by the Trade Remedies Investigations Directorate is that it did not make a sufficient industry-led assessment. Our steelworks produce many products across the categories assessed by TRID. These products are linked back to the production of crude steel and steelworks need a certain base level of production to be profitable. An increase in imports in an unprotected category could affect the viability of another steel product, and there is a real risk that the UK will be increasingly vulnerable to imports if steel safeguards are removed. I urge the Minister to work with her colleagues from the Department for International Trade to prevent that from happening.
We must also address the high cost of energy prices. Our steelworks currently pay almost twice as much for energy as French and German steelworks. On steel procurement, there has been progress and many in the industry have welcomed the overarching principles of the Government’s recent paper. The central tenets, especially on considering the overall social value of procurement and providing more flexibility for decision making, are absolutely right. The procurement of steel from the UK generates social value for our communities. Steel does indeed create well-paid jobs and has a part to play in levelling up areas such as Scunthorpe as manufacturing and logistics powerhouses.
It is always a pleasure to serve under your chairmanship, Sir Graham. I am very frustrated that we are here once again; I hope my speech will explain why. The British steel industry has huge potential, but the long-term failures of the Government to address the underlying issues continues to hold it back. Since I was first elected in 2012, steelworkers in my constituency have faced a seemingly endless cycle of crises with lingering uncertainty, not only for them but for all those throughout Rotherham, where the local economy and people’s livelihoods depend on the sector. That uncertainty has continued with Liberty’s announcement that it is selling its speciality steels division, which includes the narrow strip mill at Brinsworth in my constituency.
Throughout the recent difficulties at Liberty, the Government have promised much but, to date, delivered little in the way of practical support. That cannot continue as the sale progresses. Any sale must safeguard the long-term future of the plant and must hold Sanjeev Gupta true to his word that no plant will close on his watch. Liberty must run a transparent sales process and engage with all concerned parties, including the trade unions. The Government must carefully scrutinise any deal and ensure that it includes clear safeguards for the future of both the plant and the steel jobs. They are crucial assets to our economy and they cannot be lost as the result of a fire sale to secure finances for GFG’s other businesses.
While the sale of speciality steel is concerning, Liberty’s ongoing commitment to its Aldwarke plant in Rotherham is encouraging. The plant can lead the way in our drive to decarbonise our steel industry. Decarbonisation presents challenges but also offers huge opportunities to grow our economy and create new green jobs, but that would take sustained support from the Government and a viable long-term plan—something that, to date, has been lacking.
It is a pleasure to serve under your chairmanship, Sir Graham. I thank my hon. Friend the Member for Aberavon (Stephen Kinnock) for securing this important debate, and I draw attention to my entry in the Register of Members’ Financial Interests.
British steel was once the envy of the world. From Newport to north Lanarkshire, steel making supported hundreds of thousands of jobs and inspired a fierce and well-earned pride in all involved. In January 1980, the Thatcher Government provoked a strike at the British Steel Corporation—the first national strike in the industry for more than 50 years—to break the union and pave the way for privatisation and under-investment. We are paying the price for that today, as the future of the industry hangs in the balance. Unable to compete on the international stage, the economic output of British steel fell by a staggering 30% in 2016 alone, and last year the Government’s brazen refusal to step in and save the Orb steelworks in Newport led to the historic site closing after 122 years in operation.
Now, the crisis at Liberty Steel threatens not only the livelihoods of the steelworkers themselves but those of more than 3,000 workers in the wider supply chain. Some argue that the British steel industry is doomed to terminal decline—just another in a long line of industries sacrificed to deindustrialisation. I could not disagree more. If we made the right investment now, I believe we can not only secure work for generations to come but re-establish the UK as a world leader in sustainable steel production. Technological advances, such as direct reduced iron technology and hydrogen power, have the potential to transform the industry. It currently accounts for about a quarter of all UK industrial emissions, but it can be part of the green industrial revolution and once again become a force to be reckoned with.
None of that is possible without direct Government support. There have been many encouraging steps so far, such as the re-establishment of the UK Steel Council, the creation of the £250 million clean steel fund and the commitment to founding two industrial clusters by the mid-2020s. Very good, but I fear that we are failing to go far or fast enough in decarbonising the sector. Hydrogen-based steel making is already being piloted in at least 23 sites across Europe, so the UK risks being left far behind by our European neighbours. Whether it is Scunthorpe or Port Talbot, these are the very communities that the Government promised to level up, yet they will be the ones that pay the price.
I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this debate and on his excellent analysis of the challenges facing the steel industry. He, the hon. Member for Scunthorpe (Holly Mumby-Croft) and my hon. Friend the Member for Rotherham (Sarah Champion) referred to the problems of trade defence measures, and that is what I will concentrate my remarks on.
Last month, the Trade Remedies Investigations Directorate published a draft recommendation to withdraw half of all trade remedies on steel. If that happens, the consequences could be disastrous. During the Committee stage of the Trade Act 2021, I argued that there should be an independent body to make recommendations on trade remedies, which would also take into account domestic economic considerations, but the recent recommendations by TRID show that the regulations that were set out in its mandate, which now also govern the newly established Trade Remedies Authority, are simply not fit for purpose.
Steel manufacturing is a critical national asset. Steel produced in Britain is used to make ships for the Royal Navy and wind turbines to meet our climate obligations. The construction of a nuclear power station at Hinkley Point C is using Welsh steel, and 1.3 million tonnes of steel are required for the construction of High Speed 2. The sector directly employs more than 30,000 people, supports a further 41,100 jobs in high-value supply chains, makes a £2.8 billion direct contribution to UK GDP and supports a further £3.6 billion in its supply chains. Steel is a vital asset—we must protect it in the national interest. However, in making its draft recommendation, TRID failed to take into account the reality of the steel supply chain.
The full spectrum of measures is designed to protect the viability of steel as a whole, not just individual production lines. Removing safeguards would mean that the manufacture of steel sections, tubes, wire rods and plates in the UK becomes unviable. It seems almost certain that the European Union will retain its section 232 tariffs beyond 30 June, meaning that any global overproduction of steel will likely flood the UK, crush domestic supply and have potentially catastrophic consequences for the industry and communities here in Britain.
It is always a pleasure to see you in the Chair, Sir Graham. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this important debate.
Steel is a foundational sector across the UK and never more so than in Neath Port Talbot county borough. Upon these strong foundations, economies and supply chains are created. Port Talbot’s steelworks reaches all the surrounding communities. Thousands of Neath constituents have worked there, know someone who works there, or work in its supply chain—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 a 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 bounced back from every adversity so far—but the situation is about to get much worse. The recent Trade Remedies Investigations Directorate recommendations on the existing steel safeguards could be catastrophic for the UK steel sector. Only 10 out of 19 product categories are recommended to have safeguards extended, leaving sites in Llanelli, Cardiff, Gateshead, Sheffield and many more without the protection to limit sudden increases in imports. The lifting of safeguards would open up UK markets to trade diversion and have a negative impact on the remaining measures. The interconnected nature of UK steel means that a threat to one product category will have consequences for the others.
Steel imports increased by 25% between 2013 and 2017, before the original EU steel safeguards were introduced. The current circumstances of global overcapacity and import restrictions in other countries make it highly probable that steel imports will again escalate should safeguards be removed. It is probable that the EU and the US will continue to provide safeguards for their industries and place measures on UK steel imports. It is astounding that the UK Government would provide open access to our steel market. The market remains volatile and delicate during the continuing pandemic, which has seen steel demand drop by 16% during 2020. The steel sector needs stability to recover and to adapt to a post-covid world. Safeguards are crucial to provide stability. The steel sector will continue to face many challenges—decarbonisation, subsidy regulation post Brexit, public sector procurement, energy price disparity—but it is the removal of steel safeguards that poses the biggest existential challenge, given the interconnectivity across the sector.
Well done to my hon. Friend the Member for Aberavon (Stephen Kinnock) for securing this important debate. He is both the Member for Port Talbot and our chair of the all-party parliamentary group for steel and metal related industries. He gave an excellent analysis, setting out the issues yet again.
My hon. Friend mentioned that we have had 19 debates on steel in this House over recent years. I feel I have been there with him in many of those, making the same points over and over again. I do so because steel has always been at the very heart of the community that I represent, with many workers in both the steel industry in Newport East and down the road in Port Talbot, and in supply chains, making world-class automotive steel for BMW, Jaguar Land Rover and other projects at Tata Llanwern. We also have the Celsa site in the constituency of my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), which is one of the largest producers of rebar; and Liberty, which produces hot rolled coil for domestic and export markets for use in construction and is at the cutting edge of modern steel technology. On that note, I know that we all want the future of all Liberty Steel businesses secured, including Newport, and I know that hon. Members for steel constituencies will hold Liberty and the Government to account and make sure that we uphold that commitment to the workforce and our industry going forward.
On behalf of that industry, those businesses, those workers and the unions in my constituency, I say again what steel MPs have been saying here for many years: steel should be a cornerstone of a comprehensive, forward-looking industrial strategy in this country. It has an absolutely pivotal role to play in our recovery from the pandemic. The economic value of the steel sector cannot be overstated. The industry makes a £2.8 billion direct contribution to GDP and supports a further £3.6 billion through its supply chains, while the average salary is around 36% higher than the regional average in steel heartlands such as south Wales and Yorkshire. If the Government are really serious about levelling up across the UK, they should look to steel as a foundation to build on.
10:09 am
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Today, our country stands at a fork in the road, and the choice is clear. Are we going to continue to allow our manufacturing sector to wither away, constantly eroded by the sort of policies that have come to define the last decade and which are advocated in the book of the Secretary of State for Business, Energy and Industrial Strategy, “Britannia Unchained”: “Let the market rip. Let the City of London call the shots. Let globalisation and deindustrialisation ride roughshod over our communities.”? Or are we going to truly understand the pandemic as a clear and unambiguous warning that we cannot go back to business as usual and that we must strive for real enduring change; that we must stand on our own two feet by reducing our dangerous over-reliance on imports from China; that it is time to recognise that the collapse of British manufacturing is the primary cause of the grotesque inequality that exists between the wealthiest and the poorest regions of our country; and that a modern manufacturing renaissance is our only route towards a fair and just transition to a cleaner, greener future?
Our manufacturing base can be rebuilt only if it is based on a strong and healthy steel industry, because steel is a vital foundational industry that is critical for our security, prosperity and green resilience. Our economic and national security are underpinned by steel. Every military vehicle, major infrastructure project and power station requires steel. In a world where strategic competition between democracies and dictatorships is intensifying on an almost daily basis, it is crucial that as much of that steel as possible is produced here in the UK.
Our prosperity as a nation is also dependent on steel as a vital foundational industry that feeds into our entire manufacturing sector. Steel jobs are good jobs that pay an average annual salary of £36,000, which is 36% higher than the Welsh average, and the Port Talbot steelworks in my Aberavon constituency provides 4,000 such jobs, alongside thousands more through the supply chains.
Home-grown steel is also the only route to tackling climate change. Steel will play a critical role in greening our economy by building the electric cars of the future and providing vital components for solar, wind and tidal power. Moreover, British production processes have half the carbon footprint of China’s far less decarbonised steel industry, and shipping steel from the other side of the world is obviously more carbon intensive.
Whether we look at the British steel industry through the prism of our national security, regional prosperity or planetary sustainability, we draw the same conclusion: there can be no sustainable post-pandemic economic recovery without a strong and healthy steel industry. The arguments are compelling, irrefutable and over-whelming, so it is difficult to understand why the UK Government have been so slow to act, but the pandemic has put rocket boosters on the need for a modern manufacturing renaissance underpinned by the rebirth of our steel industry.
The Government must now take the following steps. First, they must reject the recommendation of the Trade Remedies Investigations Directorate regarding steel safeguards, and must ensure that all 19 of the safeguards remain in place. Those trade defence measures were put in place to guard against import surges caused by President Trump’s section 232 tariffs, and it is essential that they are retained until such time as the section 232 tariffs are dropped by the Biden Administration. The TRID’s recommendations are tantamount to dismantling the flood defences just as the tidal wave is about to hit. Will the Minister assure us that she has made the position of the steel industry, steel unions and steel MPs clear to her colleagues in the Department for International Trade?
Secondly, the Government must as a matter of urgency address the issue of our industrial energy crisis. British steelmakers pay 86% more than their German competitors and 62% more than the French. Over the past five years, that disparity has cost the UK steel industry an additional £254 million. Those additional costs represent funds that should and would have been directed towards critical capital investment, including decarbonisation projects. Will the Minister please assure us today that her Department is truly committed to tackling the root causes of the UK’s astronomical industrial energy prices, and can she set out her urgent action plan for doing so?
Thirdly, we need a patriotic procurement policy. It is absurd and inexcusable that the Ministry of Defence is buying Type 26 frigates for the Royal Navy that are built with Swedish steel. We need procurement that gives the right weighting to local value. Let us look at big opportunities such as High Speed 2, with 2 million tonnes of steel. How much of that steel is going to be British? Can the Minister assure us today that every Government Department and HS2 will be signed up to the steel charter by the end of this calendar year?
Fourthly, we need a Government who are truly committed to rebuilding our manufacturing base, and who believe in partnering with industry to do so. Some say that steel is a sunset industry, but nothing could be further from the truth—it is at the cutting edge of innovation. Indeed, the vast majority of the alloys that are used in steel these days did not even exist 10 years ago. It is absurd to have a Government who have utterly failed to support the Orb plant in Newport—I look to my hon. Friend the Member for Newport East (Jessica Morden)—which could play a major role in electric vehicles.
It seems that the left hand does not know what the right hand is doing, which is precisely why co-ordinating forums such as the Industrial Strategy Council are so important. Can the Minister please explain why the Industrial Strategy Council has been closed down by the Business Secretary, and can she please tell us whether she thinks that decision will be a help or hindrance to the future of the British steel industry?
British steelworkers are a strong, proud community of men and women who make the best steel that money can buy. They are certainly not looking for anybody’s charity, special treatment or favours. They are simply seeking the opportunity to compete without having one hand tied behind their back. They are simply asking for a level playing field. Since 2010, successive Conservative Governments have let them down by leaving the flood gates open to heavily subsidised imports from China; by failing to close the energy price gap; by declining to develop a patriotic procurement policy; and by failing to grasp the vital role that a home-grown steel industry must play in driving the green industrial revolution forward.
Receiving a fair day’s pay for a fair day’s work is as important to steelworkers as it is to every other working person across the length and breadth of our country. However, working people are motivated by far more than money. Above all, they are driven by the sense of pride and dignity that their work gives them, and steelworkers are certainly not an exception to that rule.
Steelworkers do long shifts in challenging conditions because they want to make a contribution. They are fiercely proud of the fact that steel is the basis of the houses we live in, the offices we work in and the cars we drive. They are steelworkers because they want to do their bit for their country, for their communities, and for their families. They are steelworkers because they want to be part of something bigger, but they cannot do this alone.
They need a Government who will back them to the hilt; a Government who will put policies in place that attract investment, rather than drive it away; a Government who truly believe that a country should be able to stand on its own two feet. Our steelworkers need a Government who are genuinely committed to reversing the decline of manufacturing in this country. They need a Government who are truly invested in swinging the pendulum from cities to towns, and from London and the south-east to the rest of the country. Britain needs its steel, and our steelworkers need a Government who are on their side.
However, challenges remain and I hope that the Minister will consider them. Steel procurement often involves an internal supply chain process. A contracting authority for an airport, for example, may appoint different subcontractors for different parts of the project. Each subcontractor may then appoint a sub-subcontractor on smaller bits and the sub-subcontractor may in turn, given their much smaller brief, procure the steel they need for their section of the development from an overseas producer without a tender—for example, one they have an existing relationship with.
That means that the same steelmaker may have to pursue, through multiple channels, contracts that are ultimately for the same project. That also makes reporting of the origins of steel difficult, which flies in the face of another fantastic tenet of the Government’s procurement proposals, which is transparency. Most importantly, in our national projects, this situation could cost the taxpayer more, due to the fragmented supply chain, the administration, the bureaucracy, the increase in supply lead times and the margin that each level of the steel supply chain commands.
We will see whether the proposals go deep enough and I hope that the Minister will say how she will work with her colleagues in the Cabinet Office to ensure that sub-sub-subcontractors uphold the high standards that the Government are looking to set for contracting authorities.
I believe that the British people want to see the Government use British-made steel in large-scale Government projects such as HS2. They want to see every bit of steel that we have the capability to produce being produced here in the UK. Indeed, I hope the Minister will consider what she can do with the traditional supply chain to explore whether contracting authorities can make steel procurement a separate tender, so that our steelworks can bid for large parts of the steel required in a steel-intensive national project.
That not only fulfils the core tenets of the Government’s procurement proposals but makes commercial sense. Our steelworks are well equipped to deal with the different products needed and have dedicated supply teams to provide technical management and supply chain steel expertise. I hope that the Minister can explore this approach with her colleagues in the Cabinet Office.
I come from Scunthorpe. I was brought up so close to the steelworks that we could hear them making steel when we lay in bed at night. This matter is personal to me and to many of my constituents. The hon. Member for Aberavon is absolutely right—none of us could live a single day of our lives without steel. This Government have a proud record in supporting the steel industry in places such as Scunthorpe. I look forward to hearing from the Minister and working with her on behalf of our world-class steelmakers.
I urge the Government to recognise this opportunity to work with the industry to create the greener future we all want to see. None of that can happen while the Government continue to shy from confronting the sector’s underlying issues—issues that are well understood, but remain unaddressed. The Government had long argued that EU rules prevented state aid for the steel sector. Those rules no longer apply, and it is high time that the Government developed their own system to regulate subsidies and support investment.
The public sector is British Steel’s largest single customer. Tendering processes must consider the impact on domestic jobs, as already seen in France and Germany. I see no reason why this Government’s procurement process cannot favour UK-produced steel, not least because it is the best in the world.
With British Steel paying an average of 86% more for electricity than its competitors in Germany, action on damaging high energy costs is essential if the industry is to hope to compete on an even footing. We must also defend our industry from being overwhelmed by cheap foreign imports. It is deeply disappointing that the Trade Remedies Investigations Directorate is arguing to slash safeguards on nine out of 19 product categories, which runs the risk of cutting the industry off at the knees. I urge the Secretary of State to reject its recommendations.
The steel industry can have a bright future if the Government engage with these issues and work with the industry to provide the support that it needs to grow and thrive. However belatedly, I really hope the Minister will listen and that the Government will act to protect our steel industry.
The British steel industry faces a stark choice: decarbonise or wither away. That is why I call on the Government to heed the calls of the industry leaders and environmental groups and begin trials of hydrogen steel without delay, with a view to fully decarbonising the sector by 2035, as recommended by the Climate Change Committee. That is an enormous challenge, but without that scale of ambition, we cannot possibly hope to compete with our international competitors.
This is not just about decarbonising steel. If we are going to revive this vital industry, the Government also need to take advantage of our departure from the EU’s regulatory framework and ensure that the procurement policy actively benefits British steelmakers. Over the next 10 years, an estimated 7.6 million tonnes of steel will be needed for public infrastructure projects. The Prime Minister must honour his promise and ensure that British steelworkers are at the very front of the queue.
That existential threat to the industry is a strong argument for maintaining all existing trade defence measures for steel, but TRID, and now the TRA, is forced to prioritise the unimpeded functioning of a global market because that is what it says in the regulations which direct their decision making. The regulations do not envisage the maintenance of the safeguards that domestic producers should be able to expect from their Government—these take second place for our trade remedies body. Hence the recommendation by them for the removal of some safeguards. The economic tests which TRID and the TRA must apply, according to their own regulations, do not provide the Secretary of State for International Trade with the ability to take into account wider factors of strategic national interest when deciding whether or not to reject a recommendation from them. The Business Secretary said he was
“committed to a strategic presence of steel in the UK.”—[Official Report, 25 May 2021; Vol. 696, c. 233.]
The International Trade Secretary said that she will do
“whatever it takes to protect our steel industry.”
The two Secretaries of State must keep their promises and allow the safeguards to remain beyond 30 June while the weaknesses and trade remedies regulations are fixed—they promised to do this. Members on all sides will work with the Government to support jobs and communities. The existential threat of lifting half of the safeguards means there may be just 21 days to save British steel.
This is the first major trading test for the UK in post-Brexit times, and the UK Government must establish a fair trading environment for the UK steel industry and our communities. In contrast, the Welsh Labour Government have been standing up for steel, making an £8 million commitment to help secure a £30 million power plant at Port Talbot; offering £17 million of support for skills development; investing in energy efficiency; planning to reduce carbon emission; and offering research and development funding for new product development. At critical times, the Welsh Labour Government have provided direct financial support to sites right across Wales, protecting our jobs and communities.
In his response to me at Business, Energy and Industrial Strategy questions last month, the Secretary of State said that the Government were
“committed to a strategic presence of steel in the UK.”—[Official Report, 25 May 2021; Vol. 696, c. 233.]
Although I welcome that assurance, it is now time that the Government backed it up with meaningful action to support the industry.
As others have said, we need a change of direction on procurement. The Community union, plus Unite, GMB and others—I pay tribute to them for all the work they do on behalf of their members—have campaigned for decades for contracting authorities to effectively deploy social and environmental clauses in tendering processes in order to support domestic jobs in industry, just as they do in France and Germany, but little has changed in practical terms since 2016, when there were a few measures, and home-grown steel companies are continuing to miss out on important contracts, despite rhetoric from the Prime Minister about being at the front of the queue. The most recent Government data on how much steel is sourced in the UK includes only 160,000 tonnes, which is somewhat less than the estimated 800,000 to 900,000 tonnes of steel that their forward-looking pipeline indicates is used by central Government each year. As my hon. Friend the Member for Aberavon said, we need a patriotic procurement policy.
The case for sourcing UK steel is overwhelming. Every 1,000 tonnes of UK steel used in a public project delivers 4.5 jobs in the steel industry, and 10 jobs when the supply chain is included. As others have said, in addition to the economic boost that that provides, there are real environmental benefits from not importing steel from the EU or China respectively.
Energy prices are a prevalent problem. Ministers may have grown tired of steel MPs banging the drum about this over the years, but it remains critical for our industry. The oft-quoted evidence is stark: UK steel producers pay 86% more for electricity than their competitors in Germany and 62% more than is paid in France. That is a £54-million-a-year cost burden to the UK steel sector and a huge competitive disadvantage. The targeted charging review led by Ofgem is set to make matters worse, as the review’s proposals would leave our producers paying 156% more in energy costs. Obviously, that would be devastating. I urge Ministers to do what they can on that, too.
As others have said, we need Ministers to work urgently to prevent the Trade Remedies Investigations Directorate from slashing our steel safeguards in half. The case was excellently argued by my hon. Friend the Member for Sefton Central (Bill Esterson). The safeguards are vital to providing a stable environment for the sector and protecting against unprecedented import surges, especially at a time when we are seeing significant global overcapacity in steel.
I also specifically ask the Minister to look again at the issue of bonded warehouses, which effectively undercut UK producers by waiving duty on cheap foreign imports. My hon. Friend the Member for Blaenau Gwent (Nick Smith) has led on this issue, and both of us have written to Ministers to convey our concerns and the concerns of unions and management in Newport and in Tredegar at Liberty. Will the Minister here today look into the matter?
As my hon. Friend has said, we saw the cost of doing nothing at the Orb works: we lost the only plant making electrical steels in the UK at a time when we are going to need electrical steels. The Government should have stepped in then. Orb steelworkers knew what was at stake, and I was proud to stand alongside them and their unions in the fight to save steel jobs.
As a country, we just cannot go on making huge strategic mistakes when it comes to our steel and manufacturing sectors. We need to utilise our steel assets and invest in our greatest strength, which is the indomitable, passionate and highly skilled steelworkers we have. We need the industry to have a level playing field. We need to have the right backing to drive this forward. We ask again for the Government to step up, to address the issues raised again today and to come up with a viable long-term plan to protect our industry.