PARLIAMENTARY DEBATE
British Steel - 24 July 2019 (Commons/Commons Chamber)
Debate Detail
Contributions from Anna Turley, are highlighted with a yellow border.
13:05:36
Anna Turley
Redcar
(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the sale of British Steel.
13:07:07
Greg Clark
The Secretary of State for Business, Energy and Industrial Strategy
As hon. Members will recall, I made a statement to the House a few hours after British Steel entered insolvency on 22 May. This was, and still is, an uncertain time for the British Steel workforce, their families and their communities, for the customers and suppliers of the business and for everyone who believes, as I do, in the importance of excellent steelmaking and manufacturing in the UK.
In my statement, I said that, although the independent official receiver is solely responsible for the operation and sale of the British Steel business, I would, both personally and on behalf of the Government, do everything that I possibly could within my powers to help secure a good future for the whole of British Steel’s operations.
Following a visit to the Scunthorpe plant the following day and to Skinningrove and Lackenby on Teesside the day after with local MPs, including the hon. Member for Redcar (Anna Turley), we formed a British Steel support group to work together immediately and actively to pursue that aim. I chaired the group with the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Pendle (Andrew Stephenson), which has included British Steel management; trade unions Community, Unite and the GMB; the Mayor of the Tees Valley and the leader of North Lincolnshire Council and their officers; the chairs of the Humber, Greater Lincolnshire and Tees Valley local enterprise partnerships; UK Steel; Make UK, the manufacturers’ organisation, on behalf of suppliers and customers; the Federation of Small Businesses; Government officials and other local MPs, including the hon. Lady, my hon. Friends the Members for Middlesbrough South and East Cleveland (Mr Clarke) and for Brigg and Goole (Andrew Percy), and the hon. Member for Scunthorpe (Nic Dakin). The support group has now met eight times, usually in Doncaster, and sub-groups on the supply chain have met separately, as have local partners.
I wish to pay tribute to the hard work, tenacity and dedication of this group and the extraordinary commitment of the workforce who, during this time, have worked magnificently, not only to continue but to increase steel production.
Often in insolvencies, customer orders dry up, suppliers withdraw their services and the workforce drifts away, precipitating a rapid failure. In this instance, the opposite has been the case. The confidence that the support group has built, coupled with a Government indemnity to the official receiver, has allowed trading to continue, orders to be won and production to increase. This is without precedent in my experience.
Although all decisions are for the official receiver, I have been active, as Members know, in visiting prospective buyers in many parts of the world to make it clear that the UK Government will, within our legal powers, work with a good long-term owner of these important assets to see how we can help them to realise their vision for the company.
I am pleased to say that the official receiver has said that he is encouraged by the interest in purchasing British Steel and his special managers, EY, are currently in further discussions with potential buyers. The official receiver has made it clear that, given the complex nature of the operations, any potential sale will take time to deliver.
I said in May that I was determined to see the proud record of steelmaking excellence continue. The world needs steel, and British Steel is among the best in the world. To secure that will require, in my experience, the continued active participation of everyone that I mentioned earlier without interruption during the critical weeks ahead. In particular, whoever stands at this Dispatch Box will need to devote themselves unstintingly to achieve a great outcome for everyone concerned with British Steel, which I believe, although not certain, is certainly within grasp, and that is the flourishing of British Steel’s operations for many years to come.
In my statement, I said that, although the independent official receiver is solely responsible for the operation and sale of the British Steel business, I would, both personally and on behalf of the Government, do everything that I possibly could within my powers to help secure a good future for the whole of British Steel’s operations.
Following a visit to the Scunthorpe plant the following day and to Skinningrove and Lackenby on Teesside the day after with local MPs, including the hon. Member for Redcar (Anna Turley), we formed a British Steel support group to work together immediately and actively to pursue that aim. I chaired the group with the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Pendle (Andrew Stephenson), which has included British Steel management; trade unions Community, Unite and the GMB; the Mayor of the Tees Valley and the leader of North Lincolnshire Council and their officers; the chairs of the Humber, Greater Lincolnshire and Tees Valley local enterprise partnerships; UK Steel; Make UK, the manufacturers’ organisation, on behalf of suppliers and customers; the Federation of Small Businesses; Government officials and other local MPs, including the hon. Lady, my hon. Friends the Members for Middlesbrough South and East Cleveland (Mr Clarke) and for Brigg and Goole (Andrew Percy), and the hon. Member for Scunthorpe (Nic Dakin). The support group has now met eight times, usually in Doncaster, and sub-groups on the supply chain have met separately, as have local partners.
I wish to pay tribute to the hard work, tenacity and dedication of this group and the extraordinary commitment of the workforce who, during this time, have worked magnificently, not only to continue but to increase steel production.
Often in insolvencies, customer orders dry up, suppliers withdraw their services and the workforce drifts away, precipitating a rapid failure. In this instance, the opposite has been the case. The confidence that the support group has built, coupled with a Government indemnity to the official receiver, has allowed trading to continue, orders to be won and production to increase. This is without precedent in my experience.
Although all decisions are for the official receiver, I have been active, as Members know, in visiting prospective buyers in many parts of the world to make it clear that the UK Government will, within our legal powers, work with a good long-term owner of these important assets to see how we can help them to realise their vision for the company.
I am pleased to say that the official receiver has said that he is encouraged by the interest in purchasing British Steel and his special managers, EY, are currently in further discussions with potential buyers. The official receiver has made it clear that, given the complex nature of the operations, any potential sale will take time to deliver.
I said in May that I was determined to see the proud record of steelmaking excellence continue. The world needs steel, and British Steel is among the best in the world. To secure that will require, in my experience, the continued active participation of everyone that I mentioned earlier without interruption during the critical weeks ahead. In particular, whoever stands at this Dispatch Box will need to devote themselves unstintingly to achieve a great outcome for everyone concerned with British Steel, which I believe, although not certain, is certainly within grasp, and that is the flourishing of British Steel’s operations for many years to come.
Anna Turley
Let me begin by putting on record my thanks to the Secretary of State—not only for his response just now, but for the way in which he has responded to this crisis. We find ourselves in a fundamentally different position from the situation in 2015, where, either by design or flat-footedness, the Government failed to respond, with devastating consequences. This is a completely different scenario, and I am grateful to the Secretary of State for stepping in and helping to secure the asset, enabling the business to continue and ensuring that the workforce were paid. Through the indemnity that the Government have given to the official receiver, the Secretary of State has given us a very good chance of ensuring the future for British Steel in this country. I also thank him for his efforts in going around the world to help secure a buyer.
Of course, the situation remain precarious. In the past few weeks, we have seen the new Prime Minister running around the country waving kippers in the air; by contrast, 5,000 dedicated, highly-skilled workers in British Steel have been putting their shoulders to the wheel in Scunthorpe, Skinningrove and Lackenby, despite their livelihoods being in the balance. They have been producing at record levels and working with every effort they have to ensure that the business continues to produce the best steel in the world and to flourish. I pay tribute to all those working within British Steel. They deserve a Government who will be straining every single sinew to ensure that the business survives.
I pay tribute to the trade unions, including Community and Unite; every worker in British Steel; everybody in the customer base who has continued to ensure that requests for steel have come through, including some who have even stepped up their demands; everyone in the supply chain who has continued to work so hard to supply the business; and colleagues in the Doncaster round- table. I again pay tribute to the Secretary of State for the inclusive and positive way in which he has responded. However, I do have a number of questions for the Secretary of State—for whoever will be at the Dispatch Box in the coming days, weeks and months ahead.
First, does the incoming Secretary of State understand the implications of failure? We know what 5,000 job losses could be like in areas such as Scunthorpe, Redcar and Skinningrove where there is no alternative employment, and we know the cost of cleaning up the site: £1 billion. Does the future Secretary of State understand the loss of a major industry in Britain that any self-respecting major economy would value and recognise to be essential? Will they recognise the role of steel as a foundation industry for our defence, automotive and construction sectors and what reliance on overseas production could mean for our economy, our independence and our self-reliance?
Secondly, will the future Secretary of State endeavour to ensure that the official receiver continues to receive the indemnity for as long as it takes to find a buyer? Thirdly, will they endeavour to give wholehearted Government support to the bids that primarily keep the business together as one industry across Skinningrove, Lackenby and Scunthorpe? Will they pledge to prevent cherry-picking, to keep asset strippers at bay so that we do not suffer the same issues that we have experienced before and to ensure that the terms and conditions of the workforce are maintained? Will they ensure that any company that the Government support will invest in the assets and ensure that they are modernised for the future of our industry? Will they invest in research and development and be committed to the long-term interests of steelmaking in this country?
Finally, I hope that whoever will be at the Dispatch Box in the weeks ahead will recognise that they have the jobs and livelihoods of thousands of men and women in their hands, as well as the guardianship of a vital, modern, innovative and potentially world-leading British industry.
Of course, the situation remain precarious. In the past few weeks, we have seen the new Prime Minister running around the country waving kippers in the air; by contrast, 5,000 dedicated, highly-skilled workers in British Steel have been putting their shoulders to the wheel in Scunthorpe, Skinningrove and Lackenby, despite their livelihoods being in the balance. They have been producing at record levels and working with every effort they have to ensure that the business continues to produce the best steel in the world and to flourish. I pay tribute to all those working within British Steel. They deserve a Government who will be straining every single sinew to ensure that the business survives.
I pay tribute to the trade unions, including Community and Unite; every worker in British Steel; everybody in the customer base who has continued to ensure that requests for steel have come through, including some who have even stepped up their demands; everyone in the supply chain who has continued to work so hard to supply the business; and colleagues in the Doncaster round- table. I again pay tribute to the Secretary of State for the inclusive and positive way in which he has responded. However, I do have a number of questions for the Secretary of State—for whoever will be at the Dispatch Box in the coming days, weeks and months ahead.
First, does the incoming Secretary of State understand the implications of failure? We know what 5,000 job losses could be like in areas such as Scunthorpe, Redcar and Skinningrove where there is no alternative employment, and we know the cost of cleaning up the site: £1 billion. Does the future Secretary of State understand the loss of a major industry in Britain that any self-respecting major economy would value and recognise to be essential? Will they recognise the role of steel as a foundation industry for our defence, automotive and construction sectors and what reliance on overseas production could mean for our economy, our independence and our self-reliance?
Secondly, will the future Secretary of State endeavour to ensure that the official receiver continues to receive the indemnity for as long as it takes to find a buyer? Thirdly, will they endeavour to give wholehearted Government support to the bids that primarily keep the business together as one industry across Skinningrove, Lackenby and Scunthorpe? Will they pledge to prevent cherry-picking, to keep asset strippers at bay so that we do not suffer the same issues that we have experienced before and to ensure that the terms and conditions of the workforce are maintained? Will they ensure that any company that the Government support will invest in the assets and ensure that they are modernised for the future of our industry? Will they invest in research and development and be committed to the long-term interests of steelmaking in this country?
Finally, I hope that whoever will be at the Dispatch Box in the weeks ahead will recognise that they have the jobs and livelihoods of thousands of men and women in their hands, as well as the guardianship of a vital, modern, innovative and potentially world-leading British industry.
13:15:19
Greg Clark
I am grateful to the hon. Lady for asking the question that has given us the chance to talk about these issues. She has been dedicated and devoted to her constituents, as have other Members—starting the week with me in Doncaster with the colleagues I described to ensure that we can work together and join together to ensure that there are no gaps between any of the interested parties. That has had an appreciable effect, as has been noted by many prospective buyers. Certainly, many customers and suppliers have also observed the resolution and the unanimity of resolution behind this.
Many of the hon. Lady’s questions were addressed to whoever might be the Secretary of State under the new Prime Minister, so it would be presumptuous of me to answer on his or her behalf, but she has placed a clear set of requirements on the record and I endorse everything she said. Not only would the consequences of the loss of historical assets—hugely important in all the communities she mentions—be unconscionable; there would also be the loss of a substantial opportunity.
The hon. Lady, like me, believes that there is a strong strategic future for the British steel industry. As I said in my previous answer, the world is going to need steel. Through investing in infrastructure, this country has opportunities to make greater use of UK steel. We export much in the way of our scrap steel to other countries. That could be made better use of, both environmentally and in terms of industrial opportunities. If we invest—as we intend to and are doing through the industrial strategy—in the technologies that will make steelmaking cleaner, more efficient and suitable for new uses, there is every reason to think that the UK steel industry, including British Steel, can be a beacon showing the rest of the world how a modern manufacturing industry can flourish.
Many of the hon. Lady’s questions were addressed to whoever might be the Secretary of State under the new Prime Minister, so it would be presumptuous of me to answer on his or her behalf, but she has placed a clear set of requirements on the record and I endorse everything she said. Not only would the consequences of the loss of historical assets—hugely important in all the communities she mentions—be unconscionable; there would also be the loss of a substantial opportunity.
The hon. Lady, like me, believes that there is a strong strategic future for the British steel industry. As I said in my previous answer, the world is going to need steel. Through investing in infrastructure, this country has opportunities to make greater use of UK steel. We export much in the way of our scrap steel to other countries. That could be made better use of, both environmentally and in terms of industrial opportunities. If we invest—as we intend to and are doing through the industrial strategy—in the technologies that will make steelmaking cleaner, more efficient and suitable for new uses, there is every reason to think that the UK steel industry, including British Steel, can be a beacon showing the rest of the world how a modern manufacturing industry can flourish.
13:15:29
Mr Simon Clarke
Middlesbrough South and East Cleveland
May I associate myself with the priorities outlined by my constituency neighbour, the hon. Member for Redcar (Anna Turley)? This is an opportunity to say a big thank you on behalf of the people of Teesside for all the dedication that the Secretary of State—a son of Teesside—has shown to our steel industry. It has not gone unnoticed locally how much he has gone over and above what might be called the ordinary line of duty to secure a positive outcome to this sale, so I pass on a sincere and lasting thank you.
It would be helpful to get on record what the Secretary of State has been doing to leave no stone unturned in these negotiations. In particular, will he talk about the in-principle willingness potentially to invest alongside a future purchaser?
It would be helpful to get on record what the Secretary of State has been doing to leave no stone unturned in these negotiations. In particular, will he talk about the in-principle willingness potentially to invest alongside a future purchaser?
13:17:50
Greg Clark
I am grateful for my hon. Friend’s generous words. He has been assiduous not just in being a member of the support group, but by working in Skinningrove with the customers of British Steel to convey the assurances that are necessary. Buyers will have questions about this extensive and complex set of assets, so it is important—and will continue to be important, especially during the weeks ahead in August—that everyone is available and active in providing the answers to those questions.
Through the industrial strategy, the Government have established programmes to support improvement in energy efficiency, which is very important; to decarbonise industrial clusters, of which steelmaking is a prime example; and to invest in research and development. Through the industrial strategy, we have the biggest increase in R&D in the history of this country. I am making these points to prospective purchasers so that they can see that the environment is a positive one.
It would be wrong for me to comment on the individual bids, as that is legally and strictly a matter for the official receiver, but I have made myself available in this country and overseas to answer questions. I think that I have had more than 25 meetings with bidders, and it has been encouraging—to use the words of the official receiver—that serious bids have been made, but the work must continue to land them and to secure the future.
Through the industrial strategy, the Government have established programmes to support improvement in energy efficiency, which is very important; to decarbonise industrial clusters, of which steelmaking is a prime example; and to invest in research and development. Through the industrial strategy, we have the biggest increase in R&D in the history of this country. I am making these points to prospective purchasers so that they can see that the environment is a positive one.
It would be wrong for me to comment on the individual bids, as that is legally and strictly a matter for the official receiver, but I have made myself available in this country and overseas to answer questions. I think that I have had more than 25 meetings with bidders, and it has been encouraging—to use the words of the official receiver—that serious bids have been made, but the work must continue to land them and to secure the future.
13:18:23
Rebecca Long Bailey
Salford and Eccles
I do hope that this is not my last exchange with the Secretary of State, but just in case it is, I want to stress my thanks for the amazing Mini Cooper toy that he presented me with last week and to say that he should not worry because there will always be a parking space in my heart for him. We might differ in our approach to many of the structural flaws that our economy faces, but we actually have more in common on most issues than many people would realise, not least on industrial strategy. I also thank my hon. Friend the Member for Redcar (Anna Turley) for securing this important update on British Steel.
The Secretary of State shares my opinion that British Steel must be kept as one entity, not splintered off to different buyers who do not have the long-term success of the company at heart. However, there have been reports this week that the Chinese Jingye Group, which was interested in the company as a whole, has pulled out. It was also reported that the deadline for bids has been moved a number of times. Indeed, an email sent from the official receiver is reported to have stated that no deadline has been set to conclude a sale process. Can the Secretary of State confirm how many prospective buyers remain, how many are interested in acquiring the entire the company and what deadlines for the sale have been set? Will he also confirm, as my hon. Friend mentioned earlier, that he will only give his support to bids that support the long-term interests of the company, the workforce, the local community and the steel industry as a whole?
The Secretary of State must recognise that, as Labour has repeatedly stated, action must be taken on electricity prices, business rates, driving investment and, of course, securing a good Brexit deal, because no deal could mean no steel. Will he therefore assure the House that he will be taking steps to ensure that the new Prime Minister urgently takes action on these issues and understands the real importance of the steel industry?
The Secretary of State shares my opinion that British Steel must be kept as one entity, not splintered off to different buyers who do not have the long-term success of the company at heart. However, there have been reports this week that the Chinese Jingye Group, which was interested in the company as a whole, has pulled out. It was also reported that the deadline for bids has been moved a number of times. Indeed, an email sent from the official receiver is reported to have stated that no deadline has been set to conclude a sale process. Can the Secretary of State confirm how many prospective buyers remain, how many are interested in acquiring the entire the company and what deadlines for the sale have been set? Will he also confirm, as my hon. Friend mentioned earlier, that he will only give his support to bids that support the long-term interests of the company, the workforce, the local community and the steel industry as a whole?
The Secretary of State must recognise that, as Labour has repeatedly stated, action must be taken on electricity prices, business rates, driving investment and, of course, securing a good Brexit deal, because no deal could mean no steel. Will he therefore assure the House that he will be taking steps to ensure that the new Prime Minister urgently takes action on these issues and understands the real importance of the steel industry?
13:19:38
Greg Clark
I am very grateful to the hon. Lady for the generosity of her remarks. I have enjoyed my exchanges and meetings with her. I hope the parking space in her heart has a charging point for the electric Mini—that would be very important.
The hon. Lady invites me to comment on the bids and some of the press speculation as to who is bidding and who is not. First, this is a matter for the official receiver, and secondly, I would not want to prejudice any of the bids by commenting. The discussions, in many cases, take place under confidential terms, and it would be wrong to do anything that might disadvantage that. There is often, in situations like this, speculation in the press, and much of it is misplaced. What I can say—the official receiver has said this publicly—is that several bids have been made and he is looking for bids that consider the whole of the operation. I welcome that, as the hon. Lady does.
On long-term commitments, we do have a long-term commitment to manufacturing, and to steel in particular. I mentioned some of the funds that are available in the industrial strategy. Of course, because they would accompany substantial investments, which I hope will be in place, they require a long-term commitment from any prospective buyer.
The hon. Lady is right to raise the question of energy prices and electricity prices. This is not a new phenomenon, and it is not unique to any particular Government. In fact, the biggest increase in industrial electricity prices took place under the previous Government. In the past five years, we have contributed nearly £300 million to energy-intensive industries as a rebate towards those costs. Through the industrial energy efficiency fund that is available in the industrial strategy, we want to reduce further the costs of energy. It is very important that we should do that.
The hon. Lady asks questions about the incoming Prime Minister. I spoke to both candidates during the leadership contest to impress on them what she and I agree is the crucial role of this industry. I know that she, the Under-Secretary—my hon. Friend the Member for Pendle (Andrew Stephenson)—and other hon. Members have communicated not just with the current Prime Minister but with her potential successors to reinforce the resolution across all parts of the House that this is at the top of the new Prime Minister’s agenda.
The hon. Lady invites me to comment on the bids and some of the press speculation as to who is bidding and who is not. First, this is a matter for the official receiver, and secondly, I would not want to prejudice any of the bids by commenting. The discussions, in many cases, take place under confidential terms, and it would be wrong to do anything that might disadvantage that. There is often, in situations like this, speculation in the press, and much of it is misplaced. What I can say—the official receiver has said this publicly—is that several bids have been made and he is looking for bids that consider the whole of the operation. I welcome that, as the hon. Lady does.
On long-term commitments, we do have a long-term commitment to manufacturing, and to steel in particular. I mentioned some of the funds that are available in the industrial strategy. Of course, because they would accompany substantial investments, which I hope will be in place, they require a long-term commitment from any prospective buyer.
The hon. Lady is right to raise the question of energy prices and electricity prices. This is not a new phenomenon, and it is not unique to any particular Government. In fact, the biggest increase in industrial electricity prices took place under the previous Government. In the past five years, we have contributed nearly £300 million to energy-intensive industries as a rebate towards those costs. Through the industrial energy efficiency fund that is available in the industrial strategy, we want to reduce further the costs of energy. It is very important that we should do that.
The hon. Lady asks questions about the incoming Prime Minister. I spoke to both candidates during the leadership contest to impress on them what she and I agree is the crucial role of this industry. I know that she, the Under-Secretary—my hon. Friend the Member for Pendle (Andrew Stephenson)—and other hon. Members have communicated not just with the current Prime Minister but with her potential successors to reinforce the resolution across all parts of the House that this is at the top of the new Prime Minister’s agenda.
13:22:36
Sir Edward Leigh
Gainsborough
A very large number of my constituents work at Scunthorpe. Can the Secretary of State assure me that whatever happens, their welfare is at the forefront of his mind? In an international market that is often manipulated by Governments, notably the Chinese, will he assure me that in this case, to quote Sir Keith Joseph, the market is not enough, and there will be an activist and extremely interventionist approach by the Government to ensure that there is a buyer? Lastly, I have always thought that my right hon. Friend was an outstanding parliamentarian ever since our days on the Public Accounts Committee together, and I wish him well in the reshuffle.
13:24:27
Greg Clark
I am very grateful to my right hon. Friend. My training under his expert tutelage on the PAC stood me in good stead for ministerial office, and I am grateful to him for that.
I am encouraged by my right hon. Friend’s encouragement to take an activist approach. That is the approach that I have been taking. In my view—and this applies to everyone who has been part of the support group—we let this slip through our fingers if we are not there to make sure that all the questions can be answered, whether through the trade unions, which have been magnificent in this, or through the local authorities, including some of his neighbours in Lincolnshire. Ursula Lidbetter, who leads the Lincolnshire local enterprise partnership, has been very active in the group. I will, in so far as I am still at this Dispatch Box, continue that approach. I am sure that my right hon. Friend’s recommendation of an activist approach will sound with some resonance down the corridors of this place and reach the ears of the new Prime Minister, who I hope will follow his sage advice.
I am encouraged by my right hon. Friend’s encouragement to take an activist approach. That is the approach that I have been taking. In my view—and this applies to everyone who has been part of the support group—we let this slip through our fingers if we are not there to make sure that all the questions can be answered, whether through the trade unions, which have been magnificent in this, or through the local authorities, including some of his neighbours in Lincolnshire. Ursula Lidbetter, who leads the Lincolnshire local enterprise partnership, has been very active in the group. I will, in so far as I am still at this Dispatch Box, continue that approach. I am sure that my right hon. Friend’s recommendation of an activist approach will sound with some resonance down the corridors of this place and reach the ears of the new Prime Minister, who I hope will follow his sage advice.
13:25:27
Marion Fellows
Motherwell and Wishaw
It is disheartening to hear that this process continues to drag on with no idea how long it will take for a deal to conclude. This UK Government must at last stand up for the steel industry and deliver a sector deal. In today’s global world, the uncertainty caused by Brexit is providing businesses with the nudge they need to leave the UK. How many more will leave when it becomes apparent that the new Prime Minister has no plans beyond a no-deal Brexit? Our thoughts are with all those dealing with continued uncertainty—employees, management, unions, and those in the supply chain. What will the Secretary of State, who has shown real commitment to securing the continuation of the British steel plants, do—or, indeed, what will his successor do—in the face of a Brexit that is doing irreparable damage to our manufacturing sector?
13:29:42
Greg Clark
I am grateful for what the hon. Lady said about me personally.
I think it would be more disheartening if this process had concluded, as was the wide expectation eight weeks ago, with what happened in Redcar, as the Redcar mentioned, which was the more or less immediate closure of the plant. The fact that the process continues, far from being disheartening, is heartening in that there are several bidders that the official receiver and his agents are working with. It is absolutely vital that those discussions should continue for as long as they prove necessary. That is one of the reasons why my first act on the warning of the insolvency was to commit a Government indemnity to allow an orderly process to take place, and I very much hope it will.
I very much agree with the hon. Lady that having a sector deal with the steel sector is highly desirable. All the sector deals—colleagues have heard me launch different sector deals from this Dispatch Box—require investment by the industry and by the Government alongside each other. That is precisely what we want to do in this case. I hope that this will be a catalyst for the investment that allows such a deal to take place.
I think it would be more disheartening if this process had concluded, as was the wide expectation eight weeks ago, with what happened in Redcar, as the Redcar mentioned, which was the more or less immediate closure of the plant. The fact that the process continues, far from being disheartening, is heartening in that there are several bidders that the official receiver and his agents are working with. It is absolutely vital that those discussions should continue for as long as they prove necessary. That is one of the reasons why my first act on the warning of the insolvency was to commit a Government indemnity to allow an orderly process to take place, and I very much hope it will.
I very much agree with the hon. Lady that having a sector deal with the steel sector is highly desirable. All the sector deals—colleagues have heard me launch different sector deals from this Dispatch Box—require investment by the industry and by the Government alongside each other. That is precisely what we want to do in this case. I hope that this will be a catalyst for the investment that allows such a deal to take place.
13:27:36
Andrew Percy
Brigg and Goole
I, too, thank the Secretary of State for his work on behalf of the very large number of my constituents who work at Scunthorpe. It is because of his actions, and the actions of our Government, that they have continued to be paid throughout this process and that they continue to have the confidence to commit to the British Steel site at Scunthorpe. Moving forward, does he agree that it is really important that the incoming new Government commit once again to big infrastructure projects such as High Speed 2 and, of course, Northern Powerhouse Rail—HS3—to give the industry the certainty into the future that there is going to be investment from this Government in such vital infrastructure?
13:28:09
Greg Clark
I am grateful to my hon. Friend for his participation in the support group in support of his constituents, which has been very valuable. As I made clear, this is for the official receiver, and I do not want to get ahead of his progress. The situation is still not resolved. He has said that it is encouraging, but we need to work very carefully to ensure that it is resolved satisfactorily. In terms of audit, one of the striking things he has found, as my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) and the hon. Member for Redcar (Anna Turley) will know, is how loyal customers of British Steel have been, in many cases confirming orders well into the future. Network Rail is one such customer, for two reasons—partly for steel reasons but partly because I believe that we should have big upgrades in our national infrastructure. I very much endorse what my hon. Friend said.
19:19:30
Rachel Reeves
Leeds West
I very much welcome the activist approach that the Secretary of State has taken with regard to British Steel. I also welcome the fact that no deadline has been imposed, because the most important thing is that this time we find a buyer who is going to support British Steel, invest in it and see it through to the future, unlike the previous owner. Will he give an assurance that the Government will stand by British Steel until a new buyer is found? He knows full well that if a steelworks is closed, it is incredibly hard to reopen it. I urge him to look again at a sector deal for the steel sector, which is so important for the whole industry’s future. Our Select Committee, the Business, Energy and Industrial Strategy Committee, will be looking specifically at British Steel, but also at the wider steel industry, in our inquiry in September. We will be looking both at the actions that this Secretary of State has taken, which we welcome, and at those of his successor.
19:19:30
Greg Clark
I am grateful to the hon. Lady, the Chair of the Select Committee, and I welcome the prospect of that inquiry. There is a lot to examine, and she will approach it with her usual forensic attention to detail. I very much hope that the new Prime Minister will continue the commitment that the current Prime Minister was willing to give and the authority that she has given me to act in the way that I have. She and others will hold to account the new Prime Minister and his team on that.
The hon. Lady is right; there is something special about steel assets in many respects, but one is that if they are closed down, it is very hard for them to spring back into life, so continuity is of great importance. That is one of the achievements that, together, we have been able to bring about over recent weeks.
No one is keener than I am to conclude a sector deal. It requires investment. There is an opportunity for the British steel industry to be more strategic than it has been and, as some other sectors have done, align itself to some of the products that we know will be in demand in the future, backed by research and development. That is the approach that the industrial strategy takes, and it applies in spades to steel, so I hope there will be a sector deal to reflect that.
The hon. Lady is right; there is something special about steel assets in many respects, but one is that if they are closed down, it is very hard for them to spring back into life, so continuity is of great importance. That is one of the achievements that, together, we have been able to bring about over recent weeks.
No one is keener than I am to conclude a sector deal. It requires investment. There is an opportunity for the British steel industry to be more strategic than it has been and, as some other sectors have done, align itself to some of the products that we know will be in demand in the future, backed by research and development. That is the approach that the industrial strategy takes, and it applies in spades to steel, so I hope there will be a sector deal to reflect that.
Trudy Harrison
Copeland
I am pleased to hear my right hon. Friend acknowledge the world’s dependence on steel and the value that he places on British Steel. Does he also recognise that, without coking coal, there would be no steel industry? The privately funded, multimillion-pound Woodhouse colliery being developed by West Cumbria Mining in my constituency is of vital importance and will have economic, social and environmental benefits for our area and, indeed, the country. Will he do all he can to help move that project forward?
13:29:24
Greg Clark
As my hon. Friend says, much steel production requires coking coal, so it needs to be provided. I understand that there was broad cross-party support for the operation that she describes. One of the imperatives is to move steelmaking to be cleaner and greener in its energy efficiency and use of other fuels. That feature of the industrial strategy programme applies very much to the steel industry.
13:29:24
Mr Pat McFadden
Wolverhampton South East
I echo the comments of my hon. Friend the Member for Redcar (Anna Turley) in thanking the Secretary of State for his approach to the industry in general and this issue in particular. He has reminded us today and on previous occasions that we cannot just turn on and off a steelworks like a tap. If it is allowed to go cold, it is very expensive and difficult to set up again. The indemnity has been the key thing in enabling operations to continue while a buyer is found. What assurance can he give the House that that indemnity will continue for as long as it takes to finish the process of finding a buyer?
Greg Clark
I am grateful to the right hon. Gentleman; he knows about the manufacturing industry, and he is right in his description of it. I have to report that my request for the indemnity was granted readily; I think the lessons of the Redcar closure have been learned. I have no reason to suppose that the incoming Prime Minister will take a different view—in fact, quite the reverse. I have met him and his competitor, and during the days ahead I hope and expect that that support will continue to be available. But I should be clear with the House: British Steel is in the hands of the official receiver. Neither I nor any other Minister determines its future, so it will be important to conclude a sale to a long-term investor in it. That is not in the bag yet, but I think it is evident that everyone is doing everything they can to secure it.
Mrs Kemi Badenoch
Saffron Walden
I was pleased to hear from the Secretary of State that he has been working tirelessly with British Steel and the official receiver to find a new buyer for the company. Can he tell the House what further plans the Government have to support companies in the supply chain, such as those in my constituency, over the coming days and weeks?
13:29:24
Greg Clark
I am grateful to my hon. Friend, because she gives me the opportunity to pay tribute to Stephen Phipson, the director general of Make UK, the manufacturers’ organisation. He serves on the support group and has been present at the meetings, and he has convened a panel of suppliers and customers, to ensure that some of the uncertainty and challenges that they have faced during the insolvency of British Steel have been dealt with. Working with HMRC, the British Business Bank and the official receiver, the panel has had—as I think colleagues on the support group would accept—a positive role in providing help and reassurance to the supply chain across the country.
Mr Paul Sweeney
Glasgow North East
The Secretary of State has acknowledged that the closure of a major steelworks is an intergenerational blight, as we have seen with the closure of Redcar and of Ravenscraig, which is still a wasteland 30 years on. It is therefore critical that we maintain long-term planning in the sector. That is aided by patient finance. Access to patient finance in this country is very poor compared with some of our peer nations, notably Germany. What will he do to improve patient finance access for the huge capital investment needed in the steel industry, in order to improve the attractiveness of British Steel to potential investors?
13:29:24
Greg Clark
The hon. Gentleman makes an excellent point. Improving the access to and availability of patient capital in this country is a focus through the industrial strategy and some of the work that the Treasury is doing, but there is more work to be done. He is right—a long-term owner of British Steel needs to have the patience required in an industry that is, and always has been, subject to the ups and downs of the economic cycle and sometimes conditions in international trade. It is often not the most stable of industries, and as I think he would agree, any owner needs to be resilient to that.
13:29:24
Jeremy Lefroy
Stafford
British-manufactured steel is vital for exporting companies in my constituency, such as General Electric, and across the country and therefore makes a huge contribution to our balance of payments. What is being done to support the export of British steel both directly and through other manufactured goods? Will my right hon. Friend comment on what my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) said about the possibility of the UK Government being a co-investor, alongside others, to ensure that British Steel continues to serve this nation so well?
13:29:24
Greg Clark
On the first point, there are great opportunities for exports. The support group has been working with the Construction Products Association, for example, to improve the marketing of British Steel products in this country and to overseas markets. Support is available through UK Export Finance for British exporters in all sectors. When it comes to the requirements of any bidder, strict rules pertain to British Steel, which is one reason why it requires an understanding of the investment plans of prospective bidders. That is something I have been doing, and I hope it will continue in the new Government.
Nick Smith
Blaenau Gwent
As the son of a steelworker, may I join the Secretary of State in praising the workforce and the trade unions at British Steel? I want to press him: will the Government ensure that the terms and conditions of the workforce are kept high through this difficult time, until a new buyer emerges?
Greg Clark
The terms and conditions have continued. The special managers, on behalf of the official receiver, have worked closely with the trade unions. Through the support group, we have no complaints and no reason to think that anything in those terms and conditions has been impaired during the insolvency. Of course, when a company is in insolvency, it is in the hands of the official receiver, but the special managers have shown themselves to be understanding and accommodating of the requirements of the workforce. It is a reflection of the workforce that they have committed themselves to the company and increased production at a time of uncertainty. That is a real tribute to their professionalism and the faith they have in the quality of their product.
13:39:58
Caroline Flint
Don Valley
I know from friends and colleagues in the trade unions, particularly Community, that they are thankful for the positive approach the Secretary of State has taken to his dealings with this. I am glad that Doncaster is providing the venue for talks, and everybody who is a party to them is welcome to come to my house for beer and sandwiches—or whatever they fancy—if it helps the talks in any way.
The Secretary of State has mentioned securing a steel sector deal a couple of times, and he alluded to one of the issues that the industry should think about. Does he still believe that getting those talks under way again at the earliest possible opportunity is crucial, and what other main headline issues need to be sorted, discussed or broached to get those talks up and running at the earliest opportunity?
The Secretary of State has mentioned securing a steel sector deal a couple of times, and he alluded to one of the issues that the industry should think about. Does he still believe that getting those talks under way again at the earliest possible opportunity is crucial, and what other main headline issues need to be sorted, discussed or broached to get those talks up and running at the earliest opportunity?
13:41:20
Greg Clark
I am grateful to the right hon. Lady, and it has been good to meet in Doncaster. It may seem a surprising place to meet, but it is quite convenient for both Scunthorpe and Teesside, as well as London, so that is where we start our week. The invitation to go to the right hon. Lady’s house is a very inviting one, which I am sure the support group will want to take up.
On the sector deal, we have made good progress, but all sector deals are about investment. It has been a feature of the steel industry in recent years that the investment in the future has not been at the level of some other industries where we have concluded deals—life sciences, automotive, aerospace and others. It is not in any sense that the talks have broken down; it requires investments to be made. I hope that, if there is to be a successful resolution for British Steel, that might provide the ability to do precisely that.
On the sector deal, we have made good progress, but all sector deals are about investment. It has been a feature of the steel industry in recent years that the investment in the future has not been at the level of some other industries where we have concluded deals—life sciences, automotive, aerospace and others. It is not in any sense that the talks have broken down; it requires investments to be made. I hope that, if there is to be a successful resolution for British Steel, that might provide the ability to do precisely that.
13:42:11
Mike Wood
Dudley South
Does my right hon. Friend agree that what the steel industry, including in the Black Country, needs above all else is a long-term strategy, with a pipeline of projects that can create good opportunities for those who work in the sector?
13:42:15
Greg Clark
My hon. Friend is right, and he is right, as his neighbour the right hon. Member for Wolverhampton South East (Mr McFadden) did, to call attention to the role of the Black Country. They have a phrase in the Black Country, “Made in the Black Country, sold around the world”, and that is a proud and accurate boast. However, there are opportunities in the UK for those products, and the Government have published a forward pipeline of infrastructure investments that require steel so that companies can gear themselves up to participate in procurement.
That is very important, and I would like to pay tribute to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Pendle (Andrew Stephenson), who has responsibility for industry. He has signed the steel charter and is promoting it across all public bodies. Again, it requires and encourages the use of British steel to be taken into account in all procurement decisions.
That is very important, and I would like to pay tribute to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Pendle (Andrew Stephenson), who has responsibility for industry. He has signed the steel charter and is promoting it across all public bodies. Again, it requires and encourages the use of British steel to be taken into account in all procurement decisions.
13:43:14
Stephanie Peacock
Barnsley East
Following on from the Secretary of State’s answer, he may recall the Defence Secretary saying that
“we can and must buy British.”
Does he agree that one way to do this would be to back a British bid to build the Navy’s new support ships, which could create 16,000 jobs throughout the supply chain in Barnsley and across the country?
“we can and must buy British.”
Does he agree that one way to do this would be to back a British bid to build the Navy’s new support ships, which could create 16,000 jobs throughout the supply chain in Barnsley and across the country?
13:44:07
Greg Clark
The hon. Lady makes a good point. We have published figures for each Department on their use of British steel. It is the case, and the House should be aware of this, that not all types of steel used are actually made in the UK. At least at the moment, it is not possible to supply all of our steel needs from domestic supplies; that is the reality. She mentioned the MOD, and my hon. Friend the Under-Secretary of State is working closely with the Ministry of Defence so that its support for the steel charter results in increasing levels of procurement of British steel.
13:44:51
Chuka Umunna
Streatham
We can be incredibly proud of our steel industry. It is of course a primary example of where industrial activism generally, on the part of the Government, is absolutely vital. If we see any form of Brexit, which the Secretary of State knows I oppose, it will of course be even more important that we have industrial activism. I am in no way agitating for his removal, but will he assure this House that if he is replaced in post in the next 24 hours, he will urge any successor not to turn their back on implementing a proper industrial strategy? Now is certainly not the time for a return to the Thatcherite economics that, frankly, saw the destruction of so many great industries in this country.
13:46:11
Greg Clark
I am grateful to the hon. Gentleman for what he has said. He and other hon. Members will know that the approach we took to developing the industrial strategy was to seek, I think successfully, to engage all parts of the country, all parts of the economy, and different firms, business leaders, local leaders and trade unions, to have something that reflects, as far as possible, a shared view of what our priorities should be in the future—whether that is investing in infrastructure, investing in skills, increasing the research and development investments that we make in this country, and identifying opportunities, such as in the future of mobility or the analysis of data, that are great sources of global opportunity for Britain. We did it in that way because I think it is right for an industrial strategy to endure—a short-term strategy is a contradiction in terms. I hope the consensual way in which it has been put together and the content of it will commend the industrial strategy to the incoming Government. It is obvious from what the hon. Gentleman has said that he will play a role from his seat in ensuring that those in government do that.
13:47:10
Mr Barry Sheerman
Huddersfield
As chair of the all-party manufacturing group of MPs, may I remind the Secretary of State, whom I have a lot of time for, that it is essential we have steel in this country? I represent Huddersfield, which is a major engineering community, and the community is at the heart of this. Manufacturing, steel and engineering all hang closely together. Will he take a long-term view, but will he also make sure that we do not sell at the weakest time in the market? If the steel industry needed a period of public ownership, what would be wrong with that? This pragmatic Government have done it with London North Eastern Railway, so why not with steel? May I urge him to be totally pragmatic, not ideological, and to make sure that we have a steel industry that is successful in the future?
13:48:05
Greg Clark
The hon. Gentleman and I share a view about the importance of steel and manufacturing. At the University of Huddersfield, the national rail testing facility is a very important part of our contribution to increasing standards of technological development, so he is absolutely right. When it comes to the steel industry, the key thing is having an owner that, in my view, is willing and has an ambition to invest for the future. Since the official receiver is encouraged by the level of interest, what we in the support group—I would observe that it is a pragmatic group of people—want to do is to support those bidders to make sure that we have the long-term future we all want.
13:48:51
Sammy Wilson
East Antrim
It is important strategically and for regional employment to maintain a steel industry in the United Kingdom, and I do welcome the efforts that the Secretary of State has made to date. However, does he not realise that high-cost renewable energy plans and costly decarbonisation policies—pursued by this Government and previous Administrations, who, quite frankly, have pandered to a Luddite green lobby in this country—have resulted in energy-intensive industries moving out of Britain, with the aluminium industry being an example? These issues will have to be addressed if we are to maintain a viable steel industry in the United Kingdom in the future.
Greg Clark
My experience from conversations with the bidders for British Steel is that there is a recognition in the steel industry—not just in this country, but around the world—that the move to cleaner and greener production is happening globally. Actually, there is an opportunity to get ahead of that, as investing in improved energy efficiency and reducing carbon emissions will have to be done everywhere. Again, one of the purposes of the industrial strategy is to advance ourselves as a place where this has been done well and reliably and has been well supported. That, it seems to me, is best for the long-term future of steel making and other manufacturing, rather than attaching ourselves to a model that will be increasingly costly around the world. The future depends on being more energy efficient and greener.
13:50:33
Stephen Kinnock
Aberavon
The UK exports 2.6 million tonnes of steel to the European Union every year. It is estimated that a no-deal Brexit would add £70 million of additional administration costs and costs relating to border checks. Does the Secretary of State therefore agree that a no-deal Brexit represents an existential threat to the British steel industry, and will he be conveying that message loud and clear to his successor and to the incoming Prime Minister?
13:51:20
Greg Clark
I gently say to the hon. Gentleman that that message should be conveyed to all Members of the House who did not vote for a deal that would have provided, as British steel advised, the ability to trade in that way. My views on the desirability—in fact, the imperative—of having a good deal that allows us to trade without introducing barriers and frictions are well known to the House, and indeed beyond. What I will say is that at this time, when potential purchasers are considering British steel, actually it is not the case that the steel industry would not have a future in the event of different forms of Brexit. It is very important to convey to prospective buyers the fact that the industry that exists, with its opportunities domestically and internationally, and with the quality of its workforce and of its steel production, is attractive in itself and will not be trumped by the Brexit settlement. It is important that those prospective buyers have confidence, as some of them have having done their due diligence, that this is a good investment in all circumstances.
13:51:58
Peter Kyle
Hove
May I first thank my hon. Friend the Member for Redcar (Anna Turley) for her advocacy in the Chamber and—those of us who also know her as a friend know this—for her tireless activism on behalf of the steel sector, which has no better advocate? I also thank the Secretary of State; in a time of upheaval on the Government Front Bench, I hope that one point of consistency will be his position there. He has explained in the past, and in many appearances here in the Chamber, that the steel sector does not quite fit the criteria for a sector deal. Does that mean that we need to look at how the sector deals themselves are operating, to see whether they could be tailored to support such a vital industry?
13:53:13
Greg Clark
I am grateful to the hon. Gentleman for his kind words. It is not that the sector deals do not fit at all; it is that that would require investment on behalf of the industry, the players in the sector, and in recent years that investment in the future has not been as readily available or forthcoming as it has been in other industries. I hope that will change. I have a big appetite to invest alongside the sector, as we do in others, so there is absolutely no question but that it is available, and I hope that we will be able to conclude one very quickly.
13:53:43
Alex Cunningham
Stockton North
I, too, welcome the Secretary of State’s work and lament the likelihood that he will not be there to see the deal through and a foundation industry saved, alongside many jobs, many of which are in my constituency. When he leaves a little note for his successor, will he show his true Teesside-born credentials and just tell them that they must do all they can to get the deal across the line, and that they must not fail?
Greg Clark
The hon. Gentleman seems to have powers of prediction that are certainly beyond me. I think that Hansard this afternoon will provide the little note—perhaps an extensive note—that he has in mind.
Dame Eleanor Laing
Madam Deputy Speaker
The prize for patience and perseverance goes to Jonathan Edwards.
13:54:36
Jonathan Edwards
Carmarthen East and Dinefwr
Diolch yn fawr iawn, Madam Deputy Speaker. In February this year the EU put in place a definitive safeguard strategy on steel imports, covering 26 steel product categories. It put in place a 25% tariff once the quota has been surpassed. What analysis have the British Government undertaken of the impact on the UK steel sector of leaving the EU customs union, in terms of exports to our biggest market and imports to the UK?
13:50:00
Greg Clark
We have been very clear in the discussions that have been taken prospectively. Obviously, the arrangements are not settled until the Brexit conclusions are settled, but we have been very clear in a number of product areas that safeguards should be available and should be used for precisely the purpose they have been so far and will be needed in future.
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