PARLIAMENTARY DEBATE
Steel Industry - 16 October 2024 (Commons/Westminster Hall)
Debate Detail
Contributions from Richard Tice, are highlighted with a yellow border.
00:00:00
Richard Tice
Boston and Skegness
I beg to move,
That this House has considered the steel industry.
It is a pleasure to serve under your chairmanship, Mrs Harris. I want you to imagine that you are standing at a railway station in deepest rural India. You look down at the tracks on the ground and you see those immortal words “Sheffield Steel 1895”. That happened to me six and a half years ago. It sent a complete shiver down my spine—a shiver of pride in what we have given to the world, what we have created, what we have achieved. For 130 years, those railway tracks have been there, yet fast-forward to today and we face what I believe is a potential catastrophe.
Let us just take stock of where we are. I think we are potentially within six to 12 months of having zero general steel-making capacity in the United Kingdom. Just think about that. I fear that the blast furnaces at Scunthorpe, owned by British Steel, part of the Chinese group Jingye, are very likely to close, and that would be an absolute disaster. Steelmaking, manufacturing, in the United Kingdom has halved in the last 10 years or so. We would be left as a complete rump. Think about it: we would be the only G20 nation without a blast furnace except Saudi Arabia and the only G20 nation with no general steel-making capacity whatever. I think there is a lesson in that.
Perhaps it is not so smart to lose all our steel-making capacity at a time when 71% of all steel manufactured around the world is made in blast furnaces. Even if all the electric arc furnaces that have been announced are built, which of course they will not be, we will only get to a balance, in 2050, of about 50-50. The majority of all new steel-making capacity around the world being built as we speak comes from blast furnaces. There is a reason for that. And here in the UK, imports of steel from the likes of China, India and Vietnam are soaring. Hang on—I thought we were supposed to be world leaders in steel, but 66% of all steelmaking around the world happens in nations that either have no net zero targets or have targets that are general and way beyond 2050.
Now that the truth has been told to us, which is that electricity prices in the United Kingdom are the highest in the developed world—in the House of Commons the other week, the Secretary of State for Business and Trade admitted to me that there was an issue with industrial electricity prices—my real fear is that the electric arc furnaces that have been promised down at Port Talbot, and potentially promised in Scunthorpe if the blast furnaces there close, will not actually be viable. If something is not viable and we are asking a firm to invest hundreds of millions of pounds in it, they will not build it—and that is before National Grid informs us, “Oh, in Scunthorpe we can’t get you a grid connection for the electricity that you need to run an electric arc furnace.” You genuinely could not make some of this stuff up. Because our electricity prices are so high, these electric arc furnaces are quite likely to be less viable than is the case when it comes to concerns about the viability of blast furnaces.
Five and a half years ago, I gave a press conference in Scunthorpe. I said back then that the Conservative Government should not sell British Steel to the Chinese. They ignored my advice—not for the first time and probably not the last—but we are where we are. We face catastrophe, for three critical reasons. The first is that steel is a strategic national interest. After food and water, steel is the third most important component of a modern civilisation. Without steel, we would have no internet, no cars, no buildings, no infrastructure—nothing. We would be back to mud huts; I do not call that progress. It is strategically important to be able to make the strongest steel. There are genuine concerns that if we have no blast furnaces, we will not be able to make primary steel. Some say that with new technology and direct reduced iron, the strength of steel produced in electric arc furnaces may, give or take, equal what can be produced in blast furnaces, but we cannot take the risk. We must have that capacity.
Hon. Members may say, “Well, why not have a bit of each?” My late grandmother, when faced with a choice of desserts, would say, “I’ll have a bit of each.” There is nothing wrong with that, but we cannot have nothing. For someone who likes desserts, there is nothing worse than having no dessert at all.
Four years ago, in the middle of 2020, we nearly ran out of paracetamol, which is pretty important. Why? Because it is all made in India. We make no paracetamol in the United Kingdom and the sun was not shining in mid-2020, as we all remember. It is all very well those who believe in free markets and globalisation to the detriment of everything saying, “Well, you can just buy it from elsewhere,” but what happens if the sun is not shining? What happens if there is some terrible event in the world and we cannot buy steel elsewhere? That exposes us, because steel is strategically important, so we must be able to produce it here in the UK.
The second reason why I think a potential catastrophe is facing us is the economic interest. There is a thing called the multiplier effect: if we make and manufacture things here in the United Kingdom with our own jobs and money, the wealth we create circulates around the economy. I call it bubble-up economics: when we create and make things, it bubbles up from the lowest point, and the money circulates around the economy. That is hugely powerful at a time when everyone is desperately talking about the need for growth. We will not get growth if we export all our jobs and money. We might buy the good that arrives here, but we do not benefit from the multiplier effect, and therefore we lose the power of growth.
Some will say, “Hang on. Tata lost lots of money over the last 10 years or so. It’s not viable.” Well, let us just take a look at its losses, shall we? Leave aside the one-in-100-year event of 2020, cumulatively, in the overall scheme of things—relative to the multiplier effect—its losses frankly amount to a decent round of drinks. Let us call it £100 million a year, give or take. Compare that to the size of the economy and the importance of the multiplier effect.
I would suggest to the House that it is vital that we keep steel manufacturing going in a sizeable way in the United Kingdom. Not to do so would cause a self-inflicted wound, driven by the main two political parties’ obsession with net zero. That is the reality. Net zero, and the increase in renewable energy capacity, is directly linked to the increase in our electricity prices, and to the fact that we are becoming ever more uncompetitive. The Tories started it, and now under the new net zero zealot-in-chief—the new Secretary of State for Energy—it is being accelerated.
We are promised that the bills will come down, but I was at an event last week with someone who is advising the World Economic Forum and the G20 nations about renewable projects, and he admitted—in a defining moment for me—that without subsidies and Government intervention, renewables cannot be viable. That means, by definition, that they are more expensive and that those who are obsessed with them in this country will not bring the bills down. At some point, there will be a day of reckoning.
The third reason why this is a catastrophe is what I call the community interest. We saw the devastation in the coal-mining communities in the 1980s; when I have been campaigning, I still hear people talk about that. That was absolutely devastating. The oil and gas industry is under huge threat at the moment because of net zero, which is again devastating. There is a huge loss of the multiplier effect, skills are disappearing and families are concerned.
In Port Talbot and Scunthorpe, there are not thousands but tens of thousands of jobs directly and indirectly dependent on this industry, which could disappear within 12 months. It is not just the jobs; it is the families, the partners, the spouses, the wives, the children. That makes hundreds of thousands of people devastated by this. These are seriously well paid jobs: the average value of a steel job is about 50% more than the average salary in the local area.
It is all very well saying that people can retrain, but if someone earning up there retrains and all of a sudden is earning down there, I do not call that progress—I call that going backwards. The truth is that this issue will have a devastating impact on those communities. I feel that the unions have let down their members and betrayed them.
A year ago, I wanted to go and talk to more than a thousand steelworkers in Port Talbot. I met a couple of brave union leaders in secret in a quiet room. I said I wanted to talk to everybody and tell them about the madness of what is going on but, oh no. The union leaders banned me from talking to the steelworkers and telling them the truth.
Here we are today, with thousands of jobs sacrificed on the altar of net zero in Port Talbot, with the risk facing Scunthorpe in front of us. Lots of people say, “Don’t worry, Richard. We’ll be a world leader in this stuff.” Really—a world leader? I suggest that the only things we will be a world leader in are naivety, stupidity and negligence. The truth is that behind our backs, other countries making steel, growing their economies and enjoying cheap energy are laughing at us. They cannot believe how foolish we are. They cannot believe that we are serious about destroying some of our finest manufacturing industries, but they will take it. They are benefiting and we are losing.
This is an absolute disaster. One might ask, “What can we do about it?” I have a plan and most of it is achievable by this Government. The first thing is that the Business Secretary has promised us a new steel strategy next March. I happen to know that that strategy is basically drafted and written, with just a few i’s to dot and t’s to cross. I have been told that that draft is very much there.
That this House has considered the steel industry.
It is a pleasure to serve under your chairmanship, Mrs Harris. I want you to imagine that you are standing at a railway station in deepest rural India. You look down at the tracks on the ground and you see those immortal words “Sheffield Steel 1895”. That happened to me six and a half years ago. It sent a complete shiver down my spine—a shiver of pride in what we have given to the world, what we have created, what we have achieved. For 130 years, those railway tracks have been there, yet fast-forward to today and we face what I believe is a potential catastrophe.
Let us just take stock of where we are. I think we are potentially within six to 12 months of having zero general steel-making capacity in the United Kingdom. Just think about that. I fear that the blast furnaces at Scunthorpe, owned by British Steel, part of the Chinese group Jingye, are very likely to close, and that would be an absolute disaster. Steelmaking, manufacturing, in the United Kingdom has halved in the last 10 years or so. We would be left as a complete rump. Think about it: we would be the only G20 nation without a blast furnace except Saudi Arabia and the only G20 nation with no general steel-making capacity whatever. I think there is a lesson in that.
Perhaps it is not so smart to lose all our steel-making capacity at a time when 71% of all steel manufactured around the world is made in blast furnaces. Even if all the electric arc furnaces that have been announced are built, which of course they will not be, we will only get to a balance, in 2050, of about 50-50. The majority of all new steel-making capacity around the world being built as we speak comes from blast furnaces. There is a reason for that. And here in the UK, imports of steel from the likes of China, India and Vietnam are soaring. Hang on—I thought we were supposed to be world leaders in steel, but 66% of all steelmaking around the world happens in nations that either have no net zero targets or have targets that are general and way beyond 2050.
Now that the truth has been told to us, which is that electricity prices in the United Kingdom are the highest in the developed world—in the House of Commons the other week, the Secretary of State for Business and Trade admitted to me that there was an issue with industrial electricity prices—my real fear is that the electric arc furnaces that have been promised down at Port Talbot, and potentially promised in Scunthorpe if the blast furnaces there close, will not actually be viable. If something is not viable and we are asking a firm to invest hundreds of millions of pounds in it, they will not build it—and that is before National Grid informs us, “Oh, in Scunthorpe we can’t get you a grid connection for the electricity that you need to run an electric arc furnace.” You genuinely could not make some of this stuff up. Because our electricity prices are so high, these electric arc furnaces are quite likely to be less viable than is the case when it comes to concerns about the viability of blast furnaces.
Five and a half years ago, I gave a press conference in Scunthorpe. I said back then that the Conservative Government should not sell British Steel to the Chinese. They ignored my advice—not for the first time and probably not the last—but we are where we are. We face catastrophe, for three critical reasons. The first is that steel is a strategic national interest. After food and water, steel is the third most important component of a modern civilisation. Without steel, we would have no internet, no cars, no buildings, no infrastructure—nothing. We would be back to mud huts; I do not call that progress. It is strategically important to be able to make the strongest steel. There are genuine concerns that if we have no blast furnaces, we will not be able to make primary steel. Some say that with new technology and direct reduced iron, the strength of steel produced in electric arc furnaces may, give or take, equal what can be produced in blast furnaces, but we cannot take the risk. We must have that capacity.
Hon. Members may say, “Well, why not have a bit of each?” My late grandmother, when faced with a choice of desserts, would say, “I’ll have a bit of each.” There is nothing wrong with that, but we cannot have nothing. For someone who likes desserts, there is nothing worse than having no dessert at all.
Four years ago, in the middle of 2020, we nearly ran out of paracetamol, which is pretty important. Why? Because it is all made in India. We make no paracetamol in the United Kingdom and the sun was not shining in mid-2020, as we all remember. It is all very well those who believe in free markets and globalisation to the detriment of everything saying, “Well, you can just buy it from elsewhere,” but what happens if the sun is not shining? What happens if there is some terrible event in the world and we cannot buy steel elsewhere? That exposes us, because steel is strategically important, so we must be able to produce it here in the UK.
The second reason why I think a potential catastrophe is facing us is the economic interest. There is a thing called the multiplier effect: if we make and manufacture things here in the United Kingdom with our own jobs and money, the wealth we create circulates around the economy. I call it bubble-up economics: when we create and make things, it bubbles up from the lowest point, and the money circulates around the economy. That is hugely powerful at a time when everyone is desperately talking about the need for growth. We will not get growth if we export all our jobs and money. We might buy the good that arrives here, but we do not benefit from the multiplier effect, and therefore we lose the power of growth.
Some will say, “Hang on. Tata lost lots of money over the last 10 years or so. It’s not viable.” Well, let us just take a look at its losses, shall we? Leave aside the one-in-100-year event of 2020, cumulatively, in the overall scheme of things—relative to the multiplier effect—its losses frankly amount to a decent round of drinks. Let us call it £100 million a year, give or take. Compare that to the size of the economy and the importance of the multiplier effect.
I would suggest to the House that it is vital that we keep steel manufacturing going in a sizeable way in the United Kingdom. Not to do so would cause a self-inflicted wound, driven by the main two political parties’ obsession with net zero. That is the reality. Net zero, and the increase in renewable energy capacity, is directly linked to the increase in our electricity prices, and to the fact that we are becoming ever more uncompetitive. The Tories started it, and now under the new net zero zealot-in-chief—the new Secretary of State for Energy—it is being accelerated.
We are promised that the bills will come down, but I was at an event last week with someone who is advising the World Economic Forum and the G20 nations about renewable projects, and he admitted—in a defining moment for me—that without subsidies and Government intervention, renewables cannot be viable. That means, by definition, that they are more expensive and that those who are obsessed with them in this country will not bring the bills down. At some point, there will be a day of reckoning.
The third reason why this is a catastrophe is what I call the community interest. We saw the devastation in the coal-mining communities in the 1980s; when I have been campaigning, I still hear people talk about that. That was absolutely devastating. The oil and gas industry is under huge threat at the moment because of net zero, which is again devastating. There is a huge loss of the multiplier effect, skills are disappearing and families are concerned.
In Port Talbot and Scunthorpe, there are not thousands but tens of thousands of jobs directly and indirectly dependent on this industry, which could disappear within 12 months. It is not just the jobs; it is the families, the partners, the spouses, the wives, the children. That makes hundreds of thousands of people devastated by this. These are seriously well paid jobs: the average value of a steel job is about 50% more than the average salary in the local area.
It is all very well saying that people can retrain, but if someone earning up there retrains and all of a sudden is earning down there, I do not call that progress—I call that going backwards. The truth is that this issue will have a devastating impact on those communities. I feel that the unions have let down their members and betrayed them.
A year ago, I wanted to go and talk to more than a thousand steelworkers in Port Talbot. I met a couple of brave union leaders in secret in a quiet room. I said I wanted to talk to everybody and tell them about the madness of what is going on but, oh no. The union leaders banned me from talking to the steelworkers and telling them the truth.
Here we are today, with thousands of jobs sacrificed on the altar of net zero in Port Talbot, with the risk facing Scunthorpe in front of us. Lots of people say, “Don’t worry, Richard. We’ll be a world leader in this stuff.” Really—a world leader? I suggest that the only things we will be a world leader in are naivety, stupidity and negligence. The truth is that behind our backs, other countries making steel, growing their economies and enjoying cheap energy are laughing at us. They cannot believe how foolish we are. They cannot believe that we are serious about destroying some of our finest manufacturing industries, but they will take it. They are benefiting and we are losing.
This is an absolute disaster. One might ask, “What can we do about it?” I have a plan and most of it is achievable by this Government. The first thing is that the Business Secretary has promised us a new steel strategy next March. I happen to know that that strategy is basically drafted and written, with just a few i’s to dot and t’s to cross. I have been told that that draft is very much there.
09:43:20
Sarah Jones
The Minister for Industry
indicated dissent.
09:43:40
Richard Tice
The Minister indicates that I may be wrong. This is urgent and we cannot wait six to 12 months. We cannot run the risk of civil servants saying, “I’m sorry, but we haven’t got it done by March; it will be the summer.” I urge the Minister and her team to say, “Let’s get this out before Christmas.”
My five-point plan is first to take a strategic stake in British Steel to guarantee that the blast furnaces in Scunthorpe will not close. We cannot run that risk. Otherwise, if the electric arc furnaces are not built, we have nothing—niente, zip. The second part of my plan is to scrap the carbon taxes and the potential carbon border adjustment mechanism.
The third thing is to stop the dumping of cheap imports from nations such as China. That requires, if necessary, appropriate tariffs and protectionism. America is doing it to protect its own steel industry and we should do the same. Unbelievably, according to the House of Commons Library, which helpfully produced a 50-page report yesterday, just two weeks ago, far from increasing tariffs we had to reduce tariffs on imported steel because Port Talbot has closed. Seriously, you couldn’t make this up. It is absolute insanity that we are now reducing tariffs in order to import steel. With the long-term planning that should have happened under the Conservative Government, we could have worked out that if we shut Port Talbot we would be short of rolled steel. What are we going to do about it? That is what has gone on. So that is the third part of my plan.
The fourth part is to buy British. The Secretary of State for Energy Security and Net Zero wants more and more wind turbines, but as I understand it not a single bit of British steel is used in all those turbines, which all come from overseas. If we want more turbines—some people do; some do not—maybe we should make it a condition that we use British steel to grow our own economy with more jobs and more money. Those four things plus the fifth thing are all deliverable by this Government. That is what I urge the Minister to consider.
The fifth thing is the right thing to do. I accept that it is not going to happen, but if we want cheaper electricity and to be more competitive, the fastest way to do it is to scrap net zero. That would bring down prices. It would stop us wasting tens of billions of pounds and stop blighting our countryside with thousands and thousands of pylons, including in my constituency. The first four components of my five-point plan the Government can and should do to protect our steel industry, which is strategically vital. Not to do so is negligent to the point of criminality.
My five-point plan is first to take a strategic stake in British Steel to guarantee that the blast furnaces in Scunthorpe will not close. We cannot run that risk. Otherwise, if the electric arc furnaces are not built, we have nothing—niente, zip. The second part of my plan is to scrap the carbon taxes and the potential carbon border adjustment mechanism.
The third thing is to stop the dumping of cheap imports from nations such as China. That requires, if necessary, appropriate tariffs and protectionism. America is doing it to protect its own steel industry and we should do the same. Unbelievably, according to the House of Commons Library, which helpfully produced a 50-page report yesterday, just two weeks ago, far from increasing tariffs we had to reduce tariffs on imported steel because Port Talbot has closed. Seriously, you couldn’t make this up. It is absolute insanity that we are now reducing tariffs in order to import steel. With the long-term planning that should have happened under the Conservative Government, we could have worked out that if we shut Port Talbot we would be short of rolled steel. What are we going to do about it? That is what has gone on. So that is the third part of my plan.
The fourth part is to buy British. The Secretary of State for Energy Security and Net Zero wants more and more wind turbines, but as I understand it not a single bit of British steel is used in all those turbines, which all come from overseas. If we want more turbines—some people do; some do not—maybe we should make it a condition that we use British steel to grow our own economy with more jobs and more money. Those four things plus the fifth thing are all deliverable by this Government. That is what I urge the Minister to consider.
The fifth thing is the right thing to do. I accept that it is not going to happen, but if we want cheaper electricity and to be more competitive, the fastest way to do it is to scrap net zero. That would bring down prices. It would stop us wasting tens of billions of pounds and stop blighting our countryside with thousands and thousands of pylons, including in my constituency. The first four components of my five-point plan the Government can and should do to protect our steel industry, which is strategically vital. Not to do so is negligent to the point of criminality.
in the Chair
Carolyn Harris
I remind Members that they should bob if they wish to be called.
09:47:10
Jessica Morden
Newport East
It is, as always, a pleasure to serve under your chairmanship, Mrs Harris. I declare an interest as a member of the Community and GMB unions and as chair of the Community parliamentary group.
I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing what I think is the first debate on steel in this Parliament. We have had many debates on steel during the Parliaments in which I have been here. I of course agree that the steel industry is of the utmost strategic importance to this country, our economy and our security, and we must cherish it. It is vital that we protect it. I draw the hon. Gentleman’s attention to the very active all-party parliamentary group for steel and metals-related industries, which has fought for our steel industry for many years. I hope he will take an interest in that group and play a constructive part in it in the months ahead.
I chose to ask the Prime Minister my first question of this Parliament about steel and the need for the new Government, who I know are very serious about steel— we have inherited a very difficult situation—to work in partnership with businesses and trade unions to secure a transition that is right for the workforce and delivers economic growth. Because of our past, we in Wales know well that deindustrialisation can be devastating for our communities. In his reply to me the Prime Minister confirmed that he understands that we need our steel in this country and need it made in this country, and we are going to need more, not less. We need steel to deliver our green infrastructure. It is the duty of the Government to ensure that jobs, communities and people are not ignored in the transition.
I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing what I think is the first debate on steel in this Parliament. We have had many debates on steel during the Parliaments in which I have been here. I of course agree that the steel industry is of the utmost strategic importance to this country, our economy and our security, and we must cherish it. It is vital that we protect it. I draw the hon. Gentleman’s attention to the very active all-party parliamentary group for steel and metals-related industries, which has fought for our steel industry for many years. I hope he will take an interest in that group and play a constructive part in it in the months ahead.
I chose to ask the Prime Minister my first question of this Parliament about steel and the need for the new Government, who I know are very serious about steel— we have inherited a very difficult situation—to work in partnership with businesses and trade unions to secure a transition that is right for the workforce and delivers economic growth. Because of our past, we in Wales know well that deindustrialisation can be devastating for our communities. In his reply to me the Prime Minister confirmed that he understands that we need our steel in this country and need it made in this country, and we are going to need more, not less. We need steel to deliver our green infrastructure. It is the duty of the Government to ensure that jobs, communities and people are not ignored in the transition.
09:49:38
Alex Ballinger
Halesowen
I thank my hon. Friend for giving way and the hon. Member for Boston and Skegness (Richard Tice) for securing this important debate. The west midlands region is the third largest region for the steel industry, with 5,000 jobs generated there. In my Black Country constituency of Halesowen, many jobs are in the steel sector, including at Crosby’s forge, which I was lucky enough to visit a few months ago. Although I support the green transition, does my hon. Friend agree that a decision is needed to consider what is right for the workforce in the steel industry? Any decision should safeguard the future of the steel industry in the west midlands.
Jessica Morden
The steel industry is important for many of our communities and, as we know, on average jobs in the industry pay more in the communities that really need them, such as mine in south Wales and my hon. Friend’s. I agree that our communities and the downstream industries that depend on steel should have a fair and just transition. I look forward to working on this issue with the new steel Minister, my hon. Friend the Member for Croydon West (Sarah Jones), and with the steel unions—Community, GMB and Unite—which stand up strongly for their workforce, have worked incredibly hard for their members, and understand the value of those jobs, as well as with the trade body UK Steel.
For us in Wales, and clearly in Scunthorpe too, it has been an extremely challenging time for the steel industry. The deal for Port Talbot inherited from the last Government means support for the new electric arc furnace to secure the long-term future, but the closure of the blast furnaces means heavy job losses. The new Government’s deal is better than the plan announced by the last Government in September 2023—it sees improved redundancy packages and training, as well as more commitments on investment —but if this Government had been able to start negotiations even a year earlier, I have no doubt that they would have got an even better deal.
Over the last 14 years, Members who represent steel communities, including my hon. Friend the Member for Aberafan Maesteg (Stephen Kinnock), fought hard for investment and an industrial strategy for a fair transition—or simply for any kind of plan—from the Conservative Government, but we were fighting a Government who had no industrial strategy, just occasional sticking-plaster solutions. There was a revolving door in the Department that saw 12 steel Ministers come and go. That was a dereliction of duty that left the steel industry in an extremely perilous position. It was woeful neglect.
I am pleased that the new Government acknowledge the scale of the challenge. Labour Members have never believed that decline is inevitable; we want to see the industry not just adapt but thrive. I welcome the Secretary of State’s announcement that there is to be a steel strategy in the spring. I look forward to Members being part of it and to the Government giving us a long-term plan, which we have desperately needed.
I am proud to have represented Llanwern steelworks as the constituency MP for almost 20 years. I pay tribute to the workforce and the trade union reps, who have been through phenomenally difficult times but are passionate and committed to what they do. We produce world-class products in Llanwern. Our automative steel is fantastic. I hope that the commitments on investment in Llanwern that the new Government secured in their deal with Tata will keep the site and its world-class workforce at the cutting edge of steelmaking. Llanwern is a living example of the potential that investment and innovation can bring to our industrial heartlands. In recent months it has reached a new output record of 14 kilotonnes in a week, following the introduction of new technology on the ZODIAC—zinc and other developments in alloy coatings—galvanising line.
I come to my asks. UK steelmakers need competitive electricity prices. As I have said many times in debates on steel over the years, they pay 50% more than competitors in France and Germany, and that adds £37 million to UK steel electricity costs. Will the Minister address that when she responds to the debate, and at least commit to tracking the disparity between countries? We must address the issue of the UK carbon border adjustment mechanism. UK Steel asks that we move forward the implementation in line with the EU, which is implementing it in 2026, lest displaced steel from the EU flood into the UK.
With steel safeguards expiring in 2026, we must work with the industry to address the issue of global overcapacity. This year alone, China is expected to export 100 million tonnes of steel—equivalent to the entire UK steel supply for 13 years. That is a significant threat with the potential to impact any Government support for the industry elsewhere. I also hope that procurement will be at the heart of the steel strategy. With this Government’s ambitions for house building, new energy projects, wind turbines, and offshore and onshore wind, we will need lots of steel. Let us make sure that it is UK steel.
Steel is vital to any climate solution, and steelworkers themselves accept the need to decarbonise, but they need to partner with a Government who are committed to a just transition. I know that with this steel Minister, my hon. Friend the Member for Croydon West, we can all work together to ensure that.
For us in Wales, and clearly in Scunthorpe too, it has been an extremely challenging time for the steel industry. The deal for Port Talbot inherited from the last Government means support for the new electric arc furnace to secure the long-term future, but the closure of the blast furnaces means heavy job losses. The new Government’s deal is better than the plan announced by the last Government in September 2023—it sees improved redundancy packages and training, as well as more commitments on investment —but if this Government had been able to start negotiations even a year earlier, I have no doubt that they would have got an even better deal.
Over the last 14 years, Members who represent steel communities, including my hon. Friend the Member for Aberafan Maesteg (Stephen Kinnock), fought hard for investment and an industrial strategy for a fair transition—or simply for any kind of plan—from the Conservative Government, but we were fighting a Government who had no industrial strategy, just occasional sticking-plaster solutions. There was a revolving door in the Department that saw 12 steel Ministers come and go. That was a dereliction of duty that left the steel industry in an extremely perilous position. It was woeful neglect.
I am pleased that the new Government acknowledge the scale of the challenge. Labour Members have never believed that decline is inevitable; we want to see the industry not just adapt but thrive. I welcome the Secretary of State’s announcement that there is to be a steel strategy in the spring. I look forward to Members being part of it and to the Government giving us a long-term plan, which we have desperately needed.
I am proud to have represented Llanwern steelworks as the constituency MP for almost 20 years. I pay tribute to the workforce and the trade union reps, who have been through phenomenally difficult times but are passionate and committed to what they do. We produce world-class products in Llanwern. Our automative steel is fantastic. I hope that the commitments on investment in Llanwern that the new Government secured in their deal with Tata will keep the site and its world-class workforce at the cutting edge of steelmaking. Llanwern is a living example of the potential that investment and innovation can bring to our industrial heartlands. In recent months it has reached a new output record of 14 kilotonnes in a week, following the introduction of new technology on the ZODIAC—zinc and other developments in alloy coatings—galvanising line.
I come to my asks. UK steelmakers need competitive electricity prices. As I have said many times in debates on steel over the years, they pay 50% more than competitors in France and Germany, and that adds £37 million to UK steel electricity costs. Will the Minister address that when she responds to the debate, and at least commit to tracking the disparity between countries? We must address the issue of the UK carbon border adjustment mechanism. UK Steel asks that we move forward the implementation in line with the EU, which is implementing it in 2026, lest displaced steel from the EU flood into the UK.
With steel safeguards expiring in 2026, we must work with the industry to address the issue of global overcapacity. This year alone, China is expected to export 100 million tonnes of steel—equivalent to the entire UK steel supply for 13 years. That is a significant threat with the potential to impact any Government support for the industry elsewhere. I also hope that procurement will be at the heart of the steel strategy. With this Government’s ambitions for house building, new energy projects, wind turbines, and offshore and onshore wind, we will need lots of steel. Let us make sure that it is UK steel.
Steel is vital to any climate solution, and steelworkers themselves accept the need to decarbonise, but they need to partner with a Government who are committed to a just transition. I know that with this steel Minister, my hon. Friend the Member for Croydon West, we can all work together to ensure that.
09:54:43
Martin Vickers
Brigg and Immingham
It is a pleasure to see you in the Chair, Mrs Harris. I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing this timely debate.
Part of the British steel site at Scunthorpe falls within my Brigg and Immingham constituency, so needless to say I take a keen interest in its future. The site is known across the country and further afield for the steel it produces, which is top-quality virgin steel made from raw materials. This method of production results in products used for rail tracks and tyre wire, all the way to cruise ships and the Shard. British steel can be found all over the world. The steelworkers who make this world-class product are understandably proud of the skills they possess.
There is widespread, cross-party agreement that steel is incredibly important for everything we do, from defence to growth, which the hon. Member for Newport East (Jessica Morden) mentioned. If anything can be defined as a core industry—one of genuine strategic importance—it must be steel.
Workers and their families in my constituency and across northern Lincolnshire are incredibly concerned. They have heard rumours and seen press reports in recent weeks that suggest an early end to the imports of coke, the imminent closure of blast furnaces and escalating plans to import steel from the other side of the world to replace the products they make. Understandably, they want to know once and for all whether the rumours are true. They want certainty on whether the plan is to keep the blast furnaces running at least until electric arc furnaces are fully operational—does that still stand?
Prior to the election, Labour candidates stood on a platform of support for the UK steel industry, and billions of pounds were pledged. My constituents have not forgotten what they were told. They want to know where those billions are going and they want to see them spent in Scunthorpe. Will the Minister level with workers at the Scunthorpe site and set out exactly what this Government’s intentions are? Do they want to keep a domestic steel industry, like many countries around the world, or do they not?
The absolute least that the workforce at Scunthorpe deserve is for the Government to be completely frank with them on this issue. Do the Government value the work of steelmakers in Scunthorpe? Do they value the strategic capability of our nation to make our own steel? Do they want to keep domestic steel production for use in infrastructure and defence? How and when are they going secure that? If they cannot answer yes to those questions, can they explain what is so exceptional about the UK that means we cannot aspire to maintain a steel industry? The reality is that maintaining a steel industry will always demand support from the public purse. Without a steel industry, we are in effect admitting that we no longer aspire to be a major manufacturing nation and accepting that we do not value the defence industry.
In discussions on steel there are those who like to criticise the efforts of the previous Government. Although I do not want to spend the short time I have on political point scoring, I do think it is worth setting out some of the realities. The Conservative Government extended trade tariffs on steel products twice in the last Parliament; they did this having listened to MPs and businesses. It is a fact that they brought forward measures to help energy costs, and that they paid workers’ wages at Scunthorpe for many months to maintain jobs, skills and the site itself during the sale of the business five years ago. These were tangible, proactive decisions made by a Government who understood the importance of steel to our nation.
The former Member for Scunthorpe, Holly Mumby-Croft, mentioned steel over 200 times in questions and debates during her time in the House. I recognise that the current hon. Member for Scunthorpe (Sir Nicholas Dakin) is a Minister, meaning, I presume, that he supports the Government’s policies in relation to the steel industry. If his mailbag is similar to mine, he will know the scale of anxiety across the whole area. Just last week he was calling for a deal at Scunthorpe similar to the one in south Wales, where thousands of workers are set to lose their jobs. I want to see a policy that supports jobs, produces top-quality steel and supports the whole supply chain, which Scunthorpe relies on.
Under the last Labour Government, steel production and jobs halved in the UK. Will the Minister reassure workers at the Scunthorpe site that this Labour Government do not intend to repeat that legacy? I understand that the Minister is involved in current negotiations and will not be able to share all the detail the discussions. If that is the case, can she at least give the workers some clarity on when she expects there to be an announcement on the future of the site? Will she also reassure residents that she is working with North Lincolnshire council’s leader Rob Waltham, who proactively travelled to China a few weeks ago to meet the owners in person? He is taking a front-and-centre role in putting together a masterplan for the site to ensure that jobs and opportunities are brought to the area. He must be fully supported by the Government in that work; will the Minister confirm that that support will be offered?
I am conscious that there are those who will challenge the continuation of blast furnace steelmaking on environmental grounds, but it is quite clear that ending the production of virgin steel in the UK, and then importing virgin steel from abroad, would simply be offshoring our own emissions and adding the emissions involved in the transport of the steel to the UK. We should certainly not consider patting ourselves on the back for making environmental improvements if the Government’s plan is simply to allow the same or worse levels of emissions to be created elsewhere and for the steel then to be brought to the UK on diesel ships.
Part of the British steel site at Scunthorpe falls within my Brigg and Immingham constituency, so needless to say I take a keen interest in its future. The site is known across the country and further afield for the steel it produces, which is top-quality virgin steel made from raw materials. This method of production results in products used for rail tracks and tyre wire, all the way to cruise ships and the Shard. British steel can be found all over the world. The steelworkers who make this world-class product are understandably proud of the skills they possess.
There is widespread, cross-party agreement that steel is incredibly important for everything we do, from defence to growth, which the hon. Member for Newport East (Jessica Morden) mentioned. If anything can be defined as a core industry—one of genuine strategic importance—it must be steel.
Workers and their families in my constituency and across northern Lincolnshire are incredibly concerned. They have heard rumours and seen press reports in recent weeks that suggest an early end to the imports of coke, the imminent closure of blast furnaces and escalating plans to import steel from the other side of the world to replace the products they make. Understandably, they want to know once and for all whether the rumours are true. They want certainty on whether the plan is to keep the blast furnaces running at least until electric arc furnaces are fully operational—does that still stand?
Prior to the election, Labour candidates stood on a platform of support for the UK steel industry, and billions of pounds were pledged. My constituents have not forgotten what they were told. They want to know where those billions are going and they want to see them spent in Scunthorpe. Will the Minister level with workers at the Scunthorpe site and set out exactly what this Government’s intentions are? Do they want to keep a domestic steel industry, like many countries around the world, or do they not?
The absolute least that the workforce at Scunthorpe deserve is for the Government to be completely frank with them on this issue. Do the Government value the work of steelmakers in Scunthorpe? Do they value the strategic capability of our nation to make our own steel? Do they want to keep domestic steel production for use in infrastructure and defence? How and when are they going secure that? If they cannot answer yes to those questions, can they explain what is so exceptional about the UK that means we cannot aspire to maintain a steel industry? The reality is that maintaining a steel industry will always demand support from the public purse. Without a steel industry, we are in effect admitting that we no longer aspire to be a major manufacturing nation and accepting that we do not value the defence industry.
In discussions on steel there are those who like to criticise the efforts of the previous Government. Although I do not want to spend the short time I have on political point scoring, I do think it is worth setting out some of the realities. The Conservative Government extended trade tariffs on steel products twice in the last Parliament; they did this having listened to MPs and businesses. It is a fact that they brought forward measures to help energy costs, and that they paid workers’ wages at Scunthorpe for many months to maintain jobs, skills and the site itself during the sale of the business five years ago. These were tangible, proactive decisions made by a Government who understood the importance of steel to our nation.
The former Member for Scunthorpe, Holly Mumby-Croft, mentioned steel over 200 times in questions and debates during her time in the House. I recognise that the current hon. Member for Scunthorpe (Sir Nicholas Dakin) is a Minister, meaning, I presume, that he supports the Government’s policies in relation to the steel industry. If his mailbag is similar to mine, he will know the scale of anxiety across the whole area. Just last week he was calling for a deal at Scunthorpe similar to the one in south Wales, where thousands of workers are set to lose their jobs. I want to see a policy that supports jobs, produces top-quality steel and supports the whole supply chain, which Scunthorpe relies on.
Under the last Labour Government, steel production and jobs halved in the UK. Will the Minister reassure workers at the Scunthorpe site that this Labour Government do not intend to repeat that legacy? I understand that the Minister is involved in current negotiations and will not be able to share all the detail the discussions. If that is the case, can she at least give the workers some clarity on when she expects there to be an announcement on the future of the site? Will she also reassure residents that she is working with North Lincolnshire council’s leader Rob Waltham, who proactively travelled to China a few weeks ago to meet the owners in person? He is taking a front-and-centre role in putting together a masterplan for the site to ensure that jobs and opportunities are brought to the area. He must be fully supported by the Government in that work; will the Minister confirm that that support will be offered?
I am conscious that there are those who will challenge the continuation of blast furnace steelmaking on environmental grounds, but it is quite clear that ending the production of virgin steel in the UK, and then importing virgin steel from abroad, would simply be offshoring our own emissions and adding the emissions involved in the transport of the steel to the UK. We should certainly not consider patting ourselves on the back for making environmental improvements if the Government’s plan is simply to allow the same or worse levels of emissions to be created elsewhere and for the steel then to be brought to the UK on diesel ships.
10:01:14
Lee Anderson
Ashfield
The hon. Member is making a great speech and makes a great point. Does he agree that if we are going to go down this road of net zero madness and make our steel more expensive, we should ban steel and steel products from other countries that are made in blast furnaces?
Martin Vickers
There would certainly be a case for the point the hon. Member makes. I gently point out that net zero is actually crucial to the economy of northern Lincolnshire, which I represent—I am thinking of the Humber Zero project and similar schemes.
I think you are urging me to come to a conclusion, Mrs Harris, so I will miss the next two or three pages out. I will say that whatever deal is reached now is in this Government’s hands. This an industry that, if lost, will be lost forever. I call on the Minister to redouble her efforts to secure the future of steelmaking in Scunthorpe and throughout the country. It is hard to exaggerate how crucial this is to Scunthorpe, to northern Lincolnshire and to the UK as a whole. We must bring this situation to a conclusion speedily to avoid the anxiety that workers are currently experiencing.
I think you are urging me to come to a conclusion, Mrs Harris, so I will miss the next two or three pages out. I will say that whatever deal is reached now is in this Government’s hands. This an industry that, if lost, will be lost forever. I call on the Minister to redouble her efforts to secure the future of steelmaking in Scunthorpe and throughout the country. It is hard to exaggerate how crucial this is to Scunthorpe, to northern Lincolnshire and to the UK as a whole. We must bring this situation to a conclusion speedily to avoid the anxiety that workers are currently experiencing.
10:02:25
Chris McDonald
Stockton North
It is, as always, a pleasure to serve under your chairmanship, Mrs Harris, and I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing the debate. As many hon. Members will know, I have a background in the steel industry, so, rather than recite all of my interests, I simply refer people to my entry in the Register of Members’ Financial Interests.
I listened very carefully to the speech from the hon. Member for Boston and Skegness. There were a few points of difference, but, actually, there was much on which I agreed, so I look forward to him and his colleagues coming forward and supporting the Government’s steel strategy in due course.
Turning to the position in which we find ourselves in the steel industry, the Government have an unenviable task as a result of the legacy that we were left by the previous Government. I listened when the hon. Member for Brigg and Immingham (Martin Vickers) talked about the changes to tariffs made by the previous Government. They did make those changes, but they stuck rigidly to a suite of policies that denied the possibility of private sector capital investment coming into the UK’s steel industry by making it unviable. I know that well from the international investors I worked with in the industry. They were very keen to invest in the UK, but we could never get an appropriate rate of return as a direct result of policies pursued by that Government.
The Conservative Government knew that well; they knew it when the Redcar blast furnace closed in 2015 and when they stood back and let it fail for the want of the purchase of some coal. At the time, it was the most productive and efficient blast furnace in Europe. The hon. Member for Brigg and Immingham mentioned Scunthorpe; prior to 2020, the Conservative Government poured £1 billion into Scunthorpe but did not invest any of that money in transitioning to new technology that would have actually created a great future for people in Scunthorpe, and a return for the taxpayer, too. Instead, they sold the plant off cheaply.
Therefore, I do not envy the position of my hon. and right hon. colleagues in the Department for Business and Trade, who are wrestling with this legacy. Essentially, they are putting out the fires of the previous Government, and we will see, when the steel strategy has been brought forward, how we can create a bright future for the industry. We need to do that, and I support the calls to do it, but I think that the challenge is not actually about adherence to net zero; it is about adherence to a different ideology, which has been to assume that the steel industry operates in a free market and that we can treat it as such. It does not. Other countries around the world support their steel industries, so we need to create a level playing field for investment in our steel industry, too. If we do that then we can attract billions of pounds of private sector investment into our industry, as countries such as Austria, Sweden, Germany, France and so on do.
Over the past 10 years we have seen the UK steel industry collapse to the same size as Belgium’s. Surely the UK should have the ambition to at least be as good as Belgium and have a steel industry that can serve us as well as the Belgian steel industry serves its country. Of course, we can do that to compete globally and to create the products that we need for our green transition. The previous Government knew that quite well: a report on confidence and capabilities, which I co-authored, can be found on the Government website from 2017. It identified gaps in plate steels for offshore wind, seamless tubes for nuclear power and other areas as well. The previous Government made no effort to fill those gaps because, of course, they turned their back on private sector investment.
It is important that the steel strategy is brought forward in a way that will attract private sector investment and enable us to accelerate the green transition of our steel industry. Here I come to the point of difference with Opposition Members: the green transition is not an ideology, it is an economic imperative. We need to move away from blast furnaces because they are unproductive compared with the latest steel technologies. Steel plants operating electric arc furnaces are five times more productive than those operating blast furnaces.
I listened very carefully to the speech from the hon. Member for Boston and Skegness. There were a few points of difference, but, actually, there was much on which I agreed, so I look forward to him and his colleagues coming forward and supporting the Government’s steel strategy in due course.
Turning to the position in which we find ourselves in the steel industry, the Government have an unenviable task as a result of the legacy that we were left by the previous Government. I listened when the hon. Member for Brigg and Immingham (Martin Vickers) talked about the changes to tariffs made by the previous Government. They did make those changes, but they stuck rigidly to a suite of policies that denied the possibility of private sector capital investment coming into the UK’s steel industry by making it unviable. I know that well from the international investors I worked with in the industry. They were very keen to invest in the UK, but we could never get an appropriate rate of return as a direct result of policies pursued by that Government.
The Conservative Government knew that well; they knew it when the Redcar blast furnace closed in 2015 and when they stood back and let it fail for the want of the purchase of some coal. At the time, it was the most productive and efficient blast furnace in Europe. The hon. Member for Brigg and Immingham mentioned Scunthorpe; prior to 2020, the Conservative Government poured £1 billion into Scunthorpe but did not invest any of that money in transitioning to new technology that would have actually created a great future for people in Scunthorpe, and a return for the taxpayer, too. Instead, they sold the plant off cheaply.
Therefore, I do not envy the position of my hon. and right hon. colleagues in the Department for Business and Trade, who are wrestling with this legacy. Essentially, they are putting out the fires of the previous Government, and we will see, when the steel strategy has been brought forward, how we can create a bright future for the industry. We need to do that, and I support the calls to do it, but I think that the challenge is not actually about adherence to net zero; it is about adherence to a different ideology, which has been to assume that the steel industry operates in a free market and that we can treat it as such. It does not. Other countries around the world support their steel industries, so we need to create a level playing field for investment in our steel industry, too. If we do that then we can attract billions of pounds of private sector investment into our industry, as countries such as Austria, Sweden, Germany, France and so on do.
Over the past 10 years we have seen the UK steel industry collapse to the same size as Belgium’s. Surely the UK should have the ambition to at least be as good as Belgium and have a steel industry that can serve us as well as the Belgian steel industry serves its country. Of course, we can do that to compete globally and to create the products that we need for our green transition. The previous Government knew that quite well: a report on confidence and capabilities, which I co-authored, can be found on the Government website from 2017. It identified gaps in plate steels for offshore wind, seamless tubes for nuclear power and other areas as well. The previous Government made no effort to fill those gaps because, of course, they turned their back on private sector investment.
It is important that the steel strategy is brought forward in a way that will attract private sector investment and enable us to accelerate the green transition of our steel industry. Here I come to the point of difference with Opposition Members: the green transition is not an ideology, it is an economic imperative. We need to move away from blast furnaces because they are unproductive compared with the latest steel technologies. Steel plants operating electric arc furnaces are five times more productive than those operating blast furnaces.
Lee Anderson
indicated dissent.
10:14:21
Chris McDonald
The hon. Member chunters about it, but the most productive steel plant in the world is based in the USA. It is entirely privately funded and produces the same quality of steel as Port Talbot at the same quantity with one fifth of the workforce, because it is automated and it uses electric arc furnaces. If we get energy prices right, we can make that investment here and we can produce those steels too.
The UK is the second largest exporter of scrap in the world. That is a valuable natural resource that we could use in the UK, but we do need primary steelmaking and we need it to use the most efficient technologies. I am afraid, for those people who adhere to blast furnace technology, that that is not the blast furnace. I look forward to my hon. Friend the Minister bringing forward the steel strategy, and to supporting it and debating it further. I look forward to a bright future for steel in the UK.
The UK is the second largest exporter of scrap in the world. That is a valuable natural resource that we could use in the UK, but we do need primary steelmaking and we need it to use the most efficient technologies. I am afraid, for those people who adhere to blast furnace technology, that that is not the blast furnace. I look forward to my hon. Friend the Minister bringing forward the steel strategy, and to supporting it and debating it further. I look forward to a bright future for steel in the UK.
10:14:21
Lee Anderson
Ashfield
It is a pleasure to serve with you in the Chair, Mrs Harris. I thank my hon. Friend the Member for Boston and Skegness (Richard Tice) for securing the debate, and for making probably the best speech so far of this Parliament—it was absolutely fantastic. Government Members are harping on about the steel strategy. I can assure them that steelworkers will be frightened to death of that strategy, because it will cost jobs and destroy our steel industry and our communities. I fear the steel strategy.
In the 19th century, this great country of ours was the world leader in steel production. Over 40% of the world’s steel was made right here in this country. I do not live a million miles away from Sheffield—15 minutes up the road—and not far away from Scunny. They were great industrial towns that drove our economy and provided hundreds of thousands of jobs, including in the wider community. They built up communities, and it is a shame that the Labour Government seem intent on destroying even more of the few communities that we have left.
Our country was built on coal and steel. Throughout the midlands and the north, we drove the industrial revolution. We used to export steel and coal, and now what are we doing? We have gone backwards. China is making over 1 billion tonnes of steel a year; we are making about 5.6 million tonnes. China, by the way, is a world leader in renewables, yet it is still opening coal-fired power stations to make steel, which it can export all around the world.
If we think about it, we are actually carbon emission nimbys. We are quite happy to import steel and products made from steel that have been made with blast furnaces from 60 or 70 countries around the world, but we say that we cannot do it here. That is hypocrisy of the highest level. I have friends who work in the steel industry and they are seeing a real downturn at the moment —they are struggling. They are struggling to pay the bills and to make their business work. The industry is in terminal decline, I fear.
The collapse of the Port Talbot steelworks means that we are now the only advanced nation in the world that cannot make its own virgin steel. It is absolutely ridiculous. We have Russia at war with Ukraine, and we are living in uncertain times. Over the past few years and during the last Parliament, we saw the problems that we had with energy supply and our dependence on foreign states for it. Now we are doing more of the same with our steel. It is beyond comprehension; it is absolute madness. We are killing off our steel communities just like we did the coalmining communities back in the ’80s—I know because I was there. I saw the impact that it had, and it still has devastating consequences 40 years later. Those communities were killed off and they are still struggling. I live there and I see it day in, day out, yet we are going to get more of the same from this Government.
Look at the coal mine in Cumbria that we want to—and should—open to produce metallurgical coal that will then help in the production of steel, which we could blend and use in blast furnaces in this country. But we seem reluctant to do that. That coal mine would produce millions of tonnes of metallurgical coal and provide 500 to 600 well-paid jobs in an area that needs them, as well as more jobs in the wider community. However, we are quite prepared to import 3 million or 4 million tonnes of coal a year into this country, rather than produce it, use it in this country and hopefully export some as well. It is absolute madness.
My hon. Friend the Member for Boston and Skegness spoke about the high electricity charges that will mean high production costs for making steel. Look at Drax power station in North Yorkshire. The electricity prices coming from there are astronomical. That is a power station that burns wood. It used to burn coal from a coal mine just a few miles down the road, but we had this great idea in this country to import wood from trees chopped down in North America. We stick them on to diesel-guzzling cargo ships, send them over the Atlantic and then set fire to them in a power station in North Yorkshire. It is absolute madness, and it will drive up the price of electricity and subsequently drive up the price of steel production. It is beyond madness.
China is getting it right; not only is it a world leader in renewables but it is making steel from blast furnaces. China is right and we should be copying its so-called steel strategy. It seems to have got it right. I agree with the five-point plan proposed by my hon. Friend the Member for Boston and Skegness but I feel that it will probably fall on deaf ears. The madness will continue. Steelworks will continue to close down and we will continue to lose jobs. We will continue to destroy communities in our great country.
In the 19th century, this great country of ours was the world leader in steel production. Over 40% of the world’s steel was made right here in this country. I do not live a million miles away from Sheffield—15 minutes up the road—and not far away from Scunny. They were great industrial towns that drove our economy and provided hundreds of thousands of jobs, including in the wider community. They built up communities, and it is a shame that the Labour Government seem intent on destroying even more of the few communities that we have left.
Our country was built on coal and steel. Throughout the midlands and the north, we drove the industrial revolution. We used to export steel and coal, and now what are we doing? We have gone backwards. China is making over 1 billion tonnes of steel a year; we are making about 5.6 million tonnes. China, by the way, is a world leader in renewables, yet it is still opening coal-fired power stations to make steel, which it can export all around the world.
If we think about it, we are actually carbon emission nimbys. We are quite happy to import steel and products made from steel that have been made with blast furnaces from 60 or 70 countries around the world, but we say that we cannot do it here. That is hypocrisy of the highest level. I have friends who work in the steel industry and they are seeing a real downturn at the moment —they are struggling. They are struggling to pay the bills and to make their business work. The industry is in terminal decline, I fear.
The collapse of the Port Talbot steelworks means that we are now the only advanced nation in the world that cannot make its own virgin steel. It is absolutely ridiculous. We have Russia at war with Ukraine, and we are living in uncertain times. Over the past few years and during the last Parliament, we saw the problems that we had with energy supply and our dependence on foreign states for it. Now we are doing more of the same with our steel. It is beyond comprehension; it is absolute madness. We are killing off our steel communities just like we did the coalmining communities back in the ’80s—I know because I was there. I saw the impact that it had, and it still has devastating consequences 40 years later. Those communities were killed off and they are still struggling. I live there and I see it day in, day out, yet we are going to get more of the same from this Government.
Look at the coal mine in Cumbria that we want to—and should—open to produce metallurgical coal that will then help in the production of steel, which we could blend and use in blast furnaces in this country. But we seem reluctant to do that. That coal mine would produce millions of tonnes of metallurgical coal and provide 500 to 600 well-paid jobs in an area that needs them, as well as more jobs in the wider community. However, we are quite prepared to import 3 million or 4 million tonnes of coal a year into this country, rather than produce it, use it in this country and hopefully export some as well. It is absolute madness.
My hon. Friend the Member for Boston and Skegness spoke about the high electricity charges that will mean high production costs for making steel. Look at Drax power station in North Yorkshire. The electricity prices coming from there are astronomical. That is a power station that burns wood. It used to burn coal from a coal mine just a few miles down the road, but we had this great idea in this country to import wood from trees chopped down in North America. We stick them on to diesel-guzzling cargo ships, send them over the Atlantic and then set fire to them in a power station in North Yorkshire. It is absolute madness, and it will drive up the price of electricity and subsequently drive up the price of steel production. It is beyond madness.
China is getting it right; not only is it a world leader in renewables but it is making steel from blast furnaces. China is right and we should be copying its so-called steel strategy. It seems to have got it right. I agree with the five-point plan proposed by my hon. Friend the Member for Boston and Skegness but I feel that it will probably fall on deaf ears. The madness will continue. Steelworks will continue to close down and we will continue to lose jobs. We will continue to destroy communities in our great country.
Sarah Jones
The Minister for Industry
indicated dissent.
Lee Anderson
Do you want to intervene, Minister?
in the Chair
Carolyn Harris
Order. Mr Anderson, I am “you”.
Lee Anderson
Sorry, Mrs Harris. I will wind up now because I am quite angry with the madness of this place that we work in. There are families and communities out there relying on us to save their jobs, and Members opposite sit there with glazed expressions on their faces. Come the next election, people in those communities will boot you all out.
10:03:58
Jim Shannon
Strangford
It is a pleasure to serve under your chairship, Mrs Harris. It seems like only a few minutes ago that you were chairing the last debate yesterday in Westminster Hall, and here you are again. I commend you on your perseverance and obviously on the fact that you do not need any sleep at all to look fresh and well—well done.
First, I thank the hon. Member for Boston and Skegness (Richard Tice) for leading today’s debate. As he always does, he set the scene in a very admirable way, underlining his concerns, which many of us in this Chamber share as well. There is no doubt that this is an incredibly important debate not just for myself but others, and we need to discuss these matters.
Looking at the steel industry in the UK over the years, it dates back as far as the 17th century when steel production was initially established. Steel was traditionally used for larger projects such as bridge building and weight-bearing items like rail tracks—the hon. Member referred to the trains and rails in India. In 2020, steel contributed some £2 billion to our economy and was responsible for 0.1% of the total UK economic output. Jumping forward to 2023, the latest reports show that UK steel production and demand plummeted to new historic lows of 5.6 million tonnes and 7.6 million tonnes respectively, which fall well below the levels seen at the peak of the pandemic in 2020. That is unfortunately quite discouraging.
I should have said at the start, and I apologise for not doing so, that it is nice to see the Minister in her place—I wish her well. She was telling me earlier in our conversation on the way to the hall that she has dual responsibilities. I very much look forward to her response to our inquiries. Everybody’s wish in this Chamber is to see the steel industry secured. It is also nice to see the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), in his place, and I look forward to his constructive contribution.
First, I thank the hon. Member for Boston and Skegness (Richard Tice) for leading today’s debate. As he always does, he set the scene in a very admirable way, underlining his concerns, which many of us in this Chamber share as well. There is no doubt that this is an incredibly important debate not just for myself but others, and we need to discuss these matters.
Looking at the steel industry in the UK over the years, it dates back as far as the 17th century when steel production was initially established. Steel was traditionally used for larger projects such as bridge building and weight-bearing items like rail tracks—the hon. Member referred to the trains and rails in India. In 2020, steel contributed some £2 billion to our economy and was responsible for 0.1% of the total UK economic output. Jumping forward to 2023, the latest reports show that UK steel production and demand plummeted to new historic lows of 5.6 million tonnes and 7.6 million tonnes respectively, which fall well below the levels seen at the peak of the pandemic in 2020. That is unfortunately quite discouraging.
I should have said at the start, and I apologise for not doing so, that it is nice to see the Minister in her place—I wish her well. She was telling me earlier in our conversation on the way to the hall that she has dual responsibilities. I very much look forward to her response to our inquiries. Everybody’s wish in this Chamber is to see the steel industry secured. It is also nice to see the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), in his place, and I look forward to his constructive contribution.
10:16:08
Mr Gregory Campbell
East Londonderry
In the positive tone my hon. Friend is adopting, and maybe in a light-hearted sense, would he agree that a man yesterday showed considerable backbone, of real steel: Michael O’Neill, the Northern Ireland manager, who picked a team of under-21s and thrashed Bulgaria 5-0? That is a real backbone of steel and we need to see some positive results like that from this debate.
10:16:32
Jim Shannon
I am sure the Minister has many football skills. Last night one of the players, the young fellow Price, scored a hat trick—yes, it was an admirable victory. If everybody showed that backbone and strength of character, certainly we would be in a better place. I thank my hon. Friend—I know that was moving away completely from the subject matter but he nonetheless reinforced the point to be made.
Northern Ireland plays an important role in the success of the UK steel industry, although back in 2022 that was under attack from the damages of the Northern Ireland protocol and the outbreak of war in Ukraine. It was said at the time that steel exports from Northern Ireland could face up to 25% tax and tariffs, but it is good to report today that that has since been addressed by the Windsor framework. That is one of the positives that came out of that process: I wish there were more.
What springs to mind is the 1,100 steel businesses across all parts of the United Kingdom and the 33,400 jobs that hinge on them—we cannot ignore those; they are so important. We have seen recently the threats to job security due to decisions to close production in certain steel plants. Only two weeks ago, Tata shut down its blast furnace 4, which was the final furnace operating at the UK’s biggest steelworks in Port Talbot. That resulted in 2,800 job losses across south Wales, not to mention that Port Talbot was pivotal to steel construction in Northern Ireland. That is why, in debates on steel, we do not necessarily have to have a manufacturing base in our constituency to see the benefits. The benefits for us in Northern Ireland were quite clear: the steel produced in Port Talbot came to Northern Ireland.
The hon. Member for Boston and Skegness rightly raised concerns about the impact that our net zero advancements could have on the steel sector. It is crucial that we get this correct while ensuring a proper balance. Our defence industry relies heavily on domestic home-grown steel to build tanks and warships. That raises issues of us potentially relying too much on foreign imports, which the hon. Member referred. We should not ignore that, and our focus should be on providing incentives to the fantastic local companies we already have and putting them front and centre to the UK steel sector’s success. We must modernise to advance our steel industry and properly take care of it and get it right together.
We must also be able to source steel locally; doing so is of major importance for many industries across the United Kingdom, from aerospace and defence to boats and other transport. For us in Northern Ireland, the aerospace sector is very important.
I know the debate is not about this but I want to ask the Minister a question about Harland & Wolff that I had hoped to ask in Defence questions. Will the Minister give Northern Ireland Members some update on where we are with Harland & Wolff? During my discussion with the Minister about Defence questions on Monday, the Minister said, “Jim, ask this question and I’ll be happy to come back with an answer.” Harland & Wolff is really important, No.1, for the jobs it provides, but also for the connectivity that we have, with all parts of the United Kingdom coming together. Defence and aerospace are important for our manufacturing base in Northern Ireland, but also for the continuation of how we work better together.
I support our steel system. I want the best for it. We all want the best for it and I know that. I also hear and respect the concerns of other Members about its future. And there is no doubt at all that more needs to be done to preserve and protect it.
In conclusion, society will progress and changes will be made, but it is important that we remember the benefits that our steel sector brings to the United Kingdom economy. Moreover, there are the jobs that it provides for my constituents in Strangford and for people further afield—indeed, in all areas of this great United Kingdom of Great Britain and Northern Ireland. So, I sincerely look forward to hearing from the Minister and assessing what steps our Government will take to preserve our steel sector, and I have hope—much hope—that that action will allow for all of our nations to play their part together.
Northern Ireland plays an important role in the success of the UK steel industry, although back in 2022 that was under attack from the damages of the Northern Ireland protocol and the outbreak of war in Ukraine. It was said at the time that steel exports from Northern Ireland could face up to 25% tax and tariffs, but it is good to report today that that has since been addressed by the Windsor framework. That is one of the positives that came out of that process: I wish there were more.
What springs to mind is the 1,100 steel businesses across all parts of the United Kingdom and the 33,400 jobs that hinge on them—we cannot ignore those; they are so important. We have seen recently the threats to job security due to decisions to close production in certain steel plants. Only two weeks ago, Tata shut down its blast furnace 4, which was the final furnace operating at the UK’s biggest steelworks in Port Talbot. That resulted in 2,800 job losses across south Wales, not to mention that Port Talbot was pivotal to steel construction in Northern Ireland. That is why, in debates on steel, we do not necessarily have to have a manufacturing base in our constituency to see the benefits. The benefits for us in Northern Ireland were quite clear: the steel produced in Port Talbot came to Northern Ireland.
The hon. Member for Boston and Skegness rightly raised concerns about the impact that our net zero advancements could have on the steel sector. It is crucial that we get this correct while ensuring a proper balance. Our defence industry relies heavily on domestic home-grown steel to build tanks and warships. That raises issues of us potentially relying too much on foreign imports, which the hon. Member referred. We should not ignore that, and our focus should be on providing incentives to the fantastic local companies we already have and putting them front and centre to the UK steel sector’s success. We must modernise to advance our steel industry and properly take care of it and get it right together.
We must also be able to source steel locally; doing so is of major importance for many industries across the United Kingdom, from aerospace and defence to boats and other transport. For us in Northern Ireland, the aerospace sector is very important.
I know the debate is not about this but I want to ask the Minister a question about Harland & Wolff that I had hoped to ask in Defence questions. Will the Minister give Northern Ireland Members some update on where we are with Harland & Wolff? During my discussion with the Minister about Defence questions on Monday, the Minister said, “Jim, ask this question and I’ll be happy to come back with an answer.” Harland & Wolff is really important, No.1, for the jobs it provides, but also for the connectivity that we have, with all parts of the United Kingdom coming together. Defence and aerospace are important for our manufacturing base in Northern Ireland, but also for the continuation of how we work better together.
I support our steel system. I want the best for it. We all want the best for it and I know that. I also hear and respect the concerns of other Members about its future. And there is no doubt at all that more needs to be done to preserve and protect it.
In conclusion, society will progress and changes will be made, but it is important that we remember the benefits that our steel sector brings to the United Kingdom economy. Moreover, there are the jobs that it provides for my constituents in Strangford and for people further afield—indeed, in all areas of this great United Kingdom of Great Britain and Northern Ireland. So, I sincerely look forward to hearing from the Minister and assessing what steps our Government will take to preserve our steel sector, and I have hope—much hope—that that action will allow for all of our nations to play their part together.
in the Chair
Carolyn Harris
I call the Lib Dem spokesperson, Clive Jones, to speak.
10:20:52
Clive Jones
Wokingham
It is a pleasure to serve under your chairmanship, Mrs Harris, and I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing this debate. It is also a pleasure to speak for the first time in my capacity as a Lib Dem Front-Bench spokesman.
Steelmaking is of vital strategic importance to the UK. We need to build the crucial infrastructure required to generate sustainable growth and to safeguard our national security, which must be important to all of us in this Chamber today.
Although the Liberal Democrats welcome the news that new technologies will lead to carbon emissions from steelmaking in Britain falling, the neglect of the steel industry in recent years is just another part of the previous Conservative Government’s disastrous legacy. This Government finally need to move from a patchwork of last-minute rescues to a long-term plan that will set the steel industry on a sustainable footing.
The steel industry’s situation illustrates that we desperately need a real industrial strategy that includes a proper plan for steel. Although I welcome the Government’s Green Paper, which was published earlier this week, and hope that it will provide our business community with much-needed certainty in the eight sectors that the Government have highlighted as being growth drivers, the absence of the word “steel” is strikingly apparent.
We accept the need to move towards less carbon-intensive modes of production, but it is vital that any job losses are mitigated by reskilling, retraining and new green investment. We must be certain that this investment in skills and regeneration is properly targeted where it can have the greatest impact on communities that currently rely heavily on steel production.
With 2,800 jobs set to be lost, the Government need to take action as soon as possible to bring certainty for those employed in steelworks. So, I ask the Minister today what the Department is doing to ensure that job losses are mitigated, and how will the steel strategy, which is set to be published next year, link to an industrial strategy?
Steelmaking is of vital strategic importance to the UK. We need to build the crucial infrastructure required to generate sustainable growth and to safeguard our national security, which must be important to all of us in this Chamber today.
Although the Liberal Democrats welcome the news that new technologies will lead to carbon emissions from steelmaking in Britain falling, the neglect of the steel industry in recent years is just another part of the previous Conservative Government’s disastrous legacy. This Government finally need to move from a patchwork of last-minute rescues to a long-term plan that will set the steel industry on a sustainable footing.
The steel industry’s situation illustrates that we desperately need a real industrial strategy that includes a proper plan for steel. Although I welcome the Government’s Green Paper, which was published earlier this week, and hope that it will provide our business community with much-needed certainty in the eight sectors that the Government have highlighted as being growth drivers, the absence of the word “steel” is strikingly apparent.
We accept the need to move towards less carbon-intensive modes of production, but it is vital that any job losses are mitigated by reskilling, retraining and new green investment. We must be certain that this investment in skills and regeneration is properly targeted where it can have the greatest impact on communities that currently rely heavily on steel production.
With 2,800 jobs set to be lost, the Government need to take action as soon as possible to bring certainty for those employed in steelworks. So, I ask the Minister today what the Department is doing to ensure that job losses are mitigated, and how will the steel strategy, which is set to be published next year, link to an industrial strategy?
in the Chair
Carolyn Harris
I call the shadow Minister, Greg Smith, to speak.
10:23:47
Greg Smith
Mid Buckinghamshire
It is a pleasure to serve under your chairmanship, Mrs Harris.
I thank and congratulate the hon. Member for Boston and Skegness (Richard Tice) for securing this debate in Westminster Hall this morning. I also thank everyone who has contributed to it, particularly the hon. Member for East Londonderry (Mr Campbell), whose intervention will potentially go down in history as one of the most innovative ways to participate in a debate on steel, and my hon. Friend the Member for Brigg and Immingham (Martin Vickers) for his superb contribution.
Just a few weeks ago, I challenged the Minister in the main Chamber on the Government’s approach, not just to Port Talbot but to the UK’s entire steel industry, yet just a couple of weeks later we are on the cusp of Scunthorpe steelworks potentially closing completely by Christmas, despite the owner’s clear ask to the Government to safeguard what amounts to thousands of jobs and a vital component of our economic security. If we let Scunthorpe close, on top of Port Talbot, we risk becoming dependent on cheap imports, particularly from China.
Although I understand that the Chancellor and the Prime Minister have had some issues understanding their own manifesto commitments of late, surely the Government cannot possibly have dropped their clear commitment to steel in their manifesto. Surely not, given that 90% of Network Rail steel is sourced from Scunthorpe, and that Liberty and British Steel support more than 3,500 highly-skilled jobs there—those people are dependent on the commitment that the now party of government made in their manifesto. I understand that the Government’s talks with the owners have already stalled and broken down—not the best start for the Secretary of State and the Minister. I remind hon. Members that, less than a year ago, when in opposition, the Secretary of State said that the drive for green steel must mean more jobs, not fewer, but the reality on the ground today is fewer jobs in steel in our country.
The Minister knows that Scunthorpe is now the only site in the UK with the ability to produce virgin steel. If she allows it to close on her watch, we will be left open and vulnerable to cheap imports from China, and that must not be allowed to happen. Equally, I understand that the Government are not prepared to support virgin steel manufacturing while new electric arc furnaces are being commissioned and are coming online. Is that correct? If so, how does it chime with the Secretary of State’s previous commitment that decarbonisation must not mean deindustrialisation?
With the import of coking coal due to end this month, and the possible closure of the Scunthorpe plant completely by Christmas, resulting in thousands of job losses, time is running out. The Government simply must get a grip of the situation. The loss of that vital industrial and economic asset will result in 5,000 job losses across the supply chain and the end to steel production for the first time since the start of the industrial revolution.
Given the choice in front of them, the Government must take responsibility not just for Scunthorpe but for the downstream impact on our shipbuilding industry, the defence sector and, as the hon. Member for Boston and Skegness said eloquently, the production of the wind turbines that, on the other hand, the Government are encouraging—in fact, one of their first acts was to end the ban on onshore wind. They cannot have it both ways: if they want to have their cake and eat it, they need to support the steel sector. The Government have already let Harland & Wolff down. Will they do the same with the whole of the steel sector?
The Government’s plan seems to be to divert imports of steel from China through Brazil to give the impression that this is somehow an innovative solution. I am afraid there is nothing innovative about this Labour Government’s approach. They are masking their failure to secure a future for our steelworkers and our economy as a whole, and at the same time they are risking our national security in the face of growing threats from, among others, China.
I thank and congratulate the hon. Member for Boston and Skegness (Richard Tice) for securing this debate in Westminster Hall this morning. I also thank everyone who has contributed to it, particularly the hon. Member for East Londonderry (Mr Campbell), whose intervention will potentially go down in history as one of the most innovative ways to participate in a debate on steel, and my hon. Friend the Member for Brigg and Immingham (Martin Vickers) for his superb contribution.
Just a few weeks ago, I challenged the Minister in the main Chamber on the Government’s approach, not just to Port Talbot but to the UK’s entire steel industry, yet just a couple of weeks later we are on the cusp of Scunthorpe steelworks potentially closing completely by Christmas, despite the owner’s clear ask to the Government to safeguard what amounts to thousands of jobs and a vital component of our economic security. If we let Scunthorpe close, on top of Port Talbot, we risk becoming dependent on cheap imports, particularly from China.
Although I understand that the Chancellor and the Prime Minister have had some issues understanding their own manifesto commitments of late, surely the Government cannot possibly have dropped their clear commitment to steel in their manifesto. Surely not, given that 90% of Network Rail steel is sourced from Scunthorpe, and that Liberty and British Steel support more than 3,500 highly-skilled jobs there—those people are dependent on the commitment that the now party of government made in their manifesto. I understand that the Government’s talks with the owners have already stalled and broken down—not the best start for the Secretary of State and the Minister. I remind hon. Members that, less than a year ago, when in opposition, the Secretary of State said that the drive for green steel must mean more jobs, not fewer, but the reality on the ground today is fewer jobs in steel in our country.
The Minister knows that Scunthorpe is now the only site in the UK with the ability to produce virgin steel. If she allows it to close on her watch, we will be left open and vulnerable to cheap imports from China, and that must not be allowed to happen. Equally, I understand that the Government are not prepared to support virgin steel manufacturing while new electric arc furnaces are being commissioned and are coming online. Is that correct? If so, how does it chime with the Secretary of State’s previous commitment that decarbonisation must not mean deindustrialisation?
With the import of coking coal due to end this month, and the possible closure of the Scunthorpe plant completely by Christmas, resulting in thousands of job losses, time is running out. The Government simply must get a grip of the situation. The loss of that vital industrial and economic asset will result in 5,000 job losses across the supply chain and the end to steel production for the first time since the start of the industrial revolution.
Given the choice in front of them, the Government must take responsibility not just for Scunthorpe but for the downstream impact on our shipbuilding industry, the defence sector and, as the hon. Member for Boston and Skegness said eloquently, the production of the wind turbines that, on the other hand, the Government are encouraging—in fact, one of their first acts was to end the ban on onshore wind. They cannot have it both ways: if they want to have their cake and eat it, they need to support the steel sector. The Government have already let Harland & Wolff down. Will they do the same with the whole of the steel sector?
The Government’s plan seems to be to divert imports of steel from China through Brazil to give the impression that this is somehow an innovative solution. I am afraid there is nothing innovative about this Labour Government’s approach. They are masking their failure to secure a future for our steelworkers and our economy as a whole, and at the same time they are risking our national security in the face of growing threats from, among others, China.
10:28:40
Jessica Morden
Will the Minister give way?
Greg Smith
I am not quite a Minister yet, but I will give way.
Jessica Morden
The shadow Minister talked about taking responsibility, but will he take responsibility for the fact that for 14 years we had no industrial strategy, no steel strategy and endless steel Ministers? Labour Members begged to have any kind of strategy for steel. Therefore, the situation that this Government inherited just a few months ago is the responsibility of the previous Government.
10:31:15
Greg Smith
I am grateful to the hon. Lady for her intervention, but as my hon. Friend the Member for Brigg and Immingham set out, the last Conservative Government took many concrete steps to support our steel sector. I gently remind Members on the Government side—there is no sugarcoating this for Members on my side—they won the election. They are responsible now and have to take decisions for the future of steel; it is no good constantly coming back and trying to do the political point scoring that we have seen time and again in the Chamber. The other side is in charge now, so they can make the decisions. If this Minister wants to stand at the Dispatch Box in a few moments and make those commitments to virgin steel, to steel production in this country, to Scunthorpe and Port Talbot, that will be welcomed by both sides of the House, because both sides of the House want the future of steel to be secured in this country.
What we are seeing on the ground right now is something different, however, because we have returned to the Labour party playbook: scrap jobs, scrap production and become reliant on higher-polluting countries for imports. That is not what I call decarbonisation, so I ask the Minister to come clean. What has gone wrong so early in this Government’s tenure? Why are she and the Secretary of State unable to fulfil their manifesto commitments? Can the Minister explain what will happen to those thousands of jobs in the steel sector across our country? We need the steel strategy now, not a promise of it for the future. Time is running out.
What we are seeing on the ground right now is something different, however, because we have returned to the Labour party playbook: scrap jobs, scrap production and become reliant on higher-polluting countries for imports. That is not what I call decarbonisation, so I ask the Minister to come clean. What has gone wrong so early in this Government’s tenure? Why are she and the Secretary of State unable to fulfil their manifesto commitments? Can the Minister explain what will happen to those thousands of jobs in the steel sector across our country? We need the steel strategy now, not a promise of it for the future. Time is running out.
00:00:00
Sarah Jones
The Minister for Industry
It is a pleasure to serve under your chairmanship, Mrs Harris. I congratulate the hon. Member for Boston and Skegness (Richard Tice) on securing this important debate, which I am glad that we are having. Let me be clear at the outset: the new Government were elected on a mandate to invest in the UK steel industry and turn around its decline, and that is exactly what we will do.
As Members on both sides of the Chamber have echoed, the UK has always been a proud steelmaking nation; it has a rich heritage stretching back to the industrial revolution. My grandad worked in the tinplate factory fed by the steelworks of Port Talbot, and I think most of us in this place have connections, one way or another, to steel manufacturing. Yet, as has been said, steel has been a neglected industry for many years, with crude steel production declining by more than 50% in the last decade alone. Of course, that decline was brought into sharp focus when it was announced under the last Government that the blast furnaces would be closed at Port Talbot.
This Government do not believe that decline is inevitable. The decline we have seen in recent years has been due to a lack of care from previous Governments, who did the bare minimum only when it was too late. We saw the insolvency of SSI—Sahaviriya Steel Industries—steelworks in Redcar in 2015 and the insolvency of British Steel in Scunthorpe in 2019, and we saw how close Tata came to closing its UK steel operations. That pathway risked jobs and emissions being offshored for the long term and risked making us heavily dependent on steel imports for our vital infrastructure and our energy and manufacturing sectors.
This Government are taking a very different approach. This week, we launched a Green Paper on our industrial strategy. For that to have the greatest impact, we must be clear-eyed about the sectors that offer the highest growth opportunities for the economy and businesses, but steel is a foundational industry for practically every other important industry, from energy to infrastructure. We know that it is a vital component of our economy and our ambitions for growth, which is why we also need a steel strategy to determine the best steps forward to rebuild this hugely important industry.
We need to lay out long-term policies and plans to ensure that the UK steel industry is not left behind as the world decarbonises, so last month the Government announced that we will bring forward a new steel strategy next spring. I hear the House’s impatience for that strategy and I understand it: there has been a long period of decline, and we need to turn that around. Given the £2.5-billion investment that we have committed to the strategy, however, it is right that we talk to experts and to politicians around the country, particularly those who have steel in their areas.
As Members on both sides of the Chamber have echoed, the UK has always been a proud steelmaking nation; it has a rich heritage stretching back to the industrial revolution. My grandad worked in the tinplate factory fed by the steelworks of Port Talbot, and I think most of us in this place have connections, one way or another, to steel manufacturing. Yet, as has been said, steel has been a neglected industry for many years, with crude steel production declining by more than 50% in the last decade alone. Of course, that decline was brought into sharp focus when it was announced under the last Government that the blast furnaces would be closed at Port Talbot.
This Government do not believe that decline is inevitable. The decline we have seen in recent years has been due to a lack of care from previous Governments, who did the bare minimum only when it was too late. We saw the insolvency of SSI—Sahaviriya Steel Industries—steelworks in Redcar in 2015 and the insolvency of British Steel in Scunthorpe in 2019, and we saw how close Tata came to closing its UK steel operations. That pathway risked jobs and emissions being offshored for the long term and risked making us heavily dependent on steel imports for our vital infrastructure and our energy and manufacturing sectors.
This Government are taking a very different approach. This week, we launched a Green Paper on our industrial strategy. For that to have the greatest impact, we must be clear-eyed about the sectors that offer the highest growth opportunities for the economy and businesses, but steel is a foundational industry for practically every other important industry, from energy to infrastructure. We know that it is a vital component of our economy and our ambitions for growth, which is why we also need a steel strategy to determine the best steps forward to rebuild this hugely important industry.
We need to lay out long-term policies and plans to ensure that the UK steel industry is not left behind as the world decarbonises, so last month the Government announced that we will bring forward a new steel strategy next spring. I hear the House’s impatience for that strategy and I understand it: there has been a long period of decline, and we need to turn that around. Given the £2.5-billion investment that we have committed to the strategy, however, it is right that we talk to experts and to politicians around the country, particularly those who have steel in their areas.
10:34:43
James McMurdock
South Basildon and East Thurrock
I thank my hon. Friend the Member for Boston and Skegness (Richard Tice) for securing this debate. If I may, I will read a message that I received from someone I know:
“This Westminster Hall debate in infuriating. Talk is cheap!”
I highlight that because we all seem to agree how important the steel industry is. I acknowledge the past and that not all of that lies squarely on the Minister’s shoulders. I ask her to include in her response the steps that the Government will take to secure that future.
As the hon. Member for Newport East (Jessica Morden) eloquently put it, there are advantages to the more advanced technologies, but, as clearly laid out by my hon. Friend the Member for Boston and Skegness, there are practical reasons why they may not become reality—and we need to deal with reality. We all seem to accept and agree—
“This Westminster Hall debate in infuriating. Talk is cheap!”
I highlight that because we all seem to agree how important the steel industry is. I acknowledge the past and that not all of that lies squarely on the Minister’s shoulders. I ask her to include in her response the steps that the Government will take to secure that future.
As the hon. Member for Newport East (Jessica Morden) eloquently put it, there are advantages to the more advanced technologies, but, as clearly laid out by my hon. Friend the Member for Boston and Skegness, there are practical reasons why they may not become reality—and we need to deal with reality. We all seem to accept and agree—
10:35:49
in the Chair
Carolyn Harris
Order. May I remind Members that interventions are meant to be short and to the point?
10:35:49
James McMurdock
Apologies. We all agree that this is vital; will the Minister please lay out how it will become practical?
10:36:19
Sarah Jones
I thank the hon. Gentleman for his intervention and for reading out a message from somebody watching the debate. We all agree that it is time for action and that is exactly what the Government seek.
I will expand on our plans. The steel strategy will be developed and delivered in partnership with the steel sector and the trade unions, of course. It will work in lockstep with the Government’s industrial strategy. Our intention is to increase our UK capabilities, so that we can create a more vibrant, competitive steel sector. That will turn around the situation we inherited, where— I want to emphasise this—under-investment had resulted in dated infrastructure.
My hon. Friend the Member for Stockton North (Chris McDonald), who knows so much about the steel industry, made the point about the efficiency and economy of the new technologies, and why blast furnaces have struggled to make money for the businesses that own them in this country. British Steel’s blast furnaces were built in 1938 and 1954. Both the blast furnaces at Port Talbot were built in the 1950s. They have become incredibly unproductive because they have not been invested in. The new technologies are simply more productive. If we do not keep up with what the rest of the world is doing, we simply will not be able to compete in the market.
We inherited an industry on the brink. Nevertheless, within 10 weeks of coming into Government, we negotiated a better deal with Tata with better safeguards for workers and more money invested in their future. Our £2.5-billion fund for steel will ensure that we have a steel industry for the future. The Government’s ambition is to ramp up investment, strengthen our supply chains and create more well-paid jobs in the places they are needed.
We talk of primary steel. With the help of experts, we will review the viability of technologies for the production of primary steel, including direct reduced iron.
I will expand on our plans. The steel strategy will be developed and delivered in partnership with the steel sector and the trade unions, of course. It will work in lockstep with the Government’s industrial strategy. Our intention is to increase our UK capabilities, so that we can create a more vibrant, competitive steel sector. That will turn around the situation we inherited, where— I want to emphasise this—under-investment had resulted in dated infrastructure.
My hon. Friend the Member for Stockton North (Chris McDonald), who knows so much about the steel industry, made the point about the efficiency and economy of the new technologies, and why blast furnaces have struggled to make money for the businesses that own them in this country. British Steel’s blast furnaces were built in 1938 and 1954. Both the blast furnaces at Port Talbot were built in the 1950s. They have become incredibly unproductive because they have not been invested in. The new technologies are simply more productive. If we do not keep up with what the rest of the world is doing, we simply will not be able to compete in the market.
We inherited an industry on the brink. Nevertheless, within 10 weeks of coming into Government, we negotiated a better deal with Tata with better safeguards for workers and more money invested in their future. Our £2.5-billion fund for steel will ensure that we have a steel industry for the future. The Government’s ambition is to ramp up investment, strengthen our supply chains and create more well-paid jobs in the places they are needed.
We talk of primary steel. With the help of experts, we will review the viability of technologies for the production of primary steel, including direct reduced iron.
10:38:56
Greg Smith
The Minister just said that she will review the options. I hope this is a binary yes/no question: is there a ministerial direction in the upcoming steel strategy to include a commitment to virgin steel production in the United Kingdom?
10:40:54
Sarah Jones
I think I was fairly clear. We have been in opposition. We want to produce primary steel in this country; the previous Government got us to a point where that is almost impossible without huge investment. We are supplying £2.5 billion of investment and looking, quite rightly, at the best way to spend that to create a viable steel future for this country. We are looking at direct reduced iron as part of our steel strategy, which the previous Government did not do.
The UK’s ambition is to ramp up investment. Many hon. Members talked of the need to procure British steel in this country, and we are now in a situation where 95% of the steel procured by the UK Government for infrastructure is British, if the necessary type of steel is made in the UK. The issue is that we do not produce all the different and right types of steel, so we need to ensure that we use the Procurement Act 2023 as much as we can to drive economic growth in steel.
I disagree with the hon. Member for Boston and Skegness on whether the green agenda can drive up jobs—we think that it can. For example, the Korean company SeAH is building a factory in Teesside that will build monopiles, which are the big structures that go into the ocean and anchor wind turbines. It is currently building that structure with 30,000 tonnes of steel from British Steel. We want to get to a point where we are not only building those kinds of factories in this country but using British steel where we can to make the infrastructure.
At the moment, we do not have a factory that makes turbines on the scale that we need for floating offshore wind, but SeAH is building that factory because it has an agreement with RWE, which will be running the turbines that it builds in future. That green job development into wind and renewable energy is driving our ability to build a factory in Teesside to create hundreds of jobs to build those monopiles, and we are using British steel. That is the kind of future that we want to see through the steel strategy; we are looking at those opportunities to bring new steel companies into this country and to find ways to drive up production in this country.
I should address the issues holding us back, as they were mentioned in the debate. China and excess capacity is a huge issue that we should not underplay. China is now the biggest steel producer in the world and its unfair subsidies have led to massive steel over-production, which fuels global overcapacity and drives down prices. That is a global issue with local consequences that makes profitable steel production here in the UK much harder. That key global situation is helping to shape our future steel strategy and we will need to tackle that problem through things like the carbon border adjustment mechanism—CBAM—and ensure that we are working with a level playing field.
Energy prices were mentioned by many Members, and for too long British energy-intensive industries, including the steel sector, have been held back by high electricity costs. Again, I disagree with the hon. Member for Boston and Skegness: electricity prices are set by global gas prices and the problem is our dependence on fossil fuels, as well as the fact that we did not mitigate for that situation in this country at all. When all the prices shot up with the war in Ukraine, we were in a worse position than many countries around the world.
The British industry supercharger that the previous Government developed, which the hon. Member for Brigg and Immingham (Martin Vickers) mentioned, will bring down electricity costs for the UK’s most energy intensive industries, but we know that we need to go further. It brings down only 60% of costs and there is still a disparity. We believe that, in an unstable world, cheap home-grown green energy is the future. That is what will drive down prices, reduce our exposure to the volatile fossil fuel market, protect bill payers and strengthen our energy independence. Fundamentally, that is what will bring down costs in the long term.
Members also mentioned the challenges of decarbonisation. Tata and British Steel’s plans to invest in electric arc furnaces are driven by market conditions and the desire to reduce their carbon footprint—customers want greener steel. The UK is going to have a CBAM. If we were producing steel in the UK with blast furnaces, we would be massively inhibited because the EU is bringing in a CBAM, so the cost of exporting to the EU would be much higher. We have to deal with the world as we find it, which again is where we disagree with the hon. Member for Boston and Skegness. We cannot look back and try to re-create the past; we have to deal with the world as we find it, which means that we have to move towards those more efficient and greener energies.
The EU, where 78% of our steel exports went in 2023—that is worth pointing out—will bring in its carbon border adjustment mechanism in 2027. We rely on exporting a lot of the steel we produce to the EU, and we would be at a massive disadvantage were we to carry on producing steel from blast furnaces. We have committed to a UK carbon border adjustment mechanism, which will give UK businesses the confidence that, when they invest in decarbonisation and electrification, they will not be at a disadvantage. That is important.
On other issues mentioned by hon. Members, I should touch on Scunthorpe, because that is at the forefront of everyone’s mind. No one wants to see any job losses, and everyone wants to see the steel industry thrive. Through our strategy, that is what we want to do. For commercially confidential reasons, which I am sure hon. Members understand, I cannot talk about our conversations with the owners, but I reassure Members that we are having conversations all the time and that we are working unbelievably hard to get a solution for Scunthorpe and to give the certainty that the hon. Member for Brigg and Immingham talked about. I completely understand the issue with the instability of the current situation, but all I can say to him is that we are doing all we can to work with the company on what the future will be.
The UK’s ambition is to ramp up investment. Many hon. Members talked of the need to procure British steel in this country, and we are now in a situation where 95% of the steel procured by the UK Government for infrastructure is British, if the necessary type of steel is made in the UK. The issue is that we do not produce all the different and right types of steel, so we need to ensure that we use the Procurement Act 2023 as much as we can to drive economic growth in steel.
I disagree with the hon. Member for Boston and Skegness on whether the green agenda can drive up jobs—we think that it can. For example, the Korean company SeAH is building a factory in Teesside that will build monopiles, which are the big structures that go into the ocean and anchor wind turbines. It is currently building that structure with 30,000 tonnes of steel from British Steel. We want to get to a point where we are not only building those kinds of factories in this country but using British steel where we can to make the infrastructure.
At the moment, we do not have a factory that makes turbines on the scale that we need for floating offshore wind, but SeAH is building that factory because it has an agreement with RWE, which will be running the turbines that it builds in future. That green job development into wind and renewable energy is driving our ability to build a factory in Teesside to create hundreds of jobs to build those monopiles, and we are using British steel. That is the kind of future that we want to see through the steel strategy; we are looking at those opportunities to bring new steel companies into this country and to find ways to drive up production in this country.
I should address the issues holding us back, as they were mentioned in the debate. China and excess capacity is a huge issue that we should not underplay. China is now the biggest steel producer in the world and its unfair subsidies have led to massive steel over-production, which fuels global overcapacity and drives down prices. That is a global issue with local consequences that makes profitable steel production here in the UK much harder. That key global situation is helping to shape our future steel strategy and we will need to tackle that problem through things like the carbon border adjustment mechanism—CBAM—and ensure that we are working with a level playing field.
Energy prices were mentioned by many Members, and for too long British energy-intensive industries, including the steel sector, have been held back by high electricity costs. Again, I disagree with the hon. Member for Boston and Skegness: electricity prices are set by global gas prices and the problem is our dependence on fossil fuels, as well as the fact that we did not mitigate for that situation in this country at all. When all the prices shot up with the war in Ukraine, we were in a worse position than many countries around the world.
The British industry supercharger that the previous Government developed, which the hon. Member for Brigg and Immingham (Martin Vickers) mentioned, will bring down electricity costs for the UK’s most energy intensive industries, but we know that we need to go further. It brings down only 60% of costs and there is still a disparity. We believe that, in an unstable world, cheap home-grown green energy is the future. That is what will drive down prices, reduce our exposure to the volatile fossil fuel market, protect bill payers and strengthen our energy independence. Fundamentally, that is what will bring down costs in the long term.
Members also mentioned the challenges of decarbonisation. Tata and British Steel’s plans to invest in electric arc furnaces are driven by market conditions and the desire to reduce their carbon footprint—customers want greener steel. The UK is going to have a CBAM. If we were producing steel in the UK with blast furnaces, we would be massively inhibited because the EU is bringing in a CBAM, so the cost of exporting to the EU would be much higher. We have to deal with the world as we find it, which again is where we disagree with the hon. Member for Boston and Skegness. We cannot look back and try to re-create the past; we have to deal with the world as we find it, which means that we have to move towards those more efficient and greener energies.
The EU, where 78% of our steel exports went in 2023—that is worth pointing out—will bring in its carbon border adjustment mechanism in 2027. We rely on exporting a lot of the steel we produce to the EU, and we would be at a massive disadvantage were we to carry on producing steel from blast furnaces. We have committed to a UK carbon border adjustment mechanism, which will give UK businesses the confidence that, when they invest in decarbonisation and electrification, they will not be at a disadvantage. That is important.
On other issues mentioned by hon. Members, I should touch on Scunthorpe, because that is at the forefront of everyone’s mind. No one wants to see any job losses, and everyone wants to see the steel industry thrive. Through our strategy, that is what we want to do. For commercially confidential reasons, which I am sure hon. Members understand, I cannot talk about our conversations with the owners, but I reassure Members that we are having conversations all the time and that we are working unbelievably hard to get a solution for Scunthorpe and to give the certainty that the hon. Member for Brigg and Immingham talked about. I completely understand the issue with the instability of the current situation, but all I can say to him is that we are doing all we can to work with the company on what the future will be.
10:47:29
Martin Vickers
The Minister and I share a desire to see a thriving steel industry. On a couple of occasions in her reply, she mentioned wanting to halt its decline, as well as the production of the steel strategy in the spring. Can she give any sort of assurance that there will be no job losses at Scunthorpe until the strategy is produced? Then we can then work together to plan the way forward.
10:48:17
Sarah Jones
The hon. Gentleman will understand that I am not in a position to define what commercial companies do. While we are trying to do what we can, I cannot do anything other than say that we are working incredibly hard with the owners to ensure that we get to a point that we want to get to.
The hon. Member for Strangford (Jim Shannon) mentioned Harland and Wolff, and the same situation is true there. We are working hard to understand the situation and we are hoping for a resolution relatively soon.
The hon. Member for Strangford (Jim Shannon) mentioned Harland and Wolff, and the same situation is true there. We are working hard to understand the situation and we are hoping for a resolution relatively soon.
10:48:30
Jim Shannon
Will the Minister be generous and kind enough to let us know about the situation now and what she hopes progress will be over the next few weeks, if she does not mind?
10:49:01
Sarah Jones
The process of selling the company is going through. That is a market situation, being dealt with in that way, so Government are not providing funding or anything such as that at this point. We are allowing the process to take its course, but we are obviously talking to all parties to do what we can to ensure that we get the right outcome. I have been talking to politicians from all four of the Harland and Wolff sites, as can be imagined, and there is uncertainty in each of those areas, whether that is in Scotland, Devon or Belfast. We are working hard to ensure the right outcome.
To close my remarks, in steel, not to mention the wider economy, the inheritance of this Government from the previous Government was nothing short of a travesty. We had more than a decade of lurching from crisis to crisis, with no clear plan to safeguard the future of a competitive domestic steel industry. This Government are determined to change that, making the steel industry in this country fit for the future so that it is not left behind in a decarbonised world.
The Government are on the side of Britain’s thousands of steelworkers. We have not talked about the other parts of the country where we also have steel production. Marcegaglia, which is in Sheffield, announced a couple of weeks ago that it is investing £50 million in a new electric arc furnace in Sheffield, so we have incumbents here in the UK that are doing well.
The Government are determined to ensure the future of British steel. We are on the side of Britain’s thousands of steelworkers and we are working closely with our trade unions, experts and others to develop our steel strategy. We believe that steel will forge our future, not just our past, and I look forward to working with all hon. Members in this place to develop a steel strategy that sets us up for the next 10, 15 or 20 years to come.
To close my remarks, in steel, not to mention the wider economy, the inheritance of this Government from the previous Government was nothing short of a travesty. We had more than a decade of lurching from crisis to crisis, with no clear plan to safeguard the future of a competitive domestic steel industry. This Government are determined to change that, making the steel industry in this country fit for the future so that it is not left behind in a decarbonised world.
The Government are on the side of Britain’s thousands of steelworkers. We have not talked about the other parts of the country where we also have steel production. Marcegaglia, which is in Sheffield, announced a couple of weeks ago that it is investing £50 million in a new electric arc furnace in Sheffield, so we have incumbents here in the UK that are doing well.
The Government are determined to ensure the future of British steel. We are on the side of Britain’s thousands of steelworkers and we are working closely with our trade unions, experts and others to develop our steel strategy. We believe that steel will forge our future, not just our past, and I look forward to working with all hon. Members in this place to develop a steel strategy that sets us up for the next 10, 15 or 20 years to come.
10:50:43
Richard Tice
I am grateful, Mrs Harris, for the opportunity to wind up the debate. I thank all the hon. Members who have made contributions to the debate, and I thank the Minister for her closing remarks.
It seems to me that there is a sense of unity about the ambition—we have to protect our critically important steel industry in the United Kingdom. The Government are probably correct that they have been handed a bit of a hospital pass on this vital issue. They understand that. However, the truth is that I am an impatient guy, so I will not resile from asking the Minister and the Department to move at incredible pace to secure the industry and the jobs, and—as the hon. Member for Brigg and Immingham (Martin Vickers) said—to reduce the uncertainty.
This debate has enabled all of us to highlight the risks ahead. We cannot be here in a year’s time hearing that Jingye has said, “It can’t be done, we’ve got to shut the blast furnace, it’s going to shut”, and the Government are not ready for that. I think that is what this debate has done; it has highlighted the serious risks out there. I understand that the Minister cannot share the details of commercial conversations that are clearly going on, but that is what we must be prepared for. I have asked for a commitment, and I believe that the best way to secure that commitment in Scunthorpe is to have some form of commercial stake.
Where I think we differ is that there is a confidence within the Government—the hon. Member for Stockton North (Chris McDonald) referred to this specifically—that the electric arc furnaces will be attractive and commercially viable for Tata and Jingye. However, there is a serious risk that that will not be the case. Electric arc furnaces are much more viable in the United States because, as the hon. Member referred to, the electricity price in the US is between a quarter and a third of ours. The reason for that is completely the opposite of what the Minister said. It is because the US has cheap gas—its own gas, which is shale gas—that allows it to produce cheap electricity.
We have identified the risks and we share many of the same ambitions. We differ on certain issues, but it is absolutely critical that the Government lose no time at all and push forward hard. I am encouraged by the ambition to increase capability and the ambition to ramp up investment, but we have to understand something. I do not see how we can get more investment if we cannot get electricity prices down. That is the critical objective and the Government have that responsibility.
Question put and agreed to.
Resolved,
That this House has considered the steel industry.
It seems to me that there is a sense of unity about the ambition—we have to protect our critically important steel industry in the United Kingdom. The Government are probably correct that they have been handed a bit of a hospital pass on this vital issue. They understand that. However, the truth is that I am an impatient guy, so I will not resile from asking the Minister and the Department to move at incredible pace to secure the industry and the jobs, and—as the hon. Member for Brigg and Immingham (Martin Vickers) said—to reduce the uncertainty.
This debate has enabled all of us to highlight the risks ahead. We cannot be here in a year’s time hearing that Jingye has said, “It can’t be done, we’ve got to shut the blast furnace, it’s going to shut”, and the Government are not ready for that. I think that is what this debate has done; it has highlighted the serious risks out there. I understand that the Minister cannot share the details of commercial conversations that are clearly going on, but that is what we must be prepared for. I have asked for a commitment, and I believe that the best way to secure that commitment in Scunthorpe is to have some form of commercial stake.
Where I think we differ is that there is a confidence within the Government—the hon. Member for Stockton North (Chris McDonald) referred to this specifically—that the electric arc furnaces will be attractive and commercially viable for Tata and Jingye. However, there is a serious risk that that will not be the case. Electric arc furnaces are much more viable in the United States because, as the hon. Member referred to, the electricity price in the US is between a quarter and a third of ours. The reason for that is completely the opposite of what the Minister said. It is because the US has cheap gas—its own gas, which is shale gas—that allows it to produce cheap electricity.
We have identified the risks and we share many of the same ambitions. We differ on certain issues, but it is absolutely critical that the Government lose no time at all and push forward hard. I am encouraged by the ambition to increase capability and the ambition to ramp up investment, but we have to understand something. I do not see how we can get more investment if we cannot get electricity prices down. That is the critical objective and the Government have that responsibility.
Question put and agreed to.
Resolved,
That this House has considered the steel industry.
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