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I would like to start by thanking you for allowing us, as backbenchers, this time for this crucial debate. I would also like to thank the Backbench Business Committee for granting me this opportunity to raise this issue on the Floor of the House. This is not only an issue of huge significance to my constituents, but of huge significance to the economic security of the United Kingdom and its global position in manufacturing. I would also like to thank the minister for attending today’s debate and I look forward to building on the very constructive conversations we have had recently on this issue.
I am grateful to the many honourable Members who supported me in successfully getting this debate today, including the honourable Member for Rutherglen and Hamilton West, and the honourable Member for Corby. As well as the support I have received from my honourable Friends from Middlesbrough South and East Cleveland, Cardiff South and Penarth and many others who I look forward to hearing from today. We are bringing the voices of our constituents across the country into this Chamber today and I hope the government will hear their pleas.
I am also grateful to my union Community who represent their members and the industry as a whole with great dedication and commitment, as do our colleagues from the GMB and Unite. I’d also like to pay particular tribute to Community Union’s General Secretary Roy Rickhuss and Paul Warren the Senior Trade Union representative on the Redcar Steel Works, who are in the Gallery today.
But most of all I am grateful to the generation of workers who have kept steelmaking alive on Teesside for over a century. Those who dug the iron ore and forged the steel which built Canary Wharf, the Sydney Harbour Bridge, Wembley Stadium, and the Freedom Tower at the World Trade Center. And to those proud men and women of Teesside who stand ready to fight again – for its future.
Ms Speaker, UK steel is at breaking point. This is a crisis for one of the most important foundation industries in the British economy. It employs 30,000 people across the country in highly skilled jobs, often in industrial heartlands with high unemployment. The UK Steel Industry supports the automotive, construction and aerospace sectors, as well as a raft of supply chains and it is vital we have a future for steel-making at the heart of industry in this country.
Mr Speaker, the industry is in crisis because the price of steel has collapsed from £318 per tonne to £191 per tonne. Chinese imports are flooding the market, between 2011 and 2015 the proportion of Chinese steel entering the market has quadrupled. The strength of the pound is adding a 10% increase to costs and is crippling exports.
I accept that there is very little the Government can do about these global drivers, although this should never diminish their responsibility to deliver what Government can do. I am glad for example, to hear the minister is going to China next week to discuss their dumping of steel which is affecting other producers around the world. There are however, several other UK-specific issues that are having a detrimental effect on steel-producing in the UK which are within the Government’s power to grant. Action today by this Government can give the British steel sector the chance to stay alive in this fiercely competitive global market.
Research I have undertaken in partnership with UK Steel has shown that the steel industry in the UK is disadvantaged to the tune of £431million per year compared with our global competitors as a result of the exchange rate, energy policy costs, air pollution targets and business rates. I am sure the Minister would agree that we want the UK to be the place to do business, not to penalise our own manufacturers.
It is these factors that I come before the House today, to call upon the Government to act on.
I will set out 5 key actions the Government can agree today to demonstrate its commitment to the British steel industry.
1. Firstly it must fully implement the Energy Intensive Industries Compensation Package, well ahead of the committed date of April 2016. Energy Intensive Industries in the UK are exposed to far higher costs than elsewhere and face a total cost of £430 million this year. The package of compensation and exemption measures promised over the course of the last parliament would place UK industry on level playing field with its EU counterparts. If the package was in place today it would have reduced costs from £30/MWh to £7/MWh. Instead, with compensation only available for a small proportion of the policy costs, energy intensive companies continued to be exposed to upwards of 70% of them. It is imperative that the Spending Review announcement allays these worries and confirms the budget for the package. Energy prices for UK steel producers can be more than 50% higher than for our main European competitors.
2. Secondly the government must bring Business Rates for capital intensive firms in line with their competitors in France and Germany. UK companies are currently paying between five and 10 times more than their EU competitors. UK manufacturers collectively account for 17% of total UK business rates payments. This is estimated to be £4.7bn in 2015, an increase of £0.3bn on 2014.
UK Steel want to see the removal of Plant & Machinery from the valuation process. Plant & Machinery can make up a significant proportion of a steel site’s rateable value. Under the current system, manufacturers investing in new plant and machinery to make innovative products, improve efficiencies or meet regulatory standards, are punished by the business rates regime, in sharp contrast both to the treatment of UK non-fixed equipment investments and to continental investments in any equipment. A £185m investment in a blast furnace at Tata Steel’s Port Talbot site led to the rateable value of the site increasing by £600k pa. Thus UK business rates currently act as a disincentive to upgrade facilities, increase productivity or improve environmental performance.
3. Thirdly, Mr Speaker, I would ask the government to fully consider derogation requests from the sector on a realistic timetable to meet its increased commitments under the Industrial Emissions Directive. Under current proposals, the cost of meeting revised permits for the sector are estimated at up to £500m, by 2019.
4. I turn now, Mr Speaker to the dumping of steel by China which is leading to the suppression of global prices. The proportion of Chinese steel entering the UK market has quadrupled since 2011. The Minister for Business has shown her support for the steel sector in voting in favour of extending anti-dumping measures, for a further five years, on imports of Wire Rod from China into the EU. This is enormously welcomed by UK producers of wire rod.
The UK Steel sector is very keen to see this approach extended to other anti-dumping measures proposals that come out of the European Commission, where they can be shown to support the UK steel sector against the rapid rise in global imports.
This includes the forthcoming decision from the European Commission, on Rebar (reinforcing bar for the construction sector), expected towards the end of the year. Where Chinese imports into the UK market have gone from 0% only 3 or 4 years ago, to now taking 40% of the UK market.
5. Finally there is a significant opportunity for the UK steel sector, if government supported and insisted on local steel in major public projects and strategic operations. Locally sourced steel, can have major benefits not only to the local and the wider UK economy, but as a more sustainable material than imports.
So there, Mr Speaker, are the national challenges for the UK Steel Industry and the steps we would like government to take. I want to say something before I conclude, though, about the situation in my own constituency, that brings me here today with such urgency and determination.
Steel making in the Redcar constituency makes up 7% of the North East’s exports. It employs 2000 people directly on Teesside. There are another 1000 contractors and 50 apprentices. There are approximately 6000 people employed in the supply chains, working in the ports, carrying the coal, providing the gas, producing the parts, driving the trucks, washing the overalls and feeding the workforce.
We have already experienced the devastation of losing our plant. We cannot go through this again. I ask the Minister in desperation to consider the request for financial assistance from SSI so that we can continue to see wages being paid. So we can get the 50,000 tonnes of cargo that is sitting on the dock as we speak a mile down the road to the blast furnace. So the gas can keep pumping, so the coal can load the furnace and the workers can pay their mortgages and feed their families. So the proud tradition of steel making on Redcar can remain the beating heart of my constituency.
As I said in my maiden speech there already is a ‘Northern Powerhouse’ – it’s called Teesside. If the Government doesn’t act today we will know their words are hollow.
In 2011 the Chancellor of the Exchequer promised a ‘Britain carried aloft by a march of the makers’ Will the Minister tell me whether she believes in a future for UK steel? Will she act now to enable the sector to weather this storm? And can she tell me whether the Chancellor’s ‘march of the makers’ includes the proud makers of steel on Teesside?