Steel Industry — House of Commons, 2015-10-28
Topic: Energy
David Mowat (Conservative, Centre-right): Unlike the hon. Member for Rotherham (Sarah Champion), I do not have a direct constituency interest in the steel industry, but 25 years ago I visited the blast furnace at Port Talbot, where I was working. It is one of those memories that stays with you, seeing a blast furnace in full flight. It is clearly a tragedy that the blast furnace at Redcar will no longer operate I wish to focus on energy prices. We have heard about Chinese dumping, business rates and so on and, of course, Chinese dumping is a major issue. However, as far as I am aware countries such as Germany and France are not closing blast furnaces or announcing major job losses. One reason is that the steel industry in Germany and France pays 4p per unit for electricity and the steel industry in this country pays 9p per unit for electricity. What matters is how big a proportion of the costs that difference makes up. No matter how efficient the guys watching us from the Gallery are, overcoming such an impediment is impossible. Energy makes up 15% to 20% of steel input costs, so we can work out that the cost in the end is something like 5% of the differential on the product. That is the margin that places such as SSI make on their product, and that is enough to make a difference We have an example of what happens when we do not pay attention to these things. Ten years ago, the aluminium industry in our country had three major primary smelters. That is now decreased by 90% and there is only one left, which is in Scotland. It is only left because it has its own hydropower and therefore has no need to deal with the electricity issues. Not only have we seen the demise of aluminium and steel, but this is true also across what we call the foundation industries, including ceramics and chemicals. Chemicals are a big industry and, unless we act on energy prices, we will be in the Chamber discussing chemical plant closures. The industries employ about 900,000 people and I make the point to those on both Front Benches that in this place we have Ministers responsible for banking, for digital, for farming and for sport, but we do not have a Minister responsible for the foundation industries. Perhaps we should I shall return to climate change. When I intervened on the shadow Secretary of State, she immediately closed the point down by saying that we have to be aware of climate change issues. That is true, but we cannot be aware unilaterally. No other country in the world has signed up for an 80% reduction by 2050—nobody has done it. It may be that we are right—that we are the only country in the world that will fix our 1.5% of global emissions—but the cost is the stock stuff that we are talking about now, and we all need to be aware of that. As I said in an intervention, when this issue is discussed in Parliament the Labour party and the Scottish National party always take the side of going further and faster on green stuff. Even in the Chamber this week, there were two examples of what I would describe as virtue signalling on this issue by Opposition Members, saying how green they are compared with the guys over here on the Government Benches. That is because we understand the impact of such measures, and we know that unless we act to close that energy price differential, we will be here discussing more industries in future.