Steel Industry — House of Commons, 2015-01-14
Topic: Energy
John Vincent Cable (Liberal Democrats, Centre to centre-left): I had already begun to deal with the cost issue. Let me explain how we are trying to offset it. Among our competitors, the French have a nuclear power industry, and the marginal cost of nuclear power is extremely low. The Germans use a lot of thermal power, but, under European rules, they have been able to grandfather the support that they have given to their industry. We have not overlooked the problem; there are very specific reasons for it I have dealt with the problems. Let me now deal with the major areas of opportunity, as I have rightly been asked to do. What is beginning to emerge is that successful British producers—notably Tata—are finding markets in two particular areas. One is high-quality production—alloy steels, light vehicles, aerospace—using sophisticated steels. That is where the market is beginning to consolidate and where companies are making significant margins to stay in business. The second area—again, I am very surprised the Opposition spokesman did not mention it—is exports. Within the last three to four years, exports have been growing rapidly. Tata Steel has won contracts in Singapore. We are working with it to win business in Qatar and Iraq on pipelines and other things. The future increasingly lies in export. The SSI plant, which is the big success for Redcar, has been based entirely on export production. Rather than focusing just on the problems created by import competition, let us think about this as a global industry in which good British producers have significant markets Those are the two areas of specialisation where British steel producers are doing well, so let me now turn to the areas of policy where the hon. Member for Hartlepool (Mr Wright) is asking us to do more: energy costs; the industrial strategy; and imports and certification On energy costs, I completely agree with Members on both sides of the House who argue that it is completely counter-productive to drive away energy-intensive British producers who simply pollute somewhere else. Carbon leakage is not sensible policy, so we should stop it We fully recognise that where British producers enjoy a cost disadvantage because of high energy costs they should be compensated, and we have agreed to compensate to the scale of £3 billion, which in an environment of fiscal pressure is by no means insignificant. In respect of one area of extra cost—the EU emissions trading scheme—compensation has already been paid; the cheques have gone out. In respect of the carbon price floor and the renewables obligations, we are in the process of trying to secure EU agreement on state aid. We have been waiting 18 months. If Opposition Front Benchers were familiar with what is happening in the European Commission, they would know that there is a major bottleneck in getting state aid clearance, not just for the UK but across the EU. It is important to reflect a little on that, because Opposition Members proclaim they believe in the EU—a belief which I happen to share—but the EU has as part of its operation something we support: strict state aid disciplines. When we are dealing with very complex problems, such as the approval for Hinkley or the approval we have recently obtained for the British business bank, those strict state aid disciplines take a great deal of time. We would be happy to bring forward compensation, subject to financial priorities, if state aid clearance could be obtained, but we are still waiting for it.