UK Steel Industry — House of Commons, 2015-09-17
Topic: Macroeconomics
Patricia Gibson (Scottish National Party, Centre-left): I, too, wish to extend my thanks to the Backbench Business Committee for allowing this debate to take place. I also pay tribute to the hon. Member for Redcar (Anna Turley) for her consensual tone in initiating this debate, which is very much appreciated by those on the SNP Benches As someone who represents the largest steel fabricator in the whole of the northern UK—I am talking about J&D Pierce, which is located in Kilbirnie in Ayrshire where I live—I am delighted to speak in this debate today. I am disappointed that the consensus with which the hon. Member for Redcar began the debate was rudely interrupted by others on the Labour Benches who were shouting out things such as "irony" when my hon. Friend the Member for Rutherglen and Hamilton West (Margaret Ferrier) was speaking. The Scottish Government have done all they can with their very limited powers—quite clearly, Government Members and Labour Members wanted those powers to be limited in Scotland—to support the steel industry. I did not want to make these party political points in this debate, because we are all concerned about the future of the steel industry across the UK, but if we are going to go down the road of irony, let us take that road to its natural destination. There is irony in the fact that the hands of the Scottish Government are tied in what they can do to support the steel industry in Scotland Like others in the Chamber, I believe that the importance of the steel industry means it deserves a top-level summit to discuss its long-term viability and how it can be supported in these extremely challenging times. We know that productivity increases are part of the reason there are fewer jobs in the steel industry, but we also know that there has been significant movement to production centres overseas. Chillingly, the number of employees in iron and steel production has fallen by 98% in Scotland since 1971 and by 94% across the UK in the same period. There is no doubt that what the UK Government do now and what they are prepared to do will have significant long-term consequences for the industry and might even go as far as determining its very survival, so I am grateful to the Minister for engaging in the debate The steel industry in the UK is undoubtedly at a major disadvantage compared with its European counterparts and competitors, since other European Governments have supported and sustained their steel industries while our own has not as yet—we will keep our fingers crossed—received the same level of support. As has already been pointed out, some of the challenges are global, but there is still much that the UK Government could do to provide support The importance of the industry is hard to overstate: and, along with its associated metals sector, it comprises more than 24,000 enterprises, which directly employ more than 330,000 people. It was worth more than £45.5 billion to the UK economy in 2012 and, as has been pointed out, two or three jobs in the broader economy are indirectly dependent on each job in the metals sector. The potential economic case for acting to save not only jobs but also the broader value, innovation and skills that come from a strong UK supply chain is both urgent and compelling The entire sector in Europe has faced real challenges since 2008, when the demand for steel plummeted. Indeed, such demand is still very much in recovery, standing at 25% below pre-crisis levels for 2015 by contrast with German levels of 94% and Chinese levels of 180%. Of course, China has flooded the market with cheap imports and has huge overcapacity. As has been mentioned, the devaluation of the yuan will result in further increases to China’s export volume, which is already at record levels. Indeed, imports to the UK from China during the period January to April 2015 doubled compared with those in the same period in 2014, so the problem is becoming more and more acute In addition, the strong value of sterling against the euro, an issue that poses unique challenges to the UK industry, is an issue. It impacts on UK demand for steel as UK exporters struggle to compete in European markets. Such factors, their impact and how much can and will be done to mitigate them will determine the future, and perhaps the very survival, of this industry in the entire UK. Now is the time of real challenge for the UK steel industry and the Government must not drop the ball. The steel industry has pointed out that Government intervention is needed for its very survival in areas such as energy, tax and procurement—the same levers of support that have been used by Governments in France and Germany and throughout Europe to support the UK’s competitors. We must not be left behind Community, the largest and leading trade union in the UK steel industry, has given a chilling warning that the UK Government would be foolhardy to dismiss or ignore. That warning is that unless the Government make a game-changing intervention, it is likely that thousands of jobs will be lost, whole communities devastated and priceless industrial assets lost for ever. As for the future of Tata, the second largest steel producer in Europe and the largest steel production employer in Scotland, its plate business is of real concern. The plate mills at Clydebridge have been loss-making of late, but they should have a bright future as an integral part of the renewables industry supply chain. As my hon. Friend the Member for Rutherglen and Hamilton West mentioned, Fergus Ewing MSP, the Minister responsible for energy and climate change, has committed the Scottish Government to doing all they can with the powers they have to secure the future of those mills Let us consider the renewables obligation and how it impacts on the cost of the industry. Let us defend supply chains from unfair practices and protectionism from countries such as America, with barriers being erected around the world while safeguards remain weak for our industries. Let us re-examine how we can make the industry more competitive and investment-friendly. Let us use local supply chains that will help to meet sustainability targets and to sustain local communities and jobs, examining and being mindful of the criteria of local economic benefits in assessing tenders for major projects—by inserting community benefit clauses in contracts, for example The Government in Scotland stand ready to work with the UK Government in whatever ways are necessary to secure the long-term future of this vital industry. Clearly, UK support is the key. If European Governments can support their steel industries, there is no reason why such support cannot be forthcoming from the UK Government.