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Steel Industry

It is good, Sir Nicholas, to see you in the Chair. May I add my words of commendation to the right hon. Member for Rotherham (Mr. MacShane) for securing what has been a timely debate and for his typically forthright remarks. Although our views of history may not be entirely shared, I enjoyed his line—I suspect that most here this morning will not have noticed it—of saying that the BBC was a force of conservatism. That was particularly entertaining. However, I agree with him on the question of protectionism. If it does not embarrass him too much, may I say that I think we agree on that? The country has been producing steel for longer than almost any other nation. As the home of the industrial revolution, Britain retains a strong reputation for quality of finish, especially in the production of higher value products, as the hon. Member for Sheffield, Hillsborough (Ms Smith) rightly pointed out. However, we are far from being the largest producer, as we heard this morning. Indeed, figures show that Germany, Italy, Spain and France now produce more than the UK. Even before the recession, there was a worrying decline in UK steel production. In 1997, output stood at 18.5 million tonnes, a level retained for much of the 1980s and 1990s. Since then, however, production has fallen. At the beginning of 2008—before the recession—output stood at 13.5 million tonnes. That was a 27 per cent. fall in steel production, but it occurred during a period of global growth. Will the Minister explain why, during those years of growth, steel production in the UK fell so far and so fast? Allied to that fall is the fact that energy prices have badly affected heavy industry. As the right hon. Member for Rotherham pointed out, steel production is self-evidently energy-intensive. Energy prices have a tremendous impact on the competitiveness of UK steel producers and their suppliers; yet, despite that, the Government's data show that average industrial electricity prices rose by 111 per cent. in real terms over the past five years; and, as a number of hon. Members said, average industrial gas prices rose even further—by more than 130 per cent. in real terms. Those rises have outstripped rises in most of those countries with which our steel producers must compete. Will the Minister explain why UK industrial energy prices have risen so much, especially when compared to those of many of our competitors? What does she say to those in the industry who blame the Government for failing to address the problem before it became a crisis? Members rightly spoke of the value of steel production to the UK economy. As a passionate supporter of manufacturing, Sir Nicholas, you will know that access to working capital is vital. It is the lifeblood of major industries. That is why, last November, the Conservative party set out its plan for a single national loan guarantee scheme. Worth about £50 billion, it would be available to all sectors and to all viable businesses, irrespective of their size. By making the rules common and clear, we believe that such a scheme would ensure that businesses had access to the working capital that they clearly need. In contrast to that, a plethora of ideas has been announced by the Government. My worry is that, to date, they have all too often failed to deliver the actual finance. I take the automotive assistance programme as an example. Car production is a crucial consumer of steel, so helping that trade would not only help the car plants but help the steel workers of Sheffield and Rotherham. In January, Lord Mandelson announced the automotive assistance programme, telling us that it was open for business. Since then French, German and American Governments have delivered financial aid, specifically to their car producers. The money is in their bank accounts. However, despite the promises of Lord Mandelson, not a single penny has been received by British car firms. Why not? Ministers talk about providing real help. Why, under the present Government, are our car firms the last to receive the help that they have been promised? Perhaps the Minister can tell us. The recession has hit steel hard. The sharp falls in construction, and in automotive and allied engineering production, have led to a sharp reduction in demand for steel. Those sectors represent two thirds of the UK market for steel. In that difficult context, it is not surprising that Corus has recently been struggling to cope. Hence, the company decided in January to mothball some facilities and to cut 3,500 jobs, including 2,500 in the UK. As we heard earlier, it is the recent announcements about compulsory jobs cuts on Teesside, and in Scunthorpe and Rotherham that are of most concern. It is clear that the company takes a rather different view to the Government. They believe that the upturn is a long way off. On 25 June, the chief executive of Corus, Kirby Adams, told the BBC that the recovery""appears to be some time off, so it is vital that we take this proportionate and responsible action now. We have to achieve long-term, sustainable competitiveness in a global and over-supplied steel market."" In response to Corus's announcement, the Government have offered £5 million to help to retain key jobs. It would help Members if the Minister could tell us what that means in practice, and who will and will not be helped. Also, what commitments has the company made in return for that £5 million of aid? Furthermore, it would be very helpful to hear from the Minister what strategic interest the Government place in continued UK steel production. Some have said that Lord Mandelson does not consider steel to have strategic industrial importance. Is that Government policy?