Oral evidence: UK Steel Industry, HC 546-iTuesday 27 October 2015

Oral evidence, 27 October 2015.

Witnesses

Tom Blenkinsop MP, Chair, APPG on Steel and Metal Related Industries, and Nia Griffith MP, Secretary, APPG on Steel and Metal Related Industries, gave evidence.

Chair

Tom and Nia, thank you for giving evidence to us. I do not think that you really need any introduction, but for the purpose of the record could you just say who you are and why you are here?

Tom Blenkinsop

My name is Tom Blenkinsop. I am the MP for Middlesbrough South and East Cleveland, and I am also the chair of the all-party steel and metals group.

Nia Griffith

I am Nia Griffiths, MP for Llanelli, and I am the secretary of the all‑party steel and metals group.

Chair

I will begin, if I can, colleagues, by asking the same question that I asked the unions and the industry. How grave is the situation affecting the British steel industry, Tom?

Tom Blenkinsop

You heard it from industry earlier: it is in one of the gravest situations it has ever been. I would even argue that it is unprecedented, given the emergence of the Chinese dumping in the European and, in particular, UK markets. The evidence of that is nowhere starker than what we have recently seen at Redcar SSI TCP plant, with Caparo, and also in Scunthorpe, and Dalzell and Clydebridge, which is part of the long products division. They are all sites I know quite well, and I have never seen it, across different companies at the same time, on the scale that it has occurred. For the Committee’s benefit, in my previous life, prior to being an MP, I was a trade union officer for Community union, in the steel industry primarily, and I have never seen it like this, and that is comparing it to 2008, during the financial crash.

Chair

Nia, what is your assessment of the situation?

Nia Griffith

The real tragedy about the situation is that we have been warning about it for a very long time. Tom has outlined the problems that we have at the moment. It is not just the long products; the shudders are being felt right through the industry. If we go back to the Autumn Statement of 2011, the Chancellor set out quite clearly an intention to deliver on an energy-intensive industries package, and he specifically said that that would give relief from the EU emissions trading system, increase the climate change levy relief, tackle the carbon floor price and reduce the impact of the electricity market reform. Yet four years later, we still have not seen the full implementation of that, in spite of having had 10 debates on steel, having had 91 parliamentary questions put down, six questions raised in business questions, four urgent questions and a flurry of letters to the Chancellor, particularly at Spending Review and Budget time, to try to urge the Chancellor to do something about implementing the package.

Chair

Given the gravity of the situation—the unpresented gravity, I would suggest that you have said, Tom—and given the global forces at play here, are the UK Government doing enough to help mitigate the situation and put the steel industry on a sustainable footing?

Tom Blenkinsop

I do not think it has. We have been raising these issues since the Thamesteel crisis back in 2012, with the loss of site there. But this year, prior to the general election, when we were raising these issues, the Minister in situ, prior to the present Minister, Anna Soubry, did not even turn up to debates that we put down in Westminster Hall. We were fobbed off with Ed Vaizey, DCMS Minister, on the basis that his father wrote a book on steel. We could see these issues building up, and certainly at a local level, in relation to Redcar and the SSI plant; we were hearing rumours and getting stories about not just the local problems, but also seeing it play out at long products in relation to Scunthorpe, Dalzell and Clydebridge, Skinningrove. A vast swathe of the UK steel capacity was under real pressure. We were trying to highlight those issues, mainly around the five industrial asks that your previous panel raised.

Chair

Nia, what is your sense?

Nia Griffith

Back in March 2011, we had a specific debate in Westminster Hall on the carbon floor price and energy-intensive industries, and we repeatedly, along with the energy-intensive industries group, raised that issue. The fact was that the carbon floor price had been set in such a way that it was going to be very difficult for those energy-intensive industries, and we were therefore asking very specifically to have a package delivered. That is the package that has not been delivered. When you look at prices globally, you have to compare the competitive elements. We look at energy and we see that we are 30% or 40% more expensive than other producers, and we look at business rates, which are five times more expensive than producers face in other countries, and eventually our climate change levies will, by 2050, amount to 80% more than other countries are facing. Those are the competitive elements and why these issues are so crucial to encouraging and keeping the steel industry in the UK.

Chair

Nia, I specifically asked about the UK Government, but I am interested in your perspective as a Welsh MP. Do you think that the devolved administrations, and in particular the Welsh Government, are doing more to be able to assist their local steel industry than perhaps people in Whitehall are doing?

Nia Griffith

Certainly where they can. For example, on procurement the Welsh Government have signed up to the Charter for Sustainable British Steel, because it recognises that governments can make choices; they can choose to invest. If you remember, in the last Labour Government, after the crash in 2007, there was a real effort to stimulate industry through the car‑scrappage scheme and then building of public buildings like schools. Well, that has continued in Wales, because that public investment, again, provides demand. There has been very low demand in the steel industry since 2007, and that demand is absolutely vital. The Welsh Government have tried to keep up that capital investment and is an example that the UK Government should follow.

Paul Blomfield

Specifically on that point, do you therefore find it surprising, in relation to UK sourcing, that, at this time, in the middle of the crisis facing the steel industry, the Government confirmed a deal for Hinkley Point that has specifically precluded UK companies from tendering for key components?

Nia Griffith

Yes, I certainly do, and it contrasts very strongly with the Swansea Tidal Lagoon project, where the investors, who are all private investors, are absolutely committed to having a UK supply chain and the Government do not have to pay anything until 2022, when the electricity comes on stream. There is a choice with procurement, and, although people will quote EU rules, there are ways of putting in clauses like social benefit that mean you can favour local companies. Countries across the EU do this and buy their own.

Tom Blenkinsop

In relation to procurement, we did touch on this in the steel summit and the Government promised that they would be reviewing procurement regulations to try to improve this, but when you are seeing in the media coverage of contracts being dealt with in such a way, it raises concerns about promises made in steel summits as opposed to what is actually happening in terms of delivery. What we would like to see is follow‑through on those promises.

Michelle Thomson

I was just wondering. In terms of the new Queensferry Crossing happening, in fact, in my constituency, what do you believe were the reasons why no UK or Scottish company bid to provide the steel for that?

Tom Blenkinsop

Initially, I believe the contract went to a Chinese company.

Michelle Thomson

What I am saying is that no UK or Scottish company bid. Therefore, what were the reasons for that?

Tom Blenkinsop

I will come to that. What we do know is that a component was being delivered by a certain company—I think it was Spanish—which then withdrew from the original contract that had been brought in, which I think was contracted to a Chinese firm. That was picked up by a company not too far from where I am from, called Cleveland Bridge, in Darlington. They picked up that component part of the contract and used the Dalzell site to provide the plate for the bridge contract. In many ways, it was eventually delivered by a UK site.

Michelle Thomson

So it was not a business‑operating environment that stopped that. It was just a series of events, you are saying.

Tom Blenkinsop

All I know is what happened. A part of the contract collapsed and, in effect, a British company, Cleveland Bridge, stepped in and used the Dalzell site to provide the plate to fulfil that contract, so they did use British steel in the completion of that contract.

Michelle Thomson

Yes, albeit, as you say, still fairly limited.

Craig Tracey

Particularly on SSI, I just want to get your view on whether their business model of producing basic steel for slab for the Asian market was ever going to be realistically sustainable. Was it not just the unfortunate case, and I use their own accounts, that, since reopening in 2012, the plant made losses of over £600 million and had debts of over £1.5 billion? Was it not just simply a case that it was not a sustainable business model?

Tom Blenkinsop

I am assuming you are directing that to me. I know Redcar TCP very well. I was union officer there during the last mothballing. I was more than pleased to be part of the team that helped bring it back under SSI at the time, brilliantly led by Community union. SSI’s situation, yes, faced local difficulties, and, if anything could go wrong internationally in terms of the market price, exchange rate, energy, Chinese dumping, it went wrong. Admittedly, in the last 12 to 18 months, the company’s decisions were poor, to say the least, and there were issues around employees’ pensions, around employees who thought they were paying their student loan when money never arrived to the Student Loans Company. There was a myriad of different issues that I could go into, and those will be investigated. Some of those companies that were involved with SSI in terms of recruitment, I am certain, will be investigated, because it was not just SSI who were playing tricks in the last few months. Having said that, though, Redcar TCP is the second most cost-efficient site in Europe. There is only Dunkirk that is more efficient. I still firmly believe that, if a programme was put in place in order to maintain the coke ovens and properly mothball the blast furnace, you could have retained the assets in situ, until these five elements were put in place and the market buoyed again.

Craig Tracey

I do not think the industry agrees with you, because there were no credible offers for those, were there?

Tom Blenkinsop

No, there were. That is where you are certainly wrong, and there are people who are still interested.

Craig Tracey

Okay. My understanding was that there was no credible bid.

Tom Blenkinsop

No, there were definitely people interested in that site.

Craig Tracey

You mentioned that you did not feel the Government had done enough. Given the debts and the losses over the three or four years since the plant had been opened, what more should the Government have done?

Tom Blenkinsop

If you were to look across the UK steel sector per se, you would be very hard pushed to find a site that had turned a profit since May 2010. In fact, you could probably say that about most sites prior to then. There are very few sites that have turned a profit, to be perfectly honest, and that is a reflection of the market in which we are operating at the moment. We are calling not just for the five industrial asks but for industrial discipline, because we are at a point where the Government can deliver. What we need now is industry to hold on in there, and not to follow through with the bad news of SSI and make further cuts to their sites. If you take Caparo, for example, there was certainly no indication to the workforce or the trade unions that they were going to make those announcements, whereas, for SSI, it was becoming acutely clear as time went on within that short period of time that something was very, very bad. With Tata, in a different respect, there was a far more manageable, far more sensible, far more progressive way in which it was dealt with. What we want to see is industry hang on in there, if the Government deliver those five asks.

Chair

Can I ask, in respect of the Redcar site and the industrial assets, Tom, are they salvageable at this stage?

Tom Blenkinsop

The plan that we were hoping would come forward was via the coke ovens. If you remember back in 2010, Kirby Adams, who was then the CEO of Corus, was trying to close the blast furnace and the steel‑making end so he could operate Redcar coke ovens and South Bank coke ovens as a business in and of themselves. On the day of liquidation, SSI actually tried to set themselves up as a new company, as Cleveland Coke Power Company. They knew that the coke ovens on site were a tenable business proposition. Those coke ovens, built in 1978, alongside the blast furnace, under the Callaghan Government, are some of the youngest and most efficient in the country. You do not build coke ovens willy‑nilly. They cost somewhere between £500 million and £1 billion to build. They knew they could make that into a tenable business. That has gone now, completely.

Chair

Are any buyers on the table or sniffing around at all?

Tom Blenkinsop

We certainly know of interested parties in that site, and mainly because of the asset of the RBT wharf on site, because, as I said in the Commons, if you were to build a steel plant in England today, you would put it in Redcar, which has the deep‑water access, which nowhere else on the east coast line of England has. It faces Europe. It has the knowhow, personnel and skills. It has the good trade union relations. Also, you still have assets there that you could retain and acquire from elsewhere to make it a proper integrated site. Whether that is round an oxygen furnace or round an arc furnace is where the interest lies.

Chair

Some people have suggested that we access moneys from the European Globalisation Adjustment Fund for Redcar, for Scunthorpe, for other parts of the steel industry affected. What are your views on that?

Tom Blenkinsop

That was an argument put forward by north‑east MEPs to get at a £5 million globalisation fund, which would help the 2,200‑plus contractors, who are never added to the figure, which is the unfortunate part of this—you are talking about between 3,000 and 4,000 people who worked on that site, as well as the downstream companies that are affected—to get money so they could get skills training. We were promised an £80 million package at the time, on the day of liquidation, with the confirmation that the vast majority of that money would be new money. To date, we have not seen any of it. We hear about a £3 million figure to help apprentices who started on that day of liquidation and were let go to get through, but the £5 million Globalisation Adjustment Fund would be able to be added to those other monies to help retraining, reskilling and starting new businesses for the men and women involved.

Richard Fuller

It is going to have to be a quick question, because of time, but it is a deep question. We heard that the change from China is the big factor that has created many of the problems. That is not going to go away; that is going to stay for a long period of time. Do you think it is right to focus on the other points in the five‑point plan, to try to ensure the steel industry maintains or rebuilds its competitiveness; or do you think that the change in the industry globally has been so significant that it just, in your words, Tom, cannot hang on?

Tom Blenkinsop

That is a decision for the companies, to hang on. I think they can, but we need to act quickly. In terms of Chinese dumping, there is EU precedent where there is a 24% anti‑dumping on wire rod imports from China, and that has been in place since 2009 and was recently renewed. We can extend that to other products being flown into the EU market. EU member states are doing that, and what happens is, when they have dealt with Chinese dumping, it compounds the problem for the UK, because we are not taking any individual state action ourselves against those products. That would give us a running start regarding every other issue.

Richard Fuller

Let me rephrase it a different way, then. If the Government did all the things that are on the five‑point plan we have heard other than the dumping work, then we might as well do nothing. The dumping issue is the issue and having action on that is the only thing that can provide the space for the industry here to rebuild. Is that right?

Tom Blenkinsop

I would reiterate that. Other EU states, with and without EU permission, have already acted.

Richard Fuller

You are talking about Italy, aren’t you?

Tom Blenkinsop

No, I am talking about France, Germany, Spain and Italy.

Richard Fuller

On dumping?

Tom Blenkinsop

Yes.

Chair

Are you suggesting, Tom, that the UK Government are out on a limb, there is a concerted EU response to the dumping measures, and we are not part of it?

Tom Blenkinsop

I think it is a bit of both. The EU could pick up on other elements within the steel market, whether it be hot strip, slab, or whatever, but it is certainly evident that other member states within the EU are already acting on their own individual basis and are interpreting European law in the way that best suits their industry.

Chair

Colleagues, thank you very much. Tom and Nia, we really appreciate your time. Thank you. Examination of Witnesses

Witnesses

Rt Hon Anna Soubry MP, Minister for Small Business, Industry and Enterprise, and Stuart Edwards, Deputy Director, Materials and Resource Industries, Department for Business, Innovation and Skills, gave evidence.

Chair

Minister, thank you for sparing the time to talk to us on the Select Committee. We all know who you are, but could you introduce your official?

Anna Soubry

This is Stuart, who is the deputy director in my Department. He provides me with a considerable amount of advice and support, especially when it comes to the steel industry.

Chair

I am really grateful to you for the energy that you have provided in respect of the steel industry. It has been sadly lacking in recent years, if I may say so. Could I ask how important the Government think the domestic steel industry is to the modern British economy?

Anna Soubry

The Prime Minister described it as a vital industry. I share his assessment of that. The people who were on the first panel, from the steel industry and indeed from Community, can perhaps confirm some of this. One of the first people I met, having been appointed on 12 May or whenever it was, was Gareth, because I had been told in no uncertain terms that there were grave problems in our steel industry, so that was back in May. I met him. Ernst & Young came in, because I said to my officials, as much as I respect and admire the impartial advice that they give to us, I wanted somebody with an overriding view of the future of the British steel industry and the huge challenges it faces. So we sat and we had our meeting, and Gareth made very clear to me—and he is here, and I know he will confirm or deny—many of the asks that were being made by the steel industry. Obviously dumping was one of those things, and he made it very clear that they wanted us to take, frankly, action that has never been taken, as far as I understand, by any Government, on dumping, in particular towards steel. My officials gave me the advice that they give, which is, “Minister, we normally abstain on these matters.” I said, “Well, I think he makes a very good and compelling case, and, in my view, we should vote in favour of these anti‑dumping measures.” That is what happened in July, I believe it was, and I think that is one of the first times. That change in policy happened very quickly under the new Government and it has continued. We abstained in the last vote, which was on a particular type of steel; there is a very good reason for that. But, anyway, that is how seriously I take it, and I believe that is how seriously my Government take it as well.

Chair

Can I press you on this? What is your view of what The Economist said last week, when it said, “Britain’s steel industry is not strategically important”?

Anna Soubry

I do not agree with them on that. I do not believe my Prime Minister agrees with it, and my Secretary of State does not agree with that either. It is important.

Chair

So the Prime Minister thinks that the steel industry is strategically important.

Anna Soubry

Absolutely. There are certain things, aren’t there, which you think, as a country, you could possibly live without? But then there are the core things that you need for any good economy, and one of those things is a steel industry, and we are agreed on that. When we were at the summit, which of course you were at, Mr Chairman, we talked about why that was. Defence is a really good example of the need to produce your own steel. I always put it in this way. Come the time when HS2 and HS3 place the orders for rail tracks to be made of steel, I want those rail tracks to be made, rolled, whatever it is, in Britain, and made from British steel. That, if you like, is the emotional hook upon which all our work is now resting, to secure what is left of the British steel industry.

Chair

If it is a strategically important industry, why did it take a Backbench Business debate to get a steel summit in October, with industry, unions, parliamentarians, as well as you and the Secretary of State around the table?

Anna Soubry

To be honest with you, I am one of those people who appreciate and understand why we often have meetings and so forth, but, as anybody who knows the way I work in Government will know, I get a bit fed up. I am not saying the steel summit was a talking shop, but what I do not want is when we can all sit round, have a good old chat about things and say everything is dreadful. I would much rather just get on and do stuff. I think that is exactly what we have been doing. The steel summit was a very good idea, and I said that in my speech when we closed that debate, because it was needed at that time, after everything that had happened in Redcar and, truthfully, when we knew what was going to come down the track at Tata—and we did. We all knew that, when we were at that summit. We knew exactly what was coming the following week. We do not say these things publically, but let us be honest about it. We knew that we were at an absolute crisis point, and Redcar was that awful, awful moment when everything politically came together. It needed that awful moment at Redcar to concentrate all the political minds in Government to say, “We have been doing work, but now we have absolutely got to escalate it”, because we also knew that the other companies faced such huge problems. Sorry, I should also say that, of course, I went to see Tata in Port Talbot. I went for a tour there and I went on a visit to Celsa, so I am very much aware of the brilliant equipment they have there and the fact that they use 40% of Cardiff’s electricity, just to give you an idea of the amount of electricity some of these steel companies use.

Chair

Minister, I really admire your refreshing attitude and I like the fact that you do not want meetings to discuss meetings, but you want to get on and do it. Can I ask about the working groups, which sound suspiciously like meetings to discuss meetings? Can you talk me through what is going on? What real progress—decisive, timely action—is taking place, say, on public procurement? How is that changing now, as opposed to the steel summit?

Anna Soubry

Take procurement. I was not at that meeting; that is chaired by Matt Hancock, so I rely on Gareth to give me a good independent assessment of it. I think he was impressed by the progress we have made, even from what happened at the steel summit, where we went through what Nia was talking about: the changes that the Government has made in procurement so you can take in economic and social value. Other work has been started some time ago, but that work will now be escalated, to see what else we can put into the scorecard.

Chair

What does “escalated” mean? Given that Gareth has said “two weeks to save the steel industry”, what are we doing in order to make sure of that?

Anna Soubry

Let me tell you a really good idea. You might have something where you say to an official—no disrespect to you, Stuart and all the others—“Can we report back on this next week? Can you give me an answer by the end of the day?” That is the way you escalate. Truthfully, and no disrespect to anybody, a lot of people here have not been in Government. That is quite an achievement, and no disrespect to civil servants. People in Government often do not work that way, unfortunately. They are used to a strict way: “We will come back in a week’s time.” So it is not; it is actually by the end of the day.

Chair

I asked you at the steel summit this direct question, which is: public procurement is important, but alignment of industrial supply chains is key too.

Anna Soubry

True.

Chair

Have things like the Automotive Council, the Aerospace Growth Partnership, and the Offshore Wind Industry Council been put in place to make sure that all the stuff that needs to be put in place for steel and the supply chain is happening now?

Anna Soubry

This is the different way of working. The day after the steel summit, I spoke to Andrea Leadsom. She and I spoke on by mobile phone on a Saturday to talk specifically, for example, about offshore wind. I do not want to go into all the details of it, because some of these things are commercially sensitive, but we want to know why more of the blades and more of the masts are not made using British steel. That is a piece of work that was immediately set in progress on the Monday, when I sent an email on the Saturday. These are the things that we are looking at. On the supply chain, you are absolutely right. We know 97% of Crossrail has used British products, so we want to make sure that we replicate that in the other great pieces of infrastructure that we do. Bringing the supply chains together is absolutely critical.

Chair

We heard from the first panel that the trade unions have not been invited to the working groups. Why is that?

Anna Soubry

There are no conspiracy theories on this. I chair one of them, and, at the moment, I have kept it—and it drives them mad—to a very tight group of officials so we could start it up and say, “Right, you go and look at safeguarding. Can we do that? What are the rules on that? You go away and look at working with other European Union states to see how we can do this and we can do that.” That was the first thing, certainly, on mine, and that is my understanding of the others: immediately getting on. The idea that I would exclude communities or anybody else is nonsensical, if they have a role to play. Truthfully, I hope these working groups stop working in about two or three weeks’ time, because the work will be complete. I thought, actually, Luis was coming from Celsa, but I may be wrong. All the companies are coming tomorrow to the group specifically to talk about dumping, because I specifically want the evidence to put now to the EU.

Peter Kyle

Thank you, Minister, for coming today. I appreciate both of you being here. Minister, you are on record as saying that you wish you had known nine months ago what you know now, so that you could have acted back then.

Anna Soubry

On SSI.

Peter Kyle

Indeed. What is it you could have done nine months ago that you could not have done in the last month?

Anna Soubry

SSI is what I was referring to. Tom touched on the situation with SSI. I think he is being generous, and Roy is probably being generous as well, but it was a nightmare. You have heard the stories about the fact that the employers’ liability insurance had not been paid. We found out about that at 4.20 on a Friday afternoon. I had a telephone call at 9.00 at night with the insurance provider, almost begging them to extend the cover until Monday. These guys worked like lunatics, literally scrabbling around getting bits of money together. That is how bad it was.

Peter Kyle

What you are describing is a reactive approach to this.

Anna Soubry

No, it was not.

Peter Kyle

When you found out, you reacted, but you were not proactively finding out the state of the steel industry and reacting in time. Perhaps it was not the fault that you had to wait nine months before acting. You were not acting nine months ago.

Anna Soubry

Nine months ago, we knew that there were difficulties and huge losses in the steel industry; that is a matter of public record. Nine months ago, we knew that SSI was losing hundreds of millions of pounds a year. What we did not know was the scale of them not paying their bills. What we did not know was the scale of their debts. That is the point I make about the examples I give about SSI: nobody knew the full extent. Let me be absolutely clear. On Thursday, 1 October, as it would have been, so the day before it went into liquidation, do you know how people knew that the entire company had gone into, effectively, administration? A tweet was sent out, which we happened to get, because we are on social media, in my bedroom in Redcar, to say, “Look at the website.”

Peter Kyle

You are not describing a Minister or a Government Department that is in the driving seat here. You are describing one that is reacting.

Anna Soubry

No.

Peter Kyle

Let me phrase it a different way, then. Gareth Stace said that what needs to happen is the correction of past policy errors. As he was describing the past policy errors that needed correcting, I saw you, being a very expressive person, nodding away profusely in the background.

Anna Soubry

Absolutely.

Peter Kyle

What have you precisely done since becoming a Minister to correct past policy errors?

Anna Soubry

I think one of the biggest ones is dumping. Well, it is; there is no debate about it. It has never been done before. In fact, when the UK representative voted in favour of protectionist measures, I am told that they went back to them; they were so surprised at the agreement to it, because it had never been done before. That is a really important change by Government. In relation to energy, I have had numerous conversations with the Secretary of State about it. All I can say is this. There have been a number of conversations and exchanges about looking at our energy prices, exactly to address the very real concerns that Gareth and his colleagues have, which are right. Let me make it very clear. I will tell you what I think. I do not like a system that takes away from people and then hands back. I just wish we were not doing this to our energy‑intensive industries in the first place.

Peter Kyle

You have drifted away from the question, so I am going to interrupt you.

Anna Soubry

Sorry.

Peter Kyle

The question was about specifically what actions you had taken. We know that you do not like conversations and meetings; you like action, but it is interesting that you came back and started talking about conversations you have had.

Anna Soubry

You cannot change Government energy policy overnight. Can I just explain something? When we talk about Germany, which is the right comparison to make because EIIs in Germany pay about half the price of our industries, be under no mistake who pays the shortfall. That is the individual consumer. If we were change our energy pricing, the only way that you would change it is to put the burden onto consumers. Personally, to be honest with you, I would not have a problem with that. I would be happy to make that case.

Peter Kyle

In terms of the marketplace, the situation that unfolded at Redcar, in the process of which you are an active participant, happened within the context of a market for steel, which we have been discussing here, and the future of it. What discussions did you have, leading up to the closure in Redcar, about the future demand for steel domestically?

Anna Soubry

Domestically?

Peter Kyle

Yes. There are British steelworkers—

Anna Soubry

Sorry, SSI produces steel for Thailand. That was the whole point.

Peter Kyle

Yes, but, in terms of the domestic market here, did you look for how the domestic market could be a solution to the challenge of a British manufacturing plant?

Anna Soubry

Peter, the situation at SSI, truthfully, was dreadful. It was losing hundreds of millions of pounds. It had never turned a profit and the price of slab had almost halved. There was a real desire: “God, how can we try and save this place?”, because the huge significance it has is not lost on anybody. We know now 800, we think, in the supply chain alone have lost their jobs. If there was any way that anybody could have even kept the flame burning, which was what had happened last time but in very different circumstances, because Tata did the mothballing, it would have been done, but the harsh, horrible reality was that it had lost hundreds of millions of pounds, with slab falling and consumption, unfortunately, not being where it needed to be.

Chair

Minister, I am going to have to move on, because an awful lot of people want to ask you questions.

Paul Blomfield

On the question of local sourcing, you said it was absolutely critical that we seek to use UK steel in major infrastructure projects. Are you concerned, then, that there is a lack of joined‑up thinking in Government, when the Government has signed off a Hinkley Point project that specifically precludes UK companies from even tendering?

Anna Soubry

That is the first I have heard of that.

Paul Blomfield

Well, let me illuminate that, then.

Anna Soubry

I am taking it that that is true. I mean, I do not know, so it had better be true. Well, I hope it is not.

Chair

Let us listen to Paul, then.

Paul Blomfield

There was a conference at the Advanced Manufacturing Research Centre in Sheffield about getting ready for nuclear in summer 2014, at which representatives of EDF and Areva were present. There were questions from Sheffield companies about the opportunities to bid for the large forged steel elements, which form the major part of the pressure vessels. They were told by representatives of Areva and EDF that there would not be an opportunity to bid for those. Indeed, as part of the justification, they said that some of the rationale for EDF acquiring that part of Nuclear Electric was to provide work for underutilised French manufacturing assets.

Anna Soubry

I cannot comment on things of which I have no knowledge. It is all hearsay. What I can absolutely say is that we will make further inquiry and we will write to the Committee. These are very, very serious allegations, and forgive me but I do not know the truth of it.

Paul Blomfield

But you will undertake to investigate them.

Anna Soubry

Of course I will. They are very serious allegations, so they had better be accurate.

Paul Blomfield

If they are substantiated, as I am sure they will be, will you intervene with colleagues in Government to review future procurement policy in relation to the unfolding nuclear contracts?

Anna Soubry

We have done all that already. As I explained and others have explained, on the procurement side of things, we have already introduced, way before any other EU countries, a different way of doing procurement, putting in the social benefit, and we seek to extend it even more, to the advantage of not just British‑made steel but, indeed, all British‑made products.

Chris White

Minister, I have been very impressed with what you have said so far, seeing you lead from the front and pick up these issues. As to the idea of you and Andrea Leadsom having conversations and thinking about what else British steel can be making, if it was not for your picking up some of the pieces now, we could potentially have similar problems in other industries. Is it as good as you are? Is your Department sufficiently resourced? You had to bring in Ernst & Young to give you advice.

Anna Soubry

The reason I brought in Ernst & Young was not because of any criticism of any officials. I just wanted to bring in somebody completely detached from all of it, so be very, very clear about that. Often we hire people and ask them to go and look at businesses, to give them a completely independent look. I do not want it thought that this is any reflection on my Department.

Chris White

I take your answer on board, but do you still think, when you are discussing what we should do about British steel, what we should be making from British steel, it is only as good as you are? Is your Department not sufficiently resourced to be working out these things and telling you, rather than you asking these questions?

Anna Soubry

No. Let me be absolutely clear. The standard and level of advice that I have received from people like Stuart and all that team is outstanding, and I mean that. Their depth and level of knowledge is absolutely outstanding. The other thing that I really appreciate, as much as their huge depth of knowledge and the respect that they have for the industries, is their honesty. They give good, honest advice. Forgive me, I have worked in three Government Departments; I am probably now in trouble with the other two. These guys are excellent.

Chris White

Absolutely, and I will take that on board as well. When I walked into this Select Committee earlier, the first response I heard was that the warning signs had been there for a while, something in the region of eight years. Do you think something should have been done sooner?

Anna Soubry

Oh, of course. Isn’t it brilliant, the benefit of hindsight, when you look back on things? Look, the reality and truth is that there are people sitting in this room—just look at SSI—who knew how bad things were. That is the truth of it: they knew how bad things were and they battled on. The reason they battled on was because they wanted to save SSI and everybody was fearful that, if they went public—you might remember, if you look back at any of the debates and the media stuff, I said, “I am not going to talk this company down. I am going to talk this company up”—creditors would go. We are talking about a council that is owed over £7 million in rates. I think Northumbrian Water is still owed £8 million. We are talking about some very serious creditors and we are talking about some very brilliant people locally who were owed a lot of money and did not do anything. There are people who have not been paid and probably will never be paid in the supply chain, because they kept schtum, they kept on working and, in the end, they lost their jobs.

Chair

I just want to narrow something down quickly. Up to £80 million will be available for help. Could you break that down for us in terms of what that means? How much will be on retraining?

Anna Soubry

Absolutely. Hang on, just wait one minute. I have some of the figures in front of me, because I had a meeting today with key people in the taskforce who have come to London. First of all, as you know, there is a redundancy payment of £20 million to £30 million, as part of the £80 million. That leaves somewhere between £50 million and £60 million. At the moment they put in five bids for what they want. There is an apprenticeship package. They found a place for every single one of the 50 apprentices. Now we need to get the funding sorted out. We have given them the first tranche of the two‑year package on the flexible training support fund. There is a £1.1 million safety net fund, which is currently operated by the council, which I hope we can sign off today to get that money in place. It is for emergencies: people in debt, people in crisis. Then there are two other big funds that they have asked for, in the region of about £16 million. There is the “Let’s Go” and the jobs incentive fund. They are extensions of current RGF‑type projects. They are not yet at the place where we could sign off by Friday, which is what, truthfully, I would like, but I think, by Friday, everybody will know the place they have got to and where they need to get to to get a sign‑off within the next couple of weeks.

Chair

Can I press you on that? When will money be in the North‑East, on the ground?

Anna Soubry

They had, yesterday, just over £2 million to get those first two things off. I want the £1.1 million to be signed off today. It will take ministerial direction, by the way. All these take ministerial direction, and that is what Sajid and Greg Clark have already done. The other two will not need ministerial direction. That will come together, and I would anticipate that that will be done, if not next week, the week after. That is a total of about £33 million, and that is money going in. The next thing that I insisted on is that, instead of them having to come to us, cap in hand almost—and I have made sure that Amanda Skelton has four people that she can immediately have to help and support her, because she is doing two jobs at once—we put the money down with them. These people know what they are doing, and so, instead of them having to come to us with bids, frankly, we trust them to get on and do it.

Chair

And that money will be available to any former SSI worker. I am going to speak as a pure constituency MP. It is not just for the Borough of Redcar and Cleveland; people from Hartlepool will get that as well.

Anna Soubry

Yes, that is right. One of the things that we were a bit concerned of is that £3 million has already gone to the FE colleges, but only in the Redcar area, which is great for them, but, as you identify, a lot of people working at SSI and in the supply chain do not actually live in Redcar. If you are in Hartlepool and you want to go to a more local college, that is what the flexible training support fund is for. I cannot remember what it is, but they have well over £1 million already. That is a two‑year funding stream for them.

Chair

If you could just provide to the Committee that breakdown of the £80 million, as you have just articulated, that would be very helpful.

Anna Soubry

Yes. We do not have the final figures yet.

Richard Fuller

Minister, you have described the steel industry as strategic, which seems to be a magic condition that industries get into when they get into trouble, so I would like to ask you some quick‑fire questions to judge how far you have drunk the interventionist Kool‑Aid on this. Do you believe, when we look at the purchase of steel for our infrastructure products in the future, we should prefer British steel over imported steel even if it is of below their quality or it is overpriced?

Anna Soubry

If it were ever to be below quality, but I would struggle to believe that British steel could ever be below the quality of anybody else’s.

Richard Fuller

So you are saying we should not, if it is not of the same quality.

Anna Soubry

I do not believe it would be below quality, so that is academic.

Richard Fuller

What about price?

Anna Soubry

No. Frankly, buy British. You get what you pay for.

Richard Fuller

So you are paying more because it is British.

Anna Soubry

Because it is quality.

Richard Fuller

Okay, I will try to make that out. Let us ask you the next question. I think, quite rightly, everyone here would applaud the £80 million that you have put in to help employees in that sector.

Anna Soubry

That is just in Redcar.

Richard Fuller

Exactly. Do you think, though, that the industry seems to be asking Government and taxpayers for money as well, despite their denials earlier? Do you think the Government should be giving money to the steel industry to support it, separate from the money it is giving to support employees?

Anna Soubry

No, because they do not ask for that. They do not ask for any money. All they ask for is a level playing field. They are right to make that ask and they should get a level playing field. That is all they ask for.

Richard Fuller

Just so I can clarify your earlier comment, you said, if we make any changes in the energy situation for the steel industry, then the consumers will be paying for that.

Anna Soubry

No, it is not paying for it. It is just, instead of the burden falling on EIIs, the burden would be spread, like they do in Germany, across all consumers, and, at the moment, they are part of it. They are not getting subsidy from the taxpayer; we are just recognising that these people use extraordinary amounts of energy, but, in return, they provide a superb manufacturing base, which no country should ever want to get rid of.

Richard Fuller

Onto the third question, you have a responsibility, Minister, in saying it is a strategic industry, to outline whether the steps that you can take—the four things they ask in the plan, plus the measures on the anti‑dumping—will be sufficient to protect the industry from this fundamental change in global forces.

Anna Soubry

Not necessarily.

Richard Fuller

If you cannot make sufficient changes to enable the industry to survive the change in global forces, why are you taking these steps?

Anna Soubry

The case that Gareth and his colleagues make, all of them, is that, at the moment, they cannot fight fairly, because they have one hand, arguably both, strapped behind their back. All they ask for is a level playing field, and I think they are absolutely right. It is not the job of Government to begin to tie business up. The job of Government is to create the framework, let them get on, and that is all these guys ask for. They are not asking special favours. They just want a level playing field, to compete with other countries in Europe and beyond, and I agree with them.

Richard Fuller

Thank you, Minister. I think I have the answer to my question about the Kool‑Aid.

Michelle Thomson

Thank you for coming. We have heard today about the time it has taken to get to this point where the patient has become sick, is clearly failing and, indeed, may be requiring palliative care. I hear your sense of regret over being in that position, and also your sense of energy about trying to do something about it, but to what extent do you regret that successive UK governments have failed to implement a cohesive industrial strategy? If you do, is that something you will undertake to take up, going forward?

Anna Soubry

You could have had all the strategies in the world; it would not have made any difference. There is no magic bullet to this.

Michelle Thomson

With all due respect, they would not be very good strategies if they made no difference.

Anna Soubry

You can do all this: write a strategy, have a meeting. Actually, they have identified the areas of work where Government can be involved and has some responsibility, and they ask us to get on and give them a level playing field. Personally, I just do not get all het up about strategies. I would much rather get on, give these guys the level playing field that they ask for and they deserve so that they can compete on fair and equal terms with everybody else.

Chair

Is the metal sector strategy that you launched last week a waste of time?

Anna Soubry

No. Forgive me, Mr Chairman. If you look at the metal strategy, it is a series of asks, and many of those asks are reflected in five asks that Gareth and the rest of the industry make. I am not saying that I have a problem with strategies and all of that, but do not say it is the magic bullet. Do not say, “If we had a strategy, we would not be in this position.” It is like, “If we did not have a committee, we would not be in this bad position.”

Michelle Thomson

With all due respect, I am not saying that. What I am trying to draw out is a lack of focus, and we are talking specifically about steel today, but in industrial strategy. Manufacturing we know is an issue. It is roughly 10% of the UK’s output. It is more that, and the balance between services and manufacturing and so on, that we oft talk of as being an issue. Can we see that changing so that other industries do not potentially enter palliative care, as has steel?

Anna Soubry

Every Government, whatever colour, always wants a good manufacturing base. Whether they achieve it is a different matter. I would say this of Mr Wright’s Government when they were in power. They did not want to destroy it. Nobody goes out to destroy a manufacturing base. Whether or not you achieve the maintenance and growth of it is a different matter, but nobody sets out to destroy it.

Michelle Thomson

I am certainly not suggesting that, but I am pointing out that the lack of it clearly, given the timescales, is affecting—

Anna Soubry

Can I just say this? I think the last Government had a strategy, but it did not stop huge‑scale redundancies in the steel industry and all the difficulties from occurring. I just do not want us to get hung up on strategies; that is all. Now, if you ask me whether we want to look at the way forward and whether we want to, as Gareth and I have talked about, do a report into the future of the steel industry, there is probably really good merit in that. Personally, do I want to see that metal strategy being firmed up and made a bit more meaty? I do not have a problem with that either. It was a great document, so it is a good starting point.

Craig Tracey

There is just one quick question from me. Given the stabilisation of the steel industry since 2010, with employment as well, after there had been 23 years of gradual decline, you alluded that you would like to see an end to this in two to three weeks. Do you think this current situation is short-term and potentially, in the scheme of things, just a blip, and there is a big future?

Anna Soubry

To me, my priority is securing Scunthorpe and making sure that Port Talbot is able to survive as well. We are already starting to do great things with the taskforce in Scunthorpe. I could bore you, genuinely, about some of the things that are already happening. Also, at Port Talbot, one thing that Community touched on is skills, for example, so we want to make sure that absolutely all the staff there are skilled in the right way. I want to look at the port and get that sorted out. I also want to look at land and making sure they are targeting the right place to maximise their asset.

Chair

On that basis, Minister, have Redcar and the industrial assets there, in your opinion, died a death? They are not coming back.

Anna Soubry

I am just being honest with you. I think, sadly, it is not going to come back, and that is dreadful. Of course it is. There is potential there, because you have a fantastic workforce: highly skilled, absolutely driven, some brilliant people, great unions, a fantastic council and I will even say some excellent MPs. It has every opportunity that some other things will come there that will be just as good as a very long, fine tradition of making steel.

Chair

What do you think of Lord Heseltine’s comments at the weekend that said it is as good a time as any for steelworkers in Redcar and elsewhere to lose their jobs, because the economy is working well?

Anna Soubry

I do not think he actually said that.

Chair

I think he did.

Anna Soubry

Lord Heseltine always brings great experience to anything, and he could have a role to play in Redcar, to make sure that we get the inward investment, working on that with UKTI, for example, working with the taskforce, because they are doing a great job at the moment. Now we need to work with the LEP. There is a great guy there who is the chair, Paul Booth, doing an excellent job. Now we need to look at some of the stuff that we know about in national Government and make sure that Redcar absolutely is the focal point for a regeneration that brings longevity of real skills and real industry back to it.

Chair

Do you agree with the Minister for the Northern Powerhouse’s comments that the SSI closure is a distraction?

Anna Soubry

No. I do not think he even said that. I never comment on stuff when I am told that somebody has said it. I do not even know if James said that. I do not think it is very fair. It is a bit naughty of you, Mr Chairman.

Chair

We have not got time to go on at length, Minister, so I want quick‑fire questions and answers.

Anna Soubry

Right, and I will try to keep it short.

Chair

During the Chinese state visit last week, did the Prime Minister achieve anything?

Anna Soubry

Yes.

Chair

What?

Anna Soubry

Well, he raised it with the Chinese.

Chair

Did they say, “Well, that is very kind, and we are just going to completely ignore your comments?”

Anna Soubry

I do not think they said, “That is very kind. We are going to ignore you.” He raised it with the Chinese. He put it absolutely on the agenda. It was on the agenda in any event, thanks to the media.

Chair

Were there any discernible, tangible actions as a result of raising it with the Chinese?

Anna Soubry

I honestly do not know the answer to that. I suspect it is: we are raising it because we are onto it and we will not let it go. We will be a dog with a bone.

Chair

Could you find out from No. 10 and tell the Committee what actual tangible actions came out of the raising of the issue?

Anna Soubry

I do not think anything would, though, would it? You would expect he would raise it.

Chair

So what is the point? What on earth is the point of raising it when nothing happens?

Anna Soubry

Now, hang on, because everybody said, “Raise it”, so that is exactly what the Prime Minister did. He raised it, and I can assure you it was the beginning of the conversation, because other Ministers also had meetings with other members of the Chinese delegation. It was absolutely the right thing to do. You cannot win, can you? But he raised it and he did the right thing, absolutely.

Chair

What is the Secretary of State going to come back from Brussels with in terms of victories tomorrow?

Anna Soubry

I think it is brilliant that he has gone over. It is not just about advancing the EII; it is also about working with other member states so we can look at what more we can do. Safeguarding, which is what we call the nuclear option, is certainly one of the options that we are at least considering.

Chair

What does victory look like tomorrow, when he comes back?

Anna Soubry

I cannot say off the top of my head, and I certainly cannot in 10 words.

Chair

Why not? You are the Steel Industry Minister.

Anna Soubry

When he comes back tomorrow, I am hoping that he will have been able to advance the excellent conversations that I already know he has had with a number of commissioners and a number of other member states, particularly about dumping, but also about EII.

Chair

It was made clear to us in previous panels that we seem to be out on a limb when it comes to the EU.

Anna Soubry

That is not true.

Chair

Why not? Can you demonstrate that we have a coherent European policy against Chinese dumping?

Anna Soubry

Let us get a couple of things absolutely straight. There have been conversations already with commissioners, which have been extremely positive. There have also been discussions. In fact, I am going to go and speak to another Minister in another country, because I am of the view that there are a number of us on the same page. Let me just put this in as a word of caution, as a Minister who believes the United Kingdom is better in the EU. Do not let us fall into the trap of anybody using this as a way of kicking the EU. The EU is the way that we can begin to solve it, especially on dumping, and we are working with our colleagues.

Chair

There is a division, but a final question. For a Minister that does not like conversations, it just seems that the British Government, Prime Minister downwards, are just having conversations, rather than actions. Why on earth is that happening?

Anna Soubry

No. I can assure you that we are not just having conversations. Stuff is being done and I very much look forward to the day when I return and talk to you about the positive stuff that we have done to try to retain and keep a steel industry in this country, because that is our absolute determination.

Chair

Minister, thank you very much for your time and for your conversation. We appreciate it. Thank you.

Anna Soubry

You are very naughty, Mr Wright. Oral evidence: UK Steel Industry, HC 546-i 32