09:26 Stephen Kinnock (Labour)

Today, our country stands at a fork in the road, and the choice is clear. Are we going to continue to allow our manufacturing sector to wither away, constantly eroded by the sort of policies that have come to define the last decade and which are advocated in the book of the Secretary of State for Business, Energy and Industrial Strategy, “Britannia Unchained”: “Let the market rip. Let the City of London call the shots. Let globalisation and deindustrialisation ride roughshod over our communities.”? Or are we going to truly understand the pandemic as a clear and unambiguous warning that we cannot go back to business as usual and that we must strive for real enduring change; that we must stand on our own two feet by reducing our dangerous over-reliance on imports from China; that it is time to recognise that the collapse of British manufacturing is the primary cause of the grotesque inequality that exists between the wealthiest and the poorest regions of our country; and that a modern manufacturing renaissance is our only route towards a fair and just transition to a cleaner, greener future?

Home-grown steel is also the only route to tackling climate change. Steel will play a critical role in greening our economy by building the electric cars of the future and providing vital components for solar, wind and tidal power. Moreover, British production processes have half the carbon footprint of China’s far less decarbonised steel industry, and shipping steel from the other side of the world is obviously more carbon intensive.

Secondly, the Government must as a matter of urgency address the issue of our industrial energy crisis. British steelmakers pay 86% more than their German competitors and 62% more than the French. Over the past five years, that disparity has cost the UK steel industry an additional £254 million. Those additional costs represent funds that should and would have been directed towards critical capital investment, including decarbonisation projects. Will the Minister please assure us today that her Department is truly committed to tackling the root causes of the UK’s astronomical industrial energy prices, and can she set out her urgent action plan for doing so?

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09:45 Sarah Champion (Labour)

While the sale of speciality steel is concerning, Liberty’s ongoing commitment to its Aldwarke plant in Rotherham is encouraging. The plant can lead the way in our drive to decarbonise our steel industry. Decarbonisation presents challenges but also offers huge opportunities to grow our economy and create new green jobs, but that would take sustained support from the Government and a viable long-term plan—something that, to date, has been lacking.

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09:49 Mick Whitley (Birkenhead) (Lab) [V]

None of that is possible without direct Government support. There have been many encouraging steps so far, such as the re-establishment of the UK Steel Council, the creation of the £250 million clean steel fund and the commitment to founding two industrial clusters by the mid-2020s. Very good, but I fear that we are failing to go far or fast enough in decarbonising the sector. Hydrogen-based steel making is already being piloted in at least 23 sites across Europe, so the UK risks being left far behind by our European neighbours. Whether it is Scunthorpe or Port Talbot, these are the very communities that the Government promised to level up, yet they will be the ones that pay the price.

The British steel industry faces a stark choice: decarbonise or wither away. That is why I call on the Government to heed the calls of the industry leaders and environmental groups and begin trials of hydrogen steel without delay, with a view to fully decarbonising the sector by 2035, as recommended by the Climate Change Committee. That is an enormous challenge, but without that scale of ambition, we cannot possibly hope to compete with our international competitors.

This is not just about decarbonising steel. If we are going to revive this vital industry, the Government also need to take advantage of our departure from the EU’s regulatory framework and ensure that the procurement policy actively benefits British steelmakers. Over the next 10 years, an estimated 7.6 million tonnes of steel will be needed for public infrastructure projects. The Prime Minister must honour his promise and ensure that British steelworkers are at the very front of the queue.

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09:57 Christina Rees (Neath) (Lab/Co-op) [V]

Steel imports increased by 25% between 2013 and 2017, before the original EU steel safeguards were introduced. The current circumstances of global overcapacity and import restrictions in other countries make it highly probable that steel imports will again escalate should safeguards be removed. It is probable that the EU and the US will continue to provide safeguards for their industries and place measures on UK steel imports. It is astounding that the UK Government would provide open access to our steel market. The market remains volatile and delicate during the continuing pandemic, which has seen steel demand drop by 16% during 2020. The steel sector needs stability to recover and to adapt to a post-covid world. Safeguards are crucial to provide stability. The steel sector will continue to face many challenges—decarbonisation, subsidy regulation post Brexit, public sector procurement, energy price disparity—but it is the removal of steel safeguards that poses the biggest existential challenge, given the interconnectivity across the sector.

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10:09 Mark Tami (Labour)

It is no good saying simply that steel needs to modernise or decarbonise its business, or that somehow hydrogen will save the day at some point in the future. That will not happen if we do not support and maintain a viable business today. Hydrogen might well be the future, but it is some way off and we cannot just use it as an excuse to do nothing now. That means addressing what many other colleagues have mentioned—the ludicrous situation where steel manufacturers here pay 62% more for electricity than those in France, and 86% more than those in Germany. That is not a new problem; it is something we have been banging on about year in, year out, but—shock, horror!—nothing changes, nothing happens. All we are told by the Government is to take it up with Ofgem, but we all know the answer we will get. All Ofgem says is that there is nothing it can do. I would argue that Ofgem seems intent on making the situation worse, rather than better. How can we seriously expect the industry to invest in the future when it has both hands tied firmly behind its back?

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10:14 Ruth Jones (Labour)

No steel industry in the world can manage the transition to net zero production without substantial Government support, but a recent report by the Energy and Climate Intelligence Unit revealed that while 23 hydrogen steel projects are either planned or under way across Europe, none is currently in progress in the UK. Will the Minister comment in her wind-up speech on whether she thinks that is a satisfactory state of affairs?

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10:30 Seema Malhotra (Labour)

UK steel is at a turning point. A lack of strategic focus from successive Conservative Governments has inevitably resulted in reduced resilience against external shocks and fierce international competition. Our shared goal must be a sustainable future for UK steel and its supply chains, and we need the Government leadership that that demands. Steelmaking must decarbonise, and the long-term future of the industry is in supporting green jobs at the core of low-carbon economy. Steelmaking is a highly-skilled industry and a national asset, and it has a clear opportunity for continued growth, with procurement policies that could also help to increase the contribution of UK steel to UK manufacturing, products and infrastructure.

Currently, 60% of steels are imported, and there is no assessment of the carbon footprint of those imports. Across the UK, there are around 1,100 businesses in steel and around 75,000 jobs, whether directly supported or in the supply chain. Those jobs are at the centre of our economies. In my speech, I will say a few words about supporting our steel industry today, about the need for a vision and plan for the future, and about ensuring a fair and just transition.

We urgently need a truly ambitious vision for the sector that puts the UK at the cutting edge of green steel-making technology, and we need a plan to go with it. We need to see better progress on the industrial decarbonisation strategy and the acceleration of the clean steel fund. That £250 million fund was announced in 2019, but the spend from it is not set to start until 2023. I would be grateful for clarity from the Minister about why there is a delay.

The UK seeks to decarbonise by 2050, but blast-furnace investments operate on a 20 to 25-year timescale, so we need a clean steel innovation programme now. As the Materials Processing Institute highlights, delaying until 2024 shows a lack of co-ordination between the Government’s timetable and the reality of the industry’s investment cycles.

Although we accept that it is necessary that UK steel continues using coking coal for the next decade until technology is in place to provide for decarbonised steel, with the right strategy, investment in renewable technologies can create three times as many jobs as those in fossil fuel industries—jobs that are long term, highly skilled and high wage. Hydrogen could also play a huge part. Trials of direct reduced iron technology are already happening in Germany, Sweden and China. The Government should act quickly to prevent the UK from being left behind with this technology too.

As the price of energy hinders progress, we need a clear industrial plan. We have heard how the gap between German and UK electricity prices is placing an extra £54 million a year additional cost on the UK steel sector. As the sector seeks to decarbonise, the price disparity is a major barrier to transitioning. All low-carbon options available are much more energy intensive. The Government have always said that the EU is a barrier to action. Now that we have left, they must take decisive action to address that price disparity.

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10:39 The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)

Hon. Members, including the hon. Member for Birkenhead (Mick Whitley), have rightly focused on climate change, with welcome passion. In addition to our continuing close engagement with the sector, I can reassure the hon. Member for Newport West (Ruth Jones) that we are taking action across a broad range of policy areas, including decarbonisation, energy prices, international trade and procurement. These actions aim to boost the sector’s competitiveness in the short term and to support long-term investment and transformational change that will increase efficiency while aligning with our goal of a net zero economy by 2050.

To reach our ambitious net zero target, we will need the UK steel sector to decarbonise. Our new industrial decarbonisation strategy sets out for the first time the Government’s comprehensive assessment of how industry, including the steel sector, can decarbonise in line with net zero in a way that supports both competitiveness and clean growth. The strategy includes a commitment to work with the UK Steel Council to examine the implications of the Climate Change Committee’s recommendation to set targets for ore-based steelmaking to reach near zero emissions by 2035.

The hon. Member for Birkenhead made an important point about technology. Science and innovation have been made a priority by the UK Government, in recognition of the strong economic benefits of public investment in science and innovation and the capacity to leverage private investment. That is why we will increase R&D investment to £22 billion per year by 2024-25. We plan to establish a net zero hydrogen fund, with £240 million of capital co-investment until 2024-25. That will support at-scale hydrogen production projects, allowing steel producers the potential to access suppliers of low-cost hydrogen.

As we support the UK steel industry’s decarbonisation, we must do so in a way that enables us to compete globally and across Europe. Several hon. Members have raised the issue of industrial energy prices. We of course recognise that they are currently higher in the United Kingdom than in other competitive economies.

We are committed to sustainable decarbonisation, decarbonising a globally competitive future steel industry in the United Kingdom, and I look forward to working with Members towards achieving that goal.

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