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Sajid Javid hints at use of UK-produced steel in defence projects

Published 12/04/2016

Sajid Javid maintained his stance that all options are open
Sajid Javid maintained his stance that all options are open

Ministers are set to announce moves to include more British steel in defence projects amid an industry crisis, Business Secretary Sajid Javid has hinted.

Mr Javid said Defence Procurement Minister Philip Dunne could make an announcement "in the coming days" on Ministry of Defence (MoD) acquisition of British steel.

And potential Government "co-investment" with a commercial buyer in Tata Steel's largest plant in Port Talbot could involve taking on some of the business's debts, Mr Javid added.

During an emergency debate on the steel crisis forced by Labour, Mr Javid fielded numerous questions from MPs.

Labour's Stephen Doughty (Cardiff South and Penarth) called for more action on defence procurement, prompting the Business Secretary to suggest the Government would announce plans soon.

Intervening, Mr Doughty said: "You've got the Minister for Defence Procurement sitting next to you, who answered me in a question saying that the MoD didn't even have the full records of where it was getting steel from for UK defence projects.

"So how can we be sure on you following through on that commitment of procurement when departments aren't even keeping records and when so many UK defence projects are being made in Korea, China and elsewhere?"

Mr Javid replied: "If I can say to you, I think you may hear more about that from the Minister for Defence Procurement in the coming days."

The Business Secretary faced numerous calls to clarify what exactly Government "co-investment" in the south Wales plant would involve.

Responding to an intervention on the proposal, Mr Javid said: "You will know that was in relation to Tata strip and a decision to sell their business.

"What I set out there is really to show when the Government says we will look at all options to help create a long-term viable business with a commercial operator, then that would be such an option.

"The key point is that any co-investment would have to be on commercial terms, investment can take a variety of forms, for example it could be debt.

"But again it's a demonstration of all the options the Government is looking at."

Asked by Labour's Geraint Davies (Swansea West) whether the Government would "socialise" Tata's pension fund, Mr Javid said: "We are looking at all possible solutions."

Shadow business secretary Angela Eagle criticised the Conservative-led Coalition Government for scrapping Labour's defence industrial strategy which she said made British jobs and industries the first priority in MoD contracts.

To heckles of "nonsense" from the Government benches, she said: "We now have the deeply regrettable situation of an aircraft carrier, British surface ships and armoured vehicles all being manufactured in the UK with mainly imported steel, when, with more planning, our domestic industry could have supplied these needs."

Labour called on the Government to bring forward "shovel-ready projects" that require a significant amount of steel and to ensure any changes to procurement rules make a real difference.

Ms Eagle also urged the Government to spare its "ideological blushes" and push forward with co-investing in a purchase of Tata Steel.

She said: "Call it what you like, co-investing, part-nationalisation, temporary public stewardship or sheltering the assets, it's clear that the circumstances may require the Government to do this.

"They should spare their ideological blushes and just get on with it."

She said the response from the Government and the Business Secretary has so far been "wanting".

"There has been what can only be described as an ideologically-driven reluctance to get involved as the crisis has deepened. It's been a mixture of indifference and incompetence," she said.

Tory Eurosceptic Peter Bone (Wellingborough) spoke about the importance of a British steel industry in defence.

He said: "We cannot be left without a steel industry and just really for one reason only - if there is, and I hope there won't be, some war in the future, you have to have your own steel industry otherwise you can't defend yourself."

Fellow Tory Sir Edward Leigh (Gainsborough) intervened, saying: "This is an absolutely vital national industry. Can he imagine any previous UK government in war or peace allowing our steel industry to go down the tube?"

He added that if the UK had "control of our own destiny, surely we could just stop this dumping, and stop it overnight. This is unfair, unreasonable and ridiculous dumping and we should stop it".

Mr Bone said the two front benches "can't deal with this situation because of the position they've taken on the EU", adding that it was because of the EU that constituents may lose their jobs.

He said: "If we really want to solve the problem of the steel industry, we have to stop the dumping," adding the only way to save the steel industry was to come out of the EU and "make our own decisions in this House".

He concluded: "I tell you now that if we had not been in the EU, months and months ago we'd have imposed tariffs on China, and if you want to save the steel industry you're going to have to vote to come out of the EU."

Mr Doughty argued it was "grossly irresponsible to suggest that leaving the EU would benefit the steel industry in this country".

Labour's Stephen Kinnock (Aberavon) said the Government's meetings and statements had "done very little" to address the issue of investor and customer confidence.

Erosion of the customer base was the most pressing issue facing the British steel industry, he said, adding: "No-one will buy a business if it has no customers, it's as simple as that."

He said: "At the present time, forgive us for our scepticism about the possibility that there may be a lack of action here."

Mr Kinnock stressed the clock was ticking, adding: "What we needed from the Government was the announcement that they would put down their pom poms and give up their role as China's chief cheerleader in Europe; t hat they would end their championing of market economy status for China and end their campaign against trade defence reform, but what we got was more of the same."

The Government's approach, he said, had been characterised by a "dangerous combination of indifference, incompetence and rolling out the red carpet for Beijing".

Labour chairman of the BIS Committee Iain Wright (Hartlepool) noted that in "two years China has produced more steel than we as the inventor of modern steel-making has produced since the start of the industrial revolution, so even if the Government was doing all that it could those challenges remain vast", but he added the Government could be doing more.

Conservative Tom Pursglove (Corby) said the UK should ignore EU state aid rules to help find a buyer for the Tata sites.

He also said there is "far too much knockabout" over the issue as he called for interested parties to work together to find solutions.

He added: "I happen to take the view that in relation to trying to find a buyer for these Tata sites, all options must be on the table. We shouldn't rule anything out.

"I know people will say 'you're a free market Conservative' and I am. But the fact is our steel industry is not competing on a level playing field at the moment and that requires action that doesn't necessarily go along the normal grain.

"So we shouldn't rule anything out and I happen to take the view that if a short period of public ownership is required in order to find a buyer for these sites then that is exactly what we should do."

Mr Pursglove said: "Along the way, in trying to reach that point in finding a buyer, we mustn't let state aid rules get in the way. If they get in the way we should simply ignore them and do what is right by our steel industry.

"That is the message that my constituents in Corby expect me to convey as their local Member of Parliament."

Earlier, Mr Pursglove said it was "simply unacceptable" for public bodies in Britain not to use British steel.

"O n procurement, I happen to take the view that we ought to get much more tough on this.

"We've seen some really positive steps forward but it's simply unacceptable to my mind for any public bodies in this country not to be using British steel at this time.

"We've got big procurement projects that we're seeing, we've got things like fracking coming on stream - we ought to be exploring all of those possibilities and making sure that our procurement policy reflects exactly that."

SNP employment spokesman Neil Gray described the Government's lack of clarity over the "co-investment" option as "uncoordinated and shambolic".

"I'm also keen to probe a bit further on your apparent flirtation with direct UK Government investment and potential co-ownership of steel sites including Port Talbot," he said.

"You described it as 'investing in commercial terms'.

"Perhaps you could clarify that as it was clear as mud yesterday and left more questions than answers.

"Indeed it appears this morning No 10 was briefing against your flirtation, saying nationalisation is not the answer.

"How uncoordinated and shambolic."

Mr Gray complained that ministers have had to be forced to come to the Commons to discuss the crisis, offering only defensive reactions.

"It is clear that the Government has been comfortably behind the curve on the steel crisis - poor, defensive reactions rather than proactive and practical support," he said.

"This is in stark contrast to the proactive, professional and diligent way the Scottish Government has approached the crisis facing Scottish plants at Clydebridge and Dalzell."

Labour's Angela Smith (Penistone and Stocksbridge) said: "We are at risk of seeing the industry undermined by people who are posing as experts in the field - commentators in the print media, for instance - who are giving the impression the steel industry's day is done.

"It's not done, it's got a great future."

Conservative David Davies (Monmouth) said: "I think the Government, frankly, is not doing enough."

He also claimed carbon dioxide emissions are not causing big rises in global temperatures, as he insisted more needs to be done to protect the country's heavy industries.

Mr Davies, opening his remarks, said there had been a lack of consistency from all parties, adding: "We need to ask ourselves a fundamental question, which is whether or not we want to have heavy manufacturing industries in this country.

"Of course people say that the answer is yes, I think the answer is yes, but if that is the case then one has to ask the question why is it that over the last few years governments of all parties - this Government, the previous coalition government and certainly the previous Labour government - have all enacted policies that have made it much harder for heavy industry to continue.

"They have swallowed lock, stock and barrel the idea that carbon dioxide is a pollutant, which is causing runaway global warming, and they've enacted a series of policies that have made it very expensive for any industry that emits CO2 and made it very expensive for heavy manufacturers to buy in energy."

Mr Davies said high energy costs are affecting other heavy manufacturing industries including glass, chemicals and cement.

He went on: "If honourable ladies and gentlemen truly believe these industries are polluting the atmosphere and causing great increases in temperature that we haven't actually seen any evidence of for 17 years, then they're doing exactly the right thing.

"I happen to think all of them, including this Government, are doing the wrong thing.

"I think it's high time we stopped trying to tax our manufacturing industries, stop taking tax away from companies that could be profitable and handing them over to expensive wind farms generating electricity at two or three times the cost of market rates, particularly when those same wind farm companies are not even willing to buy steel from this country and import the whole thing."

Mr Davies added: "I don't have any problem at all with CO2 being emitted.

"I want to see a viable heavy manufacturing industry in this country, I want to see lots of jobs, low taxation and I'm perfectly relaxed about CO2 emissions."

Tom Blenkinsop, the Labour MP for Middlesbrough South and East Cleveland, stressed the need for production to continue at crisis-hit sites while a deal is pursued while fellow Labour MP Mark Tami (Alyn and Deeside) said customers must be kept on board.

"We have to reassure the customer base as well because if that is not done then we have no businesses to sell because the customers will start to leave and will walk away," Mr Tami said.

"They need assurances."

Meanwhile, Tory MP Byron Davies (Gower) urged politicians of all parties to work together to find a solution to the steel crisis.

He said: "We must work together. Political grand standing will not save jobs.

"Political grand standing will not provide a long-term, viable future for steel production in Port Talbot.

"Political grand standing will not support businesses in the supply chain across south Wales.

"The history of steel in our communities runs deeper than political point scoring."

Jessica Morden, the Labour MP for Newport East, asked ministers to set out exactly which infrastructure projects they would like to see using British steel as she called for "real action on procurement".

"Not just an advice note or the kind of souped-up advice note that came out last week," she said.

"What specific projects does the Minister have in mind and can the Minister tell us that today?"

Business Minister Anna Soubry could be heard saying "HS2" and "Trident" from her position on the frontbench as Ms Morden spoke.

Labour MP Nick Thomas-Symonds, whose constituency of Torfaen has a long history of steel production, accused the Business Secretary of putting the Government's relationship with Beijing before the UK.

He asked: "Where do your loyalties lie? Do they lie with Beijing or do they lie with the steel workers of this country?"

He questioned how ironic it would be if "we have a Secretary of State supposedly wedded ideologically to a free market who ends up granting market economy status to a country where 80% of its steel industry is owned by the state".

He added: "Is that seriously what the Secretary of State is going to do? It's time you put aside the obsession with Beijing and acted for our steel workers."

Labour MP Nic Dakin criticised George Osborne for failing to use the last Budget to reform business rates in the steel industry, something the unions had pushed for during the growing crisis.

The Scunthorpe MP said: "It's deeply disappointing that the Chancellor was unable to bring us some good news in terms of movements on business rates and I believe that ministers opposite have been fighting their corner on that.

"It's deeply disappointing that the Government at the highest level was unable to make movement on that because that would have made a real difference.

"These playing fields need levelling."

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