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It is a pleasure to serve under your chairmanship on this debate, Ms Nokes. I also thank my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) for securing the debate. I know he is as passionate about the ceramics industry as I am about the steel industry.
I want to lay my cards on the table and make three clear points. First, steel uses a lot of energy; we understand that. That means we are on the frontline of the energy price rises. Secondly, we will never not need steel. I am sorry to anyone who has heard me say this a hundred times already, but no one in this country can go a single day without steel. We need it for everything we do, from infrastructure to defence and from healthcare to the wire in the tyres of my trusty old Škoda parked underneath Parliament. Thirdly, of course we must find ways to make steel that consider the environment, but we must never completely rely on other countries to make steel for us. We will have no control over the quality or the environmental issues that come with that, and it would be foolish and immoral to ship steel from other countries.
Between 5 o’clock and 6 o’clock last Monday, steelmakers in Scunthorpe paid an eye-watering £2,080 for a megawatt-hour of electricity. The average cost of electricity prices in 2020 was £35 per megawatt-hour. That volatility is crippling our daily operations. Site managers have to shut down or delay key processes to cope with the spikes in energy prices. It is unfortunate and I know this is a collective challenge for energy-intensive industries, but the cost of energy is now higher than the cost of labour and this is not merely a market blip that will come and go.
I recognise that this is in great part caused by global circumstances beyond our direct control. I believe in a free market, but when it comes to steel a free market does not really exist. Steel is made in every G7 country and, quite bluntly, one way or another those countries have consistently found creative measures to support their steelworks because they want to maintain a steel-making capacity. We were already at a disadvantage when the energy price spikes hit us and that has highlighted the extent of other nations’ support for their energy- intensive industries.
I also want to directly challenge anyone who has the incorrect view that steelworks constantly need bailing out. They do not; they need a level playing field, but it could not be any more firmly the other way round. Steelmakers in Scunthorpe are survivors and thanks to our local talent, we have kept our heads above water for decades. We need to be on a fair footing with our European competitors and we will thrive. The Treasury has said it wants
“an attractive and internationally recognised ecosystem across both regulation and tax”
for financial services. I want the same for steel. That is why I was delighted to hear the Prime Minister in his speech on Monday acknowledging that we must end the unfairness that UK energy-intensive manufacturing pays so much more than our competitors overseas. The Prime Minister has historically been supportive of steel. I know for a fact that he has a keen understanding of the industry and clearly understands the threat of high industrial energy costs and the burden of the incredibly high policy costs that UK energy-intensive industries continue to face. So I ask the Government and my hon. Friend the Minister to continue the conversations they are having with the steel industry in these really tricky times, to help it to step forward into a greener and more sustainable future.
I know that since taking over his brief my hon. Friend the Minister has engaged regularly with our steelworks, which I thank him for, and I also know that he has been assiduous in understanding this issue. So I hope that he will agree with me that as a sovereign nation we have the ability to legislate and support our steel industry in a number of ways. Our neighbours and competitors in Europe have started taking action. As the hon. Member for Aberavon (Stephen Kinnock) outlined, in Italy, the Government are temporarily removing renewable levies; in Spain, the Government have suspended power generation and consumption-related taxes; and in Portugal, the Government have put forward a minimum reduction in energy charges.
Meanwhile, our policy and network charges still continue to be much higher than those of our main competitors, so I urge the Minister to look urgently into abolishing the carbon price support mechanism, which is a tax that is not faced by our competitors; cutting down the network costs and capacity market fees; providing support for emissions trading scheme costs; and reassessing existing renewable levies applicable to steel. I understand that the renewable levies are there to encourage businesses to move towards environmentally friendly practices, and to some extent they have succeeded, but the cure should not be worse than the disease. Of course, we also need a green steel deal, as businesses transition to better, greener technologies, and British Steel has laid its cards on the table with its low-carbon road map announcement. I remain hopeful that my hon. Friend the Minister and the Business Secretary will be the ones to seal that historic deal.
There are few industries in this country that are more closely associated with an area than ceramics is with Stoke and steel with Scunthorpe. As fellow MPs in manufacturing constituencies, I am sure that many of my regional colleagues share the sense of duty to protect those industries and the communities built around them. I genuinely hope that my hon. Friend the Minister will be able to make some progress on this issue.