Written evidence from the Department for Business, Innovation and Skills
(UKS 04)
During my oral evidence session on the UK steel industry on Tuesday 27th October, I offered to write to you with further information on some of the areas of questioning. I am happy to provide, below, further information on the SSI package, Hinkley Point C and Chinese steel imports.
SSI REDCAR PACKAGE
There are three elements to the package, worth up to £80m, announced to provide support to individuals affected by SSI’s closure and invest in the future of the Tees Valley Economy. In all cases, the ultimate spend will be demand-driven and in many cases will also depend on an individual’s circumstances, therefore estimates or provisional figures have therefore been used where necessary. This support is provided on top of Jobcentre Plus’ Rapid Response Service, which has been mobilised since the first redundancies at Redcar were announced.
1) Payments made by the Redundancy Payments Service. These can include Redundancy Pay, Holiday Pay, Arrears of wages, Notice Pay and missing Pensions Contributions, subject to Statutory Limits.
2) Government programmes which are prioritising those affected by SSI’s closure
3) Proposals from the local Task Force, which Government is working with them to deliver.
So far, £9.57m worth of claims have been paid or are currently being processed for payment by the Redundancy Payments Service.
We have made up to £3m available from the Skills Funding Agency’s overall budget specifically for retraining redundant SSI workers and those in the supply chain through Redcar and Cleveland, Middlesbrough, Stockton Riverside and Hartlepool colleges.
In addition, the first instalment of £1.1m has been made available towards a safety net fund to support SSI workers with short-term financial challenges, £2.65m has been paid towards a Flexible Training Fund, to plug any gaps in existing skills provision and £1.7m has been paid tosupport the redeployment of 50 SSI apprentices. We are working closely with the Task Force on delivering further proposals on jobs and local growth and anticipate approving further packages imminently.
HINKLEY POINT C
Subject to achievement of final investment decision and first concrete, Edf have a publicly stated aim for 60% of the value of the construction work in Hinkley Point C to be won by UK firms and, working closely with their Tier 1 delivery partners, remain on track to achieve this goal.
The major forgings required for the key components of the Nuclear Steam Supply System (NSSS) will be delivered by Edf's industrial partner Areva NP. These components are safety critical and can only be made at a very small number of forges worldwide. The specification for these components is demanding and the lead time, several years. I understand the options were for Areva to use its own Creusot Forge in France or to buy in from JSW (Japan Steel Works), both of whom have the requisite experience from their previous involvement in the other EPR projects in Flamanville, Oilkiluoto and Taishan. The UK does not currently have the capability to provide these ultra-large components, but the for the smaller forgings, the supply chain opens up and there should be opportunity for UK suppliers to compete in the supply of forged components for the turbine generators and in other items of equipment.
Beyond forgings, there will be large and varied demand for steel across the project, including but not limited to around 200,000 tonnes of reinforcement in the concrete structures. It is EDF’s expectation that a large proportion of this requirement will come from UK companies, subject to a competitive process.
You will also be pleased to know that the Cabinet Office and Crown Commercial Service issued guidance on procuring steel in major projects:
https://www.gov.uk/guidance/procurement-policy-note-1615-procuring-steel-in-major-projects
This is a direct outcome from the first meeting of Matthew Hancock’s Steel Working Group on Procurement.
CHINESE IMPORTS AND STATE VISIT OUTCOMES
During the recent Chinese State Visit, the Prime Minister raised his concerns about Chinese steel overcapacity directly with President Xi. The Chinese President stated that he has plans to address this issue while observing that global oversupply of steel was due to a combination of factors including the financial crisis and a reduction in demand. The Business Secretary also met Commerce Minister Gao who reiterated that China was taking action to address its overcapacity.
In addition, since I gave my evidence, the Business Secretary has secured agreement to host an emergency meeting of the European Competitiveness Council to discuss steel and the issue of unfair trading practices. This follows productive discussions he had with French, Spanish, Italian counterparts and discussions that I had with my opposite number in Germany.
I hope this further information is useful to you and your committee colleagues. I acknowledge receipt of your letter of yesterday’s date and will respond further on the additional questions you have raised.
Minister of State for Small Business, Industry and Enterprise
5 November 2015