The below Parliamentary question was asked by Tom Blenkinsop on 2016-06-27.
To ask the Secretary of State for Transport, what assessment he has made of the potential contribution of the British steel industry to future transport infrastructure projects in the UK.
Mr Robert Goodwill
The Department has been working closely with BIS, Cabinet Office and industry to consider how Government can help the UK steel industry meet the challenges it has been facing.
The bulk of infrastructure projects within the Department are being delivered by the Department’s Arm’s Length Bodies (ALB), in particular, Network Rail, Highways England and HS2. Cabinet Office guidance on the approach to steel procurement has been circulated to the Accounting Officers of each ALB and procurement and commercial teams within these organisations are aware of the need to:
- Signal the future pipeline of requirements on steel sourcing and best practice in pre-procurement market engagement;
- Ensure there is clear visibility of opportunities at sub-contractor level where the source of steel has not been defined by a Tier 1 contractor;
- Assess the health and sustainability of potential suppliers in the supply chain at selection stage, including compliance with relevant health and safety and employment legislation;
- Ensure that the price or cost calculations are based on an assessment of the whole-life cost and not lowest purchase price;
- Take account of appropriate social and environmental impacts at the award stage where they are linked to the subject of the contract.
As with the rest of the materials for construction, steel is procured by the supply chain for the majority of our infrastructure projects. The Department and its ALBs are complying with the Cabinet Office guidance and ensuring that, for instance, where appropriate, assessment of social and environmental impacts are considered as part of the evaluation criteria. The Department and its ALBs also positively encourage bids from British companies and are holding discussions with UK suppliers to make sure they are in the best possible position to win contracts.
Activity currently underway is as follows:
- Network Rail buys approximately 120,000 tonnes of steel for rails per annum directly from British Steel in Scunthorpe, which is around 96% of Network Rail’s total aggregated demand by value.
- Highways England does not procure steel materials directly, however over the last five years Highways England has used a category management framework as the main method of procuring steel gantries for the Strategic Road Network.
- To date circa 95% of this steel has been drawn from British Steel in the UK, which equates to approximately 11,000 tonnes of steel. The approximate framework spend is £30 million, of which about 35% will be steel procurement i.e. raw materials, and will equate to around £10.5 million.
- The 57km of steel required for the rails of Crossrail’s brand new central tunnel section is being sourced entirely from British Steel in Scunthorpe. This equates to 7,000 tonnes of steel.
- Crossrail Ltd does not directly procure steel as this is undertaken by their tier 1 contractors and their supply chains. However, Crossrail keeps an oversight of its critical contracts and estimates that 85% of its supply chain providing steel to the project is UK based.
- It is estimated that HS2 will need approximately 2 million tonnes of steel over the next 10 years. The procurement for the main civil engineering works between Euston and Birmingham is now underway with procurements for the stations and rail systems expected to commence later this year and for rolling stock in early 2017. Subject to Royal Assent, the project will start construction in 2017.
- As with the rest of the materials for construction, steel is procured by the supply chain. HS2 positively encourages bids from British companies and is already holding discussions with UK suppliers to make sure they are in the best possible position to complete for contracts for the steel that will be needed for track, concrete reinforcements, overhead wires and other structures.