To ask the Secretary of State for Transport, what assessment he has made of the effect of changes in UK steel output in the last five years on the (a) value of orders placed by Network Rail and Highways England to companies in the UK supply chain and (b) projected number of steel-carrying rail freight movements over the next three years.
30 October 2015
Network Rail advises that for its major use of steel it has a five year framework contract from April 2014 for the supply of new steel rails from Long Steels UK Limited, a wholly-owned subsidiary of Tata Steel. Network Rail is in close contact with Tata Steel to ensure continuity of supply.
Network Rail buys approximately 140,000 tonnes of steel rail per annum from Tata Steel, which equates to around 95% of total aggregated demand for Network Rail. This is supplied directly from Scunthorpe. Smaller contracts are also in place with Arcelor Mittal (Spain) and Voestalpine (Austria). These relate to the manufacture of very special steel products.
These volumes are broken down are as follows. The figures for 2015-16 are provisional:
Tata Supply (Tonnes)
Tata Spend (£)
Highways England does not procure steel materials directly. Despite the changes in UK steel output over the last five years, Highways England and its predecessor have continued to invest heavily in UK steel. During this period 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 Tata 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.
As rail freight is a wholly commercial business and therefore has to respond to market changes as part of its operational model, the Government does not itself undertake assessments of the impact on rail freight of variations in the flows of specific commodities. Network Rail’s Freight Market Study, published in 2013, assumed a small recovery in the steel market based on information available at that time.