The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)
My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my honourable friend the Minister for Industry and Economic Security to an Urgent Question in another place on British Steel. The Statement is as follows:
“Steel is vital to the UK economy. I fully recognise the importance of British Steel to local communities, particularly in my honourable friend’s constituency of Scunthorpe, where the company is a major contributor to local economic growth, and where she campaigns incredibly hard for the steel sector.
Global conditions have been tough for steel companies around the world. That is why we have changed the competitive landscape for British Steel and other energy-intensive industries by announcing the British industry supercharger—a decisive package of measures to reduce the long-term electricity price gap that exists between UK energy-intensive industries and competitor countries. This support will mean that strategically significant UK industries, such as steel, are safeguarded against the high industrial electricity prices that they have faced in too many recent years. We have also provided over £730 million in energy costs relief to the steel sector since 2013, in addition to the energy bill relief scheme. Steel producers will continue to receive support until 31 March 2024 through the energy bills discount scheme.
As my honourable friend is aware, the Government made an extremely generous offer of support to British Steel earlier this year to help it invest in a decarbonised and sustainable future. We have continued to work intensively with British Steel since then and will continue to do so. However, she will also understand that the detail of those conversations remains highly commercially confidential and that any public discussion risks undermining talks.
I know that this must be a deeply concerning time for British Steel employees and others in Scunthorpe following the company’s announcement on Monday regarding its plans for future operations. I can very much assure my honourable friend that we will help affected workers, their families and others impacted in the local area, and that we are committed to finding solutions to enable the ongoing sustainable and decarbonised production of steel. Just last month, for example, we announced a £1.25 billion joint investment package with Tata Steel to secure a decarbonised future for steelmaking in Wales. That has the potential to safeguard some 5,000 jobs across the UK. In 2020, the Government provided an emergency loan to Celsa Steel to help it continue trading during the Covid pandemic, saving over 1,500 jobs, with a further 300 jobs created since the loan was made.”
Lord McNicol of West Kilbride (Lab)
My Lords, it is a real pleasure to be back on Labour’s Front Bench. I thank the Lord Speaker and his office for their support in my time as one of the Lord Speaker’s deputies; it was a real pleasure.
I turn to today’s Urgent Question. The loss of up to 2,000 jobs at the Scunthorpe plant clearly will have a devastating effect on the local community. However, this transition will also leave the UK more reliant on steel imports, meaning that we will no longer be able to produce virgin steel made from smelting iron ore. What assessment have the Government made of the national security challenges that are posed by the UK no longer having this sovereign capability?
The Earl of Minto (Con)
My Lords, obviously the loss of any jobs, particularly in a sector as important as steel, is to be deplored. However, there are commercial necessities that we are all fully aware of. The activity that the Government took in Port Talbot shows very clearly the commitment that we have to supporting the transition from historic steel-making to something more modern. As far as the production of virgin steel is concerned, the noble Lord is absolutely right that it will be affected by the closure of the smelting plants, but we will still be able to import limited amounts of iron ore pellets, which can be put towards the other steel that we have already within this country to produce what is required.
Lord Fox (LD)
My Lords, I welcome the Opposition spokesperson back to his Front Bench and thank the Minister for his answer. However, I do not think that he is grasping the point. Steel is vital to the economy, as the Answer said, but it is also vital to our strategic interest. At a time when we are talking about the need for secure supply chains, does the Minister recognise that this weakens the supply chain for our defence, aerospace and automotive industries?
The Earl of Minto (Con)
I completely understand the position of the noble Lord. During this transition period there is bound to be some effect. However, once the new systems are in place, there should be no change.
Earl Attlee (Con)
My Lords, like the noble Lord I support the UK steel industry. Can my noble friend the Minister say how much ferrous scrap the UK economy generates and how much we export overseas?
The Earl of Minto (Con)
I thank my noble friend for that question. We generate just over £11 million-worth of ferrous scrap each year, of which about £8 million-worth is exported.
Lord Sikka (Lab)
My Lords, I hope that the Minister can clarify a policy issue here. The Government are handing billions of pounds to steel, railway, broadband, car makers and others. Why do they not take an equity stake in those businesses? That way, the businesses still get the money and the public has some kind of asset. Should the business then make a recovery, there would be a return.
The Earl of Minto (Con)
My Lords, that sounds to me rather like the thin end of the wedge. Any return to some form of nationalisation is not appropriate. We operate in a global market now, in all sorts of categories. We must allow the commercial viability of each individual market.
The Lord Bishop of Oxford
My Lords, many of us around this House will have experience of what happens in communities when these devastating redundancies happen. I was Bishop of Sheffield in South Yorkshire for many years and saw the effects at first hand. Can the Minister say more about the Government’s plans to invest in the area to help those affected transition through? In particular, what industries and areas of employment does he see as appropriate to the Scunthorpe area, given all the technological and industrial changes that we are seeing?
The Earl of Minto (Con)
Since 2018, the Government have provided about £200 million-worth of investment into the north and north-east Lincolnshire, across a range of different categories. As far as this specific transition is concerned, I ask the House to consider the level of support that has been agreed by the Government —new government money managed by both the Welsh and Westminster Governments—which is providing some transition from the historic steel jobs of Port Talbot to the future.
Lord Forsyth of Drumlean (Con)
My Lords, it is this side. Does my noble friend recall that the second crossing of the Forth Road Bridge was made of steel, most of which came from China, where they are opening one coal-fired power station a week? Is it not insane to pursue a green agenda which will destroy jobs on this scale and at the same time cost many millions of what my noble friend describes as “government money” but which is taxpayers’ money or borrowed money that taxpayers will have to pay for?
The Earl of Minto (Con)
I completely understand the point about it being taxpayers’ money. There is no such thing as free money and it is very important that we do not lose sight of that. The issue of dealing with China has been well rehearsed, and the Chinese ownership of British Steel is widely known. We are supportive of that relationship.
Lord Boateng (Lab)
My Lords, it is our turn now, I think. The Minister says that we should leave the fate of these workers and our strategic interests as a nation to the market. Will he reflect on the ownership of the company in question? It is a Chinese company; every Chinese company is controlled by the Chinese Communist Party. Would he apply the same strictures to the Chinese and, if not, why should we subordinate our national interest to the market, when the Chinese—our competitors —do not?
The Earl of Minto (Con)
My Lords, I do not think I said that we are throwing employees into a wide market. In fact, I think I said that we would provide support to see them through the transition. We have a fair and open market for Chinese investment in this country. It is a major world trading relationship and, while I understand some of the political issues behind it, just to avoid a country of that weight is slightly isolationist.
Lord Hannan of Kingsclere (Con)
My Lords, will my noble friend the Minister confirm that the industries that use steel employ many more people than the industries that make steel? We have 34,000 steelworkers and 176,000 people making cars. We have the better part of 0.5 million working in agriculture and 2 million working in construction. The way to protect jobs is to bring the price of steel down, not raise it. Will my noble friend confirm that our Trade Remedies Authority found no case whatever for the tariffs that we have inherited from the EU and continue to maintain on imported steel? Will he make clear that the way to make this country competitive is to remove excess costs on energy so that our industry can compete? By the way, we are still our own biggest supplier by far, and no foreign country accounts for more than 14% of our imports.
The Earl of Minto (Con)
That was a very detailed question indeed, with which I entirely agree.
Lord Wigley (PC)
My Lords, the Minister will be aware of the concern among the workforce, particularly in south Wales, about the way in which this has rolled out. Does he agree that there is a need to ensure that the workforce are in the picture, at every stage? If, at present, we cannot afford to manufacture our own steel, which is so vital for defence and to many other industries, what happens when we cannot afford to import it?
The Earl of Minto (Con)
To answer the first part of the noble Lord’s question, we will keep key people fully informed, subject to commercial sensitivities, as I am sure everyone in the House understands. As far as the cost of steel is concerned, we trade in an open market and generate funds within this country, and I am sure that we will never lack availability of steel from somewhere in the world.