Protecting Steel in the UK
(10 months, 4 weeks ago)
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18:59 - The House divided: - Ayes: 223 / Noes: 0 - Question accordingly agreed to.
Mr Deputy Speaker (Sir Roger Gale)
Let me say at the very start of the debate that a lot of hon. Members on both sides of the House wish to take part, so once we have heard from the Front Benchers there will almost certainly have to be a three-minute time limit, if we are to get everybody in.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I beg to move,
That this House recognises the need to decarbonise steel production; appreciates the pride that local communities have in their historic steelworks; regrets that the Government has pushed through plans for decarbonising steel in the UK which will result in thousands of steelworkers losing their jobs and risk leaving the UK as the first developed country in the world without the capacity to produce primary steel; further regrets that the Government has failed to produce an industrial strategy which could have included a plan for the whole steel sector; believes that primary steel is a sovereign capability and is therefore concerned about the impact that the Government’s plans could have on national security; also believes that steel production can have a bright future in the UK; therefore calls on the Government to work with industry and workers to achieve a transition that secures jobs and primary steelmaking for decades to come; and further calls on the Secretary of State for Business and Trade to report to Parliament by 27 February 2024 with an assessment of the impact on the UK of the loss of primary steel production capabilities.
Labour has secured this debate today because this is a hugely important issue. It is important not just because the future of the Port Talbot steelworks is integral to communities across south Wales—I know that many hon. Friends will be making that case passionately—but because it speaks to a much bigger challenge that we face as a country: how to decarbonise heavy industry in a way that is effective for our climate objectives and fair for our communities.
The Opposition believe that the Government’s push to decarbonise the steelworks at both Port Talbot and Scunthorpe, in a way that guarantees large job losses and has no support from the workforce or unions, risks irrevocably damaging working people’s trust in the opportunities the net zero transition could bring. We believe that it is a calamitous mistake for the UK to become, under the Conservatives, the first major economy in the world without the ability to make our own primary steel.
Zarah Sultana (Coventry South) (Lab)
Decades of underinvestment and managed decline have devastated our steel industry, as the news from Port Talbot painfully brings home, but as the Unite the union’s workers’ plan for steel sets out, with the right Government action this crucial industry can still be saved. Does my hon. Friend agree that the Government must invest in UK steel, transitioning Britain’s remaining blast furnaces to fully decarbonised steel production, saving thousands of skilled jobs and putting Britain at the heart of clean, green steel production?
Jonathan Reynolds
I intend to make the case today that the UK steel industry could have a strong future, but that requires a much better approach than the one we have seen so far.
Jonathan Reynolds
I am cautious of doing so given the warning about time, but I will give way as I know my right hon. Friend has a significant interest in this.
Mark Tami
I thank my hon. Friend for giving way. He will be aware that I have the privilege of representing Shotton steelworks, and he has been there with me to see the high-quality products made in that profitable plant, but in order to carry on it needs to recruit and retain quality employees. What we have seen, however, is a Government who do not care, and if that message gets through to the workforce we are not going to retain those skills.
Mr Deputy Speaker (Sir Roger Gale)
Before the hon. Gentleman continues, may I make a point? I understand how this game is played, and interventions are fine, but please understand from the Chair that if Members intervene they are less likely to get called.
Jonathan Reynolds
It was a pleasure to visit the Shotton steelworks with my right hon. Friend last year, and he will know that it began as the Summers steelworks in Stalybridge in my constituency. He has much expertise, and I commend the argument and points he has put forward.
The decisions the Government have made will have consequences. They will have consequences for our national security and our resilience, and they risk leaving us exposed at a time of significant geopolitical instability.
Several hon. Members rose—
Jonathan Reynolds
I will take an intervention from the Government Benches and one more from the Labour Back Benches, if that is okay.
Sir Robert Goodwill (Scarborough and Whitby) (Con)
If the hon. Gentleman is so determined that steel is a resource we as a nation should have, why is the Labour party against the west Cumbrian coalmine, which would mean we would not have to bring in coal from Australia to smelt steel in blast furnaces here?
Jonathan Reynolds
We have considerable expertise in that matter, and that grade of coal is no good for the current way steel is produced in the UK, but the right hon. Gentleman is right to raise the point because the Government justified that coalmine on that basis and have now made a series of decisions that, frankly, makes that look even more absurd.
Today I hope to make the case for Labour’s plans for an alternative way forward, an approach that is in no way based on misplaced nostalgia for the past but is instead based on hard-headed realities and an assessment of our national interest.
UK steel should have a bright future. It is not a sunset industry, and it is central to how a modern, low-carbon economy works. I ask the Minister, for whom I have considerable regard, to listen and engage today and to have a serious debate about what is about to happen and be willing to consider the alternative case. Let us please not trade boilerplate rebuttals or pre-scripted lines, but instead ask all colleagues to listen to the rational case being put forward, which is serious, pragmatic and important and one I genuinely believe any Conservative could agree with.
Anna McMorrin (Cardiff North) (Lab)
Many of my constituents are impacted by this devastating closure, and closing Port Talbot will mean the UK is the only G20 nation unable to make steel. Does my hon. Friend agree that this is an appalling decision?
Jonathan Reynolds
Of course, the decision has to be considered in conjunction with the one in Scunthorpe, and that is why this issue is so important and deserves the attention it is getting today.
I want to say one more thing by way of introduction. We have already heard from several Welsh colleagues, and the decision of the Prime Minister and the Business Secretary to refuse even to have a phone call with the First Minister of Wales about this matter was profoundly wrong. Anyone who is a supporter of the Union wants to see productive, effective relationships across all UK Governments, and the Prime Minister’s behaviour reflects extremely badly on him on this occasion.
The Secretary of State for Wales (David T. C. Davies)
Does the hon. Gentleman realise that I was the chairman of the transition board supporting all those workers who face the loss of their jobs? I offered to speak to the First Minister last week. He has so far been too busy to do so. He has known about this potential problem since September, and only when it appeared all over the papers did he suddenly appear to take an interest and want to make phone calls.
Jonathan Reynolds
I think that is a pathetic response. I mean no discourtesy, but that is pathetic. It is entirely reasonable for the First Minister of Wales to seek a conversation with the Prime Minister of the United Kingdom. I will leave that there.
I acknowledge that in the Public Gallery we have many steelworkers who have made the journey here today, including men such as Alan, who has worked at Port Talbot for 40 years, as did his father and both his grandfathers, and Gary, who has worked there for 37 years, and whose son now works in the hot mill. We have men and women from Port Talbot, Scunthorpe and Trostre who started as apprentices. I want to thank them for the contribution that they and their families have made to the UK over many generations. Last year, I went several times to steel sites across Wales, and I met the workforce at Port Talbot when these plans were first announced. They deserve a lot better than what they are being offered right now. At a minimum, they deserve this place taking their case seriously and engaging with these issues with the respect and consideration they require.
Several hon. Members rose—
Jonathan Reynolds
I can give way one more time, to my hon. Friend the Member for Stockton North (Alex Cunningham)
Alex Cunningham (Stockton North) (Lab)
When I was a young reporter on the Evening Gazette, the steel industry supported tens of thousands of jobs on Teesside alone. The decline started with Thatcher. When the Government abandoned Redcar nine years ago, numbers fell to a few hundred. Steel is a foundation industry. Surely we need primary steelmaking in this country if it has a real future.
Several hon. Members rose—
Jonathan Reynolds
I will take an intervention from the Government Benches, then one from my hon. Friend the Member for Leeds East (Richard Burgon), and then I will take no more.
Mark Pawsey (Rugby) (Con)
Is the hon. Gentleman overlooking the half a billion pounds that the Government will contribute to Port Talbot, or the £1.25 billion in total? When the Business and Trade Committee visited Port Talbot, we saw a plant badly in need of new investment. This Government are bringing forward that investment and securing a future for the steel industry.
Jonathan Reynolds
I am not ignoring that investment; I am making the case that it is a bad deal and that there is a better deal for the resources available that would satisfy far more of our objectives and give a better future to Port Talbot.
Richard Burgon (Leeds East) (Lab)
I grew up, like the shadow Minister, in a region ripped apart by the economic vandalism of Thatcher. Is it not the case that the Tories are repeating the mistakes of the past and claiming there is no alternative, when the reality is that steel jobs can not only be saved, but even created, with a proper plan that takes advantage of the global demand for steel—especially low-carbon, green steel—which is going up fast?
Jonathan Reynolds
I agree with that case. That is why this is such an important issue for Parliament to consider. I always acknowledge that there are parts of it that are difficult. Decarbonising industry is an urgent priority, but in some cases the technology is uncertain or expensive. It is my contention, however, that getting it right is more important than doing it quickly or necessarily at the cheapest cost. To state the obvious, we can decarbonise anything by shutting it down. The cheapest path will likely always involve outsourcing most of our industrial production to other places. If we do that—it is the Government’s plan for Port Talbot—we will spend millions of pounds, and we will see huge job losses and global emissions rise as we effectively offshore our emissions and then claim that is progress. That would be a fundamental political mistake with potentially enormous ramifications for the future of the transition to net zero. We should know that from our own past.
As my hon. Friend mentioned, when I was a child growing up in the north-east in the 1980s, there was a major transition. We saw the end of coalmining and shipbuilding and the old nationalised industries as we knew them then. Many colleagues across the UK have similar personal experiences. Nobody today would propose that the UK should have an economic or energy policy based around large-scale coalmining, but how we manage the transition is fundamental. In the past, as a country, we have got that wrong. Levelling up—supposedly the Government’s flagship policy—is surely a recognition that the scars of those years and the impact of deindustrialisation are still felt in many parts of the UK today, yet the Government risk making exactly the same mistakes all over again.
The decision of this Conservative Government to hand over half a billion pounds of taxpayers’ money to make thousands of people redundant is quite simply a bad deal. It is a bad deal for workers, a bad deal for taxpayers and a bad deal for the future of our industrial sovereign capability. Worse than that, it sends a message that decarbonisation effectively means deindustrialisation. I put it to Conservative colleagues that if net zero becomes a zero-sum game for working people, that risks the very support that we need to achieve the transition. There must be public consent for the transition, and that requires our economy to benefit from better jobs and better opportunities. This is the real politics of getting net zero right: it is not imaginary meat taxes or made-up claims about seven bins but whether the transition is just and fair and delivers something for Britain’s workers. The Government’s plans so far are simply none of those things.
The race to decarbonise is a race for jobs and prosperity, and this could be a hugely significant time for steel. As the Minister knows, I have many criticisms of Government policy, and I believe that we have weak business investment, weak productivity and weak growth as a result. I recognise that the Port Talbot site is in a challenging financial position, but the Government have already recognised that uncompetitive energy prices need tackling. We have procurement rules in place that are seeing significant steel content from the UK in infrastructure projects, and we are getting close to carbon border adjustment mechanisms both here and in the EU, which will be a major development. CBAMs in particular will likely completely change the economics of the UK steel industry. There is no reason to believe that the UK cannot have a vibrant steel sector, so to make this irreversible decision now, when the policy background is clearly improving, seems odd indeed. Better options are on the table; anyone claiming otherwise is simply being disingenuous.
When it comes to Port Talbot, there is a specific alternative proposal available—the multi-union Syndex plan—which is not far off Tata’s original proposals, which were known as Project Kronus. Other proposals have also been put forward. All we ask is that the Government consider the issues involved and do not make any fundamental decisions that are irreversible.
It is widely accepted at Port Talbot that blast furnace No. 5 is at the end of its life and may need to close, but blast furnace No. 4 will not need to be relined until 2032. For the Government to force that furnace to close now, as we await the arrival of new technologies, is an act of economic vandalism. We acknowledge that electric arc furnaces are part of the answer, but we do not want to put all our eggs in one basket, which means being open to all technologies, and especially direct iron reduction, which is one of the most exciting possibilities.
The counter-arguments put forward so far are not robust. I believe that safety issues could be managed in the same way that they are every day at a major steelworks. The claim that 90% of what Port Talbot does could be met with an electric arc furnace does not stand up, as key products in packaging and automotive materials cannot be produced in one. At Scunthorpe, I understand that the lack of sufficient grid connections and the cancellation of the first carbon capture programme back in 2010 have severely limited the options available. Again, I ask the Government not to make irreversible decisions, to be open to all technologies and to recognise the growing importance of and demand for steel.
We are not the only country with these challenges, but everywhere we look, other countries are doing it better. Take the Netherlands, where Tata is in negotiations with the Government on DRI technology; Sweden, with the collaboration between SSAB, Vattenfall and LKAB; Canada, where ArcelorMittal signed an agreement some time ago to build a new green steel plant; or the news just in of a $5 billion investment in a new green steel plant in Saudi Arabia. Everywhere we look, other countries are seeing growth and investment in their steel sector, but we are seeing the opposite. I put the question to Ministers: why is the UK pursuing this path alone?
At Business and Trade oral questions, the Minister has been asked repeatedly—mostly by Government Members—about the assessment the Government have made of becoming the only major economy without primary domestic steel production. Her answers hint that she might get it, but the Government have ploughed on regardless. I ask her again: how can any Government possibly justify making thousands of workers redundant in the name of cutting our carbon footprint only to pay to ship in more carbon-intensive steel from halfway across the world?
It does not have to be this way. We cannot afford to blow this opportunity, repeat the mistakes of the 1980s and leave regional inequality entrenched—we can still see those scars. That is why I always say that, under Labour, decarbonisation will never mean deindustrialisation. I want green steel, and I believe that the workforce are our greatest asset in delivering that. Any real plan for green steel must cover the whole industry. It must be open to all technology that is available, and it should fundamentally be a story of new jobs, new opportunities, new exports and renewed British economic strength, rather than outsourcing our emissions and pretending that that is progress.
Stephen Crabb (Preseli Pembrokeshire) (Con)
The hon. Gentleman is being generous with his time. I came here this evening, as I am sure the workers sitting in the Public Gallery did, to see whether there is a genuine plan on the table from the Opposition. The hon. Gentleman said that there would be, but I have heard nothing specific. I have heard about none of the costs involved. He said that he was not interested in nostalgia, but most of the contributions from Opposition Back Benchers have been exactly that. Where is the credible plan B that people want evidence of?
Jonathan Reynolds
It is literally here in my hands. It is not hard to find. I say to Conservative colleagues that Google is their friend. I have tried to say that the plans are available, but we will be pragmatic and flexible. We are just asking that irreversible decisions are not made that limit the room for manoeuvre in future. On resources, we have earmarked £3 billion of investment from our spending plans to deliver this, all of which is predicated on unlocking much larger sums of private investment. The Government do not disagree with the case for putting money in, but the deal that they are putting forward for that half a billion pounds does not deliver very much at all. What a tragedy it would be in the future to find a Britain that is building homes and infrastructure again, with secure low-carbon energy generation and a new wave of floating offshore wind, but is not making the steel to provide those things.
Labour has a plan to build a better Britain, and we want to build it with steel made in Britain. We will only get one opportunity to get this right, and we must bring workers and steel communities with us. I will finish with what Gary Keogh, a steelworker from Port Talbot told me:
“The question for Tata and the UK Government is this—do we want to be a nation that makes goods, or a nation that imports them from heavily polluting countries? It is not too late for Tata and the UK Government to think again and change course, but time is…running out. If they fail to take a different path now, the people of South Wales will never forgive them, and history won’t forgive them either. There is so much at stake for all of us.”
Well said, Gary.
I am asking the Minister—quite honestly, I am begging her—to consider the arguments and what is really value for money, and not to make decisions that are irreversible and prevent a far better outcome in future. To Britain’s steelworkers, I say that I know how desperate things feel right now and how angry people are, but there are those of us who get it, who understand what this industry is and why it is important. Given the opportunity, we will deliver the future for steel and the right transition that we all know is essential for our future prosperity, security and wellbeing.
The Minister for Industry and Economic Security (Ms Nusrat Ghani)
First, I want to express my sympathies for the employees of Tata Steel during what is undoubtedly a difficult, tumultuous time. I recognise that Tata Steel’s recent announcement means significant uncertainty and upheaval, not just for them but for their families, the people of Port Talbot and other impacted sites.
Port Talbot is built on steel, and the community is proud of its industry and its workforce. After the news from Tata Steel on Friday, the people of Port Talbot are looking to the Government to provide some much-needed stability and as much certainty as possible. My focus, and that of my Secretary of State, my Government and the Secretary of State for Wales, has been to ensure that steelmaking continues at Port Talbot. I want to assure the House that the Government are committed to that, working very closely with Tata Steel—the decision maker—and the Welsh Government to support those affected as much as possible.
The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) talked about a plan, but there was no plan. He talked about honesty, but the honest truth is that the motion is fundamentally performative politics and a major disappointment. The risk was losing steelmaking at Port Talbot, or helping it to transition to cleaner, greener steel.
Mark Tami
Shotton can use imported steel from India, but that is not a long-term alternative. Importing steel from halfway around the world, rolling it, taking it up to north Wales and then exporting it to Europe does not have a green footprint. Does the Minister accept that? How long will it be before the arc furnace is actually built?
Ms Ghani
Steel is infinitely recyclable and we have a glut of it in the UK. We use shy of 3 million tonnes and we export around 8 million tonnes, so we have it within the system and we can recycle it. It has the same chemical compound and it can be used infinitely, so that is the assurance in the supply chain.
As hon. Members will know, Tata Steel will shortly begin a statutory consultation with employees and trade unions as it embarks on a fundamental transformation project to replace its two blast furnaces with state-of-the-art electric arc furnaces. We cannot stop the clock. The technology is here and customers are asking for cleaner, greener steel.
Sir John Hayes (South Holland and The Deepings) (Con)
Is not the truth of the matter—I admired, by the way, the shadow Secretary of State’s rhetoric—that Port Talbot is a victim of climate militancy and extremism? Net zero zealots do not understand that unless we manufacture in this country, we will extend supply chains and our carbon footprint will grow. Is that not the truth of the matter?
Ian Lavery (Wansbeck) (Lab)
The Minister mentioned the potential consultation. Tata has a legal obligation to consult the recognised trade unions in a meaningful way to try to avoid redundancies. Will she ensure that those consultations take into consideration the plans that Unite the union, the GMB and Community have on the table to try to save the UK steel industry?
Ms Ghani
Absolutely. I spoke to the hon. Member for Aberavon (Stephen Kinnock), who represents Port Talbot, over the weekend, and I reconfirmed that I will do everything in my power to hold Tata to account as it goes through the transition and to ensure that the consultation is as wide and deep as it can be.
Mark Pawsey
Is it not the case that Tata has been losing £1 million a day at this plant, which is old? The Select Committee visited the plant and we saw that it needed replacement. In the absence of discussions with the Government, the plant would have closed some months ago.
Ms Ghani
My hon. Friend is right. Tata Steel is actually losing £1.5 million a day. A statement put out by Tata Steel made it very clear that our investment of £500 million, which is unprecedented for the steel sector, would enable it to safeguard steel production in the UK in the long term. I know that this is a difficult time, but without our investment we would have risked losing steelmaking at Port Talbot.
Ms Ghani
I will make a bit of progress and then I will take interventions.
Tata’s proposed plans have the potential to turn around its economic fortunes—it is losing £1.5 million a day—and to deal with emissions, but it is also about adopting new technology and meeting customers’ needs. I know that there are huge concerns, because that means job losses. The concerns hon. Members have expressed for the people of Port Talbot are our concerns too, and they are shared by Members right across the House. They have been represented by the Government in our negotiations with the company.
As I said, we are holding Tata to account, ensuring that the transition is managed properly so that every employee receives the support they deserve. That includes £100 million of funding for a dedicated transition board, chaired by the Secretary of State for Wales and including members of the Welsh Government, to support affected employees and to provide a plan to protect and grow the local economy in the next decade. Tata also announced on Friday that on top of that £100 million, it would provide an additional £130-million comprehensive support package for affected employees.
Andrew Percy
I thank my hon. Friend. She has been a friend to those of us on these Benches who have been concerned about our local steel jobs and she has been a champion within Government for our steel industry, so I thank her on behalf of our steelworkers for her support. May I urge her to be cautious in listening to the Opposition, who more than halved the number of people who worked in the industry last time they were in power?
It is clear that customers will want green steel in the future, but does my hon. Friend agree with those of us in Scunthorpe who want to retain a capability of some sort when it comes to virgin steel?
Ms Ghani
The technology has moved on. Although 90% of everything that we need can be made from recycled steel, there is a gap, and Scunthorpe is obviously filling that gap at the moment.
My hon. Friend also made an important point about the Opposition, who are talking about potential job losses. In 1997, 70,000 people worked in the steel industry; by 2010, that number had fallen to 30,600—a fall of 40,000 jobs or 56%. The Labour leader between 2010 and 2015 did not mention the steel industry once in Parliament. Our investment at Port Talbot is the largest that has been made for a substantial period, and although the situation is challenging, without that support there was a massive risk that Tata would have left Port Talbot.
Liam Byrne
I just want to pin something down, because that was an important intervention. On 8 November the Minister said, in reply to a question from the hon. Member for Scunthorpe (Holly Mumby-Croft), that she thought it was vital to our economic security for these islands to retain their virgin steel-making capability. I put that position to the Secretary of State this morning, and she refused to confirm it. Will the Minister tell the House today whether it is her position that this country needs the capability to make virgin steel—yes or no?
Ms Ghani
I did follow the debate in the Select Committee, and I think the Secretary of State said that these decisions are commercial but that we will do everything that we can, and that our fundamental priority is to ensure that steelmaking continues in the UK.
Tata Steel’s decision has not been taken lightly. This consultation comes against the backdrop of a decade of losses, which were ignored by the Labour party when it was in power. Indeed, Tata’s managing director confirmed over the weekend that, as I mentioned earlier, the Port Talbot plant has been bleeding £1.5 million a day. Its decision also comes with a growing awareness that the UK steel industry has to modernise, because that is what customers want and the technology now exists. In those circumstances, businesses are compelled to make difficult decisions and tough changes. In fact, without the opportunity to install a modern electric arc furnace, the future of the plant would have been under serious threat.
Grahame Morris (Easington) (Lab)
The Minister and several of her colleagues have mentioned the losses at Port Talbot. Let me remind the House that Tata Steel paid dividends amounting to £1.4 billion to shareholders between 2019 and 2023, and that the group has reserves of £1.6 billion. Would not a sensible solution be to look at what the unions are proposing, and in particular at Unite the union’s proposal in its transition plan to retain blast furnace 4 during the transition and build a 3-megaton arc furnace to allow Port Talbot to take advantage of the dramatic increase in demand that we anticipate for green steel?
Ms Ghani
I believe that Tata has been sharing its business plans with the unions. There is anxiety about the multi-union plan because it does not deal with the basic economics of continuing to make steel at Port Talbot. Of course all of us here want to ensure that steelmaking continues in the UK, and this is the model that Tata has put forward to ensure that it does. Electric arc furnaces will be on line in a few years’ time, and I can assure the hon. Gentleman that we are using steel that is already in the UK system and can be recycled.
Trudy Harrison (Copeland) (Con)
There is much talk about blast furnaces. May I remind the House that a blast furnace simply will not function without coking coal? West Cumbria Mining’s proposal for Woodhouse colliery would enable the extraction of the highest-quality grade A coking coal, which is absolutely fit for purpose for blast furnaces. Labour seems to be arguing that we should not offshore our carbon emissions, but that is exactly why we should be supporting WCM’s proposal—so that we can extract that vital material, coking coal, in the cleanest, greenest way possible.
Ms Ghani
My hon. Friend is a staunch champion of her constituency and she highlights the lack of any sort of sensible plans from the Opposition. They do not want stuff coming in or going out. They will not even support the transition, and they would go harder and faster as well.
Closing the Port Talbot plant would cause immeasurable damage to the town and would be harmful for the UK as a whole, risking all 8,000 jobs that Tata Steel provides across the UK, not to mention the 12,500 jobs in the steel supply chain. That is why the Government are investing £500 million of a total of £1.25 billion towards securing the future of Port Talbot’s steel, and an industry that is inextricably linked to the community’s history and identity. That investment is a huge step forward, fortifying UK steel production at a time when traditional blast-furnace steelmaking has stopped being viable.
We have heard loud and clear the calls from the unions to keep one blast furnace open for several months during the transition. Tata held discussions with the UK Steel committee and its advisers on this very issue. In response to those concerns, Tata Steel has revised its proposal and continues to operate Port Talbot’s hot strip mill throughout the transition period and beyond. However, its position remains that continued blast-furnace production is neither feasible nor affordable, and the risk is that we would lose steelmaking at Port Talbot. An electric arc furnace provides us with greater resilience and the ability to absorb shocks in the global supply chain by reducing our dependency on raw material imports. Quite simply, UK steel will be ready for whatever the future holds with state-of-the-art modern equipment.
Just as crucially, the transformation is pivotal to the Government’s ambition to position the UK at the forefront of the growing global economy. Alongside the UK’s proposal for the Celtic freeport and the land at Port Talbot, which Tata expects to release for transfer or sale following the transition from blast furnaces, the investment would unlock thousands of new jobs in south Wales and the wider UK economy. I should also remind the House that the Tata Group continues to make significant investments in the UK’s industries of the future, including through its plans to open a £4 billion battery gigafactory in Somerset, creating 4,000 direct jobs. That will be a game changer for this country that will position us to thrive in the decades ahead.
Jonathan Reynolds
I very much recognise the case that the Minister makes for Tata’s investment in the UK, but will she just be clear with the House on whether the subsidy package for Port Talbot that we are talking about is in any way linked to the subsidy package and the decision to build the gigafactory in Somerset?
Ms Ghani
That is just another performative politics intervention—[Interruption.] No, those are completely separate things. We are talking about the future of the steel sector in the UK and in Port Talbot. The discussions have been going on for years. They are discussions that did not take place when the Opposition were in power. They left it alone and the technology has moved on, but what we have been able to do, even though it is difficult, is ensure that steelmaking continues in the UK by providing it with unprecedented levels of funding. There was no plan presented when the hon. Member spoke at the Dispatch Box. We have been able to ensure that steelmaking will continue at Port Talbot.
Understandably, Members might ask why the Government are not working harder to maintain these particular blast furnaces but, as the hon. Gentleman said, they are at the end of their lives and the cost does not work any more, and nor do they meet the needs of customers. I say this again: without the support, there would have been a complete risk of Tata Steel not continuing to making steel in the UK. We know that the 20th-century way of producing steel is no longer fit for purpose for the UK in the 21st century. The UK’s blast furnaces, such as those at Port Talbot, are reaching the end of their operational lives, and a transition from blast furnaces to electric furnaces will also increase our supply chain resilience, making the UK less reliant on imports of raw materials for steelmaking.
Sir Robert Goodwill
My hon. Friend is making valid points. We have no domestic iron ore mining or, at the moment, domestic coalmining to feed blast furnaces. What we do have, as I observed when I was shipping Minister, is massive heaps of scrap steel in every single port. This is currently being exported to China to come back again as steel. Surely the best way to keep the plant open is to use the scrap steel that is currently on our doorstep?
Ms Ghani
That is the honest conversation that we have to have in this House and with the public. We have ample scrap steel in the UK economy. We use shy of 3 million tonnes of scrap steel, and we export 8 million tonnes. We could use that scrap steel, which can be recycled infinitely, to provide us with supply chain resilience while reducing our carbon footprint.
The UK exports more scrap steel, as my right hon. Friend mentioned, than any other country apart from the United States. We have a plentiful and reliable supply of scrap metal in the UK for electric arc furnace production, and this is made into new steel products for British and other manufacturers. The scrap sourced here in the UK reduces our need to import steel from China and other countries.
We are backing UK-made steel and, crucially, we are backing it in the right way, by investing hundreds of millions of pounds to help the industry to thrive in increasingly challenging global markets. We cannot stop the clock. The technology and the customer demand is already here. Our commitment is clear from our emergency covid support to Celsa Steel and our unprecedented package of support for the steelworks at Port Talbot. We continue to work closely with the industry to secure a sustainable and competitive future for the sector and its workers.
Our commitment is clear from initiatives such as the British industry supercharger, which will reduce electricity costs for the steel industry and other energy-intensive industries, bringing them closer in line with the charges in other major economies. That is complemented by the £730 million in energy costs relief that we have given to the steel sector since 2013.
However, investment is only part of the story. The Government have also implemented a robust trade remedies framework to protect British businesses, British jobs and British goods from unfair trading practices and unmanageable surges in imports. Equally, we have not shied away from advocating for the UK steel industry abroad by resolving market access constraints and working with our partners in the US and the EU to boost access for UK steel exports. I am proud that my Department is involved in that work.
As well as our efforts to protect our steel industry on the international stage, the Government recognise that contracts for major public projects are a vital source of income for our home-grown steel producers. In the financial year 2021-22, those contracts were worth more than £600 million, which is one reason why, last April, we published an updated steel procurement policy note that emphasised the importance of early engagement among producers, suppliers and buyers, so that British steel production has a fair shot at job-creating, growth-spurring projects here in the UK.
Clearly, Tata’s decision, and any decision like it, has both national and local consequences. As we have seen over the years, when dealing with huge amounts of investment, global supply chains and national infrastructure it is easy to lose sight of the communities, families and individuals who are impacted. I believe the deal is in the long-term best interests of all parties. However, I recognise that many of those who are impacted in the immediate term will feel differently. That is precisely why we established a transition board, which was announced in September. It is up and running, ahead of any formal process taking place, so that we can be in the best position to support the local people, businesses and communities impacted by the transition.
I know that Members want to have an honest discussion about steelmaking in the UK. Without such record-breaking investment, there may not have been any steelmaking at Port Talbot.
Stephen Crabb
The Minister is making an important point about having an honest conversation, part of which is about recognising that almost from the day that Tata bought the Corus assets it has been looking for the taxpayer to subsidise the plant to keep it operational. From refurbishing and relining the blast furnaces to direct subsidies from the Welsh and UK Governments, as well as strongarming us into offloading the pension scheme, Tata has needed Government help almost from day one to keep the plant operational. In having that honest conversation, will the Minister please keep in mind that the community in Port Talbot will need massive investment to get it through this change?
Ms Ghani
Absolutely, and that is why we have the transition board. We have made money available to ensure that we help local communities. The other change is that customers now want cleaner, greener steel, so there is a market for using electric arc furnaces.
I assure the House that this Government will be at the side of the people of Port Talbot and other impacted sites over the months and years ahead, and we will continue to strive to secure a better future for them and for UK steel.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I ask everybody to resume their seats. This is a time-limited debate and we do not have much time because of the pressure of other business today. That is why there is a three-minute limit. The Front Benchers will get eight minutes each to respond—I cannot give any less because it is only fair that there is a proper Opposition response and a Government response to that. I ask Members to be mindful when making interventions, please, and to make them short. I call Marion Fellows.
Marion Fellows (Motherwell and Wishaw) (SNP)
Thank you, Mr Deputy Speaker. I almost want to repeat the speech that I have given on steel for the past eight and a half years, but I will resist that temptation. The biggest problem we have is that the Tory Government do not do steel. They may be coming up with a plan now, but since I came here in 2015 the all-party group on steel and metal related industries has tried to get movement on an industrial strategy and get steel at the heart of what we do, and it has been ignored.
When Tata sold the Dalzell mill in Motherwell to the Scottish Government for £1, two taskforces were set up in 2015: the UK Government one, which went absolutely nowhere, and the Scottish steel taskforce, which saved Dalzell. Steel is really important—it is a foundation industry—and steelmakers are, as I can testify, a different type of people. The unions have done great work in coming together and moving the industry forward. I agree with the Labour motion, but I have some doubts as to what a Labour Government would do, as there have been so many tosses and turns, and U-turns, in what Labour has been saying.
Let me return to the issue of Port Talbot. We in Motherwell and Wishaw, and the surrounding areas, know only too well the cost of the closure of a large steel plant—we had huge redundancies. I am talking about the economic and social costs. We know that manufacturing jobs are only the start of the impact of the jobs losses and that they will be felt right across the Welsh economy.
Under the multi-union plan, it was hoped that Tata Steel could transition Port Talbot towards greener steelmaking over a longer timeframe. Tata Steel intends to replace existing manufacturing processes with an electric arc furnace which, as we know, makes steel from scrap and requires a much smaller workforce. I find it hard to believe that Tata will invest £750 million to finance the restructuring, backed by £500 million from the UK Government, yet all these jobs are going. It is almost as if the Government are paying Tata to make people redundant.
A statement by the GMB and Community, which drafted the multi-union plan, noted:
“It is an absolute disgrace that Tata Steel, and the UK Government, appear intent on pursuing the cheapest instead of the best plan for our industry, our steelworkers and our country.”
I agree on that. We in the Scottish National party recognise the need to reduce our emissions and reach net zero targets, but we are equally clear that it is vital that the individuals and communities most impacted by the green transition must be at the heart of the decisions made by Governments. A just transition must have at its heart fairness and transparency for the workers affected. In the case of Tata Steel, it is clear that the impact of the closures on the workers has been an afterthought.
Diane Coyle, the economist, says:
“The UK’s industrial policy…has been characterised by frequent policy reversals and announcements, driven by political cycles”,
and there is an enduring inability to effectively co-ordinate the
“multiple…public bodies, departments and levels of government…responsible for delivery.”
Those of us with steel industries in our constituencies can attest to that. There has not been a proper industrial plan in all the time that I have been here.
Last week, our First Minister highlighted how independence offers an alternative to a lack of direction and ambition, with an industrial policy. That is what an independent Scotland will have: an industrial policy, which has been lacking here since I first came to this place in 2015. The fact that the replacement for the blast furnaces in Port Talbot will not be operational until 2027 at the earliest raises concerns from both a national security and an environmental perspective.
It is completely meaningless, as we have already heard, to close the furnaces in Port Talbot in an attempt to lower emissions if we are then going to be reliant on equally energy-intensive steel imports from other countries until at least 2027, and if the UK Government do not take measures to ensure that the UK is on par with the EU when it comes to investing in green technologies. As has already been said, we will be importing from India and China, two of the most polluting countries on the planet.
The UK Government will also be the only G20 country that does not produce its own virgin steel. That clearly poses concerns from a national security perspective. Unite the union recently summed up this ludicrous situation, noting:
“The government needs to invest in British industry in order to defend workers and communities as well as our industrial base and our national security. Instead, they are giving Tata hundreds of millions of pounds to fund their plan to cut jobs, cut capacity and give more business to their plants in other countries, like India and the Netherlands. How is that acceptable?”
The shocking decision made by Tata in Port Talbot may not have a direct consequence on Dalzell steelworks in Motherwell, in my constituency. However, the decisions being made at British Steel in Scunthorpe and Port Talbot put the future of steelmaking in the UK at risk. I am happy to pledge my support to the alternative plan put to Tata with the backing of industry experts Syndex and both Community and GMB trade unions.
The market need for UK-produced steel has increased as projects within the UK are asking for UK content. Dalzell steelworks markets itself as steel rolled in the UK, produced from steel made in Scunthorpe. If British Steel goes the same way as Tata, we will lose the only remaining UK steelmaker that can supply steel suitable for plate, and that is just madness. When Tata closed Dalzell and Clydebridge, the UK lost its ability to roll plate for submarines and other industrial purposes, such as wind turbines.
This Tory Government do not understand manufacturing. The all-party parliamentary group for steel and metal-related industries has been pushing for years and years. I notice the Minister mentioned the reduction in electricity costs, but how long did it take this Government to come forward with that plan? We have been telling them for years that we could not be competitive and that energy costs would have an effect on British steelmaking.
Many people are still waiting to speak. In Motherwell and Wishaw our hearts go out to folk in steel who are losing their jobs. We know how it feels and we know how long it takes to build a community back up again. We in the SNP support the motion.
Holly Mumby-Croft (Scunthorpe) (Con)
The news from Tata Steel is extremely concerning, and it leaves Scunthorpe as the last place in the whole of the UK that is able to make virgin steel. It is incredible to me that I am here again making the argument to retain the UK’s virgin steelmaking capability. There have been challenges from across the House on those views, so I will go into detail about some of those challenges.
Some people seem to think that we can make whatever we need in an electric arc furnace. It is true that the range of products is increasing all the time and will continue to expand, but those products are dependent on scrap and all scrap is not equal. We may have the correct tonnage of scrap in this country, but no one has yet convinced me that it is the correct quality of scrap. That is a really important point that we need to recognise.
People have said that we do not export iron ore from this country. That is incorrect; we do export iron ore as a country. People say that we do not have coking coal capability in this country. That is incorrect, because there is a perfectly good metallurgical coal mine in Cumbria waiting to be used. Some will make the argument about reducing the carbon footprint of steel products, using a purely electric arc model, to which I would again point out that many products melted in an electric arc furnace require an input of virgin steel in the mix. People on the works have told me—I listen to them because they know their stuff—that some of those products that they want to make in an EAF will need 30% virgin steel in the mix.
Andrew Percy
Is it not then clear that, given what my hon. Friend has said, it is vital that the Government negotiations with British Steel retain that virgin steel capability?
Holly Mumby-Croft
My hon. Friend, who knows a great deal about steel, is absolutely right. We need to remember that if we are not making that virgin steel here in the UK, it will come from someone else’s blast furnaces, probably from the other side of the world. We will have no control over the emissions or how that steel is produced. We will have no control over the welfare of the people who make it. The steel will then be put on a ship—a ship with a diesel engine, not a sail—and driven over here to be thrown into our electric arc furnaces to make that mix.
Sir John Hayes
My hon. Friend is absolutely right. The more that we make in this country—the more food we grow; the more products we produce—the more essential our manufacturing base becomes, and not just for our economic resilience and wellbeing, but for our move to this wonderful carbon-neutral future, which is so beloved of so many.
Holly Mumby-Croft
My right hon. Friend is correct. Put simply, unless we are going to stop using virgin steel in this country, we should have the ability to make it ourselves, so that we can take responsibility for those emissions and for the production methods, and for the working conditions of those who make the products.
Last week, my right hon. Friend the Secretary of State for Defence remarked that we are entering a pre-war world. A strong—or at least “in existence”—steelmaking industry is a core part of our nation’s defence capability. We may choose to buy the steel that we need for our defence from other countries—whether or not I agree with that—but resilience is not only about what we choose to do in future; it is also about what we may need to do, or what we may need to have the capability to do should the need arise.
On 18 September, I asked my hon. Friend the Minister for Industry and Economic Security whether she agreed that
“for national security reasons alone, we must ensure that we retain the capability to make virgin steel in this country”.
As I said in the urgent question that I later secured, that was confirmed to me by the Secretary of State the very same day, and I took contemporaneous notes of that conversation. On 18 September, my hon. Friend the Minister commented that I was correct on the importance of virgin steel, stating:
“obviously, we need a place for virgin steel, and that is in her constituency.”—[Official Report, 18 September 2023; Vol. 737, c. 1125.]
I have no problem with building electric arc furnaces—it is a good idea—but I passionately believe that the UK should retain, at least in the medium term, some blast furnace capability alongside that. After the sad news in Port Talbot, that has to be in Scunthorpe.
On 6 October, British Steel set out its plans, which it says are subject to appropriate support from the Government. They are the content of the negotiations that my hon. Friend is working so hard on. They talk about installing two electric arc furnaces, one in Scunthorpe and one in Teesside, and they propose maintaining current operations until a transition to electric arc steelmaking.
I want to be crystal clear: I expect the company to keep to its word on this. If we are to give British Steel hundreds of millions of pounds of public money, we need to ensure that it retains those blast furnaces until the transition. In short, that must be written into the deal. I do not want the sad events happening in Port Talbot to happen to my people in Scunthorpe. I do not want to see blast furnaces switched off early and steel being brought in from abroad and rolled in our mills. I want those blast furnaces to be on for as long as possible, maintaining jobs and keeping options open, so that we can explore alternative technologies, just as other countries are doing.
Stephen Kinnock (Aberavon) (Lab)
The Port Talbot steelworks is the beating heart of our community. Generation after generation have worked in that steelworks. Port Talbot is the steelworks, and the steelworks is Port Talbot. Every time I go into that steelworks, though, I do not see something to be sentimental about; I see a hotbed of innovation. I see a workforce who are deeply committed to change and ready to embrace change. This is not about some kind of request for charity or hand-outs; this is about asking for a level playing field. This is about saying that we make the best steel that money can buy.
But for 14 long years we have been competing with one hand tied behind our backs. For 14 years we have been forced to pay twice as much for our energy as our French and German competitors. For 14 years we have seen Government contracts going to foreign steel companies. For 14 years we have seen our Government completely fail to support our steel industry in anything like the way that our competitors are doing.
Let me be absolutely clear: when we look at the deal that is now on the table, we see that it does not work for jobs, it does not work for decarbonisation, and it does not work for our national security. On jobs, 2,800 jobs are set to go, with £500 million of taxpayers’ money to pay for that privilege. On decarbonisation, the deal is based on importing millions of tons of steel from India, where steel production is 30% to 40% more carbon intensive. I am not sure if anyone has noticed, but India is 5,000 miles away, so the carbon footprint will be huge. We are literally exporting jobs from Wales to India, and importing carbon from India to Wales.
I urge Tata Steel to look again at the multi-union plan and to take the bridge, not the cliff edge. Its deal will send our workforce—our proud communities—over that cliff edge. That is not something we can accept. We have to recognise that the trade unions have put together a compelling plan; a plan that would keep one of the blast furnaces going while the transition to an electric arc furnace takes place. That is the right way—the balanced and sustainable way—of doing this. Our country needs its steel. Let’s value it. Let’s stand up and fight for it.
Alun Cairns (Vale of Glamorgan) (Con)
There is no question but that this is an extremely worrying time for families in Port Talbot and for the community at large. I know the community extremely well, and my father was a welder at the basic oxygen steelmaking plant in the steelworks for more than 30 years. Port Talbot is a community where everyone knows someone who is related to the steelworks in some way. The scale of the impact that this will have on the community should not be underestimated. It is not just the jobs themselves. There will be the contractual jobs and the associated roles with those contractual jobs, so there is a significant multiplier that follows on.
Of course, this is not the first time that we have been in this position or that the steelworks have been under threat. I can remember tens of thousands of people working there when I was growing up in the 1970s. The reality is that in 2016 we were in a similar position, when Tata planned to close the plant but, in opposition to what the Government are now claiming, the UK Government proactively worked with Tata to encourage a sale and, in the interim, the price of steel rose, which has given us a much longer lifespan for the site.
I want to point out that the commitment that Tata has shown is significant and needs to be recognised, because it has lost millions of pounds over time. In the close of 2018, as Secretary of State for Wales, I went to Mumbai to meet the chairman and chief executive of Tata, and to express my concern that the price of steel at that time was falling, and I wanted to know what their plans were. That is the proactivity with which the Government maintained an interest over time in seeking to support the industry and to support steel.
Sir John Hayes
I take my right hon. Friend’s point about commerciality, but the truth is that we can and should protect those core industries that are at the heart of our manufacturing capacity. If we open ourselves up to cheap foreign imports with huge environmental costs, we are bound to end in a situation of the kind he describes. I thank him and, in particular, my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) for their work, but it is for the Government to prioritise British jobs and British manufacturers.
Alun Cairns
My right hon. Friend makes an extremely important point, and I strongly agree with him. That is the proactivity that the Government have sought to pursue. I should correct the record, by the way: it was in November 2019 that I went to Mumbai to meet Tata.
However, the reality is that every time a Member of this House, on either side of the Chamber, has called for us to go further and faster and to be ahead of the curve in the green transition, another nail has been put in the coffin of heavy industry such as Tata in Port Talbot. That is the reality of the position. When we have passed climate change legislation here we have heard many Opposition Members—those who are now seeking to defend the jobs—saying that the Government are not doing enough on our green transition.
The £500 million is a significant sum, and we should not play it down. We must also remember that this is a devolved responsibility. Pre-devolution, that money would have been coming out of the Welsh block. We all know that since 2016 the Welsh Government have done nothing to reinvest in the plant after we managed to save it from closure, so I find it churlish when the Minister in the Welsh Government says he needs hundreds of millions. Those are the people calling for further devolution and further responsibility, but ultimately there is no accountability for the decisions, because investment in industry is a devolved function.
However, thanks to the Union and thanks to the United Kingdom Internal Market Act 2020, the UK Government can invest in the steelworks in Wales. That is the same Act that the Opposition voted against and to which the Welsh Assembly would not even approve a legislative consent motion in order for it to pass.
In the limited time I have, I also want to point out this is a two-blast furnace site; having one blast furnace operational makes it even more inefficient, and it will lose more money. My hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) highlighted a really important point about an arc furnace, and I have not heard the automotive sector say that it is content with that. Finally, I hope we will have a development corporation in order to save the economy in the area.
Liam Byrne (Birmingham, Hodge Hill) (Lab)
I add my voice to the chorus asking the Minister to rethink the strategy and this deal comprehensively. At the heart of this debate is a simple truth: what the Government have offered us is a half-measure, and it is a half-measure that now threatens job security, economic security and climate security. Frankly, that is a price not worth paying.
The threat to job security has been well laid out by hon. Members this afternoon. It is not just 2,800 jobs at the steelworks itself; three times as many jobs will be lost because of the economic shock to the community. Here we have a situation where £500 million of taxpayers’ money is being forked out and up to 12,000 people are going to be thrown out of work.
The second point, which we must not let the Minister elude this afternoon, is that there has clearly been a change of Government policy on whether this country needs its own sovereign capability to make virgin steel. The hon. Member for Scunthorpe (Holly Mumby-Croft) spoke brilliantly and eloquently about precisely why we need to keep that capability in this country, and she was right to say that, in response to her urgent question in November last year, the Minister gave the House the very clear impression that she would defend a policy of His Majesty’s Government that we will retain sovereign capability for virgin steelmaking in this country.
However, when I asked the Secretary of State not once, but three times today whether it was the policy of His Majesty’s Government to keep that capability in this country, she declined to answer on all three occasions. She said that that was not a decision for Government to make, but a decision for industry—and, in her words, we might as well be trying to encourage people to keep typewriters. I do not think that is an appropriate response to a fundamental question of economic security.
The third point, of course, is on climate security, as my hon. Friend the Member for Aberavon (Stephen Kinnock) laid out very clearly. Tata has been very clear that it will honour its contract by importing steel from India. We know that that is 40% more carbon-intensive than steel made in this country and that other imports may now come in from China, where about 70% of the power is from dirty coal. That is bad for job security, it is bad for economic security and it is bad for climate security.
At the very least, we could have expected the Government to lay out a better plan that dealt with questions such as how we will guarantee the scrap supply, given that we now export 77% of our scrap and do not have a strategy to ensure that it is kept here in the event that the future is indeed in electric arc furnaces. We have not had a strategy on how to keep direct reduced iron technology here, and Tata is proposing to build that capability in Holland. So £500 million goes out the door, job security goes down, technology goes to Holland and dirty steel comes in. That is a bad deal and it needs rethinking.
Jessica Morden (Newport East) (Lab)
That was a brilliant contribution from the Chair of the Business and Trade Committee.
This afternoon, steelworkers from Port Talbot, Llanwern and beyond are up in the Public Gallery. They have come here today to ask the Government to step up after last week’s announcement from Tata. On their behalf, we implore Ministers to pursue, before it is too late, all avenues to secure a longer, fairer transition that supports our steel industry and jobs. We need a meaningful consultation with the trade unions and full consideration of the alternative options that they have proposed, because we want the best for steel, not the cheapest, which is what we have before us.
Nick Smith
My hon. Friend is a great champion for steelmaking in Llanwern. Does she agree that the negative impact of the Government’s plans for steel in south Wales will be massive? Will electric arc furnaces be suitable for the Zodiac line at Llanwern?
Jessica Morden
Indeed, last week’s announcement was devastating for Port Talbot, for the people from Newport who travel to work there, and for communities across wider south Wales. Over 18 months, 2,800 Port Talbot workers have been affected, and Tata expects that 300 further roles could be impacted at Llanwern in Newport East in around three years’ time. As my hon. Friend says, that would affect the Zodiac line, which produces world-class automotive steel and was the best processing line in the world when it was built—it remains one of the best. As the unions have highlighted, Zodiac will, in the short term, be reliant on imports. Big questions remain about the quality of steel produced in electric arc furnaces. These are high-value products, and it is a precarious position for Llanwern to be in.
As has often been repeated in recent days, no matter how the Government dress it up, they are giving Tata £500 million to make 3,000 people redundant. In so doing, they are ending our ability to make virgin steel—the only major economy in the world to do so—and that is shameful. It leaves us reliant on imports at a time when demand for steel, which we will desperately need for our green infrastructure, is only growing, and at greater cost. The imported steel will come over here, as the hon. Member for Scunthorpe (Holly Mumby-Croft) said, on diesel-fuelled vessels, shipped thousands of miles from countries with lower environmental standards.
It does not have to be so. As others have said, an alternative plan has been proposed by the steel unions. We pay tribute to them for the fight that they put up on behalf of their members. The Syndex plan is credible and based on a phased transition over a decade. Officials at Tata have acknowledged to unions that the union plan was serious and deliverable, but would not commit to the extra funding. The Government must step up, as other countries are doing—in fact, there cannot be a developed country in the world that approaches the matter in a worse way than this one.
Labour will step up. A general election cannot come soon enough for our steel industry. We have long pledged a £3 billion fund to decarbonise UK steel production. This Government’s plan is not a serious one; it is yet another sticking plaster from a Government without a proper industrial strategy. We have had 12 steel Ministers since 2010, and six in the last four years alone.
Let me address the attacks made this week by the Secretary of State for Wales at a time of awful news. This deal was done without Welsh Government or trade union support. Welsh Ministers have repeatedly contacted UK Business Ministers. The First Minister tried to get a phone call with the Prime Minister on Friday but was not allowed one. The Welsh Government have used all the levers that they have. We must not allow the UK Government to make irreversible decisions. Not only is steel part of Wales’s history, but it is vital to our greener future.
Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)
I declare an interest as a member of Unite, and totally support the union’s plan to move forward. I congratulate my party’s Front-Bench team on securing the debate. This debate should not be about political sides—it should not be about Members taking the Government’s side against the Opposition because we secured the debate. This debate is about national security, national industry and national prosperity. I congratulate the hon. Member for Scunthorpe (Holly Mumby-Croft), who stood aside from the politics and looked at the real issue.
There are also issues here about the blast furnace technology. I am one of the very few Members in this place who served as an apprentice and worked in a foundry, so I understand the issues we are talking about. As has already been said by the hon. Member for Scunthorpe and other Members, virgin steel is hugely important, because we want to increase our defence manufacturing. We have the AUKUS deal, under which we want to build submarines in conjunction with Australia and the United States. That will have a huge impact, and if we do not have blast furnaces, we will not have the capability to do that.
When we recycle steel that has already been produced—this has been said before, but I will repeat it—it contains significant impurities because of the uses it has had, and cannot be turned into virgin steel. That is what we have to come back to when we talk about how we produce that steel. If we do not do so, we will not be able to meet our defence, engineering and manufacturing commitments, which is not what the United Kingdom wants. That manufacturing is an industry that we want to take forward.
As far as I am concerned, this is a grubby deal by Tata. All it wanted to do was get hold of our steel industry, hijack it, get rid of our workers from the line, and bring steel back from that company’s highly polluting Indian plants. This has not been said today, but as somebody who has worked in the industry, I want to be clear that our steel industry and our steelworkers do not think that our people should be sacrificed at the altar of the so-called green technology that Tata is pushing—I think the intention is something quite different. We need to realise as a nation that this is our security, this is our prosperity, and this is what we need to do.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. If people could shave about half a minute off their speeches, we will be able to get everybody in. Otherwise, we will not.
Dame Nia Griffith (Llanelli) (Lab)
It is both tragic and shocking that we are faced with the potential closure of the last blast furnace in Port Talbot before greener technologies for producing primary steel are developed and operational, and even before the proposed electric arc furnace is up and running. This Conservative UK Government must bear their share of the responsibility for this appalling situation. The Government boast about the grubby little deal they made with Tata in September, spending half a billion pounds to lose 2,800 jobs in Port Talbot and leave the UK as the only country in the G20 without its own steelmaking capacity, at the mercy of world markets with the risk of price hiking, not to mention the national security risk of losing our own primary steelmaking capacity.
Instead, the Government should have been negotiating a proper deal such as the multi-union plan to ensure a just transition. They should have been protecting jobs, keeping the blast furnace going until other production means are fully up and running, and recognising that the electric arc furnace can only be part of the solution. Yes, let us recycle more steel in the UK, but we must recognise that that is not suitable for all our needs. We should also be developing green technologies such as hydrogen and direct reduction of iron to do the primary production of steel, as Labour has proposed, committing £3 billion—not half a billion—to work with the industry to make that just transition a reality.
The tin plate industry is synonymous with Llanelli. It is a central part of our industrial history, and today’s Tata plant in Trostre makes a range of different materials that go on to be used in things like food cans and aerosols. Currently, we receive our steel from Port Talbot, just some 20 miles down the railway track, which makes good economic and environmental sense. Tata tells us that when it closes the blast furnace, we will be importing steel. That imported steel will be made in blast furnaces abroad, so there will be no saving in carbon emissions—quite the opposite. Processes abroad will be much dirtier, and then of course there are the costs and emissions from transporting the steel to Trostre. The challenge will be sourcing an appropriate quality of steel to satisfy Trostre’s needs, and as Trostre makes a number of products and serves a number of different customers, that means steel of the right quality to satisfy all those needs.
We will be very much more vulnerable to logistical difficulties and price fluctuations if we have to import steel. If there is a shortage of supply, foreign producers may well prioritise their home customers.
As for the recycled steel produced in the electric arc furnace, when it eventually comes into production, there is still a lot of work to be done to assess its suitability for the different products that Trostre produces and its acceptability to our customers. It may be that some products can use electric arc furnace steel, but that will depend on the quality of the feedstock that is put in, and there is a strong case for having two smaller electric arc furnaces to provide those different qualities. Then there is the challenge of sourcing the feedstock, and not just sourcing it, but sorting it and trialling it. All this takes time.
In the meantime, we need Tata to keep the blast furnace going. The electric arc furnace should be only part of the solution, the other part being the development of green primary steel-making. I pay tribute to the trade unions, and we now need Tata to work with the trade unions—
Mr Deputy Speaker (Mr Nigel Evans)
Order. Could Members shave time off their speeches, otherwise not everybody will get in?
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Mr Deputy Speaker, you may be wondering why on earth the Member for the northernmost mainland constituency in the UK, very far away from Port Talbot, is taking part in this debate. However, a bit like the hon. Member for Birmingham, Perry Barr (Mr Mahmood), I got my fingers dirty working in an oil fabrication yard in a place called Nigg. Some of the mightiest structures in the North sea were built there, and I am proud to have worked there when I did. Those structures, which are still working today, were made out of the best of British steel. The steel did not come from anywhere else; they were made out of British steel.
I thank the Government for the decision to allow the Cromarty firth in my constituency to become a green freeport. One of the great dreams we have where I live is that with the skills we still have locally—the welders, the fabricators and the riggers who are still of working age—we could start to fabricate floating offshore wind structures in the yard once again. That is our dream. At its height when I worked in that yard, 5,000 people worked in it, and we dream of seeing the flash of the welder’s torch and hearing the clang of steel once again. However, to do that we are going to need the best of British steel—not rubbishy stuff, but the best—that will stand up to the mighty storms of the North sea. What I am saying is that, yes, I hear the impassioned pleas about making virgin steel in the UK, but I am talking about further down the line where we can use it and where we want to use it desperately badly.
I am going to keep this short, but we have fallen a long way back. One of the shattering statistics is that, while we were still in the EU—towards our last days there—the UK had fallen to being the eighth in the whole of the EU in steel production. We were actually behind Belgium. This is the country of Isambard Kingdom Brunel, the country that built the Forth rail bridge, the country of steel, and it was steel that made this country great, so I support the motion with great passion. Believe you me, it has my full support.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Steel is a strategically important industry for Wales and for the entire UK. It is vital in supporting the green transition, from energy generation to electric cars. This is not just about a fair transition, but about having the security of supply that is essential to any transition at all. As we enter the new era of Great British Nuclear and small modular reactors in places such as Trawsfynydd, there is no sense and no rational strategy in the Government committing their successors to buying thousands of tonnes of new steel—and from where? From China? We do not even know what assessment the Government have made. Does the UK need security of supply from being able to produce virgin steel in future—yes or no—and what is the Government’s role in that respect?
Plaid Cymru has called for action to ensure that ownership of the Welsh steel industry is returned to Welsh public control. This would involve nationalisation, and then recapitalisation through green bonds, with a view to mutualising and creating a Welsh steel co-operative. We could save the banks in 2008; why can we not save steel now? Look at Germany, where the Government spent €2.6 billion in state aid to steel producers for decarbonisation projects only last year. That is the scale of intervention that we need. We must also learn from countries such as Spain, Canada and Sweden, which are already investing in their capacity to produce primary steel through green hydrogen furnaces. There are lessons here for Wales. There are suggestions that a closed-loop cycle could be created in south Wales, whereby floating offshore wind is not only used for electricity but to make green hydrogen for local heavy industry, including steel production.
If we had better control over the Crown Estate, we could tie these procurement requirements into those contracts. We could put local procurement as a priority. Where is the vision? Where is the vision in saying that only central Government can manage this, given the current state of the nation in the United Kingdom? These are the sorts of exciting opportunities we should be grasping now in Wales, yet we are being let down once again by a Westminster Government who are intent on stripping Welsh assets while leaving the Senedd to bear the costs of communities and individual lives thrown on the scrap heap.
Yes, the Labour party is also promising a transition fund for the steel industry, but how can we believe it will ever be implemented, when it continues to scale back on its £28 billion green investment pledge? Solutions from Westminster are a dead end; only with control over our own resources, such as through a Welsh steel co-operative and the devolution of the Crown Estate, can Wales embark on its own journey towards a greener and fairer future.
To close, Mr Speaker—
Mr Deputy Speaker (Mr Nigel Evans)
I am afraid that time is up; I do apologise.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
First, I declare my interests as a member of the GMB and the all-party parliamentary group for steel and metal related industries.
I have to say how utterly frustrating and disappointing it is to be here as a former shadow steel Minister, hearing the same arguments that all of us on this side and some other hon. Members across the House have been making on these issues for decade that the Government simply have not listened to. They have been asleep at the wheel: there has been no industrial strategy and no vision for the future of steel, and there has been a revolving door of Ministers in and out of Government. I am deeply frustrated that, after all those arguments we have made in good faith, we have come to this point.
This is totally the wrong approach for the proud workers I was privileged to meet outside Parliament today and who are with us in the Gallery. It is totally the wrong approach for the economy of south Wales. It is not just about the workers and the jobs directly at Tata; it is also about the related industries: the electricians, engineers, rail workers, hauliers and all who work in that interconnected economy that is so crucial to the backbone of south Wales—the cafés, too—and all the families who rely on those highly paid jobs.
Workers who are willing to embrace change, as my hon. Friend the Member for Aberavon (Stephen Kinnock) said, now face being let down by this Government. It is totally the wrong approach. When it comes to carbon emissions, we have heard how it will lead to imports of lower quality steel and higher carbon steel—steel that is coming in with higher carbon emissions on transport, as has been set out so clearly in the debate. And it is totally the wrong approach for our national security. The hon. Member for Scunthorpe (Holly Mumby-Croft) was absolutely right to raise concerns about our defence industry and to talk about the need for speciality steels.
I know what an electric arc furnace can produce—I have one in my constituency and it is run by an excellent company that does excellent work providing steel to our critical national infrastructure—but it cannot produce all the steels we need for our economy. At a time of geopolitical risk, at a time when our supply chains are under threat, at a time when we want to invest in new green technologies and at a time when we face threats from major countries around the world, to be abandoning our capacity, our national security and our foundational industries is utterly irresponsible.
I praise my hon. Friend the Member for Aberavon for what he has been doing to stand up for his workers and my hon. Friends the Members for Newport West (Ruth Jones) and for Newport East (Jessica Morden) and others. I want to praise my constituency colleague the Welsh Minister for the Economy, Vaughan Gething, and indeed the First Minister. I have to say this to the Ministers on the Treasury Bench: I like them personally, but it is simply not good enough for the Prime Minister not to pick up the phone to the First Minister. He picked up the phone to me about issues when he was Chancellor, so why is he not doing that now and calling the First Minister? Where is the Secretary of State? She has not been speaking to the Welsh Economy Minister, Vaughan Gething. She needs to put aside partisan differences, get around the table and work with us to find solutions on this, and she is not doing it. And where is the Chancellor? Fundamentally he has been involved in this deal, which appears to be delivering very little; where is he on this? They need to get with the programme.
We need to look at the multi-union led plan. We need to listen to what our unions are saying, listen to what the workers are saying, not make irreversible decisions, and make sure there is a future for the steel industry in this country.
Richard Thomson (Gordon) (SNP)
First, I express my concerns on behalf of the 2,800 workers at Port Talbot who will lose their jobs and the many others in that community and the surrounding area who will feel the knock-on ramifications of this decision. It is a situation that all too many communities in Scotland, and indeed across the UK, remember from the toxic legacy of the Government’s industrial policies in the 1980s, when the rapid enforced decline of heavy industry across too many places was progressed with. That toxic legacy gives us a prime example, if we needed one, of how not to go about an industrial transition. With the rejection of the multi-union plan, it seems that the present-day Government have learned no lesson in that regard.
Make no mistake: this decision is economically, environmentally and strategically inept. It means that the UK takes a step closer to being the only state in the G20 without the capacity to make its own virgin steel. That is a risk to security, but it also means that the UK is effectively outsourcing the emissions associated with the production of that virgin steel, while unforgivably offshoring the jobs. That is not a just transition; it is just plain daft.
The green transition that we know we need to make should be a main driver of economic growth in the decades ahead, and we can see how Governments in the EU and in the US who get to grips with that challenge can drive forward that investment. In contrast, in Port Talbot we see a £500-million UK Government investment leading to the direct loss of 2,800 jobs. That is a transition of a sort, I suppose, but it does not come anywhere close to meeting the needs of the communities there, the economy or the planet.
Finally, I say as gently as I can to those on the Labour Front Bench that if decarbonisation is not to mean deindustrialisation, they should please have a word with their leader and make sure that he does not water down any further his £28 billion pledge, because communities that depend on our getting the transition right, such as mine, deserve and expect no less.
Mr Deputy Speaker (Mr Nigel Evans)
To resume her seat no later than 6.44 pm, I call Ruth Jones.
Ruth Jones (Newport West) (Lab)
It is good to participate in this debate, but it is not good to recognise the thousands of job losses coming down the track and the devastating effect that will have on our local communities. We cannot underestimate the anxiety and anguish caused by this callous announcement by Tata, and the lack of thought by the UK Government in just going along with it. It is not just about the direct job losses, but about the thousands of other workers and families involved in the supply chain of the steelworks in south Wales.
This announcement is a massive blow for everyone across Wales and the UK. It is all the more frustrating, because we know that this decision to shed 2,800 jobs is completely avoidable. We know that the steel industry has to decarbonise, and we must achieve our goal of net zero, but we do not have to do it overnight. We can transition to green steel. Decarbonisation cannot mean deindustrialisation. The route to green steel involves a mix of all the available technologies, not just electric arc furnaces. We will move towards our goal of net zero, but in partnership and co-operation, leaving no one behind. That is the fair way; that is Labour’s way.
In contrast, this Government are so deaf to the problem that the Prime Minister would not even answer the phone to the First Minister Mark Drakeford when he rang to discuss the proposed job losses. That tells us volumes about how ready to listen this Government are. As we are talking about Government responses, will the Minister meet the unions? I believe that the last meeting was way back in May 2023. It would be good to have a commitment from the Minister.
There is also a knock-on effect, because while we are mainly concerned with jobs in Port Talbot today, there will be an impact on its sister site Llanwern in the constituency of my hon. Friend the Member for Newport East (Jessica Morden). Many people in Newport West work in Llanwern, and let us not forget the other steel companies, such as Island Steel and Sims Metal recycling, which are also suffering because of a lack of coherence and strategy from the current UK Government. It is unbelievable.
Like all the speakers on the Labour Benches, I pay tribute to the union representatives here in the Public Gallery today, and I thank them for their diligent and proactive work. I call on the UK Government to engage with them and work with Tata to ensure that the UK retains its steel production capabilities and that our automotive, defence, manufacturing, construction and renewables industries can procure and use our own British steel.
Mr Deputy Speaker (Mr Nigel Evans)
To start the wind-ups, I call the Opposition spokesperson.
Sarah Jones (Croydon Central) (Lab)
This has been a powerful debate, reflecting the huge strength of feeling in this place, but also the huge knowledge and ambition for our steel industry. I was disappointed that the Minister came to this place and said that this debate was performative, less than a week after Tata Steel announced nearly 3,000 job losses. I think we all would have expected better from her.
Like many others, this afternoon I met steelworkers and union officials not only from Port Talbot, but from all the other steel sectors and steel sites across the country. They have come because they know what this announcement means for them and their future. These actions will have consequences beyond last week’s announcement. The steelworkers here today, like many of us, are baffled by the Government’s approach. They know that steel is a foundation industry. They know how crucial it is to our economy. They know that the world is uncertain—for goodness’ sake, the Prime Minister was here only this afternoon talking about strikes on Houthis in Yemen—and that having our own supply of primary steel is crucial to our security. Our genuine question is: why are the Government so content to be spending half a billion pounds on a scheme that leads to thousands of job losses?
Stephen Kinnock
On jobs, my hon. Friend will have seen that every steel industry across the G20 and around the planet is going through massive change, but the only place where there is a threat of thousands of job losses is the United Kingdom. Why does she think that might be?
Sarah Jones
My hon. Friend is absolutely right. He made a brilliant speech earlier and has been a great defender of his constituents. The lack of any plan from the Government over the last 14 years is at the heart of the problems we see today.
As the shadow Secretary of State, my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), said in his opening speech, we also risk something much wider: that net zero becomes a zero-sum game for working people and we lose the public consent that we need for the transition. There is no getting away from the facts. The Government have pushed a plan that uses hundreds of millions of pounds to make thousands of people redundant. If Scunthorpe ends up going the same way—the hon. Member for Scunthorpe (Holly Mumby-Croft) made a powerful speech to the contrary—we will be unable to produce primary steel in the UK.
In the Port Talbot plan, the two blast furnaces will shut this year, with a cliff edge for jobs. For at least three years, steel will be completely imported from India and the Netherlands to feed Trostre and Llanwern in south Wales, but there is no guarantee that once the electric arc furnace is built, those jobs will stay. We know that there are huge questions about scrap steel and whether it will produce the steel we need. Many Members, including the Chair of the Business and Trade Committee, my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), asked questions to which the Government have so far provided no answers.
Alun Cairns
I did not have an opportunity to develop this in my speech, but would the hon. Lady and the Labour party support a development corporation to diversify the economy so that it is not so dependent on one industry and one company?
Sarah Jones
The Labour party would support an industrial strategy, which would have myriad plans that would look exactly at some of these issues. Our national wealth fund would fund some of the really important future industries that we need, crowd-in private sector investment at a much greater scale and, hopefully, lead to the manufacturing industry growing and not the managed decline we have seen under this Government.
My hon. Friend the Member for Aberavon (Stephen Kinnock) said that the plan is exporting jobs and importing carbon, and he is exactly right. My dad was from Llanelli, once the tinplate capital of the world. My grandad worked at the tinplate factory that was then called Richard Thomas and Baldwins, and his brother worked at the Salter saucepan works. They would have stood in Stradey Park singing “Sosban Fach,” I am sure bursting with pride.
Britain’s steel industry has seen us through momentous periods in Britain’s national story—the white heat of the industrial revolution; the planes, ships and tanks that saw us through the second world war; and the buildings dotting our skyline across this modern Britain—but if we get nostalgic for the past, we do not look to the future. The world is changing, it is less safe and less secure, and steel is changing. New technologies are transforming how we make and use steel, and it will be as crucial to our future as it has been to our past.
We cannot make solar power without steel. We cannot make electric vehicles without steel. We cannot make wind turbines without steel. We will not reach the Paris climate agreement targets without steel. Steel is used for 3D printing and robotic automation, and everything from the tools that our doctors use to save our lives to the rocket ships that reach into space needs steel. Our pens are made of steel, and Big Ben ticks because of steel. Anyone who does not know that it is magic should read Ed Conway’s book “Material World”. Steel makes the machines, the tools and the factories that make everything possible. It will forge our future, not just our past. The debate is not about nostalgia: it is about looking head. Labour Members know that steel can have a bright future in Britain.
The Government’s last-minute chaotic deal is a masterclass in how not to run the transition. What they offered was never a serious plan for the long-term of our steel industry; it was yet another sticking plaster from a Government lurching from crisis to crisis, unable or unwilling to take a long-term view.
There are other ways forward. Labour has a cast-iron commitment to support our steel industry. We have earmarked up to £3 billion for investment in green steel alongside industry, working with steel communities to ensure that the transition comes with jobs. There are other ways forward that can help us, not least hydrogen. While the Conservatives scramble around for last-minute deals, Labour will make long-term investments. That is the central difference in our approach.
We must think about manufacturing differently. I have lost track of the number of times businesses have said to me, “We would invest in renewables, but the Government make it too hard.” Our manufacturers say, “We want to decarbonise, but we are living hand to mouth because our energy bills are so much higher than in other countries, and Government won’t help us.” This steel debacle speaks to a much wider issue. We do not just need a steel industry: we need glass, ceramics, cement, compost, critical minerals, batteries, composites and cheap energy. We need supply chains that work, an upgraded national grid, planning reform and a job plan to create jobs across every part of this country—a transition from the old to a much cheaper renewable future. In short, we need an industrial strategy. We need a Government who believe in working in partnership with industry, not just telling them to “F off”, and we need a plan that looks to the future of our own country and does not just rely on cheap imports from China.
We are asking the Government to think again, to look at the multi-union plan again and to think about how to defend primary steel capacity in our country. We know that steelworkers are watching this debate, and they must feel wretched. I ask Government Members in all sincerity: are they concerned about our defence capabilities if we lose the capacity to make primary steel? Do they really think the Government’s plan is money well spent? Should decarbonisation really be about cutting jobs? Is manufacturing really a Victorian pursuit best left to the Chinese, as a former Tory Prime Minister is reported as saying?
Or, as the great country that we are, can we harness the skills and talents of our people and create a vibrant manufacturing sector here in the UK? Tonight, can we send a message to the steelworkers here that we want to protect the future of British steelmaking, and that we will not sit by and let managed decline be the hallmark of this great British industry? I commend the motion to the House.
The Secretary of State for Wales (David T. C. Davies)
I thank the hon. Lady and all those who took part in the debate. I say very clearly that I completely understand how devastating the news is. I understand the devastation that people will feel in Port Talbot—the whole community, but especially those people who face the loss of their jobs and those in the wider supply chain. There will be a wider impact—no one is denying that or running away from that.
Let me set out the situation that the Government found themselves in. Throughout the debate, Members have tried to suggest that this is a Government decision. It is not a Government decision. It is not the Government who decided to close—
David T. C. Davies
Let me make a little progress, as I only have about six minutes and I think Members will want me to put things on the record. The hon. Member for Birmingham, Perry Barr (Mr Mahmood) waved around the Syndex plan; as a member of Unite, surely he will be aware that it rejected that plan.
Let me go back to the situation we found ourselves in. It was not a decision of the Government to shut down the blast furnace, but one taken by Tata in the light of the losses it was making.
Stephen Kinnock
I thank the Secretary of State for giving way. Yes, it is a Tata decision, but £500 million of British taxpayers’ money is going into it. Will he set out what red lines the Government put down around that £500 million? Were there any red lines around jobs?
David T. C. Davies
It came down to this: the Government had to find a solution that was acceptable to Tata and that would save the maximum number of jobs. The Government are not paying £500 million to throw 3,000 people out of work—[Interruption.] No, the Government are paying £500 million to save 5,000 jobs, because they will be saved, as well as around 12,500 jobs in the supply chain.
David T. C. Davies
I will give way to the hon. Gentleman in a moment, because he knows more about this than many who have spoken. The reality is that Tata told us that it was looking to pull out completely from the United Kingdom. If the loss of 3,000 jobs is devastating—it certainly is—how much more devastating would 5,000 be, and 12,500 jobs in the supply chain? It was a simple choice for the Government—not a good one—between seeing 3,000 people lose their jobs or around 17,500 people lose their jobs, and possibly even more. That is why the Government committed to pay £500 million towards an arc furnace. Let me make one other thing clear: the Government will not pay a penny to Tata until that arc furnace is built.
Stephen Kinnock
I thank the Secretary of State for giving way again; he is being generous. I think there are many reasons why Tata would not be considering full closure, not least the multibillion cost of closing down the Port Talbot steelworks. The remediation costs would be absolutely astronomical, so that was never on the table. The choice was between the bad deal that the Government have done with Tata and the compelling multi-union deal. Can we please just have the facts on the table, which are that this is not about closing the plant versus the Government’s deal, but about the multi-union deal being the right way forward?
David T. C. Davies
I understand the hon. Gentleman’s position and he is right to stand up for his workers. This is the reality of the situation: that plan has not persuaded Tata. Tata has not said that it is credible. Tata has said to me that it could not go along with that plan, because although one of the blast furnaces—blast furnace No. 4—has a number of years to run, it would still come to the end of the life of the coke plant and the sintering plant, so if Tata went ahead with that proposal, it would keep open one blast furnace, which is still losing a lot of money, and then have to start importing all the coke and all the sinter that it would need for it.
There is then the technical problem in that Tata says it would be very difficult indeed to build an arc furnace next to a working blast furnace containing molten steel. [Interruption.] The hon. Gentleman can shake his head, but that is what it is saying to us. That is what it has said to us as a Government and that is why we find ourselves in the difficult, unpleasant and awful situation of having to choose between 3,000 people losing their jobs and 17,500 people losing their jobs. That is why we came to the decision we did.
David T. C. Davies
May I just continue, because I have only three minutes left?
I want to say something about those 3,000 people. I worked in a steel plant myself. I worked in Llanwern when I left school, so I am directly involved in this and I feel it. I say to the workers that I have met the trade unions on a number of occasions. In fact, I will cancel what I am supposed to be doing next and I will go out there in the Public Gallery and meet the workers, with the hon. Member for Aberavon (Stephen Kinnock) and anyone from the unions, to explain the Government’s commitment.
There is £100 million on top of the £500 million, which will be there for the community in Port Talbot. It will be there to develop infrastructure to get other companies in. But the most important thing, and the hon. Gentleman knows that I have said this in the transition board meetings, is to ensure that anyone and everyone who loses their job has the absolute maximum opportunity to retrain and do anything that they want to do as far as retraining is concerned—to help to set people up in businesses, to get them licences, to get them any training they want. There is a massive commitment from the UK Government to that and we will not turn our backs on the people of Port Talbot.
Alun Cairns
My right hon. Friend is making an extremely powerful and factual case, rather than some of the wilder claims that have been made. Bearing in mind that this is a devolved responsibility, is he aware of any capital sums that the Welsh Government are making available to support the community?
David T. C. Davies
The Welsh Government have made it clear that they are not able at the moment to put in the sort of money that would be needed to come up with any kind of different plan. There is no other plan on the table, which is why we find ourselves in the situation we are in.
I will turn very quickly to a couple of points that were made. First, on primary or virgin steel, obviously all the iron ore and coal used in the plant is being imported. We are, therefore, at this moment, dependent on other countries for our virgin steel capacity. The advantage of an arc furnace, although this is not the situation that I want to be in, is that we would not be dependent on foreign countries for the supply of steel because, as the Minister for Industry and Economic Security, my hon. Friend the Member for Wealden (Ms Ghani) pointed out, we currently export 8 million tonnes.
David T. C. Davies
I think I had better keep going because I have one minute left.
On defence, none of the steel being produced in Port Talbot is going into the defence industry. The defence industry uses steel from Sheffield Forgemasters, which is created by an electric arc furnace. There is an issue, historically, with the quality of the steel that comes out of an arc furnace, but all the experts have told me that it is getting better and better all the time. Tata expects an electric arc furnace to be able to supply about 90% of the products that it currently supplies through the blast furnace.
Exciting technology is being developed that uses hydrogen instead of coal or coke to reduce iron, but there is only one plant doing it, at Luleå in Sweden. It is completely experimental at the moment. There is a podcast on the BBC in which the chief executive being interviewed makes it clear that it is 25% more expensive than the steel produced in a convention blast furnace. So good luck trying to persuade Tata that it should get rid of producing steel in the usual fashion and replace it with something that is 25% more expensive. The reality is—
David T. C. Davies
I know my time is up, but the plan that Labour Members have waved around has not been put to Tata by the Labour party.
Sir Alan Campbell
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question accordingly put.