18:59 - The House divided: - Ayes: 223 / Noes: 0 - Question accordingly agreed to.
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.
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—
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.