Tata Steel: Port Talbot

Debate between Lord Fox and Lord Anderson of Swansea

Tuesday 19th September 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for allowing us to debate this Statement. The noble Baroness from His Majesty’s loyal Opposition made some important points, and I associate myself with her remarks. I have some additional questions.

The agreement to fund the installation of new arc furnaces for steel making will have a positive effect on emissions, and that is good news. However, as the noble Baroness said, the package could mean as many as 3,000 job losses in the UK, and in one area of the UK. That is a terrible outcome.

Tata is reported as warning that there would be a

“transition period including potential deep restructuring”

at the plant. I am not sure that I understand what that means. Can the Minister please translate it for your Lordships’ House in real terms and real lives? Those jobs are being shed. What plans do the Government have to support those people and that local economy when the jobs go? What are the plans for retraining, for example? What are the realistic expectations for a concentration of new and different jobs in that area?

As we also heard, the electric arc furnaces deliver different grades and qualities of steel compared to what we get from a blast furnace site. What is the Government’s assessment as to how the new capacity in this country as a result of that will affect the profile of steel we need to import? To add to the point that the noble Baroness made, what is the assessment on resilience in this country as a result of this change?

The new coal mine in Whitehaven that was last year partially waved through by Michael Gove is also a factor here. West Cumbria Mining said that the coking coal that it would produce would be used for steel making in the UK and Europe. As the Minister knows, electric arcs do not use coke. Yesterday’s announcement removes at a stroke a large proportion of the domestic market for that mine, meaning that the mine will be almost solely for export only, which even further removes the legitimacy of that venture.

The Statement mentions that the British industry supercharger, aimed at assisting electricity prices and helping to make them competitive for energy-intensive industries, will be applied here. His Majesty’s Government responded to the consultation on this only on 5 September, so I suspect that this is its first outing. I really do not understand what it is, but it is cited in reports. Can the Minister please write to us outlining what it is and what it means? I saw the consultation on the British industry supercharger and the response to it, and it is cited as being applied here. How is it applied? What are the terms of that application and what does it mean in energy terms for this business? What other businesses are now in line to benefit from it—not least Scunthorpe, where the Chinese owners cited energy costs as the reason for their shutting down of its coking ovens?

I have a couple of other points. Tata expects to release land at Port Talbot for transfer or sale following the closure of the blast furnaces. This land presumably hosted high industrial activity for decades, so who will be responsible for the not inconsiderable costs of decontaminating and remediating this land before it becomes useful and valuable for anything else? Who will be stumping up these costs?

In conclusion, we have seen a number of government interventions, including the also Tata-owned Jaguar Land Rover, Nissan, BMW and perhaps, going forward, British Steel. It has been said by some that these are foreign investors who are masters at extracting subsidies. We understand that there is an international subsidy competition going on here, but how does the Minister respond to that charge? The Chancellor has said that he was not prepared to go toe to toe with the US and EU in the subsidy bidding war, but this looks like the Government reacting to things when they settle in their in-tray. A patchwork of deals is a poor substitute for a coherent industrial strategy. Where is His Majesty’s Government’s plan? What are the Government seeking to cause to happen, or should we expect further examples of sticking plaster activity?

[Lord Anderson of Swansea (Lab)]

My Lords—

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

Apologies, my Lord. I think I have the opportunity now to respond to the two opening speeches and then I will answer questions one at a time, if I have the order correct.

I greatly appreciate the debate we have had so far over what I believe is a pretty sensational recovery of an extremely difficult situation. Noble Lords will be aware that these conversations around Port Talbot have been going on for many years—some say even more than a decade. Certainly, from my own experience in the private sector, I regarded the situation with a great degree of pessimism, to be frank, and I am surprised that the tone of the debate is not more positive. That does not negate the realities of saving the situation and the transformation that will result in the locality.

I will go through the points raised by the noble Baroness, Lady Chapman. I am happy to answer them one by one because we have a strong and coherent policy response to each of the very important points raised. This is a very serious issue. We are not playing politics here; we are dealing with people’s lives and the important commitment of, I believe, all of us in this House to maintain steel production in Port Talbot and to guarantee a future for those communities. What we have ended up with is a powerful opportunity for this country to reshape its industrial base in terms of producing steel and reducing emissions. Noble Lords will be aware of the astonishing level of emissions that Port Talbot alone produces; I think it is 1% of our entire national output. If we are serious—and I think, collectively, we are—about reducing carbon emissions, to reduce one site that produces 1% of the emissions by 80%, which is what this outcome will produce, is significant for the collective challenge we are presented with.

I also find, if I may say so to noble Lords in this House and to the noble Baroness, Lady Chapman, and the noble Lord, Lord Fox, that there is an opportunity to shift. This is a business case—so it is subjective and perfectly reasonable to raise it—for virgin steel, whereby we import the ore, at great cost to emissions and national resilience, and recycle the nine or 10 million-plus tonnes of scrap. This presents an opportunity to us, to Port Talbot, to the people of Wales and to the whole country to realign our steelmaking industry—to rightly make the most of this scrap steel, which otherwise is being exported to Turkey or the US to be recycled. We were losing out on an enormous opportunity to be part of the circular economy.

Let us look at the prima facie business case for what the Government have done, to work in partnership with Tata. I put on record my personal thanks to the leadership of Tata for the extraordinarily good tone of the negotiations that I know it engaged in. From my first meeting with the chairman of Tata a year ago—although I was not involved in these specific negotiations —there was a very clear signal that Tata felt it was important that it reflected its family ownership in terms of commitment to the community of Port Talbot and the United Kingdom. I hope all noble Lords will join me in expressing thanks for the intense amount of good will demonstrated.

The Government have been extremely brave and forward-footed in bringing forward a proposal that will enable us to transform this site, reduce our emissions and, through the transformation to the Celtic freeport projects and the work we shall do—the noble Lord, Lord Fox, rightly raised this—in releasing land that is currently either potentially contaminated or has risk around it, create up to 16,000 new jobs. The noble Baroness, Lady Chapman, is right to call back some of the policy decisions taken in the 1980s, when there probably was not enough sensitivity paid to the transformation process, which affects people but ultimately makes us safer. That is why the Government have been extremely aware of and sensitive to this crucial point that affects people’s lives. Working with Tata—again, a private enterprise—we have created, or are in the process of establishing, a £100 million fund specifically to look after the communities and the people affected. I am aware that specific task forces are being set up to ensure that the process can be properly handled.

There is a reasonable case to be made by noble Lords, although I do necessarily agree with it, about the process by which this announcement was made, but I am sure all noble Lords who have been involved in sensitive and complex commercial negotiations will be aware that the specific terms cannot be entirely public. It was quite right that we got to a good decision, rather than one jeopardised by too much general community discussion. However, as the noble Baroness, Lady Chapman, will know well, as will her colleagues on the Front Bench, these discussions have been going on for a very long time. Indeed, the announcement of electric arc furnaces at Port Talbot really should have brought great relief to many people, because the worry in the air was that a far more jeopardous decision would be made.

This gives us an enormous opportunity to restructure our industry and reduce our emissions, which is a core commitment of all sides of this House and this Government. It gives us an opportunity to reinvent a huge site with great potential, creating tens of thousands of jobs. I have tried to take a much more positive view of what is a wonderful partnership between the Government, private enterprise and the community that will safeguard thousands of jobs, when the risk of losing those jobs was so significant.

I am aware that both the noble Baroness, Lady Chapman, and the noble Lord, Lord Fox, asked me specific questions, which I am sure other noble Lords would like answers to. If the noble Baroness will allow me, I will just cover those points I did not cover in my main speech. There is an issue over virgin steel. The noble Lord, Lord Fox, suggested that we guarantee always to have a capacity for virgin steel.