Steel: Port Talbot

Lord Johnson of Lainston Excerpts

Monday 15th April 2024 Lords Chamber

[Lord Roberts of Llandudno]

To ask His Majesty’s Government what assessment they have made of the social impact of the Port Talbot steel works blast furnace’s closure on the surrounding communities.

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

My Lords, the Government recognise the impact of transforming the Port Talbot steelworks. This is why we have established a transition board with membership from the local authority, the Welsh Government and Tata. The board has £100 million of funding—£80 million from the UK Government and £20 million from Tata—for projects to support the communities affected. The UK Government are contributing £500 million towards Tata’s £1.25 billion investment, to ensure a sustainable future for Welsh steel and to safeguard up to 5,000 jobs.

[Lord Roberts of Llandudno (LD)]

I thank the Minister for those remarks, but can I have an answer to one question? What assurance have we that we have sufficient electricity to work the steel plants at full capacity? Without that, we could have large-scale unemployment. South Wales has known enough of that in the past. Also, our communities could be affected. I remember how many of our local organisations lost out because of previous unemployment, being unable to take part again. There will be all sorts of consequences if we do not have full-scale working plants, and that depends on full-scale electricity supply.

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for that point and agree with him. This is why we have invested significantly in developing the Celtic Freeport as an anchor for floating offshore wind. It will be sufficient to provide a large portion of the power for these two new electric arc furnaces.

[Lord Woodley (Lab)]

My Lords, my union, Unite, last week voted to strike over Tata’s disastrous plan. The plan is an appalling act of industrial vandalism as far as we are concerned, with the loss of thousands of jobs devastating the local community and the local economy. As the Minister knows, Tata has other options, especially as Unite has secured a commitment from the Labour Party to invest £3 billion—not half a billion pounds—in UK steel. Will the Minister therefore urgently rethink the Government’s strategy and insist that Tata keeps at least one blast furnace going until the end of its life as a condition of investing any public money in this operation?

[Lord Johnson of Lainston (Con)]

I must respectfully disagree. This is a very sound plan to ensure that we have a future of steel-making not just in this country but in Wales. This plan will save 5,000 jobs. It will make the steel industry profitable and result in a crucial circular economy where we take our scrap metal and turn it into real steel rather than importing steel or ore from abroad. The Opposition are keen to copy the Conservative Party in so many of our policies, so I am surprised that in this instance they refuse to do so.

[Lord Wigley (PC)]

My Lords, does the Minister accept that there is an outstanding record of employee work in Port Talbot, and that there has not been a significant strike for 40 years there? In these circumstances, is it not outrageous that Tata should now threaten to take back the employees’ pension and redundancy packages to try to stop any industrial action? Is it not time that the Government got a grip on this to secure the future of this vital plant?

[Lord Johnson of Lainston (Con)]

I am grateful for that point. All of us in government are very sensitive to the people whose lives will be affected, which is why we are putting so much money into this process—£100 million in the transition board. I take this opportunity to thank Tata for its commitment to invest £1.25 billion in regenerating the area and renewing the British steel industry. I urge the unions to maintain their very strong record of good relationships, to not go on strike and to work with Tata, so that we can deliver what will be an incredible benefit for the area and the country.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I agree with all previous speakers that it would be an utter tragedy for steel-making to disappear from Port Talbot. However, does my noble friend agree that the only way of preserving a great British steel industry, and a green steel industry at that, is for the workers to work closely with Tata Steel, and for us to further green it using the offshore floating wind projects and with the potential of advanced modular reactors on site in Port Talbot?

[Lord Johnson of Lainston (Con)]

I thank my noble friend for that point, and she is absolutely right. If we look back six months or a year, there was very little future for steel-making in this country, and now we have one; we have a truly advanced manufacturing plan for this entire industry. This is something we should celebrate. It is a true industrial policy backed by government money, in partnership with the private sector, and supported by the extraordinary and brilliant talent of the people at Port Talbot.

[Lord Fox (LD)]

My Lords, the Minister will have noticed that the Prime Minister and the leader of the Opposition visited Barrow-in-Furness recently. The reason they went there, as he knows, is to see its submarine manufacturing process. Submarines need high-strength steel—the sort of steel that comes from blast furnaces and not from electric arc ones. Where will that steel come from? From which countries will we import it?

[Lord Johnson of Lainston (Con)]

It is very important that we have a strong defence basis; there is no question about that. The UK industry uses only about 1% of British steel. A quantity of the steel comes from Sheffield Forgemasters, which is owned by the Ministry of Defence. This plan will actually produce the right level of steel from recycled scrap, which is far more efficient for the environment, to enable us to provide for our defence needs.

[Lord Naseby (Con)]

My Lords, is my noble friend aware that the resources he has announced are enormously welcome? However, on the point the noble Lord, Lord Griffiths, made about electricity supply, there should be an absolute guarantee. His Majesty’s Government might consider using the site for one of our many nuclear reactors that we have talked about for the last 18 months. This would be a wonderful situation if that were included on this particular site.

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for that comment. The possibility of advanced modular reactors or small modular reactors operating in conjunction with offshore wind was just mentioned. The key is to build a sustainable green steel industry. That is why the Government have put so much money and thought behind this extraordinary and very powerful revolutionary plan.

[Baroness Blower (Lab)]

My Lords, demand for steel is expected to grow tenfold in the coming years. With proper investment, the UK could again be the steel-making capital of Europe. Will the Minister consider changing the procurement rules to ensure that UK public contracts use 100% UK steel, which by itself would create and maintain hundreds, possibly thousands, of jobs?

[Lord Johnson of Lainston (Con)]

I am always wary of insisting on local content when it comes to procurement. We want the best possible value and choice for our consumers, so I am not sure that is the answer. The point is to create a steel industry that produces steel that everyone in the world—not simply customers in the United Kingdom—wants to buy at the right price.

[Lord Bilimoria (CB)]

My Lords, we should be very grateful for the investment that Tata has made in the United Kingdom, starting with Tata Steel and then Jaguar Land Rover. These are huge, risky investments. With the big free trade agreement between the UK and India about to be signed, we should back Tata and appreciate what it has done.

[Lord Johnson of Lainston (Con)]

I am extremely grateful to the noble Lord for making that point. The first visit of my colleague Minister Mak as a Minister in my department was to Port Talbot to meet Tata’s managers. They made it very clear that they want to manage the redundancy process as closely as possible and by using a voluntary scheme. They have a huge amount of interest in this country and have partnered with us by creating a giga-factory, which kick-started our EV car industry in a major way. I echo the noble Lord when I thank Tata for all it is doing with the United Kingdom.

[Lord Leong (Lab)]

My Lords, the Government’s decision to give £500 million to Tata means that 2,800 people will lose their jobs. These are desperate times. People are worried and angry. The Government’s negligence in the 1980s devastated industrial communities, and the scars of entrenched inequality are still evident today. The Port Talbot transition board has up to £100 million to invest in skills and regeneration. Seven months on, can the Minister tell your Lordships’ House if any of this has been spent and if the strategy for doing so will be set out?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his comments. I point out that the Conservatives have not been in government continuously since the 1980s; there was a prolonged period when Labour was in power. However, the next meeting of the transition board, on 27 April, will discuss exactly that: how will that £100 million be spent on local regeneration? The Government have also invested just under £800 million in the four city deals and £150 million in the Swansea Bay area. We are also investing significant tens of millions, nearly £60 million, in the offshore wind industry in the area, so we are definitely putting our money where our mouth is.

[Lord West of Spithead (Lab)]

My Lords, I will return to the question from the noble Lord, Lord Fox. What percentage of British steel will be used in the Dreadnought class, the AUKUS class submarines, Type 26s, Type 32s and fleet solid support ships? We need sovereign capability and resilience, and I have a feeling that we will be relying on France and other countries for quite a lot of this specialist steel.

[Lord Johnson of Lainston (Con)]

The noble Lord knows far more about building warships than I ever will. All I can say, as I said earlier, is that 1% of defence requirement is provided by UK steel. We believe that this plan will allow us to produce the necessary steel for all our industries, particularly as technology develops. I say again that this is truly a first-class plan to regenerate the area and create a green steel industry for the UK. We should celebrate it while putting in a huge amount of attention to detail to ensure that we mitigate for affecting people’s lives, as much as possible.