Draft Reporting on Payment Practices and Performance (Amendment) Regulations 2024
Nusrat Ghani Excerpts(8 months, 3 weeks ago)
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The Minister for Industry and Economic Security (Ms Nusrat Ghani)
I beg to move,
That the Committee has considered the draft Reporting on Payment Practices and Performance (Amendment) Regulations 2024.
It is a pleasure to serve under your chairmanship, Mr Stringer.
The draft regulations were laid before the House on 10 January. The Government have declared 2024 to be the year of small businesses. Small and medium-sized enterprises are the backbone of our economy, making up to 99.9% of UK businesses, employing millions of people and enriching our everyday lives. So far this year, we have further improved our Help to Grow campaign and established a Small Business Council, and today we are here to extend the Reporting on Payment Practices and Performance Regulations 2017.
Tackling late payment is critical to the UK economy’s growth and productivity; 56 million hours are wasted each year by businesses chasing late payments, and small businesses are being let down. Late and long payments contribute to an estimated 50,000 UK business closures each year. The Reporting on Payment Practices and Performance Regulations and the Limited Liability Partnerships (Reporting on Payment Practices and Performance) Regulations 2017 were introduced to bring transparency to the payment practices of large businesses. The regulations require businesses above a certain size threshold to publish information twice yearly on their average payment times, how frequently they pay suppliers late, and their standard payment terms. Those regulations and the transparency they have brought mean that payment times across the UK have gone down. That is good news. We want to continue that trend by extending the requirement to report and to improve transparency through the introduction of new metrics.
Last year, my colleague the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who is the Minister for small business, launched a consultation seeking views from the public about the existing regulations and how we can improve them. Trade associations and businesses across the economy endorsed our proposals to extend the regulations and to introduce new reporting requirements. I will now briefly outline the draft statutory instrument.
The first objective of this draft instrument is to extend the 2017 regulations beyond the expiry date of 6 April this year until 6 April 2031. The extended 2017 regulations will be subject to a further statutory review in April 2029, before their new expiry date. In 2017, the regulations were to sunset without extension, which would remove payment time transparency entirely. Without these reporting requirements, we would deprive small businesses of crucial information that helps them to decide who to enter into business with, and arms them in renegotiation of payment terms that suit.
The second objective of the draft regulations is to require large companies and limited liability partnerships in the scope of the 2017 regulations to disclose additional information and report to new payment performance metrics. One of the new metrics is that businesses are to be asked to state the value of the invoices paid during the reporting period. Small businesses told us that they wanted even more clarity about how large businesses act. The other new metric is a requirement for businesses to report on the percentage of invoices that they dispute. Small businesses are concerned that the practice of raising frivolous disputes to avoid making payments on time is becoming more common, so we are taking action to address that.
The third objective of the draft regulations is to clarify the reporting requirements when supply chain finance is used by large businesses. This amendment will change reporting to make sure that the use of supply chain finance by businesses is more accurately reflected in the reporting data.
I thank the 137 respondents to last year’s consultation on the draft regulations. They included small and large businesses, as well as representatives of trade bodies, who provided us with the support that we need to extend and improve the reporting requirements. I hope that the Committee can see the benefits that the regulations will provide.
Nigel Mills (Amber Valley) (Con)
I support the idea of disclosure of invoices that are disputed. Businesses in Amber Valley commonly tell me about that pretty naughty trick to avoid paying—people just pay late because they dispute the bill. What will the data published show? Will it literally show, for example, that this person disputed 10% of their invoices? Will it show how many of the disputes were resolved with full payment being made, showing it was a scam? Or will it just show that straight percentage, which might be quite meaningless?
Ms Ghani
My hon. Friend makes a very good point, which reflects the strain that can be put on small businesses when payments are delayed, although the issue of scams may be a little bit outside the scope of the draft instrument. This is fundamentally about ensuring that we have the right framework in place, are encouraging good practice, and doing what we can to bring down payment times. Already, payment times have been brought down to, I believe, 35.6 days. This affirmative instrument will drive that good effect even further. I commend the draft regulations to the Committee.
Ms Ghani
I am grateful for the contributions made by colleagues across the Committee, and of course for their support. We are all incredibly keen to do everything we can to support small and medium-sized enterprises. Some very good questions have been raised.
Both I and my hon. Friend the Minister for small business consistently champion small businesses, and we believe that this legislation is critical in applying pressure and encouraging large businesses to improve their payment culture. Likewise, the draft regulations will arm small businesses with even more information than before about the behaviours of their customers, thereby equipping them to decide who they do business with and helping them to negotiate better terms with their customers.
I will quickly address some of the questions raised by the Opposition spokesperson, the hon. Member for Bethnal Green and Bow, and my hon. Friend the Member for Amber Valley. On giving small businesses more authority, we have established a Small Business Commissioner, and in our prompt payment and cash flow review we have committed to giving them increased powers to tackle businesses that persistently pay late; however, that will require primary legislation and depends on the legislative timetable. We have chosen to prioritise the extension of the existing reporting requirements to ensure that they do not expire, but we remain committed to fulfilling the actions to improve payment practices across the UK that we set out as part of our review.
Another point was raised about providing more authority, especially how we empower small businesses beyond the regulations. Of course, we have the prompt payment code, and this instrument will increase its effectiveness and provide more information for small businesses that will help them better manage their cash flow and negotiate payment terms; it also strengthens the powers of the Small Business Commissioner and equips them better to deal with businesses that pay late.
This instrument is really good news. The 2017 regulations would have sunsetted without this extension, and that is why we are here today. It is our aim to end the practice of late and long payments. We want to make the UK the best place in the world for both large and small businesses to operate. I commend the regulations to the Committee.
Question put and agreed to.
Financial Assistance to Industry
Nusrat Ghani Excerpts(8 months, 3 weeks ago)
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The Chair
It may help if I clarify from the Chair that what we are debating in this Committee—for up to 90 minutes, as Members will be aware—is the content of the motion in the name of Ms Ghani, which is listed on the Future Business section of the Order Paper. The House itself will be asked to pass the motion without debate after the text has been reported from this Committee later today.
The Minister for Industry and Economic Security (Ms Nusrat Ghani)
I beg to move,
That the Committee has considered the motion, That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, a grant or grants exceeding £30 million and up to a total of £75 million to BMW to support the production of electric Minis at Plant Oxford.
It is an honour and a privilege to do this under your chairmanship, Mr Pritchard.
The UK’s automotive sector is a global success story, contributing £14 billion to the UK economy annually, with some of the highest productivity levels among the major European automotive-producing nations. The sector currently employs 182,000 people in manufacturing, with an estimated 780,000 jobs supported by the sector in the wider economy. Major global companies such as Jaguar Land Rover, Nissan, Toyota and BMW have a significant manufacturing presence in the UK.
On 11 September 2023, BMW announced a £600 million investment in its Oxford plant for the production of two new electric Mini models, to start in 2026. BMW requested £75 million of funding from His Majesty’s Government via the exceptional regional growth fund to support that £600 million investment. It is that Government funding that we are debating now.
The exciting decision by BMW to invest in the future of the UK’s automotive sector is a prime example of how industry and Government are working together to meet new challenges. BMW’s investment in new tooling and machinery, and in re-training and upskilling of employees, will create and safeguard jobs in its Oxford and Swindon facilities and in the wider supply chain.
This support to BMW builds on our existing winning formula, which has delivered significant investment success. I am confident that BMW’s decision is among the first of many such investments that will drive the future of the sector in the UK. This Government will continue to work towards maintaining the competitive environment necessary to stimulate growth and productivity in the sector and ensure that the UK continues to be one of the most competitive locations in the world for automotive manufacturing. I commend the motion to the Committee.
Ms Ghani
I thank the hon. Lady for her contribution to this debate. As she says, we are discussing a large sum of money—although of course the larger sum is the £600 million overall investment, which is key to ensuring those supply chains continue and that we remain the most stellar place to come in and invest in the auto sector.
Beyond that £600 million, the largest sum is the settlement we received from the Treasury in the last Budget but one for the advanced manufacturing plan, under which £2 billion will be allocated to the automotive sector. We have a fantastic automotive sector here in the UK, and the commitment made by this particular company, like so many others, speaks of their huge confidence not only in their workers, but in the supply chain.
This investment comes on the back of some fantastic successes to date, including the Tata Group’s £4 billion investment in a new gigafactory, which will be one of the largest in Europe, Nissan and Envision delivering up to £2 billion of new investment in Sunderland, with two new electric models, and Ford’s £380 million investment to manufacture electric drive units. I am pleased that the hon. Lady has made clear that the Opposition are not objecting to, but welcoming, the support being provided.
I turn now to a couple of points the hon. Lady raised, starting with the Competition and Markets Authority’s report. Those reports are published and we respond to them. We submitted our assessment to the CMA, as is our legal obligation, and the CMA did not recommend any adjustment to the grant award. We have reviewed its recommendations thoroughly and updated our internal documentation accordingly. We are satisfied that the award meets the subsidy control principles, and that is supported by the evidence.
On the issue of support for the company, the grant was assessed and tested in accordance with the Government’s Green Book appraisal guidance, which provides a framework for ensuring that due diligence is done. That included a rigorous assessment of the minimum Government intervention needed to swing the investment decision in favour of the UK and scrutiny by the Industrial Development Advisory Board. Those initiatives and frameworks are independent, to ensure that decisions receive due diligence. On top of that, there was third party due diligence by KPMG.
This Committee is meeting today because we are providing substantial support of up to £75 million, but we must not forget that the overall package is £600 million. I confirm that the Government will continue to support the automotive sector by giving businesses the confidence to invest and innovate in the UK. This grant is just another example of that.
Question put and agreed to.
Business and Trade
Nusrat Ghani Excerpts(8 months, 3 weeks ago)
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Gerald Jones
SMEs in Merthyr Tydfil and Rhymney tell me of their frustrations around exporting goods and now the Government have scrapped the trade show programme, which was set up to support British businesses to attend events and win overseas orders. Will the Minister tell the House and the thousands of businesses that rely on that vital support when there will be a replacement?
Ms Ghani
UK exports are increasing. Using current prices, they are up by £21 billion compared with 2023.
[Official Report, 7 March 2024, Vol. 746, c. 943.]
Letter of correction from the Minister for Industry and Economic Security, the hon. Member for Wealden (Ms Ghani):
An error has been identified in my response to the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones). The reply should have been:
Feryal Clark
We are lucky that Enfield North has quite a lot of small and medium-sized businesses, but they are suffering because of the cost of spiralling bills and no Government support. Does the Minister think it is the lack of a Government industrial strategy or the lack of individual support for exporters that is most holding our businesses back?
Ms Ghani
That is an extraordinary statement, because in the hon. Lady’s constituency the greatest level of exports is from professional and business services, and those exports are increasing not only to the EU but to countries outside the EU.
[Official Report, 7 March 2024, Vol. 746, c. 944.]
Letter of correction from the Minister for Industry and Economic Security, the hon. Member for Wealden (Ms Ghani):
An error has been identified in my response to the hon. Member for Enfield North (Feryal Clark). The reply should have been:
Gareth Thomas (Harrow West) (Lab/Co-op)
The Office for Budget Responsibility said yesterday that exports, including from SMEs, will fall even more than expected this year; growth in exports will be less than 1% in each of the next three years; and other countries will not be hit the same way. There have been cuts in the funding to help businesses start exporting and there has been no deal with the United States, no Diwali deal with India, and no veterinary agreement with the EU to cut red tape and slash costs. What does the Minister think is the best explanation for the Government’s dismal performance on exports so far?
Ms Ghani
…When it comes to exports, we are exporting not only into the EU but outside the EU. As I said earlier, professional and business services are increasing outside the EU by 19%.
[Official Report, 7 March 2024, Vol. 746, c. 944.]
Letter of correction from the Minister for Industry and Economic Security, the hon. Member for Wealden (Ms Ghani):
An error has been identified in my response to the hon. Member for Harrow West (Gareth Thomas). The reply should have been:
Ukraine War: Trade and Business Support
Nusrat Ghani Excerpts(9 months, 2 weeks ago)
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The Minister for Industry and Economic Security (Ms Nusrat Ghani)
This week marks the two-year anniversary of Russia’s unprovoked and illegal full-scale invasion of Ukraine. The UK and its allies stand united with Ukraine in condemning the Russian Government’s reprehensible actions, which are an egregious violation of international law and the UN charter.
Daily, Ukrainians continue to defend themselves against Russian aggression, while also working to emerge from it as a strong, sovereign and free country.
Following the outbreak of the full-scale war, the UK has now wholly or partially sanctioned over 96% —£20 billion—of the goods traded with Russia. This includes every item Russia has been found using on the battlefield to date. We will continue to maintain pressure on the Russian regime to secure peace.
The UK will continue to support Ukraine to defend its sovereign territory through the training of its soldiers and the provision of military aid, but we are also laying the foundations for a private sector-led economic recovery with UK businesses at the forefront of reconstruction efforts.
The Government has enabled UK and Ukrainian companies to trade more easily.
Last year, we signed Ukraine’s first digital trade agreement, which supports Ukraine’s transition to a digitally-led post-conflict economy. To help unlock necessary private capital at scale to aid economic recovery, and as part of the UK’s commitment as hosts of the Ukraine recovery conference 2023, we spearheaded development of the London framework for war risk insurance and donated £20 million to the Multilateral Investment Guarantee Agency’s Ukraine trust fund, which supports trade finance and considers war-risk insurance for select real-sector projects.
Earlier this month, we put in place a world-leading extended tariff liberalisation for an additional five years on almost all goods, with eggs and poultry to be extended for two years, continuing to provide much needed economic support to Ukraine and its businesses.
We are connecting UK businesses with their Ukrainian counterparts to unlock new innovations and shared expertise.
The UK-Ukraine business bridge offers a platform through which UK businesses can connect with partners across the global private sector to engage with Ukraine’s repair, reconstruction and recovery opportunities. This includes supporting businesses to attend international conferences and events such as ReBuild Ukraine, providing a platform to champion and promote UK private sector expertise. The UK-Ukraine TechBridge, formally launched last month, will nurture tech talent and promote skills development in a priority sector for both our nations.
The Government are advocating for the interests of UK businesses.
The UK-Ukraine infrastructure taskforce, co-chaired with the Government of Ukraine, offers a strategic dialogue to agree where and how UK companies can best support critical infrastructure projects.
Ukraine must be able to defend itself and to support this we are deepening our defence-industrial relationship, using commercial and strategic partnerships between UK and Ukrainian companies to support the recovery of Ukraine’s industrial base.
As the Prime Minister made clear in his most recent visit to Ukraine, the United Kingdom will continue to do everything in its power to support Ukraine’s fight against this brutal invasion, for as long as is needed. A more prosperous Ukraine is one that can best safeguard its own citizens. And a more secure Ukraine supports wider UK and global security.
[HCWS282]
Steel Industry: Wales
Nusrat Ghani Excerpts(9 months, 2 weeks ago)
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The Minister for Industry and Economic Security (Ms Nusrat Ghani)
It is an absolute pleasure, Sir Gary, to serve under your chairmanship.
I congratulate the hon. Member for Llanelli (Dame Nia Griffith) on securing this important debate and on speaking so powerfully on behalf of her constituents, many of whom, as she said, are directly affected by the proposed closure of the blast furnaces at Port Talbot. It was lovely to have on the record the importance of the history of steelmaking, especially the creation of tin cans and canned beer, which is something new to me that I will try to take forward somehow.
All hon. Members here in Westminster Hall today have recognised how vital it is that we have a competitive and thriving steel industry, not just for jobs at the Port Talbot and Trostre plants but because of how important steel is to the broader Welsh economy and its future. I thank hon. Members for their valuable contributions to this debate. It is unfortunate that the hon. Member for Croydon Central (Sarah Jones), the Opposition Front-Bench spokesperson, had to make it so political, but I will try to address as many of the points that have been raised as I can in my reply.
First, however, let me start by expressing my heartfelt sympathy for the hardworking employees across Wales and the rest of the United Kingdom who are affected by Tata Steel’s announcement. Undoubtedly, these are challenging and turbulent times for everyone involved, not only the workers but their families and the communities in which they live. Steel has played a pivotal role in modern Welsh history and Welsh people take immense pride in their industry and workforce. This Government are working hard to secure a long-term sustainable future for Welsh steelmaking and to grow the legacy of this cornerstone industry.
The concerns expressed throughout this debate are indeed our concerns; they are shared by hon. Members across the House. They have been expressed by the Government in our negotiations with Tata. We are indeed holding Tata to account. The transition board has been mentioned and we are ensuring that the transition is managed properly, so that every employee receives the support they deserve.
That is why the Government are making a significant investment of £80 million towards the dedicated transition board; Tata is also contributing £20 million. The board includes representatives from this House, the Welsh Government, the local council and other key areas to ensure that the local community is well represented and supported through this period of change.
In addition, Tata Steel has committed a further £130 million towards a comprehensive support package to assist impacted employees. This Government are indeed working hard to ensure that help and support are there for those who need it throughout this disruptive period.
I will be present at those transition board meetings, as will the unions, which I meet regularly. In fact, I believe I met the unions just this week. I forget exactly when, because my weeks blur into one, but regular meetings with the unions are taking place. The point about ensuring that we are involved in constructive dialogue stands, is noted and is on the record. At the same time, however, we must not forget the context that led Tata to make this decision, because the alternative, regardless of the politics being played out, could have led to no steelmaking at Port Talbot.
Dame Nia Griffith
Does the Minister recognise that many of the investment decisions have been taken because over the past few years the difference between energy prices here in the UK and in other countries across Europe, such as France and Germany, have had a significant impact?
Ms Ghani
The hon. Member always makes very thoughtful interventions. It is true that energy prices have spiked, partly because of what is happening in Ukraine, and that is most definitely a challenge, but the support that we are providing Tata is the largest grant that has ever been made available to the steel industry. That was not done under the Labour Government, but under this Conservative Government providing the widest and deepest level of support to the steel sector.
Dame Nia Griffith
Does the Minister acknowledge that the issue of energy prices pre-dates the events that happened in Ukraine two years ago?
Ms Ghani
Energy prices are a component. There is also the challenge that customers and users are seeking cleaner steel and the challenge of managing blast furnaces that are coming to the end of their life. It is a complicated scenario, but, because of the support that we have provided and the transition board that is focused on supporting the staff, there will continue to be steelmaking in Port Talbot.
Holly Mumby-Croft
Can I be clear in my understanding? In the negotiations with Tata—my hon. Friend has talked about the £500 million support package—did the Government get a deal, an understanding, some certainty over when the blast furnaces would be switched off as part of that deal?
Ms Ghani
My hon. Friend is far more knowledgeable on steel plants and steelmaking than I could ever be. The discussions continue. There is a consultation taking place. I was with the unions this week. They will continue to push their plans, which Tata has made clear are neither credible nor economically viable. But within those plans there is a proposal that electric arc furnaces will be upstream, not years away but in a couple of years’ time, which also gives assurances to the supply chains. My hon. Friend knows that the negotiations continue with British Steel and she will probably want to intervene on me later. A huge amount of support was provided by Tata and the transition board, which makes this a far easier programme of work to manage.
Tata has seen a decade of financial losses, with the Port Talbot plant reportedly losing £1.5 million every day. As I mentioned earlier, those challenges stem from complex international dynamics. China’s long-standing practice of flooding the global steel market with subsidised products has been a significant factor. Despite our efforts to mitigate the impact of cheap imports through domestic measures and challenging unfair practices internationally, we cannot ignore the harsh economic reality.
Ms Ghani
I will in a moment. Private companies in the UK steel industry are facing immense difficulties in turning a profit. In fact, without the opportunity to transition to a modem electric arc furnace, the existence of the Port Talbot plant would have been in jeopardy. I cannot stress that enough.
Sarah Jones
On the point that the Minister makes about China, we know that the cheapest steel from China has been a factor, but major importers to the UK are western European nations: the Netherlands, Italy, Spain and Germany. We are not competing with them, either. There is a fundamental problem in the way that we run this economy, which has meant that our industries cannot be competitive when others in the European Union can be.
Jessica Morden
On the issue of competitiveness, we pay 50% more for our energy costs in this country than they do in Germany. The German Government are putting around £2.6 billion into helping the industry transition. That has a major effect.
Ms Ghani
I will go on to answer that point. We have provided support for the energy costs of high-energy industries, and the supercharger initiative is coming down the line, but I will reflect on that point shortly.
The reality is that the Port Talbot plant would have been in jeopardy. Its closure would have had devastating consequences for the town and would have posed a serious threat to the UK as a whole, endangering the 8,000 jobs provided by Tata Steel across the country and numerous small businesses in the steel making supply chain.
Ms Ghani
I will in a moment.
I am on record as having had a regular, constructive relationship, so it disappoints me when Members come to this place and do not accept the reality of what was taking place in Port Talbot. If we had not provided support—the biggest support we have provided to the steel sector—there would have been a devastating effect on the entire 8,000 jobs.
Holly Mumby-Croft
I asked the shadow Minister whether all the Tata Steel jobs in the UK would have been at risk if a deal was not done at Port Talbot—presumably, that is where the “5,000 jobs saved” figure comes from. Will the Minister be very clear that her understanding is not the same as the shadow Minister’s understanding? I think her understanding is that all 8,000 jobs would have gone.
Ms Ghani
I thank my hon. Friend for putting that on the record. I am not sure what evidence the hon. Member for Croydon Central has that the plant would not have been under threat. When Tata circulated information prior to our debates or made announcements, it said that there was an absolute threat to Port Talbot and the company. The reality is that if we did not provide that support, there was a risk of losing all 8,000 jobs.
Stephen Kinnock
Surely when the Government entered into a negotiation with Tata Steel, which is highly experienced in the business of negotiation, they considered the possibility that a gun was being held to their head, and that Tata Steel would of course make threats about total closure because that would strengthen their negotiating position. Were the Government completely naive or just incompetent when they went into a poker game dismissing the possibility that they might be getting bluffed?
Ms Ghani
The hon. Gentleman knows better than most that these conversations and negotiations have been going on for years. The Labour party had an opportunity to invest in the blast furnaces when it was in government, and it did not do so. He also knows that the blast furnaces are coming to the end of their life, so a decision would have to be made at some time. Tata could have decided to exit completely, which would have resulted in a loss of the 8,000 jobs and certainty in the supply chain. The hon. Gentleman knows that, because he had I have been at meetings with the unions and at the transition board. I know it is very difficult when there are potential job losses in one’s constituency, but the reality is that the model was not working.
Before I give way to the hon. Member for Croydon Central, let me say that Opposition Members constantly want harder, greener net-zero policies, and this is what happens when we flow those through. Customers—end users—want cleaner, greener steel that is made in electric arc furnaces, and this is the outcome of that demand. The reality is that, without the support, there would have been a high risk of Port Talbot and Tata no longer producing steel in the constituency of the hon. Member for Aberavon (Stephen Kinnock).
Sarah Jones
The Minister is being very generous in giving way. I want to return to the point about whether it was this deal or the end of everything. If the Government had paid attention to their own report in 2017, which said, “Here are the problems with the steel industry: the supply chain, skills, R&D and transition,” and responded with a steel strategy, Tata would not hold all the cards and would not be able to say, rightly or wrongly, “It’s all or nothing.” We would not be in this situation. But the unions are supporting a reasonable deal that has a calmer transition and would not lead to job losses. Does the Minister think there is merit in that union plan?
Ms Ghani
I will go on to reference that, but not all unions subscribe to the plan, as the hon. Member knows. It was put forward by a collective, but not by all of them. Tata has been clear that keeping open a blast furnace for a very narrow period of time while opening up electric arc furnaces, which will provide the certainty that we need so that we can use scrap steel in the UK, is neither credible nor financially viable. Keeping a blast furnace open also creates difficulties around security and health and safety.
The negotiations continue, and a consultation is taking place. I was asked about what I am doing to ensure that Tata is observing the parameters of that consultation. The transition board is in place, and our focus is on ensuring that the consultation is as wide and deep as it can be, and that the transition board can do the job that it was set up to do, with huge sums of money.
I have already mentioned, and I cannot reiterate enough, the threat that the Port Talbot plant was under. We recognise the vital importance of the steel industry to the community’s heritage and identity. As I have mentioned, the Government have committed £500 million —the biggest sum ever invested in the steel sector—as part of a total investment of £1.25 billion to ensure the future sustainability of Port Talbot steel. That is what we have been able to do, and we should reflect on that. The investment is a huge step towards fortifying UK steel. Sustaining the blast furnaces would entail significant additional losses for the company and compound its current issues. Moreover, as the hon. Member for Llanelli knows, the UK’s blast furnaces, such as those in Port Talbot, are approaching the end of their operational lifespan.
Stephen Kinnock
The Minister keeps saying that the blast furnaces—plural—are reaching the end of their lifespan. Yes, everybody agrees that blast furnace No. 5 is very close to the end of its lifespan; that part of the heavy end, with the coke ovens, should shut down, because the investment does not wash its face. The lifespan of blast furnace No. 4 is until 2032. It does not require that additional investment. I would be grateful if the Minister would stop saying that both blast furnaces are reaching the end of their lifespan.
Ms Ghani
The hon. Gentleman has been at the same meetings as I have, so he knows that the blast furnaces cannot be going if we are to transition in a period of time to having the electric arc furnaces up and running. However, I know that conversations are taking place with the unions, because I spoke to them this week. They are continuing to put their case forward, which is why a consultation is taking place. The hon. Member also knows that we need to give those conversations time to be followed through.
Stephen Kinnock
On a point of information, the multi-union plan is based on a 1.5 million tonne electric arc furnace. Nobody is denying that electric arc furnaces should not be in the mix. We fully support an EAF. We need a 1.5 million tonne EAF, running alongside blast furnace No. 4, not least because that blast furnace could then produce the iron ore-based metallics that are a vital part of sweetening the mix for the electric arc furnace. That would allow us to continue to deliver the current customer portfolio and be ready to embrace the opportunities of the future. I urge the Minister to recognise that we want an electric arc furnace; it is just that a 3 million tonne electric arc furnace is madness.
Ms Ghani
Three million tonne electric arc furnaces do exist in other parts of the world; it is not a unique capacity of arc furnace. I spoke to the unions on Monday, so I know that they are continuing to put their plans forward. Let us see what happens in the next few weeks.
I think everyone recognises that a transition has to take place. We have talked not only about supply chain resilience, but about how we can use scrap steel in electric arc furnaces as technology moves forward. Tata has confirmed that it will observe 90% of its supply chain contracts.
Holly Mumby-Croft
Has the Minister’s Department carried out any work on the quality of scrap in the UK? I keep hearing about tonnages of scrap, but I do not think that anyone knows—or perhaps they do—what that scrap is made up of or whether it is suitable to go in electric arc furnaces.
Ms Ghani
My hon. Friend raises an important point. UK Steel and a number of other umbrella organisations have done a huge amount of work in this space, including with universities in Wales, and they have huge confidence that we could retain most of the 11 million tonnes of scrap steel that circulates in our economy and the 8.2 million tonnes that is exported overseas for use in the electric arc furnaces. Technology will move forward as well—it never stands still—but Tata is confident that it can meet 90% of the contracts it has in place at the moment.
Sir Gary Streeter (in the Chair)
May I make an observation? It is helpful if the Minister can respond to one intervention before people bounce up and down for the next one. Let us take it calmly.
Sarah Jones
It has been a while since I bounced up and down, Chair; I am too old for that. Is the Minister exploring incentives to keep scrap steel in this country? Because at the moment we export it all. Is she looking at VAT relief, tariffs or restrictions to help that process?
Ms Ghani
I will make some progress before I take any further interventions. If the hon. Lady paid more attention to the business model, she would know that we cannot use more scrap steel in the UK economy because we do not have the capacity. But we will with the electric arc furnaces, which will be the dynamic change that is definitely needed.
Furthermore, by reducing our reliance on raw materials such as iron ore and coking coal, electric arc furnace technology offers a more sustainable alternative. Unlike blast furnaces, electric arc furnaces use scrap materials that are readily available—as I said, we have around 11 million tonnes circulating—from abundant domestic sources in the UK. In fact, the UK ranks among the top exporters of steel scrap globally, second only to the United States. Leveraging our ample supply of steel scrap for electric arc furnace production enables us to create new steel products locally, supporting British and international manufacturers alike. Every tonne of steel scrap that is sourced domestically diminishes our dependence on raw material imports from overseas countries, none of them near neighbours.
Wider support for the steel industry was raised in the debate. More widely, we are backing UK-made steel and, crucially, we are backing it in the right way, investing hundreds of millions of pounds to help the industry to thrive in increasingly challenging global markets. We are launching initiatives such as the British industry supercharger, which reduces electricity costs for the steel industry and other energy-intensive sectors, bringing them closer in line with the charges of other major economies. That is complemented by the £730 million in energy cost relief given to the steel sector since 2013. We have given specific support through our energy bill relief scheme and energy bills discount scheme.
We are, then, ensuring the resilience and prosperity of the UK steel industry in the face of increasingly competitive global markets. This work is preparing UK steelmaking for the coming years, but it is not the final word in future-proofing the industry. The SUSTAIN future manufacturing research hub, which is led by Swansea University, is the largest fundamental research activity centre working right now to decarbonise and improve the efficiency of steelmaking in the UK. I believe it is also looking at the quality of scrap steel and new technologies to ensure that we can make even more products using steel in the UK.
Other points were raised by the hon. Member for Cynon Valley (Beth Winter), who serves on the Welsh Affairs Committee. I will go through the transcript from that Committee; I am across most of the issues raised. She asked about an unlimited budget; I am not sure that having an unlimited budget is a good use of taxpayers’ money, nor does it answer the question about the demands of customers looking for cleaner green steel.
A question was asked about absorbing further technologies. We are looking at electric arc furnaces at the moment, but that product is just the first step. As other technologies become commercial, they could be considered in future. I thought the question about our taking a stake in the company was curious because that is not something that we do. Regarding the condition on the grant, the consultation is taking place, and agreements are still being finalised and will include appropriate conditions on the grant. That is why the transition board is vital to that conversation. The grant will be paid in arrears against set milestones for the build of the electric arc furnace.
Beth Winter
I am not sure you have answered all the specific questions from the Opposition. You made a comment earlier about the consultation process that left me slightly confused. You met the unions on Monday and said you want to wait to see what happens in the next few weeks. Is this a done deal—or does the consultation process actually have some teeth in terms of potential outcomes? The unions are pushing the multi-union deal. You met them this week and just intimated that we should wait to see what happens in the next few weeks so—this is my understanding of a consultation process—are you still open to alternative options? Tata may not be, but the UK Government could be, just as the Labour party has proposed if and when we get into government.
Sir Gary Streeter (in the Chair)
Order. That was another long intervention. I remind the hon. Lady that any reference to “you” is a reference to me. I am certainly open to further negotiations, but that does not really matter.
Ms Ghani
This is a decision for Tata to take. It has made it clear that the offers put forward by the unions are not really credible, because it does not think they enable a transition without a huge amount of losses, so they are not financially credible. However, the consultation is taking place. It is not that I just met the unions this week: I meet them regularly and obviously I attend the transition board as well. The consultation is to ensure that Tata can make the right decision, and one would hope that it does that in consultation with the unions and with their overall support, accepting that it is incredibly challenging when we are talking about any level of job losses.
Holly Mumby-Croft
The Minister says it is a decision for Tata to make, which I absolutely understand, but as the UK Government are putting in half a billion pounds of funding and investment support, do we not have some say in that decision as well?
Ms Ghani
We cannot force Tata. We put the support package in place when Tata said that it was struggling and making losses of over £1 million a day, but we cannot insist that Tata continues. We have provided an offer of support, and we want to ensure that the least amount of people are impacted, that the transition board provides support for those impacted, that supply chains continue to be resilient, and that any decision Tata takes to transition is one that meets the framework it puts forward. For example, if Tata plans to continue with its plan for a 3 million tonne capacity electric arc furnace by 2027, we need to ensure that all the milestones are met.
I want to touch on the issue of procurement, which we really have to address. First, less than 1% of UK steel is needed by the defence industry, and it has nothing to do with Port Talbot. This Government have implemented the procurement pipeline, which I was committed to doing when I became the steel Minister, to encourage our steel producers to access more contracts. In the last reporting year, there was an increase in the value of UK-sourced steel, from £97 million to £365 million. It is important to put that on the record, because Ministers say that they will try to increase UK procurement and we have most definitely done so.
I am worried that we are going to run out of time. The reality is that without our support there would have been a serious conversation fundamentally about the loss of 8,000 jobs at Port Talbot. I appreciate that the Opposition cannot understand the realities of business, but under Labour employment in the UK steel industry was cut back by more than half, or 40,000 jobs. Obviously, the Opposition do not appreciate the number of jobs that we hope to have saved.
We understand that Tata’s announcement will come as a heavy blow to the people of Port Talbot, but I recognise that everyone present accepts that we cannot stop the clocks. Technology has moved on. There has to be a transition, and this is a transition in which the majority of jobs will be supported with a substantial sum of money, and of course by the transition board as well. The transition we are talking about is one that enables us to adopt new technologies, with even more allowed to be adopted further down the line. It prevents the further loss of profit and prevents a dependence on imports going forward because we can use scrap steel within our own economy.
I assure the hon. Member for Llanelli that we are committed to working with Members throughout the House to realise a brighter future for our steel-making industry. If the options proposed by Opposition Members—whether it is the £28 billion or the £3 billion—were seen as serious and credible, I am sure that Tata would have taken heed of those support packages. Obviously it thought either that they were not credible or that they would not enable it to continue to do what it wanted—to transition to electric arc furnaces—and that they could have meant even more job losses in Wales and across the UK.
Stephen Kinnock
The Minister is being generous in giving way. She said that the Tata plan would enable us to be open to new technologies. In fact, the opposite is the case because the 3 million tonne electric arc furnace negates the possibility of direct-reduced iron capability, of an open slag bath furnace and of a plate mill; the plan is closing down routes to other technologies, not opening them up.
Ms Ghani
We can look at the reality of a DRI plant at Port Talbot, as well as examples across the rest of the world. A DRI plant requires even fewer people. I was looking at a plant in Texas that ended up having a 2 million tonne DRI plant, and it only requires 190 jobs. It is possible to transition; the opportunity to transition is there. There is often talk of hydrogen. That technology has not been tested to the capacity needed for this particular plant or for the levels of steelmaking that we need in the UK.
Let us deal with the matter in real terms. These conversations have been going on for years. I have spoken to the hon. Member for Aberavon, who represents Port Talbot, and I know that we could have continued the conversations and had a cliff edge, with Tata leaving; or we could have come up with the biggest settlement for steel and a consultation to make sure that the least amount of jobs are impacted—and that is going to provide certainty and security for steelmaking at Port Talbot for years to come.
I fear I have run out of time.
Sir Gary Streeter (in the Chair)
Dame Nia Griffith will have the final word.
Protecting Steel in the UK
Nusrat Ghani Excerpts(10 months, 2 weeks ago)
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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—
Critical Imports and Supply Chains Strategy
Nusrat Ghani Excerpts(10 months, 3 weeks ago)
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The Minister for Industry and Economic Security (Ms Nusrat Ghani)
Today the Department for Business and Trade has published the UK’s first “Critical imports and supply chains strategy”. This meets the commitment made in the integrated review refresh in March 2023. The strategy can be accessed via the following link:
https://www.gov.uk/government/publications/uk-critical-imports-and-supply-chains-strategy
The commitment made in the integrated review refresh reflects the importance of ensuring the resilience of our critical supply chains for the UK’s economic prosperity, national security and essential services. These range from the semiconductors essential to modern electronics to the medicines that are used on a daily basis within the NHS. As the global economy changes, the UK is responding by using all its domestic, diplomatic, and trade levers to secure access to the most critical goods. This will safeguard and grow our economy both now and in the future. We are committed to ensuring that the UK remains a reliable and supportive place to do business, where firms can import the goods they need efficiently.
With the critical imports and supply chain strategy, this is the first time the Government have brought together existing work on supply chains, set out our priorities and outlined actions to enhance resilience further. The strategy aims to inform and reassure citizens and businesses in the UK that the Government are prioritising this work, while also informing international partners about the UK’s approach to critical imports and supply chain resilience. It highlights the benefits of free trade and the crucial role of businesses in managing their supply chains. The strategy builds on existing announcements made by the Government, such as the “Advanced Manufacturing Plan” and the “National Semiconductor Strategy”, to provide a cross-cutting approach to building resilience. The strategy has been informed by extensive engagement with businesses importing critical goods into the UK and operating in global supply chains.
The strategy sets out five priorities that will shape the Government’s ongoing work:
Making the UK Government a centre of excellence for supply chain analysis and risk assessment through building on our existing expertise to better understand the goods and the broader supply chain systems, including transport routes and infrastructure, that the UK needs now and in the future;
Removing critical import barriers to support the UK’s business-friendly environment, including through new work with business to identify and where appropriate address barriers in order to support the resilience of our critical supply chains;
Building the UK’s response to global supply chain shocks by continuing to refine and expand our capability to forecast and respond to external shocks to global supply chains, from extreme weather events to geopolitical incidents. This will include increasing the information available to businesses;
Ensuring the UK can adapt to long-term trends by developing the insights, policies and international partnerships needed to address long-term trends impacting supply chain resilience, including climate change, evolving geo-political dynamics and the growth of new industries and technologies; and
Expanding collaboration between Government, business and academia, including through the establishment of a new critical imports council.
We will publish a progress update in due course, setting out the steps that have been taken to deliver the strategy, and plans for further work.
[HCWS191]
UK Export Finance Support for Ukraine
Nusrat Ghani Excerpts(10 months, 3 weeks ago)
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The Minister for Industry and Economic Security (Ms Nusrat Ghani)
Nearly two years since Russia brutally invaded the sovereign territory of Ukraine, the UK continues to stand resolutely with the Ukrainian people against Russian aggression.
The UK is providing significant economic, humanitarian and defensive assistance to Ukraine, including through export credits and insurance from UK Export Finance (UKEF). As part of the UK’s support for the repair and defence of Ukraine’s critical infrastructure, UKEF has already agreed to provide financing for the reconstruction of six bridges in Kyiv and support for Urenco’s contract to supply fuel to Ukraine’s largest power producer, Energoatom, and provided payment risk insurance for UK exporters trading with Ukraine.
Government Ministers have decided it remains in the national interest for UKEF to stay on cover for Ukraine. This means that UKEF’s £3.5 billion of financial capacity for UK exporters and their buyers in Ukraine is still available.
The heightened risk of supporting Ukraine during a war falls outside UKEF’s minimum risk standards as set by HM Treasury and is not a typical activity undertaken by UKEF. Therefore, ministers must instruct UKEF to operate.
Depending on the volume and value of the transactions supported by UKEF, the Government could incur up to £3.5 billion of contingent liabilities over time. UKEF will assess transactions on a case-by-case basis in accordance with normal policy and practice, while also obtaining written consent from Ministers and HMT before providing support for each transaction.
[HCWS185]
Cheese Market Access: Canada
Nusrat Ghani Excerpts(11 months ago)
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The Minister for Industry and Economic Security (Ms Nusrat Ghani)
Under the UK-Canada trade continuity agreement, the UK agreed a time-limited market access arrangement on cheese, guaranteeing ongoing access to the EU portion of Canada’s WTO cheese tariff rate quota for three years. UK access to the EU portion of Canada’s WTO cheese TRQ for tariff-free access expired on 31 December. Going forward, imports will need to take place under the reserve for non-EU sources.
Over the last six months, UK negotiators have made multiple efforts to retain our access to Canada’s dairy market. We were unable to reach an agreement due to Canada’s insistence on UK concessions that would not have been in the interest of our agricultural sector.
The Departments for Environment, Food and Rural Affairs and Business and Trade have been engaging for several months with stakeholders that will be impacted by these arrangements, at both senior official and ministerial level. We will continue this engagement to ensure a smooth transition for business to the rest-of-world pool. Further information for businesses is available on www.gov.uk.
While this development is disappointing, it comes following an increase in the UK’s total diary exports. According to UK overseas trade in goods statistics: October 2023, UK dairy exports grew by 13.7% between 2018 and 2022, from £1.8 billion to £2 billion in current prices. In addition, other agricultural exports such as beef and pork increased significantly over the same period, by 25.1% and 15.3% respectively, in current prices.
Working jointly with the Department for Environment, Food and Rural Affairs, officials are also supporting dairy producers through a range of avenues, such as through the Dairy Export Programme, which is the result of the £1 million committed by the Prime Minister to boost UK dairy exports, especially among SMEs. The programme was agreed following consultations with UK dairy businesses and industry bodies. It is UK-wide and designed to unlock new opportunities for our dairy exports in growth markets around the world.
The Government are determined that any agreement must work for consumers, producers, investors, and businesses alike. We remain committed to upholding our high environmental, labour, public health, food safety and animal welfare standards.
[HCWS166]
Trade Sanctions Implementation Update
Nusrat Ghani Excerpts(11 months, 4 weeks ago)
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The Minister for Industry and Economic Security (Ms Nusrat Ghani)
The Government are announcing today that they will create a new unit—the Office of Trade Sanctions Implementation—within the Department for Business and Trade to improve the implementation and enforcement of trade sanctions.
Over the last year, the Government have implemented sanctions against Russia unprecedented in scale and scope. In total, the UK has sanctioned over £20 billion-worth of its 2021 trade in goods with Russia. We have also banned the provision of a range of professional and business services that are crucial to Russia’s economy, including accounting and audit, advertising and public relations, architectural services, engineering services, management and IT consulting, and legal advisory services. The UK is a world leader in services trade, and Russia has high levels of dependence on skills and expertise from G7 countries. Our services sanctions will degrade Russia’s ability to maintain, upgrade and modernise its economy over the medium term, thereby reducing the revenue available to finance its war machine.
The new Office of Trade Sanctions Implementation will play a pivotal role in ensuring that these sanctions, but also those across 23 other UK sanctions regimes such as Afghanistan, Belarus, North Korea, Iran, Lebanon and Syria, are effectively implemented and enforced.
The new unit will support businesses to comply with UK trade sanctions as well as investigate potential breaches. The Office of Trade Sanctions Implementation will have a range of civil enforcement tools, including the ability to levy monetary penalties. The Government will make regulations to provide the framework for these monetary penalties. Where the Office of Trade Sanctions Implementation investigates and potentially finds more serious breaches, it will refer these to His Majesty’s Revenue and Customs or other agencies for criminal enforcement.
The Office of Trade Sanctions Implementation will be an important addition to the Government’s sanctions enforcement capability. It will work closely with His Majesty’s Revenue and Customs, which will continue to enforce trade sanctions where goods—and ancillary services—cross the border in line with its role as the UK’s customs authority; with the Office of Financial Sanctions Implementation in His Majesty’s Treasury, which is responsible for financial sanctions as well as the oil price cap; with the Department for Transport, which leads on transport sanctions, and with the Home Office, which is responsible for immigration sanctions and for modern slavery.
The creation of the Office of Trade Sanctions Implementation is a key part of how Government are delivering the economic deterrence initiative announced as part of the refresh of the Government’s integrated review, published in March this year. This funding is from the conflict, stability and security fund, and administered by the Foreign, Commonwealth and Development Office, which is responsible for overall foreign policy on the use of sanctions. It will strengthen our tools to respond to and deter hostile acts by current and future aggressors, including by building expertise across Government to design, implement and enforce sanctions for maximum impact.
Further detail on when the Office of Trade Sanctions Implementation will be operational will be shared with Parliament at a later date.
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