Protecting Steel in the UK

David T C Davies Excerpts

Tuesday 23rd January 2024 Commons Chamber

[Jonathan Reynolds]

Of course, the decision has to be considered in conjunction with the one in Scunthorpe, and that is why this issue is so important and deserves the attention it is getting today.

I want to say one more thing by way of introduction. We have already heard from several Welsh colleagues, and the decision of the Prime Minister and the Business Secretary to refuse even to have a phone call with the First Minister of Wales about this matter was profoundly wrong. Anyone who is a supporter of the Union wants to see productive, effective relationships across all UK Governments, and the Prime Minister’s behaviour reflects extremely badly on him on this occasion.

[The Secretary of State for Wales (David T. C. Davies)]

Does the hon. Gentleman realise that I was the chairman of the transition board supporting all those workers who face the loss of their jobs? I offered to speak to the First Minister last week. He has so far been too busy to do so. He has known about this potential problem since September, and only when it appeared all over the papers did he suddenly appear to take an interest and want to make phone calls.

[Jonathan Reynolds]

I think that is a pathetic response. I mean no discourtesy, but that is pathetic. It is entirely reasonable for the First Minister of Wales to seek a conversation with the Prime Minister of the United Kingdom. I will leave that there.

I acknowledge that in the Public Gallery we have many steelworkers who have made the journey here today, including men such as Alan, who has worked at Port Talbot for 40 years, as did his father and both his grandfathers, and Gary, who has worked there for 37 years, and whose son now works in the hot mill. We have men and women from Port Talbot, Scunthorpe and Trostre who started as apprentices. I want to thank them for the contribution that they and their families have made to the UK over many generations. Last year, I went several times to steel sites across Wales, and I met the workforce at Port Talbot when these plans were first announced. They deserve a lot better than what they are being offered right now. At a minimum, they deserve this place taking their case seriously and engaging with these issues with the respect and consideration they require.

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[The Secretary of State for Wales (David T. C. Davies)]

I thank the hon. Lady and all those who took part in the debate. I say very clearly that I completely understand how devastating the news is. I understand the devastation that people will feel in Port Talbot—the whole community, but especially those people who face the loss of their jobs and those in the wider supply chain. There will be a wider impact—no one is denying that or running away from that.

Let me set out the situation that the Government found themselves in. Throughout the debate, Members have tried to suggest that this is a Government decision. It is not a Government decision. It is not the Government who decided to close—

[Mr Khalid Mahmood]

rose—

[Stephen Kinnock]

rose—

[David T. C. Davies]

Let me make a little progress, as I only have about six minutes and I think Members will want me to put things on the record. The hon. Member for Birmingham, Perry Barr (Mr Mahmood) waved around the Syndex plan; as a member of Unite, surely he will be aware that it rejected that plan.

Let me go back to the situation we found ourselves in. It was not a decision of the Government to shut down the blast furnace, but one taken by Tata in the light of the losses it was making.

[Stephen Kinnock]

I thank the Secretary of State for giving way. Yes, it is a Tata decision, but £500 million of British taxpayers’ money is going into it. Will he set out what red lines the Government put down around that £500 million? Were there any red lines around jobs?

[David T. C. Davies]

It came down to this: the Government had to find a solution that was acceptable to Tata and that would save the maximum number of jobs. The Government are not paying £500 million to throw 3,000 people out of work—[Interruption.] No, the Government are paying £500 million to save 5,000 jobs, because they will be saved, as well as around 12,500 jobs in the supply chain.

[Stephen Kinnock]

rose—

[David T. C. Davies]

I will give way to the hon. Gentleman in a moment, because he knows more about this than many who have spoken. The reality is that Tata told us that it was looking to pull out completely from the United Kingdom. If the loss of 3,000 jobs is devastating—it certainly is—how much more devastating would 5,000 be, and 12,500 jobs in the supply chain? It was a simple choice for the Government—not a good one—between seeing 3,000 people lose their jobs or around 17,500 people lose their jobs, and possibly even more. That is why the Government committed to pay £500 million towards an arc furnace. Let me make one other thing clear: the Government will not pay a penny to Tata until that arc furnace is built.

[Stephen Kinnock]

I thank the Secretary of State for giving way again; he is being generous. I think there are many reasons why Tata would not be considering full closure, not least the multibillion cost of closing down the Port Talbot steelworks. The remediation costs would be absolutely astronomical, so that was never on the table. The choice was between the bad deal that the Government have done with Tata and the compelling multi-union deal. Can we please just have the facts on the table, which are that this is not about closing the plant versus the Government’s deal, but about the multi-union deal being the right way forward?

[David T. C. Davies]

I understand the hon. Gentleman’s position and he is right to stand up for his workers. This is the reality of the situation: that plan has not persuaded Tata. Tata has not said that it is credible. Tata has said to me that it could not go along with that plan, because although one of the blast furnaces—blast furnace No. 4—has a number of years to run, it would still come to the end of the life of the coke plant and the sintering plant, so if Tata went ahead with that proposal, it would keep open one blast furnace, which is still losing a lot of money, and then have to start importing all the coke and all the sinter that it would need for it.

There is then the technical problem in that Tata says it would be very difficult indeed to build an arc furnace next to a working blast furnace containing molten steel. [Interruption.] The hon. Gentleman can shake his head, but that is what it is saying to us. That is what it has said to us as a Government and that is why we find ourselves in the difficult, unpleasant and awful situation of having to choose between 3,000 people losing their jobs and 17,500 people losing their jobs. That is why we came to the decision we did.

[Stephen Kinnock]

rose—

[David T. C. Davies]

May I just continue, because I have only three minutes left?

I want to say something about those 3,000 people. I worked in a steel plant myself. I worked in Llanwern when I left school, so I am directly involved in this and I feel it. I say to the workers that I have met the trade unions on a number of occasions. In fact, I will cancel what I am supposed to be doing next and I will go out there in the Public Gallery and meet the workers, with the hon. Member for Aberavon (Stephen Kinnock) and anyone from the unions, to explain the Government’s commitment.

There is £100 million on top of the £500 million, which will be there for the community in Port Talbot. It will be there to develop infrastructure to get other companies in. But the most important thing, and the hon. Gentleman knows that I have said this in the transition board meetings, is to ensure that anyone and everyone who loses their job has the absolute maximum opportunity to retrain and do anything that they want to do as far as retraining is concerned—to help to set people up in businesses, to get them licences, to get them any training they want. There is a massive commitment from the UK Government to that and we will not turn our backs on the people of Port Talbot.

[Alun Cairns]

My right hon. Friend is making an extremely powerful and factual case, rather than some of the wilder claims that have been made. Bearing in mind that this is a devolved responsibility, is he aware of any capital sums that the Welsh Government are making available to support the community?

[David T. C. Davies]

The Welsh Government have made it clear that they are not able at the moment to put in the sort of money that would be needed to come up with any kind of different plan. There is no other plan on the table, which is why we find ourselves in the situation we are in.

I will turn very quickly to a couple of points that were made. First, on primary or virgin steel, obviously all the iron ore and coal used in the plant is being imported. We are, therefore, at this moment, dependent on other countries for our virgin steel capacity. The advantage of an arc furnace, although this is not the situation that I want to be in, is that we would not be dependent on foreign countries for the supply of steel because, as the Minister for Industry and Economic Security, my hon. Friend the Member for Wealden (Ms Ghani) pointed out, we currently export 8 million tonnes.

[Holly Mumby-Croft]

Will the Minister give way?

--- Later in debate ---

[David T. C. Davies]

I think I had better keep going because I have one minute left.

On defence, none of the steel being produced in Port Talbot is going into the defence industry. The defence industry uses steel from Sheffield Forgemasters, which is created by an electric arc furnace. There is an issue, historically, with the quality of the steel that comes out of an arc furnace, but all the experts have told me that it is getting better and better all the time. Tata expects an electric arc furnace to be able to supply about 90% of the products that it currently supplies through the blast furnace.

Exciting technology is being developed that uses hydrogen instead of coal or coke to reduce iron, but there is only one plant doing it, at Luleå in Sweden. It is completely experimental at the moment. There is a podcast on the BBC in which the chief executive being interviewed makes it clear that it is 25% more expensive than the steel produced in a convention blast furnace. So good luck trying to persuade Tata that it should get rid of producing steel in the usual fashion and replace it with something that is 25% more expensive. The reality is—

[Sir Alan Campbell (Tynemouth) (Lab)]

rose—

[David T. C. Davies]

I know my time is up, but the plan that Labour Members have waved around has not been put to Tata by the Labour party.

[Sir Alan Campbell]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.