British Steel

Jonathan Reynolds Excerpts

Wednesday 8th November 2023 Commons Chamber

[Mr Speaker]

I call the shadow Secretary of State.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank the hon. Member for Scunthorpe (Holly Mumby-Croft) for securing this urgent question, at what will be a very difficult time for her constituents.

The Labour party supports the transition to green steel. We recognise, as the Government have now conceded, that a blend of public and private funding is necessary to do that. We believe electric arc furnaces are part of the solution, but we do not believe they can be the only solution. Specifically, we believe that the retention of primary or virgin steelmaking in the United Kingdom is a matter of economic necessity and of national security. While we all welcome the return of steelmaking to Redcar, which should never have been taken away to begin with, this will clearly mean very significant job losses at Scunthorpe. I therefore have major concerns about this announcement, coming, as it does, just after the Government have confirmed a deal to also close the blast furnaces at Port Talbot.

First, the Minister said in her answer to her hon. Friend that talks are ongoing. I have to say that that is not my understanding of the current status of this deal. Could she confirm that, please? Secondly, is it true that carbon capture technology could not be pursued at Scunthorpe because of delays from the Government to the necessary infrastructure over the last 13 years and uncertainty about a future business model? In addition, is it correct to say that a DRI—direct reduced iron—solution could not go forward because of uncertainty over the Government plans for green hydrogen, which would obviously be essential for a DRI business model? Thirdly, do the Government recognise the figure of 2,000 job losses, and will the Minister confirm that this is the net figure covering Scunthorpe and Redcar—in other words, that once recruitment at Redcar is taken into account, job losses in Scunthorpe will likely be in excess of 2,000? Finally, will she confirm how much public money this announcement involves?

Most of all, I reiterate to the Minister that decarbonisation cannot mean deindustrialisation; we cannot simply outsource our emissions to other countries, call that progress and expect public support for the transition. A real plan for green steel must be open to all technologies, it must be industry-wide, and it should be a story of new jobs, new opportunities and British economic strength. Sadly, this announcement seems very far from that.

[Ms Ghani]

Negotiations are indeed ongoing, which is why I am limited in what information I can put out in the public domain; information is of course incredibly sensitive. British Steel will make commercial decisions, but if it is hoping to secure Government support, we need to make sure that we are getting value for money for taxpayers.

The hon. Member asked why decisions have been taken on the electric arc furnace compared with other technologies. It is because the other technologies just cannot come up to speed fast enough. In particular, the hydrogen-based direct reduced iron equipment just cannot enable furnaces to transition at the speed at which they need to. He is very much aware of that, and this is also a challenge in Europe, not just in the UK.

Fundamentally, there are a number of challenges for the global steel sector. First, there are energy costs, which we have done everything we can to provide support for, with the hundreds of millions of pounds to cover energy costs and now the supercharger. Secondly, we have to ensure that we get more UK steel into the UK economy. That is why the public procurement note was incredibly important for us to do, and we will be able to secure millions of pounds for more UK steel projects. Thirdly, there is a major challenge in that advanced manufacturers, customers and consumers are looking for greener steel, and a lot of companies are trying to reflect on how they can provide a green steel option. Having said that, it is a particular kind of steel; as I said to my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft), for me that means a mix of virgin steel in the market as well. Of course, these are commercial decisions, but we need to make sure there is a mix to deliver for the UK market in particular.

The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) talked about the environmental issues and about hydrogen. We export a lot of scrap steel, and that also has a carbon footprint, so for us to have the capacity to turn that steel into products we can use will be incredibly useful. The positive news is that we are the eighth largest manufacturing country in the world. We are going to need more steel, not less, but there will also be demand for more green steel, not less, and we are trying to ensure that we provide support to the steel sector so that it can meet those market needs.