Protecting Steel in the UK

Jonathan Reynolds Excerpts

Tuesday 23rd January 2024 Commons Chamber

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

I beg to move,

That this House recognises the need to decarbonise steel production; appreciates the pride that local communities have in their historic steelworks; regrets that the Government has pushed through plans for decarbonising steel in the UK which will result in thousands of steelworkers losing their jobs and risk leaving the UK as the first developed country in the world without the capacity to produce primary steel; further regrets that the Government has failed to produce an industrial strategy which could have included a plan for the whole steel sector; believes that primary steel is a sovereign capability and is therefore concerned about the impact that the Government’s plans could have on national security; also believes that steel production can have a bright future in the UK; therefore calls on the Government to work with industry and workers to achieve a transition that secures jobs and primary steelmaking for decades to come; and further calls on the Secretary of State for Business and Trade to report to Parliament by 27 February 2024 with an assessment of the impact on the UK of the loss of primary steel production capabilities.

Labour has secured this debate today because this is a hugely important issue. It is important not just because the future of the Port Talbot steelworks is integral to communities across south Wales—I know that many hon. Friends will be making that case passionately—but because it speaks to a much bigger challenge that we face as a country: how to decarbonise heavy industry in a way that is effective for our climate objectives and fair for our communities.

The Opposition believe that the Government’s push to decarbonise the steelworks at both Port Talbot and Scunthorpe, in a way that guarantees large job losses and has no support from the workforce or unions, risks irrevocably damaging working people’s trust in the opportunities the net zero transition could bring. We believe that it is a calamitous mistake for the UK to become, under the Conservatives, the first major economy in the world without the ability to make our own primary steel.

[Zarah Sultana (Coventry South) (Lab)]

Decades of underinvestment and managed decline have devastated our steel industry, as the news from Port Talbot painfully brings home, but as the Unite the union’s workers’ plan for steel sets out, with the right Government action this crucial industry can still be saved. Does my hon. Friend agree that the Government must invest in UK steel, transitioning Britain’s remaining blast furnaces to fully decarbonised steel production, saving thousands of skilled jobs and putting Britain at the heart of clean, green steel production?

[Jonathan Reynolds]

I intend to make the case today that the UK steel industry could have a strong future, but that requires a much better approach than the one we have seen so far.

[Mark Tami (Alyn and Deeside) (Lab)]

Will my hon. Friend give way?

--- Later in debate ---

[Jonathan Reynolds]

I am cautious of doing so given the warning about time, but I will give way as I know my right hon. Friend has a significant interest in this.

[Mark Tami]

I thank my hon. Friend for giving way. He will be aware that I have the privilege of representing Shotton steelworks, and he has been there with me to see the high-quality products made in that profitable plant, but in order to carry on it needs to recruit and retain quality employees. What we have seen, however, is a Government who do not care, and if that message gets through to the workforce we are not going to retain those skills.

[Jonathan Reynolds]

rose—

[Mr Deputy Speaker (Sir Roger Gale)]

Before the hon. Gentleman continues, may I make a point? I understand how this game is played, and interventions are fine, but please understand from the Chair that if Members intervene they are less likely to get called.

[Jonathan Reynolds]

It was a pleasure to visit the Shotton steelworks with my right hon. Friend last year, and he will know that it began as the Summers steelworks in Stalybridge in my constituency. He has much expertise, and I commend the argument and points he has put forward.

The decisions the Government have made will have consequences. They will have consequences for our national security and our resilience, and they risk leaving us exposed at a time of significant geopolitical instability.

[Several hon. Members rose—]

[Jonathan Reynolds]

I will take an intervention from the Government Benches and one more from the Labour Back Benches, if that is okay.

[Sir Robert Goodwill (Scarborough and Whitby) (Con)]

If the hon. Gentleman is so determined that steel is a resource we as a nation should have, why is the Labour party against the west Cumbrian coalmine, which would mean we would not have to bring in coal from Australia to smelt steel in blast furnaces here?

[Jonathan Reynolds]

We have considerable expertise in that matter, and that grade of coal is no good for the current way steel is produced in the UK, but the right hon. Gentleman is right to raise the point because the Government justified that coalmine on that basis and have now made a series of decisions that, frankly, makes that look even more absurd.

Today I hope to make the case for Labour’s plans for an alternative way forward, an approach that is in no way based on misplaced nostalgia for the past but is instead based on hard-headed realities and an assessment of our national interest.

UK steel should have a bright future. It is not a sunset industry, and it is central to how a modern, low-carbon economy works. I ask the Minister, for whom I have considerable regard, to listen and engage today and to have a serious debate about what is about to happen and be willing to consider the alternative case. Let us please not trade boilerplate rebuttals or pre-scripted lines, but instead ask all colleagues to listen to the rational case being put forward, which is serious, pragmatic and important and one I genuinely believe any Conservative could agree with.

[Anna McMorrin (Cardiff North) (Lab)]

Many of my constituents are impacted by this devastating closure, and closing Port Talbot will mean the UK is the only G20 nation unable to make steel. Does my hon. Friend agree that this is an appalling decision?

[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.

[Several hon. Members rose—]

[Jonathan Reynolds]

I can give way one more time, to my hon. Friend the Member for Stockton North (Alex Cunningham)

[Alex Cunningham (Stockton North) (Lab)]

When I was a young reporter on the Evening Gazette, the steel industry supported tens of thousands of jobs on Teesside alone. The decline started with Thatcher. When the Government abandoned Redcar nine years ago, numbers fell to a few hundred. Steel is a foundation industry. Surely we need primary steelmaking in this country if it has a real future.

[Jonathan Reynolds]

I agree entirely.

[Several hon. Members rose—]

[Jonathan Reynolds]

I will take an intervention from the Government Benches, then one from my hon. Friend the Member for Leeds East (Richard Burgon), and then I will take no more.

[Mark Pawsey (Rugby) (Con)]

Is the hon. Gentleman overlooking the half a billion pounds that the Government will contribute to Port Talbot, or the £1.25 billion in total? When the Business and Trade Committee visited Port Talbot, we saw a plant badly in need of new investment. This Government are bringing forward that investment and securing a future for the steel industry.

[Jonathan Reynolds]

I am not ignoring that investment; I am making the case that it is a bad deal and that there is a better deal for the resources available that would satisfy far more of our objectives and give a better future to Port Talbot.

[Richard Burgon (Leeds East) (Lab)]

I grew up, like the shadow Minister, in a region ripped apart by the economic vandalism of Thatcher. Is it not the case that the Tories are repeating the mistakes of the past and claiming there is no alternative, when the reality is that steel jobs can not only be saved, but even created, with a proper plan that takes advantage of the global demand for steel—especially low-carbon, green steel—which is going up fast?

[Jonathan Reynolds]

I agree with that case. That is why this is such an important issue for Parliament to consider. I always acknowledge that there are parts of it that are difficult. Decarbonising industry is an urgent priority, but in some cases the technology is uncertain or expensive. It is my contention, however, that getting it right is more important than doing it quickly or necessarily at the cheapest cost. To state the obvious, we can decarbonise anything by shutting it down. The cheapest path will likely always involve outsourcing most of our industrial production to other places. If we do that—it is the Government’s plan for Port Talbot—we will spend millions of pounds, and we will see huge job losses and global emissions rise as we effectively offshore our emissions and then claim that is progress. That would be a fundamental political mistake with potentially enormous ramifications for the future of the transition to net zero. We should know that from our own past.

As my hon. Friend mentioned, when I was a child growing up in the north-east in the 1980s, there was a major transition. We saw the end of coalmining and shipbuilding and the old nationalised industries as we knew them then. Many colleagues across the UK have similar personal experiences. Nobody today would propose that the UK should have an economic or energy policy based around large-scale coalmining, but how we manage the transition is fundamental. In the past, as a country, we have got that wrong. Levelling up—supposedly the Government’s flagship policy—is surely a recognition that the scars of those years and the impact of deindustrialisation are still felt in many parts of the UK today, yet the Government risk making exactly the same mistakes all over again.

The decision of this Conservative Government to hand over half a billion pounds of taxpayers’ money to make thousands of people redundant is quite simply a bad deal. It is a bad deal for workers, a bad deal for taxpayers and a bad deal for the future of our industrial sovereign capability. Worse than that, it sends a message that decarbonisation effectively means deindustrialisation. I put it to Conservative colleagues that if net zero becomes a zero-sum game for working people, that risks the very support that we need to achieve the transition. There must be public consent for the transition, and that requires our economy to benefit from better jobs and better opportunities. This is the real politics of getting net zero right: it is not imaginary meat taxes or made-up claims about seven bins but whether the transition is just and fair and delivers something for Britain’s workers. The Government’s plans so far are simply none of those things.

The race to decarbonise is a race for jobs and prosperity, and this could be a hugely significant time for steel. As the Minister knows, I have many criticisms of Government policy, and I believe that we have weak business investment, weak productivity and weak growth as a result. I recognise that the Port Talbot site is in a challenging financial position, but the Government have already recognised that uncompetitive energy prices need tackling. We have procurement rules in place that are seeing significant steel content from the UK in infrastructure projects, and we are getting close to carbon border adjustment mechanisms both here and in the EU, which will be a major development. CBAMs in particular will likely completely change the economics of the UK steel industry. There is no reason to believe that the UK cannot have a vibrant steel sector, so to make this irreversible decision now, when the policy background is clearly improving, seems odd indeed. Better options are on the table; anyone claiming otherwise is simply being disingenuous.

When it comes to Port Talbot, there is a specific alternative proposal available—the multi-union Syndex plan—which is not far off Tata’s original proposals, which were known as Project Kronus. Other proposals have also been put forward. All we ask is that the Government consider the issues involved and do not make any fundamental decisions that are irreversible.

It is widely accepted at Port Talbot that blast furnace No. 5 is at the end of its life and may need to close, but blast furnace No. 4 will not need to be relined until 2032. For the Government to force that furnace to close now, as we await the arrival of new technologies, is an act of economic vandalism. We acknowledge that electric arc furnaces are part of the answer, but we do not want to put all our eggs in one basket, which means being open to all technologies, and especially direct iron reduction, which is one of the most exciting possibilities.

The counter-arguments put forward so far are not robust. I believe that safety issues could be managed in the same way that they are every day at a major steelworks. The claim that 90% of what Port Talbot does could be met with an electric arc furnace does not stand up, as key products in packaging and automotive materials cannot be produced in one. At Scunthorpe, I understand that the lack of sufficient grid connections and the cancellation of the first carbon capture programme back in 2010 have severely limited the options available. Again, I ask the Government not to make irreversible decisions, to be open to all technologies and to recognise the growing importance of and demand for steel.

We are not the only country with these challenges, but everywhere we look, other countries are doing it better. Take the Netherlands, where Tata is in negotiations with the Government on DRI technology; Sweden, with the collaboration between SSAB, Vattenfall and LKAB; Canada, where ArcelorMittal signed an agreement some time ago to build a new green steel plant; or the news just in of a $5 billion investment in a new green steel plant in Saudi Arabia. Everywhere we look, other countries are seeing growth and investment in their steel sector, but we are seeing the opposite. I put the question to Ministers: why is the UK pursuing this path alone?

At Business and Trade oral questions, the Minister has been asked repeatedly—mostly by Government Members—about the assessment the Government have made of becoming the only major economy without primary domestic steel production. Her answers hint that she might get it, but the Government have ploughed on regardless. I ask her again: how can any Government possibly justify making thousands of workers redundant in the name of cutting our carbon footprint only to pay to ship in more carbon-intensive steel from halfway across the world?

It does not have to be this way. We cannot afford to blow this opportunity, repeat the mistakes of the 1980s and leave regional inequality entrenched—we can still see those scars. That is why I always say that, under Labour, decarbonisation will never mean deindustrialisation. I want green steel, and I believe that the workforce are our greatest asset in delivering that. Any real plan for green steel must cover the whole industry. It must be open to all technology that is available, and it should fundamentally be a story of new jobs, new opportunities, new exports and renewed British economic strength, rather than outsourcing our emissions and pretending that that is progress.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

The hon. Gentleman is being generous with his time. I came here this evening, as I am sure the workers sitting in the Public Gallery did, to see whether there is a genuine plan on the table from the Opposition. The hon. Gentleman said that there would be, but I have heard nothing specific. I have heard about none of the costs involved. He said that he was not interested in nostalgia, but most of the contributions from Opposition Back Benchers have been exactly that. Where is the credible plan B that people want evidence of?

[Jonathan Reynolds]

It is literally here in my hands. It is not hard to find. I say to Conservative colleagues that Google is their friend. I have tried to say that the plans are available, but we will be pragmatic and flexible. We are just asking that irreversible decisions are not made that limit the room for manoeuvre in future. On resources, we have earmarked £3 billion of investment from our spending plans to deliver this, all of which is predicated on unlocking much larger sums of private investment. The Government do not disagree with the case for putting money in, but the deal that they are putting forward for that half a billion pounds does not deliver very much at all. What a tragedy it would be in the future to find a Britain that is building homes and infrastructure again, with secure low-carbon energy generation and a new wave of floating offshore wind, but is not making the steel to provide those things.

Labour has a plan to build a better Britain, and we want to build it with steel made in Britain. We will only get one opportunity to get this right, and we must bring workers and steel communities with us. I will finish with what Gary Keogh, a steelworker from Port Talbot told me:

“The question for Tata and the UK Government is this—do we want to be a nation that makes goods, or a nation that imports them from heavily polluting countries? It is not too late for Tata and the UK Government to think again and change course, but time is…running out. If they fail to take a different path now, the people of South Wales will never forgive them, and history won’t forgive them either. There is so much at stake for all of us.”

Well said, Gary.

I am asking the Minister—quite honestly, I am begging her—to consider the arguments and what is really value for money, and not to make decisions that are irreversible and prevent a far better outcome in future. To Britain’s steelworkers, I say that I know how desperate things feel right now and how angry people are, but there are those of us who get it, who understand what this industry is and why it is important. Given the opportunity, we will deliver the future for steel and the right transition that we all know is essential for our future prosperity, security and wellbeing.

--- Later in debate ---

[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.