Tata Steelworks: Newport

Kevin Foster Excerpts

Tuesday 8th October 2019 Westminster Hall

[The Parliamentary Under-Secretary of State for Wales (Kevin Foster)]

It is a pleasure to serve under your chairmanship, Mr Hanson. I congratulate the hon. Member for Newport East (Jessica Morden) on securing this debate, which has given us the opportunity to come together to discuss a topic that is important not just for Newport but for the whole of Wales. She has always been, and was today, an energetic and passionate advocate for her constituents and those affected by the potential closure of Tata’s Cogent Orb plant.

It is clear that there is a shared understanding of the important role the steel sector plays in communities and its critical place as a foundation industry in the national economy, especially in Wales. That is evidenced by the number of Members attending this debate. I have heard their comments and the request to meet the unions. I understand that the Secretary of State for Wales has already been in contact with them, and I am more than happy to facilitate meetings. I will pass on the request for a meeting of the steel council. That is something we are always happy to do, and certainly if hon. Members request it. Those who have dealt with me previously know that I am only too happy to meet Members, particularly if it relates to matters in their constituencies that are this important. I would be happy to facilitate that.

[Kevin Brennan (Cardiff West) (Lab)]

Is the Minister saying that he will go back to his colleagues and recommend that the UK steel council meets, as my hon. Friend the Member for Newport East (Jessica Morden) has requested?

[Kevin Foster]

I will pass on the strong demand that the hon. Member for Newport East has made for the council to meet. In terms of what I can offer, and the direct request for meetings with Ministers about the Orb plant, I am more than happy to arrange to do that. That was the second part of her request.

Although there are considerable challenges, we believe there remain great opportunities for the industry to secure a successful, sustainable future at the centre of British manufacturing. The announcement on 2 September 2019 that Tata is to close its Orb Electrical Steels plant in Newport has understandably been a huge blow for employees, their families, contractors, suppliers and customers. I am grateful to the hon. Lady for her commitment to working with Government and other stakeholders, including the Community union, to help secure the future of the business, both in her role as MP for Newport East and as an officer for the all-party parliamentary group on steel and metal-related industries, many of whose members are in the Chamber.

The Government have worked with Tata to seek possible solutions to the financial challenges facing the company. We have also met with the unions to discuss the concerns of the workers and their families. This was a commercial decision by Tata Steel Europe. The Orb Electrical Steels plant has been on sale for two years, but sadly Tata was unable to find a buyer. We are open to considering plans that would deliver a long-term, sustainable future, based on a clear business plan, but as I am sure hon. Members realise, that cannot just be based on an ongoing subsidy or on merely hoping that business will come forward. We have sought and had reassurance from Tata that every effort will be made to mitigate the impact on affected employees. It is offering alternative employment opportunities where possible at other Tata Steel sites. The UK Government are committed to working with Tata to avoid job losses as a result of any closure of the Orb steel plant, as Tata is one of the most important employers in Wales. We will keep all options open to support a sustainable future for that plant and for Tata elsewhere in Wales.

[Nick Smith]

The Minister says that the Government have met Tata, but what has he been able to offer it to help keep Orb open and keep steel going in south Wales? Can he be clear about what the Government are willing to put on the table?

[Kevin Foster]

The Government are clear that if a sustainable, long-term business plan can be produced, we will consider support packages, but the key part is that it must be sustainable for the long term, and it must be based on a clear business plan.

[Nic Dakin]

We have heard today about the Syndex report, which places a way forward on the table. Will the Government meet the unions, Syndex and Tata to see how that could be turned into the sort of plan that would deliver not only for this workforce and industry, but for UK plc?

[Kevin Foster]

We are more than happy to meet. Obviously we cannot guarantee that a third party would wish to be involved in those meetings, but certainly from the perspective of the Government and the Wales Office, we would be more than happy to arrange a meeting with the unions and Syndex to see how their plan could be taken further. The key part has to be whether it can provide a long-term sustainable future, and we note that the plant has been for sale for two years with no purchaser having come forward. Certainly, UK Government Ministers are more than happy to meet interested parties to discuss what we could do.

In the context of the wider steel industry, the Government have made up to £800 million of funding available to support decarbonisation and innovation in the industry. We remain committed to supporting the Welsh steel sector in accessing this funding and ensuring that it is able to compete with the best in the world. Recent and ongoing work to support the steel sector includes establishing the £250 million clean steel fund, which was announced in August and will support the sector’s transition to lower-carbon iron and steel production through new technologies and processes. It will also maximise longevity and resilience in the UK steel sector by building on longstanding expertise and skills and harnessing clean growth opportunities.

Our industrial energy transformation fund is a £315 million fund supporting short-term projects in both energy efficiency and decarbonisation for businesses with high energy use. The fund will help businesses with high energy use, including steel companies, to cut their bills and transition UK industry to a low carbon future.

The industrial decarbonisation challenge is a £170 million fund aimed at the UK’s industrial carbon emissions clusters. South Wales has been identified as one of six clusters in the UK that will benefit from that fund, which supports our grand challenge mission to develop a net zero emissions cluster by 2040 through the development of innovative low- carbon solutions. It will provide long-term support to the industry, ensuring Britain’s long term sustainable future.

[Ruth Jones]

The Minister is making some laudable points about laudable plans for the future of the steel industry, but does he not agree that closing the only electrical steel plant in the UK makes absolutely no sense in terms of future planning? That is not joined-up thinking at all.

--- Later in debate ---

[Kevin Foster]

This is a commercial decision by the company and the plant has been for sale for two years, but as I have already said, we are more than happy to meet stakeholders to see if the Government can provide some support. That support would have to be based on a sustainable long-term business plan for the future.

We are also providing up to £66 million through the industrial strategy challenge fund to help steel and other foundation industries develop radical new technologies and establish innovation centres of excellence in those sectors. This challenge will create a pilot facility to demonstrate new technologies, and develop a cross-sectoral approach for research, innovation and skills. To date, the UK Government have provided more than £312 million in compensation to the steel sector since 2013 to make energy costs more competitive, including over £53 million during 2018.

[Stephen Kinnock]

The Minister talks about this being a commercial decision, but it is absolutely clear that the underlying conditions for the British steel industry are completely undermined by the energy price disparity. Is he aware of the fact that it costs £50 per MWh in the UK, compared with £31 per MWh in Germany, a disparity of 62%? The disparity with French energy costs is 80%. The Minister cannot claim that this is a purely commercial decision; it is a commercial decision based on the utter failure of the British Government to deal with this energy price disparity.

[Kevin Foster]

As has been mentioned, to make energy costs more competitive, we have made £312 million in compensation available to the steel sector since 2013, including £53 million in 2018 alone.

We have commissioned independent research to identify high-value market opportunities for UK steel producers that will be worth up to £3.8 billion a year by 2030. The UK is a supplier of steel for a range of high-value applications and is a strategic part of the supply chain for the automotive, aerospace, construction, defence and oil and gas sectors. We are successfully working with the steel industry to introduce steel procurement guidance that will ensure that Government and the wider public sector take into account social and environmental benefits when procuring and designing their major projects.

[Jessica Morden]

Will the Minister give way?

[Kevin Foster]

I have to conclude, as I am starting to get close to time.

We have also signed up to the UK steel charter, acknowledging and supporting that initiative from industry. We continue to press for the introduction of trade defence instruments to protect UK steel producers from unfair steel dumping. Tata has confirmed the closures are not linked to Brexit; instead competition from much larger players in China and Japan is understood to be the key reason.

[Kevin Brennan]

On a point of order, Mr Hanson, this kind of debate is supposed to be a conversation between the Minister and the Member who secured it. There are five minutes left in the debate; surely it would be appropriate for the Minister to give way to the person who secured the debate.

--- Later in debate ---

[David Hanson (in the Chair)]

As you well know, Mr Brennan, it is for the Minister to decide whether he wishes to give way. Clearly at the moment he does not wish to do so.

[Kevin Foster]

Thank you, Mr Hanson. I will take another intervention as I come nearer to the end of my speech, but I have not been ungenerous in taking interventions from Opposition Members so far.

The UK Government are stepping up their efforts to ensure businesses are ready to leave the EU on 31 October via their national communication and engagement campaign. We are also urgently identifying and delivering actions to support businesses in improving readiness. The Government will take economic measures to mitigate any short-run disruption, to support the economy through the transition and to boost the long-term potential of the UK economy, taking advantage of the opportunities outside the EU. As I said, the Government are prepared to look at and discuss any plans that present a long-term, sustainable option for the plant.

[Jessica Morden]

I appreciate the Minister responding today, but members of the all-party parliamentary group on steel have not yet had a real opportunity in a debate to question the new steel Minister. I ask the Minister to convey to the new steel Minister the urgency of the situation, because if we lose Orb, we lose the opportunity of an end-to-end supply chain for electric vehicles before Christmas.

[Kevin Foster]

I will certainly convey the hon. Lady’s message to the steel Minister. I have to say, looking at the many Opposition Members here and given my knowledge of their determination to stand up for the communities they represent, that I have a feeling that the steel Minister will get a number of opportunities in the very near future to discuss steel on the Floor of the House, if not in a debate in this Chamber. Certainly as a Minister, I would be badly mistaken to think I can ignore some of the people on the Opposition Benches.

However, it is worth reflecting on the fact that there are currently 46 trade defence measures in place to protect UK steel products from unfair steel dumping. As we operate an independent trade policy, the UK will continue to champion free trade and take a proportionate approach to trade remedies, with a view to continuing the defence of our industry where necessary. The steel industry is an important industry in Wales, as reflected by today’s turnout among Members representing Welsh constituencies. The UK Government are committed to supporting companies, such as Tata, that have contributed to the local economy in Wales for decades, and we will continue to work with the sector, the unions and the devolved Administration to support the UK’s steel sector in developing a long-term, viable solution for that industry.

In closing, I thank all hon. Members who have contributed to today’s debate, and the hon. Member for Newport East for having secured it. I know that she will continue to be a strong advocate for those she represents and will ensure that the Government hear loud and clear their views and what she believes the options to be. I would certainly be more than happy to have a longer discussion with her about some of the proposals that are being put forward; I look forward to the opportunity to do so. However, as I say, those proposals must be based on providing a long-term, sustainable future for the plant, not just subsidy with a hope of something coming along.

Question put and agreed to.