Ukraine War: Trade and Business Support
Nusrat Ghani Excerpts(9 months 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.
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Steel Industry: Wales
Nusrat Ghani Excerpts(9 months 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 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, 1 week 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, 1 week 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(10 months, 2 weeks 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, 2 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.
[HCWS110]
British Steel
Nusrat Ghani Excerpts(1 year ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Holly Mumby-Croft (Scunthorpe) (Con)
(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on the announcement made by British Steel on 6 November, and provide an update on the negotiations between British Steel and the Government, and on the Government’s position on virgin steelmaking in the UK.
The Minister for Industry and Economic Security (Ms Nusrat Ghani)
Steel is vital to the UK economy. I fully recognise the importance of British Steel to local communities, particularly in my hon. Friend’s Scunthorpe constituency, where the company is a major contributor to local economic growth, and where she campaigns incredibly hard for steelworkers.
Global conditions have been tough for steel companies around the world. That is why we have changed the competitive landscape for British Steel and other energy-intensive industries by announcing the British industry supercharger—a decisive package of measures to reduce the long-term electricity price gap that exists between UK energy-intensive industries and competitor countries. That support will mean that strategically significant UK industries, such as steel, are safeguarded against the high industrial electricity prices that they have faced in too many recent years. We have also provided over £730 million in energy costs relief to the steel sector since 2013, in addition to the energy bill relief scheme. Steel producers will continue to receive support until 31 March 2024 through the energy bills discount scheme.
As my hon. Friend is aware, the Government made an extremely generous offer of support to British Steel earlier this year to help it to invest in a decarbonised and sustainable future. We have continued to work intensively with British Steel since then and will continue to do so. However, she will also understand that the detail of those conversations remains highly commercially confidential and that any public discussion risks undermining talks.
I know that this must be a deeply concerning time for British Steel employees and others in Scunthorpe following the company’s announcement on Monday of its plans for future operations. I can very much assure my hon. Friend that we will help affected workers and their families, and that we are committed to finding solutions to enable the ongoing sustainable and decarbonised production of steel. Just last month, for example, we announced a £1.25 billion joint-investment package with Tata Steel to secure a decarbonised future for steelmaking in Wales. That has the potential to safeguard several thousand jobs across the UK. In 2020, the Government provided an emergency loan to Celsa Steel to help it continue trading during the covid pandemic, saving over 1,500 jobs, with a further 300 jobs created since the loan was made.
Holly Mumby-Croft
I stand absolutely unapologetically with steelmakers and my community today, and I do not support these moves. In this Chamber on 18 September, I asked the Minister for Industry whether she agreed that we need to retain a virgin steelmaking capability in the UK for strategic reasons alone. She said
“obviously, we need a place for virgin steel”—[Official Report, 18 September 2023; Vol. 737, c. 1125.]—
and that that place was Scunthorpe. That was reiterated the very same day by the Secretary of State, and so pleased was I with the comments that she made that I took contemporaneous notes of that conversation.
British Steel is a private company and can make business decisions as it sees fit, but I am clear that if it is seeking hundreds of millions of pounds of public money, the Government must leverage that money to protect steelworkers’ jobs and maintain our sovereign capability to make steel in the UK. Electric arc furnaces melt scrap; to make virgin steel from scratch, we need blast furnaces. Can the Minister tell the House how the UK will make virgin steel if all our blast furnaces are decommissioned? Can she tell us how many countries in the G20 are unable to make their own virgin steel? Would the Government be comfortable with us being entirely dependent on foreign imports for the virgin steel we will continue to need in this country?
Will any financial support offered to British Steel seek guarantees on steel jobs and lock in, as a minimum, an interim period of blast furnace production to allow us to explore green options to run them? Did the Government know that this announcement from British Steel was imminent? When will I get a response to my letter of 29 September to the Secretary of State? Why did the Department not contact me until 5 pm on Monday, when I was sent simply a short text message? What support is the Minister offering our excellent North Lincolnshire Council, which is proactively working with British Steel to bring additional green jobs on to the site? This Government have a good record on steel—they have paid workers’ wages. Can the Minister confirm that steel remains high on the Government’s agenda?
I have 3,500 of the world’s finest steelmakers in my constituency. It is my privilege to come out and bat for them today. Thank you, Mr Speaker, for allowing this urgent question.
Ms Ghani
My hon. Friend makes lots of very credible points—there is very little for me to disagree with. She does indeed make representations at the highest levels of Government, and her priority has always been steelworkers; she has never played politics with that role. I put on record my apologies if I have not done due diligence and provided the public service that she should have received by being contacted much sooner on that particular day. There is nothing she could say that I would not be telling myself off for even more, and I hope I will not fall short in communications going forward.
My hon. Friend is absolutely right: I did indeed say at the Dispatch Box that my personal opinion is that there is a strong place for virgin steel production in this country, and that, of course, is in her constituency. We are in the middle of live negotiations, and any decision taken by British Steel is a commercial decision. My hon. Friend is also right that we are able to carry out due diligence on any support we provide; it is taxpayers’ money, and our primary focus is to safeguard the sector and jobs, including in her constituency.
My hon. Friend is right to note that we have prioritised the UK steel sector, and we will continue to do so. We need to provide it with support as it transitions, because that is also a choice being made by manufacturers, customers and consumers who are looking for greener steel going forward. Any decision we take and any support we provide will be to ensure that the sector is sustainable and competitive. We want the sector not just to survive, but to thrive.
My hon. Friend spoke about the support we have provided to the sector to date. We have provided hundreds of millions of pounds of support to British Steel to deal with its emissions, and over £730 million in energy cost relief to the steel sector since 2013. We have put the supercharger in place, as well as the steel procurement policy note, which does its very best to ensure that we procure more steel here in the UK. We have provided support to Tata to ensure that that part of the country can continue to make steel and to protect those jobs, and we have provided support to Celsa. My hon. Friend talked about the support we are providing to North Lincolnshire generally—there is a huge amount of support there. Since 2018, the Government have committed over £200 million in investment in the north and north-east Lincolnshire area.
I cannot say much more at this time because we are in the middle of live negotiations that are commercially sensitive. When British Steel put out its press release, that was the first time I saw it, but we must recognise that it was a proposal; many things have to fall into place for such proposals to become accurate plans—not only will there be issues around planning, but our negotiations have to conclude as well. I do not doubt that I will continue to lean on my hon. Friend, and that she will continue to champion steelworkers in her constituency and across the country.
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.
Sir Edward Leigh (Gainsborough) (Con)
Many of my constituents work at Scunthorpe, and we are all obviously deeply concerned about them, but the whole House must be concerned about the Minister’s statements in terms of our national security. There is no other major developed country in the world that is giving up its traditional blast furnaces—the only way we can make virgin steel. Frankly, the Minister did not bother to answer a single one of the brilliant questions from my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft). Will she now make it clear to the House that this Government are committed, as a major economy, to go on making virgin steel? Do it now.
Ms Ghani
As I have said repeatedly at the Dispatch Box, I fundamentally believe we need to have virgin steel capacity in the UK, but these are commercial decisions, and negotiations are continuing. These are incredibly commercial decisions, and we are doing our very best to support electric and virgin steel capacity in the UK. We are very much aware of the challenges we have in importing steel and with the global markets when it comes to the price of steel, and that is why we need to make sure we have a mix. These are commercial decisions, which is why negotiations are ongoing. Fundamentally, the announcement by British Steel was a proposal—nothing is done yet. We are still in the middle of negotiations.
Richard Thomson (Gordon) (SNP)
May I begin by expressing my concerns on behalf of the 2,000 workers who are likely to be affected by this announcement? Also, I re-emphasise, as other contributors have, the importance of virgin steelmaking, not just in terms of security, but in meeting demand in the construction industry, where inflation is already racing ahead and our ability to build things will not be helped by being further away from the supply chain and reducing domestic capacity in steelmaking.
The Energy and Climate Intelligence Unit think-tank has said:
“Ageing blast furnaces need to be replaced and upgraded to produce greener steel…electric arc furnaces have a role in recycling steel”,
but
“failing to invest in modern hydrogen furnaces belies the government’s promises to invest for the longer term.”
Just as in the oil and gas sector, what plans do the UK Government have for a just transition for the steelmaking workforce? What support will the UK Government be giving to the development of hydrogen furnaces in the UK? What challenges will they put constructively to British Steel over these plans? Given the Government’s high-profile retreats on other climate measures, such as the date for banning the sale of internal combustion engine cars, how much faith can the industry have in any guarantees that the Government do make?
Ms Ghani
Negotiations are ongoing and nothing is concluded. The statement made by British Steel was a proposal, not a conclusion. The steel that comes out of electric arc furnaces can be used for a variety of things, including construction and military-grade steel—it is incredibly nimble—but I fully appreciate that different types of steel are produced out of different furnaces. The hon. Gentleman spoke about hydrogen, and the Government have a substantial hydrogen strategy that we launched in May 2022. The net zero hydrogen fund is worth up to £240 million of capital co-investment out to 2024-25. That will support upscaled hydrogen production projects, allowing companies, including steel producers, the potential to secure supplies of lower-cost hydrogen. Ultimately, decarbonisation pathways for specific sites are commercial decisions for individual companies based on their own operational circumstances. In the case of Port Talbot, it was about timing for using a technology that can be commercialised at scale. At the moment, for that part of the country, it is electric. Hydrogen may no doubt be the next stage of technology that is used.
Greg Clark (Tunbridge Wells) (Con)
May I pay tribute to my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) for her passionate support for steelmaking in her constituency? Just yesterday at the Dispatch Box, the Prime Minister said that even when we get to net zero, we will still need to have oil and gas supplies. Does the same logic not apply to primary steel? We will still need that at net zero. Does that logic not extend to making sure we have the capability to make primary steel in this country to supply our needs in the future?
Ms Ghani
I agree on both points: first, on the incredible work that my hon. Friend the Member for Scunthorpe does for steelworkers in her constituency; and secondly, that we cannot achieve net zero without a mix of steel being manufactured in the UK. We have a booming renewables sector, whether that is solar panels, blades for offshore wind farms, or electric vehicles. Much of that steel can be produced by electric arc furnaces, but my right hon. Friend the Member for Tunbridge Wells (Greg Clark) is absolutely right that there is a space for virgin steel, too.
Liam Byrne (Birmingham, Hodge Hill) (Lab)
I am grateful to the hon. Member for Scunthorpe (Holly Mumby-Croft) for securing this urgent question. The Minister is in peril of presiding over the end of primary steelmaking in this country and the curtain falling on 300 years of Britain’s industrial history. The announcement comes at a time when an analysis shows that the Department’s budget is set for a 16% real-terms cut in the years ahead. Is it the policy of His Majesty’s Government that blast furnaces will stay in operation in our country and that we will not be dependent on imports of primary steel? When can we expect a conclusion to the negotiations and some safeguarding of the vital industry either at Tata or at British Steel?
Ms Ghani
I congratulate the new Chair of the Business and Trade Committee, of which I was previously a member. As I have made clear, these are commercial negotiations and they are ongoing. When the decision was taken on Port Talbot, discussions had taken place for several years—even decades. This will not take that long, but my point is that many Ministers have stood at the Dispatch Box talking about steel and doing what can be done to protect and promote the steel sector in the UK. The negotiations are ongoing.
British Steel’s statement on Monday contained proposals and a plan—nothing is concluded yet. My focus, as our focus has always been, is on protecting the steel sector in the UK, protecting steel jobs in the UK and doing everything we can to procure more British steel in UK manufacturing. Of course, that continues. These are commercial decisions about how companies wish to continue their business going forward. I have made it clear that fundamentally there needs to be a mix of steel produced in the UK in the steel market, but the reality is this. First, steel produced in electric arc furnaces is far more nimble because of the technology, and it can be used for many more materials in advanced manufacturing than previously—that is a fact. Secondly, manufacturers, customers and consumers fundamentally want a cleaner, greener steel package. It is not just me saying that at the Dispatch Box; it is also the UK steel industry representatives who have put together a net zero strategy and are talking about having cleaner, greener steel going forward. We have a lot of scrap steel in the UK that can be recycled, and we have far more capacity to recycle that than we have for that steel to be used in UK manufacturing, but, fundamentally, we need to have a mix. I believe that that mix will continue as long as it can and should, but these are commercial decisions. We continue to negotiate with British Steel.
Mr David Davis (Haltemprice and Howden) (Con)
I have a simple question to put to the Minister; I hope that I will get a yes or no answer. Much of the arc furnace capacity is being moved away from Scunthorpe or not put in Scunthorpe because of a lack of grid capacity. That electrical grid capacity is due to be increased. If she were to accelerate the increase to 2025, we may save many more jobs in Scunthorpe. Will she seek to do that?
Ms Ghani
Unfortunately, there is never a simple answer to these questions. Access to the grid is a challenge for many industries, let alone for the steel sector. We have been doing everything we can to increase access to the grid. British Steel’s proposal—negotiations will continue—says that it has chosen two sites over one, with its key site at Scunthorpe and a second site at Teesside to be closer to its manufacturing work. That decision has been made for many other commercial reasons beyond access to the grid.
Jon Trickett (Hemsworth) (Lab)
Yorkshire and the Humber is one of the great centres of steelmaking—in our area, there were more than 8,000 jobs in steelmaking, the last time that was counted—but how many jobs will be left when the Minister has finished with her cuts? Has she noticed that whenever the Conservative party is in government, it deindustrialises further? Unite the union—I declare an interest as a member—is saying that if the Government would commit to procurement of steel for all our relevant contracts, 8,000 further jobs could be created. What exactly does she make of that? Has she met representatives of the union to discuss that matter?
Ms Ghani
I meet representatives of the unions regularly, and I co-chair a steel council. The steel procurement policy note on increasing procurement in the UK was a personal ambition of mine. Previously, we did not calculate enough of the data on what was being procured and how we could continue to secure more contracts. Procurement has increased, with the value of contracts up by £97 million on the previous year. I want to go further; that is only the starting point. Earlier today, I was with the Minister for Defence Procurement, the hon. Member for South Suffolk (James Cartlidge), and I will continue to work to ensure that there is more UK steel in all our construction, whether rail, road, automotive, aviation or anything else. The reality is that last year it increased by £97 million-worth of work.
Martin Vickers (Cleethorpes) (Con)
I fully endorse all the comments of my neighbour, my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft). Many hundreds of my constituents work at British Steel, and I have a British Streel terminal on Immingham docks in my constituency. What assessment have the Department and the Treasury made of the impact on the local economy if the changes go ahead? The Minister talked about support for workers who may be made redundant. I have witnessed the decline of the fishing industry in the Grimsby-Cleethorpes area, which has ripped the core out of the community, who need generations of support. What plans will the Government put in place to ensure that that happens?
Ms Ghani
First of all, negotiations are ongoing, but I fully appreciate that the statements from British Steel will be incredibly unsettling for my hon. Friend’s constituents. Let me explain the way that we worked on Port Talbot. We were keen to ensure that any support we provided continued to guarantee jobs, in consultation with local stakeholders and the unions. We set aside a fund of around £100 million to ensure that people were reskilled and redeployed. That work will continue if circumstances require it. We are anxious about jobs. These are highly skilled workers, recognised internationally, and these are well-paid jobs. That is why negotiations are sensitive and continue at pace. If we provide support, we want to get the best deal for UK steelworkers.
Mark Tami (Alyn and Deeside) (Lab)
The Minister will know that Shotton steelworks rely on steel from Port Talbot. What assurances can she give on the supply of steel between the closure of the blast furnaces and the installation of new electric arc furnaces?
Ms Ghani
While negotiations were ongoing and support was being provided, we had a conversation to ensure that the supply chain continues to be resilient. A taskforce has been set up to ensure that supply chains continue to get support, working with the unions, Tata and the local community. We have been assured that supply chains will continue to secure the contracts that have been in place.
Simon Fell (Barrow and Furness) (Con)
Supporting British Steel need not be just about money; it can be about ensuring that the Government are joining the dots for industry and explaining the pipeline of work available to it. With the Dreadnought and SSN-AUKUS programmes, we have generations of need for virgin steel. The same goes for the new nuclear programme. Will my hon. Friend confirm that the Government are doing that work and signalling to British Steel that the demand is there? Also, where we have control over procurement, are we ensuring that we lean towards the British market?
Ms Ghani
Absolutely. That is why procurement went up by £97 million recently. I was looking at what the industry group UK Steel reflected on when it came to steel produced by electric arc furnaces—the reality is that a substantial amount of speciality military-grade steel can be manufactured using electric arc furnaces. We are working very closely with the steel sector to do everything we can to ensure that it secures UK contracts.
Jessica Morden (Newport East) (Lab)
The Minister seems to be ignoring events in south Wales last week. I met steelworkers from Llanwern last week, who understandably are deeply worried following speculation about the closure of the blast furnaces at Port Talbot. What conditions were attached to the £500 million grant agreed with Tata? Was this the agreed plan? What are the Government actually doing to safeguard jobs?
Ms Ghani
We put in place a programme of work and a substantial sum of money—around £100 million—to ensure that the transition took place in a just fashion. Decisions will be taken by the transition board—as has been mentioned—about providing upskilling and reskilling and ensuring that there are assurances in the supply chain. The board is made up of the Secretary of State for Wales, the Minister for the Economy of Wales, the Secretary of State for Levelling Up, Housing and Communities, and the hon. Member for Aberavon (Stephen Kinnock), who chairs the all-party parliamentary group for steel and metal related industries. Those decisions will be taken locally and in consultation.
John Stevenson (Carlisle) (Con)
The Government have supported a coalmine in west Cumbria that will produce coking coal, which is used in steel production. Does the Minister agree that it would be sensible for strategic reasons—which should override commercial reasons—to retain virgin steel production capacity in this country, and that from a practical perspective the coal mined in Cumbria could be used in the production of steel in Scunthorpe? Will she take into consideration the wider issues in the policy decisions that she may make?
Ms Ghani
Absolutely. I think all of this has made it clear to British Steel that there is a supply chain here in the UK, not only in the ability to make virgin steel but in the market afterwards, but even with electric arc furnaces we still need some ability to access coal. These are decisions taken across many Whitehall Departments. My job, fundamentally, is to ensure that steelmaking in the UK continues at the pace that it has done and grows even further, and that we support the manufacturing sector, which requires British steel.
Richard Foord (Tiverton and Honiton) (LD)
The official march of the Royal Navy includes the words,
“Heart of oak are our ships”.
In the 21st century, virgin steel is the critical industry for the Royal Navy, in the way that timber was in the 18th century. I am the first to want reduced carbon emissions, but this move sounds more like offshoring than about reducing carbon emissions. What consideration have the Government given to the supply of steel to the defence industry?
Ms Ghani
First of all, negotiations continue; no decision has been taken. Having said that, the UK steel industry group, which oversees the steel sector in the UK, has made it very clear that military-grade speciality steel can be made in electric arc furnaces. I have been working incredibly hard to make sure that more UK steel is procured in more UK contracts, including defence contracts.
Peter Gibson (Darlington) (Con)
I commend my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) for her dogged campaign in respect of steel; she is a real champion for her constituents. This week’s news is bittersweet, as Teesside welcomes the return of steelmaking. Will the Minister outline what the whole Government are doing to support my hon. Friend’s constituents at this time, and what use of carbon capture and storage is being explored to ensure that we continue to produce our own virgin steel?
Ms Ghani
I of course agree with my hon. Friend’s first point: there is nobody more vocal about steel than my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft). We have had a number of programmes in place to support the steel sector, because it has a number of challenges, as it has in many continental European countries. Fundamentally, Putin’s invasion of Ukraine caused energy costs to skyrocket, and we had in place an energy costs relief scheme for the steel sector, which has been worth up to £730 million since 2013. We now have the supercharger in place; I have spoken about the steel procurement policy note to ensure that there is more UK steel procured in UK markets; and, obviously, we provided support for Tata recently and Celsa previously. We are doing everything that we can—with my hon. Friend the Member for Scunthorpe, of course—to get the best deal possible for Scunthorpe, but these are commercial decisions and they are ongoing.
Alex Cunningham (Stockton North) (Lab)
It is clear from today’s comments that the Government are set to abandon more than 2,000 steelworkers in Scunthorpe, just as they abandoned over 3,000 on Teesside eight years ago. That said, I too welcome the news of a new arc furnace for Redcar, but let me give the Minister yet another chance to answer the question from the hon. Member for Scunthorpe (Holly Mumby-Croft) and others: are the Government really going to settle for recycled steel and foreign imports, and consign virgin steelmaking in the UK to history?
Ms Ghani
Recycled steel can be recycled infinite times, so it does a huge amount for the circular economy. Because of the way technology has moved on, steel can now be used in many more sectors. We have a huge surplus of scrap steel, which we end up exporting to countries such as Turkey, Bangladesh and Pakistan. We could be reusing that in the UK economy. But as I said, these are commercial decisions and nothing has been concluded. The statement put out by British Steel was a plan or a proposal.
Sir Chris Bryant (Rhondda) (Lab)
Does the Minister not accept that it is a matter of national security that we should retain the ability to create primary steel in this country?
Ms Ghani
I have put it on record previously that we need to ensure that we have blast furnace capacity in the UK, and that, fundamentally, should be at the Scunthorpe site. There are matters involving national security—for instance, the anxieties about steel dumping from China and the issues emanating from Russia—and as we continue to manufacture at pace, we need to be able to ensure that we have access to steel manufactured here in the UK.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Some of the mightiest structures made of steel were built in my constituency, in the Nigg yard—I worked there myself once upon a time. The hon. Member for Scunthorpe (Holly Mumby-Croft) talked about the strategic importance of the industry. May I point out to the Government that it is as important to my constituency in the far north of Scotland as it is to any other parts of our great United Kingdom?
Dame Nia Griffith (Llanelli) (Lab)
The feedstock for the Trostre tinplate works in Llanelli is steel of a quality that can currently only be produced in the blast furnace process. Following the devastating news that Port Talbot blast furnaces will be closed by the end of March, leaving Trostre dependent on imported steel—quite possibly produced to lower environmental standards abroad, and certainly not saving on emissions—may I ask the Minister to stop just quoting commercial decisions, and tell us what strategy the Government have to develop the green technologies of the future here in the UK and to keep virgin steel production here as well?
Ms Ghani
I had a feeling that I had mentioned that a few times. We have a fund of about £1.5 million, partly aimed to ensure that we are adopting, testing and commercialising new technologies to enable the steel sector to decarbonise. We have done a huge amount of work on electricity and we are also considering the possibilities of hydrogen, so we are looking into alternative sources of energy to help the sector in the UK. I know there are challenges for places such as the hon. Lady’s constituency because of the sort of steel that they need, but the fact remains that more and more different types of steel can be made to a high standard and a high grade in electric arc furnaces.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The move to net zero should deliver tens of thousands of long-term, well-paid, green industrial jobs, but with her Government’s sticking-plaster policies the Minister is destroying both jobs and sovereign national capability. Is it really her intention to leave behind her a British steel sector that cannot make British virgin steel, and if not, what is her plan? Labour has an industrial strategy for green steel; why does she not have one as well?
Ms Ghani
I simply do not recognise the picture that the hon. Lady paints. Our recent decision on Tata Steel was welcomed by UK Steel, the organisation representing the UK sector, which said that it was the way forward. UK Steel itself has a net zero strategy, and wants to see the transition proceed apace.
Decisions have been just left to sit there, but now we are able to provide the support that is needed. What we did in Port Talbot has saved thousands of jobs and allowed the adoption of new technology which will, indeed, create thousands of jobs as well.
Stephen Kinnock (Aberavon) (Lab)
Last Wednesday morning, Tata Steel executives in Port Talbot summoned the workforce to tell them of the plan to shut down our entire virgin steel making capability by March 2024. This was utterly shocking, because the understanding had always been that some of the heavy end would continue to function while the electric arc furnace was being constructed, but it takes years to construct an electric arc furnace. The plan is utter madness: it involves importing millions of tonnes of steel from the other side of the world. Electric arc furnaces need the products of virgin steel making, such as iron and iron ore—that is why we need direct reduced iron capability—and the loss of 3,000 jobs over a period like that is completely unacceptable and unnecessary.
When the Government did the deal with Tata Steel about Port Talbot, did they know that Tata was actually proposing not a transition at all, but a potentially lethal cliff edge for our steel industry? Did they know that Tata would be doing that? Does the Minister not agree that the idea of this process is that it should be a transition? It needs to be a bridge, not a potentially lethal cliff edge.
Ms Ghani
Tata Steel employs more than 8,000 people and 12,500 further in the supply chain. All of that would have been at risk if we had not been able to provide the certainty it needed to increase its investment to over £1 billion to allow it to transition. These are commercial decisions relating to the pace of transition. The hon. Gentleman knows that there is a transition board in place because he is a member. If there has been a failure in consultation at the level and depth of time required, there is no doubt that he and I will take that up as we will both be at the next transition board meeting. The reality is that to ensure the long-term viability of steel in the UK, some tricky decisions have to be made, but the company was provided with support to make sure that it transitioned in a way that supported local jobs, knowing that it had to transition and support the supply chain.
Jim Shannon (Strangford) (DUP)
I thank the Minister for her responses. We have committed to a net zero target, but consideration must be given to the potential loss of 1,500 to 2,000 jobs, which could be gone from the industry. We have been told that the two furnace closures could put further employment at risk for many. What steps will be taken to ensure that the steel sector and industry jobs throughout the whole of the United Kingdom will be protected? I had a meeting this morning where it was confirmed to me that the United Kingdom of Great Britain and Northern Ireland is No. 7 in the world for manufacturing. If that is the case, steel is a key part of that. The hon. Member for Scunthorpe (Holly Mumby-Croft) is to be congratulated on bringing forward this urgent question. Really, Minister, we need to make sure that the industry can be retained and not reduced at all.
Ms Ghani
That is why the support was so substantial to Port Talbot, to ensure that the steel sector could continue to thrive here in the UK. Manufacturing in the UK is booming. We are the eighth largest manufacturer in the world and we need to get our goods fundamentally from the UK, including steel. The hon. Gentleman is right to say that we cannot achieve net zero without steel, but we can help steelmaking to become even more green and clean than it is at the moment.
Nick Smith (Blaenau Gwent) (Lab)
Does the Minister accept that this news gives up on the UK’s capability to produce primary steel?
Mike Amesbury (Weaver Vale) (Lab)
This is a question of national security. It is not just a commercial decision. A specific question was asked of the Minister by the shadow Secretary of State on job losses specifically in Scunthorpe. Is that figure of 2,000 correct?
Ms Ghani
Negotiations have not concluded. We are continuing to be in intensive talks with British Steel. We wish to provide the support that is needed to support the steel sector and steel jobs but negotiations will continue. We need to make sure that due diligence is done and that we get value for money for taxpayers, whose money we are going to put on the table. But look at what we achieved at Port Talbot—a sector that was unable to confirm its future until we provided it with the financial support that it needed.
Shipbuilding Credit Guarantee Scheme Update
Nusrat Ghani Excerpts(1 year, 2 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Industry and Economic Security (Ms Nusrat Ghani)
I am making a statement to correct the record in relation to the supplementary estimate for UK Export Finance.
The final paragraph of the statement I made on 13 September 2023 should have read as follows:
“Parliamentary approval for additional resource of £51,000 for this new service will be sought in a supplementary estimate for UK Export Finance. Pending that approval, urgent expenditure estimated at £51,000 will be met by repayable cash advances from the contingencies fund.”
[HCWS1055]
Tata Steel: Port Talbot
Nusrat Ghani Excerpts(1 year, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Minister for Industry and Economic Security (Ms Nusrat Ghani)
With permission, Madam Deputy Speaker, I shall make a statement about Tata Steel’s proposal, which has been agreed with Government, to invest in greener steel making at its Port Talbot site in south Wales.
I can confirm that the Government have agreed on a proposed joint investment package to provide £500 million to Tata Steel as part of its proposed £1.25 billion project to move to low-carbon steelmaking in Port Talbot, subject to the necessary information and consultation processes that will be led by the company. For me it was always about certainty, continuity and security, and through investment in a state of the art electric arc furnace at Port Talbot the deal will support the UK’s efforts to meet increasing demand over the next decade and enable industry to take a significant step towards decarbonisation. It will strengthen our supply chain resilience as well as protect thousands of skilled jobs across south Wales and the UK for the long term.
The Conservative Government have been supporting the UK steel industry for many years. It will be no surprise that the industry has been acutely impacted by recent wider geopolitical and macroeconomic developments that have made traditional blast furnace steelmaking financially unviable. The global steel market has become saturated with heavily subsidised carbon-intensive steel, while Putin’s invasion of Ukraine has dramatically increased energy costs. This Conservative Government will continue to stand by our steel industry and this deal is part of our long-term plan for steel.
This ambitious transformation is the culmination of several years of negotiations between the Government and Tata Steel and it has been backed by a majority investment by the company. The transition will secure continued production of steel at Port Talbot, enable the industry to take a significant step towards decarbonisation and provide a clear pathway towards a long-term financially and environmentally sustainable business model, removing the repeated need for Government intervention.
As well as investment, the Government are enabling the major transformation and modernisation of the steel sector through key policy changes, including delivering the British industry supercharger to make electricity prices competitive for energy-intensive industries, including steel, so that they are line with those charged across the world’s major economies.
Steel is a strategically significant industry that plays a vital role in the UK economy. The sector supports tens of thousands of UK jobs and remains a key driver for local economic growth in regions with proud steelmaking histories, but it is also an industry in urgent need of modernisation. Decarbonising industry is a global challenge to meet the temperature goals of the 2015 Paris agreement. By replacing Port Talbot’s existing coal-powered blast furnaces and assets nearing the end of their effective life with an electric arc furnace, this proposed project is expected to reduce the UK’s entire business and industry carbon emissions by 7%, Wales’s overall emissions by 22% and the Port Talbot site’s emissions by 85%.
As such, decarbonising UK industry is central to the Government’s bold plans for tackling climate change and in doing so placing our country at the forefront of the growing global green economy. We are committed to seeing a low-emission production steel sector in the UK and are also working with global partners to support decarbonisation of steel production internationally.
This agreement with Tata represents the best offer and result for the UK and the people of south Wales. This package represents one of the largest support offers in recent history and will secure long-term jobs not just in Port Talbot but across all Tata Steel sites in England and Wales. It is a deal that not only safeguards jobs but will help to build better resilience in the UK economy and help to create new opportunities in our construction, automotive and energy sectors. We have been working closely with the Secretary of State for Wales and the Secretary of State for Levelling Up, Housing and Communities to establish a new transition board to help to capitalise on some of the opportunities that it will create. The UK Government will ensure a broad range of support for staff who are affected by the transition, working with the Welsh Government and Tata Steel to provide up to £100 million of funding for a dedicated workforce to support both affected employees and the local economy. We will continue to engage with local MPs and stakeholders in the area to ensure the project is a success.
Of course, any Government funding offered to a private company is subject to extensive scrutiny of detailed business plans, vigorous due diligence and subsidy control assessments. It will include strong conditions around financial probity, governance and delivery. With that in mind, we are delighted that we have reached this agreement on the Government’s role in the proposed project. As part of the proposal, Tata Steel will also release land in Port Talbot for redevelopment and use for new industrial businesses. Alongside the UK Government’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, this investment could help to unlock thousands of new jobs in both south Wales and the wider UK economy.
The landmark proposal builds on other major investments in UK green technology by Tata Group, including the July announcement of a £4 billion battery gigafactory creating 4,000 direct jobs, and represents a major vote of confidence in the UK. The Government are focused on working with business to get on with delivering key investments, creating opportunities across the UK. I commend this statement to the House.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the shadow Secretary of State.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
After 13 years of failure, expectations of this Government are not high, but even by their standards, spending half a billion pounds to make thousands of British steelworkers redundant is a truly remarkable feat. Last week, I went to Port Talbot to meet some of the workers affected by this announcement, and like us, they support green steel. They have actually been campaigning for green steel for many years, and those workers were promised repeatedly that they would be a part of the process. They rightly feel betrayed by this announcement and the fact it is being done to them, rather than with them.
I know the Minister will come back to say that more jobs were at risk. I have heard the Government’s line that all the jobs would have gone entirely, but she must be honest: it is absurd even to countenance the UK being the first major economy not to have a domestic steel industry. The UK steel sector is already much diminished compared with when the Conservatives came to power. The transition to green steel should be about more jobs, not less. It should be an optimistic, exciting moment for steel communities, but instead this has caused anxiety and anguish. I say genuinely to Government Ministers and to all on the Conservative Benches that if they allow decarbonisation to become associated with Thatcher-style job losses, it will risk the legitimacy and political support for net zero in a way that courts disaster. Is levelling up not a tacit admission by the Conservative party that the scars of the 1980s deindustrialisation cut so deep that we still feel them today?
Why were the workforce not involved in this process? Why has only one technology—the electric arc furnace—been chosen? What consideration was given to hydrogen and carbon capture possibilities? We already know that this deal was not the company’s opening proposal, so what other options have been considered? Crucially, what will happen to downstream facilities, such as Trostre and Llanwern, that provide packaging and automotive steels that cannot currently be served by an electric arc furnace? Will that steel be supplied from India, with a larger emissions profile than at present, which is what many of the workforce believe?
What is included in this package as regards ongoing industrial energy costs? Crucially, when will a grid connection for an arc furnace be provided? In addition, how will this £500 million of taxpayers’ money be protected? In the absence of any clear and identifiable criteria, how do we know that it represents good value for money? Finally, what does this announcement mean for the rest of the UK steel industry and, in particular, Scunthorpe?
The plan that Labour put forward for green steel was industry-wide, comprehensive and transformative, and it was designed to secure major economic dividends for the UK. We cannot secure the future of UK steelmaking with sticking plasters. We cannot do it on a plant-by-plant basis, and we cannot do it without the workforce behind us. This should have been such a positive announcement. It should have been about creating jobs, strengthening national capabilities and showing that we can do decarbonisation in a way that works for working people. I say to every single steelworker out there that it is clear that they will only get the bright future that they know is out there when they get a Labour Government.
Ms Ghani
It is unfortunate that the hon. Member decided to politicise such an important sector. It was not me but Gareth Stace for UK Steel, the trade association for the UK steel industry—the voice of the country’s steel manufacturers—who said:
“This is a really important day for our steel sector in the UK, with the Government showing a real commitment to the future of steel making here in the UK. We will get a true transformation of our sector to create steel for the net-zero economy, something which our customers are asking us for. We have the ability to completely transform our sector and boost the net-zero economy in the UK. We can really seize the opportunity to increase production in the UK and increase exports. We all know that a net-zero economy will need more steel, not less.”
The hon. Member is putting on a very poor display over a serious decision that has been in discussion, I am told, for more than a decade. I have spoken to Ministers who have held the portfolio over many years before me, and they tell me that these matters are nothing new.
More importantly, the hon. Member knows that the blast furnaces were at the end of their life. The right decision is to provide certainty, security and continuity, and that is exactly what we are doing. The UK is a world leader in producing steel, but we need to decarbonise, and this is the best way of ensuring and guaranteeing jobs, of which there are 8,000 on the site and 12,000 in the supply chain.
As well as the £500 million, £100 million has been put together for a group to consult and work with the unions, the staff, the Welsh Government and the Secretary of State for Wales to ensure that the transition is as appropriate as it can be and not so challenging for the people who are impacted. The proposal is to go for electric because other energy sources are underdeveloped. If the hon. Member will reflect on what is happening in Europe on hydrogen, for example, he will see that nothing else can work at this scale and within the tight timeframe that we want to work in to ensure that the site continues to be viable not only for manufacturing steel in the UK and supporting all the jobs in the supply chain but to support Wales, too.
The proposal will also transform the Welsh community and the Welsh area. A huge amount of work is taking place with the freeport, and a huge number of businesses and jobs will be coming out of the transformation to green steel. It is unfortunate that the hon. Member cannot recognise that, without this decision, there would have been continued uncertainty, no security for the staff and definitely no security for the UK steel sector.
John Redwood (Wokingham) (Con)
Have the Government ascertained that there is enough old steel and metal around for the recycling facility? Do their wider plans for steel in the United Kingdom include retaining capacity to produce new steel?
Ms Ghani
My right hon. Friend is always absolutely hot on these topics. There is enough steel, because we export so much of it and we can now use it on the site. Considering the age of the current furnaces, the reality is that electric arc furnaces are, within the timescale, the best way for us to transition. There is of course a supply chain in place that enabled Tata to put the business plan forward, for it to commit a substantial amount of money, and for us to support its plan.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Madam Deputy Speaker,
“I’m not going to shy away from the fact that this is still terrible news.”
Those are not my words but those of the Wales Secretary, who is sat next to the Minister. How did we get to a stage where £0.5 billion of UK-wide taxpayers’ money is being used to prop up a deal that is classed as “terrible news” by a Government Minister?
We know that we need to decarbonise, but with this level of taxpayer investment we should be looking at proper, green, virgin steel manufacturing and job creation, not the loss of 3,000 jobs, and not settling for lower-grade steel production from recycling. What will the lower-grade steel production mean for Port Talbot’s ability to supply key UK infrastructure programmes? What UK-based supply chain guarantees are being sought for the £1.25 billion of investment that the Government say is coming forward into the plant? Why were the unions not involved in the discussions? Why were the Welsh Government not involved? Is it not hypocritical to propose to involve the Welsh Government in the taskforce for job losses but not to have included them in the initial discussions on options for the plant going forward?
Not that long ago, the Tata Group also received a reported £0.5 billion for a proposed electric battery factory—another deal lacking in transparency at this stage. How can the Tata Group secure £1 billion so easily from the Government? It is the same with EDF, with more than £1 billion allocated to the development of the Sizewell C nuclear power station. Too many deals are done behind closed doors, based on who has got the Government’s ear and where the Government think there is some political capital. Does it not prove yet again that there needs to be a structured, coherent, long-term strategy to address the competition from the Inflation Reduction Act in the United States and the EU’s green industrial plan? Does it not also prove that in the current constitutional framework and fiscal straitjackets imposed on the Welsh and Scottish Governments, our communities will always be at the mercy of decisions made at Westminster?
Ms Ghani
There were so many questions, but I will do my best to address the most important ones. Conversations at Port Talbot have been going on for years—one could argue more than a decade. It is not news that the site needed financial support to ensure that it continued to be viable. Steel companies lose more than £1 million a day producing steel, and it is no longer viable without Government support. That is a route that many countries have taken.
The blast furnaces in Port Talbot can be operated for 15 to 20 years only before a major investment decision is reached, either to be relined or to be rebuilt. There was a very tight timeframe; it was important to find alternative energy—electric—to make sure that it would work with the timeframe of the new furnaces coming on site. That is why it is electric, not hydrogen—there are no hydrogen alternatives that can give us the steel that we need on the scale that we need. This is not only a £500 million investment. There is also £100 million to deal with the transition. As I said, the transition board will comprise union members, staffers, the Welsh Government and the Welsh Secretary of State. The conversation will take place, and consultation will occur. Those conversations have been happening for quite some time.
It is important to note that the sector is now secure. In a part of the UK that is incredibly important to us, thousands of jobs will be created—up to 16,000 jobs in the Celtic freeport proposal, which is linked to the renewables at Port Talbot. That will create even more jobs. Any transition that requires a consultation on jobs is always sensitive, which it is why it is important that the transition board will be stood up to provide the support needed. The site needed to make a decision. The best decision was for it to continue to make steel. That is what we will support it to do.
Holly Mumby-Croft (Scunthorpe) (Con)
Tata in Port Talbot and British Steel in Scunthorpe are the last two steelworks in this country that have blast furnaces. There is a place for electric arc furnaces, but we need to remember that they melt scrap; they cannot make brand-new virgin steel from scratch; a blast furnace is needed to do that. My hon. Friend made the comment about steel being a strategic industry, and she is right. Does she agree that, for national security reasons alone, we must ensure that we retain the capability to make virgin steel in this country?
Ms Ghani
My hon. Friend is absolutely right on the importance of virgin steel production. She is the best champion for her constituency and her steel plant, which is now uniquely positioned as the blast furnace to make virgin steel. That will be important in line with our mantra of “continuity, certainty and security.” Conversations have been taking place with British Steel, the details of which are commercially confidential. My hon. Friend campaigns incredibly hard for the steel sector both in the constituency and across the UK. Those meetings will continue. She is right that, obviously, we need a place for virgin steel, and that is in her constituency.
Stephen Kinnock (Aberavon) (Lab)
When all is said and done, the purpose of the deal should have been to protect the current order book and to prepare us for the opportunities of the future. All investment is welcome— I do thank the Minister for her work in this area—but I am afraid that the deal will fail to keep us competitive and to deliver a just transition for the thousands of my constituents whose dedication to our proud steel industry is second to none.
Could the Minister kindly address the following questions? Why have the Government put all their eggs into the electric arc furnace basket? Where is the investment in hydrogen, direct reduced iron and carbon capture technology so that we can continue to produce virgin steel, as the hon. Member for Scunthorpe (Holly Mumby-Croft) pointed out? Why were the steel unions not consulted in advance of the announcement? There are literally dozens of hydrogen-based steel projects ongoing across Europe. They are not necessarily ready to make steel but at least they are out of the traps, whereas we are still in the changing room putting our trainers on. Why have the Government not actually entered the hydrogen race?
Ms Ghani
The hon. Gentleman, who worked with me incredibly well as chair of the all-party parliamentary group for steel and metal related industries, answers his own question when he speaks about hydrogen. He knows very well the age of the blast furnaces in his constituency and the fact that we needed a transition that enabled certainty to continue. There is no option other than electric to scale up within the time required. [Interruption.] My right hon. Friend the Member for Wokingham (John Redwood) knows that. We have spoken about this many times, so it is disappointing to see the hon. Member for Aberavon being so political about it now. The electric option was a commercial decision for Tata, but it was the only way to ensure certainty to continue. Another Member talked about supply chains and making sure that production continues, so that Tata can deliver the contracts it has in place. The only way to do that is with electric, and that is the way we are going forward.
Commercially sensitive conversations can take place in a much tighter circle, but the hon. Gentleman will know that discussions have been going on for years and years. There is now a transition board, and there will be a huge amount of consultation. The focus is on ensuring that the people impacted are provided with the support they need to transition into the jobs that they should. The fact is that we are securing the future of the steel sector in the hon. Gentleman’s constituency. Without this funding all 8,000 jobs would have been lost, along with 12,000 in the supply chain, and we are not seeing that. We are backing steel in his patch.
Alun Cairns (Vale of Glamorgan) (Con)
The Minister is absolutely right when she says that steel is of strategic importance to the UK’s security interests and to our manufacturing base. We need to recognise the scale of this investment, which strictly speaking is a devolved responsibility. This is the UK Government coming in to support a UK national interest. Tata has long held an ambition to turn this into an electric arc furnace. What assessment has my hon. Friend made of suggestions that electric arc steel is inferior to virgin steel, which is made in blast furnaces?
Ms Ghani
My right hon. Friend, who spent a considerable amount of time as Welsh Secretary, knows very well how these relationships work. He is absolutely right: the negotiations and securing the £500 million investment have taken place via the Government here. It was important for us to make sure that the Secretary of State for Wales and everyone else involved were across this, too. He is absolutely right that there is a difference in the steel produced—my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft), the hon. Lady for steel, pointed out the importance of virgin steel—but there is a growing circular economy for steel produced in electric arc furnaces. It utilises scrap metal that is in abundance in the UK—we export tonnes of it—so there is a huge amount of work to be done in electric arc furnaces. That is why the business model is so substantial and why Tata put in so much money, with our £500 million going into the £1.25 billion commitment in total.
Dame Nia Griffith (Llanelli) (Lab)
The future viability of Tata’s tinplate works at Trostre in Llanelli depends both on the proximity of Port Talbot and on the production there of the grade of steel that can currently only be produced in the blast furnace process. While I welcome the recognition of the need for increased electric arc furnace capacity in the UK, what assurances can the Minister give me that the Port Talbot blast furnace will continue to supply steel to Trostre until such time as greener technologies are developed there? What will she do to support the development of those technologies in Port Talbot?
Ms Ghani
I am pleased that the hon. Lady recognises that whole new supply chains will be created and whole new businesses set up, with many more jobs in place too. There will now be a consultation in place. Tata has already put up its business plan for how it will continue to supply steel, but also for the work it will do with supply chains downstream. That work will continue to take place. As far as I am aware, there is no other change in any other sites. Now that the deal is out in public, work will continue at pace. I will continue to meet the chair of the steel APPG and the steel sector to ensure we are doing everything we can to back UK steel and UK manufacturing, and all the businesses in the supply chains too.
Mark Pawsey (Rugby) (Con)
The Minister was a distinguished member of the Business, Energy and Industrial Strategy Committee. I cannot remember whether she was with us when we visited Port Talbot, but we saw a plant that had given great service over many years but was badly in need of updating. At a time when we send almost all our previously used steel, otherwise known as scrap, abroad, is this not the best option to provide a less carbon-intensive method of production and to secure UK manufacturing?
Ms Ghani
My hon. Friend is correct: I was a member of the BEIS Committee when we produced the report on steel. I think I said earlier that we export just shy of 9 million tonnes; it is actually eight point something, so forgive me, Madam Deputy Speaker, if my earlier figure was inaccurate. All that scrap metal can now be used within this site, which is extremely important. We know that a huge challenge is posed to the steel sector, for instance by countries that tend to dump their steel elsewhere, and we will work both nationally and internationally to do what we can to protect UK steel.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Three thousand job losses at Tata Steel will be a huge blow to Wales. Just as happened under Thatcher, our industrial communities are being forced to pay the highest price, and it is being paid by those who can least afford it. This news comes just weeks after the Minister’s Government failed to attract funding for offshore wind in the Celtic sea. The Tories have had more than 13 years in which to put in place a proper industrial strategy maximising Wales’s green energy potential with a just transition from fossil fuel dependency, and with workers’ futures at its heart. Is the Minister proud that her party’s time in power will, once again, leave a toxic legacy in Wales?
Ms Ghani
It is unfortunate that the right hon. Member has taken such a narrow view. We are providing £500 million to ensure that the plant will continue to make steel, and to support the jobs in the industry. There are 8,000 direct jobs and 12,000 jobs in the supply chains which would disappear if there were no steel plant in Port Talbot. I should have thought that the right hon. Member, who has been so passionate about net zero, would appreciate the work that is being done in this regard. There is no alternative energy source that can deliver net zero, at scale or within the timetable that is required, given the infrastructure that is in place.
In case the right hon. Member thinks that it is just the Conservatives who are saying this, I invite her to read what UK Steel has said about this decision. It has said that this is a really important day for the steel sector in the UK, and that the Government are showing a real commitment to the future of steelmaking here. It is not just a question of our ambitions for net zero; the UK steel sector itself has put together a road map to net zero, which this investment will enable it to reach.
The right hon. Member alluded to the Celtic freeport. That will create 16,000 jobs, and will also ensure that a supply chain in renewables continues in that part of the country. It is unfortunate that the she cannot understand that the discussions that took place for so long could have continued the uncertainty, and, potentially, the age of the furnaces could have caused the site to close down. That would have been terrible, but we have ensured that we now have certainty, continuity and security.
Jessica Morden (Newport East) (Lab)
We have seen years of inaction on steel from this Government while watching other countries around the world invest proactively, but the investment announced on Friday will lead to potential job losses that will be deeply felt in Port Talbot and across south Wales. Why was there no consultation with the unions and the Welsh Government, who should surely have had a voice in ensuring that there is a fair transition to decarbonisation? What will the Minister do to provide clarity for workers about, for instance, the impact on downstream plants such as Llanwern, and to address the point about the grades of steel needed?
Ms Ghani
Any change will be challenged by those potentially affected, which is why the transition board is being set up with a budget of £100 million to ensure that people who are impacted are given the support that they need. It is hard not to go on repeating that this has not come out of the blue, and that discussions have been taking place forever. I speak to the hon. Member regularly about this matter. I know that it is difficult for her to reflect on it in the Chamber, but we finally have some certainty. She mentioned that no decision had been made for what seemed like forever, but this is a really good decision: it is protecting jobs, it is protecting the industry next to her constituency, and it is ensuring that there is a future for steel at Port Talbot. It is good news, although we know that there is some difficulty, which is why, as I have said, we are establishing a transition board.
The hon. Lady also mentioned the unions. They were in Westminster recently, attending a huge event co-hosted by our fantastic iron lady, or rather steel lady, my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft), as well as UK Steel. There was a presentation of the procurement policy note, but also a discussion about the road map to net zero. This is a route that was identified, and it is one that we have now taken to ensure the longevity of steelmaking in Port Talbot.
Helen Morgan (North Shropshire) (LD)
The green transition should present exciting opportunities to build a fair, more prosperous economy for the benefit of communities across the UK, but the job losses involved here highlight that, for some workers, when the industrial landscape shifts around them there might not be an opportunity to benefit from those opportunities. They need to be supported to train and retrain throughout their adult lives, so will the Minister take this opportunity to commit to the development of a national skills strategy?
Ms Ghani
That is a sensible point. There are skills strategies in lots of different portfolios within industry, and in these particular circumstances, as I mentioned, a transition board will be stood up with £100 million to do exactly that—to ensure that people are redeployed and reskilled so that they can continue to work in the sector.
Nick Smith (Blaenau Gwent) (Lab)
The impact of the war in Ukraine has emphasised the importance of the UK’s sovereign steelmaking capacity, yet an electric-only arc model means that we will have to import supplementary virgin steel and be unable to produce high-end automotive steel. Does the Minister accept that, under this deal, the self-sufficiency of our steel industry has been dealt a real blow and that our defence capabilities are badly undermined?
Ms Ghani
The answer is no. Under this deal we have protected jobs and ensured that we will continue to have a steelmaking facility in Port Talbot that supports the diversity in the supply chain. We also realise how uniquely important the blast furnaces in Scunthorpe are. We have talked about looking at hydrogen, but as I mentioned, it is untested at this scale to work within the timeframe that is needed. This deal is really good news for the UK steel sector, enabling it and us to reach our decarbonisation targets and ensuring that we are dealing not with virgin steel but with scrap steel in a way that can be recycled within UK industry. It ensures the longevity of the steel sector in Port Talbot.
Sammy Wilson (East Antrim) (DUP)
No matter what gloss is put on this today, 3,000 jobs have been sacrificed on the Government’s altar of net zero and decarbonisation. There can be no hiding from the fact that there are huge costs associated with this policy, and that they are becoming apparent week after week. Despite what the Opposition spokesperson said, the fact is that job losses are associated with this policy. We have seen it with steel, aluminium, oil and gas—we could go on and on. Will the Minister not accept that, as a result of this policy, we now have strategic industries under threat, we are losing jobs, we are putting greater pressure on taxpayers, we are pushing production overseas and we are making ourselves dependent on foreign producers?
Ms Ghani
The reality is that one of the furnaces in particular was coming to its end of life and the other was mature, so a decision had to be taken on whether the company would want to continue, considering the loss it was making every day in producing steel, or to transition to making cleaner steel. That was a commercial decision. It was important for us to ensure that steelmaking in Port Talbot would not disappear but continue, and this is the option that the company went for. It is the option that it has a supply chain for, and it was best that we supported it through this process and ensured that there were fewer job losses.
The reality is that any transition is going to impact jobs, which is why it is so important to ensure that support is available to enable people to skill up and transition. That is why the transition board has been set up with £100 million to help people on that journey. It is not fundamentally about achieving net zero; it is fundamentally about the age of the furnaces on the site, about the loss-making in the steel sector in the UK, particularly at this site, and about what decisions the company would take next. It was important for us to support the UK steel sector and provide it with £500 million—it has an overall envelope of £1.25 billion—to ensure that steelmaking continues in Port Talbot.
Kerry McCarthy (Bristol East) (Lab)
I would have hoped to hear a rather more robust defence from the Minister of the need to reach net zero and of the massive job opportunities that will come from pursuing a green agenda, as we have seen from what is happening with the Inflation Reduction Act in the States.
I visited Port Talbot last month during the recess, and I echo what the constituency MP, my hon. Friend the Member for Aberavon (Stephen Kinnock), said about the importance of the site and of continuing to support jobs there. Concerns were raised with me about the availability of scrap and how difficult it is to recycle and retrieve scrap metal. There does not seem to be any strategy from the Government for dealing with that. Can the Minister tell us what she intends to do, working with her colleagues in other Departments, to achieve that?
Ms Ghani
As I mentioned, just shy of 9 million tonnes of scrap could potentially be used at the site. Tata has put together a substantial package, which shows that it has thought through its supply chains. A huge amount of work will continue to take place to ensure that more information is put in the public domain. No doubt there will be more public tenders, too. The scrap does exist and we recognise that electric arc furnaces produce a particular kind of steel, which is why it is important to have a virgin steel sector here in the UK as well.
I have spoken about the environmental impact and how it helps us to reduce our emissions, but it is not only about that. This site was reaching the end of its life, and these negotiations have been taking place forever. It is important that we made sure that we had the certainty and support to move on to the next conversation on how we best exploit the new site to produce cleaner, greener steel and how we make sure the contracts are in place.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
Understandably, there has been much focus on the potential job losses at the Port Talbot plant, but the steelworks is an anchor operation supporting a vast supply chain across Wales and beyond. The Minister mentioned that Tata Steel is making an assessment, but what assessment have the UK Government made of the impact of the announcement on the wider supply chain?
Ms Ghani
The hon. Gentleman is right that the sector has a vast supply chain, and we know how important it is for UK manufacturing. Last week’s data show that we are the world’s eighth largest manufacturer, so supply chains are imperative.
I am also working on an import supply chain strategy to ensure that we are as resilient as possible when importing from countries that may not share our democratic values. Work has been done internally on the supply chain. To secure the money in this package, Tata had to ensure it had a business plan and sight of its supply chains. This work has been ongoing for quite some time, and a lot of it has been commercially sensitive. Now we are able to speak about it, I do not doubt that more will be made public. We will continue to work on the supply chains, and I hope to put forward the import supply chain strategy by the end of the year.
Bill Esterson (Sefton Central) (Lab)
The UK is the only country in the G7 in which steelmaking is in decline. We need to be honest with ourselves that the job losses announced at Tata are a further continuation of that decline.
The Minister said there have been ongoing negotiations for a very long time on the switch to electric arc production, and she has been asked a number of times about the supply of scrap. Why is she not able to tell us that she has a plan to end the export of scrap steel and to secure its use for electric arc production in the UK, now that this decision has been announced?
Ms Ghani
The hon. Gentleman’s opening comment is factually incorrect. He says we are the only country in decline, which is not true. French production has declined by 21%, German production has declined by 13% and Italian production has declined by 12%. It is appropriate to make sure we are accurate in setting the scene. His opening comment was wholly inaccurate.
These commercial decisions are based on business plans and Tata’s relationship with is supply chain. The hon. Gentleman was with me at the event in Parliament last week or the week before, and we have put together a procurement policy note to ensure that we have more UK steel in our supply chains, and definitely in Government contracts. I will continue to do my best to ensure that the number goes on the opposite trajectory to steel produced in the rest of Europe.