Protecting Steel in the UK

Robert Goodwill Excerpts

Tuesday 23rd January 2024 Commons Chamber

[Jonathan Reynolds]

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

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

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

[Jonathan Reynolds]

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

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

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

--- Later in debate ---

[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.