Tata Steel: Port Talbot

Baroness Winterton of Doncaster Excerpts

Monday 18th September 2023 Commons Chamber

[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.

--- Later in debate ---

[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.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson.

[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?