Sarah Jones
Main Page: Sarah Jones (Labour - Croydon West)Department Debates - View all Sarah Jones's debates with the Cabinet Office
(9 months ago)
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Sarah Jones (Croydon Central) (Lab)
It is a pleasure to serve under your chairmanship, Sir Gary. I am delighted that my hon. Friend the Member for Llanelli (Dame Nia Griffith) was able to secure this debate, and I want to congratulate her on such an excellent speech. She is right: we stand at a crossroads and we risk being left behind. She painted a lovely picture of the tinplate factory—as she knows, that is where my grandfather worked—and how long that has been there.
I also want to mention the other speeches, particularly that of my hon. Friend the Member for Aberavon (Stephen Kinnock), who told us that this is not about the past; this debate is about the future and what the steel industry can become. My hon. Friends the Members for Neath (Christina Rees) for Newport East (Jessica Morden) and for Newport West (Ruth Jones) made, along with others, really brilliant speeches that highlighted the problem incredibly well. I listened carefully to the debate, and I am very proud to have such Members on this side of the House standing up for workers in south Wales.
My main takeaway from considering everything that has been said is: what is this Government for? What are they usefully doing? What is their plan on steel? The challenges we face in Wales have been excellently set out, but let me set out the broader context. The steel industry is badly broken. It has been lurching from crisis to crisis for more than a decade, and there are two fundamental points where the system is not working.
First, the steel industry does not serve the needs of the UK—of our economy or of our security. Companies pursue completely legitimate corporate objectives, but those are no longer aligned with what we need as a country for our security or our economy.
Secondly, the steel industry is not serving the needs of private investors either. Companies are struggling to make money or find opportunities for growth. We have seen investment in the steel industry in other equivalent countries—big investment—but it has been staggeringly low for many years in the UK. It is not working for anyone.
What have the Government done in the face of this challenge? Well, we have the worst of all worlds. They do not know whether they want to be interventionist or not. They do not know whether they want to encourage competition or not. They do not know whether they want to have a plan or not. They dither; Ministers change; obsessions lie elsewhere, so this Government end up treating each crisis in isolation. They support existing players in the market rather than encouraging new ones, failing to tackle the lack of competitiveness and pouring billions of pounds of public investment into the steel industry without any improvement in the sector or any increase in capability. The result has been a significant fall in the amount of steel we are making. What is the overall outcome? Our steel industry is now smaller than that of Belgium, jobs have been offshored and we have damaged our communities.
Labour’s approach could not be more different. We will not pour billions of pounds into an industry without being clear what it is for, what the outcome will be or how the security and economy of the UK will be enhanced. We will not stifle competition; we welcome competition. We will go after new entrants to the market to encourage investment. We want the UK to be the most attractive country in western Europe to invest in steel. Labour’s £3-billion investment in steel will unlock billions of pounds of private sector investment. We will not just shore up a broken model, as this Government are doing. We will not dither. Our industrial strategy will clearly define the objectives for UK growth. We will identify the space in which UK national objectives align with corporate objectives, and we will be agile enough to respond to the different scenarios facing the industry by the time this wretched Government have finished their work.
Labour also has a commitment to primary steel making, unlike this Government. We will not jeopardise the security of our nation.
Jonathan Edwards
This is a genuine question—I am not trying to catch the hon. Lady out. As I alluded to earlier, there will be a change of Government before the end of the year and the hon. Lady will effectively be the Minister. Are the Labour Front Benchers now in a position to negotiate directly with those steel producers about the plan that will be in place in a year’s time? They are essentially a Government in waiting, are they not? Are those negotiations happening, or is there no chance of them happening at all?
Sarah Jones
Obviously, we need to wait and see if there is a change of Government, and we would not assume that. Many of us are in constant conversation with Tata and the unions about the way forward, and we are also talking to the Government about a different approach. We are doing everything we can from an Opposition point of view, but obviously the Government hold the reins at the moment.
Holly Mumby-Croft (Scunthorpe) (Con)
The hon. Lady makes mention of talking to Tata, and presumably that has been ongoing for some time. Can she be very clear whether her understanding is that Tata would have removed all its UK-based jobs had it not been able to reach a deal with the Government for some support at Port Talbot?
Sarah Jones
That is not my understanding—no. What we are trying to focus on in any conversations we have about any industry on steel is what the future is and where we go from here—that is the important question.
My advice to the Minister is to go to the hon. Member for Ashfield (Lee Anderson) and talk to him about when he worked down the mines, and what happened to his communities when the mines shut—the cliff edge, the redundancies, and the closure of all the community assets that went with it. That is what we risk doing in Port Talbot with the cliff edge that we face—nearly 3,000 jobs, as well as the huge knock-on impact of one job in the plant linked to three jobs in the community. Let us not lose 3,000 jobs in Port Talbot. Do not spend half a billion pounds on that. Let that not be the Government’s legacy.
It is not too late; there is an alternative that we could all work towards. The multi-union plan helps us to transition in a way that protects jobs. That is what the Government should be talking about to Tata. It is not too late for the Government to have a steel strategy, to spend taxpayers’ money in a way that works for the UK, our economy and our security, and to listen to their own work, if not Labour’s. The Government’s 2017 review, “Future capacities and capabilities of the UK steel industry”, identified the barriers to growth: supply chains, competitiveness, skills, and research and development capability. Has the Minister read that? What is the Government’s response to that review from 2017? It could do with an update now but the basics are there. The Harrington review is clear:
“The reality is that many of our competitors chase investments via their industrial strategies backed by substantial government support…The UK needs to respond.”
Has the Minister read the Harrington review and what is the response on steel? What is the Government’s steel strategy?
Ministers talk about how important scrap is going to be, and of course it is for electric arc furnaces, but how are they incentivising measures to keep our scrap here rather than exporting it, which is currently the case? Ministers talk about how we need new technology, but electric arc furnaces are not really the new technology any more—they are years old. What are we doing to take us towards a direct reduced iron facility in the UK using hydrogen? What is the plan? What is the plan to grow the steel industry and where is the ambition? What are the Government doing about carbon border adjustment mechanisms? The steel industry will be exposed to unfair competition, so what is the Minister going to do about that? What is the plan on skills, and what is the Government’s view of the multi-union plan for steel in Port Talbot?
Many of the manufacturing industries that I meet across different sectors are at a crossroads. Bills are high, there is no strategy to support them, they are reducing their output and they are struggling to find people to work with them. The steel industry in Wales is a case in point; the Government’s last-minute, chaotic deal was a masterclass in how not to run the transition. Members across the House are worried about the future of the UK steel industry. Members across the House do not want thousands of steel workers to lose their jobs.
Stephen Kinnock
My hon. Friend is summarising the discussion extremely well. I declare an interest as a member of the transition board. During the board’s discussions, we talked about what the vacancies looked like in the labour market in south-west and south-east Wales, and the vast majority of vacancies are in the retail and healthcare sectors. Those are really important sectors and really important parts of our economy, but does my hon. Friend agree that there is not really a connection between the skills and experience of the men and women who have worked in the blast furnaces, for example, and those required to fill the vacancies in the labour market outside those steelworks, and that that is extremely worrying?
Sarah Jones
My hon. Friend makes a really good point, which is why we keep coming back to this cliff-edge approach and saying that it is not the way to transition. If we think about south Wales and the Celtic sea, we think about the huge opportunities with an industrial strategy and industry working together with Government, including the jobs and growth that we could create, but do we have any of that under this Government? No, because they do not even have the starting point of a plan for steel.
Members across the House do not want to see this country becoming the first developed country in the world without the capacity to produce primary steel. Is the Minister concerned about our defence capabilities if we lose the capacity to make steel here from scratch? Does she think that the Government’s plan is really money well spent? Can she answer the question that was originally put today: what conditionality has been placed on this deal? We keep asking for the answer to that question, but we have yet to receive it.
Labour will have clarity of vision on steel. We will invest to unlock private sector investment and we will work hand in glove with the private sector. We will use our flagship policies—the national wealth fund, GB Energy becoming a clean energy superpower, grid reform and an industrial strategy—to make the UK a place to invest in, not a place to leave.
Once again I thank my hon. Friend the Member for Llanelli for making such a brilliant speech today and I also thank all the Members who have contributed to the debate. I hope that this debate serves to raise the Government’s game, but Labour stands ready to step in if it does not.
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.
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.
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.
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.