Protecting Steel in the UK

Stephen Crabb Excerpts

Tuesday 23rd January 2024 Commons Chamber

[Jonathan Reynolds]

I agree with that case. That is why this is such an important issue for Parliament to consider. I always acknowledge that there are parts of it that are difficult. Decarbonising industry is an urgent priority, but in some cases the technology is uncertain or expensive. It is my contention, however, that getting it right is more important than doing it quickly or necessarily at the cheapest cost. To state the obvious, we can decarbonise anything by shutting it down. The cheapest path will likely always involve outsourcing most of our industrial production to other places. If we do that—it is the Government’s plan for Port Talbot—we will spend millions of pounds, and we will see huge job losses and global emissions rise as we effectively offshore our emissions and then claim that is progress. That would be a fundamental political mistake with potentially enormous ramifications for the future of the transition to net zero. We should know that from our own past.

As my hon. Friend mentioned, when I was a child growing up in the north-east in the 1980s, there was a major transition. We saw the end of coalmining and shipbuilding and the old nationalised industries as we knew them then. Many colleagues across the UK have similar personal experiences. Nobody today would propose that the UK should have an economic or energy policy based around large-scale coalmining, but how we manage the transition is fundamental. In the past, as a country, we have got that wrong. Levelling up—supposedly the Government’s flagship policy—is surely a recognition that the scars of those years and the impact of deindustrialisation are still felt in many parts of the UK today, yet the Government risk making exactly the same mistakes all over again.

The decision of this Conservative Government to hand over half a billion pounds of taxpayers’ money to make thousands of people redundant is quite simply a bad deal. It is a bad deal for workers, a bad deal for taxpayers and a bad deal for the future of our industrial sovereign capability. Worse than that, it sends a message that decarbonisation effectively means deindustrialisation. I put it to Conservative colleagues that if net zero becomes a zero-sum game for working people, that risks the very support that we need to achieve the transition. There must be public consent for the transition, and that requires our economy to benefit from better jobs and better opportunities. This is the real politics of getting net zero right: it is not imaginary meat taxes or made-up claims about seven bins but whether the transition is just and fair and delivers something for Britain’s workers. The Government’s plans so far are simply none of those things.

The race to decarbonise is a race for jobs and prosperity, and this could be a hugely significant time for steel. As the Minister knows, I have many criticisms of Government policy, and I believe that we have weak business investment, weak productivity and weak growth as a result. I recognise that the Port Talbot site is in a challenging financial position, but the Government have already recognised that uncompetitive energy prices need tackling. We have procurement rules in place that are seeing significant steel content from the UK in infrastructure projects, and we are getting close to carbon border adjustment mechanisms both here and in the EU, which will be a major development. CBAMs in particular will likely completely change the economics of the UK steel industry. There is no reason to believe that the UK cannot have a vibrant steel sector, so to make this irreversible decision now, when the policy background is clearly improving, seems odd indeed. Better options are on the table; anyone claiming otherwise is simply being disingenuous.

When it comes to Port Talbot, there is a specific alternative proposal available—the multi-union Syndex plan—which is not far off Tata’s original proposals, which were known as Project Kronus. Other proposals have also been put forward. All we ask is that the Government consider the issues involved and do not make any fundamental decisions that are irreversible.

It is widely accepted at Port Talbot that blast furnace No. 5 is at the end of its life and may need to close, but blast furnace No. 4 will not need to be relined until 2032. For the Government to force that furnace to close now, as we await the arrival of new technologies, is an act of economic vandalism. We acknowledge that electric arc furnaces are part of the answer, but we do not want to put all our eggs in one basket, which means being open to all technologies, and especially direct iron reduction, which is one of the most exciting possibilities.

The counter-arguments put forward so far are not robust. I believe that safety issues could be managed in the same way that they are every day at a major steelworks. The claim that 90% of what Port Talbot does could be met with an electric arc furnace does not stand up, as key products in packaging and automotive materials cannot be produced in one. At Scunthorpe, I understand that the lack of sufficient grid connections and the cancellation of the first carbon capture programme back in 2010 have severely limited the options available. Again, I ask the Government not to make irreversible decisions, to be open to all technologies and to recognise the growing importance of and demand for steel.

We are not the only country with these challenges, but everywhere we look, other countries are doing it better. Take the Netherlands, where Tata is in negotiations with the Government on DRI technology; Sweden, with the collaboration between SSAB, Vattenfall and LKAB; Canada, where ArcelorMittal signed an agreement some time ago to build a new green steel plant; or the news just in of a $5 billion investment in a new green steel plant in Saudi Arabia. Everywhere we look, other countries are seeing growth and investment in their steel sector, but we are seeing the opposite. I put the question to Ministers: why is the UK pursuing this path alone?

At Business and Trade oral questions, the Minister has been asked repeatedly—mostly by Government Members—about the assessment the Government have made of becoming the only major economy without primary domestic steel production. Her answers hint that she might get it, but the Government have ploughed on regardless. I ask her again: how can any Government possibly justify making thousands of workers redundant in the name of cutting our carbon footprint only to pay to ship in more carbon-intensive steel from halfway across the world?

It does not have to be this way. We cannot afford to blow this opportunity, repeat the mistakes of the 1980s and leave regional inequality entrenched—we can still see those scars. That is why I always say that, under Labour, decarbonisation will never mean deindustrialisation. I want green steel, and I believe that the workforce are our greatest asset in delivering that. Any real plan for green steel must cover the whole industry. It must be open to all technology that is available, and it should fundamentally be a story of new jobs, new opportunities, new exports and renewed British economic strength, rather than outsourcing our emissions and pretending that that is progress.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

The hon. Gentleman is being generous with his time. I came here this evening, as I am sure the workers sitting in the Public Gallery did, to see whether there is a genuine plan on the table from the Opposition. The hon. Gentleman said that there would be, but I have heard nothing specific. I have heard about none of the costs involved. He said that he was not interested in nostalgia, but most of the contributions from Opposition Back Benchers have been exactly that. Where is the credible plan B that people want evidence of?

[Jonathan Reynolds]

It is literally here in my hands. It is not hard to find. I say to Conservative colleagues that Google is their friend. I have tried to say that the plans are available, but we will be pragmatic and flexible. We are just asking that irreversible decisions are not made that limit the room for manoeuvre in future. On resources, we have earmarked £3 billion of investment from our spending plans to deliver this, all of which is predicated on unlocking much larger sums of private investment. The Government do not disagree with the case for putting money in, but the deal that they are putting forward for that half a billion pounds does not deliver very much at all. What a tragedy it would be in the future to find a Britain that is building homes and infrastructure again, with secure low-carbon energy generation and a new wave of floating offshore wind, but is not making the steel to provide those things.

Labour has a plan to build a better Britain, and we want to build it with steel made in Britain. We will only get one opportunity to get this right, and we must bring workers and steel communities with us. I will finish with what Gary Keogh, a steelworker from Port Talbot told me:

“The question for Tata and the UK Government is this—do we want to be a nation that makes goods, or a nation that imports them from heavily polluting countries? It is not too late for Tata and the UK Government to think again and change course, but time is…running out. If they fail to take a different path now, the people of South Wales will never forgive them, and history won’t forgive them either. There is so much at stake for all of us.”

Well said, Gary.

I am asking the Minister—quite honestly, I am begging her—to consider the arguments and what is really value for money, and not to make decisions that are irreversible and prevent a far better outcome in future. To Britain’s steelworkers, I say that I know how desperate things feel right now and how angry people are, but there are those of us who get it, who understand what this industry is and why it is important. Given the opportunity, we will deliver the future for steel and the right transition that we all know is essential for our future prosperity, security and wellbeing.

--- Later in debate ---

[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.