Tata Steelworks: Newport

Stephen Kinnock Excerpts

Tuesday 8th October 2019 Westminster Hall

[Jessica Morden]

My hon. Friend is exactly right, and we need that investment to do it.

Attention has been given to electric car battery production —the Prime Minister mentioned the gigafactories needed to produce high volumes of battery products in his conference speech—but electric motors are an equally important part of the supply chain. They are built from the high-quality, non-oriented electrical steels that could be produced at Orb, and the demand for this type of steel is expected to increase tenfold by 2030.

The number of electric cars on our roads will grow and grow over the next decade. The UK Government are providing millions of pounds to support the roll-out of charging infrastructure, and it is imperative that we use UK steel in all this. The Government have awarded Jaguar Land Rover, which is owned by Tata, a £500 million loan guarantee to help the company sell electric vehicles. In this context, with the Government’s stated support for the electric vehicle industry, I ask what the Government can do for all. Electric cars need electric motors. Why should we have to import them? We have a site here in the UK that, with support, could be part of the supply chain.

We need UK steel every step of the way, and electrical steel is part of that. As members of the all-party group and the unions have long said, the industry can be a key part of building the infrastructure we need to green our economy in the future.

At Labour’s conference, we pledged to accelerate the electric vehicle revolution with 2.5 million interest-free loans for the purchase of electric vehicles, a new requirement for the Government car fleet to be 100% electric by 2025, and action on a private fleet. Labour is determined to ensure that the right conditions are in place for this revolution, and the Government should be, too. If the Orb works is not kept open, the potential to build a supply chain will be squandered. It is not an overstatement to say that the UK could lose its capacity to be a global leader in electric car manufacturing.

Developing a supply chain for electric vehicles will be hugely important for the national balance of trade. Across the UK, 10,000 workers are making internal combustion engines, and Community has emphasised that a failure to develop the supply chain will result in a loss in the export value of those engines. It will be replaced by the import cost of electric motors, which equates to £1.2 billion for every 1 million electric cars. That is why Community has called Orb a

“strategically important business underpinning this vital industry of the future.”

Tata has publicly confirmed that, with investment, the Orb works can produce the steels required for the future production of electric vehicles. Community’s steel consultant, Syndex, has researched and concluded that with a new strategy and some public support, there could be a sustainable future for the business. So what is the plan? The new strategy for Orb would mean transitioning to a new model and producing non-oriented steels, in addition to grain-oriented steels, based on a new Wales-only supply chain and using coil from Port Talbot. To fund the necessary capex, the profits from the sale of Cogent Power Inc—another part of the business, which is wholly owned by the Orb—would be reinvested into the business, along with the money set aside to finance a closure.

[Stephen Kinnock (Aberavon) (Lab)]

My hon. Friend is making a very powerful speech. The Government often criticise us for critiquing their failure to support the steel industry without proposing a constructive plan, but she has just outlined an absolutely compelling and viable plan. One of the vital parts of it is that we would be relocating the supply chain for hot rolled coil from IJmuiden to Port Talbot. Surely if the Government are talking about backing British business, they should back the Syndex plan.

--- Later in debate ---

[Kevin Foster]

This is a commercial decision by the company and the plant has been for sale for two years, but as I have already said, we are more than happy to meet stakeholders to see if the Government can provide some support. That support would have to be based on a sustainable long-term business plan for the future.

We are also providing up to £66 million through the industrial strategy challenge fund to help steel and other foundation industries develop radical new technologies and establish innovation centres of excellence in those sectors. This challenge will create a pilot facility to demonstrate new technologies, and develop a cross-sectoral approach for research, innovation and skills. To date, the UK Government have provided more than £312 million in compensation to the steel sector since 2013 to make energy costs more competitive, including over £53 million during 2018.

[Stephen Kinnock]

The Minister talks about this being a commercial decision, but it is absolutely clear that the underlying conditions for the British steel industry are completely undermined by the energy price disparity. Is he aware of the fact that it costs £50 per MWh in the UK, compared with £31 per MWh in Germany, a disparity of 62%? The disparity with French energy costs is 80%. The Minister cannot claim that this is a purely commercial decision; it is a commercial decision based on the utter failure of the British Government to deal with this energy price disparity.

[Kevin Foster]

As has been mentioned, to make energy costs more competitive, we have made £312 million in compensation available to the steel sector since 2013, including £53 million in 2018 alone.

We have commissioned independent research to identify high-value market opportunities for UK steel producers that will be worth up to £3.8 billion a year by 2030. The UK is a supplier of steel for a range of high-value applications and is a strategic part of the supply chain for the automotive, aerospace, construction, defence and oil and gas sectors. We are successfully working with the steel industry to introduce steel procurement guidance that will ensure that Government and the wider public sector take into account social and environmental benefits when procuring and designing their major projects.