PARLIAMENTARY DEBATE
Port Talbot Steelworks - 30 April 2024 (Commons/Commons Chamber)

(Urgent Question): To ask the Secretary of State for Wales if he will make a statement on Tata ending the statutory consultation on redundancies at Port Talbot steelworks.

On 25 April Tata announced its strategic direction to proceed with its Port Talbot transformation, following the launch of the formal national consultation with the unions on 6 February. Technically, the consultation has not concluded at national or local level. The statutory consultation remains under way, and I understand that the company intends to move to local consultation with staff who may be affected.

This is a deeply concerning time for the Tata workforce and the wider community. I hold regular conversations and meetings with the unions and management, and will continue to do so as we develop interventions to build a brighter future for Port Talbot. On 15 September we announced an unprecedented £500 million Government grant as part of the £1.25 billion investment by Tata Steel to build a new electric arc furnace. Tata Steel employs more than 8,000 people, including at Port Talbot. All those jobs— along with many thousands more in the supply chain—would be under threat were it not for the agreement that we struck. The transformation will be difficult but the funding has saved 5,000 jobs in the company. It is not the case that we have paid money to put people out of work—we have paid a lot of money to save 5,000 jobs. We are also looking to modernise production and ensure that steelmaking in south Wales can continue for generations to come.

Going beyond that, to support those affected by Tata’s decision we have put £100 million towards the creation of the transition board, which I chair, and which includes representatives of the UK and Welsh Governments, local authorities and industry. The funding includes £80 million from the UK Government and £20 million from Tata—nothing as yet from the Welsh Government, but we hope that there will be some. It will be used to achieve the transition board’s priorities, the first of which is to support those affected employees to find new, well-paid jobs. The board’s priorities also include supporting businesses in the supply chain and the longer-term regeneration of the region.

In its most recent meeting last week the transition board endorsed a local economic action plan, which will act as a road map for how best to use the funding to support those affected. While the ongoing consultation is a matter between the trade unions and the company, we will continue discussions with all parties. We hope a resolution is found that avoids industrial action. The Government will continue to work closely with industry to secure a sustainable and competitive future for the Welsh steel sector.

I am confident of a good future for Port Talbot and the region, with the UK Government progressing the bid by Associated British Ports to the next stage for up to £160 million of funding to support our nascent floating offshore wind industry, and our progress towards establishing the Celtic freeport, backed by £26 million of UK Government funding.

Last Thursday’s news was a gut punch for workers in Port Talbot, with economic consequences that could reverberate across south Wales for decades. Last month, I met workers at the plant. The sense of the threat to nearly 3,000 people’s livelihoods was all-consuming. The wider supply chain in Llanwern, Shotton and Trostre is vulnerable, too. We again urge Tata not to make any irreversible decisions before a general election.

My hon. Friends the Members for Aberavon (Stephen Kinnock), for Newport East (Jessica Morden), for Newport West (Ruth Jones) and for Llanelli (Dame Nia Griffith) have been proud vocal advocates for their constituents. In contrast, the Government have forked out £500 million of taxpayers’ cash for the loss of 3,000 jobs. That is their deal and they own it.

In addition, the loss of sovereign steelmaking is a fundamental threat to our UK economy and security. It will constrain our ability to build the floating offshore wind we need to lower energy bills, deliver energy security and create the jobs of the future.

We are now around a month away from blast furnace No. 5 potentially closing, so what assessment have the Government made of the impact of the closure on job losses at the plant and in the supply chain across Wales? With the talks ongoing between unions and Tata this week, does the Secretary of State, like me, want to see an agreement from Tata that compulsory redundancies will be avoided? What steps will he take to encourage such an agreement? He has said that no one will be left behind if they lose their jobs. Will he publish the local economic plan that the transition board has agreed as the basis for its investment decisions?

With Labour’s national wealth fund, the future of UK steel will be fuelled by the skills, talent and ambition of Welsh steelworkers, but until the country is given the chance to have its say at a general election, I want workers across Wales to know that Labour Members have their backs.

Let me take the hon. Lady’s points one by one. First, the £500 million investment will save 3,000 jobs. We are not paying money to throw people out of work; we do not want to see anyone thrown out of work. Tata has made a decision to close blast furnaces based on the losses it is making. When it came to us, we said, “What can we do to keep people in work?” This was the plan it came up with.

Secondly, the plan will have no impact on sovereign steelmaking. The hon. Lady, if she talks to Tata, will understand—[Interruption.] She is chuntering, but all the iron ore that goes into the blast furnaces comes from abroad, all the coal that is turned into coke comes in from abroad, and all the limestone comes in from abroad. It therefore has no impact whatever on our sovereign steelmaking ability. In fact, we have 8 million tonnes of scrap steel in this country, much of which has been exported abroad. We are going to use that scrap steel and put it in the electric arc furnace, which will increase our sovereign ability.

The hon. Lady says that the plan will have an impact on our ability to create floating offshore wind. Last time, she said it would have an impact on our ability to create battleships. She needs to understand that battleships are made using steel plate and that floating offshore wind turbines are also made using steel plate. Steel plate is not made by Tata at Port Talbot. Tata at Port Talbot produces coil, which is thin and not strong enough to make either battleships or floating offshore wind turbines.

The hon. Lady asked about the number of people affected. We have been very clear about that from the start. [Interruption.] I am trying to answer the hon. Lady’s questions. She asked the questions; I listed them and I am answering them. She asked about the number of jobs affected. We have said all along that we expect it to be around 2,800, but it is for Tata to confirm that once it has gone through the statutory consultation procedure.

The hon. Lady asked whether we would encourage Tata to come to an agreement so that there are no compulsory redundancies. Of course, we would. We do not want anyone to be made redundant against their wishes. We did not want this process to happen in the first place, but as I said to her several times, Tata came to the UK Government with a threat to pull out, which would have cost 8,000 jobs and the entire supply chain.

The hon. Lady asked if the local area action plan can be published. It is not fully finalised yet—it is a road map—but she will surely be aware that the current First Minister was sitting on the board as the economic development Minister. The Labour economic development Minister in the Senedd is on the board. The local Member of Parliament is on the board, as is the local Senedd Member, the chief executive of the local authority, and the representatives of three trade unions, so it is hardly a secret document. It is not as if the transition board is meeting in conditions of great secrecy.

If the hon. Lady has any further questions, I am more than happy to answer them.

When will the Government do something about the very high energy prices in this country, which have been made high by regulations and taxes? Does my right hon. Friend not accept that any kind of steelmaking will be extremely difficult if we have uncompetitive energy, and is it not wrong to import such materials, because it will mean even more carbon dioxide emissions, as well as destroying jobs here?

We have looked carefully at the losses that Tata is making, which have come about partly because of the age of the infrastructure. In fact, Tata has had to close down the furnaces at the Morfa coke ovens within the last few weeks. The UK Government are fully cognisant of the cost of energy at the moment, which is why Tata has already benefited from many of the schemes that we have introduced over the past few years, will begin to benefit from the British industry supercharger scheme shortly, and will benefit from the carbon border adjustment mechanism at the start of 2027.

I call the Scottish National party spokesperson.

Despite what the Secretary of State may claim, the Government are investing in support of plans that will lead to approximately 2,800 job cuts, along with an irreversible cut in the capacity to produce virgin steel. Tata has announced that it will open a voluntary redundancy scheme on 15 May. Can the Secretary of State update the House on what he expects the redundancy packages to include, and will he join me in condemning threats that the company appears to have made to withdraw enhanced redundancy packages if industrial action goes ahead?

Let me answer the hon. Gentleman’s questions directly. The value of the redundancy packages will have to be agreed between Tata and the trade unions, but Tata has made it very clear that it wants to go well beyond statutory redundancy. It has put out several figures, some of which could be more generous if there is no industrial action. I do not want to see industrial action, but I do not condemn the unions either; I think that they have played a very positive role in discussions on the transition board and outside it, and I understand the strength of feeling among people at Port Talbot.

As for the two other points made by the hon. Gentleman, let me say this again, and say it clearly, so that everyone can understand it. Tata came to the UK Government and said that it was going to pull out of steelmaking in south Wales. That decision would have cost 8,000 jobs, as well as, we think, about 12,700 in the wider supply chain. Officials from the Department for Business and Trade wanted to come up with a plan that would save as many jobs as possible, which is where the arc furnace plan has come from. That plan will save 5,000 jobs, with a Government investment of half a billion pounds. It is not the outcome that anyone wants, but it is a better outcome to see 2,800 jobs lost than to see 8,000 lost. Neither is a good outcome, but that is what we wanted to achieve.

Let me repeat that this is not really about a sovereign ability to produce virgin steel. All the elements of steelmaking are being imported from abroad. We are not about to start opening up iron ore mines. Steel is produced here with iron ore from abroad, limestone from abroad, and coke made from coal from abroad. We cannot do this by ourselves. At the same time, we have 8 million tonnes of steel that is being exported. We will be making use of a resource that is already in our country.

Back home in Scunthorpe, we watch very closely what is happening in Port Talbot. What work has been done to determine the quality of those 8 million tonnes of scrap and whether it will be suitable for use in the electric arc furnaces? May I also ask my right hon. Friend to reflect on this point? When it comes to sovereign capability, the issue is not always what you are doing and choose to make; it sometimes comes down to what you may need to make at some point in the future. May I remind my right hon. Friend that we have a perfectly good mine full of coke and coal in Cumbria, and that there is an awful lot of limestone under the ground in this country as well?

My hon. Friend is right that if we wanted to, we could probably find iron ore, coke, coal and limestone in the UK, but I do not see any great enthusiasm at the moment for opening up the mines to do that. As for the 8 million tonnes of scrap in the UK that will go into the arc furnaces, officials from the Department for Business and Trade and EY have gone over very carefully the business plan being put forward by Tata. Let me point out to my hon. Friend that not only are the UK Government investing half a billion pounds, but Tata is investing £750 million, so Tata obviously feels that there is a good, strong, commercial case for building that arc furnace, and is putting its money where its mouth is.

The Port Talbot steelworkers in my constituency have given their life to the steel industry and to Tata Steel. The reckless deal that has been done by the UK Government and Tata is a hammer blow for them, and we hope that there is still time for the employer and the unions to come together, drop the bad deal for steel, and adopt the compelling and robust multi-union deal instead.

May I ask the Secretary of State about the role of contractors in all this? Everyone knows that for every job lost in a steelworks, between two and three more are lost through supply chains and contractors, so the figure of 2,800 that is being used is a massive underestimate of the devastating impact, as there will be job losses through supply chains and subcontractors. Does he agree that the number of job losses will be far higher than 2,800 if this reckless deal is adopted? If so, does he agree that it is time for everyone to pull back from the brink and adopt the multi-union plan, which offers us a bridge to the future, rather than the cliff edge that is currently being pursued?

Clearly, there will be an impact on those in the supply chain; there has been absolutely no doubt about that. At the last transition board meeting, at which the hon. Gentleman was present, we discussed that, and we agreed that we would want to support anyone in the supply chain who has been affected, but we cannot start putting numbers on this. It would be irresponsible to start guessing the number of people who will lose their job, but I agree with the hon. Gentleman that there will clearly be an effect.

The hon. Gentleman talks about a reckless plan, but ours was the only plan on the table. He keeps suggesting that we adopt the Syndex plan, but it is not a plan unless Tata agrees to it. I have discussed the Syndex plan with senior management at Tata and with the head of Tata Holdings, Mr Chandrasekaran, in Mumbai. He does not believe that it is commercially viable, and he believes that it would be technically far too difficult to try to build an electric arc furnace on the site of the steel melt shop.

The hon. Gentleman shakes his head. I do not know what the answer is; he says that it is possible to implement the Syndex plan, but Tata says that it is not. What the hon. Gentleman has to realise is that it is not the UK Government he has to convince; it is Tata. The UK Government have never said that they would be against the Syndex plan. It is Tata that has to be persuaded.

I commend my right hon. Friend for his comments, and for reminding us that half a billion pounds is no small beer when it comes to intervention in a private industry. There are clearly difficulties with the transition, and a lot of us who care deeply about the steel industry in Wales and Britain are worried about our capacity to do what we need to in the future, as my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) said. What ongoing discussions are there on whether Tata will keep one of the blast furnaces open for longer than is set out in the plan, in which they are to be shut down by the end of this year?

I have had that discussion with senior management at Tata, as have members of the Labour party, trade unions and many others. Tata faces losses of over £1 million a day as a result of keeping the two blast furnaces open. It says that those losses would continue even if one was functioning, because, first, it would have to make significant capital expenditure on blast furnace 4 for that to go ahead, and, secondly, it would have to import all the coke that goes into that blast furnace, as the coke ovens were shut down with the agreement of the unions, because of health and safety concerns. Then Tata would face the additional technical problem of trying to build an electric arc furnace on the same site as a steel melt shop containing hundreds of tonnes of molten steel that is poured off into casters. That is why it has said very clearly that it will not entertain the proposal. The UK Government have never said that we would not entertain the proposal. If Tata wanted to come forward with a plan to build the arc furnace, using the grant that the Government have put forward, while keeping one blast furnace open for longer, of course the Government would be open to discussion of that.

I call Liz Saville Roberts.

Diolch yn fawr iawn, Llefarydd. In the Netherlands, political pressure has resulted in Tata investing in an electric arc furnace and direct reduced iron technology, all while protecting jobs and keeping blast furnaces open. The German Government are spending €2.2 billion—over four times more than the UK is spending—on transitioning the country’s steel industry towards hydrogen. Why is the UK so uniquely incapable of effective investment in our strategic steel future?

A few people seem to have the idea that building a DRI plant would resolve this problem. The first point to remember is that if a DRI plant were built on the site, it would probably save another 200 jobs. There is a plant in Texas, run by Voestalpine, which I believe produces 2 million tonnes or so of steel every year and employs 200 people, so a DRI plant will not resolve the problem. Clearly, DRI plants require access to a regular and affordable amount of natural gas. There is, however, nothing whatsoever to stop Tata, at some point in future, building a DRI plant to go along with the electric arc furnace, if it believes that that is commercially sensible. Even if it were to do that, it would not really resolve the problem that we face: 2,800 jobs being lost in Port Talbot. At best, it would save another 200 jobs.

I am sorry, but this Government’s lack of ambition for our steel industry is just disgraceful. As many of the Secretary of State’s constituents work in Llanwern, he should understand that decisions made about Port Talbot have a direct impact on Newport and can lead to problems with securing volume for Llanwern. We are looking at potential redundancies, and uncertainty about the long-term future of the plant. It is not too late for the Secretary of State to stand up for his constituents, show more ambition for our steel industry—as other countries do—argue for a fairer transition, and try to avoid compulsory redundancies. Why will he not do that for his own constituents?

We have acknowledged all along that under the proposals, Port Talbot planned to close down the pickle line at Llanwern, but not until the electric arc furnace was built. We discussed that at the last meeting of the transition board, and we all agreed that just as we want to help everyone in Port Talbot, we want to help anyone affected in Llanwern.

The hon. Lady keeps talking about a lack of ambition. We can all dream about a situation in which blast furnace 4 is kept open for another six years, but what we cannot do is force Tata to continue accepting losses of over £1 million a day in order for that to happen. I have to say that there has been a lack of responsibility on the part of some Labour Members—though not any present in this Chamber—who seem to have gone around suggesting that they have a special, costed secret plan that would save all those jobs. They do not. They have not put any kind of a costed plan to any senior management in Tata. They have never sat down and said, “If you do this, we will give you this, and that way, we could save all those jobs.” They have simply gone around saying that they want to see all the jobs saved. We all want to see every single job saved, but we cannot force Tata to continue to take losses of over £1 million a day.

I come from an area of the country that suffered from industrial decline two generations ago, and the human impact of what we see happening to Port Talbot will blight the current generation. We talk a lot about a transition to a green economy. When will the Government invest in the national skills strategy that we need to provide? People in Port Talbot are about to lose their jobs, and redundancy payments do not last forever. A generation will be blighted. They need skills for the 21st century, so will the Government commit to a national skills strategy?

The hon. Lady asks about the money to support the town of Port Talbot. I have said already that there is £500 million to build an arc furnace that will save thousands of jobs. There is £15 million going into regenerating the town. There is £26 million of funding for the freeport, £7.5 million of funding for Launchpad and, as far as skills are concerned, £80 million from the UK Government primarily to retrain people. There is another £20 million coming in from Tata. There has not been one penny from the Welsh Government towards this endeavour. They have been able to find £120 million to spend on more Senedd Members, and £30 million to spend on 20 mph road signs, and we have just learned that they have lost £60 million, having set up a bank, but they have not been able to find one penny to support the steelworkers at Port Talbot.

Is this not just the tail end of a Government who abandoned the words “industrial strategy” a decade ago when I asked questions on this matter? Why have the Government not had the ambition and the vision to realise the potential? For example, if there were a plate mill on the site, it could produce the steel for the substructures and wind turbines that are planned to be built in the Celtic sea around the Milford Haven and Port Talbot freeport? There is no industrial strategy, there is no vision and there is no joined-upness. There are just massive sticking plasters from this Government.

There are discussions going on about the possibility of building a plate mill on the site when the electric arc furnace is completed. There is nothing whatsoever to prevent a plate mill from being built. The hon. Gentleman will not be aware of all the discussions going on, but I say respectfully to him that a plate mill will not save 2,800 jobs. We face the loss of a significant number of jobs as a result of the decision to close down the blast furnaces, and even if a plate mill, a direct reduced iron plant or a hot zinc dip line were built on the site—all of which are reasonable things to consider—it would not solve the problem that 2,800 people are facing the loss of their jobs. That is why the £500 million for the arc furnace was so important, as was the £80 million for the transition board.

We talked earlier about the supply chain. The repercussions of this decision will be felt across south Wales, so can I ask the Secretary of State directly whether he has secured any commitment whatsoever from Tata about the future of the workers at those downstream facilities across south Wales?

Yes, Tata has been clear that it was originally going to close those sites but it now expects all those sites to remain open. During the process of building the arc furnace, while the blast furnaces are shut down, it will be bringing steel in from elsewhere to make sure that the product is going into those other plants.

With the closure of the coke ovens making the viable lifespan of the blast furnaces all the more precarious, and the electric arc furnace still being a long way off, we will rapidly reach a situation where Port Talbot can no longer supply the Trostre works in Llanelli in my constituency, so what talks has the Secretary of State had with Tata bosses about securing high-quality interim supplies for Trostre and securing all the jobs there?

I have spoken to Tata on that very issue. It has been clear that it would have to import steel to feed Trostre, and it is willing to do that. The timeline for the electric arc furnace is ambitious, but work is ongoing: the groundworks will start very shortly, the application for planning permission should go in in the autumn, and hopefully it will be turned round and dealt with by early next year. It will then take about two years to build the electric arc furnace.

The Secretary of State casually discards 2,800 jobs and is so uninterested in the ongoing effect on the rest of the economy in south Wales that he has not even made an assessment of what the economic impact will be on the south Wales valleys more generally. Can he clear up for us precisely how many other people’s jobs are likely to be affected? Is he aware that, in the last few months, we have had 500 jobs go at UK Windows and Doors in the Rhondda and 100 jobs go in the last 24 hours at Everest 2020 in the Rhondda? As my hon. Friend the Member for Cardiff West (Kevin Brennan) says, it does not feel as if the Government have an industrial strategy. Nor does it feel as if they have an anti-poverty strategy. For that matter, they do not have a levelling-up strategy either, do they? Is it not time we had a new Secretary of State for Wales, so that we can get on and have a proper plan for the economy of south Wales?

I am sorry to have to say this to the hon. Gentleman, but it is slightly insulting for him to suggest that the tone in which I have set out the answers suggests casual disregard or a lack of interest. I assure him that nothing whatsoever in the Wales Office at the moment is more important than securing the future of Port Talbot. I am sorry, but frankly, while this Government are putting up £500 million to ensure the future of steelmaking in south Wales and demonstrating an interest in making steel, some Opposition Members are more interested in making headlines.

My constituents who work in Port Talbot inform me that there has been no progress on enhanced redundancy negotiations between the unions and Tata. Given the scale of the public investment involved, will the British Government use their leverage to ensure that Tata treats its workforce with a degree of dignity?

The hon. Gentleman is absolutely right. I think that Tata now needs to come forward with a bit more information about who exactly we can expect to see being made redundant and what their current skillsets are, so that we can begin targeting the help. The challenge up until now is that we have not had the information on who is being made redundant. Tata has made it clear that it will not automatically be the people on the blast furnaces, for example, who are made redundant, because it hopes to retain some of the people who are working there but offer redundancy to people in other parts of the plant. We have not had the information as of yet, but I think the time has come to have that information. We of course want to ensure that any redundancy packages are as generous as possible.

My constituents who work at the Shotton plant are very worried about the news they are hearing and concerned about their colleagues’ futures, but they are also wondering what it means for them. Clearly there will be knock-on effects, not just in the supply chain but in other Tata plants around the country, so what assessment has the Secretary of State made of the short, medium and long-term impact of these decisions on other plants?

We were very clear that while the arc furnace was being built, we wanted to make absolutely certain that all those other plants around Wales were able to receive product to finish, and Tata has been very clear that that will happen. It will have to bring it in from elsewhere over the next two to three years, but that will happen. There will therefore not be the impact that the hon. Gentleman is rightly concerned about.

Of course, that is possible only because of what some of the hon. Gentleman’s colleagues have described as a reckless deal. What would have been reckless would have been for us to see Tata in an office and say, “Okay, you’re going to make 8,000 people redundant and shut down all these sites, and there’s nothing for us to do about it.” That would have been reckless. What we actually did was to come forward with a £500 million package of taxpayers’ money, and rightly so, to support the continuation of steelmaking in Port Talbot and to ensure that all the other plants in Wales—Shotton, Trostre and Llanwern—continue to receive product during that interim period, so that we do not see significant job losses anywhere else.

It is an increasingly dangerous world, as the hon. Member for Scunthorpe (Holly Mumby-Croft) and the right hon. and learned Member for South Swindon (Sir Robert Buckland) said, so will the Secretary of State release an impact assessment on Britain losing its sovereign capability to produce virgin steel?

It is starting to feel a bit like groundhog day here. Can I explain again that the iron ore, the limestone and the coke are all coming in from abroad? There is no sovereign capability to make steel in the blast furnaces at Port Talbot. However, we are already producing high-quality steel in arc furnaces that is used in the defence industry. I recently met Sheffield Forgemasters, which is producing steel for nuclear submarines in an electric arc furnace in the United Kingdom.

We have great hopes and plans to build offshore floating wind structures in the Cromarty firth and the surrounding area, which would be a fantastic use of the great fabrication skills we have there, but do the Government recognise that the continued production of steel—and very probably the increased production of steel—will be crucial to this plan becoming a reality?

Yes, I agree with the hon. Gentleman that it is important that we have a means of producing steel that can be used to build floating offshore wind turbines. Technically, that is quite difficult to do. It would require either steel plate or a very heavily reinforced version of steel coil. I know that discussions are going on between Tata and at least one of the likely major investors in floating offshore wind turbines to ensure that the steel can be made, and we hope that we will use steel from the electric arc furnace to do just that.

I thank the Minister for his answers. It is clear that he is keen to find solutions, but obviously many on this side of the Chamber—indeed, on both sides—are a bit concerned. Bearing in mind that steel produced in Port Talbot is the backbone of much construction in Northern Ireland—which prompted the hon. Member for Aberavon (Stephen Kinnock) to highlight protocol problems with the Prime Minister in the past—I too want to express my deep concern and ask the Minister to explain where the steel for our construction sector in Northern Ireland will come from if the Government are unable to step in and save jobs in Port Talbot.

In the short term, I assume that the steel going into the industry in Northern Ireland does not come directly from Port Talbot. It probably comes from some of the other finishing plants. I do not know the full detail of the exact grades of steel that go into the Northern Ireland construction industry, but I am happy to discuss that with the hon. Gentleman.

Tata has made it absolutely clear that it does not expect any disruption in supply while the arc furnace is being built. Everyone I have spoken to—not just those at Tata, but independent experts—has said that 90% of the grades currently produced using blast furnaces can be produced using an electric arc furnace, and that the technology of electric arc furnace steel production is rapidly improving, so I would not expect there to be any disruption to supplies in the medium or long term.