PARLIAMENTARY DEBATE
British Steel: Negotiations - 2 February 2023 (Commons/Commons Chamber)

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on negotiations between the Government and British Steel.

First, let me begin by saying I understand that this must be a very concerning time for British Steel employees, following the discussions that took place between the company and union representatives yesterday. Of course, these are commercial decisions taken privately by the firm, and conversations with the unions are private.

We all recognise that Putin’s illegal invasion of Ukraine has created challenging global trading conditions for steel, but it is very disappointing that British Steel has chosen to take this step for its employees while negotiations with the Government are ongoing. The Business Secretary and I have always been clear that the success of the UK steel industry is a priority. We have worked intensively with British Steel on support to help safeguard and unlock shareholder investment and will continue to do so. Steel is important for our economy, supporting local jobs and economic growth. We are committed to securing a sustainable and competitive future for the steel sector. I must put on record my thanks to my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) for all the insight and advice she provides to me as the Minister.

We have already taken action to protect the steel industry from unfair trade and reduce the burden of energy costs, including £800 million in relief for electricity costs since 2013. That is on top of a range of other support funds worth £1.5 billion to support efforts to cut emissions and become more energy efficient across the sector. It is firmly in the interests of the sector that we continue our engagement. We want British steel production to continue in the United Kingdom, to protect our steel sovereignty as a nation and build a stable, decarbonised and competitive industry. It is in the interests of employees, their communities and all areas of the UK that benefit from the UK steel supply chain, and I encourage the company to continue discussions with us to reach a solution.

I can confirm that the Government have put forward a generous package of support, which we believe, combined with shareholder action, would put British Steel on a sustainable and decarbonised footing. My officials are helping British Steel to understand that package in more depth, and I am hopeful that together we will find a solution that protects jobs while setting British Steel up for success. Obviously, decisions that the company takes are its commercial decisions, but I will continue to work with colleagues across Government to ensure that a strong package of support is available, including Jobcentre Plus and the rapid response service, if needed. Members across the House should be in no doubt of the Government’s determination to continue support for the UK steel industry, and I urge British Steel to continue discussions to help us secure its future in the UK.

As my hon. Friend has set out, in the midst of these negotiations with Government, involving hundreds of millions of pounds of further support on top of what she has listed, Jingye sat down yesterday with the unions and talked about laying off 800 British Steel workers. I do not want to break down my communications with British Steel, because I will fight for these jobs and continue to talk to it. Accordingly, I will temper my language today, but I want to be clear that I cannot and will not defend this decision, which is unacceptable in every possible way for my constituents. This is not a way to behave. It sends entirely the wrong message and breaches the spirit of negotiations, which I believe are the result of a level of Government focus on steel and its wider issues, including energy and carbon costs, that are genuinely encouraging for the industry.

Hundreds of families in Scunthorpe are worried sick, wondering if and when they will lose their jobs. I want to add that I am very capable of challenging the Government if I do not think they are going far enough on steel, but that is not what is happening here, and I hold the company entirely responsible for how it decided to act yesterday.

I ask the Minister to do three things, please. First, will she challenge the company on whether it is actually credible to run its operations with 800 fewer people? I have been told that it would not be possible to safely run the blast furnaces if that many team members were lost. Secondly, will she express in the strongest terms that this is not a way to do business and ask the company to immediately reconsider these potential redundancies? It is in its gift to do that, and if it publicly halted these redundancies, that would send a welcome and strong message to the community of which it is a part.

Thirdly, will the Minister reiterate this Government’s support for the thousands of world-class steelmakers in my patch, who are decent, hard-working, skilled members of our community? Will she tell them again today that we value their skills, we understand the importance of steel, we understand that we need it for every single thing we do in this country—from defence to growth—and that we are determined to do whatever it takes to make sure we do not become the only country in the G20 that cannot make its own steel?

Our lady of steel basically sums up the whole argument in her two minutes, and I do not disagree with much of what she has said. The decision to hold this meeting is a commercial one, but I agree with my hon. Friend that it is a peculiar way to do business, while we are in the middle of negotiations that will involve substantial amounts of Government support, which I will go on to describe.

I put on record, agreeing with my hon. Friend, that we make the finest steel in the world, and the steelworkers in the UK are the most skilled in the world. British Steel manufacturing is vital, and it cuts across everything we do, as well as issues around supply chain resilience brought on by Russia’s illegal invasion of Ukraine and issues around Chinese steel dumping. Steel is vital for our national security, just as it is for every sector involved in manufacturing and production. The Government are absolutely committed to the steel industry, and I will go on to describe that.

I make it clear that any decision that Jingye makes is a commercial decision, but it is our duty to make sure that if support is needed, we make it available, so our thoughts are first and foremost with employees and their families. We will work across Whitehall, whether that is standing up the Department for Work and Pensions rapid response service to support employees, working with the MoneyHelper scheme or working with the Department for Education’s National Careers Service.

I will spend a moment to explain the level of support that British Steel has already had. We have offered £120 million in grant funding through the exceptional regional growth fund to ensure that it can continue to work in the area. We have offered UK export finance to help it with new export contracts. In June, we extended UK Steel’s safeguards to protect domestic production. It has benefited from Government electricity price compensation for energy-intensive industries and the energy relief scheme for business. As I have mentioned, £800 million has been provided across the sector since 2013. It can also apply for help with energy efficiency, decarbonisation, low-carbon infrastructure, and research and development, where more than £1 billion is available in competitive funding for industry. The support is strategic and long term.

My hon. Friend the Member for Scunthorpe raised three points. She asked me to challenge the company on the number of employees it needs to continue functioning in a safe and stable way. Of course, we will drive that message home, and we will make it clear in the strongest terms that this is not the way to do business. She knows that I was on the Business, Energy and Industrial Strategy Committee for a few years, and we wrote a report on steel. Perhaps my language then was a little freer than I can be at the Dispatch Box. It is peculiar for this conversation to take place while we are in the middle of good negotiations, since the negotiations involve substantial taxpayer money. Obviously, these are sensitive negotiations, but I do not think that it is inappropriate for me to say that the Government want some assurances and guarantees linked to jobs. The message I want to send today is that we will continue to be available to ensure that discussions and negotiations continue.

I listed the huge support that the Government have already put in place for steel. If I may, I would like to share some of the other support available for the region in and around Scunthorpe. More than £20 million was given to Scunthorpe through the towns fund, and more than £10 million through the future high streets fund. More than £25 million in seed capital was given towards the Humber freeport, and more than £5 million to north Lincolnshire from the UK shared prosperity fund. I must put on record my thanks to my hon. Friend the Member for Scunthorpe for being such a fantastic campaigner and for securing that funding for her constituency.

These are ongoing, sensitive negotiations. I hope everybody across the House, regardless of what they think of the Government’s record, will send the shared message that negotiations and discussions should continue. It is appropriate that within those discussions we should expect some assurances on job security.

I call the shadow Minister.

Order. I have granted the urgent question because I thought it was important. I certainly will not have the hon. Member for Scunthorpe heckling by putting her hands around her mouth to shout.

I had hoped that the Opposition Front Bench spokesperson would support our ongoing desire for negotiations, and that she would ask why the redundancy conversations are taking place while negotiations are ongoing.

On Liberty Steel, on 20 July 2021 the then Business Secretary set out in his evidence to the BEIS Committee that we did not have adequate assurances to be confident that money offered to Liberty Steel would remain solely available to UK operations. It is important to note that that approach was commended in the Committee’s November 2021 report. Of course, I was on the Committee then, but it is important to note that the Committee is made up of Members from both sides of the House, so that was obviously an agreed position of colleagues across the House.

The hon. Member talked about the level of support that we are providing to the sector to ensure that it can reduce its emissions and take on board new technology to go as green as it can. We have more than £1.5 billion of long-term, strategic and focused support in place to help it to go green, cut emissions and become more energy-efficient. There is more than £1 billion for the carbon capture and storage infrastructure fund, more than £240 million for the net zero hydrogen fund, more than £55 million for the industrial fuel switching fund, more than £20 million for industrial decarbonisation research, £289 million for the industrial energy transformation fund and up to £66 million as part of the industrial strategy challenge fund. That is substantial funding to help the sector to be strategic and have structures in place to help it to reduce emissions, invest in new technology and decarbonise.

The hon. Member spoke about Labour’s plan, or the budget it has in place to help steel become green. I am not sure how that has been costed or tested. As I said in my statement, what is important is that we are putting forward a generous package of support. I hope that she agrees that, because it is taxpayers’ money, we should also have certain assurances, whether on job security, or that new technology to decarbonise is adopted. That is a sensible, strategic way to go forward.

The company has clearly acted in a most inappropriate and high-handed manner, and that affects not just the 800 workers directly employed at British Steel: my neighbouring constituency has many thousands of jobs dependent on the supply chain. Could the Minister assure us that the Government will give maximum support and recognise the importance of steel to the region as a whole?

My hon. Friend has always been a great advocate for all the jobs in his constituency, including those linked to the steel supply chain. That is why the sector is so important: the number of jobs that trickle through it is huge, and it is a foundation industry that supports every other manufacturing sector. We are negotiating as hard as we can to ensure that we get over the present hurdle and that we can go on and talk about other things, such as further procurement, which would be great news for the supply chain as well. Of course, if any decision is taken by the firm, it will be a commercial decision, and if any support is required for workers, across Whitehall, we will do everything we can to ensure that that support is available.

I call the SNP spokesperson.

I have listened carefully to the Minister’s words, and she has regularly detailed the amount of public money that has gone in to support the steel industry in the United Kingdom, and said that these are commercial decisions and private discussions. I wonder though, with the renewed role for steel in the green energy transition, why the Government—I will say this, even if the Labour party will not—do not consider nationalising steel in the United Kingdom? If so much public money is going into the industry anyway and they recognise—the Minister has assured the House that they do—that steel is not just any other industry but a strategic asset for any developed economy, why does she not nationalise it?

Nationalisation is not going to solve any of the problems that we are talking about right now. The problems that the steel sector in the UK faces are the problems that it faces globally. It is unfortunate that the hon. Member thinks that nationalisation could be the answer to this or to everything. It would not make steel more competitive, it would close down the ability to raise money from capital markets, and the whole of the risk and burden would fall on the taxpayer, with no guarantee of a long-term, sustainable strategy. We are proposing to ensure that we have a long-term strategy which is providing support now. We provided support during covid. We are providing substantial support during the energy crisis, and there is a fund of more than £1 billion—£1.5 billion in total—to help with tackling emissions and energy costs. We have a long-term strategy in place.

I think the shadow Minister must have forgotten—I like her a lot, but I think she must have forgotten—who the Government were in 2009, when the mothballing of Teesside and the loss of 1,700 jobs commenced. I would hope that the Opposition do not use my constituents who are affected by this as political pawns in some game to try to bash the Government, because that would be pretty low. I know that the shadow Minister will not do that, and I hope others will not.

Everything British Steel has asked us to do as local MPs in the past few years we have done. We have gone out and fought for it to ensure our steel safeguards are protected and to ensure that, when the site ownership changed, hundreds of millions of pounds of UK taxpayers’ money was offered to support the new buyers and to pay the salaries of our constituents during that period, and, of course, we have done everything they have asked us to do on energy costs. So I am as angry as my hon. Friend and constituency neighbour the Member for Scunthorpe (Holly Mumby-Croft) at the way in which our workers are being treated by Jingye. This is no way to conduct a negotiation with Government and it is no way to engage with its workforce or with local Members of Parliament, at a time when the Government have put hundreds of millions of pounds on the table to help to support the sector. So I can only join my hon. Friend in demanding that Jingye and British Steel show a bit more respect to our constituents and negotiate in good faith.

My hon. Friend, once again, nails the position that we are in. I know that the steel sector has such fantastic champions across the House. Since I have been in post, which is not very long, I have attended several meetings, briefings and debates in Westminster Hall, so I know it has fantastic champions, and it is a shame that those champions are feeling let down today. What is extraordinary is that there is a huge amount of growth coming down the line for steel. Demand for UK steel is expected to rise by 20%. Significant commercial opportunities are coming down the line. Once again, because British Steel has such fantastic champions and we have such superb MPs across the House, including my hon. Friend, they have been able to win some substantial deals for the sector. He mentioned steel safeguard measures. In 2022, we extended all 15 steel safeguard measures and agreed an extensive solution to the US section 232 tariffs, significantly increasing US market access for UK firms. The steel sector could not have better steel champions and, like them, I feel a bit let down today.

The point that was made relentlessly by hon. Members in last week’s steel debate, and we really appreciate what hard news this is for steel workers today, is that high production costs mean that UK steel is unable to be competitive in the international market. The Government support is not as generous as other countries’, and some of the list that the Minister read out is older money and it is across industry, not just for steel. So does the Minister understand that a long-term plan is needed to give our industry confidence?

Because we have invested so much in renewables, we know that there will be better energy costs coming down the line, but we have had £800 million for the steel sector since 2013. We know that policy is being reviewed, and we are going to make sure that support is just as substantial going forward. The UK offers a great place to have a steel sector, and we know that there are opportunities for growth. We know there is going to be a 20% increase in UK contracts, we are looking at procurement and we have a fantastic skilled workforce. There is support to help decarbonise and take away some of the costs of emissions, too. Support has been available—up to £800 million—and support will continue to be available.

In the BEIS Committee report the Minister referred to, we recognised that the ability to produce steel is fundamental to the existence of UK manufacturing, and it was good to hear the Minister’s commitments. We know that, in part, the future will be about making more use of recycling of previously used steel in electric arc furnaces, but could she say a bit more about the discussions that have taken place with the broader industry to secure its future here in the UK?

My hon. Friend was my neighbour when I was on the BEIS Committee: we sat next to each other every Tuesday morning for two years, so I saw more of him than I did of my husband. I take care of manufacturing and advanced manufacturing too, so conversations are taking place across the sector. My attention since being in post has fundamentally been on steel, on ensuring that we can get these negotiations over the line, and on how we can take the sector forward and ensure it is as competitive as it can be, in particular by looking at procurement and ensuring that the £1.5 billion fund is actually used by the steel sector, that it comes forward and tries to get hold of as much of that money as possible.

This crisis is facing British Steel today, but the rest of the UK steel industry may not be far behind. The Minister will know that I and other Opposition Members have raised on many occasions the cost of energy, which was a problem before Ukraine and covid—it has been going on for years and years, and this Government have done absolutely nothing about it. We need a long-term solution to the cost of energy for steel, not just these little pots of money that she keeps talking about.

We have had many meetings, and normally they are very respectful, but I must object to “little pots of money”. There has been £800 million of energy cost relief since 2013, with more money to come down the line, and £1.5 billion to help decarbonise. These are not little pots of money. Energy costs for the steel sector are an issue worldwide. We have a strategy and a fund in place, and this debate is about ongoing negotiations and the action that has been taken by this particular firm.

Does my hon. Friend agree that “little pots of money” seems a somewhat odd description, considering the £800 million since 2013 and lots of other support being available? Does she agree that holding the residents of Scunthorpe to ransom is a funny way of doing business? Does she also agree that my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) has worked relentlessly and fought tirelessly to help her residents and is doing so again today?

“Ransom” is not my word, but it is an interesting way to explain what is going on. Of course, my hon. Friend the Member for Scunthorpe is the leading champion of steel across the industry. I was at a Westminster Hall debate last week, and I pointed out that I cannot turn around any corridor without her cornering me on steel. That is why the sector is so well represented in the UK and why we have put together support that has been valued at over £1.5 billion of grants to help it decarbonise, with £800 million to cover energy costs.

Negotiations are ongoing. My officials will be speaking to British Steel and Jingye today. It was interesting to hear what meetings took place yesterday. When we are talking about hundreds of millions of pounds of support for a firm, while it is in negotiations with Government, for it to have this sort of conversation is not the way that we tend to do business in the UK.

Steel is vital to help us move to net zero by, for example, extending our railways or building net zero homes, but the industry is also a major contributor to carbon emissions, and we know that the industry will only survive long term if it becomes sustainable. The Government recently gave the green light to the Cumbria coalmine, supposedly to support the steel industry. How does that sit with the Government’s claim that they are supporting the steel industry to go green?

I fear that the hon. Member would rather have coal imported and not worry about the cost or the emissions impact of that. The Secretary of State’s decision on the Cumbrian coalmine was made following a comprehensive planning inquiry that heard from over 40 different witnesses and considered matters such as demand for coking coal, climate change and the impact on the local economy. What is really important is that we have a resilient UK steel sector, and I will never apologise for that.

To safeguard our national strategic interest, it is imperative that this country maintains a capacity for steel production. The Minister has outlined the considerable package of support that the Government have already provided, not least the £800 million for energy costs over the last few years. Can she reassure the House that this Government will do everything they can to support this key industry?

Absolutely. That is why we are working so closely with the companies and the unions. I have met with the unions, most recently last week. Hopefully I am not divulging too much information, but they also claimed that they struggled to have good levels of communication with Jingye and British Steel, so it is not lost on all of us. We are very committed to the sector.

We have also been buying more British steel. In 2021-22, the Government procured £268 million of UK-produced steel for major projects, which was an increase of £160 million on the figure from the previous year—this is based on departmental reports. I have been the HS2 Minister, and I have always been concerned about why we could not procure more UK steel in our rail and road projects, and in all others, including those for shipping—I have also been maritime Minister. So there is even a greater future ahead. As I mentioned, the UK’s steel demand is going to rise by 20%; this is a good space to be in. We are just in a peculiar situation while we are having ongoing negotiations, and the decision was taken to have this meeting with the unions yesterday.

I know that the Minister is sympathetic, but Ministers across Government need to realise that this is a crucial time for steel companies, as they are making decisions about where to invest for the future worldwide. What discussions has she had with colleagues across Government about giving guarantees that far more than £300 million will be there for developing the steel technologies of the future, that there will be a proper Government procurement strategy for British steel and that there will be a fair deal on energy prices for the future?

I appreciate that this is a very tricky moment for the sector, as it is worldwide. We have spoken about this previously, and it is incredibly important for us to get it right. We have been focused on the present real-time negotiations. Let me put it on record that we are, as always, available to continue those discussions and we are hoping that they will continue regardless of the announcement of the discussions that took place yesterday. I cannot stress enough the long-term and strategic benefit of having a £1.5 billion fund in place to help us decarbonise—that is providing a huge amount of support.

We have spoken previously about procurement, and when I moved away from BEIS Committee after, I realised how life comes at you fast when you are a Minister and you cannot commit to the recommendations you made in your report. However, we are working hard on procurement, too. We want to make sure that there is more British steel in our defence projects. Let me put it on record that the Ministry of Defence purchased £4.3 million of UK-produced steel through its contracts in 2020-21, which is an increase of 42%, from £3 million in 2019-20. There is a huge market here, which is why we are so committed to ensuring not only that we negotiate well, because this is about British taxpayers’ money, but that we have the right resources and infrastructure in place for a long-term future for British steel.

The announcement and news will be frustrating for my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft), who has worked so hard, and for neighbouring constituencies such as that of my hon. Friend the Member for Cleethorpes (Martin Vickers), who has worked with the supply chain. We are all conscious of the strategic importance of steel, the need to modernise the industry and the impact of energy costs on the profitability of the business. As the Minister says, there is a positive future demand for steel. So will she confirm from the Dispatch Box that there is direct ministerial contact with British Steel’s owners, Jingye, and perhaps also with the China Chamber of Commerce in the UK, so that the importance of this partnership is stressed and the need for a successful outcome to the negotiations is made very clear?

Not only are my hon. Friends the Members for Cleethorpes and for Scunthorpe huge champions for steel, but they have good relationships with Ministers, unions and workers locally. I could not be better supported, which is why I am committed to ensuring that I deliver the best package for the steel sector that I can.

My hon. Friend the Member for Gloucester (Richard Graham) talked about ministerial engagement with Jingye; I do not have all the dates in front of me, but there is engagement from the Secretary of State downwards, and of course I have meetings as well. Officials will be holding meetings with British Steel and others, too, so meetings do take place regularly. I will do my best to put together some more dates and write to him so that he knows the exact number of meetings taking place and at what level.

The green freeport announcement for the Cromarty firth is very welcome. Our dream is to build floating offshore wind structures in the Cromarty firth, at the Nigg yard, where I once used to work. We want to build them out of British steel, not steel from any other country. Our hopes, wishes and aspirations are for that to happen, so may I wish the Government all the best in sorting this situation out? I do not want to see my constituents’ hopes dashed. We need that steel, including for the future of my constituency.

The hon. Member has hit on two of my favourite topics: freeports and the Maritime 2050 strategy, which I launched when I was the maritime Minister. He has all my support, and I am grateful for his support with ensuring that we get the best possible negotiations over the line as soon as we can. It is unfortunate that the discussions took place yesterday.

Does my hon. Friend agree that it is vital that we find a way to ensure that steel is produced sustainably, right here in the UK, so that we can deliver new renewable industries such as floating offshore wind in the Celtic sea, particularly as shipping steel in creates additional supply chain emissions?

Absolutely. I think the argument is sometimes lost when people say that we can bring steel in. Why would we want to do that when we have a sector right here? People do not often calculate the cost or the impact on the environment. We have put together substantial funding to help the industry take new technology on board, reduce emissions and decarbonise. I must say that when I have had meetings with those in the sector, they have enthusiastically embraced the opportunity to reduce carbon emissions and meet net zero targets. That is why we want to work hand in hand with them.

On TV this morning, a journalist carefully outlined the case with reference to discussions between the Government and British Steel’s Chinese owners. I echo what the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) said about the supply of British steel; its supply to Northern Ireland is so important for the construction sector. What is forcing companies to look elsewhere is the increase in price, not a desire for a better product—the best product is British steel. Will the Minister commit to working with the industry to fund more efficient technology and mechanisms, and subsequently to aid the production of cheaper materials to maintain affordable buildings and enhance the British steel sector?

Absolutely; once again, the hon. Member asks a very sensible question. That is exactly what we are here to do. We need a cleaner, greener steel sector, so we need to do everything we can to support it in helping us to meet our net zero targets.

Our steel industry has suffered as a result of unfair international competition for many years, because Governments all over the world have been subsidising their own steel industries. My hon. Friend referred to our steel industry’s bright future and the potential 20% increase. Does she agree that it is an absolute business nonsense to lay off highly skilled staff at a time when the order book is likely to fill up?

That is why it was so peculiar to be made aware of the conversations that took place yesterday. Opportunities are coming down the line and we know that there will be huge demand for more UK steel. Grants are available to help with cutting the cost of adopting new tech and decarbing. The Under-Secretary of State for International Trade, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), is next to me on the Front Bench, and we are doing everything we can to ensure that we can export. It is a peculiar period to be having discussions with the unions, while we are in the middle of negotiations and we know that the sector will only improve.