British Steel: Negotiations

(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.

I call the shadow Minister.

I thank the hon. Member for Scunthorpe (Holly Mumby-Croft) for securing this urgent question on an issue that affects not just the workers in her constituency but the future of a foundation industry across the UK.

In November last year, the iconic Redcar blast furnace—once the second largest in Europe—was demolished. Decades of work, tradition and pride needlessly went up in smoke. Here we are, yet again: another crisis under the Conservatives’ watch, with Liberty Steel announcing a number of weeks ago the potential loss of hundreds of jobs and yet more pain this week from British Steel. [Interruption.]

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.

Liberty Steel bosses have described the UK steel sector as being “on life support”. No other developed country faces losing its domestic steel sector. If that were to happen here, it would be a badge of shame for this Government. It is entirely avoidable. Will the Minister outline the steps the Government are taking to secure the future of the Liberty and British Steel sites? She talked about the economic impact, but it is about more than that. It is about the fact that those sites have been at the heart of their communities for generations.

Earlier this month, there were reports that the Secretary of State wrote to the Chancellor requesting a bail-out for British Steel. Will the Minister confirm whether that is the case and whether she and the Secretary of State are continuing to push for that? The last thing that the steel sector and the British taxpayer need is another blank cheque bail-out for a buyer, rather than a proper investor. We do not need more sticking plasters; we need a long-term plan.

The market wants green steel, so will the Government back Labour’s plan for green steel, invest in new technology over the coming decade, crowd in private investment and address the root of the problems, rather than play an ever more expensive game of whack-a-mole? Labour will always back our steel industry. It has a bright green future—something it will never get under the crisis management Conservatives.

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.