Port Talbot Steelworks

(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.

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.