Port Talbot Steelworks

Commons Urgent Question

My Lords, with kind agreement from the usual channels and with the leave of the House, I will read in the form of a Statement the Answer given in the Commons by my right honourable friend the Secretary of State for Wales. In doing so, I declare my farming and heritage interests in Wales, as set out in the register. The Statement is as follows:

“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 great 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 money to save 5,000 jobs. We are also looking to modernise production and ensure that steel-making 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—unfortunately nothing as yet from the Welsh Government, but we hope that there will be some in the near future. These funds 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 UK 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 government funding”.

We are proud of our steel sector in Wales: it is an asset for the whole of the UK, so this closure is devastating news. Yesterday, in the other place, the Minister said that the Government would encourage Tata to come to an agreement so that there are no compulsory redundancies. What steps are the Government taking to protect workers whose jobs are at risk? There are also those in the supply chain: what commitments have the Government secured from Tata for the workers at downstream facilities about the security of their jobs after the electric arc furnace is built, and what are they doing to secure more?

My Lords, the deal struck by the UK Government with Tata will safeguard around 5,000 jobs in the UK steel industry, as well as 12,000 jobs in the wider supply chains. However, we all recognise that this is a devastating blow for the community of Port Talbot, and we are committed to doing everything that we possibly can to save jobs and support anyone who loses their job. This is why the UK Government have set up the Port Talbot transition board, backed by £80 million from the UK Government and £20 million from Tata.

My Lords, the people of Wales well understand the suffering that can be the consequence of industrial decline and the loss of a major industry. What we see happening in Port Talbot will blight the current generation and those to come, unless the Government invest in the national skills strategy that we need to prepare for the “new, well-paid jobs” that the Secretary of State talked about and for the future workplace. We need to develop skills for the remainder of the 21st century, so will the Government commit to a national skills strategy?

My Lords, I thank the noble Baroness for her question. In addition to the £100 million funding for the Port Talbot transition board, £15 million is being put towards the regeneration of Port Talbot town centre, with improvements to the civic square, the refurbishment of the Princess Royal Theatre and improvements to green space. Seed funding of £26 million for the Celtic freeport will support regeneration of local communities by attracting new businesses, jobs and investments, and we are investing £790 million in city and growth deals across Wales, including the Swansea Bay city deal, which is building on the region’s strengths in the areas of life sciences, energy and manufacturing.

My Lords, as others have said, this will have a devastating impact on the south Wales community. It reminds me of the 1980s when the pits were closed; south Wales valleys were devastated and never recovered. I hope that that is not going to happen in Port Talbot. As the UK will now become the only country in the G20 to leave itself without the capacity to make virgin steel, how does the Minister feel about the legacy of this Government in making the UK reliant on foreign imports? What discussions has he had with the Welsh Government? Could he give us a report on them and are they ongoing?

My Lords, the noble Baroness asked a range of questions. What came through was her passion, which I think everyone involved in this Question shares, that these jobs and the steelworks are part of the community—it is an identity, not simply a job, and we feel that deeply. I am afraid to say that the Welsh Government have not offered financial support towards this transition. However, we are doing everything we can to create new jobs for the ones that have been lost. Without our investments, there was a threat that all jobs within TATA, not just those in south Wales, could have left the UK.

The noble Baroness also asked me about virgin steel. We have heard these arguments. We are ensuring that the UK, by moving to green steel, will be less dependent on international supply chains. By moving to green steel—electric arc furnace steel—we are securing the future of UK steel capability and our economic and national security.

My Lords, the events in south Wales are a real demonstration of the Government’s absolute failure to deliver a just transition for the workers of the region and indeed beyond, and nor are we seeing the growth in renewable energy we should be seeing in uses of steel. I have questions for the Minister about the supply of steel for recycling. The EU is looking to secure the supply of scrap steel by 2027. It is going to bring in rules to ensure that scrap steel is exported only to places with very high environmental standards. That contrasts with the situation here in the UK. More than 50% of our scrap steel is now exported to three countries: Turkey, Egypt and India. Pakistan is the next country on that list, and none of those places is known for the environmental standards of its steel industry. Will the Government bring in a plan for the long-term future of a steel industry using electric arc furnaces?

My Lords, that is exactly what we are doing. I find it quite staggering that the Green Party fails to recognise that moving to electric arc furnaces will reduce carbon emissions by around 5.5 million tonnes per year—the noble Baroness shakes her head, but that is a fact. The UK produces 11 million tonnes of domestic scrap per year. Currently, demand is lower than supply, so 8 million tonnes of that scrap is exported. This gives plentiful and reliable future supply in the UK for electric arc furnace production from domestic scrap.