When I looked at the Order Paper, I thought I might be making my speech at about 9 o’clock or even later, so I am pleasantly surprised. I am willing to take interventions as we have more time.
This year in Alyn and Deeside, we are delighted to be celebrating the 125th anniversary of the Shotton steelworks, which is now under the ownership of Tata Steel. The plant employs about 800 people and is an integral part of the local community. For generations, Shotton Steel has provided secure jobs and supported the local economy, and has made the Shotton site synonymous with quality, productivity and innovation. Celebrating this significant landmark is an opportunity not only to reflect on the past but to prepare for future challenges to ensure that the Shotton Steel plant continues to flourish and that it remains a stable local employer for another 125 years. I will probably have retired by then, but you never know.
On that point, Mr Deputy Speaker, I congratulate my right hon. Friend on securing the debate. On behalf of Llanwern steelworks, I send greetings to Shotton on its 125th birthday; Llanwern is considerably younger. Does he agree that it is important to emphasise how interconnected operations are between south and north Wales, and all parts of Wales, in the steel industry, and how important Shotton is for steel producers in south Wales?
I totally agree with my hon. Friend’s important point. Although Shotton is doing very well at the moment—touch wood—it is reliant on Port Talbot for the steel that it finishes. Without that, the business model does not work.
For decades, Shotton Steel has produced some of the finest steel products in the world. Today, as part of Tata Steel, it takes its place in a network of steelmakers that stretches across five continents with about 81,000 employees. Shotton is well known across the world for its extraordinary quality, efficiency and profitability, and is the company’s base for a unique range of metallic and paint-coated products that are widely used in the domestic appliance, construction and other sectors. Even in this digital age, steel is essential for our public services, manufacturing, military, and everyday essentials.
Shotton’s long history provides the solid foundation on which its current success is built. John Summers, born in the 1820s, ran a small business using one of the country’s first handheld rolling mills to roll puddled iron into crude steel sheets for clog nails. I must say that I was not around then.
After John Summers’ death in 1876, the business began to expand under the leadership of his son Harry, who joined forces with three of his brothers, grew the business and opened the Hawarden iron works on the banks of the River Dee in 1896. With a 250-strong workforce and the installation of eight steam-driven rolling mills, galvanising pots, annealing furnaces and corrugating equipment, that was the beginning of the Shotton Steel plant that we know today.
Workers travelled from all over the country, such was the production demand, and by 1902 Harry Summers had turned the plant’s attention to steel production, with the site in Shotton being recognised as a leading steel manufacturer by 1909. John Summers and Sons was now the largest manufacturer of galvanised steel in the country, with a site covering 60 acres and employing 3,000 workers.
One of only two strikes in the works’ history caused major disruption to production between 1909 and 1910. The dispute concerned the contract system, whereby at each mill one person—the contractor—employed ten others on a piecework system. It was common for workers to be paid according to favouritism, rather than the hours they actually worked or their productivity.
I can only agree with my hon. Friend.
Believe it or not, there was even the idea that some received payment in the local pub by way of a pint or two of beer. As a result, many joined the Steel Smelters Union in protest, and to avoid industrial action the Summers family drew up a deal with the disgruntled workers. However, the deal failed to avoid industrial action, as the contractors protested against it, with daily picketing at the factory gates. The dispute came to end in December 1910, following a mass address to the workforce by Harry, who agreed to replace the ad hoc contract system with the direct payment of wages—progress, indeed.
Following this period of uncertainty, Shotton focused its efforts on the first world war, producing thousands of steel sheets for the trenches, Nissen huts and shell making. Despite jobs in production remaining strictly for men, many women entered the site for the first time to carry out clerical work. In the immediate post-war years, Shotton Steel maintained its success, with the workforce rising to some 5,800. The period between the two world wars saw considerable change in both production techniques and global demand, with a general decline in demand for black and galvanised sheets, which at one time accounted for 98% of Shotton’s production. Disruption continued during the great depression following the Wall Street crash and Black Friday, when two thirds of Shotton’s workers lost their jobs and the plant closed its doors, not to open again until 1933.
During the second world war, Shotton Works operated at full capacity, producing 2.2 million tons of black and galvanised sheets for various uses. Most notably, as I am sure people will remember—I do not know whether they will remember at first hand—there were the Anderson air raid shelters, which saved many lives during the blitz. Unlike in the first world war, women were now employed in the labs, packing departments and cranes, making up about 1,000 of the workforce. Harry Summers died shortly before the end of the war, but he has always been remembered fondly:
“A more fearless, a more honest and more straightforward man it would be hard to name”,
as Richard Summers wrote in his obituary of Harry.
His Royal Highness Prince Philip, the Duke of Edinburgh, officially opened the first phase of the plant’s post-war development scheme in 1953, giving the plant additional space. At that time, steel consumption by the UK car industry had increased by 88%, creating a dramatic rise in demand. Under Harold Wilson’s Labour Government, Shotton moved to public ownership under the British Steel Corporation, employing 12,000 people out of the 270,000 British Steel Corporation employees nationwide. That figure, if we think of the workforce today, shows the dramatic change.
While this marked the end of the Summers’ ownership, for generations after the family name remained synonymous with Shotton. The Summers family had guided the company to become a world leader in steelmaking, putting Deeside on the global stage. I know that many people, even now, still refer to it as Summers’s—the name has lived on.
The 1970s were dominated by disputes over plans to phase out iron and steelmaking at Shotton, as part of the Government’s deep-seated review of the British Steel Corporation. Following several protests and backroom negotiations, led by the workers action committee, in May 1977 the British Steel Corporation removed proposals for the termination of iron and steelmaking at Shotton. With trading prospects looking brighter, the review was put on hold until 1982.
Sadly, rising oil prices and declining demand for strip mill products brought the review forward to 1979, resulting in a plan to end iron and steelmaking at the plant by 1981. Around 6,400 jobs were to be phased out following an agreement between the British Steel Corporation and trade unions. No community in living memory had faced the prospects of such a substantial and rapid loss of jobs—I think it was the place where the largest number of jobs were lost on a single day in a single plant anywhere in western Europe. As a result of only the second period of industrial action in its history, some 7,000 workers clocked off in December 1979, never to return other than for counselling. The heavy end closure was eventually complete in 1981.
The workers action committee, which had fought hard for the retention of iron and steelmaking at the works since 1972, formally disbanded its campaign, which was probably the longest in British industrial history. It had been successful to the extent that Government decisions were reversed on two occasions, with the British Steel Corporation withdrawing its closure proposal totally at one time. Despite the eventual loss of jobs, the Shotton campaign is regarded by many in this place, trade unionists and others as a model of collective resistance. By peaceful demonstration, reasoned argument and persuasion, the men and women of Shotton won support and sympathy at the highest level of Government. I put on record my thanks and, I am sure, that of everyone at Shotton, to Lord Jones, now in the other place, who led delegations and campaigns and spoke many times in this place and the other place, and continues to do so, in support of Shotton and how vital it is to the area.
Towards the close of the century, Shotton’s productivity saw strong growth, with modern equipment and processes, an increasing product range, and high-quality performance. Shotton was the centre of Britain’s coated steel production once again. By the time the Corus Group was formed to run the Shotton plant in 1999, productivity had tripled compared with 1986 levels. Corus was acquired by the Tata Steel group in 2007, and despite global financial challenges, the works remained profitable and forward thinking. With a focus on high-value products, the works achieved a record level of profitability within 10 years. Today, Shotton’s primary markets are construction and consumer products, supplying global brands such as Airbus, Jaguar Land Rover, IKEA and Wickes. As I said, it employs around 800 people.
In its 125-year history, Shotton has remained resolute, and it is still one of the largest employers in Alyn and Deeside, fostering hundreds of livelihoods. We can reflect on the history, but we should not dwell on it, because the next 125 years are just as important as the first, if not more important. This Government must step up their support for the UK steel industry, which continues to face critical challenges. A decade of Government indifference and failure to take action has caused the UK steel industry to nosedive by a fifth—a £1 billion hit to our economy. Since 2010, UK steel production has plummeted by 21.5%, which is 20 times the average among other European countries.
We are all experiencing the dramatic rise in gas prices, which hits Shotton hard because it relies mainly on gas for its energy. When we compare our gas and electricity prices with those in other countries—they are 60% cheaper in Germany and 51% cheaper in France—it is a miracle that we have a steel industry at all.
As my hon. Friend Jessica Morden rightly pointed out, there is a family of steelmaking plants in Wales, Port Talbot obviously being the hub, and we send birthday greetings to Shotton. The integrated nature of the steelmaking process means that the energy costs for Port Talbot, which are the highest in Wales, are crucial for the entire steelmaking process in Wales. As my right hon. Friend Mark Tami has rightly pointed out, we are trying to compete with one hand tied behind our back, because the Government’s inaction is leaving us with massively higher energy costs than our European partners and neighbours.
I hope the Minister does not say, “Well, we pay the energy intensive industries compensation fund,” because these energy price disparities exist after that fund has been provided. Let us please not hear that line again from the Government. Does my right hon. Friend agree that this is the No. 1 priority? We are just asking for a level playing field. We have talked about the past, but the present and the future are so much more important. Unless we get this sorted, we are going to be uncompetitive for another year, two years or even 125 years.
I congratulate Shotton steel plant on its 125th anniversary. I bring greetings from Trostre, which this year celebrated nearly 70 years of existence but, like Shotton, uses the steel produced in Port Talbot. Does my right hon. Friend agree that the Government must not only pull out all the stops to ensure the very existence of our steel industry, which is facing these astronomical and totally uncompetitive prices, but invest in a massive renewables programme to secure energy for the future, help the decarbonisation of steel production in this country and ensure the future of Shotton, Trostre, Llanwern and Port Talbot?
Once again, I agree. I am also very concerned that the Government only ever seem interested in the steel industry when we are in crisis. When there is a crisis, suddenly the Government are all over the steel industry, and the moment it drops out of the headlines, so does the Government’s interest in it. That is just not acceptable. As my hon. Friends have said, the danger is that, at some point, the industry—or significant parts of it—will fall over. My hon. Friend Stephen Kinnock made the point that without Port Talbot, there is a danger that there would not be a Shotton either. That is a point that the Government really need to grasp.
There is no mention of steel in the Government’s latest Budget or their so-called plan for growth, and their industrial strategy has effectively been scrapped. There has been a total failure to support environmental targets with investment that could boost decarbonisation in the industry. Funding from the clean steel fund has been delayed until 2023 and, as I have said, the issue of high energy prices has been completely ignored. All we ever get is, “Oh, it’s nothing to do with us. Have a look at Ofgem; maybe they can do something.” That is not acceptable.
Labour’s analysis shows that 24p of every pound spent on steel for Government infrastructure projects was spent outside the UK in 2017-18, meaning that Shotton and other plants throughout the UK have been left behind. The Government are making an utter mockery of their pledge to “level up” with such actions, which leave behind steel areas completely. Stronger “buy British” steel targets could create and safeguard around 50,000 jobs, and boost the economy by £4.4 billion. Vitally, it would also lower the environmental damage of steel imports. True levelling up would consist of more than just rhetoric. It is clear that we need decisive action and decisive planning. We heard only a couple of days ago in the other place that steel for our warships and our submarines is being imported, with the argument being, “We don’t have it in this country.” We do not have it in this country because we were not told soon enough that the plants could start producing what was needed. The end result is that we are importing steel to build warships and submarines. That is how stark the position is and how stark the Government’s failure is.
As well as taking action to secure the next 125 years of production at Shotton, we must also reflect on the role Shotton is taking in the fight against the climate and ecological crises we face—a point raised earlier. We need a green plan for steel and we need it to be supported by the Government. I want Shotton steelworks to become the first carbon-neutral plant in the UK. Shotton has been central to much progress in UK steelmaking for more than a century, so it would be fitting for the plant to lead the country’s decarbonisation efforts. Fortunately for us in Wales, the Welsh Labour Government are already taking the first vital steps to support Shotton’s path to becoming carbon neutral. The manufacturing action plan for Wales, a collaborative effort made between Industry Wales, trade unions and representatives from the manufacturing sector, is central to that progress. First Minister Mark Drakeford is stepping in to take action in pursuit of a prosperous, green and equal economy.
The Tata Steel group has been clear that decarbonisation and securing a green approach to steelmaking are top priorities. Shotton is already playing a key role in the fight against climate change through the application of its products in the construction of “active” buildings, which produce more energy through renewables than they consume. There is scope for more progress, and we must support and encourage Tata with that. Many critics argue that decarbonisation and economic growth in the steel industry are mutually exclusive, but with the right financial backing and strategic approach, Shotton can lead the UK steel industry to being carbon neutral and continue to support jobs in north Wales.
We hear a lot from the Government that hydrogen is the future. It may well be the future, but it is not currently the present and it will not be the future unless we invest in it. It is not going to happen by accident that one day we wake up and the steel industry and other industries suddenly have plentiful supplies of hydrogen, it works and everything is fine. We need to be ploughing investment into research now, otherwise we will fall further behind and we are already falling behind our European neighbours.
The steel industry in Alyn and Deeside is the very fabric of our area.
The point on hydrogen relates to the discussion we were having about energy costs. An electric arc furnace approach or a hydrogen-based approach takes even more energy, power and electricity than the current gas-fired approach. If we do not get the energy costs issue sorted, it will completely hamstring our efforts towards decarbonisation.
I listened closely to what my right hon. Friend said about energy. On the point about costs, the Labour party’s proposal to introduce a total review of business rates is critical to the industry. As we know, comparison of business rates in this country with their equivalent in Europe shows a disadvantage for the UK of something like 70%.
My hon. Friend makes a very good point. Every which way the industry turns, it seems to be at a disadvantage to its neighbours.
I implore the Government: instead of turning their back, will they turn towards the people they serve, provide a proper industrial strategy for the industry and the workers, support the industry to decarbonise, and put stronger targets in place to buy British? It is our duty and our place to stand up and represent the industries and businesses providing a livelihood for the people we represent, which are the lifeblood of our areas, while taking steps to secure a green and sustainable environmental future for us all.
Shotton has provided communities in Alyn and Deeside with secure employment since its inception, has supported the local and global economy and has provided vital quality products for infrastructure developments. The Government must recognise and support the Tata Steel group in its effort to transform into a green steel producer. I will continue, as I am sure hon. Friends will, to demand that funding is properly directed to that area. Above all, I will continue to stand with the workers of Shotton Steel, the trade unions and the management, for it is their skill and dedication that maintain production and innovation. It is they who keep Shotton at the heart of the community, and it is they who will be central to the next 125 years of steel making in Alyn and Deeside.
Thank you, Mr Deputy Speaker, for the opportunity to speak this evening. I am grateful to Mark Tami; I congratulate him on securing this very important debate for him and his constituents. It is important that we celebrate this extremely important milestone for his constituency and for north Wales in general, so I am grateful for the opportunity to contribute to the debate and respond on behalf of the Government.
I confess that I do not know a huge amount about Shotton steelworks—I come from a very different part of the country—but it has been very helpful to hear all the history that the right hon. Member has outlined so clearly and cogently in the past 20 minutes or so. From the little I do know, I know that there are many reasons to celebrate the 125th anniversary of Shotton Works. One reason is the history that he went through; it has been fascinating to hear about the contribution that Shotton has made for so long, the deeply embedded history within the community and the opportunities that Shotton has had over a century and a quarter. Its contribution over such a long time includes producing millions of tonnes of steel sheet to build shelters for the population in the second world war, for example.
Jessica Morden highlighted the interaction of steelworks, across Wales and more broadly. Shortly after being appointed Minister for industry, I had the privilege of visiting Tata’s plant at Port Talbot. It was an extremely interesting and useful visit: I was impressed by the scale of the plant and the level of integration of systems. I have not yet had the opportunity to go to Shotton, but I look forward to doing so. I am aware that Shotton steel can be seen in a huge number of places, from IKEA stores to Jaguar Land Rover showrooms and even the Old Trafford stadium. The sculpture commissioned to mark the anniversary showcases the best of the plant’s products and will be a proud reminder of this milestone.
In highlighting the constant evolution and innovation of the Shotton plant, I pay tribute to the very regular discussions about Shotton over so many decades in this place, not least because of the contributions from the right hon. Member for Alyn and Deeside as its constituency Member of Parliament since 2001. He mentioned his predecessor, Barry Jones, who was just as assiduous a contributor on the issue; Barry Jones’s predecessor, Eirene White, was talking back in 1954 about how Shotton steelworks had secured
“a…record in steel production.”—[Official Report,
It was a pleasure to work through Hansard for a little while this afternoon to understand the history of Shotton’s relation to this place. I think it was talked about as long ago as November 1948, when there was a big discussion about whether iron ore should have been brought over from Birkenhead or sourced from elsewhere.
I know, on a personal level, how important this is to the right hon. Gentleman’s constituency. My own constituency is not particularly steel-based, although there is plenty of steel nearby, but it has a proud industrial heritage and a proud industrial past, and is making its way towards the coming decades of the new industry that the right hon. Gentleman is so keen on. Speaking as the Member of Parliament for North East Derbyshire as well as the Minister for industry, I know how important Sheffield steel is to local communities, and I know that it has been integrated in the histories of those communities. I have no doubt that that applies as much to steel in Wales as it does to steel in Sheffield.
My constituency has faced similar challenges. We had a steelworks back in the 1870s, a little before the right hon. Gentleman’s steelworks began, but it closed overnight in 1883, and all the activity was moved up to Cumbria. Although it was on a very small scale and long before my time, I am well aware of the huge interaction involved, and of the huge importance of the steelworks industry in general to local communities.
I applaud Shotton’s commitment to becoming carbon-neutral by 2040, and the efforts that have been made so far. For the past 15 years the site has run a scheme offering to offset customers’ carbon emissions, and as a result more than 130,000 tonnes have been offset via investment in clean energy projects in the developing world. I also pay tribute to its work with Natural Resources Wales to create bird habitats: I understand that 20,000 tern chicks have flown from the breeding grounds created in the lagoons. That is a brilliant example of the way in which industry and nature can co-exist.
I know how important Shotton and its history are to the right hon. Gentleman’s constituents, but I also know that we have the shared aim of securing the future of steelmaking in this country, particularly in the areas where it has a history and has thrived for so long. Although he and I may not agree on every element of the speech he has made tonight, I know that how assiduous he is, and how keen he is to see more progress and improvement. Let me now deal with a few of his points, in the spirit of constructiveness that has been set by the debate.
I recognise the challenges that the right hon. Gentleman has identified in suggesting that the Government are not taking steel seriously, but I would urge some caution. While there is no doubt that challenges will be coming our way in the next few decades, I believe that for a number of years the Government have demonstrated their willingness to support the UK industry where necessary to maintain its resilience. Mention has already been made of the subsidies that have been provided to support electricity for the steel industry, and for other energy-intensive industries, over the past decade or so. The industrial energy transformation fund is helping to transform steelmaking in Wales, and a project is going on there right now. The net zero hydrogen fund is coming, and funds are currently in place for the Materials Processing Institute to increase efficiency, reduce emissions and improve competitiveness.
I accept that gas prices are high at the moment: there can be no argument about that. They are volatile, and have been for some months. At some points in 2020, they were low in relation to where they have been historically, but they are now relatively high. However, I hope that the support that we have provided for energy-intensive industries since 2013 has mitigated that to some extent, and we have confirmed that it will continue.
Before the recent spike in energy prices, the comparison with Germany and France was even starker. That is because the Government have consistently failed to address this fundamental imbalance in the system.
I know that the right hon. Gentleman will not expect me to accept that point. We accept that there is a challenge with energy prices at the moment, and we understand that that is a cause for concern for a number of energy-intensive industries, including steel, ceramics—which I debated with a number of colleagues in this Chamber and beyond in another place last week—glass and paper. We are keen to understand the detail, and it is important that we recognise that there is nuance in this debate and that different strategies are being employed by different companies.
There are also different contexts in which these energy prices are applied. A diverse group of industries are impacted by gas prices. Efficiencies are being pursued in some places, and there are hedging strategies in others. I accept the right hon. Gentleman’s challenge that energy prices are high, albeit volatile and variable, but I hope he will also acknowledge that we are really trying to work with the industry and the sectors to understand the different challenges presented by high gas prices, and that we will continue to do so over the coming weeks and months.
I applaud the Minister’s ambition in seeking to address energy costs in the energy-intensive industries that he has just identified. Would he welcome and support a move towards a greater number of onshore wind turbines, which would be one of the best providers of low-cost energy to this country?
If the hon. Gentleman will forgive me, I will not set out our energy strategy on wind turbines today. That would be a matter for one of my colleagues in the Department. The broader point that he makes, however, is that over the coming decades we need to decarbonise our electricity supply. We have had some success in doing that over the previous decades. By doing that, through whichever process we can achieve it, we will ensure that we have clean and green energy to support industries such as we are talking about today.
I just want to touch on a couple more points before I close. The right hon. Member for Alyn and Deeside highlighted his concern that the Government do not focus on steel. I would not accept that point. In the 10 or so weeks that I have been the Industry Minister, I have already visited two steel mills and had regular conversations with the companies involved. I have met them on a number of roundtables and will continue to do that. On a broader level, we had the announcement at COP26 and the Glasgow breakthroughs, and we will be working with a number of countries around the world to ensure that we can decarbonise the industries that are more challenging to decarbonise. That indicates a desire to find ways through difficult challenges where there are no easy answers, and the Government and communities are trying to work through how to do that.
One way is through hydrogen, as the right hon. Gentleman highlighted extensively in his speech. He was somewhat sceptical about the UK Government’s activities in this space, but I want to place on record for completeness that there has been significant movement on hydrogen in recent months. We had the publication of the hydrogen strategy in August, the hydrogen business model is being consulted on, and the net zero hydrogen fund stands at nearly £0.25 billion. We also have the UK low carbon hydrogen standard. Of course there is much more to do on that, which is why we are putting in place the frameworks for that to happen, but I hope that that demonstrates an intent from the Government to explore the possibilities around hydrogen.
Finally, I want to touch on procurement, because I know that that was an important part of the right hon. Gentleman’s speech.
Just before the Minister moves on to procurement, may I say that it is disappointing that he does not seem to have taken on board the seriousness of the issue of energy costs? They were 61% above those of our major competitors before any of the crises and conditions that we now face. I ask him to take this seriously now, and to go back and have a real think about what we are going to do, because we are genuinely facing the extinction of our steel industry if we cannot be properly competitive.
I am grateful to the hon. Lady for highlighting that this issue is vital to companies across Wales and across the country, and I reiterate that we take it seriously. In recent months, much of my time as Industry Minister has been spent on meeting and speaking to those affected to get into the detail of their concerns and how they are affecting individual companies and individual sectors. A diverse range of sectors are affected, and we will continue to work with industry to see what is possible within the wider context of volatile and variable gas prices over the coming months.
The right hon. Member for Alyn and Deeside highlighted his concern about procurement, and I gently highlight the procurement taskforce, which is currently under way. A substantial amount of procurement in the public sector is supported by UK steel. Last year more than £100 million-worth of UK steel was procured by major public projects in the UK. Network Rail reports that 85% of the steel it took in during 2019-20 was from UK producers, and High Speed 2 reports that all of its structural steel is from UK producers. We know that UK steel is a brilliant product, and we know it has brilliant opportunities. We want it to be able to take those opportunities both in the UK market and globally in the years ahead.
I hope it is recognised on both sides of the House that the importance of the UK steel industry to resilience and ensuring we have a clear pathway is taken as read. Steel is important to the UK and to the UK Government. We have given it substantial support in recent years, and we will continue to consider what is possible in the years ahead. We recognise there are challenges and the work continues, but I thank the right hon. Gentleman for securing this debate and for providing me with the opportunity to respond. I wish Shotton all the best in the next century and a half.
From this proud Welshman, will you take the very warm wishes and congratulations of everybody at the House of Commons to Shotton steelworks, to the current workforce and to the former employees and their families, and will you congratulate them all on this incredible milestone?
Question put and agreed to.