Tata Steel: Port Talbot

– in the House of Commons at 4:09 pm on 18 September 2023.

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Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office) 4:09, 18 September 2023

With permission, Madam Deputy Speaker, I shall make a statement about Tata Steel’s proposal, which has been agreed with Government, to invest in greener steel making at its Port Talbot site in south Wales.

I can confirm that the Government have agreed on a proposed joint investment package to provide £500 million to Tata Steel as part of its proposed £1.25 billion project to move to low-carbon steelmaking in Port Talbot, subject to the necessary information and consultation processes that will be led by the company. For me it was always about certainty, continuity and security, and through investment in a state of the art electric arc furnace at Port Talbot the deal will support the UK’s efforts to meet increasing demand over the next decade and enable industry to take a significant step towards decarbonisation. It will strengthen our supply chain resilience as well as protect thousands of skilled jobs across south Wales and the UK for the long term.

The Conservative Government have been supporting the UK steel industry for many years. It will be no surprise that the industry has been acutely impacted by recent wider geopolitical and macroeconomic developments that have made traditional blast furnace steelmaking financially unviable. The global steel market has become saturated with heavily subsidised carbon-intensive steel, while Putin’s invasion of Ukraine has dramatically increased energy costs. This Conservative Government will continue to stand by our steel industry and this deal is part of our long-term plan for steel.

This ambitious transformation is the culmination of several years of negotiations between the Government and Tata Steel and it has been backed by a majority investment by the company. The transition will secure continued production of steel at Port Talbot, enable the industry to take a significant step towards decarbonisation and provide a clear pathway towards a long-term financially and environmentally sustainable business model, removing the repeated need for Government intervention.

As well as investment, the Government are enabling the major transformation and modernisation of the steel sector through key policy changes, including delivering the British industry supercharger to make electricity prices competitive for energy-intensive industries, including steel, so that they are line with those charged across the world’s major economies.

Steel is a strategically significant industry that plays a vital role in the UK economy. The sector supports tens of thousands of UK jobs and remains a key driver for local economic growth in regions with proud steelmaking histories, but it is also an industry in urgent need of modernisation. Decarbonising industry is a global challenge to meet the temperature goals of the 2015 Paris agreement. By replacing Port Talbot’s existing coal-powered blast furnaces and assets nearing the end of their effective life with an electric arc furnace, this proposed project is expected to reduce the UK’s entire business and industry carbon emissions by 7%, Wales’s overall emissions by 22% and the Port Talbot site’s emissions by 85%.

As such, decarbonising UK industry is central to the Government’s bold plans for tackling climate change and in doing so placing our country at the forefront of the growing global green economy. We are committed to seeing a low-emission production steel sector in the UK and are also working with global partners to support decarbonisation of steel production internationally.

This agreement with Tata represents the best offer and result for the UK and the people of south Wales. This package represents one of the largest support offers in recent history and will secure long-term jobs not just in Port Talbot but across all Tata Steel sites in England and Wales. It is a deal that not only safeguards jobs but will help to build better resilience in the UK economy and help to create new opportunities in our construction, automotive and energy sectors. We have been working closely with the Secretary of State for Wales and the Secretary of State for Levelling Up, Housing and Communities to establish a new transition board to help to capitalise on some of the opportunities that it will create. The UK Government will ensure a broad range of support for staff who are affected by the transition, working with the Welsh Government and Tata Steel to provide up to £100 million of funding for a dedicated workforce to support both affected employees and the local economy. We will continue to engage with local MPs and stakeholders in the area to ensure the project is a success.

Of course, any Government funding offered to a private company is subject to extensive scrutiny of detailed business plans, vigorous due diligence and subsidy control assessments. It will include strong conditions around financial probity, governance and delivery. With that in mind, we are delighted that we have reached this agreement on the Government’s role in the proposed project. As part of the proposal, Tata Steel will also release land in Port Talbot for redevelopment and use for new industrial businesses. Alongside the UK Government’s proposal for the Celtic freeport and the land at Port Talbot which Tata expects to release for transfer or sale following the transition from blast furnaces, this investment could help to unlock thousands of new jobs in both south Wales and the wider UK economy.

The landmark proposal builds on other major investments in UK green technology by Tata Group, including the July announcement of a £4 billion battery gigafactory creating 4,000 direct jobs, and represents a major vote of confidence in the UK. The Government are focused on working with business to get on with delivering key investments, creating opportunities across the UK. I commend this statement to the House.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Secretary of State for Business and Trade 4:14, 18 September 2023

After 13 years of failure, expectations of this Government are not high, but even by their standards, spending half a billion pounds to make thousands of British steelworkers redundant is a truly remarkable feat. Last week, I went to Port Talbot to meet some of the workers affected by this announcement, and like us, they support green steel. They have actually been campaigning for green steel for many years, and those workers were promised repeatedly that they would be a part of the process. They rightly feel betrayed by this announcement and the fact it is being done to them, rather than with them.

I know the Minister will come back to say that more jobs were at risk. I have heard the Government’s line that all the jobs would have gone entirely, but she must be honest: it is absurd even to countenance the UK being the first major economy not to have a domestic steel industry. The UK steel sector is already much diminished compared with when the Conservatives came to power. The transition to green steel should be about more jobs, not less. It should be an optimistic, exciting moment for steel communities, but instead this has caused anxiety and anguish. I say genuinely to Government Ministers and to all on the Conservative Benches that if they allow decarbonisation to become associated with Thatcher-style job losses, it will risk the legitimacy and political support for net zero in a way that courts disaster. Is levelling up not a tacit admission by the Conservative party that the scars of the 1980s deindustrialisation cut so deep that we still feel them today?

Why were the workforce not involved in this process? Why has only one technology—the electric arc furnace—been chosen? What consideration was given to hydrogen and carbon capture possibilities? We already know that this deal was not the company’s opening proposal, so what other options have been considered? Crucially, what will happen to downstream facilities, such as Trostre and Llanwern, that provide packaging and automotive steels that cannot currently be served by an electric arc furnace? Will that steel be supplied from India, with a larger emissions profile than at present, which is what many of the workforce believe?

What is included in this package as regards ongoing industrial energy costs? Crucially, when will a grid connection for an arc furnace be provided? In addition, how will this £500 million of taxpayers’ money be protected? In the absence of any clear and identifiable criteria, how do we know that it represents good value for money? Finally, what does this announcement mean for the rest of the UK steel industry and, in particular, Scunthorpe?

The plan that Labour put forward for green steel was industry-wide, comprehensive and transformative, and it was designed to secure major economic dividends for the UK. We cannot secure the future of UK steelmaking with sticking plasters. We cannot do it on a plant-by-plant basis, and we cannot do it without the workforce behind us. This should have been such a positive announcement. It should have been about creating jobs, strengthening national capabilities and showing that we can do decarbonisation in a way that works for working people. I say to every single steelworker out there that it is clear that they will only get the bright future that they know is out there when they get a Labour Government.

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

It is unfortunate that the hon. Member decided to politicise such an important sector. It was not me but Gareth Stace for UK Steel, the trade association for the UK steel industry—the voice of the country’s steel manufacturers—who said:

“This is a really important day for our steel sector in the UK, with the Government showing a real commitment to the future of steel making here in the UK. We will get a true transformation of our sector to create steel for the net-zero economy, something which our customers are asking us for. We have the ability to completely transform our sector and boost the net-zero economy in the UK. We can really seize the opportunity to increase production in the UK and increase exports. We all know that a net-zero economy will need more steel, not less.”

The hon. Member is putting on a very poor display over a serious decision that has been in discussion, I am told, for more than a decade. I have spoken to Ministers who have held the portfolio over many years before me, and they tell me that these matters are nothing new.

More importantly, the hon. Member knows that the blast furnaces were at the end of their life. The right decision is to provide certainty, security and continuity, and that is exactly what we are doing. The UK is a world leader in producing steel, but we need to decarbonise, and this is the best way of ensuring and guaranteeing jobs, of which there are 8,000 on the site and 12,000 in the supply chain.

As well as the £500 million, £100 million has been put together for a group to consult and work with the unions, the staff, the Welsh Government and the Secretary of State for Wales to ensure that the transition is as appropriate as it can be and not so challenging for the people who are impacted. The proposal is to go for electric because other energy sources are underdeveloped. If the hon. Member will reflect on what is happening in Europe on hydrogen, for example, he will see that nothing else can work at this scale and within the tight timeframe that we want to work in to ensure that the site continues to be viable not only for manufacturing steel in the UK and supporting all the jobs in the supply chain but to support Wales, too.

The proposal will also transform the Welsh community and the Welsh area. A huge amount of work is taking place with the freeport, and a huge number of businesses and jobs will be coming out of the transformation to green steel. It is unfortunate that the hon. Member cannot recognise that, without this decision, there would have been continued uncertainty, no security for the staff and definitely no security for the UK steel sector.

Photo of John Redwood John Redwood Conservative, Wokingham

Have the Government ascertained that there is enough old steel and metal around for the recycling facility? Do their wider plans for steel in the United Kingdom include retaining capacity to produce new steel?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

My right hon. Friend is always absolutely hot on these topics. There is enough steel, because we export so much of it and we can now use it on the site. Considering the age of the current furnaces, the reality is that electric arc furnaces are, within the timescale, the best way for us to transition. There is of course a supply chain in place that enabled Tata to put the business plan forward, for it to commit a substantial amount of money, and for us to support its plan.

Photo of Alan Brown Alan Brown Scottish National Party, Kilmarnock and Loudoun

Madam Deputy Speaker,

“I’m not going to shy away from the fact that this is still terrible news.”

Those are not my words but those of the Wales Secretary, who is sat next to the Minister. How did we get to a stage where £0.5 billion of UK-wide taxpayers’ money is being used to prop up a deal that is classed as “terrible news” by a Government Minister?

We know that we need to decarbonise, but with this level of taxpayer investment we should be looking at proper, green, virgin steel manufacturing and job creation, not the loss of 3,000 jobs, and not settling for lower-grade steel production from recycling. What will the lower-grade steel production mean for Port Talbot’s ability to supply key UK infrastructure programmes? What UK-based supply chain guarantees are being sought for the £1.25 billion of investment that the Government say is coming forward into the plant? Why were the unions not involved in the discussions? Why were the Welsh Government not involved? Is it not hypocritical to propose to involve the Welsh Government in the taskforce for job losses but not to have included them in the initial discussions on options for the plant going forward?

Not that long ago, the Tata Group also received a reported £0.5 billion for a proposed electric battery factory—another deal lacking in transparency at this stage. How can the Tata Group secure £1 billion so easily from the Government? It is the same with EDF, with more than £1 billion allocated to the development of the Sizewell C nuclear power station. Too many deals are done behind closed doors, based on who has got the Government’s ear and where the Government think there is some political capital. Does it not prove yet again that there needs to be a structured, coherent, long-term strategy to address the competition from the Inflation Reduction Act in the United States and the EU’s green industrial plan? Does it not also prove that in the current constitutional framework and fiscal straitjackets imposed on the Welsh and Scottish Governments, our communities will always be at the mercy of decisions made at Westminster?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

There were so many questions, but I will do my best to address the most important ones. Conversations at Port Talbot have been going on for years—one could argue more than a decade. It is not news that the site needed financial support to ensure that it continued to be viable. Steel companies lose more than £1 million a day producing steel, and it is no longer viable without Government support. That is a route that many countries have taken.

The blast furnaces in Port Talbot can be operated for 15 to 20 years only before a major investment decision is reached, either to be relined or to be rebuilt. There was a very tight timeframe; it was important to find alternative energy—electric—to make sure that it would work with the timeframe of the new furnaces coming on site. That is why it is electric, not hydrogen—there are no hydrogen alternatives that can give us the steel that we need on the scale that we need. This is not only a £500 million investment. There is also £100 million to deal with the transition. As I said, the transition board will comprise union members, staffers, the Welsh Government and the Welsh Secretary of State. The conversation will take place, and consultation will occur. Those conversations have been happening for quite some time.

It is important to note that the sector is now secure. In a part of the UK that is incredibly important to us, thousands of jobs will be created—up to 16,000 jobs in the Celtic freeport proposal, which is linked to the renewables at Port Talbot. That will create even more jobs. Any transition that requires a consultation on jobs is always sensitive, which it is why it is important that the transition board will be stood up to provide the support needed. The site needed to make a decision. The best decision was for it to continue to make steel. That is what we will support it to do.

Photo of Holly Mumby-Croft Holly Mumby-Croft Conservative, Scunthorpe

Tata in Port Talbot and British Steel in Scunthorpe are the last two steelworks in this country that have blast furnaces. There is a place for electric arc furnaces, but we need to remember that they melt scrap; they cannot make brand-new virgin steel from scratch; a blast furnace is needed to do that. My hon. Friend made the comment about steel being a strategic industry, and she is right. Does she agree that, for national security reasons alone, we must ensure that we retain the capability to make virgin steel in this country?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

My hon. Friend is absolutely right on the importance of virgin steel production. She is the best champion for her constituency and her steel plant, which is now uniquely positioned as the blast furnace to make virgin steel. That will be important in line with our mantra of “continuity, certainty and security.” Conversations have been taking place with British Steel, the details of which are commercially confidential. My hon. Friend campaigns incredibly hard for the steel sector both in the constituency and across the UK. Those meetings will continue. She is right that, obviously, we need a place for virgin steel, and that is in her constituency.

Photo of Stephen Kinnock Stephen Kinnock Shadow Minister (Home Office) (Immigration)

When all is said and done, the purpose of the deal should have been to protect the current order book and to prepare us for the opportunities of the future. All investment is welcome— I do thank the Minister for her work in this area—but I am afraid that the deal will fail to keep us competitive and to deliver a just transition for the thousands of my constituents whose dedication to our proud steel industry is second to none.

Could the Minister kindly address the following questions? Why have the Government put all their eggs into the electric arc furnace basket? Where is the investment in hydrogen, direct reduced iron and carbon capture technology so that we can continue to produce virgin steel, as Holly Mumby-Croft pointed out? Why were the steel unions not consulted in advance of the announcement? There are literally dozens of hydrogen-based steel projects ongoing across Europe. They are not necessarily ready to make steel but at least they are out of the traps, whereas we are still in the changing room putting our trainers on. Why have the Government not actually entered the hydrogen race?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

The hon. Gentleman, who worked with me incredibly well as chair of the all-party parliamentary group for steel and metal related industries, answers his own question when he speaks about hydrogen. He knows very well the age of the blast furnaces in his constituency and the fact that we needed a transition that enabled certainty to continue. There is no option other than electric to scale up within the time required. [Interruption.] My right hon. Friend John Redwood knows that. We have spoken about this many times, so it is disappointing to see the hon. Member for Aberavon being so political about it now. The electric option was a commercial decision for Tata, but it was the only way to ensure certainty to continue. Another Member talked about supply chains and making sure that production continues, so that Tata can deliver the contracts it has in place. The only way to do that is with electric, and that is the way we are going forward.

Commercially sensitive conversations can take place in a much tighter circle, but the hon. Gentleman will know that discussions have been going on for years and years. There is now a transition board, and there will be a huge amount of consultation. The focus is on ensuring that the people impacted are provided with the support they need to transition into the jobs that they should. The fact is that we are securing the future of the steel sector in the hon. Gentleman’s constituency. Without this funding all 8,000 jobs would have been lost, along with 12,000 in the supply chain, and we are not seeing that. We are backing steel in his patch.

Photo of Alun Cairns Alun Cairns Conservative, Vale of Glamorgan

The Minister is absolutely right when she says that steel is of strategic importance to the UK’s security interests and to our manufacturing base. We need to recognise the scale of this investment, which strictly speaking is a devolved responsibility. This is the UK Government coming in to support a UK national interest. Tata has long held an ambition to turn this into an electric arc furnace. What assessment has my hon. Friend made of suggestions that electric arc steel is inferior to virgin steel, which is made in blast furnaces?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

My right hon. Friend, who spent a considerable amount of time as Welsh Secretary, knows very well how these relationships work. He is absolutely right: the negotiations and securing the £500 million investment have taken place via the Government here. It was important for us to make sure that the Secretary of State for Wales and everyone else involved were across this, too. He is absolutely right that there is a difference in the steel produced—my hon. Friend Holly Mumby-Croft, the hon. Lady for steel, pointed out the importance of virgin steel—but there is a growing circular economy for steel produced in electric arc furnaces. It utilises scrap metal that is in abundance in the UK—we export tonnes of it—so there is a huge amount of work to be done in electric arc furnaces. That is why the business model is so substantial and why Tata put in so much money, with our £500 million going into the £1.25 billion commitment in total.

Photo of Nia Griffith Nia Griffith Shadow Minister (International Trade), Shadow Minister (Cabinet Office)

The future viability of Tata’s tinplate works at Trostre in Llanelli depends both on the proximity of Port Talbot and on the production there of the grade of steel that can currently only be produced in the blast furnace process. While I welcome the recognition of the need for increased electric arc furnace capacity in the UK, what assurances can the Minister give me that the Port Talbot blast furnace will continue to supply steel to Trostre until such time as greener technologies are developed there? What will she do to support the development of those technologies in Port Talbot?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

I am pleased that the hon. Lady recognises that whole new supply chains will be created and whole new businesses set up, with many more jobs in place too. There will now be a consultation in place. Tata has already put up its business plan for how it will continue to supply steel, but also for the work it will do with supply chains downstream. That work will continue to take place. As far as I am aware, there is no other change in any other sites. Now that the deal is out in public, work will continue at pace. I will continue to meet the chair of the steel APPG and the steel sector to ensure we are doing everything we can to back UK steel and UK manufacturing, and all the businesses in the supply chains too.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

The Minister was a distinguished member of the Business, Energy and Industrial Strategy Committee. I cannot remember whether she was with us when we visited Port Talbot, but we saw a plant that had given great service over many years but was badly in need of updating. At a time when we send almost all our previously used steel, otherwise known as scrap, abroad, is this not the best option to provide a less carbon-intensive method of production and to secure UK manufacturing?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

My hon. Friend is correct: I was a member of the BEIS Committee when we produced the report on steel. I think I said earlier that we export just shy of 9 million tonnes; it is actually eight point something, so forgive me, Madam Deputy Speaker, if my earlier figure was inaccurate. All that scrap metal can now be used within this site, which is extremely important. We know that a huge challenge is posed to the steel sector, for instance by countries that tend to dump their steel elsewhere, and we will work both nationally and internationally to do what we can to protect UK steel.

Photo of Liz Saville-Roberts Liz Saville-Roberts Shadow PC Spokesperson (Home Affairs), Shadow PC Spokesperson (Women and Equalities) , Plaid Cymru Westminster Leader, Shadow PC Spokesperson (Justice), Shadow PC Spokesperson (Business, Energy and Industrial Strategy), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Attorney General)

Three thousand job losses at Tata Steel will be a huge blow to Wales. Just as happened under Thatcher, our industrial communities are being forced to pay the highest price, and it is being paid by those who can least afford it. This news comes just weeks after the Minister’s Government failed to attract funding for offshore wind in the Celtic sea. The Tories have had more than 13 years in which to put in place a proper industrial strategy maximising Wales’s green energy potential with a just transition from fossil fuel dependency, and with workers’ futures at its heart. Is the Minister proud that her party’s time in power will, once again, leave a toxic legacy in Wales?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

It is unfortunate that the right hon. Member has taken such a narrow view. We are providing £500 million to ensure that the plant will continue to make steel, and to support the jobs in the industry. There are 8,000 direct jobs and 12,000 jobs in the supply chains which would disappear if there were no steel plant in Port Talbot. I should have thought that the right hon. Member, who has been so passionate about net zero, would appreciate the work that is being done in this regard. There is no alternative energy source that can deliver net zero, at scale or within the timetable that is required, given the infrastructure that is in place.

In case the right hon. Member thinks that it is just the Conservatives who are saying this, I invite her to read what UK Steel has said about this decision. It has said that this is a really important day for the steel sector in the UK, and that the Government are showing a real commitment to the future of steelmaking here. It is not just a question of our ambitions for net zero; the UK steel sector itself has put together a road map to net zero, which this investment will enable it to reach.

The right hon. Member alluded to the Celtic freeport. That will create 16,000 jobs, and will also ensure that a supply chain in renewables continues in that part of the country. It is unfortunate that the she cannot understand that the discussions that took place for so long could have continued the uncertainty, and, potentially, the age of the furnaces could have caused the site to close down. That would have been terrible, but we have ensured that we now have certainty, continuity and security.

Photo of Jessica Morden Jessica Morden Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Shadow Minister (Wales)

We have seen years of inaction on steel from this Government while watching other countries around the world invest proactively, but the investment announced on Friday will lead to potential job losses that will be deeply felt in Port Talbot and across south Wales. Why was there no consultation with the unions and the Welsh Government, who should surely have had a voice in ensuring that there is a fair transition to decarbonisation? What will the Minister do to provide clarity for workers about, for instance, the impact on downstream plants such as Llanwern, and to address the point about the grades of steel needed?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

Any change will be challenged by those potentially affected, which is why the transition board is being set up with a budget of £100 million to ensure that people who are impacted are given the support that they need. It is hard not to go on repeating that this has not come out of the blue, and that discussions have been taking place forever. I speak to the hon. Member regularly about this matter. I know that it is difficult for her to reflect on it in the Chamber, but we finally have some certainty. She mentioned that no decision had been made for what seemed like forever, but this is a really good decision: it is protecting jobs, it is protecting the industry next to her constituency, and it is ensuring that there is a future for steel at Port Talbot. It is good news, although we know that there is some difficulty, which is why, as I have said, we are establishing a transition board.

The hon. Lady also mentioned the unions. They were in Westminster recently, attending a huge event co-hosted by our fantastic iron lady, or rather steel lady, my hon. Friend Holly Mumby-Croft, as well as UK Steel. There was a presentation of the procurement policy note, but also a discussion about the road map to net zero. This is a route that was identified, and it is one that we have now taken to ensure the longevity of steelmaking in Port Talbot.

Photo of Helen Morgan Helen Morgan Liberal Democrat Spokesperson (Levelling up, Housing and Communities), Liberal Democrat Spokesperson (Local Government)

The green transition should present exciting opportunities to build a fair, more prosperous economy for the benefit of communities across the UK, but the job losses involved here highlight that, for some workers, when the industrial landscape shifts around them there might not be an opportunity to benefit from those opportunities. They need to be supported to train and retrain throughout their adult lives, so will the Minister take this opportunity to commit to the development of a national skills strategy?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

That is a sensible point. There are skills strategies in lots of different portfolios within industry, and in these particular circumstances, as I mentioned, a transition board will be stood up with £100 million to do exactly that—to ensure that people are redeployed and reskilled so that they can continue to work in the sector.

Photo of Nick Smith Nick Smith Shadow Deputy Leader of the House of Commons

The impact of the war in Ukraine has emphasised the importance of the UK’s sovereign steelmaking capacity, yet an electric-only arc model means that we will have to import supplementary virgin steel and be unable to produce high-end automotive steel. Does the Minister accept that, under this deal, the self-sufficiency of our steel industry has been dealt a real blow and that our defence capabilities are badly undermined?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

The answer is no. Under this deal we have protected jobs and ensured that we will continue to have a steelmaking facility in Port Talbot that supports the diversity in the supply chain. We also realise how uniquely important the blast furnaces in Scunthorpe are. We have talked about looking at hydrogen, but as I mentioned, it is untested at this scale to work within the timeframe that is needed. This deal is really good news for the UK steel sector, enabling it and us to reach our decarbonisation targets and ensuring that we are dealing not with virgin steel but with scrap steel in a way that can be recycled within UK industry. It ensures the longevity of the steel sector in Port Talbot.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Brexit)

No matter what gloss is put on this today, 3,000 jobs have been sacrificed on the Government’s altar of net zero and decarbonisation. There can be no hiding from the fact that there are huge costs associated with this policy, and that they are becoming apparent week after week. Despite what the Opposition spokesperson said, the fact is that job losses are associated with this policy. We have seen it with steel, aluminium, oil and gas—we could go on and on. Will the Minister not accept that, as a result of this policy, we now have strategic industries under threat, we are losing jobs, we are putting greater pressure on taxpayers, we are pushing production overseas and we are making ourselves dependent on foreign producers?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

The reality is that one of the furnaces in particular was coming to its end of life and the other was mature, so a decision had to be taken on whether the company would want to continue, considering the loss it was making every day in producing steel, or to transition to making cleaner steel. That was a commercial decision. It was important for us to ensure that steelmaking in Port Talbot would not disappear but continue, and this is the option that the company went for. It is the option that it has a supply chain for, and it was best that we supported it through this process and ensured that there were fewer job losses.

The reality is that any transition is going to impact jobs, which is why it is so important to ensure that support is available to enable people to skill up and transition. That is why the transition board has been set up with £100 million to help people on that journey. It is not fundamentally about achieving net zero; it is fundamentally about the age of the furnaces on the site, about the loss-making in the steel sector in the UK, particularly at this site, and about what decisions the company would take next. It was important for us to support the UK steel sector and provide it with £500 million—it has an overall envelope of £1.25 billion—to ensure that steelmaking continues in Port Talbot.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Climate Change and Net Zero)

I would have hoped to hear a rather more robust defence from the Minister of the need to reach net zero and of the massive job opportunities that will come from pursuing a green agenda, as we have seen from what is happening with the Inflation Reduction Act in the States.

I visited Port Talbot last month during the recess, and I echo what the constituency MP, my hon. Friend Stephen Kinnock, said about the importance of the site and of continuing to support jobs there. Concerns were raised with me about the availability of scrap and how difficult it is to recycle and retrieve scrap metal. There does not seem to be any strategy from the Government for dealing with that. Can the Minister tell us what she intends to do, working with her colleagues in other Departments, to achieve that?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

As I mentioned, just shy of 9 million tonnes of scrap could potentially be used at the site. Tata has put together a substantial package, which shows that it has thought through its supply chains. A huge amount of work will continue to take place to ensure that more information is put in the public domain. No doubt there will be more public tenders, too. The scrap does exist and we recognise that electric arc furnaces produce a particular kind of steel, which is why it is important to have a virgin steel sector here in the UK as well.

I have spoken about the environmental impact and how it helps us to reduce our emissions, but it is not only about that. This site was reaching the end of its life, and these negotiations have been taking place forever. It is important that we made sure that we had the certainty and support to move on to the next conversation on how we best exploit the new site to produce cleaner, greener steel and how we make sure the contracts are in place.

Photo of Jonathan Edwards Jonathan Edwards Independent, Carmarthen East and Dinefwr

Understandably, there has been much focus on the potential job losses at the Port Talbot plant, but the steelworks is an anchor operation supporting a vast supply chain across Wales and beyond. The Minister mentioned that Tata Steel is making an assessment, but what assessment have the UK Government made of the impact of the announcement on the wider supply chain?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

The hon. Gentleman is right that the sector has a vast supply chain, and we know how important it is for UK manufacturing. Last week’s data show that we are the world’s eighth largest manufacturer, so supply chains are imperative.

I am also working on an import supply chain strategy to ensure that we are as resilient as possible when importing from countries that may not share our democratic values. Work has been done internally on the supply chain. To secure the money in this package, Tata had to ensure it had a business plan and sight of its supply chains. This work has been ongoing for quite some time, and a lot of it has been commercially sensitive. Now we are able to speak about it, I do not doubt that more will be made public. We will continue to work on the supply chains, and I hope to put forward the import supply chain strategy by the end of the year.

Photo of Bill Esterson Bill Esterson Shadow Minister (Transport)

The UK is the only country in the G7 in which steelmaking is in decline. We need to be honest with ourselves that the job losses announced at Tata are a further continuation of that decline.

The Minister said there have been ongoing negotiations for a very long time on the switch to electric arc production, and she has been asked a number of times about the supply of scrap. Why is she not able to tell us that she has a plan to end the export of scrap steel and to secure its use for electric arc production in the UK, now that this decision has been announced?

Photo of Nusrat Ghani Nusrat Ghani Minister of State (Department for Business and Trade) (jointly with the Cabinet Office)

The hon. Gentleman’s opening comment is factually incorrect. He says we are the only country in decline, which is not true. French production has declined by 21%, German production has declined by 13% and Italian production has declined by 12%. It is appropriate to make sure we are accurate in setting the scene. His opening comment was wholly inaccurate.

These commercial decisions are based on business plans and Tata’s relationship with is supply chain. The hon. Gentleman was with me at the event in Parliament last week or the week before, and we have put together a procurement policy note to ensure that we have more UK steel in our supply chains, and definitely in Government contracts. I will continue to do my best to ensure that the number goes on the opposite trajectory to steel produced in the rest of Europe.