3. Statement by the Minister for Economy: The Steel Industry

– in the Senedd at 2:53 pm on 19 September 2023.

Alert me about debates like this

Photo of Elin Jones Elin Jones Plaid Cymru 2:53, 19 September 2023


The next statement will be made by the Minister for Economy on the steel industry. Vaughan Gething.

Photo of Vaughan Gething Vaughan Gething Labour

Thank you, Llywydd. A strong economy needs a successful steel industry. The Welsh Government is ambitious about steel and the integral role that it will play in the transition to net zero. That transition will support strong and lasting demand for steel in the goods of the future, as well as the everyday staples that we rely on. From floating offshore wind turbines and electric vehicles to tins of baked beans and new houses, steel will be the thread that will go on running through the economy of today and tomorrow.

The Welsh contribution to the steel industry is totemic and historic. It is a firm part of the foundations of the UK economy. Thousands of skilled workers in the sector know the role that it plays in supporting a secure economy. Those workers see why and how other G7 nations provide stable and strategic support for their own domestic steel industries. They understand the lessons of the energy crisis and the risks posed by the dumping of steel by nations that are not our allies. This backdrop should guarantee the industry a far greater level of priority in the UK Government, which should have a clear vision for the sector and a plan to achieve it. As costs have piled up and new risks emerged, UK Ministers have failed to grasp the issue quickly enough to secure a fairer transition that delivers a first-mover advantage that our industry could exploit.

Photo of Vaughan Gething Vaughan Gething Labour 2:55, 19 September 2023

Llywydd, an earlier decision would have allowed for a fairer transition in a strong industry. We have long been urging the UK Government to provide the significant co-investment needed to support the move to greener methods of steel production. Against this context, it is welcome that the UK Government has progressed negotiations with the company to ensure a long-term future for steel in Wales. The total loss of the operation in Wales would be unconscionable, and it is in the interests of the workforce, industry and communities that the sector has a long-term future here in Wales.

We value our industrial base in Wales immensely. I am determined that we transition to net zero in a way that maintains and builds on our industrial strengths and is in line with our commitment to a just transition. That is why we created Net Zero Industry Wales, a body that I was proud to launch in Port Talbot. Llywydd, it is however the case that the proposed agreement now reached between Tata Steel and the UK Government provides too little detail and raises too many questions. The UK Government has decades of experience in dealing with commercially sensitive information in a managed way with the Welsh Government to support sound decision making. The decision, the choice, to communicate via leaks and media briefings to share the announcement on the proposed deal reached is disrespectful to the workforce and harmful to a sector that needs to recruit people who will, of course, be looking for a level of security, and, as we know, they are crucial to the future of steel in the UK. As I've mentioned, it is frustrating that this deal was not reached at an earlier stage in negotiations. An earlier deal could have led to a longer and fairer transition.

Much remains unknown about the agreement, its time frame for implementation and the potential impact not only on the workforce and the company but on the wider supply chain and the local economy. Therefore, as I stated last week, whilst the announcement contains significant investment for the longer term, it is inevitable that Tata employees and their families, rightly, are focused on the impact it will have on the thousands of jobs in Port Talbot and Tata’s downstream facilities in Wales.

It is essential that Tata now conducts a meaningful consultation with its employees and the trade unions about this proposed plan. The proven commitment of the workforce is an enduring strength for the sector that means that the uncertainty that those workers now face is harmful to the sector and to our economy as a whole, as well as, of course, to those individuals and their families. I had an early meeting with steel trade unions last week and held further meetings with representatives both yesterday and today. I visited Port Talbot yesterday and will return once more later this week. I will continue to engage with the unions, the company and the UK Government as the situation develops.

Turning to the wider supply chain in Wales and beyond, the decision that Tata Steel takes about the nature and timescale of its decarbonisation journey will have a profound impact on its full supply chain and the wider steel-making region. For this reason, I have always seen the future of Tata not in isolation, but sitting within a much broader effort to support industry and develop our manufacturing base across Wales in the vital transition to net zero. While making the case for early and meaningful negotiations, we have set out how that longer transition could provide more certainty for options for wider technologies, including a role for hydrogen at scale.

It is a matter of great frustration that UK Ministers chose to exclude the Welsh Government from discussions, when both Governments will need to take decisions that impact upon the industry and the communities that it supports. The Secretary of State for Business and Trade offered to meet with me in May, some months after her appointment, but she has subsequently refused to agree a suitable date to discuss these matters in the months that followed. In fact, I don't believe a single date has been offered by the Secretary of State for Business and Trade to meet with me. I have, since May, written on multiple occasions to try to set up a meeting and to engage on the important overlapping issues that fall across our responsibilities. However, in a letter received from the Secretary of State earlier today, no offer to meet has been made. I have shared this letter with the Economy, Trade and Rural Affairs Committee, so they’re sighted on its contents.

Llywydd, I recognise that the industry’s transition is complex and far-reaching, requiring hundreds of millions of pounds of investment. It is not just about what happens within the company’s site boundaries. It will require a transformation of our infrastructure on a scale that we have not seen in our lifetimes. There are many questions that need to be answered. For instance, what impact will it have on wider infrastructure requirements, such as the grid network? What impact will it have on the value and availability of scrap metal within the UK, and how will this affect our other major steel producer, Celsa? I should declare an interest, of course, as Celsa's main operations are within my constituency. I've been clear that the free-port programme in Wales presented an incredible opportunity to link steel production with accelerated economic potential in the Celtic sea. UK Ministers are fully aware of the importance we attach to these matters and I will be writing to the levelling-up Secretary to share my serious concerns about the lack of clear co-ordination across these areas.

I know that Tata Steel have been looking closely at the opportunities that could come from the enormous economic benefits from floating offshore wind. It is not clear what impact the proposal would have on its capability to do this, or indeed to support its current markets. The UK Government has announced in its press release the creation of a transition board to oversee the proposed deal that it has agreed. We currently know very little about how this board will operate and how the announced funding of up to £100 million would be spent.

The Welsh Government is firmly committed to proper partnership working arrangements with the UK Government and indeed other devolved nations. However, this relationship must be genuine, and this new board must operate in a meaningful and transparent way. Many of the powers that have a significant influence in industrial net zero transition, including energy prices, the regulation of energy networks, hydrogen and carbon capture utilisation and storage business models, are reserved to the UK Government. However, the Welsh Government also has levers and knowledge that will be critical in turning a deal into a reality. The Welsh Government will continue to work closely with the trade unions and the company to do everything that we can to minimise job losses and ensure a sustainable future for steel making here in Wales.

Thank you, Llywydd. I'll be happy to take Members' comments and questions now.

Photo of Paul Davies Paul Davies Conservative 3:02, 19 September 2023

Can I thank the Minister for his statement this afternoon and the copy of the letter that he has sent me in my capacity as Chair of the Economy, Trade and Rural Affairs Committee? The announcement that the UK Government has provided £500 million to help ensure Tata Steel can continue to operate and to produce steel in a greener way is very welcome. Quite simply, without that investment, the reality is that Tata may have had to cease operating in the UK completely. Nevertheless, as Tata moves into a transition period that includes restructuring, it’s also a very anxious and worrying time for workers who may now be facing job losses, and it’s vital that there is sufficient support for the workforce at this time.

Today’s statement acknowledges that the Welsh Government also has levers and knowledge that will be critical in turning this deal into a reality, though the statement doesn’t say anything about how the Welsh Government is using those levers, so perhaps the Minister can tell us in his response what the Welsh Government is doing with the levers it has.

Now, we know that the UK Government has provided £500 million to help ensure Tata Steel can continue to operate, but perhaps the Minister can tell us if the Welsh Government has any intention of also providing financial assistance to help the plant produce steel in a greener way, given the Welsh Government’s commitment to decarbonising the sector. The chairman of Tata group said that the agreement presents an opportunity for the development of a green technology based industrial ecosystem in south Wales, and I’m very interested to learn more about what new opportunities may be on the horizon. Therefore, perhaps the Minister could update us on any discussions the Welsh Government has had with Tata about building that ecosystem in south Wales, and what that looks like. Has Tata asked for support from the Welsh Government to deliver this vision, and does the Welsh Government intend to provide any funding to help the sector with this agenda, and, if so, how much?

Now today’s statement refers to the importance of developing our domestic manufacturing sector and strong supply chains, and, as I’ve said before, it’s crucial that the Welsh Government is using its levers to maximise any procurement opportunities for the Welsh steel industry. Therefore, I’d be grateful if the Minister could tell us how the Welsh Government’s procurement strategy identifies opportunities for Welsh steel, as well as what other steps are being taken to maximise any procurement opportunities in Wales and, indeed, further afield.

Now, as I mentioned earlier, there will be Tata employees and their families who will be anxiously waiting to hear how the announcement will affect them, and it's crucial that Governments at all levels are providing the workforce with the support that it needs. Today's statement says that it's essential that Tata now conducts a meaningful consultation with its employees and the trade unions about its proposed restructuring plan, and I completely agree with the Minister. Of course, the Welsh Government has plenty of levers at its disposal to support the sector and its workforce, going forward, and it's crucial that they are used. And whilst I appreciate that it's still early days, perhaps he can tell us a bit more about the discussions he has had with Tata and the workforce. 

I know that the Minister recognises that the industry continues to change and that jobs in the industry 20 years ago were very different to the jobs of today, and probably will be very different from the jobs being done in 20 years' time. Therefore, can the Minister tell us how that has affected the way in which the Welsh Government has invested in the sector and in its workers to date? Perhaps he could tell us exactly how much has been invested in skills for the sector and how that investment has responded to the changing nature of the industry over the years. 

The Tata site in Port Talbot is currently the UK's largest single carbon emitter, and it's thought that replacing the existing coal blast furnaces could reduce the UK's carbon emissions by 1.5 per cent. As today's statement recognises, the biggest challenge facing the sector is its move to decarbonise. The new, less labour-intensive furnaces could lead to more and more job losses, and it's vital that a balance is found between modernising the industry and protecting its workforce. The time to have honest, meaningful discussions about how we address that challenge and balance those two competing objectives is now, and I'm pleased that today's statement confirms that the Welsh Government is committed to proper partnership working arrangements with the UK Government.

It's a fact that, when both Governments work together, Wales benefits, and we've seen evidence of that with the free-port programme and the city and growth deals. The Minister is right to highlight that the free-port programme offers an opportunity to link steel production with accelerated economic potential in the Celtic sea. Therefore, perhaps the Minister can update us on the latest discussions he's had with the Welsh ports about developing new opportunities for Welsh steel through the free-port programme. 

Llywydd, Wales has a proud history of steel making, and I sincerely hope that the agreement between Tata and the UK Government helps to ensure that our steel sector will have a bright future too. Of course, there is an important role for the Welsh Government too in terms of supporting the industry, and it needs to do more with the levers it has to help find the right balance between decarbonising the industry and supporting its workers. Thank you.

Photo of Vaughan Gething Vaughan Gething Labour 3:07, 19 September 2023

Thank you for the comments and questions. I think the main point here is that we recognise in the Welsh Government, as indeed the sector recognises and, indeed, steel trade unions recognise, the need to transition to decarbonise the way that steel is produced. The challenge is how that's done, the pace at which it's done and how co-investment works between different Governments and companies within the steel sector.

Now, the uncertainty is that, at present, the deal looks at a single technology answer, and we have always been clear, as I've indicated in the statement, that we have said both to Tata and to the UK Government that our preference was to invest in hydrogen as an alternative for the heavy end, as well as looking at the potential for further electric arc making. Choosing one technology with one proposed single furnace I think provides some challenges in us understanding how that does that. At present, we don't know that this will mean a just transition. And given the figures that have been briefed on the thousands of job losses available, it doesn't look like a just transition. So, we need to understand much more.

It isn't just us who need to understand. When I've met trade union stewards, they've been very clear that they're already being asked questions by their members that they can't answer, and that is adding to the uncertainty in a sector that needs to keep its workforce, that needs to keep skills within the sector for the opportunity that we recognise exists. It's a very, very difficult message, and that was added to by the way that Government sources briefed the announcement over several days. 

And I think that, on the other point that you make about partnership—. We are serious about partnership. We have taken pragmatic choices throughout this Senedd term on reaching agreements with the UK Government. Free ports is one example. It's why when that doesn't happen it is more frustrating, because actually we were able to have grown-up conversations that meant that we could all reach a deal that we could all sign up to. This is an example of what partnership working doesn't look like. We were excluded from the talks, not even briefed on the day. The announcement we found out from the press releases. And the Secretary of State for the Department for Business and Trade has not been able to find time in her diary to meet me since her appointment earlier this year. She was able to find time to go to Port Talbot to do media interviews, not to find time to talk directly with the Government. And the letter that you will have seen, and other Members of the economy committee will have seen—and, indeed, it is public for Members—contains a choice not to offer a meeting, and it thanks me for my interest in the steel sector. I think I have more than an interest in the steel sector, as the economy Minister in the Welsh Government, and I would want to see partnership working that is genuinely meaningful, and that means trust needs to be invested on both sides, and it means the UK Government need to act as partners and not simply to act in the style of an old-style governor-general.

On the challenges that are still there, I still see more that we can do in our work. On procurement, for example, I'm working with Rebecca Evans on looking into what we can do to further strengthen Welsh procurement so that it is completely in line with the UK steel charter. There will be more opportunities for UK-produced steel. And to be clear, that's UK-produced not sourced steel. You can source steel within the UK that isn't produced here, and the two things are important in terms of their differences. We still see there's more work to do on offshore wind. That's why I mentioned it in the statement. We need to understand what does this look like in terms of both the free port and the wider south Wales cluster. We also need to have conversations with Associated British Ports and Milford Haven as stakeholders who could be affected, and to understand what Tata are now proposing to do, the time period in which they propose to do that, and what that then means for the proposals that have been made with those partners.

On skills, we continue to provide a range of support to Tata, and it's agreed with the company about how we do that, and indeed a conversation with the regional skills bodies around the sorts of skills we'll need to provide. You'll see lots of apprentices within Tata, lots of people upskilling through that workforce as well, and that comes on the back of the work that we do with them and indeed their trade unions. At the recent union learning conference that I went to, I met a group of workers who had come through Tata, fairly young workers, who are looking forward to a future for them and their families. They're exactly the sort of people that will be looking on with concern about what this means for their future as well as other people in the wider supply chain. So, we will carry on being prepared to have conversations about how we can assist practically in decarbonisation and providing the skills that the workforce will need as steel making continues to shift and to move forward. The talks this week that I've held with the trade union—. There will be talks later this week between the company and indeed those trade unions. And that is the start of the consultation, engagement and negotiation process. What we have is a proposed deal, and within that negotiation it's possible that we'll end up with a different shape to the deal when it comes. We'll continue to talk in a trusted manner with all those stakeholders, the company, the UK Government and indeed the steel trade unions themselves representing the workforce.

Photo of Luke Fletcher Luke Fletcher Plaid Cymru 3:13, 19 September 2023

Firstly, Plaid Cymru stands in solidarity with the workers at the plant in Port Talbot and with our communities, who are no doubt facing anxiety over Friday's announcement, and the potential impact of any job losses will not only be felt in Port Talbot but in communities across my region, from Neath to Swansea to the Gower and to my home county of Bridgend.

Now, steel runs through the veins and arteries of Port Talbot and its people, through the good times and the bad, and I'll say as well that I share the frustration with how long it's taken for us to get to this point and how scandalous it is that Welsh Government and the unions have been locked out of negotiations—workers and unions especially. Surely, one of the key voices that should be around the table when talking about workplace transition is that of the workers—workers who have given and lost so much to the plant through the years.

Now, turning to the announcement, does the Minister accept that this is it, or does he agree with Plaid Cymru and the unions that this isn't it and that there must be room for further negotiation? We all know here how important the sector is strategically on a security basis and a green basis. We know this is one of the biggest challenges facing this sector when it comes to decarbonising, but you can't build wind turbines and you can't build solar panels and you can't build hydroelectric plants without steel. So, it's important we get this right, and that means not solely focusing on electric arc furnaces. We've heard time and time again that electric arc furnaces don't produce the grade of steel needed, so does he agree that we need to invest in diverse ways of making green steel, so, through hydrogen, reduced iron, and investment in carbon-capture technologies? Perhaps this fills into the green ecosystem mentioned by Tata. If so, then we need to know about it. These investments have already been made elsewhere in the world, like in Germany, with KfW, the German development bank, that invested in hydrogen steel. Does he believe that there might be a role for the Development Bank of Wales here at some point?

We have all seen reports about the significant job losses. The ReAct programme is often the go-to, and I appreciate that the Minister has already said a lot about the need for a just transition. There's talk of a transition fund being set up between Tata and UK Government, as well as the new transition board mentioned by the Secretary of State for Business and Trade in her letter to you. Has the Minister been in discussions relating to Welsh Government's involvement in either of these funds and panels? And has the Government managed to see how these funds actually line up with Welsh Government's priorities when it comes to green skills? Or was the letter literally just a 'for your information'?

Finally, I've already mentioned it, but steel is a strategic and massively important sector, and looking to the future, the Minister, of course, is a member of the Co-operative Party and has ambitions for the co-operative sector here in Wales. So, regarding the future of steel, has he given any thought to potentially earmarking steel for the largest co-operatisation project in Wales, or even indeed the UK? Proof of concept exists already in the Basque Country. It will safeguard the sector here in Wales, it will empower the workers within the sector, and it will keep any profits made here in our communities, for the benefit of our communities.

Photo of Vaughan Gething Vaughan Gething Labour 3:16, 19 September 2023

Thank you for the comments and questions, and I agree with the broad thrust of the Member's comments on where we are. You'd expect that Welsh Labour Members, not just Ministers, would stand in solidarity with the communities that we represent, with a sector we have long pointed out is the foundation of the future of the Welsh and UK economy. We should not be the only G7 country that does not have a significant steel-making asset. We could not and should not put ourselves in a position where we are reliant on imports, with everything that would mean. So, the asset itself is of strategic importance. It's why we have invested so much of our time, energy and effort in conversations with the company and, indeed, with the UK Government. It's also why it's so disappointing that we have not had the constructive engagement that we have undertaken responded to in kind, with the sort of trust that should take place, from the UK Government itself.

On your point around turning steel making into a co-operative endeavour, we're not in control and not in a position to do that. We will continue to make a case for greater co-operative enterprise right across our economy, but I don't think it's a practical answer to the challenges that are faced now. We have a company that are determined to maintain their ownership of this steel-making asset, and they're looking to put their own funds into doing so.

And your point around whether there will be meaningful negation now, well, that is exactly what steel trade unions expect to happen. And for any consultation to be meaningful, they have to be prepared to look at the proposed deal that is on the table, as opposed to simply accepting that every single detail that has so far been announced is going to be the end result and, indeed, what that means for the workforce in terms of any future move in the way that steel is produced and the time frame over which that change takes place.

We are talking again about what can happen and some of the constructive work with the UK Government on, for example, the industrial energy transformation fund, that has provided access. We've been part of the phase of consultation, and that should have another round in the spring, and we will look to see that, within that next phase, there will be real and practical support for steel making here within Wales. As I say, you can't have a significant steel-making asset within the UK without significant steel making taking place here in Wales as well.

On your point around technologies, as I said earlier, we have always been clear that our preference is that hydrogen is part of the answer. That would require a UK Government co-investment for that to take place. It's taken place in the Netherlands because they have an arrangement and they have co-investment taking place there, and, as I say, there are different arrangements in place for the steel sector in other competitor EU economies. Germany and France are good examples. We want to see the sector treated fairly here, with the same level of support, the same level of recognition, and the same opportunity to decarbonise without costing the significant number of jobs that has been briefed by UK Government sources to date, and that's why we'll continue to talk meaningfully with our trade unions and the UK Government to understand what this actually means in practice, as opposed to the headlines we've been given to date. I'll be more than happy to update spokespeople, and indeed Members who represent steel communities, as we carry on.

Photo of David Rees David Rees Labour 3:20, 19 September 2023

Can I thank the Minister for his statement today, and for his support for the workers and the communities that are going to be devastated by this announcement last week? Because there's no question, there are thousands of steelworkers and their families and other people in the contractor sector and in the supply chain that are worried about their futures, and there are businesses in Port Talbot that will struggle as a consequence of the loss of income from those individuals who spend their money there. So, this announcement is, in a sense, a thorn in people's sides: 'What do we do?', 'Where do we go?', 'What's happening?' The timeline needs to be made clear. So, in your discussions with Tata, please stress upon them the need to make clear the timeline to their workforce, to ensure they do engage with the trade unions and listen to the trade unions, because they're the workers and they're the experts in this area, and they seem to be being ignored in that aspect, and their input would have been critical in any decision making. In fact, the UK Government, I've heard Ministers refer to themselves, 'We've been discussing this for years.' Well, if this is the deal they've come up with after years of discussion, it's time for them to go and get new negotiating skills, because they can't do it.

I'm pleased Plaid Cymru joined the Labour Party on the green steel deal, because it's actually what we want, and that's important. So, what discussions have you had about ensuring that that approach is something we can still move towards? Because this is a proposal; it's not the future yet, it's not in stone, it's still something that can be modified. So, what can we do about that? And, do you agree with me that, in fact, the biggest benefit we can get is a Labour Government coming in to actually enact its green steel deal, to allow us to actually get on with making sure of a sustainable future, with far more jobs, better opportunities for people, because the UK Government, at this moment in time, talk about opportunities—the £100 million fund, opportunities—but where are those opportunities? The week before, they didn't get any bids for floating offshore wind in the Celtic sea; they lost that opportunity. So, I don't see them coming down the line. They seem to be talking, but not actually acting and getting people into work.

Photo of Vaughan Gething Vaughan Gething Labour 3:22, 19 September 2023

I recognise the Member's long-term commitment not just for the sector in his constituency, but the broader points that he makes about the importance of steel in the future of the economy. I also recognise the points he makes powerfully about the worry for the future, and that's very real. As I said, when I met trade union stewards yesterday and today, they were very clear that those worries are real, the questions are real, and, at the moment, the trade union stewards cannot tell them what is happening. The start of the conversations that is now taking place after the announcement's been made puts everyone in a difficult position, and, actually, it's the sort of thing that does not help with the trade union side and its relationships with Tata, which have been broadly constructive over a long period of time, and that in itself is really unhelpful.

There have been years of discussion around this. If you remember someone from the history books called Kwasi Kwarteng, when he was the Secretary of State for Business, Energy and Industrial Strategy, he was already talking about the fact that there was a discussion on co-investment, and the terms of that discussion, if they'd been reached earlier, could have allowed for a longer and fairer transition, with more technological answers that could have been brought into a deal. So, not being able to do a deal earlier actually provides more of a problem.

Conversely, David Rees is right that, actually, given the time that we're in, and the end of the road that is coming for this Government, because there must be a general election within a time frame, the fact that there is a negotiation that has to take place now, and there is an alternative approach from an alternative Government that may be across the United Kingdom over the next year, there are conversations around one of the few funding commitments that have been made and stuck to, and I actually understand why my UK colleagues are not making a whole series of funding commitments a long time in advance of an election. But, actually, the green steel, the £3 billion figure that's been given, is one of the commitments that is being continually referred to, and that does mean that there are alternative means to discuss about what the scale of co-investment might look like, and what the return for that investment might look like.

I think the Member makes a fair point around floating offshore wind: there wasn't a single bid for any part of the UK in the last contracts for difference round for any floating offshore wind—any offshore wind project. There is an opportunity to put that right within the coming months. There should be another round coming up before the end of this calendar year. If the UK Government are serious about the UK being world leaders in practice and not simply in rhetoric, they will need to do something to make sure those demonstrator projects get off the ground and have the opportunity to come forward. If that doesn't happen, other countries will not sit still; they will move up and recognise the inaction taking place here. If that does not happen, then the opportunities that the free ports could produce for the Celtic free-port bid, going right across from Port Talbot, all the way to the port of Milford Haven, could be reduced, if not lost. Now, I want to see that maximised. I want to see the jobs and the quality of jobs take place. And I want to see Tata part of that conversation, with their partners, about what steel they will produce, how much of that can be made here, how much can go into those turbines, to maximise the economic benefit to us, as well, of course, as a point made powerfully by trade union stewards, that they understand that if you import steel, you're not cutting your emissions, you're offshoring them. And actually, that provides a real risk not just for what this might do for decarbonising, but actually the opportunity to sell that steel into European and US markets too.

Photo of Tom Giffard Tom Giffard Conservative 3:26, 19 September 2023

I, for one, welcome the UK Government's massive £500 million investment in Port Talbot, which safeguards 5,000 direct jobs and 17,500 indirect jobs, and the future of the steel industry here in south Wales.

I do share the Minister's concern at the loss of jobs in the area. That's why the £100 million towards a transition board to manage the change is very welcome and stands as one of the biggest amounts of money ever committed to a project of this nature. And I've heard the Minister in this Chamber, numerous times, calling on the UK Government to resolve the future of steel making in Port Talbot. Now that's happened, I thought he would have welcomed it. But instead, listening to the Minister's statement today, it sounded like someone scrambling around looking for someone or something to criticise. It's a bit rich for the Minister to be talking about a lack of clarity and detail when, at the same time, seemingly, the only thing Welsh Government might have got behind that was any different is an uncosted, untested hydrogen scheme, at some point in the future, which wouldn't do anything to safeguard jobs in the here and now; it's completely detached from the reality of the situation. And the business Secretary and the Welsh Secretary pointed out that that would mean spending six times as much as the Government's offer, just to kick the can further down the road. But his opposition to this issue risks damaging the stability of the future of the deal and the steel industry in Port Talbot. If he's as opposed to the deal as he makes out, and the UK Labour Party, on social media, makes out too, can he confirm whether he has had discussions with the UK Labour Party to ensure that any future UK Labour Government would honour the terms of this deal, so that Tata and the town of Port Talbot can proceed with clarity?

Photo of Vaughan Gething Vaughan Gething Labour 3:27, 19 September 2023

Well, with respect, the Member has tried to provide views for me that I don't have and haven't set out. I think he should listen a deal more carefully and recognise the seriousness of the matter. The tone of his comments I find deeply disappointing. This is a mixed announcement. There is longer term certainty for the sector, which we have recognised. We recognised it at the time, and I've recognised it today in my statement. There is a strong future for the steel sector, and it's important to be positive about that. We have skills, we have production capability, we should be able to transition to a future where significant steel making still takes place, and we want to do that on a basis where a just transition is delivered, not simply discussed and then put to one side. I would have thought that's an ambition that should go right across this Chamber, and yet the Member trashes what we are trying to do in asking serious questions about what the proposed deal means and what it will mean for all of those workers facing an anxious future. We want the certainty that David Rees has referred to, that Luke Fletcher has referred to, that even Paul Davies referred to, and I think the Member's comments really do jar, not just in tone, but in content as well.

When it comes to hydrogen, I make no apologies for making clear that we have always said that our preferred option was to have hydrogen as part of the mix for the future. If you allow that future to be created somewhere else, then it's entirely possible that that technology will not find its way to these shores. Now, who would want that? Because you'd be reliant on new steel making, as opposed to recycled steel making that electric arcs represent, taking place somewhere else, and the grades of metal that are currently only produced in that way will have to come from somewhere else. You'll be reliant, for at least a significant portion of steel making, on importing it from other parts of the world.

I would rather the UK took a strategic choice in wanting to see that development take place within the UK. We have institutions here in Wales, actually, who could take part in that research and the development of both the electric arc steel making, what that can provide, as well as hydrogen as an alternative for the heavy end. And I make no apology for setting out that's always been our position. The company will not be surprised to hear me say that, the UK Government won't be surprised to hear me say that. And as we have said, this is a proposed deal. We don't know enough about the deal and what it contains to say we'll sign up fully to every aspect of it. So, I look forward to having more clarity on the proposals in the deal, and the consultation and negotiation that must take place between the company and the trade union side for it to be meaningful, and I would not put any time frame on the length of that negotiation. The important point is that you get the right answer for the workers in the sector, and for the importance of the sector to not just the Welsh economy, but the UK economy as well. 

Photo of Sioned Williams Sioned Williams Plaid Cymru 3:30, 19 September 2023

Tata steelworks in Port Talbot employs people from across the region I represent. It employs many of my friends and their children. The town of Port Talbot has been shaken by the news of these enormous job losses, but also Neath, Swansea, Bridgend and their valley communities. These workers have families to support, mortgages to pay, they buy in local shops, go to local pubs and restaurants, as do those who work for the local companies that supply the plant with all the materials, products and services needed over decades to make Port Talbot steel. There are apprentices who I know feel their future is in doubt. None of these people had a say in this huge and far-reaching decision that will change their futures, and this is keeping them awake at night. 

You refer in your statement, Minister, to the transition board funding, but, as we've heard, there's not a lot of detail. So, I'd like to know, Minister, how will the wider region's communities be supported economically in the future? What conversations has the Government had with Neath Port Talbot, Swansea and Bridgend councils regarding the impact of these job losses and the changes to the nature of the Port Talbot plant? Because 'just transition' is not just words. 

Photo of Vaughan Gething Vaughan Gething Labour 3:31, 19 September 2023

I think there are two points to make in response. As I've said on a number of occasions already, I recognise that the concern that people have is very real, and isn't going to go away quickly, because, actually, the negotiations with the trade union side are only just about to start, and I wouldn't want to see those rushed to get, potentially, to the wrong answer being delivered. If there's a better way to deliver the transition, including looking at technology, whether it's one furnace or more, all those things have to be part of a conversation that takes place. This Government certainly won't try to short-circuit that negotiation that must now take place to provide a long-term answer for steel making in Port Talbot

On your point around the conversations that we have with all those interested local authorities, we actually need to have more certainty about what this means, because, on the number of job losses that have been briefed, it's not certain that's going to be the end figure. And there's the balance between direct jobs and, indeed, the point that David Rees made about all the indirect jobs, and the point you made about the spend in the local economy, and, if there's a reduction in Tata Steel's footprint, what that means on a whole range of other fronts as well. So, we need more certainty on that, and, indeed, on the partnership board. 

I'd like to have a meaningful conversation with the UK Government about what the £100 million really means, the time period over which it will be spent, how it works with, not over or between, our devolved responsibilities for economic development, and to do it in a way where we can add real value. Otherwise, potentially, this blows a very big hole in any kind of levelling-up agenda that has any kind of meaning. So, we recognise there's a lot to talk about—really practical questions—and I'll continue to engage meaningfully and constructively with the UK Government. I'll also, of course, make sure that Members are updated when there are significant updates we can provide to Members, either in committee, or, indeed, in public, which would be my preference. 

Photo of John Griffiths John Griffiths Labour 3:33, 19 September 2023

Minister, one of the downstream operations affected by the Port Talbot announcement is the Llanwern steelworks in Newport East. We still have several hundred direct jobs there, as well as lots of contractors, the supply chain serving the plant, and, of course, local businesses that feed off the spend from employees at Llanwern and in those other jobs. And, of course, we mustn't overlook the downstream operations in the overall picture, because it's very significant locally, Minister. And one of the key questions is the quality of steel that an electric arc furnace—which obviously is the favoured approach of the UK Government and Tata Steel at the moment—would produce. 

We've heard various views, and I'm just wondering what the Welsh Government's take is on the quality of steel that an electric arc furnace would produce, and its suitability for the Zodiac plant at Llanwern, which obviously produces steel for the automotive industry. The plea, really, from the workforce at Llanwern and the unions is, as you have said, for them to be involved, for the Welsh Government to be involved, meaningfully, as we proceed from this point. As you said, Minister, there's an awful lot yet to be addressed about the transition, about retraining opportunities, alternative jobs for those who will lose employment, but a host of other matters as well. So from here on, Minister, and I know you will be asking the UK Government for this, obviously that's what the unions and the workforce want—meaningful involvement for them, for the Welsh Government, and a different approach in that regard as we go forward and deal with all of the detail involved.

Photo of Vaughan Gething Vaughan Gething Labour 3:35, 19 September 2023

Thank you. It's an important point around some of the specifics of the wider supply chain. For both Llanwern, and indeed for Trostre, with steel currently provided from Port Talbot, it's not clear that you can make that in the way that it would need to be through the electric arc process at present. So, understanding what that looks like, and understanding whether the company are going to invest in a long-term future for both Llanwern and Trostre, is really important to us. The trade union side have been talking about it publicly already, since the proposed deal was announced.

But there's also our understanding of the point that's been made around carbon emissions; you can't simply offshore your emissions. So, if you're going to have steel produced somewhere else, which is imported, how long term is the commitment to do that, if you don't make that steel any more in Port Talbot? Where does that steel come from? When the European Union, as is almost certain, does have a carbon border adjustment mechanism, that broadly means you understand the carbon content of the steel that's coming to you, both in its production method, and indeed in its transport method. So, if you have steel produced in a different part of the world in what still is a carbon-intensive method, and add it to the carbon cost for transport, that will have an impact on how that steel is treated within the European Union. I would like to see UK steel, not just Welsh steel, produced in a way that is recognised as being equivalent to the steel that is produced within the European Union. It will reduce the friction that might otherwise be in place for the way that steel is used, and then the preparedness of anybody to invest in the future of that steel making here within the UK.

It also goes into what we think we want to hear from Tata around future metals research. Swansea University have a particular specialism in this, and Tata are used to working with them; are they prepared to invest in that research to make sure we can still produce different grades of steel using electric arc? We need to have an answer on that, and, indeed, the broader question of scrap metal. The UK currently produces around about 11.5 million tonnes upwards of scrap metal each year. Two and a bit million tonnes of that is used in electric arc steel making, so there's a big gap. The challenge is, though, that that excess is currently exported. So, we're exporting our scrap metal. Now, are there going to be incentives or challenges around exporting that scrap? If you're going to interrupt the business model of exporters, how are you going to do that and how are you going to get not just the volume but the quality of scrap that will be required to feed another significant electric arc production here that doesn't undermine the steel-making production capability in Celsa, which, as I say, is in my constituency?

All those questions we need to understand and the trade union side need to understand. We'll definitely be looking for answers on those, and how, if at all, the partnership board and the £100 million goes to that, or the steps that the company themselves will be taking. So, there are lots of questions that need to be answered in the negotiation process, and I can guarantee you that the Welsh Government will not lose sight of the interests of workers in Llanwern, Trostre, Shotton or elsewhere when it comes to these negotiations and what it means for the future of the sector.

Photo of Llyr Gruffydd Llyr Gruffydd Plaid Cymru 3:38, 19 September 2023

Thank you for your statement, Minister. You mentioned Shotton there in your final sentence. I just wanted to say that I stand in solidarity, of course, with Tata workers wherever they are, but particularly in my region in North Wales and Shotton. This dark shadow has been cast across all sites that we represent, in all parts of Wales. I would like just to ask what your understanding is of any potential impacts for Shotton, particularly, but also, importantly, for you to confirm that, as a Welsh Government, you will stand ready to step in and provide the necessary support for workers wherever they are in Wales, particularly, from my point of view, those in Shotton, in terms of retraining and support in finding alternative employment if the need arises.

Photo of Vaughan Gething Vaughan Gething Labour 3:39, 19 September 2023

I've had the opportunity to visit Shotton with Unite the Union, and Jack Sargeant as the constituency Member, previously. Our initial understanding is that there's less concern about Shotton than other steel-making facilities, but we need certainty on that. Having certainty through the negotiations taking place will be really helpful for us, and, again, to make sure that any future production will continue to feed the Shotton plant. If there is an impact in the head count, then we will continue to provide the support that we already do—the ReAct+ programme, and others—to work with the company, the workers and the trade unions themselves. It's why the time frame of a transition really matters, because if you move to rapidly removing a workforce, it creates a much bigger problem for almost everybody. The challenge of having a longer time frame is whether you can keep people in the sector, if they think the longer term future doesn't exist for them. So, there are different challenges that exist. We'll continue to provide practical support, as you mentioned. And it's very much in my mind, as a former health Minister, that when you have large and rapid redundancy events there is almost always a mental health impact that comes from it. So, we all need to understand what that means directly and then to understand if there is an extra demand that will be going into our health service, if there is a rapid large-scale redundancy event. So, there are many good reasons to want to avoid that. I'm very well aware of each of them, and, as I say, I'll continue to keep Members updated on the progress we make. 

Photo of Mike Hedges Mike Hedges Labour 3:40, 19 September 2023

I worked as a research officer at what was the BSC research centre in Port Talbot, specialising in iron and steel making, including with the blast furnace computer model. I have heard the statement and read the press releases. Moving to electric arc furnaces removes the need for iron making and for basic oxygen steel making. It also makes it very difficult to make any specialist steels. The problem is not just the huge losses and direct and indirect jobs; it puts the whole future of steel production at risk. We are now, if we go to an electric arc system, totally dependent on the price of electricity and the price of scrapped steel. As the Minister I am sure is aware, both of those are extremely volatile. And we've had people who have used electric arc furnaces recently mothball them from time to time, because the price of electricity has gone up. Will the Minister ask for a consideration of using hydrogen instead of carbon in the creation of iron, thus continuing the iron making? 

Photo of Vaughan Gething Vaughan Gething Labour 3:42, 19 September 2023

It's a key ask, and, as I said, our position and our preferred end point has always been this. And, actually, from the trade union side, they have engaged meaningfully in what a just transition could look like to decarbonise the sector. They've worked with consultants Syndex to look at what that transition might look like with the whole sector, in fact, not just with Tata. The point is well made and, I think, well recognised that different grades of steel can be made through different production methods. If you can have a different answer for electric arc technology, then you need to invest in the research to get there. I'm interested in that in any event to maximise what we can do with electric arc production, but there is a challenge and an opportunity with scrap production to see more of that retained here within the UK, to see value added from that. But the Member is quite right to point to electricity price volatility, which is a real concern for the sector. It is raised with me every time I meet steel workers and every time I meet the steel company. They always point to the fact that a better deal is available in European countries where a different level of support is provided. It's why I highlighted in my statement that our steelworkers see why and how other G7 countries make different choices about how to support this strategic sector of the economy. I would want that to happen with this Government, and I would certainly carry on having a conversation with any future Government on how they might support the sector for a longer term sustainable future. 

Photo of Jane Dodds Jane Dodds Liberal Democrat 3:43, 19 September 2023

Good afternoon, Minister. Thank you so much for all of the work that you've been doing to date, and I wish you well with continued negotiations. I stand here, as the Welsh party leader of the Liberal Democrats, ensuring that we stand in support with those workers in Port Talbot. Port Talbot is an iconic plant not just here in Wales, but even further, even across the world, I would say, and we owe those workers a duty to support them. I cover the upper Swansea valley. There are workers who live there who work in Port Talbot. So, it's really important to all of us across Wales that we make sure that we give a fair deal to those workers and ensure that they are supported and protected.

I wonder if I could just link two of the issues I've raised with the First Minister, one this week and one last week. The one this week was around mental health. There are massive economic issues, but there are also massive mental health concerns. If you are a family facing potential redundancy, it must be incredibly stressful not just for you as a worker, but for your family. So, we need to ensure that there is cross-governmental support. The second one I raised last week, about universal basic income and the transition universal basic income for workers from carbon-heavy industries, such as Port Talbot, to green industries. The First Minister talked about the fact that we needed to protect all of the current redundancy payments et cetera, and I would absolutely support that, but universal basic income comes on top of that. So, I would ask you to consider what support you're giving to those workers across Government in terms of mental health support, but also how we can ensure those workers have a real consistent message around the income, going forward. We cannot let those workers down in Port Talbot. Diolch yn fawr iawn. 

Photo of Vaughan Gething Vaughan Gething Labour 3:45, 19 September 2023

I recognise the points the Member is making and, indeed, I referenced the potential mental health impact of a large-scale and immediate redundancy event, and what that would inevitably do across the population of people who might lose their jobs, if that happened rapidly and at scale. That's why I've kept on talking about the time frame for the transition and whatever the transition is itself. That is still part of the negotiation on the proposed deal. 

On your point around practical resources for workers who may either choose to leave their job if they're uncertain about their future or, indeed, those people that might be made redundant, it is part of the reason why that negotiation is so important—to understand what practical support is going to be provided, either within or outside and above terms and conditions, as we have seen on a number of occasions. So, Ford workers, for example—the trade union Unite at that time were able to negotiate a significant enhanced package that gave them the space to look for other opportunities. Welsh Government support has still been available on top of that, and it's important not just to find work but to think about the quality of work that those current workers have and their earning power, and the commitments they already have, and whether we can find them work that is in some way commensurate. So, there's a different challenge depending on the types of—[Inaudible.]—that needs to take place, and what we're able to do then. We are continually, within our budget challenges, looking at what we can continue to do and will continue to do, and I'm very clear that we continue to have a support and retraining package available for workers across the sector and that will be directly relevant to what happens at the end of the negotiation that is still taking place around Port Talbot

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour 3:47, 19 September 2023

There are many, many hundreds of steelworkers in the Ogmore and, indeed, the Bridgend area and, in fact, we've spoken to many of them over this last weekend. They say we shouldn't turn our backs on any investment, but there should have been proper engagement between the workforce and the unions and the owners, and proper engagement between the UK Government and Welsh Government, and that this has not happened, as we've heard, is of truly deep concern. They agree electric arc is part of the solutions for the future, but the Minister will know that the unions and others have argued consistently for support from the UK Government far beyond what is currently on offer, more akin, indeed, to other nations within Europe, and where alternatives to electric arc are also being explored—the move to hydrogen, carbon capture, direct reduced iron models, which have the benefits of not only retaining a broader steel-making capacity, including primary-making steel capacity, but also retaining more jobs and developing that green steel, giving us the leadership in Wales and the UK that we want, instead of offshoring climate change, carbon, and also offshoring jobs as well. So, could you assure us, could you assure the Senedd, that you will continue to work with the unions, push hard on the UK Government and work with Tata, and keep all options on the table, and then keep this Senedd and the workforce fully updated?

Photo of Vaughan Gething Vaughan Gething Labour 3:48, 19 September 2023

I'm more than happy to give that commitment, because in the conversation I had with the trade union side, the meeting I had when I was overseas on the Friday—we had an early meeting then—and the meetings I've had yesterday and today, we're very clear that we have aligned interests in the future of the sector, what it can do for the economy, and the fact that the trade union stewards understand how their steel can be used in the future. They know that a green revolution is coming in the way that power is generated. They know that there are significant economic opportunities that come with that. They also know that that doesn't have to take place here within Wales or the wider UK, and that is reliant on choices that are made by companies and the support provided by the UK Government. It's why David Rees was right to point out that there is a reason why not a single developer bid in the last contracts for difference round to generate offshore wind. It's a missed economic opportunity, and it provides real concern for the workforce.

I also agree with your point, and I just want to make this clear: the trade union side and the Welsh Government always recognised that electric arc furnaces are part of the answer, and the challenge comes in how technology-neutral the decarbonisation journey can be and what will come from the negotiation. So, we look forward to being constructive in what happens with that negotiation, and to work alongside the company, the UK Government and the trade union side. And as I've said, and I'm happy to repeat, I am more than happy to keep Members updated formally through the Senedd on what is happening in those negotiations when I'm able to do so, respecting, of course, the fact there will confidentiality around some of those processes, and, unlike what has happened in the last week, the workers need to hear first what is taking place with their jobs and their livelihoods.

Photo of Cefin Campbell Cefin Campbell Plaid Cymru

Diolch yn fawr, Llywydd. Can I thank the Minister for his statement? I share his concern and others' regarding the current situation, and I too feel deeply frustrated by the UK Government's approach to the matter. Particularly disappointing is the fact that you as a Government have been bypassed in the negotiations, and again it's an example of undermining the devolution settlement. However, in your statement you make several references to the Tata Steel plant in Port Talbot, and rightly so, and you refer to your visit yesterday to the town. Now, you will also be aware, of course, of the Tata Steel site at Trostre in Llanelli in my region. Again, this has been a long-standing, crucial, local employer for over 70 years, currently employing about 600 people, and in an area with stubbornly high deprivation levels. So, in light of your statement and the continued uncertainty, could I therefore ask you what discussions you've had about the future of steel making in Trostre at these worrying times?

Photo of Vaughan Gething Vaughan Gething Labour 3:51, 19 September 2023

It's a point that I think I mentioned earlier in response to John Griffiths, but I'm happy to restate the point. Near the start of my statement I referred to where steel is made, how it's produced and what it is, and of course the reference to baked beans was deliberate, because Trostre produces lots and lots of cans that are used in everyday goods, including baked beans. Now, the challenge is that, if you have a gap in production, those customers will move, and there's absolutely no guarantee they'll come back. And the trade union side have said, 'We want certainty', and the Welsh Government wants certainty on what this means for Trostre and the supply of steel that they will need to carry on their production. So, that is part of what we're looking for. It's certainly part of what the trade union side are looking for. So, that is definitely on our list of issues we have already raised and will continue to raise where we want long-term certainty, and that's why the types of steel making are so important, it's why I'm so disappointed at Tom Giffard's tone and the conduct of his commentary, because, actually, that ignores the fact that downstream production in Llanwern and in Trostre are reliant on the type of steel that is currently produced within Port Talbot.

So, there many questions still to be answered, but I should finish on this point, Llywydd: for all the challenges that exist—and they're very real—we have a significant asset of UK significance here in Wales. It is a strength to build on, and if the UK Government are prepared to see it in that way, there can still be a strong and positive future for steel making here within Wales, within the United Kingdom, where we are not reliant on other parts of the world to make our steel for us and all of the vulnerabilities that that would provide. We will engage in that constructive manner, recognising the significance of this foundational sector of our economy. I look forward to updating Members and I hope we can have more certainty and more positivity about the future of the steel sector in the future.