British Steel

– in the House of Commons am 12:11 pm ar 8 Tachwedd 2023.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Holly Mumby-Croft Holly Mumby-Croft Ceidwadwyr, Scunthorpe 12:11, 8 Tachwedd 2023

(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on the announcement made by British Steel on 6 November, and provide an update on the negotiations between British Steel and the Government, and on the Government’s position on virgin steelmaking in the UK.

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

Steel is vital to the UK economy. I fully recognise the importance of British Steel to local communities, particularly in my hon. Friend’s Scunthorpe constituency, where the company is a major contributor to local economic growth, and where she campaigns incredibly hard for steelworkers.

Global conditions have been tough for steel companies around the world. That is why we have changed the competitive landscape for British Steel and other energy-intensive industries by announcing the British industry supercharger—a decisive package of measures to reduce the long-term electricity price gap that exists between UK energy-intensive industries and competitor countries. That support will mean that strategically significant UK industries, such as steel, are safeguarded against the high industrial electricity prices that they have faced in too many recent years. We have also provided over £730 million in energy costs relief to the steel sector since 2013, in addition to the energy bill relief scheme. Steel producers will continue to receive support until 31 March 2024 through the energy bills discount scheme.

As my hon. Friend is aware, the Government made an extremely generous offer of support to British Steel earlier this year to help it to invest in a decarbonised and sustainable future. We have continued to work intensively with British Steel since then and will continue to do so. However, she will also understand that the detail of those conversations remains highly commercially confidential and that any public discussion risks undermining talks.

I know that this must be a deeply concerning time for British Steel employees and others in Scunthorpe following the company’s announcement on Monday of its plans for future operations. I can very much assure my hon. Friend that we will help affected workers and their families, and that we are committed to finding solutions to enable the ongoing sustainable and decarbonised production of steel. Just last month, for example, we announced a £1.25 billion joint-investment package with Tata Steel to secure a decarbonised future for steelmaking in Wales. That has the potential to safeguard several thousand jobs across the UK. In 2020, the Government provided an emergency loan to Celsa Steel to help it continue trading during the covid pandemic, saving over 1,500 jobs, with a further 300 jobs created since the loan was made.

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

I stand absolutely unapologetically with steelmakers and my community today, and I do not support these moves. In this Chamber on 18 September, I asked the Minister for Industry whether she agreed that we need to retain a virgin steelmaking capability in the UK for strategic reasons alone. She said

“obviously, we need a place for virgin steel”—[Official Report, 18 September 2023;
Vol. 737, c. 1125.]— and that that place was Scunthorpe. That was reiterated the very same day by the Secretary of State, and so pleased was I with the comments that she made that I took contemporaneous notes of that conversation.

British Steel is a private company and can make business decisions as it sees fit, but I am clear that if it is seeking hundreds of millions of pounds of public money, the Government must leverage that money to protect steelworkers’ jobs and maintain our sovereign capability to make steel in the UK. Electric arc furnaces melt scrap; to make virgin steel from scratch, we need blast furnaces. Can the Minister tell the House how the UK will make virgin steel if all our blast furnaces are decommissioned? Can she tell us how many countries in the G20 are unable to make their own virgin steel? Would the Government be comfortable with us being entirely dependent on foreign imports for the virgin steel we will continue to need in this country?

Will any financial support offered to British Steel seek guarantees on steel jobs and lock in, as a minimum, an interim period of blast furnace production to allow us to explore green options to run them? Did the Government know that this announcement from British Steel was imminent? When will I get a response to my letter of 29 September to the Secretary of State? Why did the Department not contact me until 5 pm on Monday, when I was sent simply a short text message? What support is the Minister offering our excellent North Lincolnshire Council, which is proactively working with British Steel to bring additional green jobs on to the site? This Government have a good record on steel—they have paid workers’ wages. Can the Minister confirm that steel remains high on the Government’s agenda?

I have 3,500 of the world’s finest steelmakers in my constituency. It is my privilege to come out and bat for them today. Thank you, Mr Speaker, for allowing this urgent question.

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

My hon. Friend makes lots of very credible points—there is very little for me to disagree with. She does indeed make representations at the highest levels of Government, and her priority has always been steelworkers; she has never played politics with that role. I put on record my apologies if I have not done due diligence and provided the public service that she should have received by being contacted much sooner on that particular day. There is nothing she could say that I would not be telling myself off for even more, and I hope I will not fall short in communications going forward.

My hon. Friend is absolutely right: I did indeed say at the Dispatch Box that my personal opinion is that there is a strong place for virgin steel production in this country, and that, of course, is in her constituency. We are in the middle of live negotiations, and any decision taken by British Steel is a commercial decision. My hon. Friend is also right that we are able to carry out due diligence on any support we provide; it is taxpayers’ money, and our primary focus is to safeguard the sector and jobs, including in her constituency.

My hon. Friend is right to note that we have prioritised the UK steel sector, and we will continue to do so. We need to provide it with support as it transitions, because that is also a choice being made by manufacturers, customers and consumers who are looking for greener steel going forward. Any decision we take and any support we provide will be to ensure that the sector is sustainable and competitive. We want the sector not just to survive, but to thrive.

My hon. Friend spoke about the support we have provided to the sector to date. We have provided hundreds of millions of pounds of support to British Steel to deal with its emissions, and over £730 million in energy cost relief to the steel sector since 2013. We have put the supercharger in place, as well as the steel procurement policy note, which does its very best to ensure that we procure more steel here in the UK. We have provided support to Tata to ensure that that part of the country can continue to make steel and to protect those jobs, and we have provided support to Celsa. My hon. Friend talked about the support we are providing to North Lincolnshire generally—there is a huge amount of support there. Since 2018, the Government have committed over £200 million in investment in the north and north-east Lincolnshire area.

I cannot say much more at this time because we are in the middle of live negotiations that are commercially sensitive. When British Steel put out its press release, that was the first time I saw it, but we must recognise that it was a proposal; many things have to fall into place for such proposals to become accurate plans—not only will there be issues around planning, but our negotiations have to conclude as well. I do not doubt that I will continue to lean on my hon. Friend, and that she will continue to champion steelworkers in her constituency and across the country.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Secretary of State for Business and Trade

I thank Holly Mumby-Croft for securing this urgent question, at what will be a very difficult time for her constituents.

The Labour party supports the transition to green steel. We recognise, as the Government have now conceded, that a blend of public and private funding is necessary to do that. We believe electric arc furnaces are part of the solution, but we do not believe they can be the only solution. Specifically, we believe that the retention of primary or virgin steelmaking in the United Kingdom is a matter of economic necessity and of national security. While we all welcome the return of steelmaking to Redcar, which should never have been taken away to begin with, this will clearly mean very significant job losses at Scunthorpe. I therefore have major concerns about this announcement, coming, as it does, just after the Government have confirmed a deal to also close the blast furnaces at Port Talbot.

First, the Minister said in her answer to her hon. Friend that talks are ongoing. I have to say that that is not my understanding of the current status of this deal. Could she confirm that, please? Secondly, is it true that carbon capture technology could not be pursued at Scunthorpe because of delays from the Government to the necessary infrastructure over the last 13 years and uncertainty about a future business model? In addition, is it correct to say that a DRI—direct reduced iron—solution could not go forward because of uncertainty over the Government plans for green hydrogen, which would obviously be essential for a DRI business model? Thirdly, do the Government recognise the figure of 2,000 job losses, and will the Minister confirm that this is the net figure covering Scunthorpe and Redcar—in other words, that once recruitment at Redcar is taken into account, job losses in Scunthorpe will likely be in excess of 2,000? Finally, will she confirm how much public money this announcement involves?

Most of all, I reiterate to the Minister that decarbonisation cannot mean deindustrialisation; we cannot simply outsource our emissions to other countries, call that progress and expect public support for the transition. A real plan for green steel must be open to all technologies, it must be industry-wide, and it should be a story of new jobs, new opportunities and British economic strength. Sadly, this announcement seems very far from that.

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

Negotiations are indeed ongoing, which is why I am limited in what information I can put out in the public domain; information is of course incredibly sensitive. British Steel will make commercial decisions, but if it is hoping to secure Government support, we need to make sure that we are getting value for money for taxpayers.

The hon. Member asked why decisions have been taken on the electric arc furnace compared with other technologies. It is because the other technologies just cannot come up to speed fast enough. In particular, the hydrogen-based direct reduced iron equipment just cannot enable furnaces to transition at the speed at which they need to. He is very much aware of that, and this is also a challenge in Europe, not just in the UK.

Fundamentally, there are a number of challenges for the global steel sector. First, there are energy costs, which we have done everything we can to provide support for, with the hundreds of millions of pounds to cover energy costs and now the supercharger. Secondly, we have to ensure that we get more UK steel into the UK economy. That is why the public procurement note was incredibly important for us to do, and we will be able to secure millions of pounds for more UK steel projects. Thirdly, there is a major challenge in that advanced manufacturers, customers and consumers are looking for greener steel, and a lot of companies are trying to reflect on how they can provide a green steel option. Having said that, it is a particular kind of steel; as I said to my hon. Friend Holly Mumby-Croft, for me that means a mix of virgin steel in the market as well. Of course, these are commercial decisions, but we need to make sure there is a mix to deliver for the UK market in particular.

Jonathan Reynolds talked about the environmental issues and about hydrogen. We export a lot of scrap steel, and that also has a carbon footprint, so for us to have the capacity to turn that steel into products we can use will be incredibly useful. The positive news is that we are the eighth largest manufacturing country in the world. We are going to need more steel, not less, but there will also be demand for more green steel, not less, and we are trying to ensure that we provide support to the steel sector so that it can meet those market needs.

Photo of Edward Leigh Edward Leigh Ceidwadwyr, Gainsborough

Many of my constituents work at Scunthorpe, and we are all obviously deeply concerned about them, but the whole House must be concerned about the Minister’s statements in terms of our national security. There is no other major developed country in the world that is giving up its traditional blast furnaces—the only way we can make virgin steel. Frankly, the Minister did not bother to answer a single one of the brilliant questions from my hon. Friend Holly Mumby-Croft. Will she now make it clear to the House that this Government are committed, as a major economy, to go on making virgin steel? Do it now.

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

As I have said repeatedly at the Dispatch Box, I fundamentally believe we need to have virgin steel capacity in the UK, but these are commercial decisions, and negotiations are continuing. These are incredibly commercial decisions, and we are doing our very best to support electric and virgin steel capacity in the UK. We are very much aware of the challenges we have in importing steel and with the global markets when it comes to the price of steel, and that is why we need to make sure we have a mix. These are commercial decisions, which is why negotiations are ongoing. Fundamentally, the announcement by British Steel was a proposal—nothing is done yet. We are still in the middle of negotiations.

Photo of Richard Thomson Richard Thomson Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland), Shadow SNP Spokesperson (Trade), Shadow SNP Spokesperson (Business)

May I begin by expressing my concerns on behalf of the 2,000 workers who are likely to be affected by this announcement? Also, I re-emphasise, as other contributors have, the importance of virgin steelmaking, not just in terms of security, but in meeting demand in the construction industry, where inflation is already racing ahead and our ability to build things will not be helped by being further away from the supply chain and reducing domestic capacity in steelmaking.

The Energy and Climate Intelligence Unit think-tank has said:

“Ageing blast furnaces need to be replaced and upgraded to produce greener steel…electric arc furnaces have a role in recycling steel”,

but

“failing to invest in modern hydrogen furnaces belies the government’s promises to invest for the longer term.”

Just as in the oil and gas sector, what plans do the UK Government have for a just transition for the steelmaking workforce? What support will the UK Government be giving to the development of hydrogen furnaces in the UK? What challenges will they put constructively to British Steel over these plans? Given the Government’s high-profile retreats on other climate measures, such as the date for banning the sale of internal combustion engine cars, how much faith can the industry have in any guarantees that the Government do make?

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

Negotiations are ongoing and nothing is concluded. The statement made by British Steel was a proposal, not a conclusion. The steel that comes out of electric arc furnaces can be used for a variety of things, including construction and military-grade steel—it is incredibly nimble—but I fully appreciate that different types of steel are produced out of different furnaces. The hon. Gentleman spoke about hydrogen, and the Government have a substantial hydrogen strategy that we launched in May 2022. The net zero hydrogen fund is worth up to £240 million of capital co-investment out to 2024-25. That will support upscaled hydrogen production projects, allowing companies, including steel producers, the potential to secure supplies of lower-cost hydrogen. Ultimately, decarbonisation pathways for specific sites are commercial decisions for individual companies based on their own operational circumstances. In the case of Port Talbot, it was about timing for using a technology that can be commercialised at scale. At the moment, for that part of the country, it is electric. Hydrogen may no doubt be the next stage of technology that is used.

Photo of Greg Clark Greg Clark Chair, Science, Innovation and Technology Committee, Chair, Science, Innovation and Technology Committee

May I pay tribute to my hon. Friend Holly Mumby-Croft for her passionate support for steelmaking in her constituency? Just yesterday at the Dispatch Box, the Prime Minister said that even when we get to net zero, we will still need to have oil and gas supplies. Does the same logic not apply to primary steel? We will still need that at net zero. Does that logic not extend to making sure we have the capability to make primary steel in this country to supply our needs in the future?

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

I agree on both points: first, on the incredible work that my hon. Friend the Member for Scunthorpe does for steelworkers in her constituency; and secondly, that we cannot achieve net zero without a mix of steel being manufactured in the UK. We have a booming renewables sector, whether that is solar panels, blades for offshore wind farms, or electric vehicles. Much of that steel can be produced by electric arc furnaces, but my right hon. Friend Greg Clark is absolutely right that there is a space for virgin steel, too.

Photo of Liam Byrne Liam Byrne Chair, Business and Trade Committee, Chair, Business and Trade Committee, Chair, Business and Trade Sub-Committee on National Security and Investment, Chair, Business and Trade Sub-Committee on National Security and Investment

I am grateful to Holly Mumby-Croft for securing this urgent question. The Minister is in peril of presiding over the end of primary steelmaking in this country and the curtain falling on 300 years of Britain’s industrial history. The announcement comes at a time when an analysis shows that the Department’s budget is set for a 16% real-terms cut in the years ahead. Is it the policy of His Majesty’s Government that blast furnaces will stay in operation in our country and that we will not be dependent on imports of primary steel? When can we expect a conclusion to the negotiations and some safeguarding of the vital industry either at Tata or at British Steel?

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

I congratulate the new Chair of the Business and Trade Committee, of which I was previously a member. As I have made clear, these are commercial negotiations and they are ongoing. When the decision was taken on Port Talbot, discussions had taken place for several years—even decades. This will not take that long, but my point is that many Ministers have stood at the Dispatch Box talking about steel and doing what can be done to protect and promote the steel sector in the UK. The negotiations are ongoing.

British Steel’s statement on Monday contained proposals and a plan—nothing is concluded yet. My focus, as our focus has always been, is on protecting the steel sector in the UK, protecting steel jobs in the UK and doing everything we can to procure more British steel in UK manufacturing. Of course, that continues. These are commercial decisions about how companies wish to continue their business going forward. I have made it clear that fundamentally there needs to be a mix of steel produced in the UK in the steel market, but the reality is this. First, steel produced in electric arc furnaces is far more nimble because of the technology, and it can be used for many more materials in advanced manufacturing than previously—that is a fact. Secondly, manufacturers, customers and consumers fundamentally want a cleaner, greener steel package. It is not just me saying that at the Dispatch Box; it is also the UK steel industry representatives who have put together a net zero strategy and are talking about having cleaner, greener steel going forward. We have a lot of scrap steel in the UK that can be recycled, and we have far more capacity to recycle that than we have for that steel to be used in UK manufacturing, but, fundamentally, we need to have a mix. I believe that that mix will continue as long as it can and should, but these are commercial decisions. We continue to negotiate with British Steel.

Photo of David Davis David Davis Ceidwadwyr, Haltemprice and Howden

I have a simple question to put to the Minister; I hope that I will get a yes or no answer. Much of the arc furnace capacity is being moved away from Scunthorpe or not put in Scunthorpe because of a lack of grid capacity. That electrical grid capacity is due to be increased. If she were to accelerate the increase to 2025, we may save many more jobs in Scunthorpe. Will she seek to do that?

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

Unfortunately, there is never a simple answer to these questions. Access to the grid is a challenge for many industries, let alone for the steel sector. We have been doing everything we can to increase access to the grid. British Steel’s proposal—negotiations will continue—says that it has chosen two sites over one, with its key site at Scunthorpe and a second site at Teesside to be closer to its manufacturing work. That decision has been made for many other commercial reasons beyond access to the grid.

Photo of Jon Trickett Jon Trickett Llafur, Hemsworth

Yorkshire and the Humber is one of the great centres of steelmaking—in our area, there were more than 8,000 jobs in steelmaking, the last time that was counted—but how many jobs will be left when the Minister has finished with her cuts? Has she noticed that whenever the Conservative party is in government, it deindustrialises further? Unite the union—I declare an interest as a member—is saying that if the Government would commit to procurement of steel for all our relevant contracts, 8,000 further jobs could be created. What exactly does she make of that? Has she met representatives of the union to discuss that matter?

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

I meet representatives of the unions regularly, and I co-chair a steel council. The steel procurement policy note on increasing procurement in the UK was a personal ambition of mine. Previously, we did not calculate enough of the data on what was being procured and how we could continue to secure more contracts. Procurement has increased, with the value of contracts up by £97 million on the previous year. I want to go further; that is only the starting point. Earlier today, I was with the Minister for Defence Procurement, James Cartlidge, and I will continue to work to ensure that there is more UK steel in all our construction, whether rail, road, automotive, aviation or anything else. The reality is that last year it increased by £97 million-worth of work.

Photo of Martin Vickers Martin Vickers Ceidwadwyr, Cleethorpes

I fully endorse all the comments of my neighbour, my hon. Friend Holly Mumby-Croft. Many hundreds of my constituents work at British Steel, and I have a British Streel terminal on Immingham docks in my constituency. What assessment have the Department and the Treasury made of the impact on the local economy if the changes go ahead? The Minister talked about support for workers who may be made redundant. I have witnessed the decline of the fishing industry in the Grimsby-Cleethorpes area, which has ripped the core out of the community, who need generations of support. What plans will the Government put in place to ensure that that happens?

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

First of all, negotiations are ongoing, but I fully appreciate that the statements from British Steel will be incredibly unsettling for my hon. Friend’s constituents. Let me explain the way that we worked on Port Talbot. We were keen to ensure that any support we provided continued to guarantee jobs, in consultation with local stakeholders and the unions. We set aside a fund of around £100 million to ensure that people were reskilled and redeployed. That work will continue if circumstances require it. We are anxious about jobs. These are highly skilled workers, recognised internationally, and these are well-paid jobs. That is why negotiations are sensitive and continue at pace. If we provide support, we want to get the best deal for UK steelworkers.

Photo of Mark Tami Mark Tami Opposition Pairing Whip (Commons)

The Minister will know that Shotton steelworks rely on steel from Port Talbot. What assurances can she give on the supply of steel between the closure of the blast furnaces and the installation of new electric arc furnaces?

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

While negotiations were ongoing and support was being provided, we had a conversation to ensure that the supply chain continues to be resilient. A taskforce has been set up to ensure that supply chains continue to get support, working with the unions, Tata and the local community. We have been assured that supply chains will continue to secure the contracts that have been in place.

Photo of Simon Fell Simon Fell Ceidwadwyr, Barrow and Furness

Supporting British Steel need not be just about money; it can be about ensuring that the Government are joining the dots for industry and explaining the pipeline of work available to it. With the Dreadnought and SSN-AUKUS programmes, we have generations of need for virgin steel. The same goes for the new nuclear programme. Will my hon. Friend confirm that the Government are doing that work and signalling to British Steel that the demand is there? Also, where we have control over procurement, are we ensuring that we lean towards the British market?

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

Absolutely. That is why procurement went up by £97 million recently. I was looking at what the industry group UK Steel reflected on when it came to steel produced by electric arc furnaces—the reality is that a substantial amount of speciality military-grade steel can be manufactured using electric arc furnaces. We are working very closely with the steel sector to do everything we can to ensure that it secures UK contracts.

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)

The Minister seems to be ignoring events in south Wales last week. I met steelworkers from Llanwern last week, who understandably are deeply worried following speculation about the closure of the blast furnaces at Port Talbot. What conditions were attached to the £500 million grant agreed with Tata? Was this the agreed plan? What are the Government actually doing to safeguard jobs?

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

We put in place a programme of work and a substantial sum of money—around £100 million—to ensure that the transition took place in a just fashion. Decisions will be taken by the transition board—as has been mentioned—about providing upskilling and reskilling and ensuring that there are assurances in the supply chain. The board is made up of the Secretary of State for Wales, the Minister for the Economy of Wales, the Secretary of State for Levelling Up, Housing and Communities, and Stephen Kinnock, who chairs the all-party parliamentary group for steel and metal related industries. Those decisions will be taken locally and in consultation.

Photo of John Stevenson John Stevenson Ceidwadwyr, Carlisle

The Government have supported a coalmine in west Cumbria that will produce coking coal, which is used in steel production. Does the Minister agree that it would be sensible for strategic reasons—which should override commercial reasons—to retain virgin steel production capacity in this country, and that from a practical perspective the coal mined in Cumbria could be used in the production of steel in Scunthorpe? Will she take into consideration the wider issues in the policy decisions that she may make?

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

Absolutely. I think all of this has made it clear to British Steel that there is a supply chain here in the UK, not only in the ability to make virgin steel but in the market afterwards, but even with electric arc furnaces we still need some ability to access coal. These are decisions taken across many Whitehall Departments. My job, fundamentally, is to ensure that steelmaking in the UK continues at the pace that it has done and grows even further, and that we support the manufacturing sector, which requires British steel.

Photo of Richard Foord Richard Foord Liberal Democrat Spokesperson (Defence)

The official march of the Royal Navy includes the words,

“Heart of oak are our ships”.

In the 21st century, virgin steel is the critical industry for the Royal Navy, in the way that timber was in the 18th century. I am the first to want reduced carbon emissions, but this move sounds more like offshoring than about reducing carbon emissions. What consideration have the Government given to the supply of steel to the defence industry?

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

First of all, negotiations continue; no decision has been taken. Having said that, the UK steel industry group, which oversees the steel sector in the UK, has made it very clear that military-grade speciality steel can be made in electric arc furnaces. I have been working incredibly hard to make sure that more UK steel is procured in more UK contracts, including defence contracts.

Photo of Peter Gibson Peter Gibson Ceidwadwyr, Darlington

I commend my hon. Friend Holly Mumby-Croft for her dogged campaign in respect of steel; she is a real champion for her constituents. This week’s news is bittersweet, as Teesside welcomes the return of steelmaking. Will the Minister outline what the whole Government are doing to support my hon. Friend’s constituents at this time, and what use of carbon capture and storage is being explored to ensure that we continue to produce our own virgin steel?

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

I of course agree with my hon. Friend’s first point: there is nobody more vocal about steel than my hon. Friend Holly Mumby-Croft. We have had a number of programmes in place to support the steel sector, because it has a number of challenges, as it has in many continental European countries. Fundamentally, Putin’s invasion of Ukraine caused energy costs to skyrocket, and we had in place an energy costs relief scheme for the steel sector, which has been worth up to £730 million since 2013. We now have the supercharger in place; I have spoken about the steel procurement policy note to ensure that there is more UK steel procured in UK markets; and, obviously, we provided support for Tata recently and Celsa previously. We are doing everything that we can—with my hon. Friend the Member for Scunthorpe, of course—to get the best deal possible for Scunthorpe, but these are commercial decisions and they are ongoing.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

It is clear from today’s comments that the Government are set to abandon more than 2,000 steelworkers in Scunthorpe, just as they abandoned over 3,000 on Teesside eight years ago. That said, I too welcome the news of a new arc furnace for Redcar, but let me give the Minister yet another chance to answer the question from Holly Mumby-Croft and others: are the Government really going to settle for recycled steel and foreign imports, and consign virgin steelmaking in the UK to history?

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

Recycled steel can be recycled infinite times, so it does a huge amount for the circular economy. Because of the way technology has moved on, steel can now be used in many more sectors. We have a huge surplus of scrap steel, which we end up exporting to countries such as Turkey, Bangladesh and Pakistan. We could be reusing that in the UK economy. But as I said, these are commercial decisions and nothing has been concluded. The statement put out by British Steel was a plan or a proposal.

Photo of Chris Bryant Chris Bryant Shadow Minister (Creative Industries and Digital)

Does the Minister not accept that it is a matter of national security that we should retain the ability to create primary steel in this country?

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

I have put it on record previously that we need to ensure that we have blast furnace capacity in the UK, and that, fundamentally, should be at the Scunthorpe site. There are matters involving national security—for instance, the anxieties about steel dumping from China and the issues emanating from Russia—and as we continue to manufacture at pace, we need to be able to ensure that we have access to steel manufactured here in the UK.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Digital, Culture, Media and Sport)

Some of the mightiest structures made of steel were built in my constituency, in the Nigg yard—I worked there myself once upon a time. Holly Mumby-Croft talked about the strategic importance of the industry. May I point out to the Government that it is as important to my constituency in the far north of Scotland as it is to any other parts of our great United Kingdom?

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

I cannot disagree with that. I have been reading up on Scunthorpe steel: it has been used to create structures ranging from the Sydney Harbour Bridge to the London Eye, which demonstrates the breadth and the depth of its history.

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

The feedstock for the Trostre tinplate works in Llanelli is steel of a quality that can currently only be produced in the blast furnace process. Following the devastating news that Port Talbot blast furnaces will be closed by the end of March, leaving Trostre dependent on imported steel—quite possibly produced to lower environmental standards abroad, and certainly not saving on emissions—may I ask the Minister to stop just quoting commercial decisions, and tell us what strategy the Government have to develop the green technologies of the future here in the UK and to keep virgin steel production here as well?

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

I had a feeling that I had mentioned that a few times. We have a fund of about £1.5 million, partly aimed to ensure that we are adopting, testing and commercialising new technologies to enable the steel sector to decarbonise. We have done a huge amount of work on electricity and we are also considering the possibilities of hydrogen, so we are looking into alternative sources of energy to help the sector in the UK. I know there are challenges for places such as the hon. Lady’s constituency because of the sort of steel that they need, but the fact remains that more and more different types of steel can be made to a high standard and a high grade in electric arc furnaces.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Science, Research and Innovation)

The move to net zero should deliver tens of thousands of long-term, well-paid, green industrial jobs, but with her Government’s sticking-plaster policies the Minister is destroying both jobs and sovereign national capability. Is it really her intention to leave behind her a British steel sector that cannot make British virgin steel, and if not, what is her plan? Labour has an industrial strategy for green steel; why does she not have one as well?

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

I simply do not recognise the picture that the hon. Lady paints. Our recent decision on Tata Steel was welcomed by UK Steel, the organisation representing the UK sector, which said that it was the way forward. UK Steel itself has a net zero strategy, and wants to see the transition proceed apace.

Decisions have been just left to sit there, but now we are able to provide the support that is needed. What we did in Port Talbot has saved thousands of jobs and allowed the adoption of new technology which will, indeed, create thousands of jobs as well.

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

Last Wednesday morning, Tata Steel executives in Port Talbot summoned the workforce to tell them of the plan to shut down our entire virgin steel making capability by March 2024. This was utterly shocking, because the understanding had always been that some of the heavy end would continue to function while the electric arc furnace was being constructed, but it takes years to construct an electric arc furnace. The plan is utter madness: it involves importing millions of tonnes of steel from the other side of the world. Electric arc furnaces need the products of virgin steel making, such as iron and iron ore—that is why we need direct reduced iron capability—and the loss of 3,000 jobs over a period like that is completely unacceptable and unnecessary.

When the Government did the deal with Tata Steel about Port Talbot, did they know that Tata was actually proposing not a transition at all, but a potentially lethal cliff edge for our steel industry? Did they know that Tata would be doing that? Does the Minister not agree that the idea of this process is that it should be a transition? It needs to be a bridge, not a potentially lethal cliff edge.

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

Tata Steel employs more than 8,000 people and 12,500 further in the supply chain. All of that would have been at risk if we had not been able to provide the certainty it needed to increase its investment to over £1 billion to allow it to transition. These are commercial decisions relating to the pace of transition. The hon. Gentleman knows that there is a transition board in place because he is a member. If there has been a failure in consultation at the level and depth of time required, there is no doubt that he and I will take that up as we will both be at the next transition board meeting. The reality is that to ensure the long-term viability of steel in the UK, some tricky decisions have to be made, but the company was provided with support to make sure that it transitioned in a way that supported local jobs, knowing that it had to transition and support the supply chain.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I thank the Minister for her responses. We have committed to a net zero target, but consideration must be given to the potential loss of 1,500 to 2,000 jobs, which could be gone from the industry. We have been told that the two furnace closures could put further employment at risk for many. What steps will be taken to ensure that the steel sector and industry jobs throughout the whole of the United Kingdom will be protected? I had a meeting this morning where it was confirmed to me that the United Kingdom of Great Britain and Northern Ireland is No. 7 in the world for manufacturing. If that is the case, steel is a key part of that. Holly Mumby-Croft is to be congratulated on bringing forward this urgent question. Really, Minister, we need to make sure that the industry can be retained and not reduced at all.

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

That is why the support was so substantial to Port Talbot, to ensure that the steel sector could continue to thrive here in the UK. Manufacturing in the UK is booming. We are the eighth largest manufacturer in the world and we need to get our goods fundamentally from the UK, including steel. The hon. Gentleman is right to say that we cannot achieve net zero without steel, but we can help steelmaking to become even more green and clean than it is at the moment.

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

Does the Minister accept that this news gives up on the UK’s capability to produce primary steel?

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

I do not, because it was a plan or proposal put out by British Steel. We have not concluded negotiations.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Levelling Up, Housing, Communities and Local Government)

This is a question of national security. It is not just a commercial decision. A specific question was asked of the Minister by the shadow Secretary of State on job losses specifically in Scunthorpe. Is that figure of 2,000 correct?

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

Negotiations have not concluded. We are continuing to be in intensive talks with British Steel. We wish to provide the support that is needed to support the steel sector and steel jobs but negotiations will continue. We need to make sure that due diligence is done and that we get value for money for taxpayers, whose money we are going to put on the table. But look at what we achieved at Port Talbot—a sector that was unable to confirm its future until we provided it with the financial support that it needed.