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Tata Steel: Port Talbot

Volume 835: debated on Wednesday 7 February 2024


Asked by

To ask His Majesty’s Government what steps they are taking to safeguard jobs at Tata Steel in Port Talbot, and to encourage alternative forms of employment in the area.

My Lords, Tata informed the UK Government last year that it intends to close the steelworks and withdraw from the UK, putting 8,000 jobs at risk. The current plan put forward by Tata, which is subject to consultation, will see the Government investing £500 million to secure the future of steelmaking in Port Talbot, protecting 5,000 steel jobs in the UK and thousands more in the supply chain, while putting UK steelmaking on a more green and sustainable footing.

I thank the Minister for her reply. As she will be aware, job losses on this scale—some 2,000 at Port Talbot—will have a totally devastating effect on the community. Lord Tebbit said about the closure of the mines in the 1980s that, however necessary it was, he regretted the destruction of those communities and thought that in retrospect the decisions had been taken too quickly and not enough had been done. We can only hope that the Government do not have similar regrets about what is happening at Tata. First, what pressure are the Government putting on Tata Steel to slow down the phasing out of the blast furnaces? Secondly, would the Government consider setting up a task force, which would work very closely with the Welsh Government, employers’ organisations and members of the local community, to see what alternative forms of employment there might be, given that there are bound to be some job losses?

I thank the noble and right reverend Lord for that question. It is true we recognise that this is a devastating blow for the community, which is why we have already set up the Tata Steel/Port Talbot Transition Board. It is not called a task force but it will, in effect, act in that way. It is set up to

“protect and grow the economic environment and to support and mitigate the impact on those workers, businesses and communities … directly affected by”

this Tata Steel announcement. The reality is that that board is already up and running. It has support, being not just chaired by the Secretary of State for Wales but having representatives of the Welsh Government on it. It also has on it the local MP and various members from Tata and the local community, and business experts. So it is already set up and has a £100 million fund to do this work, and it will be tasked with making sure that alternative employment is found for all those who need it.

My Lords, is it not insanity to spend half a billion pounds of taxpayers’ money on ending the production of virgin steel through blast furnaces in this country, which means that we end up importing steel from China, where the electricity to fire its blast furnaces is made by opening coal-fired power stations? Surely this is the green agenda going too far, and the price that is being paid by that community and the taxpayer is far too high.

I understand my noble friend’s point. However, Tata informs us that it is losing £1.7 million per day in running these blast furnaces and on the coke they need. With regard to carbon emissions, we are following a green agenda and we have targets that we have set. With the advent of the new electric arc furnace, which will provide a modern, efficient and less carbon-intensive method of producing steel, we will be reducing Tata’s footprint in this country by 85%, 22% of Welsh carbon emissions, and more than 1% of the UK’s emissions as a whole.

My Lords, the Minister must know that the economy of the Swansea Bay City Region is heavily dependent, directly and indirectly, on this giant steelworks, which I can see from my home in Swansea. Has it not been clear for some time that there has been a major threat to it? Why did the Government not earlier set up such a fund as they now have, to steer creatively private industry to the area, or relocate government departments, as the previous Labour Government did so well with the DVLA at Morriston?

I can tell the noble Lord that, more broadly, the UK Government have provided substantial support for the economy of Port Talbot and south Wales, with further projects being developed. This includes the development of the Celtic Freeport in Port Talbot and Milford Haven, backed by up to £26 million of UK government funding, which will focus on low-carbon technologies. It aims to create 16,000 jobs by mid-2030. The Celtic Sea is also the prime location for the floating offshore wind centre that is being planned, which will also bring several thousand jobs. Meanwhile, the Swansea Bay city deal, which covers the Port Talbot area, is in the process of delivering a number of exciting developments across the region.

One way to meet the justified need mentioned by the noble Lord, Lord Forsyth, to produce more virgin steel rather than from scrap is to use direct reduced iron technology that can be produced through an electric arc furnace. Last month, Tata Steel’s global chief executive told Parliament’s Welsh Affairs Committee that Tata would invest in DRI technology only if it could be guaranteed a good supply of first methane and then hydrogen. That is why he told that committee that Tata is building that plant in Holland and not in the United Kingdom. Can the Minister investigate how much money Holland is giving Tata to build that plant? Perhaps it could drive a harder bargain because with this technology comes more jobs.

I thank the noble Lord. The Port Talbot transformation project does not prevent further technologies being deployed over time. We are paying careful attention to the international developments, particularly the hydrogen and DRI systems, such as the Tata Steel project in the Netherlands. Ultimately, this technology has not yet reached commercial activity, but when it does reach that maturity, we will look at it closely.

My Lords, Tata has multiple interests beyond steel. Are the Government looking at its operation in total and perhaps encouraging a package deal that takes into account all its other interests that impact this country internally?

I thank the noble Lord. Yes, I understand that Tata is being spoken to as a global entity by various government departments, and it announced last year that it was going to invest very heavily in the gigafactory.

My Lords, I find myself much in sympathy with the points made by the noble Lord, Lord Forsyth. What part of the package is being invested in upskilling our people? In the last figures I saw, about 80% of people in work in the United States had been back in the classroom upskilling themselves, compared with 56% in Germany and Japan and 30% in the United Kingdom. We have to give our people skills for the jobs that do not exist yet.

I agree with the noble Lord, and that is why the £100 million has been made available: £80 million of that is from the UK Government, £20 million from Tata, and the majority of it will be spent on upskilling the local population, so that they can fill the advanced manufacturing jobs we are expecting to create in that area.

My Lords, electric arc furnaces require huge volumes of electricity to be produced reliably—24 hours a day, seven days a week—and distributed by a reliable transmission system. Are the Minister and her colleagues in the Government satisfied that the necessary investment should be started—there is not much sign of it yet—in expanding the national grid by five times, and in moving from 25 gigawatts of nuclear power, our present low level, up to 50 gigawatts, which is the minimum that will be needed?

I agree with the noble Lord that we need to upgrade all this infrastructure. However, the holistic view of this particular area in Wales is that we will have, I hope, one of the largest offshore floating wind platforms to facilitate plants such as the Tata arc facility, but also any of the new advanced manufacturing that will take place on that site.

My Lords, as the Minister said earlier, and as the noble Lord, Lord Forsyth, mentioned, Tata Steel secured £500 million of taxpayers’ money in state aid, yet it rejected union proposals for a two-phase plan that would protect more than 2,300 jobs over a decade and that would see no compulsory redundancies at Port Talbot. The loss of these jobs will clearly have a very hard impact on the region and the national economy. Have the Government made any assessment of whether this £500 million in state aid passes their value-for-money test?

I can tell the noble Lord that I believe that the unions have been fully involved in these discussions. The plans have been discussed with the company, but the company informs us that is not viable for it to consider that plan at this point. However, the consultations started only on 2 February. Therefore, it is for the company and the unions, and its employees and staff, to ascertain the possibilities. With respect to what the Government are doing, they are monitoring everything very closely and having long conversations with the companies and the Welsh Government.

My Lords, sadly, the community in Teesside experienced almost 10 years ago what the community in south Wales is about to endure, and the development that Ministers speak about at the site at Port Talbot has been happening in Redcar. Sadly, there has had to be an investigation by the department into the way that the deals there have been conducted. Will the Minister make sure that all the correspondence about this deal is released so that confidence in investment can be secured for Teesside?