Scunthorpe Steelworks

11:22:00

(Urgent Question): To ask the Secretary of State for Business and Trade to make a statement on the future of Scunthorpe steelworks.

First, my thoughts are, and the thoughts of all hon. Members will be, with British Steel workers and their families, following the company’s announcement of plans to close the blast furnaces and other steelmaking assets at Scunthorpe, and its commercial decision to consult on redundancies. This is not what we wanted, and I know how worrying it will be for all those involved. I am grateful to my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin), who is in his constituency today engaging directly with his local community. In the immediate term, we must support the people who work at British Steel. Our contingency plans have kicked in to ensure that all possible support is made available to British Steel’s workforce. Both the Department for Work and Pensions and the Department for Education will have teams on the ground shortly to engage with employees for as long as necessary. We have asked British Steel that officials be given direct access to British Steel sites to bring their support as close as possible to affected workers. This Government inherited a steel sector in crisis, and resolving the long-standing uncertainty around the future of Scunthorpe has been a priority from our first days in office. That is why, when we committed up to £2.5 billion of investment to support our steel industry, we earmarked substantial funding to support British Steel, in addition to the funding allocated to our new and improved deal with Tata Steel. I confirm today that we have taken another significant step forward. On Monday, my right hon. Friend the Business and Trade Secretary made a generous conditional offer of financial support to British Steel designed to deliver a sustainable future for the workforce, industry and local communities. In the light of the challenging fiscal context, this speaks volumes about our commitment to the steel industry. The offer follows months of intensive engagement with British Steel to reach a deal that meets our public accountability and legal requirements, works for local people and UK taxpayers, safeguards as many jobs as possible and ensures the company’s long-term commercial viability. The offer that we have made is conditional on British Steel meeting those key tests, which is consistent with our approach to similar investment deals. The company must provide the commitments that we need, and which taxpayers would quite rightly expect, in exchange for substantial public funding. It is regrettable that it has not yet done so or accepted our offer. I therefore call on the company to reconsider its plans to announce early closures, accept our conditions and accept our generous offer, which remains on the table. I assure the House that we are working tirelessly to find a solution. We believe that there is a bright future for steelmaking in the UK, and we call on British Steel to work in partnership with a Government who care deeply about the steel sector to put the business on a sustainable footing for the future and to put an end to the years of uncertainty at Scunthorpe.

I thank the Minister for her statement and for the updates that she has provided to me in recent weeks. As she said, there will be increased anxiety among the workforce today, and we look to the Government to provide maximum support. For the sake of clarity, will the Minister confirm that the Government do wish to maintain blast furnace production until an alternative arc furnace installation is up and running? Will she also confirm that they want to maintain production to meet the demands of the defence sector, particularly in view of the recently announced increased spending? The Minister will be aware of the projects that North Lincolnshire council have proposed, such as the green growth zone and those in the artificial intelligence sector. Will she confirm that she will support them? She will also be aware of other projects in the region that are looking for Government support. Will she confirm that she will look sympathetically on them? Also, although I would not want to advocate this, will the Government consider nationalisation of the industry as a last resort?

I thank the hon. Gentleman for the manner in which he has represented his constituents today and engaged with us previously. On the point of clarity, I confirm that we would rather the blast furnaces remained open. He knows that if they closed before a supply of steel were secured, that would be significant in terms of customer confidence and what will happen to the customer base. On the hon. Gentleman’s point about defence, as was said at the Business and Trade Committee yesterday, there was a reason why the Russians bombed the blast furnaces in Ukraine first: steelmaking capacity is needed not just for defence, but for building the structures required for construction. He was therefore absolutely right on that front. This morning, I met the council and talked about both the plans for us to work together on British Steel and the wider question of what else we can do in the region and how the Government can support that. A small ministerial team has been coming together to think about those things. On the hon. Gentleman’s final point, as he knows, the amount of money that we are talking about to develop new infrastructure is significant. Our preferred approach by far is that British Steel comes back to the table, talks with us about the offer on the table and we have that private sector investment in the future, but of course we are looking at all options.

I call the Chair of the Business and Trade Committee.

May I welcome the Minister’s explicit ambition to retain primary steelmaking capability on these islands? I hope the whole House will row in with that. I also welcome the £2.5 billion that the Government have earmarked for investment in the sector. Will she, however, put a rocket up the Trade Remedies Authority? We have heard very clearly from steelmakers that they need the same safeguards against diverted Chinese steel flooding into our market that will click into place in Europe in April. It is not acceptable that we have to wait until the summer for our markets to be safeguarded in the same way. The TRA needs to act, and it needs to act now.

I thank my right hon. Friend for his question and his contribution through the Select Committee session we had yesterday. The TRA announced yesterday that it will widen its review of UK steel defences. It has accepted the challenge from UK Steel to do just that and is acting. The Secretary of State and others will be looking to make sure our steel defences are as strong as they need to be. Today’s news about Scunthorpe sits alongside the wider issues about tariffs and the global trade of steel. We need to make sure we are helping in that space too.

I call the shadow Minister.

The news from Scunthorpe is deeply concerning. Jobs are at risk and our thoughts are with all those who now face uncertainty. The world is becoming more dangerous and we need to bolster our defence industry. Without the ability to produce our own primary steel, those efforts could be put in jeopardy. What impact does the Minister believe the news will have on Britain’s defence industry and what impact does she believe closure would have on our national security? It takes a special something to be able to offer someone £500 million and for them to reject it, but whatever it is, I guess the Business Secretary has it. Whenever Labour negotiates, Britain loses. Whether with Mauritius, AstraZeneca or now British Steel, the Government confirm that—and so far, at least, that appears to be the case with the United States too. The Government pretend that tariffs on steel are inevitable, which, as we showed in government, is simply not the case. Therefore, will the Minister update the House on United States trade negotiations, in particular in relation to steel? Will the Minister confirm that the Business Secretary has engaged further with Jingye since it rejected him? Tariffs are but one challenge facing the industry. Alongside the jobs tax and the unemployment Bill, the steel industry is being choked by the Government’s ideological green targets. Will the Minister tell the House what concerns British Steel has expressed about those net zero targets? As I said at the beginning, this news will be deeply concerning for steelworkers in Scunthorpe. Has the Minister or the Secretary of State spoken with them about the news and, if so, what support are they being offered?

I do not want to insult this House by suggesting that there was any kind of deal on the table under the previous Government and that anything happened on steel other than a halving of production over the last decade—a halving. Lots of things shut down and closed during that period, not just in the steel industry but in many others. I look at my hon. Friend the Member for Redcar (Anna Turley) for proof of that. Whether in steel, in shipbuilding or in the automative sector, the previous Government had neglected to take major decisions or had kicked the can down the road. All we inherited were a series of industrial crises that we are now trying to solve. We delivered a better deal with Port Talbot than had been negotiated under the previous Government. We are still in talks with British Steel and hoping that we can come to a resolution, and not just because of the very many very highly skilled workers in Scunthorpe who we respect, honour and want to make sure stay in their jobs. I have nothing more to say on that front. On tariffs and the situation with the US, we are in a good position in this country in that the relationship that our Prime Minister has built with President Donald Trump and his team means that we are in active conversations about a potential trade deal. This is a good, positive thing, and we are carrying on having those conversations. My right hon. Friend the Secretary of State has been talking regularly with our American counterparts, as Members would expect. We will have cool heads in this space and navigate our way through. We—our officials—are talking daily with British Steel. We are talking with the trade unions and all the players to try to ensure that, in the difficult global landscape that we find ourselves in, we are doing right by the people of Scunthorpe.

I draw the House’s attention to my background as an official of the GMB steelworkers union, that union’s support for my constituency party and my membership of GMB and Unite. The three steelworkers unions—GMB, Unite and Community—have put forward a multi-union plan for Scunthorpe. Will the Minister meet those unions urgently, including with cross-governmental officers, so that we can do everything possible to keep that multi-union plan on the table?

I take this opportunity to pay tribute to the trade unions—GMB, Community and Unite—which we have been working with closely. We have been discussing their plan. As I say, our preference is that British Steel accepts the deal—the incredibly generous offer of public funding—we have given it. We hope we can find a way forward that involves keeping the blast furnaces open, but we are of course looking at every other option, and we certainly have been talking to the trade unions about their suggestions.

I call the Liberal Democrat spokesperson.

Like the Minister, my thoughts are with the British steelworkers and their families following the closure of the Scunthorpe site.

It is not closed yet.

It is going to. From electric vehicles to wind turbines, high-quality green steel is an important component of our transition to a low-carbon economy. The Government need to move rapidly from the Conservative’s legacy of a patchwork of last-minute rescues to a genuinely long-term approach that is effective for British industry and does not harm British workers. What are the Government doing to ensure that communities in Teesside and Scunthorpe are supported against job losses? When will the Government realise that sitting on our hands and hoping that Trump will not hit us with even more tariffs is not a good negotiating strategy? Will the Minister take a stronger approach and bring forward retaliatory measures against Donald Trump’s political allies such as his co-President Elon Musk and his company Tesla?

I can reassure the hon. Gentleman that we are not sitting on our hands, and there is a good reason why it would not be right to comment in this place on the internal negotiations between this Government and the United States. We will rightly keep a cool head in those conversations and ensure that we are ultimately doing what is right for our industry and our people, but we are in a good position in that we are engaged in deep conversations with the US and will continue to do that. The hon. Gentleman asked about the support for local people. There are various stages. The starting point is that we very much hope that we can come to a deal and negotiate with British Steel—that it will accept what we are offering and that we can move forward on those terms. In the short term, the Department for Work and Pensions and the Department for Education will be there on the ground ensuring that people are getting the immediate support they need. If the consultation continues and there is a closure, of course much more intervention to support local people would need to kick in. We are already working on all manner of contingencies to ensure that we support people as we are doing in Port Talbot, but our aim is absolutely not to get to that point.

I call Select Committee member Sonia Kumar.

The UK now produces less steel than our European neighbours Germany, Italy, Spain, France, Austria and Poland, and over the past 30 years, China’s share of global steel production has risen from 13% to 54%. To safeguard the future of the steel industry, we must think about diversification. Does my hon. Friend agree that supporting British small and medium-sized enterprises into the steel industry will make it more competitive and sustainable?

I thank my hon. Friend for that conversation and all her work with the steel industry in her constituency. The steel strategy that we are putting together, which will be published in the spring with £2.5 billion to invest, will consider how to stimulate demand, use research and development and get the most out of scrap in the UK, as well as looking at trade and overcapacity, carbon leakage and the availability of sites—there is a whole raft of work going on. She is right about ensuring that there is an industry for the big and small players. That is what we are working through, and I look forward to working with her on that.

I call the Father of the House.

Scunthorpe neighbours my constituency, and many of my constituents who work there will be desperately worried today. This is a vital national interest—a crisis. For the past 150 years, wars have been won by states that can make virgin steel. Will the Government do anything—tariffs, or the Secretary of State going up to Scunthorpe now to negotiate directly with the company—to ensure that we keep our vital national interest going, which means blast furnaces?

As the right hon. Gentleman would expect, the Secretary of State is and has been talking to Jingye, as have I and officials. Those negotiations will continue. The site at Scunthorpe produces a lot of different types of steel, as he will know. It provides 95% of all steel used by Network Rail. It is incredibly important in that sense, and he is right to draw attention to that. There are many different ways of making steel. On the primary steel point, we are investigating the merits of investing in direct reduced iron, which is when hydrogen is used instead of the old blast furnaces. The reality is that the Scunthorpe blast furnaces are old infrastructure—decades old—that needs updating. We need to move to new technology, and that is what we are trying to do with Jingye.

Clearly, the absence of an industrial strategy in the past five years has had an impact, so I welcome the Government’s notion of a steel plan. Given that the industrial strategy features three major elements—construction, defence and energy infrastructure—will the steel plan look not at a 10-year horizon but at one of 25 to 30 years, to ensure that we get the investment we need for the UK to have virgin steel production, like all other 19 countries of the G20?

I thank my hon. Friend for his question and for his expertise as a member of the Select Committee. We had this debate yesterday. Yes, having a long view has to be the right thing. The Government must ensure that we spend that £2.5 billion of taxpayers’ money in the right way to secure the industry well into the future.

As the grandson of a steelworker in Corby, Northamptonshire, I understand something of the iconic nature of the industry. The hon. Lady tries to blame us Conservatives for what went wrong. Is the situation not too confused? The Government are not sending the right signals to the industry and we are not sure what we want. We already do not make the right kinds of steel for much of the defence industry. The steel strategy will be published in the spring—wonderful. When is the spring? The Government need to get a grip and send out signals now. If we are going to negotiate with the Chinese about the Scunthorpe mill and the amount of money we are spending there, should we not have some kind of golden share so that taxpayers are comfortable about what is going on there?

I can assure the hon. Gentleman that I very much have a grip. We are working with officials, the Secretary of State and others all the time. In terms of the conditions that he suggests we should put on the offer of funding, the offer we made was conditional on job targets, fair terms for workers, adhering to UK law, protecting taxpayers’ money—a whole raft of conditions were set and need to be adhered to. As for the hon. Gentleman’s haste, there was no steel strategy in the 14 years of the previous Government. We are developing one. I am not going to stand in front of taxpayers in my constituency and say, “I have spent £2.5 billion just on a whim.” We have to get this right. We are working with industry. I was at Celsa in Cardiff this week at a roundtable of the scrap industry and the steelmakers talking about the plan. I have done roundtables with all the industries that buy steel to ensure that we understand what demand will be over the coming years. We are getting this right, which is what the taxpayer would expect of us.

My hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin) is in Scunthorpe right now, supporting our fantastic steelworkers. Many of my constituents work in Scunthorpe; I know that they will be feeling extremely anxious, and my heart goes out to them. Will the Minister confirm that she remains steely in her determination to secure the future of the UK construction and steel industries, and that she will do everything she possibly can to support my constituents who are affected?

My hon. Friend’s constituents who work for British Steel will, of course, be deeply worried. When I was last there in February, I talked to workers, the unions and management. This is a proud industry of good jobs with good salaries compared with the local averages. I am well aware of how anxious those workers will be feeling; I hope they can take some comfort, at least, from the fact that we are doing absolutely everything we can to secure a deal with British Steel.

It is difficult to listen to the Minister at the Dispatch Box saying that everything is okay with the United States because of the positive relationship between the Prime Minister and the President, when it can be characterised as the President saying, “Jump,” and the Prime Minister asking, “How high?” The US has visited precisely the same tariffs on the UK steel industry as on the Chinese. If that is a special relationship, I would hate to see what an ordinary relationship looks like. When will the Government get a grip on the production of primary steel? It is a non-negotiable for a G7 nation to produce primary steel. It is intrinsic to our defence and security. The Government seem to be trying to negotiate a situation that is the worst of all worlds, whereby the taxpayer has to stump up the money but the private sector in China gets to dictate the terms.

I do not recognise that framing at all. We are in a better position than many other countries in terms of the strength of our relationship with the US and the building up of relationships that has happened over recent months. As I said, the Secretary of State is in regular talks with his counterparts and we are having constructive talks with our counterparts. We cannot go into the details of those negotiations, but I can assure the hon. Gentleman and the House that we have a cool head, we know what we want and we will do what is best for our industries in the long run. On the matter of primary steel and steelmaking in the UK, we need our defence and our security to have strong, vibrant steelmaking production in the UK. There are different ways to do that, including with different technologies, which are moving all the time. That is why the steel strategy needs to anticipate where technology is going and make sure we get that right.

I think the Minister is giving a few mixed messages, if I may say so. The Government are sending support people to counsel those who may be out of a job and are making an offer to the firm that will actually be providing those jobs to try to cushion the blow. The sad reality is that if those blast furnaces close down they will not be recoverable, so the first thing that has to happen is ensuring that they are not closed down. The consequence would be the steel industry going into steep decline, with more people unemployed; we would then have to import steel from China at a much higher cost. Why will we not give a guarantee that the blast furnaces will not close down?

I am sure the hon. Gentleman knows that this is a private company that will make decisions of its own. We are operating within that environment. We have put an offer on the table that is about the development and redevelopment of Scunthorpe, the creation of an electric arc furnace and the transition for that. The offer is still on the table and we are still talking to the company about it. The reason that we are there on the ground now is that the company has decided to launch a consultation on redundancies, and it is right and proper that we are there to provide support to workers.

I commend the Minister and the Secretary of State for their hard graft to secure a deal in the interests of my steelworkers in Teesside and those in Scunthorpe. It is deeply concerning that Jingye has chosen to reject the generous offer that was on the table. I am sure I stand with Members across the House in urging Jingye to come back to the table and secure that deal. Will the Minister reaffirm that all options remain open, including strong national intervention to protect our steel industry and make sure that British steel is made here in Britain?

I know that my hon. Friend is working hard on behalf of his constituents; I appreciated being able to talk to him in the run-up to this. I can reassure him that this Government want to deliver a vibrant steel industry in the UK. We are very well aware of the importance of British Steel and of the Scunthorpe site and associated sites. We are doing all we can to make sure that we keep that operation going.

We all know that steel, and particularly the ability to make primary steel, is a critical national industry. The Chinese might be giving up on British steel, but the British people do not want to give up on British steel, nor should we allow the final two blast furnaces to close. May I urge the Minister to take this not as a negative, but as an opportunity to be positive? We should take British Steel into public ownership and create a long-term, 20 to 30-year positive plan to invest in steelmaking for British industry and for our defence industry.

Through our plan for steel and the £2.5 billion that we are investing in the steel industry, we are aiming to do exactly that, to keep the industry going. I invite the hon. Gentleman to go and see the other sites around the country where we have electric arc furnaces in operation, because they are not that different from blast furnaces: they are still massive buildings melting and making the steel, but in a much more efficient way. The problem we have with Scunthorpe is that the blast furnaces are very old and will need huge amounts of money spent on them, and of course British Steel is losing £700,000 a day on Scunthorpe. This is not about ideology or particular political beliefs; this is about economics and about making sure that we protect our country, that we provide the defences we need, and that we are as secure as we can be in a changing world. On that, I agree with the hon. Gentleman.

I thank my hon. Friend for her statement; I know that she is doing all she can on the issue. We cannot have a defence industrial strategy unless we have our own primary steelmaking facilities, so clearly we cannot let these furnaces close. I was interested to hear what the Minister said about having various meetings in Whitehall and with the Treasury. When is she likely to be able to come back to the House and report on the progress made on this issue and, importantly, on a steel strategy for the long term—not just five or 10 years, but 20 years or more?

I can reassure my hon. Friend that the Treasury is completely committed to having a plan for steel. We talked to my right hon. Friend the Chancellor a lot about this when we were in opposition, just as we have been doing in Government. The very generous offer put on the table to British Steel was signed off, as is quite right, by the Chancellor and by the Prime Minister. They are both committed to this. We will be coming back in the spring with the steel plan, in which we will set out how we will spend the rest of the fund that we have. In the meantime, I again urge British Steel to come back and talk about the offer that is on the table and see whether we can come to a deal.

Given the geopolitical uncertainty ushered in by the new American Administration and by America and China’s attitude to net zero, will the Minister assure the House that in making decisions on the future of critical national infrastructure that touch upon the defence of this country, such as the extraction of shale gas and the continuance of blast furnaces producing virgin steel, she will be very careful about doing anything that would reduce this country’s capability to stand on its own two feet?

I will certainly ensure that we do not do anything that reduces our ability to stand on our own two feet. I can give the right hon. Gentleman that assurance.

I thank the Minister for her comments on the national steel strategy and for agreeing to meet the owners of Union Electric Steel in my constituency. Does she agree that continuing to be able to produce cast steel rolls in the UK is an essential part of the steel strategy that will benefit Scunthorpe, Port Talbot and other communities?

I am very much looking forward to the meeting with my hon. Friend’s constituents, who are an important part of the steel chain. He makes an important point: we make many different products and have many different assets in the UK that we need to protect, beyond the big six steel companies.

It is now clear that domestic virgin steel production is a national security imperative. Acting on it is not acting on a whim. Will the Minister respond to her hon. Friends and to Conservative Members by recognising that domestic virgin steel production is a national security imperative? Whether it is through nationalisation, golden shares or the other ideas that have been suggested, if it is a national security imperative we must act, regardless of technology. Will the Minister please tell the House that she agrees with that?

Madam Deputy Speaker, you will recognise the conversations that we are having from your experience as Minister of State in the Department for Business, Energy and Industrial Strategy. The Opposition seem to have a new-found enthusiasm for virgin steelmaking that in government they did not have at all. We will make sure that we are doing the right thing. [Interruption.] I do not have time to go into this conversation at this point, but I will be very happy to have it with the right hon. Gentleman. There are some important points to note, including that we make a lot of our steel for defence not from primary steel but in electric arc furnaces. It is about getting the right mix. That is what we will make sure we do.

Last week, I visited British Offsite, whose chief executive officer hails from my constituency of Harlow, about the innovative house building that it is doing using techniques that require a lot of steel, although I have to say that it uses it efficiently. What meetings has the Minister had with house builders, as well as with the defence sector, as she rightly said, as part of the Government’s steel strategy?

I meet house builders regularly; I have some meetings with them today. The production and recycling of steel is important to construction, as are some of the off-takes from steel that can be used to make cement; there is recycling that can be done on that front as well. We need a lot of steel to build the 1.5 million homes that the Government want to build, so we need to make sure that the steel industry is strong.

I thank the Minister for her answers. We all share her frustrations about the process. The news that the Government’s offer of funding to retain jobs at Scunthorpe is to be rejected certainly outlines the difficulties in British businesses no longer being owned by those who have an interest in British jobs. My thoughts are with the workers today who are looking at their children and their mortgage repayments and wondering how they can make it work out, when all they want to do is work. How can the Government give confidence to workers in Scunthorpe and in industries that rely on steel throughout the United Kingdom of Great Britain and Northern Ireland, so that they know that a way forward can be found?

The hon. Gentleman is absolutely right to talk about how we can give comfort in what is a very difficult time; we are not shying away from that at all. The immediate support that we will provide through the Department for Work and Pensions and the Department for Education is important. If there is a closure, there will be a big transition board, through which we will support people as much possible, and ensure that they get skills and training, as he would expect. The comfort that we can give people now is that we are trying as hard as we can to make sure that closure does not happen.