Scunthorpe Steelworks

15:39:00

(Urgent Question:) To ask the Secretary of State for Business and Trade what actions the Government are taking to prevent the closure of Scunthorpe’s steelworks.

I appeared before this House on 27 March, just moments after British Steel’s devastating announcement of early asset closures at Scunthorpe and its commercial decision to consult on large-scale redundancies. The course of action chosen by British Steel’s owner is deeply disappointing, and our thoughts remain with British Steel workers and their families at this very concerning time. Government’s contingency plans have kicked in, and teams from the Departments for Work and Pensions and for Education are there to provide support and advice to affected workers. We will ensure that support is in place for as long as possible. Looking ahead, I can assure this House that early blast furnace closures at Scunthorpe are far from a done deal. We have been clear that the best way forward is for British Steel to continue as a commercially run business with private investment and Government acting in support, which is why we made the company a generous offer of public funding on 24 March. As Members are aware, British Steel’s owner did not accept our offer or the necessary conditions attached, which were designed to protect workers, safeguard taxpayers’ money and deliver a sustainable company at the core of the future of British steelmaking. However, that is not the end of the matter. The Business and Trade Secretary and I met Jingye, the owner of British Steel, on Friday, and there are plans to meet again this week. The Government remain resolute in our desire to secure a long-term future for the Scunthorpe steelworks, retaining steel production and putting an end to the years of uncertainty, and I can assure the House that no options are off the table to achieve that. We will continue to work tirelessly across Government and with British Steel’s owner to find a better outcome. I cannot go into further detail at this stage. It would be damaging to British Steel’s workers and their families, the company and its supply chain for me to speculate on how events might unfold in the coming days and weeks while a live negotiation is under way and policy is being developed at pace. However, Members should be in no doubt that there is a bright future for steelmaking in the UK under this Government, and we believe that British Steel and its superb workforce at Scunthorpe have an integral role to play in it.

I thank the Minister for her comments. While it is welcome that work is being done through DWP and so on to support potential redundant workers, the reality is that Jingye is not involved in meaningful negotiations. The Government have been critical of it in previous responses to my questions. It is very obvious that Jingye has cancelled the raw material orders that are essential to keep the furnaces going; those orders were due in mid-May. When I was at the steelworks on Friday, I was told that unless another order for iron ore pellets could be placed this week, it would be too late. The Minister was somewhat reluctant to go down the nationalisation route when I raised the matter a couple of weeks ago. However, the majority opinion in the area and among leading politicians is that nationalisation on a temporary basis is the only solution to keep the furnaces burning come the middle of next month. Can the Minister therefore confirm that it is something the Government are actively considering? It would provide an opportunity to rebuild the industry, hopefully secure new private sector involvement and convince the customers—most notably Network Rail, which gets 95% of its rail track from the Scunthorpe works—that supply will continue. I have come round to the view that nationalisation on a temporary basis is, in this instance, the only way. It will secure the jobs and secure a future for steel production in Scunthorpe. I urge the Minister not to rule it out, and indeed to commit to it.

I thank the hon. Gentleman for securing this urgent question and for his comments. I know we will continue to talk and have honest conversations. Jingye is very much talking to us. As I said, I met Jingye with the Secretary of State and others on Friday, and we hope to do so again this week. Our priority is respecting the workers, safeguarding jobs and retaining steelmaking. We have been clear in our belief that the best way forward is for Scunthorpe and British Steel to continue as a commercially-run business with private investment and with the Government acting in support, but I can tell the hon. Gentleman that no options are off the table.

I was concerned to read about the cancellation of shipments of essential coking coal and so on for Scunthorpe. The Business and Trade Committee heard from British Steel and Tata about some of their needs. The Minister will be aware that an area where we have failed as a country over the last six years or so is not having an industrial strategy, so I make clear to her once more the absolute urgency for us to establish a steel plan to set out the UK’s needs and ensure that we have resilience across our industries and for our economy.

My hon. Friend is absolutely right, and we talked about exactly that at the Business and Trade Committee. This country has seen a significant decline in steel manufacturing over the last decade, and we want to turn that around. Long before we got into government, we committed to a plan for steel, which represents a £2.5 billion investment in UK steelmaking. As we speak, there is a roundtable at JCB in Stafford on the plan for steel, on this occasion discussing trade barriers—I was due to be chairing but came back to be in the Chamber. We have been having a series of roundtables to gather evidence and pull the facts and figures together so that we can put the right investment in place.

I call the shadow Secretary of State for Housing, Communities and Local Government.

I thank my hon. Friend the Member for Brigg and Immingham (Martin Vickers) and Rob Waltham, our excellent candidate for Mayor of Greater Lincolnshire, for their engagement and work on this issue. Despite repeatedly promising to protect and support virgin steelmaking capacity when in opposition, the Labour party is potentially presiding over its total demise. In the process, thousands of blue-collar jobs in this once proud industry have either gone forever or are at risk, including 5,000 directly employed roles at Port Talbot and Scunthorpe alone and many more in the supply chain. Given that the regions with the highest numbers of steelworkers are Wales and Yorkshire and the Humber, the situation is dealing a hammer blow to efforts to address regional inequality. Steel is obviously a key strategic industry—even more so given our need to increase defence spending and infrastructure investment, and even more so again given President Trump’s game-changing imposition of tariffs. The Prime Minister keeps saying that the world has changed, and that we are witnessing the end of globalisation. I cannot say that I totally agree, but if that is the Government’s position, surely they have no choice but to intervene to support domestic production. The alternative could see us locked out of reliable, consistently priced sources of steel. The Government have stepped in to help car manufacturing in recent days, so will the Minister now redouble her efforts to reach a deal with British Steel? Steel production is just one of the industries closing due to our high energy prices, which are 50% higher than our competitors in France and Germany and 400% higher than in the USA. Other manufacturers such as CF Fertilisers on Teesside and Ineos at Grangemouth have closed their doors or are in the process of doing so. Will the Minister press with the Chancellor the case for permanently lower industrial energy prices? The Minister mentions support for steelworkers. How many steelworkers have the Government engaged with? What support has been given to account for the knock-on effect to communities? What assessment has the Minister made of the effects this situation will have on national security? She mentions a bright future for steelmaking in this country. Will she confirm that that means primary steelmaking capability?

I thank the hon. Gentleman for his contribution and for welcoming the Prime Minister’s announcements today on the zero emission vehicle mandate and the changes we have made to support the automotive industry, which is incredibly important. The hon. Gentleman talks about the number of good steel jobs that have gone forever or are at risk, but that happened because the previous Government failed to intervene to support our steel industry. That is why we lost so many jobs over the last decade. Not having an industrial strategy or a plan for steel meant that we allowed offshoring of our jobs in the steel sector, which has damaged us. He rightly said that in many key parts of our country we need good jobs. I should say that steel produced really good jobs, which are better paid than the average in the area and are done by really good, qualified people we want to retain in the UK. The hon. Gentleman talked about energy. Again, the reason why we are here is that we had years of the previous Government not intervening in this space. We are well aware of energy prices in this country and are doing all we can to bring those down. [Interruption.] I was asked by the hon. Gentleman to redouble my efforts in the negotiations we are having with British Steel. I will do everything that I possibly can—as we are doing. I hope he understands that I cannot go into detail about the state of those negotiations because that would be bad for the workers, bad for our supply chains and bad for the outcome. The hon. Gentleman talked about national security and primary steel. We are conducting a review of primary steel as part of our plan for steel and we will have the results of that soon. We will look at those results and see what we need to do. I should stress that there is defence equipment made in the UK from electric arc furnaces; there is not much defence work either in British Steel or at Tata in Port Talbot at the moment. People such as Sheffield Forgemasters produce steel from electric arc furnaces. However, the hon. Gentleman is right to talk about the importance of national security and to say that the world has changed and things have moved on, so we need to ensure that we are protecting our country as we need to. As I said in the Chamber in response to the last urgent question on this issue, there is a reason why Putin bombed the blast furnaces in Ukraine pretty much first: it was because a country wants to have that steelmaking capacity. We are alive to those issues, and that is why nothing is off the table. We are doing everything that we can.

You’re not!

It is a shame that the Conservative Members who were heckling the Minister have forgotten their own Government’s failure to tackle the problems of high industrial energy prices. [Interruption.] They can heckle again now, but they did nothing in government. Two weeks ago, I was at the Tata steelworks with the Energy Security and Net Zero Committee. We spoke to people locally, who had great concerns that when the blast furnaces there shut—it was too late for this Government to take action to prevent that when they came in—it was some years before the new electric arc furnace technology was ready to be installed and to operate. Will my hon. Friend do everything in her power to ensure that there is not that same gap here? The problem that has caused in south Wales has reminded people of the damage done by previous eras of deindustrialisation, and they are concerned that we are now repeating the same mistakes. Will she confirm that the Government will do everything in their power to ensure that we do not make those same mistakes of deindustrialisation this time?

We are very much planning not to make the mistakes that my hon. Friend talked about. We do not want the blast furnaces to shut—that remains the Government’s view—and we will do everything we can to reach a deal with British Steel to protect workers and secure those jobs and the production of steel in the long term.

I call the Liberal Democrat spokesperson.

Speculation around British Steel at the Scunthorpe plant is deeply concerning for the workers and business owners alike, who are desperately waiting for the Government to deliver just one piece of good news. Steel is vital to our green economy as it plays a huge role in our ability to extend our railways and to build zero carbon homes. What incentive does British Steel have to keep going? It has had to contend with the Chancellor’s decision to hike national insurance contributions and with Trump’s terrifying tariffs. Manufacturing businesses need the Government to offer reassurance, certainty and stability. We need to move from a patchwork of last-minute rescues to a long-term plan that will see industry on a sustainable footing. We need a robust industrial strategy with a proper plan for steel within it. We have been told to expect this industrial strategy shortly. Will the Minister confirm exactly when we will have it? Can she reassure the small and medium-sized manufacturing businesses in my constituency and across rural England that Britain wants them to grow? Will the strategy include a long-term vision that will allow the UK to secure the investment that we need for virgin steel production?

I can reassure the hon. Lady that we are developing a long- term plan in the industrial strategy. We are developing the plan for steel, as I have said, and alongside that we have our trade strategy, which has become very significant in recent times. She is right to point to the tariffs that have been placed on steel and aluminium. This is a deeply difficult situation and I have met the steel sector on multiple occasions to talk about it. That is what the conversation that is happening in Stafford as we speak is about: what extra measures need to be put in place. The Secretary of State met the Trade Remedies Authority this morning to push on some of the issues around trade protections. The hon. Lady talked about the SME manufacturing supply chain. Of course that is very important and we will do what we can within the industrial strategy and the steel strategy to support those businesses. I understand that the speculation about what may or may not happen at Scunthorpe is deeply distressing, not just to the workers and their families but to all those who are part of the supply chain. That is why we will continue at pace to have the conversations we need to have with British Steel to ensure that we do the right thing, and as I said, nothing is off the table.

The whole of northern Lincolnshire will feel the brunt of this British Steel decision, should the site close, and I urge Jingye to reconsider the Government’s generous £500 million offer. Support through the Department for Work and Pensions is really welcome but the truth is that people have been leaving British Steel for years because of the cycle of its uncertain future. I welcome the Government’s comment that no options are off the table. In the interim, are the Government considering ordering the raw materials to keep the blast furnaces burning?

I thank my hon. Friend for her question and for pointing out that the uncertainty that has existed for many years is difficult for people, and that if they can secure jobs elsewhere, they will do that. I have been to Scunthorpe and talked to people who work there and to the trade unions a lot, as she would expect, to make sure that we understand all the issues at play. I understand my hon. Friend’s question about what we may or may not do in the immediate term, but I hope she will respect the fact that we cannot at this point talk about what we might end up doing, because those conversations are commercially sensitive. I want to reassure her, and the whole House, that we are doing what we can to ensure we get the right solution and that we do not want the blast furnaces to close.

About 10 days ago, I urged the Minister and the Government to use this decision by the Chinese to close British Steel as an opportunity to take British Steel into public ownership. The situation is urgent. It has stopped ordering the raw materials for the blast furnaces, and unless those raw materials are ordered within about 10 days, those blast furnaces will go cold in mid-May. The Minister says that no options are off the table. Will she confirm that the Government will make those decisions and come to a conclusion about the options within this very short timeframe to ensure that the blast furnaces stay open, and that the right long-term solution is to take British Steel into public ownership and invest in it for British industry, for British Steel and for the workers in Lincolnshire?

As I said about 10 days ago, economics and jobs, not ideology, will drive the decisions that we make. The hon. Member is right to point to lots of speculation about the need to buy raw materials. I assure him that we are having those conversations with British Steel, and we will continue to do so. As I said, our preference is for a commercial solution, with Government providing support, but all options remain on the table, and I can assure him that we are working at pace.

Wolverhampton North East has the UK’s largest steel processing and distribution centre. Will the Minister outline how the Government intend to protect jobs across this vital industry by backing a robust industrial strategy and the £2.5 billion plan for steel?

I would be happy to come to my hon. Friend’s constituency to have a look at and to talk to some of the people who work in the steel business. Huge numbers of organisations and businesses across the country rely on, use, and produce things from steel, and we need to ensure that we factor them into the conversations we are having. We are looking at the supply chains and how we boost industry more widely through our industrial strategy. We are looking at all the things—whether it is skills, R&D or access to finance—that businesses of all sectors have told us they need. Whether it is through the industrial strategy or the plan for steel, we are trying to ensure that we have a robust industry in this country so that jobs are not offshored and we have the security of knowing that we are producing the things that we need here in the UK.

Between 1997 and 2010, about 36,000 jobs were lost in steelmaking, or about half the workforce—that was under Labour, of course. I am concerned to hear talk today about nationalisation, and I say that with due deference to my hon. Friend the Member for Brigg and Immingham (Martin Vickers); the old joke is that if we want to stop crime paying, we should nationalise it. Given that this Government could not run a bath, never mind the steel industry, would a better idea not be to support the industry with, as I have mentioned before, a golden share to give us some say over what happens? Again, is the truth not that the dogmatic pursuit of net zero is driving up energy bills in this country to a level that is simply not sustainable for industry?

I will repeat what I have said: we are looking at all the options on the table; we are talking to British Steel about the right outcome; and we will do what is right for our country and our industry. On energy prices, the hon. Member is right to raise the high costs of energy. The supercharger comes into effect this month, and British Steel will get support from that, as will other high-end energy-intensive industries. But he is right to point to that issue and we are looking at it.

I thank the Minister for her answers. As she will know, there has been intense media speculation that the blast furnaces will close before the consultation is complete. Will she reassure me and workers that everything is being done to ensure that does not happen, and that Jingye conducts its affairs with respect to UK law?

My hon. Friend is right, and we will do that. The offer that was put to British Steel and which was refused included conditions to do exactly that, as well as including a number of other things around jobs, as we would expect. It is very important that any deal using British taxpayers’ money is done in a way that we know is within the law and is a good use of taxpayers’ money. I am very mindful of that, and I am constantly mindful of the insecurity that people who work at British Steel will feel, as well as the need for all of us to try to work as hard as we can to ensure that we get a good outcome for those people.

I thank the hon. Lady for keeping an open mind about what to do to save the remnants of our steel industry. Does she not agree that it is vital that we maintain a strategic capability to make steel? Is it not unconscionable that we are building British warships with imported steel? I recognise that the situation represents the cumulative failings of Governments over many decades, but it is now time utterly to change our policy. That includes the energy policy, which has prioritised things other than price in relation to our energy-intensive industries. I am glad to hear that the Government have some answer to that, but to build up a strategic capability for wartime, which is what we now need to tool up for in this country, we need a wholesale change in energy policy. I hope that she will look for common cause between the two Front-Bench teams, because this should be done on a consensus basis. We do not need to tear chunks out of one another for the mistakes we have all made in the past.

I agree with the hon. Member’s premise that we need to ensure that we have steel production in the UK, although there is some nuance around some of this. High-quality steel is being made, as we speak, for defence purposes by electric arc furnaces. That is perfectly possible; we melt scrap and add about 20% of primary steel. For some things, depending on what we are making—I know too much about the steel industry now—we do not need any primary steel. We are conducting a review of primary steel, which will be finished shortly. Again, neither Tata nor British Steel is a critical supplier to defence programmes at the moment, but we need that steel production, as I said before, so that we can build whatever we might need in the future. Of course, we will work cross-party; if that is his offer, it is very gladly taken.

The Minister should not waste the opportunity of a lifetime in the parties of the right urging a party of the left to nationalise a British industry. One organisation that has been utterly consistent in all this is the GMB union: it wrote to the previous Government’s Defence Secretary saying that a business Minister had failed to answer clearly whether virgin steel was essential for defence. Today’s Minister seems to suggest that it might not be, but we must have a quantity of virgin steel, even if we add other things to it, to embark on the process of making essential defence products. Seize the opportunity: keep the blast furnaces, and if necessary, nationalise them for good.

If we get into conversations about different types of steel, it is like the Facebook update “It’s complicated”, right? It is complicated. For some things, we absolutely need primary steel; and for some things, we do not. That is why we are carrying out a fundamental review of steelmaking and the need for it here in the UK. Those results will come out soon. The right hon. Member is right that the GMB has been an advocate for this, as have Community and Unite. We talk to them regularly about British Steel. I have not failed to notice the slightly odd position that we find ourselves in today. I repeat that we are looking at all options. The House will understand that we are talking about large amounts of taxpayers’ money, which we have to spend in the right way, in a sensible way, and in a way that will get us what we need. That is what we are looking at, and it is what we will do.

These steelworkers do not want visits from the DWP. They do not even want visits from out-of-touch Labour Back-Bench MPs. What they want is their jobs: they want to make steel. It is interesting to hear from the Minister that all options are on the table. Do they include Reform UK’s policy of scrapping net zero and renationalising British Steel?

It is good to hear that the workers in British Steel do not want visits from politicians; I assume the hon. Member, and his party, will take his own advice. I hope that he will understand that we cannot talk about the conversations that we are having with British Steel. It would be very disruptive to the process, the workforce there, the supply chain and commercial confidentiality. I can only repeat that our preference is that we come to an agreement with British Steel based on commercial terms, with Government support, but we are looking at all options and nothing is off the table.

Does the Minister agree that we appear to have hammered out a cross-party consensus on the need to ensure that this country is able to continue to produce virgin steel, just like every other G7 country, for a whole raft of reasons? Does she agree that the case is underscored and reinforced by the Trump slump, by her party’s welcome, albeit belated, pragmatism on net zero and, one hopes, an attendant fall in energy costs, and by the Prime Minister’s intriguing announcement of the end of globalisation? Does she agree that those three things have underscored and reinforced the case for continuing to produce virgin steel in this country?

I agree with the right hon. Member that the world has changed. We know that we are in a different position than that which we found ourselves in a few years ago. We need to ensure that we are secure as a country, and I believe steel is part of that answer. We also need to ensure that we are stopping the decline of the steel industry, which was always the Labour party’s wish in opposition. We are committed to the plan for steel—the £2.5 billion on top of the £500 billion that we are giving to Tata Steel in Port Talbot. This is a real commitment to changing how we operate the steel industry in this country, so that we stop this constant decline and start to grow the industry and ensure that we are producing the things we need.

The Minister seems to be on the verge of acknowledging that, as the last virgin steel production in the UK, Scunthorpe is critical national infrastructure and that the Government will nationalise it, if necessary. Can she commit to the House that virgin steel production in the UK is critical national infrastructure and that, if necessary, she will indeed nationalise it to maintain this critical resource for UK defence?

I am afraid I have to disappoint the right hon. Member, as I am not on the verge of anything. I repeat what I said, because it is the right thing to do: we will continue to negotiate with British Steel, mindful of the workers and the insecurity of the consultation they are currently undergoing. We will ensure that we do the right thing through our plan for steel and our response to British Steel, and I cannot say any more than that at this point.

I thank the Minister for her comments. Given the vital importance of this industry, on which I believe the whole House agrees, does she recognise that it would be a siren to those who, on a national scale, would be less than trustworthy, if we were unable to produce virgin steel ourselves? Given the undoubted national security risk, does she agree that, despite no options being off the table, one outcome that is absolutely off the table is closure? If so, why not just commit to protecting and saving these jobs?

British Steel is a private company owned by Jingye, and it is for Jingye to make its own decisions. I have said multiple times that we will continue to talk to see if we can come to an agreement on the very generous offer that was made. We are looking at all options, because we know that is the right thing to do. To be clear, we do not want the blast furnaces to close, and we want to come to an agreement.

I wish the Minister would stop saying that some of these issues are complicated, and therefore that we should not debate them. We are sent here to debate complicated issues, and she is supposed to be here to answer our questions. We are witnessing the absurd spectacle of the Government begging a Chinese company to take taxpayers’ money to keep British Steel alive, while China suppresses its own costs and dumps its steel on other countries. We may soon be the only G7 country incapable of producing primary steel. The Minister brushes off the reality of crippling British energy costs, which will only get worse in the years ahead as a matter of deliberate Government policy. Why will she not guarantee the supply of the raw materials needed to keep the blast furnaces open, and why will she not admit that steel has no future in this country so long as this Government’s trade and climate policies continue?

If only the hon. Member had done something when he had some influence as an adviser to a previous Prime Minister. That would have been good, wouldn’t it? I was not sent here to divulge commercially confidential conversations with a private company that affect thousands of people’s jobs, and if the hon. Member thinks that I was, he is wrong. We are not going to do that, nor are we begging anywhere for anything—

You are.

No, absolutely not, and I am disappointed that the hon. Member would speak in that way. As he knows, we are having a conversation about a potential deal that we believe is there to be done with British Steel. On the wider issue, it is a fact that China produces 53% of the world’s steel, and we have huge issues with that, as the hon. Member knows. The tariffs have over-complicated the situation, which is why the Secretary of State is meeting the Trade Remedies Authority today, why we are looking at our trade strategy, and why we are talking to the Americans to make sure we can do a deal with them. We will continue to ensure that we have all the protection we need, in terms of stopping the onshoring of steel as much as we can. Those conversations will continue. The TRA is now looking at steel, and we expect those results quite soon.

The Minister used the interesting stat that 53% of the world’s steel is produced by China. If we look back at the lead-up to Russia’s illegal invasion of Ukraine, and the way that Russia started to dominate the nuclear fuel market in particular by pushing out western providers, we see that there is a reason why China and Russia are behaving this way: they want to control the raw materials that are critical for national security around the world. This House is debating the prospect of a Chinese-owned company turning off our blast furnaces in this country in a month’s time. That cannot be an acceptable position to be in. This has been asked several times, but it has not been answered: will the Minister commit to ordering the raw materials to keep those furnaces on, if necessary? She said in response to a question on primary steel that a consultation was under way on a strategy, and that we would look at what we needed to do. It is clear what we need to do: produce primary steel.

That is what we were telling the previous Government for many years. British Steel is owned by a Chinese company because the purchase was made under the last Government in a commercial and private sector way. Labour Members believe in fair, open markets; I do not know quite what the Opposition are becoming. On China, our priority is UK jobs and steel production. We believe in a fair, open market for foreign investments, and in having mature and balanced relationships with trading partners such as China. We will ensure protections for the steel industry in the UK, and make sure we do the right thing. On primary steel and the materials that the hon. Member wants me to commit to spending millions of pounds on, I think most Members would understand that I cannot commit to anything like that at this time and place.

I thank the Minister for her answers to the questions—they have been very helpful. My concern is not only about retaining UK steel, but for the workers. The potential for 2,700 people to lose their jobs is frightening, and I think of all the families who will be directly impacted by this. Will the Minister confirm that ahead of any announcement made on Scunthorpe steel, she will commit to meeting the workers who will be directly affected by any decision, and provide a way forward, so that workers in the steel industry are secure in their employment and are protected throughout the United Kingdom?

I thank the hon. Gentleman for his question. We of course continue to talk to the trade unions, including Community, GMB and Unite, who have been incredibly strong voices for their workers in Scunthorpe. We will continue to talk to them and to people who work there, to understand exactly what they are going through. They have to be at the heart of all the decisions we make.