Government 'risks making same mistakes as coal industry' with steel, MPs told

24 January 2024 , 10:29

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Tata Steel in Port Talbot, South Wales (Image: PA Wire/PA Images)

Tata Steel's deal with the Government could lead to a repeat of the nations coal industry collapse, warns Shadow Business Secretary Jonathan Reynolds.

He pleaded with the ministers not begging them to avoid making lasting decisions about the Welsh steel industry, as he demanded more efforts to save thousands of jobs in danger in Port Talbot. David TC Davies, Welsh Secretary, defended the governments actions saying they have striven to rescue as many jobs as possible.

This is under the threat of Tata possibly leaving the UK completely which would result in a significant loss, "17,500 people losing their jobs, possibly even more than that". A week ago, Indian-run Tata Steel confirmed its plans to shut down blast furnaces in the town, leading to a loss of nearly 2,800 positions in South Wales.

Vaughan Gething, the economy minister for the Welsh Government, sounded an alert on Tuesday hinting that the UK Government's £500 million support package for Tata to create greener steel might not be sufficient to protect jobs. In the Commons, Mr Reynolds warned that Port Talbot could suffer the same devastation as areas affected by the closure of coal mines if there isn't a planned move towards greener steel production.

He claimed: "Levelling up, supposedly the flagship policy from the Government, is surely a recognition that the scars of those years, of the impact of deindustrialisation are still felt in many parts of the UK today. Yet the Government risk making the same mistakes all over again."

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The Labour spokesperson continued: "Minister I'm asking you, quite honestly I am begging you, consider the arguments, consider what is really value for money, and do not make decisions that are irreversible and prevent a far better outcome in future." Mr Reynolds also expressed it was "profoundly wrong" Prime Minister Rishi Sunak had not spoken to Wales' First Minister Mark Drakeford following Tata's announcement.

The Labour MP Stephen Kinnock, whose constituency includes Port Talbot, encouraged Tata to reconsider an alternative plan for greener steel production proposed by trade unions. "I urge Tata Steel to take the bridge not the cliff edge," he said, adding: "Their deal is a cliff edge that will send our workforce, our proud communities, over that cliff edge."

Holly Mumby-Croft, the Conservative MP for Scunthorpe, insisted ministers guarantee "virgin steel" production remained at the steelworks in her constituency. She told her colleagues: "If we are going to give British Steel hundreds of millions of pounds of our money, of public money, we need to ensure they retain those blast furnaces until the transition and in short, it must be written into the deal."

"I do not want to see what is happening in Port Talbot, the sad events in Port Talbot, happening to my people in Scunthorpe." Mr Davies informed MPs, "It came down to this: the Government had to find the solution that was acceptable to Tata that was going to save the maximum number of jobs."

"The Government is not paying £500 million to throw 3,000 people out of work, the Government is paying £500 million to save 5,000 jobs because 5,000 jobs will be saved and around 12,500 jobs will be saved in the supply chain." He then added, "The reality is Tata were telling us that they were looking to pull out completely from the United Kingdom. If 3,000 jobs is devastating, and it certainly is, how much more devastating would 5,000 jobs be and 12,500 jobs in a supply chain."

"It was a simple choice for the Government, it wasn't a good choice, it was a choice between seeing 3,000 people losing their jobs or see around 17,500 people losing their jobs, possibly even more than that and that is why the Government committed to pay £500 million towards an arc furnace. But let me make one other thing clear: the Government is not going to pay a penny to Tata until that arc furnace is built."

Earlier, Mr Gething insisted that any further rescue package for Port Talbot would need intervention from Westminster. During a press conference, he remarked: "It's not a marginal investment of one or two million it's hundreds of millions. I think this comes down to whether the UK Government is prepared to contribute to a future of the UK steel sector."

Tata has stated that keeping blast furnace production in Port Talbot going is "not feasible or affordable", and a deal with the UK Government would assist the transition to more sustainable and greener steel production using electric arc furnaces. The UK Government has promised to put up to £500 million into the project, while Tata will chip in £750 million.

In addition, Tata announced over £130 million will be used for things like redundancy payouts, skills retraining, and jobseeking assistance.

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