2. Will the First Minister provide an update on the support the Welsh Government is currently giving to the Welsh steel industry? OAQ(5)0126(FM)

Yes. The Cabinet Secretary for Economy and Infrastructure sent Members a full update yesterday on the progress that’s been made since the written statement on 8 August. No progress has yet been made, however, by the UK Government in terms of the issues of energy and pensions.

Thank you for the answer, and I did get that statement. In that letter from the Minister, it says that good progress is being made on a range of projects that have allowed the Welsh plants to become more efficient and capable of withstanding the global competition, including developing a major environmental improvement project for Port Talbot, as well as the research and development investment projects in Port Talbot. These are, I believe and if I understood correctly, to be Plaid Cymru ideas that you have taken on board. I wonder whether you would like to give us information on the development of the power plant, and also the research and development activities at Swansea University, which we proposed to you and you have kindly taken on board?

I don’t think the principle of keeping our steel industry was wholly a Plaid Cymru idea. The issue of a power plant is something that we’ve been discussing for years with Tata, long before, actually, what happened at the beginning of this year. What I can say—and there’s a limit to what I can say at this stage, because negotiations are still ongoing—is that good progress has been made, as far as we are concerned as a Government, on seeking to provide a platform for the long-term future of our steel industry. But it is true to say, of course, that those two issues of energy and pensions are still not resolved at UK Government level.

First Minister, thank you for that answer, and we are seeing Welsh Government support for the steel industry, through these projects, which I very much welcome, in Port Talbot. But also, we’ve seen over the summer, since we last met, financial improvements in the steel industry in Port Talbot as well, where we saw losses of £1 million a day beforehand, and we’re now turning it into profits in a month—I think it was £5 million in July, and perhaps it will a break-even in August. So, we are seeing progress in steel making in Wales. It is viable, as we said. But, when you met with the Prime Minister, you talked about steel, and you’ve already partly mentioned this afternoon the issue of the UK Government’s position. Did she indicate that they will actually be working to improve the situation with the British steel pensions fund, and, also, are they making any movements towards the energy costs, because they were the big issues that any prospective buyer had concerns about?

It’s true. I think it’s fair to say that the previous Prime Minister was very proactive in this regard. We’ve not heard as much from the current Government in terms of these two issues. There have been initial conversations; they’ve not been negative, but I think we need now, in the next few months, to see some progress, particularly on the issue of pensions, and on the issue, of course, of energy prices—a long-held issue. We have correspondence going back five years with the UK Government on the issue of energy prices, not just in the steel industry, but for all our energy-intensive industries. We cannot afford to be seen as an expensive place to manufacture because of energy prices.

Following representation by the Prime Minister, Theresa May, the G20 members agreed to set up a forum to tackle the issues of overcapacity and production in the global steel market, so the UK is moving ahead and getting world leaders to confront and answer the central question as well as dealing with the issues they’ve already been acting on until recently. Now, I accept that the Welsh Government has a more limited role—I do accept that—but it can make a practical difference in my region. Pulling out of a deal that could have saved 200 jobs at Fairwood Fabrications as part of the steel industry’s supply chain connected with Port Talbot probably wasn’t helpful, so can you tell us specifically what you’re doing to assist stability in the Welsh steel supply chain? Thank you.

Well, more than anything else, what we’re doing is assisting Tata, looking at ways that they can save money, particularly with regard to the power plant, seeing what we can do in terms of skills and training, and providing the support that they need in order to be sustainable in the longer term. There are issues regarding other businesses that had their issues with Tata, which unfortunately led to the consequences that the Member has mentioned, but we are confident that we can put together a good package as far as Tata is concerned in terms of what we can offer. But we do now need to see progress on the two major issues, and we need to see that progress pretty soon.

First Minister, Welsh steel and other energy-intensive industries are suffering as a result of EU-imposed carbon reduction policies, which have resulted in higher energy bills. In order to secure the future of Welsh steel, particularly the Tata plant in Port Talbot in my region, we have to drop EU legislation that pushes up our energy costs. First Minister, do you agree with me that the best support that the Welsh Government can give the Welsh steel industry is to press the UK Government to complete the Brexit process as soon as possible?

The biggest threat to the steel industry is tariffs. We export 30 per cent of the steel that we produce. Anything that increases the price of that steel is not going to be helpful. If she’s talking about carbon reduction, what she means is more emissions, so, more coming out of the steelworks than before. If she wants to sell that to the people of Port Talbot and Bridgend, she’s welcome to do it. Indeed, I’m sure there will be opportunities this week where she can explain that policy to people in the area—that she doesn’t want to see emissions controlled properly.

But there’s another point here as well. If you look at other countries in the EU, their energy prices are much lower than ours. If you look at Germany, 20 per cent lower. If you look at Spain, 37 per cent lower. So it’s nothing to do with the EU at all. It’s to do with the UK, and the UK’s alleged energy market. Every single energy-intensive industry is saying to us that it’s not an EU issue—it’s the fact that the UK’s energy industry is not transparent enough, and it’s something that Celsa Steel have raised with me along with others. They say, ‘Look, the UK is an expensive place to do business because of its energy costs’. Now, the regulations are the same across the entire EU, but the fact remains that the UK is more expensive than many other of our competitor countries, and that has to change. That’s not to do with emissions, because Germany and Spain have the same regulations. It’s to do with the way that the market operates in the UK.

First Minister, as you are aware, the plants in Newport East, my constituency, at the Orb works and Llanwern, are very important parts of the overall Tata operations in Wales. Will you assure me that those plants will continue to be properly considered in Welsh Government’s thoughts and actions to ensure a sustainable steel industry in Wales?

Absolutely. The four major sites are hugely important—Shotton as well, of course, and Trostre. They are operations that we want to keep in Wales, producing steel in Wales, exporting steel from Wales. Port Talbot of course has had the most focus because it is the biggest plant and it has had the greatest challenges, but all four plants are important for the future of Wales.

I welcome Tata’s August announcement of investment in the Shotton site to create the next generation of steel coating. I spent a day there just after the announcement and I know the workforce is appreciative of the proactive approach by the Welsh Government in securing this investment. But as you’ve already alluded, I urge the Welsh Government going forward to make sure we consider that a successful and profitable site like Shotton is as integral to any discussions on the future of the steel industry going forward.

Absolutely, and I’ve been, of course, to all four sites. Shotton always was a profitable site, but as it was said to me in Shotton, it would be very difficult for Shotton to operate without the steel from Port Talbot because it would take about six months to source the steel from somewhere else if Port Talbot wasn’t there, with an obvious knock-on effect in terms of loss of customers. So, all four of our steel plants are integrated with each other. It’s hugely important, then, that they all stand together and prosper.