6. Member Debate under Standing Order 11.21(iv): Steel Industry

Part of the debate – in the Senedd at 4:35 pm on 6 February 2019.

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Photo of Ken Skates Ken Skates Labour 4:35, 6 February 2019

After the UK and Ireland, the primary market for UK-produced steel is, of course, Europe. When we exit the EU, it is therefore vital that the steel industry in Wales is not disadvantaged through unnecessary trade barriers such as additional customs, tariffs, quotas or technical barriers to trade. The steel sector is highly dependent on free trade, but, equally importantly, on the rules such as trade remedies that underpin this free trade. It's also important, Deputy Presiding Officer, to emphasise the steel industry will be impacted by any disruption in its supply chain as a result of Brexit, including, importantly, in the auto sector, as Suzy Davies and Rhun ap Iorwerth identified. Indeed, the first two rolls of steel that came from blast furnace 5 last week were destined for auto manufacturers in the west midlands and north of England. And I heard for myself just last week the sector's concerns at the Cross-Party Group on Steel. The sector has been engaging directly with the UK Government's Department for International Trade to raise its concerns and to emphasise the importance of ensuring future trade remedies in the UK are robust.

The Welsh Government is in regular dialogue with the UK Government on Brexit, and we are making the case for them to provide as much certainty as possible for Welsh industries, including, of course, the steel industry. The impact of the UK industrial electricity price disparity with other countries, especially with regard to France and Germany, is another issue that we continue to raise with the UK Government and which Members this afternoon have identified. This is of utmost importance if the sector is to compete on a level playing field internationally and if it is to attract investment in plant and research and development. This is being reinforced by the most recent statistics published by the UK Government, which show that the UK has the highest industrial electricity prices in the EU. For extra-large industrial users, prices are 90 per cent—90 per cent above the EU median.

Now, it was a pleasure to visit Tata Steel's Port Talbot works last week alongside the First Minister to mark the re-lighting of blast furnace 5. The completion of this project marks a substantial investment in the future of the plant and in its workforce, and demonstrates Tata Steel's commitment to sustaining steel making in Wales. In June 2018, Tata Steel announced it signed a definitive agreement to enter into a joint venture with Thyssenkrupp. This is currently subject to regulatory examination by the European Commission. However, meanwhile, we continue our engagement with Tata Steel UK regarding further potential supporting relations to enable their operation to become more sustainable for the long term. To date, we have offered £17 million of funding across Tata Steel's Welsh operations that support skills development in the workforce and, of course, an £8 million investment in the Port Talbot power plant.

Many Members in this Chamber, alongside Tata Steel, recognise the importance of increasing levels of research and development for the long-term sustainability of the business, and our support includes over £600,000 of funding for research and development in new product development alone. And our economic action plan has been designed, in part, to help Wales develop new platforms and new partnerships between Government, universities, colleges, businesses and so forth that might enable us to target more competitively awarded funding in UK industrial strategy challenge funding. There are clear synergies between our economic action plan and the UK Government's industrial strategy. Wave three of the industrial strategy challenge fund includes two challenges particularly relevant to the steel sector: firstly, a £170 million challenge focused on decarbonising industrial clusters, and as Suzy Davies said, a £66 million challenge transforming foundation industries. We are working with the sector to take advantage of these and other opportunities available from the UK Government.

The UK steel sector has identified public sector procurement as a key core action that Government could take to strengthen the sector and to improve its ability to compete, and in January last year, we published a procurement advice note supporting the sourcing and procurement of sustainable steel in construction and infrastructure projects here in Wales. This is part of our ongoing commitment to support the long-term viability of steel making in Wales, and is designed to encourage the widest use possible of Welsh and UK steel in public sector contracts.

Dirprwy Lywydd, to conclude, I fully recognise the ongoing challenges that steel companies in Wales face, particularly given the uncertainty caused by Brexit, but equally, I can assure the steel sector that this Welsh Government will continue to work at its side to ensure a long-term future for all steelworks in Wales, and I am pleased to support this afternoon's motion.