6. Statement by the Minister for Economy: The Future of the Steel Industry

– in the Senedd at 5:03 pm on 6 July 2021.

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Photo of Elin Jones Elin Jones Plaid Cymru 5:03, 6 July 2021

(Translated)

That brings us to the statement by the Minister for Economy on the future of the steel industry. I call on the Minister to make the statement—Vaughan Gething.

Photo of Vaughan Gething Vaughan Gething Labour

Thank you, Llywydd. The steel industry has a long and proud history here in Wales. I am committed to working to secure a long, proud and sustainable future for our steel industry. Not only does the sector support many thousands of jobs in Wales, but steel enables everything from our buildings, transport, utilities and communication systems, to many of our consumer products. Developing a sustainable and low-carbon steel sector is a hugely important foundation for our manufacturing and construction industries. The importance of our steel sector is more, not less, important following our departure from the European Union.

Since becoming Minister for Economy, I have undertaken a number of engagements with the sector. Indeed, one of my first engagements was attendance at the UK Steel Council on 19 May. It is very clear to me that the sector continues to face both immediate and longer term challenges. However, we have the opportunity to collectively work towards a more sustainable future. All parties that I have met place critical importance on the transition to low-carbon steel making. There is a recognition from business leaders and trade unions that we need to reduce carbon emissions in order to meet our collective climate change ambitions. Within Wales we have committed to achieve a transition to net-zero emissions by 2050. Industry accounted for 36 per cent of total Welsh greenhouse gas emissions in 2018, and of this, iron and steel sectors represented 43 per cent of industry’s total emissions in that year.

Photo of Vaughan Gething Vaughan Gething Labour 5:05, 6 July 2021

The low-carbon transition is complex and far-reaching. It requires collaboration across governments, industry and the workforce over the coming decade and beyond. In the short term, some improvements can be made—improving energy efficiency and resource efficiency, for example. However, the significant reductions in emissions required can only come from major shifts in production processes and consideration of the potential for new technologies such as carbon capture and storage, fuel switching to electricity and longer term to hydrogen. The appropriate low-carbon pathway and mix of technologies for our steel-producing companies is being considered by employers, trade unions and governments. Whichever path is taken will require major investment within individual production plants and in wider energy production and infrastructure.

One of the greatest challenges to reaching net zero across the economy is the change needed to electricity supply. The Climate Change Committee has advised us that we need to reach near-zero greenhouse gas emissions from electricity by 2035. At the same time, various projections suggest that the electrification of transport, buildings and industry will mean electricity demand in Wales will more than double by 2050. Decisions taken by the steel industry on its decarbonisation pathway will have a huge impact on our electricity needs.

Our pathway to a net-zero Wales will be challenging, but it will offer opportunities for sustainable growth and more resilient businesses. We live in a world where economies are already prioritising decarbonisation. By taking a more efficient approach in how we use resources, we can shorten supply chains and boost economic resilience. Producing the lower carbon products that we need means that more economic value can be retained here in the Welsh economy. For example, we’ve invested £1 billion in recycling infrastructure that collects materials, including steel, from every home in Wales. We are also bringing forward requirements on businesses to separate their recycling, and that will also support the supply of recycled steel for reuse.

This is a challenge the steel sector cannot meet in isolation, though. Industry as a whole has come together through the South Wales Industrial Cluster and has been awarded funding through the UK industrial decarbonisation challenge. We’re working closely with those industries on their holistic approach to the transformation of industry for a net-zero future. Developments are also accelerating in the potential for hydrogen infrastructure to be deployed across Wales, and in particular north Wales, at present. This includes cross-border engagement with HyNet in Ellesmere Port, who are developing a hydrogen and carbon capture and storage integrated network in north-west England and north-east Wales.

To provide the low-carbon energy we need we’re also committed to looking at opportunities to develop marine renewable energy and to supporting innovation in new renewable energy challenges, including the tidal lagoon challenge. We are working closely across the offshore renewable energy sector, particularly offshore wind and marine energy. There are already 4 GW of fixed offshore wind in planning or development off the north Wales coast, and these projects are likely to be developed by the early 2030s. Whilst this is significant, in the short term it is not enough to unlock the required infrastructure investment. This requires the support of the UK Government with the development of a market pipeline in tandem with associated financial tools and enforcement of the 60 per cent UK content rule to underpin local delivery of value-added goods and services.

I was pleased to hear a firm commitment from the UK Government department, the Department for Business, Energy and Industrial Strategy, at the Steel Council on 19 May to support the sector with its key challenges, including energy prices and decarbonisation. It’s a simple fact that the UK Government holds many of the powers related to industry decarbonisation, including the business models for developing hydrogen, carbon capture and storage, the cost of electricity, and key market drivers such as a potential carbon border adjustment mechanism. We will continue to do all we can to work with them, and the trade unions, to ensure that our steel companies in Wales remain as competitive as possible.

We will continue to work with the UK Government, with businesses and trade unions to ensure that our steel industry is modern, competitive and fit for the future. The talented workforce we have here in Wales drives the success of the UK steel industry, and we'll work in partnership to pave the way for a fair transition. Llywydd, with much progress to make and so much at stake, we do need to see early action from the UK Government. The next meeting of the UK Steel Council, this year's comprehensive spending review, and COP26 now represent key tests for the UK Government and their practical commitment to the sector and its future.

I was also pleased, though, with the UK Government's decision last week to make new regulations to defend the UK steel industry with a temporary extension of steel safeguard measures. The initial decision from the Department for International Trade seemed to me to be at odds with the direction and support given by the Secretary of State at BEIS. I welcome the change of heart and reversal of the position of the Department for International Trade to ensure that safeguard measures remain in place, as they do within European Union countries. That should help to avoid steel dumping into the UK.

Since becoming the economy Minister for Wales, I've made it clear to the UK Government that extending existing steel safeguards was absolutely vital in order to protect the UK steel industry. The solutions to many of the challenges facing the steel sector are complex and will need to be transformational. I will continue to champion the sector and look forward to working collectively with the industry, the workforce, and the UK Government on the transformational technologies, infrastructure and market drivers that will underpin the operation of the sector and all of our businesses to meet our longer term net-zero aspirations.

Photo of Paul Davies Paul Davies Conservative 5:11, 6 July 2021

Can I thank the Minister for his statement this afternoon? This statement, of course, is timely, following the UK Government's decision last week to support the UK steel industry by extending safeguard measures. The UK Government has also confirmed that it's reviewing the trade remedies framework as a matter of urgent priority, and that it's also developing a monitoring and surveillance system, which will enable the UK to respond rapidly and decisively to import surges, dumping, and unfair competition. I'm pleased that the Minister has welcomed this development in today's statement, and, as we move forward, it's vital that discussions are ongoing between the UK Government and the Welsh Government, given the complex challenges facing the sector. Therefore, Minister, perhaps you can update us on the latest discussions that are taking place with Westminster and the UK Government in relation to steel safeguard measures and industry decarbonisation more widely.

Minister, we all want to see the Welsh steel industry thrive for the future, and so it's important that both Governments are working together to support the sector from unfair trading practices, a sudden surge of imports, and to ensure that our industry can compete on a level playing field. I appreciate the role that the UK Government has in underpinning the sector too in terms of securing higher end strategic investment and in terms of energy pricing, and that's why collaboration is so important, to ensure that the sector is sustainable and competitive for the future.

Your statement reconfirms that, within Wales, the Welsh Government has committed to achieve a transition to net-zero emissions by 2050, and we know there are some potential ways forward in relation to carbon capture and storage, melting scrap steel and the use of hydrogen instead of coal. Minister, you are right to say that one of the greatest challenges to reaching net zero across the economy is the change needed to electricity supply, and so, can you tell us a bit more about the current work that's taking place to start making progress on this front?

Your statement mentions opportunities to develop marine renewable energy and supporting innovation in new renewable energy technologies, which need to be developed further. Of course, these options require a huge amount of investment and collaboration between governments, industry and, indeed, academia, and there has to be sufficient investment not just to the sector directly but also in fields like research and innovation, to ensure that all opportunities are being explored. Therefore, Minister, perhaps you can tell us a bit more about the levels of investment the Welsh Government is providing, not just to the sector directly, but also in terms of research and innovation, so that Wales is at the forefront of any global and technological developments.

Today's statement talks about Wales's economic resilience, and the COVID pandemic has showed us the importance of developing our domestic manufacturing sector and creating strong supply chains. It's crucial that the Welsh Government is using its levers to maximise any procurement opportunities. And with the news of Nissan expanding its electric vehicle production at its car plant in Sunderland, it's vital that discussions are taking place to ensure Wales's steel production benefits from that announcement. Therefore, Minister, can you tell us a bit more about the Welsh Government's procurement strategy and the steps that are being taken to maximise any procurement opportunities, both in Wales and in other parts of the UK?

Of course, we have to ensure that steel makers have every opportunity to be part of supply chains for publicly-funded projects with a steel requirement, and yet the Welsh Government has recently confirmed that it's looking to shift spending towards better maintaining our existing roads, rather than building new ones. That announcement would surely have an impact on the sector, which would have had a substantial role in supporting those new, major infrastructure developments. And so, perhaps, Minister, you can tell us what assessment was made of the impact on the steel sector of freezing new road projects, and in light of that, what other opportunities the Welsh Government is exploring to maximise the use of Welsh steel?

Now, it's also vital that the Welsh Government develops the workforce and doesn't overlook the opportunities in the steel sector in terms of apprenticeships and skills. Tata Steel, for example, has played a huge role in this particular field, first offering apprenticeships to its employees back in the 1950s. Therefore, I'd be grateful to know what the Welsh Government is doing to increase the opportunities for apprenticeships within the steel sector, and what other programmes and developments are being considered.

Llywydd, we all recognise that global economic conditions continue to be challenging for the steel sector, and that's why it's so important that both the Welsh Government and the UK Government are committed to supporting it to become a sustainable and modern industry. To ensure our steel industry is a success, collaboration is essential—collaboration between Governments, the sector itself, the wider business community and with research partners. Thank you.

Photo of Vaughan Gething Vaughan Gething Labour 5:17, 6 July 2021

Thank you for that series of questions. I'm pleased that the Member welcomes and recognises the change in approach the UK Government is taking to steel safeguards. I believe that's a proportionate step that's been taken, and I do welcome the action that has been taken, as you know, that we've also called for.

When it comes to the future work between the Governments, our main engagement is with Kwasi Kwarteng's department at the Department for Business, Energy and Industrial Strategy. Unfortunately, the meeting I was due to have with Kwasi Kwarteng yesterday he wasn't able to attend, so we're rearranging that to take place in the coming days. That's an important engagement, and the initial correspondence between our officials is genuinely constructive. There are many areas where we disagree with the UK Government, but we recognise that this is an area where we would all benefit from a constructive approach, because we recognise that we each have something to add and to gain, and it is a welcome shift in honesty from the view of the UK Government a few years ago about the steel sector. There is now what I believe is a more positive view for the future of the sector, and it's important that we take the opportunity that that offers.

That also will lead ahead to the work that is being done by both businesses and trade unions—so, the Steel Council group of employers. So, UK Steel, the group of employers, they've tabled proposals to consider around moving to decarbonising the sector, and they're now working through that with trade unions. So, we may get a more unified offer from the sector itself, from both sides, to understand how that transition could be made, and how to invest in a way that doesn't sacrifice lots of jobs. So, I'm looking forward to the Steel Council due to take place over the summer, where we can have an update on the proposals there and the work that our officials are doing to try to support that, and you mention a number of areas that I'll come on to where that can be helpful. I have, as well as meeting with UK Steel overall in the Steel Council, met Welsh producers, as well as the trade union side already.

You mentioned the important point about electricity supply that I dealt with in my statement. If we can both maximise and improve the supply, we have really significant opportunities in Wales with renewable energy, but also an unfinished conversation about the role that the nuclear industry could play about the way in which we can generate electricity itself. We then have significant investment choices to make, or rather together with people responsible for investing in the grid, to make sure that we can actually deliver that increased capacity to where it's needed, both to steel and other sectors as well. And that's been a feature of the conversations I've had with a range of people, whether they're engaged in the renewables industry, or indeed in battery supply as well. So, we're already working with Ofgem and network owners to have a shared understanding of what the grid will need to look like by 2050, and to make sure that both planning and spending decisions can be aligned to make sure that capacity is there and made real.

And when it comes to steel research, we already support a range of research initiatives here in Wales: the research we've made into Swansea University, but also that work alongside a range of other people, so the Steel and Metals Institute in Swansea is recognised across the sector for the value that it adds, but also the work that Swansea are doing in collaboration with both Sheffield and Warwick universities, and that is on the basis of UK funding—research council support. So, there is already work that is looking at how we do that, and I'm really pleased to say that that's supported by our major manufacturers here in Wales, at Tata, Celsa and elsewhere.

You make an important point about procurement, because it's one of the issues that are regularly raised by steel producers. Part of their concern was, for example, that in high speed 2 line, only about 25 per cent steel being used was UK sourced and produced. There's a challenge about what our rules say about whether it's UK sourced, where it can come in from another part of the world but be sourced from a buyer within the UK, or UK produced, which, of course, is different. That's part of what we're working through in implementing the steel charter, so there's work and there's progress being made. There's more for us to do, but here in Wales we've already got a 10-point plan for improving public procurement, and that certainly does look at where the steel comes from in new development projects, and I'm pleased to say Transport for Wales, for example, are fully signed up. So, as they expand their operations and the opportunities to expand track, which they are looking at as part of their procurement strategy, how they look for British-produced steel as part of it, because procurement can be a really big driver for a genuinely sustainable sector and one that takes account of how steel is produced in the first place, how it gets to the point of entry within the UK, or, actually, if it's produced in the UK, how it's produced as well. I think that will be a key challenge for the development of the vision, otherwise, we could end up badging things as green steel without taking account of the additional carbon in potentially importing it from other parts of the world.

Your point about apprenticeships is well understood. There is an honest challenge here, and I'll try and put this as gently, but as honestly, as possible. The way in which we deliver apprenticeships in Wales relies on what were European structural funds, and there's a significant portion of the funding for those that has come from that route. So, the choices that are made about how those successor funds are used is really material for the supporting of skills across the whole economy, including the delivery of apprenticeships, and if we end up having an approach that doesn't allow significant regional or national strategic projects, then that is a real risk including in this area. I should say though that the certainty about the path for the steel industry is part of delivering that certainty, to make sure that apprenticeship investment can be made. I would say though that the employers here in Wales, I think, have a good track record, and in the conversations I've had with them, they're certainly committed to ensuring they continue to reinvest in their workforce, to look for new workers to come into the industry, and also to understand where they come from, to make sure that it is a more diverse steel industry in its make-up and workforce.

Photo of Luke Fletcher Luke Fletcher Plaid Cymru 5:23, 6 July 2021

Of course, thank you to the Minister for his statement and the copy of his statement in advance. There's some good news in the steel industry at the moment. I'm told that the market is at a 15-year high, so now is the perfect time to look at developing the sector for the future, which is why I think this statement is very welcome.

A few questions and points. First of all, will the Welsh Government be publishing a long-term strategy for the development of research and development for the steel sector in Wales? I'm sure the Minister is aware that currently Tata Steel are looking to separate the UK and Dutch sides of the business. In fact, I believe that's out for consultation right now, so, as far as I'm aware, as part of any potential strategy, it would be important to see how this would affect the UK industry if it were to go ahead. Given that we've declared a climate emergency, R&D in particular will be vital to the sector, especially given that, as things stand, the path to decarbonisation for steel isn't as clear as other sectors, even though renewable energy, of course, is very reliant on steel in the first place. To that end, what discussions has the Welsh Government had with the UK Government on what funding would be made available, whether that's through co-investment or solely through the Welsh or UK Government?

Another important consideration, of course, relates to energy and pricing, as the Minister pointed out. I'd be interested to know what measures the Welsh Government will be taking to make prices more competitive for the steel industry, similar to what has been done already in Germany. It's welcome, of course, to hear that the Minister raised marine renewable energy, and I'm looking forward to seeing the Government's ambition here and, hopefully, that will lead to the Swansea bay tidal lagoon in the long term. I'd also be interested in knowing what role the Minister thinks community-led energy projects have, not only in creating more competitive prices, but also in increasing capacity on the local grid for the sector in Wales.

Further to this, what support will the Welsh Government be looking to give regarding recycled steel? The Minister alluded to it in his statement, but there currently seems to be an issue with the quality of scrap coming through, specifically issues surrounding contamination from dirt, plastics and other metals. I'm sure the Minister is also aware, of course—and I'm pretty sure he alluded, again, to it in his statement—of the SUSTAIN project, through Swansea University, which has yielded very positive results relating to the separation of metals in scrap. The project, of course, has an important role to play when it comes to recycled steel, so I would be interested to hear if the Welsh Government has had any further conversations with the sector and the team behind SUSTAIN to see how their work can be carried forward. 

And finally, I've mentioned it several times in the Chamber before, but what plans does the Welsh Government have to pursue a similar set-up to the Scottish Government in setting up a just transition commission? As I mentioned at the beginning of my contribution, industries like steel do not have a clear path to decarbonisation, and so workers in those industries are at more risk of job insecurity, going forward, as we look to decarbonise. I'm sure a strategy to safeguard workers would be gratefully appreciated. Diolch yn fawr.

Photo of Vaughan Gething Vaughan Gething Labour 5:26, 6 July 2021

Thank you for the questions. I'll deal with R&D not just in the steel sector but more generally, and this is one of the challenges overall for our economic future, because when it comes to the distribution of innovation and R&D funding, Wales doesn't actually, I think, secure a fair share of UK-wide funds at present. Actually, Scotland does better than its share at present, in population. That is one of my priorities, to change the way that works. And again, if the levelling-up agenda is to be made real, this is an area where the UK Government could actually do something about that. It's not as if we're asking the UK Government to invest in a part of the UK where there isn't the ability to make good use of that innovation and R&D funding. 

But Swansea is a good example of where that's already working. As I mentioned in my statement, the work that they're doing, alongside Warwick and others, is the SUSTAIN project. That's what I was referring to. And so it does show that there's more that can be done with the real expertise that exists around the industry here in Wales. So, I do want to see more R&D spend taking place in Wales, and there are collaborations where that already works and could be invested in further. And that will be really important not just for the points you make around recycling.

It's one of the things I have definitely discussed with the sector already. It has been raised by them in the individual meetings I've had with a variety of actors as well as collectively around the Steel Council, and we have a challenge—an honest challenge—across the UK that actually we are still exporting scrap at present. We're a net exporter. And that in itself, if we're looking at a greater use of electric furnaces—we've got to think about where the scrap comes from, to see it as a raw material, the quality of it. Now, at present, I don't think you could say to an exporting business, 'Out of the goodness of your heart, you should stop operating.' There's got to be some thought given to how to incentivise the route that currently leads to export leading to those goods being retained here for use within the UK as well as then making sure that we have high-quality materials for use within the sector itself as well.

That is part of what we're looking to address, and this is actually about the expertise that exists within the sector, about how we can do that. And it comes back to the point that I want to make about your point about whether there's a plan, whether we want to produce a strategy. Actually, on decarbonisation and a just transition, the two go together, because you could decarbonise steel production in a way that would cost lots of jobs very quickly, not just directly within the sector, but jobs that are reliant on it. And this is a particular issue for David Rees's constituency, with Port Talbot. And actually the challenge there is you can have a just transition that gives the time to think about how the technology is developed, and that then means you can actually retain lots of high-quality jobs but also the wider value that producing steel from the start actually gives you. Now, that does mean we need to think about what a just transition looks like, for workers and for the wider country as well. We'll need to understand what the broad plan for the industry is so that there is a plan to invest in and around, and that will lead to practical discussions between ourselves and the UK about the different levers and budgets we have to do just that. 

On your point about community energy, I'm sure that Julie James will have lots to say about the role community energy can have and the returns that can be made to those individual communities, as well as providing material additional amounts into the grid. And I'll just deal with, I think, your final point in everything that you've covered, and that is about energy prices. This has been a regular point of concern, and Members who have been here for some time will have heard previous First Ministers talk at length about the challenge that the steel sector has in the UK when there are much higher prices for energy to be paid by UK steel producers, compared to the main competitors in Germany and France, where it's on average 86 per cent more than in Germany and 62 per cent more than in France. So, those current prices are a real barrier to investment and it's only the UK Government that can unlock that and that is a direct challenge that's been made to the UK Government, not just by this Government but by people on all sides of the sector, and it's an issue we'll keep on having to come back to and to return to at each Steel Council, because that potentially puts off investment in the sector and the significant commitment that is needed to move to a genuinely zero-carbon future for the steel industry.

Photo of Jack Sargeant Jack Sargeant Labour 5:30, 6 July 2021

Diolch yn fawr, Llywydd, and I'm honoured to be the vice-chair of the cross-party group on steel. It's an extremely important sector for Wales and across the United Kingdom and I do thank the Minister for bringing this statement forward today. The Minister will know we have a proud tradition of steel production in my constituency of Alyn and Deeside and we celebrate 125 years of steel production in Shotton Steel this year. Local steel production in Alyn and Deeside is a must if we are to tackle the climate change emergency and produce the next generation of green products. For me, there are two ways we can help achieve this: one is becoming the first carbon-neutral site in the United Kingdom, and the second one is locating a logistics hub at the Shotton site to build the next generation of low-carbon modular homes.

With those two points in mind, Minister, will you accompany me at Shotton Steel for a visit to see the site, meet the dedicated and highly skilled workforce and their trade union representatives, to discuss just how Welsh Government can further support Shotton Steel's sustainable plans for the future?

Photo of Vaughan Gething Vaughan Gething Labour 5:31, 6 July 2021

I think there are two questions in there, Llywydd, as well as the invite. The question about the invite: in principle, yes, and I'll happily work with you to look to find an appropriate opportunity to come to Shotton. I think the other question is about how we look at what we can do to invest around that, what companies are prepared to do themselves, and what certainties the Welsh Government can provide, and you'll have heard Julie James talk about modern methods of construction on a number of occasions in the past, both before the previous election and since the election as well. I think there are real opportunities in the way we see different parts of Government activity and how they can benefit the industries here in Wales, so I'll happily take up the formalities of the diary engagements and work with you to have a visit to Shotton and broader engagement that I look forward to continuing with in north Wales.

Photo of Tom Giffard Tom Giffard Conservative 5:32, 6 July 2021

Thank you, Minister, for your statement, and can I also welcome the constructive tone I think you've given in your statement and your answers so far? I'm sure you'll agree with me that a future vibrant steel sector in Wales is contingent on Welsh Government and UK Government working together where it can, so I'd like to welcome the Welsh Government's commitment to do what it can to make the steel sector greener. And for the steel sector in Wales, as you said, that will mean doing things differently and embracing different practices. So, I'm much interested in your answer to Luke Fletcher's question, where you talked about a transition to that greener form of steel production and what that would actually look like. So, as you kind of said, I'm sure the last thing you would want is for any changes to threaten jobs in places like Port Talbot in my region or undermine the competitiveness of the steel industry on the international stage. So, can I ask: how do you envision that transition happening and what measures will you take to ensure that any changes that take place in the sector not only have decarbonisation and green jobs at their heart but also the protection of the workforce and the jobs in places like Port Talbot?

Photo of Vaughan Gething Vaughan Gething Labour 5:33, 6 July 2021

Well, these are exactly issues that I have had regular conversations with not just David Rees about in previous Senedd terms, but at the start of this one and indeed in my conversations with Community, who are the lead steel union on the Steel Council. There's a range of high-quality jobs at stake within the industry and that's why you need to think very seriously about what happens with the future for either carbon capture and storage or hydrogen technology as well. And here, the UK Government has a real opportunity to invest to make sure that there is a real future for those jobs, and that's the honest challenge.

So, a few years ago, it didn't look like there'd be the activism necessary from the UK Government for this to happen; there does now appear to have been a shift in priority and policy, which is welcome. But it's got to be seen through. So, the conversations that are taking place now need to see direct investment. And the work on the potential hydrogen technology in north-west England and north-east Wales is really welcome, but actually, given where the blast furnace is in Wales, when you see what does that mean for how technology can be deployed within the southern part of Wales and to have an understanding about how near that technology is for delivery, whether it's hydrogen or carbon capture, to make sure you decarbonise the way that steel is then produced.

So, that's the conversation that we're having and, in broad terms, there's nothing secret about that. The challenge though is how do we get there, and then the choices that the UK Government are prepared to make to make sure that investment happens, because this is an area where only they can choose to invest at the scale required to make sure that it happens. And in doing that, I think they'll find a steel industry that is ready and prepared to respond, and in a way that meets the way that the trade union side are understandably anxious to make sure that high-quality jobs are not lost in the transition. And that's where I'd want to be, and that's certainly the position of the Welsh Government, and it's well understood by people on all sides of the debate. 

Photo of David Rees David Rees Labour 5:35, 6 July 2021

Can I thank the Minister for his statement this afternoon and for the answers he's given? Because he's made it quite clear he fully understands the challenges that are facing the steel industry today, with the move towards decarbonisation, and your recognition that it will cost jobs if we're not careful, if we don't do it correctly and rightly, and the time taken to get the new technologies in place and how we process that.

So, can I ask you a couple of questions quickly? What discussions have you had with Welsh steel companies in relation to their strategies for going forward, and how does the Welsh Government's plan dovetail with their strategies to ensure that we work together? And what discussions have you had with the UK Government about the funding, because we talk about the investment, and this funding is not going to be small? There's going to be large funding needed to actually deliver on the different pathways for decarbonisation to ensure that these businesses are sustainable for the future—you've mentioned electricity—because, remember, arc furnaces will use a lot of electricity, and we need to look at how we manage to actually deliver that, at the same time keeping green. 

Photo of Vaughan Gething Vaughan Gething Labour 5:36, 6 July 2021

I think those are entirely fair challenges, and I was just looking at the Deputy Minister for Social Care when talking about the energy demands from these companies—because, of course, as Cardiff Members will know, a huge amount of the demand that goes into electricity here in Cardiff comes from Celsa—and what that practically means for the ability of the grid to keep on doing that. So, there are very real practical challenges for the industry, but, actually, for all other activity as well. And that's why earlier I was referring to the need to have a plan with Ofgem and others to understand what the grid will need to look like in 2050. And you're right, these are significant sums of investment that need to be made, but there's real opportunity in doing that as well—not just the opportunity to make sure that the steel industry is more sustainable, but what that means in terms of enabling other economic development to take place as well, and the real opportunities that we have in Wales in the way that we produce electricity with all of our natural resources as well. That's been part of the conversation that I've already had with the UK Government, and my officials have had. It's part of the conversation I want to have with the Secretary of State for the Department of Business, Energy and Industrial Strategy when I do have a meeting with him directly, and the regular conversations that we already have had with BEIS Ministers. 

Now, the challenge then is whether we see, in the run-up to and beyond COP26, choices being made to allow that investment to take place to allow a more decarbonised steel sector to emerge. It's also very real for the challenges around the comprehensive spending review at the end of this year, because if we're not prepared to see UK-wide investment in this through that period of the next spending review, the time frame to be able to do that successfully will be ever more tight, and then more risk for the jobs that Tom Giffard was talking about. And, actually, we could see some of those jobs disappear if we don't see investment choices being made, because there's going to be a need for certainty for the industry to invest itself, to understand what the Governments are doing as well. And that has very much been part of the conversations I've had with Welsh steel-producing companies already. In those direct conversations, Welsh steel companies make it clear that they enjoy, and want to continue enjoying, constructive relationships with their trade unions on site, because the members and their unions understand the need for the sector to change, but to change in a way that doesn't sacrifice their jobs in the transition, to see more investment in the future—the point made about apprenticeships, the possible creation of future jobs and the way that the steel sector can look to the future with some confidence and a genuinely sustainable future, and its wider economic significance.

So, I'm positive that the steel companies themselves have a strategy for the future that will buy-in their own workforce, and it's then about the Government being able to get alongside that to make the significant investments needed. And, at this point, I think we can have some cautious optimism about that. 

Photo of Laura Anne Jones Laura Anne Jones Conservative 5:39, 6 July 2021

Minister, right across my region of South Wales East, communities have been shaped by Wales's industrial past and present. I'm pleased therefore to see the statement reaffirming your support for Wales's steel sector, and recognising the vital role that it will play in securing our low-carbon future. 

But, Minister, from an educational angle—and you've already touched on it from my colleague Tom's question, and Luke's—what steps are the Government taking to make sure that the current and future workforce of the steel sector are futureproof and that they have the transferable skills and will be re-educated in those that they will need to have to continue to adapt and manage this transition to low-carbon production and the new ways of working? Thank you.

Photo of Vaughan Gething Vaughan Gething Labour 5:40, 6 July 2021

Well, this is really a point about how we continue to invest in the workforce. And this is an area where the job that you'd have done in the steel industry 20 years ago isn't necessarily the job that you're doing today and won't be the job that you do in 20 years' time, and employers recognise that themselves. And, again, it's recognised not just by employers but by the trade union side as well—to constantly need to look again at how the job is done and the skills that people need. And that's why I think there is optimism about the fact that those companies want to invest not just in their current workforce but in their future one. So, it's partly about the skills you need to enter that workforce, to become an apprentice, to get taken on, but actually then what will you need to carry on doing.

So, I think we're dealing with employers that recognise they've got responsibilities to be able to invest, and it's why I make the point about how European successor funding is used. If we can't use that in a way that allows us to have proper strategic investment in skills in different sectors of the economy, we could end up spending money poorly and not actually advantaging those businesses and workers to have the sort of future that we would all, from today's statement, want them to have. So, there are real choices to be made that aren't simply about the Welsh Government and the UK Government disagreeing—there is a real, practical impact in the choices that we make about skills investment.

Photo of John Griffiths John Griffiths Labour

Minister, among the areas of Wales with strong steel traditions, of course, is Newport, and my constituency of Newport East, with the Llanwern site, for example, and, more recently, Liberty Steel. Liberty Steel, of course, is in considerable difficulty at the moment, and I'd just like your assurance, Minister, that you are involved in that situation at Liberty, in terms of keeping a watching brief on developments, and of course working with UK Government and the trade unions as well as Liberty and potential buyers. And one key point I think, Minister, is that Liberty acts as a responsible seller and that there is a transparent process that fully engages our trade unions, and that plans of any potential buyer are scrutinised, including their commitment to the workforce and, indeed, the industry. These are crucial matters to my constituency of Newport East, and I'd like your reassurance on these matters.

Photo of Vaughan Gething Vaughan Gething Labour 5:42, 6 July 2021

I'm happy to give the Member the assurance that we continue to stay as engaged as we could and should be with the company in discussions about their future. There are about 180 jobs between the two sites. Those jobs are valuable, and we want to be able to protect them and to see them have a real future, moving forward. I know that I have had conversations with your constituency neighbour, Jayne Bryant, on the same effect, and, if it's helpful, I'll happily have a further conversation with you about what we are doing to try to support the workforce at Liberty Steel, as they look to move forward in the future.