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

Part of the debate – in the Senedd at 5:17 pm on 6 July 2021.

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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.