12:37 Jonathan Reynolds (Labour)

Steel is essential to delivering on our net zero goals and building the next generation of green infrastructure, and I know that Labour Members are passionate about that. That is why, under our steel strategy, we intend to use the Procurement Act 2023 to drive economic growth and account for social value in the things that the Government buy and the projects we commission. Work is already under way to increase the role of steel as we build our manufacturing base.

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12:47 Greg Smith (Conservative)

It is also no surprise that, once again, Labour is presiding over the demise of our steel sector. Output fell by 47% under the last Labour Government, and 56% of jobs were lost. Today’s deal means that 100% of output will go at Port Talbot. An electric arc furnace will take five years at best to get up and running; some suggest that it will be eight to nine years before a single new job is created, if we see any new jobs at all. As the statement says, this is a transition, but it is a heartbreaking transition for thousands of people—a transition from being in work to being out of work. In his discussions with Tata, why did the Secretary of State not take steps to ensure that the blast furnace will not be closed before the new electric arc furnace opens? Is this not the New Labour playbook—scrap jobs, scrap production and become reliant on higher-polluting countries for imports? That is not what I call decarbonisation. I must say, I feel a little sorry for the Secretary of State, who has been dispatched here to announce these spending decisions just a day after Labour’s day of shame on winter fuel cuts for pensioners.

For the benefit of new colleagues, the Government, when in opposition, were committed to £28 billion a year of borrowing to fund their decarbonisation plans—a price tag that has magically disappeared, although the target has not. The Secretary of State made promises about that to the steel industry, but where are those promises now? Where is that money? Is he still battling the Chancellor? We know that Labour’s unions are quite successful in squeezing money from the Treasury, so maybe he can send them to stand up to the Chancellor if he is having problems.

Will the Secretary of State assure us that his steel strategy will be fully aligned with a wider industrial strategy, and will take a view on steel’s importance to our economy and society as a whole? Will it aim to balance the need for infrastructure, national security and net zero commitments? Will he assure us that he will bring the strategy to this House by spring next year for scrutiny and debate, so that the industry can finally move on with certainty?

I am grateful to my hon. Friend for his question and to you, Mr Speaker, for your very skilful introduction. He is right to talk about that wider business environment, and specifically asks about the carbon border adjustment mechanism. We have inherited this situation of the UK being out of line with the EU. Obviously, because our carbon prices are lower, there is a potential carbon barrier to UK exports to the single market. I can tell him that we are looking at that. The carbon border adjustment mechanism is a key part of a wider policy environment that must deliver decarbonisation, which is not deindustrialisation. We must recognise that the current policy environment is not doing that in the way that any of us would want.

The loss of virgin steel production in Wales is a serious economic blunder that will devastate the community of Port Talbot. Unions have previously called for additional investment of £683 million in Port Talbot to save jobs. Meanwhile, Germany has invested €1.3 billion in decarbonising steel in one region alone this year. Can the Secretary of State explain why he will not match the ambition of the workers here and Governments of other countries to save Welsh steel?

The right hon. Gentleman will know that this has long been a campaigning issue of mine. I have talked repeatedly about the relationship between decarbonisation and the potential for deindustrialisation, and the policy environment in this country not being fit for purpose to deliver that. On the wholesale electricity prices of energy-intensive industries, for most of the time under the previous Government the UK’s prices were wildly uncompetitive. There was some movement, as he knows, with the supercharger policy near the end. More can be done, and there is an even more exciting longer-term position that we could get to. He will have to wait for the Budget, and maybe the spending review, for some more detail on that, but this issue has to be an essential priority for the competitiveness of the UK. We have to recognise that a lot of the industries that we will transition to are very heavy users of electricity—not just clean steel, but for instance gigafactories. This will be a key tool in the future that we have to do better on than we have in the past 14 years.

I congratulate my right hon. Friend on securing this improved deal. I know how hard he has worked over many years, not just in the short term before and since the election, as he referred to in his answer to the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith). On procurement, will there be a presumption in favour of using British-produced steel both in nationally significant projects in green energy and in defence? That would be in stark contrast to what the previous Government did, in particular with the fleet solid support contract.

The truth is—and the country needs to know this—that the thousands of jobs and the loss of the blast furnaces announced today is because of both main parties’ obsession with net zero. The reality is that blast furnaces have been losing money because of high energy costs caused by very expensive renewable energy, but we are where we are. In the event that Tata does not build the electric arc furnaces that are being promised, will the Secretary of State guarantee the House that the taxpayers’ money will be returned to the taxpayer?

I thank the Secretary of State very much for his statement, and I welcome his endeavours, which I think we all recognise, to create firm foundations for the sector as it moves forward. I also recognise his commitment to Harland & Wolff, to which he referred. That is indeed great news, not just for workers but for the construction sector in Northern Ireland. However, the steel industry faces the problem of affordable energy, which he mentioned in his introduction. Will he safeguard the long-term sustainability of that and other industries by immediately addressing the energy price crisis and implementing the necessary long-term green energy fixes?

I am extremely grateful to the hon. Member for his support for what we have announced. Having a competitive environment is an absolutely key issue. I am already having extensive conversations with the Chancellor and key Cabinet colleagues, including the Secretary of State for Energy Security and Net Zero, about the way to do that not just in the short term but in the longer term, when we will clearly have a significant renewable energy base. There are a lot of exciting options available, including in how we use some of that capacity in areas of low consumer demand. I can tell him that that is a key priority for getting this right in future.

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