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Urgent Question: Tata Steel

November 30, 2016

11 speeches by…

  • Elin Jones
  • Kenneth Skates
  • Adam Price
  • David Rees
  • Suzy Davies
  • Bethan Jenkins

Kenneth Skates

Yes, I firmly believe our steel industry has a sustainable future in Wales, and we are fully committed to doing all we can to achieve this. However, we will not respond to media speculation as Tata explores options for the future of the plants in Wales.

Adam Price

The Cabinet Secretary’s obviously referring to the very worrying report from Reuters yesterday based on an e-mail circulating among the trade unions and other sources. Could he say at what point he was aware of the possible proposal to close one of the two blast furnaces at Port Talbot and if he raised this in his letter to the new interim chair of Tata, Ratan Tata? Could he also say: the First Minister has previously indicated that, in the absence of sufficient long-term guarantees to primary steel production, the Welsh Government would ask the Secretary of State for Business, Energy and Industrial Strategy to intervene to prevent a merger under his public interest powers—is that still the position of the Welsh Government? The Cabinet Secretary has previously referred to the need for a long-term guarantee. Can he state on the record that three years absolutely would not be a sufficient guarantee? The report referred to Tata and ThyssenKrupp taking a minority stake and the possibility of a third investor. Would the Welsh Government, in conjunction with the UK Government, be prepared to be that third investor, subject to appropriate guarantees? Finally, if all these avenues fail and acceptable guarantees are not forthcoming from Tata and ThyssenKrupp, would he, as a last resort, be prepared to temporarily nationalise Port Talbot, as the Welsh Government will be able to do, according to analysis by the House of Commons Library, under the terms of the Wales Bill currently before Parliament?

Kenneth Skates

Can I thank the Member for his question and say that I do understand the concerns that will have been presented as a consequence of recent media reports? But there are many, many reports that are circulating at the moment, including some that are more positive. I reflect on one just on Friday, for example, in ‘The Guardian’ that suggested that Tata was looking imminently at announcing that all 11,000 jobs would be secure for at least a decade. I therefore think it’s not the role of Welsh Government to provide a running commentary on media speculation, but instead to stand firm in the position that we take in terms of potential intervention. The Member is absolutely right to say that three years of guarantees would be insufficient. We share that view. We have been, as the Member is aware, in discussions with Tata for some time regarding a significant package of support that would be compliant with European state aid rules. That support would be conditional on Tata agreeing to certain criteria. It would go beyond three years, it would include at least two blast furnaces being operated, and it would also include local management control, which in turn would then enable the UK and Welsh steel interests in Tata to identify new market opportunities and also to develop new products and innovation that would put it on a sustainable footing for the future. It’s my firm belief that the best assurance of sustainability for Tata is the development of a competitive business, which in turn requires investment in research and innovation and in modernisation of those plants that are contained within the UK Tata Steel family. The Member raises the question of actions that could be taken by the UK Government in regard to a potential merger and I would say that the UK Government should do all it can to secure the long-term production of steel in the UK. It is unfortunate that, in the autumn statement, insufficient regard was paid to immediate action and intervention that could be taken, but I think the Member is right to say that the UK Government should consider all of the levers at its disposal to ensure that there is security of employment at Tata Steel sites right across Wales and indeed the UK. In terms of the support that we would offer, as I say, we would expect the conditions to include more than three years—as a very minimum, five years—but also the guarantee of at least two blast furnaces. I’m confident, as I say, that the direction of travel that’s been taken by the steel sector in Wales is one that we can be proud of in the last 12 months. All steel manufacturing sites are showing positive results but, within the Tata family, I think the journey that has been taken as part of the bridge has been incredibly impressive and bodes well for the future.

David Rees

Can I thank the Cabinet Secretary for that set of answers, because I think it’s important that the steelworkers and people in my community understand the strong position the Welsh Government is taking on this position? Since the start of 2016, we’ve heard very bad news. It started with job losses, then the possible closures. Steelworkers in Port Talbot, their families and their whole communities have been living with a sword over their heads for this whole 12-month period. The speculation—from positive news on Friday to less positive news yesterday—is not doing any good to the morale of the workers or their families. It’s important we get clarity on the position of the steelworks and the future of our steelworks. In that sense, can I join Adam Price in saying: will you be making strong representations to the UK Government to ensure they take positive action? I’ve yet to hear Theresa May actually say anything positive about steel making. It’s about time she did and about time she committed to the UK steel industry. That is important—and therefore Greg Clark similarly—to ensure that we have a strong voice here and the UK Government is prepared to back it up, because they control issues on pensions, and it’s been known that the Tata joint venture discussions with ThyssenKrupp are dependent on the pensions being resolved. So that’s an important area. It’s also about energy costs, to show that there is a future for steel making. But perhaps you can go a bit further than the UK Government and actually seek a meeting with Ratan Tata to actually say to him directly how this affects communities and the steelworkers, and the commitment they have given to the industry across recent months, and that they should be rewarded for that commitment and not punished through all this speculation.

Kenneth Skates

I couldn’t agree more with the Member. I think he speaks eloquently about the need to capture security at a time when media speculation is causing something of a rollercoaster ride of emotions within many families and households that rely on the steel sector. And I will most certainly be requesting a meeting with Ratan Tata to follow up my letter to him, which was sent yesterday. The meeting that I had with the chief executive back at the end of September was very positive, but I do wish to ensure that our message is conveyed at every opportunity to the highest level of Tata management: that we are ready to support them if they are prepared and ready to make the right decision. I will be meeting tomorrow with the Secretary of State for Wales, where I will relay the message from both sides of the Chamber that it is essential the UK Government acts where it knows it can to secure the long-term sustainability of the steel sector in Great Britain, and especially in Wales.

Suzy Davies

Thank you, Cabinet Secretary, for your answers to Adam Price and David Rees, and thank you also for what I’m now taking to be your definition of what a sustainable future for steel might mean, which includes the retaining of the two blast furnaces and longer than three years in terms of the support that you’re prepared to provide. If it emerges that a guarantee can’t be given to save both blast furnaces and won’t be given to secure more than three years’ sustained investment, does that mean that you will be reducing the support that you’ve already committed to giving Tata Steel? In your answer to me in questions in July, you indicated that any Welsh Government support to Tata was conditional on sustaining jobs and sustainable steel production for the short and long term, but also that you would work with any alternative buyer—and, of course, the potential of ThyssenKrupp isn’t one that appeals to all of us—but that you would work with them if they would guarantee a sustainable future for the Welsh steel industry. So, if that guarantee doesn’t end up being given, does that mean that existing support will be reduced? Secondly, I appreciate what you say, that you don’t want to respond to every single press release, but I’m intrigued to know what’s the letter that which you wrote yesterday. Obviously, you’re seeking reassurances on what we’ve heard recently, but are you also seeking reassurances that the press speculation of a $500 million investment in the plant would be forthcoming? And then, finally, as my other questions have already been answered, last week, or the week before, in response to the question raised by Bethan Jenkins, you indicated that the 49 new full-time job equivalents that had been announced for Tata were part of a strategic plan from Tata in terms of employment, rather than just doing a bit of backfilling or emergency cover. And I’m wondering whether the press speculation that we’ve heard today about job losses seems to contradict that comment. Perhaps you could just give us some clarification on that.

Kenneth Skates

Well, it would seem to contradict it. What we do know—. The facts are that there is a strategic plan at the Port Talbot site and, as a consequence, a significant—more than four-dozen people were, or are, in the process of being recruited directly by Tata in Port Talbot. I am happy to publish my letter to Ratan Tata once he has received it, and I would hope that it will be received, if not today, then in the coming days, so that Members are aware of the assurance that I have given him of our position in being willing and ready and determined to work with Tata to secure the long-term future of Port Talbot and the other steel sites in Wales. The Member raises a question about hypothetical scenarios whereby Tata might seek only three years of conditions. We’ve said our minimum is five years. That is an absolute minimum. And we are still in contact with other potential interests, including, for example, Excalibur. And our position is: we will work with others if others can secure the long-term future of Port Talbot and the other steel facilities across Wales.

Bethan Jenkins

Thank you, Cabinet Secretary. I’m particularly concerned about the pension scheme, as has been mentioned previously in this debate. Tata bought Corus, as you will know, for more than it was worth and just before a recession, and it should have done the due diligence and known the liabilities, although those of us who have been involved in other pension issues such as the Visteon pensioner campaign will know that even a £700 million deficit in a scheme with obligations of £15 billion is really not all that great, and less so now that it is claimed to be just £50 million. Do you agree with me, then, that this is what makes ThyssenKrupp’s involvement so galling? Here is a company where a €9.7 billion pension scheme is two thirds wholly underfunded. That’s according to Bloomberg, which also said that the German group ‘makes more money with elevators than it does selling steel.’ Does the Welsh Government really want a company with a pension underfunding of more than €6 billion and such weak growth attaching itself to Welsh steel, and has it spoken to Tata Steel specifically about these issues?

Kenneth Skates

I thank the Member for the question. I’ll say my concern is the long-term employment of the people who work in the steel sector, and as far as pensions are concerned, Tata has restated that it is seeking a solution for the British Steel pension scheme. Again, we’d urge all parties towards achieving a satisfactory solution that is in the best interest of all members of the scheme.