The Assembly met at 13:30 with the Presiding Officer (Dame Rosemary Butler) in the Chair.
Y Llywydd / The Presiding Officer
The National Assembly for Wales is now in session. In accordance with Standing Order 12.3, at the request of the First Minister, I have summoned the Assembly as a matter of urgent public importance for a statement on Tata Steel and I call on the First Minister to make the statement. Carwyn Jones.
Thank you, Llywydd. Can I thank you for recalling the Assembly at an important time in our economic and social history?
Llywydd, I believe that there is a future for steel making in Wales and, working with others, the Welsh Government is doing everything we can to secure that future. Port Talbot, Llanwern, Shotton and Trostre have been producing high-quality steel for years. Whole communities have grown up around those works and the livelihoods of thousands of families depend on decisions being taken now. Those families and those communities are the first concern of this Government, now and in the future.
Llywydd, I have one simple message for the people of Wales and the UK Government. These plants cannot close. Welsh steel—British steel—cannot be allowed to die. These plants are vital to the future of the United Kingdom’s interests. Britain cannot face a twenty-first century where we are dependent exclusively on imported steel. We need capacity to make our own steel and to build our own future.
Tata’s decision to put their plants up for sale was deeply disappointing. The board rejected a turnaround plan presented to them by their European management. I believe that Tata’s loyal and efficient workforce deserved the chance to implement that plan and make it work. The plants are well managed and the workforce has done everything asked of them, and more. The current situation has been created by distorted conditions in the global steel market, and not by any inefficiency on the part of the workforce.
Llywydd, I have to say that I’m disappointed that the UK Government has failed to tackle the underlying difficulties in UK steel production in a systematic way. We’ve stood alongside the steel industry for years complaining about high energy costs and steel dumping. UK Government action thus far has been slow and inadequate. It’s clear that they’ve not driven a hard enough bargain at EU level to protect our products from the effects of market-distorting steel dumping. Instead, we discovered at the weekend that it’s not the European Union holding the UK back, but the other way round—the UK Government has been holding back the European Union.
We must deal with what’s in front of us. The Welsh Government is working closely and tirelessly with Tata and the UK Government to do everything we can to secure a viable and sustainable future. We are in close touch, too, with the unions, who are playing a very constructive role.
Llywydd, three things must happen to secure the future of the plants: firstly, if a buyer cannot be found within the sales period, the UK Government must take the plants into public ownership until a buyer can be found. The Welsh Government is willing to contribute from our resources the money we’ve previously pledged in support of a turnaround. Secondly, the UK Government needs to negotiate a realistic tariff regime at European Union level to mitigate steel dumping. Steel producers in the UK need to operate on a level playing field with the rest of the world. Thirdly, we do need to see a long-term strategy to reduce energy prices and improve energy efficiency for energy-intensive industries in the UK. Without these measures, the underlying problems will re-emerge later and undermine the future of the plants, whoever owns them. What we need, then, is a sustainable plan for the long term.
Llywydd, Tata is preparing a sales prospectus for their operations. They must allow sufficient and realistic time for interested buyers to consider the offer. This should be months, not weeks. As they prepare to withdraw from Wales, Tata must have regard for its legal and moral responsibilities. Tata has duties and obligations to its workforce and steel communities. It is a company with a global reputation for corporate social responsibility and it should not surrender that reputation cheaply.
We owe it to the workforce at the Tata plants to conduct our debate based on honest facts. Any proposed solution must be viable and durable. As I’ve already said, I would strongly support a transfer into UK Government ownership, if necessary, while a buyer is being found.
But on one thing I have to be clear: the Welsh Government simply does not have the resources to own or manage the Tata plants. We do not, and no-one should mislead the workforce into thinking otherwise. But we are working closely with the UK Government and we are prepared to contribute from Welsh Government resources to help secure a long-term solution.
Let me move on, Llywydd, to some specific actions. We have a team of officials in London today working on the detail with the Department for Business, Innovation and Skills and others. I spoke to the Prime Minister last week and I’m talking to him again tomorrow. I repeat: we are committed to working with the UK Government to do everything we can to secure the future. There have been some early expressions of interest in Tata’s plants—I’ve spoken to one potential buyer this morning. How we deal with these expressions of interest is the substance of our joint work with the UK Government.
In January, we established the Tata taskforce, chaired by the Minister for Economy, Science and Transport, bringing together unions, local authorities and other partners to look at ways of supporting our steel communities. The taskforce met this morning and we have announced that we’ve established the Port Talbot Waterfront enterprise zone and we’ve today announced that it will be chaired by Roger Maggs, a founder of the investment firm Celtic House Venture Partners. I can also announce that we are launching the enterprise zones business rates scheme in Port Talbot Waterfront. The scheme is open to applications from this week until 30 September. It’s geared towards generating growth amongst small and medium-sized enterprises and will provide an additional stimulus in the area.
Llywydd, I expect there will be support for our steel communities in every part of this Chamber. As I said at the outset, the workforce, their families and their communities are at the front of our thoughts. But we are driven not just by sentiment. We are not arguing to prop up a dying industry. Wales needs steel. Britain needs steel. Both as First Minister of Wales and a member of the wider British political community, I say that we cannot contemplate a future without a domestic steel production capacity. Steel is vital to our long-term strategic interests, both for our economy and our defence. A United Kingdom without steel making is a United Kingdom that is enfeebled and smaller in the world.
Llywydd, steel production is not just about statistics and the economy, vital though they are: it’s a fundamental part of who we are as a country. So, the clear message that needs to go from this National Assembly today to all our steel communities—Port Talbot, Llanwern, Trostre and Shotton—is that we stand beside you, shoulder to shoulder. [Applause.]
Y Llywydd / The Presiding Officer
I now call on the leader of the opposition, Andrew R.T. Davies.
Thank you, Presiding Officer, and thank you, First Minister, for your statement this afternoon. Thank you, Presiding Officer, for agreeing to the recall of the National Assembly for Wales in these extraordinary circumstances, but it’s very, very understandable why. We stand shoulder to shoulder with the steel communities the length and breadth of Wales, but, indeed, the length and breadth of the United Kingdom. It is vital that we maintain the steel-producing capacity of this country and we maintain capacity at Port Talbot, Trostre, Llanwern and Shotton, because, without steel, as you quite rightly pointed out, First Minister, this country will become enfeebled, and it is vital that, economically, we keep that domestic capacity.
However, we do understand that there are international whirlwinds around the steel industry that do also need to be faced and challenged, and that is why it is so important to work Government to Government, institution to institution, working with the European Union as well to make sure that the European market does have the tariffs put in place that are required to have a level playing field. Tariffs have been introduced recently that have helped certain sectors of the steel market, but it is vital that discussion continues to make sure that that level playing field is introduced into the UK and, importantly, the Welsh steel market.
I would pay tribute to the workers at all the Tata sites, but, indeed, all the sites that produce steel here in Wales, because we have Celsa here in Cardiff and Liberty steel in Newport as well, who have also faced their own economic challenges and, obviously, will be looking on with interest to see what support is offered to the entire steel industry. But, importantly, the current issue is how we succeed in getting a successful sale of Tata’s assets.
You, First Minister, have, on many occasions through the fourth Assembly, emphasised the working relationship that the Welsh Government has had with Tata Steel, and indeed you have been out to visit the Tata headquarters on numerous occasions. So, it is important, and my first question to you is: could you explain how that working relationship will continue with the UK Government and Tata Steel, importantly, to secure the time and the space to allow potential purchasers to come forward and succeed in those negotiations to secure the futures of the plants, not just in Port Talbot but at Trostre, at Llanwern and Shotton as well? Because it is the whole package that we need to be looking at here, because one job lost is one job too many lost in any one of those communities. Importantly, once we’ve established that working relationship, we need to understand the timescale in which a sale might be coming forward. Obviously, there will be the expressions of interest period, which, as I understand it, is a three to four week period, and Tata Steel are bringing forward their prospectus as we speak this week, I understand. What discussions have you had with Tata Steel as to their flexibility around that expressions of interest period that will be so critical in giving confidence to future purchasers of any part or all of the steelwork operations here in Wales?
Today, you have talked extensively about what the Welsh Government could put on the table, or you’ve said about the Welsh Government putting support on the table, albeit within the means that you have available to you as a devolved administration, and that’s why it will be so vitally important to work collaboratively with the UK Government, who will, in this particular instance, be able to put so much more onto that table. When you hear the comments from the Secretary of State yesterday, and the entire Government over the weekend, we can be confident that substantial resources will be made available. But could you make clear to the Assembly this afternoon what exactly the Welsh Government will be making available in a meaningful way so that we can understand the offer that is available to prospective purchasers?
In your statement this afternoon, First Minister, you’ve touched on business rates. This is an area that has been long called for from Tata Steel—progress to be made in this particular area. Regrettably, progress was not made in the given time frame that could have facilitated some support leading up to this decision. You’ve made the decision today, obviously, around enterprise zone status but, specifically, you’ve mentioned that it would affect small and medium-sized businesses. Obviously, this particular package, I presume, will not be of much significant interest to Tata or the successful purchaser. Are you able to offer any comfort around business rates in a wider context that the Welsh Government is considering at the moment that could be part of the offer that you would be putting on the table to assist prospective purchasers of any of the Tata Steel provision in Wales?
Public procurement is a big area that could always be ramped up and, obviously, major infrastructure projects. I heard you talking at length this morning on the radio, First Minister, around the Swansea tidal lagoon concept. I—you will know—and the Welsh Conservatives are fully supportive of the tidal lagoon concept, and we very much welcome the UK Government’s movement on this, and hopefully progress will be made. Obviously, as First Minister, one of the big issues that could be brought forward by a Welsh Government is the M4 relief road, and that could also stimulate demand substantially for Welsh steel. You obviously have had the ability to do that over the last five years. For whatever reason, that hasn’t come forward. Are you able to give us some encouragement as to what specific measures the Welsh Government is taking around public procurement to assist the steel industry here in Wales?
I want to reiterate again, from the Welsh Conservative benches, and I believe passionately from the efforts that the UK Government are undertaking, that steel is absolutely vital to our long-term economic and national security. We must have a domestic steel-making capacity in the United Kingdom and in Wales. I will work tirelessly with any politician from any political party in any institution to make sure that we stand up for the communities that are affected by this announcement, we make sure that a successful outcome is concluded in the negotiations, and that, long into the future, quality Welsh steel is on the international and domestic markets so that we can proudly carry on the great heritage that this country has had in steel making over many, many decades.
Could I thank the leader of the opposition for his comments and the tone that he adopted? He has questions there, of course, which I’ll look to answer. The relationship with Tata has been good over the last few years. When I went to Mumbai they announced an investment of £400 million. They delivered on that. It’s right to say that the situation at the heavy end, in Port Talbot particularly, is something that has happened fairly recently. Just over a year ago, Port Talbot was beginning to break even, but the world steel market has taken a turn for the worse, as we know, and that has affected Port Talbot particularly badly. But we’re not talking about a situation here where Port Talbot will always be in a situation where it loses money. It’s a question of bridging the gap between where it was and where it can be in the future, which is as a successful and prosperous steel-making enterprise.
I’ve had numerous conversations with Tata over the last few months, and particularly over the last week or two. I can say that Tata understand the point that I made to them, that they must look at their plants in the UK, and indeed in Wales, as a package—that selling off different areas is not something that we would be supportive of—and, in fact, if you look, for example, at Shotton, which is a plant that, historically, does make money, Shotton is reliant on Port Talbot to source its feedstock, and, if Port Talbot wasn’t there, it would take at least six months, Shotton have told me, to actually source steel to continue its operations. That’s six months without production, and that means a loss of customers. So, even though, on paper, there are some plants that are doing better than others, in fact, they’re quite interdependent.
As part of the conversation I had last week with Tata as well I wanted to explore with them the timescale here. What they’ve said to me is that the timescale is three to four weeks, but, within that time, they would want to see buyers coming forward and making an expression of interest. They don’t expect things to be concluded within three to four weeks. It would take months for there to be a conclusion and a sale. So, what’s vital, of course, is that buyers come forward in the next few weeks. That, of course, then will extend the time frame, Tata have told me, within which a sale can be completed.
There is the issue, of course, of pensions, which the UK Government will need to address. I think it’s right to say, and Members wouldn’t be surprised at me saying this, that, as with so many pension schemes, there is a liability, and, as part of any sale process, there will need to be a solution for the pension liability that exists around Tata UK at the moment. That is something the UK Government will need to consider.
The leader of the opposition raised the issue of business rates, and, indeed, what that means in terms of the package of support. I think it’s important, first of all, to inform Members of what the situation is with business rates. Business rates targeted at particular sectors are considered to be selective state aid. They can only be awarded in line with de minimus requirements. That means that the amount of relief that can be awarded in terms of business rates is €200,000 over a three-year period. Bear in mind, of course, that the rates bill is £15 million. As you can see, it’s a very small amount of money that we could offer in terms of business rate assistance.
We’ve also looked at ways of removing certain classes of plant and machinery—we’re working with the Valuation Office Agency on this—from all ratings assessments. There is no quick or easy way to do this that would avoid state aid and appeals from others within the sector, because—. Historically, there’s not a huge amount of data available. But we do estimate that, with regard to Tata, about £4.5 million to £6 million of their rates bill per annum is made up of plant and machinery. What we did instead was to put on the table a package worth £60 million, so 10 times the amount of money that would be made available through any kind of support on plant and machinery, and four times the size of anything that would be made available in terms of the size of their business rate bill. That would be made up of a £30 million commercial loan to convert the CAPL line to a galvanising line, another £30 million for environmental improvements for various projects, and up to €2 million for skills and training. That’s what we’ve put on the table. That remains on the table and we will examine, of course, what we may need to do in the future in order to preserve these jobs in Wales.
In terms of procurement, it’s fair to say that the Welsh market is not big enough to sustain steel making of itself, although we have seen more and more Welsh businesses be successful in terms of being able to bid successfully for public sector contracts, and 55 per cent of them now are going to Welsh businesses. I heard what he said about the tidal lagoon. We want to see the tidal lagoon go ahead. It’s a hugely important project, it’s on the doorstep of Port Talbot, it has great potential for not just the steelworks but the docks, and it’s got great potential for developing the equipment that would be needed to maintain—and to build that equipment, indeed—in Port Talbot itself, and it would be an enormous boost to steel making if the lagoon was given the go ahead, and also, of course, to see more done in terms of moving ahead with big infrastructure projects, such as the high-speed railway lines that have been mooted so far.
The issue of the M4—yes, it is true to say that an M4 relief road would be helpful, but, as he knows, the money to build any relief road for the M4 has to come from money that will need to be borrowed. We don’t have those powers yet. We’ve never said that we would be able to able to afford an M4 relief road around Brynglas from our usual capital budget. It would have to be through borrowed money, and that money isn’t available, certainly until those powers come to us.
As I said, I’m grateful for the way in which he made his comments. I look forward to the meeting with the Prime Minister tomorrow. I know the Prime Minister and myself are looking at the same objective, and that is to make sure that we continue to have a steel industry in the UK. Of course, I am willing to work with him, and any others of course, to ensure that that remains the case.
Y Llywydd / The Presiding Officer
Now, I have the leader of Plaid Cymru, Leanne Wood.
Diolch, Lywydd. Thank you for your statement, First Minister. From the outset, I want to repeat for Members here today, and for people out there in the wider country—and especially for those communities whose future hangs in the balance—that Plaid Cymru is committed to working for an outcome where steel remains a core industry in this country. It’s always a temptation, especially at election time, to overplay partisan points and to lose sight of what really matters: people, their livelihoods, communities, their futures. That said, there are serious questions for the Welsh Government to answer, and we are here today to scrutinise their actions on this.
The last time we faced an industrial crisis of this nature, there was no devolution. A Tory Government in Westminster freely allowed the deindustrialisation of so many of our communities back then, and they are now prepared for the sequel. This time, we have an opportunity—you, First Minister, have an opportunity—to make devolution count, and to show the leadership that is needed in this country right now. Plaid Cymru’s considered and constructive position is that Government intervention is crucial in order to ride out the current challenge. We’ve been arguing that point since last January, and we have lost precious time since then. Solutions could include a joint venture between Government and the private sector; it could include temporary nationalisation; it could include a permanent public stake. Our view is that nothing should be off the table; nothing at all.
I have a series of questions for you now, First Minister, and I’d be grateful if you could provide comprehensive answers for these questions. I’d like to begin by asking you about your Government’s taskforce on steel. Did you ask the taskforce to draw up contingency plans in case Tata announced a complete sell-off, as Plaid Cymru demanded in January? Will you be widening the taskforce’s remit and membership now, so that it has the requisite skills and expertise to face the current crisis? This morning, we heard that the Welsh Government hadn’t seen a copy of the McKinsey plan. Can you tell us what efforts you’ve made to get hold of a copy of that plan? Does the UK Government have a copy of that plan? Do the trade unions have a copy of that plan? And, if you can’t get a copy, will you now commission your own rescue plan for steel?
We hear that the UK Government is meeting and discussing with potential buyers. Are you involved in those meetings, alongside UK Government Ministers? Are you conducting your own discussions with potential buyers, or is that being left entirely to UK Ministers? Do you have an assessment of the environmental remediation liability at Port Talbot and the other sites in the country, and do you agree that the costs should be paid as an exit dowry by Tata should they sell the site?
The Welsh Government has already said that it would be prepared to put money on the table to help save the steel industry, and we welcome that. Will you go further today and commit to investing in a public stake if that could help secure the future of this industry?
Finally, First Minister, a source in your Government has said that they knew of the likelihood of Tata making an announcement to sell its UK business months ago. Did you know, First Minister? If not, which of your Ministers knew, and, if they did know, why did they not inform you?
There are many other matters to be raised here in this Chamber this afternoon, and my colleagues will raise some of those matters, but, for now, I would be grateful for comprehensive answers to those points. We must all be prepared to do what we can now, to do whatever it takes to keep those furnaces burning in Port Talbot. We owe it to those workers to show leadership on this. So, please, First Minister, don’t rule anything out now. We all agree that we can’t afford to lose this vital industry, so let’s make sure that we don’t.
Could I thank the leader of Plaid Cymru for her comments? There is little she said that I would disagree with. Intervention is indeed crucial. A joint venture is certainly something that needs to be considered. A joint venture certainly needs to be considered. It needs the UK Government’s involvement; there is no way the Welsh Government could get involved in a joint venture, given the sums of money involved, on its own. In terms of a temporary takeover, well, I’ve been saying that for a number of days now, that that has to be an option. Particularly, it needs to be done to ensure that there is more time to find a buyer if that is required. So, the UK Government does need to be ready to take over the steel industry in the UK in order for that space to be created.
In terms of the taskforce, no, the taskforce hasn’t been asked to look at what should be done if the plants in Wales were to close. That’s because our focus has been on making sure that they don’t close. When I met with Tata before Christmas, at that time, they outlined their concerns, but they at no time have said to us that they’re looking to close the plants—never. In fact, that’s obvious by the fact that they haven’t announced closure of the plants; they’ve announced a sale. I made it clear, as did the Community union, to Tata that any suggestion that there would be closure of Port Talbot or any other plant in the future would be wholly unacceptable, and if they were not able to run the plants, they should make sure that those plans were put up for sale, and that, of course, is what happened following the conversations I had last week.
In terms of the McKinsey plan, well, Tata own the McKinsey plan. We don’t own it; we have no way of obtaining it. I have asked for it. In the discussion that I had last week with Mr Chatterjee from Tata, I asked him for a copy of the plan. He said to me that he would have to consult lawyers before that plan could be made available. The UK Government doesn’t have that plan either. As regards the union, they would have to answer that, but I’ve had no indication that the union has the McKinsey plan. The McKinsey plan should be made available to Government. It’s important that we’re able to see it—and, indeed, the UK Government—so that we can make a judgment as to that plan being taken forward. So, I’ve made my position very clear to Tata that I expect that plan to be made available to the Governments in order that we may be able to assess it.
In terms of remediation, a substantial amount of money would need to be obtained in order to remediate the Port Talbot site. It’s been there for 70 years. There are a number of issues that Natural Resources Wales have already identified, and it’s correct to say that many hundreds of millions, at least, would be needed to remediate the site, which is why, to my mind, it’s actually better from an economic perspective—if we see it purely from that perspective—to ensure that steel making continues, because of the liabilities that crystallise if steel making ceases in Port Talbot and if the other plants are threatened as well.
In terms of a public stake, well, it depends on how much. I’ve seen members of her party talk about hundreds of millions of pounds that the Welsh Government has squirrelled away. We don’t have it. Our reserves at the moment and no more than £392 million—that’s at the start of the financial year, and that’s every single penny that we have in reserve. So, we don’t have the £500 million to £600 million that’s been suggested to buy a stake in an industry, although we do have money, as I mentioned, available to support the industry, but we have to work with the UK Government on that. The reality is that the UK Government does have far greater resources, as the leader of the opposition has said, than we do. It has the ability to borrow and to raise money, which we don’t. And so, in terms of finances, yes, we stand ready to help financially. That’s true; I’ve already said that. But, the UK Government does have access to far more resources. And, of course, we are talking about the steel industry that exists mainly in Wales, but also outside Wales as well. This is a UK strategic industry. It is as strategic as the banks, and it’s why we need to make sure that there is a UK approach that ensures that the steel industry continues.
With regard to the suggestion that we knew that there was going to be closure, that’s just wrong. Nobody knew that the plants were going to close, and, indeed, the plants are not going to close at this moment in time; they are up for sale. There is a threat, of course; we understand that. What’s absolutely crucial now is working with the UK Government and, indeed, all parties in this Chamber to make sure that the buyers who have already identified themselves come forward with plans and there’s Government help for those plans and we can save our steel making jobs.
Y Llywydd / The Presiding Officer
Now we call on Kirsty Williams, the leader of the Welsh Liberal Democrats—Kirsty Williams.
Thank you very much, Presiding Officer. Can I thank you for recalling Members to the Chamber this afternoon, and I can I thank the First Minister for his statement? Like you, First Miniser, I think at the forefront of our minds must be the individuals directly affected by the threat to their livelihoods, those who currently work in the plants, not just in Port Talbot—and it’s clear why Port Talbot is at the forefront of our minds—but also the people working in Newport, in Shotton and in Trostre in Llanelli, too, all of whom will be facing grave uncertainty. Of course, it goes beyond those directly employed, to the wider community. You and I will both have witnessed in our youth what happens to a community when employers and industry of this nature is ripped out of a community: it hits the entire poulation—the smaller businesses that deal directly with the bigger plants and the service industries that grow up around those plants. We know how communities have struggled in the past to find alternative forms of employment for their citizens should these jobs be lost.
Can I also say that it’s inconceivable to me that any Government—whether that is a UK Government or, indeed a devolved Government—would allow the UK to lose an industry that is one of national strategic importance? In an ever-increasingly unstable and uncertain world, it would be foolish, I would suggest, in the extreme, to leave our nation as the only developed economy in the world without its own capacity to produce steel.
I’m afraid to say the alarm bells should have been ringing. With the loss of Redcar and with the threat to Scunthorpe, we should have been on our guard that our plants would be next. It’s very clear that that danger was recognised by the industry as a whole when the Rotherham steel summit was held last year. The industry was very clear coming out of that steel summit about what it needed—what it needed from the Westminster Government and what it needed from devolved institutions. It is, sadly, clear to me that those calls were not responded to in a timely fashion, especially, I’m afraid, by the Westminster Government.
What we need to do now is actually look to see what steps we can take to make the plants as attractive for a potential buyer as possible, and that’s what I’d like to concentrate on. We do know that business rates are a factor, and the existing business rates regime is not structured in a way that would make a meaningful difference. We do know that, when the Sutton review of business rates was published 18 months ago, they made a very specific recommendation around plant and machinery. First Minister, you’ve said here today that you’ve offered something instead of taking steps around plant and machinery; I ask the question: why does it have to be an either/or? At this stage, given the seriousness of the situation, why can’t we do both? I appreciate that maybe these things take time, but it has been 18 months since the recommendation was made to your Government about plant and machinery, and I wonder when you will be in a position to introduce a regime that will look to assist not just Tata but all our manufacturing industries with business rates with regard to plant and machinery, because, I’m sure you’d agree with me, that would be one way in which we could make a possible sale more attractive.
You are also correct to say, of course, that Wales’s contribution to public procurement is limited, and I would ask you what discussions you have been having in your conversations with the Prime Minister and the Westminster Government about how far we can push the issue of procurement of Welsh and British steel in public projects. I appreciate that there are rules around that, but what can we do to maximise the opportunity for the use of these products? Let’s be clear: they are a quality product. Only this week, I spoke to a manufacturer that had imported some Chinese steel only to have it arrive and discover it was unusable in their products. We are producing a first-class product that should be used as much as possible in public procurement.
Can I turn to the issue of the enterprise zone? I welcome very much its establishment. Could you outline to me what outcomes you’re expecting as a result of the creation of the enterprise zone? What do you expect it to achieve? And again, whilst I understand that the focus, naturally, is on the Port Talbot area, what additional help may be available to small and medium-sized industries around the other plants across Wales? Are there any plans to take similar action with regards to Newport, Llanelli and the plant at Shotton?
Can I ask also, in your discussions with the Westminster Government, what are you asking for? Could we have clarity about what your expectations are and what your asks are? We do know that the pension liability is one of the bigger issues that may put off a potential buyer. Could you say what discussions you’ll been having with the Westminster Government about the issue around pensions, and what reassurance you can give to those people in receipt of a pension who may perhaps be extremely worried about what might happen to that?
I believe the UK Government has to be the lender of last resort in this case, and, if necessary, provide that bridging finance to allow a successful sale to take place in the future. Have you directly asked that question of the Prime Minister, and what was his response, please? Could you also assure us that, in your discussions with the Westminster Government and your team that you have sent to London to work with BIS, in looking at a future buyer there will be some assurances that this plant and these workers won’t be sold off to someone whose ultimate purpose is to asset strip the company? We want to sell this to a business that is going to continue to produce steel, not to come into Wales, cut and run, strip out what is best and then to leave the rest behind. We need some reassurances that this will be sold as an ongoing and successful business.
And in that regard, First Minister, we know we produce an excellent quality product. We know we produce innovative steel products, above and beyond what may be available in the rest of the world. What plans are you discussing internally within your own Government and with the Westminster Government about a long-term strategic future for our industry? Because I believe there is one. This is an industry not only too big to fail; it’s an industry too good to let fail, and I’d appreciate your insight on what you will do to produce a plan for a long-term commitment to steel production in our nation.
Can I thank the leader of the Liberal Democrats for her comments and for her questions? The issue of the pension liability is an important one and, of course, the issue of the pension liability is important in terms of a sale. There will need to be further discussion with the UK Government, who are aware of the issue, in order to make sure that that pension liability does not become the hurdle that prevents a sale from taking place, and that’s something that I’ll be discussing again with the Prime Minister tomorrow.
With regard to plant and machinery, as I said earlier on, we have been looking hard at ways of removing certain classes of plant and machinery from all ratings assessments. We’ve looked at whether a cap could be applied to the rateable value and whether reliefs could be applied against new investments in plant and machinery. We have had detailed discussions with the Valuation Office Agency. They haven’t identified a quick way of doing this that would avoid state aid and appeals, given the lack of data that they have available and the technical complexities. That said, the Valuation Office Agency will be looking at an improved situation with regard to business rates next year, which will be helpful for the sector. But as I said earlier on, plant and machinery is worth about £4.5 million to £6 million on the rates bill as far as Tata are concerned. What we’ve put in place is a package that’s 10 times bigger, and faster; that was the issuers that we had. And again, with business rates we are limited to €200,000 over a three-year period because of state aid rules. So, the decision that we took was that, rather than to plough through the mud in that regard, we should just put an offer on the table that was far larger than the offer that could be made with regard to plant and machinery and business rates, and that is still on the table for any potential new buyer.
In terms of procurement, what can be done in order to stimulate demand? Build things; to make sure that road projects go ahead; to make sure that rail projects go ahead; to make sure that the tidal lagoon goes ahead. It is possible to specify certain types of steel as part of those projects, but the projects need to go ahead in the first place. They are UK projects, and infrastructure is a hugely important driver when it comes to driving demand for steel.
In terms of the enterprise zone, that is indeed aimed at SMEs and we are looking, of course, to see that enterprise zone grow.
With regard to the other sites that she asked about, well, of course, Port Talbot is the site at the moment that is in the most difficult position. The heavy end of Port Talbot is losing the most money, although I am not convinced it’s £1 million a day, if I’m honest. But it is definitely losing money. So, what we’ve done thus far is to look primarily at Port Talbot, but not exclusively. We know, of course, that there will be concerns and worries in Trostre, in Llanwern, in Orb, and also, of course, in Shotton. We understand that, and we’ll work with all the sites to make sure that we can work to ensure their future.
The leader of the Liberal Democrats asked me what we’re asking of the UK Government. We need the UK Government to back higher tariffs. They are there, but they’ve not, thus far, backed them enough. Other countries—we saw China do it over the weekend—are imposing tariffs on certain steel products. We need to make sure there’s a level playing field and, thus far, it’s not the European Union that have been preventing this, it’s been the UK Government. I hope now that the issue is understood, and we would support the UK Government, of course, in terms of making sure that the tariffs are fair and are similar to tariffs that are being imposed by other countries around the world.
Energy prices—we’ve been lobbying on energy prices since 2011. I’ve personally discussed energy prices with Vince Cable in Tata when he was the Secretary of State. We need to see movement on that. There is no doubt—you can speak to energy-intensive industries around Wales, and they will tell you the same thing—that energy prices in the UK are higher than in Germany or in Spain. This has to be dealt with; otherwise the message will be that the UK is not a place where energy-intensive industries are welcomed. That will need to be dealt with.
And, of course, to show a commitment to the industry. I don’t doubt the Prime Minister when he says he is committed to ensuring that steel making continues. In the conversations I’ve had—and he’s said this publicly—he said that nationalisation is not the answer. Define ‘nationalisation’, of course, is the question there. What is needed, though, is a willingness to ensure that Government will take over Tata’s assets in order—if need be—for a buyer to be found. It’s creating that space for a buyer to make sure that there is every opportunity for the workers in Tata to have a future.
She is absolutely right to say that the last thing we’d want to see is an asset stripper coming in to run the plants in Wales. The conversation that I’ve had with a potential buyer—this particular buyer, although I can’t reveal who it is, is not an asset stripper; it is somebody who would be very interested indeed in actually making steel. But, it’s absolutely right that the last thing we’d want to see is for a business to come in to strip the asset in order to remove competition, perhaps elsewhere—for plants elsewhere in Europe. So, having somebody who is going to run Tata’s assets as a going concern is absolutely crucial.
In terms of the strategic future of steel, well, about a year ago, Port Talbot was not losing money; it was breaking even. It had gone through difficult times before, that’s true, but it was breaking even. What’s happened in the world steel market has caused great difficulties for Port Talbot for the reasons that we’ve already outlined. But the point that I’ve made is: these problems are not permanent. This is not an industry that’s doomed to die; it’s not an industry that is doomed to lose money for ever and a day. It just needs help to go through a current, short-term crisis. We will stand ready to help. The UK Government has indicated that it stands ready to help and it’s important that those commitments are translated into action.
Diolch, Lywydd. Can I thank you again for actually recalling the Assembly, because it is important that politicians have an opportunity to ask the questions of the Government to find out answers for the future of the steel industry, particularly for the communities that survive from the steel industry? First Minister, can I start by thanking you for your statement? There's nothing in there anybody can disagree with on that. I think it’s what we all want to go forward with. Can I also thank the Welsh Government for the work that has been done to date on the industry? I know we’ve been raising the question of energy prices for many years—since I’ve been in the Assembly. Also, the taskforce was immediately put into place following the last announcement, and I would hope that the taskforce now will be, perhaps, looking also at some of the issues that will arise following last week’s devastating news from Tata about the decision to actually sell off the UK steel sector of its business, particularly at Port Talbot.
We’d all hoped that Tata would accept the survival plan, or as most people know it, the bridge. But, unfortunately, it seems that they didn’t accept that, and no-one actually expected the news that we had last Tuesday evening. I don’t want to be party political—I know there are comments over the UK Government’s involvement and its inability to actually act up to now, but we’ll leave that aside because I want to look, like you, to the future. Like you, I believe that there is a future for steel making in Wales, particularly in Port Talbot. Thousands of people in my constituency—steelworkers, contractors, the supply chain workers, businesses and all their families—actually want answers to some questions about the future of the works and the actions that we’re going to be taking to secure that. We’ve heard words from both yourself and the UK Government that no stone will be left unturned and all options are on the table. I include in that comment, therefore, state intervention. We don’t want to call it ‘nationalisation’—fine; let’s call it ‘state intervention’. That’s okay with me. But we want support for the works, and we want to give it sufficient time. Now, you indicated that there’s time for expressions of interest, but expressions of interest are based upon viability often and we need time for the works to demonstrate the viability and the potential that the works can offer to anyone who is interested in buying the plant. So, I think the discussions you have with Tata must ensure that that flexibility is provided, or the UK Government must provide that support to allow the time for an expression of interest to be made. We can’t do it now, and that’s my concern. You just can’t do an expression of interest in six weeks. You need to know the viability, the potential of the plant, you need to do the due diligence, and, if someone’s coming in now, then that time is not good enough.
There’s clearly a time for both Governments to work together as one, to unite. The Welsh Government and the UK Government need to be in unison on this. I hope that if the UK Government doesn’t take the lead—and I’ve got to be honest, my faith has not been convinced yet in the UK Government—I would want the Welsh Government to take the lead on this to ensure that the steel industry actually survives here in Wales.
First Minister, I have got many questions for you. Some have already been answered and asked, so I’ll try to avoid repeating and duplicating those, Llywydd. But I want to praise the steelworkers first. Those who know the Port Talbot plant know the works and know the production levels in those works. Those steelworkers have committed themselves above and beyond normal working practices to demonstrate the viability and the operation that works. We need to do something because they deserve our support. They deserve this Welsh Government actually taking action to ensure that steel continues, not just in Port Talbot, although it is the main focus, but across Wales. Because, as has been rightly pointed out, Newport, Shotton, Trostre are all in this—and the Orb in Newport. We can’t forget that either, because that’s part of Tata steel. Can I also thank, before I go on, the leaders of the other parties? Because the support is important across party for this industry, for the sector and for the communities that will be affected by this decision.
First Minister, you’ve had discussions with Tata. I think it’s important that you keep in discussions with Tata, but can you tell me the flexibilities that Tata are talking about in this timescale? They’ve indicated it’s six weeks, from what I understand, but is there flexibility in their discussions to extend that and not do a cut-off point and not say in six weeks’ time, ‘We are closing’? That’s crucial, not just for Port Talbot, but, as you pointed out, the six-month order list for Shotton is going to be crucial in that aspect. So, is there discussion on flexibility?
You also talked about the package that you put forward to Tata. Did you ever have a response from Tata about that package, and is there flexibility in that package? You mentioned today £60 million that was put on the table. Is that flexible? Is there a possibility of more? Could we look at other projects, such as the power plant—because I don’t think you mentioned that possibility—and flexibility in joint ventures for the power plant at Port Talbot, which would make it, again, attractive to a potential buyer?
Now, I want to ask a couple of points regarding the joint funding of UK Government. What discussions have you had with UK Government about state intervention, and will the Welsh Government be part and parcel, beyond the package that you’ve talked about? Is there a possibility, beyond that package, to get involved in the state intervention of the industry?
What actions have the Welsh Government taken to address the issues in the EU? We all know that cheap imports have been highlighted by many people, including workers at Port Talbot. Have you had discussions with the EU, yourselves, as a Welsh Government? What discussions have you had with the UK Government? You quite rightly pointed out that they are blocking the lower rate duties. I wouldn’t give them credit for looking at anything. They’ve actually blocked lower rate duties, and they need to change tack on that and they need to start actually putting duties at a reasonable level that make the industry competitive with the Chinese imports and Russian imports. Will you demand a place at the Council of Ministers whenever steel is being discussed in Europe? Because, at the moment, it seems—and I’m going to be blunt, I have no faith in Sajid Javid because his comments in the past have actually shown his lack of understanding of steel, full stop. Will you demand a place at that table, so that we can have someone who knows the steel industry going out to Europe to discuss those things?
Will you also seek to ensure that Tata act as a responsible seller? I have deep concern over the current situation with regard to the order books and the procurement of products. I think we need to ensure that those now are handled in Wales for Wales. At the moment, I understand that it’s in joint position with the Dutch plant. We need to make sure that that separation occurs, so that we can demonstrate that Wales is a profitable opportunity. Steelworkers have actually told me that the stockyards are being diminished and depleted. Again, I’ve great concern over that because, if the stockyards are being depleted, the production levels will go down. We can’t allow that to happen because, the blast furnaces, once they’ve gone cold, that’s an end to them, full stop. We need to ensure that those blast furnaces keep operating. So, will you ensure that Tata act responsibly in all aspects of their business, and don’t just simply do it by stealth, which I fear is the position they’re leaving us?
You mentioned buyers, First Minister. You mentioned asset stripping, and I will mention the name: Mr Gupta has been highlighted and reported quite a lot in the newspapers and the press. Again, he apparently indicates that he wants to actually put an arc furnace into Port Talbot, which would shut the blast furnaces down, which would take the sinter plant, the stockyards, the concasts, the coke ovens and the BOS plant all out of action—basically, two thirds of the plant going. It was built as an integrated plant. It works as an integrated plant. That would take thousands of jobs, not just in the works, but in the community and in the supply chain and contracts out. So, will you have those discussions to ensure that we don’t get into that position, we don’t see the works being broken up, and we don’t see those thousands of jobs being lost as a consequence of that?
Finally, First Minister, you’ve got, perhaps, confidence—I don’t have confidence—in the UK Government. I’m being open; I’m being honest. They have taken over two years to actually implement—and, from what I understand, the money still hasn’t come through—the green tax compensation package. Do you really have confidence that they will get their act together and do something for the steel industry? Because, as has been pointed out today, it’s a foundation industry, a strategic industry. Without steel in the UK, and particularly here in Wales, there is going to be a major impact upon manufacturing and the rest of our economy. It is important that my constituents—and they don’t have confidence at this point in time in the Tory Government—have confidence that we are going forward with a future plan in mind. I make no excuses for asking all of these questions, because thousands of people’s livelihoods depend upon the decisions that we take as a Government, both here and in the UK. I can tell people now: I will be no friend to any Government that abandons them. [Applause.]
Can I thank the Member for his comments? I know that he has been present at every opportunity to support those working in his constituency, and those living in his constituency. Whenever I have been in Port Talbot, he has been there, and he and I have had extensive discussions over the past few weeks about Port Talbot itself. So, could I pay tribute to him in that regard?
I met with Tata Europe just before Christmas. It was at that point that it was indicated to me that there was a turnaround plan—the McKinsey plan, as it’s been suggested. Unfortunately, we know that the Tata board did not accept the turnaround plan. So, it’s at that point that we know that Tata decided that they wished to sell their assets within the UK. He is absolutely right to point out the difficulties of gathering expressions of interest in a very short timescale. Three to four weeks is the timescale that they mentioned to me. It’s an incredibly truncated timetable, not realistic, which is why, of course, I’ve been saying that the UK Government needs to stand ready—and we, of course, would be part of that process—to take over the running of those assets in order, at least, for there to be more time for a buyer to be found. Because the timetable is exceptionally truncated. The thing to emphasise again, as I mentioned earlier on, is that this is not some kind of antiquated industry. Port Talbot has seen investment—hundreds of millions of pounds of investment. It’s a good plant with modern machinery and a skilled workforce. So, in times where the world steel market was more robust than it is at this present moment in time, it would be a plant that would be attractive. It is a question of making sure it’s still there when the steel market picks up—as it will at some point in time; we know that.
With regard to the steelworkers themselves, he has paid tribute to those in his community. He will know that the ‘abbey’, as everyone calls it, has been a source of employment for many in the wider area as well. In the south-west of my own constituency, the village of Cornelly was built to accommodate workers at the steelworks. So, the reach and influence of those works is very wide indeed.
In terms of the responses that I've had from Tata, Tata have been aware of the package that was on the table. I think we have to accept that there is a limit to what we can do, and so there needs to be money put in as well by the UK Government. There is no getting away from the fact that, in order for the plants to be seen as attractive to buy, money needs to be on the table from Governments. We accept that. We've already put down that amount of money; we will have to look to see what might be needed in the future, and we’ll do that. That's already on the table, but the UK Government as well, of course, will need to put, from its more substantial resources, money in as well in order to make sure that a sale can take place.
There has been extensive correspondence between ourselves and the UK Government, and between ourselves and the EU, in terms of the issue of tariffs, as the Member would expect, when this issue was a live—. I mean, there's extensive correspondence over energy prices going back many years, and, as the Member would expect, there's been correspondence over the issue of tariffs as well and the fact that the tariff barriers are far too low, particularly when compared to other countries and particularly after the news we heard on the weekend, in terms of what China has done.
We want to be as constructive as we can. He is right to say that Tata need to act as a responsible seller. I’ve said that to them, and I've said that publicly, and they have said to me that they understand that their assets in the UK need to be in a state where they can be sold, and that would mean, of course, ensuring that the blast furnaces are still lit. He and I both know that, once blast furnaces cool down, a substantial amount of money has to be invested in order to get them back up and running again that would affect adversely the economics of any purchase, and that is what Tata have said to me, that they will ensure at the very least that what they are offering for sale will be in a state to be sold and, indeed, to be bought. So, I can assure the Member that we will continue to work with the UK Government and with others in order to ensure a future for our steel industry. I cannot imagine a major industrial economy without steel-making capacity, and that is what is staring us in the face here in the UK. It's important, then, that Governments at all levels work together to make sure that what is a strategic industry continues in that way in the future.
Y Llywydd / The Presiding Officer
I call William Graham, as Chair of the Enterprise and Business Committee—William Graham.
Thank you, Presiding Officer, for this chance to consider the critical situation facing the Welsh steel industry. As Chair of the Enterprise and Business Committee, we held a meeting with the industry, the unions and the Minister to address the imminent dangers to steel—and this was a month ago. On behalf of that committee, I wrote to both the Secretary of State for business and the Welsh Secretary calling for urgent action on tariffs to counteract the dumping of Chinese steel on the market. We did note some of the EU measures have been successful. Chinese imports of wire rod fell to virtually zero last year after measures were imposed in 2009 and renewed last year. Inorganic coated steel Chinese imports fell 90 per cent following duties imposed in 2013, and stainless steel flat products again fell by almost 90 per cent following duties calculated under the lesser duty rule. And there are promising signs that measures imposed in January on rebar are starting to have an effect, with imports already reduced. But we also noted, as David Rees pointed out, that Russian steel now has entered the market at five and 10 per cent below even Chinese steel.
So, we highlighted the cost of energy prices to our manufacturers, which the First Minister has already covered, and we felt very strongly there should be a level playing field for producers in Wales. We also would call on the Welsh Government to speed up action on business rates, which were identified as a major factor in the wider financial pressures affecting the industry, and the First Minister has given an exposition already of how difficult that is. We noted, for example, in the plant and machinery, that even the reservoir is taxed, and that sort of facility is just some of the complexity in this.
However, when it comes to public sector procurement, the committee felt that we should ensure that contracting authorities in Wales and the rest of the United Kingdom do more to specify that our contracts deliver social benefits. We should do more to make sure that we use the weight of our buying power to support the steel industry, and infrastructure has already been identified. But we noted that, since 2011, of 130 Welsh Government corporate procurement contracts worth more than £0.5 million, only 53 per cent of those have been awarded to Welsh businesses. With Welsh Government capital procurement having awarded 44 contracts worth more than £500,000, just 36 per cent went to Wales-based businesses. The committee felt strongly that the Welsh Government should have published guidance, through its Value Wales division, ensuring the procurement of steel that meets the standards endorsed by the charter for sustainable British steel. At the meeting, we also heard that the Welsh Government was looking into the quality of Welsh steel, and perhaps the First Minister could give an indication of what has happened in that particular respect. We also enquired about the discussions with the United Kingdom Government on the possibility of an application to the European globalisation adjustment fund, and asked the First Minister for an update on that.
The house will know that the committee is a cross-party committee, and what was absolutely resounding within our remarks was that Welsh steel must remain.
Could I thank the Member for his comments? It’s correct to say that the amount of successful bids by Welsh businesses for public sector contracts has increased substantially over the years, although it’s true to say that we want to do more. We can’t stipulate that contracts should only go, obviously, to Welsh businesses—either by law or in any other way—but it is important that we’re able to help businesses to understand what is required in order to bid successfully for contracts. We understand, of course, that there is a role here for Welsh Government procurement as well as the much larger UK market.
The Member has already identified what I’ve said about business rates and about plant and machinery. He is correct in what he says with regard to some of the tariffs that have been imposed at EU level, but they don’t go far enough, that’s the difficulty. The situation is a swiftly changing one; we saw that following the Chinese decision on Saturday. I do emphasise this is not some kind of attack on China, as China is an important trading partner; it’s simply a plea for a level playing field. We know that other countries have put in place measures to protect their strategic industries of steel, of course; we need to make sure that the UK and, indeed, the Dutch Government both support what is needed and what is required in order to make sure that the steel industry has a level playing field here in Wales. I’ll continue to make that point, of course, to the Prime Minister tomorrow and, indeed, in subsequent discussions.
Can I firstly thank the First Minister for responding positively to the requests for a recall of the Assembly and thank the Presiding Officer for ordering that recall? I think it was inconceivable that we would not have reconvened at this time. I should say at the outset that we all here want to see the UK Government do more—do much, much more. But, we’ve reconvened, of course, not just as a means to lobby UK Government, but to hold Welsh Government to account for its actions in responding to the steel crisis.
Ministers, as I have, have regularly worn their ‘Save our Steel’ badges, since the onset of the current crisis, and saving our steel is something that all of us here are passionate about, but I’d remind Ministers that, making a public statement like that, asking for steel to be saved, can’t be a substitute for action. Welsh Government is not a pressure group in all this. Welsh Government is in a privileged position of being able to help forge the strategy, to lead the strategy, that can give steel a future, and Welsh Government should be very clear, not only in calling for UK Government action, but in spelling out exactly the kind of UK Government action that’s needed and how Welsh Government itself is ready to feed into that strategy in every way possible. A UK without a steel industry is something that isn’t worth thinking about, but there is added incentive, surely, for Welsh Government in seeking to show strategic leadership on the needs of steel in Wales, because to lose the steel industry here would be catastrophic—not only for the individuals directly affected, for the workers, their families and their communities, but for the Welsh economy as a whole. Wales is the most heavily dependent nation in Europe on the steel industry, and to lose steel for Wales would be like the UK losing its car industry three times over. That’s why we have needed a proactive Welsh Government and not a reactive one.
I’ll ask a number of questions to the First Minister. Looking forward, of course, is what is important now, but it is important also, I think, to revisit Government actions in the period leading up to where we are today. Firstly, whilst I’ve certainly regularly supported moves taken in light of the job losses announcement in January to respond to that situation in terms of seeking reskilling, and so on, and some of the announcements that have been made today in relation to enterprise zones and business rates, can the First Minister explain also what parallel work has been ongoing since January on the more strategic work of securing the industry’s very existence? Welsh Government knew since Christmas that the writing was on the wall, according to the ‘Financial Times’. Can I ask what detailed assessments did the First Minister order to be made, around Christmas perhaps, of the potential impact on the Welsh economy of the various options being sought by Tata?
On the issue of tariffs, the First Minister was critical of UK Government on radio this morning; he’s been critical again this afternoon for blocking higher tariffs on Chinese steel imports. I must disagree with him, though, that this is not something we found out about at the weekend. Can I ask what formal representations Welsh Government made to UK Ministers at the time of the European-level deliberations about the risk of blocking tariffs on Chinese steel?
Can I ask what is the financial package available from Welsh Government, if not in pounds and pence at this stage, perhaps for valid commercial reasons, then perhaps the First Minister can tell us in terms of the purpose of that financial package, and how it fits in with what Welsh Government wants from UK Government? The First Minister said in his statement this afternoon that Welsh Government is willing to contribute from its resources the money they had previously pledged in support of a turnaround. Has the First Minister considered perhaps that it’s time to reassess the scale of that financial contribution, in light of the increased seriousness of the situation that we find ourselves in, perhaps reprioritising expenditure or current expenditure plans? Can I also ask what scale of contribution you have calculated you are seeking from UK Government in order to make your strategic proposals for the future of steel in Wales workable?
Now, the First Minister said this morning that Wales has only limited funds—true, of course—but he also said in an article in the ‘Independent’ a few days ago, ‘We cannot nationalise even if we had the resources and powers to do it’. Now, I’m not joining some ideological drive for permanent nationalisation—I’m looking for practical measures to get us through this crisis—but the Labour shadow chancellor said yesterday, ‘If we have to nationalise in the short term, fine.’ Even Sajid Javid for the UK Government, as an ideological opponent of intervention, said he didn’t want to rule it out. Can the First Minister perhaps explain why he seemed in that article unwilling to commit to doing whatever it takes, even if it is the last roll of the dice?
Now, we have put forward our ideas. I’m sure they’re not perfect; I’m sure that some proposals we have made raise further questions that need answering. But we have worked diligently with those in the industry in Wales and the UK and further afield, with economists, with unions, because we believe passionately in seeking a future for steel. Will the First Minister commit to engaging genuinely with us and other parties in pursuing solutions?
Finally, the First Minister also said in that ‘Independent’ article that he wanted boldness from the UK Government, and we’ve heard the Member for Aberavon saying today that he has little confidence in the actions coming from UK Government. We also require boldness from Welsh Government. I’m not entirely sure that we have yet a clear strategy spelt out by Welsh Government. Our workforce, our communities, our steel industry, our entire economy needs it; what is that bold plan that we can now expect? Our steel industry deserves no less.
Y Llywydd / The Presiding Officer
Before I ask the First Minister to respond, can I remind Members to turn their mobile phones off? That’s also members of the public in the public gallery, please, because it does interfere with the broadcasting system. Thank you. Sorry, First Minister.
Could I thank the Member for his comments? If I could seek to respond to his first question by saying that the discussions that we had with Tata before Christmas identified the difficulties that Tata were experiencing and, at that point, they wished to move forward with the McKinsey report. We worked with them and, indeed, corresponded with both the UK Government and the EU in order to facilitate that outcome. After Christmas, it’s clear that the situation changed—that the Tata board obviously did not want to proceed with the McKinsey report and, at that point, decided to offer the assets up for sale. Sale was not an option before Christmas; it was something, at that stage, that they were strongly against. But that did change as a result of the comments that the Community union made to them—I have no doubt about that—and the comments that we made to them that it was not a question of fix or close, as it was put to me, it was fix or, if not, give the opportunity to sell. That’s exactly where we find ourselves at the moment, although there are still challenges, as we know, in terms of that option.
I did tell the Chamber what the financial package was, so I’ll repeat it for the Member. It’s in excess of £60 million: a £30 million loan, £30 million for environmental improvements for various projects and up to €2 million for skills and training. That package remains on the table. We will of course revisit what might need to be done as part of a package in the future.
He asked what is the estimate of how much money it would take in effect. We’re talking many hundreds of millions. If you take on board the liabilities as well then it goes beyond that. The pension issue is significant, the UK Government would need to deal with that, and, of course, the environmental situation is also significant. But I don’t really follow that Tata would hand over their assets in the UK to whichever level of Government and also give a cheque of £1 billion on top of that. I think that’s difficult to see, although I know it’s been advocated by some, and it is correct to say that there is a substantial environmental liability if steel making doesn’t continue. Of course, if it continues, then that liability doesn’t crystallise.
In terms of what we are doing as a Government, we know that the kind of sums we’re talking about here are beyond our resources as a Government, especially as we can’t borrow money and we can’t raise money. As I’ve said before, this is a UK strategic industry: it needs a UK approach. There are some plants in England as well—we should remember that—that are involved in the current process. That’s not to say, of course, that we would not reconsider what kind of finances would need to be put on the table in the future. Clearly, that has to be kept under review, although I’ve already told the Chamber what we have in reserves. We could not spend all our reserves on one thing and then have nothing for the next financial year. Clearly, Members will understand that that is the case.
What then is the plan? I’ve already identified the way forward as far as I am concerned as First Minister: we need to deal with tariffs and we need to deal with energy prices. No matter what we do, we cannot influence energy prices; that is for the UK Government and it is the same for tariffs. And also, of course, a commitment—. He asked me about nationalisation. I was sure he was being mischievous when he said this. What I’ve said is the Welsh Government can’t nationalise, we haven’t got the powers or the money to do it. Well, the UK Government does. If it means taking the plants into public ownership, certainly for the time being, of course, I’d be supportive of that—I’ve said that already in the Chamber today—particularly to give the industry a chance to recover in the future. But the resources lie in the hands of the UK Government.
We are not a pressure group—he’s right—we are not bystanders here, we are part of the process, but it’s not realistic to think that we have the resources purely in Wales to take over the Tata assets in Wales, together with the liabilities that are attached to them. There needs to be work by us, true. There needs to be work by the UK Government in terms of lessening some of those liabilities and, of course, work in terms of finding a buyer in the future.
Can I reflect the words of previous Members in saying that it’s inconceivable that the steel industry should disappear from the United Kingdom economy; in terms of the region I represent in South Wales West, that we need to keep the Port Talbot works as a going concern; and that if it involves the UK Government, working with the Welsh Government, taking a stake in that to make that happen or even taking over the entire plant so as to make that happen in the short term, then I think that is something that needs to be actively considered? I think that we need a far greater level of action from the UK Government, in particular, in terms of how they will be approaching this, because, so far, all we have seen are words and very little action, and I’m very concerned indeed by the way that UK Ministers appear to be approaching this particular issue.
First Minister, just in terms of some questions in relation to the Welsh Government, but also in terms of what you know of what the UK Government is doing—because I think we are reduced here to actually asking questions of the UK Government through what you know of what they’re doing, which is not the ideal situation. But, first of all, in terms of business rates, you’ve told the Chamber that your own £60 million package is the preferred way forward for the UK Government. I accept that that is 10 times what you’d get from a business rates package concentrated on plant and machinery, but could you confirm whether you are also proceeding with the recommendations in terms of business rates on plant and machinery in addition to that package, and if so, what sort of timescale would apply to that? Because although the £60 million is a very important package, anything on top of that that makes this plant a better going concern for someone to take over, by reducing their costs, would of course make things much easier.
In terms of the pension fund, it has been suggested that the UK Government should take over the pension fund in the same way as it took over the Royal Mail pension fund, which made the Royal Mail sell-off a more viable one. Do you know, through your conversations with UK Ministers, whether they are actively considering this as a potential way forward? If so, is this something that the UK Government is prepared to commit to?
We’ve heard a lot of talk about the tariffs. Of course, the UK Ministers themselves have referred to this. However, the question about the abolition of the lesser duty rule is one that I think we are all concerned about. That is effectively keeping tariffs on steel at too low a level, compared to what is required to counter the cheap steel coming in from China and other countries. In your conversations with UK Ministers, do you get an impression that they now understand that their previous opposition to the abolition of the lesser duty rule has hurt Tata Steel, and particularly in terms of Port Talbot; and do you get an impression that they now understand that they may need to reverse that opposition in the future?
Kirsty Williams referred, I think, to not wanting to bring someone in who would be asset stripping this plant. I certainly support that. We can’t have someone buying the Tata Steel operation and then asset stripping it. I’m also concerned as well, because we’ve heard talk of buyers who are more interested in the electric arc type of production, which would effectively downgrade the level of production that is available in the steel rolling mills in Port Talbot. Can I have your assurance that that is being discussed and whether any buyer taking over Port Talbot is looking at a downgrading of that production to effectively recycling steel rather than actually producing the high-quality steel that is currently being produced there?
Finally, First Minister, in terms of the Welsh Government’s direct support for the Port Talbot area, I very much welcome the fact that the enterprise zone is being taken forward. I think that’s a very important initiative, and I think it’s absolutely crucial that we get that. We mustn’t forget that 750 jobs are effectively gone irrespective of what happens in terms of Tata Steel. It’s very important that support is going in there in terms of training et cetera to try to find new jobs and new sources of employment for the Port Talbot area. Will the Welsh Government be taking forward the suggestion I made a number of times in this Chamber—or the other Chamber—in terms of an urban development company for Port Talbot in the same way as the Welsh Government established in 2003 in Newport as a means of trying to attract investment into the area and as a means of providing incentives for companies to come in and provide additional employment in the Port Talbot and wider area?
Can I thank the Member for his comments? He talked, of course, about Port Talbot. I need to emphasise—and I’m sure that this is his view as well—that we are talking about all the plants as a package. Port Talbot on its own—. The heavy end at Port Talbot is the end with the greatest difficulties at the moment, and it’s important, of course, that we look at this as a package. I understand that it’s in his region, and he has focused on Port Talbot. He will have heard what I said about business rates and the fact that we put in place a package that was far bigger than what we were able to offer in terms of business rates, and far swifter in terms of the situation with regard to plant and machinery. I can say, though, that we have asked the Valuation Office Agency about whether the state of the industry can be taken into account in steel sector valuations. They have advised that, although their preferred approach is not to apply an industry-wide allowance, they will be considering the state of the market and its impact on how each plant is operating for the 2017 valuation. Although the full impact of this won’t be clear until the revaluation process is complete, it does mean that, from 2017, rateable values will better reflect the current circumstances at steel plants in Wales.
He asked me if I had a view on what the UK Government’s view was about pensions. I think it’s probably fair to say that they have not been persuaded until now of the need to intervene on the pension fund issue, but that situation may be changing today. I’m trying to be diplomatic and say that the situation is fluid with regard to the UK Government. It may well be that they are reconsidering what needs to be done in terms of the pension fund. He’s right in terms of what he says about the LDR rule. He is right that the UK Government opposed the abolition of LDR, and I will be making the point to the Prime Minister tomorrow that we need to—. Once again, we need to make sure that they do disappear to make sure that we can get the right tariffs in place, not as a baldly protectionist measure but to create a level playing field that the workers in our plants in Wales deserve.
It is very early days yet, with regard to a buyer, and we have to wait to see whether other buyers come forward. But clearly, from our perspective, the objective is to ensure that the plants continue to employ people, obviously, and to continue to be in a position where they offer the jobs that they do now. But it’s difficult to give a guarantee on that because we don’t know, as yet, how many buyers might come forward and what the nature of their interest might be. We will take on board the issues of the urban development company—or something like it—that he has mentioned. We have the taskforce, of course. It may be that, in time, the taskforce starts to look at other options, depending, of course, on what news we get with regard to the future of the steel industry.
First Minister, Port Talbot is at the eye of the storm as far as the fight for the life of the UK steel industry is concerned—unsurprisingly, given the scale and capacity of the operations there, the jobs involved, and the importance to the regional economy. Nonetheless, Llanwern, Trostre and Shotton are also vital to their local and regional economies, and I think we’ve heard that reflected in various contributions today and, indeed in your own statement, for which I am very grateful, along with all the work that the Welsh Government has done, and is doing, to deal with this crisis.
First Minister, Newport has gone through some tough times as far as steel is concerned. There has been a lot of restructuring. Local workforces have had to adapt, and they have shown tremendous resilience. They have achieved amazing change and shown unquestionable commitment. We have seen that resilience reflected in continuing operations at Llanwern and, indeed, the Orb steelworks; also, at Liberty and a variety of smaller players. So, I think it’s clear that steel, with its strong history in Newport, still has a great future because of that adaptability, resilience and strength. So, I very much want to see the Welsh Government working with partners—the UK Government and others—to recognise that potential. Indeed, parts of the operations—and this isn’t true just of Newport and just of Llanwern and the Orb works, but is also true, I know, of other parts of the steel industry in Wales—are profitable at the current time. We must, of course, avoid any cherry-picking, as you’ve been very strong in saying, First Minister, and we must see all of the operations in Wales in and the UK as a whole. They are integrated. They do rely on each other, again as you’ve outlined today. So, that, I think, is the spirit within which this debate and this statement today takes place, First Minister—looking at it all as an integrated whole. When we look to restructuring and investment for the future, I do think that we need to look at it as a whole, and that will include those profitable operations at the moment, which do have great potential, and skilled workforces that have shown that they can produce world-class products that can be exported and can take advantage of niche markets. They have shown that innovation and strength to deal with the challenges of the current day and the future. I’m sure that, in the restructuring, the investment, and the research and development, First Minister, operations such as Llanwern and the Orb works will be at the forefront of supporting that expertise, that experience and that strength. I would like to hear from you today that that very much is the way that the Welsh Government is thinking.
When it comes to tariffs, First Minister, again, as you have mentioned, we have seen a new development with the imposition of tariffs by China on steels that will include the electrical steel that the Orb works in Newport produces. I think that has introduced a new element into this debate about tariffs and the dumping of steel from China and how UK Government needs to respond, and, indeed, how the European Union needs to respond. So, do you agree that this is a new factor that has to be assessed now, and that, perhaps, there needs to be a new look at how the UK Government responds to these questions and these issues of dumping and the terrible effect that has on our steel industry?
Also, First Minister, I think we've heard from a number of people today that there is a very basic fundamental question here that needs to be answered by the UK Government. Is the UK Government really prepared to countenance a UK that doesn’t have a substantial steel-making capacity? We've heard of the importance of the defence industry for our partnerships with other nations in terms of the UK's defence. We know about the importance for manufacturing in general, you know, for the standing and status of the UK as the fourth or fifth biggest economy on the world stage. Is the UK Government really willing to countenance a future for the UK that doesn't have that steel-making capacity, or are they willing to do whatever it takes to retain that capacity, including public ownership?
As you’ve said, First Minister, it's a cyclical industry, and we had that experience in Newport. Not so many years ago, the heavy end was shut down in Newport. In short order, Corus were very much regretting that decision and saying, because the market had picked up again, because there was then a lot more demand for steel, they very much wished they'd retain that heavy end at Newport, and they were suffering financially as a result of not having retained that heavy end. So, it is a cyclical industry and, as you say, we need to find a way through to those better times, and public ownership might be the means of achieving that.
Finally, First Minister, will you agree with me that, as I said, we must consider Tata’s operations in Wales as a whole—Port Talbot, Llanwern, Trostre and Shotton—and we must recognise the top-quality products and performance being produced and achieved in those various sites, and our planning, our investment for the future, research and development, must reflect that? There must be a sustainable future for all these plants, and it must be communities, trade unions and workforce, Welsh Government, UK Government, and the European Union, all working together for the outcome that I believe we all want to see, and that is: retaining that steel-making capacity, saving our steel for all our communities, First Minister, right across Wales. As with many other people here today, I’ve been out knocking doors and campaigning, and what I've heard from people is that they will not accept an end to steel making in the UK; they demand that it continues, and they want to see all levels of government working with the workforce and our trade unions to make sure that that is achieved. First Minister, we must not let our people down in Wales or across the UK.
I thank my old friend, the Member for Newport East, for the passion that he has displayed. I know he is somebody who cares very deeply about the steel industry as somebody who has lived his life in the shadow of what was Llanwern steelworks, and he understands, of course, the importance still to his constituents of the industry.
There are some who argue that free trade is all-important, but there is no point arguing that where countries and economic blocs impose tariffs, and we've seen the tariff that's been imposed only in the course of the last weekend on steel made in his constituency. The point is this: there is no point trying to play by a self-imposed set of rules when nobody else is doing it, and it means that the UK has to put itself in a position where it is supportive of the tariffs that are needed at this stage, doing what everyone else is doing. This is not something unusual that would only happen within the EU; every big economic bloc or country is taking these steps in order to protect what they see as a strategic industry, and it's important that the UK does the same.
The UK Government has given its commitment to the steel industry. It needs to deliver on that. That much is true, but we've been making this case to them for months, if not years. It's important now, of course, that we are able to work together to make sure that steel making continues in Wales and, indeed, the rest of the UK, because, as he rightly says, steel-making capacity is fundamental to a major industrial economy. It’s difficult to imagine, as I said before, how the UK could prosper without the ability to make its own steel—a fundamental basic, I’d argue, of any economy.
He’s mentioned research and development. I did say earlier on, of course, that £2 million was available for skills and training as part of the package that we’ve put on the table. We’ve worked on R&D with Tata in the past and I know that, for example, Swansea University, with their new campus, have been very keen to work with Tata to provide the expertise that’s required for the future. What’s needed, of course, now is bridging the difficult gap that exists at the moment to get to that position where R&D can be developed further, where new product lines can be looked at in the future, in Port Talbot and the other plants, and bridging that gap now is all important. This is a strategic industry, as strategic as banking, and should be treated in the same way.
Thank you for your statement, First Minister, and can I also thank other people who’ve raised questions with you today—it certainly makes my list of questions a lot shorter—and also for your answers to those questions as well? I would like, however, to associate myself with those comments that have been expressed against asset stripping, those that are in favour of ensuring a long-term future for Port Talbot, and, of course, the—I think that ‘congratulations’ is the right word—congratulations for the workforce at all our plants, but particularly Port Talbot, obviously, as that’s in my region. Both my grandfather and my mother worked at Trostre, and I need no telling about how steel can make a metaphorical framework for a family’s finances, let alone the finances and the economy of a community. I think it’s incumbent on both Governments to do everything that they can to ensure that that framework does not collapse and that any shortfall in that ambition is avoided as best it can be by both those Governments.
While I recognise that the future of the works in Port Talbot is tied up with Welsh steel and UK steel as a whole, I think the concept of a strategic national industry is a meaningless concept unless it includes Port Talbot, and so I’ve been grateful to you for your comments today, and those of other Members, and, of course, for the Secretary of State yesterday, who said that he is intent on securing a future for Port Talbot. We all want the same thing on this, I think.
I understand that specific Government interventions will depend on the nature of the applications to buy at some point in the future, but I would like to come back, if I may, First Minister, to the conversations you already have had with Tata about being sale ready, if I can put it like that. I appreciate that you said that, in your conversations at Christmas, you weren’t really considering a sale—I think the words you used were that Tata were strongly against a sale—but bearing in mind the world conditions at that time and the existing fragility within Tata, which had already divested itself of over 1,000 jobs in the Port Talbot area, I would be keen to know what it was that you asked of them specifically at the time.
When MG Jaguar was in negotiations—and this is going back some time, obviously, now—certain requirements were made of that company before state help was offered to create the space, to tide it over, to be bought out, ironically, of course, by Tata, as it turned out. You have a support package on the table; I’m assuming you’ll have wanted some sort of reassurances for that. So, bearing in mind at Christmas you were saying that you were assured that a sale was not on the table—I do share the views of some people to my left here that that, perhaps, was a little bit naive—what were you asking of Tata at that stage to prove that it was still viable across all of its estate in Wales, and what did you ask them about the dreaded question—if there is going to be a sale, even though nobody wants it, what did you demand of them in terms of keeping it sale ready? I appreciate that you say that Tata’s a responsible employer and that they want to maintain their assets in order to make them attractive for sale, but what did you ask them for at that time? What did you think made them an attractive option, in anticipation of any sale?
We’ve also heard a little bit, in the media, primarily, of likely reorganisation—and, bearing in mind what I’ve already said about my antipathy to asset stripping, I think it’s also worth bearing in mind that Tata’s already done an awful lot of reorganisation, particularly at Port Talbot, so the word ‘reorganisation’, to me, just flags up more job-loss potential. I appreciate what you said about the Welsh Government’s creation of an enterprise zone and the announcements that have come through the taskforce. We also know what infrastructure projects aren’t immediately available to us. Can you tell us what the next Welsh Government would be able to confirm within days of becoming a Welsh Government in terms of infrastructure that can be acted upon immediately? What construction firms have told us in the past is that they need to be able to plan to procure, and what they don’t have at the moment is certainty about the infrastructure projects within Wales that they can immediately get to work on. Thank you.
Just to clarify the situation for the Member, my discussions with Tata before Christmas, where at that point the choice was to move forward with the McKinsey report, which was the preferred option, and therefore put in place a turnaround plan—at that point, it was suggested that a sale wouldn’t be something that would be considered, because it would create competition. And so a sale was very much off the table at that point. We then worked with Tata and informed the UK Government of the situation, but it’s clear that at some point they decided that a sale was going to be an option. They were lobbied hard by the union, Community, I know, and by the other unions, and, indeed, I made the point to them that any decision to close would be very unwelcome—that they would need to move forward with the McKinsey plan, or, if that wasn’t possible, to look for sale, which is what they’ve decided to do at the moment. They were aware of the package of support that could be put on the table, but they needed more, and there was nothing else on the table at that moment in time from the UK Government.
I think it’s fair to say that the UK Government didn’t see the seriousness of the situation; they do now, and I do believe the Prime Minister is keen to make sure that they do deal with the issue of tariffs and that they do deal with the issue of energy costs that we’ve been lobbying on for a long, long time. And, whatever happened in the past, the important point now is to move forward to secure the industry in the future.
In terms of being sale ready, that conversation occurred last week. When I asked Tata about what their plans were, they said to me that they understood that the asset needed to be sale ready, and I clarified with them that that would mean that the blast furnaces would remain lit in Port Talbot. That does not mean necessarily, of course, that it would continue to produce steel. As far as they were willing to go was to say that we will make sure that, if somebody wishes to buy, the blast furnaces would be in a condition where they can be sold; so, the blast furnaces would continue to be lit.
In terms of infrastructure projects, the M4 relief road is one such project; I know there are different views in the Chamber on that, but that’s certainly the biggest potential infrastructure project that we have that we control, and, of course, things like the tidal lagoon and other UK projects. So, we can certainly move forward, depending on the result of the election, with the M4 relief road. There are other projects across Wales. Members will know that one of the issues being considered is another crossing over the Menai. That, of course, is a potential project. And, of course, Members will be aware of the metro and the opportunities that that offers. But, of themselves, they won’t be enough. We do need the tidal lagoon; we do need to make sure that there are opportunities for Welsh steel and British steel to be used in infrastructure projects that are taken forward across the whole of the UK.
Thank you, Presiding Officer, for agreeing to the recall here today. I hear that some people are saying that it’s not worth having this recall, but I think that, as a nation, we have to show leadership, and, if this debate here today means anything, I think that showing leadership is key.
I think, in all of what has happened in the past week, two things are absolutely certain, and others have said it too—that closure is not an option at Port Talbot, and we are just weeks away from running out of time. We all know by now—or, at least, we should all know by now—what the consequences would be for Port Talbot, and I speak of Port Talbot and I don’t apologise for doing that, because it’s an area that I represent. It’s all anyone is talking about on the doorstep, and rightly so. So, it’s right that we cut straight to it and thrash out what exactly this Assembly can do to fight for the future of this vital Welsh industry. Wales has to show leadership, and if, First Minister, we are not a pressure group, as you agreed with Rhun ap Iorwerth here on my right, then why were you not at the Tata talks in Mumbai as a Welsh Government, alongside the UK Government?
Let’s start with Tata itself. What intentions does the Welsh Government believe Tata has for its Welsh operations? The language coming from the company is worrying steelworkers. Its announcement was hardly a sales pitch. The company has restated its desire to sell, but has also highlighted the pension deficit, and Port Talbot’s supposed losses have risen from £1 million to £2.5 million a day. A sold and rejuvenated Port Talbot would directly compete with Tata’s European flagship plant in the Netherlands, so I want to know if you’ve discussed this with Tata and whether they, therefore, are serious about finding a buyer.
Has the Welsh Government asked Tata whether the current round of redundancies needs to or should go ahead if it is selling the site?
Forgive me for not, potentially, understanding barrister-speak here today, but I want to know—earlier on, you said that you didn’t know whether they intended to close, but you must have known that there was a threat of this happening. I need to find clarity for the people in my area as to when exactly you or other Ministers knew, so that you could have put action in place as early as January or as late as December last year to make sure that we were on the ball with regard to this particular issue.
On the reported daily losses, steelworkers tell me those figures are not real losses, but how far short of Tata’s projections the site is—what Tata had hoped to make, rather than what it lost. Have you queried those figures specifically, and, if so, what has Tata told you, because the media is reporting that as fact? You said earlier to us that you are not convinced of those figures. How do you say that? On what basis do you say that here today?
With regard to a buyer, what kind of buyer would the Welsh Government think is best suited to turning the plant around, rather than a rush sell as many have talked about here today in terms of asset stripping the site, because we need to look carefully at proposals like those from Liberty? If the heavy end is shut down, as much as two thirds of the existing workforce could go. Has the Welsh Government considered that as part of its plans?
Has the Welsh Government worked with Tata to secure funding from the European fund for structural development and Horizon 2020, specifically for the Welsh steel industry now? Because I am aware of the finance Minister’s recent statements on both. I read them and I was trying to look for steel, but I couldn’t find anything within those two statements specifically on steel making. If this is the most important issue at the moment, then surely, if that Minister went to Brussels to have those conversations with Commission staff, steel making should have been at the heart of those discussions. I can’t see that from the Welsh Government statements.
Now matters are far more serious, it’s good to see that you’ve finally come around to the Plaid Cymru ideas of public ownership, as has David Rees. Has the Welsh Government reconsidered Plaid Cymru’s proposals for using its capital budget to support the building of the new power plant in Port Talbot? Our argument is that this can be viewed as an environmental improvement, which should mitigate any potential European concerns about state aids.
With regard to manufacturing, what discussions specific to Tata have you had with the EEF or other trade bodies? What are they saying to you about the future of our steel industry and how are their views being incorporated into your thinking?
How does last week’s news change the work of the taskforce? I understand that they met today, but they didn’t meet last week, when this was all over the news. Why did they not have an emergency meeting, as we have been recalled here today? Surely the time for action is now.
To echo Leanne Wood’s calls earlier, can we now set up a separate work stream on the public ownership possibilities? At the moment, that’s not something that the taskforce has been told that they need to look into—if I’m wrong, I stand to be corrected.
With regard to pensions, schemes run comparable deficits to Tata’s and recover them in better economic times. I was alarmed to hear yesterday that Tata wants to shift its scheme to the pension protection fund, given the hugely unsatisfactorily position that the ASW workers are still in and Visteon pensioners previously had to deal with. We all know what happened there. Have you held any discussions with the DWP and the pensions regulator, specifically, on this, and would you as a Government make representations to seek to avoid it going into the PPF and ensure Tata honours any pensions obligations it has made?
Finally, has the Welsh Government made any estimate of how many jobs would be lost in the town and surrounding area that are not directly connected to but are reliant upon the works? I was in Port Talbot on Saturday, speaking to hairdressers, estate agents, butchers—they’re all concerned about the fact that, if jobs go at the plant, that will have, surely, a detrimental impact upon their work there. This is the biggest issue for Welsh politics now. The fire of our furnaces is the breath of our Welsh dragon. If it goes out, a part of Wales will die, and we cannot let this happen.
The Deputy Presiding Officer (David Melding) took the Chair at 15:14.
They’re serious. We have conversations on a regular basis with Tata and have done for many, many months and years. With regard to the pensions deficit, the last thing we would want to see is a situation arise where Tata pensioners did not have full access to their pension rights. That is not something that we would support. As far as the UK Government are concerned, they have not, up until now, suggested that they would be willing to take over the pension liability. Whether that changes in the next day or so, we will have to wait and see.
As far as the situation with Tata was concerned, at no time did they ever indicate to us that they intended to close down their Welsh operations, or indeed Port Talbot. They indicated that they had the McKinsey report, and that’s what Tata Europe will be putting forward to the Tata board. We knew from the statement that they made. The first time that we knew, from the statement that they made from Mumbai, was that they wanted to sell. On that basis, of course, we have then moved forward rapidly in order to look to resolve the issues in the industry, working with the UK Government.
She is right to say—and I said this earlier on—that the £1 million a day lost is a figure that I’m sceptical about, mainly because I’ve had different figures from Tata themselves as to what the true figure is. I have no doubt that the heavy end, at the moment, in Port Talbot is losing money, but I’m not convinced that it is £1 million a day. Certainly, before Christmas, that was not the situation. I’ve had different figures since then. What exactly the situation is would require, of course, looking at the books in more detail. Absolutely no difficulty in making sure that there is a committed buyer. The last thing that we would want to see is a buyer who comes forward and then, of course, looks to reduce the size of the workforce, or indeed to asset strip the plants that are there already.
She mentions the European globalisation fund. It’s for the UK Government, of course, to make applications under that. They have not done so so far. We will continue to press them to access all sources of European funding in order that they might be of benefit to the plant themselves.
In terms of the power plant, it is something that we have been in discussions with Tata about. She will know about the package of support that I’ve already mentioned. That’s been on the table for some months; but, of course, what’s not happened so far is an equivalent-by-size package from the UK Government, and that is absolutely crucial for the future in order for the industry to continue.
In terms of public ownership, I agree that public ownership must be on the table, but it’s a UK strategic industry. The UK Government has the resources to take the steel industry both in Wales and in England, because there are English plants here, into public ownership, at the very least to ensure that there’s time to find a committed buyer for the future. That is something that I very much support.
So, in terms of the issue of the pension fund, which I think I have dealt with, yes, it is a liability. Again, the pension fund and the environmental liabilities are substantial. They are potentially well beyond what we could afford to take on as a Government in Wales alone. That’s why, of course, it’s for the UK Government. We accept that there is a financial call on us; we don’t say that this has nothing to do with us, clearly, but it is for the UK Government then to make sure—as it did with the Royal Mail, as Peter Black has already said—that it is easier for a responsible buyer to come forward and to save the jobs that are there.
Finally, she asked me about the multiplier. It’s 1 to 1.22. For every one job sustained in Tata, it sustains the equivalent of 1.22 jobs elsewhere. So, she is correct to say that the impact more widely in the economy is substantial and not just, of course, limited to those working for Tata.
I come from the small village of Brymbo, which had a pretty large steelworks, actually, compared with the small village, and a very successful steelworks, which produced high-quality steel. It helped us, not just in the Brymbo area, of course; it supported a large workforce. It closed in 1990, with the loss of 1,100 jobs. The bar and billet mill that, at the time, was state of the art and had only been installed a few years earlier was sold to steel companies in China. Now, of course, what we’re seeing here, in Wales, in the UK and in Europe—and I understand what the First Minister says, that we have a good relationship with China—it doesn’t alter the fact that the steel industry is under threat because of surplus steel coming into us from China; it is on the world market and it is affecting us. Brymbo has recovered, but it’s been a long way back, and it’s a different community today to the community it was. That’s what I fear. We cannot afford to strip the steel industry out of Port Talbot, Llanwern, Trostre or Shotton. We can’t afford to do it. Wales needs steel, and steel needs Wales.
We have dedicated workers here. We have unions who will co-operate with management, and we’ve got innovation. We cannot afford to lose that. What we need though now—. People have been talking about it, and I do hope—. I’m retiring tomorrow, but I do hope that people here will remember this, as they knock on doors: when you talk about political co-operation, it has to be with UK Government, with the Welsh Government, with local authorities, and between politicians of every stripe.
My constituency now runs alongside Shotton, which closed in 1980, with the loss of 6,500 jobs, with a terrible, terrible impact on the area. But there has been a real fight-back in the area. Now, we know that there are several hundred workers employed on the Alyn and Deeside, or Shotton, site and the coating business is profitable. It doesn’t produce steel, but it reportedly made £20 million last year. Every one of these plants is integral to the steel industry. We can’t afford to lose any of them. That’s what we should be keeping in mind. I do realise, by the way, that Port Talbot, is the biggest, and it will have an enormous impact. You said yourself: it’s not just the jobs that are in the plants themselves; it’s the people who depend on those jobs. But, I refer back to Brymbo, because Kirsty Williams was actually absolutely right: we can’t afford asset stripping. It doesn’t work. It’s not successful—not for the communities and places that are asset stripped.
I am so pleased to hear you say that this is an industry not doomed to die. It is cyclical. John Griffiths made that point himself about Corus, which now has some regrets about letting some things go. But, what we have for the future has to be strong and sustainable, and it has to be long term. First Minister, you talked about the support we are prepared to give here from Welsh Government, and the things that you have agreed with people. Tariffs will have to be looked at. Energy prices need to be looked at. There’s a whole package of things that need to be put together, and I’m very glad to hear that the Welsh Government have given their commitment to what they can do for the turnaround. We do need the UK Government to co-operate with you. A lot of questions that I was going to ask have been answered, but what I would like to know—. On the one hand, we are saying that we haven’t got a lot of time because, who knows who is going to come in, or not come in, and what will disappear? At the same time, we have also got David here telling us—quite rightly—that these plants and managements need to have time to develop what they’ve got to offer and to show how good it is. So, it’s the timeline. The other thing that I am particularly concerned about, perhaps because I am retiring tomorrow, is the pension situation. You’ve answered it to an extent, but is there anything at all that we can do to safeguard and to support people who not only face losing their jobs, but face losing a lot of their future? Those are my questions.
Can I thank the Member for her questions? She has said very passionately that Brymbo steelworks, and the effect of the closure of Brymbo, had an enormous effect on the community. The reality of the situation is this: you cannot make up this number of well-paid jobs in a short space of time. That is why it’s so important that jobs such as these in the steel industry are maintained, because there is no way that they can be replaced very quickly or, indeed, replaced with the same levels of pay—certainly not in a fairly short space of time.
Tata, as I mentioned earlier on, are a company who value their global reputation. There are some companies who would think nothing of just collapsing their division in the UK, going bankrupt, walking away from the environmental liabilities of many hundreds of millions of pounds, walking away from the pensions liability of, again, probably many hundreds of millions of pounds, and then leaving the local authority, actually, in terms of the environmental liabilities, to pick up the tab and the UK Government to pick up the tab in terms of pensions. Tata, as a company, have always prided themselves on their corporate social responsibility, and I have reminded them of that. If they are to leave the UK, it needs to be amicable, and it needs to be in a situation where people feel that Tata have played fairly. To lose that reputation, for them, would be a major change from the situations that they have found themselves in in the past. That is why I have said to them that there is a need for sufficient time to allow a buyer to come forward. The assets have to be sale ready. There can be no question of walking away from liabilities, and, of course, what we need to see now—and, as we accept this, the UK Government will accept this—is progress towards finding a buyer, and if there is insufficient progress in a short space of time, then UK Government running the assets in England and Wales in order for a buyer to be found.
Y Dirprwy Lywydd / The Deputy Presiding Officer
I still have 17 Members who wish to be called. This is such an important matter, I'm certainly not going to apply any time limit, but can I just remind Members that precision and a lack of repetition will in no way reduce the power of your scrutiny and argument this afternoon? Eluned Parrott.
Diolch, Ddirprwy Lywydd. First Minister, today, it’s right that the focus is on the future, but there are questions on the past and the present that I would like some clarity on. Port Talbot is the UK’s biggest steelworks now, so the future of Welsh steel is actually the future of Britain’s ability to be a manufacturing nation in the future. It’s not only a strategic business for us because of the tens of thousands of people here who work in the industry, and the impact that any closures would have on our communities; if you like, it is an existentialist question for the future of Britain as a modern industrial economy. Is that what we will be in the future, or is it not? If we can’t make steel, we frankly can’t build so much as a garden shed without being reliant on imports in the future, and at the mercy of a subsidised Chinese steel industry that seems set, by its actions, to be halfway to getting a monopoly. But, as I say, I have questions on the past, before we move to the future, that I would like some clarity on.
I have been told that, on Friday, when Sajid Javid met with steelworkers at Port Talbot, he admitted that he knew that the sale of UK assets was a likely outcome three weeks previously. Despite that, he didn't go to Mumbai, and in doing so, I believe, he has lost the confidence of steelworkers here in Britain by his actions. You’ve said that the report in the ‘Financial Times’ that you knew about this at Christmas is wrong, but you haven't been entirely clear about when you did know that a sell-off was a likely or possible outcome here. If you knew that they were commissioning management consultants to look at the future of the business, you must have anticipated that this was possible, and so, I ask you again, because you did not answer when Bethan Jenkins posed this question: why was there no Welsh Government representative at that meeting in Mumbai?
The Welsh Government’s future relationship with Tata over the next few months is crucial in keeping these plants going through this immediate crisis. As we've heard, if the furnaces go off, we face an even bigger task getting a buyer. But, given the commercial sensitivities, how confident are you that Tata are actively pursuing this positive sale that we would all wish to see? I am deeply concerned by the negative rhetoric about the Welsh sites that we've heard coming from the company, and from others, and if we do not set the record straight, then finding a buyer will be even harder. You have wanted to set the record straight, I know, about this question about whether or not the losses are of the scale that we know, but let's be clear here: we have to be on the front foot. We have to be telling the world that this is a business, this is an industry, with a positive future, with skilled and talented people, with opportunities for new businesses in the future, with an innovative outlook. This is a business with a future, and we need to be all singing from the same hymn sheet when we’re talking about the future for Port Talbot.
You're absolutely right, First Minister, that asset stripping is something that would be a disaster, not only for Wales, but for Britain as an industrial nation. Do you agree with me that, actually, we should be even cautious of some of the piecemeal approaches that people are talking about? Because, the plants that Tata own across the UK are interdependent, absolutely. If we lose Port Talbot, Shotton and Trostre lose their supplier. If we lose Shotton and Trostre, Port Talbot loses something like a third of its business. These plants entirely depend upon each other, and when we look to a future that is safe, secure and sustainable, we have to understand that that business really does work as a partnership. Do you really believe that the UK Government understands how closely related those businesses are, and can you give us any insight into what they’re thinking is in terms of talking to potential buyers, and whether or not they will accept any piecemeal proposal?
There has been talk of a workers-and-management buy-out as a possible way to create a sustainable future for the business as a portfolio, and I wonder, First Minister, if you can give us an idea of whether you’ve had discussions with any of those individuals. If so, in addition to the support package that you’ve previously outlined, what additional support and advice can the Welsh Government offer to a worker and management buy-out team to help them to bring a viable proposal to the table? Because, clearly, in the timescale available, that is going to be a challenge.
Now, looking to the immediate actions, clearly, we need immediate action from the UK Government to get us through this current immediate crisis, but if steel in Wales is going to be a strong, sustainable industry for the future, something in the long term has to change. If that wasn’t the case, Tata wouldn’t have been commissioning management consultants to look at the business. We can’t compete, in the long term, in a commodity market, with Chinese steel on price. We can’t do it and we shouldn’t. But, I really do believe we can secure a sustainable long-term business if we’re looking at competing with the very best in the world on the quality of what we offer and on being able to specialise and differentiate ourselves, between one product and another. But, the problem is, of course, specialist products change very fast, and we do need a long-term plan of investment to put us ahead of the curve in the first place and then keep us there in the long term.
Now, as you’ve rightly said, Port Talbot was breaking even last year, now it is not. This is a market that moves very fast. Frankly, the workers I’ve spoken to are heartily fed up of living from crisis to crisis. Does German steel live from crisis to crisis? No, it does not. Why does it not? Because they have planned for the future. They have invested for the future. They have kept themselves at the forefront, and we need to make sure that, when we are looking at the recovery of British steel here in Wales, we are doing the same. We cannot be complacent. We cannot assume that, if we can just get through the next few months, the future will always be rosy. We have to do better than that. Would you agree, First Minister, that the backbone of any future strategy must be the five-point plan that the industry and its unions brought to the steel summit in October? If so, two of those five points sit in your hands.
We’ve heard about business rates, and I’m grateful for your comments on that, but your response in terms of procurement is completely absent from your statement today. Yes, we know that some of the products are in the hands of other steel producers, but we have to ask you: have you done the audit of Welsh procurement to see what your steel use, as a buyer, looks like? Have you made an assessment of how much of the Welsh Government’s steel purchasing has been Welsh steel in the recent past? What steps have you taken to ensure that Welsh public bodies in the future will be sourcing steel in a way that gives Welsh steel the best possible chance whilst remaining within the rules? First Minister, not all of the cards are in your hands, we all know that, but that’s no reason not to play the cards that you do have. When can we expect to see a timetable from you outlining when the actions the industry have been begging for for six months will finally come to fruition?
Well, I thought, over the last few hours, I’d actually explained what our position is and what we want to see in taking a way forward. It’s correct to say that we didn’t have Government representation in Mumbai; that’s because there had been substantial discussion, both by phone and through correspondence previously. Our view was made well known to Tata, and that was that that the McKinsey report, which was a turnaround plan, not a plan to look at whether to close the plants or not, but a turnaround plan, should be taken forward, that Tata Europe were advocating that to the Tata board in Mumbai, and that that should be the way forward. So, the first time we heard there was going to be a sale was when a statement was made, because that’s when the situation was confirmed. Neither did we know what the timescale might be until, again, the statement was confirmed.
It’s right to say that the last thing we’d want to see is a piecemeal sell-off of the different plants, but I don’t think that’s possible anyway. Shotton, for example, sources its steel from Port Talbot. If Shotton didn’t have that steel, it would have six months where it would have to look for steel from somewhere else and, in that time, it wouldn’t be producing anything. It’s obvious to Members what that would mean in terms of loss of customers and in terms of temporary lay-offs in that plant. So, even though Shotton is a profitable undertaking, it still needs the steel from Port Talbot, certainly in the short term, in order to be able to prosper, and the same applies to the other plants as well.
We’ve not seen any details yet of the management buy-out proposals; although I’ve read of it, nothing’s come forward to us yet. We’d study that, of course, in detail and would look to support any viable plan that preserves and enhances the steel industry in Wales. I’ve seen the five-point plan. I mentioned procurement—the M4 relief road is the biggest project that we have. I know her party’s view on that, but it is the biggest project that we have, and, of course, as I’ve already mentioned, the tidal lagoon, which is outwith the control of the Welsh Government.
In terms of procurement, we’ve seen an increase in the amount of Welsh product that is being used by the public sector in Wales, but we shouldn’t lose sight of the fact that procurement at a UK level and dealing with energy prices and the issue of tariffs are the main issues here. Yes, procurement in Wales can help—I don’t deny that—but there are major issues that would remain if the UK Government does not deal with them now. So, whoever runs the steel industry in Wales—whether it’s public or private or a joint venture—the issue of energy prices and tariffs still has to be resolved, otherwise the problem will still remain whoever runs the industry. And these are issues, of course, that I will be discussing with the Prime Minister tomorrow.
Many of the questions I was going to ask have already been asked, but there are quite a few important points I think that, perhaps, haven’t been considered. For example, I’m thinking of the 1980s and what happened to the coal industry in Wales. And one of the major reasons for that was that we didn’t get any support from the British Government. So, I was very pleased to hear you say earlier that they see now that this is a serious problem, because up until last week I was really flummoxed by the lack of effort by the British Government to support the UK steel industry. And even when I listened to ‘The Andrew Marr Show’ yesterday morning, even then, the Minister there didn’t know really what was going on as far as I was concerned, because they were talking about buyers, and one of my concerns with buyers—. I listened to somebody from Liberty who said that in Port Talbot, it’s the blast furnaces. He wouldn’t buy Port Talbot because he wants to convert steel products from rubbishy products and convert into steel, and doesn’t want to convert iron ore into steel. And I thought, ‘How are you going to know what these buyers are going to do?’ So, my question on that to you, First Minister, is: what involvement will the Welsh Government have with Tata when they talk about the kind of buyers that they’re proposing to sell to?
As far as the major concerns—and you mentioned them earlier; the energy and the tariffs—well, really, that is with the British Government, and if they can’t see that the UK is dependent on a good steel industry—because if we don’t have a good steel industry, we won’t have manufacturing companies in this country—so the number of jobs we’re talking about losing probably triples, not only the ones involved with steel production, but also the other jobs aligned with it.
I can’t remember who said it earlier—it was Bethan Jenkins talking about Port Talbot; well, if she had her hair done in Llanelli, she’d have the same questions asked there—what’s going to happen to the jobs in Llanelli? So, it’s not only Port Talbot that worries about what’s happening. This afternoon, First Minister, you’ve said on many occasions and supported what John Griffiths said earlier—it’s not only Port Talbot; it’s Shotton, it’s Llanwern, it’s Trostre. The question that I was going to ask you there was: if we’re going to have enterprise zones in Port Talbot—and I think that’s a good idea—what about the three other regions, then? Are we considering enterprise zones in those areas? Because, in the end, it’s jobs we’re talking about, and you mentioned earlier that for every job in the steel industry, there’s 1.22 jobs aligned to it. And I read somewhere that Tata actually spends £200 million on wages in Wales. How many jobs that is I don’t know, but if you double that and add another fifth to it, we’re really talking about a significant number of jobs—probably 10,000 plus. So, it’s quite important that, if that’s occurring in Wales, the British Government realises what will happen in England as well, because if they are going to produce cars in England, where are they going to get their steel from? Are they going to pay those low prices from China, and get the low-quality steel that somebody was talking about earlier? So, your debate tomorrow with the Prime Minister in whatever takes place is quite an important one, and I was very pleased to hear you say earlier that they’re seeing this as a serious problem, because up to now, they haven’t seen it as a serious problem. So, hopefully, you’ll have a good, positive discussion with him tomorrow. Diolch yn fawr.
Could I thank the Member for his comments? Much of the ground has already been covered, and he makes the point, of course, about the concerns that people feel about Trostre, obviously, in his constituency. We will, of course, continue to talk to Tata and be involved in any process that involves a buyer coming forward with a view to maximising the jobs that are preserved as a result of that process.
Thank you, First Minister, for your statement. It is pleasing to note that the Welsh Government and the UK Government are working together on solutions to support our steel industry. The steel industry is vital to the UK, and securing a long-term, viable future for the industry is essential for the people of my region. We must all work together to tackle the problems facing the steel sector.
On energy prices, we welcome the action taken by the UK Government to mitigate the impact of climate change policies, which has seen over £50 million returned to Tata in compensations. However, we also have to ensure that the actions to embrace renewable technology do not drive up energy prices. First Minister, do you agree with me that we should not be subsidising the industrialisation of renewable energy and that future subsidy should be both affordable and sustainable? We welcome moves to build an efficient energy plant at the steelworks in Port Talbot. What can Welsh Government do to support the steelworks becoming more energy efficient?
Next door to the Port Talbot plant, we have the Baglan energy park. Is the Welsh Government working with any companies looking to develop energy storage solutions? In the rush to exploit feed-in tariffs, a glut of solar farms has come on stream in the last few weeks. However, we had days in the height of summer last year when the existing solar generations exceeded demands and the energy was wasted, a situation that will be much worse this year with the new capacity that has come on stream. Unless we can store this energy, we can’t provide cleaner, cheaper energy to high energy users like the steelworks. First Minister, will you work with the UK Government to secure greater R&D into energy storage solutions?
One of the most essential ingredients in making steel is coal. What consideration has the Welsh Government given to allowing the steelworks at Port Talbot access to vast amounts of coal sitting beneath the South Wales West region?
We welcome the work the United Kingdom and Welsh Governments have undertaken to secure an enterprise zone at Port Talbot. Can I ask that this covers not only the immediate area around the plant, but also Aberavon and Neath, as both towns are dependent on the steelworks?
Finally, First Minister, can I ask that you work closely with the UK Government to secure concessions from the EU? EU rules effectively tie one hand behind our backs—[Interruption.] Well, we’re limited in the support we can give to the industry, and we can’t insist that public procurement contracts require Welsh steel. While the UK Government have introduced new procurement guidelines that make conditions more favourable for British steel, we can’t specify British steel, as it breaks EU procurement rules. For those of us who have yet to make up their minds on the EU referendum, this is crunch time for the European Union. They have to show short-term flexibility in state aid and procurement rules in order to safeguard the long-term future of the Welsh steel industry. Thank you.
Well, let me first of all deal with the issue of energy prices. I’ve seen figures from other steel producers that suggest that Germany has prices that are 20 per cent lower than the UK and Spain is 37 per cent lower. They have substantial renewables as part of their energy provision. It’s nothing to do with renewables, and if the Member thinks carefully about what he’s just said—he was asking me to oppose subsidies to renewables—that means he’s against the tidal lagoon, because the tidal lagoon is a renewables project, and has therefore directly contradicted what his own leader said at the beginning of this debate. When it comes to solar, the whole point of the national grid—. I don’t believe that solar energy is wasted. The whole point of the national grid is that energy is sourced at a time when there’s the demand for it. So, some energy will come from bigger plants, some from smaller plants, such as those who use solar energy. So, energy isn’t wasted from solar. Every single source of power feeds into the national grid, and it’s for the National Grid to decide how energy is brought on tap.
He talks about coal. Now, I’m sure he means that what he wants is for consideration to be given to a deep mine supporting the steelworks. We’ve given support to that. That clearly isn’t a factor at the moment. I hope he isn’t suggesting that there should be more opencasting, particularly for many of us in whose constituencies opencasting has left a very serious legacy. I hope he isn’t suggesting that that is something that he would want to pursue, but he makes the point about the deep mine—if that’s what he meant, well, yes, it is something that we’ve worked with Tata on in years gone by in terms of developing that deep mine.
I have to say to him that the issue of tariffs is an issue for the UK Government. It was the UK Government who opposed the imposition of tariffs at a sufficient level in order to protect the steel industry. It wasn’t the EU that did that. It was not just the UK Government, in fairness, but the Dutch Government as well, if I remember rightly. They said that they didn’t want to see those tariffs increase because of a fear of a trade war with China. We’ve now seen, of course, China impose tariffs anyway. So, I’m afraid that it’s not the EU that has to cop the blame in this regard. The UK Government has to look at what it has done. It has to take steps now to resolve that issue—we are where we are—and to make sure that the tariffs are in place to create a level playing field for Welsh and British steel, and to make sure that we have energy prices that are competitive. It’s nothing to do with renewables because we know that other countries have substantial renewables sectors, yet their energy is cheaper than the UK’s. These things have to be dealt with. So, yes, there needs to be a short-term solution, that much is true, but, long term, those issues need to be resolved. Otherwise, whoever takes the plant over or plants over is going to find it difficult to actually run them at a profit in the medium term.
First Minister, the first thing I want to do is thank you: first of all for standing there for two and a half hours and taking all the questions and dealing with them expertly, like you always do, but, more crucially, for reconvening this Assembly, because we really do understand here that this is a really critical time that might define the future of Wales as we currently know it.
I’m speaking in this debate because, clearly, Trostre is in my area and the impact will be felt loud and clear in that area in that region. I think, like others, I want to pay tribute here today to the workers who have always given of their very, very best, backed by their families, who have given of their very best, to make sure that they can produce the goods that we can be so very proud of, which in turn produces the very best British goods coming from Wales.
I have to say that I am disappointed so far with the response that the UK Government has shown. It is notable that everybody in Wales was here when we were needed and we weren’t actually on holiday elsewhere, and that we did recognise the urgency that was required to take this issue forward. It is also notable that the banks were bailed out, and quite rightly so at that time, and that maybe some of the same bailing out should be available to the steel industry. I hope that that will happen, and I know that you have called for that. But if we are talking about steel as being a strategic industry—and it is—then we need a strategy that will underpin delivery of that. If you look at the growth in the economy—the projected growth as it stands—it’s just above 2 per cent in the private sector, but if you have public investment just in those projects in Wales alone, that shoots up to over 6 per cent growth in the public sector.
That gives some sort of idea what we could be doing if we stopped and thought about a different ideology that might actually grow the manufacturing industry in this country, because it is ideology, at the moment, that is preventing that from happening. If we had a clear manufacturing plan that was allied to all of the constituent parts that go with that, and if we had some investment in steel—because we are talking about steel—and if we had some investment in the growing of that economy and in bringing major projects forward, we might actually see a real turnaround in a very short time about the possibilities of keeping the steel industry alive and well in Wales. It is the case, in my opinion, that we have to keep steel here in Wales. Because if we lose that, we lose all the other possibilities that everybody has talked about here today. We have done an excellent job in Wales in bringing industry into Wales. The types of industry that we have brought into Wales also need a good steel industry to support them.
Can I thank the Member for her comments and join with her, of course, in emphasising, once again, the need to have a viable and vibrant steel industry in Britain, and, of course, in Wales? I think much of what she said I’ve already answered, but I know, as somebody who has Trostre within her region, it is a matter on which she feels very passionately, and rightly so.
As one who also represents Trostre, may I say first of all that I—and, I’m sure, everyone in this Assembly—do stand shoulder to shoulder with the workers in Trostre and the wider Tata workforce for their future, and we do understand how important those works are for the town of Llanelli, not only as works, but in the way they are actually involved with production in Llanelli, the way that they relate to the car industry in Llanelli, and the way that they generate crucial skills, the loss of which to Llanelli would be a huge blow to the whole of west Wales? It’s important that we as an Assembly have gathered to discuss this issue, but it is just as important that we don’t turn into a talking shop. At times, the debate this afternoon has seemed like a vigil for the steel industry rather than a Parliament with fire in its belly fighting for the soul of the Welsh economy.
What people in west Wales don’t understand is how it was possible to save the banks with over £100 billion, but it isn’t possible to save the steel industry, which would cost something in the region of £1.5 billion. People simply don’t understand that. For us not to be a talking shop, and to insist on action, then we do have to have answers to those questions. You will be meeting David Cameron, First Minister, tomorrow. Will you tell him that this Senedd expects at least for the UK Government to match what you have done as the Welsh Government as your proposal? You have mentioned today £60 million from the Welsh Government. That means that we need at least £1 billion from the Westminster Government tomorrow, on the table, to show clearly that they are going to support the steel industry.
If we don’t see the colour of David Cameron’s money tomorrow, we’ll know that the UK Government is walking away from steel, walking away from Wales, and walking away from the Welsh economy. We need to see that £1 billion up front tomorrow from David Cameron. Take that message to him please, First Minister. It’s a pity this is a statement, not a resolution, and that we can’t resolve as an Assembly today that that is the united, unanimous view of this Assembly—that the UK Government must at least match what the Welsh Government has already done.
But, turning to what you have already done, or not done, don’t you also agree that you, now, must also up your game considerably? You have talked about £60 million available, £30 million of which is actually a loan. That’s probably less than you’ve given Aston Martin. Now, we don’t know the true figures. Certainly, in kind, it’s less than you’ve given Aston Martin. What are you going to do now for this crucial industry? You need to increase the amount of support that you can give, and shame the UK Government into giving extra support. I was disappointed with what you said today about potential nationalisation. Nobody expects the Welsh Government to become a long-term owner of Welsh steel. Nobody expects that. But you took over an airport because it was failing. You took over an airport in order to pass it on to better owners in time. The Scottish Government took over Scottish steel plants temporarily, for a short period of time, so that Liberty Steel could then step in.
He who would be a leader, let him be a bridge. If you want to be First Minister of Wales, then you do have to show leadership in this area. You have to be ready to put aside your concerns and your caution and you have to be bold. You have to be proud on behalf of Wales and be willing, if needs be, to shame the UK Government by stepping in to save this industry.
One question that hasn’t been answered to date is what the Welsh Government was doing when the summit was taking place in Mumbai. It’s been asked of you a number of times, and I’m going to ask it again: where were you or a member of your Government when this summit was happening? Why didn’t you follow Stephen Kinnock? To be fair to him, he is a backbench MP who had gone there to make the case for his community, and I respect what he did. Why didn’t you do the same? Now, I know what you were doing the weekend before then, I know where you were, so tell this Assembly why you didn’t decide to go from where you were on that weekend straight to Mumbai. What was the reason for that?
The very last question is: what are you now doing about the taskforce and skills in this area? We have to change the taskforce and its remit. You’ve said nothing about that today, although it has been asked of you a number of times. Even if we do succeed in finding a buyer. or even if it is nationalised, then we will need new skills. Some people will have to leave jobs and gain additional skills, and some will need additional skills in their current employment, and €2 million, I would suggest, is not sufficient for that. Do you regret now that you cut the skills budget three years on the trot, destroying the funding available for the retraining of adults? So, will you now review this issue, as €2 million isn’t enough? We must have more funding for skills, not only in Trostre, Port Talbot and beyond, but also for the wider economy. The time has come to take action. You are in a perfect position to do that as the leader of our nation, for the time being. Now, will you show more fire for this industry, please?
Well, can I remind the Member that I need no lectures on Port Talbot? I live almost within sight of it. I've lived near that plant for many, many—much of my life, in reality, and I know how important the industry is to Wales and, indeed—[Interruption.] Well, I'm sorry if you don’t accept that, as it happens to be true.
Now, in terms of the issues that he has raised, I have seen his party suggest that we should set up a steel company with a Welsh Government stake in it at some unknown cost and unknown liability. Now, I'm all for suggestions; I don't run these things down, but there are clear liability issues there in terms of how much money this would cost, where the money would come from, and any kind of steel company would need an unlimited guarantee to operate, or it would be trading whilst insolvent and the directors would be personally liable. So, there's the issue: there would have to be an unlimited guarantee on the part of the Welsh Government. Now, clearly, that is an issue that is of concern, and the money doesn't exist. The money doesn't exist. I've explained to him how much money exists in all our reserves. He is correct to say that we need to consider what kind of package we can put on the table to add to what we already have, and we'll do that. That's part of the discussions that will be having with the UK Government and any potential buyer.
He mentioned the airport. The airport was £52 million. It's much, much smaller than the kind of liability we’re talking about now. And, of course, there are issues—[Interruption.] Well, I didn't interrupt him when he was speaking. And, of course, there are issues regarding energy prices and the world market, and, of course, issues with regard to tariffs that don't exist with regard to the airport. So, the amount of liability, the amount of exposure, is substantially less than it would be for the steel industry.
With regard to what Scotland did, the Scottish Government had no liability at all for what it had to do. It simply took with one hand and gave with the other. That's all it did. There was no liability. There was no risk to the Scottish Government in that regard. It simply acted as an intermediary, in effect, for one buyer and one seller. And nor do I think, I have to say, that it is correct that the UK Government should not be made to recognise its liabilities and its duties to the Welsh people. Simply to say that this would all be a matter for the Welsh Government clearly wouldn't be correct. He wasn't saying that, in fairness, but others in his party have said that before now. It's a UK strategic asset; there are plants in England. We're not proposing, I'm sure, taking those plants over in England.
He has mentioned the £60 million. I will be making the point very strongly, on his behalf and other Members, that we need to see a plan and money in place as quickly as possible from the UK Government.
Now, of course, we have to see what the nature of any potential buyer’s offer might be, but if there is insufficient time according to Tata’s timetable for a buyer to come forward, there will be a need for the UK Government to run the industry in the meantime. I will make that point absolutely clearly.
He talks about Mumbai; the delegation that went to Mumbai didn’t talk to the board in the board meeting. We had constant contact with Tata in terms of correspondence, both in terms of official level and ministerial level, so there was no question that they didn’t know our view or they didn’t know what support was available. Then, of course, we saw the decision that they took, and it was the first time we were aware that they were looking to sell.
In terms of skills, well, skills are important, but when compared to issues such as energy costs, when compared to issues such as the tariff, and when compared to issues such as the steel market, they are the major issues that need to be resolved. Whoever runs the steel industry will have to have assistance with regard to pensions, will have to have assistance with regard to energy prices, and the issue of tariffs will need to be resolved. Without action in those three areas, then no matter what the business model is that runs the steel industry, it’s not going to succeed, certainly in the medium term. So, those issues do need to be resolved. Yes, there are issues that we will take forward. We’ve already mentioned the package we’ve already put on the table; we’ll be considering what else will need to be done, and we will discuss with the UK Government, or rather we have been discussing with the UK Government, and we’ll continue to do so, what the UK Government will need to do in order to save our steel industry.
May I thank the First Minister for allowing me to speak in this debate as the Member for Alyn and Deeside too? First Minister, last week brought back many memories—36 years ago to the day when a cloud descended upon Alyn and Deeside and Flintshire, when Shotton steel, then under Corus, received a redundancy notice. Six and a half thousand people, in one day, received redundancy notices in my constituency, and that changed the shape of my community and we still, today, bear the scars of that.
You mentioned earlier, First Minister, that this is a strategic industry for the UK, and you’re absolutely right. This also, First Minister, is a national economic emergency, in my view. The fact is that the last time this happened, when the banking industry came under this pressure, the Government stepped in. I call today for the Government of the UK to step in also. We must make sure that our communities don’t see what we saw 36 years ago in my community, and also in communities like Sandy Mewies’s in Brymbo, not so long ago in Wrexham.
Now, the First Minister is right in terms of the success of Port Talbot, and we must stand here in solidarity with colleagues across the length and breadth of Wales in terms of the business of steel making in our communities. It’s our industrial heritage. These are the things that we are good at. In fact, First Minister, you’ll be aware that Port Talbot as a heavy manufacturing industry is one of the world leaders in terms of green steel, and we should make sure that we promote that at every opportunity. My constituency, in Shotton, has world-class panels being created and world-class technology and skills being delivered for many businesses the length and breadth of Wales and Europe, and long may it continue, working with my colleages in Unite and Community unions, important as they are, representing the very people we support.
I have two questions, First Minister, that you may be able to help with. First of all, you do recognise, as I do, the issue of mass unemployment and the fear of that. I would ask you when you meet Mr Cameron tomorrow that you ask them to do a review, very quickly, of the impact of unemployment. The fact is that 6,500 in Port Talbot, or 900 people in Shotton or elsewhere, in Newport, across our communities, have a long-term effect, and the fact is that protecting the workforce now may be cheaper, actually, than the long-term effects of community destruction longer term. We must make sure we look at the wellbeing of communities for the future.
My second point, First Minister, is I also recognise that you recognise the importance of the workforce right across Wales, and across the UK, and I want to just ask that you continue to lead in the way you have done over the last week, and give my community reassurance, and all the others too, that you will make representation on behalf of my Shotton team members and of colleagues across the steel sector here in Wales.
First Minister, you have been, for this week and before, the statesman of this organisation and of this institution in leading the way across Wales, and I’m very proud to have been part of that. Can I say, it is also important, and it’s very difficult for me and people like Dai Rees and John Griffiths—people who represent communities across the length and breadth of Wales—to be so statesman-like? I just think back to the days of the 1980s when Mrs Thatcher rained down upon my community, and many in this community. Let us hope that this is not about Mr Cameron just finishing the job that Thatcher started. I and many in this room are relying on you, First Minister, to take the message to Westminster, and now it’s time for Mr Cameron to step up to the table. Thank you. [Applause.]
Can I thank my colleague for his comments? He is quite right about the banks, as was Simon Thomas. The reality is that the banks were nationalised; this is a strategic industry, as the banks were and are, and therefore public ownership must be an option. There is no doubt about that. I remember—. Not every party supported the banks being taken over as they were, but it was important to keep the financial sector going; it is equally important to keep a strategic industry like steel going, because he’s right to point out that the cost of unemployment and the cost to communities is substantial. And we know that without those well-paid jobs, we will see an effect—not just in Port Talbot, or in Llanelli, or in Newport, or in Shotton—but more widely across the whole of Wales. He has made the points that he has on behalf of his constituents, of course, in Shotton. I’ve heard the Prime Minister in what he has said that he wishes to make sure there is a future for steel in Wales and in Britain. I’ve heard the promises that have been made by the business Secretary, and I expect him to deliver on those promises. And again, tomorrow, I will be making the point that we cannot afford, in the UK, to lose our steel industry; we cannot be an industrial economy without the capacity to make our own steel. We will step up to the plate; the UK Government has said they will; we do now need to see action over the next few days.
Thirty five years ago, the building society I previously worked for merged with the Shotton steel building society—the John Summers Building Society—beginning my own long association with the wonderful people in that community. And there are still over 800 jobs at the steel plant in Shotton. And after Tata Steel Colors in Shotton told me early last year that they were critically dependent upon the supply chain for sustainable British steel, and that they were directly affected by substandard imports of carbon steel rebar because of their reliance on feedstock from the heavy end in south Wales, as they described it, I added my support alongside Members across the Chamber in March 2015 to the call for the Welsh Government to adopt a charter for sustainable steel, pledging only to purchase carbon steel reinforcement for concrete from suppliers adhering to the framework standard for responsible sourcing.
In January of this year, 10 months later, I asked your Minister for Economy, Science and Transport what action the Welsh Government was taking to adopt that charter, or whether she could share with us any legal or other barriers that might prevent full adoption at a devolved level. And she replied,
‘there was an issue that Jane Hutt looked at.…I will have to check what reason was given why we couldn’t do it, because I recall there was something.’
Could you tell us what that something was, First Minister, and whether there is still opportunity to revisit this within the context of the legal framework and the international framework applying?
My second and final point relates to the EU aspect that so many Members have referred to, because EU membership means we are dependent upon the European Commission to speed up work on unfair trade practices, and ensure the effectiveness of state aid rules. I also understand that when the Chancellor announced he was cutting costs for energy-intensive industries, recognising that UK steel had said that the cost of green levies was around £4 million a month, putting annual compensation close to £50 million a year across the sector, that that also first had to be approved in Brussels under state aid rules. So, after the steel industry crisis talks at EU level last November, which the UK business Secretary had called for, which led to commitments to speed up the European Commission’s work in these areas, and after the UK Government lodged a formal anti-dumping complaint with the European Commission, again I asked the Minister in January what direct communication the Welsh Government had had with the European Commission regarding protection for steel producers from the dumping of cheap steel, and she replied,
‘I think we need to redouble our efforts by using our Brussels office, et cetera, within Europe, to start having more…discussions out there.’
Well, you’ve referred a few times to correspondence with Europe, but what direct discussions, either directly or through the Brussels office, have occurred before January and since the Minister replied to me on that basis in January? Thank you.
Well, in terms of the charter, there are issues, of course, that will relate to state aid, but there are ways around it, as Members will know. What can’t be done is to baldly state that only steel from Wales can be used, but then that is not what Members would expect such a charter to do, or would expect us to do rather. So, it’s important, of course, we examine every way to ensure, as we have been doing, that steel from Wales is used. But, as I’ve said, the major market is outside Wales—it’s in the UK and, indeed, Europe. People talk about the EU, the kind of tariffs that would be imposed on UK steel if we weren’t members of the EU don’t bear thinking about. We would lose the export market for steel, and it is a significant export market for Port Talbot. So, we have to be very, very clear about that as well.
In terms of the situation in Europe, we have been in correspondence with the Commission and made the point about tariffs, but the UK have the seat at the table, and the UK have not—I have to say; I’ve said it before—been vociferous enough. In fact, they’ve opposed the imposition of a fair level of tariffs for British steel. I hope now that’s changed as a result of the situation that we sadly see. I’ll be making this point again to the Prime Minister tomorrow because it is important that we don’t sit there and play by some self-imposed set of rules, that we understand the world as it is, and that means protecting our steel industry.
First Minister, there’s not a single constituency in Wales that is not affected by what is happening within the steel industry. I met last week with constituents of mine who work in Port Talbot steelworks and those who also work in related industries. Some of them have young families, some will have mortgages, they have homes and the anxiety and the concern over their future and their wellbeing is of considerable consequence. So, there are two succinct points I’d like to ask. The first one, which, again, was raised by a constituent of mine and was a matter that was raised in the business committee when evidence was received, was with regard to the Ministry of Defence where I think the steel industries said it would be good if the MOD were at the table as one of the biggest procurers of steel—purchasers of Swedish steel in place of UK steel. It would be good if they were at least there at the table in discussion over the future of the steel industry, and I would ask you if that is an issue that will be raised with the Prime Minister.
But can I raise, in addition, another point, and that is with regard to the issue of public ownership? Can I firstly congratulate yourself and the Minister for the economy, because it seems clear that the impact you’ve had has actually moved the UK Government from a position where it was saying, ‘Well, we’ll do our best. We’ll do what we can, we’ll help as best we can, et cetera, but we won’t nationalise’, to a position of, ‘Well, we don’t like nationalisation, but we’re prepared to consider it.’ That is a significant movement. Can I say, now that we have the UK Government accepting the possibility of that level of state intervention, if there is one thing that could be done that would put at ease the anxieties and the concerns of all those working in the industry and related businesses with mortgages, with families and with children to think about and with their futures to be concerned about, it would be if the UK Government said, ‘We will do our best, we will do everything we can to find a buyer or whatever for the steel industry, but at the end of the day, if all else fails, we will step in and this industry will come into public ownership’? That would give them the assurance of a future. It would also send a tremendous international message out that we have a UK Government that is absolutely committed to preserving steel, and what better way to actually market it and to sell the industry if that is what the intention of the UK Government is? [Assembly Members: ‘Hear, hear.’]
Could I thank my colleague the Member for Pontypridd for his comments? Firstly, with regard to the MOD, he is right: one of the concerns that were raised, following the announcement, was that the UK would not be able to manufacture its own armaments without sourcing steel from abroad and as, still, a major military power in the world, not having the ability to actually equip your armed forces without worrying about where the raw material is going to come from is a serious issue. He’s right to point out that the MOD is a major procurer, and that is something, I think, that is worth taking up with the UK Government.
In terms of public ownership, the situation is acute. I’ve observed the UK Government move from, ‘No nationalisation, but everything’s on the table anyway’, to considering some quite radical proposals, potentially. From the perspective of the Welsh Government, if it isn’t the case that a suitable buyer can be found within the short timescale that has been proposed, then it is for Government—primarily the UK Government—to take over the running of the steel industry. In response to the question, ‘How long should that be for?’, my answer is: ‘For as long as it takes’, because we want to make sure that the steel industry continues, that it gets to a point where it’s profitable again, and those jobs can be preserved. As other Members have mentioned, it happened with the banks. There was no time limit put on public ownership of the banks; the same applies for steel.
I’m not very well, so forgive the voice. I had a lovely speech prepared, but we’ve said all the ‘oohs’ and ‘aahs’ in all the right places now and we’ve heard it all before. It’s fabulous, I’m sure, but it’s not what the steelworkers really want. What they want is action. I’ll never forget, in 1981, the seven months I spent unemployed. It was the worst period of my life, I can assure you. If somebody should meet David Cameron tomorrow it’s perhaps people like me, to tell him what it’s like to actually be struggling on low or, actually, no income at all. It’s very difficult.
I know you want to cut the debate short, so I will go straight into my questions. First Minister, what will happen to the steel coil operations at Llanwern? As certain aspects of the facilities there are currently mothballed, can you confirm that closure or a serious mothballing at Port Talbot—heaven forbid—would mean the end of realistically seeing any operations restarted at Llanwern? What impacts have you made as a Government regarding loss of jobs in non-steel-related sectors due to the wider impact on communities? Are we advising people to diversify now? How will we reskill any workforce? We have already heard—I can’t remember who said it—that 750 jobs have gone anyway; so, we need to re-educate those people. Are all educational establishments being contacted, and are they being brought on board?
Would you agree, First Minister, that, since Labour was elected on a promise to stand up for Wales, and since the whole existence of the Labour Party is based on your apparent efforts to protect working people from the excess of right-wing economics, surely now is the time for you to actually put words into action? Given the almost complete economic destruction that occurred when we lost a major strategic industry the last time the Tories were in power, do you agree that this time we cannot afford to let it happen, and we must learn from the mistakes of the past?
Finally, First Minister, will you please have the courage to ask David Cameron to stop—if you’ll pardon the pun—pandering to the Chinese? We all know he wants them to build his power stations. You must tell him that he needs to take action. We want action; otherwise we’ll take it ourselves.
Labour has spent virtually all of your existence and all of my life promising to stand up for working people. Well, it’s time for you to fulfil those promises. You’re a bigger party than my party, but hey, we will join you. We will join you; and all of us should stand up for the industry and the hard work of the people that we promised to represent when we took the oath, can you believe it, five years ago. So, let us all come together to save this industry. If either Government—London or Cardiff—fails now, well, just as I have never forgotten my period of unemployment, the people of Wales will never forget either. Thank you.
The one thing that cannot happen is that Port Talbot and the other plants should be sacrificed in order to see Hinkley built with its current financial model. [Assembly Members: ‘Hear, hear.’] That worries me. I don’t spend my time having a go at China. China is an important trading partner, but there are bound to be suspicions that the need to obtain finance from China to build Hinkley has been a factor in opposing the tariffs. Now, I’ll put this position to the Prime Minister tomorrow. That can no longer be the case; the Chinese have imposed their own tariffs. So, it can’t be a cause of complaint from China if tariffs are increased at EU level. You cannot build Hinkley and sacrifice other parts of our industry in order to do that.
With regard to steel coil, it just creates uncertainty at the very least, because we know—and Shotton has already been mentioned—that Shotton relies on Port Talbot to be supplied. Even though Shotton is a profit-making plant, it’s got no feed stock without Port Talbot being there, certainly in the short term, which is why, of course, all the plants are so interlinked that they come as a package, not as individual plants.
We’re not at this moment in time looking to put in place measures to deal with closure, because our objective is not to see that; it is to find a buyer, and for Government to take over the plant if a buyer cannot be found in the timetable that’s been set down. As I mentioned earlier on, there are 1.22 jobs for every job that is provided in the steel industry itself. I recognise the passion that the Member brought to the Chamber. He and I will have experiences of the 1980s; it was an experience that brought me into my party and to where I am now, seeing what happened to the coal industry, but we have to make sure that the same thing doesn’t happen to steel. We've heard the right noises from the UK Government now, but we now need to see some action.
Can I place a declaration on the record, in that my brother is a steelworker?
I think many of us across the Chamber will welcome the statement that’s been made by the First Minister this afternoon, but we also welcome the approach that the Welsh Government has taken over recent weeks and recent months, playing an active and proactive role, seeking to intervene to ensure that steel has the future that we all want to see in Wales. You’ve been asked, First Minister, to remind David Cameron of a number of things tomorrow, but perhaps you could remind him of when the Conservatives took the view that they would intervene before breakfast, intervene before lunch, and intervene before dinner to save British industry. That was a Conservative Minister speaking to his conference. Perhaps Conservative Ministers today, who need to be dragged in front of television cameras to make only the most mealy-mouthed statements, need to be reminded that they’re not only selling Welsh steelworkers short, but they’re forgetting their own history in doing so.
Can I also say this to you, First Minister? Steel is an emblematic industry in Wales, nowhere more so than places like Ebbw Vale, where we have been defined and described as a community and as a nation by the history of steel and the place of steel, but also the place of steel in the future of our communities. The Circuit of Wales, in my own constituency, wants to use steel—Welsh steel, British Steel—in order to construct that new facility, but we also need steel to be a part of an industrial policy and an economic policy that’s going to drive forward manufacturing in Wales.
I hope, First Minister, that in responding to this, you'll be able to look beyond the crisis that we are experiencing today, to an industrial policy where steel is at the heart of that policy, and steel is at the foundation of that policy, able to drive forward manufacturing in Wales, able to drive forward sustainable economic growth in communities such as Blaenau Gwent, and also ensuring that steel remains at the heart of what we see as a future Welsh economy. And in doing so, I recognise what you’ve said about the need to create a level playing field for Tata and for Port Talbot and the other facilities affected. It’s important that we ensure that UK Ministers, when they are attending the Council of Ministers, are also represented by a Welsh Minister. Because I hear what UK Ministers say that they’re arguing for when they go to Brussels, to European meetings, but I share the concerns raised by David Rees. I'm not sure that I trust them, quite frankly. I'm not sure that I trust them. We have the right, through the memorandum of understanding with the Foreign Office, to be represented at the Council of Ministers, and it is important that Welsh Ministers represent the Welsh steel industry and that we don't simply rely on the promises that we hear from Conservative politicians, who I have seen work day in, day out to protect the interests of their friends in the financial industry in the City of London, but don't raise a pen or a finger or a voice to speak up for manufacturing, to speak up for steel, and to speak up for the interests of the economy of Wales. So, let's ensure that whenever steel is debated or discussed in any Council of Ministers meeting in the future, there is a Welsh Minister there, standing up and speaking up for Welsh steelworkers.
Can I thank the Member? His constituency, of course, has a historic—sadly, now—tradition of steel making. We know that steel is very much a part of our history, but it doesn’t belong in our past—that’s the point. Steel has a future; I’ve said this many times before. This is not a dying industry that is doomed to taper off and to lose money forever—something that, somehow, belongs to a chapter of our history and doesn’t belong to our future. It does belong to our future.
We know that the situation at the moment is temporary. We know that it can improve in the future, in the right hands and with the right support. As I’ve said many times this afternoon, to imagine us without the capacity to make steel is to imagine an economy that’s no longer properly a manufacturing or industrial economy. He’s right to say we need to look beyond the current situation. We need to get through the current situation—that much is true—but also absolutely to look to a time when steel—the heavy end of steel making—is profitable again.
He’s right to point out the situation with regard to the Council of Ministers. I hope now, though, that the UK Government understands that it does need to press the case for a proper tariff to be in place, rather than what we have at the moment. It will find support, I’m sure; I know it’ll find support from other countries for such a proposal, and we do need that in place, along with the other measures, in order to make sure that our steel industry can get through the current crisis and prosper in future.
Thank you very much, First Minister, for spending so long and giving us such a good statement, but I disagree with the last line of the first page where you say that
‘The UK Government has been holding back the European Union.’
I don’t agree with that wholeheartedly.
I come from Newport. In 1970, when I walked into Newport as a very young man, as a student, Llanwern steel mill had more than 14,000 full-time employees. It was a bustling city. Now, still today, because Llanwern is gone, the city hasn’t fully recovered. So, you must learn lessons from losing steel of that magnitude. Port Talbot is exactly the same. We should not ever, at any cost, lose our steel industry in Wales. Steel is not Wales—Wales is steel. So, First Minister, my one or two points are—. You bought Cardiff Airport. You got the adviser there to advise you how Cardiff Airport is running; you’ve got the adviser there. You also know that when Port Talbot steel was taken over by Tata, £800 million of public money was given to them. I agree that Tata is one of the most reputable companies in the world, but in the last 10 years, did you have any advisers there to advise you how they are trading within that company? What was the steel position in that company? How about import, export and development in the company? The skilled workforce was leaving and there were some going, for the last few years, we know—1,700 jobs—and no notice was taken. This is not your fault, London’s fault or anyone else’s. We know that the Chinese are there, but the fact is—.
You also said in your initial speech that it’s only short term. So, we’ve got to be prepared for short-term problems. You’re putting your good money for the short term to safeguard our workers there, and we should protect them; there’s no reason why not, because Port Talbot is also our lifeline for steel not for Wales, but the United Kingdom and the world. When the world was not even making nails, we were actually producing the industrial revolution in the world through Wales. It is a criminality if, actually, we try to close this down. So, I would be recommending from this side—I’m sure the Prime Minister and Sajid Javid are also on the same line—not to destroy our steel. Our steel will always live, I assure you.
As I said, steel is not Wales—Wales is steel. So, my point here is: First Minister, when Mr Kinnock went to Bombay, I was watching television—live television—on an Indian channel. Well before the meeting, they were saying there was no hope for anything. Any good reason? Why did they go there when they knew very well about this—that there was no prospect for success? So, why did our Government—I mean this Chamber—never have some sort of input in their handbags, and said, ‘Look, this is an offer for you; please stay and trade, and we need to find the right buyer and then we can deal with you’—? How much money? You’re just saying £30 million. You’ve got £350 million in reserves. Use the maximum you can in this institution. Make sure our steel survives with that sort of funding—some sort of funding to maintain it. The only point we can talk about is how much money you’re going to put aside for the new buyer or management buy-out. I personally think the best route is, whenever you sell this company to another company, make sure our Government and we are involved with it. Thank you.
Can I thank the Member for his comments? I will ensure the Prime Minister knows that he regards it as a criminality if the industry closes down. He mentioned the airport; that was, of course, something he supported—for a short space of time, until such time as we were told that his comments in support were ironic—but the airport is of a much smaller scale. It’s a much smaller scale than what we’re talking about with the steel industry.
Tata, in fairness, have put investment into Port Talbot. This is not a plant that’s been starved of investment over the last few years. It has put in over £400 million-worth of investment into the plant itself. It’s right to say that, this time last year, the prospects were nothing like as bad as they are now. But the world steel market has taken a dip. That is not to say, of course, that it will always be depressed. As I’ve said before, taking it through the current crisis—because that’s what it is—is the objective.
He asked whether we made an offer. We did put the offer on the table. Tata were aware that we could put a package worth £60 million on the table. At that point, there was nothing from the UK Government; that was the issue. We knew it wouldn’t be enough of itself, but the UK Government didn’t come forward with an equivalent package by size, tariffs weren’t dealt with, energy costs weren’t dealt with. I think some alarm bells have been ringing in Whitehall in the past few days, and I hope that means that we can get to a position where we need to be.
I’m surprised he’s suggesting we should spend every single penny of our reserves now. I certainly wouldn’t advise that. That leaves us with absolutely nothing to deal with any kind of crisis over the course of the year. I don’t think there’s any financial institution or public institution anywhere that would run without any reserves at all, especially when it has no means of raising money or borrowing money. So, clearly, that isn’t, surely, sensible for the future. That said, we understand that there may well be a call on public finances as far as the Welsh Government is concerned in the future. We’re aware of that. But we’re also aware—and Simon Thomas makes the point for me—that it is in the hands of the UK Government, with its greater resources, to help to ensure that the steel industry continues in Wales.
First of all, can I thank the First Minister for his statement and the answers he’s given so far to a huge number of questions? I speak as somebody who used to work in Orb Electrical Steelworks and then worked in Port Talbot, and left Port Talbot at a time of slimlining in the 1980s. I still have many friends and family working in both Trostre and Port Talbot, and I think it needs to be remembered that Trostre and Port Talbot take people from a very wide area, which includes a large part of Swansea.
The problems of steel are many and varied. We’ve got overvalued currency, we’ve got a very porous economy in Britain, we’ve got very high energy costs, we’ve got a position where the price of sheet steel has dropped by between €200 and £200 per tonne in a very short period of time. That’s obviously causing problems. What I think is needing to be done is we need tariffs to stop this dumping of Chinese steel, otherwise we won’t have a steel industry—not just in Britain, but in Europe. I’d like to see an energy deal similar to the one that Anglesey Aluminium had with Wylfa during the time that Wylfa was going, where they had guaranteed low-price energy provided to Anglesey Aluminium for a long period of time. The question I’ve got for you, First Minister, though, is: we’ve talked about the steel industry almost in isolation; is there anything you’d like to say about the importance of the steel industry to things such as car making, can making, white goods, and the food industry, which puts the food in those cans? It’s part of an integrated economy and, without the steel industry, each and every one of those industries, in my opinion, would be in serious danger.
Well, the Member’s right, those are all products that are produced at Port Talbot, and Trostre, of course, particularly, the ones that he’s mentioned, as well as what happens at Shotton and Llanwern. There are serious issues in terms of supply. We know there are issues within other plants, where there would be problems with supply if Port Talbot, for example, wasn’t there manufacturing steel, and it creates a problem for our British industry. When we look at this, we have to ask ourselves this question. We saw what happened in the 1980s and 1990s, when it was assumed that mass privatisation and a free market was a good thing. And there was a price to pay. What we cannot do—and it’s not something that was unique to one party, I think that’s true, but the price that was paid was the loss of jobs in important strategic industries. That has to stop. That stops today. And the message I’ll be taking to the UK Government and the Prime Minister is: no more of this. This is a strategic industry, it needs Government help, it needs to be run for the future, for the good of Britain and for the good of our communities in Wales.
As we’ve heard, 36 years ago, of course, 6,500 jobs were lost in Shotton, the largest individual redundancy in western Europe—at the time, certainly, if that’s not still the case. And, as we’ve heard, the effects are still being felt; the same is true in Brymbo. Ten years later in 1990, 1,100 jobs were lost there too. But despite that history of job losses, what we have now in Shotton, of course, is a business that is profit-making and also that is a viable business. It’s important that we bear in mind, I think, given the wider difficulties in the sector, that that is the position in Shotton. They produce some £20 million to £30 million of profit in the two parts of the business—Colors producing some £13 million in profit in this financial year, and Panels and Profiles producing some £18 million of profit. But, as you have referred to, the steel comes from Port Talbot. So, this is an integrated Welsh steel company in a very real sense, although it’s not in Welsh ownership, of course.
It’s an innovative and modern plant, which—. In fact, Shotton provided the steel for the Millennium Stadium and for the Cardiff City Stadium as well—you know, the spiritual homes of Welsh rugby and Welsh international football. [Laughter.] Well, that’s my view, anyway. But, clearly, they are iconic buildings that we can proudly say are truly made in Wales. Now, the case for keeping Port Talbot open is therefore important for other communities as well, and I’m sure we all recognise that.
At present, of course, steel is supplied into Shotton from Port Talbot by rail. If, heaven forbid, that does change in the future, then steel could potentially be brought along the Dee to Shotton, although that would require new investment in a jetty. And I’d like to ask you, First Minister, if we do find ourselves in that particular situation, whether the Welsh Government would be willing to provide that funding in order to safeguard Shotton’s steel supply. Because Shotton isn’t, as we’ve recognised, just about the hundreds of workers directly employed there by Tata; we can double or treble that with those employed indirectly—Gwynedd Shipping Ltd, for example, have an operation centre on site, with hundreds of wagons going in and out every month, employing many, many drivers. There are laundry contracts, scaffolders, agency workers, et cetera, all of whom depend on Shotton for their livelihoods. But, of course, we have to remember that those workers wouldn’t necessarily be entitled to any form of redundancy package if the directly employed jobs are lost, as, of course, is regrettably possible at the moment. So, the work done to overcome the devastating economic blows that Deeside and Wrexham have suffered in previous years due to steel closures would be undone if the Welsh Government and the UK Government don’t get their acts together on this one.
Now, you tell us, First Minister, that you will do everything possible to protect the interests of our jobs, but that didn’t extend to going to Mumbai. It may be true that your officers and officials were in contact with the company, but do you not agree with me that it would have sent the strongest possible signal that the First Minister of Wales was there at the table speaking to the company directly, and do you not feel that in not being there that you have actually let people down?
The Member talks as if I’ve never met Tata, or had no contact with them, or not spoken to them, or had any correspondence with them. There was regular contact with Tata, both through officials and with Ministers. Tata could not have been in any other position other than to know our view, and strongly know that our view was that there had to be a future for the Welsh steel industry. To suggest that somehow they wouldn’t have known that, it just doesn’t ring true, because everything that we said to them both in conversations and, indeed, through correspondence, made it absolutely clear that we wanted to see the Welsh steel industry prosper.
Now, in terms of Shotton, I’d ask the Member not to give the impression at this stage that what we need to look at is piecemeal sale of some of the asset. He’s mentioned the issue of a jetty to supply Shotton. I have to say, at this stage, my objective is to keep all the plants open rather than looking at each individual one at this moment in time. I’ve spoken to the management in Shotton, and they made the point clearly to me that Shotton relies on Port Talbot for its feedstock, and that it would be six months before they could get another source—that’s six months without production, potentially, unless there are reserves on site. It also means, of course, a potential loss of customers. So, even though, on the face of it, yes, Shotton is a profitable plant, it needs Port Talbot to supply it in order for it to continue going. So, at this stage, certainly, I wouldn’t be prepared to look at help to individual sites. I want all our sites to remain open, whether it’s Port Talbot, Trostre, Shotton or Llanwern or the Orb. They are all important to the communities that they serve.
My thoughts are with the steelworkers, their families and their communities at this very difficult time. Most of my constituents who work in the steelworks work in Celsa in Cardiff, which, obviously, produces a different type of steel, not the flat products, but the issues are the same: the Chinese steel dumping, energy prices and the business rates. I think those have all been well covered in this debate, and I thank the First Minister for his very detailed responses.
However, I must tell the First Minister that on the streets in Cardiff North there is huge concern about the fate of Tata and for the communities in Port Talbot and in the other areas, because I think this is an issue that is an all-Wales issue and that, wherever we are in Wales, we feel deeply about these issues. I also have to tell the First Minister that when I was going around on Saturday in the streets in Cardiff North that the constituents in Cardiff North felt that the Westminster Government has not responded quickly enough. I am pleased to hear that the First Minister is telling us now that the Prime Minister is there, ready and wanting to move forward, but, certainly, that was the view of my constituents: that there has not been a quick enough response.
Most of the issues I wanted to raise in questions have been raised, but just a few issues I’d like to reiterate and ask him about—. Alun Davies talked about how important it is to have a Welsh Minister at the Council of Ministers. Will Welsh Ministers and officials be directly involved in all the different teams that will negotiate with potential buyers and be there for future plans? I think this is absolutely essential, because I do believe that we do have here in Wales the expertise and the knowledge that are needed to take those plans forward, and that it’ll be a huge loss if we’re not there at every stage. I don’t know how much control he feels he has over that process.
The second point is: how will we ensure that the trade unions will continue to be totally involved in the process, because I think we all want to pay tribute to the forceful and the dignified way that they have put their case? I think every time I’ve seen one of them speak or appear on the television, I’ve thought how grateful we are that they are here acting in this way in this country.
Finally, the last point I wanted to make was that—lots of Members have mentioned the banks—the banks were saved. They were nationalised, the banks. Our constituents’ money was saved. The money in our pockets was saved, and can I remind the Chamber that it was a Labour Government that saved the banks, that it was Gordon Brown who saved the banks, that he stepped forward? They stepped up to the plate and now we have to see what this Government now, this Westminster Government, will do now.
Can I thank the Member for her comments? We have been receiving briefings from BIS, who’ve wanted to work with us. It would make no sense for it to be any other way, because the solution to the problem that faces the steel industry lies in the hands of UK Government, yes, and Welsh Government. The two of us have to work together on this. If we are not having information shared with us, then the response becomes weakened. Now, there’s no suggestion that that is the case at the moment, but that cannot be the case in the future. People expect us to work together as Governments in order to save the steel industry. I don’t think that they would respond particularly well if they thought that one Government wasn’t telling the other Government what was going on. That’s not what people want to see at the moment.
I have spent a lot of time speaking to Community and with Unite. I’ve spent much time talking to Roy Rickhuss. We spoke before they went to Mumbai; we spoke afterwards. We’ve been in touch with each other. I know that the unions are certainly appreciative of the support they’ve received from Welsh Government and the Welsh Government’s stats.
The point’s been made about the banks. What is strategic? Steel is strategic, banking is strategic; the two need to be treated in the same way.
I’d like to thank the First Minister very much for his statement today and for responding to our questions. Like Alun Davies’s brother, my late uncle Jim was also a steelworker, and that was in Alun’s constituency of Blaenau Gwent. He told me, years ago, of the pain of redundancy that he had in a previous decade and that echoes what we’ve heard earlier from Lindsay Whittle. But it’s very important that we don’t have the sense of a vigil for an industry that’s lost. That point’s been made earlier today.
It was my privilege this lunch time, together with my fellow Petitions Committee members, Bethan Jenkins and Joyce Watson, to receive a petition from some residents of Port Talbot, and also people associated with the Community union. They’ve spent much of this afternoon watching our deliberations from the public gallery. What they were calling for—. It’s one of the briefest petitions we’ve had, as it has two sentences, I think. With the indulgence of the Deputy Presiding Officer, I’ll just read out what their ask is. It is simply:
‘We the undersigned call upon the Welsh Government to use all levers at its disposal, including financial levers, to support the completion of a new power plant planned for Port Talbot steels works. The construction of this plant will create jobs and when it is operational it will reduce emissions, reduce Tata’s running costs and help to safeguard vital jobs in the area.’
That was brought forward by retired steelworker Peter Bamsey and his colleagues. We’ve had an initial positive response from your Minister for business and enterprise, and it’s also going to be on the table in a forthcoming session of that committee, I understand. And I’m very grateful for that, but I think it’s time that we ramp up our support for this critical development—a critical development in terms of the sustainability of steel making here in Wales. I would ask you, when you have your session with David Cameron tomorrow, to ask him whether he would promote a joint bid, potentially to the European Investment Bank, to actually bankroll this kind of modernisation at Port Talbot, and in other settings, that would increase the sustainability, both economic and environmental, of the industry in the time to come. It would also be very much a line in the sand in terms of showing our commitment to the future of the industry.
I’d also have one further ask in that connection—and reference has been made earlier to procurement policies, and we’ve heard about the Ministry of Defence and its procurement policies. Just as rural Wales has got real concerns about their sourcing policies in terms of meat and supplies, also the heartland industries of steel have real cause for concern in that regard. The Prime Minister clearly has his hands on levers to do something about that. Will you, First Minister, please raise that issue again when you have talks with David Cameron tomorrow? Diolch yn fawr.
Yes, I will. I can assure the Member of that. With regard to the power plant, again this is an issue that we can look at as part of an overall package. As I’ve said several times this afternoon, we have something that was on the table and is on the table; we know that there’ll be more that will need to be done within the resources that we have and as part of an overall package offered by the UK Government. That, and many other issues, will form part of the discussions with the Prime Minister tomorrow.
Many speakers have already said how important the steel industry is strategically to the future of advanced manufacturing. It isn’t just about the defence industry; it isn’t just about the food canning industry. It is about whether or not we are going to have an advanced manufacturing industry in this country or not. Because we cannot do it without the operations that are currently centred at Port Talbot. What nobody has mentioned so far is the strategic work that Tata has been involved in with our universities in the SPECIFIC scheme, which is about the Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings, which, in plain language, is the panels on the SOLCER house that produce the energy that enable new buildings to become power stations. We simply cannot meet our climate change obligations unless we have the Tata Steels of this world, or those who will take over the work currently done by Tata Steel, to meet our climate obligations.
Of course, I welcome entirely the suggestion by the First Minister that we should be pushing ahead with the Swansea lagoon and the south Wales metro, but were we to do it with foreign steel, we would be using imported steel, which uses up two or three times more carbon emissions to bring it over from China. So, like Julie Morgan, I can echo the remarks that she has made: that it is not just those communities that have the steel industry as the heart of their community; it is the whole of Wales that realises that steel is absolutely integral to our future, our industrial future, our advanced manufacturing future. So, I think there is widespread interest in and support for what the Welsh Government is doing, and trepidation that the UK Government will be found wanting.
In the light of the context of the strategic importance of the steel industry, and the public support that is available, I would like to explore the possibility of adding the £60 million that the Welsh Government is putting on the table to explain the possibility of some form of public subscription if the transitional plan, the McKinsey plan—which, I appreciate, you have yet to see—adds up. What thought has the Welsh Government given to enabling the whole of the community of Wales to buy into saving the Port Talbot operations, which also obviously are crucial to the survival of all the other steel operations in Wales? Because this is a way—. If the UK Government will not act, or refuses to act, or simply won’t put the money that they do have at their disposal forward, can we in Wales galvanise the people of Wales, led by the Welsh Government, to save our steel industry until we can find an alternative buyer?
It’s an interesting suggestion. First of all, trying to work out how that would work, there would have to be a public limited company set-up listed in order to be able to issue shares. The directors of the company would have to satisfy themselves that they weren’t trading whilst insolvent—which, without a guarantee from Government, would be the case—and they’d then become personally liable for the debts of that company. So, again, coming back to this point of there being an unlimited guarantee, potentially, on the table from Welsh Government with regard to the steel industry in Wales, which is a substantial risk to be exposed to.
My view is, and always has been, that this is a UK industry and it needs UK support. We can put some support on the table, that much is true, but we can’t do it all given the numbers that are there. Of course, there are issues that will need to be resolved, such as energy costs, such as tariffs, which we can’t influence, and they are long-term problems for the industry that can be influenced at a UK level. That said, we’ll look to see what needs to be done over the course of the next few days and weeks to secure the industry, but we have to be wary of creating a situation where all the liability’s on the Welsh Government and that liability’s unlimited. That would be the situation if a company was set up. Otherwise, how can the directors satisfy themselves that they’re not trading whilst insolvent? The only way to resolve that is to have a guarantee in place that there is a funding stream in order for the company to be able to demonstrate that it is solvent. So, there are issues that would need to be resolved there that are not easy to resolve.
First Minister, you’ll be pleased to know that I’m going to be very brief, since many points have already been covered, and you have now been standing at that lectern for getting on for three and a half hours, which probably breaches no end of health and safety regulations, so we’ll let you sit down soon. Can I ask you, first of all, on the issue of procurement? It has been mentioned already that the Welsh Government doesn’t have all the levers at its disposal, but you do have some procurement powers. The UK Government and the Royal Navy did procure British steel when they were producing the first UK aircraft carrier, and I believe the second one as well, which is coming online, also contains UK steel, or British steel. You obviously don’t have that sort of production within Welsh Government control, but there are some procurement powers, which I’ve discussed at length over the last five years with the Minister, Jane Hutt, so could you look at that?
Secondly, the issue of business rates has been raised by a number of Members. Again, it is not the whole solution, I recognise that, but it could be part of the solution. Will you undertake to look at the business rate regime, which is within the control of the Welsh Government, to see what can be done to try and make that as attractive as possible to the steel industry and to any possible buyers of the plants across Wales? We’ve spoken about all the plants across Wales today, and I know that John Griffiths and Lindsay Whittle mentioned Llanwern. In my neck of the woods, Llanwern is one of the key employers, so I’d like to know specifically what discussions you’ve had with Tata and with the UK Government about the operations at Llanwern. I’m very pleased to hear, and welcome the fact, that you’re looking at putting money into equipment as part of a package that can try and attract a future buyer to that.
Finally, I would say, Deputy Presiding Officer, that this has been a very interesting discussion today. I know that there have been some voices off, but you certainly have the support of the Welsh Conservatives in doing what you can to safeguard the future of the steel industry. I know that all speakers here today are coming from slightly different angles, I know, in different parties, but all of us really do want to send our very best wishes out to the steelworkers in Wales and to their families. Be under no illusion that you do have the support of this Chamber when you go into those discussions. We all of us want to see the best possible future for the Welsh steel industry. [Assembly Members: ‘Hear, hear.’]
Can I thank the Member for his comments? He will have heard me talk at length about procurement in previous answers. With business rates, as I’ve said before, the maximum is €200,000 over the three-year period that we can offer, but, as I’ve already mentioned, the rateable values from next year on will better reflect the current circumstances of the steel plants in Wales following the discussions that we’ve had with the Valuation Office Agency. There haven’t been specific discussions about Llanwern, but there’ve been discussions, obviously, about the whole of the Tata operation in Wales. I suppose it’s inevitable that the focus has been heavily on Port Talbot, given the size of the plant and given the fact that it has the greatest challenges at the moment, particularly at the heavy end.
I’m grateful to him for his indication of the support that he has given. This is an issue, as well, where we can show that the UK is able to support industry in Wales. A point I’ll be making to the Prime Minister is that Wales benefits from its membership of the UK, and this must be shown to be a benefit—that the UK is able to use its greater resources in order to ensure that steel in Wales continues. We’ll work with the UK Government in order to look to deliver that, because we know that our people the length and breadth of Wales expect nothing less, and I’m grateful to Members for their contributions during the course of the afternoon. [Applause.]
Y Dirprwy Lywydd / The Deputy Presiding Officer
Thank you, First Minister, and we’re grateful to you for standing at the podium for the whole afternoon to answer these questions and the points put to you on this vital matter for the whole of Wales.
Y Dirprwy Lywydd / The Deputy Presiding Officer
That concludes today’s proceedings.
The meeting ended at 16:57.