The next item of business is a statement by Fergus Ewing on the future of the Scottish steel industry. The minister will take questions at the end of his statement and there should therefore be no interventions or interruptions.
I say to all members in the chamber that we are very tight for time this afternoon and I may well have to drop some people from being able to ask a question; we simply will not have the time. Therefore, if you wish your colleagues to be able to ask questions, please keep your question as brief as possible.
14:23
I welcome this opportunity to address the Parliament, albeit to talk about the extremely disappointing news from steel firm Tata that it intends to mothball its two production plants in Scotland. Two hundred and seventy workers could be directly affected if the plans go ahead—225 at the Dalzell plate-rolling works and a further 45 at the Clydebridge plant. Our thoughts are with them and their families as they go through this period of huge uncertainty. We also express our solidarity with the 900 employees at Tata’s facility in Scunthorpe, who are facing a similar fate.
However, let me be clear from the outset that we will leave no stone unturned in our efforts to save the steel industry in Scotland. Our top priority is to secure an alternative operator to continue with commercial production. We are aware that that task is not an easy one and that there are significant challenges facing the continued production of steel in Scotland, but we are determined, as a Government, to use all our resources and, as ministers, to devote our individual time and attention, as required, to do absolutely everything that we can do to prevent the loss of steel making in Scotland.
The chamber is well aware of the long and proud heritage of steel work in Scotland. The Dalzell plant in Motherwell has been involved in the iron and steel industry since 1872 and the Clydebridge steelworks in Cambuslang opened in 1887. Their products have been used across the world in the construction, mining and energy exploration sectors, and their steel plates were formed into many of the most famous ships that were built on the River Clyde and around the world. However, even the reputation for quality that Dalzell and Clydebridge earned could not help them to battle the serious problems that the steel industry has faced in recent years. The price of steel has fallen significantly as worldwide production has almost doubled since 2000. Cheap, subsidised steel is widely available in western markets, high energy costs particularly affect energy-intensive industries and a strong pound has hit export opportunities.
Tata’s operations in Scotland and the rest of the United Kingdom have suffered greatly against that difficult trading background, as have those of other steel companies in the UK. Just last week, administrators were appointed to parts of Caparo Steel Products, with 1,700 jobs at risk. Last month, when Sahaviriya Steel Industries mothballed its Redcar steel operations, the Westminster Government called for a UK steel summit. The Scottish Government was represented at the UK summit and, yesterday, in discussions with Anna Soubry, the Minister for Small Business, Industry and Enterprise, we confirmed that we will co-operate with the UK Government and contribute fully to that work.
I wrote to Anna Soubry on 20 October, asking that the Prime Minister continue to urge the Chinese premier to take voluntary action to reduce capacity in the Chinese steel sector and to reduce the volume of exports. I urged the UK Government to help the steel sector with its energy costs by bringing forward the implementation of all the provisions of the energy-intensive industries compensation package from April 2016 to October 2015. I also asked the UK Government to put as much pressure as possible on the European Union to complete as quickly as possible an investigation into Chinese steel imports into Europe and whether they constitute illegal dumping. When I spoke to Anna Soubry yesterday, I stressed those concerns and assured her that we shall contribute fully to any negotiations.
I welcome the UK Government’s confirmation that it will co-operate fully in relation to state aid clearance of any deal that may emerge, but it is disappointing that the UK Government did not agree to allow Scottish ministers to participate in crucial EU discussions that may affect Scotland’s interests in the preservation of a key industry. However, I will not dwell on that today.
Following Tata’s announcement on 20 October that the Clydebridge and Dalzell operations were to be mothballed, we moved immediately to establish a task force with the aim of retaining functioning steelyards employing as many of the staff as possible. The First Minister visited both sites last Thursday and met Tata Steel management, trade unions and the workforce to highlight our full commitment to the issue and to emphasise that the primary aim of the task force is to seek the continuation of steel making at Clydebridge and Dalzell. The First Minister specifically asked for Tata Steel’s commitment to maintaining the staff at both sites throughout the consultation period, as it is hugely important to keep the work of the plants going as we seek alternative operators.
Scottish Enterprise had already been working with Tata Steel to assist the Scottish sites, including by commissioning an energy review to identify savings and options for energy generation onsite, by producing tailored training packages and by providing Scottish manufacturing advisory service—SMAS—support with an efficiency review. I am chairing the Scottish steel task force, which includes representatives from both Lanarkshire councils, trade unions, the Scottish Government and its agencies and the Westminster Government as well as members of this chamber. I will also co-ordinate the development of a joint, multi-agency economic recovery plan to mitigate the economic impacts on the area resulting from Tata Steel’s announcement. The task force will first meet on Thursday this week, and we already have Tata Steel’s commitment that it will play a full part in the task force process and will work closely with us throughout the consultation period. We are very grateful for that co-operation.
The task force will also consider wider support for the workforce at this difficult time, including ensuring that the modern apprentices who are employed on site do not have their education affected. To that end, I am happy to confirm that, as an early step, the Scottish Government will guarantee that the modern apprentices who are employed at the plants will be able to continue with the off-the-job training that is required for them to complete their apprenticeships, should there be a gap in their employment.
In Lanarkshire, we have a highly skilled workforce. It is essential that those skills are not lost but put to productive use. Our primary focus remains on seeking an alternative owner for the plants, which we recognise will not be easy. Although I do not think that it is helpful to speculate on which individual commercial organisations may be interested, I assure members that we will work with all parties who could help with future investment in the plants.
I am sure that the chamber will recognise that any discussions in relation to potential alternative operators must be conducted in commercially confidential terms. The Scottish Government and Scottish Enterprise, with support from Tata, are developing an information prospectus that will allow our Scottish Development International offices worldwide to generate interest in the opportunity that this situation in Scotland presents.
I firmly believe that there can be a viable future for a steel industry in Scotland, and I assure Parliament that this Government will do everything in its power to seek a secure and sustainable future for the Tata sites in Scotland. The Government will, of course, keep the chamber informed of further developments as they arise. For now, I am happy to answer any questions.
Thank you. The minister will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for questions, after which we must move on to the next item of business.
I thank the minister for advance sight of his statement.
There is no doubt that the mothballing of the Dalzell and Clydebridge plants is very serious, particularly for the workers and their families, and our thoughts are with them at this time. We must ensure that everything is done to ensure that those plants and those jobs remain in place.
Steel is an iconic part of the Lanarkshire economy and the Scottish economy, and it would be unacceptable and unimaginable if steel production were to cease at the plants. The Scottish Government rightly makes infrastructure one of the main platforms of its economic policy, and part of that is the production of steel.
Scottish Labour supports the setting-up of the task force, but we must ensure that it is not a talking shop. We need hard action. From that point of view, I have two specific questions for the minister. First, what financial assistance will the Scottish Government provide to ensure that the physical assets remain in place while the search for a buyer goes on and to retain the skills of the workforce?
Secondly, what work has the Scottish Government done in identifying the steel requirements in current and future public contracts in order that Dalzell and Clydebridge can bid and be successful in retaining the work for those projects, so that we can build a sustainable steel operation at the plants going forward?
I thank Mr Kelly for his constructive approach and welcome him and other colleagues who are local representatives to take part in the work of the task force, which will have its first meeting on Thursday of this week.
To answer Mr Kelly’s questions, our primary objective is to seek an alternative operator for the site. That is the primary task and, in the work that the task force carries out, we will consider extremely carefully whatever financial assistance is practicable and legally capable of being extended in order to secure that objective. We will apply that approach throughout our work on energy costs and business rates, and in all other areas.
Secondly, I entirely agree that the workforce is highly skilled. We will do exactly what was done in Wales, where ReAct provided assistance for workers, and we will ensure that partnership action for continuing employment—PACE—support is fully extended. However, our primary objective is to continue steel production in Scotland, not to make provision for what happens after it is closed. Of course, we shall also in the task force consider very carefully the needs of the workforce—that will be done.
Finally, on public contracts, of course we are working extremely closely with all public procurement bodies in relation to what future projects could benefit from a Scottish steel supplier. Transport Scotland is already reviewing what future projects fall into that category and I am very happy to work closely with Mr Kelly on the detail of that as the work of the task force progresses.
I thank the minister for his statement and for advance sight of it.
It is a matter of the greatest concern that steel making not just in Scotland but across the UK is under such serious threat. We welcome the co-operation that there has been between the UK and Scottish Governments, and the establishment of the Scottish task force that the minister referred to. Unite the Union has identified five key issues that need to be addressed to help the industry: help with high energy prices; action on unfair imports; reform of business rates; fair implementation of regulations; and support for local content in major construction projects. I appreciate that in relation to some of those the minister’s hands are tied, but business rates have been fully devolved since 1999 and he could act here if he wished.
Can the minister tell me what the annual rates bill paid by the plants at Clydebridge and Dalzell is? Secondly, what action will the Scottish Government now take on business rates, given that it has been identified as a key issue and is an area entirely under its control?
Again, I welcome the general, constructive approach that we are hearing this afternoon from across the chamber. A very important and welcome message to send to everybody affected is that we are working hard to do everything that we can. Of course, I welcome the reference to the trades unions, with whom we are in extremely regular contact, and I share their analysis of the particular challenges—the five topics—that we are facing. I had a workmanlike discussion with Anna Soubry yesterday afternoon, in which I think that broadly we were coming at this from a shared desire. I mentioned our particular appreciation that the UK Government has already pledged to assist in state aid clearance of any offer that may emerge—that is a very valuable offer that would be necessary in that event.
To answer Mr Fraser’s specific questions, off the top of my head, according to my own arithmetic carried out earlier this morning, the business rates for the two plants combined are £823,000. The two plants had appeals against the rateable values at the most recent revaluation and both appeals were successful. That is how matters stand at the moment. We have, of course, obtained advice in relation to this matter and are looking at all possible ways in which assistance can be provided. We are constrained, however—I think it is only correct to say—by the state aid rules, because there is a maximum amount of assistance that can be provided to any steel company over a period of three years, and it is a relatively small amount of money. However, there are practical measures that may be applicable, depending on a future operator’s wishes and requirements as regards space, by subdivision. There are a number of other possibilities that we are looking at and I am, of course, happy to share the details with Mr Fraser and all other members of this chamber as that work progresses.
I thank the minister for his statement and welcome the Scottish Government’s immediate, swift approach in establishing the local task force. However, does the minister share my concern that that is in stark contrast to the response to the steel industry by the UK Government, which has largely ignored the warnings over the past few years and has yet to act in some of the areas that the Community union has detailed, especially fuel and energy costs for the companies? Does the minister share my disappointment that Scottish ministers will not be included in the European talks? What guarantee can he give us that the case for the high-quality, highly skilled workforce in both Dalzell and Clydebridge will be heard in Europe?
Of course I fully understand that there will be considerable anger and frustration, especially among members of the workforce and their families, at the events that have taken place.
Forgive me, Presiding Officer, if I look forward rather than back, and focus on what we might do rather than on what might have been. It is important that I place on record our appreciation for the full support of Tata Steel in the work that we are doing, without which I suspect the situation would be even more challenging.
It is also fair to reflect on the fact that Tata Steel—as John Pentland will know—made a substantial investment of £8 million in a new plating operation at Dalzell in 2010 and invested the same amount in Clydebridge the following year.
I put that on record simply as a matter of fact, and highlight that we are working with Tata to seek a solution in an extremely challenging situation.
As I explained, I had a chat with Anna Soubry in which I sought representation for the Scottish Government. We have an interest in preserving our steel industry, and I felt that we had a constructive role to play—as we always seek to play—in such negotiations and discussions. I have in the past been involved in negotiations on such matters in other areas.
My request was rejected, but—as I said earlier—I will not dwell on that. Rather, I hope that today unity will emerge among all parties in the chamber. I hope that we will seek to do our very best and that we will, through the hard work of our agencies and our leadership, “leave no stone unturned”—as the First Minister pledged—in securing the continued future of the steel industry in Scotland.
I thank the minister for advance sight of his statement and I welcome the—by and large—constructive tone of members from all parts of the chamber this afternoon.
I understand that the two plants may be attractive to new buyers because some markets—not only flood prevention and port infrastructure, but defence—have not so far been fully exploited by Tata. Has the Government considered capital investment in the plants—if that is permitted—to allow Tata or a new buyer to enter those new markets?
Also, has the Government considered providing wage support to extend the 45-day consultation period so that we do not lose the workforce from these two important plants?
Once again, I say that I am grateful for the constructive approach that we are hearing from all parties this afternoon. Mr Rennie has—not for the first time—raised two relevant and apposite issues.
Of course, we are fully considering the opportunities that may exist for the Scottish side of Tata—namely, the Dalzell and Clydebridge plants, which offer particular expertise and facilities. I am no expert, but I am told by experts that the plate mill there can carry out work that no other plate mill can do, and that it can produce steel plates of the thickest dimensions, which cannot be replicated in other plants. There may therefore be opportunities for the Scottish operations to carry out more profitable niche specialist work than has been possible in the past for various reasons.
The answer to Mr Rennie’s first question is yes: we are looking fully at those matters, as he would expect, and we are taking expert advice on all aspects.
Secondly, the consultation period is now 45 days, which means that it will expire on 7 or 8 December, just before Christmas. We are in daily contact with Tata and we will discuss with the company the procedures and mechanism. It is important that there is sufficient time to enable a potential alternative operator to carry out due diligence and inquiries, so that will be part of our discussions with Tata as we move forward.
The First Minister is on record as saying that
“nothing is off the table”
and that she would “leave no stone unturned” in her attempts to keep the Dalzell and Clydebridge steelworks open. That would include the option of public ownership, as was the case with Prestwick airport.
Given that public ownership is a possibility—and must, I believe, be given serious consideration—what is the Scottish Government doing to assess and prepare for such an outcome?
I thank John Pentland for his question and I respect his experience in the industry over his lifetime. Of course we are considering all potential options. It is accurate to say that our preferred option is to identify a buyer—a commercial operator. Patently, that would be the best possible option. All other options involving an element of public state support would immediately risk difficulty with state-aid rules.
I assure Parliament that all options will, as the First Minister has confirmed, be considered. However, the task force’s main focus will be on securing another private sector operator for both sites.
We appreciate the Government’s considerable efforts to do all the things that were mentioned in the statement to find a buyer for the steelworks at Dalzell and Clydebridge. However, I ask the Government to engage with Tata and the workforce to consider an employee buyout through a repayable loan from the Government. My experience is that in circumstances in which that option is exercised with capital investment, productivity increases and costs reduce, which leads to higher-quality results and the definition of new up-market opportunities. That can all be done very quickly.
I confirm that I have had frequent dialogue with Tata, and that our senior officials have had daily dialogue with it. Yesterday, I had a discussion with Jon Bolton who will, with Colin Timmins, attend the task force for Tata on Thursday.
I will say to Chic Brodie the same as I said to John Pentland. Sadly, this is an extremely difficult time for the workers. However, it is relatively early days in the task that we have set ourselves. We need a bit of time to work with colleagues to explore all possible options. At this stage, it would be premature and, indeed, foolish to rule out any option. Plainly, we are—as we always are—determined to ensure that we have input from the workforce; after all, who knows how to do things better than the people who are actually doing the job?
The minister will be aware that Tata Steel has been increasing the capacity to build wind turbines at the Dalzell and Clydebridge plants. Further to that, the plants have the potential to repurpose steel from decommissioned oil rigs. Currently, 11 million tonnes of scrap steel leave Britain every year to be recycled in other parts of Europe. Any investment in the plants would help them to compete in that market. Have those two areas of potential production been discussed with the task force, and will the Government support any investment that is needed to make those things happen?
Siobhan McMahon is absolutely correct to say that Clydebridge has expressed a close interest in the construction of wind turbines, as it has done in shipbuilding. I can confirm, of course, that we are looking at what opportunities exist in relation to the building of two ferries by Ferguson Marine Engineering Ltd.
We are looking at all options; the task force will consider all potential business sources. We need to identify, encourage and provide whatever appropriate support is sought by any potential alternative operator. We will do that informed by issues such as those that Siobhan McMahon raises.
High energy costs are cited as being one of the costs that are faced by UK industry operators. What has the Scottish Government done to help to tackle the problem, and does it agree that current UK Government regulation regarding energy pricing undermines not just the steel industry but all industry in Scotland?
I will say two things in response to Christina McKelvie’s question. First, when I visited Dalzell on 4 February, I instructed that a detailed energy analysis be carried out. That has been carried out by Mabbett & Associates. The purpose was to identify means by which costs could be reduced, and the report has been completed. It is commercially confidential—at the moment, at least—but I hope that it will be made public in the course of the work that the task force does. It is reasonable to say that the report identifies a number of opportunities to bring down energy costs. That is why I instructed, back in February, that it be carried out.
Secondly, as Christina McKelvie suggested, the UK Government has sought to bring in support for energy-intensive industries. That has been debated for quite a long time. I discussed it with Anna Soubry yesterday, when we had a productive and workmanlike conversation. I believe that she is doing all that she can to bring the support forward from April to an earlier time. She is undertaking to keep in regular contact with me and my officials in order to secure that objective, which would make a solid contribution to the capacity to continue to have a steel industry in Scotland—and, indeed, in the UK.
I thank the minister for his statement and for the swift creation of the task force. Although it is absolutely right, in this critical phase of the situation, that the task force is looking in particular at Clydebridge and Dalzell, will the minister confirm that the wider steel manufacturing sector in Scotland needs to be considered by the task force? In particular, the Vallourec Mannesmann Oil & Gas UK plant—the Clydesdale works at Mossend—which has undertaken two rounds of redundancy in the past year, has been adversely affected by the downturn in the North Sea oil sector. Again, it is a plant that produces a high-quality product—
We need a question.
—and it is the only heat-treatment plant in the whole UK. It must also be included in the wider picture so that it does not become a critical consideration in the near future.
I agree that that is relevant. That plant will probably not be the primary focus of the task force’s work, but it is certainly related and relevant. Also, there is a large number of businesses—as Michael McMahon well knows—in the sector in Scotland and south of the border, which are all anxious about the future of the industry in Britain. The Deputy First Minister and I know that from direct discussions that we have had with some of those companies. The member is absolutely correct to raise the issue; it will form part of our deliberations.
I welcome the minister’s confirmation that apprentices will be able to continue with their qualifications. Will the Scottish Government look to put in place support to help those apprentices into employment at the end of their qualifications, should they be unable to find employment directly in the steel industry?
Yes. I am happy to provide that confirmation.
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