Monday, 4 April 2016

Ta-ra Tata : Senedd Recalled

(Pic : BBC)

Following last week's sudden announcement that Tata are actively considering a quick sale of its UK steel-making business, the National Assembly was recalled from Easter recess for an extraordinary plenary session this afternoon.

I've created a tag for posts referring to the steel crisis, but some of the key posts include :

This is now the biggest single industrial crisis Wales has faced since devolution and only the second time the Assembly has been recalled, so due to the serious nature of events I'm going to do back-to-back posts.

This first one will cover the First Minister's statement and key points made during the debate. Immediately following on there'll be a second post looking at the options on the table for Tata's portfolio and what the future might hold for the steel industry in Wales; that's simply to prevent this becoming a 5,000 word tome.

If you're wondering about the unfamiliar surroundings, the Senedd chamber is currently being renovated so AMs sat in the old Ty Hywel chamber.

I'm going to cover this differently than usual. There'll be no individual clips and I've decided only to cover contributions from the First Minister and party leaders – it'll become obvious why. If you want to watch the whole thing it's available above.

In his statement, the First Minister said it was an "important time in the economic and social history of Wales". Whole communities developed around the steelworks, and the livelihoods of families depend on decisions taken now. He has one simple message : "The plants cannot close". Steel is vitally important to future UK interests, and the UK can't become dependent on imported steel.

Tata's decision was "deeply disappointing", and their loyal and efficient workforce deserve a chance to make the turnaround plans (known as the McKinsey plan) work. He was also disappointed that the UK Government hadn't tackled the issues in a systematic way – particularly Chinese steel-dumping.

The First Minister said three things needed to happen to secure the plants' future:
  1. If a buyer can't be found, the UK Government should take Tata into public ownership until a buyer can be found. The Welsh Government will make a contribution from funds already pledged for the turnaround plan, but they don't have the resources to take public ownership themselves.
  2. Steel-dumping needs to be mitigated at an EU level.
  3. There needs to be a long-term strategy to cut energy prices and improve energy efficiencies for all energy-intensive industries.

Tata need to allow a realistic timescale for offers from potential buyers; "months not weeks". They must also have regard for their legal and moral obligations, having built a reputation for social responsibility. A team was in London working with the Department for Business, Innovation and Skills (BIS) and he spoke to the Prime Minister last week and will again tomorrow.

There has been interest declared in Tata's plants, and he spoke with a potential buyer this morning. The steel task force also met this morning, where an enterprise zone for Port Talbot has been formally established, with applications for business rate relief set to start this week.

This isn't being driven by sentiment, and he's not arguing to prop up a "dying industry". Wales and the UK need steel, and he can't contemplate a future without domestic steel-making capacity as it's vital to the UK's long-term economic and defence interests. He told steelworkers and steel-making communities that the Assembly would "stand shoulder to shoulder" with them.

Leader of the Opposition, Andrew Davies (Con, South Wales Central), agreed that they stood shoulder-to-shoulder with steel communities throughout the UK and without the steel industry the UK would be enfeebled. There's a need to understand the international challenges but also a need to work government-to-government, and with the EU, to ensure tariffs are put in place in order to create a level playing field.

Moving to questions :
  • Could the First Minister explain how the working relationship will continue with the UK Government and Tata to allow time and space to bring a purchase forward?
  • What discussions with Tata have there been on the timescales for expressions of interest by potential buyers?
  • What will Welsh Government make available to potential buyers?
  • What measures and projects could boost procurement of Welsh and British steel?

The First Minister said the Welsh Government's relationship with Tata has been "good for years", and there've been numerous conversations. He stressed that Tata's business should be seen as a whole package and the situation can change quickly – Port Talbot broke even as recently as a year ago and he expressed scepticism over the £1million-a-day loss figures.
The UK Government will need to address issues with the pension scheme as part of the sales process. Business rate relief targeted at specific sectors is considered state aid and is restricted; they're looking at removing certain classes of plant and machinery from business rates but that could result in appeals from others in the sector.

The value of the Welsh government support package is £60million; £30million in commercial loans to create a galvanising line at Port Talbot, the rest to support training and environmental projects. In terms of helpful projects he picked out the Swansea Bay Tidal Lagoon as it's very close to Port Talbot.

Plaid Cymru leader Leanne Wood (Plaid, South Wales Central) said her party were committed to work towards and outcome where steel remains a core industry. During the last crisis of this scale there was no devolution and this was a sequel of deindustrialistion overseen by a Tory government. Some sort of government intervention was crucial – either a joint public-private venture, temporary nationalisation or a permanent public stake; nothing should be off the table.

Questions :
  • Did you ask the steel task force to draw up contingency plans in case of asell-off?
  • Will you commission your own rescue plan for steel?
  • Are you involved with meetings with potential buyers?
  • What assessment has been made for possible environment remedial works in the event of closure?
  • An anonymous Welsh Government source reportedly knew about the likelihood of a sale. Did you or other ministers know?

In replying, the First Minister said intervention was crucial, and a joint venture is something to be considered; however it had to be UK Government led due to the sums of money involved ("hundreds of millions" – not counting other liabilities like pensions and environmental clean-up works).

The task force hasn't been asked to look at closure as their working to ensure it doesn't happen. Any suggestion of closure is unacceptable and the sale option needs to be looked at instead. The rescue plan is Tata's own, but neither governments have access to it – something he wanted changed so they can make a proper judgement.

He said suggestions the Welsh Government had "hundreds of millions of pounds squirrelled away in reserves" were wrong, but there are some funds there to provide support. It was also wrong to suggest they knew about the closure or sale.

Welsh Lib Dem leader, Kirsty Williams (Lib Dem, Brecon & Radnor), said they both saw what happened the last time an industry like this was ripped from a community; it hits the entire population with small businesses and support services taking a hit and people struggling to find alternative employment.

No government would allow an industry of national strategic importance to be lost and it would be "foolish in the extreme" for the UK to be the only developed economy without its own steel-making capacity.

Alarm bells should've rung with the closure of Redcar and threats to Scunthorpe. These dangers were recognised by the industry, who called for clear action from Westminster and the devolved administrations but those calls weren't responded to in a timely fashion. The industry was simply "too big and too good to fail".

Questions :
  • What can you do to maximise the use of domestically-produced steel?
  • The enterprise zone is welcomed, but what outcomes are expected?
  • What are your expectations from the UK Government?
  • What discussions have you held with the UK Government on the steelworkers pension fund?
  • Will you offer assurances that the plants won't be sold to "asset-strippers"?

The First Minister said the pensions issue was a critical part of the sale, but there'll need to be further discussion. He later said the UK Government had not been persuaded until now to intervene on the pension fund and the situation was "fluid". He didn't want Tata pensioners to not have full access to pensions.

On maximising steel use, major projects on road, rail and infrastructure needed to go ahead and the type of steel can be specified. The enterprise zone in Port Talbot was aimed as small and medium sized enterprises (SMEs).  On his expectations of Whitehall, they need to back higher tariffs and they are currently blocking the EU from implementing them. He's also lobbied them on energy prices since 2011.

He said the potential buyers he's spoken to were not "asset-strippers", but he didn't want to see steelworks scuttled to remove a competitor – Port Talbot has a sister plant in IJmuiden in the Netherlands which makes the same products and is currently profitable.

Following the contributions from the First Minister and party leaders, things moved onto party spokespeople, the Chair of the Business & Enterprise Committee as well as interested backbenchers....a lot of interested backbenchers....

David Deans nails it. Be thankful there are people out there
willing to sit through this so you don't have to.

I'd say a minimum of 25 AMs spoke, and while many of them raised particularly important questions it was wrapped within a lot of repetition of the same points over and over and over and over....

It's clear a few of them didn't pay much attention to what others had said before them – even in the absence of computers in front of them. Some were quick to take out their phones despite being told not to as it interferes with broadcasting equipment - the nation simply cannot go on without their tweets.

As you can imagine I've developed a good stamina when it comes to things like this and I started to make notes of what other AMs said, but I gave up around the two and a half hour mark. Accusations of being a "talking shop" are inbound and that's a shame because the earlier half of the session was relatively useful.

In the end what should've been a one hour debate stretched to three and a half hours. There was no need.

The concern shown was understandable, but as the longer things went on and the crankier AMs became the finger-pointing and poorly-disguised pre-election grandstanding started.

There's little the Assembly can do here but I've got no doubts it was the right decision to recall - even if the opportunity wasn't used properly. Things are moving so quickly we shouldn't have expected to wait for an official response from Ministers until after the election and AMs deserved to have their say on our behalf – that's what they're paid and elected to do (for another 36 hours or so).

Coming up shortly is the aforementioned follow-up post looking at what future might lie for the steel industry in Wales.


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