Steel Industry (Nationalisation) Bill
Thursday 21st May 2026
(2 months ago)
Commons ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
16:59 - The House divided: - Ayes: 68 / Noes: 242 - Question accordingly negatived.
Madam Deputy Speaker (Judith Cummins)
The reasoned amendment in the name of the Leader of the Opposition has been selected.
The Secretary of State for Business and Trade (Peter Kyle)
I beg to move, That the Bill be now read a Second time.
For generations, the steel industry has stood at the very heart of our national story. From the furnaces of Sheffield to the docks of Port Talbot, from Scunthorpe to Redcar, steel forged not only the railways, ships, bridges and factories that powered the industrial revolution, it built communities, livelihoods and a sense of pride in Britain. Steel made in Britain built our Navy, helped to defend our freedoms in times of war and laid the foundations for modern infrastructure right around the world. When people speak of the United Kingdom becoming a great industrial nation, they speak of the skill, resilience and determination of the steelworkers who helped to shape that destiny by the fruits of their labour.
The decline of the steel industry destroyed jobs, diminished skills and damaged communities, but it never, ever diluted the pride, resilience and determination of those working people. Today, this Steel Industry (Nationalisation) Bill repays, in part, the debt that we owe Britain’s steel communities. Steel is integral to the key growth-driving sectors of our industrial strategy: to advanced manufacturing and the car industry; to clean energy, in our wind turbines and our grid infrastructure; and to security and defence, in fighter jets, battleships and submarines. It is essential to this Government’s growth mission to create a strong, resilient economy delivering for working people. That is why Britain’s steel sector accounts for thousands of jobs, right across the country.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
For the reasons that the Secretary of State has mentioned, the nationalisation of the steel industry is a noble endeavour, with which many of us from across the House will agree, but there are people in Wales pointing to the fact that, despite there being legislation, Port Talbot has lost thousands of jobs. Does he recognise the feelings that remain in Wales because the option of nationalisation by this Government was not on the table at the time?
Peter Kyle
As the right hon. Lady knows, I have been to Port Talbot and I have launched a steel strategy since this Government came into office. The vast majority of the decline that she describes happened under the previous Administration. We are cleaning up the mess on a whole bunch of fronts and in different areas of our public life. This Government have invested £500 million into that plant, and we have launched a steel strategy that I believe will give it a fruitful and prosperous future. We are doing what it takes to be the partner needed in these times.
Mr Calvin Bailey (Leyton and Wanstead) (Lab)
The nationalisation of the steel industry explicitly links our domestic and international policies. It demonstrates the need for us to go out and champion our steel sector by filling its order books, as we have been able to do because of the wonderful trade deal created with Nigeria, which is expanding its ports and railways, that has been achieved by this Government. That is the type of work that I am doing in southern Africa, and it is the type of work that we should all be going out to do on behalf of our country and our growth agenda.
Peter Kyle
The work that my hon. Friend is doing is incredibly important to fulfilling the mission, and the possibility that the British steel sector has in the 2020s and going forward. That is the purpose of having a strategy where we invest and modernise, and then at times we need to protect as well. These are the things that we are doing to deliver a long-term, sustainable and global future for Britain’s steel industry.
Kit Malthouse (North West Hampshire) (Con)
I have two quick questions for the Secretary of State. First, if the Bill passes, how are the global competitors to British forged steel likely to react? Secondly, if our steel becomes more expensive than the global market norm, what choice will manufacturers in the UK be faced with about where to base their manufacturing?
Peter Kyle
I am not sure why the right hon. Gentleman would think that British steel would be more expensive as a result, but let us take one step back: if we did not protect, there would be no steel sector to export in the first place. That is why I took the decision to invest, to modernise and to protect where needed. If this Government had continued on the same trajectory that we inherited from the previous Government, I would fear for any steelworks at all being capable to export, let alone producing domestic supply as well. This is the future that we are now creating.
Dr Andrew Murrison (South West Wiltshire) (Con)
On that point, will the Secretary of State give way?
Peter Kyle
I am going to make some progress because the debate has been cut short. I have taken a few interventions and I am sure I will find time for the right hon. Gentleman to intervene later in my opening remarks, but first let me make a bit of progress.
I have pledged to ensure that Britain retains its capacity and capability to manufacture steel. It is a commitment that I have made to hon. Members in this House and it is my commitment to the steel communities of this country. This House acted last year to support British Steel, which is one of the country’s most vital steel firms. We recalled Parliament to pass the Steel Industry (Special Measures) Act 2025 so that the company’s blast furnaces could remain lit and its workforce could remain protected. I am grateful to my predecessor, my right hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), for his leadership during that time, and I am grateful to the House for supporting that vital piece of legislation.
When we intervened then, we were certain that there was a future for British Steel. Our determination now is that the future may best be served by full public ownership in the national interest, not because of ideology, but because of practical pragmatism. Public ownership would allow us to explore future opportunities for the company and to retain its vital resource as a critical piece of our national infrastructure—one that is essential to our economic resilience. I want British Steel to play its part in driving up our domestic steel production to ensure that 50% of the steel used in this country is made in this country.
Dr Murrison
In keeping open the options that the Secretary of State hints at, has he had any discussions with his colleagues in the Ministry of Defence? At least for the foreseeable future, there will always be a need for virgin steel for certain defence applications.
Peter Kyle
The right hon. Gentleman raises a really important point. This Government are determined to make, produce and use more steel from the British sector in lots of different areas of the economy, and we want to ensure that we are using Government spending and procurement in driving up steel production in the UK.
I had the privilege to visit the Agratas gigafactory in Somerset. It is in a different sector, but it is using 231 tonnes of British steel in its production. That is using an amount of Government investment as well, so it has Government investment and private sector investment and is using British steel. That shows that when we align our priorities, we can drive up demand for British steel.
Sir Jeremy Wright (Kenilworth and Southam) (Con)
I want to ask the Secretary of State about the breadth of the Bill. Clause 1 makes it clear that a “steel undertaking” includes those businesses that have the “manufacture or processing” of iron or steel as part of their operations. Is there any lower threshold to that? Is a business that has only 1% of its operations in iron or steel liable to nationalisation under the Bill?
Under clause 2, the Secretary of State is entitled to determine the public interest and can nationalise if it would support
“the economy of the United Kingdom or any part of the United Kingdom.”
I have the same question: is there any lower threshold? Would the interests of one town where a steel facility is located be sufficient to justify the nationalisation of an entire company?
Peter Kyle
The public value test is a high test, and I think the right hon. and learned Gentleman will agree that that is the case on seeing and reading the legislation, as he has done.
I have set the bar high enough that this power would be triggered only in extraordinary circumstances. These are things that we can test in Committee in the coming days—I believe that will be next week. [Interruption.] It will be in the next sitting week, when we return from recess. Do not worry; we are not recalling Parliament again. I will address this matter a bit more in my speech. This power will not be used routinely; it is a specific power, and the test for it will be high.
Peter Kyle
I will make some progress.
To that end, we began negotiations in good faith with Jingye, the owner of British Steel, to see if a commercial sale was viable, but that did not prove to be possible. We could not agree terms that would have safeguarded simultaneously the integrity of the business and the interests of the taxpayer. That is why the Prime Minister announced the Government’s intention to bring British Steel into public ownership, subject to the public interest test being met at the time of that decision. That is why we need to pass the Steel Industry (Nationalisation) Bill now, to give us the power to make that possible.
Let me be clear to the House. In answer to the question from the right hon. and learned Member for Kenilworth and Southam (Sir Jeremy Wright), the powers given to the Government by the legislation cannot be exercised without due caution and proper care. These powers are bold, but they are not boundless. They can be used only where there is a clear public interest and where they will be needed to safeguard British steelmaking capability. The Bill does not nationalise British Steel in and of itself, but it grants the Government powers to do so if considered necessary. That is the scope of the legislation we are debating today.
Sir Jeremy Wright
The Secretary of State is being generous. I take him at his word as I do not think that he intends to use this legislation otherwise than appropriately. However, there is an important point to be made about the language in the Bill as it stands. As he knows, the public interest test is defined in certain ways in clause 2, which states that the test “is not limited to” the grounds listed, so there could be other grounds on which the public interest might be met. I have already pointed out one aspect in which the public interest test is relatively broad. I invite the Secretary of State to look again at the public interest test to make sure that we do not just rely on his word, which I do, but that we are confident that succeeding Secretaries of State cannot misuse this power to nationalise too broadly.
Peter Kyle
I am grateful for the right hon. and learned Gentleman’s intervention. I knew when I was bringing these powers in and working through the legislation that they would be an important part of the Bill and rightly the subject of scrutiny. There will be significant time in Committee of the whole House for Members to scrutinise the legislation. We are modelling this Bill on the Banking Act 2009, which has worked effectively. In that circumstance, the powers were used during the financial crisis in extremis, and those powers, on which we are modelling this Bill, have not been used irresponsibly since. I have been clear about my expected use of these powers, and the bar set in the legislation meets my expectations, including limiting my ability to use these powers in ways that would cause concern for Members.
For too long, the steel sector in this country has been left to fend for itself, abandoned by Government, demoralised, starved of resources and the victim of international market distortions. Crude steel production has declined by more than 50% in the past decade. Capabilities have been reduced, and communities have been let down. Previous Governments have been too reactive and not proactive. This Government will not repeat the errors of the past. We are building the future for British Steel. While the industry faces challenges today, we will do everything we can to help it modernise and grow. This legislation allows us to apply that policy to this industry. We recognise that securing the long-term future of the UK steel sector relies on public and private investment for modernisation, so that the UK can become a global leader in clean green steel, electric arc furnaces and decarbonised steel production.
We recognise that blast furnace production will need to continue in the immediate future and that a managed transition is vital to maintaining supply. We need this legislation to raise resilience, to protect businesses up and down the country that depend on Britain’s steel, to defend the workforce at British Steel and to safeguard the communities built on British steel. The significance of steel is not simply a matter of history; it is a matter of our national future. In an uncertain world, the ability to make steel remains a strategic national asset. Steel is essential for our transport networks, our energy security, our housing and our transition to a greener economy. That is why supporting the British steel industry is about more than protecting jobs, important though they are. Supporting British Steel—
Warinder Juss (Wolverhampton West) (Lab)
Will the Secretary of State give way?
Peter Kyle
I will give way in just a moment. Supporting British Steel is about more than national pride, although we are proud of the steelworkers who help build it. Nationalising British Steel is about hope and faith in the future.
Warinder Juss
I did not mean to interrupt my right hon. Friend, but I thought this was an appropriate time to intervene. As a member of the GMB trade union executive council, I was pleased to see my union welcome the Government’s move to nationalise British Steel, which it described as a
“decisive and timely intervention by the Government which will protect one of the UK’s most important industries.”
That sentiment has been echoed throughout the trade union movement. Does my right hon. Friend agree that we must engage with the trade unions throughout this process and utilise their expertise in this area to secure the long-term future of British Steel?
Peter Kyle
My hon. Friend raises a really important point. Workers in steel production facilities have played a really important role in shaping our policies, helping us constructively to find a way through. Members on both sides of the House were prodding me to release the steel strategy more swiftly, but there were so many moving parts at the time of developing it. There were global forces at work, different ownership models and different production facilities, with different challenges, in different parts of the steel community. I will say this again: the unions played a highly constructive role. I pay tribute to GMB, Community and others for helping us to design our policies and find a way through some really challenging strategic issues.
Together with our measures on automotives, digital technology, the life sciences, the defence industry, clean energy, ceramics and chemicals—on which we made announcements today—and advanced manufacturing, taking the power to make possible the nationalisation of British Steel heralds the new dawn of an age of British industrialisation.
Greg Smith (Mid Buckinghamshire) (Con)
Given that no UK steel producers produce the specialist grades of steel used by precision engineers such as Gibbs Gears in Stoke Mandeville, in my constituency, which supplies components for the aerospace and defence sectors, what is in this Bill for them? All they can see are incoming tariffs on the steel that they necessarily have to import because nobody makes it here.
Peter Kyle
The hon. Gentleman will know that when I took the difficult decision to introduce measures, I did so for products that compete directly with the products that we are capable of making domestically. Speciality Steel UK is going through an administration process at the moment, but when that is complete and the company is up and running properly, I need to make sure that its products and services are protected and viable domestically. Given the world in which we are living, where national resilience is so important to our nation and the economy in a way that it simply has not been for decades, the decisions that I am making to ensure that British steel production is viable and sustainable are of paramount importance.
Saqib Bhatti (Meriden and Solihull East) (Con)
Will the Secretary of State give way on that point?
Peter Kyle
I am going to make a bit more progress.
While the Government are working alongside businesses to invest in, modernise and protect Britain’s manufacturing base, the amendment would deny the Bill its Second Reading. The very people who did so much to damage the steel industry in government are now trying to do so again in opposition—then as tragedy, and now as farce. As such, the House should reject the amendment. Britain’s steel industry needs an activist, interventionist Government, and it needs determination, decisiveness and delivery. It does not need a Government who have their hands tied, their room for manoeuvre blocked and their ability to act denied. Britain must have a strong domestic steel industry—now and into the future.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
Order. A lot of Members with a direct constituency interest rightly want to put their remarks on the record. There will be an immediate six-minute time limit for Back-Bench speeches, but we will very swiftly move to three minutes to enable as many Members as possible to speak on this important topic. I call the shadow Minister.
Andrew Griffith (Arundel and South Downs) (Con)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House declines to give a Second Reading to the Steel Industry (Nationalisation) Bill because it believes that politicians should not be running businesses; because expropriating businesses sets a precedent that will deter inward investment into other UK businesses; because the Bill exposes taxpayers to unlimited liabilities; because the powers that the Bill confers on Ministers are far wider in scope than would be required for its stated purpose; and because it fails to contain any measures that would address the issues which are currently making domestic production of steel unprofitable such as higher employment costs and policies in pursuit of net zero, such as carbon taxes and associated regulations and levies.”
Conservatives will never be neutral about the deindustrialisation of our country, but we do not believe that politicians or Whitehall bureaucrats should run businesses. Instead, we need a Government who do fewer things better, such as defending our nation, securing energy supplies and restoring the nation’s finances. We believe in British steelmaking and the importance of sovereign capabilities—not just steelworks, but the steel supply chain, critical minerals and many defence- related technologies—but that is not what this Bill does. This Bill is the Government’s attempt to break out of a mess we warned one year ago they were getting themselves into, and it fails even in the Government’s own terms. It does not keep the blast furnaces open and it does not guarantee that military needs can be met domestically.
Let us be clear what we are doing today. We are being asked to nationalise British Steel, and put the British taxpayer permanently on the hook for a business that this Government had every chance to keep in private hands, but chose not to. They ignored plans to open electric arc furnaces on Teesside, and chose to let the situation deteriorate until the only option left was the one that suited their ideology. The Prime Minister went kowtowing to China, gave it an embassy spy base and, instead of a deal on Jingye, came back with a box of fortune cookies with only a bill for the taxpayer to be found inside.
Mr Jonathan Brash (Hartlepool) (Lab)
I just wish to seek some clarity from the hon. Gentleman. Is the Conservatives’ position that they would prefer British Steel in the hands of the Chinese than the British?
Andrew Griffith
That was a waste of an intervention. If the hon. Member lets me continue, I will explain exactly what the Conservative plan is for British Steel, and it is a better plan and a more sustainable plan than we have heard from the Secretary of State today. This Government did not inherit—
Richard Tice (Boston and Skegness) (Reform)
As the shadow Minister was unable to respond to the previous intervention, would he like to explain why the Conservative Government sold British Steel to the Chinese in 2019 against my specific advice?
Andrew Griffith
When it suits the hon. Gentleman, he claims to be a fan of the late Margaret Thatcher, but he seems to have forgotten that most of her time in office was spent untangling the mess of Labour’s past nationalisations. Unlike him, she did not bend with the wind or find herself in the same Lobby as a Government who have hiked taxes to record highs, driven wealth offshore and drowned business in red tape.
Members would like to know what our plan is, and our plan is to address the cause, not the symptoms. [Interruption.] Labour Members would do well to listen to this, and we might have more of a steel industry left if they do. We cannot have an industrial policy for steel without an energy policy for industry. Britain has the highest industrial electricity prices in the world, and every choice the Government are making has pushed those prices further up. This week, they voted against new licences in the North sea, choosing to import from Norway gas that could be drilled here, at a cost of 200,000 jobs and £12 billion in tax revenue.
The Secretary of State knows this and his Back Benchers know this, but the Prime Minister is too weak to stand up to his windmill-fetishist Energy Secretary. We have offered an alternative. Our cheap plan would slash energy prices and improve energy security. Why would the Government not want that? If they were genuinely interested in securing the future of steelmaking, as well as those of many other industries, they could have come here today and adopted that plan. Instead, this Bill is an indictment—
Andrew Griffith
I will happily give way, as long as the hon. Member is going to talk about our cheap energy plan.
Andrew Griffith
The only way we are going to have a sustainable steelmaking industry in this country, and the same applies to the manufacturing sector and our defence supply chain, is lower energy costs. That is the only sustainable way.
Andrew Griffith
We have a plan for sustainable steelmaking. The Government do not have a plan for sustainable steelmaking. Ministers themselves have admitted that the blast furnaces in Scunthorpe will close. They are reverting to a plan that already exists.
The Bill is an indictment of this Government’s modus operandi—a spray and pray Government who write blank cheques from the taxpayer and call that a strategy. We are doomed to relearn the hard lessons of the 1970s: if it moves, tax the hell out of it; when it stops moving, subsidise it. It was socialist idol Tony Benn who wanted to nationalise everything that moved, and one result that the Government may care to look at was the state-owned Kirkby Manufacturing and Engineering company, which simultaneously made car radiators and orange juice. When the Government last ran British Steel in the late 1970s, the company’s losses hit £1.3 billion a year. Since Labour’s botched nationalisation of just a year ago, it has already spent £500 million of taxpayers’ money—£1.3 million a day.
Where is the Government’s published, costed and scrutinised plan for what nationalised British Steel will look like in five years’ time, or even in one year’s time? I have read the Bill and there is not one. There is no provision for a proper impact assessment before the sweeping powers are used. There is no acknowledgment of the monumental decommissioning liabilities—in the billions—that will sit on the Treasury’s balance sheet. There is a sunset clause, but it can be extended indefinitely by Ministers—a sunset where the sun never sets.
The House deserves better than this. We deserve a Bill with a proper thought-through plan. The Government have turned a negotiation into a crisis, a crisis into an emergency and an emergency into this nationalisation. We know that Ministers, however well-meaning, will be unable to resist using their power to tilt the playing field in favour of steel businesses that they themselves own: no longer the referee, they will be on the pitch wearing one of the teams’ shirts. There is no better example of that than their plans on steel tariffs.
Andy McDonald (Middlesbrough and Thornaby East) (Lab)
What does the shadow Minister make of tilting the balance in favour of communities in Redcar and across Teesside, when his Government sat on their hands and saw the blast furnace go to the wall? Is that his definition of sustainability—to let those businesses and communities collapse?
Andrew Griffith
The hon. Member would be better addressing that question to his own Ministers, who, notwithstanding the nationalisation, acknowledged that the blast furnaces will cease—they will go dark and close on this Government’s watch. The Bill does not protect blast furnaces and he should invite the Minister, when he winds up, to talk about the future there. There was a plan to invest in British Steel in Redcar to secure those jobs, but the Government pulled the chain—
Andrew Griffith
There was absolutely a plan before the election to open arc furnaces in Redcar—that was absolutely case—and to move Scunthorpe operations to Redcar.
I asked the Secretary of State to address the issue of tariffs. There is no better example of the folly of these plans—
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
Will the shadow Minister give way?
Andrew Griffith
No, I am going to make some progress on tariffs. A number of hon. Members have raised this very important issue, shedding light on the way that the Government are tilting the playing field on tariffs. Under this Government, we have already seen a flurry of Trump-style tariffs—doubling steel tariffs and halving quotas—that elevate the interests of one firm over the automotive, aerospace, advanced manufacturing and defence sectors. Firms involved in the supply chains of AUKUS and Tempest are now looking at shifting tooling and jobs to other countries, instead of manufacturing components here.
Saqib Bhatti
I thank the shadow Minister for giving way; he is making an excellent speech. Specifically on tariffs, does he agree that the approach is illogical? Reducing quotas will decrease the supply, and increasing the tariffs will increase the cost. I listened to the Secretary of State very closely. He talked about getting domestic production here, but by the time that happens, most of the businesses will have gone to the wall. Does my hon. Friend agree that the approach is illogical?
Andrew Griffith
My hon. Friend makes exactly the right point, and that point has been made by other hon. Members and across the manufacturing industry. We are at risk of losing critical parts of our defence, aerospace and automotive supply chains.
Kit Malthouse
Does my hon. Friend agree that although the Bill appears to be an attempt at providing a simple solution for one industry, we need to be careful what we wish for? A huge amount of steel is used in the car industry—I do not know if Members have seen the number of Chinese cars appearing on our streets. If we have elevated and protected steel markets in the UK, at a time when we have a massive global oversupply of steel, we will not stand a chance of competing with the finished goods that use all that cheap oversupply. We will end up subsidising the car industry like we did back in the 1970s. That would have a particular impact in my constituency, where firms such as Stannah Stairlifts use steel in advanced manufacturing, and face having no choice but to consider offshoring their production.
Andrew Griffith
My right hon. Friend and my hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) have made exactly the right point: we need a more thoughtful approach.
I have written to the Secretary of State, as have many of my colleagues, asking that the tariffs are delayed for six months while the Department does more work; that the Government investigate more specialist grades of steel; that within the broader tariff buckets, they look again at the steel alloys used in the defence, aerospace and automotive sectors that are simply not made here today, because there are perhaps unintended consequences of the tariffs; that they be more forensic in their approach; and that they bring forward the measures the Conservatives have talked about on industrial energy costs, which are damaging not just the steel industry but many other industries’ and our basis on which to compete.
There is no point securing what the Secretary of State thinks is in the national interest for one steel manufacturer in a particular location if the foreseeable consequence, unintended or otherwise, is to ship offshore large parts of our high-end automotive manufacturing, engineering and defence industries, so that they are lost forever and conducted in other countries. I have raised that serious point with the Minister, and I ask him to address it.
Luke Myer
I am afraid that I want to give the hon. Member another chance to answer the question from my constituency neighbour, my hon. Friend the Member for Middlesbrough and Thornaby East (Andy McDonald), which was not about the prospect of a future EAF on Teesside—a prospect that I support but that the Leader of the Opposition confirmed from the Dispatch Box was not as advanced as the hon. Member claims. My hon. Friend’s question was about the crash closure of the blast furnace at Redcar in 2015, which ripped 3,000 jobs out of our region. What message does the hon. Member have for the people of Redcar, whose Government he was in when that happened?
Andrew Griffith
I am afraid that the hon. Member ought to look again at the calendar, because I was not only not in Government but not in this House—I was getting on in business trying to help grow the British economy. When the same issue arose in Port Talbot, it was the previous Government—indeed, my right hon. Friend who is now the Leader of the Opposition—who took action and were willing to back the private sector owner to secure the future of steelmaking in Wales. That was what we did in Government.
We are talking about the issue of tariffs because it is intrinsically related to the Government and the taxpayer taking ownership of one participant in a complex industry supply chain. I know that on the Government Benches, some of the truths that we share today may not be immediately popular, but past Governments failed because they were happy to do what was popular in the moment, without looking at the long-term consequences. The truth is that we should not be nationalising British Steel, and certainly not with the Bill in this form—my hon. Friend the Member for Meriden and Solihull East made the point about the sweeping nature of the clauses, whatever we think about the Secretary of State’s intentions.
We have demonstrated in the past, and we will again, that there are other options, such as partnering with the private sector and negotiating a better deal. The Conservatives would fix the cause, not the symptoms; we would save steelmaking in this country not through state quick fixes, but by fixing the state itself. We would not pit industries against each other, as Labour is now doing, and we would not sit idly by for a rerun of the 1970s horror show that Labour made Britain sit through the last time around.
Madam Deputy Speaker (Judith Cummins)
With a six-minute time limit, I call the Chair of the Business and Trade Committee.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
I will be very quick, because I know that colleagues are keen to get in. I am going to speak against the amendment and in support of the Bill for the simple reason that a speech such as the one we have just heard from the shadow Minister may have just about cut the mustard five or six years ago, but it certainly does not work today in a world of weaponised interdependence. It does not work in a world where President Trump is back in the White House or where President Xi is prosecuting the sixth five-year plan, as he is. The critical point in this debate, which the Secretary of State made very well, is that we must have a sovereign capability to make steel. In today’s world, we cannot afford to have a critical steelmaker like British Steel in the hands of a Chinese firm; we cannot, as Ronald Reagan once said, be innocents abroad in a world that is frankly no longer innocent.
Regardless of those remarks, there are a couple of areas where I think the shadow Minister made some important points. I want to stress that although the Secretary of State is proposing some perhaps welcome statism, he must not forget the statecraft that is needed to make a success of this Bill. There are six areas I would like him to respond to very briefly, and I hope we will be able to strike a cross-party consensus around them.
First, it is important that the Secretary of State wills the means and not simply the ends. We have, as the shadow Minister said, already spent a lot of money on this. The transition to electric arc furnaces that the Secretary of State is proposing is not cheap—it is extremely expensive. I think we are hoping that a lot of that money will come from the National Wealth Fund, but he does not control the National Wealth Fund or the allocations that it makes. The National Wealth Fund has not said anything about guaranteeing money for the kinds of ends that the Secretary of State has in mind, and the Government have declined to explain what will happen if steel projects are not funded by the National Wealth Fund. We therefore need a bit more clarity about where the investment resources for the Secretary of State’s plans are going to come from.
Sir Ashley Fox (Bridgwater) (Con)
Does the right hon. Gentleman agree that it is unlikely that the National Wealth Fund, or indeed anyone else, would wish to invest in British steelmaking while our electricity prices are so very high? Does he agree that there is no point in this Bill until we fix the electricity market in this country?
Liam Byrne
The hon. Gentleman makes an excellent point that I am about to come on to. My point, I suppose, is that there is a case for this Bill. I think it is actually quite important, and the powers that it confers are also important, but if we are to get value for money from it, there have to be five other components, which I will come on to now.
The second area is lower energy costs. The British industrial competitiveness scheme is welcome, but it does not come online until 2027. Steelmakers, like much of our manufacturing industry, are saying very clearly to the Business and Trade Committee that there is a widening gap between UK wholesale electricity prices and the prices of our peers in the wake of the Iran crisis. My question to the Minister is: what further targeted support will be available to energy-intensive industries before 2027? As the hon. Member for Bridgwater (Sir Ashley Fox) rightly points out, that is an essential component of the package.
The third area that the shadow Minister was right to highlight is the issue of tariffs. This is now an urgent issue. The Committee heard evidence this afternoon at our own roundtable about the need to refine the tariff structures that have been put in place. The key thing is that we get a better deal with the European Union, to which we export 80% of our steel. It is about to cut tariff-free quotas by 47%, double tariffs from 25% to 50%, and impose melt and pour requirements. Unless we can get a deal in place with the European Union before the end of July, I am afraid that many of the good intentions behind this Bill will be confounded.
The fourth area is procurement. We must ensure that there is a proper demand curve from the UK state for the things that British Steel makes. In the British economy, British state procurement makes up £1 in every £6. Right now, despite the excellent changes in the Procurement Act 2023, we do not have a sufficiently clear forward pipeline. That has to change, not least because when we talk to defence companies—which are, of course, patiently awaiting the defence investment plan—and defence contractors, they still tell us that the kind of steel that they need to make the things that keep this country safe are not made in this country. Ensuring that there are advanced market commitments alongside the defence equipment plan, along with the range of other big, long-term ambitions that I know the Secretary of State has, is very important.
The penultimate area I want to touch on is scrap supply. The Secretary of State has ultimately come to the conclusion—wisely, I suspect—that we should shift to electric arc furnaces, but that kind of industry model will work only if there is a healthy supply of scrap. I think that Ministers are being just a tiny bit too complacent about whether we have the plans in place to source all that scrap. I know that there is a roundtable proposed for later this month, but as part and parcel of ensuring that the steel strategy actually works, can we have, at the very least, a read-out for Parliament about what scrap supplies will be kept in our country, rather than exported?
The final point I wanted to flag is about consolidation. One of the virtues of this Bill is that it bestows on the Secretary of State the power to ensure that there is consolidation in the UK steel industry for the future needs of the economy. In particular, it should allow us to take assets that have gone to firms that are currently out of business, and to rationalise the industry in a way that makes sense. I would like to hear more about what the Secretary of State is proposing when it comes to consolidating the industry.
Ultimately, in the world that we are in, when there are so many visible hands in the global economy interfering with the free market in steel, we will have to have a stronger visible hand. That is what the Secretary of State is proposing through this Bill. There will be a lot more work to do in the Bill’s subsequent stages to satisfy the House that he has got right the statecraft package behind this measure of statism. I look forward to hearing some reassuring noises on that point when the Minister winds up.
Madam Deputy Speaker (Caroline Nokes)
I call the Liberal Democrat spokesperson.
Sarah Olney (Richmond Park) (LD)
Steelmaking is of vital strategic importance to the UK. We rely on steel for essential parts of our national infrastructure, including in defence, transport, clean energy generation, and advanced manufacturing. Steelmaking creates tens of thousands of highly skilled jobs across the country, helping to power our economy and boost our local communities.
However, for too long, our steel industry has been neglected. The last Conservative Government oversaw a string of near collapses and last-minute rescues. They scrapped the industrial strategy, which is so vital to our manufacturers, and erected new trade barriers, making it harder for our steel producers to do business with their biggest export market across the channel.
We have a duty to stand by this vital sector, especially as it navigates unprecedented challenges, including President Trump’s unfair steel tariffs, China’s anti-competitive state aid practices, and the transition to environmentally sustainable production methods. If we are going to foster a thriving steel industry, we cannot allow more producers to collapse and more jobs to be lost, and we cannot risk our last blast furnaces going cold.
The Liberal Democrats broadly welcome this legislation as a temporary, emergency and targeted step, aimed specifically at turning around British steel, before returning it to the private sector. It is in that spirit that British steel producers also support this measure. The Liberal Democrats are clear that our country needs a vibrant, privately run steel industry. In the long term, only private enterprise—not Government Ministers—can ensure that the sector powers forward. We will be closely scrutinising these measures, and indeed the Government’s broader steel strategy, to ensure that they move us in that direction. We need to move on from a patchwork of last-minute rescues to a long-term plan that will set the industry on a truly sustainable footing. Right from the get-go, we would have liked to see plans to find private co-investors who can help modernise the sites and create more jobs.
Putin’s barbaric war in Europe threatens our national security; Donald Trump’s reckless tariffs are undermining our economy; and the continuing conflict in the middle east threatens business supply chains. All those factors make the future of reliable domestic steel production more important than ever for whole swathes of our economy. That is why the Government should ensure that industries that rely on steel, such as defence, are represented and involved in decision making relating to this legislation. We need stronger action from the Government on improving trade with the EU, so that our steel exporters can benefit from easier access to their biggest market, and so that our manufacturers get easier and cheaper access to the materials they need. A new UK-EU customs union would be hugely beneficial in that respect.
Last but not least, we need more ambition on the use of UK-made steel in our domestic market. We welcome the Government’s target of boosting domestic production from 30% to 50% of UK steel demand, although there is no clear timeline for that, and we cannot help but note that the equivalent target in the EU is 75%. While we understand the difference between the two markets, we hope that the Government will keep the target under review in the light of uncertain supply chains, and will consider further incentives for the use of UK-made steel in private sector projects.
The Liberal Democrats know that nationalising steel producers is not the answer in the long term; I ask the Minister to confirm that the Government also view this as an interim rescue measure. What specific steps do Ministers plan to take to ensure that British Steel becomes investable for the private sector, should the legislation be triggered? As the Bill progresses through the House, the Liberal Democrats will be carefully scrutinising the use of secondary legislation, with the aim of maximising accountability. Many of the Bill’s measures will be implemented through secondary legislation subject to negative resolution procedures. I hope the Minister agrees that the affirmative procedure would offer more meaningful parliamentary engagement.
I urge the Government to ensure that there is proper transparency for Parliament about costs associated with the legislation. Clauses 53 and 54 set out the process for the valuation of relevant businesses and the calculation of any compensation that might be paid to previous owners. While we understand that valuations will depend on factors specific to each business, the Government should publish detailed information about the criteria taken into account, and must ensure that Parliament is given the opportunity to scrutinise proposed valuations and compensation amounts. Have the Government considered granting powers to the Business and Trade Committee to scrutinise spending on these measures? Lastly, will the Minister update the House on whether and to what extent the Bill will affect employee pension schemes? What conversations have been had with the Pensions Regulator to that effect?
Looking at the broader state of the steel sector, from 1 July the Government’s new UK steel and trade measure will impose tariffs on imported steel. While we understand the need to bring in such protections temporarily, due to the disruption caused by US steel tariffs and cheap, subsidised Chinese exports, the measure will have a significant impact on manufacturers who depend on steel as a key business input. In Business and Trade questions this morning, my hon. Friend the Member for Harpenden and Berkhamsted (Victoria Collins) mentioned Dynamic Metals, a firm in her constituency that is facing about a £3 million bill to import the specialist steel grades it requires for its services. While I welcome the Government’s aim of encouraging domestic production and the purchase of steel from UK steel companies, some specific grades of steel are not domestically produced, so the Government are harming the purchasing power of UK businesses. Will the Government commit to re-examining the application of tariffs on certain grades of steel to ensure that they do not inadvertently damage domestic buyers?
The Bill’s measures are subject to a public interest test, but there are limited details about what that test will involve. Will the Government allow Parliament to scrutinise the criteria for the test, and publish a detailed report setting out why they believe they have been met? How will the Minister ensure that the aim of protecting the vital infrastructure and manufacturing sectors is balanced with sustainable energy commitments? Will he confirm that when compensation is calculated, Jingye will be financially responsible for any environmental damage caused? What consideration will be given to the affected workforce, and to ensuring that jobs and skills are protected?
The Government are right to take action to protect British steel, but nationalisation must be a temporary step, taken in order to rescue businesses before they are returned to the private sector. We are supportive of the Government’s pace and urgency of action to assist the steel industry, but we need more details on the longer-term vision. I would be grateful if the Minister gave, in his response, the reassurances that I have asked for. How will the Government ensure that the steel industry becomes investable for the private sector, following nationalisation? How will Parliament have oversight, once the powers in the Bill are triggered? How will Parliament be provided with transparency regarding the costs associated with nationalisation?
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
With a five-minute time limit, I call Jessica Morden.
Jessica Morden (Newport East) (Lab)
I very much welcome the Bill, which gives the Government new powers to intervene in the steel industry when doing so is in the public interest. I do so because I, alongside many other steel MPs over many years, have relentlessly made the point that the steel industry is of the utmost strategic importance to the country’s economy and security, and that we must do all that we can to protect and cherish it. While the focus of the legislation is the future of British Steel—I very much pay tribute to the efforts and fantastic advocacy of my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin)—the Bill also sends a clear signal about the Government’s commitment to the industry and workers more widely.
As Ministers know, steel is important to my constituency, both at Tata’s Llanwern works and at 7 Steel. I know that the steel Minister—the Under-Secretary of State for Business and Trade, the hon. Member for Stockton North (Chris McDonald)—met representatives from Llanwern this week. I also pay tribute to the steel unions —in particular, Community and GMB, which I am a member of—and Reg Gutteridge, the newly elected national chair of Community union, who I know will be an excellent advocate.
I completely understand that significant funding was necessary to help keep British Steel in Scunthorpe open, but it is really important that producers and steelworkers in Wales, at sites such as Llanwern, get their share of the Government’s billions of pounds of investment through the National Wealth Fund. It is also important that Ministers urge Tata to follow through on the future investments that it has talked about previously, including in Llanwern.
I really welcome the steel strategy; it is the first time we have had one. The Conservative party had 14 years to set one up and did not. We had a revolving door of steel Ministers, and I am afraid that the Conservatives’ woeful approach continues with their reasoned amendment today. Our approach is a real road map for the future. I welcome the new import quota and tariff levels to cut the amount of foreign-made steel that comes in, and to protect us from global oversupply. However, as others have mentioned, there are concerns at downstream plants that the import quotas for galvanised steel and hollow sections allow too much leniency for highly subsidised products from non-EU countries to come into the UK market and undercut manufacturers at sites such as Llanwern. Will the Minister look at that?
Ministers will be aware of the industry’s concern about the timing and design of the UK carbon border adjustment mechanism. I am keen to hear more about that. As my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) said, we are doing great work on procurement, and it is a big part of the steel strategy, but I am aware from 7 Steel, which has proved over and over again that it can supply high-quality products for High Speed 2, that some contracts are still being made for foreign-made steel. Will the Minister please check that and raise it with HS2? Energy is always an issue, and our underlying costs are still far greater than those of our European rivals, so I join others in asking the Minister to look further at more targeted support.
Those are a few of my asks, but I very much welcome the Bill and the Government’s clear direction of travel on steel. I will end by acknowledging the deep industry expertise and knowledge that the steel Minister brings to the job. It is recognised in our plants, and it is hugely refreshing after the last Government.
Stuart Anderson (South Shropshire) (Con)
I do not support this Bill, and I believe that the reasoned amendment is the right way forward. I will set out clearly the devastating impact that the Bill is about to have, in real time, in my constituency.
We have a great local business called Amodil. It is a British family-run business that started with a couple of people in 1976 in Cleobury Mortimer, South Shropshire. I recently went to Cleobury to meet Paul, Chris, Ben and the team, as well as Rob Cooper from the British Stainless Steel Association. The business was founded by Paul Slingsby, who at 75 still works in it today. It is the UK’s largest privately owned supplier and stockholder of stainless steel long products, with more than 1,200 customers—about 20% of the UK market.
The people who run Amodil know what they are on about, and they were completely blindsided by the announcement on tariffs. They had not been told, and none of their customers or suppliers, or the people they were involved with, knew anything about it, so they came straight to me. I have written to the Minister multiple times and had one response. He needs to sit down with the largest British business in this industry and have a serious conversation.
The big issue that Amodil faces is the tariffs on the stainless steel products it brings in that cannot be made in the UK in the required quantity or type. The Government want to protect the steel industry as an industry of vital strategic importance—I get that—and they want to protect jobs, but for the almost 1,000 jobs they will save, many thousands more will be lost, and I will say exactly where.
The UK cannot meet domestic market demand, and a huge gap will be created. Businesses such as Amodil will be forced to import, and tariffs will drive up costs by 50%. There is not the cash across the industry to absorb those extra costs without mass redundancies. The costs will be passed on, meaning that manufacturers’ costs will go up. What will happen then? The customer will buy the finished product from manufacturers overseas at a lower price, and those products are not subject to tariffs. That does not level the playing field for us.
The UK does not produce enough stainless steel of the right type or quality to meet demand. Amodil currently has 5,000 tonnes of stainless steel in stock, 2,000 tonnes of which cannot be, and is not, made in the UK. It could take up to 15 years to get some of the skills right. Large-diameter bars of a certain grade are not made in the UK and those bars are vital to key industries, such as aerospace, defence, pharmaceuticals, oil, automative, general engineering and many more. If the tariffs are put on these businesses—Amodil is the largest British business in the field in the UK and there are many others—they will be priced out of the industry. I really hope the Secretary of State can see the importance of this matter.
Peter Kyle
I will save the hon. Gentleman from driving home the point even more, because I understand the passion with which he speaks. With regard to Amodil, I will look into that company personally. The intention with the measures that I have brought in is to protect domestic production and the possibility of domestic production. It is not to prevent goods that we do not make here, and do not intend to have the capacity to make here, from suffering. If there is a specific issue, I will look into that, because I do not want negative impacts downstream when we do not have the capacity to produce here. The Trade Minister said earlier today that he would look into that as well. We, as a team, will look into these issues.
Stuart Anderson
I thank the Secretary of State for saying that. I will follow up personally with him and with Amodil to see if we can talk about a way forward. I said to Amodil, “I believe that this is an unintended consequence of what the Government are trying to do, and once I point this out clearly, there will be a way forward to look at it.” The long and the short of it— I will put my speech to one side—is that there is a certain size of rod that only the UK can make. I watched it at Amodil’s facility a few weeks ago. When it gets past that size, it is not made in this country, but it is needed by so many of those critical industries.
Looking at steel as a whole, this matter is just one part of the stainless steel industry. If the Secretary of State, or one of the Ministers, will sit with me and the team at Amodil, they will be able to see, within a matter of minutes, where the gap is and how to plug it. It is along the blanket grading for all the bars. I request a pause for, say, just six months—or if we can talk with Amodil in a matter of days—so we can sit down and look at this, because there is a massive knock-on impact that will seriously hurt the stainless steel industry, and one of the largest employers in my constituency will be massively hurt too.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
I am setting a three-minute time limit, which will allow most Members to get in, but not all.
Andy McDonald (Middlesbrough and Thornaby East) (Lab)
I warmly welcome the Bill and the action that the Government are taking to protect Britain’s steel industry. I congratulate the Minister for Industry on his sterling work to bring this legislation before the House. Steel manufacturing is a strategic national asset; it underpins our infrastructure, transport system, energy, security, defence capability and industrial future. It is too important to be left entirely to the private sector.
For many of us who represent industrial communities, this debate is deeply personal. On Teesside, iron and steel built towns, livelihoods and identities from the early 19th century onwards. Generations of skilled workers helped forge modern Britain with Teesside steel, and as Chris Rea said:
“The ships and bridges they were all delivered
From Sydney harbour to the Cisco bay”.
Over the decades, however, those industries were systematically weakened. The deindustrialisation of the 1980s and 1990s hollowed out communities across the north and across Britain. Then, in 2015, the Conservative Government allowed the Redcar steelworks to close, with devastating consequences for 3,000 workers, families and a further 6,000 in the wider Teesside economy. Whereas with ILVA’s Taranto plant the Italians intervened to save that, and the French did the same for Florange, the previous UK Government sat on their hands. The truth is that a different choice could have been made in Redcar, just as a different choice is being made now. The Government could have intervened back then to preserve strategy industrial capability.
The Bill signals something important: a Government once again willing to play an active role in shaping industry and growing the economy, and doing so pragmatically. It will create a framework for the state to step in when markets fail to protect industries of strategic national importance. It will allow intervention, including public ownership where necessary, when the loss of industrial capacity would damage the national interest. It is common sense: people understand that there are sectors in which the public interest must come before narrow private gain. We have already seen this Government adopt new models of public intervention elsewhere.
We need a serious strategy for reindustrialisation and growth. That means backing British business through a strong public procurement strategy and delivering a long-term pipeline of orders. If public money is funding railways, schools, hospitals and so on, then wherever possible the steel for those projects should be made here, in Britain, by British workers.
David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)
I start this contribution on a positive note for the steel industry. Last week I visited Kiernan Steel’s fabrication workshop in Llandrindod, Wales. Kiernan Steel is a tremendously successful Irish company that has brought much-needed jobs to Radnorshire, and its success shows how the rural economy can prosper if our businesses are encouraged and enabled to locate there. One thing there is no shortage of in mid-Wales is land, and if we make that land available to businesses that need it, they will create the jobs that our region and economy need.
The steel industry is critical to our wider economy—it is virtually impossible to build anything without steel. However, the steel industry requires a skilled workforce. I was encouraged by some of the Secretary of State’s comments about the skills shortages, because we have serious skills shortages. There are thousands of vacancies for welders alone, and their pay is shooting up as a result. Skills shortages throughout the steel industry are pushing up the price of building anything, particularly infrastructure. That is why the health of our steel industry matters. If we do not look after it, the costs for projects such as HS2 and the cost of delivering all the housing we need will continue to mount.
Peter Prinsley (Bury St Edmunds and Stowmarket) (Lab)
I was interested in the hon. Gentleman’s comment about the shortage of welders. Does he agree that the Government’s plan for construction colleges of excellence, including the one in Bury St Edmunds, will be crucial for the provision of welders?
David Chadwick
There are at least 6,000 vacancies for welders, so we absolutely need a lot more of them.
The skills shortages present opportunities to get future generations into well-paid and secure trades. Artificial intelligence cannot do welding yet, because it does not have any arms—yet. Our education system is not producing the skills that our economy needs, and our economy is suffering from that failure. Steel is strategic. It is part of our sovereign capability and part of British power. That is why steel matters.
As has been mentioned, the steel industry is affected by the geopolitical tensions that are so rampant across the world. Our steel industry has been hammered by the Chinese, who have flooded the international market with cheap Chinese steel and have run one of our biggest companies into the ground. China has wiped out our steel industry intentionally, yet today the Conservatives seem to be saying that they do not think the Government should do anything about it. Just yesterday they were complaining about our lack of defence readiness. Well, what do they think tanks and ships are made from?
Today, this Government ask Parliament to move heaven and earth to save steel in Scunthorpe. It is right to act—of course the Government should have the proposed powers—but people in Wales are asking one simple question today: where was this Bill in July 2024, when the blast furnaces at Port Talbot were switched off for the last time? When Welsh communities were crying out for help, Westminster shrugged its shoulders. That was despite Welsh Labour MPs and candidates, in the months prior to the general election, lining up in front of giant election posters that read, “Save our steel.” They said they had a £2.5 billion fund to spend on steel. Given that the Government have admitted to spending £1.3 million a day to keep the Scunthorpe plant going, how much of that fund is left to spend in Wales?
If protecting primary steel production is so important, why did they allow the biggest steelworks in Britain to be turned off? Welsh workers were told that nothing could be done. People in my constituency have lost their jobs because of this. When 2,800 jobs were wiped out in Port Talbot, there was no emergency Saturday sitting, no recall of Parliament, no emergency legislation and no sudden declaration that steel was a vital national—
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
I pay tribute to my northern Lincolnshire neighbour, my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin), who is a long-time champion and campaigner for protecting and securing the future of Scunthorpe steelworks, which is essential to the fabric of the town and a critical part of its identity.
The Government are right to take the steps needed to bring British Steel back into public ownership. Having our own sovereign steelmaking capacity is crucial to ensuring the UK’s defence and infrastructure security. Jingye has failed as custodians of British Steel in Scunthorpe. It has the opportunity to do the decent thing and come to an agreement before the Government are forced to use the powers in this Bill, and we will wait to see whether it does that.
I know that the Minister for Industry, my hon. Friend the Member for Stockton North (Chris McDonald), has a deep understanding of iron and steelmaking. I am sure he will agree that resolving the ownership issue for British Steel will allow an ambitious future for the business to be realised and a plan to be brought forward that will attract investment.
The UK management and workforce at British Steel have been working in an impossible situation while the Government have been negotiating with the current owners. I hope the current leadership will be empowered by the Government to make the necessary decisions to deliver the positive future for the business that the town deserves.
The trade unions Community, Unite and GMB have worked consistently hard to keep steelmaking in the UK. Could the Minister confirm that the action the Government are taking will enable both management and trade unions to deliver the positive future that everybody wants to see for steelmaking in the UK?
Scunthorpe is home to one of the last very large pieces of industrial land in the UK. The proper development of that land could benefit not just Scunthorpe and my constituency, but the whole of the UK. Can the Minister set out what plans he has to work with North Lincolnshire local authority and other partners to make the most of these opportunities? We do not want to see a first come, first served situation where the best users and custodians of that land are not given the opportunity to take it on. It has to be the right company, which will ensure that the proud history of manufacturing in northern Lincolnshire continues long into the future. Will the Minister confirm that that will be his approach?
Richard Tice (Boston and Skegness) (Reform)
It is exactly seven years since I started calling for British Steel at Scunthorpe to be taken into public ownership. The Conservatives rejected my splendid advice, and the chaos we have seen is a result of that. In opposing this Bill, they show that they do not care about the sovereign nature and importance of steelmaking, they do not care about the thousands of highly-skilled jobs, and they do not care about the communities and families around them—they have no understanding of its importance.
I congratulate the Secretary of State and the Minister for Industry on bringing forward this Bill—the first from the King’s Speech to be debated on Second Reading. I told the Secretary of State’s predecessor that he should show some cojones and get on with it, and I think that is what we are now seeing. Alongside this support from the Secretary of State, we now need to see the vision and the plan for the long term. I am concerned that there is an attitude of, “We’ll quietly let the blast furnaces go cold and disappear, and then replace them with electric arc furnaces.” We need a big, bold vision to renew, reline and rebuild at least one blast furnace.
Around the world, 50% of all new steelmaking capacity in the last five years has come from blast furnaces. It is the strongest, most robust primary steel. I know that the Minister of State is a great fan of direct reduced iron, and he has a point there; nevertheless, we should not expose ourselves by putting all our bets on electric arc furnaces, when we know that the price of electricity is at a crisis high. We need diversity in this, rather like when my late grandmother would look at the desserts available for Sunday lunch and say, “Grandson, have a little bit of each.” When it comes to steelmaking, let us have a little bit of each. Let us have a bit of primary steel and a little bit of electric arc furnace steel, to ensure that we always retain those skills and recognise the importance of our sovereign steelmaking capability.
I hope that the Minister and the Secretary of State will produce that vision and plan over the coming weeks, so that we can have confidence in those jobs and so that the communities can have confidence that steelmaking will be retained and invested in for the long term.
Sureena Brackenridge (Wolverhampton North East) (Lab)
I represent a constituency built around steel and manufacturing that is now home to Tata Steel’s processing and distribution centre, the largest in the UK. In Wolverhampton and Willenhall, steel is our history and our identity. With the actions taken by this Government, I sincerely believe it will continue to be our future, too.
The Steel Industry (Nationalisation) Bill marks a serious and necessary step towards safeguarding the long-term future of the UK steel industry. It gives the Government the power to bring steel companies, including British Steel, into public ownership where it is in the public interest to do so. This is safeguarding Britain’s steel capability and capacity, which is firmly in the national interest, protecting jobs and our communities. That matters profoundly to places like mine. I am calling for British procurement as well, so that British-made steel is used to build our railways, infrastructure and wind turbines, so that national renewal runs through communities such as Wolverhampton North East, through the skills of our workers, the strength of our industries and a future based on good, secure jobs and apprenticeships.
I also sincerely believe that this decisive action would not have been taken under the previous Conservative Government. Since 2010, we have seen a litany of missed chances and, in my opinion, moral failures. That is why it is welcome that the Bill reflects the seriousness with which we should treat domestic steel production and the communities that depend on it. That certainty is being recognised by the industry. As UK Steel has said, it provides a vital reassurance for workers, customers and supply chains at a critical moment, recognising steel as a strategic national asset that is essential to economic growth, national security and resilience.
I also support the Government’s ambition to boost domestic production from 30% to 50%. However, I would ask the Minister to look at tariffs on imported steel, using evidence based on specific codes, and to engage with downstream firms that are concerned about the measures. In Wolverhampton and Willenhall, and across the Black Country, we understand what steel represents. We understand the value of secure, well-paid, skilled work. For our workers, our apprentices and our supply chains, and for the long-term strength of the United Kingdom, I support the Bill and commend it to the House.
Sarah Bool (South Northamptonshire) (Con)
In March, the Government released their steel strategy, which talked about taking bold steps to help to grow the industry. The bold steps that we have before us include granting powers to nationalise the industry and introducing a 50% tariff in six weeks’ time on the import of steel products that can also be made in the UK—I come back to this because it is a really important point. Protecting British Steel does sound admirable, and I completely understand it, but the decision has been made without consultation with the industry.
If the Government had consulted with the industry, I would not have had to meet with my constituent Alex Bailey last week, who felt absolute desperation about the future prospects of his business, which employs 70 people and has a £35 million turnover. He owns Dynamic Metals, one of the UK’s largest independent stockists of aerospace high-grade metals, which are specialist steels tested to high standards to be suitable for use in aircraft. The issue that he faces deals with three product types—12A, 14 and 27—but I will spare hon. Members with further details.
The Vice-Chamberlain of His Majesty's Household (Sir Nicholas Dakin)
I would like to know more.
Sarah Bool
I will be sure to write to the Minister with more details.
First, none of this steel can realistically be made in the UK. The Government have provided a list of potential suppliers, but the majority, including British Steel, only make commercial not aerospace-grade steel, and the only company that might, Speciality Steel UK, is currently in liquidation.
Secondly, as Alex explained to me, the drafting of the legislation is such that there is no way customs will be able to differentiate between a generic steel and a specialist steel as they use the same harmonised system codes upon import. That needs to be revisited.
Thirdly, the quota has been set far too low. Product 12A is subject to a 31% reduction in the quota allowance and now a tiny quota will be introduced for products 14 and 27, where there was no quota before. All in all, to be able to meet his order book requirements, Alex has no option but to incur the tariffs. The additional burden that he will have to pick up on 1 July amounts to £3.2 million. He will be bankrupt within six months if this measure goes ahead. As we have heard, he is not alone, because hundreds of businesses are in the same position. As Alex said:
“This is a classic example of legislation that has been written with noble intentions—to save the UK steel industry—but due to a lack of consultation with industry, lack of industry knowledge by the authors and a total misunderstanding of the knock-on effects, this single piece of legislation will kill stockholding and manufacturing in the UK.”
When the Secretary of State is looking into the case raised by my hon. Friend the Member for South Shropshire (Stuart Anderson), will he also meet with Dynamic Metals? Without prompt action now, the Government will run into much more significant issues down the line come 1 July.
Mr Jonathan Brash (Hartlepool) (Lab)
I warmly welcome the Government’s decision to move towards the nationalisation of British Steel. It is the right decision for our economy, our industrial communities and Britain’s national security. I say that as somebody who believes in the value of enterprise, competition and a strong private sector, but there are clear cases where privatisation has failed the national interest and where Government have not only the right to intervene but the duty to do so, particularly where foundational industries are now foreign-owned. I was stunned that when the shadow Minister was asked a straight question about whether the Conservatives would prefer British steel to be in the hands of the Chinese or the British, he could not simply answer “the British”. He avoided the question. That shows a staggering disregard for our country’s national security.
Steel is not just another commodity—it is fundamental to our national sovereignty. It underpins our defence industry, infrastructure, energy sector and manufacturing base. A nation that cannot produce its own steel leaves itself vulnerable, dependent on the decisions, priorities and interests of others. We have moved into a different era, although if we listened to some of the contributions from Opposition Members, we could believe that we are still in the 1990s. Globalisation is dead and, to be honest, I welcome its death, because all it ever did was leave working-class communities such as mine behind, ripping out the heart of industrial communities like Hartlepool.
The tragedy is that in this country we still import 68% of our steel needs. We must fix that tragedy. If British taxpayer money is to be spent, then British industry must benefit. If we are building British warships, British steel should be used. If Britain is building offshore wind farms, then British steel should be used. If we are building new nuclear reactors, as we are in Hartlepool thanks to the deal that we struck last September, then British steel should be used. My biggest plea to my right hon. and hon. Friends on the Front Bench is that we radically reform procurement policy in this country.
I welcome the steel tariffs being put in place and the assurances given by the Secretary of State that he will look carefully at the individual cases that have been mentioned, but we must put our country first. This Bill is critical to doing that and to protecting the working-class communities I represent.
Saqib Bhatti (Meriden and Solihull East) (Con)
It probably will not come as a surprise to Labour Members, but I fundamentally disagree with the last speaker, although I appreciated his passion. [Interruption.] The Secretary of State is getting a bit excited; I will come to him in a minute on the issue of tariffs. I am proud that we are the only party in this House objecting to the Bill, and for the right reasons.
The Secretary of State repeatedly talks about making this country stronger, but I do not think this Bill does that by nationalising. I just do not think that Governments can run businesses. I certainly mean no disrespect to Ministers on the Front Bench, but they will create inefficiencies and push up prices, and the taxpayer will end up stomaching the cost. That does not make us stronger; it makes us weaker.
The hon. Member for Hartlepool (Mr Brash), who spoke before me, said that we are still in the 1990s, but I think this Government are taking us back to the 1970s by pushing up costs and lumbering the taxpayer. A future Conservative Government will have to unwind some of the real harm that will come to fruition. No Labour Members can tell us where the nationalisation will stop. Will it be ceramics tomorrow? What will happen? Which industries will the Government pick and choose?
In the limited time that I have, let me come on to the issue of tariffs. Like my hon. Friend the Member for South Northamptonshire (Sarah Bool) and all my hon. Friends who have raised this point, I have been visited by a constituent. His name was Peter Watson, of Davicon. I have written to the Secretary of State about this issue, although that was only last week; I respect the fact that he may not have had time to come back to me, but I hope he does.
Davicon is the UK’s leading mezzanine manufacturer. The briefing that Peter put in front of me was a result of the tariffs and the quota reduction. There is a reduction of almost 97% on merchant bars and an increase in quotas of 50%. For all the Secretary of State’s best intentions and whatever he wants to achieve, the reality is that industry and markets do not work to the whims of Government. They will not move quickly enough to do that, which will push up prices. In the briefing I saw, that would mean a doubling of the quota for per-tonnage steel by 1 July. That cost will have to be borne by industry and taxpayers. If we are talking about nuclear power plant creation or HS2, we know that those taxpayer-funded projects will have to bear those costs.
I was listening to the Prime Minister yesterday during Prime Minister’s questions, and it is clear the Government recognise that an issue is coming down the tracks. I argue that that should have been anticipated before the tariffs came into place, but we are where we are. I have written to the Secretary of State, and I would really welcome some serious action on this issue. My hon. Friend the Member for South Shropshire (Stuart Anderson) made a really eloquent argument about a delay in the introduction. If that is not going to happen—
Saqib Bhatti
The Secretary of State is shaking his head. If that is not going to happen, let us look at the HS codes. He needs to recognise that there will be a serious impact on the steel industry and the peripheral industries that rely on steel manufacturing in this country.
Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)
Steel is to the UK what Yorkshire tea and Yorkshire puds are to God’s own county, what the hotpot is to Lancashire and what black cabs are to London. It is to the UK what the St Leger is to Doncaster and what the hood is to Haxey. It is about us. It is about what makes us and drives us. It is about pride.
British Steel is at the heart of the UK’s industrial heritage. It was the backbone of the industrial revolution, driving global infrastructure and enabling military pre-eminence. It was key to our rail, maritime, defence and major capital infrastructure. Someone said to me this week, “There is history that has been made, but, more importantly, there is history that we can still make.” We need to make it right here, right now, with British Steel.
The future of British Steel matters not only to my neighbouring area of Scunthorpe, but to communities across north Lincolnshire, South Yorkshire and beyond, including people in my own constituency, some of whom work at Scunthorpe and all of whom are deeply affected by the fortunes of a major local industry. The steelworkers at Scunthorpe are doing work that is essential to this country. It is highly skilled, technical and sometimes dangerous work. They deserve respect for what they do, and they deserve certainty about the future of the industry that they have helped to sustain. That is why the Bill before the House is so important.
While my interest is local, the issue is absolutely national. By nationalising steel, we can ensure that the UK does not become the only G7 country incapable of producing its own primary steel, and stop reliance on foreign imports. This is not about nostalgia for the past or keeping an industry going just for sentimental reasons; it is about recognising that steel is a strategic national asset.
If Britain is to build the homes, railways, energy infrastructure and defence capability that we need, Britain needs steel. If we are serious about industrial resilience, national security and economic growth, we cannot be indifferent about whether we retain the capacity to make steel here at home. The steelworks at Scunthorpe are not just another private asset on a balance sheet; they are a vital part of our industrial base. Once that capacity is lost, it is not easily rebuilt. Once those skills are gone, they are not easily recovered.
The Government are right to bring forward legislation that gives the Secretary of State the powers needed to act where the public interest requires it.
Public ownership should never be treated lightly, but nor should it be ruled out when a vital national industry is at risk. The test here is straightforward: does Britain need steel? Yes. Does Britain need the skills and capacity represented at Scunthorpe? Yes. Would it be in the national interest to allow that capacity to disappear? No. That is why intervention is justified. For the workers at Scunthorpe, for the communities in my constituency that depend on those jobs and for the future strength and resilience of our country, the Bill deserves the support of this House.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
That brings us to the Front-Bench contributions. I call the shadow Minister.
Dame Harriett Baldwin (West Worcestershire) (Con)
This has been an interesting debate, because it has brought out the strategic love of nationalisation for the sake of nationalisation among Government Members. With our reasoned amendment we have tried to put out a different approach. We also heard clearly from Reform that it is in favour of nationalisation for the sake of nationalisation. This Bill will satisfy neither our camp nor their camp. With this Bill, we have a chaotic, unplanned, non-strategic journey that will end up burning through taxpayers’ money at every stage. We can see that the decisions that the Government have taken since they came to power have delivered the worst of all possible worlds for this crucial industry.
Dame Harriett Baldwin
I promised Madam Deputy Speaker that, in the interests of time, I would not take any interventions. This Bill is an emergency intervention with mounting public costs that have no clear limits for the taxpayer. This legislation will certainly not put things on a secure footing.
We were told this time last year, when we were brought in on a Saturday for the first time since the Falklands war, that nationalisation was not the plan. The Prime Minister went to China with the Secretary of State and failed to secure a deal for British Steel, so we have this Bill. It does not resolve any underlying issues. Instead, it just opens the door to an indefinite and infinite bill for the taxpayer, and that is not all. It has a sunset clause that, would the House believe it, can be extended indefinitely.
There are far too many unchecked powers in this Bill. It does not address, as the Chair of the Business and Trade Committee mentioned, that Britain has the highest energy prices in the developed world. We cannot have an industrial policy for steel unless there is an energy policy for industry. In addition to the Chair of the Select Committee, we had an interesting speech from the Liberal Democrat spokesperson, the hon. Member for Richmond Park (Sarah Olney). She spoke about how we could turn this Bill into temporary, emergency legislation and about the path to returning British Steel to the private sector.
We also had powerful interventions from Opposition Members, including from my hon. Friends the Members for South Shropshire (Stuart Anderson), for South Northamptonshire (Sarah Bool) and for Meriden and Solihull East (Saqib Bhatti). They spoke up for the businesses in their constituencies that will be so badly affected by the inflationary 50% tariff on imported steel as of 1 June.
This afternoon is a chance for the Minister to answer some questions. Why were the Government unable to strike a deal with the Chinese owners? When exactly did the Government decide that nationalisation was the right path? Did they decide that before the Steel Industry (Special Measures) Act 2025 was introduced? If so, why was the House not told that at the time? Why should the taxpayer be the one who foots this bill? How is this value for money for the taxpayer? Do we even know what the total cost to the taxpayer will be from these ongoing losses, the capital investment and the enormous liabilities? This Bill commits the taxpayer to ownership of an asset that loses hundreds of millions of pounds each year. What assessment has the Minister made of the chilling impact that the measures in this Bill will have on other inward investors into the United Kingdom, and what is his exit strategy, if he has one?
If the Government propose to nationalise a steel company on the basis that it meets the public interest test, can the Minister explain how the same asset could ever be returned to private ownership without contradicting their own public interest assessment that it is in the national interest? Or is the reality that once the threshold is crossed, the British taxpayer is locked into permanently underwriting a loss-making asset, with no timetable for it to return?
Why is there no requirement in this Bill for a proper impact or value-for-money assessment before the Secretary of State exercises the powers? Why have the Government not taken us up on our cheap power plan, which addresses one of the root causes of this sector’s difficulties? Can the Minister—I think I heard him say it from a sedentary position, but I would like to hear him say it again—urgently commit to look at the impact of the 50% steel tariffs on our steel manufacturing sector?
This House should not be required to sign a blank cheque. We cannot and will not support legislation that appears to be nationalisation in search of a rationale. I urge all colleagues to support our reasoned amendment.
The Parliamentary Under-Secretary of State for Business and Trade (Chris McDonald)
As I was preparing for today’s debate, it struck me that 60 years ago this summer, this House was debating steel nationalisation and the England team went on to win the world cup. We are back here discussing steel nationalisation again, so I have high hopes for the summer.
Sometimes it is informative to learn from the past. Going back to the steel nationalisation of 1966, the Minister of Power opened the debate and said that
“there is no manufacturing industry of such basic importance to the British economy.”—[Official Report, 25 July 1966; Vol. 732, c. 1224.]
Of course, he was right then, and it is true now. However, the steel industry is so good that we have not nationalised it twice; we have nationalised it thrice, because the steel industry was also partly nationalised in 1948. The Minister of Supply said:
“Without steel the life of Britain would collapse.”—[Official Report, 15 November 1948; Vol. 458, c. 53.]
That is absolutely true, as we have heard from Members of the House today.
As the Minister for Industry, part of my mission is to increase the productive capacity of our industry. What we have seen in the steel industry, particularly during 14 years of the Tories, is productive decline. They presided over the loss of great steel plants and a reduction in the productive capacity of those steel plants. The thing is, the decline in market share—from 80% to 30%—was not inevitable. It was a choice born out of inaction and out of a lack of industrial policy.
The reason that this Bill is so important is exactly the same as the reason it was important in 1966: there has been a great technological shift in the industry. Back then, it was continuous casting; now, it is electric arc furnaces. The industry has been de-capitalised by years of under-investment, and it needs to be re-capitalised. Productivity fell off a cliff under the previous Government. It fell repeatedly following the closure of the Redcar blast furnace, and productivity must be improved. These are not the words of someone who is wedded to a socialist principle of nationalisation. They are the words of someone who has spent his life in the steel industry, who ran a business in the steel industry, and who is dedicated to improving productivity in our industry.
I heard the words of the shadow Minister, the hon. Member for Arundel and South Downs (Andrew Griffith), when he opened the debate, and I was quite disappointed. He and I met earlier this week, and my colleagues sitting behind me might be surprised to learn that he was thoughtful and probing in the questions that he asked me. He made some really interesting points, and we had a good discussion. I thought about his points afterwards, and I found it really interesting that he had thought about the things that we will have to bear in mind when we pass this legislation. But what has he done? He has fallen into the Conservatives’ usual trap of presenting this as an ideological debate, instead of a debate about the function of an industry that is vital to this country. That is how they have prosecuted this debate.
I learned something when I was working in the industry. Two years ago, I was running a business in the steel industry. Twenty years ago, I was working at the Scunthorpe steelworks. More than 30 years ago—the House will not believe it—I left school and got a job in the steel industry. There were a lot of changes over that time. Sometimes I stayed in the same job, but the company and the badge on my hard hat changed. When it changed from British Steel to Corus, that was a big blow to how people felt about it, but I will tell the House one thing that I recognised: ownership matters, and it makes a difference. Strategy matters, and it matters where the head office of a business is. People care about the area where they work, and those things are important. The workers care, communities care and we care, but the Conservatives do not care—that is quite clear to me.
Andrew Griffith
I will be very brief. I thank the Minister for his remarks. One ideological difference he has not mentioned once is the huge gulf between those on our side and his party on energy, and the Government are not going to have a sustainable steel industry due to energy.
Chris McDonald
Yes, the hon. Member is right. There is a gulf there: the Conservatives were in favour of some of the highest industrial energy prices in the world. We have delivered an increase in the supercharger benefit from 60% to 90% and introduced the British industrial competitiveness scheme. Through our investments in chemicals, ceramics and, of course, steel, we are supporting British industry with its operating costs on energy and its capital costs to improve its productivity as well.
In steel communities, they are proud people. They are people who can stand on their own two feet, and they want to; they do not want subsidies. They have pride and they have dignity in their work, and when I went to the Corby steelworks recently, I saw the sacrifice of individuals and communities with their hard and dangerous labour.
Pamela Nash (Motherwell, Wishaw and Carluke) (Lab)
The Minister knows the sacrifices that have been made by my constituents at Dalzell plate mill in Motherwell. Will he confirm that this plate mill remains at the heart of the UK steel strategy, and that the Bill we have debated today provides a potential safety net for the future of Dalzell?
Chris McDonald
While the Government are minded to nationalise British Steel, we do not have any other nationalisations in mind. However, we do recognise the importance of the Dalzell plate mill, and I am concerned to ensure that it gets back up and running, and delivers its steel ship plate orders. I thank my hon. Friend for the work that she has been doing in championing that.
I thank my hon. Friend the Member for Penistone and Stocksbridge (Dr Tidball)—she is sitting behind me—who has supported me throughout the preparation of this Bill, but cannot speak because of her position in the House. Likewise, I thank my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin), who is also supporting the passage of this Bill, but again cannot speak because of his position. I also thank the Chief Whip, who of course did so much work in advance of this Bill coming forward.
Let me give at least one or two minutes to the amendment. Fundamentally, there is a contradiction in the Opposition’s position in that, if we do not pass this Bill, British Steel is trapped in the Steel Industry (Special Measures) Act. The Conservatives supported that legislation, so they do not want to allow British Steel to break out of that. However, I would point out to Conservative Members—and certainly those who feel that the Bill gives too many powers to the Secretary of State—that this Bill has been modelled on the Banking Act. At the time the Banking Act was being passed, a fellow sitting on the Opposition Front Bench called George Osborne—I understand he is popular in Tory circles—said, “I will do everything I can to help this Bill on to the statute book.” I think what we are hearing is that that is good enough for the bankers, but it is not good enough for the steelworkers.
To move on, I am as concerned as the shadow Secretary of State, the hon. Member for Arundel and South Downs (Andrew Griffith), and the spokesperson for the Liberal Democrats, the hon. Member for Richmond Park (Sarah Olney), to get in private sector investment. We have carried out a very careful balance with this Bill to ensure that the steel industry is fully informed, understands our intentions and is supportive—and it is supportive. Just in the last couple of weeks, 7 Steel has announced a £100 million private sector investment in the steel industry in the UK, so there is no chilling effect from this. In fact, this will be a spur to, or a boost for, private sector investment.
Let me mention some of the speeches. The Chair of the Business and Trade Committee mentioned a number of things, but I think he was the only person to raise scrap. We have launched a scrap working group, which will be dealing with that issue.
My hon. Friend the Member for Newport East (Jessica Morden) rightly raised the importance of the Llanwern steel plant, and she mentioned import penetration in relation to rebar. My near constituency neighbours, my hon. Friends the Members for Middlesbrough and Thornaby East (Andy McDonald), for Hartlepool (Mr Brash) and for Middlesbrough South and East Cleveland (Luke Myer), could not have been clearer about how the Tories abandoned the steel communities in Teesside and the difference that this Labour Government are making.
A number of Opposition Members mentioned tariffs. There are no tariffs in this Bill. However, as we heard from the Trade Minister at the Dispatch Box this morning and from the Secretary of State this afternoon, there is an open door for companies to come in and discuss those issues.
Finally, the hon. Member for Boston and Skegness (Richard Tice) and I have had many exchanges about steel. Sometimes we agree and sometimes we do not agree, but we always have a good discussion. He raised the importance of DRI blast furnaces as well as electric arc furnaces, and he and I will certainly have the opportunity to discuss that much further.
I think it is quite clear that the British Government are not and should not be neutral when it comes to British business, and we are on the side of business. We are unashamedly on the side of British business, and we are unashamedly on the side of the steel industry and steel communities. That is the difference between us and the Opposition, and I commend this Bill to the House.
Question put, That the amendment be made.
Proceedings | Time for conclusion of proceedings |
|---|---|
First day | |
Clauses 1 to 51; new Clauses relating to Part 1; new Schedules relating to Part 1. | The moment of interruption on the first day. |
Second day | |
Clauses 52 to 57; new Clauses relating to Part 2; new Schedules relating to Part 2; Clauses 58 to 60; new Clauses relating to Part 3; new Schedules relating to Part 3; Clauses 61 to 64; new Clauses relating to Part 4; new Schedules relating to Part 4; remaining proceedings in Committee on the Bill. | One hour before the moment of interruption on the second day. |
Steel Industry (Nationalisation) Bill
Monday 8th June 2026
(1 month, 2 weeks ago)
Commons ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 8 June 2026 - (8 Jun 2026)
20:11 - The Committee divided: - Ayes: 81 / Noes: 266 - Question accordingly negatived.
00:00 - The Committee divided: - Ayes: 65 / Noes: 257 - Question accordingly negatived.
20:40 - divided: - Ayes: 145 / Noes: 251 - Question accordingly negatived.
Dame Harriett Baldwin (West Worcestershire) (Con)
I beg to move amendment 21, page 1, line 6, leave out “of or including” and insert “predominantly of”.
This amendment would narrow the definition of a steel undertaking so that it had to be a business consisting predominantly of the manufacture or processing of steel, or iron for the purposes or in connection with the manufacture of steel.
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
With this it will be convenient to discuss the following:
Clause stand part.
Amendment 14, in clause 2, page 1, line 14, leave out
“includes (but is not limited to)”
and insert “means”.
This amendment would limit the public interest test to the areas set out in subsections (a) to (c).
Amendment 23, page 1, line 20, at end insert—
“(d) preventing the closure of, or the loss of jobs at, a steel undertaking in Wales.”
This amendment includes the public interest in preventing the loss of jobs in Wales and the prevention of the closure of a steel undertaking in Wales in the meaning of public interest for the purposes of the Act.
Amendment 1, page 2, line 20, at end insert—
“(2A) The Secretary of State may not exercise a principal transfer power unless they have laid a statement before both Houses of Parliament explaining their reasons for concluding that it is necessary to exercise the power in the public interest.”
This amendment would require the Secretary of State to lay a statement before Parliament explaining their reasons for concluding that it is necessary to exercise a principal transfer power in the national interest, before exercising that power.
Amendment 15, page 2, line 20, at end insert—
“(2A) The Secretary of State may not exercise a principal transfer power unless he has commissioned an independent assessment of whether the exercise of the power is in the public interest, and that assessment has demonstrated that it is in the public interest.
(2B) The Secretary of State may appoint such independent person as he thinks fit to carry out an independent assessment under subsection (2A) above, and may pay remuneration and allowances to that person.”
This amendment would require an independent assessment of whether the public interest test had been met before the Secretary of State could exercise the principal transfer powers.
Amendment 16, page 2, line 20, at end insert—
“(2A) The exercise of a principal transfer power may only be considered to be in the public interest under subsection (1) if the Secretary of State has is satisfied that the exercise of the power would provide value for money for the taxpayer.”
This amendment would require the NAO to have concluded that the exercise of the principal transfer power was good value for money before the Secretary of State could consider it to be in the public interest.
Amendment 17, page 2, line 20, at end insert—
“(2A) The Secretary of State may not exercise a principal transfer power under subsection (1) unless they have laid a report before Parliament containing full details of the criteria used to assess whether the exercise of power would be in the public interest.”
This amendment would require the Secretary of State to publish full details of the criteria used to assess the public interest test before exercising the principal transfer power.
Clause 2 stand part.
Amendment 12, in clause 3, page 2, line 10, leave out subsections (3) to (5).
This amendment would prevent the Secretary of State extending the sunset of the principal transfer powers.
Clause 3 stand part.
Amendment 2, in clause 4, page 2, line 30, leave out “negative” and insert “affirmative”.
This amendment changes the procedure for share transfer regulations from the negative procedure to the affirmative procedure.
Clauses 4 to 14 stand part.
Amendment 3, in clause 15, page 8, line 21, leave out “negative” and insert “affirmative”.
This amendment changes the procedure for property transfer regulations from the negative procedure to the affirmative procedure.
Clauses 15 to 38 stand part.
Amendment 18, in clause 39, page 25, line 32, leave out “negative” and insert “affirmative”.
This amendment would require regulations relating to continuity obligations to be subject to the affirmative procedure.
Clauses 39 to 44 stand part.
Amendment 19, in clause 45, page 28, line 37, leave out “negative” and insert “affirmative”.
This amendment would require regulations related to enforcement to be subject to the affirmative procedure.
Clauses 45 to 51 stand part.
New clause 2—Stakeholder Advisory Committee—
“(1) The Secretary of State must establish a Stakeholder Advisory Committee to provide advice on the exercise of principal transfer powers under this Act (“the Committee”).
(2) The Secretary of State must ensure that the membership of the Committee includes representation from stakeholders, including but not limited to—
(a) industries that rely on the supply of steel, including the defence sector and critical national infrastructure,
(b) representatives of the workforce of the steel undertaking, and
(c) local authorities for the areas in which the steel undertaking operates.
(3) The Secretary of State must consult, and have regard to the advice of, the Committee before making a determination that the exercise of a principal transfer power is necessary in the public interest under section 2.”
This new clause requires the Secretary of State to establish a stakeholder advisory committee. The Secretary of State would be required to seek the committee's advice before making a determination that the exercise of a principal transfer power under the Act was in the public interest.
New clause 3—Jobs and industrial transition strategy—
“(1) Where the Secretary of State has exercised a principal transfer power in respect of a steel undertaking, the Secretary of State must prepare and publish a jobs and industrial transition strategy.
(2) A strategy under subsection (1) must explicitly set out how the Government's investment and transition plans for the specified steel undertaking will—
(a) protect skilled employment,
(b) provide and support reskilling and redeployment opportunities for the workforce, and
(c) deliver tangible economic renewal and support economic resilience in the local communities dependent on the steel undertaking.
(3) The strategy must be laid before Parliament within six months of the day on which the regulations exercising the principal transfer power take effect.”
This new clause requires that the Secretary of State publishes a report on jobs and industrial transition strategy where it exercises a principal transfer power.
New clause 5—Duty to report: 10-year strategy for nationalised steel undertakings—
“(1) Within three months of exercising a principal transfer power in relation to a steel undertaking under this Act, the Secretary of State must publish and lay before both Houses of Parliament a report containing a 10-year strategy for the steel undertaking.
(2) Any report published under subsection (1) must include—
(a) a strategy for the operation of any blast furnaces which form part of the steel undertaking,
(b) an investment plan for the steel undertaking,
(c) a vision for the future of the site of the steel undertaking, and
(d) consideration of the need for a steel procurement strategy which prioritises British steel to support the steel undertaking,
for the following 10 years.”
This new clause would require the Secretary of State to publish a 10-year strategy for any steel undertaking nationalised under this Act.
New clause 8—Contingent liabilities—
“(1) The Secretary of State may not exercise a principal transfer power in relation to a steel undertaking unless they have made a statement to Parliament on the value of contingent liabilities associated with the use of the power.
(2) The statement made under subsection (1) must include—
(a) the value of any contingent liabilities to be acquired; and,
(b) the steps the Secretary of State will take to seek to minimise taxpayer exposure to any contingent liabilities so acquired.”
This new clause would require the Secretary of State to make a statement to Parliament on contingent liabilities acquired before they exercise a principal transfer power under this Act.
Dame Harriett Baldwin
If I may, I would also like to speak to the other amendments in my name and those of my hon. Friends, and, before I do that, approach the Bill with the serious concern it deserves. Today’s amendments reflect some of the points the Opposition made on Second Reading: that the Bill is a chaotic, unplanned intervention that risks landing taxpayers with an open-ended and potentially unlimited bill. Without addressing those issues as we make this legislation, we need to really focus on the things that are currently making the domestic production of steel unprofitable, such as higher employment costs and policies in pursuit of net zero, such as carbon taxes and associated regulations and levies.
Before I turn to the amendments in detail, I put on record how much I respect the Under-Secretary of State for Business and Trade, the hon. Member for Stockton North (Chris McDonald), and his real-life expertise in the steel business. He is truly a rare example on the Government Benches of someone who has deep private-sector experience and really knows his subject—I salute that. My own private-sector expertise is as an investor, so most of the amendments in my name and those of my hon. Friends are trying to protect the taxpayer from some of the financial risks the Bill lands them with.
The fact is that nobody wanted to nationalise British Steel. The Government told us last year, when they brought in emergency legislation—and brought Members back on a Saturday for the first time since the Falklands war—that they did not want to nationalise British Steel. They may now claim to their Back Benchers and union backers that this is something to celebrate as true socialism, but the reality is that it is an outcome that the Government wanted to avoid.
The Government failed to negotiate a good outcome with the Chinese owners of British Steel. The Prime Minister and the Business Secretary went all the way to China and failed to get a deal. Whenever this Government negotiate, the taxpayer loses out. The Conservatives do not think that the Government should nationalise British Steel, because we do not think politicians should be running businesses. Since the Government intervened last year, it has cost taxpayers over £1.3 million every day.
The Bill is deeply flawed, and it is in a spirit of goodwill that I offer the Government the chance to adopt the Opposition’s amendments. I am sure that they will want to agree to them, as they are all sensible.
Richard Tice (Boston and Skegness) (Reform)
To correct the record, I have been calling for British Steel to be nationalised for seven years. I urged the previous Conservative Government not to sell British Steel to the Chinese, and if they had followed my excellent advice, we would not be in the pickle we are now in.
Mark Pritchard (The Wrekin) (Con)
It is interesting that the hon. Member for Boston and Skegness (Richard Tice) once again outflanks Labour on socialism, but there we are. As a fellow west midlands MP, I am sure my right hon. Friend will be as concerned about the Bill as I am. My constituent, Mr Peter Hughes of EverEdge, which is a west midlands steel manufacturing company, has suggested that:
“While these measures are positioned as protecting primary steel production (such as TATA Steel), they are inadvertently undermining the much larger UK steel-processing sector.”
Does my right hon. Friend share his concern, in particular, the fact that:
“While raw material costs are rising, there are no equivalent restrictions on imported finished products”?
That could be seen—inadvertently, I accept—as a tax on manufacturing. It will certainly damage UK, Shropshire, and west midlands steel manufacturing.
Dame Harriett Baldwin
As a west midlands MP, I absolutely recognise that. In fact, I was with a constituent in Worcester on Friday, Mr Michael Outwin of Industrial & Tractor Ltd, who is going to have to pay a 50% tariff. I tried to table some amendments on the tariff regime, but unfortunately, they were not orderly, so I will limit myself to agreeing with my right hon. Friend. There are many types of steel that will be affected by the tariffs that do not seem to be made in the UK. I would like the Minister to clarify how he expects people to continue manufacturing from the steel that they have been importing for some time, once the tariffs are in place.
On the Opposition amendments, I am sure that everyone in the Committee agrees that the Bill as it stands exposes the taxpayer to unlimited liability for an unlimited length of time. The Bill expropriates businesses, and that will deter inward investment into our country. You do not have to take my word for it, Dame Caroline, as it is also in the Government’s impact assessment that one of the Bill’s potential impacts is that it chills the investment environment in this sector. That is why we have tabled the amendments the Committee is considering today.
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
Before I call the Minister, I will set the record straight: sadly, it is just plain old Ms Nokes in Committee of the whole House.
The Parliamentary Under-Secretary of State for Business and Trade (Chris McDonald)
I thank the shadow Minister, the hon. Member for West Worcestershire (Dame Harriett Baldwin), for her incredibly generous remarks at the start of the debate. I think we all try our best here with whatever expertise we have; of course, I recognise her expertise in finance, and will aim to address some of the serious issues she raised.
At the heart of the Bill and this debate is the future of our steel industry. The difference in opinion between the Government and the Opposition over the use of nationalisation as a tool of industrial strategy may be irreconcilable, but it is a useful tool—although not one to be used lightly. It is important that it is used in situations of market failure or some other private sector issue, which is certainly the case today. It was also the case when the previous Conservative Government briefly nationalised one of our steel companies, before that led to a failed private sector ownership.
Sir Edward Leigh (Gainsborough) (Con)
Yes, the Minister is right: Greg Clark nationalised it. As far as my constituents who work at Scunthorpe are concerned—and, I am sure, those of my hon. Friend the Member for Brigg and Immingham (Martin Vickers)—all we want is a viable Scunthorpe. We do not take an ideological line on nationalisation in this case. Given the problems we are now reading about in respect of electric arc technology in Port Talbot, can the Minister commit that the Government are fully committed to the blast furnaces in Scunthorpe?
Chris McDonald
Perhaps I can even give a slightly fuller answer than that. The particular issue with that previous nationalisation by the then Secretary of State was that it was effected merely to create a change of ownership, without actually improving the quality of the business or attracting additional investment into the business at the time. It is important to take this Bill in the full context of our steel trade measures and our steel strategy, which lays out a forward plan for the steel industry. Nationalisation is one of the tools that we can use.
The Government have been clear in our steel strategy that we see a transition to electric arc furnaces over time—there are good reasons for that, not least because they are the most productive and efficient technology available and are reliable and tried and tested—but our intervention in the Steel Industry (Special Measures) Act 2025 and our ongoing support of the British Steel business has been to ensure that we have blast furnace-produced primary steel available as part of that transition. The furnaces in Scunthorpe are the only two working blast furnaces in the UK, and they are currently our only source of primary steel.
The right hon. Member for Gainsborough (Sir Edward Leigh) also raised reports in the press about delays to the project in south Wales. Delays on such a large project are not unusual, but the specific issue in that case was around the groundworks—I would certainly be happy to expand on that more if it becomes part of the debate. I am, of course, in close contact with Tata Steel about that. In my experience of such projects, it is always difficult to understand what the duration of the project will be until it gets out of the ground, and ultimately there are issues with the groundworks there.
Let me move on to address amendment 21 and the issues raised by the shadow Minister. In terms of its structure, the Bill is very much modelled on the Banking Act 2009, which received incredibly broad support. The clauses in part 1 are vital to the operation of the Bill, and I urge the Committee to reject attempts to remove them.
While I understand the consideration that has gone into the preparation of the amendments, narrowing the scope of the definition of a steel undertaking would, in the Government’s view, introduce ambiguity rather than clarity. In practice, there are unlikely to be many undertakings operating at scale in both steelmaking and an unrelated business practice; if there were, the Government would look to exercise powers in a way that focused on what was necessary to operate the steelmaking business. The drafting of the Bill follows on from the text of the Steel Industry (Special Measures) Act. The Government are therefore of the view that amendment 21 is not necessary.
Jacob Collier (Burton and Uttoxeter) (Lab)
I fully support the need to buy British, but does the Minister recognise that JCB, based in my constituency, cannot source the grade and size of steel required for its machines entirely from the UK, and that a significant proportion of its steel comes from the EU? The proposed tariffs will apply to imported steel even when no UK alternative exists, so they are due to cost JCB millions. Will the Minister look into the matter urgently and meet me and JCB to discuss it?
Chris McDonald
My hon. Friend raises a specific point about JCB. I am reasonably familiar with its business, and I think its particular concern may be around the sourcing of plate steel. The steel trade measures—the tariffs and quotas that we announced—are designed to ensure that the UK is not subject to subsidised steel, which would damage our upstream industry, and will certainly help to support the upstream sector. Of course, we need a strong upstream sector in order to have a strong downstream sector. The issue with plate steel is that the Dalzell plate mill in Scotland, which is capable of making many of these steels, has not been operating for some time. I would be happy to meet my hon. Friend and JCB to discuss that in more detail.
Chris McDonald
I was just going to address the point the right hon. Gentleman made about the business in his constituency. I am not familiar with that business, but the general approach we have taken is to ensure that the groupings of steel under the trade measures are subject to the tariffs where those steels are or can be made in the UK, accepting that some of them are not but could be made in the UK, including at operations such as Dalzell. It is not always possible to separate all those steels out based on the groupings, so that is the purpose of the quota.
I am always interested to hear of specific examples. I had a meeting with a business last week for which this appeared to be a concern, but once we discussed the issue in detail we found that it was not an issue for the business, because of some of the arrangements that were in place. If the right hon. Gentleman would like to share further details about that case, I am keen to hear them.
Mark Pritchard
For clarity—perhaps I was not clear— a constituent of mine runs the company but the company itself is actually in another constituency, and it employs people throughout the west midlands. Could I write to the Minister about that particular case in order to seek more clarity?
Mark Pritchard
I am grateful for that. I want to make two brief points on tariffs, which the Minister mentioned. First, the Shropshire chamber of commerce has said:
“There is growing concern that tariffs may be applied to certain materials and products that are not currently available from UK manufacturers”.
I would be interested to hear the Minister’s view on that. Secondly, concerns have been raised about fabricated steel products that appear to fall outside the tariff regime. In practice, that could create an unintended incentive for steel-processing fabrication work to move overseas to avoid tariff costs. Will the Minister comment on that?
Chris McDonald
I am aware of that issue as well, and if the right hon. Gentleman would like to include all those issues in the letter, I will be happy to provide him with a response.
Gideon Amos (Taunton and Wellington) (LD)
I have been contacted by Coker Engineering in my constituency, which supplies Rolls-Royce, Leonardo and other defence companies. It can only use steels from certified electric arc mills of certain types and is worried about facing 50% tariffs after 1 July, once tariff-free goods have been used up. Will the Minister similarly look at its concerns and consider exemptions for steels that cannot be sourced in the UK?
Chris McDonald
The hon. Member might wish to let the business know that we have committed to a 12-month review of these tariffs, which, as I said, apply to steels that are made or could be made in the UK. I am aware that Speciality Steel UK is currently not operational as it is going through an administration process. Although the sort of high-quality aerospace steels that he mentioned may not be made there, I think it is probably the most likely location where they will be made, subject to those certifications, which are held by that business. The official receiver is currently in exclusive discussions with the business and a potential owner, so it is possible that the company he refers to may see a UK supplier soon, but if he shares the details with me, I will certainly be able to give him a fuller response.
Alex Ballinger (Halesowen) (Lab)
Interestingly, there is also a Coker facility in my constituency, and I have had several other businesses write to me on this subject. Only last week I visited the London Screw Company in Halesowen, which is really concerned that the 50% tariffs will increase the price of its products and make it uncompetitive. Although I am pleased that there will be a 12-month review, I wonder if that will come soon enough for such businesses in my constituency. Can the Minister provide any relief in the interim for those that may be on the verge of something more serious?
Chris McDonald
I thank my hon. Friend for raising the issue of the London Screw Company, and also for the discussion he had with me about that very company last week. It looks to me to produce an extraordinarily high-quality range of products, and certainly better than I normally find for my DIY projects, so it is my intention to patronise that company in future—we should all have more high-quality ironmongery, I believe. In a similar vein, if my hon. Friend writes to me with further details, I will ensure that my officials look at that matter, but in the first instance we would look to see whether those steels are made or could be made in the UK.
Unless there are any further questions about downstream steel producing, I will move on to address more of the shadow Minister’s comments. She talked about the public interest test in clause 2. Some of the amendments would limit the test exclusively to consideration of the three factors in clause 2, whereas amendment 23 seeks to expand them to include the prevention of closure or job losses in Wales. The inclusion of the three factors in the Bill offers some additional weight, and of course any assessment of an intervention will need to be considered against them. However, there may be a good rationale for an intervention that moved beyond that and did not sit squarely under those factors, so in our view it would be sensible not to bind the hands of the Government in that way.
The Chairman of Ways and Means (Ms Nusrat Ghani)
I call the Liberal Democrat spokesperson.
Sarah Olney (Richmond Park) (LD)
Steel provides vital materials for our national infrastructure, from defence to renewable energy, and creates thousands of jobs across the UK. The Liberal Democrats therefore welcome the action that the Government are taking to protect British Steel and ensure that the blast furnaces in Scunthorpe do not go cold, but we are clear that the nationalisation of British Steel must be a temporary step to rescue the business before it can be returned to the private sector. We believe in a thriving, privately run steel industry, supported and empowered by the Government through an effective steel strategy.
Although the Liberal Democrats support this step, the Government must provide more detail on the plan, including how they will find private co-investors who can help to modernise the sites and put the money in to help to create more jobs. They must also ensure that the key stakeholders, including industries that rely on steel such as defence, are properly engaged in and represented through the process. We cannot afford another collapse of British Steel in a few years’ time, and we must move on from interim short-term measures to create a robust long-term plan for the future of the plant and sustainable domestic steel production, with an emphasis on national security.
I wish to speak first in favour of amendment 1, which stands in my name. Fundamentally, it is about parliamentary accountability. If the Secretary of State is to exercise a significant transfer power, Parliament should, at the very least, be told why that action is necessary and in the public interest. The amendment would not prevent the Government from acting; it would simply require Ministers to explain their reasoning before exercising the power, providing far greater accountability and transparency. Requiring a statement to both Houses would help to ensure that the use of the powers is proportionate, justified and open to democratic oversight. The Government already argue that the powers will be used only where necessary. If that is the case, there should be no objection to setting out those reasons clearly before Parliament. Amendment 1 proposes a modest and reasonable safeguard. It does not create a veto or impose an onerous process; it merely asks Ministers to account for their decisions.
I wish to speak in favour of amendments 2 and 3, which seek to ensure that regulations relating to property transfers and share transfers are made subject to the affirmative procedure rather than the negative procedure. The transfer of property or shares by ministerial regulation is not a minor or purely technical matter. These provisions are the heart of the Bill and give the Government significant powers with substantial financial, operational and public consequences. Given the importance of such decisions, does the Minister not agree that it is entirely appropriate that Parliament should approve such regulations, rather than having to rely on the limited scrutiny afforded by the negative procedure? The affirmative procedure would guarantee a debate and a vote in both Houses, ensuring proper democratic oversight before the powers were exercised. At their core, amendments 2 and 3 are about reinforcing accountability, transparency and parliamentary sovereignty in the exercise of delegated powers, and I urge Members to support them.
New clause 2, which also stands in my name, would establish a stakeholder advisory committee to ensure that decisions made under the powers in the Bill included input from the relevant groups and those most affected. The exercise of principal transfer powers could have major implications not only for the steel undertaking itself, but for workers, local communities, supply chains and strategically important industries across the country. The proposed committee would bring together voices from industry, the workforce and local authorities, ensuring that decisions were grounded in practical expertise and real-world consequences. The inclusion of sectors such as defence and critical national infrastructure is particularly important, given the strategic significance of the steel supply to national resilience and economic security. A structured advisory mechanism would improve transparency, strengthen confidence in decision making and help to ensure that interventions are sustainable and effective. New clause 2 is about ensuring that the public interest is determined not behind closed doors, but with the benefit of broad expertise and stakeholder input.
I wish to speak in favour of new clause 3, which recognises that intervention in a steel undertaking cannot simply be about ownership or transfer powers in isolation. It must be about people, jobs and the long-term future of industrial communities. If the Government exercise these significant powers, they should be required to set out a clear strategy for protecting workers and supporting economic transition. Not only is the steel industry strategically important to the national economy; it is often central to the identity and prosperity of the local communities within which it is situated. Workers in these industries possess highly valuable and specialised skills. Any transition strategy should therefore prioritise the protection of skilled employment wherever possible. Where change is unavoidable, there must be a serious commitment to retraining, reskilling and redeployment opportunities so that workers are not left behind. New clause 3 would help to ensure that Government intervention was accompanied by a coherent industrial strategy, rather than being another short-term fix and crisis management.
Steelmaking is of vital strategic importance to the UK. It creates thousands of jobs across the country and is central to many communities, and we rely on it for essential parts of our national infrastructure, from defence and transport to clean energy generation and advanced manufacturing. Although the Liberal Democrats are supportive of the pace and urgency of the Government’s action to protect British Steel, nationalisation must be a temporary step, and the Government must ensure adequate transparency and accountability throughout the process. I therefore urge the Minister to support these amendments, to ensure that the legislation can deliver the necessary support to the steel industry, while balancing the needs of local communities and workers and ensuring that the necessary steps are taken to ensure thorough parliamentary accountability.
Sarah Champion (Rotherham) (Lab)
As you know, Madam Chair, I have been urging successive Governments for over a decade to back the British steel industry, so it is genuinely a pleasure to be here today as the Government do just that. I support this historic Bill.
Steel is essential for the UK’s economy. It supports thousands of well-paid, skilled jobs and plays a crucial role in ensuring Britain’s security, particularly in an ever more volatile and uncertain world. Yet for years the industry has been allowed to wither. Production has fallen and plants have been lost—and with them jobs, capability and capacity. We simply cannot afford to allow this precipitous decline to go on any longer.
Rotherham is a steel town. It has seen the consequences of past Governments’ neglect up close. Speciality Steel, which is based in Rotherham—and Stocksbridge—should be a crown jewel in our economy, but it has been allowed to lurch from crisis to crisis, choked of investment and left at the mercy of unscrupulous ownership, unfair competition and a lack of vision. The plants currently stand still, shuttered amid the fallout of Liberty’s collapse. The workers are furloughed and uncertain about what their futures hold. I would be grateful if the Minister could update the Committee on the current state of the sale, which is now in its final stages.
My concern is not limited to Speciality Steel. Steel in Rotherham is at the centre of our local economy, and the crisis has had a substantial impact up and down the supply chain. The Minister’s ambition for steel’s renaissance could also be a rebirth for local businesses and local communities, but that requires investment, foresight and commitment. The Government’s steel strategy sets out a strategic vision for the industry and, crucially, delivers real and profound change for the sector as a whole. With £2.5 billion of investment in the sector and an ambitious but achievable target of 50% of the steel used in Britain to be produced here, the strategy is a blueprint for a revitalised domestic steel industry; it is one that has been roundly welcomed by the sector.
Perhaps most importantly, the strategy sets out a new approach to steel imports. Time and again, I and other steel MPs in particular have warned that a failure to tackle cheap, often state-subsidised and heavily polluting imports would destroy any attempt to increase domestic production. Without a level playing field, British steel cannot hope to compete. It is therefore welcome that the Government have acted to protect UK steel producers from unfair competition through a range of new trade measures, quotas and tariffs. While that is good news for steel producers, we do need to get the details right. I thank hon. Members on both sides of the Committee for raising specific examples of that.
Alongside steel producers, Rotherham hosts a large number of steel stockholders and downstream businesses. I have raised with the Government a number of instances in which trade measures have been introduced on products not currently produced in the UK, or where UK production and capacity is far below demand. I urge Ministers to act to ensure that those businesses are not impacted unfairly and that trade measures conform to the realities of the UK market; to do otherwise risks inadvertently harming the very industries and communities that the Government seek to defend.
While the Bill will not have a direct impact on steel production in Rotherham, it does send an important signal. I am proud that the Government are taking resolute action to ensure that they have the necessary tools at their disposal to safeguard the future of British Steel in Scunthorpe. I hope that this will set a precedent as the situation with Speciality Steel develops and that they will take similarly decisive action there, should it prove necessary.
With the right support, British steel can—and should—play an ever greater role in our economy, in infrastructure projects and, crucially, in our national security. I know that steelworkers in Rotherham will be relieved to have a Government who are so clearly on their side—on the side of good jobs and a dynamic economy—and, most importantly, a Government who back British steel.
Sir Jeremy Wright (Kenilworth and Southam) (Con)
I will focus my remarks on clauses 1 to 3 of the Bill and the breadth of the powers that they give to the Secretary of State. I start with the meaning of a “steel undertaking” in clause 1, which is one
“that carries on a business consisting of or including…the manufacture or processing of steel, or…iron”.
As the Minister will know, I raised in an intervention on the Secretary of State on Second Reading—indeed my hon. Friend the Member for West Worcestershire (Dame Harriett Baldwin), who speaks from the Front Bench, also mentioned this earlier—that that wording could appear to include undertakings that have as little as 1% of their business in iron or steel.
Richard Tice
The very reason that the Government need the ability to extend the sunset clause is that if they listened to the amendments from the Conservative party, the delays from various items would be so great that they could go beyond the two years. Of course the Government need the ability to extend the sunset clause.
Sir Jeremy Wright
I recognise that the hon. Gentleman does not normally engage in the detail of legislation, but if he did, he would know that this is the Committee stage, where we look at the detail.
What the Government could perfectly properly do is pass the legislation, as amended by my hon. Friend the Member for West Worcestershire, and if they felt at the end of the sunset clause period that they needed further powers, they could come back to this House with further primary legislation and seek our consent to do that. The difficulty with what we have before us is that the Secretary of State has the power to extend the sunset clause indefinitely, by regulations, over and over again. That is what the wording of the Bill says, and that seems to me to be something we should not accept here. What we should do is reinstate the natural, ordinary meaning of a sunset clause, which is set out in clause (3)(1), by removing the rest of that clause. If, as the hon. Member for Boston and Skegness (Richard Tice) suggests, the Secretary of State wants to extend those powers, he should seek the authority to do so in primary, not secondary, legislation.
These deficiencies in the Bill are cumulative: the power to indefinitely extend the Secretary of State’s proposed powers is more pernicious because the powers are so broad, and the huge latitude that he would have to define the public interest matters more because the Bill may apply to many more companies than might have been thought when hearing the Government’s original intentions for the Bill. Plus, of course, the Secretary of State’s consequent powers, which are set out in the rest of the Bill—having decided to nationalise and make that initial transfer decision—are mostly constrained only by the scrutiny of secondary legislation, so the initial transfer decision is all the more important. It is my view that the Secretary of State’s powers, as defined in clauses 1, 2 and 3, are simply too wide and need to be constrained.
The Government make two substantive arguments in response to that view, and I want to address those arguments. The first, which the Minister put forward earlier, is that the Government are doing only what a previous Government did in the Banking Act 2009, and that the powers they seek to take here are no wider than those taken in that Act. I do not agree, for three reasons.
The first reason is that the powers in the Banking Act were premised on the existence of a special resolution regime, where the bank in question was already in financial trouble. As far as I can tell, this Bill does not require the relevant steel undertaking to be in any trouble at all for nationalisation to be an option. The second reason is that the Act provides for a temporary transfer to public ownership. This Bill does not use the word “temporary”, and again, I can find nothing in the Bill that prevents a nationalisation being permanent. The third reason is that the Banking Act requires the Treasury to consult before using its powers under that Act. There is no requirement in this Bill for the Secretary of State to consult anyone, so I am afraid it is just not like the Banking Act.
The Government’s second argument, which I discovered lurking in the memorandum from the Department for Business and Trade to the Delegated Powers and Regulatory Reform Committee—I am sure we have all read it— is that broad powers such as the right to define the public interest are
“buttressed by administrative law, including the need for interferences with property rights to be proportionate”.
Of course, that is so: the courts may intervene if the Secretary of State tries to use his powers irrationally or unreasonably, but Parliament should not be subcontracting our work to the courts.
If the legislative powers as drafted are too broad, it is up to the legislature—us—first and foremost to constrain them. The Secretary of State has consistently maintained, as has the Minister, that he wants only the powers needed to act where Government action is unavoidable, and only for the period needed, but the powers that he has in the Bill go well beyond that, and they could and should be restricted.
Lee Barron (Corby and East Northamptonshire) (Lab)
I want to start off by saying that I find it absolutely incredible when people turn around and say that our Government should not be intervening and running services, when they are happy to allow other countries’ Governments to run our services and utilities. To be honest, I get a bit tired of it, because it is essential that we do this if we are going to save industries, save sectors and save jobs. That is why we are right in doing this.
I want to speak on amendment 21, new clause 8 and new clause 5. It was a privilege to be recalled here on a Saturday last year to pass the emergency Steel Industry (Special Measures) Act 2025 to save the Scunthorpe works, and I am just as happy to be here today to see this Bill go through its first day of Committee. Since last year, it has become clear that public ownership is in the national interest. Corby is a town built on steel—steel that built this country. At one time, the Corby steelworks was the largest combined steelworks in Europe. I recognise that the Bill does not nationalise the steelworks in Corby, but it will make sure that the sector does well, and where that happens, that will ensure that the other aspects of steel do well.
In 1967, it was the Labour party that nationalised the steelworks and put British Steel in charge. It did so because it knew that home-made steel was essential for our national security, for our economy and for thousands of jobs. In 1980, a Government who failed to see those opportunities closed the steelworks, and with that, tens of thousands of jobs went and almost a third of people in my constituency became unemployed. That is why it is so important that British Steel should be allowed to continue.
This Bill marks a reversal in direction. It shows what can happen when we have a vision for our economy and the dedication to see that vision through. How could the last Government shape our economy and create jobs when they failed to even create an industrial strategy? This Government have a strategy. Their decade-long industrial strategy, and the steel strategy announced in March, show that.
The steel strategy provides £2.5 billion through the National Wealth Fund to help rebuild our steel sector so that we can move towards 50% of all British demand for steel being made in this country, ensuring our security in an unstable world with the capacity for our own virgin steel supply. That is what this Bill leads to, and that is what is going to happen as a result of it.
British steelworking powered the first industrial revolution, and it can do so again, building the renewables and technology for the future. We still have a steelworks in Corby, and we want to make sure that Corby and the towns like it across our country have a new and secure future. I believe that the passing of this Bill will ensure that that happens.
Richard Tice
It is a pleasure to stand up and support the Government and this Bill, because we all know that the ability to make primary steel is absolutely in the public interest, and it therefore automatically meets the public interest test. We cannot be the only G7 nation without the ability to make primary steel using a blast furnace, but that will be the consequence if this legislation does not go ahead.
The Conservatives’ line of thinking is to just rely on the private sector. Well, they tried that for some 14 years, but the reality is that the state of the blast furnaces means that they need investment for relining, renewing and rebuilding. The private sector has said that it is not there yet, but it could be, so we need a period of time when the industry has the commitment of the public sector to ensure that a thriving primary steelmaking capability can exist.
Sir Jeremy Wright
I understand the logic of the hon. Gentleman’s argument. He has referred several times to the series of proposals being made in Committee by the Conservative party, as outlined by my hon. Friend the Member for West Worcestershire (Dame Harriett Baldwin). They come to this: that no Government should be able to create for themselves a very wide definition of what a steel undertaking should be, that they should not be able to define for themselves without restriction what the public interest may be, and that they should not be able to extend indefinitely, without parliamentary authority, the effect of the Bill. Will the hon. Gentleman tell us what he objects to in those proposals?
Richard Tice
I will indeed. My objection is that the consequence of the Conservative party’s amendments would be to delay the investment that is required to get on with this. People have expressed concern about the current losses. The last thing we should do is create bureaucratic delays that prevent the investment that would turn the cash flow around from negative to positive.
Martin Vickers (Brigg and Immingham) (Con)
I have already made clear to my constituents that I do not oppose the Bill, but I support the Opposition Front Benchers in trying to constrain its cost. Will the hon. Gentleman give a specific figure, or is the Reform policy just to spend, spend, spend?
Richard Tice
Actually, the consequence of the Conservative party’s amendments would be to delay the vision and investment that is required, and therefore to increase the losses. That is why they should be ignored. If you are going to do a job, then for heaven’s sake, do it properly and get on with it. That is the difference here.
We need the blast furnaces to be refurbished and relined, and we need a plate mill. We need proper, committed investment. We need the Minister to have a pro-British steel procurement strategy at all levels of the public sector, from warships and the railways to even the planning conditions for a new Chinese embassy—let’s make it with British steel from Lincolnshire, not cheap Chinese steel from far away.
Graham Stuart (Beverley and Holderness) (Con)
I am trying to understand how constraining Government powers in the three areas of concern would in any way lead to a delay. I do not think that any constraints imposed would stand in the way of this undertaking. In what way would there be a delay? I may not have sufficiently understood the linkage between such constraints on Government powers in other undertakings and how on earth those would impact this particular one.
Richard Tice
It is my judgment that the Conservative party’s amendment would prevent the Government from getting on and setting out the vision, placing the investment that is required, and giving the confidence to everybody that there will be a steel-making capability for primary steel. Once we get that investment in the core asset in Scunthorpe—with a refurbished, renewed blast furnace that is ready for the next 50 years—then, with brilliant management from the private sector, we will start to attract private sector capital, which we all want to bring in. This is a moment that requires the proper seed investment, the commitment and the courage from this Government to get on with it, which was so lacking in the previous Administration.
Sir Edward Leigh
I agree with a lot of what the hon. Gentleman says. We can surely agree on this point: what is really killing Scunthorpe are the insane green energy policies and the fact that we have the highest energy costs in Europe. If we had a sane energy policy, we could start to make a profit at Scunthorpe.
Richard Tice
The Father of the House is absolutely spot on. The net-stupid-zero policies have been catastrophic across the piece, and I fear that those very policies are the reason why people are concerned about the possibility of opening an electric arc furnace. That puts even greater pressure on the need to have a renewed, brilliant, wonderful blast furnace capability for the next 50 years. If we achieve those things, we can bring in private sector capability with a pro-British procurement strategy. That will give confidence to all.
It has been mentioned that the Bill would somehow prevent other investment from the private sector. The discussions that I have had with overseas pension funds and overseas sovereign wealth funds suggest exactly the opposite. They suggest that, with this sense of commitment—what I like to call a joint venture with the core asset, under public ownership—we will attract more international investment, because people will know that there is a long-term commitment as opposed to the wibbly-wobbly, flip-flop approach of previous regimes. That is the reason that we need to get on with this. We need to ignore any delaying amendments.
Let us have the vision. New clause 5 would require the Government within three months to set out that 10-year vision and 10-year commitment to the blast furnaces and others in the steel undertaking, to ensure that we have a vibrant and, ultimately, viable primary steel-making capability in the United Kingdom.
Alan Strickland (Newton Aycliffe and Spennymoor) (Lab)
I am pleased to speak in support of the Bill and comment on a number of the amendments. I do so as a Member of this House who represents a proud manufacturing constituency, which includes a number of industries that rely on steel in a variety of ways, from the rail industry and advanced manufacturing to the cluster of innovative defence and space-related companies at NETPark—North East Technology Park—in Sedgefield. Steel is not only used by some of those companies, but extensively used in their supply chain. It underpins manufacturing not just in my seat, but across the north-east and many other constituencies in the country, as we have heard. I have also campaigned successfully to protect sovereign supply of key materials in my constituency and the wider economy. Given the importance of steel to our national security and national critical infrastructure, it is crucial that we get our approach to steel right.
So what does this mean? First, as hon. Members across the House have said, we need to ensure that the Government can act quickly and with agility. That is why I have concerns about several amendments, which, as other colleagues have raised, could slow down the Government’s ability to act decisively. That appears in a number of amendments but, for example, amendments 2, 3, 18 and 19 and new clause 2 seek to impose additional requirements on Ministers before they can act using the provisions of the Bill. Others have gone into some of the specifics, but my concern is that when considered in the round, these proposed changes would have the cumulative effect of hampering the Government’s ability to act and to act swiftly. It is critical that Ministers can act because that is the key purpose of the Bill; that is why we are here debating it today.
Why is it important that Ministers can act quickly, and why might some of the amendments be a challenge? Because, as we are discussing, when a steel plant faces significant challenges and the Government are minded to intervene, Ministers need to achieve three things. First, they need to be able to provide certainty about the future of the business, which helps sustain the workforce and gives certainty to its supply chain and reassurance to its contractors. We have heard Members talk from their private sector experience—I myself worked in regeneration and housing previously—that when there is doubt about the future of an industry or a particular business, or there is a particular commercial concern, we know that when business confidence starts to fall, if action is not taken quickly, the lack of confidence in the supply chain and the contractor chain can do serious damage.
The second priority for Ministers must be to minimise risk. We know not just in this process, but in other similar processes undertaken by the public and commercial sectors that the longer the process, the higher the commercial and legal risk and the more likely it is that we will not get the outcome we desire. It was that desire to act swiftly and show significant national leadership that, as hon. Members mentioned, is why we were all recalled last year on a Saturday, to intervene quickly in the steel sector.
Thirdly, and crucially, the reason that speed is important is if this is agreed, it is important that Ministers have the powers they need to enact the will of Parliament quickly. Quicker intervention in circumstances like this, given the factors we have discussed, is likely to be more successful, particularly in complex cases as we see at British Steel in Scunthorpe.
Graham Stuart
The hon. Gentleman makes the point about the need for speed in these circumstances, but perhaps he could explain to the House why the endless resetting of a sunset clause, contradicting the whole purpose of a sunset clause, plays into the need for urgent action right now? Or does he agree that it is something that should be looked at again and does not need to delay any of the effective action for which he is calling?
Alan Strickland
Ministers will speak for themselves, but I think they are seeking the flexibility to act in the national interest and to do so appropriately. My concern is more with some of the clauses that add lots of prerequisites to what needs to happen before Ministers can act. My view is that in the limited, and hopefully rare, circumstances where Ministers do feel the need to exercise these significant powers, they need to be able to act quickly, and that is what we are discussing today.
Several of the amendments relate to concerns around value for money, which of course is an incredibly important consideration. It is important for all of us to remember that one of the key reasons we are here today is precisely because Ministers have said that they want to do more to ensure value for money for taxpayers delivered in the Government’s potential intervention in British Steel Scunthorpe. That is why my hon. Friend the Minister for Industry was clear in May that the Government intended to bring this legislation forward precisely because Ministers were unable to agree suitable terms with the current owner of British Steel that represented a
“responsible use of public money,”
so value for money has been a key driver of ministerial action on this matter and the reason we are debating it in the Chamber today.
I turn to new clause 5, which the hon. Member for Boston and Skegness (Richard Tice) was just describing. I am sort of slightly astonished that Reform, a party with no plan for steel, has put an amendment demanding a plan for steel. I am pleased to tell Reform Members who are here that we already have one. The Labour Government, as the Minister mentioned, published the UK steel strategy in March. It clearly addresses a number of the important points that the hon. Member rightly mentioned earlier, including specifically the need for the public sector to buy more steel. A year ago in June 2025, the Cabinet Office published guidance—procurement policy note 22—that required public bodies nationally and locally, and their executive agencies, to ensure that UK-produced steel is routinely considered in public procurement and that this is done at an early stage in the process, so the mention of public procurement around steel in that amendment is redundant. Ministers have already issued clear guidance on that some time ago.
Ann Davies (Caerfyrddin) (PC)
I rise to speak to amendment 23, tabled in my name, which seeks to strengthen the public interest test that decides when Governments may nationalise steel sites under the Bill. Specifically, it would ensure that nationalisation can and should be used to prevent the loss of jobs in Wales and to prevent the closure of 16 sites in Wales.
Why is this change needed? Currently, the public interest test notes three specific factors for when nationalisation powers may be used, two of which are
“the construction, maintenance and operation of critical infrastructure in the United Kingdom”
and to support
“the economy of the United Kingdom or any part of the United Kingdom.”
While those provisions could allow the Government to intervene to protect Welsh steel sites, they offer no guarantee that they will.
Welsh steel communities know all too well what happens when Governments choose not to act. We have experienced this before. Port Talbot stands as the most painful example, where the blast furnaces were allowed to close in 2024, resulting in thousands of job losses and devastating a community that had a proud history of making steel for over 100 years. Before the closures Wales had the largest steel workforce in the UK, with 9,300 people employed in the sector. The Labour party had several years in opposition prior to entering government; the Government could have developed a plan to nationalise Port Talbot to safeguard jobs, as they have done for British Steel in Scunthorpe. They could have acted, but chose not to. Port Talbot deserved equal treatment. Wales deserves equal treatment. The Welsh economy cannot afford a repeat of the calamity of Port Talbot.
The need for certainty is not theoretical. Only recently, last Thursday night, a major fire at Port Talbot caused significant disruption. We are so grateful to the emergency services for acting so quickly, evacuating the area so there were no casualties, but significant damage was caused to the steelworks. We have also learned that the installation of a new electric arc furnace at Port Talbot may be delayed for months because of an electrical connection issue. I believe that is a planning issue with the local authority. These events have not helped the precarious situation at Port Talbot. To safeguard the site and jobs, the Government should make it clear that they will step in to prevent closure or job losses, as a measure of last resort—a position Plaid Cymru has consistently called for.
Steel jobs in Wales are not just jobs: they are strategic assets. They are essential for the future of our economy, for major infrastructure projects and for the development of offshore wind in the Celtic sea. They are also the backbone of our communities from one end of Wales to the other. Alongside Port Talbot, Wales is home to the Trostre works in Carmarthenshire, 7 Steel in Cardiff, Tata in Llanwern and the steelworks at Shotton in the north-east of Wales. Each of these sites deserves the same level of protection that is being offered to sites in England. All deserve equality.
Graham Stuart
Does the hon. Lady share my concern that the funds put in place by Government—£2.5 billion for the steel plan—are completely inadequate to match the enthusiasm of Members across the House for nationalisations? The National Audit Office suggests there would be £1.5 billion in losses from running the Scunthorpe plant alone, without any investment and without any compensation for Jingye, so the £2.5 billion would be rapidly gone. The truth is that this House and this Government are unable to put in place the sums of money that would allow Scunthorpe sensibly to be supported and invested in, let alone the long string of 16 sites in Wales that the hon. Lady so bravely speaks up for today.
Ann Davies
I thank the right hon. Gentleman for his intervention. Some £500 million has been ringfenced for Port Talbot; that money is rapidly gone, with no benefit to the local community, but that is another issue that I will not talk about now.
We want an end to the double standard. Welsh steel must be given the same guarantees as English or Scottish steel. What we want is equality for all the sites across the UK; we want the same security and the same commitment to preventing closures and safeguarding jobs.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I am delighted to welcome the Bill, and will speak to a couple of the new clauses and amendments. I declare my role as chair of the all-party parliamentary group on steel and metals-related industries, through which it is a pleasure to work cross-party in the interests of the industry.
Just outside Middlesbrough, wedged between the gas pipes and the railway, is an old path. Someone walking there 200 years ago would have found sailors trudging through salt marsh hamlets, and 100 years ago they would have found steelworkers—hundreds of them—walking home on the tired commute. The cinders underfoot gave the path its name: “the black path.”
If someone walks that path today, they will see the remnants of a bygone age for Teesside iron and steel. They will see a former railway station, now disused, which was used for industry. They will see a lost ironworkers’ village and the red wild flowers that thrive on former slag pile soil. And, of course, they will arrive at one of the largest brownfield sites in Europe: the former Redcar steelworks, which once stood as a great shadow on our skyline, the heart of the region, pumping out steel across the world.
The phrase on Teesside goes, “We built the world.” Everything from the Sydney harbour bridge to the Churchill War Rooms were made with Teesside steel. It can never be forgotten that, in 2015, the then Conservative Government’s laissez-faire approach to Chinese steel dumping denied us the intervention that we needed on Teesside. The closure of Redcar steelworks tore a hole through our region and cost thousands of jobs. I pay tribute to my constituency neighbour, my right hon. Friend the Member for Redcar (Anna Turley), who at that point was a newly elected MP and fought tirelessly for the workers of Teesside, but we can never allow a situation like that to happen again.
We cannot change the past, but steel is not our past, as the workers at British Steel Special Profiles at Skinningrove in my constituency will tell us, or the workers at Teesside beam mill at Lackenby, along with the many supply chain SMEs on Teesside. Having run a Teesside steel company for many years, the Minister for Industry knows that landscape well. I commend the decisions that the Government have taken, particularly on British Steel, that have protected and safeguarded jobs in my constituency and my region.
Graham Stuart
The hon. Gentleman is giving a powerful speech and showing great expertise. Is he confident, as so many critics of the steel plan were not, that the £2.5 billion that has been found by the Treasury is sufficient to allow the interventions that he so enthusiastically supports? If it is not, is there not a danger that we will not invest in things, but just bleed out public cash on facilities that continue to be uncompetitive and do not get renewed? If we do not put the right resource in, as France and other countries have arguably done, we will be losing out and not winning.
Luke Myer
As a Back Bencher, I will always fight for more funding to modernise our steel industry. What I do know is that the current owners of British Steel are not responsible owners. We saw last year the crisis that was created when they failed to provide sufficient supply to keep the blast furnaces running. We cannot allow the current situation to continue if we are to protect our domestic industry. This Bill is about having the powers to nationalise and ensure that the national interest is served. Whether there is sufficient funding is a question on which I will continue to push the Government.
We are not focusing today on clause 58, but the freedom to make the necessary fiscal decisions to support operational stability and competitiveness is fundamental to the sunset clause we are discussing, as well as the potential for ongoing considerations on other critical assets that the Bill might be used for. It would be helpful to hear more about the Government’s intentions on issues like energy and procurement, as my hon. Friend the Member for Newton Aycliffe and Spennymoor (Alan Strickland) said. We had a positive intervention from the Cabinet Office last year and the ambition to increase domestic steel market share back towards 50% is right, but the test will be in the delivery.
For too long, we have had industrial strategies while approving publicly backed projects that import vast quantities of overseas steel. Taxpayers rightly expect public investment to strengthen British industry and British jobs. Mechanisms like contracts for difference and other subsidy schemes must align much more closely with procurement objectives, so that public money genuinely supports UK supply chains. The forthcoming defence investment plan is a major opportunity to ensure that we are using UK steel across the country in industrial communities to support national security. At the end of the day, economic security is national security. Britain cannot become dangerously dependent on overseas steel for critical infrastructure or defence capability.
While I support the shift to electric arc furnaces and the increased focus on how we use domestic scrap, which is welcome, Britain should seek to retain some primary iron capability. Other countries are investing heavily in technologies like direct reduced iron. We need only look at Luleå in northern Sweden, for example, where an operational hydrogen-powered DRI facility is already producing steel. That has not held the region back in any way. Economically, it has had the opposite effect of attracting inward investment in new industries, from data centres to clean power. I would like to hear a little from the Minister about DRI and whether we will be looking seriously at that, but I do not wish to stray too far out of the scope of the Bill.
The legislation was brought forward in the context of British Steel, but we should not pretend that British Steel is the only critical asset that may ever require Government action. There may be other sites, capabilities and parts of the supply chain where future intervention is needed to protect jobs, sovereign capability and the national interest, so my concern with amendment 12 is that it would make these powers too easy to lose. A future Government may not share the same commitment to active industrial strategy and may not be as willing to renew the tools needed to protect the sector, so we should not remove the extension mechanism now because we may leave workers and industry more exposed later on.
Opposition Members made the point that politicians should not run businesses, although of course the Minister for Industry did run a steel business for many years and did so very effectively. They may mean that politicians from this country should not run businesses. The Bill is before us because of the approach that Jingye has taken. The Chinese steel industry has long benefited from huge state subsidies, and cheap state-directed finance, energy support and overcapacity policies. Beijing did not leave it to the market; it used state power aggressively to expand industrial capacity, which is worth bearing in mind.
I will finish on this point. While the Government cannot say which assets they wish to use these powers for, it is evident that British Steel cannot remain in Chinese hands. I do not know what the long-term ownership structure will look like—perhaps it will be modernised and sold to a new buyer, or perhaps it will be taken into public hands and remain there, with steelworkers having some stake in the company that they built—but I do know this. When a Labour Government intervened to create the nationalised British Steel Corporation in 1967, Teesside enjoyed such high employment and high wages that it was classified as one of the best places to live anywhere in the UK. It brought stability to tens of thousands of families and built the second largest blast furnace in Europe.
In 1979, a very different Government took office with a very different theory of Britain—a small state and a blind faith in the global free market. In just five years, our region had the highest registered unemployment rate anywhere in Great Britain. By the end of Thatcher’s premiership, almost 250,000 jobs in our region had gone. They took a British industrial economy and turned it into a globalised service sector economy.
Today the Thatcherites are back, with a new logo and a new face. They will talk a big game on steel, but we have been here before. It is my belief that only a social democratic Government can truly protect our steel communities and equip them to face the future, because a social democratic Government recognise something that a foreign private owner cannot: the value of protecting sovereign industry, even when the going gets tough.
This issue is about our jobs, but it is also about our security. Will we be left exposed in a volatile world, or will we build for the future again? I hope that this Labour Government have the courage and ambition to do so.
The Chairman of Ways and Means (Ms Nusrat Ghani)
Minister McDonald, I believe you wish to contribute again.
Chris McDonald
There is so much so say, and so little time until the rise of the House. Members who are standing may wish to take a seat, because we might be here for a little while.
Chris McDonald
Indeed, Madam Chair—I was banking on 10 o’clock.
I thank all Members, including the shadow Minister, the hon. Member for West Worcestershire (Dame Harriett Baldwin); the Liberal Democrat Front-Bench spokesman, the hon. Member for Richmond Park (Sarah Olney); and the former leader of Reform, the hon. Member for Boston and Skegness (Richard Tice), for the extremely constructive and civil way in which this debate has been conducted. I know that that comes from a real enthusiasm among all Members in the Committee for having a successful steel industry.
In fact, there were many points of agreement in the debate. In debating the amendments to the first part of the Bill, the importance of the steel industry came through extremely strongly, as did the importance and reliability of the use of public money. We all share that view across this Committee, and we also want there to be extreme care in the use of the powers in the Bill. I know that Members who moved amendments in that regard are concerned about that, and the Government are too. I will address some of those points, and I will endeavour to address some of the points raised by Members during the debate. I will start by addressing a recurring theme in the debate: what nationalisation is.
Jim Shannon (Strangford) (DUP)
I am thrilled that the Minister has until 10 o’clock to speak—if you are agreeable, Madam Chair, we will have lots of interventions. The issue is not whether people agree with the nationalisation of the steel sector, so we can set that aside; the issue is whether we will have a steel manufacturing sector that can produce steel for all the United Kingdom of Great Britain and Northern Ireland. We in Northern Ireland need the steel from here, and we need it for our defence sector, which is really important. Just before Christmas, my pastor in my church told me, “There are 69 wars in the world.” We have to be prepared for the world wars we are going to have to fight. We need a steel sector to do that, and what the Minister has put forward is a justification for it.
Chris McDonald
The hon. Gentleman is quite right. The steel sector is vital for our national security and our infrastructure and construction industries throughout the whole of the United Kingdom, including in Northern Ireland. He speaks very well about that.
Nationalisation or national ownership is not an objective in and of itself; it is simply a pragmatic tool of industrial strategy that can be deployed with care in order to achieve legitimate aims of Government. If we think about some of the nationalisations of the past, it may be that some of those were driven by the pragmatic use of industrial strategy, and it may be that some were driven by ideology. In general, the way that the nationalisation of a business works is that the Government intervene when a business is in distress or is no longer viable but is important. Those businesses are returned to the private sector only once they are successful.
Contrary to the narrative that is often peddled about public ownership, the purpose of public ownership is to pick up businesses when there is a market failure or where a private sector operator is unable to continue. We have seen that in other instances, such as in the railway industry. I see nationalisation simply as a useful and pragmatic tool of industrial strategy.
Sarah Champion
Does the Minister share my concern and confusion about the comments made by the right hon. Member for Beverley and Holderness (Graham Stuart)? I was not sure if he was supporting the nationalisation of British Steel but thought that there was not enough money or that there was too much money. However, he seemed to support the fact that in Europe, the Government subsidise electricity, and I felt that he wanted that to happen here. For all the reasons that Members have said, I just want a really strong and secure steel industry in this country.
Chris McDonald
I think the right hon. Member for Beverley and Holderness (Graham Stuart) also wants a strong steel industry, but he has been quite clear that he does not see nationalisation as a tool for delivering that—I think that is fair. He is also concerned about the use of public money, which I think is fair as well. I shall address both of those points as I continue.
I am very pleased that my hon. Friend the Member for Rotherham (Sarah Champion) raised those issues. This is an opportune time to mention that in her earlier comments, she asked for an update on the current status of the Speciality Steel UK business, which I know affects her constituency and that of my hon. Friend the Member for Penistone and Stocksbridge (Dr Tidball). That business shows the power of a productive Government intervention, working carefully with industry, because the Government have underwritten the costs of the official receiver to allow a proper sale of the business. The official receiver is in exclusive discussions with a potential buyer, and there was a high level of interest in the business from the market.
As we look forward to the potential sale of the business, we can see the vital role that the Government have played in recognising that steel undertakings are complex, that it can be difficult and can take time to assess them, and that they require high levels of working capital. That contrasts significantly with Governments in the past, who allowed steel companies to close simply by not allowing that process to continue.
Chris McDonald
I will take an intervention from the right hon. Member for Beverley and Holderness. Given that he was referenced, it would be helpful to give him the right to reply.
Graham Stuart
To help the hon. Member for Rotherham (Sarah Champion), I do not think I said anything about subsidising. What I am looking for, and what I think all of us across this Committee would like to see, is the continuation of steel, especially in a dangerous world. I was questioning whether we have a coherent strategy and sufficient funding to take the steel industry—the specific site in Scunthorpe and others—on the journey that the Minister set out, which requires intervention to take it back to being a thriving industry. I worry that there is not such a pathway or sufficient resource, so we could be in the worst of all possible worlds, where we just bleed public money without it leading to the restitution of a healthy steel industry in this country. That is what I am looking for an answer to.
Chris McDonald
Let me address that point. It is helpful for us to think about the potential options. There is agreement across the Committee that we want a successful and thriving steel industry, and the Government have made some serious financial commitments. We have committed £500 million to support the transformation of the plant in Port Talbot, which has attracted another £500 million of private sector investment. We have committed £2.5 billion through our steel strategy and an additional £400 million to support the Forgemasters operation, which is successfully under public ownership.
We have to think about the potential options. Given that the Government have put that money on the table and are seeking private sector partners to work with for all our steel plants, the alternative would be the closure and the loss of those facilities. This comes down to a judgment as to whether we think the UK is capable of having a successful, profitable and investable private sector industry.
It is the Government’s view that it is possible for the UK to have that, not least when we compare ourselves with similar advanced economies in Europe—we are not necessarily comparing ourselves with low-cost economies around the world—but it is a matter of ensuring that we have the right business environment to enable that to happen, and it is clearly incumbent on Government to arrange policy in that way. I think our steel strategy, in particular, and our trade measures provide that response, which is what gives us confidence that we have the resources to do that.
Chris McDonald
If the hon. Gentleman does not mind, I will take the second intervention from my hon. Friend the Member for Rotherham, and then I will give way to him.
Sarah Champion
The Minister is being very generous with his time. I want to take him back to the issue of Speciality Steel, because this is not just about the business itself—it is also about the supply chain. For example, the steel that is made in my constituency goes into Formula 1 cars and almost every plane in the sky. I think many hon. Members need to understand the consequential impact of saving not only British Steel, but all of our steel industry, on our whole economy and on global industries.
Chris McDonald
The supply chain is incredibly important. My hon. Friend is right about the jobs and the economic value in the supply chain; my hon. Friend the Member for Newton Aycliffe and Spennymoor (Alan Strickland) also referenced the supply chain, and particularly how its needs relate to the measures in the Bill.
A number of the proposed amendments to the Bill would ultimately slow down the ability of the Secretary of State to make decisions—that point was also made by the hon. Member for Boston and Skegness. If the Secretary of State cannot act swiftly, there is a risk of greater uncertainty among employees and commercial partners in the supply chain, as my hon. Friend the Member for Newton Aycliffe and Spennymoor rightly said. That can have real-world consequences for businesses that rely on trade finance or other forms of working capital support, as a lack of confidence can rapidly turn into business closures. While some of those amendments are well-meaning—I am speaking particularly about amendments 2, 3, 18 and 19—they would fundamentally interfere with the speed and operational ability of the Secretary of State under the legislation and reduce legal certainty.
Sir Ashley Fox
Does the Minister believe that the Government’s current energy strategy is consistent with a successful British steel industry, or does he envisage that energy strategy having to change in order to lower industrial electricity prices?
Chris McDonald
I am pleased that the hon. Gentleman has raised that question, because it was mentioned by a number of Members during the debate. To go back to the point about having a business environment that creates a profitable and investable steel industry, energy is clearly part of that. Some of the changes that the Government have already made—increasing the rebate on the supercharger from 60% to 90%, or the British industrial competitiveness scheme, which will support some of the downstream industry—will be particularly helpful in supporting not only the steel industry but other parts of heavy industry between now and 2030, which is when the Government’s clean power mission will come fully online. We anticipate that at that point, we will have not only clean energy, but secure and lower-cost energy.
If we consider the timescale of some of the investments in steel companies that we are talking about—not only multiple-year investments in order to commission, but multiple-decade investments beyond that—we can see that we have a pathway on energy that will enable us to get from now to 2030 and beyond. The Father of the House, the right hon. Member for Gainsborough (Sir Edward Leigh), who is not currently in his place, was concerned about this issue as well. He was also concerned that the UK has the highest energy prices in Europe, but we do not currently, and it is certainly our plan to ensure that our energy prices for industry are competitive with Europe in future.
Returning to the amendments that have been tabled, there was quite a lot of discussion about the sunset clause in the Bill. There were a number of objections to it, but the case for its continuation was made extremely well by my hon. Friend the Member for Middlesbrough South and East Cleveland (Luke Myer). As it stands today, the Government have no intention of extending the sunset period, but we recognise that we are living through particularly volatile times. There is geopolitical and economic uncertainty, which is likely to have a bearing on the steel sector in ways that it is difficult for us to see at the moment. As such, our view is that it is simply pragmatic to include this level of flexibility in the Bill, and of course, regulations made under that clause would be subject to the affirmative procedure.
It is important that I address some of the concerns of the hon. Member for Caerfyrddin (Ann Davies), who spoke with great passion and commitment about the importance of the steel industry throughout the whole of Wales. There is often considerable discussion of Port Talbot in this House, but as she rightly set out, there are also steelworks in Llanwern, Cardiff, Newport, Trostre and Shotton—I hope I have remembered all of them—that deserve recognition and investment.
I could not disagree more, however, that this Government have treated the Welsh steel industry unfairly, or not in an equitable way, compared with the steel industry elsewhere in the UK. The steel industry in Wales is the only part of the industry that has a ringfenced fund—£500 million for Port Talbot. The hon. Lady said that that has been spent with no benefit to the local community, but I frankly cannot agree with that. That £500 million has enabled Port Talbot to invest an additional £500 million in a transformation of that steelworks that will secure steel production at that site and the future of the south Wales steel industry for decades to come. It is a significant investment in the local community.
I know that the hon. Lady, like me, would have preferred for that transition in south Wales to have happened without the hard stop between the closure of the blast furnaces and the restart of the electric arc furnace, and I support Tata Steel’s view on the installation of its electric arc furnace. However, the decision to close was taken before the general election, and my right hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds)—the former Secretary of State, who is now Chief Whip—was able to intervene at that point and get a much better deal for the workers at Port Talbot and the community there than the previous Government did. I share the hon. Lady’s frustration and concern, but we need to be clear about where the indifference to the blast furnace closures in Port Talbot was. It was not with this Government; it was with the then Conservative Government.
Richard Tice
As we are talking about the new electric arc furnace in Port Talbot, can the Minister guarantee with certainty his confidence that, when built, it will open?
Chris McDonald
I am really glad that the hon. Gentleman has asked me that question—I know he has great experience in the property industry, and certainly with construction projects. As I mentioned earlier in the debate and as he will know very well, in any construction project you only really have certainty on the timeline when you have got out of the ground, and this project is still very much in the ground.
The hon. Gentleman’s question gives me the opportunity to clear up some issues. I know that the delay as reported by Tata Steel—this is Tata Steel’s project, not the Government’s—related to an electrical connection, and specifically the soil condition as it relates to building a substation. At the outset, quite rightly, assumptions were made about the soil condition based on engineering assessments. Right hon. and hon. Members must be aware, though, that there have been steelmaking activities on that site in Port Talbot for well over 100 years. Not all of those operations had been fully documented, and the ground conditions were considerably worse than had been anticipated. That is now being dealt with, and as soon as the project gets out of the ground, we will have great certainty about when the electric arc furnace can turn on. Until that happens, as a project manager, I would hesitate to give a cast-iron guarantee, because you need to get out of the ground first.
What I am looking forward to, though, is the delivery of the electric arc furnace in Port Talbot, because that is the point when the project will feel real—when the workforce will be able to see the furnace itself. I have been around the shop and seen the space that has been created for the installation of the furnace, but once it arrives on the dock of Port Talbot, we will all feel a greater degree of certainty about that. That will be a big boost to the workforce when it does happen. I am absolutely confident that it will happen, but to say when—to pin it down to an individual week or month—is more difficult.
There was one more point I wanted to make about the contribution of the hon. Member for Caerfyrddin. She essentially called for public ownership of Port Talbot, and I am really sorry, but that is another point on which we disagree.
The Government’s view is that where a steel undertaking is running adequately under private ownership, that ultimately should be allowed to continue, because the Government believe in private involvement in the steel sector. It goes back to the point about investment that I think the shadow Minister made earlier. She described her concern about a potential chilling effect on investment.
Mr Alex Barros-Curtis (Cardiff West) (Lab)
I am grateful to the Minister for putting on the record this Labour Government’s record on Welsh steel, because it contrasts with the 14 years of ruin under the Tory Government. Their failure to have an industrial strategy caused decisions to be taken in Port Talbot before this Government came into power. The Tories do not like to be reminded of that, but we will remind them about it every time. It is something that Plaid Cymru—I have great respect for the hon. Member for Caerfyrddin (Ann Davies)—and Reform would do well to remember when they turn up for their photo op outside Port Talbot.
I want to touch on something that my constituents are grateful for, which is this Government’s steel strategy. As the Minister rightly says, that resulted in a £100 million investment by Sev.en in 7 Steel in Cardiff. Does he agree that that is not only a sign of the importance of the steel strategy, but will mean that at least half of future UK steelmaking will be Welsh steel? All Members in the House should welcome that.
Chris McDonald
I thank my hon. Friend for making that point. He is right that we should welcome that 50% of UK steel will be made in Wales. We talk about Port Talbot specifically, but 7 Steel’s plant has operated incredibly well for so long, making the rebar steels that are essential for our construction industry in the United Kingdom, as well as in Ireland, which 7 Steel supplies, too. Long may that continue. I am sure that the investment will help with that.
The right hon. and learned Member for Kenilworth and Southam (Sir Jeremy Wright) raised a number of concerns, such as the operation of the Bill, its powers, public money and so on. He made a comparison with the Banking Act 2009, and he is right that I have made great play about the similarity between this Bill and that Act. I reassure Members that, having passed the Banking Act to great acclaim, this Bill is following its path, and we made a positive decision to do that.
The right hon. and learned Gentleman mentioned the requirement in the Banking Act for the Chancellor of the Exchequer, I believe, to consult with the Prudential Regulatory Authority, the Financial Conduct Authority and the Bank of England, and how a consultation requirement is not in the Bill. He is right to point that out, but these are different industries. The banking industry is highly regulated, and there are statutory bodies that require consultation. There is no opportunity to replicate that in the steel sector, because there are no such statutory bodies. He rightly made the point that it is important that we engage on the detail in Committee, and I thank him for raising that point and giving me the opportunity to respond.
Jim Shannon
The Minister quickly and helpfully responded to my earlier intervention, and he will be well aware of the economic position of Northern Ireland due to the Windsor framework. Should the Bill go forward, the Government must provide a cast-iron guarantee that the nationalisation and supply chain structures outlined in this Bill will operate seamlessly. Can he give us a guarantee that that will happen and that Northern Ireland will not be disadvantaged by any new tariffs or tariffs that are already in place?
Chris McDonald
From the Government’s perspective, there is certainly no intention to disadvantage Northern Ireland. The unique position that Northern Ireland holds is enabling it to attract additional investment above and beyond. In fact, the economic growth rate in Northern Ireland is incredibly impressive, and I look forward to seeing that when I visit in two or three weeks’ time.
Having addressed the amendments, I will move on to some of the new clauses. First, I acknowledge the incredibly constructive dialogue I have had with the hon. Member for Richmond Park (Sarah Olney) in preparing for the Bill and the tabling of her amendments. New clause 2 would place a requirement on the Secretary of State to consult an advisory committee as part of his decision-making process. The Government agree with the sentiment—we have had wide consultation with stakeholders—but there is a practical reality and in particular a commercial consideration for the exercise of the Bill’s powers. It is therefore not possible for us to accept that new clause.
New clause 3 relates to the detail of a jobs and industrial transition strategy, which my hon. Friend the Member for Newton Aycliffe and Spennymoor asked a specific question about. I reassure Parliament that from a skills perspective, the Government will assess any impacts of a transfer on jobs, skills and local communities. In fact, that is an incredibly important part of why we would seek to intervene at all. Following an acquisition, the company’s objectives will be published as part of the shareholder framework document.
Finally, I will move on to new clause 5. Again, this issue was mentioned by my hon. Friend the Member for Newton Aycliffe and Spennymoor, and it also comes back to where I started the discussion about the nature of a nationalisation. While the Government in this situation would own a steel undertaking, and as the main shareholder in the business would have the opportunity to set the direction and appropriate strategic objectives, it is not the Government’s aim that the steel companies would then become an extension of the civil service, as amazing as my civil servants are. Instead, steel undertakings should be run by those who are knowledgeable and skilled in the industry, as we have seen at Sheffield Forgemasters and, as we heard, at the semiconductor factory at Octric.
Having covered the amendments and the new clauses, and perhaps tried the patience of the Committee to a great extent, it would be wise to conclude. I point out to hon. and right hon. Members that there is an additional day of debate on the Floor of the House on this Bill tomorrow. Rather than me standing here and talking to myself for six hours, they would be most welcome to come back then. If I have addressed their points sufficiently, perhaps some of those who have tabled amendments may see fit not to press them to Divisions, but otherwise, I feel I have addressed the points sufficiently for now.
The Chairman of Ways and Means (Ms Nusrat Ghani)
I call the shadow Minister.
Dame Harriett Baldwin
It is wonderful to see so many people interested in following this debate until 10 pm, which when our scrutiny of the Bill ends today. I will make just a few remarks, if I may. Despite the fact that we still have another day tomorrow, there were a few things in today’s debate that I have not heard sufficiently answered.
First, I pay tribute to the wise remarks from my right hon. and learned Friend the Member for Kenilworth and Southam (Sir Jeremy Wright). I encourage the Minister to take on board his points about the wide scope of the powers the Minister is taking in this legislation. My right hon. and learned Friend is a former Attorney General, so his remarks should be heeded with a great deal of seriousness. I reiterate the questions from my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) and my hon. Friend the Member for Brigg and Immingham (Martin Vickers), who sought assurances that the blast furnaces will continue. I am not sure we heard that on the record. When the Minister next gets to the Dispatch Box in these days of debate, will he clarify his intentions as far as that is concerned?
Will the Minister provide clarity on the public interest test? Sensible remarks were made about the Regulatory Reform Committee and how the public interest test is too broadly defined. How can it ever be reversed once it has been invoked? I did not hear anything about limiting the contingent liabilities or the sunset clause, or the possible impact—mentioned in the impact report itself—on investor confidence in this country.
The Minister mentioned that he was willing to meet Members who have concerns about the steel tariffs, which are a separate issue. May I urge him, over the next 24 hours, to try to find some time in his diary so that they can raise specific examples with him?
Charlie Maynard (Witney) (LD)
On 21 May, the Business and Trade Committee met representatives of more than 20 steel fabrication companies who were deeply worried about the potential loss of hundreds, or thousands, of jobs. I second that, in respect of the urgency, because 1 July is around the corner, and this represents a major risk to the sector.
Dame Harriett Baldwin
Indeed; and, as we have heard, one of the suppliers is still in administration. I think that the Minister needs to rethink that deadline, and I hope he will find time in his diary, perhaps as early as tomorrow, to meet Members on both sides of the House to discuss the issue.
With no more ado, Ms Ghani, I will now attempt to press as many of the amendments as you will allow, and we will test the view of the Committee. However, I beg to ask leave to withdraw amendment 21.
Amendment, by leave, withdrawn.
Clauses 1 and 2 ordered to stand part of the Bill.
Clause 3
Sunset for exercise of principal transfer powers
Amendment proposed: 12, in clause 3, page 2, line 10, leave out subsections (3) to (5).—(Dame Harriett Baldwin.)
This amendment would prevent the Secretary of State extending the sunset of the principal transfer powers.
Question put, That the amendment be made.
The First Deputy Chairman of Ways and Means (Judith Cummins)
It has been drawn to my attention by the Tellers that the numbers were incorrectly reported for the Division on the Question that amendment 12 be made. The correct numbers were 81 for the Ayes and 266 for the Noes. I will direct that the numbers be corrected in the Journal.
The occupant of the Chair left the Chair (Programme Order, 21 May).
The Deputy Speaker resumed the Chair.
Progress reported; Committee to sit again tomorrow.
Steel Industry (Nationalisation) Bill
Tuesday 9th June 2026
(1 month, 2 weeks ago)
Commons ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 9 June 2026 - (9 Jun 2026)
00:00 - The Committee divided: - Ayes: 90 / Noes: 290 - Question accordingly negatived.
16:45 - The Committee divided: - Ayes: 94 / Noes: 297 - Question accordingly negatived.
16:58 - The Committee divided: - Ayes: 157 / Noes: 287 - Question accordingly negatived.
The First Deputy Chairman of Ways and Means (Judith Cummins)
Under the Order of the House of 21 May, we shall now move to the Committee of the whole House. I remind Members that in Committee they should not address the Chair as “Deputy Speaker”. Please use our names when addressing the Chair. “Madam Chair, “Chair” and “Madam Chairman” are also acceptable.
Clause 52
Compensation scheme regulations
Sarah Olney (Richmond Park) (LD)
I beg to move amendment 7, page 34, line 15, at end insert—
“(5A) Compensation scheme regulations must include provision which specifies that payment of compensation may be made until any written estimate under section 54 (4A) is laid before Parliament.”
This amendment works with Amendments 8 and 9 so as to require regulations to specify that payment of compensation cannot be made until the Secretary of State has published a written estimate of the environmental liabilities of the steel undertaking, provided to them by the independent valuer.
The First Deputy Chairman
With this it will be convenient to discuss the following:
Clauses 52 and 53 stand part.
Amendment 8, clause 54, page 35, line 25, leave out “may—
(a) require or permit”
and insert—
“must—
(a) require”.
See explanatory statement for Amendment 7.
Amendment 9, page 35, line 34, at end insert—
“(4A) The regulations must—
(a) provide that the independent valuer prepares and submits to the Secretary of State a written estimate of the environmental liabilities of that undertaking, including but not limited to—
(i) contamination of land, water or air attributable to the undertaking’s operations;
(ii) compliance with environmental obligations imposed by or under any enactment; and
(iii) remediation or restoration costs that are contingent or prospective;
(b) provide that the Secretary of State must publish and lay any written estimate provided under this subsection before Parliament.”
See explanatory statement for Amendment 7.
Amendment 6, page 35, line 40, at end insert—
“(c) the anticipated effects of—
(i) external tariffs on UK industry; and
(ii) the Carbon Border Adjustment Mechanism, as set out by Part 5 of the Finance Act 2026 on the value of a steel undertaking.”
This amendment would require consideration of external tariffs and the implementation of the Carbon Border Adjustment Mechanism, when conducting a valuation of the Steel undertaking.
Clauses 54 to 57 stand part.
Amendment 20, clause 58, page 39, line 7, at end insert—
“(1A) The Secretary of State may only provide financial assistance under this section if they are satisfied that financial assistance will secure value for money.”
This amendment would only allow the Secretary of State to provide financial assistance if the NAO had concluded that it would secure value for money for taxpayers.
Amendment 22, page 39, line 8, at end insert—
“(1A) The Secretary of State may not in any five-year period provide financial assistance under this section of an amount that exceeds £1 million per employee of the steel undertaking.
(1B) The number of employees of a steel undertaking for the purpose of subsection (1A) is the number of persons employed on the date the financial assistance was first provided.
(1C) ‘employee’ has the meaning given by section 230 (Employees, workers etc.) of the Employment Rights Act 1996.”
This amendment would cap the amount of financial assistance that could be provided to a steel undertaking to £1 million per worker over 5 years.
Amendment 24, page 39, line 24, at end insert—
“(4A) Financial assistance under this section may not include funding provided by the National Wealth Fund.”
This amendment prevents money from the National Wealth Fund being used to provide financial assistance under this Act.
Clause 58 stand part.
Amendment 4, clause 59, page 39, line 29, insert at end “and,
(b) compensation paid under any compensation scheme regulations made under section 52.”
This amendment requires the Government to report on the compensation paid under any compensation scheme regulations made under section 52.
Amendment 10, page 39, line 31, leave out “12” and insert “3”
This amendment together with Amendment 14 would increase the frequency with which the Secretary of State must make reports about financial assistance to every three months.
Amendment 11, page 39, line 33, leave out “12” and insert “3”
See explanatory note for Amendment 13.
Clauses 59 and 60 stand part.
New clause 6—Parliamentary scrutiny of Financial Assistance—
“(1) Before providing any assistance under section 58, the Secretary of State must lay a proposal for providing the financial assistance (‘the proposal’) before Parliament.
(2) No financial assistance may be provided under section 58 unless the proposal has been laid before Parliament.
(3) If, within the period of 90 days after the proposal has been laid, a select committee of the House of Commons makes any recommendations with regard to the proposal, the Secretary of State must lay before Parliament a statement setting out the Secretary of State’s response to the recommendations before providing any financial assistance.
(4) The proposal must include—
(a) details of the nature and amount of the financial assistance,
(b) the intended beneficiary or beneficiaries of the financial assistance,
(c) the expected purpose and effect of the financial assistance,
(d) any conditions, repayment arrangements, guarantees, indemnities or other liabilities attaching to the financial assistance, and
(e) any other information the Secretary of State believes it is necessary for the Committee to have in order to complete its consideration of the proposal, subject to the restrictions in subsection (3).
(5) The proposal may not include information which, if it were made public, may damage—
(a) national security;
(b) fiduciary duties; or
(c) commercially sensitive interests.”
This new clause prevents financial assistance being provided until 90 days after information about the package of financial assistance being made available to a Select Committee of the House of Commons for its consideration.
New clause 12—Financial assistance: limit—
“Financial assistance of a total value of no more than £2.5 billion may be provided under section 58 of this Act before 15 August 2029.”
This new clause would limit the financial assistance that can be provided under the Act.
New clause 13—Financial assistance: England and Wales—
“Where financial assistance is provided to steel undertakings in England under section 58 of this Act, an equivalent to the total amount of financial assistance provided to steel undertakings in England must be made available to steel undertakings in Wales.”
This new clause requires equivalent funding to be provided to steel undertakings in Wales compared to those in England.
Clauses 61 to 64 stand part.
New clause 7—Impact assessments—
“Before exercising any power under this Act, the Secretary of State must publish an impact assessment on the proposed exercise of that power.”
This new clause would require an impact assessment to be published before the Secretary of State exercised any of the powers under the Act.
New clause 4—Limit on expenditure on financial assistance and compensation—
“(1) The total amount of compensation paid by the Secretary of State under Part 2 and financial assistance paid under section 58 is limited to—
(a) £500m, or
(b) an amount so authorised by resolution of the House of Commons, whichever is higher.”
This new clause prevents the Secretary of State from paying more than £500m in financial assistance and compensation under the Act, unless the House of Commons passes a resolution authorising them to do so.
New clause 9—Duty to try to find a private sector purchaser for any nationalised steel undertaking—
“Where a steel undertaking has been subject to the principal transfer power under this Act, the Secretary of State must—
(a) make all practicable efforts to find a private sector purchaser for the steel undertaking; and
(b) lay a report before Parliament every six months which sets out progress made towards finding a private sector purchaser for the steel undertaking.”
This new clause would put a duty on the Secretary of State to seek a private sector buyer for any steel company that has been nationalised, and report to Parliament on progress made every six months.
New clause 10—Report on the impact any nationalisation of steel undertakings has had on inward investment to the United Kingdom—
“Within six months of the passing of this Act and every subsequent six months, the Secretary of State must lay a report before Parliament which sets out the impact that nationalisation of any steel undertaking under this Act has had on inward investment to the United Kingdom.”
This new clause would place a duty on the Secretary of State to report to Parliament on the impact any nationalisation of steel undertakings has had on inward investment to the United Kingdom.
New clause 11—State aids—
“The Secretary of State must not exercise the powers in this Act so as to grant any advantage through state resources on a selective basis to any organisations that could potentially distort competition and trade, including any advantage that might be granted to steel undertakings subject to a transfer power over comparable privately-owned steel undertakings in the United Kingdom.”
This new clause would require the Secretary of State to maintain a level playing-field between nationally owned and privately owned steel businesses.
Sarah Olney
We heard throughout yesterday’s debate from Members across the Committee about the importance of steelmaking as a vital strategic sector in the UK, and no doubt we will hear about it again today. We rely on the sector for essential parts of our national infrastructure, for transport and for advanced manufacturing. Steelmaking and the industry more broadly create thousands of good jobs across the country, helping to power our economy and boost our local communities, and in increasingly uncertain times, it is essential to support our defence industry.
We on the Liberal Democrat Benches therefore broadly welcome this legislation as a temporary, emergency and targeted step aimed specifically at turning around British Steel before it can be returned to the private sector, and we note that it is in that spirit that British steel producers also support these measures. We need to see more ambition and clarity in the delivery of the steel strategy—for example, when it comes to boosting domestic production to meet 50% of domestic steel demand, further incentivising the use of British-made steel in the private sector and managing the transition to electric arc furnaces.
I wish to speak in favour of amendments 7, 8 and 9. These would strengthen the treatment of environmental liabilities in relation to the steel undertaking and ensure that they were explicitly identified and accounted for before compensation payments were made. They highlight the principle that the true financial position of an undertaking cannot be properly understood without a clear and transparent assessment of its environmental liabilities. By accepting the amendments, the legislation could work as a package to ensure that environmental liabilities were not only considered but formally assessed, published and laid before Parliament.
In particular, the amendments would require an independent valuer to prepare a written estimate of the environmental liabilities associated with the undertaking, including contamination of land, water or air; compliance with environmental obligations; and current and future remediation or restoration costs. That would ensure that the full environmental cost of the undertaking’s operation was properly captured, including liabilities that might not yet have crystallised but were none the less foreseeable. Crucially, the amendments would link the process to the timing of compensation payments, specifying that compensation could not be paid until the environmental liabilities estimate had been produced and presented, and ensuring that taxpayers were not left to pick up the bill for any environmental damage caused by the company’s previous owners.
Furthermore, I wish to speak in favour of amendment 6. This amendment would require that when carrying out a valuation of the steel undertaking, consideration was explicitly given to the impact of external tariffs and the carbon border adjustment mechanism. It reflects the reality that the value of a steel business is not determined solely by its internal operations and that it is also significantly influenced by international trade conditions and environmental policy frameworks.
The previous Conservative Government oversaw a string of near collapses and interim last-minute packages. They scrapped the industrial strategy, which is so vital to our manufacturers, and they erected new trade barriers, making it harder for our steel producers to do business with their biggest export market across the channel. This legislation should be much more ambitious on an improved agreement with the EU for steel exports. Given the international nature of the steel market and the growing importance of carbon-related border adjustments, it is reasonable that these factors should be explicitly included in valuation methodologies. Amendment 6 would help to ensure that any valuation was not artificially insulated from key external drivers of cost and competitiveness. It would also provide a more accurate basis for decision making.
Mr Toby Perkins (Chesterfield) (Lab)
I am interested in what the hon. Member has had to say on amendment 6. She spoke specifically with regard to steel making. Has she also had representations about the impact of these tariffs on UK manufacturers who make things out of steel, as well as on steel stockholders? Is it her intention through the amendment to get further information on that, or is that not its purpose?
Sarah Olney
That is not the specific purpose of the amendment, but I am glad that the hon. Member has raised that point. I know that the Minister has heard about this issue on a number of occasions, throughout the debates on this Bill and during the urgent question last week in the Chamber. I would like to take this opportunity to reinforce the point that has been made on multiple occasions across this House about the tariff regime and the changes that are coming in. I have spoken to a number of manufacturers about the very real concerns right across the sector about the changes in tariffs. I know that the Minister is focused on that, but I am grateful to the hon. Member for giving us another opportunity to raise concerns with the Minister, which I know he has heard.
Amendment 5 would extend the Government’s reporting obligations to include progress on negotiations with the European Union—
The First Deputy Chairman
Order. I remind the hon. Lady that amendment 5 has not been selected and so would be out of scope for this debate.
Sarah Olney
Thank you for your guidance, Madam Chair. I will reframe my remarks slightly, because they relate to the intervention that I took.
Steel producers in the UK are heavily integrated into international supply chains, and continued access to frictionless or improved export arrangements is vital for sustaining jobs and production. From 1 July, the Government will limit tariff-free steel imports. Although in many ways that will support business, there is a lack of certainty about costs and the impact on downstream manufacturers is still opaque.
Mr Calvin Bailey (Leyton and Wanstead) (Lab)
Perhaps I can give the hon. Lady a moment to gauge where she is in her notes while I take her back momentarily to amendment 7. She spoke about the importance of steel to our defence industry, which is therefore central to European security and to deterring the threat of Russian rearmament, but amendment 7 would produce significant procedural barriers and slow down our ability to use the Bill. Does she agree that such amendments risk causing serious impediments to supply-chain security, particularly for our defence industry?
Sarah Olney
I am grateful to the hon. Gentleman, not least for underlining the real importance of the steel industry to our defence industry and the heightened importance of sustaining our defence industry, and all the companies and the jobs associated with it, in this time of heightened global instability. Liberal Democrat Members certainly believe that support for our defence industry is paramount at this time, but it is important that Parliament gets the opportunity to scrutinise all the costs associated with the proposed undertaking should the Government choose to exercise the powers in the Bill. That is the purpose of amendment 7.
Clause 52 will give the Secretary of State broad powers to establish compensation arrangements linked to the exercise of transfer powers, including transfers of shares, property rights and liabilities. Amendment 4 would require the Government to report not only on the existence of compensation schemes under the clause, but on the compensation actually paid under those schemes.
My new clause 6 would strengthen parliamentary scrutiny of any future financial assistance. It would require, before any assistance is provided, the Secretary of State to lay a detailed proposal before Parliament, setting out the nature and amount of assistance and the intended beneficiaries, the purpose and expected effect, and any associated conditions, including repayment terms, guarantees, indemnities or other liabilities.
In a similar vein, new clause 4, in my name, would introduce parliamentary oversight, and compel the Government to bring forward a resolution for any expenditure by the Secretary of State under part 2 that exceeds £500 million, which is roughly equivalent to the annual cost of keeping the Scunthorpe plant running, based on the publicly available figures. The clause reflects the principle that, where significant public funds are being committed, there should be clear parliamentary control and oversight of the overall financial exposure. By setting a defined limit, it would ensure that expenditure does not escalate beyond what has been explicitly agreed by Parliament without further democratic approval. The measure is designed to ensure a balance between enabling necessary intervention and maintaining proper oversight of the total level of public expenditure involved. I urge hon. Members to vote in favour of the new clause.
Steel is a valuable sector with far-reaching benefits across the UK for critical infrastructure projects, defence and the future of renewable energy. The steel industry is vital to so many of the UK’s national strategic priorities. The Liberal Democrats support the Government’s pace and urgency in taking action to assist the steel industry, but there is a significant need for greater transparency and accountability relating to how these measures will be exercised. There is potential in the Bill to improve training opportunities for steel exports, and I urge Ministers to consider our proposals on that matter.
Several hon. Members rose—
Mr Perkins
Thank you very much, Madam Chair—that was a pleasant surprise.
I do not intend to detain the Committee for long, but I will take this opportunity to welcome the Government’s steps in the Bill, which build on the steps that we took with the emergency legislation that ensured a future for Scunthorpe. We all recognise that steelmaking is part of our national security. Without steel capability, we are simply unable to be truly independent in military terms or in many other terms. The commitment of the Minister, the Secretary of State and the Prime Minister to ensuring a future for British Steel is not only sensible and ambitious, but a welcome change from the policies that were pursued by previous Prime Ministers over too many years to mention.
At a time when there has been such huge pressure on the public finances, it is tremendously welcome that the Government are stepping forward with £2.5 billion to boost the steel industry, along with the important measures relating to those with expertise in the industry, which is a complicated sector. It is therefore very welcome that the Government’s efforts in these areas are being led by those with such expertise in the sector.
Richard Tice (Boston and Skegness) (Reform)
The hon. Gentleman talks about the opportunities from an electric arc furnace, but does he recognise the vital importance of keeping blast furnace primary steelmaking capability, which can only take place in Scunthorpe?
Mr Perkins
Yes, I do. I should say to the hon. Gentleman that I had the opportunity last night to predict that he would be the leader of Reform by the time we went into the general election, and I stand by that. We would normally expect to see a party leader in the House of Commons. We never see the Reform leader, the hon. Member for Clacton (Nigel Farage), in the House of Commons, which is why I predicted that it would be the hon. Member for Boston and Skegness (Richard Tice)—but I am getting distracted and will return to his question.
I am absolutely committed to doing everything we can to decarbonise, but in certain sectors doing so would be to deindustrialise. There is no sense in allowing blast furnaces only for imported products and not looking after that ourselves. I welcome the Government’s drive and direction, but I absolutely want to see that future for Scunthorpe. We should look at ways that we can use greener gases rather than pursue anything against that.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Nuclear is going to play a role in cheaper energy for households, and I welcome the Government’s announcement there will be an array of small modular reactors that will have to be made out of British steel. Equally, I regret the fact that offshore wind turbines are being built not in this country; they should be built here, out of British steel.
When I worked in the oil fabrication industry, we had thousands of trained welders. Today, we do not have so many people who could actually work with British steel. Does the hon. Member agree that, in parallel with doing the good work in the Bill, we should be thinking about keeping these skills, which are crucial to the future? If we do not have them, we will not use British steel.
Mr Perkins
I agree 100% about the importance of protecting skills, which has been a huge priority of mine throughout my time in this House. The hon. Gentleman is absolutely right that skills have been lost from the sector, as we tragically and foolishly allowed the steel industry to be stripped away, as he rightly pointed out, by the Conservative party. That has been tremendously damaging to our national security, our economy, our industry and, as he rightly says, the skills base in this country.
I am very supportive of what the Government are doing in this Bill. I would like to take the opportunity to speak, as I did a moment ago, to a question raised with me that is somewhat parallel to the narrow terms of the Bill, but is relevant to amendment 6 and to amendment 5, which has not been selected. We are—absolutely sensibly—taking measures on the tariffs to prevent the dominance of the Chinese steel industry, which sells steel at ludicrously cheap prices and is attempting to get all other countries to lose their steel industries so that we will then all be dependent on China. However, we have to be careful that we do not cause unintended consequences for British manufacturers that use steel and for our international competitiveness. We do not want to end up in the position of, for example, rolled bar, where we do not have reliable and strong provision of that here in the UK. We need to tread carefully with this. I know the Minister is on this, but I take this opportunity to come back to that point.
I have already written to the Secretary of State about a manufacturer in my constituency that makes transport ramps out of steel, and three other companies in the constituency are more directly involved in steel stockholding and have products manufactured out of steel, and they are all deeply concerned about where we currently are on this.
I know we have the current plan for 1 July—that is not far away at all. If we do not get this right, the consequences could be extraordinarily serious. I know that is on the Minister’s list and that it is prominent in his mind, but I add my call to all those others who say that we need to tread extremely carefully. With that, it remains only to say well done to the Minister and the Government for their continued backing of steel, and I look forward to seeing this—
Mr Perkins
I was just about to finish, but if my hon. Friend thinks that it cannot wait, I will happily bring him in.
Mr Bailey
My hon. Friend has been speaking about the steel strategy in the round. I wish to echo his remarks about the lower part of our defence sector, but there are also our small and medium-sized enterprises that make things that are not necessarily identifiable as tangible defence things. We need to ensure that we understand the types of steel that they require and the consequences of the tariffs on them. It is also important that we understand the steelmaking strategy as a whole, so from ore all the way through to direct reduced iron. We need to ensure that in gaining our sovereignty, we can create more reliable partners and separate some of the places that produce ore from the production that has traditionally been done in China. Does he agree that is something we must ensure is encompassed in this? That is why I am concerned about some of the amendments that have been tabled.
Mr Perkins
I absolutely agree with my hon. Friend, who clearly speaks with great knowledge on these subjects. He makes an important point, once again raising the importance of this whole area of legislation to the defence industry and to sovereign capability. The reality is that our defence industry is crucial economically, for jobs and for our national protection, but also for exports. We should absolutely welcome those British manufacturers making things here and selling them across the world. If we inadvertently cause them to be less competitive, we will rue the day, so we need to tread carefully. But his point about ore and those amendments is well made.
I will sit down now, but I tell the Government that they have my absolute support on this approach to the nationalisation of British Steel, and I ask the Minister to respond to the points I have made.
Dame Harriett Baldwin (West Worcestershire) (Con)
Yesterday we discussed amendments in which we sought to rein in some of the unfettered powers that the Secretary of State is taking for himself in this legislation. Today’s amendments are about trying to rein in the unfettered liability and financial risk that this legislation puts on the taxpayer.
For example, amendment 20 would allow the Secretary of State to provide financial assistance if the National Audit Office has concluded that it would secure value for money for taxpayers. The amendment is obviously about making it clear that these powers are not a blank cheque, that they must be constrained, justified and used only when strictly necessary. We cannot have industrial improvisation when the British taxpayer is being asked to pick up the bill. It is not fair that hard-working taxpayers should be forced to pay for a potential failure of Ministers who think they are able to defy the realities of this market.
Amendment 22 would cap the amount of financial assistance that could be provided to a steel undertaking to £1 million per worker over a five-year period. It would also fix the employee count at the point that support begins, with “employee” being defined by section 230 of the Employment Rights Act 1996. The amendment would ensure that financial assistance is targeted, proportionate and provides value for money. If the Government believe in this intervention, as they clearly do, they should be willing to set limits on it, because without such a cap we are simply asking taxpayers to sign up to an unlimited liability.
Pamela Nash (Motherwell, Wishaw and Carluke) (Lab)
Would the shadow Minister consider that putting a limit on this, when the financial support would only be provided in an emergency, when absolutely necessary, might be unwise and might lead us to having to recall Parliament yet again to take the necessary action?
Dame Harriett Baldwin
I take issue with where the hon. Member is coming from on that, because by putting a sensible and finite limit on the amount per employee—and I will speak later to another amendment where we propose an overall limit—we are talking about the amount that has been set by the Chancellor through the spending review envelope. I do not think she really wants to say to the Committee that there should be completely unlimited budgets for this intervention. She herself would know that in any intervention we ought to go in with a wise idea about what is a reasonable spending limit.
Amendments 10 and 11 would increase the frequency with which Parliament is told about the amount that has been spent. Currently, as it is framed in the legislation, the Secretary of State must make a report to Parliament only every 12 months. We are suggesting in these amendments that reports about financial assistance should come every three months. We are talking about substantial and significant sums of public money, so we do not think that annual reporting would be sufficient. Quarterly reporting would ensure that Parliament can properly scrutinise how much money is being spent and how much is being done in closer to real time. It is essential that financial exposure is monitored closely and transparently. We do not want costs to escalate without people being able to notice them, and we want Ministers to remain accountable for public spending.
Edward Argar (Melton and Syston) (Con)
My hon. Friend and I have both been Ministers; we know that a written ministerial statement is not a complicated thing to do every three or four months or whatever it is. I struggle to see what reason there could be not to give Parliament that transparency, for the simple sake of a piece of paper tabled once every three months, to ensure that taxpayers’ interests are protected.
Dame Harriett Baldwin
My right hon. Friend is absolutely right, and I know the Minister to be an extremely reasonable man, so I am sure he will agree with our amendment.
New clause 12 would place a firm cap on the total financial assistance that can be provided under the Bill, limiting it to £2.5 billion. As I am sure the hon. Member for Motherwell, Wishaw and Carluke (Pamela Nash) and other Members know, that is the limit that has been set for the steel strategy, so to reach that limit would mean that this intervention used up the entire amount allocated to the overall steel strategy. The new clause would set the limit up to a specific date in 2029.
As our explanatory statement makes clear, the purpose is simple: to limit the total financial exposure under the Bill. At the moment, the way the Bill is phrased means that it is a completely open-ended financial commitment. We think that a cap of this nature, which would ensure that Ministers had to prioritise their spending decisions rather than continue to inject funds without clear limits or outcomes, is a very sensible thing to do, and I urge everyone to support it.
Mr Perkins
The hon. Lady is making a very important and interesting point. In the steel industry over recent years, we have seen foreign companies buying British firms, then closing them down and leaving us without this capability. Would anything in new clause 9 prevent that from happening again? Having forced the Government to seek this buyer, is there anything in it to stop that buyer coming in and just closing the business down, meaning we lose that sovereign capability?
Dame Harriett Baldwin
We are looking at a Bill that the Government’s own impact assessment says might have a bit of a “chilling effect” on inward investment into the sector. We should all want to have inward investment into our economy. If someone who we regard as an excellent owner of this business should come in and make an offer that is attractive to the Government, I absolutely think the Government should be prepared to take that seriously. We do not want this to be a permanent state of affairs; we want it to be a journey to a thriving steel sector, which may well involve investors coming in from overseas.
Mr Perkins
I think the hon. Lady is in the same place as the Government, in that they want to see an excellent private sector partner at the earliest opportunity. The point I was trying to make is that she would be compelling the Government, in new clause 9, to seek this provider, and we have seen what has sometimes happened previously. Is she saying that, ultimately, we must do whatever the market decides, or is she basically supporting the Government’s position that this sovereign capability must remain in the UK and that we will work with other partners, but they will not be able to shut down British steelmaking as they have done in the past? Will there be any provisos in the new clause?
Dame Harriett Baldwin
The hon. Gentleman seems to be conflating two issues. Last year, when the emergency legislation was introduced and Parliament was recalled on a Saturday for the first time since the Falklands war, we did not stand in its way, but what we are asking for in the new clause is for Parliament to be kept informed. Let us agree that we all want to be kept informed about how the discussions are going and to find out what the Government are thinking about their exit plan. I made the point yesterday about the public interest test that it is very unclear whether, once the Secretary of State determines that it is in the public interest for this particular site to be owned by the taxpayer, there will ever be the potential for it to change to different state.
Richard Tice
The shadow Minister seems to be implying that, essentially, the business should be up for sale at any moment, almost at any price. It is incredibly destabilising for any business and its employees to suffer that uncertainty. What is required is a period of stability and investment, with a strong vision. She previously made comments about relying on auditors at the National Audit Office to make a strategic judgment about what is in the sovereign national interest. With the greatest of respect to auditors, it is experienced businesspeople—including the Minister—who understand the industry and who can make a much stronger judgment about what is required to retain primary steelmaking in this country, with that sovereign capability, than a bunch of auditors.
Dame Harriett Baldwin
I actually think the hon. Gentleman is also agreeing with me on this point. I yield to no one in my admiration for the Minister and his expertise in this industry, but I heard the hon. Gentleman say that he too thinks that it will take business nous and investment into this business to bring it back to a state where it is making money. I also heard him say that he would therefore not object to hearing a report to Parliament every six months about the progress being made, so I look forward to him supporting this amendment in the Lobby later. We want our Ministers to actively work towards returning the business to private ownership, so we want to hear in Parliament about that ongoing progress and to be able to hold Ministers accountable and ask them questions on exactly that from time to time.
New clause 10 would require the Secretary of State to report to Parliament every six months on the impact that nationalising steel undertakings has had on inward investment into the UK. I mentioned earlier that the Government’s own impact assessment worries about the potential for a “chilling effect” where Government are taking assets into public ownership in the way that this Bill allows. During its history, the UK has very much relied on being seen as a stable and predictable environment for inward investment. Expropriating and nationalising private businesses sets a precedent that could deter future investors, not just in the steel sector but across the wider economy. The new clause would ensure that Parliament received a regular, transparent analysis of how these interventions were affecting investor confidence and capital flows into the UK economy. We all hope that they would not be adversely affected, but we would want Parliament to know, and this new clause would ensure that any damage to our reputation was identified, understood and addressed early.
New clause 11 would prevent the Secretary of State from using the powers in the Bill to grant any selective advantages through state resources that could distort competition. It would ensure that nationalised steel undertakings were not unfairly advantaged over privately owned ones. Without this safeguard, there is a real risk that nationalised entities could receive preferential treatment, whether through subsidies, contracts or regulatory advantage, undermining fair competition within the domestic steel sector. If private firms believe they will be placed at a disadvantage compared with state-owned competitors, that risks deterring further investment in UK steel and related supply chains.
To conclude, these amendments are about bringing discipline, transparency and balance to a Bill that, as drafted, risks being too broad, too costly and too unconstrained. They would ensure that any intervention was properly assessed, carefully limited and consistently scrutinised, while protecting taxpayers, competition and investor confidence. If the Government are serious about supporting the steel industry, they should also be serious about accountability, value for money and a credible long-term plan, and these amendments are designed to deliver exactly that.
Cat Eccles (Stourbridge) (Lab)
It is a huge pleasure to speak in a debate on a Bill to nationalise British Steel, reversing one of the many mistakes of the Thatcher Government in the 1980s. I will speak against new clause 9, in the name of the hon. Member for West Worcestershire (Dame Harriett Baldwin), which would seek a private buyer for the nationalised British Steel company.
It is absolutely right that the Government are taking action to nationalise British Steel and set out a clear strategy to strengthen domestic production. While the strategy will safeguard our steelmaking capability, we must recognise the realities facing the downstream steel sector, which has been impacted by having to compete with the unfair terms of international markets and by being consistently starved of investment. Many such businesses, including those in my constituency, depend on imported grades and products that the UK simply does not produce and that are regularly used in our defence force, the automotive industry and construction.
I also oppose new clause 11, which would require the Government to create a level playing field between nationally owned and private sector businesses. While I support in principle the use of quotas and tariffs to back British Steel, we must avoid unintended consequences for the downstream industry. Sudden or poorly calibrated changes risk undermining downstream firms. These businesses are vital in constituencies such as mine, and supporting domestic production must not come at the expense of the wider steel ecosystem. I have discussed these matters extensively with the Minister on several occasions, and I look forward to welcoming him to Stourbridge in the coming weeks to meet a local steel company.
Downstream companies have expressed legitimate concerns about the present proposals. I sincerely thank the Minister for engaging with me and them on these issues, but can he confirm whether, in cases where particular steel grades are not currently produced domestically, including zero-carbon grades, the Government intend to allow exemptions from the proposed tariff and quota regime? The most recent stance is that tariffs and quotas will be reviewed in 12 months’ time, but I really fear that that will be too late for some businesses. Will he consider transitional arrangements at the very least to offer some stability to the downstream industry?
I will also speak against new clause 12, which would limit the financial assistance that can be provided under the Bill. While supporting British Steel, we cannot ignore the climate crisis. Our steel industry must be driven towards green, decarbonised production. On that point, the steel strategy states an ambition to transition to carbon-neutral steel production with electric arc furnaces when market conditions allow. It is worth noting that SSAB in my constituency, which is part-owned by the Swedish Government, imports zero-carbon steel from Sweden, where such steel—its only by-product is water—has been produced using electric arc furnaces since the 1980s.
Following the Government’s introduction of an investment debt rule in 2024, I encourage the Minister to consider what further flexibility there could be to use a similar investment method to enable the transition away from coal-based steel production. I hope that he will reflect on those points and continue to engage well with the industry. With the right decisions, I believe that we can secure a competitive, resilient and low-carbon steel sector for the future.
Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)
There is those three lions on my shirt, our NHS, the joy of holding a brolly over a barbie on another washed-out bank holiday Monday, that sweet smell of fish and chips on a Friday, a Mr Whippy on the beach, strawberries and cream at Wimbledon, His Majesty the King, the pageantry of trooping the colour, nil points at Eurovision, Fifa Ultimate Team, “Strictly” at Christmas, a “Gavin and Stacey” special, Monty Python, that Geri Halliwell dress, Phil Mitchell, James Bond, KSI, corgis, Larry the cat, Ant and Dec, accents, having that main character energy—and steel. Steel is to the UK what Yorkshire tea and Yorkshire puds are to God’s own county, what hotpot is to Lancashire and what black cabs are to London. It is about us. It is about what makes us and drives us. It is about pride.
Before I turn to new clauses 12 and 4 and amendments 20 and 7, which I am against, I want to begin with Martin Welch. Today marks 48 years since Martin began working at Scunthorpe steelworks, and he is now its longest-serving employee. That is 48 years of skill, graft, and loyalty to an industry that has helped to build this country. Martin has also been a champion of safety for his coworkers, standing up for people who are doing difficult, skilled and sometimes dangerous work. When we debate steel, we are debating people like Martin, families like his, and communities whose working lives, pride and futures are bound up with the future of British steel.
David Smith (North Northumberland) (Lab)
My hon. Friend is making an excellent speech. He has just made the point that I wanted to make, which is that we surely cannot make an ideological decision that it is always right to put national assets of sovereign capacity back into the private sector when, over generations, private industry has singularly failed to make the steel industry flourish. Does my hon. Friend agree?
Lee Pitcher
I absolutely agree. This is not about heritage or the sentimental value of steel, although those things are of course important. Steel means something to people in their hearts, but, with a business brain, this is just about doing the right thing for the industry and for our country, our people and our communities.
Steel is part of who we are. It is in the homes we need to build, the railways we need to renew, the energy infrastructure we need to deliver and the defence capability we need to protect our country, and it is in the skilled work, pride and industrial strength of communities that have already given more than enough to Britain. This debate is not only about a steelworks; it is about whether Britain is prepared to act like a serious industrial nation again. For too long, we have been too casual about losing the things that make us strong: factories, skills, supply chains, ownership and industrial capacity. We have allowed strategic British assets to pass out of British hands and then pretended that ownership does not matter. It absolutely does.
In Dunscroft, Hatfield, Rossington, Thorne and Moorends, people know what happens when a major industry is allowed to collapse. They do not need a lecture in industrial policy; they and their families have lived through it, and their towns still live with the consequences. The loss of coalmining was not just an economic event but a social rupture. It damaged local economies because it damaged confidence. It damaged pride and the sense that the country valued the people and the places that powered it. That damage is still visible 40 years later.
When people say that the Government intervention is too bold, too risky or too ambitious, I say that they need to look at the cost of not acting. Doing nothing is not free. It has costs for jobs, skills, supply chain resilience, industrial communities and national capabilities. It leaves Britain less able to build, less able to defend itself and less able to stand on its own two feet. That is not prudence; that is managed decline, and I did not come into this place and into politics to manage decline.
This Bill says that when a foundational industry is at risk, when thousands of skilled jobs are at stake, and when national resilience is on the line, the Government do not have to stand aside and hope the market sorts it out. The market has not sorted this out. Decades of decline, under-investment and foreign ownership have brought us to this point. The choice before us is not between some perfect private sector solution and public ownership. The real choice is between responsible public action now or allowing a vital national capability to disappear. We cannot allow that.
Some of the amendments before us seem to start from the idea that Government intervention is dangerous. I disagree: the danger is delay and timidity. The danger is pretending that rigid caps, lengthy processes and automatic routes back to private sale are the same thing as responsibility. Managed risk is not recklessness; managed risk is leadership. If we keep doing the same safe things, we will keep getting the same results. Those results are the decline that people keep voting for us to change—the change that I come to this House to be part of.
This is a time to be bold and to step up. This is a time to take well-managed risks in the public interest. There are times to seize the bloody obvious and deliver for the country, and this is one of them. For the workers at Scunthorpe, for the families across my constituency who depend on those jobs, for the industrial communities that know exactly what happens when the Government walk away, and for the future strength of this country, I support this Bill. Britain needs steel, Britain needs British assets in British hands, and Britain needs a Government with the confidence to act in the national interest.
This Bill is a welcome step in the right direction. It turns the tide on 40 years of ideological self-sabotage. That is why amendments that would delay, dilute, cap arbitrarily or force a route back to failed models should be resisted. This Bill deserves the support of the Committee today.
Pamela Nash
It is an absolute pleasure to follow my hon. Friend the Member for Doncaster East and the Isle of Axholme (Lee Pitcher). What a passionate speech—I hope I can do half as well as him.
At the outset, I should state that I am a long-term and proud member of Community trade union. I thoroughly welcome the Bill, which takes additional steps forward from the legislation we passed last year. I am especially happy that the Bill is UK-wide and covers Scotland, too.
I want to touch on my concerns regarding new clauses 4 and 12, which seek to limit the level of financial support that the Government can provide. Given that the provisions in the Bill are designed to be used only in emergency and necessary situations, such amendments seem unwise. Over decades, we have seen Conservative Governments let down the steel sector time and time again by failing to support and invest. I am disappointed, but not surprised, that the Conservatives are seeking to bring into the Bill unnecessary and debilitating restrictions that are based on politics rather than the needs of the steel sector.
Mr Perkins
When I asked the shadow Minister, the hon. Member for West Worcestershire (Dame Harriett Baldwin), about this point, it was instructive that we heard her resort to saying, “It is just about being kept in touch.” The new clauses say that the private sector is always the way to go, but we know from our long history with the steel industry that that idea has often led to private companies coming in, mismanaging or indeed closing British steelmaking companies, and us seeing sovereign capability disappear overseas. Does my hon. Friend agree that we need to ensure that the Government can always act in the national interest by rejecting the new clauses?
Pamela Nash
I completely agree with my hon. Friend. That is certainly the experience we have had in Motherwell in my constituency, where a questionable buyer for Dalzell has caused many problems. I will go into that later in my speech.
I am disappointed, and surprised, that the Liberal Democrats are seeking an even more restrictive limit on potential support. For us, Motherwell became the unwilling emblem of the Tories letting the steel industry down in the 1980s, with the closure of Ravenscraig and the subsequent loss of thousands of jobs across the area. It has taken decades even to begin to repair the damage that was done at that time.
In recent years, the Tory Government failed to prevent cheap imports and to bring in the investment and strategy that were needed to protect what was left of our steel industry. I therefore feel that Members on the Opposition Benches have an absolute brass neck in trying to put limitations on this Labour Government’s ability to breathe life back into it.
Sarah Olney
The hon. Lady referred specifically to our new clause. Does she not accept that we are merely asking for a further parliamentary vote if the proposed consideration for transfer exceeds a certain level, and that that is a sensible and workable way forward? Not only do we need to be open to the possibility of enabling the Government to take steel into national hands, but taxpayers’ interests need to be protected, and Parliament needs to have oversight of any decision of that nature.
Pamela Nash
If we brought the Government to Parliament every time we wanted them to intervene when there was an emergency, we would not be able to react effectively, so I do not accept that that is necessary.
Sarah Olney
It would take just hours to do that. All we are asking for is a safeguard. Without any kind of safeguard, what does the hon. Lady think would be an acceptable amount for the Government to offer in exchange for taking on a steel undertaking? Does she think that no limit at all would be acceptable? We are merely proposing that a motion should be laid before Parliament to be voted on, and that does not take much time.
Pamela Nash
This legislation is designed for extraordinary situations, so we are going to have to agree to disagree on that point.
Motherwell remains the home of steel in Scotland. While the immediate and particular focus of the Bill is, understandably, on the manufacturer British Steel, I want to take the opportunity to highlight the plight of what is currently our only Scottish steelworks: the Dalzell plate mill.
The Bill suggests three potential factors that can be considered in the assessment of whether it is in the public interest to nationalise a steel company or facility. Is the plant part of the supply chain for our defence industry, thus contributing to our national security? Is it necessary for the building and/or the maintenance of parts of our national infrastructure? Does it support the local or national economy? I would argue that the Dalzell plate mill is essential to all three of those elements of our country’s progress and security, and that we would be demonstrably better off if it was supported back to full operation.
When Sanjeev Gupta took over the plant almost a decade ago, he presented a vision of a bright future for Dalzell in a “green steel” era, but that has not come to pass. Like others, the plant has suffered as a result of the onslaught of cheap imports and the global events that our wider economy has faced, but Liberty has largely been unable to provide the funds or leadership needed to make Dalzell a success during its time at the helm, with repeated failures to deliver the raw steel that is required for the plant to fulfil orders and with staff left without work. There have been regular promises of materials and work being on the way, but more often than not they have been stalled or unfulfilled.
The current situation for the team of dedicated and highly skilled staff at Dalzell is difficult to imagine. The majority of them have spent most of the last two years at home on furlough, receiving less than their full pay. A skeleton workforce of about 20 is keeping the mill ticking over, ensuring that it is clean and maintained and that necessary paperwork is completed. They want to be ready to go as soon as an order comes in.
Lee Pitcher
It is really sad that we have got to that point. Does my hon. Friend agree that the whole point of making bold decisions and taking a bit of risk is that it gives people aspiration for the future? It is about getting the next generation of children to set their minds on having jobs and careers in steel and manufacturing, working on the shop floor and having camaraderie. They need to envisage a future in which people have a regular, great income and support their local community and economy.
Pamela Nash
I share the vision of my hon. Friend, and that is exactly what I for Dalzell in Motherwell. At the moment we have staff who are worried each month about whether they are going to get paid, as they see troubling headlines and hear rumours about their parent company. I am becoming increasingly concerned about the mental health and wellbeing of the team, who have been left in an impossible limbo. Most of them want to be back in the workplace, in a job that they are proud of, and to be contributing to our country’s economy, security and infrastructure.
The workforce in Dalzell has now dwindled to 100—about a third of the full capacity. Predictably, key skilled team members are eventually leaving. These are people who are irreplaceable, because they have a unique combination of skills, qualifications and years of experience. Despite the team’s best efforts, the mill has not been used properly for a period of time, so the equipment and technology used in Dalzell is at risk of being dated and damaged out of value.
Jamie Stone
The hon. Member speaks with passion and cares about her constituents. It seems that what she is saying is in parallel with my earlier intervention about the risk of losing the skills of working with steel—welding and suchlike. Does she share my disappointment, but perhaps not surprise, that there is no member of the Scottish National party with us today? We know that the Scottish Government set their face against all new nuclear in Scotland, but we would welcome an SMR at Dounreay in Caithness.
The hon. Member might agree that the Scottish Government are not helpful on defence either. She talks about leadership and shouldering the responsibility, but we have a gap—
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
Order. Mr Stone, we are here to debate the steel industry, not new nuclear or the pros and cons of the Scottish Government. Perhaps it is better if we stay within the confines of this Bill.
Pamela Nash
When it comes to Dalzell, the SNP Government have not been helpful. They previously stepped in when the steelworks went into administration, and then they sold it to the current owner, who has been less than helpful.
Richard Tice
The hon. Lady is making a very powerful case for the importance of the heavy plate mill in her constituency, and of having the right owners of critical steelmaking capability and the functions around it. What we have seen with the failed ownership of Jingye, and with the failed ownership and fibs of companies such as Liberty, is that if we rely on an unaligned basis, without any care for the strategic importance of steelmaking, we end up in the pickle that we are in. That is why I think the hon. Lady makes a powerful case for the importance of the plate mill in the UK’s overall steel strategy going forward.
Pamela Nash
I thank the hon. Gentleman for his very helpful intervention.
For the reasons I have set out, we are getting to the point where we are losing experienced staff and equipment is in danger of going out of date. Time is running out very quickly for Dalzell. If it is left to close up shop, we will not be able simply to go back later and restart it. I have no intention of being the Member of Parliament who sees the closure of the last steelworks in Scotland, and I know the Minister has no intention of allowing that to happen on his watch.
Steel is Motherwell’s heritage and is also a key part of its progress. It is our threads in the fabric of the future of our country. I want my constituents once again to look at planes, wind turbines and bridges and be excited to know that the steel encasing them came from Motherwell.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I have seen in our all-party parliamentary group on steel and metals-related industries how my hon. Friend is such a tenacious and tireless champion for her part of the world and the steelworkers in it. She mentioned defence earlier in her speech. Does she agree with me that we really need the Government to bring forward the defence investment plan, that its focus really needs to be on making sure that steel jobs benefit across the UK, including in Scotland and in Teesside, and that small and medium-sized enterprises and the entire supply chain benefit as well?
Pamela Nash
I appreciate my hon. Friend’s enthusiasm for the publication of the defence investment plan, but I do not think it is within the scope of this Bill and it is definitely above my pay grade as a Parliamentary Private Secretary to Defence Ministers.
Finally, I want to see Dalzell again supporting a vibrant workforce, providing safe, well-paid, high-quality jobs to local people and being able to develop apprentices for the next generation of steel processing in Scotland. I want to see income investment in Motherwell from the reinvigoration of this plant, allowing surrounding businesses to benefit from its success. I reject the attempts of Opposition Members to limit the Bill’s ability to support our industry when it needs it most.
In his closing speech, will the Minister reassure the workers at Dalzell that this Government will support them, possibly with the safety net of this Bill or otherwise, whenever it is necessary? Will he also confirm to the people of Motherwell that Dalzell remains at the heart of this Government’s plans for the UK steel industry?
The Parliamentary Under-Secretary of State for Business and Trade (Chris McDonald)
Just like yesterday, this second day of debate has been incredibly considered and collaborative. I very much thank everyone for contributing, just as they did yesterday.
Having listened very carefully to the debate, I think many of the proposed amendments and new clauses fall into categories to do with the good use of public money in relation to valuations and liabilities, and to the role of this Parliament in scrutiny and reporting. I say at the outset, and I think this was put quite well by my hon. Friends the Members for Doncaster East and the Isle of Axholme (Lee Pitcher) and for Motherwell, Wishaw and Carluke (Pamela Nash)—she did so in an intervention I had slightly forgotten about—that the Government are trying to strike a balance. We must strike a balance between the essential nature of government, with our public accountability and also the obvious bureaucracy, and the commercial demands of business. I think we have found the balance in the right place, and as I address some of the amendments, I hope to convince hon. Members that we have given due consideration to that.
Many Members, quite understandably, have highlighted specific cases in the steel industry that they believe the Government should consider. We have heard very powerfully about the plate mill at Dalzell and we have also heard about British Steel. However, this Bill is not targeted at any particular steel company; it provides powers to the Secretary of State to act in the national interest.
Lincoln Jopp (Spelthorne) (Con)
This is not my specialist subject, so I ask the Minister to bear with me. Thames Covers in Shepperton in my Spelthorne constituency, which is a boat fitter, has been told that the cost of stainless steel tubing will go up by 50% from 1 July because of a new tariff kicking in. As I understand it, the tariff is to encourage people to buy British Steel, but the trouble is that British Steel does not make stainless steel tubing, so it will add a huge cost. The Minister says the Bill is not about individual businesses, but about overall governance. However, the Government may be causing unintended consequences, and perhaps the impact assessments we are calling for in new clause 7 would be a good idea.
Chris McDonald
I am grateful to the hon. Member for taking the trouble to make that intervention. A number of Members have talked about downstream steel, so although it is not precisely within the scope of this Bill—and, in fact, I do not think those impact assessments would address that point—perhaps I could address their comments.
Members have mentioned several different companies. This morning, I had a very constructive discussion with the shadow Minister, the hon. Member for West Worcestershire (Dame Harriett Baldwin), about specific instances, but she also pressed me on the concerns of many Members across the whole House. There are concerns about the introduction of the new trade measures from 1 July. I have, with the co-operation of Members from across the House, been able to gather specific examples from a number of different companies around the country that are concerned.
I am engaging with my officials and it is a matter of detail for each company. Some are finding that they will still be able to access the steels, because the measures are targeted at steels that are either currently produced or could be produced in the UK. Some have a concern because the steels that could be produced are produced primarily as speciality steels, or perhaps at Dalzell plate mill, as we have heard—certainly, the measures should incentivise some production there. Owing to the nature of the trade measures—they are grouped under eight broad categories, rather than extremely specific grade codes—some grades that are not made in the UK, such as seamless tubes, could be drawn into that. That is where quotas are important, so it is really an assessment of whether the quotas are right. Again, we have been able to provide reassurance on those instances.
However, I would never claim that the Government are infallible—I am certainly not—so that is why it has been very important to collect information and take action. In fact, I can inform the hon. Gentleman that tomorrow I am co-chairing a meeting with the Minister for Trade, my hon. Friend the Member for Rhondda and Ogmore (Chris Bryant), in whose area this matter strictly falls, to talk specifically to downstream businesses. I would like to acknowledge not only Members, but the Confederation of British Metalforming and the British Constructional Steelwork Association, which have worked with me so closely on this matter.
Paul Waugh (Rochdale) (Lab/Co-op)
On that point, will the Minister give way?
Helena Dollimore (Hastings and Rye) (Lab/Co-op)
Will the Minister give way?
The Second Deputy Chairman
Order. I just want to make it clear that I did allow some latitude, but this is a debate on the nationalisation of the steel industry, not tariffs.
Chris McDonald
Okay. I am happy to give way and we will see what the Members have to say.
Paul Waugh
Simply to follow up, Ms Nokes, on the point the Minister was making about exemptions for individual companies, Hanson Springs in Rochdale relies heavily on imports of steel of a particular length. Will the Minister reassure us that, as with the shadow Minister, he will be engaging with many businesses to ensure that they are not hit by tariffs and that the Bill will not harm them?
The Second Deputy Chairman
I am going to allow the Minister to respond, but I am not going to allow this to turn into a debate on tariffs and how they may or may not impact individual companies around the entire country, which I fear is where we are headed.
Chris McDonald
Thank you, Ms Nokes. Perhaps it would be helpful for me to take the second intervention and respond just once.
Helena Dollimore
I recently met a local steel business to discuss this issue and how it can source more British steel in line with the principles of the Bill. It raised with me a keen desire to source as much as possible in Britain, but it is not sure if it can actually source all the products it needs in Britain. It mentioned hot rolled coil as one example. The business is called Fowle & Co. and it would be great if the Minister could commit for his officials to meet my local business and hear its experience.
Chris McDonald
I am aware of the issue with the springs company raised by my hon. Friend the Member for Rochdale (Paul Waugh). I think it is particularly an issue around 13 metre bars. My office is arranging a meeting with the company concerned. I am also aware of the issue on hot rolled coil and am addressing that, too.
Jamie Stone
I assure the Chamber that I shall not mention power of any particular sort. Will the Minister, if he has not done so, think about having a word with the Scottish Government and how they might help him in his endeavours?
Chris McDonald
I am always very happy to receive help from everywhere, but the Scottish Government could help themselves by taking a more proactive approach to nuclear, as the hon. Gentleman identified earlier. The Scottish economy could benefit from that.
Let me make some progress. I want to turn to the parts of the Bill that Members have raised in the debate, and thank the hon. Member for Richmond Park (Sarah Olney) and the shadow Minister for the amendments they have tabled. Amendment 4 was one of the amendments intended to extend reporting requirements around financial assistance and compensation under section 52. In the case of compensation, that is of course a one-off payment and so the question of regular reporting does not arise.
On the amendments tabled by the Liberal Democrats, to which the hon. Lady spoke earlier, amendment 6 is about taking into account ETS, CBAM and so on in valuations.
A number of comments were made about valuations and the role of the independent valuer, which we will also touch on when we consider the new clauses on capping compensation. It is particularly important that we draw a distinction between the role of Government and that of the independent valuer here, which goes back to some of the concerns raised by the hon. Member for West Worcestershire. It is a serious and rare intervention that the Government are making, and one that should happen only when there is a market failure or a company is in distress.
Luke Myer
The Minister is right in what he says about trade. On amendment 6, however, industry is concerned that phasing out free allowances before the new CBAM is fully tested risks exposing UK industry to carbon leakage. Does he agree that the new CBAM must be robustly designed and implemented to genuinely level the playing field for industry?
Chris McDonald
I thank my hon. Friend for his work as chair of the all-party parliamentary group for steel and metals-related industries. The Treasury is responsible for the carbon border adjustment mechanism and is consulting extremely carefully with the industry on that. I am sure that the Treasury will have heard his remarks and will take them into account.
Amendments 7 to 9 relate primarily to some of the environmental liabilities. The issue also arose in yesterday’s debate, where there were concerns about liabilities—the phrase “unlimited liabilities” might have been used. However, the liabilities are not unlimited. We have a reasonably good sense of what the liabilities are. We would expect the valuer to take those liabilities into account—that is quite right—but we have extensive experience with the remediation of similar sites elsewhere in the country.
The Committee has heard about the Ravenscraig site, but the Teesside site is a more recent example. The remediation of the Teesside site—the amount of public money spent on that—is well documented. The site in Scunthorpe is of a similar age, has had similar industrial activity, and is of a similar size. Ultimately, however, the Government are seeking to avoid the crystallisation of environmental liabilities by ensuring the continued operation of steel on the site. It is the responsibility of the valuer to take that into account when determining the valuation of the company. For that reason, the Government do not consider it necessary to support amendments 7 to 9.
Amendments 10 and 11 propose increasing the frequency of reporting on financial assistance to every three months. Again, it is the Government’s view that the current framework is proportionate in terms of the balance between transparency and delivery. We are incredibly concerned to ensure that we do not impose unnecessary administrative burdens. Inevitably, the management of a business acquired through the Bill and the civil servants in my Department would have to deal with the reasons for the business’s acquisition. Although we of course feel that reporting, transparency and accountability to this House are important, we are trying to strike a balance.
I know that amendment 20 is particularly important to the Opposition, so I will spend a bit of time on it. We are all incredibly concerned about value for money, but we have existing arrangements across Government to deal with that. It is already the case that Departments must secure value for money under the Treasury’s managing public money framework. It is also our view that the drafting of the amendment does not quite meet the requirement as described: that the National Audit Office would check the assistance prior to being approved. We think that putting this requirement in statute would unnecessarily reduce the Government’s ability to act quickly where support is needed. We have heard from many contributions today that on the presumption that the legislation will be required, the Government must be able to move quickly.
We have seen the need for acting quickly before. Harking back to a previous example of a failed steel business, I recall that we had only a matter of days within which to save the Teesside business due to a shortage of coal. Of course, we all remember that it was necessary to come back to Parliament at incredibly short notice to pass the Steel Industry (Special Measures) Act 2025, again because there was a shortage of coal, with the potential for those coal shipments to be diverted. It is therefore incredibly important that the Secretary of State is able to act quickly when required.
A couple of amendments have been proposed by Plaid Cymru Members—although they are not present, I think it is still responsible to address them. One amendment is about restricting the National Wealth Fund, with which I completely disagree. The National Wealth Fund is one of Government’s primary instruments for assessing potential investment opportunities and investing in industry. In fact, there is provision through the Government’s £2.5 billion steel fund for the National Wealth Fund to offer support to steel companies, as set out in the steel strategy. We intend to use whatever funding instruments are available to Government, not to restrict them.
Jessica Morden (Newport East) (Lab)
Although Plaid Cymru Members are not present, another Welsh Member is. With the Minister mentioning the available funding, I will take the opportunity to raise a topical matter with him, which is the catastrophic fire that took place on the pickle line last week in Port Talbot. I want to put on the record our thanks to the emergency services and the steelworkers who worked so hard to contain it, as I know from my hon. Friend the Member for Aberafan Maesteg (Stephen Kinnock). The work is now being transferred to Llanwern, but it is a worrying time for those at Port Talbot. Does the Minister agree that, alongside the Bill, we must protect the jobs in the south Wales steel industry and ensure that they are fully equipped to support the expansion of sovereign steel that we all want to see as we go forward?
Chris McDonald
I thank my hon. Friend for mentioning the incident last Wednesday at the Port Talbot site. Pickle lines are notoriously susceptible to these sorts of incidents because of the high-temperature hydrochloric acid used to treat the steels. I would imagine that once such a blaze has taken hold, the effects can be absolutely devastating. I want to echo her commendation of the emergency services and the workforce, who are, in this situation, the first responders, protecting life and valuable industrial plants. I was incredibly relieved to hear shortly after the incident that every single member of staff was accounted for. It is a credit to Tata Steel and its management processes.
I am, however, concerned about our loss of productive capacity there as a result of this incident. As my hon. Friend rightly points out, we are fortunate in having another pickle line available in Llanwern, and I understand that as of last Friday Tata Steel is looking at restarting that plant and moving the work there—perhaps it has already restarted—but the hot mill was down for a time in Port Talbot. This really emphasises where we have points of vulnerability in our industrial capacity, not only in steel but more broadly. We are determined to address those points through this Bill, our steel strategy and our wider industrial strategy. I thank her for raising that matter.
Luke Myer
I thank the Minister for giving way again; he is being very generous. He has made a couple of references to the Teesside site, both to the crash closure in 2015 and to the remediation of the land. With that land having now been remediated, immense steel structures are being built there as part of the Government’s carbon capture programme. It was great to be on site recently and to see the progress of that site. The project is using 50% UK steel; of course, Liberty Steel in Hartlepool has benefited from that. Does the Minister agree that procurement measures like contracts for difference need to be adjusted to ensure that we are using domestic steel in as much of our major infrastructure projects as possible?
Chris McDonald
I agree that procurement has an important role to play here. I am sure that my hon. Friend will have welcomed recent changes in guidance by the Cabinet Office to ensure that British steel producers are well placed to win these orders, as well as in the areas of renewable energy, where the Government are awarding significant contracts, and nuclear power, where we are again endeavouring to ensure that British companies are well placed to win those contracts.
I turn to amendment 22 and new clauses 4 and 12, which would impose statutory caps on compensation and financial assistance. I have already addressed compensation, and financial assistance is somewhat similar in that applying a cap on the basis of the number of employees, or indeed a fixed cap of any kind, would ultimately restrain the Government’s ability to respond effectively to circumstances as they evolve.
I believe that could fundamentally undermine the purpose of the Bill, which is for the Government, with the will of Parliament, to be ready to respond to circumstances such that we are not required to fly back from wherever we are in the world at incredibly short notice, and prolong uncertainty among the workforce and suppliers. We do not want to create any legal uncertainty, uncertainty in the supply chain or commercial uncertainty. That is why it is important to have this level of flexibility.
The Bill has proportionate and robust transparency and accountability mechanisms for the provision of financial assistance. For instance, clause 59 requires the Secretary of State to report to Parliament at 12-monthly intervals, and funding will be subject to the established framework for managing public money, including through Treasury approval processes.
New clause 6 would place on the Secretary of State a requirement to put forward a proposal to Parliament about providing financial assistance if a Select Committee were to make recommendations on that. Again, that is not realistic. Given that financial support would be required immediately following a transfer, there would not be time for that level of parliamentary scrutiny. Important though scrutiny is—I certainly welcome the investigation into steel currently being carried out by the Public Accounts Committee—we have to be realistic about the point at which it is possible to apply scrutiny.
New clause 7 would require impact assessments to be published before exercising the Bill’s provisions. Again, the issue is essentially about pace among other things. We believe that impact assessments are crucial to show the impact of Government intervention, and the Government are committed to operating in line with our better regulation framework requirements. We do not want to introduce any further legal uncertainty, so we reject the new clause.
A number of colleagues mentioned new clause 9, so it is important to address some of the issues raised around that. Fundamentally, the new clause would not be at all helpful; I will give an example as to why. There is an assumption in the new clause that if the Government were to nationalise a business under the Bill, the best approach would be to treat it like a hot potato and immediately throw it away. We have seen the impact of that.
We heard yesterday about the nationalisation—briefly—of British Steel by the previous Conservative Government: they spent £750,000, made no investment in the business and immediately sold it on to a company called Greybull Capital, whose track record was failure at Monarch airlines, failure at Comet electrical stores and failure at Rileys snooker halls. If you cannot run a snooker hall, you definitely cannot run a steel company.
This is where the hon. Member for Boston and Skegness (Richard Tice) and I have some points of agreement: there is more than one way to bring investment into a business other than selling it to an overseas investor. We could have debt and equity finance, and the Conservative party used to be keen on mass public ownership via a listing on the London Stock Exchange. There are many different ways in which we can bring private sector investment into a business and resolve issues around ownership.
Of course, it is intolerable to work in a business that is constantly up for sale—I have been in that position myself—as businesses do not perform in that position. A decision to sell a business is a decision made at a point in time, not an ongoing process. The Government therefore reject that new clause.
Given that I have detained the Committee considerably over the last couple of days, I have no wish to do so any further. I hope that, having responded as fully as I can to the amendments and new clauses, the Members who tabled them might feel sufficiently reassured not to press them and therefore save the House their consideration. I fully and sincerely thank everyone for their incredible participation in the debate, for the marvellous speeches that we have heard today, and for their strong interest in the steel industry that I have worked in and which I continue to champion in this House.
Sarah Olney
I beg to ask leave to withdraw amendment 7.
Amendment, by leave, withdrawn.
Clauses 52 to 57 ordered to stand part of the Bill.
Clause 58
Financial assistance
Amendment proposed: 20, page 39, line 7, at end insert—
“(1A) The Secretary of State may only provide financial assistance under this section if they are satisfied that financial assistance will secure value for money.”—(Dame Harriett Baldwin.)
Question put, That the amendment be made.
Madam Deputy Speaker (Caroline Nokes)
Before we proceed to the next business, I have a short statement to make. I have received a report from the Tellers in the No Lobby on the Division that took place in Committee of the whole House at 8.27 pm yesterday on new clause 2 to the Steel Industry (Nationalisation) Bill. The hon. Members for Bangor Aberconwy (Claire Hughes) and for Wells and Mendip Hills (Tessa Munt) have informed me that the number of no votes was erroneously reported as 257, rather than 251. I will direct the Clerk to correct the numbers in the Journal accordingly. The ayes were 65 and the noes were 251.
—[Official Report, 8 June 2026; Vol. 787, c. 111.]
Third Reading
The Secretary of State for Business and Trade (Peter Kyle)
I beg to move, That the Bill be now read the Third time.
This Government believe in Britain’s steel future. This Bill will help to transform that belief into a reality. It will ensure that the long-term vision for our UK steel sector is realised, helping to restore domestic production to sustainable levels and to support this Government’s economic growth plans. This Bill provides powers for the Government to bring steel companies into public ownership, subject to the public interest test being met.
In many ways, the progress of this Bill has shown the House at its very best, with passion, insight and determination to take action in the national interest. We had an excellent and wide-ranging debate, with Members from all parts of the House recognising the importance of passing this legislation. Let me begin by thanking Members for their time and their thoughts. I express my gratitude to those who have contributed to the passage of this Bill so far, especially those who have taken a particular interest in ensuring that we get the details of this vital piece of legislation right.
I also take a moment to recognise those working in and supporting our steelmaking communities. Every day, they make a vital contribution to our country’s economic security. During the passage of this Bill, we have heard much about the specific situation at British Steel Ltd, and in particular about its current ownership status.
Let me be frank with the House: our decision to proceed with this Bill—to take these powers now—has absolutely nothing to do with the national origin of the current owners, Jingye. We have always been and remain country-agnostic about the current ownership. We simply believe that the British public interest should be paramount in determinations about future ownership. We continue to welcome international investment into the UK, including from China. We remain committed to our legal and international obligations to overseas business and foreign investors. We are fully compliant with our treaty undertakings to protect overseas investors and businesses operating in the United Kingdom.
While this Government need to take steps to secure UK Steel’s capability, we are committed to doing so in a manner that respects the rights of businesses. When and where the Government exercise the transfer powers in the Bill, an independent valuer will be appointed to determine what compensation, if any, is payable. The Bill requires a clear public interest test and provides for a compensation scheme where that might be relevant. The Government fully respect the rights of businesses and investors subject to this Bill. We will continue at all times to act fairly, regardless of the nationality or background of those businesses.
I place on record my thanks to parliamentary counsel and officials in my Department for their hard work on drafting and guiding the passage of this Bill. I also thank the Clerks, the Doorkeepers, Hansard and all of the House and its authorities for making the passage of this legislation possible. Let me also, on a personal note, pay tribute to the Minister for Industry, my hon. Friend the Member for Stockton North (Chris McDonald). A lifetime of dedication to the steel sector has brought valuable insight, passion and creative parliamentarian work to the Bill, which has enriched the debate in this place.
The House has sent a clear message about the importance of decisive action to safeguard the future of the steel industry. Since I became Secretary of State, I have championed an activist, interventionist industrial policy—activist, because the years of standing back and watching British industry decline are over; interventionist, because we, like other Governments around the world both right and left, from the United States to France and Germany, step in to invest, modernise and protect our industries. Our policy is both activist and interventionist, because purpose without action is merely rhetoric, and acting without purpose is performative, not strategic. The Bill is action with a purpose, and the purpose is clear: to invest in, modernise and protect Britain’s steel.
I am encouraged to witness the strength of support in the Chamber for this activist, interventionist Bill. As it moves to the other place, let me reiterate my commitment to continued engagement with parliamentarians as it completes its passage and we ensure that the Government’s vision for Britain’s steel sector becomes a reality. I commend the Bill to the House.
Dame Harriett Baldwin (West Worcestershire) (Con)
I think it has been clear throughout these two days of debate that none of us in the House underestimates the importance of the steel industry to our national economy, to our industrial resilience, and to the communities whose livelihoods depend on it. We can all agree that steel matters, and that steel jobs matter. However, we also believe that the responsible stewardship of taxpayers’ money matters, and despite the eloquent way in which the Secretary of State expressed his views on the Bill, we see it much more as a chaotic and unplanned intervention. It is not the product of a clear steel industrial strategy, but the product of a failure to negotiate a better outcome. The negotiated outcome was a possibility; the Secretary of State even went to China to try to achieve it.
It is the failure to address the root causes of the industry’s difficulties that has brought us to where we are today. The Bill could also be described as the steel industry blank cheque Bill, because it fails to protect the public purse from potentially vast and open-ended liabilities. Nationalisation does not solve the underlying issue that is making domestic steel production unprofitable. The higher employment costs, higher energy costs, planning issues, carbon pricing, regulation and levies associated with the Government’s net zero policies continue to weigh heavily on the sector, and the Bill does nothing to resolve those pressures. Instead, it transfers them wholesale on to the taxpayer.
We should reflect on how we came to this point. Not long ago, the Government told the House that they did not want to nationalise British Steel—indeed, that was presented as a last resort to be avoided—and yet here we are, because the Government have failed to negotiate an alternative. We see once again that when this Government negotiate, it is the taxpayer who picks up the bill. Since the intervention began last year, on that historic Saturday, the cost has already run to more than £1.3 million every single day. That is a bill for the taxpayer that will only become larger with this legislation. The Bill exposes the public finances to further liabilities—contingent liabilities, not only substantial but, alarmingly, potentially unlimited in terms of both their scale and their duration. This is a Government getting a blank cheque forever.
Richard Tice
The root cause of why we have the Bill is that the previous Conservative Government sold this business to Jingye in 2019. Another root cause is net zero, which was introduced by the Conservative Government. Surely what the Conservative party should do is show some humility about why we are here and support the Bill.
Dame Harriett Baldwin
Surely what the hon. Member should do is welcome the fact that our party is under new and outstanding leadership. We believe that politicians should not be in the business of running commercial enterprises, but I can see that that is the political position of the Reform party. The risks of inefficiency, political interference and poor capital allocation are very well known.
Dr Scott Arthur (Edinburgh South West) (Lab)
The hon. Lady is right to say that her party is under new leadership, but what did that leadership think about the decision to sell British Steel to Jingye? What did the leadership think of the net zero policies that the hon. Lady blames for the current situation? What did the Leader of the Opposition think of them when she was in government, and what did she do to oppose them?
Dame Harriett Baldwin
It is a bit rich to be lectured on support for party leadership from someone on the Labour Benches, so I will move on swiftly.
This Bill sets a precedent. Indeed, the Government’s own impact assessment says that expropriating assets in this way risks undermining the investor confidence that we need at this precise moment, when the UK needs to attract inward investment into strategic industries.
Throughout our Committee considerations, we have sought to improve this legislation to introduce better transparency for Parliament, to limit liability and to ensure proper parliamentary oversight. I thank my team, the team of Clerks, the whipping team and you, Madam Deputy Speaker. Throughout this process, our amendments were responsible safeguards; they were designed to protect the taxpayer and to impose discipline on the Government. Their rejection only reinforces our concern that Ministers are unwilling to confront the full implications of their own policy.
As we come to Third Reading, the choice is clear. This Bill risks enormous cost, offers insufficient answers, and sends troubling signals about the UK as a place to do business. We cannot support it in its current form. We will not vote against its Third Reading today, but for the sake of the taxpayer, the health of the steel sector and the credibility of industrial policy in this country, we cannot support it either.
Lola McEvoy (Darlington) (Lab)
In my constituency of Darlington, we know the economic importance of the steel industry, and many of my constituents bear the scars of the Conservative party’s unwavering worship of the global free market. Regardless of the social, economic, community or security costs, they badly let us down. The last Government refused to step in for our highly skilled essential steel workers in Redcar, leading to the loss of thousands of jobs and the closure of a 170-year-old industry, and thousands more jobs in the supply chain were lost.
The Conservatives demanded a cap on the cost to the Treasury for this essential intervention to protect out sovereign steel capacity, which shows that they still do not get it. It shows their fundamental misunderstanding of the mistakes they made while they were in government. Despite their historic defeat, they refuse to accept that their inaction on steel has already cost the taxpayer dearly, and not only in significant employment tax contributions but in the business contributions of this critical industry’s supply chain. It is their inaction that chilled investment.
We know that thriving supply chains boost local employment and incubate home-grown entrepreneurs. They boost confidence locally, and industrial communities such as ours support and cultivate thriving, close-knit business ecosystems—something that we in Darlington still benefit from greatly, despite the closure of SSI, Cleveland Bridge and British Steel on Whessoe Road.
The vacant South Works site in Darlington, which is currently available to rent, is 131,000 square feet and comes with three cranes. If anyone is looking for a magnificent industrial steel site in the heart of the country’s most investable town, please do contact me, and I will happily negotiate and advocate for a discounted rent from the hon. Member for Boston and Skegness (Richard Tice).
The pride that our community has in a critical, century-old industry cannot be overstated. It is vital for wellbeing, but it is security that is essential for growth. People employed in critical industries, whether self-employed, businesses or workers, can afford to spend locally—they have the confidence to get the kitchen done, or take the family out for a meal. It is insecurity that chills investment and growth. By securing this critical sovereign industry, this Labour Government are demonstrating and living our values, and delivering on the change that we were sent here to make.
The difference could not be more clear: where the last Government allowed an essential, critical, highly skilled, historical British industry to be decimated by inaction and ignorance, this Labour Government promote our most qualified steel industry expert to the Front Bench to protect high-skilled jobs, stand up for our supply chains, champion our communities and nationalise steel in the national interest—and I, for one, say all power to them.
Martin Vickers (Brigg and Immingham) (Con)
As Members will be aware, part of the Scunthorpe steelworks site falls within my Brigg and Immingham constituency. As such, hundreds of my constituents work there, and hundreds more are employed in the supply chain. With that in mind, I made it known to my constituents a number of weeks ago that I would support this Bill. It could have been improved, and the Opposition tabled some perfectly sensible amendments, which I supported. However, having got to this stage, I think it is only right that we give our full support to the business and, more importantly, to the workers employed there. I thank the Minister with responsibility for steel. We have had a number of meetings in recent weeks, and he has been extremely helpful.
As I said in a previous contribution to this debate, it is not natural for me as a Conservative to support a nationalisation Bill, but the reality is that it is of course a restructuring. The existing position whereby the Chinese own the business and the Government in effect run it is clearly unsustainable, and we cannot allow that to continue, so it is a perfectly sensible move. I was reassured by what the Minister said in yesterday’s debate about the Government looking for private sector involvement, whether that be a wholesale sale or a partnership arrangement. I have met two or three groups that are interested in investing in the sector. Indeed, the hon. Member for Scunthorpe (Sir Nicholas Dakin) and I had quite an interesting evening a few weeks ago listening to what was, I think it is fair to say, quite an ambitious plan for steel, so there are organisations and businesses that are prepared to invest.
Scunthorpe without steel would not be Scunthorpe. As a resident of Grimsby, I have witnessed what can happen to a town when it loses its core industry—in the case of Grimsby, it was of course the deep-sea fishing industry—and when that happens, it takes about two generations for the local economy to be able to sustain the jobs that are necessary. On that basis, I will certainly be supporting the Bill.
The Minister was not quite 100% clear when challenged about the continuation of production in blast furnaces. I know the situation, and I recognise that a long-term move to electric arc furnaces is perhaps the only way to sustain the industry and the jobs in Scunthorpe. So I await developments with interest, but at this stage I welcome the Bill, which is a sensible way forward and has my full support.
Becky Gittins (Clwyd East) (Lab)
I welcome the contributions from both sides of the House, in particular from the hon. Member for Brigg and Immingham (Martin Vickers). Like him, I represent an industrial constituency. My constituency in north Wales sadly holds the record, in any western country, for the largest number of industrial redundancies in one day. I think it speaks to all the constituencies affected that that goes through not just generations, but families—different generations of the same family. Many of my constituents have been affected, as have I personally.
The most exciting thing about how the Government have been very decisive on working to support and encourage British-made steel is not only what it does for just the steel sector, but what it says about our ambition to have proud, decent, good-quality jobs back in the UK. I thank everyone who has contributed. It is an absolute privilege for my communities to vote the Bill through today.
Peter Kyle
With the leave of the House, I would like to thank my hon. Friend the Member for Darlington (Lola McEvoy) for her passionate speech and my hon. Friend the Member for Clwyd East (Becky Gittins) for her heartfelt speech just now. Those are the kinds of contributions that give heart and soul to what we are trying to achieve, and that give voice to the communities affected. I also pay tribute to the hon. Member for Brigg and Immingham (Martin Vickers) for his contribution. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Steel Industry (Nationalisation) Bill
Wednesday 10th June 2026
(1 month, 2 weeks ago)
Lords ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 9 June 2026 - (9 Jun 2026)
Steel Industry (Nationalisation) Bill
Tuesday 16th June 2026
(1 month, 1 week ago)
Lords ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 9 June 2026 - (9 Jun 2026)
Lord Leong
That the Bill be now read a second time.
Northern Ireland, Scottish and Welsh legislative consent sought.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)
My Lords, steel is a historic British industry at the heart of our national story. For generations, steelworkers have forged not only steel but Britain’s prosperity. From Scunthorpe to Sheffield, from Port Talbot to Teesside, steel communities have powered our industrial success, strengthened our economy and contributed immeasurably to our national life. For those communities, steel is far more than an industry; it is a source of pride, identity and opportunity. It is a way of life, built over generations through skill, dedication and enterprise.
However, steel is not only about our past; it is fundamental to our future. Steel underpins our infra- structure, manufacturing base, energy networks and transport system. It is essential to the homes, railways and power stations that we build and the defence capabilities on which our national security depends. Steel is therefore not merely another sector of the economy; it is a strategic national asset. Its future is central to our economic resilience, our industrial strength and our ability to deliver the growth and prosperity that this country needs.
The global steel industry faces profound challenges. The volatile geopolitical climate, intensifying international competition and significant global overcapacity have placed enormous pressure on steel producers worldwide. British producers face those challenges while contending with energy costs that remain higher than those of most of their many international competitors. Recent events have highlighted the fragility of global supply chains. The pandemic exposed vulnerabilities that many had assumed did not exist. Russia’s invasion of Ukraine reminded us that economic and national security are inseparable. Increasing geopolitical uncertainty has underscored the importance of maintaining domestic industrial capability.
The lesson is clear: a modern industrial nation cannot afford to lose the capability to produce the materials on which its economy and security depend. Without intervention, the United Kingdom faces the prospect of being the only G7 nation unable to produce virgin steel from raw materials within its borders. That would be more than an industrial failure; it would represent a strategic vulnerability. That is why in March the Government published The UK Steel Strategy, setting out a commitment to revitalise the steel sector, restore domestic production to sustainable levels and secure the industry’s long-term future.
The strategy recognises that the Government have a vital role to play. It means tackling the drivers of high operating costs, including reducing industrial energy costs. It means maintaining a robust trade defence regime to protect British producers from unfair competition. It means working alongside industry to secure the investment that is needed to modernise and decarbonise steel production. It means ensuring that where strategically important steel-making assets are at risk, government has the tools necessary to act decisively in the national interest.
That brings me to the Bill before the House today. This Bill establishes a framework that enables the Government, where necessary and justified by the public interest, to bring steel undertakings into public ownership. This is an enabling measure. It provides the Government with the ability to intervene where strategic domestic steel-making capability is at risk and where such intervention is necessary to safeguard the national interest. As the Prime Minister has already made clear, the Government are strongly minded to use these powers in relation to British Steel, subject, of course, to the public interest test set out in the legislation.
The circumstances surrounding British Steel and the Scunthorpe steelworks are well-known to the House. Scunthorpe is the last remaining primary steel-making capability in the United Kingdom. It directly employs approximately 2,700 highly skilled workers and supports many thousands of additional jobs throughout the wider supply chain. The Government took decisive action last year under the Steel Industry (Special Measures) Act 2025 to prevent the premature and disorderly closure of the blast furnaces at Scunthorpe. I would like to place on record my gratitude to noble Lords across the House for their constructive and responsible engagement with that legislation. I pay tribute to the parliamentary staff whose efforts enabled Parliament to respond swiftly to an urgent national challenge.
The measures enacted last year served their immediate purpose. They prevented closure and ensured continued production. However, those powers were always intended to be temporary. Although they have enabled continued operation, they do not provide the flexibility required to undertake the longer-term restructuring, investment and modernisation that the business now requires. As matters stand, the Government believe that public ownership offers the most effective way to secure the company’s future and to enable strategic decisions to be taken in the long-term interests of the business, its workforce and the nation.
However, I emphasise that any decision to nationalise remains subject to the public interest test as set out in the Bill. The Government did not reach this position lightly. We engaged constructively and extensively with Jingye to pursue a commercial solution. Our clear preference was to secure the future of steel-making through agreement rather than through intervention. However, despite extensive negotiations, it has proved impossible to reach an agreement that would represent a responsible and proportionate use of taxpayers’ money. In those circumstances, the Government concluded that legislation was necessary.
Some noble Lords may reasonably ask whether nationalisation is the right answer. The Government’s response is straightforward. Nationalisation is not an ideological aim and it is not the first option either. It is a pragmatic tool available for use when the national interest requires it. The costs of losing our steel-making capability would far outweigh the costs of preserving it. Once blast furnaces are extinguished, once supply chains disperse and once specialist skills are lost, rebuilding those capabilities becomes extraordinarily difficult and expensive. Inaction carries consequences and dependency carries risks. The loss of sovereign industrial capability carries costs that cannot be easily measured in purely financial terms. That is why Governments around the world intervene to protect strategically important industries. Britain should be no different.
We believe that British Steel can succeed. With the right leadership, investment and long-term strategy, the company can be transformed. We have already seen the success of public ownership in the case of Sheffield Forgemasters. Recently, British Steel has secured important new contracts, including supplying rail infrastructure and supporting future energy projects. These are encouraging signs of the opportunities ahead.
Turning to the detail of the Bill, I recognise that it contains significant powers and that noble Lords will wish to scrutinise them closely. That scrutiny is both expected and welcome. The Government have consistently sought to ensure that the powers contained in the Bill are proportionate, necessary and appropriately constrained.
Lord Leong (Lab)
I will continue. In developing this legislation, we have drawn heavily on the framework established by the Banking Act 2009, adapting well-established precedents, rather than creating entirely new mechanisms. The principal transfer powers are subject to a sunset clause and will expire two years after Royal Assent. This ensures that they remain in force only for as long as necessary to achieve their intended purpose. The Bill provides for compensation arrangements when powers are exercised. Compensation will be assessed independently, by a valuer appointed through an independent process. This ensures fairness, impartiality and proper protection for affected parties. The Government are committed to treating all investors fairly and consistently.
Many of the technical provisions contained within the Bill are designed to ensure that any transfer of ownership can be carried out smoothly and effectively. In practice, we are seeking through legislation to replicate many of the outcomes that would normally be achieved through a complex commercial transaction. That inevitably requires powers to address legal and operational issues arising from such transfers and to ensure continuity of operations. These powers are not novel; they follow established legislative precedent, and are solely intended to ensure that the legislation’s objectives can be achieved effectively.
The Bill is ultimately about the kind of country that we aspire to be. Do we believe that Britain should continue to produce the steel upon which modern economies depend? Do we believe that strategic industries matter? Do we believe that economic security, industrial resilience and national security are worth safeguarding? Do we believe that steel-making communities deserve a future? The Government’s answer to each of those questions is yes. The Bill demonstrates our resolve to safeguard a strategically important industry. It demonstrates our commitment to safeguarding jobs, supporting communities and securing Britain’s industrial future. It demonstrates that this Government are prepared to act decisively when the national interest demands it.
Today, we have an opportunity to send a clear signal to steelworkers, investors, industry and the country that Parliament is committed to preserving and strengthening Britain’s steel-making capability for generations to come. I look forward to the contributions that noble Lords will make during this debate and to the constructive scrutiny I know this House will bring to the legislation. I beg to move.
Lord Hunt of Wirral (Con)
My Lords, I start by congratulating the Minister on his appointment last Friday as Parliamentary Under-Secretary of State at the Department for Business and Trade. He has a long established and proven track record of success in business. I hope that his voice will be heard loud and clear within government. I wish him well and hope that he will emerge from our debates with his reputation enhanced.
At the outset of this debate, I make it clear that my party accepts that steel is a strategic industry. Steel helped to build our past and I agree with the Minister that it will shape our future. It matters to our national resilience, to our defence capability, to our manufacturing base, to our construction sector and to communities right across the country. Recognising the importance of steel is not, however, the same as accepting that nationalisation is the necessary answer. The central issue facing the sector is competitiveness, and the Government have still to set out a credible plan to address just that.
Last week, Al Carns, who was then Minister for the Armed Forces, resigned from the Government. He has since argued that energy policy has to be treated as a matter of security, but high energy costs are making British steel less competitive globally. The Government’s chosen path towards lower carbon production will dramatically increase the sector’s reliance on electricity and therefore require very substantial capital investment. The industry itself has warned that high electricity prices risk undermining its long-term plans to decarbonise. The Government acknowledge that steel is vital to national security. If that is the case, surely the energy policy upon which steel depends must also be judged through the lens of national security, resilience and industrial capability.
The Government came to office promising a £2.5 billion steel fund—a fund that was supposed to transform the sector, modernise production, support new technology and crowd in private investment. There is now a real risk that that money will be used not to transform British Steel but simply to plug the losses created by the Government’s failure to address the underlying causes of uncompetitiveness.
If hundreds of millions of pounds are being spent merely to keep British Steel operating day to day, and if still more liabilities are now to be brought on to the public balance sheet through nationalisation, how much of that £2.5 billion will be left for genuine transformation? How much will remain available to support new technologies, energy-efficiency improvements and the investment needed to secure the industry’s long-term future?
This leads to a more fundamental question: where does this end? Will British Steel, under public ownership, be expected eventually to stand on its own two feet, or will taxpayers be asked to fund operating losses year after year, while Ministers continue to promise that help is just around the corner? Before Parliament grants these powers, surely it is reasonable to ask what the end state is, what the exit strategy is and how the Government intend to measure success beyond simply writing more and larger cheques.
The Government’s impact assessment makes it clear that the costs of this Bill will be substantial. These costs include the possibility of capital injections, working capital support, operating costs if the company remains loss making, compensation, administrative overheads, and the expenditure inherent in establishing and running a government-owned company. So I ask the Minister what the Government’s estimate of the total cost is. Will Parliament be told that figure before the Bill receives Royal Assent?
We must also question the Government’s approach to ensuring environmentally friendly steel. Ministers have chosen a pathway that the industry warned will be more costly, more electricity-intensive and thus more difficult to finance. In the other place, the Secretary of State Peter Kyle said that
“the long-term future of the UK steel sector relies on public and private investment”.—[Official Report, Commons, 21/5/26; col. 787.]
If the Government’s preferred model drives up costs and makes the United Kingdom less attractive than competitor countries not operating under the same net-zero constraints, where is that private investment supposed to come from? Investors can choose where they deploy capital; if the Government make steel production more expensive, more regulated and more politically uncertain, they will look elsewhere.
The Government’s impact assessment of 13 May is clear and explicit about the risk to investment. I quote its paragraph 75:
“One potential impact is a chilling effect on investment as investors may perceive an increased risk of government intervention. This could increase uncertainty for investors and therefore deter future investment in the UK steel sector. If investors perceive these risks as material, they could further undermine the recovery of the sector, putting jobs and capabilities at risk”.
This is a remarkable admission from any Government.
The Government have also not properly addressed the wider trade risk. If British Steel is to be subject to constant and persistent subsidisation at the expense of the taxpayer, Ministers must explain how they intend to ensure that this remains compliant with the United Kingdom’s international obligations. Prolonged state support, if not carefully structured, could risk challenge under WTO subsidy rules and invite countervailing measures from trading partners. That would not be a theoretical concern; other countries could impose countervailing duties, raise disputes or just take other retaliatory action if they believe that UK steel is being unfairly subsidised.
Such action could not only harm British Steel itself but damage the wider UK steel sector and the downstream industries that rely on steel inputs, including automotive, aerospace, defence, construction and advanced manufacturing. Can the Minister therefore tell the House what assessment the Government have made of the WTO implications of the Bill and of any continuing public subsidy to British Steel? Have Ministers had any discussions with the World Trade Organization or major trading partners about the proposed structure of support? What conversations do they intend to have before any transfer into public ownership takes place?
On the issue of trade, I also raise the significant concerns expressed by stakeholders across industry about the Government’s steel strategy and, in particular, their tariff policy. The Government appear to have conducted a partial U-turn: it seems that we did not need to wait 12 months for a formal review for Ministers to discover that tariffs can be harmful—if only more than a century of economic history had already taught us that.
The first point is one of parliamentary accountability: any change to the Government’s steel tariff regime should be reported to Parliament first, so why are Members of both Houses having to learn through the media about possible changes? That is just not acceptable, and it gives the impression of a Government making up policy in response to headlines rather than setting out a coherent and properly examined trade strategy.
We have already seen the risks of retaliation. We have seen concerns in relation to the United States and questions raised on India, including the possible implications for the trade deal. We now read of concerns about the European Union, with reports that the Secretary of State has been to the EU to plead with it not to reduce tariff-free imports of British steel. What did the Government expect? If the UK chooses to escalate protectionist measures, it should not be surprised when trading partners respond in kind. Retaliation was not unforeseeable; it was predictable. We saw the European Union respond in precisely this way to President Trump’s tariffs. Did the Government really fail to assess that risk before introducing their own regime?
Countermeasures, reduced market access and increased uncertainty could all make it much harder for UK producers to export, and harder for investors to commit capital. At the same time, tariffs risk raising costs for downstream sectors that rely and depend on steel inputs —metal forming, automotive, aerospace, construction, defence and advanced manufacturing among them. These sectors are central to growth, productivity and investment. If tariffs increase their costs, reduce their competitiveness or force them to source elsewhere, the Government will have weakened the very industrial base they claim to be trying to strengthen.
I therefore ask the Minister: what assessment has been made of the impact of the steel tariff regime on downstream manufacturers? What assessment has been made of possible or likely retaliation by trading partners? Why should British businesses have confidence in a strategy that appears to protect one part of the supply chain by imposing costs and risks on so many others? We cannot just ignore the wider business climate the Government have created.
I am not going to go into detail about the Employment Rights Act 2025, but that will not stop me raising it, because it is making the business environment less competitive and less conducive to investment. Combined with those increased national insurance contributions, endless reporting requirements and carbon taxes, the Government are damaging the steel sector, along with every other sector of the UK economy. For a steel sector already operating under intense global pressure, these additional costs affect hiring, investment, margins, productivity and the ability of British steelmakers to compete. In the light of the importance to our national security, the steel sector may be a special case, but that does not mean it is immune to the effects of wider government policy.
Many questions remain to be answered. At this point, His Majesty’s Opposition are far from convinced that nationalisation is the best option, or even the so-called least worst option, but we are eager to hear some, or better still all, of those questions answered as the Bill progresses. Steel has shaped our nation’s history. The challenge now is to secure a future for the industry that is internationally competitive, financially sustainable and attractive to investors.
Lord Bilimoria (CB)
My Lords, I thank the noble Lord, Lord Leong, for introducing this debate, and I too congratulate him on his well-deserved appointment as a Minister. This Steel Industry (Nationalisation) Bill is a government Bill, and it will provide powers to nationalise any company involved in steel manufacturing where that is in the public interest. But we know the focus of the Bill is the potential nationalisation of British Steel Ltd, a company currently owned by the Chinese company, Jingye Group, and subject to ongoing government financial assistance, and it is still operating.
The Government said in May—last month—that they were minded to nationalise the company. This was cautiously welcomed, including by the local community in Scunthorpe, but concerns have been raised about the significant cost and complexity of nationalisation. Of course, the Chinese Government have urged the UK to act prudently and said that they would protect Chinese business. The Conservative Party, as articulated by the noble Lord, Lord Hunt, very clearly just now, has set out its opposition to the Bill, and stated that it does not address the problems affecting the industry, which I will address.
The company, Jingye Group, operates the only remaining blast furnace for steel, in Scunthorpe. This is the country’s only remaining production capacity for making virgin steel. If the blast furnaces are switched off, it can be very difficult and costly to ever return them to operation. The company was preparing to close down the furnaces, and noble Lords will remember that last year Parliament was recalled—something that very rarely happens. We passed emergency legislation, the Steel Industry (Special Measures) Act 2025, which gave the Secretary of State the power to intervene in steel undertakings—and that is exactly what has happened.
The result is that the production plant at British Steel is still producing. The Government have stated that they now want to modernise and co-invest with the private sector. The Minister for Industry, Chris McDonald, set out the details and said that government officials would continue to provide on-site support. To date, the Government have spent almost £0.5 billion on working capital to support British Steel. Can the Minister confirm that? When it comes to modernising and decarbonising, and providing stability for workers, suppliers and customers, the Government recognise that that will require both public and private investment. Can the Minister confirm that?
Then there is the impact assessment that was carried out for this proposal. It said that the 2025 Act provided only short-term emergency powers and did not allow for the longer-term planning or investment required. It also said that the powers could create fear among investors and put off UK investment in the sector—owing to, for example, concerns about government intervention —and that this could undermine jobs and attempts to develop the sector. Will the Minister acknowledge that aspect?
The impact assessment also said that, on the other hand, the powers could have a positive impact on supply chain confidence and reduce uncertainty, boosting investment in jobs in the sector, and that they could have wider impacts on supporting and stabilising the economy and jobs. Overall, the impact assessment said that the socioeconomic benefits were likely to outweigh the associated costs, and that there would be a post-implementation review within five years. There is now the beginning of a clear and credible long-term plan for British Steel, with low-carbon steelmaking as a priority.
An important point from a legal perspective was made by Peter Ware, who is a partner and head of the government sector at the law firm, Browne Jacobson; I have to declare my interest, as I have worked with this firm in my business. He described this as
“one of the most significant acts of state intervention in British industry in decades”,
and said that it would raise
“substantial questions that will need careful navigation”,
including on compensation and the transfer of employees. Will the Minister acknowledge this?
Of course, there are underlying sovereignty concerns that losing the Scunthorpe furnaces would, as the Minister said in his opening speech, leave the UK as the only G7 country unable to make steel from raw materials, and dependent on imports for a material central to defence and infrastructure. I am co-chair of the India All-Party Parliamentary Group, and the UK signed the CETA with India—its FTA—last July at Chequers, with implementation due any time soon. There was a pitch to Indian capital, yet the Bill contains a discretionary power to seize a foreign-owned steelmaker. That is scary to any potential investor and sends the opposite signal to the Vision 2035 partnership at the worst possible moment, when we are about to implement the CETA.
Also to do with India, there is Tata, India’s flagship industrial investor in the UK, with Jaguar Land Rover and of course the £1.25 billion investment in Port Talbot’s electric arc furnace, which the Government have supported with £500 million of grants to save 5,000 jobs. The Bill defines a “steel undertaking” generically. Can the Minister confirm that the Government’s intentions are to do with Scunthorpe and not to do with Tata? Having secured Tata’s £1 billion commitment, the UK is handing itself a power to expropriate that same asset in the public interest, and that is quite scary.
Moreover, when it comes to compensation and the valuing of the business—this needs to be taken into account—nil compensation could be awarded. This is something the Government could do. Tata’s entire transition therefore rests on government co-investment. If the state can seize the asset and value it, but for the support of the UK Government, the inbound investment is worth little or nothing. This is really very scary to a country we have just signed a free trade agreement with—a country with which we are hoping to double our bilateral trade from nearly £50 billion to £100 billion by 2030.
Peter Ware of Browne Jacobson again said:
“The compensation question is particularly complex: with the government having already committed over £400mn in working capital, Jingye’s scope to claim substantial compensation may be limited, but legal challenges under bilateral investment treaties or domestic property rights principles cannot be ruled out”.
Will the Minister acknowledge this?
Shevaun Haviland is the director-general of the British Chambers of Commerce. I chair the International Chamber of Commerce UK; we are the regional co-ordinators for Europe, and she sits on the board of the ICC UK. She warned of
“significant financial and logistical problems”
from planned tariff changes, cautioning that revised quotas and tariffs risked
“economic damage in key supply chains”
for sectors such as car-making, aerospace and medical technology.
Can the Minister please clarify the rumours circulating in the press that India may reduce tariff concessions for the UK due to steel tariffs jeopardising the FTA that we have signed and that this FTA should be separated from any issues to do with steel? That would be really reassuring to hear.
On top of this, we have the backdrop of US tariffs and the UK’s high energy costs. The Government announced their much-delayed steel strategy focused on reworking trade quotas designed to protect steel majors from a glut of Chinese imports. Before that, Tata Steel—I do not want to miss this point—had broken ground with £500 million of government backing, which is going to be a pivotal moment in UK steel-making in future. It is expected to cut the site’s carbon emissions by 90%, thanks to the £500 million help from the Government that will save 5,000 jobs. Tata Steel says it is paramount that how it operates and what it is doing should be a distinguishing fact versus what is happening with UK Steel in Scunthorpe. We need clarification that these powers are not going to be implemented for a company such as Tata.
Domestic demand is a challenging opportunity. The UK steel industry now supplies only 32% of the UK’s overall steel demand. Will the Government commit to a minimum threshold of 30% domestically produced steel? On top of this—this is a point that the noble Lord, Lord Hunt, mentioned—the UK’s energy prices are some of the highest in the world and certainly the highest in Europe. I will give some facts. UK steel producers face an average electricity price of £66 per megawatt hour, compared with Germany at £50 and France at £43. We pay up to 50% more than our main competitors right at our doorstep in Europe.
On top of that, steel is a highly traded commodity. I am chair of the ICC UK and regional co-ordinator for Europe. Our expertise is in trade. Our competitors in Europe have successfully accessed government grant funding of 50% and more for major operational changes. China’s steel subsidies are more than 10 times higher than those of OECD countries and more than five times those of non-OECD economies. Steel subsidies in non-OECD countries are 42% higher in terms of cash grants, and 11 times higher with respect to below-market borrowings than in OECD countries. How do we create a level playing field when we are facing this sort of competition worldwide?
On the other hand, there are great opportunities. Renewable energy infrastructure presents a huge opportunity for the UK steel market. One report shows that just the offshore wind pipeline will require 25 million tonnes of steel by 2050, with a potential value of £21 billion to the UK steel market over the coming decades, which will be great for our British steel industry. This reinforces that we need to have that 30% minimum threshold.
We are paying more than 50% more for our electricity than our counterparts in France and Germany. When it comes to facing excess steel-making capacity, the gap between global capacity and crude steel production in 2023 was estimated at 543 million tonnes. That is 70 times the size of the UK market. Exports from China this year are expected to reach 100 million tonnes, the highest since 2016, when the last steel crisis saw several steel plants close and thousands of jobs lost in steel-making countries around the world, including the UK. On top of that, there is the effect of the US tariffs. Tata Steel, for example, exports about 170,000 tonnes of products to the US. Those products are not made in the US. They can come only from us, so the US needs what we produce.
There is no question: we cannot compete on costs with producers in China and across Asian markets. They have lower environmental regulations and cheaper carbon-intensive energy and labour costs. It is very difficult. On top of that, UK steel producers face higher network charges despite the Government’s recent announcement of a 60% exemption for charges starting in April last year. Germany produced a 90% exemption and France 80%, so we could do more. Can the Government do more to help our industry?
My last two points are about research and development and innovation. Tata Steel spends around £10 million to £15 million in R&D and collaborates with universities such as Warwick, Swansea, Cambridge, Sheffield, Cardiff and Imperial College. We must encourage more of this research and development between our industry and universities. On skills, we need core capabilities in engineering, metallurgy, safety, sustainability, leadership, advanced digital, green skills and AI.
To conclude, I have the privilege of chairing the Manufacturing Commission, which is the research arm of the All-Party Parliamentary Manufacturing Group. Although manufacturing was 30% of GDP in the 1970s and has now gone down to less than 10% of GDP, the UK is still the sixth-largest economy in the world and the 11th-largest manufacturer in the world in absolute terms. It is, most importantly, high-quality manufacturing that we are proud of. Steel is a vital part of our manufacturing industry. We must do all we can to ensure that our steel industry continues to flourish and prosper.
Baroness O’Grady of Upper Holloway (Lab)
My Lords, I too offer my warm congratulations to my noble friend the Minister on his appointment. I strongly welcome this Bill for the simple reason that our country must have a sovereign capability to make steel, and I commend the Government on acting swiftly. Taking powers to nationalise in the public interest is an essential tool of a modern industrial policy. We have done it before. In 2009, with cross-party support, similar powers were taken to stabilise the banking and finance industry. If we can bail out bankers, we can certainly support our steel-workers.
Steel is a vital part of our economy, as we have heard. Critical infrastructure such as roads, bridges, defence capability, hospitals, schools, housing and wind turbines all rely on steel. Some would add to that list Wembley Stadium, which was built with British steel. In today’s world, we cannot afford to leave ourselves at the mercy of China dumping cheap steel on the global market or the United States playing a capricious game on tariffs. Nor can manufacturing depend on supply chains left vulnerable by wars made in Moscow or Washington, so the Bill is essential for our security.
Many other advanced economies recognise the value of a mixed economy and the important role that state intervention and ownership can play. Germany, France, Italy, Belgium, Spain, China and India already provide major state aid to their steel industries. The state can intervene not just to correct market failures but to accelerate industrial success. It can both protect and grow firms of strategic importance and, for good measure, lift skills, living standards and whole communities.
The Opposition once recognised that. In 1971 a Conservative Government led by Ted Heath, admittedly somewhat reluctantly, nationalised a strategically important firm that was on the brink of bankruptcy. It was called Rolls-Royce. Some mounted the same arguments against nationalisation back then that we hear from some quarters today: that it was too expensive or that government should not bail out so-called lame ducks. History records that under state ownership, Rolls-Royce produced a new generation of engines that were a huge commercial success. It was only 16 years later that Rolls-Royce was sold off alongside a good deal of the nation’s family silver, including, of course, the national grid. Over subsequent years, bill payers and taxpayers have paid a high price for that 1980s dogma of privatisation. Now the steel industry is at a crossroads.
According to More in Common polling last year, the public think that the Government should take state control of the wider steel industry. More than half the public support this, with only 13% opposing. Support for public ownership of British Steel is even higher. Roy Rickhuss, chair of the National Trade Union Steel Co-ordinating Committee, and a former steel worker himself—in fact, I think he is also the son of a steel worker—backs this Bill. Gareth Stace, director-general of the trade association UK Steel, strongly backs it too. They agree that, without support, our steel industry risks falling further behind international competitors, but with state backing British Steel can become a global leader once again.
Let us be clear: we owe our steel workforce. Their vital work is hard, and it can be dangerous, so we owe them respect for their skill and resilience, but, most of all, we owe them respect for their sheer determination to see a successful and sustainable future for their industry and for their communities.
In conclusion, I would welcome my noble friend the Minister’s views on the following. First, I agree that we need to deliver competitive energy prices. Can he tell us what additional support there will be for energy-intensive industries, including progress being made to speed up and scale up grid connections? Secondly, we must match the ambition of other countries’ investments in green steel production and ensure a just transition for workers. Can the Minister update us on discussions with the steel industry and trade unions to develop a just transition plan, and does the Minister agree that all technological options need to be on the table? Thirdly, can the Minister comment on the need to introduce robust climate measures to protect us from dirty steel imports, and on progress to mandate the procurement of UK-made steel for defence, energy and major infrastructure projects, including a clear forward pipeline to encourage long term investment?
Finally, in this House I have previously asked about the Government’s assessment of the impact on UK manufacturing of the EU Industrial Accelerator Act. I would add to that question another one on the impact on UK steel of the European Union’s plans to cut tariff-free quotas by 47%, to double tariffs from 25% to 50% and to impose melt-and-pour requirements. I would be very grateful if the Minister could provide an urgent update on the reset negotiations, and other discussions with the EU on these specific matters, either now or by letter.
Lord Redwood (Con)
My Lords, I congratulate the Minister on his appointment. I am also very grateful to the Minister for his honest account of this legislation, where he made it very clear that it is very likely that the strong powers in this legislation will be used sometime soon fully to nationalise the Scunthorpe works. That, I think, makes it even more curious that the Government he represents have given us an impact assessment with no numbers in it at all, no account of what a nationalisation of the Scunthorpe works would look like, what impact it would have on the public budgets, what impact, as my noble friend Lord Hunt said, it would have on the £2.5 billion allocated for steel as a whole, and no account of how it would be a transfer of money we thought had been allocated for capital investment and modernisation in creating something new to the purpose of paying losses on a very old plant whose future is very uncertain. During this debate and over the course of this Bill, I hope we can get some numbers from the Government.
When the emergency legislation went through a year ago, I think both Houses of Parliament understood that the Government were not then in a position to produce numbers, but at that point, in those debates in both Houses, strong voices said, “There must be a business plan; there must be budgets”, and we were told at that stage that these would be forthcoming in relatively short order—but we await them. We still have a menu with no prices. We still have a lack of information about what the business plan of a nationalised Scunthorpe would look like, just as we have travelled for a year with a Scunthorpe that is run by the state and paid for by the state, but not owned by the state, making enormous losses which, according to the press, have been running at £1.3 million a day. We were offered no explanation of how long this might go on, when those green shoots the Minister reports will actually translate into real cash, how much steel this plant needs to sell and at what kind of prices before it can have a positive margin or before it can maybe halve the negative margin which it has been running at for all too long. Indeed, we were told at the point when the state took on these mighty obligations that, under the previous Chinese owners, it had been losing about £700,000 a day, so if the more recent press stories are right, the losses have clearly been considerably worse over the last year.
I understand that the Minister cannot firmly say they are definitely nationalising because they have put in this public interest test and they obviously have not yet applied the test to any project to nationalise which they are currently planning. However, reading how wide the public interest test allows the Government to be in order to satisfy themselves, I do not think it is any actual prevention of the nationalisation of Scunthorpe. I am sure they are quite clever enough to come up with a plan that is well within the details of the public interest test, widely drawn as it is in this piece of legislation, so I do not think that is a reason for not giving us proper figures.
I think it would also be good, over the course of this Bill’s debates, if we could hear a more honest statement to the workforce of Scunthorpe, because the Government say two different things. They tell the press and the rest of us—and we are very relieved to hear it—that they have saved the jobs, but then the Government still seem to be wedded to a net-zero strategy, which says that all blast furnaces of the Scunthorpe type have to close—and they are the only two left—to be replaced by electric arc furnaces. Therefore, if that is still the plan, we need to be told that honestly, and the workforce needs to be told that, because, of course, there will be a very big reduction in the numbers of people working, should they switch from blast furnaces to electric arc furnaces in the case of Scunthorpe, as the Welsh steel industry discovered when the previous Government went on that journey, carried on by this Government, to replace those blast furnaces with electric arc furnaces.
Ministers should have a personal interest in wishing to get beneath the numbers and work out how much it is going to cost, not just because of pressures on public budgets and the need to assess this against alternative ways of spending the money, but also because we read that, when the initial transfer of the liabilities and the running of the plant was made to the state, the senior civil servants apparently said to the Secretary of State and Ministers that they were not able at that point to sign off that this was value for money. They were not able to sign off that it was definitely going to be a policy that was going to work. They were not saying it definitely would not work: I think they were saying they did not have enough time and it would require a lot of very detailed work and consultation.
Ministers used their right to issue a direction to the Civil Service to say, “We think the public interest is such that this is urgent, and so we are going to ignore the absence of sign-off on value for money and on the efficacy of the policy because it is worth a shot and we, Ministers, will take responsibility”. I understand that, but, having taken that responsibility, the Ministers are under more of a personal duty to come to this House and to the other place with proper budgets and proper business plans to show that there will be value for money as they go on this course. Indeed, I think we need a year’s audited statement on what has happened so far with all that money passing to a Chinese-owned business, which the state largely controls but where it does not own the assets.
It would be good as well to be updated on where the Government have got to in negotiating with the Chinese owners. I think it is tragic that we have not had a deal with the Chinese owners. Maybe it is the fault of the Chinese; I understand that there are two sides in any negotiation. However, when I looked from the outside, just using public sources, at what was on offer when the state moved in a year ago, I thought that, as a rough rule of thumb, if the state said to the Chinese owners, “We will take full responsibility for the workforce and their future payments, so we save you all the redundancy payments you would have had to make if you had carried out your closure”, the state would take on the land and buildings in the state that they were in, probably with many environmental obligations and costs of clean-up, and that would have been another relief for the Chinese authorities of the company, because otherwise they could be liable for having to clean up the site after they had closed it.
In return, the Government should have said, “You definitely keep all the debts you have incurred during your unsuccessful period of management, and the value of your share and your land and plant we would put at £1 to complete the transaction”. Some people thought I was being a bit generous there, but I think that was the shape of a deal that one might have been talking about. According to press comment, the Government have been thinking about £100 million of compensation for the liabilities that they are absorbing to also obtain the plant and the land in its current state.
We read in the press that the Chinese say that, no, they want £1 billion for this transfer of the freehold and the shares, which would seem to me to be extremely excessive in the circumstances. I would fully support the Government pushing back very hard on that and, if necessary, defending themselves in court if they cannot get a deal. But it would be in everybody’s interest if a deal could be reached. Getting to that deal would be helped if we had a published statement of the likely business plan for an enterprise now in public control and maybe soon to be in public ownership. That would also help create a mood for the negotiations with the Chinese.
I fear that that business plan, certainly for the last year and probably for the next year or so, would produce an awful lot of red ink. It would be the background to explaining to the Chinese why the idea that they might walk away with £100 million or £1 billion is for the birds. They have presided over a heavily loss-making business and they were unable to find a way to make it work, so they were thinking of incurring massive costs of closure as the alternative to carrying on with a very high rate of losses.
Like all the other speakers in this debate, I think we want a proud steel industry again in Britain, as we were used to having over many decades. I also think there is a case for keeping a virgin steel manufacturing capability, as well as a lot of electric arc recycling steel capability. That would require a study of how much longer one could carry on with these two blast furnaces, which the state will probably own quite soon, and of what would be a sort of deep or long-term maintenance schedule if it is thought that they can carry on, because these are quite ageing plants. That would perhaps be a better option than having to think about how to find an investor who wants to establish new virgin steel-making capability in our country.
What is very clear in the wider debate of the Minister and the Shadow Minister’s opening remarks is that we will not have that opportunity—through inward investment, or domestically financed investment, or City financing through private equity, or new equity issued through the AIM market, or whatever—of steel-making capability in this country as long as our energy prices are sky high.
We heard unfavourable comparisons in a previous good speech with European competitors, but, of course, they are not the main threat. Asia and America have energy prices considerably lower. In the case of the United States of America—a first-world competitor in many fields, with a much stronger economy than the European one—its electricity prices are one-quarter of the prices that industry in Britain has to pay before any subsidy.
The Government are following a bizarre policy towards energy. They put on massive carbon and emissions taxes, and all sorts of other taxes if we dare to produce any of the energy ourselves, or else we have to pay other people’s heavy oil and gas taxes as we import so much. Then they realise that this produces energy prices that mean the loss of jobs and the mass closure of industry. We have seen refineries and bits of the oil industry go, we have seen petrochemicals go, and we have seen a lot of our steel industry and a lot of our ceramics industry go.
So then they say, “Why don’t we offer a little bit back by way of subsidy to discount the very expensive energy prices we’ve got with these very high taxes imposed on the energy?” This is a very bad way of doing it: you get the worst of all possible worlds. You deter investment because the energy prices are too high. You do not give enough back in subsidy to make the businesses competitive, so they still close. You are left with a situation where you are deindustrialising, so your import bill for goods goes through the roof. Your import bill for energy also goes through the roof because of the bad mistakes made in the energy policy. That is why the UK is struggling so much.
So I plead with Ministers, for their own sakes, to do some sums: find some numbers, work out what the business case will look like, interrogate your managers, find out what you need to do to help them to sell more steel. Unless you can sell more Scunthorpe steel, there is no point pumping money in; you will not end up saving the jobs. And please tell your workforce whether you are serious about saving these jobs and really want to carry on with blast furnaces, or whether your net-zero preoccupations mean that their jobs are doomed anyway.
Baroness Donaghy (Lab)
My Lords, I congratulate my noble friend Lord Leong, both on his ministerial appointment and on his opening speech. I also give full support to the Government for doing their best to protect and modernise a strategic industry that has suffered from past failures to adapt and from short-termism and lack of courage by successive Governments.
It was not the workers who let the side down or the communities who depended on them. These are tough jobs and tough people. My brother-in-law, Don, worked in the steel industry in Scunthorpe for most of his working life. I was there to celebrate his 90th birthday two years ago and he is still soldiering on. As I said, these are tough people.
We could spend a lot of time analysing how we got to this position, how much steel is stuck in the Strait of Hormuz, tariff imposition by the USA, and whether Europe is doing any better. We could pore over the comments by the Chinese Commerce Ministry when it called on our Government to
“respect the wishes of firms and market principles and avoid the abuse of administrative coercive measures”.
We could compare that with Chinese state aid and anti-competitiveness practices. We could score points on all of these things, together with overcapacity, cost and the complexity of the issues, but none of it would preserve a strategic industry or save a single job.
Clearly, issues such as parliamentary scrutiny, sunset clauses and regular reports to Parliament are important and can be discussed more thoroughly in Committee. This Bill is a signal that the Government are ready to act if it is in the public interest to do so. At present, we are not in control of our steel industry. We do not have sovereignty.
Why is the public interest not more closely defined in the Bill? I accept the explanation that we cannot forecast the circumstances. Will it be defence, national security or the construction, maintenance and operation of critical infrastructure in the United Kingdom? Which companies might be the first to impact on us? The noble Lord, Lord Bilimoria, asked this—quite understandably, given his connections with the Indian industries. Included in this must be where a steel company attempts to take a decision that might have a detrimental national implication, whatever the name of the company. I do not believe that any Minister would choose to be in this position today. There are no guarantees of success and no political kudos. It is about taking tough decisions to keep a national lifeline to try to protect our future security.
The Government recognise that blast furnace production will need to continue in the immediate future—I am sure they welcome the remarks by the previous speaker, the noble Lord, Lord Redwood, on that—and that a managed transition is vital to monitoring supply. They accept the need for public and private investment to modernise. That was repeated several times in the debate in the other place.
Opponents of the Bill have cited the cost of employees and energy. Workers in the UK earn an average of £40,000 a year and represent only 13% to 22% of total costs, depending on operating a primary basic oxygen furnace or a recycled electric arc furnace, so I argue that this is far from a labour-intensive industry. However, as has been said by previous speakers, energy costs are a different matter altogether and represent the highest in Europe.
I understand that the British industrial competitiveness scheme is being developed as part of the UK’s industrial strategy and could save a substantial amount in energy costs, but it is not due to be launched until April next year. Is there any chance that this could be brought forward? Does the Minister have any more information on the development of that policy? Germany, Spain and France have already intervened on energy costs in their steel industries. As we are now, we cannot provide long-term control or stability. We must safeguard supply chain resilience for defence, critical national infrastructure and major programmes, as stated in the impact assessment. The Government need to have the ability to respond quickly and effectively. I commend the Bill to the House.
Lord Frost (Non-Afl)
My Lords, I congratulate the Minister on his promotion and thank him for his very clear opening statement. The problem we have today is that we are looking at a Bill that is important in its own right but is only one part of a much bigger problem: can we sustain a steel industry at all in this country and, if so, how? I am not quite such a fan of the Government’s March steel strategy as the Minister is. The problem is that what one thinks of this Bill really depends on what one thinks of this broader strategy and how viable it is.
I sympathise with the Government’s difficulties, even though they are in part self-generated, although not wholly. Even somebody as economically liberal as me recognises that we are hardly operating in a free market environment in this area and that some sort of government steering hand is needed. We all have an interest in maintaining a viable steel industry in Britain, after all. It is the design that is crucial.
I want to set out three contextual problems before talking about how we might find a way forward. The first problem has been alluded to before: the fact that there is no genuine market in steel globally. We know about the huge amount of structural overcapacity worldwide, the Chinese subsidies and the reaction—the wave of tariffs, quotas, anti-dumping measures and so on that has spread across the industrialised world. There is no sign that that is going to change any time soon. In that context I understand the Government resorting to tariffs. I certainly do not like them, but it is unreasonable to exclude them as a weapon. They could be better targeted on particular kinds of steel, stronger rules of origin and perhaps bigger TRQs for reliable suppliers. Maybe the Minister can say whether the Government have considered this or might consider it in the future as a way of reducing the downstream effect on our own producers.
The second problem is the need for resilience and the national security issues that go with that. That means maintaining a necessary sovereign capacity, as other noble Lords have said. The question is, what does that sovereign capacity actually mean? The UK currently consumes about 12 million tonnes of steel a year. It is going up slightly. Domestic production is about 30% of that and the Government say they want it to go up to 50%. It is never going to be 100%. Sovereign capacity does not mean producing everything you consume; it is about defining the capabilities you cannot afford to lose and the supply chains you cannot afford to depend on. Others will have different views, but my assessment is that the main capabilities we should be focusing on are: the defence-grade plate, forgings and specialist alloys that are broadly made in Sheffield, and the Government are committing to that; stockpiling and reliable contracts for the upstream supply chains; and rail and critical infrastructure products currently made at Scunthorpe but unprofitably.
The first of those three categories is largely state guided and in part state owned. As for the second, stockpiling, the Government have said nothing at all about this. On the third, Scunthorpe, the Government have not really been clear about the national security or resilience case for keeping Scunthorpe going. The Minister mentioned that it was about maintaining the ability to produce steel from scratch from raw iron, but an EAF plant with a DRI plant can do that as well, and that may well be the direction of travel. It is not in some particular resilience in the upstream supply chain either. After all, we no longer make coking coal in the UK, so we have to import that anyway to keep Scunthorpe going. As far as I can see, the only real case is transitional: to keep the UK as a main supplier to the rail industry while the new electric arc furnace facilities are built at Scunthorpe. I do not know whether this is the case or what mix of these things is the Government’s thinking on Scunthorpe. Perhaps the Minister can give us a bit more detail on that.
The third problem is this. If we are envisaging a modernised steel industry of some kind in this country and the capacity of specific types for specific purposes, can it be done profitably over the long term? Is it viable? I think our answer to that is yes. We can see it done in the US in the mini-mill industry and elsewhere—Turkey, for example, has a profitable steel industry based on EAF plants. Maybe this points to a UK model that is something like specialist capability for defence in Sheffield, two or three EAF clusters, perhaps including Scunthorpe, and this question of a DRI plant, which is touched on in the Government’s strategy but not brought to a conclusion.
Perhaps we could all agree to this as a viable destination. The problem is, how do we get there? As a destination, it depends on a cost and business environment that currently does not exist. Electricity is super expensive and getting more so. The business environment is poor and getting worse. As a transition, it involves somehow encouraging investment into this poor business environment, or else the Government coming up with the money themselves. This is why we have the problem that this Bill encapsulates. We are heading for a destination, however desirable it may be, that is probably unviable in current conditions without massive government help. This is the problem with rushing to nationalise Scunthorpe without thinking it through properly.
So where does that leave us? In the circumstances, there is clearly a case for the temporary nationalisation of Scunthorpe, on certain conditions. Temporary public ownership may be justified—and we wait to hear from the Minister on this—because closure might remove the UK’s primary iron capability overnight, with no clear succession plan. The problem is, as we know, that nationalisation always sets up terrible perverse incentives and poor management, which is why temporariness is really important. There must be a way out and a viable end point. It is reasonable to ask for something clearer on those conditions if we are going to proceed satisfactorily, and I give notice that I will probably put down some amendments to that effect.
We need three things. First, we need a clear exit strategy for Scunthorpe: the blast furnace run-out date if there is one, an EAF commissioning date if there is one and a target for return to the private sector. Without that, Scunthorpe risks becoming British Leyland—a permanent loss-making ward of the state where all the incentives are just to put in more money and hope that things turn out better, impossible to close but impossible to fix either.
The second condition—unfortunately, this is far from being fulfilled—is electricity and energy prices and a business environment that support a viable industry. We know the problem with electricity prices. It has been said that the British industrial competitiveness scheme exists and will hold down those prices, but that itself is only cross-subsidy. We are supposed to believe, and the Secretary of State for Energy has said, that our great net-zero project is going to bring prices down in the future, so why do we need the cross-subsidy if that is really the case? There is a real problem here with the strategy.
It is not just me saying that; plenty of people are. Dieter Helm, who is a pretty neutral commentator on this subject and has certainly supported net zero in the past, wrote on 3 June that the industrial consequences of the Government’s energy policy
“have been dire. High electricity prices have contributed to the closure of Grangemouth … the Exxon refinery in Scotland, one of the Hull refineries, the closure of most of the steel industry, the closure of the fertiliser and fibreglass industries, and severe problems for pottery and for glass-making. Car manufacturing is back to the 1950s’ levels. There is devastation amongst the SMEs … unfunded welfare spending has increased the cost of capital … Energy policy has reduced economic growth, not increased it”.
That is the problem. We are building a steel industry—we hope—in that environment but it is not clear to me how it is going to survive in those circumstances.
The third thing we need is a proper strategy for the industry as a whole, not just for Scunthorpe but something broader. What is the end point? Is there going to be a DRI plant or not? Do the Government recognise the need for the stockpiling of hard-to-source EAF kit and scrap? Do they recognise the need for strategic stockpiles of defence plate billets, HBI and so on?
The problem we have, to return to where we started, is that the March strategy covers only about half the ground. It commits on Port Talbot funding, on expanding Forgemasters and on one or two other things, but it is unclear on Scunthorpe—the subject before us today—non-committal on DRIs and silent on stockpiling. It says little or nothing about whether the future industry can be expanded further if we need to upgrade our defence effort. Above all, it does not tell us what the hierarchy of objectives is. What is the Government’s choice framework? When national security clashes with profitability, what is most important? When employment clashes with modernisation, do we protect jobs or do we fund the transition? When net zero clashes with the industrial base, do we change the plans or continue the charge of the Light Brigade to industrial suicide? That needs to be clear if it is a strategy. I would like to think the March strategy was interim but I do not know. Perhaps the Minister could say whether any thinking has been done on this broader approach and whether a broader strategy is needed.
Britain is not going to get back to a world of free trade in steel—that is not going to appear any time soon—but it can have a steel industry that is smaller, smarter, sovereign in the things that matter and capable of paying its own way. The problem is that putting so much of this in the hands of a Government relies on a Government who are capable of strategising for industries and running them, but history suggests that Governments are not good at those things. We are right to be sceptical about the approach and to ask for more information. Perhaps in winding up the Minister could start to give us some of that.
Baroness Noakes (Con)
My Lords, when the Government took powers to take control of British Steel’s operations last year, they were clear that they had no intention of nationalising it. Now nationalisation is the name of the game. This pivot has nothing to do with the Government’s failure to reach an agreement with the owners of British Steel; the weakness of the Prime Minister has driven it. In his desperate attempt at another reset after last month’s local government elections, the Prime Minister reached for the socialist playbook of nationalisation. This was aimed at placating the trade unions and the left wing of his party, and they duly reacted with joy. There is no plan for British Steel other than to take it into national ownership. The Government have not said how much this socialist adventure will cost British taxpayers. The impact assessment is very long on words but has no financial analysis, as my noble friend Lord Redwood has said. Parliament is being asked to buy a pig in a poke.
Nationalisation is not the answer to the root causes of unprofitability in the steel industry, as many have said today. As for all British businesses, high unemployment costs and taxes are an issue, but it is the ruinous level of the cost of electricity that is killing our energy-intensive industries. Now, I am not proud of the former Government’s net-zero policies, which made so much of British industry uncompetitive, but the current Government’s policies are much worse. Industrial electricity prices are among the highest in the western world, as we have heard, and the reliefs already announced but not yet enacted barely scratch the surface of the problem. That is where the Government’s attention should be, not this Bill.
As a matter of principle, I oppose state ownership of businesses. I spent much of my professional working life working first on nationalised industries while in state ownership and later on privatising them, and I am clear that the state was a terrible owner of commercial businesses. There were many downsides of state ownership. Instead of the informed judgments of capital markets, nationalised industries were overseen by civil servants who had little or no experience of business. Key decisions, such as those on investment, were made by Ministers for reasons that were political rather than economic, while trade unions typically called many of the shots and prioritised job protection over commercial success. The result was massive inefficiency that only privatisation could unlock.
One of the biggest problems that faced nationalised industries in the past, and will surely face British Steel if it is nationalised, was financial pressure from the Treasury. Nationalised industries are rightly classified to the public sector, so their borrowing scores as public sector debt. It does not matter whether the debt is provided via the Treasury or borrowed from the market; it is all public sector debt, so there is no escaping the Treasury’s interest in keeping public borrowing in check. We know that the UK’s public debt is not far short of 100% of GDP, a long way from its pre-financial crisis norm of no more than 40%, and the risks are all on the downside. If the powers under this Bill are exercised, we can expect public sector debt to rise as British Steel sucks in more and more cash. The Treasury is unlikely simply to nod in approval.
While I do not favour nationalisation, one of my main problems with this Bill is that it is not a nationalisation Bill. I remember what nationalisation legislation looks like and it is not like this Bill. When businesses were nationalised in the past, there was a clear legislative formula. The Government controlled all key appointments, such as the governing board and the chief executive. The Government had wide powers of direction, which were generally not used but acted as a reminder to the nationalised industry that the Government called the shots. The Government had powers over borrowing, for the reasons I have just mentioned. There were also arrangements for parliamentary accountability, such as the laying of annual reports and accounts.
There is none of that in this Bill. Instead, the Government make great play of basing this Bill on legislation designed to deal with the fallout from the financial services sector after the global financial crisis. That legislation was never conceived in terms of creating nationalised banks and building societies. It was used as a mechanism to sell any saleable bits of the failed financial institutions and to wind down the rest. Its use as a precedent for the nationalisation of British Steel is a category error.
The Banking (Special Provisions) Act 2008 lasted for only one year and it allowed the Government to deal with a very small number of failures such as Northern Rock, which could not find a private sector buyer. The Banking Act 2009, which set up a permanent resolution regime for failing banks and building societies, has been used only once, and that was for a very small building society. I cannot think of a less suitable legislative foundation for a nationalised industry.
While the Government seem to have no idea about the future of British Steel and what role, if any, the private sector might have, they have been clear that the purpose of this Bill is nationalisation. If that is the case, a completely different Bill is needed to give the Government the correct powers and levers. If the Government intend state ownership to be temporary—which I would applaud, though it would doubtless upset their left wing—they need to make this clear on the face of the Bill. For example, there should be regular reports to Parliament on the progress made in returning British Steel to the private sector. There should be a duty on the Secretary of State to seek all reasonable ways of encouraging private sector ownership, as well as an explicit duty to ensure that the cost to the public purse is minimised.
I was pretty shocked by the lack of financial analysis accompanying the Bill, so I have just two questions that I ask the Minister to answer when he winds up. First, do the Government accept that the debt of British Steel will be classified as public sector debt from the day that the Government exercise the power to acquire it under this Bill? Secondly, will the Government commit to giving Parliament a full analysis of the impact on the public finances when they choose to exercise this power and seek parliamentary approval?
Lord Murphy of Torfaen (Lab)
I begin by congratulating my noble friend Lord Leong on his debut in this debate. It was a very good one as well, and we look forward to similar contributions in the future. I welcome the Bill. I welcome it because, first, there has been almost unanimity in this debate from your Lordships regarding the significance of steel and the importance of having steel as a critical and vital part of our economy. That is a very important starter. How we do it, I suspect, will be the cause of lots of debates in Committee and on Report. But it is vital to our construction, to our defence and to our engineering. It is vital because of the uncertain world that we now live in: a world of tariffs and wars and presidents who are unpredictable and dictators all around the world. As we debate this, the G7 is meeting meet in Evian, and each of the countries around the table has its own steel industry.
It is also vital—this has not been touched on too much in this debate—for the communities around the steel industry. You would expect a Welshman to refer to the Welsh steel industry as part of our life in Wales. It is in our blood. I come from a family of miners and steelworkers. I represented a constituency in the other place that was a steel-making constituency. In Blaenavon, the Gilchrist-Thomas process was invented, which transformed steel-making in the 19th century. I had in the constituency a stainless steel works, which for generations was hugely important to our communities. As an aside, before I entered politics, I taught in a college in Ebbw Vale at the time when the steelworks was almost completely closed. The impact of that closure on a one-industry town was devastating. That is why, in terms of British Steel and Scunthorpe, it is about the significance not simply of keeping our steel industry but of ensuring that our communities are healthy and intact.
I point out to the House that we are only talking about approximately half of steel-making coming from British Steel. The other half comes from Wales, from an industry which is not nationalised. The great Port Talbot steelworks, which is now changing over from blast furnaces to electric arc furnaces, is where the whole of the steel-making capacity of Tata in Wales is produced. It is interesting that this 50% of steel-making is not nationalised. It is a working partnership between, on the one hand, the Government—by which I mean two Governments, the Government in Cardiff and the Government here in Westminster—and the company itself. The deal, which was struck only days before the general election, meant that approximately £1.3 billion was to be invested in Port Talbot: £500 million of that came from the then Conservative Government. This Government have honoured it and indeed have gone further by giving about £120 million to retraining and by ensuring that procurement rules have changed, so that British companies must use British steel. To that end, 5,000 jobs are to be maintained in Port Talbot. So, as welcome as this Bill is, we must see it in context. It is only part of the picture: only half of it.
The questions I would like to ask the Minister concern Port Talbot, which this month suffered a severe fire on its site and is facing some difficulties with that. Also, there are hugely important problems with the supply of electricity—and I very much take the points that have been made regarding the cost of electricity. We cannot ignore it as a Labour Government. We must look at it very seriously. Secondly, there are planning issues which have been faced by the company in Port Talbot. These I would have thought can be overcome if my noble friend liaised with the Secretary for Wales and with the new Welsh Government.
At the end of the day, all of us understand that we cannot be without a British steel industry. Nothing is going to be easy with regard to this. There is no easy solution to it. But this is at least a start. It is the right thing to do and it is the British thing to do.
Lord Sikka (Lab)
My Lords, this enabling Bill paves the way for a possible nationalisation of steel companies, with a particular emphasis on British Steel, currently owned by the China-based Jingye Group. This nationalisation may or may not happen—we have to wait and see. The Bill allows the Government to transfer the shares or property of a steel company into public ownership, where doing so is in the public interest. The concept of public interest is inevitably highly contested, and competing meanings can be advanced. It would be helpful to have the Minister’s explanation of the detailed conditions that would actually satisfy the public interest test; that might enable us to discuss public ownership of other industries as well.
The Minister’s explanation would help to dissolve uncertainty for workers, suppliers and local communities. Prolonged delay of nationalisation would increase the cost to the public purse as, since April 2025, the Government have already been incurring significant costs to keep the Scunthorpe plant going. I support the public ownership of steel, as it is a crucial input for so many industries. The Scunthorpe plant is the last UK plant producing virgin steel, which is essential for the construction of buildings, railways and critical hardware such as submarine hulls and aircraft landing gear. The loss of the plant would leave the UK as the only G7 country without the capacity to produce virgin steel. A large number of direct and indirect jobs depend on the plant. Nationalisation and expansion of the steel industry would help to expand our industrial base.
The Bill raises lots of questions about the Government’s strategy. It would rescue England-based British Steel but allow the Port Talbot blast furnaces in Wales to be extinguished. People in Scotland have still not forgotten the Government’s failure to rescue the Grangemouth refinery. Can the Minister answer the charge of being England-centric? Can he assure the House that once the Scunthorpe plant is nationalised, it would not be re-privatised by a Labour Government?
The Bill also throws up other inconsistencies in the Government’s policies. Nationalisation of steel and rail passenger services is apparently in the public interest, but the same is rejected for water, even though water companies exploit people, dump raw sewage in rivers and are destroying human lives, marine life and biodiversity. Some 120,000 people a year are dying in fuel poverty, but there is no attempt to nationalise energy. Is it that the Government are prioritising corporate interests over the lives of the people?
Part 2 of the Bill establishes a framework for possible compensation for nationalisation. I assume that this would eventually require another Bill. Can the Minister clarify the position? As British Steel is financially insolvent—it is finding it very difficult to survive and its assets probably have no alternative use value—the chances are that any compensation offered for it would need to be fairly low. Any framework for compensation must recoup the £500 million or so spent by the Government to keep the Scunthorpe plant going. The real value of all subsidies and grants must be recovered.
The Jingye site in Scunthorpe is the second-largest single-site source of carbon emissions in the UK. It accounts for approximately 2.2% of the UK’s total carbon footprint. Surely the Government will insist that Jingye makes good the environmental damage before it exits the steel industry. If not, it would be helpful to know why the Government would not insist on that.
As expected, the Opposition Benches have focused on the possible cost of nationalisation and its impact on the national debt. That is really a one-sided argument because through nationalisation, Governments also acquire the assets of the enterprise in question, enhance economic resilience and improve supply-chain security. The tendency of the ONS is to show the net liabilities of publicly owned entities and ignore the assets. It does that for Network Rail, where its liabilities are shown in the national debt but its assets are completely ignored. That practice needs to change. If changed, the ONS calculation must net off a nationalised British Steel’s liability against its assets, which would result in a very small change to any national debt calculation. Can the Minister clarify the position and indicate whether how we measure the national debt would be changed?
The high cost of energy is a major obstacle, as many noble Lords have already indicated. It puts steel- making and other industries at a competitive disadvantage. The high cost is an issue all across households as well. We know that, in April, the Government extended what they called the British industrial competitiveness scheme, which reduces energy bills by about 25% for 10,000 companies deemed to be heavy users of energy. That scheme kicks off in April 2027, although discounts would be backdated to 2026. The scheme is funded by the public purse and is therefore likely to be temporary. In any case, it does not help small businesses, farmers and others who are totally excluded from it.
A bright future for steel-making and British industry requires a permanent reform of energy costs. That would require decoupling the price of gas-produced electricity from the rest, moving all levies to general taxation, and cuts in the profit margins of energy companies. This in turn would require scrutiny of the way that Ofgem calculates the weighted average cost of capital and all the assumptions that are used to generate those numbers. Noble Lords earlier mentioned many countries which have a competitive advantage in energy production, such as France, Norway, Sweden, Denmark, Germany, India and China. What they did not mention was that in these countries, a significant part of energy production is state-owned so, freed from the need to generate profits, they are able to simply break even, taking one year with another. That therefore offers their industries a competitive advantage and lower rates of inflation.
Public ownership of energy must not be a taboo for the UK. It could give the Government more economic policy options and help to address the competitiveness of our industries. I look forward to hearing the Minister’s reply.
Baroness Redfern (Con)
My Lords, I thank noble Lords for allowing me to speak in the gap. I congratulate the Minister on his appointment and his opening statement.
As negotiations to resolve are still being discussed, the Bill will not immediately nationalise until the public ownership test is met. But years of underinvestment in our steel industry has resulted in it being neglected, and uncertainty lingers for many skilled Scunthorpe steelworkers and those employed in the supply chain.
Only last April, the House was recalled for emergency state intervention. At the same time, we witnessed a cliff-edge shortage when the Chinese owners halted new orders for coking coal and iron pellets, causing a critical threat that the last blast furnaces would go cold. Since then, it has cost the Government over £1.3 million a day to keep the furnaces running.
To sustain steel-making in Scunthorpe in the future, there will be a transition to two new electric arc furnaces, but that will take several years due to limited preparation and the need for a secure grid connection. The question posed is: how will the Government secure stability for the plant in the short to medium term? Our steel having to compete on an unlevel playing field due to our having the highest energy costs in Europe is one of the greatest barriers to competitiveness and viability for future investment. These costs must be reduced. In their ongoing support of the steel business, the Government must ensure that Bess and Anne are part of that transition. They are proud Scunthorpe queens of virgin steel. They are hungry to keep burning and cannot be left to run cold—as they nearly were last April—and they need further investment now.
There are initial concerns surrounding the scale of the UK carbon border adjustment mechanism while we are still importing nearly 70% of our steel requirements. This too must be reduced for procurement, and we must look at how future UK contracts are managed. We must not, and cannot, be the only G7 nation without the ability to make primary virgin steel. We must not forget that, from defence to renewable energy, steel provides vital material for our national infrastructure and for economic growth, and that it supports our highly skilled specialist workers, who work in the production of our own steel-making.
As the Government put forward this proposal to nationalise a steel company in the short term, they can make their own decisions and, in future, may have the opportunity to include new investors or owners. Above all, our steel sector needs certainty for our dedicated workforce and contractors and for future investments in our industry stretching across the country. For our prosperity, the future has to be “UK steel first”.
Lord Wigley (PC)
My Lords, very briefly in the gap, I flag up my support, and that of Plaid Cymru, for the Bill’s general objectives, although we have reservations on some of the detail, which I hope I can pursue at later stages. I also wish the Minister well in his new duties.
Before entering Parliament, I worked for two major steel-using companies: the Ford Motor Company at Dagenham, and Hoover washing machines at Merthyr Tydfil. Steel was a basic ingredient of both products. When I started working, steel employed over 100,000 workers in Wales. The danger then was of such manufacturing processes becoming vulnerable to new techniques or being undercut by overseas manufacturers. Modernisation was essential. The third quarter of the 20th century saw the nationalisation, denationalisation, renationalisation, and then in the 1980s the privatisation, of steel—hardly conducive to attracting the investment needed to modernise that industry.
At that time, as now, steel had strategic importance in defence policy. Surely that is the real backdrop to this Bill. I accept that, for defence purposes, the UK requires a steel industry that is not vulnerable to commercial or strategic decisions taken by overseas industrialists or Governments, or the whims of financial markets. If steel has that level of strategic importance, all the eggs should not be in one basket. We need at least two or three centres where the capacity, technology and skills are available and not vulnerable to being undermined by physical or cyber attacks.
It is in that context that I view the Bill before us. I have in mind the implications for iron and steel manufacture at Port Talbot. The main reservations Plaid Cymru has about the Bill is whether its powers will be used to safeguard the steel industry in Wales. There is widespread belief that the steel industry at Port Talbot has not been treated on an equal basis with that at Scunthorpe. We do not claim that Port Talbot should have preferential treatment, but neither should Scunthorpe. Both are needed, and both should be developed in a manner that avoids strategic, economic or defence needs being limited to one location. That would be nothing less than strategic myopia and a blunder of monumental dimensions. So the assurance I seek is that the Bill is not the prelude to building up Scunthorpe at the expense of Port Talbot. I will seek to clarify whether the public interest test applies equally to Port Talbot and Scunthorpe, and whether equivalent resources will be available to both Port Talbot and Scunthorpe. Both plants need to be as effective, productive and resilient as each other.
While Port Talbot is the major plant in Wales, other steel locations such as Shotton and Llanwern should be developed appropriately. A diversity of capacity, technology and experience is needed to ensure a steel industry that responds to commercial and strategic needs. At later stages, we may also want to probe how “public interest” is defined. Defence and strategic considerations are clearly within such a definition, but the public interest may extend much further, as the noble Lord, Lord Murphy, implied in his comments a few moments ago. There must also be a provision requiring the UK Government to work closely with devolved Governments in implementing the Bill. I shall be grateful for whatever assurances the Minister can give me, and I look forward to his response.
Lord Fox (LD)
My Lords, I join the chorus welcoming the noble Lord, Lord Leong, to his new ministerial role. He has not only got the new role but got it in time to steward this Bill, and the Commercial Payments Bill, through your Lordships’ House. What a time to be alive.
As we have heard, around Easter 2025, the Government pressed the emergency button. They pulled us into Parliament on a Saturday and, as a result, acquired the powers to make decisions regarding the Scunthorpe blast furnaces and prevent its owners running it down. Subsequent events supported the Government’s haste in that movement. To avoid becoming a hybrid Bill, this Bill carefully avoids Scunthorpe. However, I very much doubt that we would have this Bill were Scunthorpe not an issue. It sits there, like Banquo’s ghost, and clearly the Government are having to press buttons in order to take control from the Chinese owners.
So that noble Lords did not have to, I reread my speech from last year. To be honest, I could have copied and pasted large parts of it. In the Saturday debate, I noted that the steel industry’s problems did not start a couple of years ago but were systemic and had been there for a long time. In that regard, I noted the hubris of the Conservative spokespeople—and the noble Lord, Lord Hunt, did not let me down today. There are huge responsibilities for this industry that go back a long way; it is not two years’ work.
I asked how steel fitted into the carbon emissions route to net zero; I questioned the path to electric arc conversion, and, in giving support to that Bill, I said that there needed to be an overarching steel strategy. Well, we have reached the privatisation stage and, to be honest, I am quite surprised it has taken that long. The Scunthorpe plant has been haemorrhaging public money for over a year and the Government have clearly been arm-wrestling with the owners, Jingye.
In 2025, the Government published a steel strategy that had billions of pounds attached to it. In this context, this Bill is part of a very high-stakes exercise that the Government are seeking to run. It is therefore important that there is sufficient scrutiny, both in your Lordships’ House and at the other end, of every move that follows this Bill, should it be passed.
I will use this speech to set the scene. There are four broad issues of concern, and we have heard them raised in different ways: national security, economic resilience, modernisation, and jobs and communities. The justification for protecting the steel industry has always been that it is a strategic asset, not least in that it supports defence, critical infrastructure, wider national resilience and our advanced manufacturing industries. For many years, a contrary commercial argument has preached that most of what we need is available on the open market and is usually cheaper as a result. Clearly, the Bill’s proponents frame it as protecting the country’s ability to make essential materials at home. This turns on the question of sovereignty and readiness. Given the world we live in now, Liberal Democrats side with this sovereignty argument. Going on the world market is no longer a safe option to take us forward.
However, I remind your Lordships that none of what we discuss today can be taken in isolation from the steel tariff regime and the implementation of CBAM, the carbon border adjustment mechanism, nor can success be achieved without the provision of low-cost green energy. I will talk about the first two points and leave energy costs for another day—not because they are unimportant, clearly, but because they do not directly relate to this Bill.
On tariffs, I thank the Minister for his letter clarifying some of the issues, but I question the spirit of his reply, which seems to be that everything is okay in how the tariffs will be pitched. The word from steel users is that it most certainly is not. We are being told that the measures due to come into force in just two weeks, on 1 July, are likely to have a materially damaging impact on downstream manufacturers, with immediate implications for competitiveness, investment and jobs.
Where there are no direct domestic sourcing alternatives, materials for steel users must be imported. However, we are being told that the current commodity code structure is too broad, reflecting some of the issues raised by the noble Lord, Lord Frost. There seems to be a need for a more subtle coding process in the focusing of tariffs. If essential items that cannot be domestically sourced are captured in the tariff regime, this will have a dire effect on industrial users. With tariff-free quotas being reduced by around 60% and a 50% tariff applied beyond those limits, businesses that need those kinds of steel are effectively being taxed on critical inputs, with no ability to substitute domestic products if they are not being made. I think the Department for Business and Trade has received proposals from the industry to remove or move certain commodity codes, make amendments to quota sizes and utilise authorised use schemes. I urge the Minister to respond to this and make sure that the department is fully co-operating with different elements of the supply chain to ensure that what I believe is an unintended consequence does not come back.
Most of the imported steel comes from the EU, and negotiations on this between the UK Government and the European Union are critical. If they reach a successful fulfilment, many elements that are causing problems around tariffs will be eliminated. However, we are homing in on a very tight corner here; as I have pointed out, 1 July is two weeks away and we may have an interim period between an agreement with the EU and the implementation of these tariffs. It would be useful to hear from the Minister how the timing and phasing of this could be achieved and whether putting relief in for a further period until the EU negotiations are concluded would give better certainty to our businesses. We will come back to this in Grand Committee, but that will be another week gone, so it is important to find out where we are going.
Fundamentally, I want to make the obvious point that it is not the manufacture of steel that is strategic, but its use. If ring-fencing steel production using tariffs creates higher costs for our businesses, we are missing the point. It is how we make stuff that is important. We do not just need a secure industry that produces strategic materials; we need it to be cost effective. That is one element of economic resilience.
The Government have said that their actions are meant to avoid a sudden halt in production and provide stability while longer-term options are considered. The nub of that is what the longer-term options are. Although we have a steel strategy, the Government have an awful lot of work to do to flesh out how they see the future of our industry. A key element of that is whether they see Scunthorpe continuing to have blast furnaces or converting to electric arc, as raised by the noble Baroness, Lady Redfern. The Minister and I have discussed substitutability and whether there is a strategic need for blast furnace capacity to keep virgin iron production in the United Kingdom. I would like to hear from the Dispatch Box that, if we are going to all-electric arc provision in the United Kingdom, we will be able to maintain all the strategic needs of steel in this country—as it stands now, not in some future provision where electric arc can be honed and tuned. Can we deliver the steel we want with the knowledge we have now?
The aim is to make the industry investable. Can the Minister explain how this will be achieved? For example, every location will come with a huge environmental legacy. Ultimately, there will need to be remediation, and usually it is the owners of the businesses who have to fund that. Every location has important pensions commitments. The Bill appears to deal with pensions liability only indirectly. I presume that, once it is taken into public ownership, Ministers will have to manage the company’s wider obligations, including pensions, through the rescue or transfer process. Can the Minister expand on that? Both these factors affect investability. Can the Minister explain their attitude to environmental and pensions liabilities in any nationalisation when they are looking for investors? Will subsequent investors in nationalised steel have the opportunity to invest clean of past liabilities, or will they be investing in a business that retains them? Again, I will pursue this topic in Committee.
The Government have said that their aim is not just to preserve the status quo but to create a modern, competitive steel sector. Once again, this legislation is merely a route to explore future options. It is still not the final answer.
The Government have rightly emphasised the importance of steel plants for jobs and communities. Nationalisation could preserve many of those jobs, but does the Minister recognise that, in creating that modern, competitive and investable steel sector, there may well be fewer jobs in future? How will the Government prepare those communities now so that they can be made stronger and absorb any changes to employment patterns in their area?
The other important part of this Bill is the inclusion of the public interest test. The noble Lord, Lord Sikka, did my work for me in laying out some of the puts and takes that go into that. There will be tension between the real value of Scunthorpe, whether that is positive or negative, and our relations with the Chinese Government. In that case, where does the balance of public interest lie? How do the Government view this?
Last year, we were asked to approve an emergency stopgap to save Scunthorpe. This Bill is couched in wider terms, devoid of detail and laden with executive powers that could very well leave taxpayers exposed to huge costs and liabilities. That vagueness means it is unclear how it will protect jobs and what the future of steel will look like. Because of this, my colleagues in the Commons tabled amendments seeking to give Parliament more oversight of the developing stages of this paving legislation. We agree that it is important to get on with this, but only with the necessary parliamentary controls. We will retable those amendments.
As a parting point, to echo the noble Lords, Lord Bilimoria and Lord Wigley, nothing in the Bill should be used to put Tata and Port Talbot at an unfair disadvantage, as their transformation reaches fruition.
In practice, the UK steel strategy’s success will depend on whether the prevailing energy costs, the implementation of the CBAM, huge public sector investment, the imposition of procurement and demand measures, and the introduction of import tariffs and tighter controls are enough to make domestic production commercially viable. That is a huge task, and we will have to work together closely to achieve it. It is a mission that we want to succeed and we support the Bill, with some provisos. I look forward to Grand Committee.
Lord Sharpe of Epsom (Con)
My Lords, I join the general approval of the Minister’s promotion. I wish him well and I am delighted to face-off somebody who has considerable business experience.
I am grateful to all noble Lords who have contributed to this important debate. It is always a pleasure to follow the noble Lord, Lord Fox, who, when talking about hubris, was slightly selective with his times. The steel industry has had systemic issues for a couple of decades—and there was a Liberal Democrat Business Secretary for at least five of those years. Apart from that, I agreed with much of what he said.
There was a great deal of agreement in the House about the general strategic importance of steel, which is welcome. British Steel matters to Scunthorpe, jobs, rail, construction, manufacturing, defence and our national resilience more generally, as many others have noted. We do not deny that the Government may have had to act in April 2025 to prevent an immediate and disorderly closure of the blast furnaces, but the central question remains, and it runs through the debate. It is not whether steel matters; it is whether nationalisation is a serious strategy for making British Steel viable. On that question, the Government have still not provided convincing answers.
As my noble friend Lady Noakes noted, nationalisation, we were told, was not the Government’s original plan. When the emergency Steel Industry (Special Measures) Bill was brought before Parliament last year, the then Secretary of State, Jonathan Reynolds, told the Commons that:
“The Bill does not transfer ownership to the Government”.
He said that the Government’s aspiration remained
“a co-investment agreement with a private sector partner to secure a long-term transformation”.—[Official Report, Commons, 12/4/25; cols. 840, 841.]
I have absolutely no doubt that the Minister will say that private investment remains the goal—indeed, the Minister in the other place, Chris McDonald, said as much in a Written Statement—but where is the plan to achieve it? Where is the timetable? Where is the private partner? Where is the route back to commercial viability?
The noble Baroness, Lady O’Grady, referred to the halcyon days of the 1970s—when state ownership worked so well that I have clear recollections of doing my homework by candlelight. In the 1970s, when the Labour Government last ran British Steel, the taxpayer was forced to carry staggering losses. We worry that the danger now is that we will repeat the same mistake, by not solving the underlying problem but moving it from the company’s balance sheet to the public balance sheet.
The central barrier is not ownership; the central barrier is competitiveness. Every speaker in the debate referred to high energy costs. It is the cost of doing business now more generally in Britain. It is the regulatory and taxation environment that makes heavy industry harder here than it is in competitor countries. Yet the Secretary of State for Energy Security and Net Zero appears more interested in driving forward an ideological net-zero agenda than in bringing industrial energy prices down dramatically. I cannot help thinking that, with his messianic zeal, he is doing more damage to the Government’s growth agenda than anyone else in Britain. Instead of cutting bills and taxes, abolishing the UK carbon border adjustment mechanism and giving energy-intensive industries a fighting chance, the Government seem preoccupied with regulating ever more aspects of economic life, from factories to household heating products.
We recognise that there has been a long-standing and serious problem with Jingye. We also recognise that there may now be legal proceedings. I do not ask the Minister to prejudice the Government’s position in litigation, but there are matters on which the House is entitled to clarity. Can the Minister confirm whether Jingye has asserted that, from 12 April 2025, the date on which the Government assumed control of British Steel, neither Jingye nor any company in the Jingye Group has any continuing obligation to British Steel? Can the Minister confirm whether Jingye intends to disaggregate British Steel from Jingye Steel (UK) Holding Ltd and remove assets, liabilities and other British Steel-related items from its own balance sheet? If that is correct, what is the Government’s assessment of the solvency position of British Steel itself?
If British Steel is continuing to trade only because the Government, directly or indirectly, are underpinning its working capital, does the Minister accept that this raises serious questions about the public accounts treatment of the support advanced since April 2025? Does it still make sense to treat that support as recoverable debt if the company cannot repay it without further taxpayer support? Do the Government now accept that, if British Steel continues to trade, the taxpayer may have to assume responsibility not merely for the working capital but for accumulated non-cash losses, balance sheet liabilities and forward obligations?
Will the Minister address the reported intercompany debt position? Jingye has been reported as quantifying outstanding British Steel debt to different Jingye counter- parties at hundreds of millions of pounds. If the Government acquire all the shares in British Steel and the company is not placed into insolvent liquidation, will the Government become responsible for those liabilities? Will the taxpayer be assuming the full built-up losses since 12 April 2025, losing the prospect of clawing back earlier support, and taking responsibility for future liabilities, including the eventual decommissioning of the blast furnaces?
In opening, the Minister talked about the premature closure of the blast furnaces, which the Steel Industry (Special Measures) Act was supposed to prevent. Have the Government commissioned a study of how much life the blast furnaces have left in them? It is important to ask that question and to know the answer, because it will have a material impact on the decommissioning costs, as and when they arise.
Can the Minister confirm whether our maths is correct on this? The National Audit Office has said that support for British Steel is expected to reach £615 million by June 2026, while Jingye is reportedly seeking compensation of more than £1 billion. Once potential compensation, operating support, working capital, administrative costs and future capital investment are taken together, is the taxpayer exposure now approaching £2 billion or potentially even higher? If that figure is wrong, will the Minister set out the Government’s current estimate of the total cost to the taxpayer, including any liabilities that may come on to the government balance sheet on day one of nationalisation? If the assets—a couple of 70 year-old blast furnaces—offset the liabilities, as the noble Lord, Lord Sikka, thinks likely, I have a couple of hats that I will eat.
As my noble friend Lord Hunt of Wirral set out so clearly, the Government came to office promising a £2.5 billion steel fund—a fund that was supposed to transform the sector, modernise production, support new technology and crowd in private investment. Yet there is now a real risk that this money will be consumed not by transformation but by rescue, as my noble friend Lord Redwood pointed out. Money that should have been used to modernise the sector, lower energy costs, support new technology and bring in private capital may instead be used simply to keep one loss-making business afloat. That leads to the question that has been asked repeatedly in this debate: where does this end? Will British Steel, under public ownership, be expected eventually to stand on its own two feet, or will taxpayers be asked year after year to fund operating losses, while Ministers promise that a solution is just around the corner?
The Bill says that the Secretary of State may exercise transfer powers only where he considers it necessary in the public interest. The noble Lords, Lord Sikka and Lord Fox, asked some good questions on what the public interest is and how it is defined. I look forward to the Minister’s answers to those. The Government say that public interest will include considerations of national security, the economy and critical infrastructure, but could Ministers be any more vague when they refer to the “economic interests” of the United Kingdom? Will taxpayer funding be limited or capped, or are Ministers asking Parliament to approve an open-ended commitment? Will the Government be required to show that they have made every reasonable effort to secure private sector investment before nationalisation proceeds?
It was uncomfortable and somewhat ironic to witness representatives of the Chinese ownership and the Chinese Communist Party lecturing the United Kingdom about abiding by market principles—although I note that the noble Baroness, Lady Donaghy, pointed out the irony of that as well. However, the Government must consider the signal that they are sending to international investors. If Ministers seize control, fail to secure a commercial settlement and then proceed to nationalisation without a clear compensation, exit or investment plan, how does that make Britain look to the next investor who is considering committing capital to a strategic industry here?
We also cannot ignore the wider business climate that the Government have created. As my noble friend Lord Hunt and others have made clear, the elephant in the room is the Employment Rights Act 2025. I know that Ministers are tired of hearing about it, but we are not going to stop raising it because it is helping to make the business environment less competitive and less investible. Combined with the increase in national insurance contributions, endless reporting requirements and carbon taxes, the Government are piling costs upon costs and burden upon burden on the very industries that they claim to want to support. For a steel sector that is already operating under intense global pressure, those additional costs are not abstract. They affect hiring, investment, margins, productivity and the ability of British steel-makers to compete. At precisely the moment when steel needs flexibility, lower costs and greater productivity, the Government are increasing the cost of hiring and handing still more leverage to trade unions.
It is no surprise that the unions have called for steel nationalisation. The concern is that the Government have given in to them. How will Ministers ensure that a national security asset is not left at the mercy of industrial action? The Government have removed important strike safeguards. What protections will exist to ensure continuity of supply for defence, infrastructure and critical manufacturing if British Steel is brought into public ownership? Are we seriously to place a strategic industrial asset under state control and then leave it vulnerable to the same union pressure that the Government have chosen to empower elsewhere?
The Government have had more than enough time to tackle the underlying problems—uncompetitive energy prices, rising employment costs, higher national insurance, excessive regulation, the burdens of the Employment Rights Act and the net-zero policy that too often ignores the realities of energy-intensive industry. The steel sector has been operating on a tight margin for years. Nationalisation does not make any of those problems disappear.
In closing, can I ask the Minister to answer the central questions: what is the total expected cost to the taxpayer? What is the plan for private investment? What is the timetable for restoring commercial viability? What is the exit strategy? What measures will the Government take to reduce the costs that made British Steel uncompetitive in the first place? Without answers to those questions, this Bill is not a serious strategy for steel; it is a costly exercise in papering over the cracks with nationalisation. We urge the Government to come forward with a serious plan—one that lowers costs, attracts investment, protects taxpayers and secures the long-term future of the British steel industry.
Lord Leong (Lab)
My Lords, I thank all noble Lords for their contributions to this excellent, thoughtful and wide-ranging debate and for their very kind messages on my appointment. I was trying to count the number of questions asked, but I gave up at 45. I will try to respond to as many as possible within my allocated time. If I am unable to address every point raised, especially those relating to costs and technical issues, I will ask my officials to review Hansard carefully, write to noble Lords accordingly and place copies of those responses in the Library.
The quality of debate in your Lordships’ House is often remarked upon, and today’s proceedings have once again demonstrated the immense expertise, experience and commitment that Members bring to issues of national importance. There have been contributions from across the House and from all sides of the debate. While there may be differences of opinion about the means, there is a remarkable degree of consensus about the end—namely, that the United Kingdom should continue to have a strong and sustainable steel industry. That consensus matters.
Many noble Lords spoke of the challenges facing the sector, and the Government recognise those challenges. They are real and significant, and they are unlikely to disappear in the foreseeable future. As my right honourable friend the Secretary of State has made clear, we are determined to revitalise the UK steel sector, restore domestic production to sustainable levels and secure the industry’s long-term role in supporting economic growth. That means reducing industrial costs, which I will come back to later. It means supporting investment, modernising production and creating the conditions for a competitive and sustainable industry. It also means ensuring that government has the tools necessary to act when that strategically important steel-making capability is at risk. It is about ensuring that future generations continue to benefit from a British steel industry capable of supporting our economy and security.
The noble Lord, Lord Sharpe, asked about the company Jingye and the ownership of British Steel. While we are strongly minded to use the powers in the Bill to nationalise the company, no decision has been made and any decision will be subject to the public interest test. The Government have been providing ongoing funding to British Steel under the Steel Industry (Special Measures) Act 2025. We are publishing regular updates to Parliament detailing this funding. These funding arrangements will be set out in the department’s upcoming annual reports and accounts. We are committed to transparency on this issue.
On the point raised by the noble Lords, Lord Hunt and Lord Sharpe, for whom I have the greatest respect, blaming workers’ rights for unemployment is a caustic distortion of the real issue. It substitutes ideology for evidence and seeks conveniently to scapegoat, rather than confronting the structural changes that hold back employment. Fair pay and basic protections are not obstacles to growth; they are the foundations of a stable, productive labour market. Businesses that invest in their workforce through training, progression and decent terms tend to achieve stronger retention, higher productivity and better long-term performance. Responsible capitalism reduces the need for state intervention. However, where short-termism prevails and workers are treated as a cost to be squeezed rather than an asset to be developed, government has a legitimate role in setting fair minimum payments.
The noble Lords, Lord Hunt, Lord Bilimoria and Lord Fox, and my noble friend Lord Murphy raised the issue of tariffs. The Government support free and fair trade, but trade must be fair. Free trade does not mean surrendering British jobs to subsidised foreign competitors. It means ensuring that British firms compete on a level playing field, not with one hand tied behind their backs. British steel producers should not be expected to compete with heavily subsidised imports, dumped products or unfair trading practices that distort markets and undermine domestic production. Every major steel-producing nation takes steps to protect its industry from unfair competition. The United Kingdom cannot be the only country to leave its producers exposed while others actively defend their national interests. This is why we will continue to use the full range of trade remedies available to us, including tariffs, where justified, to ensure a level playing field, safeguard jobs and maintain British sovereign capability to produce steel.
The noble Lord, Lord Bilimoria, asked about the UK-India free trade agreement. The noble Lord will know that we are seeking to bring this deal into force as quickly as possible. We are working with India to ensure that all parties have taken all the necessary steps to bring the deal into force.
The noble Lords, Lord Redwood, Lord Bilimoria and Lord Fox, and my noble friend Lady O’Grady, raised points regarding green steel and electric arc furnaces versus blast furnaces. The Government are clear that the future of the steel industry is green steel. Electric arc furnaces in the UK are making the full range of steels, from commodity construction grades to stainless steel and specialised steel for defence and nuclear industries. There are still challenges in certain areas such as packaging steel, but we are confident that the industry will find the right solutions. If it would be helpful, I can arrange for a technical briefing on this point for noble Lords who are interested in this area.
Several noble Lords asked about energy-intensive industry. The British industry supercharger seeks to address this crucial issue, providing targeted relief to qualifying sectors to improve competitiveness, safeguard manufacturing and support decarbonisation objectives in the UK. From April 2026, the level of compensation offered by the network charging compensation scheme was increased from 60% to 90%. Reducing electricity network connection timescales is also a high priority for the Government. We are working very closely with Ofgem, the electricity system operator and network companies to accelerate network connections.
The noble Lord, Lord Bilimoria, asked about the transformation of British Steel and the noble Lords, Lord Hunt and Lord Frost, asked about the future of British Steel under public ownership. The Government’s ambition is straightforward: we want British Steel to become a successful and sustainable British industrial champion that the entire country can be proud of. Should public ownership proceed, it would provide the opportunity to take a longer-term view and put in place the leadership, governance and investment necessary to secure the company’s future and safeguard domestic steel production. We believe there is every reason to be optimistic. British Steel continues to have highly skilled workers, valuable industrial assets and significant commercial opportunities. Recent contract wins, as I mentioned in my opening speech, demonstrate that there remains strong demand for British steel and that the company has an important role in the future of our economy.
Several noble Lords asked questions on jobs. I fully understand those concerns. The Government’s objective is a sustainable steel industry capable of standing on its own two feet. That is the best guarantee for long-term employment and stability for workers and their families alike. The decisive action taken by the Government last year prevented the immediate loss of approximately 2,700 jobs and ensured a continuation of steel production in Scunthorpe. We recognise that the sector is evolving and that future technologies will shape the future of steel-making. That is why any transition must be managed carefully. It must support workers, protect communities and preserve our economic resilience. The Government will continue to work closely with trade unions, employees and local stakeholders through the process.
The noble Lords, Lord Wigley, Lord Bilimoria and Lord Murphy, asked about Port Talbot. The Government have no plans to acquire any other steel undertakings, but the Bill provides flexibility to intervene if a future need arises and the public interest test is met. The Government remain fully committed to securing the long-term future of steel-making in Port Talbot through Tata Steel’s £1.25 billion transition to a state-of-the-art electric arc furnace supported by up to £500 million of government funding.
The noble Baroness, Lady O’Grady, and the noble Lord, Lord Fox, asked questions on the EU. The global context has changed drastically since Brexit. We need a closer economic relationship that protects our collective industrial security. Both the UK and the EU are taking measures to improve the security and resilience of key sectors. We both face the same challenges, such as overcapacity and higher tariffs, which are distorting global markets. The historic UK-EU summit last year was the first of our annual summits that will take place to improve our diplomatic, economic and security co-operation following Brexit. The date of this year’s summit will be announced in due course.
The noble Lord, Lord Fox, asked about the chilling effect on investment. Let me address this head-on: the Bill does not create any chilling effect on investment. I can do no better than to quote my friend the Minister in the other place:
“We have carried out a very careful balance with this Bill to ensure that the steel industry is fully informed, understands our intentions and is supportive—and it is supportive”.—[Official Report, Commons, 21/5/26; col. 812.]
The Bill is explicitly framed as a targeted, last-resort response to a market failure. The Government are signalling that it is not intended for wider or frequent use, which narrows uncertainty to a specific context rather than the sector as a whole.
The noble Lord, Lord Redwood, asked about the environmental liabilities, and rightly so. Many environmental liabilities arise on closure. Government intervention is precisely about avoiding disorderly shutdown and managing safely the remediation, respectively.
Several noble Lords raised the issue of compensation. The Government are committed to respecting business rights and ensuring fair treatment. To be absolutely clear, the Government’s actions to date at British Steel, and any future actions, are solely about commercial reality and delivering our domestic steel strategy. They would not differ under an owner of any nationality. If the transfer powers in the Bill are exercised, a compensation scheme would be established to consider and pay compensation for any losses suffered by those affected. An independent valuer would be appointed to oversee this process and determine what compensation, if any, is payable. There is nothing to prevent an outcome of nil compensation, but this would be a decision for the valuer and would depend on the circumstances.
Let me address the issue of nationalisation, which was mentioned by the noble Baroness, Lady Noakes, and the noble Lord, Lord Sharpe. We propose this nationalisation on principle. Are other Peers prepared to accept the loss of the United Kingdom’s last remaining primary steel-making capability in the name of market purity? We believe in free markets, but no responsible Government can stand aside when a strategically vital industry and national security are at risk. This is not ideology; it is pragmatism. Every major industrial nation supports its steel industry. The question is not whether Governments intervene but whether they are willing to act in the national interest where circumstances require. Faced with the choice between preserving British steel-making and watching it disappear, this Government chose action.
The promise of privatisation was that private ownership would deliver greater investment, stronger productivity and better outcomes for consumers and taxpayers, yet too often we have seen the opposite, with underinvestment, short-term decision-making and strategic national assets left vulnerable when market conditions turned difficult. The reality is that, when privatisation succeeds, profits are privatised; when it fails, losses are socialised. Working people lose their jobs, communities pay the price and taxpayers are asked to step in. That is precisely why this Government are prepared to act when a strategically important industry such as steel is at risk. When the national interest is at stake, standing aside is not a responsible option. I commit to writing to the noble Baroness about the classification of British Steel—my officials will definitely write to her. We will provide annual reporting to Parliament on financial support, as is provided under the Bill’s powers.
I turn to Port Talbot, as mentioned by several noble Lords. The fire at Port Talbot was successfully contained and all personnel are safe. We will continue to monitor the situation closely while investigations are ongoing and the company moves from emergency response to recovery planning. Regarding grid delays, timelines are still evolving and are not yet finalised. We remain fully committed to securing the long-term future of steel-making at Port Talbot and are working closely with all parties involved to identify mitigations and explore options to accelerate delivery.
The noble Lords, Lord Sikka and Lord Fox, asked about the importance of foreign investment and our relationship with China. I wish to be clear that the Government have decided to introduce this Bill regardless of the nationality of the firm that owns British Steel, which is Jingye currently. The Government continue to welcome Chinese investment in the UK and do not consider the situation at British Steel to reflect our wider relationship with investors.
British Steel is a strategic asset, as I said earlier, for the UK’s steel production. It is critical to national infrastructure and to the local economy. Unfortunately, the Government could not find a way to save British Steel’s operation under its current ownership. Although this Government now need to take steps to secure UK steel capability, we are committed to doing so in a way that respects the rights of business.
Throughout this debate, one theme has recurred: the future of steel matters. It matters to our economy; it matters to our industrial base; it matters to our national security; and it matters to the communities whose lives have been built around steel-making for generations. The Bill before your Lordships’ House is not about preserving the past; as I said in opening, it is about securing the future. It is about ensuring that Britain retains the sovereign capability to produce steel. It is about creating the conditions for a modern, competitive and sustainable steel sector. It is about demonstrating that, when strategically important national capabilities are at stake, this Government are prepared to act.
Today, your Lordships have the opportunity to send a clear message to steelworkers, industry investors, and the country that Parliament remains committed to the long-term future of British steelmaking. I am grateful to all noble Lords for their contributions and for the constructive spirit in which this debate has been conducted. I look forward to continuing those discussions as the Bill progresses. I beg to move.
Steel Industry (Nationalisation) Bill
Monday 29th June 2026
(4 weeks ago)
Lords ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 22-I(a) Amendments for Committee (Supplementary to the Marshalled List) - (29 Jun 2026)
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment seeks to narrow the definition of a steel undertaking so that it had to be a business consisting predominantly of the manufacture or processing of steel, or iron for the purposes or in connection with the manufacture of steel.
Lord Sharpe of Epsom (Con)
My Lords, Amendment 1, in my name and that of my noble friend Lord Hunt of Wirral, is very simple. It seeks to confine the powers in this Bill to genuine steel businesses. Those are undertakings consisting predominantly of the manufacture or processing of steel—or iron for the purposes of steel manufacture.
As drafted, the definition catches any business which merely includes steel-making as part of its operations. That is a very broad formulation. It could, in principle, sweep up a diversified business in which steel was only a minor part of what it does. Businesses with a limited connection to steel production should not face uncertainty about whether it falls within the reach of these nationalisation powers.
When this point was pressed in the other place, the Secretary of State was asked whether a business with only 1% of its operations in steel would be caught by Clause 1. He did not say that it would not be. However, a statement of intent is not a limit on the face of the Bill, and future Governments are not bound by the assurances of this one. The Government say that these powers are intended for British Steel, and British Steel is obviously and predominantly a steel business. Therefore, this amendment should create no difficulty for that purpose. If the Government’s intention is genuinely not to use these powers against businesses with only a peripheral connection to steel, they should have no difficulty in accepting this amendment. I beg to move.
Lord Redwood (Con)
My Lords, I fully support this amendment and hope that it will tease out from the Minister a little more about what the underlying purpose of the general legislation is, as I am not too enamoured of this becoming a fully nationalised industry with the ability to acquire all sorts of other steel interests.
I felt that the Government’s policy arose out of the circumstances of British Steel at Scunthorpe and the question of blast furnace-produced steel, where we are down to our last two blast furnaces. I did not think that the intention was to build an electric arc furnace set of businesses when progress has already been made in establishing these in the private sector and where there are plans in certain cases for government grant aid to achieve an electric arc steel additional business by that combination of subsidy assistance and private capital.
I hope that the Government will accept this quite substantial narrowing of such a broad piece of legislation, because there are many with general interests in steel whom we would not like to get caught up in this. I would also like clarification on whether there is any possibility that the Government might want to build a nationalised electric arc steel set of businesses. This would be an expensive and difficult proposition.
Lord Fox (LD)
My Lords, I thank the Minister, his team, the department and the two experts who came all the way from Coventry in 35-degree temperatures to educate the noble Lord, Lord Hampton, and me on the technology of steel. It has been very co-operative and I thank them.
I am slightly confused by how narrowing these words are: “of or including” versus “predominantly”. What is predominantly? Is it 60:40? Is it 55? I do not know. You have to look upon it with the body language of the Government. The Government have shown no tendency to go on a nationalisation rampage through all businesses that have ever touched a piece of steel. It is very clearly focused in one area, as the noble Lord, Lord Redwood, alluded to. Also, I remind noble Lords that there is a sunset clause in here which closes it after two years. So the talk of subsequent Governments does not have particular purchase and I am much more relaxed than the noble Lord, Lord Sharpe, on this.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)
My Lords, I thank all noble Lords for their constructive engagement in advance of Committee, and for all the amendments and valuable contributions that they will make during it.
Amendment 1 in the names of the noble Lords, Lord Sharpe and Lord Hunt, seeks to introduce a narrow definition of a “steel undertaking”. I fully understand the purpose of the amendment, but the Government have no desire for these powers to extend beyond what is necessary. They are exceptional powers for exceptional circumstances and should be exercised only where Parliament intends.
I respectfully suggest that the amendment would not provide greater certainty; instead, it risks introducing greater ambiguity into the Bill. The proposed test, that a business must be “predominantly” involved in steel, immediately raises difficult questions, as alluded to by the noble Lord, Lord Fox, on how “predominantly” is measured. Is it turnover, assets, employees, production, profit or some combination of these? The amendment provides no answer. That uncertainty would inevitably invite legal challenge, precisely when swift and decisive action may be required. Businesses with significant steel operations could argue that they fall outside the definition, because steel is not their primary activity. Equally, complex corporate structures could be organised to make the test easier to avoid altogether. In seeking to narrow the definition, the amendment risks creating loopholes that undermine the legislation’s very purpose. The Government’s drafting avoids these difficulties; it provides a clear and workable definition that gives legal certainty, while ensuring that powers are used only when genuinely needed to protect the public interest.
For those reasons, while I appreciate the spirit in which the amendment was tabled, I cannot agree that it improves the Bill. I know this is not what the noble Lords intended and I can accept that the current drafting is broad, but this definition follows closely that used in the Steel Industry (Special Measures) Act and it ensures that there can be no disputes about its meaning. In practice, we do not expect many companies to fall within the current definition, so the amendment would have minimal effect.
I will repeat the Government’s position expressed throughout the Bill’s passage so far: we are strongly minded to use the powers to acquire British Steel if it is in the public interest to do so, and we do not have any plans to acquire any other steel undertakings. It is therefore very unlikely that this would be used for any other company, let alone one that is engaged primarily in non-steel activity. I hope this helps clarify the matter and respectfully request that the amendment is withdrawn.
Lord Sharpe of Epsom (Con)
I am grateful to all noble Lords who have spoken. It was remiss of me not also to thank the Minister and his team for their extensive engagement on the Bill.
This amendment is simple. I am afraid that I do not agree with the Minister’s comments or those from the noble Lord, Lord Fox. This is very straightforward. In fact, I refer noble Lords to the Merriam-Webster dictionary, which says that the word “predominantly”, in formal or technical usage, can denote a precise majority, such as more than 50%, or an even higher threshold, such as 60% to 80%, depending on jurisdiction. I am not an expert on which jurisdiction we are in, but it clearly means north of 50%. The way the Bill is written, as I pointed out, could allow for as little as 1%.
I have listened to the Minister’s objections to the wording of the amendment and am very happy to work on tightening it up, if he thinks that would help. The amendment is simple: it would confine the powers in the Bill to genuine steel businesses—that is, undertakings
“consisting predominantly of the manufacture or processing of steel, or iron for the purposes or in connection with the manufacture of steel”.
I think that answers most of the Minister’s objections, which, frankly, if they are relevant to my wording, are also relevant to the wording currently in the Bill, so I do not really believe in the ambiguity argument.
Businesses with a limited connection to steel production should not face uncertainty about whether they fall within the reach of these nationalisation powers. The present drafting does not provide that reassurance; it permits powers to apply to an undertaking that merely includes steel-making or related iron production, as I have already pointed out. I will not press the amendment for now, but I would like further discussions with the Minister, if he is amenable, to see whether we can find a way to tighten up the language so that it both suits the Government’s purposes and makes it clearer for all those undertakings that we are discussing. For now, I beg leave to withdraw.
Lord Hunt of Wirral
Member’s explanatory statement
This amendment seeks to limit the public interest test to the areas set out in subsections (a) to (c).
Lord Hunt of Wirral (Con)
My Lords, I speak to Amendments 2, 3 and 8.
Amendment 2 limits the public interest test to the specific factors listed in Clause 2. On first reading, the test looks robust: national security, the economy and
“the construction, maintenance and operation of critical infrastructure”.
These are serious criteria that one might think provide a meaningful check on the exercise of what are very significant powers. However, when one reads on, Clause 2(2) says that the test
“includes (but is not limited to)”
those grounds. I contend that, with those five words, the floor falls away. If the test includes but is not limited to the listed grounds, surely, in practice, there is no test at all. Any Secretary of State of any political persuasion at any time can conjure a reason and call it the public interest.
The amendment in my name and that of my noble friend Lord Sharpe of Epsom would remove those words and make the listed grounds exhaustive. It would ensure that when Ministers say that these are exceptional powers subject to a robust public interest test, it is actually true—not merely true for now with this Secretary of State in these circumstances but true in the legislation for every Secretary of State who follows.
The Government may say that there need to be other grounds, beyond national security, the economy and critical infrastructure. I would genuinely like to know what they are. What situation could possibly arise that those three criteria do not already cover? If the Government can answer that question, let them do so today. Let them set out on the record what additional circumstances they have in mind. If they cannot, these words should not be in the Bill.
We have a Bill that, as we just discussed in the first group, can capture businesses with only a peripheral connection to steel. We now have a public interest test with no effective limit. Will the Minister confirm that the powers in the Bill cannot be triggered simply because of industrial pressure; for example, because a trade union decides that the answer to a dispute is public ownership? Will he rule that out?
On Amendment 3, the Government’s impact assessment describes the difficult environment in which the steel sector operates, including high domestic operating costs and a lack of long-term investment. It recognises that these pressures bear directly on the ability of UK steel producers to compete. Yet Clause 2 refers only in the broadest terms to “supporting the economy”. That phrase could cover almost any intervention; it does not require Ministers to demonstrate that the intervention will leave the United Kingdom with a stronger, more productive or more internationally competitive steel sector.
There is a difference between preserving an undertaking for the moment and putting it on a sustainable footing for the future. Nationalisation may avert an immediate crisis, but it should not become a means simply of transferring losses, risks and difficult decisions from a company to the taxpayer. The question must be whether public ownership can help to secure the investment, modernisation, productivity and commercial resilience needed for this sector to compete successfully.
There is also a point of consistency with the Government’s own drafting. The Bill makes clear that the public interest test is not intended to be limited to the matters specifically listed. It says that the test includes but is not limited to national security, critical infrastructure and the economy, as I said earlier, so the Government have already chosen not to confine the public interest test. In those circumstances, why would they resist including economic growth and international competitiveness expressly within it? Growth is the Government’s stated number one priority. International competitiveness is plainly fundamental to the future of a sector exposed to intense overseas competition and high energy costs. If the Government consider national security and critical infrastructure important enough to name in the Bill, surely growth and competitiveness should also be named. I invite the Minister to explain why those two objectives do not appear in the Bill. How will the Government assess whether an intervention is likely to strengthen competitiveness? Will that assessment include energy costs, investment, productivity, output, technological modernisation, export potential and the undertaking’s ability to operate sustainably without indefinite support from the taxpayer?
On Amendment 8, the Government have confirmed that they have already provided approximately £555 million to British Steel for working capital, including raw materials and salaries. The National Audit Office reported that, as at 31 January this year, the Department for Business and Trade had spent £377 million on its intervention. At the then current rate of spending, total costs were expected to exceed £642 million by the end of this month. More importantly, the National Audit Office warned that if spending continued at the then current rate, costs could exceed £1.5 billion by 2028—and that figure was before any potential transformation of the business, compensation to the current owner or the eventual costs of exit. The NAO also found that the intervention has
“no clear end date … has not stabilised the company’s finances”
and began
“without a clear exit strategy”.
This Bill is not simply emergency legislation to keep the furnaces operating over a weekend. It creates enduring powers to transfer businesses, assets, rights and liabilities into public ownership. Before those powers are exercised, the Government must be able to demonstrate that the proposed course represents value for money.
The facts since the emergency intervention underline why this matters. We are told that the business in its present form is structurally unprofitable. We know that substantial decisions remain to be made on its future, including any transition in production technology, the cost of investment, the length of any transition period and the eventual route to a viable and sustainable business. The taxpayer needs protection against an open-ended commitment.
The Government may argue that the Treasury’s Managing Public Money framework already requires departments to consider value for money. I suppose I could look forward to the day when there is some evidence of the Treasury acting responsibly in this way. Can the Minister tell us what value-for-money assessment will be undertaken before a principal transfer power is exercised? Will it include the expected costs of compensation, operating losses, capital investment, decommissioning, restructuring and any eventual exit?
This amendment would not frustrate the Government’s ability to act where action is genuinely justified. It would simply ensure that before nationalisation takes place, the Secretary of State is satisfied that it is a responsible use of taxpayers’ money. I beg to move.
Lord Sentamu (CB)
My Lords, Amendment 2 would replace
“includes (but is not limited to)”
with the word “means” so that we knew what we were describing. The worry is that leaving it as it is could create a public interest so large that there was a mission creep that I do not think should be in the Bill, which is trying to nationalise steel. We need to be slightly more economical in the words we are using, so that we need not fear that on another day, if another public interest was being taken into account, the definition would prove far too loose. The word “means” does the job: we know exactly what one is talking about, and it lists the three elements. The noble Lord, Lord Hunt, wanted to include two other areas but, for me, limiting it to those three objects seems to be where we should stop. The word “means” would stop mission creep.
Lord Redwood (Con)
My Lords, I welcome these three amendments. Amendment 2 is a necessary slight curtailment but would still leave the Government with enormous scope, given how wide-ranging the three cited reasons for public interest intervention are. Like my noble friend, I cannot think of any other reason why they might want to do this that could not be adequately covered by the wide-ranging proposals in the existing text.
I agree that it would be a good idea to change the language through Amendment 3 to stress that intervention should, in the longer term, be interested in economic growth, profitability and successful investment. Surely the Government do not want a lame-duck investment that costs a large sum of money for a limited period of time but then they have to disappoint all those people who thought that it was going to be kept going for a rather longer period or that it might break through to profitability and success. If I had to choose between the three amendments, I hope my noble friend would particularly press Amendment 8 on value for money, which sums it all up.
At Second Reading, in looking at the general legislation, we had some discussions asking: what is the medium and longer-term future of blast furnace steel? As I think we have agreed across the House, at Second Reading and now, the main reason for the previous emergency legislation and this legislation is the temporary cessation of closure of two very important blast furnaces, which are our last blast furnace-making capabilities in the country. But I believe—I would love to have the Government either confirm or deny this—that it is still their medium to longer-term intention to close all blast furnaces in this country, as previous Governments have been doing, and to transfer to electric arc steel-making, preferably with private finance and successful competitive private sector businesses doing that work. In the previous exchanges, I think the Minister signalled that the Government do not wish to build a nationalised electric arc business with these powers, although for understandable reasons they have to be general and will most likely be exercised in the case of the blast furnaces. It would be helpful to workers and taxpayers if there were greater clarity over the time period for keeping these blast furnaces open, and whether there are any limits on the costs that the Government are prepared to run, so that people can make proper plans concerning their jobs and their futures in this important steel industry, and so that taxpayers could have some reassurance.
Lord Fox (LD)
My Lords, one of the things that the briefing from the high value catapult team confirmed is the enormous difficulty there will be in creating a viable business from what His Majesty’s Government intend to take control of in Scunthorpe. There is the age of its blast furnace, the potential cost of any replacement of a blast furnace, the expense of conversion to an electric arc furnace—if that is what is intended—and the hugely competitive landscape of the global steel markets. These are just the headlines of the complexity, but the choices go beyond blast furnace or arc furnace.
If investment is found to install a new electric arc furnace, what will it produce? Will it aim to produce the full range of steels that we need—longs, flats, rebar—or will it specialise in particular steels that perhaps are more strategic and less easy to source? If it goes down the specialisation route, the UK will probably need access to much more direct reduced iron, or DRI. It is likely that this would have to be imported, and these would be very high CO2 emission imports from most countries, because making our own DRI would need a whole new bit of kit which is very pricey. Choices and making the right calls will determine whether Scunthorpe has a long-term future and what that future looks like. It will determine whether it is indeed an investable prospect and whether it can attract the private sector.
When the Government begin—assuming this Bill becomes an Act—to use the terms of the Act to take ownership of this plant, that will change the focus of these choices. Of course, there will be a new board and management to run the plant, but the cost of the choices will rest with UK taxpayers, at least at first. We will be providing the capital. As we have heard, we have already made available £555 million in working capital, but clearly these sums could increase massively at scale. It is the scale of risk that the Government are taking on that is guiding my approach and our approach, because this Bill needs more scrutiny from Parliament at all levels. From these Benches, we will be pushing those buttons.
These three amendments start at least to open up that point around accountability. I am a bit intrigued because while I do not always agree with the noble Lord, Lord Hunt, he is normally internally consistent. However, the noble Lord started out by saying there should be no expansion of the terms of Clause 2 and then put forward two pretty reasonable ones about growth and expanding the economy. I have one that I think the noble Lord, Lord Redwood, would agree with, which is cost. We should have a clear understanding of the cost before the public interest test. I completely disagree with Amendment 2 because there needs to be a broader discussion around “public interest”. We need to understand the numbers around it, otherwise we do not know whether it is interesting to the public. I do not agree with Amendment 2. I have some sympathy with the other two amendments, and I am sure we will talk more about public interest tests as we deal with other groups.
Lord Leong (Lab)
My Lords, I thank the noble Lords, Lord Hunt, Lord Redwood and Lord Fox, and the noble and right reverend Lord, Lord Sentamu, for their contributions to this group. There are several amendments to the articulation of the public interest test in Clause 2. This is a key clause in the Bill; it is a necessary safeguard to ensure that the powers are used proportionately in response to a clear need.
Amendment 2 would limit the public interest factors that the Secretary of State may consider to those set out in the Bill. The Government agree that the three factors of national security, critical national infrastructure and support for the economy are likely to be the most relevant to the steel sector. Accordingly, the current approach ensures that they are given particular weight when assessing whether to pursue an intervention. However, circumstances may arise in which a case for intervention may not be clearly made on the basis of these three factors, yet it would clearly be in the public interest to take action. It is therefore pragmatic to build some flexibility into the Bill to address this issue.
I turn to Amendment 3. It has been suggested that the third public interest factor should refer specifically to
“economic growth and international competitiveness”,
rather than “supporting the economy”. With respect, this is a distinction without a meaningful difference. It is largely a matter of drafting rather than substance. The phrase “supporting the economy” is deliberately broad. It clearly encompasses economic growth and international competitiveness but also recognises that the economy is more than growth figures alone. It includes strengthening economic resilience, protecting strategically important industries, supporting employment, safeguarding supply chains, encouraging investment and ensuring the long-term productive capacity of the United Kingdom. By contrast, narrowing the text to
“economic growth and international competitiveness”
could unintentionally exclude other legitimate public interest considerations that any responsible Government should be able to take into account.
There may be circumstances where intervention is necessary to preserve critical industrial capability or economic resilience, even where the immediate effect on growth or competitiveness is less direct. The Government’s intention is to provide Ministers with a sufficiently broad framework to consider the full range of economic factors that may arise. The existing wording achieves precisely that: it is flexible, comprehensive and future-proofed, while fully capturing the objectives that the amendment seeks to emphasise. For those reasons, I do not believe that the amendment would improve the Bill. The Government believe that protecting our sovereign capability in what is a foundational sector for the economy will help to underpin our resilience and leave us less exposed to volatile international trading conditions. The Government therefore cannot support the amendment.
I turn to the amendments tabled by the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, and by the noble Lord, Lord Fox. In different ways, all three noble Lords seek to require the Secretary of State to consider value for money or the impact on the public finances before exercising the principal transfer powers.
Lord Leong (Lab)
I am referring to the noble Lord’s later amendment.
I fully agree with the principle that taxpayers’ money must be spent wisely. Any decision to bring a steel undertaking into public ownership would be among the most significant interventions that a Government could make. Such a decision should never be taken lightly, and it would not be. However, these amendments seek to place into statute an obligation that already exists as a fundamental principle of government. Every significant spending decision is subject to the rigorous disciplines of managing public money—as stated by the noble Lord, Lord Hunt—Treasury approval where appropriate, and the established accounting officer framework. Ministers are already required to demonstrate that public money is being used properly, proportionately and with due regard to value for money.
The question, therefore, is not whether value for money should be considered—it absolutely should—but whether it is necessary to restate an existing, well-established constitutional obligation in the Bill. I do not believe it is. Doing so would add no new safeguard, create no new accountability and impose no duty that does not already exist. More importantly, this legislation is intended to ensure that, where a vital national interest is at stake, the Government can act decisively. Decisions of this nature will always involve weighing immediate fiscal costs against the far greater economic and strategic costs of inaction. The loss of sovereign steel-making capability, thousands of skilled jobs and critical supply chains, and industrial resilience could ultimately impose a far greater burden on the taxpayer than timely intervention would. The Government will continue to ensure that every decision made under the Bill is subject to the highest standards of financial discipline and accountability. Those safeguards already exist; they are robust and will continue to apply.
Lord Hunt of Wirral (Con)
My Lords, I am grateful to all noble Lords who have contributed to this debate and to the Minister for his response. I reiterate what the noble Lord, Lord Fox, said earlier about the way in which the Minister has given us every opportunity to think ahead into the future and to receive expert advice as to the way ahead.
To summarise these three amendments, they do not sit easily together, as has been pointed out, but they have provoked a widespread debate. The noble and right reverend Lord, Lord Sentamu, was absolutely right to point out that mission creep should stop here. There should not be ways that the Minister could include all sorts of other reasons. In Amendment 3, I suggested two reasons, but the Minister carefully responded by not ruling them out and not ruling anything else in. It seems that either the noble and right reverend Lord, Lord Sentamu, is right, or the noble Lord, Lord Fox, is right or the Committee is confused. It has considered all the various options, but it would be useful, as my noble friend Lord Redwood said, to have greater clarity in the form of some draft business plan that could look to the future and work out the way ahead. Value for money, as my noble friend said, sums it all up. Although the Minister thought that the noble Lord, Lord Fox, had signed Amendment 8, either it has not come to my attention that he has or he has not signed it. It may be a later amendment which suggests that value for money is required.
I remain far from convinced by the Government’s case. These amendments address three basic questions which ought to be answered before the state is given a power of this significance. First, in what circumstances will the power be used? Secondly, what is it intended to achieve? Thirdly, as my noble friend Lord Redwood pointed out, how will the taxpayer be protected? The Government’s response seems to be that Ministers will behave reasonably, that the powers will be used sparingly and that the existing public interest test provides sufficient protection.
As my noble friend Lord Sharpe of Epsom said in the previous group, this Bill sends a message well beyond the immediate circumstances of British steel. Investors considering whether to commit capital to the United Kingdom will examine not simply what Ministers say today but what the legislation permits tomorrow. The Government say those risks are mitigated by a clear public interest test. But the reality is there is no actual test. There is much in this debate for the Government to consider, but for now I beg leave to withdraw the amendment.
Lord Wigley
“(d) supporting the local economy of any steel-making location which may be adversely affected by this Act.”Member's explanatory statement
This amendment seeks to ensure that consideration is given to the impact on the local economy arising from decisions made under this legislation.
Lord Wigley (PC)
My Lords, I beg to move Amendment 4 standing in my name and to speak to Amendment 36, which is also in my name and which is grouped with it—as is Amendment 29 in the name of the noble lord, Lord Fox, and Amendments 30, 31, 43, 44 and 46 in the names of the noble Lords, Lord Sharpe and Lord Hunt.
I quote Amendment 4, just to bring it to everyone's mind. It would add, at the end of line 20 on page 1, a new subsection:
“(d) supporting the local economy of any steel-making location which may be adversely affected by this Act”.
I would have thought that those words would commend themselves very much to this House. All these amendments have to do with the impact of the Bill when enacted—an impact which may be so significant to various aspects of the economy, and indeed on the communities which may benefit or may suffer directly or indirectly from this legislation. I shall look forward to hearing the Opposition Front Bench when they speak, particularly on Amendment 43, on the possible impact of this Bill when enacted on inward investment—a subject close to my heart, as the noble Lord, Lord Hunt, will recall, from prior incarnations. But I digress. Amendment 4 in my name would specifically impose a duty on the Secretary of State, in relation to his responsibilities regarding the public interest, to broaden that responsibility to include, via the proposed new subsection (d),
“supporting the local economy of any steel-making location which may be adversely affected by this Act”.
I have deliberately drawn this new subsection widely and not confined it to Wales, as I know from our experiences in Wales how badly steel-making communities across these islands can be hit when steel-making is ended or run down, wherever those communities may be located. I saw this with my own eyes when I was living in Merthyr Tydfil in the 1970s, at the time of the rundown of the steel manufacturing in nearby Ebbw Vale. The economic decline of the Blaenau Gwent area has been staggering, as the noble Lord, Lord Murphy, mentioned in the Second Reading debate of this Bill. It is now amongst the poorest areas, economically speaking, not only in Wales but throughout Britain. Decisions arising from the operation of this Bill, when enacted, could have far-reaching consequences for communities that have depended on steel in the past, and which may be facing dire consequences of specific and deliberate action undertaken by the Government through this Act. A duty surely lies on us to help safeguard those communities.
There will inevitably be winners and losers as a result of actions taken under this legislation. Hard-working, skilled industrial communities may be undermined through no fault of their own. Indeed, the decisions taken by the UK Government may be, in some regards, for the good of the industrial base of these islands, but do not tell me that, to an unemployed skilled steel-worker in Margam or Shotton or Llanwern—or, for that matter, in Teesside or Sheffield or Doncaster—this does not matter. If the actions of the Government in consolidating steel-making in a limited number of locations has that knock-on effect, then the Government surely have a responsibility to support those local economies hard hit. I cannot believe that a Labour Government will not readily acknowledge this. I invite them to accept Amendment 4 or at least to undertake to return with their own amendment on Report to secure the objectives I have outlined.
Amendment 36 in my name is also in this group. It would provide a vehicle, via Clause 58, whereby the financial aid outlined in Amendment 4 could be channelled through local authorities in steel-making areas hard hit by this Bill so that they were compensated for the adverse effects on local communities arising from the exercise of the powers in the Bill relating to steel-making in their area. As I stated at Second Reading, I support the objectives of this Bill but, with all the good will in the world, there will inevitably be losers as well as winners. As such far-reaching changes will be triggered by Act of Parliament, surely it behoves Parliament to safeguard those who may be adversely hit as a direct consequence. I beg to move.
Lord Fox (LD)
My Lords, this is a mixed bag of amendments. I will speak primarily to Amendment 29 in my name but also to some of the others.
Amendment 29 highlights the potentially distorting effects that CBAM—the carbon border adjustment mechanism—would have on various elements of the steel industry, from supplier to steel user. On the one hand, if applied fairly, CBAM could and should deal with the currently distorting global steel market, whereby Chinese steel, with a high carbon investment, is competing unfairly with greener steel in Europe and the United Kingdom. So far, so good, but the effects of CBAM on other steel users and manufacturers could, if applied wrongly, be very detrimental. That is why the international picture, particularly our future agreement with the EU, will be so important in ensuring that manufacturers do not have one hand tied behind their back.
The way that CBAM interacts with tariffs, which has not been discussed terribly much, is important and issues around energy costs have been put in this group, but in truth CBAM, the EU and energy costs fall outside—or at least at the very edges of—the scope of this Bill. However, Amendments 4 and 36 in the name of the noble Lord, Lord Wigley, and Amendment 44 from the noble Lords, Lord Sharpe and Lord Hunt, are front and centre within it. Tata, for example, is making considerable investments on its own account and should not be disadvantaged by any publicly owned business. Similarly, the communities in which the industry is located are vital and must be a key part of decision-making.
The nature of the amendments in this group is almost a snapshot, whereas in reality it will be a long-term issue. That is why, later in Committee, I have proposed a stakeholder advisory committee in Amendment 22 and an explicit role for Select Committees in Amendment 38. This will be an ongoing issue and we will need ongoing parliamentary review of it. While I support elements of this group and the intentions within it, I think the heavy work will be done in a different way going forward.
Lord Sharpe of Epsom (Con)
My Lords, I will speak to Amendments 30, 31, 43, 44 and 46 standing in my name and that of my noble friend Lord Hunt of Wirral. I thank the noble Lords, Lord Wigley—who I thought made a very powerful case—and Lord Fox, for their previous speeches.
Amendment 30 goes to the valuation of a steel undertaking and the need for that valuation to reflect the real commercial environment in which the undertaking will operate. That environment is not fixed; it is being shaped directly by government policy and, in particular, by the new steel trade measure coming into effect from 1 July. Only days ago, the Government changed the detail of that policy, relaxing the original proposals somewhat, with tariff-free quota reductions pulled back from the level first proposed. We will no doubt discuss that in more detail when the Statement is taken tomorrow, and I do not intend to rehearse that debate now.
However, the fact is that the Government’s choices on trade policy will have a material effect on the commercial position, and therefore the value of any steel undertaking. A tighter quota and a higher above-quota tariff will limit import competition. The way quotas are set will affect downstream industries, supply chains, customer relationships and the availability of particular steel products. The Government cannot, on the one hand, present their trade policy as central to the future of UK steel and, on the other hand, resist any requirement for that policy to be factored into what a steel undertaking is actually worth.
The need for clarity is made more acute by the uncertainty of recent weeks. Businesses have been trying to understand what the new quota levels will be, how quickly quotas may be exhausted, which products will be covered and what the practical effect will be for producers and steel-consuming industries alike. Do the Government accept that the new steel trade measure will affect the value of steel undertakings? If so, why should the independent valuer not be required to consider it?
On Amendment 31, electricity costs are among the central determinants of the viability, competitiveness and future value of steel. The position facing British industry is stark. The United Kingdom has had some of the highest industrial electricity prices in the developed world. UK industrial users pay substantially more than competitors in France and Germany, and—on the most widely cited international comparison—around four times as much as businesses in the United States.
For steel-makers, the gap remains significant. That is particularly serious as the sector moves towards more electricity-intensive production methods, including electric arc furnaces. A business may have the workforce, the plant, the orders and the ambition to modernise, but it cannot compete indefinitely if one of its principal inputs costs materially more than it does for its overseas competitors. These costs, I am afraid, reflect recent policy choices by the Government. The fact that the Government provided some limited relief from network charges to eligible energy-intensive industries rather demonstrates the point.
The Government now say that further measures will bring prices closer to those in competitor countries, but closer is not the same as competitive—and nor is a future scheme with questions of timing and eligibility still to be resolved an adequate basis on which to value a business today. This amendment would require the valuer to consider the prices paid by UK steel producers, the disparity with comparator countries and the effect of any support intended to reduce energy costs, including both the costs after existing reliefs and the risk that relief may be time-limited, incomplete or dependent on eligibility. It should also include a clear comparison with major competitor countries.
Is the Government’s objective genuine parity in industrial electricity prices with our principal competitors? If not, what continuing cost disadvantage do the Government consider acceptable for a strategic trade-exposed industry? How will the valuer assess the effect of support, which is prospective rather than guaranteed, particularly where broader measures are not expected to operate fully until 2027? The Government’s own impact assessment accepts the seriousness of this problem. It states that energy costs threaten the sector’s long-term viability and its ability to compete. It also acknowledges that UK steel producers face higher electricity prices than comparable countries, and that contributes to the uncompetitive production costs and pressure on margins.
On Amendment 43, as we raised at Second Reading, the Government’s impact assessment recognises the risk of a chilling effect on investment if businesses and investors perceive a greater risk of state intervention—a point very well made by my noble friend Lord Redwood in the last group. The United Kingdom has long depended on its reputation as a stable, predictable and rules-based place in which to invest. The risk is greater in the current climate. Steel businesses are already dealing with high electricity costs, rapidly changing trade policy and significant regulatory burdens. Adding an open-ended power of nationalisation can only increase the sense of risk for those considering whether to invest in the United Kingdom. If the Government are confident that their actions will strengthen confidence and attract private capital, they should have nothing to fear from transparency.
Amendment 44 addresses a basic point of fairness. If the Government take a steel undertaking into public ownership, that business must not receive selective advantages which place comparable privately owned steel businesses at an artificial disadvantage. Without this safeguard, there is a clear risk of distortion through subsidies, preferential access to public contracts, more favourable regulatory treatment or other support unavailable to private companies. The Minister in the other place stressed the need for flexibility and for the Government to act quickly, but flexibility need not mean unfairness. It is entirely possible to support a strategic undertaking in exceptional circumstances while maintaining a level playing field for the wider sector.
On Amendment 46, if we accept the Government’s central argument that British Steel is critical national infrastructure and that domestic steel production is essential to our national security and without it we cannot build our Navy, jets or submarines, they must accept the logic of what follows from that argument: you cannot declare something critical to national security then leave it defenceless. Amendment 46 states that, where the Secretary of State has exercised a principal transfer power where steel has been brought into public ownership precisely because it is in the public interest, the Secretary of State must have the power to prevent industrial action destroying the very thing that public ownership was meant to protect.
We have seen what happens when Governments are all too timid to act. We have watched the railways held to ransom by the RMT, and we have seen it in healthcare where the former Health Secretary himself felt compelled to call out what he described as “cartel-like behaviour”. The Government have made themselves more vulnerable still. The Employment Rights Act 2025 stripped away strike safeguards that existed for a good reason. The ballot thresholds are gone: the Government unlocked the door and then expressed surprise when it was pushed open.
If a steel undertaking is nationalised in the name of national security and a trade union then calls a strike that shuts down production, what will the Secretary of State do? Will he stand at the Dispatch Box and explain that our defence supply chains have been severed because he did not want to upset the unions? Do the Government seriously want domestic steel production halted because a union decides the moment of public ownership is the moment to press its advantage?
The Government cannot have it both ways: they cannot argue that steel is so vital to this country that it must be brought into public ownership and simultaneously argue that, once it is in public ownership, it should be just as exposed to industrial disruption as any other business. The whole point of this public interest test, if it means anything at all, is that some things matter too much to be left to the ordinary run of commercial risk. Industrial action that threatens critical national infrastructure is precisely such a risk.
I invite the Minister to tell the House that the Government have considered the risk. I invite him to explain what powers the Secretary of State would have on the day a strike is called at a nationalised British Steel to keep the blast furnaces lit. If he cannot answer that question satisfactorily, this amendment provides exactly the answer that is needed.
Lord Redwood (Con)
My Lords, I am grateful to my noble friend for raising the crucial issue of electricity prices. As the strategy is to convert more and more to electric arc furnaces, the price of electricity becomes the critical variant in determining how successful those businesses will be, how competitive their prices will be and whether they will generate cash and profit to reward those who ventured in them, or whether there will be problems for those businesses, just as there are problems in the British Steel carbon-based system through its blast furnaces. I hope the Minister can give us a little more background by way of reassurance, given that the steel strategy has been, and is still to be, based on electricity as the prime source of energy. There needs to be a policy that will consistently deliver competitive electricity prices because the current prices, without specific and targeted subsidy intervention, are way out of sync with the electricity prices in the more competitive world of our major competitor countries.
It is very important that this group of amendments raises the issue of tariffs. Of course, anybody valuing the assets that might be acquired under this legislation, or valuing what we already have by way of control and operating responsibility, will need to look at the impact of tariffs. It is a good idea to stress this because these are a very major change to the background for the conduct of steel businesses in this country, and we cannot be sure exactly what the impact is going to be. We have two types of impact arriving around the same time. There is the carbon border adjustment mechanism, which is, in effect, a fairly universal tariff based on the carbon content of imported material, which is clearly going to apply substantially to this industry. Then there are the specific tariffs which the Government have announced to come shortly, which target competitive steel coming into Britain with a very large increase in tariff and a rather low protected quota so that there will definitely be a substantial increase in cost for import.
You could argue, as I presume the Government do, that this is completely benign for our steel industry because it means that the combination of the immediate tariff and the soon to come CBAM tariff will make imported steel so much less competitive, and will therefore help reduce the pressures on our existing electric arc furnaces in the private sector and the two blast furnaces now, in effect, under the control—but not in the ownership—of the public sector. There will be some relief, as the policy intends. However, there can be other consequences which a valuer would have to take into account.
For example, the higher the cost of imported steel, the more difficult it will be for those many companies and industries that use and add value to steel in our wider steel-using industry. There will be limited scope for all users of imported steel to find exactly the right specifications of steel, and the right availability and pricing, from the rather limited-scale industry that the United Kingdom now has as a steel producer. There could well be financial difficulties, reductions in turnover and activity, or the collapse of steel-using businesses in the United Kingdom that face these very high tariff impositions on their main raw material. If they acquire more by way of import than at home and they cannot immediately substitute, you could have the paradoxical effect that the tariff designed to protect the British industry lost orders to the British industry as well as to the exporting industry from abroad. You could well have businesses here collapse—those that are substantial steel users but can no longer carry on the business efficiently to sustain their limited purchases from the UK, because of the cost of the expensive imports.
This needs careful policy examination. I am glad that the Government had one rethink about the tariff quota arrangements for this, but they probably need to do a bit more homework about the balance between the rather larger turnover at risk in steel-using businesses in the United Kingdom and the rather too small turnover available in steel production. They therefore probably need to consult a bit more widely over the medium- to longer-term impact on steel demand from domestic as well as imported sources.
I am interested in the proposals on impact on the economies, but I am not quite sure what is in mind and how it would work out. It is quite right, as the noble Lord, Lord Wigley, said, that there will have been impacts from previous closures or redundancies, and there could be future bad impacts as steel plants become more productive and need less labour, or as the final conversion is made from blast furnaces to electric arc, when there would clearly be a substantial loss of employment. There will need to be assistance and help for those who lose their jobs or have lost them in the past but still have not been able to retrain or find good alternative employment. One needs rather more by way of detail, and I am not quite sure that this Bill is the right place to do that, because it relates to a series of other government initiatives, funds and programmes that are more generally available. However, the noble Lord, Lord Wigley, might be right that they need to be improved. That is a subject for another conversation on another day.
Lord Leong (Lab)
My Lords, noble Lords have raised a number of amendments to ensure that there is a level playing field across the steel industry. I thank noble Lords for their commitment to ensuring that the Bill positively impacts the UK steel industry. A number of amendments have been tabled on this topic so, with this in mind, I will address those before turning to the new clauses proposed for the Bill. I will consider Amendments 29 to 31 together, as I believe they are intended to have the same effect.
Amendment 29 seeks to specify that compensation regulations under Clause 54(4)(b) allow the independent valuer to take into account external tariffs, as mentioned by the noble Lord, Lord Redwood, and the carbon border adjustment mechanism when valuing the steel undertaking, as mentioned by the noble Lord, Lord Fox. Meanwhile, Amendment 30 seeks to require that any valuation of a steel undertaking takes into account the steel import quota and tariff measure that is due to take effect from 1 July 2026. Amendment 31 would require any valuation to consider the anticipated effects of electricity prices.
I am sympathetic to concerns about the impact that these trade-related measures and electricity costs may have on steel undertakings, and therefore on any compensation determinations made by an independent valuer in relation to them under any compensation scheme regulations. However, I emphasise that the Government consider it unnecessary to add these amendments to the non-exhaustive list of examples of matters for a valuer to take into account under any compensation regulations. Any valuation would reflect the wider economic and market context, including the trading environment in which the steel undertaking operates, with or without tariffs, without the need to single out specific factors in primary legislation. This means that the valuer will ultimately have discretion to determine what they consider to be the relevant factors in making their determination.
Valuing a steel undertaking would be complex. The independent valuer would necessarily have, or be advised by those who have, expertise and experience in this area and would be well equipped to make informed decisions on their approach to valuation. For this reason, the Government do not consider these amendments necessary.
I turn to Amendment 43, which would place a duty on the Secretary of State to report to Parliament on the impact that any nationalisation of a steel undertaking would have on inward investment in the UK. I emphasise the commitments the Government have already made to support investment in the steel sector. The Government’s steel strategy set out commitments to removing barriers to investment and creating a more supportive business environment so that steel companies are better able to compete, are protected from carbon leakage and unfair trading practices, and have greater security and certainty. The Government welcome new entrants to the UK steel industry, which would foster a more competitive business environment. Government funding is available to support this.
I reassure noble Lords that the impact of nationalisation would be taken into account in any impact assessment on the use of transfer powers. This is the most appropriate mechanism for reporting on any expected impact on the economy. Given the complexity, interlinking and scale of investment trends, it would be difficult to report further on the exact impact of a single intervention. It is for this reason that we ask for this amendment not to be pressed.
Amendment 44 seeks to ensure that the powers in the Bill do not confer any advantage on publicly-owned steel undertakings which could distort competition and trade. I understand the concerns from the noble Lord, Lord Sharpe, that the Bill may unfairly distort competition and investment across the steel sector. However, I reassure your Lordships that this is not the Government’s intention. Any financial assistance provided to publicly-owned steel undertakings will be time-limited, targeted and proportionate. Furthermore, we will continue to comply with domestic and international subsidy control obligations to avoid market distortions. I hope this clarifies that the Government are committed to ensuring a level playing field between state and privately-owned steel companies. This amendment is therefore not required.
Amendments 4 and 36 were tabled by the noble Lord, Lord Wigley, who has raised concerns about what he considers to be the potential adverse impact of the Bill on local communities in steel-making areas. Amendment 4 would create an additional public interest factor for a Secretary of State to consider ahead of exercising the principal transfer power. This would be to support the local economy of any steel-making location adversely affected by the Bill.
The Government have introduced the Bill to support domestic steel-making, not to threaten it. Additionally, one of the three factors set out under the public interest test in Clause 2 is supporting the economy, including any part of the UK economy. The same applies to Amendment 36, which would allow financial assistance to be provided to compensate communities adversely affected by the Bill. I do not expect the Bill to have any adverse impacts on local communities, so I do not consider this amendment appropriate.
I emphasise to the noble Lord that the steel industry in Wales is the only part of the industry with a ring-fenced fund: £500 million for Port Talbot to transform the steelworks and secure steel production at that site and to secure the future of the south Wales steel industry. This is a significant investment that will benefit the local community in that area for years to come. This demonstrates the Government’s confidence in the Welsh steel community and the crucial role that Tata plays in it.
I understand the objective of Amendment 46, tabled by the noble Lord, Lord Sharpe. We all want to ensure that any publicly owned steel undertaking can operate effectively, maintain production and continue to serve the national interest. On that objective I do not believe there is any disagreement within the Committee; where we differ is on the means of achieving it. The amendment would give the Secretary of State the power to prohibit or restrict industrial action where it is considered to pose a sufficient risk to the public interest.
The Government do not believe that curtailing workforce rights is either necessary or the right way to secure a successful and resilient steel industry. The people who work in our steel plants are not an obstacle to operational success; they are the reason it is possible. Their skills, commitment and professionalism keep furnaces running, fulfil customer orders and sustain a strategic industry on which our economy and national security depend. The long-term success of a publicly owned steel undertaking will be built on partnership with this workforce, not on restricting their rights.
Moreover, good industrial relations are an asset in themselves. Constructive engagement with employees and their trade unions is far more likely to ensure stable operations than legislation that risks damaging trust and co-operation. Indeed, imposing additional restrictions could prove counterproductive, making disputes harder rather than easier to resolve. The Government have established constructive relationships with the trade unions representing workers at British Steel and across the wider steel sector. We value the role they play in representing their members and in helping secure the future for this vital industry.
Existing industrial relations legislation already provides the legal framework for industrial action. The Government see no justification for establishing a separate and more restrictive regime merely because an undertaking has entered public ownership. Public ownership should not mean fewer workers’ rights; it should mean responsible stewardship of a strategically important industry, working with the skilled men and women whose expertise will determine its success.
I thank all noble Lords for their amendments, which aim to ensure that the Bill does not distort the market to create inequality between public and private sector steel companies. I hope I have reassured noble Lords that the Government remain committed to revitalising the steel sector, which should be achieved through co-investment from the private and public sectors. I respectfully ask that the amendment be withdrawn.
Lord Wigley (PC)
My Lords, I am grateful to the Minister for his response on the whole range of diverse amendments we have before us. No doubt the Opposition Front Bench will have their own opinion on which ones of these they may want to return to on Report, because there are important issues that undoubtedly have arisen from those amendments.
Amendment 4 seeks to support
“the local economy of any steel-making location which may be adversely affected by this Act”.
I noted the Minister’s response, that this may be taken to be covered by other words in this subsection and in other parts of the Bill. But, with respect, words such as
“supporting the economy of the United Kingdom or any part of the United Kingdom”,
are so general that they do not actually address the point we are specifically addressing in Amendment 4, which is the impact on local communities of steel-making locations which may be adversely affected by the Act. It may well be that some such locations are not adversely affected by the Act—they may not be helped by the Act, but they may be able to get on with it—but some almost certainly will be, and there should be express and specific provision to ensure that the needs of those areas are on the face of the Bill.
In Committee, we are quite clearly only probing these matters. But I ask the Minister whether, between now and Report, he will come back and consider that. This is because the reaction against the Act will not be from the generality of the UK economy, or regional economies; it will be from specific places that are in danger of losing out because of the changes, some of which are perhaps inevitable, but which need to take place in order to facilitate the general objective of the legislation. Therefore, in begging the leave of the House to withdraw Amendment 4, I ask the Minister to consider that specific aspect between now and Report.
Lord Hunt of Wirral
“(2A) The Secretary of State may not exercise a principal transfer power unless the Secretary of State has commissioned an independent assessment of whether the exercise of the power is in the public interest, and that assessment has demonstrated that it is in the public interest.(2B) The Secretary of State may appoint such independent person as the Secretary of State thinks fit to carry out an independent assessment under subsection (2A), and may pay remuneration and allowances to that person.”Member’s explanatory statement
This amendment would require an independent assessment of whether the public interest test had been met before the Secretary of State could exercise the principal transfer powers.
Lord Hunt of Wirral (Con)
My Lords, Amendments 5, 6 and 42, standing in my name and that of my noble friend Lord Sharpe of Epsom, go to three basic questions which ought to be answered before the Government exercise powers of this scale. They are: on what evidence is nationalisation justified, by what criteria will Ministers make that judgment, and what will be the financial and economic consequences?
Amendment 5 would require an independent assessment before a principal transfer power is exercised, establishing that the proposed transfer is in the public interest. That is not an attempt to prevent the Government acting in a genuine emergency. It is an attempt to ensure that before private assets are transferred into public ownership, there is an objective check that the case has been made.
The sums involved may be very substantial. Once the state acquires a business, it may assume not only its assets but its liabilities, its working capital requirements, its investment needs, and the risks of continuing operating losses. These may be decisions with billions of pounds at stake. They should be based on evidence, not merely urgency or political pressure.
Amendment 6 is the natural counterpart. It would require the Secretary of State to lay before Parliament the full criteria by which the public interest test has been judged. The Bill currently gives Ministers a broad discretion. I believe that Parliament is entitled to know how that discretion has been exercised before a transfer takes place. What precisely has been considered? How have national security, economic consequences, competition, costs to the taxpayer and the future viability of the undertaking been weighed? Those are not matters which should be left to assertion after the event.
Lord Redwood (Con)
I am very glad that my noble friend raised the issue of an impact assessment, because if the Government press ahead with the acquisition of British Steel under the legislation, that could be the first opportunity we have for a realistic impact assessment. Yet, the taxpayer has been responsible for the losses in working capital and investment funds for over a year now, with the lack of clear reporting that we have commented on before.
We have an impact assessment for this piece of legislation. Understandably, it says that there are not any costs or benefits to report, because there is not a transaction. These are enabling powers, which would enable the Government to undertake and complete a transaction. But it would only be at that point that officials tasked with the difficult question “What is the impact?” would be able to come up with some numbers, because we would then presumably have some visibility on the cost of acquisition, if any, the operating costs and working capital costs that will go forward. That would be very helpful, in connection with the difficult investment at Scunthorpe, where, as we heard earlier, the NAO reported that there has already probably been £642 million of taxpayer expenditure up to the current month, with a very high run rate going forwards. So, I hope that the Government will offer us reassurance—if not a new clause in the Bill—to say that there will have to be a proper and timely impact assessment.
That, too, would clearly require proper due diligence, which I trust has been under way, now that the Government are responsible for the business. We would need to know that there had been a proper study of Anne and Bess, the two blast furnaces, which were either built or last substantially modified in the early 1950s. These are ageing assets. They have had deep maintenance in this century, but we would need a condition statement on that, so that the Government are reassured that however long they think they can run these blast furnaces for is feasible in terms of the condition of the plant. In order to sustain the employment for the next month, year or whatever it may be, we would need to know that there will not be major maintenance required or no question of having to cool the furnaces down, because that is a dangerous and expensive process and would raise issues about how easy it would be to spend enough money to reinstate these particular assets.
Of course, it would also require proper reporting to the Government—not supplying all the detail to us, but proper reporting on market prospects and how the steel product produced at Scunthorpe is perceived, and what the market opportunities, in general terms, might be and other supporting documents. It will require a serious impact statement, for the benefit of democratic accountability. More importantly, that would prove that the Government have done their homework, because the Government should not be taking on a plant like this unless they have a condition report, a marketing report, a proper cost examination and so forth, which I and my noble friends have been referring to.
Lord Fox (LD)
My Lords, I do not want to be the bringer of bad news to the noble Lord, Lord Redwood, but I suspect that it is pretty clear that the condition of the blast furnaces is poor and whatever happens, either to reinstate them to the level that would take them forward or to invest in electric arc, will take a lot of money. That is the point that we are focusing in on, and that is why we are focusing in on the public interest test. We have not yet gotten past Clause 2 yet, because this is the crunch.
I have a group of amendments in the next group, so I will reserve almost everything I have to say. The noble Lord, Lord Hunt, has already disobeyed his Amendment 2, because we are seeking to broaden the scope of the public interest test. With respect to the noble and right reverend Lord, Lord Sentamu, there is such a number of issues that have to be addressed within the particular field of potential investment that the public interest really requires focus. I will leave it at that for this group and then come back to these in the next group.
Lord Leong (Lab)
My Lords, I thank the noble Lords, Lord Redwood, Lord Fox and Lord Hunt, for their contributions.
The noble Lords, Lord Hunt and Lord Sharpe, tabled Amendments 5, 6, and 42 to provide for an independent person to assess the public interest. Further amendments tabled by the noble Lords would require the Government to publish both the criteria used to assess the public interest and their assessment on how those criteria are met, before exercising the principal transfer power. Amendment 42 would require an impact assessment to be published before any intervention or the exercise of any power under the Bill. As these amendments deal with similar issues, I will address them together.
I start by saying that I understand and sympathise with the desire for the greatest parliamentary and stakeholder scrutiny of a decision to intervene under the powers in the Bill. Stakeholder engagement is a key part of the Government’s policy approach to the sector, with Ministers regularly meeting key industry groups and representatives through the steel council and other forums. The Government have published an impact assessment alongside the Bill, explaining how the public interest test will be considered. A further impact assessment will be published alongside any secondary legislation exercising the transfer of power.
The framework for decisions to intervene will stem from what has been included in Clause 2, with regard to the three public interest factors. There is no attempt on our part to obfuscate or hide the criteria that will be applied in practice. The Government will not only consider whether a steel undertaking is engaged in activity that serves the public interest; they will also consider whether the activity is at risk of not receiving government intervention.
The Government cannot support these amendments as each would create additional hurdles and process pre-intervention. In the kinds of situations that the Bill envisages, speed will be crucial. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances, be necessary to avoid uncertainty.
None the less, I am aware that there are strongly held concerns about this issue, and I can confirm that the Government will consider options for Parliament to scrutinise decisions taken either at the time of or after the exercise of the transfer of powers ahead of Report stage. I hope that this offers some reassurance to noble Lords, and I look forward to continuing further conversations with the noble Lord, Lord Fox, ahead of Report. With that, I ask that the amendment be withdrawn.
Lord Hunt of Wirral (Con)
My Lords, I am very grateful to the Minister for his response, particularly his closing words. My hopes were raised when he started by saying that he understood everything that I had said and was sympathetic. Then the situation clouded a little as he said that these amendments would present additional hurdles at a time when speed would be essential, but then he said that the Government would consider options between now and Report—and that is what I was seeking to hear.
I am very grateful to my noble friend Lord Redwood for putting it all in the historical context. It is easy to forget the pace at which we entered this debate, by being summoned to Parliament in April of last year. As the noble Lord, Lord Fox, reminded us, Clause 2 is the crunch. It is a key part of this Bill. To remind colleagues, Amendment 5 would require an independent assessment confirming that nationalisation is in the public interest before transfer powers could be used. Therefore, as we approach that amendment, I obviously cannot press the Minister on the options that the Government will consider, but it would be a way forward if we could find a solution comparable to that in Amendment 6, requiring the Secretary of State to lay before Parliament the criteria used to assess the public interest before using transfer powers—and then Amendment 42, which would require an impact assessment.
I recognise the point that the Minister has made about the practical difficulty of preparing a full assessment before the exercise of emergency powers—particularly, as he explained, where Ministers may need to act quickly to prevent serious harm. However, that cannot mean, as I believe the Minister accepts, that the financial consequences are treated lightly. The cost to the taxpayer of taking on a steel undertaking—its liabilities, its working capital needs and its future investment requirements—may be substantial. As my noble friend Lord Redwood pointed out, Parliament has a proper understanding and an interest in understanding those costs, the risks assumed and the basis on which the decisions have been made. Parliamentary scrutiny should not be seen as an obstacle to action. It is surely a necessary part of ensuring that exceptional powers are used responsibly and transparently.
We await the decision of the Government. I had hoped that the Minister would commit to publishing an impact assessment alongside the exercise of the power. I will examine his words carefully, because that assessment is the key. It should set out the costs incurred, the economic implications, the liabilities assumed, the anticipated future costs and the risks to the taxpayer. There is much for the Government to reflect on. I beg leave to withdraw the amendment.
Lord Fox
“(2A) The Secretary of State may not exercise a principal transfer power unless they have laid a statement before both Houses of Parliament explaining their reasons for concluding that it is necessary to exercise the power in the public interest.”Member's explanatory statement
This amendment would require the Secretary of State to lay a statement before Parliament explaining their reasons for concluding that it is necessary to exercise a principal transfer power in the national interest, before exercising that power.
Lord Fox (LD)
My Lords, I shall speak also to Amendments 10 and 11 in my name.
Agreement appears to have broken out. The noble Lord, Lord Hunt, the Minister and I all agree that the wording of Clause 2 is central to how we move forward. I always suspected that the public interest test element would be the hardest bit to resolve in this Bill. We are beginning to see that this might be true.
Lord Sharpe of Epsom (Con)
My Lords, I am very grateful to the noble Lord, Lord Fox, for bringing forward these amendments. As he has observed, there are similarities with some amendments of ours and we are happy to work together to clarify them. He could also have said that Parliament will be acting at speed tomorrow on the National Security (State Threats) Bill from the noble Lord, Lord Hanson—so it can be done.
We have already raised significant concerns about the breadth of the public interest test in Clause 2. The amendments in this group go directly to those concerns. The noble Lord is quite right that, before such exceptional powers are used, Parliament should be told why nationalisation is considered necessary. It is also right that the Government should have to consider the effect on the public finances and whether the undertaking has any credible short-term and long-term prospect of being investable. A business may be capable of being kept open in the short term, but that is not the same as being viable, competitive or capable of attracting the investment needed for its future. The public interest also cannot be assessed without proper regard to the liabilities and continuing costs that may fall on taxpayers.
The Government’s approach so far has relied heavily on broad discretion and ministerial assurance. These noble Lord’s amendments would introduce greater transparency, discipline and realism into that process. For those reasons, we support them.
Lord Leong (Lab)
My Lords, I thank the noble Lords, Lord Fox and Lord Sharpe, for their contributions. I also thank the noble Lord, Lord Fox, for his constructive engagement over the past few weeks. I understand that he is trying to support the steel sector and the Bill while ensuring value for money, which is the Government’s objective as well.
Amendment 10 would require the Secretary of State to take into account the impact on the public finances when applying the public interest test. Of course, any decision to nationalise a steel undertaking should not be taken lightly, given the significant costs that could be incurred. However, the principle of securing value for money for the taxpayer is already well established and embedded in government decision-making, as I said on an earlier group. Any decision to exercise the powers in the Bill is subject to the usual Managing Public Money governance and the framework of accounting officer checks, which includes consideration of the impact on the public finances. I therefore respectfully suggest that incorporating the amendment into statute would not serve any particular purpose, but we are mindful of ensuring that costs associated with the Bill are well managed.
The noble Lord, Lord Fox, also proposes, in Amendment 11, that the Secretary of State should take into account the short-term and long-term investability of a steel undertaking when considering whether to intervene in the public interest. I understand the sentiment behind the amendment, but I do not think that investability should directly inform the public interest test.
If a steel undertaking is an investible prospect in the short term, it is unlikely that there would be a case for government intervention, as the need could be met by the private sector. The intention behind the Bill is not to crowd out private investment but to act where private ownership has failed. Whether a steel undertaking is investible in the longer term is highly speculative, so I do not think it would be particularly helpful for it to form part of the statutory framework for the decision. By intervening, the Government would hope to turn a steel undertaking that is not investible into something that may become investible. To the extent that this is what the noble Lord hopes to achieve, we share his ambition, but I do not think that the amendment is workable.
Amendment 7 would prevent the Secretary of State exercising the principal transfer powers until a statement explaining how the public interest test is met has been provided to Parliament. I am sympathetic to the desire for greater parliamentary and stakeholder scrutiny of any decision to intervene under the powers in the Bill.
As I said previously, the Government have published an impact assessment alongside the Bill, explaining how the public interest test will be considered. Any further impact assessment would be published alongside any secondary legislation exercising the transfer powers. The framework for the decision to intervene will stem from the three public interest factors included in Clause 2. The Government will consider not only whether a steel undertaking is engaged in activity that serves the public interest but whether that activity is at risk without government intervention.
The Government cannot support this amendment, as it would create additional hurdles and processes pre-intervention. In the kinds of situations that the Bill envisages, speed will be crucial, as I said previously. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances, be necessary to avoid uncertainty; I take note of what noble Lords said about speed. None the less, I am aware that there are strongly held concerns about this issue and I confirm that, ahead of Report, the Government will consider options for Parliament to scrutinise decisions taken either at the time of or after the exercise of the transfer powers. I hope that this of some reassurance to the noble Lord and ask that his amendment be withdrawn.
Lord Fox (LD)
My Lords, I thank the noble Lord, Lord Sharpe, for his support for these amendments and I was pleased to hear the closing part of the Minister’s statement. We all want the costs of any nationalisation to be well managed; we are looking for those costs to be well understood in advance of any commitment by the Government on behalf of the people of this country. We look forward to those discussions and I beg leave to withdraw Amendment 7.
Lord Wigley
“(2A) In assessing the “public interest” in regard to the exercise of transfer powers relating to a steel undertaking located in Wales, the Secretary of State must consult the First Minister of Wales before exercising such principal transfer powers.”Member’s explanatory statement
This amendment is to ensure that the UK Minister and the First Minister of Wales work together in taking forward transfer powers which involve a steel undertaking in Wales.
Lord Wigley (PC)
My Lords, the amendment proposes inserting a new subsection (2A), which provides that:
“In assessing the ‘public interest’”—
which is the whole dimension underpinning the Bill—
“in regard to the exercise of transfer powers relating to a steel undertaking located in Wales, the Secretary of State must consult the First Minister of Wales before exercising such principal transfer powers”.
This is surely basic common sense, since many, if not most, of the responsibilities impacted by such transfers in Wales rest with Senedd Cymru. These powers include economic development, town and country planning, roads, education and training, and the environment. Each one of these may, and almost certainly will, be impacted by the consequences of transfer decisions.
To those who argue that responsibility to co-operate already exists, I say that, if that responsibility is spelled out in the Bill, it would trigger an earlier and more thorough approach. Otherwise, it would be so easy to treat such dialogue and mutual action as an afterthought when it should be a cast-iron statutory requirement.
This brings me to the associated Amendment 19. Clause 50 provides powers to the Secretary of State
“to modify law in connection with … property transfers”.
Clause 50(3) is very serious as it provides for retrospective legislation. This should always trigger alarm bells, in whatever context it arises. As many of the legislative responsibilities that might be impacted by this are fully devolved to Senedd Cymru, any such regulations must be made only with the prior agreement of Senedd Cymru. This must be included in the Bill, otherwise it would be open to a Pandora’s box of utter chaos.
Amendment 19 specifically provides a route to avoid such consequences by requiring the prior agreement of Senedd Cymru to any such regulations that involve devolved powers. Including this in the Bill would avoid misunderstanding and unhelpful polarisation, so I beg to move Amendment 9 and would like to hear the Minister’s response to both it and Amendment 19.
Lord Fox (LD)
I will be very brief and speak with some support for the noble Lord, Lord Wigley. As far as I can tell, the Bill does not require legislative consent from either Cardiff or Edinburgh. Perhaps the Minister could confirm that. If it does not, the principle set out by the noble Lord, for both Wales and Scotland—I know that there may be industrial differences, but the two things apply—would be very important. I look forward to hearing what the Minister says in that regard.
Lord Hunt of Wirral (Con)
My Lords, I very much echo what the noble Lord, Lord Fox, has just said, and I thank the noble Lord, Lord Wigley, for his amendments, which raise very important points. There are considerable concerns about what is happening at steel plants in Wales and the consequences for the workers, their families and the much wider community. It is right that, where these powers may affect a Welsh steel undertaking or devolved responsibilities, Wales should be properly involved. I urge the Minister to respond positively to the concerns so rightly raised by the noble Lord.
Lord Leong (Lab)
My Lords, in this group of amendments, the noble Lord, Lord Wigley, has raised important concerns about the ways in which the Bill includes the Welsh Government and legislature in decision making. Amendment 9 would amend Clause 2 on the public interest so that the Secretary of State would be required to consult the First Minister of Wales before exercising the principal transfer power in relation to an undertaking located in Wales.
The Government have been keen to engage closely with the devolved Governments throughout the passage of the Bill, and I am grateful for the approach taken by all parties in that engagement. I am delighted to inform your Lordships that the Scottish Parliament granted its legislative consent to the Bill on 23 June. I record my thanks to Ministers and officials who worked swiftly to complete the legislative consent process ahead of the Scottish Parliament’s Summer Recess.
I am happy to confirm that the Government will ordinarily consult the relevant devolved Ministers if it is likely that the principal transfer power will be used in relation to a steel undertaking with its principal place of business in Scotland, Wales or Northern Ireland. If this is not possible because swift action in the public interest is required, Ministers will engage with their ministerial counterparts at the earliest opportunity following the exercise of the principal transfer power. I also understand that my colleagues, Ministers and the Secretary of State for Wales will meet their counterparts in the Welsh Government tomorrow to discuss the Bill further.
Amendment 19 would require the Senedd to give approval to any proposed use of the modification power that would relate to devolved regulations. Again, I am sympathetic to the sentiment of this amendment and reassure the noble Lord that the modification power in Clause 50 is targeted and limited to applications necessary to ensure that transfer powers can be exercised effectively. It is not a general power to amend legislation. The drafting does not permit any changes to other laws unless they are for the purpose of ensuring that the powers in the Bill can be exercised effectively.
Although I cannot agree with these amendments, I reiterate the Government’s desire to continue engaging closely with our partners in the devolved Governments. In particular, the Government are continuing to discuss the Bill with the Welsh Government, and I hope to be able to provide noble Lords with further updates later in the Bill’s passage. However, I ask the noble Lord to withdraw his amendment.
Lord Wigley (PC)
Well, well, well—I thank noble Lords for their positive responses. I thank the noble Lords, Lord Fox and Lord Hunt, and indeed the Minister, for the tone and content of their support for the principles here, if not the exact wording on the Order Paper. I noted with interest the ongoing discussions with colleagues in Cardiff and that there are further discussions about to take place. If, arising from those discussions, the Government feel it is appropriate to tweak the Bill to cover those points, I am sure that would be widely welcomed all round. On the basis of this general positive approach, I beg leave to withdraw the amendment.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment seeks to prevent the Secretary of State extending the sunset of the principal transfer powers.
Lord Sharpe of Epsom (Con)
My Lords, I hope that this outbreak of agreement means that the Government will accept my Amendment 12. The Government have repeatedly spoken of a long-term plan for steel—securing private investment, increasing domestic production, safeguarding jobs and creating a viable future for the industry. Against that background, Clause 3 comes as something of a surprise. Earlier, the noble Lord, Lord Fox, indicated that he was somewhat reassured by its presence, but I suspect that its actual terms have escaped his usual vulpine scrutiny. A sunset clause is intended to place a clear limit on exceptional powers, but the Bill allows the Secretary of State to substitute, by regulations, a different period for the two-year limit.
Subsection (4) makes it clear that this can be done more than once. Therefore, in practice, the powers could be extended again and again, which gives no reassurance at all. Two years could become five years, 10 years or longer. That is not a meaningful sunset clause; it is a potentially perpetual sunset clause. It is an indefinitely renewable power.
What does that say about the Government’s confidence in their own ability to secure a viable private sector-led future for British Steel? If Ministers genuinely expect these powers to be exceptional and temporary, why do they require the ability to extend them without any stated final limit? This goes directly to the concerns raised throughout our debates—the risk of open-ended liabilities for taxpayers, uncertainty for investors and a lack of clarity about the Government’s intended endpoint.
The Constitution Committee of your Lordships’ House has considered this point and has been unequivocal. It said:
“The use of delegated powers to bypass sunset clauses undermines their purpose, and sets an unusual and unwelcome precedent”.
It recommended either that the final period of extension be set out in the Bill or that there should be a statutory time limit each time the power is used. This would not prevent the Government seeking additional time when there is a compelling case, but it would require Ministers to return to Parliament with a clear final boundary rather than retaining power capable of perpetual renewal.
Will the Minister accept the Constitution Committee’s recommendations and bring forward amendments before Report? Will the Government set a final limit on these powers and demonstrate that they have genuine confidence in securing a thriving, investible and private sector-led future for British Steel? I beg to move.
Lord Fox (LD)
My Lords, I see the point that the noble Lord, Lord Sharpe, has made, and I commend him for getting past this amendment before 9.21 pm, which is of course sunset.
Lord Leong (Lab)
I thank the noble Lord, Lord Sharpe, for his contribution. I note the Constitution Committee’s comments on this clause in its recently published report on the Bill. The inclusion of the sunset provision demonstrates the Government’s commitment to ensuring that powers remain on the statute book for as long as necessary to serve their purpose. Ultimately, we want to see the domestic steel sector return to a more sustainable and stable state in which government intervention is unnecessary.
As we have said, we do not currently see another use case beyond the possibility of British Steel. Therefore, we hope that noble Lords get their wish and there is no need to extend the sunset period. However, the current geopolitical landscape creates a volatile backdrop for this sector, making it difficult to anticipate what may transpire in the coming months and years. We have therefore built in some flexibility to extend or shorten the two-year sunset timetable if circumstances change. We consider this a reasonable precaution to take.
The drafting ensures that there will be full parliamentary scrutiny of any change to the sunset period through the affirmative procedure, meaning that parliamentarians will be able to test and debate any regulations brought by the Government to extend the sunset period. We anticipate needing to use this extension power only in extenuating circumstances. I therefore request that the amendment be withdrawn.
Lord Sharpe of Epsom (Con)
My Lords, that was a very brief debate, and I am grateful to the Minister for his response, but I am afraid I remain unconvinced. The Government say they want to secure a sustainable private sector-led future for British Steel. But a power capable of being extended repeatedly without any final statutory limit sends exactly the opposite signal. It risks making investors more, not less, cautious about committing capital to the sector. There must be a reasonable period that the Minister can identify and put in the Bill. If the Government genuinely regard these as exceptional and temporary powers, they should be willing to set out a clear limit.
The noble Lord cannot realistically blame external circumstances. There are always external circumstances. This has fallen foul of the Constitution Committee for very clear reasons, which it has set out. Speaking personally and from experience, I think it is unwise to fall foul of the Constitution Committee.
We urge the Government to take seriously the recommendation of the committee and either specify the final extension period in the Bill or impose a statutory limit on each extension. I think we will have to return to this matter at a later stage, but for now I beg leave to withdraw the amendment.
Lord Hunt of Wirral
Member’s explanatory statement
This amendment seeks to require regulations transferring securities of a steel undertaking to be subject to the affirmative procedure.
Lord Hunt of Wirral (Con)
My Lords, Amendment 13 makes regulations transferring securities in a steel undertaking subject to the affirmative procedure. Amendment 14 makes regulations transferring the property rights or liabilities of a steel undertaking subject to the affirmative procedure. Amendment 15 makes regulations on continuity obligations subject to the affirmative procedure. Amendment 18 in this group makes enforcement regulations subject to the affirmative procedure. I will begin by referring to those amendments but speaking to the question of whether Clause 50 should stand part of the Bill.
This clause gives the Secretary of State a very broad power to modify primary legislation, secondary legislation and common law in connection with a share or property transfer. It may be used retrospectively and, in some circumstances, before Parliament has had the opportunity to approve the regulations. These are considerable powers, particularly when we are discussing property rights, contractual rights and the compulsory transfer of businesses and their assets. My noble friend Lord Sharpe of Epsom has already referred to the report of the Constitution Committee, and he speaks from personal experience of knowing the dangers of ignoring the recommendations of that committee. The committee is pretty clear about Clause 50, and I will quote from its report:
“We recommend that the broad power granted to the Secretary of State in Clause 50(1) to modify the law in relation to share or property transfer by regulations should either be removed or significantly tightened to specify the circumstances in which such law may be modified”.
I believe that the Government should take that recommendation seriously.
The Government’s delegated powers memorandum sets out at some length why Ministers believe that a broad power may be needed. It refers to the complexities of company law, insolvency law, commercial law and supply chains, and the possibility that an obstacle to a transfer may emerge unexpectedly. A compulsory transfer may well give rise to legal complications, but the memorandum does not provide concrete examples of the circumstances in which primary legislation would need to be disapplied or modified. If those circumstances can be identified, they should be placed in the Bill, or at least the power should be more tightly defined.
On Amendments 13 and 14, the Government’s own delegated powers memorandum confirms that the transfer powers in Clauses 4 to 29 are subject to the negative procedure. That is a very wide suite of powers. They not only concern the initial transfer of shares or property but include the legal effect of those transfers, continuity arrangements, the conversion and delisting of securities, the position of directors and senior managers, licences, termination rights, foreign property and supplemental onward, reverse and connected transfers. Amendments 13 and 14 focus on the central powers, the compulsory transfer of securities and the compulsory transfer of property rights and liabilities. Those are the acts by which the state takes control of a private business, or part of one.
Lord Fox (LD)
My Lords, I have to say I was a bit grumpy when the Conservative Party tabled these amendments that we had tabled in the Commons, but in retrospect I am very pleased. No joking—that was a tour de force from the noble Lord, Lord Hunt. This is his specialist area, and that was his best speech on Henry VIII that I have heard. All the points were points that I would have made except that I am not good enough to have made them, so in that respect I am glad that he was the person proposing this, rather than I. The only thing that stops the noble Lord from being risen to the pantheon is that, having won affirmative powers, he and his colleagues never actually exercise them through fatal Motions. Frankly, that is the only flaw in what we have just heard.
I countersigned Amendments 13 to 15 and 18 but my pen ran out when we got to Clause 50 stand part. All the points that the noble Lord made are valid. I hope the Government are able to take on board both what he said and what your Lordships’ committees have said about the shortcomings in this draft.
Lord Leong (Lab)
My Lords, before I turn to the amendments in this group, I thank the members of the Select Committee on the Constitution for their report on the Bill, which relates to this grouping. The report recommended that in Clause 47 the provisions for dispute settlement should be set out more fully in the Bill. The approach to drafting here is in line with existing precedent under the Banking Act 2009 and reflects the approach taken for similar powers, such as enforcement powers. We think it is appropriate to provide for dispute settlement on a case-by-case basis through regulations.
Noble Lords have tabled a number of amendments relating to parliamentary scrutiny of and procedure on the transfer regulations. In particular, the noble Lords, Lord Sharpe and Lord Hunt, have tabled amendments which would change the parliamentary procedure for the principal share and property transfer powers, continuity obligations and enforcement powers from negative to affirmative. I understand the concern expressed by the noble Lords. From the outset, I reassure all noble Lords that the Government take parliamentary scrutiny extremely seriously. For that reason, we have ensured that a number of substantial powers in the Bill, such as the compensation and tax powers, are subject to the affirmative procedure. However, the Government consider that changes to the procedure for transferring powers would adversely affect the Government’s ability to effect a smooth transfer where necessary in the public interest.
Steel is fundamental to the UK’s industrial base and our national resilience, making it critical to secure supply. Any delays, especially in a non-consensual transfer, would prevent the transfer from taking place, particularly if the transferer was unco-operative. I draw noble Lords’ attention to the recently published report from the Delegated Powers and Regulatory Reform Committee, which did not raise any cause for concern about these powers, including the level of parliamentary scrutiny attached.
To set out the necessity for the negative procedure for these powers, I will discuss them in turn. I will address Amendments 13 and 14 together as they seek to amend the procedures for the share and property transfer powers respectively. It is important that the principal transfer powers can be exercised with speed and operational and legal certainty. The Government expect that, if these powers were exercised, it would be in a fast-moving, commercially sensitive situation. The affirmative procedure would introduce a substantial delay, creating a vacuum in ownership. Such uncertainty would significantly affect the business, particularly the supply chains and third-party contracts.
Amendment 15 seeks to amend the procedure for continuity obligations. The continuity obligations in the Bill are essential to ensure that the company continues to operate as normal following the transfer, minimising disruption and maintaining operations at the steel undertaking. This is achieved by imposing obligations on residual steel undertakings and their group companies to ensure that all services and facilities required by the transferred business continue to operate as normal. Any changes to the procedure would affect the effectiveness of the transfer. The Government’s primary objective with this provision is to ensure a smooth transfer of ownership. As I have set out, it is imperative that there be no delay to any transfer of a steel undertaking into public ownership.
Amendment 18, in the name of the noble Lord, Lord Sharpe, aims to amend the procedure for enforcement regulation. Clause 45 gives the Secretary of State the power to make provision in regulations for the enforcement of obligations under the share and property transfer regulations. As with the other amendments, if the Government consider it necessary to enforce obligations, they must do so at pace. Any delay in using these powers risks interrupting the transfer process and reducing its effectiveness.
For those reasons, the Government do not consider these amendments necessary. However, I have reflected on the argument made by the noble Lord, Lord Hunt. While it is critical that the Government are able to preserve their ability to enforce as necessary, there is a reasonable rationale for further parliamentary scrutiny. I cannot accept this amendment but I will consider this issue further, ahead of Report.
The noble Lords, Lord Sharpe and Lord Hunt, have given notice indicating their intention to oppose Clause 50 standing part of the Bill. That would remove the modification power in Clause 50. This power is not taken lightly, but it is a necessary measure to ensure that the transfer powers under the Bill can be used effectively. The clause has precedent because the same power was used in the Banking Act 2009 to resolve complex companies in the financial sector. Given that the transfer powers would be used only in circumstances where a public interest test was met, it is crucial that the Government have the necessary tools to ensure that any such transfers can be implemented effectively to deliver the intended outcome.
The powers in Part 1 of the Bill interact with commercial, company and insolvency law. This is the law that normally governs the consensual acquisition of companies or of their businesses. The legislative environment is therefore varied and complex and, because general legislation was not designed with compulsory transfers in mind, as the Bill envisages, there will be some tension between applying the Bill’s powers to a steel undertaking and the highly complex private law that it will inevitably cut across. The clause therefore provides a necessary power to modify other laws that may ordinarily interact with a transaction of this nature in order to integrate the Bill’s powers into the existing legislative and commercial landscape.
The use of the modification power is limited to the purpose of enabling the transfer powers to be used effectively. It is not a general power to amend legislation; it is targeted and limited. It cannot be used in isolation from the use of powers in respect of a particular steel undertaking to amend or disapply laws, and it cannot be used to amend the Bill—or Act—itself. In the absence of these powers, there is a real and significant risk that the Secretary of State could not fully and effectively implement a transfer. This could result in an ineffective or incomplete transfer to public ownership, affecting a company’s ability to continue operation. If a smooth transfer is not achieved, the public interest aims could be undermined.
I turn to the potential retrospective effect of the power. The Bill permits it to be applied retrospectively but does not require it. Preserving the possibility of applying this power retrospectively anticipates circumstances in which the transfer powers may need to be exercised at pace and in which there may be limits on the ability to conduct the level of due diligence necessary to support acquisition. Similarly, it may not be possible to identify all legislative interactions in the transfer scenario before making a transfer. This may mean that any secondary legislation made under the transfer powers may not fully affect the transfer that was intended. In such circumstances, it would be necessary to address this through the modification power, with the modification backdated to the time of transfer. The use of the power will be subject to the affirmative procedure unless there are particular circumstances that justify the Secretary of State proceeding on an affirmative basis, likely due to time pressures.
I hope that I have provided some clarity on the need to include the provision, and its retrospective effect. For these reasons, I respectfully ask that the amendment be withdrawn.
Lord Fox (LD)
On a number of occasions, the Minister has painted a picture of a breathless process, where all the organs of government have to operate at breakneck speed. Taking the Government at face value, we are talking largely about a particular asset that we have been talking about for around 15 months, since the discussion at Easter last year. At some point, perhaps not at the Dispatch Box but when we are having our meetings, the Minister will explain why there is this predisposition to putting everything in place to have things moving at the speed of light when, in reality, they have been moving relatively slowly.
Lord Leong (Lab)
I am happy to give that commitment in our further conversations.
Lord Hunt of Wirral (Con)
My Lords, I am grateful to the noble Lord, Lord Fox, not only for his generous praise, which I felt was completely undeserved, but for his support. At some stage, this great Chamber of ours will consider better ways to deal with secondary legislation. He will know that I gave quite a lot of support, when I chaired the Secondary Legislation Scrutiny Committee, to one of his noble friends who moved that there should be a new Bill—the Statutory Instruments (Amendment) Bill. But that is for another occasion. In the meantime, I thank the noble Lord for his strong support.
There is clearly much now for the Government to consider, in particular in view of the commitments made by the Minister. How do we achieve the right balance between acting swiftly where necessary and, at the same time, ensuring that Parliament has a meaningful role in scrutinising powers, particularly where they affect property rights, liabilities and commercial arrangements? I am sure these issues will merit further discussion as the Bill progresses. For the present, I beg leave to withdraw the amendment.
Steel Industry (Nationalisation) Bill
Wednesday 1st July 2026
(3 weeks, 5 days ago)
Lords ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 22–II Second marshalled list for Committee - (30 Jun 2026)
Lord Sharpe of Epsom
“(3A) On the day on which this Act is passed, the Secretary of State must lay before Parliament a consultation document on the proposed exercise of the powers under this section.(3B) The consultation document must invite representations from—(a) every steel undertaking affected by the provisions of this Act,(b) trustees or managers of any pension scheme in respect of which such an undertaking, or a group company of such an undertaking, is or was an employer,(c) persons appearing to the Secretary of State to represent members and other beneficiaries of such schemes,(d) trade unions representing employees of such undertakings,(e) the Pensions Regulator, and(f) the Pension Protection Fund.(3C) Before making regulations containing provision by virtue of this section, the Secretary of State must have regard to the interests of members and other beneficiaries of affected pension schemes, including the protection of accrued rights and the security of benefits.”Member’s explanatory statement
This amendment requires the Secretary of State to lay a consultation document before Parliament on the day the Act is passed, consult affected steel undertakings and pension stakeholders, and have regard to scheme members’ and beneficiaries’ interests before exercising the pension powers.
Lord Sharpe of Epsom (Con)
My Lords, my apologies: I was asleep at the wheel, much like the England defence. I rise to speak to Amendments 16 and 17 in my name and that of my noble friend Lord Hunt of Wirral.
I thank the Minister for his letter on Clause 44 and for meeting us to discuss the Bill and the ways in which it may be improved. I welcome his confirmation that the Government’s intention is for workers’ pension benefits to remain unchanged, but where the Bill gives the Secretary of State powers to modify or apportion pension rights and liabilities, transfer accrued rights between schemes, and amend scheme terms, workers and pensioners need more than an assurance of present intent. They need a clear legal safeguard, which my Amendment 17 would provide. It would ensure that regulations made under Clause 44 could not reduce the value of accrued pension rights or benefits, nor make the terms on which benefits accrue less favourable in future.
Amendment 16 addresses consultation and engagement. It would require the Government to consult affected undertakings, pension trustees and managers, scheme members and beneficiaries, trade unions, the Pensions Regulator and the Pension Protection Fund, and to have regard to the interests of members and beneficiaries, including the protection of accrued rights and the security of benefits. The Minister suggested that full consultation before the use of these powers may not be realistic where urgent action is required. We understand the need to avoid delay where a transfer must take place swiftly, but urgency cannot mean that pension stakeholders are simply bypassed. If consultation cannot practically take place before a transfer, will the Minister commit to a prompt and meaningful consultation afterwards, and in any event before any further pension regulations are made? Will he also confirm that the Government will engage formally with the Pensions Regulator, the Pension Protection Fund, trustees, scheme members and their representatives, so that any necessary arrangements are made to protect members’ accrued rights and the long-term security of their benefits? I beg to move.
Lord Fox (LD)
My Lords, I, too, am confused, because I thought Amendment 20 was in this group.
Lord Fox (LD)
Unfortunately, the proposer failed to mention it in his speech. I signed it merely because I wanted to indicate that the contingent liabilities are an important part of the Bill as we discuss it. However, the main issues within this group are those that I will discuss later, in group 4. In that respect, I am going to keep my powder dry.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)
My Lords, before I start, I am sure all noble Lords want to join me in wishing the England team the very best for the rest of the match this afternoon.
First, let me thank the noble Lord, Lord Sharpe, for his contribution and his amendments. Amendment 20, in the name of the noble Lord, Lord Fox, would require the Government to provide a statement to Parliament outlining the value of contingent liabilities and the steps they would take to minimise taxpayer exposure to them before an intervention. As I have set out previously, the Government are somewhat constrained in the procedural steps they can take before exercising the power in the Bill. This is why the transfer powers are exercisable by regulations subject to a negative procedure. We will likely be operating in a fast-moving commercial environment where intervention needs to be done at pace, and negative procedure transfer regulations do not require prior parliamentary approval before they take legal effect.
It is not appropriate to publish details of a private company’s contingent liabilities prior to nationalisation. If a steel undertaking is brought into the public sector, its financial position will rightly be subject to parliamentary scrutiny, including the publication of its annual report and accounts. Of course, the Government will take steps to minimise taxpayers’ exposure to liabilities wherever possible. Any decision to exercise the transfer powers will be subject to the usual principles of Managing Public Money and government approval processes.
Amendment 17, tabled by the noble Lord, Lord Sharpe, seeks to prevent any pension regulations from reducing accrued pension rights or benefits or worsening future pension terms. I thank the noble Lord for his amendment and understand his concerns that the Bill may adversely affect pension rights, benefits or terms for employees. I reassure the noble Lord that any use of these powers would be considered on a case-by-case basis, with the primary objective of ensuring alignment across pensions. These powers give the Government the flexibility to achieve this. Any changes to the terms would likely be due to regulatory changes where pension terms may need to be standardised or contributions adjusted. The Government would seek to consult regulators, unions and employees, where possible, on any future changes.
Amendment 16 seeks to require the Secretary of State to consult with affected steel undertakings and affected pension stakeholders before exercising the pension powers. To address the concerns raised by the noble Lord, Lord Sharpe, perhaps it would be useful to set out the Government’s intent behind Clause 44. Clause 44 is essential for managing the consequences of a transfer for pension schemes and for employees’ rights under a pension scheme. It enables the Government to make provision for pension schemes where the steel undertaking is or was an employer.
These powers are necessary and give the Government flexibility on a case-by-case basis to make suitable provision for pensions during the transfer. For example, the provision would enable the Government to modify terms in the event of regulatory changes where pension terms may need to be standardised upon transfer or contribution minimums adjusted. It also gives the Government flexibility on a case-by-case basis, if needed, to consider a fair division of pension liabilities between the transferer and transferee in complex transfers.
In the case of British Steel, if, after Royal Assent, the Government decided that nationalising British Steel was necessary in the public interest, this power would not be required. To the best of our knowledge, British Steel has a defined contribution scheme, so there is nothing to transfer or leave behind.
In relation to the requirement to consult before exercising these powers, I reassure the noble Lord that, wherever possible, the Government would seek to consult with regulators. However, a statutory duty to consult could delay the transfer of the pension schemes, causing uncertainty and concern among employees. That is exactly what the Government are trying to avoid. For those reasons, I do not consider this amendment necessary and ask for it to be withdrawn.
Lord Sharpe of Epsom (Con)
I am grateful to the Minister for his answers and to the noble Lord, Lord Fox, for correctly pointing out that I neglected to mention Amendment 20 on contingent liabilities. We will come back to that.
As regards Amendments 16 and 17, I am grateful for the Minister’s commitments, particularly on consultations where possible. Perhaps we could explore in another forum what potentially that will mean in practice. People’s pensions are their future and their security. It is vital that the Government ensure that workers’ pension rights are properly protected—I have no doubt at all that the Minister agrees with that—and that the relevant experts, regulators and representatives are fully consulted as these powers are exercised. We are merely trying to explore how that is done. I look forward to picking up that subject again in the future. For the present, I beg leave to withdraw Amendment 16.
Lord Hunt of Wirral
“Duty to try to find a private sector purchaser for any nationalised steel undertakingWhere a steel undertaking has been subject to a principal transfer power under this Act, the Secretary of State must—(a) make all practicable efforts to find a private sector purchaser for the steel undertaking, and(b) lay a report before Parliament every six months which sets out progress made towards finding a private sector purchaser for the steel undertaking.”Member’s explanatory statement
This new clause would put a duty on the Secretary of State to seek a private sector buyer for any steel company that has been nationalised, and report to Parliament on progress made every six months.
Lord Hunt of Wirral (Con)
My Lords, Amendment 21, standing in my name and that of my noble friend Lord Sharpe of Epsom, would, ultimately, put into the Bill what the Government say is their objective. The then Secretary of State for Business and Trade said that the Government’s aspiration for British Steel was
“a co-investment agreement with a private sector partner to secure a long-term transformation”.—[Official Report, Commons, 12/4/25; col. 841.]
The future of British Steel cannot rest indefinitely on public ownership and continuing working capital injections, together with an open-ended commitment from the taxpayer. It must be a viable, competitive and investible business able to secure private capital for the investment and the transformation that it requires. Yet that objective does not appear in the Bill. There is no statutory duty on the Secretary of State to seek a private sector purchaser, no clear exit route from public ownership and no requirement to report to Parliament on progress. Without that discipline, there is a real risk that nationalisation becomes not just a temporary intervention to stabilise and restore business but an accumulating and indefinite cost to the taxpayer. If the Government are serious about a private sector-led future for British Steel, they should have no difficulty in accepting that duty.
Amendment 23 from the noble Lord, Lord Fox, is very important indeed. It goes to the heart of concerns raised throughout these debates, including by my noble friend Lord Redwood on the first day in Committee, that the Government need a genuine business strategy for steel. Where nationalisation is contemplated, there must be a strategy for skilled employment, retraining, reskilling and local economic renewal. Workers cannot be treated as an afterthought to a transfer of assets or as a balance sheet exercise. I look forward to hearing the Minister’s response. I beg to move.
Lord Fox (LD)
My Lords, Amendment 23 is in my name. I was very pleased to hear what the noble Lord, Lord Hunt, just said, because I had put in my notes that I feel that this is an important amendment. I hope it is pushing at an open door.
In the previous debate, on Monday, the noble Lord, Lord Wigley, spoke of the effect on local communities. I agreed then, and this amendment would put in place a requirement for a jobs and industrial transition strategy to follow once the Secretary of State has exercised the principal transfer power in respect of the steel undertaking. I emphasise that this would be post exercising that power.
This amendment calls for the strategy to be laid before Parliament within six months—sooner, I would hope—from the exercise of the transfer powers. This published strategy must set out the Government’s investment and transition plans to protect employment, deliver a skills and reskilling programme and, if necessary, redeployment opportunities, and deliver real economic renewal, while supporting resilience in communities that are dependent on that steel undertaking. I am happy to discuss with the Minister ways of achieving this objective, but this process is aimed at ensuring that there is an explicit plan to which Parliament will be able to hold the Government to account.
Lord Redwood (Con)
My Lords, these are indeed important amendments. It is a tragedy what has been happening to our steel industry in this country. It suffered considerable decline under the last Government thanks to very high energy prices and decarbonisation, which turned out to be disruptive. In the last full year of the Conservatives, we were down to 5.6 million tonnes of manufactured steel—around half our requirement.
There has now been a further very big collapse, such that our output last year was, I think, around half of that in 2023—around 2.5 million tonnes—and we are heading for an even smaller output this year unless the business plan is provided, kicks in and starts to do something to help the ailing Scunthorpe business that we are talking about. I think we are united in our belief that this is not what we want from our steel industry. It means that we have a chronic dependence—in the last year, 7.1 million tonnes—on imported steel and we are heading to a position where we import practically all our steel. I fear we will discover that, unless we do something about electricity prices, even when electric arc production starts to kick in on a bit of a bigger scale, it will be very difficult to sell that steel at a profit because the electricity costs are unrealistic and uncompetitive, as well as the general carbon taxes and carbon costs, which have been adversely affecting the blast furnaces.
Given our common interest in saving jobs and having a better steel sector, I again urge the Government to provide that plan and that thought-through work, which should be shared without commercial secrets with the wider public and both Houses of Parliament. This would give us some confidence that there is a way out of this very deep tunnel that we are going down to producing less and less steel of our own.
The Government have clearly introduced very penal tariffs on importing steel from non-EU sources, with the 50% increase in tariff. They hope that that will change the situation but, because they have relaxed the quotas for the EU, I suspect that we are still extremely vulnerable to EU import competition at a time when our industry is not properly competitive. They will find that the tariffs will not protect the diminishing British steel industry, but that the much bigger and somewhat stronger steel-using industries in the United Kingdom will be very gravely affected, because more than half our imported steel may well have to come from sources that attract tariffs. That will be very penal and, therefore, will reduce the amount of steel-using activity that we can undertake.
I urge the Government to take some of these points seriously. I am glad that two sensible amendments have been put forward to concentrate this debate.
Lord Wigley (PC)
My Lords, I am glad to have the opportunity to support Amendment 23, tabled by the noble Lord, Lord Fox, concerning a jobs and industrial transition strategy, which is very much in in line with the comments I made in our previous debate. The question of protecting skilled employment, in particular, and the need to reskill and deliver the tangible economic renewal, support and resilience in the local communities is very close to my heart. It is also very close to the minds of those in places such as Port Talbot who have faced insecurity in these matters. I hope that the Government, if they are not able to accept this amendment, will at least underline their agreement with its approach. I would be very surprised if it was not the Government’s approach, in fact.
When it comes to Amendment 21—I address this to the noble Lord, Lord Hunt, who moved the amendment —if a duty is placed to find a private sector purchaser as soon as possible then surely that has to be constrained very much more than in the amendment. What would the situation be if an overseas company in the private sector was to make a bid? As I see it, the whole logic behind the nationalisation that we have here is to defend the United Kingdom’s strategic interests as well as its economic interests. If an important part of the steel industry was to fall into overseas hands—perhaps a perfectly reputable company but an overseas company outside the control of anybody within the United Kingdom—would that not raise serious questions? These are issues that I put to the noble Lord, Lord Hunt, rather than to the Minister. I regard them as a serious weakening of the Bill’s strategic objectives, which I generally support.
Lord Leong (Lab)
My Lords, I thank the noble Lords, Lord Hunt, Lord Fox, Lord Redwood and Lord Wigley, for their contributions. I am very grateful that the noble Lords, Lord Sharpe and Lord Fox, are raising important questions about the future structure and operations of any steel undertaking that may be brought into public ownership under the Bill.
Before addressing their specific amendments, I should make this very important point: no decision has been made in relation to any particular steel company. Any decision to exercise the powers in the Bill can be made only after the Bill has received Royal Assent and only if the statutory public interest test is satisfied.
With that important caveat, I turn to the specific amendments before the Committee. Amendment 21, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would place a duty on the Secretary of State to secure a private buyer for any nationalised steel undertaking at the earliest opportunity. As a matter of corporate governance, however, we would expect responsibility for exploring future ownership options to rest with the company’s board and chair, working closely with Ministers, rather than being imposed as a statutory duty on the Secretary of State. More fundamentally, I reassure the Committee that the Government share the amendment’s underlying objective. As we made clear in the steel strategy, the long-term future of the UK steel industry depends on attracting sustained private investment.
Public ownership is not an end in itself; it is a means of safeguarding a strategically important asset when exceptional circumstances require government intervention. The Government do not envisage a steel undertaking remaining in public ownership indefinitely. Our objective would be to stabilise the business, restore its commercial viability and place it on a sustainable footing so that it is well-placed to attract private investment in due course.
That said, timing is critical. A company requiring nationalisation is, by definition, unlikely to be an attractive investment on day one. It will first need financial stability and operational improvements, and in many cases a revised strategic direction, before credible private investors are prepared to commit significant capital.
Throughout that process, Ministers and the company’s leadership would remain in close dialogue about its long-term future, including the most appropriate ownership model and opportunities for private investment when the conditions are right. I hope this reassures noble Lords that the Government’s ambitions align with the intent behind this amendment. We are happy to consider further whether there are appropriate ways to make that position clearer, but we do not believe that placing a statutory duty of this kind in the Bill would improve its operation.
I turn finally to Amendment 23, in the name of the noble Lord, Lord Fox, which would require the Secretary of State to publish a jobs and industrial transition strategy after the exercise of the principal transfer power. I fully appreciate the purpose of the amendment. If the Government were required to intervene to safeguard a steel undertaking, Parliament would rightly expect a credible plan for its future. The Government share that objective. However, the success of any nationalised steel undertaking will ultimately depend on strong commercial leadership, not on a strategy prescribed by legislation.
One of the Government’s first priorities would be to appoint a board and an executive team with the expertise, commercial experience and vision to restore the business to long-term sustainability. The detailed strategy for the company’s future—including its workforce, investment, operations and industrial transition—should therefore be developed by that leadership team in close partnership with Ministers, rather than being imposed from Whitehall via a statutory reporting requirement. That approach provides the flexibility to respond to changing commercial circumstances while ensuring that the company is run on sound business principles.
That said, I recognise the importance of parliamentary scrutiny. When a steel undertaking enters public ownership, Parliament should have appropriate opportunities to understand the company’s strategic direction and to hold the Government to account for its stewardship. I am therefore happy to reflect further on the most appropriate mechanisms to provide that transparency. I am grateful to the noble Lord for raising these important issues. I hope I have provided assurances about the Government’s approach. For the reasons I have set out, I respectfully ask that the amendment be withdrawn.
Lord Hunt of Wirral (Con)
My Lords, the purpose of any debate in Committee is justified when the Minister responds by giving us the series of assurances that he has just done, and I warmly welcome his approach. He has clearly outlined that without a clear route towards private investment, this ownership, as I pointed out in moving the amendment, becomes an open-ended commitment. I thank my noble friend Lord Redwood and the noble Lord, Lord Fox, for their contributions, and I owe my good friend the noble Lord, Lord Wigley, an explanation, because this is very much a probing amendment. He is quite right that you can envisage various circumstances which are counterproductive, and that is why I warmly welcome the fact that the Minister has given such a clear commitment that there is no public ownership in perpetuity intended here. We are all determined to produce a plan which will last for generations to come and secure the future of our great steel industry, so I have no hesitation in seeking to withdraw the amendment.
Lord Fox
“Stakeholder Advisory Committee(1) The Secretary of State must establish a Stakeholder Advisory Committee to provide advice on the exercise of principal transfer powers under this Act (“the Committee”).(2) The Secretary of State must ensure that the membership of the Committee includes representation from stakeholders, including but not limited to—(a) industries that rely on the supply of steel, including the defence sector and critical national infrastructure,(b) representatives of the workforce of the steel undertaking, and(c) local authorities for the areas in which the steel undertaking operates.(3) The Secretary of State must consult, and have regard to the advice of, the Committee before making a determination that the exercise of a principal transfer power is necessary in the public interest under section 2.”Member's explanatory statement
This new clause requires the Secretary of State to establish a stakeholder advisory committee. The Secretary of State would be required to seek the committee’s advice before making a determination that the exercise of a principal transfer power under the Act was in the public interest.
Lord Fox (LD)
My Lords, I move Amendment 22 in my name, but just briefly, with your Lordships’ indulgence, let me first respond to the Minister’s response to Amendment 23. I think he is quite right that it is up to the management of the company to set its own course, but that course will have wider implications than simply the company itself. It will have implications on the community in which that company is located, and that is something the Government, local government, and indeed the Welsh Government if appropriate, have to be concerned about. That was very much part of the point I was bringing forward. There might be another way of doing this, and perhaps we can discuss it when we get to a later group, but I am pleased to hear the Minister’s relatively positive response.
Turning to Amendment 22, in a sense the purpose of this follows on from Amendment 23 and keys into some of what the noble Lord, Lord Redwood, was talking about just now. An area not covered to date is the need for the wider supply chain to have an explicit voice in what is going on here. We should remember that there are about 400,000 employees working in the steel-using community and about 40,000 in the steel production capacity, so this is a 10 times bigger part of our national wealth and we need to make sure that there is a place for steel users and producers to have a voice within the strategic decision-making going forward.
I believe the Government have a steel board, but it is not clear to me how the steel-users community feeds into that steel board. In what we have seen in the setting of tariffs, users seem to have a somewhat second-class status within the decision-making process. This amendment envisions the creation of a statutory stakeholder advisory committee, which would make sure that those producers are well represented in the decisions that Government make concerning the industry on things like tariffs. Union and community interests and those kinds of things should also be included.
I am very flexible about the approach taken to do this, but I feel there needs to be a formalised, statutory approach. We have seen with respect to the proposed tariffs that users are falling behind producers on the Government’s agenda. This amendment is there to ensure that users have a formal voice. Trade associations do a great job, but in the end Secretaries of State can and do ignore them on a regular basis. This amendment is there to add a voice for the manufacturers in any debate. I beg to move.
Lord Redwood (Con)
My Lords, I welcome the intent behind Amendment 22. We should not be careless about the interests of the steel-using industries. Many years ago, I was responsible for Darlington & Simpson Rolling Mills. In those days, that was a profitable and successful business, but the price of raw material was critical to that type of operation. I was very interested to learn from noble Lord, Lord Fox, that he thinks that there are 10 times as many people involved; that may well be an underestimate. When I was trying to do some research on this, I identified a number of sectors where steel use is an important part of cost, and I came up with about £200 billion of business activity in those areas, excluding construction, which is obviously the main steel user in the country. That was many times the amount of turnover we are talking about in trying to protect maybe 2 million tonnes of steel production in this country from our own resources. Both in setting the tariffs and in setting the plans, and in the details of any future nationalisation, we need to have fuller recognition than we have had so far of the legitimate interests and concerns of the steel-using industries.
I hope that Ministers will see that we are also interested in a report and audit on where we are at already. Although we have not nationalised British Steel and do not own the assets, we are otherwise completely responsible for the people who do those jobs and their families, for the safety and success of the production processes of those two ageing blast furnaces, and for that part of what remains of the British steel industry, so I think we are probably owed a bit more consultation and plan already.
Lord Wigley (PC)
My Lords, I am delighted to support the amendment moved by the noble Lord, Lord Fox, and to be following the noble Lord, Lord Redwood. I am sorry the noble Lord, Lord Hunt, is not in his place at the moment, but both he and the noble Lord, Lord Redwood, will be very familiar with a project that took place in north-west Wales 40 to 50 years ago now—the construction of the pumped-storage scheme at Llanberis by the CEGB. The reason that is relevant is that, in the very early days of that project, the CEGB was wise enough to pull together trade union leadership and the local authorities in a regular meeting to review issues that were arising. Over the 10-year period of the construction of that exciting project, only about a week was lost due to industrial difficulties. The company, the CEGB, was working with the workforce and the local community, and problems were sorted before they boiled up to triggering strikes and all the rest. It is motivated self-interest to have such an approach to bring in these forces: with good leadership coming from the company involved and, yes, from central government but also from local government and from the trade unions within the company involved, so many problems can be overcome before they cause difficulties and boil up to something that they do not need to be. I believe such an approach should appeal to the Government, and I am very glad to support the amendment.
Lord Sharpe of Epsom (Con)
My Lords, I thank the noble Lord, Lord Fox, for this amendment. He is quite right to point out that decisions about the future of a steel undertaking affect a wide range of sectors that rely on secure domestic supply, including defence, construction, advanced manufacturing and critical national infrastructure.
National security has, rightly, featured prominently throughout our debates. If the Government are relying on that argument to justify the exercise of these exceptional powers, it is surely right that those with responsibility for defence and critical infrastructure should have a voice in the wider policy discussion. The number of workers potentially affected in the broader and wider supply chain, as cited by both the noble Lord, Lord Fox, and my noble friend Lord Redwood, is staggering.
It is difficult to argue that the steel-using community is really being consulted, as the noble Lord, Lord Fox, pointed out; that is certainly true of the representations we are getting from members of that community. I urge the Government on this occasion to have a careful think about what this amendment is trying to achieve. It recognises, as the noble Lord, Lord Wigley, has pointed out, the importance of the workforce and of local communities. Workers, their representatives and local authorities will understand better than most the consequences of a transfer for jobs, skills, supply chains and of course the local economy. It is difficult to see how the Government can judge properly what is in the public interest without hearing from the workers, communities, industries and strategic sectors most affected by the decision. I look forward to hearing the Minister’s response.
Lord Leong (Lab)
My Lords, I am pleased to inform noble Lords that we have equalised—so come on, England!
I thank the noble Lords, Lord Redwood, Lord Wigley and Lord Sharpe, for their contributions. I am grateful to the noble Lord, Lord Fox, for tabling Amendment 22, which would require the Secretary of State to consult a stakeholder advisory committee before determining whether an intervention under the Bill was in the public interest. I fully understand the motivation behind the amendment. Decisions of this significance should be informed by expert views, and I have considerable sympathy for the desire for strong parliamentary and stakeholder engagement.
However, as I said in relation to earlier amendments, the Government cannot support a statutory precondition of this nature. The powers in the Bill are intended for exceptional circumstances in which events may be moving quickly and decisive action is required. Introducing a mandatory consultation process before intervention could delay action at precisely the moment when speed is essential to protect jobs, safeguard strategic capability and secure the future of a steel undertaking. In some cases, a delay could undermine the very purpose of the intervention.
Nor do I believe that establishing a statutory advisory committee is necessary to ensure that the Government receive expert advice. My ministerial colleague, Minister McDonald, regularly maintains contact and extensive engagement with the sector through a wide range of established forums. This includes the steel council, the steel council working groups, the metals circularity group and a programme of industry round tables. Alongside those formal structures, Ministers and officials regularly meet with steel producers, downstream users, trade associations, trade unions, recyclers and other stakeholders throughout the supply chain. These relationships provide the Government with a detailed understanding of the opportunities and challenges facing the sector and ensure that policy is informed by those with direct operational experience.
I am also pleased to inform the Committee that we will shortly be inviting the UK Metals Council, which I understand is the largest downstream user group, to join the steel council, so we are reaching out to downstream users too. This will strengthen the representation of downstream users and ensure that their perspectives are fully reflected in future discussions about the sector.
The Government firmly believe that sustained engagement with industry is essential to delivering our steel strategy, but there is an important distinction between ongoing engagement and creating a statutory procedural hurdle that could impede timely intervention when the national interest requires it. For those reasons, while I fully recognise the amendment’s intent, I do not believe it would improve the Bill and I therefore respectfully request that the noble Lord withdraw it.
Lord Fox (LD)
I thank noble Lords for their contributions to this short debate. It was stark that when the Minister went through his long list of parties that the Minister at the other end consults with, the vast majority of the ones that the noble Lord, Lord Redwood, and I were discussing came under the “other stakeholders” category, so it is encouraging that the UK Metals Council will be invited.
I take the point about the nature of preconditions for any activity, and I understand the Minister’s reaction to that, but the purpose of the amendment was to make the point that users are underrepresented as it stands. We can wait and see whether adding the UK Metals Council is sufficient to reweight that, but I hope the Minister can go away and perhaps come back to us with a statement as to how users will become central to the Government’s philosophy in making plans, rather than being just another stakeholder, which is where they currently seem to be. Leaving that to one side, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
Before we move to the next group, I want to point out that Amendment 25 in that group is in fact to Clause 54, not Clause 53 as printed on the Marshalled List.
Clause 52: Compensation scheme regulations
Amendment 24
Lord Fox
“(5A) Compensation scheme regulations must include provision which specifies that payment of compensation may not be made until any written estimate under section 54(4A) is laid before Parliament.”Member’s explanatory statement
This amendment and others in the name of Lord Fox require that payment of compensation cannot be made until the Secretary of State has published a written estimate of the environmental liabilities of the steel undertaking, provided to them by the independent valuer.
Lord Fox (LD)
My Lords, I will also speak to Amendments 25 to 28, 39 and 45, all in my name—I think I must have gone slightly mad at the time.
As promised when we touched on the contingent liabilities earlier, this group homes in on how such liabilities affect possible compensation in the event of nationalisation. As I set out at Second Reading, the possible environmental liabilities and future remediation costs for a site as large as Scunthorpe, let us say, are potentially huge. Scunthorpe has been there for a long time and is a very big site. The site has also employed a lot of people for a long time, and their pensions and any contingent liabilities should be fully understood by Parliament, as we discussed in the debate on the previous group.
Those contingent liabilities are likely to majorly impact the current and future valuation and sustainability of any steel undertaking. The current draft has evaluating the environmental liability as a voluntary exercise and the pension liability seems to have been ignored, but I take on board what the Minister has just said and perhaps withdraw that sense, as some elements seem to be covered.
Amendments 24 to 27 together would require that the payment of compensation could not be made until the Secretary of State had published a written estimate of the environmental liabilities of the steel undertaking provided to them by an independent valuer. Amendment 28 would require that the payment of compensation could not be made until the Secretary of State had published a written estimate of the pensions liabilities of the steel undertaking provided to them by an independent valuer.
Amendment 39 would require the Government to report on the compensation paid under any compensation scheme regulations made under Clause 52. Finally, Amendment 45 seeks to place a limit on financial assistance and compensation without additional parliamentary approval. This proposed new clause would prevent the Secretary of State paying more than £500 million—which I point out is quite a lot of money—in financial assistance and compensation under the Bill unless the House of Commons passes a resolution authorising them to do so. In this way, we would ensure that there was no blank cheque.
I am happy to approach these issues in other ways, as long as the material objective of this group of amendments is achieved. I beg to move.
Lord Redwood (Con)
My Lords, I am glad that the noble Lord, Lord Fox, has raised this; it was also something that I mentioned in our previous debates. In my experience of old industrial sites, the land under and around the plant is often heavily polluted and may contain toxic substances. Clearly, the Government need a report on that and would need to consider it not only when considering any possible compensation to a previous owner but as part of the costings of the whole project. Sooner or later, that land will have to be cleaned and if there is any current risk to water courses, it might be sooner rather than later that action would need to be taken. I trust that will all be properly investigated and has been properly investigated where we have already taken operational and financial responsibility for the plant in the case of Scunthorpe.
On other liabilities which can occur in these situations, which probably should be mentioned for the sake of completeness, it is a good idea to find out about current and retired staff to see whether any long-term health issues have arisen which can be attributed in any way to the processes they have been handling and the working conditions they have been in. Those, too, need sensitive treatment and can, if something has gone wrong, amount to significant sums of money.
Lord Wigley (PC)
My Lords, I want to speak briefly to Amendment 28, which deals with pension liabilities of the undertaking that has gone into state ownership. Some noble Lords will remember in our pensions Bill debates that we had the example of Allied Steel and Wire, where employees, who had been given all sorts of promises that they would be safeguarded, feel that they have been very badly let down. If the shadow of Allied Steel and Wire is to find its way to Scunthorpe, or any of the other locations where these questions may arise, the failure to safeguard the interests of those pensioners will militate against employees wanting to accept the course being taken by the Government unless provisions are written into the Bill of the sort provided by Amendment 28. There may be other ways of doing it, but certainly these assurances need to be given.
Lord Sharpe of Epsom (Con)
My Lords, I am very grateful to the noble Lord, Lord Fox, for tabling these amendments, which raise an important point of principle. Where the Government are taking a steel undertaking into public ownership, the environmental, pension and other contingent liabilities which may fall on the taxpayer should be clear to Parliament and, of course, to the public. The Minister in the other place suggested that further disclosure was unnecessary because the Government already had a reasonably good understanding of the potential liabilities and that the independent valuer would take them into account, but that is not the same as ensuring that Parliament can see the likely costs before compensation is paid and further public money is committed.
I was very taken with my noble friend Lord Redwood’s comments about the environmental impact. From memory—and I might have this date wrong—I think the oldest of the blast furnaces dates back to 1939, so it is inconceivable that that site is not contaminated in some way, which we probably do not have any accurate historical records for.
I have also recalled the reason why I was a bit lukewarm on my own Amendment 20. I hate to say this, and I hope I never have to admit it again, but it is rather because I preferred Amendment 27 from the noble Lord, Lord Fox—a shocking admission to have to make.
Environmental remediation, pension obligations and historic liabilities can amount to very substantial sums. The Government are using taxpayers’ money, and Parliament should be able to scrutinise the liabilities assumed alongside the compensation and support provided. For those reasons, the amendments make a valuable contribution to transparency and accountability, and I look forward to the Minister’s response.
Lord Leong (Lab)
My Lords, just to update the Committee, we are 2-1 up.
Lord Leong (Lab)
Harry Kane, thank you.
The noble Lord, Lord Fox, has several amendments in relation to the compensation provisions in the Bill. I appreciate his careful attention to detail, which is a key aspect of this Bill, and will respond to the points raised in order. I will preface these points by noting that, if introduced, compensation regulations will be subject to the affirmative procedure, thereby providing opportunities for parliamentary scrutiny.
Amendment 27 is on the approach to environmental liabilities in the compensation process. The noble Lord, Lord Fox, has indicated that this would prevent the payment of compensation until the independent valuer has delivered to the Secretary of State a written estimate of the environmental liabilities of the steel undertaking in question and the Secretary of State has published that estimate and laid it before Parliament.
It is important that the independence of the valuation process is maintained. It is not appropriate for the inputs to the valuation exercise to be disclosed before the valuer reaches their determination. This may risk exposing the independent valuer to undue pressure while they are still deliberating on an outcome, thereby undermining the independence and fairness of the compensation scheme. None the less, the Government would have the power to direct the independent valuer to consider environmental liabilities in their determinations of compensation. We also intend to allow the final compensation determinations to be made public, including any consideration of environmental liabilities carried out. There is an opportunity for further parliamentary scrutiny, as the compensation scheme regulations will be subject to the affirmative procedure, allowing all Members to debate the specific framework set at that stage.
Amendment 24 would prevent the payment of compensation until an estimate of liabilities arising from the environmental and health and safety matters under Clause 54(4) is provided to Parliament. An important principle of the compensation process is that it is assessed independently to ensure that affected parties are treated fairly. The proposed amendment would begin to erode this independence by making the payment of compensation contingent on parliamentary scrutiny of one of the factors that would inform the outcome. It is therefore not feasible to proceed with the proposed amendment. As a general point, compensation scheme regulations would require the independent valuer to consider environmental liabilities as part of the assessment. Additionally, in the event that a steel company is nationalised, we would expect it to publish an annual report setting out its financial position, including any liabilities.
I now turn to Amendment 28. The noble Lord has tabled a similar amendment that would require the Secretary of State to publish an estimate of the pension liabilities of the relevant steel undertaking before compensation is paid. I understand the concerns the noble Lord has about taking on unknown liabilities and putting undue pressure on the public balance sheet. If the Government decide to nationalise British Steel, subject to the public interest test, I can reassure the noble Lord that the Government would not be taking on a large contingent pension liability. The company’s pension scheme is a defined contribution scheme with a pot funded by contributions made by the employees and the company over time. In other cases, the pension scheme may be based on different arrangements, but we have built flexibility into the Bill to address these circumstances on a case-by-case basis.
The pension power in Clause 44 allows us to adapt to regulatory changes, standardise terms and adjust contribution minimums. Where necessary, it also allows for consideration of a fair division of pension liabilities between the transferor company and the government corporation. This follows the approach in the Banking Act. Where relevant, pension liabilities will form only part of the picture in the valuation exercise, and publishing them in isolation without the wider context would not be helpful. As I have already mentioned, following nationalisation we would expect contingent liabilities to be included in the company’s annual reporting.
I am more sympathetic to the noble Lord’s Amendment 25, which would require that the compensation regulations provide for the appointment of an independent valuer in all cases to determine compensation. The current wording makes it discretionary whether an independent valuer is involved in any given case. In practice, it is very likely that the Government will consider it fair to provide for an independent valuer to be established in compensation scheme regulations to consider any compensation for a transferor. The clause is currently discretionary because there could be situations where independent valuation is not required. For example, where the Government and the transferor agree on a sum, it would be unnecessary for the legislation to require that an independent valuer be engaged. However, I will reflect further on the noble Lord’s points and consider how I expect to return to this on Report.
Lord Wigley (PC)
Before the Minister sits down, will he please address the question of why steelworkers in Scunthorpe, Port Talbot or anywhere else should have faith in the Government’s provisions for pensions when they failed to safeguard the pensions of Allied Steel workers in Cardiff and continue to do so?
Lord Leong (Lab)
I will have to write to the noble Lord, because I do not have specific information on that particular pension scheme.
Lord Fox (LD)
My Lords, I thank noble Lords for their contributions—particularly the noble Lord, Lord Wigley, who was saying what I was thinking, but he said it with authority: he understands the issue for those workers quite viscerally. It was in my mind that some level of protection or safeguard needs to be there. I thank the Minister for his very thorough answers. They are so thorough that I will have to spend some time with Hansard, reading them through, to find out how much comfort there is in there. His comments regarding Amendment 25 were certainly encouraging, and I hope we can come to some sort of agreement. On the others, I will have to come back him later, but, with those comments, I beg leave to withdraw Amendment 24.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment seeks to limit the financial assistance that can be provided under the Act.
Lord Sharpe of Epsom (Con)
My Lords, in moving this amendment, I will speak to Amendments 33 to 35, 40 and 41 standing in my name and that of my noble friend Lord Hunt of Wirral. These amendments address a basic question: if the Government are to provide financial assistance under these powers, what limit is there on the liability being placed on taxpayers? I heard what the Minister had to say in the previous group, but I will carry on regardless and probe a little further.
Clause 58 permits financial assistance in an exceptionally broad range of forms. This could be grants, loans, guarantees, indemnities, the acquisition of shares or assets, contractual payments or other expenditure. It is additional to any other funding powers available to Ministers. Yet the Bill contains no overall financial ceiling, no requirement for advanced detail to Parliament and no explicit statutory value-for-money test.
We understand the need for urgent support, but the Government’s stated objective is not permanent public subsidy but a viable, competitive, private sector led future for British Steel. That requires a business capable of attracting investors with capital, commercial expertise and a long-term commitment. To achieve that, public support must be disciplined, transparent and as limited as is consistent with the securing of the strategic objective. Otherwise, the Government risk creating a perverse incentive: a prospective purchaser may conclude that it need operate the business efficiently enough only to maintain access to public support, rather than to establish a genuinely sustainable commercial future. This would be an indefinitely subsidised business model, with the taxpayer carrying the risk.
Amendment 32 would place a £2.5 billion limit on financial assistance until August 2029. That figure reflects the Government’s own stated steel funding envelope in the steel strategy. Amendment 33 would provide a further test of proportionality by limiting assistance over five years to £1 million per employee. It is intended to ensure that support is targeted at transformation and viability, rather than becoming a substitute for a credible business plan.
Amendment 34 would require a detailed statement to Parliament before assistance is provided. Parliament should know the amount, form and recipient of support, its intended purpose and expected effect, and any conditions, repayment arrangements, guarantees, indemnities or other liabilities attached to it. That is particularly important where exposure may not appear as a simple cash grant. Guarantees and indemnities may create significant liabilities that only crystallise later. Taxpayers should not be asked to accept those risks without clear disclosure.
Amendment 35 would ensure that the Secretary of State is satisfied that financial assistance represents value for money. Value for money does not just mean ignoring strategic capability, national security, skilled employment or supply chain resilience. Ministers must weigh those against the costs, the liabilities, the alternatives and the likelihood that support will lead to a competitive business capable of standing on its own feet. In the other place, it was rightly argued that, if the Government believe in this intervention, they should be willing to set limits on it. Without such limits, taxpayers are simply being asked to sign up to an unlimited liability. The Government have already been providing working capital support and have been in discussion with potential private sector partners. Therefore, they should now have a clearer understanding of the likely financial assistance required, the risks involved and the route to a sustainable outcome.
I turn to Amendments 40 and 41. The Government have been providing monthly updates on working capital being provided to British Steel since the passing of the Steel Industry (Special Measures) Act 2025, which is welcome. It should be the same for financial assistance if British Steel, or indeed any steel undertaking, is nationalised. I beg to move.
Lord Fox (LD)
My Lords, Amendment 37 is in my name. This amendment covers concerns regarding the level of financial assistance but also focuses on the relationship between the United Kingdom and the EU. I think we covered this in a previous group on Monday, so I am not opening up that, but I have some contributions that I hope are helpful to the noble Lord, Lord Sharpe. I am still reeling from his bombshell on the last group, but bear with me.
Clause 52(1)(a) says that the Secretary of State must make regulations for compensation. Clause 57 makes those regulations subject to the affirmative procedure. However, Clauses 58 and 59, on financial assistance, do not have such requirements to make affirmative regulations. It seems that there is an asymmetry here. If the Government are prepared to use the affirmative procedure for the compensation process then why is there not an affirmative process for the financial assistance process? If the Minister was prepared to give ground on that then many of the discussions that the noble Lord, Lord Sharpe, wishes to have about financial assistance would be had during the discussion of the affirmative resolution. That is a helpful and, indeed, balanced way of dealing with this issue.
Lord Redwood (Con)
My Lords, I am grateful to the two noble Lords on the Front Bench for setting out this challenge to the Government. When you have a company in loss that is really struggling, there is an absolute requirement for accurate, speedy and regular financial reporting. Many years ago, I was a chairman with a large group of industrial companies reporting to me. I am pleased to say that none of the subsidiaries reported anything like the losses or the cash haemorrhage of British Steel, and we could not have afforded such a thing. I remember that if I or the chief executive saw one of our subsidiaries in danger of going into loss or dipping into bad performance, it would be put on to monthly reporting and quite often weekly reporting. That was not just because we wanted to know the bad news early but because it started a conversation between us, and other senior directors and executives, and the leading executives of the ailing subsidiary around how they could generate more cash and revenue, win more business and reduce costs in the meantime. If there was no immediate prospect of increasing the revenues, they needed to reduce the cash outflow.
My advice to Ministers, who took responsibility for British Steel many months ago, is that they should be seeing that kind of information, because it is now their responsibility. They decided to undertake this action without advice on value for money, so they need to have that sort of detailed information in front of them. They or their representatives also need that informed conversation with the people they have entrusted with running this business to find out why, as I understand it, the numbers are still not going in the right direction. You need that information weekly, and certainly monthly, because these things accumulate. The National Audit Office has led us to believe that the losses in this business have already accumulated to £642 million.
The description that the Government have offered help with working capital is true, but I do not think it is the whole story. As I understand it, there is a massive trading loss, and taxpayers—through Ministers and the Treasury—are having to pay trading losses. That means the Government are both subsidising the customer, who is getting it too cheaply, and paying for costs that the business needs to meet, which the customer is not going to pay for. In addition, the Government may need to provide additional working capital to provide for the work in progress and the stocks and raw materials for the next bit of production. I would regard the loss as a different category from the provision of additional working capital to keep the business running, and I would be much more worried about the loss.
From my business experience with industry, my conclusion is that cash is the king. By all means look at the P&L—that will give you an indication—but a business has to generate more cash than it spends. Otherwise, it goes bankrupt. That is the fundamental discipline that Ministers, through their chosen representatives, need to impose on this business. They need to see the cash line of outflow starting to reduce—otherwise, they need a fundamental rethink of policy.
Lord Leong (Lab)
My Lords, I thank all noble Lords for their contributions on this group. I will address each of the issues raised in turn. Amendments 32 and 33, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would impose a cap on the amount of financial assistance the Government could provide under the Bill. Amendment 32 seeks to place a statutory cap of £2.5 billion on financial assistance until 15 August 2029. Amendment 33 would apply a cap on a different basis, relating to the number of employees in a steel undertaking.
Imposing a fixed cap of any kind on financial assistance would risk constraining the Government’s ability to respond effectively to evolving circumstances. It could ultimately undermine the very objectives the Bill is designed to achieve, namely the protection of our domestic capability in a strategically vital sector. The Bill contains proportionate and robust measures to ensure transparency and accountability in the provision of financial assistance. Clause 59 requires the Secretary of State to report to Parliament every 12 months on the use of financial assistance. Furthermore, as I am sure all noble Lords will know, any financial assistance provided by the Government will be subject to the established framework for managing public funds, including HM Treasury approval processes, departmental accounting officer responsibilities, and reporting to Parliament through the usual public spending controls.
Lord Sharpe of Epsom (Con)
My Lords, I am grateful to the Minister for his response, and I agree with him that the focus must be on operational challenges. But I think the Minister will have agreed very much with what my noble friend Lord Redwood said about cash flow. The Minister is a businessman and will know exactly what my noble friend was talking about. Therefore, the focus should not be solely on operational challenges; there obviously also has to be a very keen focus on the cash position. I would have thought that the transparency we are suggesting would aid the Government in that.
If one month is not right, as per Amendment 40, I am happy to have a conversation about what might be. But we think that 12 months is far too long a gap between reports. Far be it from me to help the Government in this regard, but I would have thought that it would minimise the potential for political shocks if there was a more of an ongoing dialogue with the British public about the state of play in any entity that is nationalised, as opposed to one-off bombshells on an annual basis—but I will leave that for the Government to ponder.
I am grateful to the noble Lord, Lord Fox, for his helpful comments about asymmetry—he is correct. I believe the Government’s heart may be in the right place on all this. We want to see growth, we want to see investment, and we want to secure jobs in the steel sector, but we are ultimately talking about taxpayers’ money. That is why we think there must be clear limits and proper discipline around this financial assistance. Support should not be simply open-ended with no clear ceiling, no transparent statements of exposure and no statutory tests of value for money. We would welcome further discussions with the Minister on how the Bill can better reflect those safeguards but, for the present, I beg leave to withdraw the amendment.
Lord Fox
“(1A) Financial assistance under subsection (1) must be provided through regulations, specifying—(a) the financial assistance proposed to be provided, and(b) the estimated cost to public funds of that assistance.(1B) Regulations under subsection (1A) are subject to the affirmative procedure.”Member’s explanatory statement
This amendment requires financial assistance under Clause 58 to be approved by a resolution of both Houses of Parliament before it may be provided.
Lord Fox (LD)
My Lords, I thought it would be helpful, on this group, to bring together the necessary levels of scrutiny about which I have spoken on various other groups in various different ways. In moving Amendment 36A, I will speak to my Amendments 38 and 41A.
As prefaced on the previous group, Amendment 36A would require financial assistance under Clause 58 to be approved by a resolution of both Houses of Parliament before it may be provided. By amending Clause 58, financial assistance under the relevant subsection would have to be provided through regulations specifying the financial assistance proposed to be provided and the estimated cost to public funds of that assistance. These regulations would be subject to the affirmative procedure.
The Minister got his revenge in early on the previous group, because Amendment 38 outlines a mechanism by which parliamentary scrutiny of the public interest test and nationalisation could work. I propose a new clause after Clause 58 that would prevent financial assistance being provided until 90 days after information about the package of financial assistance has been made available to a Select Committee of the House of Commons or the House of Lords.
I take the Minister’s point about timing, but this is a useful probing amendment to look at the role of Select Committees going forward in the scrutiny of this. I hope the Minister will have something broader to say if he continues to shoot down the principle of the timing of this intervention. This amendment proposes that the Select Committee should look at
“details of the nature and amount of the financial assistance … the intended beneficiary or beneficiaries of the financial assistance … the expected purpose and effect of the financial assistance … any conditions, repayment arrangements, guarantees, indemnities or other liabilities attaching to the financial assistance, and … any other information the Secretary of State believes it is necessary for the Committee to have in order to complete its consideration of the proposal”.
Whether this is before or post hoc, the Select Committees —either of just the Commons, or of the Commons and the Lords—need to have this important investigation. Of course, any information that would be made public that might compromise national security, fiduciary duties or commercially sensitive issues would not be included. Going forward, it would be useful to hear from the Minister his understanding of how Select Committees will be involved.
I had hoped to persuade the Government to commit to an annual parliamentary debate on the steel industry—its strategy, the market and the state of nationalised businesses in the industry—both in the Commons and in the Lords. This would take place once a year, as long as there were still steel undertakings in public ownership. Perhaps we can discuss this, but Amendment 41A proposes an alternate approach to information sharing. It would require the Secretary of State to make a Written Ministerial Statement every three months on the progress of any nationalised steel undertaking.
During the during the passage of the Steel Industry (Special Measures) Act—SISMA—just before Easter last year, Ministers committed to a debate six months following Royal Assent on the use of direction-giving powers. That took place in October 2025. This was a commitment to a single occurrence, but SISMA also included a commitment to a monthly Written Ministerial Statement on the use of direction-giving powers. If British Steel were taken into public ownership, this commitment would fall away, replaced only by any commitments associated with this Bill.
To date, there are no provisions of anywhere near this level of information sharing within the Bill. So, without this amendment, as the cost to the taxpayer increases, the level of parliamentary scrutiny would actually decrease, creating less scrutiny for steel nationalisation than there is under SISMA. I accept that a monthly report may be unreasonable, and I know that the Minister has mused in our discussions about half-yearly reports, but I think quarterly would be a sensible interval, and that is what this amendment seeks to achieve. I do not think any Minister would be afraid of doing this because, as the noble Lord, Lord Sharpe, said on the previous group, a level of public understanding of what is going on—the difficulties, the struggles, the cost and the importance of the industry—is important. This is an opportunity to restate that, coming back to the point about what is happening in the communities, and with jobs and skills. We would expect that to be included in those quarterly reports. If we are not getting a debate every year, this would be a better response, in a way.
Taken together, these three amendments are designed to deliver a level of comfort: an affirmative process for assistance, a role for the Select Committees and a quarterly reporting mechanism. I beg to move.
Lord Hunt of Wirral (Con)
My Lords, this is a very important debate, and I thank the noble Lord, Lord Fox, for these amendments. It is not just a case of public understanding; I think the public would expect Parliament to hold the Government to account. In many ways, I hope we are pushing at an open door with these amendments. In an area potentially involving substantial financial assistance, the Government must be able to provide both Houses of Parliament with a clear indication of the estimated cost to public funds. Parliament must be able to scrutinise not only the principle of financial assistance but its scale, purpose, conditions and likely liabilities.
The proposed 90-day period in Amendment 38, which we have already debated, strikes a sensible balance. It would allow an expert Select Committee to examine the proposals and make recommendations, while preserving the Government’s ability to proceed once that scrutiny has taken place. The noble Lord, Lord Fox, seemed uncertain several times as to whether it should be a Select Committee of the House of Commons or of the House of Lords. I have always been a great believer in Joint Committees. Something of this importance requires both Houses of Parliament to scrutinise it, and the best way to do that is through our expert Select Committee process.
Parliament has enormous expertise which should be used in determining the appropriate level and form of support. That is particularly important where taxpayers may be exposed through grants, loans, guarantees or indemnities. I hope the Minister will be able to respond positively on how he intends to proceed.
Lord Leong (Lab)
My Lords, I am grateful for all the contributions in this group of amendments.
Amendment 38 in the name of the noble Lord, Lord Fox, would require the Secretary of State, before providing any financial assistance, to put forward a proposal to Parliament for doing so, setting out the underlying details. The amendment stipulates that a Select Committee would have 90 days to provide any recommendations on the proposal before it can proceed. I respectfully suggest that this amendment is not realistic, given that financial assistance may need to be provided immediately following a transfer. It is unlikely that there would be time for the parliamentary scrutiny envisaged by this amendment without imposing significant risk to the continued operation of the steel undertaking. I appreciate the noble Lord’s intention in tabling this amendment but, for the reasons I have outlined, I ask that he does not move it.
Amendment 36A would require the financial assistance power in Clause 58 to be exercised by regulations specifying the purpose and estimated costs. I understand the desire for further parliamentary scrutiny of the costs that might be incurred in relation to an intervention in a steel undertaking. The Government have been transparent about the costs incurred to date as a result of the intervention in British Steel under the special measures Act. Estimating future costs relating to nationalisation is more challenging because they would depend on decisions not yet taken about the future operation of a particular steel undertaking.
I hope I can provide reassurance by emphasising the extensive controls over expenditure that would apply by default. If these provisions are used, the Government would need to consider the potential range of costs and make the usual value-for-money tests under the accounting officer. These spending processes are subject to ongoing parliamentary scrutiny by the Public Accounts Committee. The Permanent Secretary to the Department for Business and Trade appeared before PAC last week to discuss steel.
As with Amendment 38, I am concerned that this amendment does not reflect the operational realities of a potential intervention. It is likely that there would be urgent and immediate pressures to draw down on the financial assistance spending power to maintain operations in a way that would not be conducive to the set-up of the secondary legislation process. However, I understand that the noble Lord would like us to go further in this respect, and I appreciate the constructive engagement we have had on this and other issues. I will of course consider whether anything more can be done to give him the reassurance he desires.
Amendment 41A, also tabled by the noble Lord, would require the Secretary of State to make a Written Ministerial Statement every three months on the progress of any publicly owned steel undertaking. I am sympathetic to this amendment and recognise Parliament’s interest in the Bill’s impact on the steel industry, employment and public finances. That is why the Bill requires the Government to produce an annual report on financial assistance under it and the company will publish its annual report and accounts. I do not think reporting every three months for as long as a steel undertaking remains in public ownership is necessary. However, the principle is sound and the noble Lord made some excellent points. I recognise that our current reporting commitments may not encompass the full scope of his amendments. I ask him not to move the amendment, and the Government will consider this further before Report.
Lord Fox (LD)
My Lords, I thank the Minister for his positive response on the last amendment, and I understand the nature of his concerns on the first two. All roads point back to Clause 2 and the public interest test, frankly, so perhaps we should have another discussion about that. However, on that basis, I beg leave to withdraw.
Lord Sharpe of Epsom
“Exemption of iron and steel carbon border adjustment mechanism goods(1) Section 143 of the Finance Act 2026 (charge to carbon border adjustment mechanism) does not apply to emissions embodied in a CBAM good which is an iron and steel good for the purposes of Schedule 16 to that Act where the good is imported by a transferred steel undertaking for use in connection with the carrying on of its business.(2) In subsection (1), “transferred steel undertaking” means a steel undertaking in respect of which the Secretary of State has exercised a principal transfer power.”Member's explanatory statement
This amendment would exempt iron and steel CBAM goods imported for use by a steel undertaking brought into public ownership under this Act from the carbon border adjustment mechanism.
Lord Sharpe of Epsom (Con)
My Lords, I will speak to Amendments 47 and 48 in my name and that of my noble friend Lord Hunt of Wirral. These amendments address two costs which bear directly on the viability and competitiveness of a transferred steel undertaking: the carbon border adjustment mechanism and the United Kingdom emissions trading scheme.
Amendment 47 would exempt a transferred steel undertaking from the carbon border adjustment mechanism in respect of iron and steel goods imported for use in its business. Amendment 48 would disapply the United Kingdom emissions trading scheme in relation to installations forming part of such an undertaking. These amendments go to a wider question which has run throughout our debates: whether the Government’s approach will genuinely secure steel-making in this country or simply add further costs to an industry already exposed to intense international competition.
The Government’s impact assessment on the free allocation review makes the point. It accepts that reducing free allocations increases businesses’ exposure to carbon costs. It accepts that energy-intensive industries producing globally traded commodities are particularly vulnerable because they cannot simply pass those costs on to consumers. It also recognises the danger of carbon leakage—production, investment, jobs and emissions moving overseas, rather than emissions genuinely being reduced. The assessment says that the traded carbon price could be approximately £25 per tonne lower by 2030 if free allocations do not fall in line with the industry cap.
This is a policy choice, and it has consequences for industry. The steel sector has warned of the effect of reducing free allocations. It has described the proposed changes as an “earthquake moment”. The Government must listen to that warning. CBAM can affect imports into the domestic market; it does not protect a United Kingdom producer competing in export markets. Moreover, higher costs can be passed down the supply chain to downstream manufacturers, reducing their competitiveness and risking the relocation of activity and jobs abroad.
We have now seen the Government introduce new trade measures with substantial tariffs and lower quota volumes. The Minister in the other place, Chris Bryant, said:
“We are determined to make sure that we have a proper steel production industry in the UK, and that means that we have to take some tough measures”.—[Official Report, Commons, 30/6/26; col. 767.]
But thus far the tough measures appear to fall on downstream manufacturers and therefore, inevitably, on British consumers. The Government cannot impose new trade barriers and costs on those who use steel while also increasing carbon costs for domestic producers, and then claim to have solved the competitiveness problem. When will they get tough on the ideological net-zero policies which are imposing substantial costs on the steel industry?
The Government need to make a clearer choice. Do they want a steel sector which can compete, invest and employ people in the United Kingdom, or do they want to continue a policy framework which makes domestic production more expensive and pushes activity overseas? This is particularly important as they pursue electric arc furnace production. If they want greener steel, they must ensure that the electricity required to make it is available at a competitive price. It is no good requiring industry to electrify while maintaining a policy environment in which power and carbon costs make that transition commercially unviable.
The Government should not use nationalisation to shield themselves from the consequences of their own industrial and environmental policies. They should instead create the conditions in which steel can be produced competitively in Britain, with lower energy costs, realistic carbon policy and a serious commitment to preventing industrial activity leaving our shores. I beg to move.
Lord Redwood (Con)
My Lords, I support my noble friend. I have also referred to this in past interventions, so I need not say very much. Looking at the tragedy of the British steel industry under successive government policies, there is no doubt about it: the very high energy costs, carbon taxes, emission trading arrangements and CBAM coming in are the main reasons why we are not competitive and we have had this colossal collapse. If the Government will not accept that, they will never have a successful steel industry.
Lord Fox (LD)
My Lords, I will be equally taciturn. I have spoken a lot about CBAM, and I do not intend to repeat it. It occurs to me that if the Government become a major owner of the steel industry, they might become more sympathetic to some of the arguments that the noble Lord, Lord Sharpe, has just advanced.
Lord Leong (Lab)
My Lords, I am grateful to the noble Lords, Lord Sharpe and Lord Hunt, for their thoughtful amendments on the UK emissions trading scheme and the carbon border adjustment mechanism and their impact on the steel sector.
A common theme across these amendments is the proposal that a publicly owned steel undertaking should be exempt from one or both of these measures. I understand the concerns that have been raised about the sector’s competitiveness and the costs faced by steel producers. However, I must be clear that the Government cannot support this approach. We remain firmly committed to industrial decarbonisation and to securing a competitive, sustainable and low-carbon future for the UK steel industry. The UK cannot build a resilient steel sector by exempting it from the very policies designed to support the transition to cleaner production and to create a level playing field against higher-carbon imports.
The UK emissions trading scheme and the carbon border adjustment mechanism are complementary policies. Together, they encourage investment in cleaner production, while ensuring that UK producers are not undercut by imports from countries with lower environmental standards. Exempting a publicly owned steel undertaking from these measures would not only undermine those objectives but create an uneven regulatory framework within the UK steel sector. With this in mind, I will turn to the amendments tabled by the noble Lords, Lord Sharpe and Lord Hunt.
Amendment 47 seeks to exempt a publicly owned steel undertaking from CBAM. I understand the noble Lords’ concern that CBAM will increase the cost of imported products for steel undertakings. However, I emphasise that the CBAM’s purpose is to ensure that imported carbon-intensive goods face comparable carbon prices to those of domestically produced goods. It will give industry the confidence to invest in the UK, knowing that its decarbonisation efforts will not be undermined. CBAM makes no exemptions for particular UK firms. Its intent is to target the problem of carbon leakage and ensure that highly traded carbon-intensive goods from overseas, including steel, pay a comparable carbon price to that paid by UK manufacturers.
Amendment 48 seeks to exempt a publicly owned steel undertaking from the emissions trading scheme. I am sympathetic to the fact that this also imposes a cost on activities that have significant emissions. However, as with Amendment 47, accepting Amendment 48 would provide preferential treatment based on ownership and undermine a level playing field across the industry. The transition to low-carbon steel must be fair, credible and consistent across all operators, whether publicly or privately owned.
I emphasise that the ETS includes targeted protections for energy-intensive, trade-exposed industries, including steel. Further protections will be introduced through CBAM from 2027. It is for these reasons that I cannot support these amendments and ask that they not be pressed.
Lord Sharpe of Epsom (Con)
I am very grateful to the Minister, but I have to admit that I am very disappointed in his response, and I wonder if he is a bit disappointed in the response that he had to give. It seems to me that you can either have decarbonisation or have a competitive steel industry, but at this precise moment in time you cannot have both; at this precise moment in time, they are mutually exclusive. That is not to say that we should not pursue net zero in the future—of course, we should—but this is a particularly exposed industry at a particularly critical time.
Lord Hunt of Wirral
“Strategic reports: transferred steel undertakings(1) Chapter 4A (strategic report) of the Companies Act 2006 does not apply in relation to a company carrying on a transferred steel undertaking.(2) In this section, “transferred steel undertaking” means a steel undertaking in respect of which the Secretary of State has exercised a principal transfer power.”Member’s explanatory statement
This new Clause would disapply strategic report requirements for companies carrying on transferred steel undertakings.
Lord Hunt of Wirral (Con)
My Lords, I will speak to Amendments 49 to 55 standing in my name and the name of my noble friend Lord Sharpe of Epsom. As we have just discussed, the explosion of environmental, social and governance—ESG—red tape has created a vast and complex web of rules, which force businesses to comply with political targets at a cost to investment, job creation and, above all, the competitiveness of Britain.
Admittedly, I should add a declaration of interest, as a practising solicitor in the City of London. This has undoubtedly created an explosion of work and therefore I should probably declare an interest. But I do not take any pride in the fact that ESG reporting requirements have become more and more burdensome and onerous.
This is why I am delighted to confirm that His Majesty’s Official Opposition have committed to repealing a number of ESG reporting requirements, including those addressed by this group of amendments, so that unnecessary business costs can be removed and businesses can focus on investing, growing and creating jobs. However, if the Government are going to nationalise a steel undertaking, in order to minimise the cost of its transition, attract private sector investment and reduce the burden on the taxpayer, they should at least disapply these regulations in respect of that undertaking. British Steel employs more than 4,000 people and is, therefore, likely to be caught by a number of these costly and burdensome requirements.
Amendment 49 would disapply the Companies Act strategic report requirements, which require quoted companies to include annual greenhouse gas emissions information and reporting on environmental impacts in directors’ reports. Amendment 50 would disapply greenhouse gas emissions and related environmental reporting requirements. Amendment 51 would exempt a nationalised steel undertaking from the energy savings opportunity scheme, which requires large companies, including those with more than 250 employees or turnover above the relevant threshold, to carry out energy audits every four years to identify energy efficiency opportunities.
Amendment 52 would disapply the energy and carbon reporting requirements which apply to large companies and limited liability partnerships. Amendment 53 would remove executive pay ratio reporting requirements. These require certain companies to report chief executive pay against median, lower-quartile and upper-quartile employee pay, with the figures subject to audit. Amendment 54 would disapply forest-risk commodity due diligence and reporting requirements. These would require businesses using certain commodities to conduct supply chain due diligence and publish annual reports. Finally, Amendment 55 would disapply climate-related financial disclosure requirements. These require companies and LLPs to report how their boards oversee climate risks, the impact of climate change on strategy, and the metrics and targets used to assess those risks.
None of these requirements reduces electricity costs, secures orders, improves productivity or makes British Steel more competitive, yet each requires additional reporting, auditing and compliance costs on a business which the Government may have taken into public ownership at substantial expense to taxpayers. I therefore say to the Minister that, if the Government are serious about making a nationalised steel undertaking viable, investable and capable of returning to the private sector, they should focus on reducing unnecessary burdens and allowing management to concentrate on commercial recovery, investment, modernisation and jobs. I beg to move.
Lord Fox (LD)
My Lords, I was planning to say nothing and I will say little more than nothing. I have a question for the noble Lord, Lord Hunt, which he can answer when he gives his response to the Minister. Can he remind me when most, if not all, of these measures were brought on to the statute book?
Lord Leong (Lab)
My Lords, the noble Lords, Lord Sharpe and Lord Hunt, have tabled a number of amendments regarding the deregulation of the steel sector. These amendments focus on three core areas of regulation: industrial action, environmental regulations and reporting, and company reporting.
I recognise the concern from noble Lords that any publicly owned steel undertaking will face a significant array of reporting requirements. That is true, and the Government believe that these are necessary to ensure that any publicly owned company operates in a similar way to its privately owned counterparts. Any publicly owned steel undertaking must protect its workers’ rights, fulfil its environmental obligations and transparently report on its progress.
At the outset, I make the general point that a company under public ownership is ordinarily treated as a public corporation—that is, it is run as a private company with an independent board of directors, operating under broad strategic direction from Government Ministers. It is right, therefore, that such a company is subject to the regulatory frameworks within which any similar private company operates. I also emphasise to noble Lords that amendments seeking to level the playing field within the steel industry are inconsistent with that position. Instead, the amendments in this section seek to give preferential treatment to publicly owned steel undertakings.
I will now address the amendments directly. I believe that Amendments 50 to 52, 54 and 55 are intended to address the noble Lord’s concern that the Government’s industrial decarbonisation policies could impose additional costs and burdens on publicly owned steel undertakings. In summary, these amendments seek to exempt publicly owned steel undertakings from a number of statutory requirements, including greenhouse gas reporting, the energy savings opportunity scheme, energy and carbon reporting, forest-risk commodity due diligence, and climate-related financial disclosures. Although I recognise the noble Lord’s concern that there is a range of requirements on the steel sector with regard to environmental reporting, I cannot support these amendments.
The reporting requirements the Opposition have identified are integral to this Government’s commitments to decarbonising our industries. Our steel strategy set out a vision for a move towards green, decarbonised steel production. We are committed to supporting the sector in achieving those objectives, as evidenced by the £500 million of funding to Tata Steel for the development of its electric arc furnace in Port Talbot.
A public steel company, no more than any other steel company, should not be exempt from these important transparency requirements. Accepting these amendments would undermine the intent of the Government’s industrial decarbonisation policies, creating an unfair system for other domestic steel producers. The Government are committed to revitalising the entire UK’s steel industry, not only the companies in public ownership. Alongside this, the Government believe that these requirements are critical to industrial decarbonisation and to meeting net zero.
Finally, I will address Amendments 49 and 53 together, as both seek to exempt a publicly owned steel undertaking from existing corporate reporting requirements. Amendment 49 would disapply the strategic reporting requirements under Chapter 4A of the Companies Act 2006, while Amendment 53 would remove the requirement to publish information on executive pay ratios.
I recognise that the purpose of these amendments is to reduce the administrative burden on a publicly owned company. However, the Government do not believe that public ownership should entail lower standards of transparency or accountability. Indeed, if a steel undertaking is brought into public ownership, there is an even greater expectation that it should operate openly and be subject to appropriate public scrutiny. That is why the Government expect any publicly owned steel undertaking to comply with the standard reporting obligations that apply to comparable public corporations. Its annual report and accounts should provide Parliament, taxpayers, employees and the wider public with a clear and comprehensive overview of the company’s financial position, operational performance, governance and remuneration arrangements.
Transparency is not merely a regulatory requirement; it is an essential part of maintaining public confidence. It supports effective parliamentary scrutiny, promotes sound corporate governance and demonstrates that public assets are managed responsibly. It also serves a practical commercial function. Should the company seek external finance, strategic partners, or, in due course, a return to private ownership, prospective investors and creditors will rightly expect access to robust, reliable and consistent corporate reporting. Maintaining those standards will enhance rather than diminish the company’s long-term prospects.
For all these reasons, the Government believe that a publicly owned steel undertaking should be held to the same high standards of openness and disclosure as comparable public corporations. Public ownership should set the bar for transparency, not lower it. I therefore hope I have explained why the Government cannot support these amendments, and I respectfully invite the noble Lord to withdraw the amendment.
Lord Hunt of Wirral (Con)
My Lords, I should first deal with the question raised by the noble Lord, Lord Fox, who perhaps sought to point the finger at me as a Minister for having introduced some of these requirements. I was indeed a Minister for 16 years, and I cannot recall having introduced any of these requirements at any stage. In fact, the Minister answered the noble Lord by pointing out that, under Tony Blair, the Companies Act 2006 started a process of requiring companies to include many of the things we are now debating and discussing. That is his answer. Perhaps when the noble Lord next gets to his feet—perhaps sometime next week—he might tell us what Vince Cable, who inherited all those requirements, did about minimising the burden on business.
Undoubtedly, at the present time, there is an overregulated regime facing the private sector, and in many ways, we are seeking to alleviate that burden as far as the new, nationalised steel industry is concerned, if the Government proceed down that road.
I remain concerned that the Government do not recognise the cumulative burden that these requirements place on an energy-intensive and strategically important industry. If Ministers are serious about restoring a nationalised steel undertaking to competitiveness and attracting private sector investment, they should be looking to reduce unnecessary compliance costs, not preserve them. No doubt we will return to these issues at a later stage. For the present, I beg leave to withdraw the amendment.
Steel Industry (Nationalisation) Bill
Wednesday 8th July 2026
(2 weeks, 5 days ago)
Lords ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 22–R–I(a) Amendment for Report (Supplementary to the Marshalled List) - (7 Jul 2026)
18:22 - Division on Amendment 31 - Ayes: 95 / Noes: 202 - Amendment 31 disagreed.
Lord Fox
(b) has had regard to the impact of exercising that power on the public finances.”Member’s explanatory statement
This amendment would add a new condition that the Secretary of State must consider before exercising principal transfer powers.
Lord Fox (LD)
My Lords, in moving Amendment 1, I will speak to Amendments 7, 9 and 24 in my name.
In Committee, I noted the difficulty of phasing the exercise of the principal transfer powers and the need for scrutiny by Parliament—there is a dichotomy. At the heart of my concerns then was that Parliament would potentially be signing a blank cheque. On the other side, there may very well be a need to move swiftly in the event that a decision is made to nationalise a steel asset.
The first three amendments in my name in this group go some way to brokering this compromise. They offer two different routes of addressing the issue of the Secretary of State’s obligations regarding the financial cost of any intervention. Amendment 1 directs this attention to Clause 2 and inserts an obligation on the Secretary of State to take into account the impact on public finances before exercising the principal transfer. However, during Committee and subsequent discussions with the Minister, it became clear that the Government feel they have some legal reservations about any modification of Clause 2. Therefore, Amendments 7 and 9 seek a similar action but focus on Clauses 4 and 15 respectively instead.
Overall, of course, government decision-making relies on tests that must be conducted by accounting officers. I expect the Secretary of State would have the impact on public finances in his or her mind at all times, and I am sure there would be some Treasury Ministers leaning over that particular Secretary of State in the event that any decisions were made. However, by putting this responsibility in the Bill, it will be easier to hold the Secretary of State and the Government at the time to account on the value for money of any issue. In the event that the Minister feels constrained in accepting Amendment 1, I hope he will accept Amendments 7 and 9.
Amendment 24 addresses a different issue and returns to pension liabilities, which we debated in Committee. It is clear that, in the event the Government exercise the principal transfer power enabled by the Bill, the pensions of all ex and current workers of that asset become an important responsibility. This amendment is clear in its assertion that Parliament needs a view on these liabilities. If the Minister is unable to accept this amendment, I hope he will take the opportunity to clarify the Government’s approach to pensions from the Dispatch Box. I beg to move.
Lord Redwood (Con)
My Lords, I am grateful to the noble Lord, Lord Fox, for reminding us of the importance of contingent liabilities and the need for the Government to complete due diligence before any acquisition. He rightly says that in a hypothetical case—not British Steel Scunthorpe—it might be necessary to move quickly, and then there will have to be some trade-offs. But if we are talking about British Steel Scunthorpe, there is obviously no need to move quickly. The Government moved very quickly many months ago, and there can still be proper analysis. I would hope, indeed, that as Ministers and their chosen executives are now responsible for British Steel, while they do not own the assets, they would have done a lot of this very important preparatory work on discovering the contingent liabilities.
Where in Amendment 11, the contingent liabilities are mentioned by category, there is an omission which could be extremely important: liabilities to employees for past problems with safety and health, and—God forbid that this does not happen—for any liabilities that might follow now that the business is under the operation or control of Ministers and their chosen executives, if some safety or other health problem arose. Where people are running these very large, industrial businesses, with the obvious threats of a very powerful fire in the furnace and the dangers of extremely hot liquid steel being moved around, it is crucial that Ministers and their chosen executives have taken all the right decisions on making sure people have the right protective clothing, there are the right protocols, and there is an absolute segregation for the employees from the risks. There also needs to be an understanding of whether there have been any longer-term health risks from the atmosphere around the blast furnace or the intense heat of some working conditions.
If Ministers have not already done so, they need to take this very seriously. Whenever I was responsible for a big plant, my main nightmare was that something would go wrong on safety, and that would be unforgivable. I am not expecting the Government to give ground on these amendments, but it would reassure the House and the wider public if the Minister could tell us more about where they have got to, at least in general terms, with exposing the contingent liabilities on pensions, safety and employee health, as well as with the other financial matters mentioned clearly in these amendments.
Lord Wigley (PC)
My Lords, I am delighted to support the amendment put forward by the noble Lord, Lord Fox, and I agree with his earlier analysis. As it happens, I agree with a lot of what the noble Lord, Lord Redwood, said on this as well. Whereas there may be certain safeguards in Scunthorpe, there is considerable worry in somewhere like Port Talbot arising from some of the experiences we have had, which I referred to in Committee. I hope the Minister will be able to give some assurances on this.
Lord Sharpe of Epsom (Con)
I rise to speak to Amendment 11 in my name and that of my noble friend Lord Hunt of Wirral. It is vital, as we have said throughout our consideration of this Bill, that there is clarity about the liabilities which may be acquired when the Government exercise a principal transfer power. That is particularly important in relation to environmental liabilities. Steelworks are substantial and long-standing industrial sites and any environmental liabilities associated with the transfer could represent a significant future cost to the taxpayer.
I am very grateful to the noble Lord, Lord Fox, for his amendments in this group, which rightly focus on the need to consider the public finances. We have consistently raised the issue of the costs associated with share and property transfers and pension liabilities when compensation is assessed. I thank the Minister and the Government for their engagement on these amendments, and I look forward to hearing what the Minister has to say and hope that at least some of these amendments will be accepted.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)
My Lords, before turning to the amendments before us, I begin by placing on record my sincere thanks to the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, for the constructive and collegiate way in which they have engaged throughout the passage of this Bill. We have not agreed on every point, but their contributions have been thoughtful, serious and rooted in a shared recognition of the importance of the UK steel industry. I am grateful for the time they have taken to meet with me to test the Government’s position and, for raising their concerns in such a fair and friendly spirit.
Responding to the points raised in this group, I will speak first to Amendments 7 and 9 in the name of the noble Lord, Lord Fox. Over the course of this Bill’s passage, I have had ongoing and constructive conversations with the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt, about the cost of nationalisation and the importance of parliamentary scrutiny. The noble Lords and I agreed that the Government must consider the costs of any nationalisation before exercising the powers. As I have stated to this House previously, existing public spending governance controls provide for this, with cost and value-for-money considerations embedded in the Managing Public Money principles and the well-established process of accounting officer tests.
However, the noble Lords have sought a statutory requirement on the face of this Bill. Through our conversations, I have been persuaded by their arguments, and I am pleased to say that the Government will support the amendment of the noble Lord, Lord Fox, which requires the Secretary of State to consider costs before exercising the share or property transfer powers in Clauses 4 and 15. We hope the House will agree. Our agreement on this issue reflects the commitment of noble Lords to ensure that this Bill is as comprehensive and effective as possible. It is an excellent representation of this House’s ability to work collaboratively, and I thank the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt, for their engagement on this issue.
The noble Lord, Lord Fox, has also put forward Amendment 1, which would require the Secretary of State to have regard to the public finances when considering exercising the principal transfer powers. Given that the purpose of this amendment is achieved through Amendments 7 and 9, I do not think this is necessary in addition.
The noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, have tabled Amendment 11, which would require the Government to provide a statement to Parliament outlining the value of contingent liabilities associated with a steel undertaking, and the steps taken to minimise taxpayer exposure to them, prior to an intervention. As I have set out previously, I have concerns about creating additional hurdles that must be cleared prior to the exercise of the transfer powers, given the likely need to act at pace. There is also a practical difficulty in publishing the details of a private company’s financial information prior to a nationalisation. None the less, the Government share the desire of the noble Lords to minimise the taxpayer’s exposure to liabilities as far as possible, and that will inform our decision-making. If a steel undertaking is nationalised, we would expect its annual report to include details of its liabilities, where relevant. We will discuss liabilities again in later groups today, and I look forward to that discussion. I hope that that helps to clarify the matter and provides the noble Lords and the rest of your Lordships’ House with sufficient reassurance.
Amendment 24, tabled by the noble Lord, Lord Fox, requires that where the Government have exercised the transfer powers, the independent valuer must prepare a written estimate of a steel undertaking’s pension liabilities and provide that to the Secretary of State, who should then publish the estimate before Parliament. Pension liabilities will of course differ for different companies. If the Government were to decide that it was in the public interest to nationalise British Steel, I reassure noble Lords that our understanding is that there would not be significant pension liabilities, as the company has a defined contribution scheme and so pensions would be funded from an existing pot. In cases where pension liabilities are relevant to the value of a steel undertaking that is subject to the powers under the Bill, the independent valuer should consider that as part of their assessment. None the less, publishing this in isolation would be unhelpful without the full context. The Government have already committed to publishing the outcome of any compensation scheme. Therefore, I do not consider this amendment necessary.
I hope I have been able to reassure noble Lords, even though there are amendments in this group that I do not support.
Lord Fox (LD)
My Lords, I thank noble Lords for their contributions to this debate. Before coming to the Minister’s words, I will pick up on the point made by the noble Lord, Lord Redwood, on health and safety. I turn his attention to Amendment 21, which returns to the issues of health and safety and environmental liabilities. Although his point does not need to be made again, the debate on that amendment is when the Minister can respond to it.
I thank the Minister for his response to Amendments 7 and 9; I believe that they will take scrutiny a step forward. His approach to accepting them is very heartening. It is therefore clear that, if we accept Amendments 7 and 9, we do not need Amendment 1.
On Amendment 24, I am reassured by the Minister’s comments on one particular steel asset. Although we do not expect it, in the event that the future Act is used for other assets, pensions may become an issue. Picking up on the point made by the noble Lord, Lord Wigley, particularly in Committee, there have been some missteps around employee pensions. It is very important that, whoever the Government of the day are, they do not make those missteps again and create the situation we have seen and on which the noble Lord commented.
On that basis, and in thanking the Minister for his acceptance of Amendments 7 and 9, I beg leave to withdraw Amendment 1.
Lord Hunt of Wirral
Member’s explanatory statement
This amendment would limit the public interest test to the areas set out in paragraphs (a) to (c).
Lord Hunt of Wirral (Con)
My Lords, I will speak to Amendments 2, 3, 4 and 5 standing in my name and that of my noble friend Lord Sharpe of Epsom. I have no wish to repeat at length the arguments made in Committee, but I feel that the Government should be clearer about the public interest test that lies at the heart of these powers.
Lord Redwood (Con)
My Lords, there will be an issue with the public interest case, if and when we get to the full nationalisation of British Steel at Scunthorpe. Many of us are unclear as to whether the Government’s aim is to find a medium-term or longer-term solution to the problem of how to keep the two existing blast furnaces running and keep a basic steel-making capability in the United Kingdom, or whether their policy aim is still—as with the previous Government and as is the case in south Wales—to move to closing the blast furnace and opening an electric arc furnace in a new plant, which may be on that land or somewhere else.
If it is the latter, it will be much more difficult to establish the public interest case for the complete nationalisation and transfer of the blast furnaces, because that will end in tragedy for the people working there, so it will no longer be the case that the main purpose is to keep the jobs. It will not resolve the issue of the electric arc furnace, because that will need separate grant aid and might even be better on a different site. We need to know more about the phasing. In the case of south Wales, the blast furnaces were closed before the electric arc furnace was available. If they did the same again at Scunthorpe, there could even be a period when the United Kingdom will not be making any steel at all on those two works, given the transition plan.
It would be very helpful if the Minister, who will have to take this policy on, gave us a little more on the Government’s thinking about the duration of the investment in the blast furnaces, and whatever information he has about the state of those plants and the ability to maintain continuous production there, and on the Government’s intention in their net-zero strategy, which implies that steel would have to be made in a different way.
Lord Fox (LD)
My Lords, because this is Report, I will not repeat my Committee speech. Briefly, Clause 2 is unchanged and Clauses 4 and 15 have been amended along the lines that the previous groups suggested and begin to bring the rigour at the start of this process. The request made by the noble Lord, Lord Hunt, for information after the fact, if it has to be brought forward, seems reasonable, but on that basis I do not support the amendments as they stand.
Lord Leong (Lab)
My Lords, I am grateful for the contributions to this debate. Noble Lords have highlighted that the public interest test in Clause 2 is a vital part of the Bill and I very much agree. It is important that we get it right. Noble Lords have tabled several amendments to this clause and we have had fruitful discussions on them at previous stages, but I am happy to return to them.
Amendment 2, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would limit the public interest factors that could be considered by the Secretary of State to those explicitly set out in statute in Clause 2. As I have set out previously, the Government agree that these are likely to be the most pertinent issues in relation to an intervention in the steel sector. We have sought to strike a balance in the Bill between minimising the scope as far as possible and ensuring that we can adapt to evolving circumstances. That is why we think it is necessary to retain some flexibility to consider other factors that may be relevant to a particular case, which may be difficult to anticipate.
Let me be clear that the legal test in this clause places particular emphasis on the factors that are explicitly set out. Where the Government seek to rely on other factors, they will need to be satisfied that those factors mean that an exercise of the powers is necessary in the public interest. I therefore do not consider the amendment necessary and respectfully ask that it be withdrawn.
Amendments 3 and 5, tabled by the noble Lords, Lord Sharpe and Lord Hunt, would create procedural steps that would need to be fulfilled before the transfer powers are exercised. Amendment 3 would require the Secretary of State to commission an independent assessment of whether the public interest test has been met and for that assessment to be met prior to using the powers. Amendment 5 would require the Secretary of State to provide details of the criteria used to demonstrate the public interest. Both are difficult to reconcile with the likely circumstances under which the powers could be exercised. The Government will likely need to act at pace to deliver an effective transfer. However, the Government will commit to publishing a Written Ministerial Statement following an exercise of the principal transfer powers, which would include details of how the public interest test has been met. I hope that provides some reassurance to the noble Lords, even if we cannot meet the full ambition of their amendments.
Finally, Amendment 4, also tabled by the noble Lords, Lord Sharpe and Lord Hunt, would require the Secretary of State to be satisfied that the exercise of the transfer powers would represent value for money for taxpayers. The Government are mindful of the potential costs that could be incurred in relation to the nationalisation of a steel company. This consideration is already taken into account in government decision-making under the usual public spending processes, as I have set out previously.
Additionally, as we discussed in the previous grouping, the Government are supportive of Amendments 7 and 9 from the noble Lord, Lord Fox, which would require the Secretary of State to consider costs prior to the exercise of the principal transfer of powers. These amendments go some way to addressing the concerns raised by the noble Lord Hunt, and I hope that will provide some reassurance.
Lord Hunt of Wirral (Con)
My Lords, I am grateful to my noble friend Lord Redwood and the noble Lord, Lord Fox, for their comments. I am grateful indeed to the Minister for his reassurances and the commitment that he has given, which meet many of the concerns I expressed earlier. In those circumstances, I beg leave to withdraw the amendment.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment would retain the ability for the Secretary of State to extend the principal transfer powers, but only in increments of up to two years at a time and only with the approval of both Houses under the affirmative procedure.
Lord Sharpe of Epsom (Con)
My Lords, these amendments stand in my name and that of my noble friend Lord Hunt of Wirral. As we stated in Committee, we cannot have a perpetual sunset clause. A sunset that can be extended indefinitely and for an unlimited period at a time is not a meaningful sunset at all.
I welcome the Minister’s engagement on this aspect of the Bill. The amendment would provide an important safeguard by ensuring that any extension of the principal transfer powers can be for no more than two years at a time. That would provide greater certainty for investors, greater assurance for taxpayers and a clearer expectation that these exceptional powers are not intended to become a permanent feature of the Government’s industrial policy. It is also important that we have a Government who are confident in their stated aim of securing private investment for British Steel so that it can thrive on a commercial basis. Regular parliamentary approval for any extension will help to ensure that Ministers continue to focus on that objective.
I thank the Government for recognising these concerns and for working constructively with us to ensure that this amendment can be accepted. I beg to move.
Lord Redwood (Con)
My Lords, two years is quite enough for these powers, and it is generous of my noble friend to suggest allowing another two-year extension. As I understand it, these steel matters are being considered under a £2.5 billion multiyear estimate, which was meant to be for the modernisation of the steel industry. When it was originally agreed, people had in mind that this was going to be grant aid for new electric arc furnaces and other such investments—not to pay continuous and high losses on an older technology plant that may not have the long future we would like.
To get into better order with the Treasury, the Government might want to have some self-imposed restraint on the duration of this. We have been led to believe that the rate of loss is at least £500 million a year on the two blast furnace activities that are currently under the Government’s control but not in their ownership. That would be a totally unacceptable continuing rate of loss and would eat into what should be modernisation money. That would mean they would get to the end of this Parliament with very little improvement to show.
Lord Fox (LD)
My Lords, I am in slight confusion that I hope the Minister can clear up. My understanding of Amendment 6A is that it offers a one-term renewal of two years, meaning a four-year total for any sunset clause. I might have misheard what the noble Lord, Lord Sharpe, said. I am assuming that is what Amendment 6A is seeking to achieve.
If we are reassured by the Government’s assurances on their intention, in a sense we do not need this—but it is certainly helpful to have it. If my reading of Amendment 6A is correct and it moves it four years as a maximum, it will move it into the next Parliament, where the Liberal Democrat Government will take a view.
Lord Leong (Lab)
My Lords, I am very grateful to all noble Lords for their contributions. I will respond to the point from the noble Lord, Lord Redwood, on financial assistance when we cover financial assistance in the sixth group.
I am grateful for the points raised regarding the sunset provisions in Clause 3. The noble Lords, Lord Sharpe and Lord Hunt, have tabled an amendment that would limit any extension of the sunset period to two years. I have had helpful discussions with them on this matter. Throughout debates on this Bill, we have emphasised that the Government are strongly minded to use the powers in the Bill to nationalise British Steel, subject to the public interest test, and do not currently see a need to use them for other steel undertakings. However, the steel sector faces challenges that can be beyond the control of government or companies themselves. It is important that we reserve the possibility of intervening in this way if it is needed in the public interest.
The amendment from the noble Lords, Lord Sharpe and Lord Hunt, strikes a good balance, allowing the Government to preserve the powers if absolutely needed while limiting any extensions of those powers to a limited period and subjecting them to an affirmative parliamentary debate. We recognise the need for this level of scrutiny, and it is appropriate that any extension be limited to a short period only. I am therefore pleased to lend my support to the noble Lord’s amendment.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment would provide that, where the Secretary of State extends the period during which a principal transfer power may be exercised, the extension may not be for more than two years.
“(3A) When deciding whether to make share transfer regulations under this section in respect of a steel undertaking, the Secretary of State must consider the costs that the Secretary of State thinks are likely to be associated with the exercise of the power.” Member’s explanatory statement
This amendment would require the Secretary of State to consider the costs associated with making share transfer regulations under clause 4.
Lord Hunt of Wirral
Member’s explanatory statement
This amendment would require regulations transferring securities of a steel undertaking to be subject to the affirmative procedure.
Lord Hunt of Wirral (Con)
My Lords, I rise to speak to Amendments 8, 10, 12 to 14 and 40, standing in my name and that of my noble friend. I thank the Minister for working constructively with us on Amendments 12 and 13. It is vital that where the Bill confers regulation-making powers of real consequence, the default should be the affirmative procedure. Amendments 8 and 10 would apply that principle to the core transfer powers, regulations transferring securities, and regulations transferring property rights and liabilities. We understand the Minister’s argument that in exceptional cases powers may need to be exercised.
Turning to Amendment 40, I ask the Minister for a clear assurance that a thorough impact assessment will be brought before both Houses of Parliament after the various powers in the Bill have been used. Given the potential effect on taxpayers, workers, investment and the wider steel industry, they must assess whether these exceptional powers have delivered the outcomes claimed for them.
Finally, Amendment 14 would remove Clause 50. The Constitution Committee was clear that the broad power allowing the Secretary of State to modify the law in relation to a share or property transfer
“should either be removed or significantly tightened”.
That is a serious recommendation from an important committee of this House. The Government should either accept the committee’s recommendation or make much clearer in the Bill the limited circumstances in which such a power may be used. I look forward, therefore, to the Minister providing some assurance on Amendment 40 and on the Henry VIII powers. I beg to move.
Lord Fox (LD)
My Lords, I rise to speak to Amendments 15 and 16 in my name, but first I speak in support of Amendments 12 and 13 in the names of the noble Lords, Lord Sharpe and Lord Hunt, which I have co-signed. Importantly, these would add necessary additional parliamentary control over continuity obligations and property transfer regulations. We moved similar amendments in the Commons that failed to attract sufficient support there.
Regarding Amendment 10, the Minister has convinced me that the need to quickly transfer property rights transcends the necessity of moving to an affirmative form of approval from a negative regulation. That is why I have not co-signed Amendment 10.
I tabled Amendments 15 and 16 as it is important that Parliament must be kept informed once any nationalisation is effected. Amendment 15 would create a new clause causing there to be a report on principal transfer powers from the point at which those powers are exercised under the Act. It says that the Secretary of State must
“make a written statement to each House of Parliament setting out … the progress, and the operational and financial performance, of the steel undertaking in respect of which a transfer power has been exercised, and … the impact of this Act, including (so far as it is possible to assess) its effects on the steel industry in the United Kingdom, on employment and on the public finances”,
and that this duty
“continues until no steel undertaking remains in public ownership”.
I hope the Minister has something positive to say on this, which includes reflecting on how the communities and skills requirements are being met in whichever part of the UK is affected by any nationalisation and subsequent changes.
It is a shame that the noble Lord, Lord Empey, was not with us in Committee, because he would have participated in a debate on an amendment that was very similar to Amendment 15, which covers not only the territory of Northern Ireland but the whole of the United Kingdom. I feel that the noble Lord’s point is important, but if it is important for Northern Ireland then it is important for the rest of the UK. I think he will see that Amendment 15 seeks to bring that across our entire country.
Amendment 16 seeks to create a stakeholder advisory committee. I will not repeat my speech from Committee, but its aim is to have stronger input into the steel strategy from steel users. The Minister responded with news that the steel council may be augmented by additional new members. I hope he can elaborate some more on how the voice of steel users is reflected more effectively in order for the Government to avoid such issues as those that have been created by the steel tariffs.
Lord Wigley (PC)
My Lords, I draw attention to a part of Amendment 16. I am delighted to see that the noble Lord, Lord Fox, has included the words
“industries that rely on the supply of steel, including the defence sector”.
That is one of the themes that is running, perhaps in the undergrowth, behind much of the thinking on the Bill. We must have a steel industry that is capable of responding, and quickly, in an emergency to the needs of the defence industry. The model has to be developed with that in hand. That is why I very much welcome the fact that that is written in the amendment.
Lord Empey (UUP)
My Lords, my Amendment 45 arises from an exchange in the other place last week with the Minister, Sir Chris Bryant. Members will be aware that Northern Ireland’s situation is different in so far as, for goods, it is covered by the Windsor Framework. Therefore, EU quotas on steel obviously apply. The issue is that we have the preposterous situation of having quotas of steel flowing from one part of the United Kingdom to the other. These two regimes are clashing.
The Minister in the other place indicated that HMRC is
“taking steps to confirm the arrangements with industry”.
Bearing in mind that this was happening with about 36 hours’ notice, it was a huge challenge for businesses and so on to get their heads around it. He went on to say:
“The Government will continue to provide guidance and support to traders moving goods from Great Britain to Northern Ireland through the trader support service”.—[Official Report, Commons, 30/6/26; col. 764.]
That is another example of why we do not have a free internal market within the United Kingdom. Can the Minister confirm whether both these matters have taken place: has HMRC taken the steps to confirm arrangements with industry, and is the Trader Support Service providing that guidance? It was not available last week, which is why I tabled this amendment.
The other issue arising is speciality steels, because of the United Kingdom’s current limited ability to produce them and because some firms which intend to produce them are not actually doing so. I will give the Minister an example of our concerns. If a European company has a branch in our jurisdiction in Northern Ireland—for instance, Harland & Wolff—and has access under its quota arrangements to speciality steel for, say, the defence sector, which the noble Lord, Lord Wigley, mentioned and which is a particular issue in my mind, and it bids for defence work that will require a significant amount of speciality steels, those steels may not be able to be sourced within the United Kingdom. Our anxiety, therefore, is that competitiveness, price and other things could create difficulties.
I fully understand the rationale for having quotas, because there is huge surplus capacity throughout the rest of the world. We understand that that has to be managed but, given that we cannot necessarily get the steels from within the United Kingdom, can the Minister give an assurance that those steels will be available, that the quotas are adequate—whatever we say about having them in the first place—and that there is sufficient headroom to ensure that companies’ competitiveness will not be significantly damaged by the unavailability of those products within the United Kingdom?
Lord Elliott of Ballinamallard (UUP)
My Lords, I support the amendment from my noble friend Lord Empey and will speak to the issue raised by the noble Lord, Lord Fox, in Amendment 15, which unfortunately does not cover the specific circumstances of Northern Ireland. I support Amendment 15, but my noble friend’s amendment goes further to, I hope, give protection to Northern Ireland.
The UK introduced a new steel trade measure on 1 July—
Lord Fox (LD)
I have a point of information. The Bill has nothing to do with steel tariffs. We have had several Statements on steel tariffs in your Lordships’ House, to which I do not think the noble Lord spoke. I am happy to debate the effect of nationalisation on the Northern Irish market and to dispute that issue. However, the issue of tariffs is not covered in this legislation.
Lord Elliott of Ballinamallard (UUP)
I recognise the noble Lord’s point about the tariffs, but the issue is that we need some protection, and my noble friend Lord Empey believes the only way to have that protection is through this amendment. There is no other mechanism for protection. We have had Statements and I have asked Written Questions, but the answers we have had are unsatisfactory. Why is it not reasonable to table an amendment to this legislation that could assist the processors and manufacturers in Northern Ireland?
Maybe the Minister will find another way of doing this. If he can then that would be extremely helpful to us, but we want to raise the issue and it is not beyond our reasoned power to do so. At the moment, there is no other way of doing that except through this legislation.
The tariffs are extremely important. We now have dual tariffs. We have not only EU tariffs, because we are part of the EU economic base, but UK tariffs. This is important in Northern Ireland, and we and our processors, fabricators and manufacturers will have to deal with it. It is unfair for the noble Lord to indicate that it is unreasonable for us to table this amendment—
Lord Fox (LD)
I am just confused, because the wording of Amendment 45 from the noble Lord, Lord Empey, asks for an impact assessment on the likely effects on Northern Ireland, and the wording of paragraph (b) of my proposed new clause in Amendment 15 asks for an impact assessment of the effects on the United Kingdom, which, of course, includes Northern Ireland. I wonder what Amendment 45 brings in addition that is not covered by Amendment 15. Thereafter, I will shut up.
Lord Elliott of Ballinamallard (UUP)
I thank the noble Lord for his intervention, but will he not agree that we are in a different situation in Northern Ireland from that in GB? We are under a double tariff. We are under a tariff from not only the European Union but the United Kingdom, which does not impact on those processors, fabricators and manufacturers in GB. So why is it not reasonable to ask for a special impact assessment for Northern Ireland? I think that is quite reasonable. I am surprised that the noble Lord has indicated that he does not want that. Surely, if he wants transparency and a reasonable outcome to this, it is only reasonable that we would have that impact assessment for Northern Ireland. I am happy to give way to the noble Lord if he wants to argue and demonstrate why that is not reasonable. If you are a Northern Ireland fabricator, like I have in my area in Northern Ireland, you will possibly have a double tariff now: one from the European Union and one from the United Kingdom. That is totally unfair and totally different—
Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)
My Lords, I think we have given the noble Lord a fair hearing. I ask him to bring his comments swiftly to a close so that we can get on with the business in hand today.
Lord Redwood (Con)
My Lords, I support my noble friends on the issue of the affirmative resolution. I think it is a superior device, given the importance of the matters that could be brought before us. I also fully support the idea of a proper impact assessment, which should of course include the impact on Northern Ireland, which may well be different because of the Windsor Framework—an arrangement which, in another life, I opposed very strongly.
Lord Leong (Lab)
My Lords, I thank all noble Lords for their contributions and for ensuring the ongoing scrutiny of any steel undertaking that is subject to the use of the powers in the Bill. Before turning to the amendments tabled by the noble Lord, Lord Fox, I will reflect on conversations I have had with noble Lords from across the House in recent weeks as we have sought to secure agreement on the drafting of the Bill.
The noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, have provided detailed feedback on and suggestions for how parliamentary scrutiny can and should continue following any acquisition. Following consideration of their feedback, I am pleased to confirm the following government commitments, which reflect the importance of transparency and parliamentary scrutiny.
I confirm that a debate will take place in both Houses on the steel strategy and the impact of the Bill, within 12 months after Royal Assent. Alongside this, the Secretary of State will lay a quarterly Written Ministerial Statement for at least the first year that a steel undertaking is in public ownership, reverting to a slower rate after that. Where a Minister considers it appropriate, the Written Ministerial Statement may provide an update on jobs, communities and other issues; I will detail this further in subsequent groups. As I have already set out, the Government will lay a Written Ministerial Statement following the acquisition of a company, setting out how the public interest test has been met.
In addition to these commitments on the impact of the Bill, I can confirm that, following any acquisition of a steel company, the company’s new chair would be able to attend a Select Committee to set out their plans for the publicly owned steel undertaking. I hope that that reassures the noble Lord, Lord Redwood. Alongside the chair’s attendance, the Government will write to Select Committees, including the Business and Trade Select Committee, with information following any acquisition, and subsequently on any future plans for any steel undertaking that falls within the scope of the Bill’s powers, and to respond to any specific requests from a Select Committee. I emphasise that it is for the Select Committees to set their agenda. If the Government, or the chair of a nationalised company, are asked to provide information and attend meetings, we will of course do so. These commitments build on the statutory reporting requirement on financial assistance in Clause 59, the company’s annual report and accounts, and the quarterly Written Ministerial Statements, which I have already set out.
Any nationalised steel undertaking would not be exempt from the corporate reporting requirements set out in the Companies Act 2006. This Act contains various reporting requirements that vary depending on the size of the entity. The Government will work closely with the company and, where necessary, if there are any material changes to the company’s circumstances outside the regular reporting cycle, the Government will be able to ask the company to produce an interim report on that particular issue.
Noble Lords have also raised a concern about ensuring that stakeholders are appropriately engaged in decision-making. I will provide further detail on this later, but I emphasise that the Steel Council will continue following the publication of the steel strategy. The council is made up of representatives from across the sector, and they would include a representative from any publicly owned steel company.
In addition to our continued engagement with the sector, I recognise the importance of ensuring that there are opportunities for Parliament to engage with the sector. I therefore confirm that the Government will convene an ad hoc round table on the future of the steel sector six months after Royal Assent. I hope that this series of commitments reassures noble Lords that the Government are committed to ensuring that Parliament can scrutinise any publicly owned steel undertaking where appropriate.
I thank the noble Lord, Lord Wigley, for his continued engagement with the Bill. I reassure him that Minister McDonald, the Minister for Industry, recently met with Minister Price from the Welsh Government, and my officials continue to engage with Welsh Government officials to try to secure a recommendation of legislative consent for agreement on the Bill. I am grateful to the noble Lord, Lord Wigley, for the discussions on these matters, and I hope to update the House on the outcome of these conversations at Third Reading.
I thank all noble Lords who have taken part in debates on Amendments 12 and 13, and particularly the noble Lords, Lord Sharpe and Lord Hunt, for their constructive engagement with me over the past few weeks. The Government respect the concerns that have been raised. Throughout the passage of the Bill, we have been clear that the Government are committed to as much transparency as possible with regard to the powers in the Bill. We have listened carefully to the cases made during our debates to date and have considered where it may be possible to amend the procedure for the power without harming the Government’s ability to carry out their objective under the Bill.
I am therefore delighted to confirm that the Government will support Amendments 12 and 13, which amend parliamentary procedure for continuity of obligations and enforcement powers. Under these amendments, the power to make regulations in relation to certain aspects of continuity obligations will change from the negative procedure to a draft affirmative procedure unless the Secretary of State considers the made-affirmative procedure necessary, and the power to make regulations on the enforcement of obligations will change from the negative to the made-affirmative procedure respectively. This compromise reflects your Lordships’ House at its best.
I shall address the other amendments in this group. Amendments 8 and 9, tabled by the noble Lords, Lord Sharpe and Lord Hunt, set out the opposition to the parliamentary procedure associated with the exercise of the share and property transfer powers in Clauses 4 and 15 respectively. While I recognise the magnitude of these powers, I must emphasise that any use of the principal transfer of powers would need to be exercised promptly to ensure operational and legal certainty. I cannot overstate the importance of this. In a scenario where the Government chose to use these powers, they would need to be exercised at pace in a commercially sensitive environment. The affirmative procedure would introduce significant delays to the transfer process and create a lack of clarity regarding ownership. This in turn would significantly affect the business, particularly supply chains and third-party contracts. This must be prevented.
Amendment 14 was tabled by the noble Lords, Lord Sharpe and Lord Hunt, and they have indicated their opposition to Clause 50 remaining part of the Bill. I am afraid that I have to disagree unequivocally in this case. I have previously set out that removing the clause would risk undermining the effectiveness of the Bill. The Bill confers powers that interact with the complex area of commercial company and insolvency law in a way that was not anticipated during the drafting of the legislation concerned. There will therefore be some tension in the way that the powers are applied. Clause 50 allows us to smooth over those challenges and avoid any unintended consequences or obstacles to a successful transfer.
I am sympathetic to the fact that it is difficult to justify a power of this nature when its potential use is quite abstract at this stage. By its nature, it is intended to deal with unforeseen circumstances in non-consensual, highly atypical transfer scenarios, and I remind noble Lords that it was necessary in the Banking Act context as well. As an example, the power could be used to modify or disapply certain corporate laws, such as disapplying shareholder voting or approval requirements to prevent any delay to the transfer. That is not to say that we plan to use it in this way but merely to illustrate its potential utility. It is worth repeating that the power can be used only to ensure that the transfer of power can be exercised effectively. It cannot be used outside the context of nationalising a steel undertaking to change or amend other laws. The use of the power will be subject to the draft affirmative procedure except in particular circumstances that justify proceeding on a “made affirmative” basis. I hope that this provides some comfort regarding the issue.
Amendment 5, also tabled by the noble Lord, Lord Fox, would require the Secretary of State to provide quarterly Written Ministerial Statements to Parliament updating on the progress of the nationalised steel undertaking and the broader impact of the Bill. I thank the noble Lord for our discussions on this point, and I recognise the appetite for further parliamentary scrutiny of the approach to a nationalised undertaking. As I have already set out to the House, I can confirm that the Government will commit to provide quarterly Written Ministerial Statements to Parliament for at least the first year of a steel undertaking in public ownership. This reflects the Government’s commitment to ensuring that Parliament is appropriately informed about the progress of any publicly owned steel undertaking.
I turn to Amendment 16, and thank the noble Lord, Lord Fox, for his continued discussions on stakeholder engagement throughout the passage of this Bill. This includes the amendment he has tabled, which would require consultation with the stakeholder advisory committee on whether an intervention was in the public interest before exercising the powers in the Bill. I believe that the noble Lord and I agree that stakeholder engagement is critical to supporting the Government’s vision for the future of the steel industry and to ensuring appropriate scrutiny. As previously mentioned, I am pleased to confirm that we will shortly be inviting the UK Metals Council to join the Steel Council, which will ensure that the views of downstream users can be fed into engagement and discussions.
However, as I previously set out, any decision to exercise the transfer powers would need to be made at significant speed. The amendment would delay the exercise of the transfer powers, creating additional risks to the business viability and ongoing operations and uncertainty over ownership. In addition, there are commercial sensitivities associated with any decision to exercise the transfer powers, making it extremely difficult to consult in advance of a decision. While I cannot accept the amendment tabled by the noble Lord, Lord Fox, I will reflect on the range of ongoing engagement that Ministers and officials from my department undertake with industry and stakeholders.
A notable forum for engagement is the Steel Council, which I have already confirmed will continue following publication of the steel strategy. The council will support the delivery of the strategy by providing evidence and feedback on evolving or emerging policies that affect the sector’s competitiveness, and by providing strategic oversight of the working groups on research and development, investment and skills. Having considered the amendments tabled by the noble Lord, Lord Fox, I can confirm that the Government will convene an ad hoc parliamentary round table on the future of the steel sector six months after Royal Assent. I hope this reassures the House that the Government regard stakeholder engagement as critical to the revitalisation of the steel sector.
The noble Lords, Lord Sharpe and Lord Hunt, have tabled Amendment 40, which would require the Secretary of State to publish an impact assessment of the operation and effect of the Bill within two years of Royal Assent. This is straightforward for me to address. As the Government have already published an impact assessment for the Bill, in line with our Better Regulation Framework requirements, further impacts will be assessed as part of a post-implementation process or review. I reassure noble Lords that if the powers under the Bill are exercised, we will publish further impact assessments to accompany any transfer regulations. Following this, the Government will consider any further impacts in the post-implementation review. As I have already set out, the Government will ensure that a debate on the steel strategy and the impact of the Bill takes place in both the House of Commons and the House of Lords within 12 months of Royal Assent. This reflects our commitment to ensuring that parliamentarians remain well informed about our plans for the steel sector.
Lord Hunt of Wirral (Con)
My Lords, this has been an important debate. I pay tribute to the Minister. His approach to the Bill has been exemplary. We may disagree, and we do disagree, but the Minister has set an example that will be difficult for his ministerial colleagues to follow. He has listened and cared deeply about all the points we have raised. I am sure I speak for the noble Lord, Lord Fox, as well as for my noble friend and friends across the House, when I say that the Minister has not only listened to us but responded in positive terms, and, where he has not been able to agree, he has explained why he cannot agree.
I thank the noble Lord, Lord Wigley, for making sure that we do not forget the vitally important Welsh dimension. I thank my noble friend Lord Redwood for always scrutinising the public expenditure side of the Bill.
I say to the noble Lord, Lord Fox, that, with him, I believe we have now received from the Minister a series of comprehensive assurances, particularly on the impact assessment, which will enable us to proceed in a positive way.
The noble Lords, Lord Empey and Lord Elliott of Ballinamallard, have raised issues that—as the noble Lord, Lord Fox, pointed out—do not fall directly within scope, but they do fall within the impact assessment. That is why it was important that those points were raised.
The Minister will argue that there is a case for a Henry VIII power in an emergency Bill of this kind. We remain concerned about the breadth of Clause 50 and the precedent it may set, but I am grateful to the Minister for his engagement with this debate, and I thank him. In the meantime, I beg leave to withdraw Amendment 8.
“(3A) When deciding whether to make property transfer regulations under this section in respect of a steel undertaking, the Secretary of State must consider the costs that the Secretary of State thinks are likely to be associated with the exercise of the power.” Member’s explanatory statement
This amendment would require the Secretary of State to consider the costs associated with making property transfer regulations under clause 15.
Lord Sharpe of Epsom
(a) the affirmative procedure, or(b) if the Secretary of State thinks it necessary to make regulations without using the affirmative procedure, the made affirmative procedure.”Member’s explanatory statement
This amendment would upgrade, from negative to affirmative or in some cases made affirmative (see clause 61), the procedure for regulations about consideration and terms for the performance of continuity obligations (see clauses 33 to 38).
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment would upgrade, from negative to made affirmative (see clause 61), the procedure for regulations about the enforcement of obligations under share transfer or property transfer regulations.
Lord Leong
Member’s explanatory statement
This amendment would require (rather than enable) compensation scheme regulations to make provision for the role of an independent valuer and would focus more explicitly on their role in carrying out valuations for the purposes of the regulations.
Lord Leong (Lab)
My Lords, I am pleased to introduce a set of amendments that the Government have tabled. I hope that we have demonstrated throughout this Bill’s passage a willingness to listen to and engage with the concerns raised by your Lordships and to consider potential solutions. In tabling these amendments, we seek to address the concerns raised by the noble Lord, Lord Fox, regarding the discretionary nature of the appointment of an independent valuer. I previously noted that the Government intend to appoint a valuer whenever the principal powers in the Bill are exercised. We therefore consider the noble Lord’s suggestion to make this mandatory reasonable.
Amendment 17 will therefore make the required change by ensuring that any compensation scheme regulations must provide for the appointment of an independent valuer. The amendments that follow to Clause 54 make minor consequential changes clarifying that the valuer’s role is to carry out valuations for the purposes of the regulations, which is a critical step in determining any amounts of compensation. I hope that these amendments demonstrate the Government’s constructive approach and that noble Lords will support them.
Turning to Amendments 20, 21 and 23 from the noble Lord, Lord Fox, I am grateful to him for his engagement over the past few weeks on this and other points. These amendments would ensure that compensation scheme regulations must require the independent valuer to take into account environmental and health and safety liabilities when assessing the value of the relevant steel undertaking. I refer also to the points made by the noble Lord, Lord Redwood, earlier. I have said during the Bill’s passage that the Government will seek to address concerns from noble Lords as far as possible.
Many companies operating in heavy industries such as steel operate as normal with contingent liabilities. The precise cost associated with environmental liabilities would depend on many factors, including the extent to which land will be retained for future steel-making, kept safe or remediated for alternative light industrial use. None the less, we agree that the environmental and health and safety liabilities are likely to be an important part of any compensation determination and that this should be made clear in statute. I am therefore pleased to confirm that the Government will support these amendments, and I hope the House will support them too.
Lord Fox (LD)
My Lords, that was a very positive response from the Minister, and I thank him and his team for really listening to what we have been saying. Amendment 17 is an important step forward and I am pleased that he has tabled it. Amendment 21, as the Minister pointed out, makes something that might happen mandatory, taking on board fully the issues raised on another group by the noble Lord, Lord Redwood, and absolutely taking on board the issues I raised in Committee. I thank the Minister for his enthusiasm and look forward to this being added to the Bill.
Lord Sharpe of Epsom (Con)
My Lords, I echo my noble friend Lord Hunt’s comments on the previous group. I thank the Minister for his engagement, and the Minister and the noble Lord, Lord Fox, for their amendments in this group. Amendment 17 is very welcome. It ensures that compensation regulations must provide for valuations to be carried out by an independent valuer rather than leaving that as an optional feature of the scheme.
I also welcome the Government’s work with opposition parties to ensure that relevant liabilities are properly reflected in the valuation process. In particular, Amendment 21 ensures that environmental and health and safety liabilities must be taken into account, as my noble friend Lord Redwood powerfully articulated on an earlier group.
Lord Redwood (Con)
My Lords, I too welcome this from the Government. I think they will find it very helpful because, should we move on to the full acquisition of British Steel at Scunthorpe, there remain, as I understand it, financial issues outstanding with the current Chinese owners. It will be very important to have an accurate and full account of all these long, deep-rooted and sometimes very expensive liabilities to provide some counter to what we read in the press is their rather extravagant idea of how much they ought to be paid.
Lord Leong (Lab)
I thank all noble Lords for their support. I want to share with noble Lords that the issue of health and safety is definitely a priority. At British Steel there has been a clear improvement in health and safety standards since the introduction of the special measures Act last year. This will remain a central priority going forward. Indeed, since the passage of the Act we have already spent some £8.1 million on essential improvements in this area, so we do take health and safety seriously and it is a priority for the Government.
Lord Leong
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Member’s explanatory statement
This amendment is consequential on Lord Fox’s amendments to clause 54(4).
(a) must require;”Member’s explanatory statement
This amendment would make it mandatory for an independent valuer to take environmental and health and safety liabilities into account when making a determination.
Lord Leong
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Member’s explanatory statement
This amendment is consequential on Lord Fox’s other amendment to clause 54(4).
Lord Leong
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).
Lord Hunt of Wirral
Member’s explanatory statement
This amendment would limit the financial assistance that can be provided under the Act.
Lord Hunt of Wirral (Con)
My Lords, in moving Amendment 31 I will also speak to Amendments 32, 33, 35 and 36 standing in my name and that of my noble friend. I support the similar sentiments and approach expressed in Amendment 37.
I do not wish to repeat the arguments made in Committee, but on these Benches we remain gravely concerned by the open-ended cost to the taxpayer that the Bill potentially permits. The Government have already announced £2.5 billion of taxpayer funding for the steel sector. That is the figure that Ministers have chosen to present as a demonstration of their commitment to rebuilding and modernising British Steel and the steel sector. Yet in this Bill they seek an unlimited power to provide financial assistance with no statutory ceiling whatever. I believe this is bad economics, bad politics and, unless some clarity is forthcoming, quite possibly bad faith too. If £2.5 billion is not enough, how much is? Is there any maximum figure at all that Ministers are prepared to put before us and then stand behind?
Lord Redwood (Con)
My Lords, I am so glad my noble friend has raised once again this crucial and fundamental point. It is of great importance and of help to the Government.
When I have in the past had some responsibility for trying to recover the financial position of the odd distressed company—although nothing nearly as distressed as British Steel at Scunthorpe—I have always found it was an essential discipline to first of all institute very frequent reporting, because you need to signal to the executives undertaking the day-to-day work that the financial state of the company is at risk and that they need to give great priority to this. You need to help them get clarity over why cash is draining out of the business. This business, British Steel, which is under the operational control of the Government, is draining cash, we believe, at £500 million a year. That is a phenomenal rate of loss, which is going to have an obvious impact on the public accounts, at a time when we know that government money is scarce and there are many other priorities. We need to know rather more about why it is £500 million.
Is there any residual investment programme left? That would be the first thing to go when you are trying to save cash. Is it still committing money to raw material stocks? It clearly should not be allowing more material stocks. Does it have a very large stock of finished product which it is not able to sell? If that is the case, what is the plan for trying to move that stock on? What is the reality of the price level it is going to get for that stock? Obviously, stock is a mixture of volume and value, and you have to try to maximise the cash you can get for the stock you have got before you would normally go on to produce more. This plant has the particular problem that it has to keep producing, even if it is not able to sell enough of the product at a sensible price. You would expect regular reporting, certainly to the chief executive appointed by Ministers, but I would have thought that the Minister with day-to-day responsibility for this would know what is going on, and on the trading accounts, because a lot of the cash going out may be trading losses. You would want to see an urgent plan for selling more and economising on costs wherever you can, whether that is bought-in materials, the productivity of labour or other overhead costs that the business is incurring.
During the debates so far, I have not felt the Government’s urgency around this financial problem. Every pound that goes out of the door on losses that you are responsible for as a steel-maker is a pound that cannot be spent on the new and better industry that you really need in order to take the country forward. I am not blaming the Minister, who has been exemplary in his conduct and helpfulness—I am sure he wants, as we all do, a good outcome to this—but in those conversations within ministerial offices, it would be good if a Minister in the other place, for example, could make more Statements which showed that there was a plan and a determination to rescue this industry that we all wish to rescue.
In this group of amendments, there is talk of quarterly reporting. That is a big enterprise in terms of people and scale of loss. Quarterly reporting is quite common and normal now in the public quoted sector. It is a good discipline, even for the most profitable businesses in the world, because people like to make sure the trends are still good and the managers are in charge of it. I would have thought that quarterly reporting was the bare minimum, and if it was somebody’s day-to-day responsibility then they would obviously need rather more frequent reporting than that.
The public deserve quarterly reporting from this industry, which they now have a substantial operational stake in. I urge the Minister to think about more regular public clarity. I hope that such detailed, short-term regular reporting is going on. It would be good to get some good news out of the Government that they are applying the right kind of financial disciplines to control the outflow of cash. If they do not control the outflow of cash, it will end in tears and redundancies.
Lord Sentamu (CB)
My Lords, I want to simply question Amendment 31. In Clause 58(2), there are many different ways in which the Government can provide assistance, such as
“by way of grant, loan, guarantee or indemnity … by the acquisition of shares or any other interest in, or securities of, a body corporate, … by the acquisition of any undertaking or of any assets … pursuant to a contract, or … by incurring expenditure for the benefit of the person assisted”.
I am one who believes that we should plan for the future and make sure we do not spend above our means. However, it seems to me that, in a Bill of this nature, putting a tag of £2.5 billion by the end of 15 August 2029 is a restricting element and it does not give me confidence that we are actually interested in nationalising steel.
There are so many unknowns. During the debate when we were all summoned by the Prime Minister to rescue the steel industry in Scunthorpe, it was quite clear that the books were not very encouraging—but this is a national asset, so what do you do? It seems to me that to put that amount in the Bill is almost legislating for failure. If, for example, it is £2.6 billion, not £2.5 billion, what would happen? Would the whole thing collapse? Putting figures in the Bill is not good for legislators. We have got the Exchequer and all kinds of other people for that. Let us not try to conduct this Report as if we are the Treasury—we are not. I urge the noble Lord, having flagged it up, to nevertheless withdraw his amendment. I would find it difficult to support.
I remember being in Birmingham when Rover collapsed. BMW announced that it would build the Mini there but left the other plant. The Government were being asked for only £600 million to keep the plant. They were already in agreement with China to sustain it, but, because of the laws around government support for businesses from the EU, the Government found that they could not, and the plant went.
I always respect the noble Lords, Lord Hunt and Lord Sharpe, because of their wisdom. However, if they do not mind me telling them this, as a Cross-Bencher rather than one of those rarefied Lords spiritual, I think that they are losing a little of what I have always taken them for—just no.
Lord Fox (LD)
My Lords, I welcome the noble and right reverend Lord’s descent from the spiritual to the temporal, and indeed the financial. His contribution is appreciated. I also welcome all those who have not had the joy of participating in the steel Bill debate so far.
Before I speak to Amendment 31, I am going to speak to Amendments 34 and 37, which are in my name. I am happy to say that the Minister pulled the rug from under my feet with respect to Amendment 34 when he spoke to a previous group of amendments. Amendment 34 seeks to promote a role for Select Committees going forward. I am happy to say that the Minister has taken that suggestion on board to a large extent. It is important that Select Committees are able to get under the bonnet of this, to look at the nature and amount of financial assistance, the beneficiaries of that financial assistance, the purpose and the effect of that financial assistance, and the conditions of repayment. I am happy to say that the points the noble and right reverend Lord made about the nature of any support were covered by previous comments.
Amendment 37 would insist on a report to outline the impact of financial assistance provided under Clause 58, with a focus on the short-term and long-term investibility of any nationalised steel undertaking. In tabling this amendment, I hope the Minister can put on record again what he told us in Committee about the long-term aim of the Government regarding returning these public assets into private hands. It would help your Lordships if the Minister were able to repeat that.
On Amendment 31, the Liberal Democrats in the Commons tabled an amendment to cap financial assistance, but we are now dealing with a different Bill. The Government have accepted Amendments 7 and 9, where value for money is accepted as a criterion in the Bill. We have inserted rigorous quarterly reporting. The noble Lord, Lord Redwood, will remember from two groups back that that amendment has been accepted and we will have quarterly reporting. As we have just said, we have ensured a role for Select Committees in scrutinising any nationalised industry, and we have implemented mandatory valuation of contingency liabilities. That Bill is not the Bill we are talking about.
I am persuaded that flexibility is required. The noble Lord, Lord Hunt, put in a spirited performance and, at one point, was possibly auditioning for the role of Chancellor—when he talked about magic money trees, I thought he was pushing his name forward to become the next Chancellor of the Exchequer. But then, he seemed to very freely talk about spending £2.5 billion here and £2.5 billion there. My worry is that his £2.5 billion would become a target, rather than the limit. Given the controls that we have put into the Bill, we will not be supporting Amendment 31.
Lord Leong (Lab)
My Lords, I thank all noble Lords for their contributions, and I thank the noble and right reverend Lord, Lord Sentamu, for his support.
Amendment 32, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would require that details of any proposed financial assistance under Clause 58 be provided to Parliament before the assistance can be granted. The noble Lord, Lord Fox, has raised the issue of parliamentary scrutiny in respect of this clause in Amendment 34, which would require detailed proposals to be put forward before Parliament for a 90-day period and allow the Select Committee to make recommendations which the Government must respond to before any assistance is forthcoming. I understand that these amendments address the concerns of all noble Lords about the potential to incur costs in relation to the powers in this Bill.
As I have noted previously, there is a framework of public-spending principles and governance, designed to ensure that public funds are well managed, and the Public Accounts Committee holds government to account in this respect. Where the Government use the powers in the Bill to transfer a steel undertaking into public ownership, costs may be incurred from day one and will need to be funded to maintain an ongoing operation. It is vital that a steel company that is running production continuously does not face disruption due to funding shortfalls. That is why these two amendments cannot be accepted by the Government, despite the good intentions behind them. As set out in Clause 59, we will provide annual reports to Parliament detailing the costs incurred under the financial assistance provided. A nationalised company will also need to publish an annual report and accounts, as the department does, so this information will be available in several places.
Lord Hunt of Wirral (Con)
My Lords, I am very grateful to the Minister, in particular for those additional comments. I and my noble friend Lord Sharpe—as well as, I believe, the noble Lord, Lord Fox—have been reassured by how the Minister has termed the positive future that we all want to see. However, as my noble friend Lord Redwood pointed out, the Government have still not provided Parliament with a clear limit on the potential exposure facing taxpayers. I do not know whether the Minister has any aspiration to become a Treasury Minister. To become one, you have to believe in caps—there is no other way to become a Treasury Minister.
I say to the noble and right reverend Lord, Lord Sentamu, that the Government just have to come to Parliament. If they require more money, they should ask Parliament for more money. At the moment, they have said that £2.5 billion is necessary. If there is a need for more money, it is perfectly open to the Government to come to Parliament and ask for it. Without a clear limit, there is a real risk that the cost could run into tens of billions of pounds.
Lord Sentamu (CB)
Therefore, if they can come to Parliament to ask for it, do not put the limit in the Bill. That is what the noble Lord seeks to do in his Amendment 31.
Lord Hunt of Wirral (Con)
If the noble and right reverend Lord does not support this amendment, it will be unnecessary for the Government to come and ask for more money. It is only when there is a cap that the Government have to be accountable to Parliament. For the reasons I have outlined, and because taxpayers should never be asked to sign a blank cheque, I wish to test the opinion of the House.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, before we divide the House, I need to inform the House that there have been intermittent network issues on the estate. Because of the small risk that this may cause temporary disruption to the pass readers and the Division system, I have agreed with the usual channels to extend the time for Divisions from eight to 10 minutes.
I ask all noble Lords to ensure they firmly tap their pass on the pass reader. If in doubt, they should tap their pass a second time. The system will only record a vote once. If we all remember that beep means you have voted and no beep means no vote, we will all be fine.
Lord Sharpe of Epsom
“Report on the impact any nationalisation of steel undertakings has had on inward investment to the United KingdomWithin six months of the day on which this Act is passed and every subsequent six months, the Secretary of State must lay a report before Parliament which sets out the impact that nationalisation of any steel undertaking under this Act has had on inward investment to the United Kingdom.”Member’s explanatory statement
This new clause would place a duty on the Secretary of State to report to Parliament on the impact any nationalisation of steel undertakings has had on inward investment to the United Kingdom.
Lord Sharpe of Epsom (Con)
My Lords, I will speak to Amendments 38 and 39, standing in my name and that of my noble friend Lord Hunt of Wirral. On Amendment 38, I hope that the Minister can give a clear assurance that the future impact assessment will include an assessment of the effect of nationalisation on investment in the domestic steel sector.
On Amendment 39, the Minister gave assurances in Committee that financial assistance would comply with domestic and international subsidy control rules. I would be very grateful if he could put that reassurance more clearly on the record. Could he please confirm that the Government have assessed whether any proposed support could give rise to concerns under the domestic subsidy control regime, including any conversations that they have had with the Competition and Markets Authority? Could he also confirm that Ministers are satisfied that the proposed support will comply with the World Trade Organization’s subsidy rules? I look forward to the Minister’s response. I beg to move.
Lord Leong (Lab)
My Lords, the amendments in this group address inward investment and a level playing field. I emphasise at the outset that the Government are committed to ensuring that any publicly owned steel undertaking is subject to the same requirements and standards as any privately owned steel undertaking.
Amendment 38, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would place a duty on the Secretary of State to report to Parliament on the impact of any nationalisation of a steel undertaking on inward investment in the UK. I reassure your Lordships that the Government are committed to revitalising the steel sector and to establishing an investible and competitive business environment. To date, we have had positive feedback from industry on the Bill and the Government’s approach to nationalisation.
To be clear, public ownership is not an end in itself; it is a means of safeguarding our strategic domestic capability in exceptional circumstances. Our intention behind any intervention would be to make the changes necessary to put the steel undertaking on a sure footing and, where possible, return it to a position where it could attract private investment.
As I have set out previously, any use of the transfer powers would require an impact assessment. This would set out the impact of a nationalisation on the economy and, where appropriate, the Government would undertake post-implementation reviews. As I have confirmed, the Government will ensure that a debate on the steel strategy and the impact of the Bill takes place in both the House of Commons and the House of Lords within 12 months of Royal Assent.
Amendment 39, again in the names of the noble Lords, Lord Sharpe and Lord Hunt, seeks to require the Secretary of State to maintain a level playing field between publicly and privately owned steel companies. I sympathise with the concern expressed by the noble Lords and want to make it clear that the governance and regulatory treatment of any nationalised steel company will seek to ensure a level playing field.
To emphasise this, I state that any financial assistance would be time-limited, targeted and proportionate to avoid market distortions. The provision of any funding would comply with domestic and international subsidy control obligations. I hope this reassures noble Lords that the Government are committed to ensuring that any publicly owned steel undertakings will not be unfairly advantaged.
Lord Sharpe of Epsom (Con)
My Lords, I am very grateful to the Minister for his remarks. It was particularly pleasing to hear that the Government have received positive feedback from the industry. It is not for now, but I wondered whether the Minister might be in a position to be a little bit more specific and perhaps write to noble Lords who have taken part in the debate, outlining some of those positive comments. That would help to contextualise our future debates. I am also pleased, as we have discussed in earlier groups, that we will deal with post-implementation reviews and that there will be a debate within 12 months in both Houses. That is a very welcome development.
As regards Amendment 39, I listened to what the Minister said. I am particularly pleased that he assured us that the Government will seek to pursue a level playing field quite explicitly and to avoid market distortion. Those are incredibly important things for so many reasons, particularly when it comes to encouraging inward investment and ensuring that existing operations are not disadvantaged by anything that the Government do on behalf of the taxpayer. In the light of those assurances, I beg leave to withdraw my amendment.
Lord Hunt of Wirral
“Exemption of iron and steel carbon border adjustment mechanism goods(1) Section 143 of the Finance Act 2026 (charge to carbon border adjustment mechanism) does not apply to emissions embodied in a CBAM good which is an iron and steel good for the purposes of Schedule 16 to that Act where the good is imported by a transferred steel undertaking for use in connection with the carrying on of its business.(2) In subsection (1), “transferred steel undertaking” means a steel undertaking in respect of which the Secretary of State has exercised a principal transfer power.” Member’s explanatory statement
This new Clause would exempt iron and steel CBAM goods imported for use by a steel undertaking brought into public ownership under this Act from the carbon border adjustment mechanism.
Lord Hunt of Wirral (Con)
My Lords, I will also speak to Amendments 42 and 43 standing in my name and that of my noble friend.
As we stated in Committee, the carbon border adjustment mechanism and emissions trading scheme will have a material effect on the domestic steel sector. The Government will no doubt argue that the CBAM and ETS are necessary to meet their net-zero objectives and that they will not harm British industry. We may have significant disagreements on that point. However, what cannot be disputed is that these measures will affect steel undertakings in this country. The question is whether that effect will be positive or negative on costs, production, exports and international competitiveness.
In Committee, Ministers suggested that the business environment, including the ETS and CBAM, would be relevant to valuation. But that is not the same as a clear assessment of the practical effect of these policies on the future of domestic steel-making. I therefore invite the Minister to confirm that the future impact assessment to which the Government have referred will include a full assessment of the effects of the CBAM and ETS on the domestic steel sector.
If the Government are right that these measures will protect industry, support investment and improve competitiveness, they should have no difficulty at all in providing that assurance. If, however, that assessment shows that these measures are damaging production, exports, investment or competitiveness, that would also give the Government the evidence needed to change course, and that is why I wish to move this amendment. I beg to move.
Lord Redwood (Con)
My Lords, I am very grateful that my noble friend has raised this important point. We would probably not be having these big debates about steel nationalisation if the United Kingdom in recent years had had competitive energy pricing, and if it had not gone in for carbon pricing and carbon taxes that can have an adverse bearing on energy-using industries. However, we are where we are, and so my noble friend is right to ask the Minister to give some reassurances. We seem to be involved in overtaxing carbon and then having to subsidise those businesses that suffer as a result.
Of course, the CBAM is an EU-designed scheme which we are copying, to try to offset the impact that very high carbon and energy costs have on domestic economies and industries, by imposing a similar tax or tariff on the imported goods from countries that do not impose such carbon taxes and carbon additions to the energy they are using in industrial plant. That does help in some way for the domestic steel-producing industry; it becomes a problem for the domestic steel-using industry where it is having to import steel beyond the tariff-free quota provided under the CBAM. We note that the tariff-free quota is skewed to favour European producers, rather than other producers around the world who might be otherwise cheaper or more advantageous.
Lord Fox (LD)
My Lords, we debated CBAM and the ETS in Committee, so I will not add to that debate, but I will ask a question of the proposers which I did not ask then: how is a steel business affected differently by CBAM or the ETS, whether it is publicly or privately owned? The answer is that it is not. The Bill is about the potential public ownership of steel. We will have to have a debate about CBAM and the ETS. The Liberal Democrats often talk about energy prices but not in the context of this Bill, because it is about whether a steel entity is in public or private ownership, and frankly, the CBAM will affect them the same way, no matter where that ownership lies.
Lord Leong (Lab)
My Lords, I thank noble Lords for their contributions to this debate on the emissions trading scheme and the carbon border adjustment mechanism, which I will refer to as CBAM, and their impacts on the steel sector.
Notably, these amendments seek to exempt a publicly owned steel undertaking from both these environmental measures, thereby undermining the level playing field that the noble Lord mentioned in the previous group. At the outset, I emphasise the Government’s commitment to their industrial decarbonisation policies and to moving towards a green, decarbonised steel sector. Although I appreciate that there may be differing views on this issue, these amendments would completely undermine the Government’s objectives for these measures.
These commitments build on the statutory reporting requirement on financial assistance in Clause 59, the company’s annual report and accounts, and the quarterly Written Ministerial Statements, which I have already set out. Any nationalised steel undertaking would not be exempt from the corporate reporting requirements set out in the Companies Act 2006. That Act contains various reporting requirements, which vary depending on the size of the entity. Where relevant or material, our Written Ministerial Statements may refer to any wider contextual or regulatory impacts. In addition, as previously mentioned, the Secretary of State would have the ability, if needed, to request an interim report on a particular issue.
Amendment 41 seeks to exempt a publicly owned steel undertaking from CBAM. I understand the concern expressed by the noble Lord; however, I emphasise that CBAM’s purpose is to ensure that imported carbon-intensive goods face comparable carbon prices to those of domestically produced goods. It gives industry confidence to invest in the UK, knowing that its decarbonisation efforts will not be undermined. CBAM makes no exemptions for particular UK firms. Its intent is to target the problem of carbon leakage and ensure that highly traded, carbon-intensive goods from overseas, including steel, pay a comparable carbon price to that paid by UK manufacturers.
I understand the intention behind Amendment 42 and the desire to ensure that Parliament remains informed about the impact of carbon pricing policies on the steel sector. The Government are committed to supporting a competitive and sustainable steel industry while delivering our decarbonisation objectives. However, the UK emissions trading scheme and the carbon border adjustment mechanism are economywide policies designed to address carbon leakage and support the transition to net zero across industry as a whole, rather than for any particular company or ownership model.
The UK ETS Authority already keeps the operation of the scheme under review. The scheme contains statutory review mechanisms. The authority has committed to continued monitoring of both free allocation policy and the interaction between ETS and CBAM. The authority has also recently confirmed the extension of the UK ETS beyond 2030 and will continue to engage with industry and consult on future scheme design, ensuring that the impacts on affected sectors are properly considered. Given these existing review mechanisms, it is not necessary to create a separate statutory requirement for a particular transferred steel undertaking.
Amendment 43 seeks to exempt a publicly owned steel undertaking from the emissions trading scheme. I am sympathetic to the fact that this imposes a cost on activities that have significant emissions. However, as with Amendment 41, accepting Amendment 43 would grant preferential treatment based on ownership and undermine a level playing field across the industry. The transition to low-carbon steel must be fair, credible and consistent across all operators, whether publicly or privately owned. I emphasise that the ETS includes targeted protections for energy-intensive, trade-exposed industries, including steel. Further protections will be introduced through CBAM from 2027.
The Government remain firmly committed to both a competitive steel sector and our decarbonisation objectives. Exempting a publicly owned steel undertaking from ETS or CBAM would create an uneven playing field, weaken the integrity of these schemes and undermine efforts to tackle carbon leakage. Steel producers, regardless of ownership, should operate within the same fair and consistent framework. I hope that my comments reassure noble Lords.
Lord Hunt of Wirral (Con)
My Lords, I am very grateful to my noble friend Lord Redwood for highlighting the importance of ETS and CBAM. I say to the noble Lord, Lord Fox, that the British taxpayer has a right to know the effect of ETS and CBAM. I take his point that it would apply whether it was in the private or the public sector, but we are now dealing with a nationalised industry which is funded by the taxpayer, and the taxpayer has a right to know exactly what the effect of the UK ETS and CBAM will be on the costs, production, exports and competitiveness of the transferred steel undertakings.
However, I recognise that the Minister has done much to explain the method by which the Government are approaching this situation. We will keep it under careful scrutiny but, in the meantime, I beg leave to withdraw the amendment.
Lord Sharpe of Epsom
“Industrial action affecting a transferred steel undertaking(1) Where the Secretary of State has exercised a principal transfer power in respect of a steel undertaking, the Secretary of State may prohibit or restrict industrial action affecting that undertaking if the Secretary of State considers that the industrial action creates, or is likely to create, a sufficient risk to the public interest in respect of which the principal transfer power was exercised.(2) An act done in contravention of a prohibition or restriction under subsection (1) is not protected by section 219 of the Trade Union and Labour Relations (Consolidation) Act 1992 (protection from certain tort liabilities).(3) Industrial action in contravention of a prohibition or restriction under subsection (1) is not protected industrial action for the purposes of section 238A (participation in official industrial action) of that Act.”Member’s explanatory statement
This amendment would enable the Secretary of State, following the exercise of a principal transfer power, to prohibit or restrict industrial action only where it creates a sufficient risk to the public interest grounds on which the steel undertaking was brought into public ownership.
Lord Sharpe of Epsom (Con)
My Lords, when we debated this amendment in Committee, the Minister suggested that it was somehow about industrial relations. It is not. This amendment is about our national security. The Prime Minister himself has warned the House and the country that we may face aggression from Putin’s war machine against a NATO ally before the decade is out. Let that sink in. It is not “if” but a real and growing risk, on our watch, in this decade.
What is the Government’s answer when it comes to the very steel from which we forge our warships and our defences? Their answer, apparently, is that production could grind to a halt whenever a strike is called—no matter the stakes, no matter the moment, no matter who benefits from Britain’s weakness. This amendment does not abolish the right to strike. Let no one on the Benches opposite pretend otherwise. It says something far narrower and far more reasonable: that, where the Secretary of State has taken a steel undertaking into public ownership precisely because of its importance to the public interest, industrial action which threatens that public interest cannot simply proceed as though nothing were at stake. Where the risk is sufficient and where the ground for public ownership was the public interest itself, the Secretary of State may act to protect it.
We are told again and again that this Bill is about safeguarding a strategic national asset. Very well, we accept those arguments—but let us mean them. You cannot claim with one hand that steel production is too vital to be left to the market and with the other hand leave that same production exposed to disruption whenever it suits a dispute wholly unconnected to the nation’s defence. You cannot have it both ways.
If a strike stopped the plates and the girders needed for a Royal Navy hull at the very moment that the Prime Minister’s own warning came to pass, would the Government stand by, hands tied by statute, and watch it happen? If the answer is no, the Government should accept this amendment today rather than legislate the problem into existence and hope it never arrives.
In an earlier group, the Minister used as a defence how difficult the industry is and the massive external pressures that it faces. This is an issue that is within the Government’s potential control. They should accept this amendment. We on these Benches are not afraid to say what needs to be said. In an uncertain and dangerous world, national security must remain a priority. I urge the Government, in the interests of national security, to accept this amendment. I beg to move.
Lord Fox (LD)
My Lords, the noble Lord, Lord Sharpe, raises a serious issue. There was a moment when I thought I had passed through the looking glass. Your Lordships on that side of the House were sitting on this side, and those Lordships who were here were sitting on that side of the House. The only thing that broke me from that reverie, far from it being the noble Lord, Lord Sharpe, at the Dispatch Box, was the noble Lord, Lord Callanan. He was proposing the Strikes (Minimum Service Levels) Act 2023, with which the Government of the day sought to do exactly as the noble Lord, Lord Sharpe, seeks with this amendment.
I ask the noble Lord, Lord Sharpe, how many times that Act was applied. How effective was it? The issue that he raises is important. Of course the security of the country is important, but this is not the way to ensure the security of our country. Having a proper partnership with the workers in the industry is the way in which you secure the security of this country.
Lord Leong (Lab)
My Lords, I thank all noble Lords for their contributions and the noble Lord, Lord Fox, for those words. As this is the last group of amendments, I thank all noble Lords for their constructive approach to the scrutiny of this Bill. In particular, I thank the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, for taking the time to meet me over the last few weeks. The way in which we have been able to collaborative to refine and improve the Bill truly shows your Lordships’ House at its very best.
Amendment 44 is in the names of the noble Lords, Lord Sharpe and Lord Hunt. Before I speak to it, I state that the Government take national security seriously; it is a priority. The amendment seeks to prohibit or restrict industrial action where there is a sufficient risk to the public interest grounds on which the steel undertaking is brought into public ownership. I understand that the intent of this provision is to ensure that any publicly owned steel undertaking can operate effectively without delay.
However, this is not the appropriate means to achieve this goal. I emphasise the absolute importance of workers’ rights. The steel workforce is the backbone of this industry. This Government are committed to protecting their rights and working with the trade unions and the workforce to ensure that operations are as effective and secure as possible. Noble Lords will know that I was closely involved in the delivery of the Employment Rights Act. Workers’ rights is an issue that is close to my heart. While political differences remain, we are not in the business of counterproductive approaches to industrial relations. As part of delivering the Employment Rights Act, our plan to make work pay, we are continuing to consult with businesses, trade unions and civil society to make sure we get the detail right. Several consultations are still live, including on reforms to zero-hours and similar contracts. This amendment is neither necessary nor appropriate to ensure that a publicly owned steel undertaking can operate effectively.
I hope I have convinced noble Lords of the reasons why the Government cannot support this amendment. I therefore respectfully ask that it be withdrawn.
Lord Sharpe of Epsom (Con)
My Lords, I am very grateful to the Minister for his response and, in particular, for the recognition of the central importance of national security in this matter. That is very welcome, but recognition is not the same as resolve. If the Minister truly accepts the force of the argument, the surest way to demonstrate that is not warm words at the Dispatch Box but acceptance of the amendment. I gently say to him that he could have strengthened his own case considerably by doing just that.
I am grateful to the noble Lord, Lord Fox, for pointing out my party’s admirable consistency, which sometimes we are criticised for. I suggest that nothing in this amendment would prevent any sort of proper partnership—to use the noble Lord’s words—with the workforce, which of course we would approve of and endorse as a first and foremost. The simple fact of the matter is that this is a different set of circumstances. We are talking here about the national interest and national security. They are of fundamental importance as regards this entire Bill, and that is why we have proposed this amendment.
To finish there would be to finish on a slightly discordant note, and I do not wish to. I am enormously grateful to the Minister for all his engagement and for accepting so many of our arguments. We are very grateful for the reassurances we have received from the Dispatch Box and the acceptance of some of our amendments, and we wish the Minister well in his future endeavours. I beg leave to withdraw the amendment.
Steel Industry (Nationalisation) Bill
Monday 13th July 2026
(2 weeks ago)
Lords ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 22–R–I(a) Amendment for Report (Supplementary to the Marshalled List) - (7 Jul 2026)
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)
My Lords, I begin by making a short statement on legislative consent. The Government engaged with all three devolved Governments as soon as possible following the introduction of the Bill. A full devolution analysis was sent to all three devolved Governments on 18 May. Since then, my ministerial colleagues and officials have engaged at pace to address the issues that have been raised.
I am pleased that the Scottish Parliament granted legislative consent to the Bill on 23 June. I thank UK Government and Scottish Government Ministers and officials for working constructively and at pace to reach that outcome before the Scottish Parliament rose for recess. In Wales, a legislative consent memorandum was laid on 1 July and a legislative consent Motion has been tabled for debate in the Senedd tomorrow. I am happy to report that the Government have been able to address the concerns raised by Welsh Ministers regarding the Bill.
If the Government did decide to exercise the powers in the Bill, we would of course want to consider the appropriate governance. If a steel undertaking which had its principal place of business in Scotland, Wales or Northern Ireland were to be nationalised using the powers in the Bill, the Government would seek appropriate involvement for the relevant devolved Government to ensure that their views were considered in discussions where appropriate. This reflects the Government’s commitment to consulting the devolved Governments where decisions impact devolved policy areas, while acknowledging that the specifics of company governance would need to reflect the specific circumstances of an undertaking.
The responsibility for the management of the company would always rest with the board, which alone would possess voting rights and the right to make decisions. This would ensure that a devolved Government could be involved in shaping how a future asset is governed, while respecting the board’s responsibility for the management of the companies. Importantly, the arrangement also recognises the Secretary of State’s ultimate accountability to Parliament for the spending of UK government funds and the running of a nationalised undertaking. As a result of this commitment, my understanding is that Welsh Ministers will be recommending that legislative consent be granted to the Bill when the consent Motion is debated tomorrow.
In Northern Ireland, the Department for the Economy laid a memorandum on 26 June indicating that consent was not currently being sought by the Executive from the Assembly. The Government regret that it has not been possible to secure legislative consent from the Northern Ireland Assembly before Third Reading. We also recognise that the pace of the Bill has made the consent process more challenging. The Government sincerely regret that we were not able to engage with the devolved Governments before the Bill was introduced. However, by its nature the Bill contains commercial and market sensitivities. Those sensitivities limited the extent to which the Government could discuss a proposed approach in advance. Since its introduction, we have sought to engage openly and constructively. In addition to official-level discussions, Minister McDonald met Minister Archibald on 17 June and offered further engagement to address any concerns and to support the legislative consent process.
Steel is a vital industry for the whole United Kingdom. This Government are determined to secure the future of UK steel-making capability. For that reason, it remains important that the Bill extends to all parts of the United Kingdom, notwithstanding the present position on legislative consent in Northern Ireland. I beg to move.
Lord Leong (Lab)
My Lords, steel has shaped our nation’s history. It has built railways, bridges, factories, ships, homes, energy infrastructure and defence capability. It remains essential to our future—to growth, resilience, national security and the critical infrastructure on which our country depends. This legislation is one part of the Government’s wider commitment to the steel sector. It gives us the tools to act decisively if strategic steel-making capability is at risk. It supports our objective of restoring confidence, protecting jobs, strengthening domestic capability and securing a sustainable future for UK steel.
I express my sincere gratitude to noble Lords from across the House who have contributed to the scrutiny of the Bill. In particular, I thank the noble Lords, Lord Sharpe of Epsom, Lord Hunt of Wirral and Lord Fox, for the constructive, professional and friendly way in which they have engaged throughout. I am genuinely grateful. I also thank other noble Lords who have spoken with deep knowledge of industry, constitutional practice, devolution, public finance, workers’ interests and the wider economy; their contribution has helped ensure that this House has done its job properly. Finally, I thank the Bill team, my private office, officials from across government, the devolved Government officials who have engaged with us, parliamentary counsel and the House authorities for their work in supporting the passage of this legislation at pace and under considerable pressure.
This House has sent a clear message. The United Kingdom must be able to act when a strategic industry is at risk. We must protect steel-making capability, support workers and communities, and safeguard the critical supply chains on which our national resilience depends. I beg to move.
Lord Hunt of Wirral (Con)
My Lords, I thank my noble friends Lord Sharpe of Epsom and Lord Redwood, and the noble Lord, Lord Fox, for their considerable contributions and the expertise they have demonstrated throughout our consideration of the Bill. I also pay tribute to the two committees of this House that have contributed so much to our understanding of this urgent matter in their excellent reports—the Constitution Committee and the Delegated Powers and Regulatory Reform Committee.
I also extend my thanks to the noble Lord, Lord Leong, the Minister, who has taken a very close interest throughout not only in the case for the Government taking the action that they have but in understanding our concern on a number of aspects. I thank his officials and the Bill team for all their hard work. Although significant differences remain between us, the Minister has always engaged constructively with concerns raised on all sides of the House, and I believe that the Bill has been improved as a result of that engagement.
Working together, we have secured a more credible sunset mechanism: any extension of the principal transfer powers will be limited to two years and will require the affirmative approval of both Houses. We have secured provisions requiring the Secretary of State to consider the likely costs before exercising the share transfer power or the property transfer power. We have also ensured that the relevant environmental, pension, and health and safety liabilities must be properly reflected in the independent valuation process.
We particularly welcome the greater parliamentary controls secured in Clauses 39 and 45: regulations under Clause 39 concerning the consideration and terms attached to continuity obligations will be subject to the affirmative or “made affirmative” procedure; regulations under Clause 45 concerning the enforcement of obligations arising from share or property transfers will be subject to the “made affirmative” procedure rather than the negative procedure originally proposed.
The Minister’s commitment to debates in both Houses on the steel strategy and the impact of this legislation is also very welcome, as are his assurances that any exercise of transfer powers will require an impact assessment and that quarterly Written Ministerial Statements will be provided for at least the first year in which a steel undertaking remains in public ownership. Those Statements will give Parliament the information that it needs to scrutinise operational performance, public expenditure and the consequences for workers, communities and the wider steel industry.
Nevertheless, a great deal of work remains to be done. Nationalisation may provide the Government with an emergency power, but it is not an industrial strategy. It cannot substitute for commercially viable businesses; for competent, market-aware management; and, above all, for sustained private sector investment. I came into the House 50 years ago, and we had experience of state ownership in the 1970s. I must tell the House that that provides no grounds for confidence or complacency. We must not allow what is intended to be temporary public ownership to default into an expensive and permanent arrangement. The long-term future of British steel depends on the United Kingdom once again becoming an attractive and affordable place in which to invest, to produce and to employ people. That requires us to confront the fundamental barriers facing steel and other energy-intensive industries.
Ministers have to address our internationally uncompetitive industrial electricity prices. They must examine the cumulative burden of the emissions trading scheme and the carbon border adjustment mechanism. They must consider the costs imposed by their employment policies as well as the ever-expanding burden of regulation, reporting and compliance. Unless those underlying problems are addressed, nationalisation will merely transfer the consequences of an uncompetitive business environment from private shareholders to the taxpayer; it will not resolve them.
Our objectives must therefore be clear: to secure the private investment that the steel industry desperately needs to preserve strategic domestic steel-making capacity and skilled employment, but also to minimise the exposure to the taxpayer. We welcome the improvements made to the Bill and the assurances placed on the record by the Minister. However, we will continue to scrutinise closely the use of these exceptional powers, the costs that arise from them and the Government’s progress in returning any nationalised undertaking to an investable, competitive and commercially viable future.
Lord Fox (LD)
My Lords, I agree with the Minister that the Bill is an important element in securing the future of the vital steel industry. It is, of course, a first step. There is an awful lot to do.
The Bill leaves your Lordships’ House in a better state than when it arrived. For example, it is now mandatory for overall costs of nationalisation to be taken into consideration by the Secretary of State when assessing the public interest; environmental legacy costs must be fully assessed by the valuer; there will be parliamentary debates and quarterly Written Ministerial Statements; the management of a business that is nationalised will be quizzed by Select Committees, and the steel council will better represent steel users.
Those are all important steps, and many are improvements on parliamentary accountability, which was the mission that we on these Benches set ourselves at the beginning of this debate. I echo the Minister in saying that that could not have been achieved without co-operation and debate.
I thank the Minister, his team and the departmental team for their openness, availability and flexibility. I thank the Minister in the Commons too for the time that he spent. I thank the noble Lords, Lord Sharpe and Lord Hunt, who remained, as ever, amiable debate company as we wended our way through the Bill. Finally, I thank Ulysse Abbate in the Lib Dem Whips’ Office, whose support has been superb.
As I said, the Bill has been materially changed. I hope that the Commons accept our changes and we do not have to see the Bill here again. It is a first step. I wish the Minister well in taking the next steps.
Lord Sentamu (CB)
My Lords, I apologise to the noble Lords, Lord Fox, Lord Hunt and Lord Sharpe. Their amendments were to this Bill and not to the trains Bill. Nevertheless, the point stands. The attendance was no greater than when it was debated in Grand Committee. I apologise and sincerely hope that they realise that I was so involved with both Bills that, in my enthusiasm, I erred. I am sorry.
Lord Leong (Lab)
My Lords, I just want to say a huge thank you to the noble Lords, Lord Hunt and Lord Fox, for their kind words and co-operation during the passage of the Bill.
Steel Industry (Nationalisation) Bill
Tuesday 14th July 2026
(1 week, 6 days ago)
Commons ChamberRead Full debate Steel Industry (Nationalisation) Act 2026 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 22–R–I(a) Amendment for Report (Supplementary to the Marshalled List) - (7 Jul 2026)
Madam Deputy Speaker (Caroline Nokes)
I can inform the House that nothing in the Lords amendments engages Commons financial privilege.
The Parliamentary Under-Secretary of State for Business and Trade (Chris McDonald)
I beg to move, That this House agrees with Lords amendment 1.
Madam Deputy Speaker
With this it will be convenient to discuss Lords amendments 2 to 18.
Chris McDonald
It is a pleasure to be back in the House today to see through the final stages of this Bill. The Government support all the Lords amendments before us.
I wish to pay tribute to my colleague Minister Leong for so expertly guiding the Bill through its passage in the other place. I also wish to place on the record my thanks for the constructive approach taken by peers to the scrutiny of the Bill during its passage through the upper House, including the constructive and careful consideration from His Majesty’s official Opposition, Liberal Democrat peers and Cross-Bench peers. I thank them for their contribution.
We have a responsibility to act now to secure the future of the UK steel industry. This Bill will assist in that by ensuring that steel production is secured, helping to restore domestic production to sustainable levels and supporting the Government’s economic growth plans where the public interest test is met.
The Lords amendments before us strengthen the Bill in several ways. Amendment 1 ensures that the sunset power in the Bill may be extended only by increments of two years. This means that the Government would have to seek parliamentary approval at regular intervals to keep the principal transfer powers on the statute book.
Lords amendments 2 and 3 place a duty on the Secretary of State to consider the costs that are likely to be associated with the exercise of the principal transfer powers, ensuring that such costs are considered in any decision making over the use of these powers.
Lords amendments 4 and 5 upgrade the parliamentary procedure relating to continuity obligations and enforcement, ensuring that Parliament has increased scrutiny of these matters.
Lords amendments 6 to 18 all relate to the appointment and role of an independent valuer and ensure that key considerations around environmental and health and safety liabilities are taken into account during any valuation exercise.
A final decision on the use of the powers in the Bill has not been taken. Any decision to exercise the powers in the Bill will be subject to satisfaction of the public interest test, based on the relevant facts at the time of the decision.
Steel has shaped our nation’s history, and this Bill is an opportunity to ensure its long-term success. The Bill enables decisive action for a strategically vital industry, defending our national security and supporting our critical national infrastructure, our economy and our national interest. I therefore ask right hon. and hon. Members to support the Lords amendments before us today.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Andrew Griffith (Arundel and South Downs) (Con)
I am grateful to their lordships for their work on the Bill. We support the amendments before the House.
Let me be plain from the outset: our objection has never been to steelmaking, or to the men and women who make steel; it is to a Government who have crashed around and used blunt instruments without ever having a detailed plan. Hope is not a strategy, and a blank cheque is not a plan. Nationalisation is a bad idea, and nothing that has yet been said at that Dispatch Box has told the House where the spending stops. The Government are taking us down a fast and expensive road with no idea where the exit lies. Even members of the Government concede in private that they rushed into something that they now repent at leisure.
Let us look at what we have learnt over the passage of the Bill. The Government and their Lib Dem little helpers in the Lords voted against a Conservative amendment in the name of the noble Lord Hunt to limit support to £2.5 billion over three years. That is almost £2.3 million every single day. The cap was not plucked from thin air—that £2.5 billion was the Government’s own figure. In their refusal to accept a cap, the Government concede that the figure is likely to be more. That could have been 35,000 new police officers, eight brand-new hospitals or more than double what the Chancellor raised over the course of this Parliament by destroying the livelihoods of British farmers.
Sarah Olney (Richmond Park) (LD)
We have a duty to stand by the steel sector, especially as it navigates unprecedented challenges, including President Trump’s unfair steel tariffs, China’s anti-competitive state aid practices, and the transition to environmentally sustainable production methods. If we are going to foster a thriving steel industry, we cannot allow more producers to collapse, more jobs to be lost, or the risk of our last blast furnaces going cold.
That is why the Liberal Democrats broadly welcome this legislation as a temporary emergency and targeted step aimed specifically at turning around British Steel before it can be returned to the private sector. I am particularly glad that the Government have accepted Liberal Democrat amendments that will require the Secretary of State to have regard to the costs of nationalisation before they table regulations to nationalise a company, as well as amendments that would ensure the consideration of environmental liabilities. Those Liberal Democrat amendments will strengthen the legislation, ensuring that these measures—and indeed the Government’s broader steel strategy—move us in the right direction to set the industry on a truly sustainable footing for the long term, while providing taxpayers with real value for money.
Lords amendments 2 and 3 ensure that if the Secretary of State is to exercise the principal transfer power, the Government must consider the expected cost to the taxpayer. That is important not only for business and industry to have certainty over the nationalisation process, but for taxpayers, who need to know that their money is not being wasted or paid to foreign owners who will leave our industries high and dry.
I am glad that the Government have also agreed to Liberal Democrat amendments that will strengthen the treatment of environmental liabilities in relation to the steel undertaking and ensure that they are explicitly identified and accounted for before compensation payments are made. On top of those legislative concessions, we are glad that the Government accepted other Liberal Democrat calls, including holding a debate in each House within 12 months of Royal Assent and requiring any future chair of a nationalised company to appear before the Business and Trade Committee. Those significant improvements to the legislation promote parliamentary scrutiny and accountability.
We also welcome the Government’s having listened to Liberal Democrat peers and introduction of written ministerial statements on the day of acquisition, which will be repeated every three months until we reach a year from nationalisation. Again, that change boosts transparency, enabling Parliament to scrutinise the measures’ impact on local communities and jobs. Lastly, we are glad that the Government adopted Liberal Democrat proposals to strengthen the UK Steel Council and its role in facilitating nationalisation within the context of the steel strategy.
Steel is a vital sector, bringing far-reaching benefits across the UK. It provides key materials for our national infrastructure from defence to renewable energy, and creates thousands of good jobs across the UK. The Liberal Democrats welcome the action that the Government are taking to protect British steel, backing a key plank of our critical national infrastructure. I am glad that the Government have worked constructively with the Liberal Democrats and that Ministers have adopted many of our proposals to improve transparency and accountability around the financial and environmental costs of any forthcoming measures. We will continue to constructively scrutinise the Government as they put these new measures in force to ensure that steel producers, local jobs and British taxpayers are properly supported and treated fairly.
Martin Vickers (Brigg and Immingham) (Con)
I welcome the Government’s acceptance of the Lords amendments. As hon. Members will know, part of my constituency takes in the Scunthorpe steelworks, and hundreds of my constituents work there. My aim throughout the rather tortuous and long saga about the future of the steelworks has been to ensure that their jobs are retained.
As the shadow Secretary of State outlined, the Bill could have been further improved, but I am delighted that we have at least reached a conclusion. There will be a sigh of relief among my many constituents who rely on the steelworks for their employment.
I look forward to engaging with the Minister as we move forward on the future of the steelworks—because, as I think he is well aware, if energy costs in particular stay as they are, there are future disasters ahead. We must do something on energy costs if we are to maintain any sort of a steel industry and heavy industry in the UK.
I thank the Minister for getting us to this point and look forward to working with him in the future.
Chris McDonald
I have listened carefully to the shadow Secretary of State’s remarks and those from the shadow Minister, and I will address them in a moment. I am grateful for the support of the Vice-Chamberlain of His Majesty’s Household, my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin), and of the Minister without Portfolio, my right hon. Friend the Member for Redcar (Anna Turley), both of whom are unable to speak in the debate as a result of their positions elsewhere in the House.
I opened by remarking on the constructive and careful consideration that the Bill has had in the other place; it is disappointing to see that the shadow Secretary of State is not taking the same approach. I will pick up a couple of the issues he raised. I am acutely aware of the position in which the previous Government left us, with uncompetitive energy prices for industry. If he had been attentive in some of the debates we have been involved in, he would be aware of some of the measures that I have taken to address that. Those include our energy-intensive scheme, increased relief on our supercharger scheme and our British industrial competitiveness scheme. I am determined to do more.
On tariffs, I am not saying that making the decision on tariffs was easy, but the shadow Secretary of State would clearly throw British industry to the mercy of dumped steel on the global market. We will not make that decision. He mentions coal for coking ovens. He may be unaware that there are no coking ovens in Scunthorpe. They were closed on his watch.
This Government are acting decisively and with purpose in the national interest, but the shadow Secretary of State is blinded by his ideological position on nationalisation. We believe that a steel industry, where necessary run by the Government and owned by the people, at least gives the opportunity to attract private sector investment. If the public interest test is met, that is the right thing to do. But if that does not convince the shadow Secretary of State, perhaps I can appeal to his sense of patriotism. I said on Second Reading that the England men’s football team had only ever won the world cup in a year when we had nationalised the steel industry. If he has any sense of duty towards our team and wishes them well, he should support nationalisation this time as well.
Lords amendment 1 agreed to.
Lords amendments 2 to 18 agreed to.
Royal Assent
Wednesday 15th July 2026
(1 week, 5 days ago)
Lords ChamberRead Full debate Read Hansard Text Amendment Paper: HL Bill 22–R–I(a) Amendment for Report (Supplementary to the Marshalled List) - (7 Jul 2026)