Steel Industry (Special Measures) Act 2025
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Baroness Lloyd of Effra
That this House takes note of the Steel Industry (Special Measures) Act 2025.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Lloyd of Effra) (Lab) (Maiden Speech)
My Lords, it is an enormous honour to address your Lordships’ House for the first time, in introducing today’s debate on the future of the steel industry. I start by thanking all those who have welcomed me: the Garter King of Arms, the Clerk of the Parliaments, Black Rod, their excellent teams, and the doorkeepers, who have already had cause to gently shepherd me in the ways of the House for the misdemeanour of trying to take notes when I came in below the Bar to observe noble Lords at Oral Questions.
I have heard much about the civility and respect in this House, and these values are important to me—the principle of airing arguments and debating positions openly and without rancour. I thank my supporters last week—my noble friends the Leader of the House, Lady Smith of Basildon and Lady Armstrong of Hill Top—and the Front Bench team for their support, particularly my noble friends Lord Leong, Lord Collins of Highbury and the Chief Whip, my noble friend Lord Kennedy of Southwark. I pay tribute to my predecessor, my noble friend Lady Jones of Whitchurch, for her tireless work on enshrining rights for decent work and embedding online safety rules, among many other areas. I am stepping into very big shoes.
On the face of it, there is perhaps not much that links my journey to this place with the steel industry. Perhaps, though, the common thread is the importance of the public and private sectors working together, and the importance of ensuring that our economy is providing decent jobs for all. For almost two decades, I have worked in the private sector and in development finance, latterly with British International Investment, the UK’s development finance institution. We focused on the dual mandate of providing a return to the taxpayer with measurable development impact. The business’s finance in emerging markets spans major renewable infrastructure supporting the green transition, manufacturing, and bringing added value to modern methods of agriculture, all underpinned with high ESG standards.
I have had the pleasure of seeing what access to the internet can bring to women business owners in Nepal, the connectivity that upgraded port infrastructure can bring to businesses in Africa, and how wind farms in Pakistan can be protected against floods through resuscitation of mangroves, at the same time bringing back fishing stocks for local fishermen.
Much earlier in my career, I had the privilege of working for the former Prime Minister, now Sir Tony Blair. I was guided by many in this House, notably my noble friends Lady Hunter of Auchenreoch, Lord Wilson of Sedgefield and, later, Lady Morgan of Huyton. That taught me the importance of rooting positions in facts as well as political arguments, but also that strong teams are built on laughter and mutual support, as well as hard work.
When it came to choosing the title I would take on joining the House, I must admit that I struggled a little. I was born in the south of England and have family roots in Wales. I enjoy nature, hiking and the living world. I live in south London and, over the past years, I have learned more about its local history and the Great North Wood that is still a corridor between the parks of Brockwell, Sydenham woods and Crystal Palace. I was intrigued by the waves of development and gradual urbanisation. I wanted something that connected the living environment, history and the places I live, and the somewhat mythical River Effra came to mind. Its course traced many of the places I have walked with our dog and family and, though now enclosed, it feeds into the Thames close to my cycle route to work.
I extend a warm welcome to my noble friend Lord Stockwood, who will also give his maiden speech today. He brings extensive practical business experience to the House. Together, we serve a Government who recognise that a strong economy must rest on strong foundations, whether that is our defence capability, energy security or domestic steel capacity, which we are discussing today.
That is why, earlier this year, when the future of British Steel was in jeopardy, we took decisive action to support continued steel production at Scunthorpe. We said that we could not and would not let the fires in the blast furnaces be extinguished, and we protected the 2,700 employees whose jobs were at immediate risk: the steel-making communities whose future depends on British Steel’s success.
We have stayed true to our word. Since our intervention in April, we have worked tirelessly to secure raw materials and avoid the blast furnaces having to close prematurely due to insufficient supplies. We have made available roughly £270 million as working capital for British Steel. That predominantly covers raw materials, salaries and invoices from SMEs in the supply chain—in other words, essential expenditure. Keeping workers safe and protected is our number one priority: indeed, the Government have spent almost £4 million on safety-critical matters at British Steel since April. This expenditure will form part of the overall cost of the intervention and be included in the Department for Business and Trade’s accounts for 2025-26.
British Steel has been working hard to reverse declining production and, in recent months, the company, with government funding, has been hiring new staff, including apprentices, to ensure the safe and continued operation of the blast furnaces. Our focus now is on working with Jingye to find a pragmatic and realistic solution for the future of the company. Once that solution is found, we can terminate the directions issued to British Steel and make a statement on the need to retain or repeal the special measures Act. Our ambition is to secure the long-term viability of steel-making at Scunthorpe and, indeed, the UK steel sector as a whole.
That is why, over the past few months, we have been putting in the hard work to set this key industry up for long-term success. That very much includes the economic prosperity deal we secured with the United States. As a result of that deal, the UK is the only country in the world to benefit from a preferential 25% rate on steel and aluminium exports to the US. This gives companies such as British Steel a 25% advantage over the competition and it strengthens our reputation as a trusted supplier of high-quality steel and aluminium for global markets.
Of course, we know that one of the principal reasons why our steel industry has struggled these past few years is global excess capacity—countries choosing to flood the market with cheap steel in a bid to quash healthy competition. We are calling that practice out. Indeed, earlier this month I joined Ministers from partner countries at the global forum on steel excess capacity in South Africa. The UK has lobbied hard to develop a comprehensive framework for joint action to address global steel excess capacity by June next year, and that is something my ministerial counterparts have agreed to. We must continue to act multilaterally.
On 7 October, the European Commission proposed a new steel trade measure on imports to replace its current steel safeguard. It will need to take this proposal through its legislative processes and member states, and through engagement with the WTO and with its free trade agreement partners, including the UK. I wish to reassure Members of the House, the sector and steel communities that we are taking this matter extremely seriously and are determined to find a solution. We will always defend our critical steel industry and have already engaged the EU at ministerial and official level to understand the details of this proposal. It is vital that we protect trade flows between the UK and the EU, and we hope there is a way to work with our closest allies to address global challenges, rather than adding to our industry’s woes. We reserve the right to take any action in response to any changes to our trading relationships. The Minister for Industry spoke to representatives of the steel industry on 9 October to listen to their concerns, and reconfirmed that we will do everything in our power to support a resilient and forward-looking steel sector.
Closer to home, we have been creating the right conditions for the UK steel sector to thrive. We are reducing electricity costs for steel producers by increasing network charge discounts through the British industry supercharger. We are strengthening current steel safeguard measures to support our producers, while ensuring that the UK maintains a steady and reliable supply. We are fulfilling our promise to create a pipeline of big infrastructure projects, such as the third runway at Heathrow. This will demand at least 400,000 tonnes of steel, primarily to reinforce concrete beneath tarmac. That is eight times the amount of steel used in the Sydney Harbour Bridge.
I know the House will agree that, when construction firms are building roads, runways and railways here in Britain, they should make full use of British steel wherever they can. Indeed, that is why we have changed government procurement rules. Our new steel public procurement notice will ensure that UK-made steel is considered for all public projects, and we are building on this momentum. We intend to publish a new steel strategy for the UK. The industry will require investment, modernisation and decarbonisation in order to compete in the global economy.
To that end, we accept the need to look seriously at options for primary steel-making in the UK. Late last year, we asked independent experts from the Materials Processing Institute to conduct a review into the viability of future primary steel-making technologies. Their findings and recommendations will also be published soon. It goes without saying that we would want to retain this capability here in the UK, but we have to be realistic. There has to be a strong business case, with the private sector, not British taxpayers, leading the charge. Our steel strategy will cover this and the additional steps we intend to take in creating the pro-growth business environment for UK steel.
We do not underestimate the scale of the challenges facing the steel sector today—whether that is in costs, competition or climate change. We cannot promise to solve all these challenges overnight, but equally, this Government will never watch from the sidelines; we will always be on the pitch. We have shown that in our intervention at British Steel. We have shown it in the actions we are supporting with Speciality Steels UK, where we are supporting the official receiver to find the right buyer who can offer the right support for the workforce and the company. We have shown it too in the much-improved deal we have secured for workers at Port Talbot, a deal delivered alongside £500 million of investment from the Government to support the transition to a low-carbon electric arc furnace.
With a Government committed to fixing the foundations of our economy, we will ensure that our steel sector plays a vital role in Britain’s future. I beg to move.
The Deputy Speaker (Baroness Garden of Frognal) (LD)
Congratulations to the noble Baroness on her maiden speech.
Lord Sharpe of Epsom (Con)
My Lords, before I begin, I also add to the general praise for the noble Baroness, Lady Lloyd of Effra, for her excellent maiden speech, and I wish the noble Lord, Lord Stockwood, the very best for his, while also welcoming both to the House. As the noble Lord, Lord Stockwood, will not be followed, I take this opportunity to say how welcome it is to have someone with his business experience join the Labour Benches.
This has been a wide-ranging and extremely interesting debate. The one theme that is very clear and has come from pretty much all speakers across the House is the lack of the strategy. I think the noble Lord, Lord Fox, just summed that up rather well. The first of the questions that I therefore add to the long list from the noble Lord, Lord Fox is: can we please have a date for the strategy? When can we expect it, and when can we expect to discuss it?
In starting, I echo the words of my noble friend Lord Hunt of Wirral, and indeed several other noble Lords. The Government’s handling of the steel industry has, to put it mildly, been deeply unsatisfactory. The events of six months ago must not be allowed to repeat themselves. Your Lordships’ House was offered little clarity as Ministers rushed through emergency powers—powers granted, as my noble friend reminded us, without a sunset clause. As a result, we have no indication whatever of when or if this Act will be repealed, in spite of ministerial assurances at the time. Instead, the saying that “nothing is so permanent as a temporary government programme” seems to hang rather ominously over us. I therefore ask the Minister to tell the House precisely when the Government intend to bring this legislation to an end.
The agreement reached by the previous Conservative Government with Tata Steel in relation to Port Talbot should have provided this Government with a clear and successful template for transition. It is a partnership model that combined industrial realism with long-term vision, with a keen eye on steel security. Yet by all accounts the current Administration have not followed that example. Indications suggest that the key sticking point in the Government’s continuation of the negotiations, originally initiated under the previous Government, has been an insistence that the existing loss-making basic oxygen furnace operations be maintained throughout the transition phase. This is an approach that defies both commercial logic and fiscal responsibility, as my noble friend Lady Bloomfield of Hinton Waldrist highlighted.
I ask the Minister, specifically in relation to the events leading up to 27 March 2025, what proposal did the Government put to British Steel? What counterproposal did the company make in response? What contingency planning, if any, was undertaken to address the possibility of a breakdown in negotiations? It is now evident that Ministers were woefully unprepared for the outcome that followed.
We have to revisit the Government’s narrative concerning Jingye’s responsibilities. A proper under- standing of British Steel’s position is essential if that narrative is not to descend into distortion. During the first four years of Jingye’s ownership of British Steel, from late 2020 to late 2023, the Government’s operating losses and capital investments required injections of some £811 million in loans and equity, almost all of which were provided, in cash, by Jingye itself. The solvency of the business was wholly dependent on that continuing support. By the end of 2024, it is probable that British Steel’s combined intercompany debt, equity and assets exceeded £1 billion.
It is simply not realistic to expect any private enterprise to provide indefinite cash support to a loss-making operation of that scale. Jingye quite reasonably sought to restructure its business model to place it on a sounder financial footing, as any responsible company would, provided that it acted lawfully and with due regard to its other obligations. But instead of engaging constructively, the Government chose to declare a national emergency and seized effective control of the company, locking its directors out of their own plants and records, while simultaneously requiring them to retain their statutory and common-law duties to the company. That is an extraordinary and troubling position. It represents a clear violation of private property rights. British Steel and its directors had, until that moment, acted entirely within the law, yet they were treated as though they were the problem rather than the victim of government failure. As my noble friend Lord Hannan of Kingsclere argued so persuasively, we know where that inevitably ends.
It would not be the first time that a Labour Government have sought to blame private enterprise for the failures of the state, but here we are. The pattern is familiar: mismanagement, intervention and then the scapegoating of those who have invested, worked and strived to keep a British industry alive. Does the Minister accept that such an action represents a serious breach of private property rights? What precedent does this set for other foreign investors considering the United Kingdom?
The Official Opposition have made the point in your Lordships’ House and the other place numerous times since the Government took office that their energy policy is leading to skyrocketing electricity prices. We have heard a good deal about that around the Chamber today, including most persuasively from my noble friends Lord Jamieson and Lord Prior of Brampton. Britain and Europe are deindustrialising, largely because of high electricity prices—it is simply much cheaper to make things abroad. Meanwhile, exporting production in this fashion almost certainly makes global CO2 emissions worse than if we made them at home. It looks very much as if we have a situation—which could only be created by a Labour Government—where the net zero-policy undermines net zero.
Having said that Europe is deindustrialising, it must also be said that it is streets ahead of us as regards steel. The EU steel and metals action plan aims at securing commercially viable melted and poured steel, partly through developing an effective carbon border adjustment mechanism which will help ensure competitive energy supply and cost. Are the Government looking at this as a possible model, without necessarily resorting to the suggestions of the noble Lord, Lord Liddle?
Recently, my noble friend Lord Hunt and I—this will please my noble friend Lord Eccles—met the British Metals Recycling Association, an organisation founded in 1919 that contributes over £9 billion in gross value added to the UK economy annually and supports more than 15,000 direct jobs across 2,000 businesses. It made plain to us its grave concern that the Government may consider pursuing restrictions on the export of recycled metals under the mistaken belief that this might somehow strengthen domestic steel production.
The evidence shows the opposite. Independent research conducted for the BMRA by the Centre for Regional Economic and Social Research at Sheffield Hallam University concludes that even modest constraints on exports would cause billions of pounds in lost economic value and tens of thousands of jobs to disappear over the next five years. A 50% export quota alone would, it estimates, result in a £4 billion loss in GVA and more than 23,000 full-time equivalent jobs lost. A total ban on exports to Turkey, which is our single largest market for recycled metal, would remove over £2 billion in value and jeopardise almost 7,000 jobs.
But the economic cost is only part of the story. The environmental consequences would be equally perverse. Restricting exports would not increase the recycling of metal in Britain; it would reduce it, by undermining the financial viability of recyclers who depend on global competition to sustain fair prices. It would mean less investment in cleaner, higher-grade feedstock and in the advanced sorting and quality systems essential for the production of low-carbon electric arc furnace steel. Indeed, the BMRA has warned, quite credibly, that if the sector’s viability were threatened, the unintended consequence could be an increase in things such as fly-tipping as end-of-life vehicles and electrical goods are dumped rather than recycled. Without access to international markets, the recycling industry cannot survive, let alone flourish and invest in the emerging technology that will make British steel greener and which, of course, is so necessary to the new electric arc furnaces.
The Government recently announced stronger trade safeguards on steel imports, claiming these measures will protect British jobs and rebuild our industrial strength. However, such a measure would have ramifications for the pound sterling and, as we know from experience, trading partners may respond with their own restrictions on UK exports, as evidenced, and as has been discussed by a number of noble Lords, by the EU recently announcing it will reduce tariff-free quotas on imported steel and hike tariffs from 25% to 50% on any excess imports. I look forward to the Minister’s answers to the questions from the noble Lord, Lord Murphy of Torfaen, on this subject.
This, in turn, will reduce access to global markets and lower overall trade volumes. By sheltering less competitive industries, we risk diverting labour, capital and energy away from high-value sectors such as aerospace, pharmaceuticals and renewables, ultimately weakening productivity and long-term economic growth. Steel is a vital input for industries such as construction, automotive and energy infrastructure, so higher steel prices would increase costs, reduce competitiveness and even push some firms to relocate. As always, protection for one sector can become a tax on many others, and protectionism and subsidies carry costs.
I conclude by asking a few very specific questions of the Government. Have they considered the potential impact of these safeguards on the competitiveness of other UK export industries? Have they assessed how higher domestic steel prices might affect downstream sectors, such as construction and manufacturing? What analysis has been done on possible retaliation from trading partners and the effect on UK exporters? Can the Minister confirm that the Government are considering, or will consider, the concerns outlined by the metal recycling association about export restrictions in the forthcoming steel strategy?
I move to a few broader questions. In his recent visit to China, did the new Secretary of State, Peter Kyle, talk to Jingye? If not, why not? If yes, can the Minister outline what was discussed? I may have misheard, but I will ask this anyway: I believe the noble Baroness, Lady Lloyd, said in her the opening speech that the rules have been changed so that British-made steel must be “considered” in public procurement. Can I probe a little more what “considered” means in practice? If it meant preferred, that would potentially leave us falling foul of WTO rules, but if it just means being considered, was it not being considered in public procurement anyway?
Where is the latest four-weekly report? I think the last one was delivered at the very beginning of September, and we are now seven weeks away from then. Finally, I reiterate, we need a strategy and then all these questions would, we hope, go away.
The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab) (Maiden Speech)
My Lords, I am pleased to respond for the Government and I am grateful to my noble friend Lady Lloyd for initiating this debate. Based on the comments, it seems I am the only one who has not worked with her in a previous life, so I look forward to working alongside her in both the Department for Business and Trade and this House over the coming months.
I begin by thanking my noble friends Lord Glasman and Lord Kennedy for the generous introduction to the House and recognising the warmth and generosity of spirit with which my fellow Members and staff have welcomed me. It is the greatest honour of my life to take my seat among you. Honour is the right word because I know that, from where I come from, there are very few people who get to sit with noble Lords. As was mentioned, I grew up in Grimsby, after the Cod Wars of the 1970s. It was an industrial town like so many others and, as happened to so much in that generation, globalisation and international politics created unforeseen consequences for the town that I love.
My mum and my grandmother raised me and my three brothers alone. It is a strange synchronicity that she passed three years ago and it is her birthday today, which I only found out when my brother texted me this morning. Growing up, I never knew my dad. We grew up in a council house and, while we did not go hungry, there was a constant stream of red late-payment reminders coming through our letterbox. I remember often feeling cold and seeing frost on the inside of our windows in winter—in fact, I am still paranoid about the thermostat in my own home today, which drives my family mental.
Knowing what I know now, I realise these circumstances do not often lead to prosperity, yet here I am among noble Lords in the House of Lords. If noble Lords will indulge me briefly, I think it is important for me to pay tribute to the support that got me here today: my mother and grandmother, who in challenging circumstances always did their best for us; my three brothers, for keeping me grounded and connected to the town that I love; my wife and children for their love, laughter and security, which allowed me to go out in the world and be myself; importantly, the innumerable people who took a chance on me and backed me to succeed; and, finally, our welfare state, without which I would not be on this earth, let alone in this House.
It is because of those people and institutions—and, let us be honest, a little bit of luck as well—I was able to succeed in business, taking my life and career from the docks in Grimsby to call centres, eventually to the world of entrepreneurship, and even today I own a stake in my boyhood club, Grimsby Town FC. Incidentally, it gave me the previous greatest honour of my life when we beat Manchester United, which the noble Lord, Lord Rook, mentioned—I know the noble Lord, Lord Lamont, a fellow Grimsby Town fan, will appreciate that.
It is very fitting for me personally to be giving my maiden speech in a debate about steel. Just half an hour away from Grimsby lies Scunthorpe—our great football rivals, not least because of our similarities. We are both industrial towns but, while Grimsby’s economy struggled for decades to weather the shift in geopolitics and trade dynamics, Scunthorpe has a chance now to succeed, thanks to this Government’s intervention—not only Scunthorpe, but the region, which, thanks to the incredible work being done locally, is poised to capitalise on the opportunity of the clean-energy transition and the investment and good jobs that this transition will create. I understand our accomplishments are not a cure-all. There is still much work to do to ensure a bright future for our steel industry, but had we not undertaken those steps six months ago, the road ahead would look very different.
I had the privilege to be in the room in Scunthorpe with friends and the PM on the day the announcement was made, and the community was given a lifeline and a chance to begin their own renewal. If the people of those steel towns need hope for the future, they should look no further than Grimsby, which has begun its own renewal, at the centre of the nation’s offshore wind industry, which is bringing in good, well-paying jobs and raising living standards in the town. If there is one lesson from Grimsby’s renewal, it is this: progress is possible, but only when people come together, shoulder to shoulder, to play their part.
Before I come on to the comments about the steel industry in this debate, it would be remiss of me in my new role as Minister for Investment not to respond to the comments from the noble Lord, Lord Hunt, about disincentivising foreign direct investment. The recent evidence demonstrates that, even in the eight weeks I have been in the role, the UK investment environment is thriving. We are committed to a 10-year industrial strategy as a party. As an entrepreneur, I believe that we are in a situation for turnaround. We have a clear plan, we recognise the problem and now we need to execute. I am happy to have a follow-up conversation with the noble Lord on that matter, but it would be remiss of me not to mention that before I start.
I now turn to some specific points made in the debate. I want to start by recognising all the personal connections in the comments of those who spoke, particularly the noble Lords, Lord Mohammed and Lord Prior, and the noble Baroness, Lady Bloomfield, whose parents worked in the industry. As this is my first time addressing this House, I trust noble Lords will forgive me for oversights or questions unanswered. I appreciate the noble Lords, Lord Fox and Lord Sharpe, giving me the opportunity to reply to detailed questions in writing, which I will take them up on, so thank you for that.
As for when the steel strategy is coming, and the delay to the September steel council, raised by the noble Baronesses, Lady Hunter and Lady Smith, the noble Lords, Lord Hunt, Lord Mohammed, Lord Bilimoria, Lord Liddle and Lord Prior, and the noble Viscount, Lord Eccles, the Government are very clear that there is a future for steel-making in this country. That is why we intervened in April to keep Scunthorpe’s blast furnaces lit. The company is now hard at work to secure the future of British Steel.
This will not be without its challenges. Noble Lords will recall that Jingye acquired British Steel in 2010 at a time when the business was already in distress. Since then, it has faced persistent difficulty in market conditions, and regrettably, the company has not yet succeeded in returning the business to profitability. I support the comments recognising the incredible work of the management in this intervening and difficult period.
The support for British Steel has been mentioned. Although no long-term decisions have been made and taken in respect of the Scunthorpe site, I reassure the House that discussions with the owner are ongoing, and our policy and strategy work continues at pace to develop the optimal approach. This Government remain steadfast in their commitment to economic growth in north Lincolnshire.
For the avoidance of doubt, British Steel belongs to Jingye. The actions taken by His Majesty’s Government to date, including under those provisions of the special measures Act, do not constitute nationalisation. Rather, they represent a temporary, targeted intervention, designed to ensure the uninterrupted production of British steel.
That said, we have been very clear that securing the long-term future of steel-making in Scunthorpe will require significant investment. Such investment will support modernisation and decarbonisation, protect skilled jobs and safeguard the interests of the taxpayer.
On the question raised by the noble Lords, Lord Hunt and Lord Mohammed, on the sunset clause and the future of the special measures Act, noble Lords will recall that during the emergency debates on the special measures Bill, there were calls for a sunset clause in the proposed legislation to limit the duration of the Government’s powers to intervene in the steel industry. I recognise the ongoing desire for clarity regarding the future of the Steel Industry (Special Measures) Act.
As promised, the Government have been updating both Houses regularly on the powers in the Act and how they are being used. I further assure the House that once directions to British Steel are terminated, we will update Parliament on the repeal of the special measures Act.
On Tata Steel, raised by the noble Lords, Lord Hunt, Lord Bilimoria and Lord Murphy, and the noble Baronesses, Lady Bloomfield and Lady Smith, the decision to close the blast furnaces at Port Talbot was a commercial one, taken by Tata Steel in January 2024 under the previous Conservative Administration. By the time this Government took office, the process was already well advanced. Noble Lords will be aware that the first furnace ceased operations in June 2024 and the second followed in September.
However, we negotiated an improved deal with Tata after just 10 weeks in office, with better support and protections for workers, including the most generous voluntary redundancy package Tata has ever offered. We have since fully allocated the UK Government’s £80 million contribution to the Tata Steel/Port Talbot Transition Board to help people learn new skills, support the supply chain and protect people’s mental health. That this funding has been delivered in under a year is a testament to this Government’s commitment to the community impacted by Tata Steel’s UK transition to greener steel-making.
The electric arc furnace’s groundbreaking in July and the start of the work on the new pickle line in September are pivotal milestones demonstrating practical delivery of this complex project. These developments not only secure the future of steel production in Port Talbot but position the UK at the forefront of sustainable industrial transformation. At this point I would like to recognise the noble Baroness, Lady Smith, for her passion about her community and for her questions, which I deeply appreciate.
The topic of industrial energy prices came up often, raised by the noble Lords, Lord Hunt, Lord Mohammed, Lord Bilimoria, Lord Murphy and Lord Hannan. Since the 2010s, these prices have risen by more than 50% in the UK. Today, UK industrial energy costs are approximately 30% higher than those in Germany, 50% higher than those in France and more than four times those of the most competitive states in the United States.
Energy-intensive industries, including foundational sectors such as steel and metals production in Port Talbot and Scunthorpe, and vital industries such as glass, cement, steel and chemicals, are the backbone of our manufacturing economy. Due to their high-grade electricity usage, these sectors are particularly sensitive to increases in electricity prices. They employ around 400,000 workers and contributed £30 billion in gross added value in 2019, representing 1.5% of our national economy.
These businesses are indispensable to maintaining a resilient manufacturing base across the UK, which is why the Government provide relief to over 500 companies in these industries, supporting them with increasing industrial electricity prices due to the increased renewable policy costs. We do this through two key mechanisms: the British industry supercharger and the EII compensation scheme. These programmes ensure that our energy policy does not deter investment or production in the United Kingdom. They keep electricity prices competitive compared with international competitors and ensure that thousands of British jobs are safeguarded.
As part of our modern industrial strategy—
Lord Stockwood (Lab)
I am aware that there are many questions; I guarantee that we will respond to them in full in writing.
As part of our modern industrial strategy, the Government have proposed deepening the support provided by our British industry supercharger by increasing the level of network charging compensation from 60% to 90% by 2026. We have consulted on this proposal and will respond in more detail in due course. This Government remain steadfast in their commitment to ensure that our energy-intensive industries are not disadvantaged by our transition to net zero. We will continue to support these sectors, which are vital not only to our economy but to our national resilience and prosperity.
I turn to the questions about global excess capacity and market-distorting practices by China, raised by the noble Lords, Lord Hunt, Lord Mohammed, Lord Bilimoria and Lord Liddle. As my noble friend Lady Lloyd of Effra set out in her remarks, we are calling out the practice of some countries that are choosing to flood the market with cheap steel in a bid to quash healthy competition. She joined Ministers from partner countries at the global forum on steel excess capacity in South Africa earlier this month, and the UK has lobbied hard to develop a comprehensive framework for joint action to redress global steel excess capacity by June of next year. The noble Lord, Lord Hunt, asked specifically about discussions with the WTO, and the UK regularly challenges China’s market-distorting practices during bilateral meetings, at the WTO’s subsidies committee and in other settings.
I turn to the topic of EU and US tariffs, raised by the noble Lords, Lord Bilimoria, Lord Murphy and Lord Liddle. The Government want to do everything they can to mitigate the impacts of tariffs raised by international partners. The UK will always defend its critical steel industry where required, and we will continue to explore stronger trade measures to protect UK steel producers from unfair behaviours.
On the recent announcement by the EU on proposed new steel trade measures on imports to replace the current steel safeguard, we are in close contact with the European Commission to understand the details of this proposal. This decision was not targeted to the UK but would be highly concerning for many steel producers and their workers, so we have been meeting with the steel industry to understand its impacts. As ever, this Government are committed to defending our critical steel industry.
Moreover, thanks to the strength of the UK-US partnership, the UK remains the only country to benefit from a preferential 25% tariff on steel and aluminium on all our exports to the US, avoiding the global tariff of 50%. That has reinforced the UK’s position as a trusted source of high-quality steel and aluminium. We have already committed up to £2.5 billion of investment, including through the National Wealth Fund, to rebuild the steel industry and continue to explore stronger trade measures to protect UK steel producers.
The UK has a robust trade defence system in place, including the UK’s existing steel safeguard measures. While the UK steel safeguard will expire in June 2026, in line with the WTO rules, we held a call for evidence from 26 June to 7 August to gather stakeholder views on the future policy options, and we are keeping all options under review to defend our critical industry. As set out in the trade strategy, the international trading landscape has rapidly changed, and we are sharpening our toolkit to respond to these increased threats.
To some of the points that the noble Lord, Lord Fox, made—I will have to write to him personally on many of them—I concur with his views on the fact that our families and communities should be at the heart of this debate. I remind the House that at present there are proposals and that we will not be drawn on the UK’s response to EU tariffs, but we will continue to take a cool-headed approach.
The UK Steel Council has met on three occasions, in January, April and July, and the next meeting is scheduled for 4 November.
On the question of our relationship with Jingye, the Government are engaged in a constructive dialogue with Jingye, in line with our commitment to a pragmatic commercial solution.
In closing, I just want to reiterate my thanks to all noble Lords who spoke in today’s debate. I want to convey my appreciation for their valuable contribution of insights and thank them for their generosity in allowing me to give written responses to many of the questions, particularly those asked at the end. I guarantee that we will provide written answers to anything I have missed.
My noble friend Lady Lloyd and I have set out the Government’s long-term vision for a strong, resilient, productive steel industry in this country that is primed for long-term success, driving growth in the communities that depend on our steel industry and help build it—the same communities that I spoke about in my opening remarks. The Government want them to feel and see the benefits of our plan for change and the decade of national renewal that we promised, and I look forward to working with noble Lords in that ambition.