British Steel: Nationalisation

Thursday 12th November 2026 Lords Chamber

Question

11:17

Asked by

[Lord Fox]

To ask His Majesty’s Government what changes British Steel has made since nationalisation in relation to its products and markets, operational costs, raw material supplies, and investments.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation, Science and Trade (Baroness Lloyd of Effra) (Lab)]

My Lords, since nationalisation, the new British Steel board, led by Alan Lovell, has been working with British Steel management to stabilise the business, understand the cost base and challenge management to bring forward proposals to manage costs. Securing the long-term future of British Steel will take time and the board will bring forward a plan for transformation to the Government as quickly as possible.

[Lord Fox (LD)]

I thank the Minister for that Answer. This Question is about day-to-day operational costs. In March this year, the National Audit Office put those costs to the taxpayer at £1.3 million a day. What are the financial targets that we, the shareholders, are putting on British Steel? We want British Steel to succeed, but it needs to perform better to do that. It is good that the management is planning ahead, but what is it doing operationally, day to day, to drive down costs?

[Baroness Lloyd of Effra (Lab)]

My Lords, since nationalisation, British Steel has taken practical steps on-site to stabilise operations and reduce costs. The management team is reviewing all material spend items in implementing saving opportunities. It is also investing in critical health and safety and operational issues on-site. This includes vital maintenance of the blast furnaces to support safer, more cost-effective operations.

[Lord Redwood (Con)]

What is the Government’s budget for steel losses this year and next? Will all that money be diverted from the steel modernisation provision in the current Budget?

[Baroness Lloyd of Effra (Lab)]

The Government took action to stabilise operations at British Steel. We have appointed a new chair and asked him and the board to bring forward a transformation plan. Once that has been agreed, we will be in a better position to set out the long-term future, to attract private sector investment and to understand what this means for long-term public sector finance.

[Lord Bird (CB)]

Is it worth the Government recognising that when they try to reduce costs with nationalised industries they often cut the workforce, who then end up on social security because there are often not many jobs in that area? The Tories did this in the 1980s and pushed up the benefit bill enormously—we still have not got over it—because they did not want to support the nationalised industries and would rather have had people out of work and supported by government than in work.

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right to highlight the importance of a carefully managed transition and careful investment in all aspects of the operation of this site and this industry. One of the areas that has had a lot of focus to date is health and safety, so that employees are able to work in a safe environment. It has been one of the areas of investment since the Government’s involvement.

[Lord Blunkett (Lab)]

My Lords, there is a nice symmetry in the Question being asked by the noble Lord, Lord Fox, because the Stocksbridge plant in Sheffield was always known as Samuel Fox’s. On the previous question, we have five wonderful young people in the Gallery from Sheffield in South Yorkshire working in the industry—an example of what Alan Milburn will say next week about getting young people into jobs. Does my noble friend agree that it is vital that the Government ensure that every penny of public funds spent in this industry ensures that this is homegrown and not imported steel?

[Baroness Lloyd of Effra (Lab)]

My noble friend is right to highlight the opportunities in the industry. The steel strategy, published in March this year, highlighted the importance of investing in skills to ensure that we have the right skills base for the future of a modern, clean steel-making industry in this country. I also highlight the fact that we have updated procurement guidance in the UK to ensure that UK-made steel is routinely considered in procurement projects.

[Lord Mohammed of Tinsley (LD)]

My Lords, I follow my former constituent, the noble Lord, Lord Blunkett, in welcoming the young people from Sheffield, a proud steel city. I will press the Minister on an important issue: the reliable supply of raw materials that are crucial for the future of British Steel, particularly coking coal, iron ore and other essential supplies. What assessment have the Government made of the risks associated with continued dependency on overseas supply, and how will they ensure that British Steel remains internationally competitive?

[Baroness Lloyd of Effra (Lab)]

Ensuring that British Steel and, in fact, the whole of our UK-based industry remain internationally competitive is a key facet of the UK steel strategy. That is why, as we set out in March, it covers very many aspects—everything from skills to procurement and trade tariffs. Obviously, each individual company needs to look at what will make it competitive in respect of its own markets and supplies. That is exactly the question we have asked the board to answer in our transformation plan.

[Lord McLoughlin (Con)]

My Lords, further to the question put by my noble friend Lord Redwood, what are the Government’s anticipated losses for British Steel for the next two years, based on the Treasury Red Book?

[Baroness Lloyd of Effra (Lab)]

With British Steel, we needed to take action to stabilise operations, and it has needed some time to get to that position. The next stage has been appointing the new board and asking it to chart a transformation plan, the answers to which will help us attract new private sector investment and be able to answer the questions about the future public funding that will be needed to support that transformation plan.

[Lord Spellar (Lab)]

My Lords, would the Government’s steel strategy not have a better chance at success if government, as a customer, was buying British steel for rail, bridges, ships, buses and cars? Should we not be prioritising that to support the British steel industry and British steel-workers?

[Baroness Lloyd of Effra (Lab)]

My noble friend is right to highlight the importance of the UK public sector as a consumer. That is why we have changed procurement guidance to ensure that UK-made steel is regularly considered in public projects and added new transparency requirements on the origin of steel in public procurement contracts.

[Lord Hunt of Wirral (Con)]

My Lords, we all want British Steel to succeed, but it is vital that we attract private investment, as the Minister just pointed out. Why have the Government been unable to attract it? I ask the Minister to consider for a moment whether there is anything she can do to persuade her colleagues that the cumulative impact of carbon taxes, high industrial energy costs, the Employment Rights Act and the increases in national insurance contributions are all policies within their control. Can we not reverse them and attract the private investment that our domestic steel industry so desperately wants and deserves?

[Baroness Lloyd of Effra (Lab)]

I am delighted to have the opportunity to talk about the business environment: today, despite the global headwinds that all countries face, we saw GDP figures in the UK that show a resilience that compares very well among peer countries. Just to emphasise, the UK has had the joint fastest-growing economy in the G7 in the first half of this year. That is the business environment that we are operating in. We are attracting further investment into energy supply: only yesterday, there was an additional £12 billion of investment into offshore wind to secure affordable, secure, clean energy for the UK. The Government are taking action in the UK steel strategy and outside to create the right business environment to attract private investment into steel.

[Lord Tyrie (Non-Afl)]

My Lords, the Government must have some estimate of the likely losses for British Steel over the next two years. Could the Government please commit to publishing their estimate of those numbers, which the Treasury will undoubtedly already have?

[Baroness Lloyd of Effra (Lab)]

We have undertaken to publish the key elements of the transformation plan once it is agreed, subject to elements which are commercially confidential. That will enable proper parliamentary scrutiny of the plan that has been devised by British Steel and agreed by the Government.