Lords Chamber

Tuesday 16th June 2026

(began 3 months, 3 weeks ago)

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None Portrait Urgent Question Repeat: Effect of the delay of the Defence Investment Plan on our Armed Forces’ ability to defend the United Kingdom
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Plan. >> My Lords, the chief of the

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My Lords, the chief of the Defence Staff has today given to the International Relations and Defence Committee of this House
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Baroness Goldie Portrait Baroness Goldie (Conservative)
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Commanders and officers of the National Crime Agency to the sailors on HMS Sutherland and HMS sailors on HMS Sutherland and HMS Ledbury, and the airmen aboard the Poseidon P-8, the Merlin and Wildcat helicopters. Now they Wildcat helicopters. Now they executed their duties with characteristic and exemplary professionalism, and I wish to professionalism, and I wish to thank all involved. Now, it is welcome that the government has welcome that the government has finally begun interdicting sanction busting Russian ships, and that is the right move to disrupt Putin's war machine, degrade Russia's efforts to undermine Britain's security, and to help our allies in Ukraine.

And it is the duty of all political parties to stand by the government in its efforts to help Ukraine defeat Putin's vicious invasion. But there remain many unanswered questions. Now. The government announced back in March that they would start boarding and seizing vessels of the Russian shadow fleet. And yet the first instance of such such action occurring was this past weekend. So why the delay? The new Secretary of State for defence failed to answer this question from my hon. Friend James Cartlidge in the other place.

So I hope the noble Lord the Minister will do better. Why did it take so long to start boarding these sanctioned law breaking vessels surely does not take three months to plan for one operation. According to the BBC, there have been at least 94 instances of shadow fleet vessels crossing into British territorial waters since March without being interdicted, and that is in addition to almost 200 that have entered our exclusive economic zone. So that's 94 vessels carrying sanctioned Russian oil that have been allowed to pass unimpeded through our waters, with the cash flowing directly back to Putin.

And that, milord, is not acceptable. Now, shortly after the government announced that British forces would be boarding these vessels, we heard reports that the Attorney General, the noble Lord Lord Hermer, was bizarrely concerned about breaching international law, and the government was very coy about responding to that allegation and indeed refused to respond to my hon. Friend David Reid when he asked that question on 13th April. Could the noble law of the Minister confirm whether or not concerns about international law were what was holding the government back and causing this delay? And if so, how has this situation changed, and can the Minister tell the House whether this is a one off, or will the government start hitting every ship of the Russian shadow fleet that enters British waters? Now, there have been further reports that after the operation at the weekend, six shadow fleet vessels that were heading for the channel have now turned round.

There seems to be a likelihood that they may head up through the North Sea and around Scotland now. This, of course, elongates her journey, but if they are permitted to continue then they will still reach their destination, offload their illegal oil and send that money back to Russia. So will the government intercept vessels making that journey north. Finally, this all leads back to resource. The Minister and I have had many exchanges on this topic recently, so he's fully aware of my position.

But I have to repeat, if we are to continue seizing Russian vessels, if we are to play a leading role in keeping the Straits of Hormuz open, as the Prime Minister announced today at the G7, if we are to maintain a military presence abroad, particularly in our overseas territories, and if we are to continue to deter our adversaries, then our armed forces must have the funding they truly require and the funding that they truly require far exceeds that which the government has committed to date.

And we know that the chief of the Defence Staff has asked for £28 billion as a minimum. Why will the government not commit to that level of funding not commit to that level of funding for the Defence Investment Plan?
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Lord Bruce of Bennachie Portrait Lord Bruce of Bennachie (Liberal Democrat)
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My Lords, the the boarding of the was conducted speedily, efficiently and without any efficiently and without any casualties, and it's a real credit to our armed forces to do that. I think we all agree it was a very impressive effort and we should be grateful to them. But it's the first that's happened, as the noble Lady has pointed out. So my understanding is that the Smirnoff was operating under a Cameroonian flag, but Cameroon abruptly purged 36 shadow fleet vessels from its shipping registry last week.

So can I ask where the other 35 are, and indeed, who is pursuing them? Or who is going to take any to block them or deter them, or prevent them from completing cells or in coordination with others to ensure that collectively we stop this shadow fleet? Because if you're talking about that number of ships, there's a huge amount of oil that is still being got through to Russia and that Russia is using to finance the Ukraine war and the oil that has been seized, which I think is 100 000 tons.

What will happen to that? I'm assuming it will be sold on the market. Will those funds go to Ukraine to compensate them for the war? I hope the government will consider that. And doesn't this also raise the potential or the case more strongly to raise the waiver on Russian fossil fuels now, rather than at the end of the year? Isn't it quite ironic that, on the one hand, we are launching military escapades to capture shadow ships, whilst at the same time we're allowing oil to go to Russia legally as a huge contradiction of a total lack of common sense.

So can I say to the government, what are we doing to try to eliminate this shadow fleet, not by ourselves, but collectively with our allies? And secondly, what are we doing to bring an end, the Russians, right? In other words, to end the wave of and apply the sanctions? And can we ensure that any oil that is seized is used for the benefit of the Ukraine war effort? Yeah.
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Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
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Yeah. Yeah. >> Well, I was first of all, can I thank both the noble Lord and the noble Baroness for the comments that they've made, and in particular, thank the noble particular, thank the noble Baroness for her. And I know it's a sentiment shared by us all for her, thanks to our armed forces and the work that they did. Can I also say, I think it's important that we recognise that as well as the military specialist officers from the National Crime Agency were also involved, and I know everyone would join with me in thanking them for the work that they did as well.

Can I just say as well that just some update which made some factual update which may be of use to the House? Before I come to the questions that that have been posed by the noble Lord and the noble Baroness, just with respect to that, the. There were one national Indian national who was the. The captain of the ship has been arrested and is currently in Bournemouth police station. There were 24 other crew on the. On the vessel, 24 Georgian and Indian crew members of that.

The ship has been seized and is currently off Weymouth, and all of those members of the crew. Those 24 remain on, on on the ship. The ship now having been seized, is now under the control of the Department of Transport. So just and just so there's a few updates. Many noble Lords will be aware of some of those facts, but I think it's worth just repeating some of that for awareness of noble Lords. And maybe there are other questions that that come from from that in answer to I'm not sure I'm going to do a lot better than my noble friend and my friend in the.

I'm not sure the noble expects me to do any better, but the, the the situation is the the Prime Minister made made the statement about acting. When all the circumstances aligned and when preparations were made, and it was. The briefing from the military and others was that this was the the right time to act. It was a time that we could act and the the importance of the way in which it was conducted. No shots were fired. Nobody was injured or hurt with respect to that.

But it was the right time to act. And that's that's why we did the noble Baroness. That's the answer to the question for the noble Baroness. I'm not sure she'll be totally satisfied with that. But that's the the answer to it. There was been, as far as I'm aware, there's been no problem with respect to the law or being held back because of the law. The government has always said it will act in accordance with the law. There's been no barrier to action with respect to that.

This particular operation was conducted totally in accordance with with the law. In answer again, specifically to the noble Baroness point. Was it is it a one off? No, it's not a one off. We will take action. This was a purely UK personnel operation. We will take action at any point, should it be appropriate. And the advice that we receive from, from, from our military and from others that if it's appropriate, we will of course act. So, no, it's it's not a it's not a one off.

The noble Baroness is quite right to, to say that the the action acted as a deterrent. There was a immediate rerouting of some ships and a round, both coming up to the English Channel past Cornwall. Some veered off there. But she's quite right to point out my understanding as well. Other ships move the other way around the top of Scotland, and of course we keep under consideration any particular activity that we may wish to to undertake, but I think can I, can I stress, because I think it's a really important point the noble Baroness has made to show that we will act, and I think that's important for others to hear from this chamber, that we will act obviously, when all the circumstances are right, when all the legalities are in place, when the military capability is there, and when the military advice we receive says that that it's appropriate to do so.

So I think, but I, I nonetheless, I think the point noble Baroness made about deterrence is a really, really important point. So I say again, this is not to be seen as a one off. The government will act. And I'm sure with the support of everyone where appropriate to take. Take that action. Just a more general point to to go to the noble Lords point in that, I mean, we've sanctioned 550 ships, of which we assess that some 200 of those have been restrained to stay in port, in other words, have become non-operational.

So I know there's the, the, the, the actions that the noble Lord was referring to. But I do think as well, the, the, the sanctioning the ships, I think is, is, is important as well. And again, in answer to noble Lords point, of course, we always work with others. This was a specific. We obviously liaised with others, but this was a particular UK led operation. He will now have other operations both off our own coast where we worked. Supported the Americans, but obviously in the Mediterranean.

I think I'm right in saying in the Mediterranean, with the with the French recently as well and supported them with with that. So there's a lot of work going on to, to, to act in the way that the noble Lord is, is, is, is suggesting. And of course, we work hard to, to, to ensure that we do all we can to, to economically impact on Russia with respect to this on oil. But there's other ways of doing that to ensure that we try and economically undermine them in what we do to impact on on the war in Ukraine, but also to impact her and to do what we can to ensure the defence of our own country.

All of what happens to the oil and all that will be considered by the Department, Department for transport. So. But they will no doubt have heard the point the noble Lord has made. With respect to that, I go back to. The noble Baroness made the point at the end about about resources, and I've got. I can't really add an awful lot to the. The points that I've made about resourcing, I just would say. And I just repeat the, the point that I that I often make the defence budget has gone up from 24, 25 from memory, from 60, approximately £60 billion to £73 billion in 28, 29.

And that's nuts. Before we get the uplift from whatever happens with respect to the dip and whatever happens with respect to the point I made about the Prime Minister's comments to the BBC about the spending review in 2027, where defence will be the the the number one priority. So I. But I do think that one of the things that that we should be under no illusion, whether it be the actions of that we've seen just recently or many other of the actions that we've seen in the Middle East or other actions that have taken place, whether we see the action that takes place in the in the North Atlantic, all of the various other operations that that take place, notwithstanding the debate about resources and the adequacy or not of those resources, I think it's important for us to recognise and realise, as I know, noble Lords in this your Lordships' House do of the significant, significant amount of activity that our armed forces conduct on our behalf in Europe and and around the world.

And I think it's important to recognise that as well, notwithstanding the challenges that that there are at the present time.
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Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
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I can't comment on the environmental risk. Obviously that's important and we will do all that's important and we will do all we can to ensure that the environmental risk we don't see any environmental risk we don't see any any adverse reaction, any impact of consequence of what we've done with respect to that. As I say, the apart from the captain who's in custody with the with the police in in Bournemouth, the 24 others remain on board. And let me just say this, the the the the only legal way that they can come to onto the mainland, onto the UK would be to if they were to be repatriated.

In other words, if they were coming here to, to be sent back to, they're sent back to their country of origin. So that answers specific, that particular point with, with respect to the the noble Lord, all I would say is that in terms of the ship, he will remember the ship. That was the one which was. Interdicted a few few months ago. That is not. It was just off the coast of Scotland for a period of time. That is. Now, as I understand it, the.

The Caribbean far away from our shores. So hopefully that's an example that while we deal with the specific consequence of the interdiction, we're mindful of the, of the, of the environmental potential, environmental consequence. We're also mindful of the fact of what we do with the, with the, with the crew. But also we don't want any environmental damage from the, from the ships as well. But that shouldn't alter the fact that notwithstanding all of that and the

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need to do something about that, we will take action where we need to do so. But surely deter the. These ships.

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These ships. It's very important. The government tells them what would happen to their cargo and what happen to their cargo and what would happen to their vessel if they persist.
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Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
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Well, can I can I thank my noble >> Well, can I can I thank my noble friend for for his his question. And he's right to to point out that And he's right to to point out that this is an important action by the government, but on its own has to be seen alongside all the various be seen alongside all the various other actions that we're taking, which I know are supported by all noble. In, in, in this House. And in particular, I agree with him about looking at the loopholes, any loopholes that might exist, as well as what further sanctions that we might that we might take.

And I know the government is keen to do that, and the Prime Minister is keen to look at that as well. Can I can I just say as well that notwithstanding, I think it's important for me to say this, that notwithstanding what is happening in the Middle East, notwithstanding what is happening in other parts of the world, our determination and I know this is a sentiment shared by all that our determination to continue to stand with Ukraine in defence of their territory against the illegal invasion by Putin remains absolute.

And I think that is a really important point. And let me just say this as well, because I think it is something that is sometimes not forgotten. But but but overlooked. Putin did not expect to be fighting a war in Ukraine in 2026 after his illegal invasion, his policy objective, and what he believed would happen was that within 3 or 4 days, he would have taken Kyiv and would have established a puppet regime in there to act as a barrier between NATO and Russia.

He's failed in that objective, and we will continue to

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To do all we can to support the Ukrainians in their fight, which is a fight for our democracy and our a fight for our democracy and our freedom, as well as a fight within Ukraine for their democracy and their freedom as well.

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their freedom as well. It's highly welcome, this highly welcome seizure. Oh, sorry. The Minister.

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The Minister. To give any. Clear answer. To the question, what is now going to be.
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None Portrait Statement: "Growing up in the online world" consultation: the Government's response - Progress Statement
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consultation. >> My Lords.
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Viscount Camrose Portrait Viscount Camrose (Conservative)
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>> My Lords. >> I thank the noble Baroness, the Minister, for repeating this statement and indeed for alerting statement and indeed for alerting me in advance of the announcement, which was much appreciated. This announcement, although coming, I'm afraid, rather later than many noble Lords would have hoped, is extremely welcome on these benches. I thank in particular my noble friends Lord Nash and Baroness Barran for their tireless campaigning on this issue. Had they and others not developed their arguments so well and expressed them so compellingly, I don't believe we would have reached this important moment.

But needless to say, most of all, I thank and offer my respect to the parents of the children that have lost their lives at the hands of social media. They have bravely and wisely directed their unthinkable pain into a legacy that will protect countless children for the future, and their efforts will not be forgotten. A social media ban for this age group has been something that conservative parliamentarians, both here and in the other place, have long advocated. We've been joined in support by Labour backbenchers, Liberal Democrats, campaigners, parents, school teachers and charities in calling for action to be taken to protect children.

Yet just months ago, the Prime Minister directed his members to vote against the same policy he is now so urgently championing during the Children's Wellbeing and Schools Bill, noble Lords were instructed by the government whip to vote against the amendments tabled by my noble friend Lord Nash, save for a small handful of admirably brave, principled Labour peers, over 150 voted against the ban not once but three times. My Lords, the government explained that it did so in order to conduct a consultation, but the evidence and support in favour of a social media ban was already overwhelming.

In fact, it had already been adopted by other countries. It's not clear at this point what value this particular consultation has added, because, my Lords, I think it's worth highlighting two opportunity costs of inaction. First, as the bereaved parents have stated, the longer you leave the change, the worse it can be for children. And second, had the government acted decisively at the time, the consultation could have been used as a means of refining the detail of the ban. And it's with that in mind that I have several questions for the noble Baroness.

The Minister. First, is the government yet ready to set out a detailed timetable of what legislation is coming and roughly when it's going to be coming to bring this about, given the extra work that will fall on Ofcom, what additional resources will they be provided with? Will tech companies be obliged to contribute towards the budget, or will the funding come from the taxpayer? When will the definition of which platforms fall into which platforms fall into scope be published? I do thank the government for listing some platforms that will be banned, but we do need a clearer, principles based explanation as to what platforms and what functionality will be banned or limited for which age group can the Minister confirm today that digital ID will not be a mandatory requirement for those wishing to access social media for both children and adults alike? Can the Minister comment on reports today that age verification will be conducted at operating system level, rather than by the platforms themselves? And lastly, does the government feel that new frictions for all users, including adults of age gated platforms, are unavoidable? My Lords, the social media ban is welcome.

I was surprised to learn, however, that the government are also considering overnight curfews and infinite scrolling interventions for those under 18. Now, there may well be a case for this, but I don't see how it is possible to believe, simultaneously, that 16 year olds have the wisdom and judgement to vote to elect a government, but not the wisdom and judgement of 18 year olds might bring to bear on what social media functionality to use. It strikes me as psychologically wildly incoherent.

But to conclude positively, my Lords, while we are disappointed, by the time it took the government to arrive at this position, we should not lose sight of the significance of the step being taken today. The protection of children online should never be, I think, and isn't an area of disagreement between us. These benches will, of course, continue to scrutinise the detail of the proposals and hold the government to account for their delivery. However, where measures genuinely strengthen protections for children and support families, the government will find in us a constructive and willing partner.

I look forward to working collaboratively with Ministers to ensure that these reforms are implemented effectively and provide the lasting protections that children deserve.
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Lord Clement-Jones Portrait Lord Clement-Jones (Liberal Democrat)
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My Lords, I too thank the Minister for taking the statement Minister for taking the statement today and indeed for her alert. My Lords, on these benches, we welcome Lords, on these benches, we welcome the fact that the government has finally responded to the overwhelming public demand to protect our children online, and especially from the bereaved parents who I likewise and I chair the noble Lord Viscount Camrose tribute to them and to their campaign, my Lords, and we share the government's diagnosis.

There is a genuine children's mental health crisis, and the platforms have been for far too long been allowed to profit from it. But my Lords, we fundamentally disagree with the government's prescription. After months of insisting that a drawn out consultation was absolutely necessary before any action could be taken, what has been announced appears to be a panicked policy, cobbled together ahead of a by election and a backbench rebellion. It appears that DSIT own expert panel flagged a substantial, I quote, lack of evidence to justify key aspects of the plans.

My Lords, can the Minister tell the House what steps the government is taking to address those evidence gaps before the regulations are laid? The Australian model the government is adopting is based on definitions and lists. It bans specific platforms while trying to carve out exemptions for messaging or education. But as my hon. Friend Caroline Voden pointed out in the Commons, the internet moves far too fast for lists. The moment one platform is banned, another unnamed platform launches. This is, at its heart, a dangerous dogs approach to regulation, focusing on arbitrary categories rather than the actual risk of harm.

And the Secretary of State made a startling admission at the Dispatch Box. She openly acknowledged that children will find workarounds using VPNs or fake IDs, stating kids will get around this. This is what kids do, my Lords. If the government itself acknowledges that children will bypass this ban, how exactly does a policy built purely on exclusion protect them? Does it not simply give parents a false sense of security? And worst of all, let the tech giants completely off the hook as a noble Baroness Kidron has tirelessly argued in this House, with our support, we must regulate the product, not just the child.

This is about safety by design. Instead of an outright ban, the Liberal Democrats have consistently called for a targeted and coherent harm based framework. Film style age ratings for platforms. Under our approach, platforms that deploy addictive algorithmic feeds or host inappropriate content would be legally restricted to users over 16, and the most extreme sites rated 18 plus. My Lords, will the Minister explain why the government has rejected this approach and why the burden of proof is not being shifted to the tech companies themselves, forcing them to remove toxic addictive features like infinite scrolling, autoplay and manipulative algorithms.

As the Molly Rose Foundation has rightly warned, relying on blanket bans risks migrating bad actors, groomers and violent groups from banned platforms to permitted ones or into the dark web. We will end up playing a desperate, endless game of whack a mole with children's safety. What assessment have the government made of that migration list, that migration risk? There is also a dangerous cliff edge in what is proposed, DSIT own expert panel warned in writing that a sudden transition at 16 could lead to intensive uptake and increased risks.

We keep. We risk keeping children in a sterile digital environment until their 16th birthday, only to suddenly expose them to harmful, unfiltered content the moment they come of age without having helped them safely develop the digital and emotional resilience they will need throughout their lives. My Lords, what specific measures does the Minister propose to address that cliff edge? And the statement is also glaringly silent on the commercial exploitation at the heart of this crisis. Will the Minister confirm when the government intends to raise the digital age of consent from 13 to 16? Finally, my Lords, any ban or restriction is entirely meaningless if the regulator lacks statutory teeth.

We have a fundamental enforcement deficit. The Australian experiment already demonstrates the immense difficulties with enforcement and circumvention. 6 in 10 children there are still on social media. Six months after the ban came into force. My Lords, will the Minister today commit to a formal review of Ofcom's enforcement powers within six months to ensure the regulator has the necessary tools? Business disruption measures injunctive relief to compel tech giants to change their business models. My Lords, we will rigorously scrutinise the forthcoming regulations and we will continue to press the government to move away from blunt exclusion and towards a robust, harm based framework that holds these tech giants properly to account.

My Lord, this must be indeed big tech seatbelt moment, but a seatbelt protects a passenger within a vehicle. It does not simply ban them from the road. We need a smarter approach that allows young people to benefit from the best of the digital world. And indeed, as the noble Viscount Camrose says, prepare to vote at 16. My Lords, to learn, connect, to grow while properly dismantling the addictive, profit driven architecture that is doing them such harm.
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Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under Secretary of State (Department for Science, Innovation and Technology) (Labour)
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I want to. Clement-Jones and the noble Viscount Lord Camoys for their contributions. They too have been at the forefront of calls to engage on how to make our world our online world safe for children growing up for many years, and I join them in paying tribute to the bereaved families who have also been so tirelessly campaigning on this issue. The government set out earlier this year our intention to consult parents, children and young people on what more needs to be done.

We also committed to act. We also committed to act swiftly following that consultation. We repeatedly said, the question is how we act, not if we act. I know that many the two noble Lords have have expressed the concern about the government's consultative approach. Perhaps they have questioned whether it was needed. We felt that the approach has been both swift and responsible. A short, focussed consultation was necessary so that we could hear that input. We received over 116,000 responses from parents, civil society, industry and, crucially, children and young people themselves.

The magnitude of that engagement demonstrates the range of strong views. We felt that it was critical to listen to to those children and families, and to have a national conversation. This week, we have set out plans to ban social media platforms from allowing those under 16 from accessing them to the noble Lord Lord Clement-Jones point. We have also announced our intention to restrict under 16 seconds from accessing some harmful functionality, such as live streaming and features which enable the discoverability of children and facilitate unrestricted communications with strangers.

It is by doing those two things together that we build a safer future. These features will also be off by default for 16 and 17 year olds, and we have also made it clear we will age gate features on AI chatbots that enable sexually explicit interactions to over 18 that we believe will deliver the graduated age appropriate experiences and address concerns about cliff edges. The. The issue of cliff edges, as highlighted by the noble Lord Lord Clement-Jones on the question of speed and when we are going to act, we have committed to moving as fast as possible to lay these regulations on social media by the end of the year, to vote shortly, as quickly as we can on those, and to implement those by spring 2027, by taking the powers in the children and Schools and Wellbeing Act that has given us the ability to move at this speed, the noble Lords also asked about the digital age of consent.

We have said we will come back to some other questions that were raised in the consultation. For example, the digital age of consent and the risk of circumvention through virtual private networks in July. When we come back on further on further details on the question of different ages, it is indeed the case that there are many different ages in our legislation for access to alcohol, access to gambling, many different ages. That is a feature of our legislation. We feel these are the right ages to restrict social media companies from providing services to under 16 year olds.

And as I mentioned, setting the default features for 16 and 17 year olds in terms of the scope, this is indeed based on the Australian criteria. And we will set out with the regulations later this year. Exactly the criteria that we choose in our regulations in respect of age verification. Currently, the Ofcom guidance recommends the following age assurance methods for over 18 so they could include things like passports, driving license, credit cards, facial scanning, mobile network operator checks, open banking checks, or email based age estimation.

Some of these will not work for the 16 plus category. That is why the Secretary of State has asked Ofcom to look at options for highly effective age assurance for 16 year olds, and we've asked that they publish their findings on October so that members of this House, noble Lords, can consider them before voting on the regulations on the. So there are a variety of. Of models to the noble Lord Lord Camoys question of. Of age verification. On the question of the evidence gaps, we are aware, obviously, that social media moves quickly, that new.

That new services may be provided. We think that this can provide some opportunities. The current legislation is set in a certain way. Once the legislation and the regulations are changed, that will provide the opportunity for providers to provide services, for example, to access the news or access to other services for particular groups that they don't today, which may provide our children and young people with better opportunities than they have today. We also recognise to the noble Lords points that some children may attempt to circumvent, circumvent age restrictions.

What we are setting out in this set of proposals is a new societal norm. We are resetting what is expected that will benefit children today and importantly, it will benefit children growing up today who have not yet reached the age of 13 of 16 of 18. The next generation tomorrow, to the question of enforcement powers. Obviously, this is an incredibly important point. We need the, the, the, the new regime to be effectively enforced. And that is why the Secretary of State wrote to the chair and CEO of Ofcom to reinforce this and ask that they ensure that there is robust and effective enforcement of the ban and submit to Parliament and make publicly available an update on their wider enforcement strategy, noting the interest, legitimate interest of member of members in the the Other place and of noble peers.

Here we will ensure that Ofcom has the resources to properly enforce these new measures and take strong enforcement action to protect all users more widely. We recognise the importance of parliamentary scrutiny in this process, and I welcome the offers and to collaborate and to engage on the proposals we put down with the appropriate scrutiny. And it may seem some extra scrutiny and critique from the noble Lord Lord Clement-Jones, because I think what we all want to do here is protect children online and ensure that online life is as fulfilling as their offline lives.

It's a responsibility we take very seriously. We do not want children to have to navigate unsafe digital spaces. We believe that our statement of intent here will do that and will deliver to make sure we give children the childhood they deserve.
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Lord Nash Portrait Lord Nash (Conservative)
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My Lords, I'd like to express my gratitude to the government and the noble Lady, the Minister and the Secretary of State for DSIT and Secretary of State for DSIT and Minister Narian for coming to the conclusions that they have as a result of the consultation they result of the consultation they have. Thank you. They have listened, and they are clearly determined to act effectively. And I will add my gratitude to the bereaved parents who have endured unimaginable pain. To get to this point.

I was very grateful to the Labour lady, the Minister, for her time earlier today when she met with a number of noble Lords, and when she said that she will share the draft regulations with those noble Lords interested in advance of them being published. As I agree that a spirit of cooperation on this issue, which clearly has got cross-party support, would be helpful, and I'd be grateful if she could just confirm that at this that box today, in my conversations with the social media companies, they have all said that if it's a level playing field, they will accept the situation.

Now, the proof of that pudding will of course be in the eating. But I would be grateful if the noble Lady, the Minister, can confirm either today or more likely in due course, that all apps which are user to user have the ability to post content and where algorithms are involved will not only be in scope, but also will not be able to provide those services to under 16 year olds. And if not that, the criteria on which they will be exempted will be very clear and consistent.

In order to minimise the risk of legal challenge and on enforcement. I would hope that because the criteria the government are talking about are very black and white, there should be minimum scope for delay in affecting enforcement. I'd also be grateful if the Minister would confirm, hopefully today, that geotagging and location sharing are within the concept of communication with strangers. But given that apart from.

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These questions, should interjections with questions, not statements, if the noble Lord doesn't mind.

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But given that apart from in relation to VPNs, the government has gone further than I was asking has gone further than I was asking for. I commend their approach, and I do particularly like the dynamic nature of it which enables it. nature of it which enables it. Under the powers taken in the Children's Wellbeing in Schools Bill to come forward, not just with Bill to come forward, not just with part two in July, but also parts three and four and so on, as technology moves on apace so that we can play catch up fast.
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Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under Secretary of State (Department for Science, Innovation and Technology) (Labour)
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I thank the noble Lord Lord Nash for his comments and moreover, for for his comments and moreover, for his engagement over the last months, in fact, longer but last months with me on this, on this topic. And we will be able to continue the engagement. Obviously, there will be the scrutiny in the House, but also outside the chamber. We committed to sharing the regulations with the opposition spokespeople and the chairs of the select committees for scrutiny, and that is what we will follow through on the question of the definition and the scope, we plan to use the same model as Australia, so that would capture user to user platforms, whose purpose is to enable social interaction and which allows users to post material alongside algorithms.

The the. The detailed. Of how we are going to. How those criteria will apply in the UK will be set out later this year. We have also said obviously that sort of purely educational services would not be in scope on the question of enforcement. As I mentioned earlier, this is an incredibly important part of our our thinking and our approach. We have made the Secretary of State and the Department has interacted frequently with Ofcom. This.

This. Noble Lords have made clear the importance of effective enforcement. Ofcom and. We have written to Ofcom to ask them to ensure that we can have robust and effective enforcement of this ban. The. The CEO of Ofcom has written back, confirming. That is what they're going to take forward. Oh, sorry sorry sorry sorry. Apologies. And on the final question of geotagging and location services, I will write question.
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Lord Russell of Liverpool Portrait Lord Russell of Liverpool (Crossbench)
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Crossbench earlier. >> On today, I have the enormous privilege to co-host with the noble Lady Baroness Berger, who I suspect will try and ask the question after will try and ask the question after me of hosting a group of the bereaved parents. Four of them spoke very bravely in person. Behind them were arrayed a. The photographs of even more children who've lost their lives. But four of those spoke very movingly, and what they said was, while they absolutely welcomed the government's announcement yesterday, that for them that is the end of a long process of trying to get government to listen.

But it is also at the same time a beginning, because there is an awful lot more to do if the noble Lady hasn't had the chance to read it. A very well known bereaved parent, Ian Russell, wrote a very sensible piece in today's Guardian, talking about safety by design and how completely and utterly fundamental that is if we're going to get this right. So what I would like to ask the noble Lady is, is really back on enforcement. I know, I know these large companies, they were clients when I was a head-hunter.

I know how well funded they are. We put in a lot of their top lawyers. They are very smart. They have very deep pockets. The only way that we will be able to enforce is by joining with other jurisdictions, most obviously, the European Union, to create a large enough economic block of customers and users of these technology companies working together, despite whatever the slightly incontinent current president may say, or any of his minions, is to work together in a united way to make the companies realise there is no get out of jail clause.

They have to be held to account and they will be. But we can only do that together.
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None Portrait Legislation: Steel Industry (Nationalisation) Bill - second reading
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Leong. >> My Lords, I beg to move that this bill be now read a second time,
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Lord Leong Portrait Lord Leong (Labour)
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this bill be now read a second time, my Lords. Steel is a historic British industry at the heart of our national story. For generations, steel workers have forged not only steel but also 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. But still is not only about our past, it is fundamental to our future. Steel underpins our infrastructure, manufacturing base, energy networks and transport system. It is essential to the homes we built, the railways we build, the power stations we build, and the defence capabilities on which our national security depends. My Lords, steel is therefore not merely another sector of the economy. It is a strategic national asset.

Its future is central to our economic resilience, industrial strength and our ability to deliver the growth and prosperity this country needs. My Lords, 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, whilst also contending with energy costs that remain higher than most of the many of their 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 lessons by Lord 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 faced a prospect of being the only G7 nation unable to produce virgin steel from raw materials within its borders.

That would be, my Lord. More than an industrial failure, it would represent a strategic vulnerability. That is why, in March this year, the government published its Steel Strategy, setting out our 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 has 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 needed to modernise and decarbonise steel production. And it means, my Lords, 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 steelmaking 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 is strongly minded to use these powers in relation to British Steel, subject, of course, to the public interest test set out in the legislation. My Lords, the circumstances surrounding British Steel and the Scunthorpe steelworks are well known to this House. Scunthorpe is the last remaining primary steel making capability in the United Kingdom.

It directly employs approximately 2700 highly skilled workers and support 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 would also like to pay tribute to the parliamentary staff, whose efforts enable Parliament to respond swiftly to an urgent national challenge.

The measures enacted last year serve their immediate purpose. They prevented closure and ensured continued production. However, those powers were always intended to be temporary. Whilst they have enabled continued operation, they do not provide the flexibility required to undertake the longer term restructuring, investment and modernisation of the business now requires. As matters stand, the government believes 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 its business, its workforce and the nation.

However, my Lords, I want to 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 engage constructively and extensively with Zhengzhi to pursue a commercial solution. Our clear preference was to secure the future of steelmaking 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. My Lords, some noble Lords may reasonably ask whether nationalisation is the right answer. The government's response is straightforward nationalisation is not an ideological aim. It is not the first option either. It is a pragmatic tool available to you for use when the national interest requires it. The cost of losing our steelmaking capability would far outweigh the cost of preserving it. Once blast furnaces are extinguished, once supply chains disperse and once specialist skills are lost, rebuilding those capabilities becomes almost extraordinary, difficult and expensive.

Inaction requires, or rather, inaction carries consequences. Depends. Dependency carries risks. The loss of several 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.

Most 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. My Lords, turning briefly to the detail of the Bill, I fully 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 has consistently sought to ensure that the powers contained in the Bill are proportionate, necessary and appropriately constrained.



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Point of information. The impact the impact assessment doesn't have the impact assessment doesn't have any figures in it. Do point of information on second readings.

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I will continue that scrutiny is both expected and welcome. The government has consistently sought to ensure that the powers contained

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to ensure that the powers contained in the Bill are proportionate, necessary And appropriately constrained.

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And appropriately constrained. 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 principle transfer of powers are subject to a clause and will expire two years after Royal Assent. This ensures they remain in force only for as long as necessary to achieve their intended purpose. The Bill also 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 is 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, 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 intended solely to ensure that the legislation's objectives can be achieved effectively. My Lords, this bill is ultimately about the country, about the kind of country we aspire to be. Do we believe that Britain should continue to produce steel upon which modern economies depend? Do we believe that strategic industries matter? Do we believe economic security, industrial resilience and national security are worth safeguarding? Do we believe 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 is 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 steelmaking capability for generations to come. I look forward to the contributions of noble Lords will make during this debate and to the constructive scrutiny.

I know this House will bring to the legislation. My Lords,

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I beg to move. The question is that this Bill

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The question is that this Bill may. I start. By congratulating. The noble.

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The noble. Lord, the Minister, on his appointment last Friday as appointment last Friday as parliamentary Under-Secretary of state at the Department of Business
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Lord Hunt of Wirral Portrait Lord Hunt of Wirral (Conservative)
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state at the Department of Business and Trade. He has a long established and proven track record of success in business and may I just say, I hope his voice will be heard loud and clear within government. I wish him well and I hope he will emerge from our debates with his reputation enhanced. Now, at the outset of this debate, I want to make it clear that my party accepts that steel is a strategic industry. Steel helped to build our past, and I agree with the noble Lord, the Minister, that steel will shape our future.

It matters to our national resilience, our defence capability, our manufacturing base, 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 has still to set out a credible plan to address just that. Last week, Alcan's, who was then Minister for the armed Forces, resigned from the government and has since argued that energy policy has to be treated as a matter of security.

High energy costs, though, are making British Steel less competitive globally and the government's chosen path towards lower carbon production will dramatically increase the sector's reliance on electricity, and will 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 acknowledges that steel is vital to national security. If that is the case, then surely the energy policy upon which steel depends must also be judged through the lens of national security, resilience and industrial capability.

Now 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. But 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 into 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? 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 continue to promise help is just around the corner? So before Parliament grants these powers, surely it is reasonable to ask what the end state is. What is the exit strategy and how the government intends to measure success beyond simply writing more and larger cheques.

The government's own impact assessment makes 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 do ask the Minister, what is the government's estimate of the total cost, and will Parliament be told that figure before the Bill receives Royal Assent? We must also question the government's approach in ensuring environmentally friendly steel.

Ministers have chosen a pathway that the industry itself has 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 steel sector depends on both public and private investment. If the government's preferred model drives up costs and makes the UK less attractive than competitive countries not operating under the same zero net zero constraints, where is that private investment supposed to come from? Investors, of course, can choose where they deploy capital, and if the government makes steel production more expensive, more regulated and more politically uncertain, they will look elsewhere.

The government's own impact assessment on the 13th of May is very clear and explicit about the risk to investment. I quote in 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.

End of quote. That is a remarkable admission from any government. There is also the wider trade risk that the government have not properly addressed. 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 this remains compliant with the UK's international obligations. Prolonged state support, if not carefully structured, could risk challenge under WTO subsidy rules and could invite countervailing measures from trading partners.

That would not be a theoretical concern. Other countries could impose countervailing duties, raised disputes or just take other retaliatory action if they believe UK steel is being unfairly subsidised. Now, such action would not only harm British Steel itself, it could also damage the wider UK steel sector and the downstream industries that rely on steel inputs, including automotive, aerospace, defence, construction and advanced manufacturing. So can the Minister, therefore tell the House what assessment the government has made of the WTO implications of this bill and of any continuing public subsidy to British Steel? Have Ministers had discussions? Any discussions with the.

Were the the World Trade Organisation or with 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? My Lords, I must also raise the significant concerns expressed by stakeholders across industry about the government's steel strategy and, in particular, its tariff policy. Now the government appears to have conducted a partial U-turn. It seems we didn't need to wait 12 months for a formal review for Ministers to discover the 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's 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.

My Lords, we've already seen the risks of retaliation. We've seen concerns in relation to the United States. We've seen questions raised in relation to India, including the possible implications for the trade deal. We now read of concerns about the European Union, with reports the Secretary of State has been to the EU to plead with the EU not to reduce tariff free imports of British Steel. Well, 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, reduce market access and increased uncertainty could all make it so 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 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, then the government will have weakened the very industrial base, they are claim, claiming to be trying to strengthen. So I 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? My Lords, we just cannot ignore the wider business climate the government have created.

I'm not going to go into detail about the Employment Rights Act 2025, but it will not stop me raising it because it's 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 is 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. There are so many questions that remain to be answered at this point. His Majesty's opposition is 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.

My Lords, Steel has shaped our nation's history. The challenge is now to secure a future for the industry that is internationally competitive, financially sustainable and attractive to investors.

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Yeah yeah yeah. Thank the noble Lord Lord Leong for introducing this debate. And I to congratulate this debate. And I to congratulate him on his very well-deserved appointment as a Minister. This steel industry nationalisation bill steel industry nationalisation bill is a government bill, and it's providing powers to nationalise any company involved in steel manufacturing, whether it's in the public interest. But we know the focus of the bill is the potential focus of the bill is the potential nationalisation of British Steel Limited, a company that is currently owned by the Chinese company Jingye Group, and it's
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Lord Bilimoria Portrait Lord Bilimoria (Crossbench)
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subject to ongoing government financial assistance. And it is still operating. And the government still operating. And the government said in May last month that it's minded to nationalise the company. And this was cautiously welcomed, including by the local community in Scunthorpe. But there have been Scunthorpe. But there have been concerns raised about the significant cost and complexity of nationalisation. And, of course, the Chinese government has urged the Chinese government has urged the UK to act prudently and said it would protect Chinese business.

The Conservative Party, as articulated by Lord hunt just now, very clearly, has set out its opposition to the bill and stated that it does not address the problems affecting the industry, which I will address in my speech. The company operates Jingye Group, 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, then it can be very difficult and costly to ever return them to operation.

So they were preparing to close down the furnaces. And if you remember, my Lords, last year, Parliament was recalled something that very rarely happens. And we passed emergency legislation, the Steel Industry Special Measures Act 2025, and that gave the Secretary of State the power to intervene in steel undertakings. And that is exactly what has happened. The result is the production plant, British Steel is still producing, and the government has stated that it wants to now modernise and co-invest with the private sector.

The Minister for industry, Chris MacDonald, has set out his details and says the government officials will continue to provide on site support and to date, the government has spent almost a half £1 billion on working capital to support British Steel. Could the noble Lord the Minister, confirm that? So when it comes to modernising and decarbonising, providing stability for workers and suppliers and customers, the government recognises it's going to require both public and private investment. Could the noble Lord, the Minister, confirm that? And then there's the impact assessment that was carried out for this proposal.

And the impact assessment said that the act of 2025 only provided short term emergency powers and did not allow for the longer term planning or investment required. And it said that the impact assessment that the powers could create fear amongst investors and put off UK investment in the sector, for example, concerns about government intervention. And it said this could undermine jobs and attempts to develop the sector. Would the Minister acknowledge this aspect? It also said the powers could have a positive impact.

On the other hand, on supply chain confidence and reduce uncertainty, boosting investment and jobs in the sector. And it could have wider impacts on supporting and stabilising the economy and jobs. And overall, the impact assessment said that the socio economic benefits were likely to outweigh the associated costs. But it said there would be post-implementation review within five years. My Lords, there is now the beginning of a clear and credible long term plan for British Steel, with low carbon steel making as a priority.

This is an important point from a legal perspective. Peter Ware, who's a partner and head of government sector at the law firm Browne Jacobson, and I have to declare my interest. I have worked with this firm in my business, described this as as one of the most potentially significant acts of state intervention in British industry in decades. He said it would raise substantial questions that will need careful navigation, including on compensation and the transfer of employees. Would the Minister acknowledge this? And of course, underlying sovereignty concerns are losing the Scunthorpe furnaces would, as the noble Lord, the Minister said in his opening speech, leave the UK as the only G7 country unable to make steel from raw materials dependent on imports for a material central to defence and infrastructure.

And as co-chair of the India All-Party parliamentary Group, the UK, of course signed the CETA with India, its FTA, last year in July at Chequers, with implementation due any time soon, and the. The pitch to the Indian. It's. The bill legislates discretionary power to seize a foreign owned steel maker. Now, this is scary to any potential investor, and it sends the opposite signal to the vision 3035 partnership at the worst possible moment when we're about to implement the CETA and to do with India, we've got Tata India's flagship UK industrial investor in the UK with Jaguar Land Rover, and of course, the £1.25 billion investment in Port Talbot.

The electric arc furnace, which the government has supported with £500 million of grants to save 5000 jobs. And this bill defines steel undertaking generically. Can the Minister confirm that the intention of government are to do with Scunthorpe and not to do with the Tata? Having secured Tata's billion pound commitment, the UK is actually handing itself a power to expropriate that same asset in the public interest, and that is quite scary. And when it comes to compensation, this needs to be taken to the valuing of the business.

It may award nil compensation. This is something the government could do. So Tata's entire transition rests on government co-investment. So if the state can seize the asset and value it, but for the support of the UK government, then the inbound investment is worth little or nothing. And this is really very scary to a country. We've just signed a free trade agreement with a country where we are hoping to double our bilateral trade from nearly £50 billion to £100 billion by 2030.

And Peter Ware of Browne Jacobson, once again said the compensation question is particularly complex, with the government having already committed over £400 million in working capital. Jingye is scoped to claim substantial compensation may be limited, but legal challenges under bilateral investment treaties or domestic property rights principles cannot be ruled out. Would the Minister acknowledge this? And Siobhan Sullivan, the director general of the British Chambers of Commerce, and I chair the International Chamber of Commerce, UK, and I'm the region where the Regional Coordinator for Europe, which 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. Could the noble Lord, the Minister, please clarify that the rumours in the press that are circulating 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.

And then on top of this, we have the backdrop of US tariffs and the UK's high energy costs. And the government announced its much delayed steel strategy, focussed on reworking trade quotas designed to protect steelmakers from a glut of Chinese imports. But before that, the Tata Steel point I don't want to miss this point, has broken ground with the £500 million of government backing. It's going to be a pivotal moment in UK steel making in its future. Which is expected to cut the site's carbon emissions by 90%.

And that is thanks to the £500 million help by the government saving 5000 jobs. My Lords, if you talk to Tata Steel, they say it is absolutely paramount that it should be a distinguishing factor of how they operate and what they're doing versus what's happening with Tata with with UK Steel in Scunthorpe. So we need clarification of these powers that they're not going to be implemented to a company like Tata. And there's another point. A challenging opportunity is domestic demand. The UK steel industry now only supplies 32% of UK's overall steel demand.

Would the government commit that there should be a minimum threshold of 30%? Minimum has to be from domestically produced steel. And on top of this, and this is a point that noble Lord, Lord hunt has mentioned. The UK's energy prices, which are some of the highest in the world, certainly the highest in Europe. If I give you some facts that UK steel producers face an average electricity price of £66 per megawatt hour, compared with Germany of 50, France at 43, so we pay up to 50% higher than our main competitors right at our doorstep in Europe.

And on top of that, steel is a highly traded commodity. And as chair of the ICC, UK and Region of Europe, we are. Our expertise is in trade, and our competitors in Europe have successfully accessed government grant funding of 50% and above for major operational changes. China's steel subsidies are more than ten times higher than those of OECD countries, and more than five times those of Non-oecd countries economies. Steel subsidies in non OECD countries are 42% higher in terms of cash grants, 11 times higher with respect to below market borrowings than in OECD countries.

So 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. The renewable energy infrastructure also 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, a potential value of £21 billion to the UK steel market over the coming decades, which will be great for our British steel industry. And this again reinforces that we need to have this 30% minimum threshold.

So when it comes to paying more than 50% more for our electricity than our counterparts in France and Germany, and 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 seven zero times 70 times the size of the UK market. Exports from China this year are expected to reach 100 million tonnes, the highest in 2016, when the last steel crisis saw several steel plants closing and thousands of jobs lost around steel making countries around the world, including the UK.

And on top of that, you've got the US tariffs. The effect of the tariffs, and Tata Steel, for example, exports about 170,000 tonnes of products the U.S. these products are not made in the US, it can only come from us. So they need what we produce. So, my Lords, before I conclude, there is no question we cannot compete on costs with producers in China and across across Asian markets. They have lower environmental regulations, cheaper carbon intensive energy and labour costs. It's very difficult.

And on top of that, UK steel producers face higher network charges. Despite the government's recent announcement of a 60% exempt exemption for charges starting in April last year, Germany produced 90% exemption, France 80%. So we could do more. Can the government do more to help our industry? And the last two points are research and development and innovation. Tata steel, for example, spends around 10 to £15 million in R&D, and they collaborate with universities. Universities such as Warwick and Swansea, Cambridge, Sheffield, Cardiff, Imperial College.

We must encourage more of this research and development between our industry and universities and skills. We need core capabilities in engineering and metallurgy and safety and sustainability and leadership and and advanced digital and green skills and AI. So, my Lords, I conclude I have the privilege of chairing the Manufacturing Commission, which is the research arm of the manufacturing APPG. And although manufacturing was 30% of GDP in the 1970s and 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, and most importantly, high quality manufacturing that we're proud of.

And steel is a vital part of our manufacturing industry. We must do all that we can to ensure that our steel industry continues to

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flourish and prosper. My Lords, can I also offer my

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My Lords, can I also offer my warm congratulations to my noble friend the Minister on his appointment? I strongly welcome appointment? I strongly welcome this bill for the simple reason that our country must have a that our country must have a sovereign capability to make steel, and I commend the government for and I commend the government for acting swiftly, taking powers to nationalise in the public interest is an essential tool of a modern industrial policy. We've done it
17:56
Baroness O'Grady of Upper Holloway Portrait Baroness O'Grady of Upper Holloway (Labour)
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before, in 2009, with cross-party support, similar powers were taken support, similar powers were taken to stabilise the banking and finance industry. If we can bail out bankers, we can certainly support our steelworkers. Steel is a vital part of our economy. As a vital part of our economy. As we've heard, critical infrastructure such as roads, bridges, defence capability, our hospitals and schools, housing and wind turbines all rely on steel and some would add to that list. Wembley Stadium, built with British steel.

In today's world, we can't 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 deploy on supply chains left vulnerable by wars made in Moscow or Washington. So the bill is essential for our security to 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. In China. 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 to, 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 shouldn't bail out so-called lame ducks. Of course, 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 Maureen Common Polling last year, the public think that the government should take state control of the wider steel industry. Over half of the public support this, with only 13% opposing support for public ownership of British Steel is even higher. Roy Rickards, chair of the National Trade Union Steel Coordinating Committee and a former steelworker himself.

In fact, I think also the son of a steelworker, he backs this bill. Gareth Stace, director general of the trade association UK steel, strongly backs it to. 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. And let's be clear we owe our steel workforce. Their vital work is hard and it can be dangerous. So we owe them respect for their skills and resilience.

But most of all, we owe them respect for their sheer determination to see a successful and a sustainable future for their industry and for their communities. I would welcome my noble friend the Minister's views on the following. In conclusion. Firstly, I agree we need to deliver competitive energy prices. So can the Minister 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 the 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 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 of the UK on UK manufacturing of the EU Industrial Accelerator Act. I would add to that questions about 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 recent negotiations and other discussions with the EU on these specific matters, either now or by letter.
18:03
Lord Redwood Portrait Lord Redwood (Conservative)
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My Lords, I. appointment, and I'm also very grateful to the Minister for his honest account of this legislation, honest account of this legislation, when he made it very clear that it is very likely that the strong is very likely that the strong powers in this legislation will be used sometime soon to fully nationalise the Scunthorpe works. That, I think, makes it even more curious that the government he represents has given us an impact assessment, with no numbers in at all, and no account of what a nationalisation of the Scunthorpe works would look like, what impact it would have on the public budgets.

What impact has 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 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. Over the course of this bill, I hope we can get some numbers from the government. I think both Houses of Parliament, when the emergency legislation went through a year ago, understood the government wasn't 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've 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 without any 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.

And 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 can't firmly say they are definitely nationalising because they've put in this public interest test, and they obviously haven't yet applied the test to any project nationalised, which they are currently planning. But reading how wide the public interest test allows the government to be in order to satisfy itself, I don't think it's any actual prevention of nationalisation of Scunthorpe.

I'm sure they're quite clever enough to come up with a plan which is well within the details of the public interest test, widely drawn as it is in this piece of legislation. So I don't 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. Scunthorpe, because the government says two different things. It tells the press and the rest of us and we're very relieved to hear it.

They've saved the jobs. But then the government still seems to be wedded to a net zero strategy, which says that all blast furnaces of Scunthorpe type have to close and they're the only two left and to be replaced by electric arc furnaces. So 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 the Welsh steel industry discovered when the previous government went on that journey and 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's 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, and they were not able to sign off, that it was definitely going to be a policy which was going to work.

And I think they weren't saying it definitely wouldn't. I think they were saying they didn't have enough time, and it would require a lot of very detailed work and consultation. And Ministers use their right to issue a direction to the civil service, to say that we think the public interest is such that this is urgent. And so we're going to ignore the absence of sign off on value for money and on the efficacy of the policy, because it's worth a shot.

And we Ministers will take responsibility. I understand that, but because they've 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. This course. Indeed, I think we need a years audited statement on what's happened so far. With all that money passing to a Chinese owned business, which the state largely controls, but where it doesn't own the assets.

I think it would be good as well to be updated on where the government has got to in negotiating with the Chinese owners. I think it's tragic that we haven't had a deal with the Chinese owners and maybe the Chinese fault. I understand that there are two sides in any negotiation, but 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 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 have made if you'd carried out your closure, that the state would take on the land and buildings in the state they were in, probably with many environmental obligations and costs of clean up. And that would have been another relief for the Chinese authorities, the company, because otherwise they could be liable for having to clean up the site after they had closed it. And in return, the government should have said, you definitely keep all the debts you've 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, but that I think was sort of shape of a deal that one might have been talking about. Now, I believe. According to press comment, the government's been thinking about 100 million of compensation for the liabilities it's absorbing in order to also obtain the plant and the land in its in its current state. And we read in the press that the Chinese say, no, they want a billion for this.

This transfer of the the freehold and the shares, which would seem to me to be extremely excessive in the circumstances, and I would fully support the government pushing back very hard on that and, if necessary, defending themselves in court if they can't get a deal. But it would be in everybody's interest if a deal could be reached and it would be helped to get to that deal. 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, because that would also help create a mood for the negotiations with the Chinese, because I fear that business plan, certainly for the last year and probably for the next year or so, would produce an awful lot of red ink.

And 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, because they've presided over a heavily loss making business, and they were unable to find a way to make it work. So they were actually thinking of incurring massive costs of closure as the the alternative to carry on with a very high rate of losses. Now, like all the other speakers in this debate, I too think we want a proud steel industry again in Britain, as we were used to having over many decades.

And I also myself think that there is a case for keeping a virgin steel manufacture capability, as well as a lot of electric arc recycling steel capability, and that would require a study of how much longer one could carry on with these two blast furnaces, which the state is probably about to own quite, quite soon. And 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.

But that would perhaps be a better option than having to think about how you found an investor to want to establish new virgin steelmaking capability in our country. And what is very clear in the wider debate of the Minister and the shadow Ministers opening remarks, is that we're not going to have that opportunity of inward investment or domestically financed investment, or the city financing through private equity or new equity issued through the AIM market or whatever, a steel making capability in this country all the time.

Our energy prices are sky high, and we've heard unfavourable comparisons in a previous good speech compared with European competitors. But of course, they are not the main threat. And Asia and America has energy prices considerably lower. And 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, their electricity prices are one quarter of the prices that industry in Britain has to pay before any subsidy to the government is following a bizarre policy towards energy, because it puts on massive carbon and emissions taxes.

It puts on all sorts of other taxes. If we dare to produce any of the energy ourselves or otherwise, we have to pay other people's heavy oil and gas taxes as we import so much. And then it realises that produces energy prices that mean the loss of jobs, the mass closure of industry. And we've seen refineries go and we've seen bits of the oil industry go, and we've seen petrochemicals go, and we've seen a lot of our steel industry go and a lot of our ceramics industry.

So then it says, well, 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 don't give enough back in subsidy to make the businesses competitive. So they soon so they still close. And you're left with a situation where you're de industrialising so that your import bill for goods goes through the roof.

Your import bill for energy goes through the roof because of the bad mistakes made in the energy policy. And that is why the UK is struggling so much. So please, Ministers, for your own sakes, do some sums, find some numbers, work out what the business case is going to look like. Interrogate your managers. Find out what you need to do to help them to sell more steel. Because unless you can sell more Scunthorpe Steel, it's no point in pumping money in.

You won't end up saving the jobs. And please tell your workforce whether you're serious about saving these jobs and you really want to carry on with blast furnaces, or whether your net zero preoccupations means that

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their jobs are doomed anyway. Interesting. My Lords, I congratulate my

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My Lords, I congratulate my noble friend Lord Leong, both on his ministerial appointment and for his ministerial appointment and for his opening speech, and give full support to the government for doing its best to protect and modernise a strategic industry, an industry
18:17
Baroness Donaghy Portrait Baroness Donaghy (Labour)
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strategic industry, an industry that suffered from past failures to adapt and from short termism and lack of courage by successive governments. It wasn't the workers who let the side down, or the communities who depended on them. 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 still soldiering on. As I said, 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 U. S a 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. And we could compare that with the Chinese state aid and anti-competitive practices.

We could score points on all of these things together with overcapacity, cost and 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 at Committee stage. This bill is a signal that the government is ready to take action if it is in the public interest to do so, because 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? Well, I accept the explanation that we cannot forecast the circumstances, whether it will be defence or 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? As Lord Bilimoria has asked, quite understandably, given his connections with the Indian industries. Included in this must be where a steel company attempts to take a decision which might have a detrimental national implication, whatever the name of the company.

In my view, I do not believe any Minister would choose to be in this position today. There are no guarantees of success and no political kudos. It's about taking tough decisions to keep a national lifeline and try to protect our future security. The government recognise that blast furnace production will need to continue in the immediate future, and I'm sure it welcomes the remarks by the previous speaker, Lord Redwood, on that. And a managed transition is vital to monitoring supply.

It accepts the need for public and private investment to modernise. That has been repeated several times in the debate. In the other place, opponents of the bill have cited the cost of employees and energy costs. Now, workers in the UK earn an average of 4000 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 would 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 competitive scheme is being developed as part of the UK's industrial strategy, and could save a substantial amount in energy costs, but it's not due to be launched until April next year. Is there any chance that this could be brought forward? I would like to ask the noble Lord, the Minister, if he has 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 a 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 needs to have the ability to respond quickly and effectively, and I commend the Bill to the House. Thank you.

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My Lords. I congratulate the noble Lord, the Minister, on his promotion and thank him for his promotion and thank him for his very clear opening statement. My Lords, the problem we've got today is that we're looking at a bill is that we're looking at a bill which is important in its own right, but it's really only one part, obviously, of a much bigger problem, obviously, of a much bigger problem, which is can we sustain a steel industry at all in this country,
18:23
Lord Frost Portrait Lord Frost (Non-affiliated)
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industry at all in this country, and if so, how? Now, I'm not quite such a fan of the government's March steel strategy as the noble Lord the Minister is. And 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. Now. I do sympathise with the government's difficulties, even though they are in part at least not wholly self-generated, and even somebody as economically liberal as me recognises, we're hardly operating in a free market environment in this area, and some sort of government sort of steering hand is is needed.

We all have an interest in maintaining a viable steel industry in Britain. After all, it's the design that's crucial. So I want to set out three contextual problems, if you like, before talking about how we might find a way forward here. The first problem is one that's been alluded to before, the fact that there isn't any 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 and so forth that has spread across the industrialised world.

And there's no sign that's going to change anytime soon. And in that context, I do understand the government's resort to tariffs. I certainly don't like them, but I think it's unreasonable to exclude them as a weapon. I do think there could be better targeted on particular kinds of steel. Stronger rules of origin, perhaps bigger trqs for reliable suppliers. And I wonder maybe the the noble Lord, the Minister could say whether the government has considered this or might consider it in the future as a way of reducing the downstream effect on our own producers.

Second problem is the need for resilience and the national security issues that go with that. And 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 tons of steel a year. It's going up slightly. Domestic production is about 30% of that, and the government says it wants to go up to 50%. It's never going to be 100%. So sovereign capacity doesn't mean producing everything you consume.

It's about having and defining the capabilities you can't afford to lose. And the supply chains that you can't afford to defend to depend on. And I think my, my assessment, others will have different views. My view is that the main capabilities we should be focusing on are the defence grade plate forging, specialist alloys that are made in Sheffield broadly, and the government is committing to that, stockpiling reliable contracts for the upstream supply chains and other parts of this.

And then third, rail critical infrastructure products currently made at Scunthorpe. But Unprofitably now the first of those three categories is largely state guided and in part state owned. The second stockpiling. The government has said nothing at all about this, and on the third on Scunthorpe, the government hasn't, I don't think, really been clear about what the national security or resilient case for keeping Scunthorpe going really is. The noble Lord. The Minister mentioned that it was about maintaining the ability to produce steel from scratch, from raw iron, but of course an EAF plant with a dry plant can do that as well, and that may well be the direction of travel is not in some particular resilience in the upstream supply chain either.

We no longer make coking coal after all 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 if this is the intention, the new electric arc furnace facilities are built at Scunthorpe and I don't know whether this is the government's case or you know, what mix of these things really is. The government's thinking on Scunthorpe and perhaps again, the noble Lord, the Minister could give us a bit more detail on that third problem.

If we are envisaging a modernised steel industry of some kind in this country and the capacity of specific types for specific purposes, can can we can it be done profitably over the long term? Is it viable now? I think our answer to that is it can we can see it done in the US, in the mini mill industry and indeed elsewhere in Turkey, for example, has a profitable steel industry based on EAF plants. Now maybe this points to a UK model that is something like specialist capability for defence in Sheffield, 2 or 3 EAF clusters, perhaps including Scunthorpe, and this question of a dry plant which is touched on in the government's strategy, but.

But

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not really brought to A conclusion now perhaps, I

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A conclusion now perhaps, I don't know. We could all agree Is how do you get there as a destination? It depends on a cost and a business environment that currently doesn't exist. Electricity is super expensive and getting worse. The business environment is poor and getting environment is poor and getting worse. And as a transition it involves encouraging somehow investment into this poor business environment or else the government coming up with the money itself. And this is why we have the problem that this bill encapsulates.

We're heading for a destination that's probably unviable, however desirable it may be in current conditions without massive government help. And this is the problem with rushing to nationalise Scunthorpe without thinking it through properly. So where does this leave us? I think in the circumstances there clearly is a case for temporary nationalisation of Scunthorpe on certain conditions, temporary public ownership may be justified and we wait to hear from the noble Lord, the Minister, on this, because closure might remove the UK's primary iron capability overnight, with no clear succession plan.

But the problem is, as we know, nationalisation always sets up terrible, perverse incentives and poor management, and that's why Temporariness is really important. There must be a way out, there must be a viable end point, and I think it is reasonable to ask for something clearer on these conditions if we're going to proceed satisfactorily and I give notice, I'll probably put down some amendments to this effect. We need three things. I think 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. And without this, Scunthorpe just risks becoming British Leyland's permanent loss making ward of the state, where all the incentives are just to put in more money and hope things turn up better, impossible to close and impossible to fix either. Second condition for a viable industry and unfortunately it's very far from being fulfilled, is electricity and energy prices and a business environment that support a viable industry.

And we know the problem with with electricity prices. And it's it is has been said that the British Industrial Competitiveness Scheme exists and will hold down those prices. But of course, it is only cross-subsidy itself. And 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? I do think there is a real problem here with the strategy.

And it's not just me that's saying this. Plenty of people are saying it. Dieter Helm, who is a pretty neutral commentator on this, this subject and certainly has supported net zero in the past. I wrote and I quote what he wrote on the 3rd of June, the industrial consequences of the government's energy policy have been dire. High electricity prices have contributed to the closure of Grangemouth, the closure of 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, severe problems for pottery and glass making, car manufacturing back to 1950s levels.

There's devastation amongst SMEs. Unfunded welfare spending has increased. The cost of capital, energy policy has reduced economic growth, not increased it. And that is the problem. We are building a steel industry. We hope, into that environment, and it's not clear to me how it is going to survive in those those circumstances. So to conclude, my Lords, I think the third thing we need is a proper strategy for the industry as a whole and not we need a plan for Scunthorpe, but we need something broader.

What is the end point? Is there going to be a dairy plant or not? Does the government recognise the need for stockpiling of hard to source EAF kit and scrap? Does it need. Does it recognise the need for strategic stockpiles of defence rate billets H, B, I and so on and so forth. And the problem we have to return to where we started is that the. The March strategy only covers about half the ground. It is. Commits on Port Talbot funding.

It commits on expanding Forgemasters, and it commits on 1 or 2 other things, but it is unclear on Scunthorpe. Subject before us today is non-committal on dry is silent on stockpiling. It says very little or nothing about whether the future industry can be expanded further. If we need to upgrade our defence effort. And above all, it doesn't tell us what the hierarchy of objectives is. What 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? This.

This needs to be clear. If it is a strategy. So I would like to think the the March strategy is just interim. I don't know, but perhaps the Minister could say whether any thinking has been done on this broader approach and whether a broader strategy is needed. My Lords, Britain isn't going to get back to a world of free trade in steel. It's not going to appear any time soon, but it can have a steel industry that's smaller, smarter, sovereign, and 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 that is capable of strategizing for industries and running them, and history suggests governments are not very good at those things. So I think we're right to be skeptical about the approach. We're right to ask for more information. And perhaps in winding up the noble Lord, the Minister could start giving us some of that.
18:36
Baroness Noakes Portrait Baroness Noakes (Conservative)
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My Lord. So when the government >> My Lord. So when the government took powers to take control of British Steel's operations last year, they were clear that they had 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 the socialist adventure will cost British taxpayers. The impact assessment is very long on words and 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 already said today. Like all British businesses, high unemployment costs and taxes are an issue. But it's the ruinous level of the cost of electricity, which 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 very much worse.

Industrial electricity prices are amongst the highest in the Western world, as we have already heard, and the reliefs already announced but not yet enacted, barely scratched the surface of the problem. This is where the government's attention should be. Not this bill. My Lords, 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 absolutely 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 which were political rather than economic, and trade unions typically called many of the shots and prioritise job protection over commercial success. The result was massive inefficiency, which only privatisation could unlock. Now one of the biggest problems that face nationalised industries in the past, and will surely face British Steel if it is nationalised, is financial pressure from the Treasury.

Nationalised industries are rightly classified to the public sector, and so their borrowing scores as public sector debt. It does not matter whether the debt is provided via the Treasury or whether it is borrowed from the market. It is all public sector debt and 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 are unlikely simply to nod in approval. My Lords, 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, and 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 great, great, make great play of basing this bill on legislation decided, designed to deal with the fallout from the 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 winding down the rest of it, its use as a precedent for the nationalisation of British steel is a category error. Now, the 2008 Banking Special Provisions Act lasted for only one year, and it allowed the government to deal with a very small number of failures, like northern Rock, which could not find a private sector buyer.

The 2009 Banking Act, which set up a permanent resolution regime for failing banks and building societies, has only been used once, and that was for a very small building society. I cannot think of a less suitable legislative foundation for a nationalised industry. My Lords, 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, and if that is the case, a completely different bill is needed to give the government the correct powers and levers.

Now, if the government do intend state ownership to be temporary, which I would applaud that 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.

My Lords, I was pretty shocked by the lack of financial analysis accompanying the Bill, and 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 exercised the power to acquire it under this bill? And 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?
18:44
Lord Murphy of Torfaen Portrait Lord Murphy of Torfaen (Labour)
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Thank you. Can I begin by congratulating my noble friend Lord congratulating my noble friend Lord Lyon on his debut in this debate? And it was a very good one as well. And it was a very good one as well. And we look forward to similar contributions in the future. I contributions in the future. I welcome the bill. I welcome it because, first of all, there's been a 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.

And that's very important. Starter. How we do it, I suspect, will be the cause of lots of debates in committee and Report stage. But it's vital to our construction, to our defence, to our engineering is vital because of the uncertain world that we now live in, a world of tariffs and of wars, and of presidents who are unpredictable and dictators all around the world. And unless we have our own steel industry and the G7 meets as we debate this in Evian, each of those countries around that table have their own steel industry.

But it's also vital, and it hasn't been touched upon too much in this debate so far. But I will on the significance of the communities around the steel industry, and you would expect a Welshman to refer to the Welsh steel industry as part of our life in Wales. It's in our blood. I come from a family of miners and steelworkers. I represented a constituency in the other place, which was a steel making constituency in Blaenavon. The Gilchrist Thomas process was invented, which transformed steelmaking in the 19th century.

I had in the constituency a stainless steel work which for generations, which was hugely important to our communities. And 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, and the impact of that closure in a one industry town was devastating. And that is why, in terms of British Steel and Scunthorpe, it's not simply about the significance of keeping our steel industry, but ensuring that our communities are healthy and intact.

And I'd like to point to the to the House that, of course, we are only talking about approximately half of steel making coming from British Steel. The other half comes from Wales and from an industry which is not nationalised. And in the great Port Talbot steelworks, which is now changing over from the blast furnaces to electric arc furnaces in that particular steelworks, the. The whole of the steelmaking capacity of Tata in Wales is where steel is produced.

And it's quite interesting that in this 50% of steelmaking, the industry is not nationalised. It's a work in partnership between. On the one hand, the government, by which I £1.3 billion was to be invested in Port Talbot. £500 million of that came from the then conservative government. This government has honoured it and indeed has gone further by giving about £120 million to retraining, and also by ensuring that procurement rules have changed so that British companies must use British Steel.

And to that end, 5000 jobs are to be maintained in Port Talbot. So as welcome as this bill is, we have to see it in the context. It's not the only part of the picture, it's only half of it. But the questions I'd like to ask my noble friend, the Minister regard is regarding Port Talbot, which this month suffered a severe fire on its site and is undergoing some difficulties with regard to that, but also that there are problems with the supply of electricity.

And I very much take the points that have been made regarding the cost of electricity. I think that is hugely important. We can't ignore it. As a Labour government. We have to look at it very seriously. And secondly, there are planning issues which 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 obviously with the new Welsh Government as well. I think 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. Not easy, no easy solution to it. But this is at least a start. It's the right thing to do. And it's the British thing to do.
18:50
Lord Sikka Portrait Lord Sikka (Labour)
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My Lords, this enabling bill >> My Lords, this enabling bill paves the way for possible nationalisation of steel companies, nationalisation of steel companies, with particular emphasis on British Steel, currently owned by the China based Jingzhi Group. This nationalisation may or may not happen. We've got to wait and see. The bill allows 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 that would actually satisfy the public interest test, and possibly enable us to discuss maybe public ownership of other industries as well. The minister's explanation would help to dissolve uncertainty for workers, suppliers and local communities. Prolonged prolonged delay in nationalisation would actually increase the cost of public purse. Since April 2025, the government has already been incurring significant costs to keep the Scunthorpe plant going.

Our support the public ownership of steel as it is a crucial input for so many industries. The. The Scunthorpe plant is the last UK plant producing virgin steel, which is essential for construction of buildings, railways and critical hardware like submarine hulls and aircraft landing gear. Lots of the plant will leave the UK as the only G7 country without the capacity to produce virgin steel. A large number of direct and indirect direct jobs depend on the plant nationalisation and expansion of the steel industry would help with our to to expand our industrial base.

The bill actually raises lots of questions about the government's strategy. It is rescuing England based British Steel, but allow the Port Talbot blast furnaces in Wales to be extinguished. People in Scotland still haven't forgotten the government's failure to rescue the Grangemouth refinery. Can the Minister answer the charge of being England centric? Can the Minister assure the House that once the Scunthorpe plant is nationalised, it would not be reprivatised by a Labour government? This bill also throws up other inconsistencies in the government 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 is prioritising corporate interests over the lives of the people? Part two 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 and is finding very, very difficult to survive and its assets probably don't have any alternative use value? Chances are that any compensation offered for it would need to be fairly low.

Any framework for compensation must recoup around £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 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 would insist that Jingye make 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 national nationalisation and its impact on the national debt. That is really a one sided argument because through nationalisation, governments also acquire assets of the enterprise in question. They enhance economic resilience and improve supply chain security. The tendency of the owners is to show 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 assets are completely ignored.

That practice needs to change. If changed, the ONS calculation must net off. Nationalised British Steel 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 actually be changed? The high cost of energy is a major obstacle, as many noble Lords have already indicated, it puts steelmaking and other industries at a competitive disadvantage. The high cost is an issue all across our households as well.

We knew in April the government extended what it called a British industrial Competitiveness scheme, which reduces energy bills by about 25% for 10,000 companies being deemed to be heavy users of energy. That scheme kicks off in April 2027, though discounts would be backdated to to 2026. This 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 steelmaking and British industry requires permanent reform of energy costs that would require decoupling of the price of gas produced electricity from the rest, moving all levies to general taxation and cuts in profit margins of energy companies. This, in turn, would require scrutiny of the way off. Gem calculates weighted average cost of capital and all the assumptions that are used to generate those numbers. Noble Lords are earlier mentioned. Many countries which have a competitive advantage in energy production countries such as France, Norway, Sweden, Denmark, Germany, India, China were mentioned.

What they did not mention was that in these countries, a significant part of the 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 and therefore offer their industry a competitive advantage and also lower rates of inflation. So public ownership of the of energy must not be a taboo for the UK. It could give the government more economic policy options and help to address competitiveness of our industries.

I'll look forward to hearing the Minister's replies.
18:59
Baroness Redfern Portrait Baroness Redfern (Conservative)
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Thank you for allowing me to speak in the gap. And may I speak in the gap. And may I congratulate the noble Lord, the Minister, on his appointment and Minister, on his appointment and his opening statement as negotiations to involve two resolve are still being negotiated. The Bill does not immediately nationalise until public ownership test is met. But years of underinvestment in our steel industry has resulted in being neglected for investment, and uncertainty lingers for many skills. Scunthorpe steel workers and those employed in the supply chain when only last year the house was recalled last April for emergency state intervention, whilst 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 of the last blast furnaces going cold, and has since then cost the government over 1.3 million every day to keep the furnaces running for the future to sustain steelmaking.

To continue in Scunthorpe will be through transition to two new electric arc furnaces, but will take several years due to limited preparation, including secure grid connection. So the question posed is how will government secure the stability for the plant be achieved in the short to medium term for steel having to compete on an unfair level playing field with 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.

With ongoing support of the steel business, government must ensure that Bess and Ann 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 did, as I said earlier last April. But they need further investment now. These are initial concerns surrounding the scale of the UK carbon border adjustment mechanism. While we are still importing nearly 770% of our steel requirements, this too must be reduced for procurement and to look how future UK contracts are managed.

We must not and cannot be the only G7 nation without the ability to make primary virgin steel. And we must not forget that steel provides vital material for our national infrastructure and economic growth, from defence to renewable energy, including supporting our highly skilled specialist workers who work in the production of our own steel making. As government puts forward this proposal to nationalise a steel company in the short term, it can make its own decisions and, for the future may have the opportunity to include new investors or new owners.

Above all, my Lords, all our steel sector needs certainty for our dedicated workforce and contractors and for future investments for our industry stretching across the country. The future has to be UK steel first for our prosperity. Thank you.
19:02
Lord Wigley Portrait Lord Wigley (Plaid Cymru)
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My Lords. May I very briefly in the gap. Flag up my support and the gap. Flag up my support and that of Clyde for the Bill. In its general objectives, though we have reservations on some of the detail reservations on some of the detail which I hope I can pursue at a later stages. May I also wish the later stages. May I also wish the Minister very well in his new duties. My Lords, before entering Parliament, I worked for two major steel companies Ford Motor Company at Dagenham and Hoover.

Washing machines at Merthyr Tydfil. Steel was a basic ingredient of both products and 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, the denationalisation, the renationalisation and then, in the 80s, the privatisation of steel hardly conducive to attracting the investment needed to modernise that industry.

And at that time, as now, steel had a strategic importance in terms of defence policy. And that surely is the real backdrop to this Bill. I accept that the UK requires, for defence purposes, a steel industry which is not vulnerable to commercial or strategic decisions taken by overseas industrialists or governments, or the whims of financial markets. And if steel has that level of strategic importance, then all the eggs should not be in one basket. We need 2 or 3 centres at least, where the capacity, technology and skills are available and which are not vulnerable to being undermined by physical or cyber attacks.

It is in that context that I view this bill that's before us today, and I have in mind the implications for iron and steel manufacture at Port Talbot. The main reservations which Plaid Cymru has about the bill is whether or not the 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 now, 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 which I seek is that this Bill is not the prelude to building up Scunthorpe at the expense of Port Talbot. I will clearly seek to clarify whether the public interest test applies equally to Port Talbot, as it does to 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 Warren should be developed appropriately. A diversity of capacity, technology and experience is needed to ensure a steel industry which responds to commercial and strategic needs. We may also want to probe at later stages as to how the public interest is defined. Defence and strategic considerations are clearly within such 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 noble Lord the Minister can give me, and I look forward to his response.
19:06
Lord Fox Portrait Lord Fox (Liberal Democrat)
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I would like to join the chorus >> I would like to join the chorus welcoming the noble Lord Leon to his new ministerial role. Not only has he got the new role, but he's has he got the new role, but he's got it in time to steward this bill through your Lordships House and indeed the Commercial Payments Bill indeed the Commercial Payments Bill as well. What a what a time to be alive, my Lords, as as we've heard around Easter 2005, the government pressed the emergency button, pulled us into Parliament on a Saturday and as a result acquired the powers to make decisions regarding the Scunthorpe blast furnaces and avoid its owners running it down.

Subsequent events supported the government's haste in that movement. In order to avoid this bill becoming a hybrid Bill, it carefully avoids Scunthorpe, but I very much doubt that we would have been having this Bill were Scunthorpe, not an issue. So it sits there like Banquo's ghost and clearly the government is is having to press buttons in order to take control from the Chinese owners. My Lords, so you don't have to. I reread my speech of last year and to be honest, I could have copied and pasted some of some of the some of the large parts of it.

On the Saturday debate, I noted that the steel industry's problems did not start a couple of years ago. They are systemic and have been there for a long time. And in that regard, I noted the hubris of the conservative spokespeople and the noble Lord hunt did not let me down today, that we. There are huge responsibilities that go back a long way on this industry. It isn't two years work. I asked how steel fits into the carbon emissions route to net zero.

I questioned the path to an electric arc conversion, and in giving support for that bill, I said that there needed to be an overarching steel strategy. Well, we've reached the privatisation stage and to be honest, I'm quite surprised it's it's taken that long. The plant, the the Scunthorpe plant's been haemorrhaging public money for over a year. And the government has clearly been arm wrestling with the owners since 2025. The government published a steel strategy which has billions of pounds attached to it.

So in this context, this bill is part of a very high stakes exercise that the government is seeking to run. And so it is important that there is sufficient scrutiny, both in your Lordships House and in the other end, on every move that follows this Bill, should it be passed. Now, I'm going to use this speech just to set the scene. And there are four broad issues of concern, and we've heard lots of them in different ways national security, economic resilience, modernisation, and of course, jobs and communities.

The justification for protecting the steel industry has always been that it is a strategic asset, not least it supports defence, critical infrastructure, wider national resilience and of course, 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 as as a result. Now, clearly the proponents the frame this bill as protecting the country's ability to make essential materials at home.

And it turns on the question of sovereignty and readiness. And my Lords, living in the world we live in now, Liberal Democrats side with this sovereignty argument. The going on the world market is no longer a safe option to take us forward. But I would remind your Lordships that none of what we discussed today can be taken in isolation of 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.

Now I'm going to talk about the first two and leave energy costs for another day. Clearly, that's not because they're not important, it's because they don't directly relate to to this bill. Now, on the subject of tariffs, I thank the Minister for his letter clarifying some of some of the issues, but I would question the spirit of his reply, which seems to say that everything is OK in terms of the way the tariffs are going to be pitched. The word from steel users is that it most certainly is not.

We're being told that the measures due to come in force just two weeks away, the 1st of July, are, or are likely to have a materially damaging impact on downstream manufacturers, with immediate implications, of course, for competitiveness, competitiveness, investment and jobs for steel users where there's no direct domestic sourcing alternatives, materials must be imported. However, we are being told that the current commodity code structure is too broad and really reflecting some of the issues that the noble Lord Frost reflected to in his speech.

There seems to be a need for a more subtle coding process in the focusing of tariffs because as a result, if essential items that cannot be domestically sourced are captured within the tariff regime, this is going to have a dire effect on on, on the industrial users. And 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 and with no ability to substitute domestic products if they're not being made.

The Department for Business and Trade has received proposals from the industry, I think, to remove certain commodity codes or move certain commodity codes, make amendments on quota sources and utilise authorised use schemes. And I would urge the Minister to both to respond to this and to go back to the Department and make sure that it is fully cooperating with different elements of the supply chain in order to make sure the unintended consequence, and I believe it's an unintended consequence, does does not come back.

Now, of course, most of the steel that is imported is coming from the EU, and negotiations between the UK government and the European Union, therefore, are critical on this element. If those negotiations reach successful fulfilment, then many elements that are causing problems around tariffs will be eliminated. But of course, we're homing in on a very tight corner here, because the 1st of July, as I've already pointed out, is two weeks away. And we may have a period where we've got an interim period between agreement with the EU and the implementation of of these tariffs.

So I think it would be useful to hear from the Minister how the timing and phasing of these could be achieved and whether putting relief in for a further period until such time as the EU negotiations are concluded, would be a better way of giving some certainty for our business, our businesses. We will, of course, be coming back to this committee, but that'll be another week gone. So I think it'll be important to find out where you're going. Fundamentally, and this is obvious, but I do want to make the point.

It's not the manufacturer of steel that is strategic. It's its use. And a ring fencing steel production using tariffs. If that then creates higher costs for our businesses. We're we're missing the point because it's the use. It's how we make stuff that is actually important. And we don't just need a secure industry that produces strategic materials. We need it to be cost effective. And that's one element, of course, of the economic resilience point. The government has said that its actions are meant to avoid a sudden halt in production and provide stability, while longer, longer term options are considered.

My Lords, the nub of this statement is what are the number, the longer term options? And although we have a steel strategy, I think there is an awful lot of work for the government to do to flesh out how it what it sees as the future of our industry, and I could a key element of that is whether or not it sees Scunthorpe continuing to have blast furnaces or converting to electric arc, and that was brought by by by the lady speaking just just just now.

Now I we've had some discussion in the past, the Minister and I, about the Substitutability and whether there is a strategic need to keep blast furnace capacity to keep virgin iron production in the United Kingdom. And I would like to hear from from the despatch box that if we are going to go to an all electric arc provision within the United Kingdom, that we will be able to maintain all of those strategic needs of for steel in this country.

As it stands now, not some future provision where electric arc can be honed and tuned. Can we now, with the knowledge we have, now deliver the steel that we want? So. So move. Moving on. The aim is to make the industry investable and. And really, I'd like the Minister to to engage a little to explain on how this is achieved. For example, every location will come with huge environmental legacy. And ultimately there will need to be remediation. And usually it is the owners of those businesses who have to fund that remediation.

Every location has important pensions commitments. The bill appears to deal with pensions liability, I think only indirectly, and I presume that once taken into public ownership, Ministers will have to manage the company's wider obligations, including pensions, through the rescue or transfer process. So perhaps the Minister can expand on that. But both these factors affect Investability. Can the Minister specifically explain its attitude in any nationalisation to environmental and pension liabilities when it comes to looking for investors? Will subsequent investors in the nationalised steel have have the opportunity to invest clean of past liabilities, or will they be investing in a business that retains those those liabilities? Again, I think this will be a topic I will pursue in committee.

The government has said that its aim is not just to preserve the status quo, but to create a modern, competitive steel sector. And once again, this legislation is merely a route to explore future options. It's still it's still not the final answer. The government is rightly, rightfully emphasised the importance of steel plants for jobs and communities. My Lords, nationalisation could preserve many of these jobs. But does the Minister recognise that when it comes to creating that modern, competitive, investable steel sector, there may well be fewer jobs going forward in in in the future? So how will the government move to prepare now in those communities so that they can be made stronger and be able to absorb any changes that happen to the employment patterns in their area? The other important part of this bill is the inclusion of the public interest test.

And the noble Lord did my work for me in terms of laying out some of the puts and takes that that go into into that. But the point that I have is that there will be tension between the real value of of Scunthorpe, whether it's a positive or a negative value. And our relations with the Chinese government. So in that case, how does the balance of interest of public interest actually lie? How does the government view this? My Lords, 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 that could very well leave taxpayers exposed to huge costs and liabilities. That vagueness means it's unclear how it will actually protect jobs and what the steel future will look like. Because of this, my colleagues in the Commons tabled amendments seeking to give Parliament more oversight into the developing stages of this paving legislation. We agree that it's important to get on with this, but only with the necessary parliamentary controls, and we will be tabling those those amendments.

And as a final passing point, really echoing the point that Lord Bilimoria and and Lord Wigley said not nothing about this bill should be used to put Tata and Port Talbot in an unfair disadvantage as the transformation, as their transformation reaches fruition. To conclude, in practice, the UK steel strategy success will depend on whether the prevailing energy costs. The implementation of 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.

This is a huge task and I think we have to work very closely together in order to achieve it. It is a mission that we want to succeed, and we support this bill with some provisions, and I look forward to grand Committee.

**** Possible New Speaker ****

My Lords, can I join in the general approval of the Ministers promotion? I wish him well, and I'm delighted to face off against somebody who's got considerable business experience. I'm also business experience. I'm also grateful to all noble Lords who have contributed to this important debate. It's always a pleasure to follow the noble Lord, Lord Fox, follow the noble Lord, Lord Fox, who, of course, when he was talking about hubris, was slightly selective in his times. I think the
19:21
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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selective in his times. I think the steel industry has had systemic issues for a couple of decades. And there was a Liberal Democrat business secretary, I think, for at least five of those years. However, apart from that, I agreed with much of what he said, and there was also a great deal of agreement in the House about the strategic importance generally of steel, which is welcome, and British Steel, of course, which matters to Scunthorpe, to jobs, to rail, to construction, to manufacturing, to defence and generally to our national resilience, as many others have noticed.

Nor do we 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 this debate, and it's not really whether steel matters, it's whether nationalisation is the serious strategy, a serious strategy for making British Steel viable. On that question, the government have still not provided convincing answers. As my noble friend Baroness Noakes noted, nationalisation, we were told, was not the government's original plan.

So when the Emergency Special Steel Industry Special Measures legislation was brought before Parliament last year, the then Secretary of State, Jonathan Reynolds, told the Commons that the Bill, and I quote, does not transfer ownership to the government, end quote. He said that the government's aspiration remained a co-investment agreement with the private sector sector partner to secure a long term transformation. Now, I have absolutely no doubt that the Minister will say that private investment remains the goal and indeed the Minister in the other place, Chris MacDonald, also said as much in a written statement on the 14th of July.

But where is the plan to achieve that? Where is the timetable? Where is the private partner? Where is the route back to commercial viability? Now? The noble Lady, Baroness 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. My Lords, the fact is, in the 1970s, when the Labour government last ran British Steel, the taxpayer was forced to carry staggering losses. And we do worry that the danger is now that we repeat the same mistake, not by solving the underlying problem, but by moving it from the company's balance sheet to the public balance sheet.

The central barrier is not ownership. The central barrier is competitiveness. I think every speaker in this debate has referred to high energy costs. It is the cost now of doing business more generally in Britain. It's the regulatory and taxation environment that makes heavy industry harder here than it is in competitive 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.

My Lords, I can't 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, cutting taxes, abolishing the UK carbon border adjustment mechanism and giving energy intensive industries a fighting chance, the government seems preoccupied with regulating ever more aspects of economic life, from factories to household heating products. My Lords, we recognise that there has been a long standing and serious problem with Jingyi. We also recognise that there may now be legal proceedings, and I do not ask the Minister to prejudice the government's position in litigation, but there are matters in which the House is entitled to clarity.

So could I please ask the Minister? Can he confirm whether Jingyi has asserted that from the date on which the government assumed control of British Steel on the 12th of April 2025, neither Jingyi nor any company in the Jingyi group has any continuing obligation to British Steel. Can the Minister confirm whether Jingyi intends to disaggregate British Steel from Jingyi Steel UK limited 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? My Lords, if British Steel is continuing continuing to trade only because the government, directly or indirectly is underpinning its working capital, does the Minister accept that this raises very serious questions about the public accounts, treatment of the support that has been advanced since 2020 5th April 2025? Does it still make sense to treat that support as recoverable debt if the company cannot pay it without further taxpayer support? Does 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 also address the reported Inter-company debt position? Jingye has been reported as quantifying outstanding British Steel debt to different jingye counterparties 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 12th April 2025, losing the prospect of clawing back earlier support and taking responsibility for future liabilities, including eventual decommissioning of the blast furnaces. And, my Lords, the noble Lord. The Minister, when opening, talked about the premature closure of the blast furnaces which or the Special Industrial Industry Steel Act was supposed to prevent.

Has the government commissioned a study of how much life these blast furnaces have left in them? And I think it's important to ask that question and to know the answer, because, of course, that is going to have a material impact on the decommissioning costs when and as and when they arise. My Lords, 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 £15 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? And if that figure is wrong, will the Minister set out the government's current estimate of the total cost to the taxpayer, including any any liabilities that may come onto the government balance sheet on day one of nationalisation? I have to say as well to the noble Lord, Lord, that if he thinks the assets which are a couple of 70 year old blast furnaces are likely to offset the liabilities. I've got a couple of hats I'll eat, my Lord, as my noble friend Lord hunt of the 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, modernize production, support new technology and crowd in private investment.

Yet there's 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, to lower energy costs, to support new technology and to bring in private capital, may instead be used simply to keep one loss making business afloat. And that leads to the question which has been asked repeatedly in this debate where does this end? Will British Steel, under public ownership, be eventually expected 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 when he considers it necessary in the public interest, and I do think that there were some very good questions asked by the noble Lord, Lord speaker, and the noble Lord, Lord Fox, on what is the public interest and how it's defined.

Looking forward to the noble Lord. The minister's answers on those. Now the government says that the 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, and will the government be required to show that they have made every reasonable effort to secure private sector investment before nationalisation proceeds? My Lords, it was an uncomfortable and indeed somewhat ironic to witness that representatives of the Chinese ownership and indeed the Chinese Communist Party lecturing the United Kingdom about abiding by market principles.

Although I do note that the noble Lady, Baroness Donaghy, pointed out to the irony of that as well. But the fact is that the government must still consider the signal that they are sending to international investors if Ministers seize control and 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 considering committing capital to the strategic industry here? My Lords, 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 of 2025. Now, I know that Ministers are tired of hearing about it, but we're not going to stop raising it because it is helping to make the business environment less competitive and less investable. 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 they claim to want to support.

So for a steel sector that's already operating under intense global pressure, those additional costs are not abstract. They affect hiring, investment margins, productivity and the ability of British steelmakers 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's 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.

So 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 had 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 and the burdens of the Employment Rights Act, and, of course, 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, and nationalisation does not make any of those problems disappear. So in closing, can I ask the Minister to answer the central question 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 and what specific measures will the government take to reduce the costs that made British Steel uncompetitive in the first place? My Lords, 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. So 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. Hey, hey.
19:33
Lord Leong Portrait Lord Leong (Labour)
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My Lords. >> Let me begin by thanking all noble Lords who have contributed to this excellent, thoughtful and wide ranging debate and also for their very kind messages on my appointment. My Lords, I was trying appointment. My Lords, I was trying to count the number of questions asked, but I gave up after 45. So I will try to respond to as many noble Lords as possible within my allocated time. If I'm unable to address every point of this, especially some relating to costs and technical issues, I will ask my officials to review Hansard carefully, right noble Lords accordingly, and place copies of those responses in the library of the House.

My Lords, the quality of the debate in your Lordships House is often remarked upon, and today's proceedings have once again demonstrated the immense expertise, experience and commitment members bring to issues of national importance. There have been contributions from all from across the House and from all sides of. The debate was there may be differences of opinion about the means. I believe there is remarkable degree of consensus

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about the end, namely, that the United Kingdom Should continue to have a strong

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Should continue to have a strong and sustainable steel industry. That consensus matter. My Lords, many noble Lords spoke of the challenges facing the sector and government recognises those challenges. These challenges are real and significant. They are unlikely to disappear in the unlikely to disappear in the foreseeable future. As my right hon. Friend the Secretary of State has made clear, we are determined to revitalise the UK steel sector, restore domestic production to sustainable levels and ensure a 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, it means modernising production, and it means also creating the conditions for competitive and sustainable industry. And it means ensuring that government has the tools necessary to act when strategic, importance steelmaking capability is at risk. And it is about ensuring the future generations continue to benefit from the British steel industry, capable of supporting our economy and security. My Lord, let me address the question posed by the noble Lord Sharpe.

First, with regards to the question about the company and the ownership of British Steel. What. We are strongly minded to use the powers in the Bill to nationalise the company. No decision has been made and taken, and any decision will be subject to a consideration of the public interest test. The government has been providing ongoing funding to British Steel, as both noble Lords know, under the Special Measures Act, and we are publishing regular updates to Parliament detailing this funding.

This funding arrangements will be set out in the department's upcoming annual reports and accounts, and we are committed to transparency on this issue. My Lords, let me address the points raised by noble Lord Huhne and Sharpe, and I have the greatest respect for both noble Lords, my Lords. Blaming workers rights for unemployment is a cost distortion of the real issue. It substitutes ideology for evidence and seeks to conveniently scapegoat, rather than confronting the structural changes that genuinely 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. My Lords, responsible capitalism reduces the need for state intervention. But 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.

My Lords, let me address the issues on tariffs are referred to by Lord hon. Lord. Lord Murphy and Lord Fox. My Lords, the government support free and fair trade. But trade must be fair. Free trade does not mean surrendering British jobs to subsidise 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, dumb 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, and 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. Refer to Lord Billy Morris. A point about the India Free Trade Agreement.

The noble Lord would know that we are seeking to bring this deal into force as quickly as we possibly can. We are currently working with India to ensure all parties have taken all the necessary steps to bring the deal into force, and all points raised by Lord Redwood, Baroness O'Grady, Lord Murray and Lord Fox regarding the green, steel and the electric arc furnaces versus blast furnaces. The government is clear that the future of steel industry is green steel.

Let me reassure the House that currently electric arc furnaces in the UK are making the full range of steels from commodity construction grades through 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 Labour Lords would find it helpful, I can arrange for a technical briefing on this point for those interested in this area. Several noble Lords have 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 electric electricity system operator, and network companies, to accelerate network connections. My Lords.

I think it's a lot more that asked the question about the transformation of British Steel and also lot and lot frost. And 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 to put in place a 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 contracts, as I mentioned in my opening speech, wins. Recent contract wins demonstrate that there remains strong demand for British Steel and that the company has an important role in the future of our economy. Several lots are questions on jobs. I fully understand those concerns. The government's objective is a sustainable steel 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 2700 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 transition must be managed carefully. It must support workers, protect communities and preserve our economy. Economic resilience.

The government will continue to work closely with trade unions, employees and local stakeholders through the process. Noble Lords Weekly and Billy Murray and I think noble Lord Murphy also asked about Port Talbot. The government has got no plans to acquire any other steel undertakings, but this bill provides flexibility to intervene if a future need arises and the public interest test is met. The government remains fully committed to securing the long term future of steelmaking in Port Talbot, through Tata Steel's 1.25 billion transition to a state of the art electric arc furnace, supported by the government.

Up to £500 million of government funding. Baroness OGrady and a lot of us are questions on on 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 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 is 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 cooperation following Brexit.

The date of this year's summit will be announced in due course. Now, noble Lord Fox, I think, did ask about the chilling effect on investment. Let me address this head on. This 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.

The Bill is explicitly framed as a targeted, a targeted last resort response to a market failure, which government signalling it is not intended for wider or frequent use, which narrows uncertainty to a specific context rather than the sector as a whole. Noble Lord, I would ask about the environment, liabilities and rightfully so. Many, and environmental liabilities arise on closure. Government interventions is precisely about avoiding this orderly shutdown and managing safely the remediation, respectively. My Lords, several Lords have also raised the issue of compensation.

But Lords, the government is committed to respecting business rights and ensuring fair treatment. To be absolutely clear, the government's action to date at British Steel and at an end in the future are solely about commercial reality and about delivering our domestic steel strategy. They would not differ under any owner's nationality. If the transfer of powers and bill are exercised, a compensation scheme would be established to consider and pay compensation for any losses suffered by those affected, and independent valuer will be appointed to oversee this process and 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. My Lords, let me address the issue of nationalisation. I think was mentioned by the noble Baroness, Baroness Noakes and Lord sharp. Look. We suppose this nationalism on principle, yet appears prepared to accept the loss of United Kingdom's last remaining primary steelmaking capability in the name of market purity. We believe in free markets, and 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 required. Faced with the choice between preserving British steelmaking and watching it disappear, this government chose action and the promise of privatisation was a private ownership would deliver greater investment, stronger productivity and better outcomes for consumers and taxpayers. Yet too often we have seen the opposite and investment, short term decision making and strategic national assets left vulnerable when market conditions turn difficult.

The reality is that privatisation succeeds. Profits are privatised when it fails. Losses are socialized. Working people lose their jobs. Communities pay the price and taxpayers are asked to step in. This is precisely why this government is prepared to act. 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 will commit to writing to noble Baroness about the classification of the British Steel, that my officials will definitely write to her, and we will also provide annual reporting to Parliament on financial support, and that is provided under the Bill powers itself.

I turn now to Port Talbot. As mentioned by several Lords with regard to the fire Port Talbot the fire 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 not yet finalised. We remain fully committed to securing the long term future of steelmaking in Port Talbot, and are working closely with all parties involved to identify mitigations and explore options to accelerate delivery.

I think noble Lords and noble Lord Faulks also asked a question about the importance of foreign investment in our relationship with China. I also 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 obviously is currently the. The government continued to welcome Chinese investment in the UK and do not consider the situation that British Steel. To reflect our wider relationship with investors. My Lords, British Steel is a strategic asset.

As I said earlier for the UK steel production, critical national infrastructure and local economy. Unfortunately, the government could not find a way to safeguard British Steel's operation under its current ownership. But while this government now needs to take steps to secure UK steel capability, we are committed to doing so in a way that respects the rights of business. My Lords, 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 communities whose lives have been built around steel making for generations. The bill before your Lordships House is not about preserving the past. I said in my opening, it is about securing the future. It is about securing that Britain retains the sovereign capability to produce steel. It is about creating the conditions for a modern, competitive and sustainable steel sector. And it is about demonstrating that when strategically important national capabilities are at stake, this government is prepared to act.

Today, your Lordship has the opportunity to send a clear message. As I said earlier to steelworkers, industry, investors and the country, that parliament remains committed to a long term future of British steel making. My Lords, I am very grateful to all noble Lords for their contributions and for the constructive spirit in which this debate has been conducted. I look forward to continue those continuing those discussions as the

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Bill progresses through the House. My Lords, I back to. The question is that this bill

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The question is that this bill be now read a second time as many of that opinion say, content contrary, not content to the

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contents of it. My Lords, I beg to move the commitment motion standing in my

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commitment motion standing in my name on the Order Paper. Question is that the Bill be committed to a Committee of the committed to a Committee of the whole House. As many of that opinion shall say, content contrary, not content. The contents have it. My Lords, perhaps this might be a
19:50
19:51
Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage, Parliamentary Under-Secretary (Housing, Communities and Local Government) (Labour)
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My Lords, I beg to move that this House consider the draft combined Authority's Mayoral Elections Amendment Order 2026, Elections Amendment Order 2026, which was laid before the House on the 21st of May 2026. Over the course of the last year, Parliament has debated, agreed and decided that the voting system for mayors and police and crime commissioners should be changed to use the supplementary voting system, or SP, through the English Devolution and Community Empowerment Act 2026, which received Royal Assent in April.

I remember fondly the debates that peers had on the matter in this chamber during the passage of the act. Therefore, I'm sure some of the points I will go on to set out in relation to SP will be very familiar to the peers who are in the chamber today. The SP system was used when the positions of elected mayors and police and crime commissioners were first established decades ago. The government believes that it is the most appropriate voting system for single executive officers, where it is essential that the individual has a broad mandate from their electorate.

The English Devolution and Community Empowerment Act contains the main measures required to change the voting system used for these types of elections, and these will be commenced in due course. However, there are also a number of other changes that must be made to the election. Conduct rules via secondary legislation to fully enable the use of SP, for example, updating the images of ballot papers to allow a voter to select multiple preferences, updating guidance to electors, and updating the procedures used at the count.

Should there be a second round of counting? As stated during the parliamentary passage of the English Devolution and Community Empowerment Act, the government's intention was to implement the change to SP for any mayoral or PCC election taking place after the scheduled May elections this year. This order has been drafted to be concise and so will only make the necessary additional amendments to enable SP to be used for both combined authority and combined county authority mayors, including those that exercise police and commissioner powers, police and Crime Commissioner powers.

The order will therefore not make amendments with regard to local authority mayors, the Mayor of London or the Police and Crime Commissioner. Elections and further legislation will be brought forward for those in due course. Turning to the timings for implementation. This order will make the change to SP for any combined authority or combined county authority mayoral election, for which notice is given on or after the date that this order comes into force. I would also note that as this is a reversion to the original voting system used for mayoral elections, the SP process will be familiar to both administrators and electors.

Implementing these changes will therefore be straightforward, and we are confident returning officers will be able to make the necessary changes. I turn now to the content of the instrument. The conduct rules for elections have combined authority and combined county authority mayors are set out in the Combined Authority Mayoral Elections Order 2017. This order will make a number of amendments to the 2017 order. As we have discussed already, the SB system was the system used when combined authority mayors were first established, so these changes are largely reverting the 2017 order back to its original drafting.

The Electoral Commission has been formally consulted on these changes, changes and has raised no objections. Articles three, four and five of this instrument will amend schedules one, two and three to the 2017 order, respectively, which set out the conduct rules for these mayoral elections, both where the poll is a standalone poll, and when the poll at a mayoral election is combined with the poll at another type of election or referendum, the amendments will update the guidance given to voters in polling stations to reflect that they now have the option to select a second preference.

They will also update the various processes involved in counting the votes to reflect that a second round of counting may be required. They also make a number of consequential amendments throughout the conduct rules to ensure that references to votes refer to first and or second preference votes as appropriate. Schedules one and two to this instrument contain updated statutory electoral forms. Schedule one sets out the forms in respect of a standalone mayoral election, and schedule two sets out the forms where a mayoral election is combined with another type of election or referendum.

There are two types of forms that require updating to enable s-v. The first is the ballot paper. A new ballot paper image is provided in this instrument to allow voters to be able to select both a first and second preference of candidates. The instrument also contains the ballot paper to be used where there are only two candidates running, as in that scenario, voters are not given the choice to select a second preference, and the poll reverts to a simple majority voting system.

The second is the postal voting statement, and these contain guidance to postal voters. And so this instrument provides a new postal voting statement form that will inform the voter that they may select both a first and second preference, where there are three or more candidates running. To conclude, these are straightforward changes necessary to implement a change set out in primary legislation in the English Devolution and Community Empowerment Act. I hope the House will join me in supporting this instrument, and I look forward to answering any questions that

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members might have I move. My Lords. The question is that this motion be agreed to.

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this motion be agreed to. My Lords, I thank the Minister for her introductory comments, and for her introductory comments, and I shall return to 1 or 2 of the points that she made in a moment. I think it's worth being honest with think it's worth being honest with everybody in relation to election changes in every party. When they changes in every party. When they make election, election law changes, they may hide it in one form or
19:57
Lord Hayward Portrait Lord Hayward (Conservative)
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another, but actually over their shoulder they're looking at, well, how are we going to benefit from how are we going to benefit from any particular change? And I think that's worth acknowledging. But in this particular case, it is this particular case, it is striking the speed with which this order has been brought forward. And one has to ask the question, why on one has to ask the question, why on earth is it being brought forward at this stage, particularly because, as the Minister said, she referred to the legislation which has just been passed, having received Royal Assent in April.

And she also went on to say further legislation will be brought forward for those for other matters in due course. Now, every single debate in which I have participated on election law in the last decade has included a request to simplify the whole process of elections law, not make it more complicated. There's been persistent reference to the Law Commission and their original report and further changes thereafter. What do we have here? An admission by the Minister that we are debating one thing this evening.

But at some stage unspecified further legislation will be brought forward. Why? The answer is quite simple because the Labour Party has got itself in an almighty mess. In the North West. There is a by election in Makerfield on Thursday, and there is the possibility of a by election for the Greater Manchester. Morality thereafter, at a cost probably. Although the government refuses to identify the actual figure. But probably of around £5 million to solve their problems. That's the first issue.

But let's be honest, in relation to this particular order, it's not normal to identify who is going to be affected by any particular change of law. But let's be honest, this order is an attempt to stop reform, winning the possible Greater Manchester morality by election. It would be better titled this order. The combined authority's mayoral elections stop reform winning the Greater Manchester Morality Order 2026. Because that's what it simply comes down to.

There is no other justification for the haste with which this order has been introduced, other than solving Labour Party's problems and actually stopping the Reform Party from winning a morality. And it really doesn't do British democracy well when the position is as blatant as just that, and nothing more and nothing less, because otherwise this order could have waited until we had all the different changes that were necessary being introduced in one go at one time in the very near future.

My Lords, I want to comment just on one other element of this particular order, and that is the impact assessment. All changes in legislation have an impact, some smaller than others, and the Minister is right that we are reverting to a system which operated previously, and therefore there should be relatively small changes, but they are changes that nonetheless. We've gone quite a few years since this system was introduced. There will be many polling station officers, returning officers, people who are asked to administer the whole process, who are actually new to this.

There will be a necessary set of changes which has which result in training courses. As the Minister referred, identified, sorry, Minister identified. Notices will be different, understanding will be different. And I cannot believe that when this is introduced, the Electoral Commission will not expect to provide guidance to the voters of Greater Manchester as to how they will now vote as they as against how they did last time. So although the costs are relatively in terms of impact assessment are small, I do think it isn't correct to say that there will be no or virtually no cost.

I think it is appropriate that we should be told what the cost is, but I do actually think it's also appropriate that we should be told what the total cost of a Greater Manchester by election is actually going to be, as they, as the Labour Party tries to get itself out of a mess of its own making.

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My Lords, I concur 100% with the comments by my noble friend Lord Heywood. I am going to take this Statutory Instrument on its face value and discuss the issues that value and discuss the issues that it raises with regard to the alternative vote and first past the
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Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Conservative)
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alternative vote and first past the post, as noble Lords will know when proportional representation was tested with the electorate in 2011, in this case the alternative vote referendum. It was lost by a margin of 68% to 32%. I think what is noteworthy in this document, in the Statutory Instrument, is the paucity of intellectual rationale for why the changes are happening. I agree with my noble friend. It looks like a cynical stitch up to avoid embarrassment in the combined boroughs of Greater Manchester, but it also looks potentially like a rolling out the strategy of a progressive alliance in the run up to a general election with, for instance, the Green Party and the Liberal Democrats with the stated aim, or probably the unstated aim of locking out the Conservatives and Reform UK from power.

First past the post is simple and fair, and conservatives have always supported it. It ensures proper representation and broad campaigning by parties, rather than targeting policies of a subset of voters. It's simple and transparent, and even in a disaggregated, fragmented political landscape, it still stable and effective in terms of delivering governance. One person secures a plurality of votes, and that's transparent. In fact, as it happens, almost 100 Labour MPs have been elected in the other place, with less than 35% of the vote.

So if it's good enough for this government's majority in the other place, then it's good enough generally for our elections. In fact, the Home Affairs Select Committee in 2016 recommended that first past the post was best to replace the supplementary vote in police and Crime Commissioner elections. Causes confusion and leads to a lot of spoilt and rejected ballots, and the Electoral Commission, in their report of September 21st of the 2021 elections, noted, quote, a quarter of people who had difficulty filling in their ballot paper in areas holding local government and PCC elections said it was confusing that the elections used were under different voting systems.

A third of people voting in London said that they found the two voting systems confusion confusing, and in fact, the rejection rate in the London mayoralty election in 2021 was 114,201 ballots, of which 87,000 were because votes. Voters cast a vote for more than one candidate in the first preference column, 263,005 353 voters were invalidated because their second preference was cast for the same candidate as the first and 319,978. Second preferences were unmarked. In fact, these void rates exceeded the votes actually validly transferred to the two leading leading candidates.

Mr. Khan, who got 192,000 votes, and Mr. Shaw, the noble Lord Bailey of Paddington, who got 85000 transfers. My Lords, first past the post, focuses on clear accountability. Electors know the one individuals responsible for the failings or the successes of public policy. S.V. gives a recycled second vote. The same democratic credibility as voters. First choice. Each votes vote should count equally one person, one vote, and in fact, supplementary vote is used almost nowhere else across the globe.

The late and much renowned and much missed elections expert and academic professor David Butler described S.V. as, quote, a silly answer based on the need to compromise between rival factions, unquote. First past the post is quicker to count and cheaper to administer, as my noble friend has alluded to and better understood by voters and some very eminent people in your Lordships House agree with this. In fact, one of them said S.V. is one of the worst systems. We had a referendum in 2011 on changing the voting system for elections to the House of Commons.

This was wholly rejected and I have seen nothing following on from that result or anything that has happened subsequently. Which leads me to believe that the country wants to change the voting system for any elections. No, any elections. We have managed to keep voters on voters, a whole plethora of voting systems. That is not a good thing to do. I thought that one of the worst systems with the S.V. system, I've observed many counts where people have put a cross in the second column, which means that their votes are discounted.

Brilliantly said by the current Labour Government Chief Whip. Quite my Lords. He said that in 2015 and indeed the UCL Constitution Unit in 2021 described supplementary vote as, quote, an anomaly and out of step with other elections in England at least a V, which is an alternative system, allows a more pluralistic preference. Voting. My Lords, I want to ask the noble Lady, the Minister, directly, will she confirm that these changes will take effect in respect of a putative Greater Manchester mayoral by election, which may or may not happen later this year? My Lords, this is about raw politics.

It fails to make a coherent, fact based intellectual case for reverting again to an SV regime. It is about locking out reform UK and the Conservatives from power, and therefore it fails on merit is a retrograde step which my party and and myself oppose.

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Oh well, my Lords, methinks the. The previous speakers on the The previous speakers on the conservative benches do protest too much. First of all, I would remind the noble Lord Jackson that I believe that it was the conservative government who conservative government who introduced the use of the supplementary vote in the first supplementary vote in the first place. So that puts that argument to one side. Secondly, the. The
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Baroness Pinnock Portrait Baroness Pinnock (Liberal Democrat)
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noble Lord Jackson's argument about the use of the first past the post the use of the first past the post gives us good, good results. Clear results. Well, they may do, but on results. Well, they may do, but on a very minority of the electorate. And we share this wonderful system And we share this wonderful system with just one country in the world, with just one country in the world, Belarus. So maybe those aren't the sort of companion that we would really prefer.

I certainly would rather a system that reflects the voting preferences of people rather than having, as the noble Lord Jackson said, something easy to count. So, my Lords, the. The timing of this s I. As Lord Heywood pointed out, is interesting. And and very helpful to the government. A by election on Thursday, where. Which may result in a vacancy for the Mayor of Greater Manchester. So here we are with an s I the. Now the the voting system for the combined authority mayors was, as I have said just now, initially by the supplementary vote, but this was abandoned by the Conservatives government in 2022, I think.

In favour of the first past the post model. Now, the noble Lord Heywood was saying that cynically governments do this, they choose a voting. So this will be better, more reflect the needs of the electorate while looking over their shoulders to how the voters are going to can actually choose who they vote for. And I suggest to him that maybe that's what happened in 2022, though the outcome was not what the conservative government hoped for, because in the mayoral elections that followed that change last year, the average turnout was 30%.

And two of those mayors who were elected did so, with less than 30% of that 30%. In other words, with less than 10% of the electorate supporting them. I do maths, I'm right. So which illustrates the degree of voter apathy about whichever system that is used. So at least with the supplementary vote, there is a bit of a a better reflection of voter preferences. So the system is by no means perfect. And as far as matching what voters want, it is at best a halfway house towards true electoral fairness because voters are restricted, as we've heard, to two preferences, column A and column B.

Now, I think it was the noble Lord Jackson who said that voters get confused by different voting systems. I'm going to ask him to go to Scotland to enjoy their voting system. Local government is, by single transferable vote. The vote for the Scottish Parliament are by a two system. You have two votes, one for for regional and one for a first past the post. And the regional is a regional. To make a more proportional. And then the third, of course, is by first past the post for the Westminster election.

So if that the. The people of Scotland have no trouble with that. The people of Ireland, Northern Ireland and Ireland have no trouble with STV. So I'm not sure why the noble Lord Jackson. Jackson thinks people will be in England will be confused. So the argument against S V is that you limit the voters preferences to just two. And you know, if you don't like either what's on offer, then if your second choice is not of one of the top two candidates, you have no say at all.

So because your vote is just discarded. So in that sense, those voters are left out completely. Now, I have a question for noble Baroness, the Minister, because I have assumed that the S v vote will be counted so that the top two are taken forward to. If there is no majority on the first count will be taken through to the second preferences and all other candidates eliminated. However, that's not what it says that I could find in the in the s I it talks about and I quote, referring to the candidates remaining in the contest without actually identifying that that will be, as I'm assuming, the top two.

So perhaps the Minister can just, you know, help help me understand if and what it's meant and why it's worded rather vaguely. Now, I know we don't. The noble Lord Jackson doesn't like the alternative vote. Actually, neither do I, really, because it's. Although it's more proportional than either first past the post or supplementary vote, it. It's not the best system to reflect what people want and. But it would be somewhat a bit better than using either first past the post or s v.

So we support the order reluctantly because it moves us a bit further forward. Gets rid of first past the post, but at least one election that we have to use and. And I do hope. I think it was the noble Lord Hayward was suggesting this, that now we're in a very a multi-party situation, and we're often in elections. There are going to be candidates from at least five parties. And in the recent local elections where I live, there were sometimes six and seven in several wards, seven candidates.

And in those. In that instance, people could get elected on 20% or less of the vote. So that makes it more of a lottery than it ought to be and does not reflect what voters really want and is not good for democracy, actually, because it's only seven seconds a. Giving me the I just because I've gone 13 seconds over because I've gone 13 seconds over the over the time. So. What we democracy depends on the electorate having having trust and faith in the system.

And if we don't have trust and faith in the system, that's when democracy is in peril. So a big change to the electoral system would be good. But I'll go with this one.

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My Lords, before I speak, I'm not sure it is a conflict in this issue, but I do need to declare that I'm a councillor in Central Bedfordshire, and I thank noble Lords for speaking on this debate. Lords for speaking on this debate. I thank the noble Baroness Pinnock, who, I think at the end of her debate, said she was in favour of debate, said she was in favour of the single transfer of minutes from one speaker to the next speaker to one speaker to the next speaker to allow her to speak longer.

But can I thank my noble friends, Lord Hayward, who has raised the very important question of why now? And I will come to that later. And Lord Jackson, who has given an excellent exposition of the shortcomings of the transferable vote system or the supplementary vote system. Now, this is, in essence, a reversal within a relatively short period of time, we have moved from supplementary vote to first past the post and now back to supplementary vote. Supplementary votes for mayoral elections. Whatever the view one takes of the retrospective systems, that degree of oscillation is not a strength of constitutional design.

And I ask the very simple question, what problem is this change actually seeking to solve? The government's answer appears to be that the claim supplementary vote system produces a mayor with broader support and therefore greater legitimacy. It's
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Lord Jamieson Portrait Lord Jamieson (Conservative)
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also said to allow voters to express preferences more fully and to ensure that votes are not wasted. to ensure that votes are not wasted. Though, as my noble friend Lord Jackson pointed out in the previous London mayoral election, there seem London mayoral election, there seem to be quite an awful lot of wasted supplementary votes. Now, these arguments are familiar. They have arguments are familiar. They have been advanced in favour of preferential systems for many years. But repetition is not justification. The reality is that this draft does not demonstrate a failure in the existing arrangements of fast first past the post, nor does it set out evidence that voter confidence in mayoral elections has been undermined by the current system.

Instead, it simply asserts that the alternative system is preferable. My Lords, that is not sufficient. When what is issue is the rules by which Democratic Office is secured first past the post has one defining virtue, and that is clarity. The candidate with the most votes wins. There's no second count, no transfer of preferences, no calculation. The result is immediate and intelligible. As my noble friend Lord Jackson of Peterborough has pointed out, the public has previously demonstrated that they have a preference for the first past the post system, and that matters more than members may realise, because the electoral system does not exist, just in theory, it exists in the mind of the voter at the ballot box.

If the voter does not really understand how their vote translates into outcome, we risk something important being lost. The supplementary vote system is not comprehensible, but it is more complex. It does introduce a second stage of allocation where preferences are redistributed. That may be administratively manageable, but it's not straightforward. It's not intuitive. My Lords, we must remember that confidence in our elections is essential. The government also argue the system produces a more legitimate mandate because it takes account of second preferences.

My Lords, that's a fundamentally different conception of legitimacy. And it's not a neutral change. Under first past the post legitimacy comes from a clear view expressed at the ballot box under the supplementary vote. It comes from aggregated preferences after elimination and redistribution. Those are different constitutional logics. First past the post is well understood. It's tried, it's tested. It's clear. The question for this House is which is more appropriate for mayoral elections in England today? We are not persuaded that the government has made a strong enough case that change is required.

There is also the wider concern of uncertainty caused by frequent changes that cannot be ignored. Electoral arrangements should not shift back and forth with such frequency. Voters, candidates and administrators require stability. They need to know that the rules they are voting under today will be the same at the next election. At present, that confidence is weakened by repeated changes. I should therefore be grateful if the Minister could address a straightforward point. What is the government's principle here? Is it that electoral systems should be treated as settled constitutional arrangements? Unless there is clear and compelling evidence of failure? Or is it that they may be altered whenever the government takes a different view? Because those are very different approaches.

There is also the question of practice. The instrument requires changes to ballot papers, guidance to returning officers, counting procedures, voter information, administrative systems across combined authorities. Now all of that is manageable, but it's not without its cost, without its friction, and its implications for time. As my noble friend Lloyd Hayward has raised, I also ask the question, why now? Why the urgency? Putting this in place will take some time for electoral returning officers, yet there is a risk we shall very shortly have a mayoral by election.

Would it not be better to delay, to ensure a smoother implementation and also to include those other potential future changes? As my noble friend asked, why now? And I also ask why now? What assessment has been made of the cost to local authorities of implementing this change? What additional burdens will fall on electoral administrators, and what steps will be taken to ensure consistency of understanding across different areas in the run up to elections and, more importantly, what assessment has been made of voter understanding.

It's often assumed in this debate that voters are closely engaged with the mechanics of electoral systems, but my personal experience is they're not that closely engaged. In fact, sometimes they're not that closely engaged in the detailed minutiae of politics. So I think that is a stretch assumption. What matters to voters is that the process is clear at the point of voting, and that the outcome is trusted. And trust depends on simplicity, familiarity, and both are weakened by this system change repeatedly.

My Lords, none of this requires us to resolve, once and for all, the philosophical debate between electoral systems. Reasonable people will differ on that question, but what the House is being asked to approve is not an abstract principle. It's a concrete change to the machinery of elections, justified on the basis of asserted improvements in legitimacy. We, on this side of the House are not persuaded that the case has been made. We're not convinced that the benefits outweigh the costs to clarity, stability and confidence, and we're concerned about the wider pattern of repeated alterations to electoral arrangements.

And we're also concerned about why. Now, for those reasons, while I do look forward to the minister's response, I must indicate that we remain unconvinced by the necessity or wisdom of this Statutory Instrument.

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Excellent. My Lords, I thank all noble Lords for their contributions today, and if I can pick up, first of all, Lord Jamison's point about the Lord Jamison's point about the principle behind this, because I think that's the most important thing that I did set it out in my introduction speech. And that's that government believes this is the most appropriate voting system for single executive offices, where it's essential that an individual has a broad mandate. So having cleared that point of principle up, I will try and answer all of noble Lords questions.

First of all, the noble Lord Heywood asked me about the is the reason for delivering this change of pace for political advantage? Well, the answer to that is clearly no. As I've already said, the government was very clear during the passage of the English Devolution and Community Empowerment Act that we intended to make this change for mayoral and PCC elections after May 2026. There is now the potential for such an election. I'll come on to more about that in a moment, and we therefore are now acting to deliver on our commitments made to Parliament just in respect to the noble Lord Jackson, who raised these issues as well.

And I'm sorry that the charm offensive that I experienced yesterday has come to a shuddering halt. But never mind. And he referred to locking conservatives out from power. I think they did a very good job of that themselves. So I think that's that was clear. Lord Heywood asked me about the cost of any by election in Manchester. I will if he's if he doesn't mind, I'll write to him on that issue. But it is paid for, of course, by the local authority, not.

Not from central taxation. However, in the general course of things, when these elections are held, of course the election would be held anyway. When it's not a by election, they will be held anyway. Ballot papers have to be printed anyway. The count has to be held anyway. So those costs are very similar, whether it's a held under S V or whether it's held

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under the first past the post. The Minister for giving way, and I'm very pleased indeed of her commitment to write to me. Can I commitment to write to me. Can I just ask, in association with that, Lord Jameson made reference to the Lord Jameson made reference to the associated costs of introducing this process. Could we possibly have both at the same time, please?

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have both at the same time, please? I will have a look whether it's possible to get that figure. So possible to get that figure. So thank you for your question. Noble Lord Heywood and the noble Lord Jameson asked me about why we're only changing the voting system for two types of mayoral elections. First of all, can I reiterate that these changes do as I think the noble Baroness Pinnock referred to? They revert to the 2017 voting system, which was brought in by the Conservatives, and it was the Conservatives who changed it back in 2022.

We are reverting back to the system that that the Conservatives had introduced for these single office posts. And I've set out already the English Devolution and Community Empowerment Act received Royal Assent in April this year, and the government's stated aim has always been. We will work at pace to deliver secondary legislation
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Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage, Parliamentary Under-Secretary (Housing, Communities and Local Government) (Labour)
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held in Greater Manchester in the coming months, subject to the outcome of a parliamentary by election in the Makerfield election in the Makerfield constituency on Thursday this week to fulfil both Parliament's will to fulfil both Parliament's will and this government's stated commitment to re-implement SB. We have drafted this order at pace to ensure that the necessary legislation will be in place for this system to be utilized if this by election takes place to meet this deadline, the order had to be kept concise and could not include measures to amend all other types of mayoral elections, amending all the relevant mayoral and PCC election conduct rules would also require a range of Statutory Instruments as they use different parliamentary procedures, so we intend to implement SB for other mayoralties and peaks in due course through separate instruments.



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I'm the Minister. So if the noble Lord will bear with me for a moment, because I'm just going to come on and answer just going to come on and answer some of his other points. So if I don't cover it, please do step in. don't cover it, please do step in. Lord Jackson, the noble Lord Jackson raised issues about the Jackson raised issues about the voting system. I'm sure he'll make his comments on voting in London when we make the instrument for when we make the instrument for London mayoral elections.

But just to be very clear, this particular instrument does not cover the London mayoral elections. And I think SB was the voting system implemented on the introduction of both Maryland Police Crime Commissioner elections. We think, as I said, is much more appropriate for selecting single person executive positions such as mayors or police and crime commissioners. However, and the noble Lord Jameson did ask about this. We believe that first past the post system is a clear way of electing representatives, which is well understood by voters and, while not perfect, provides for a direct relationship between a member of a legislature and the local constituency.

The first past the post voting system is therefore a more suitable system, where there are a number of seats to be filled, such as for a council or a parliament, and the likelihood is that people representing a range of views and parties will be elected.

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Therefore, government has no plans to change the electoral System for UK parliamentary or

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System for UK parliamentary or local council elections in England. Thank the noble Lady, the

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Thank the noble Lady, the Minister, on a point of fact, as a result of the 2022 legislation result of the 2022 legislation which reverted back to first past the post, the Greater London Returning Officer estimated that Returning Officer estimated that because it was not necessary to use the e-voting infrastructure for counting, that there was an indicative saving of £4 million. So that is the difference between the A, V and S V system or the S V system and first past the post.

So surely the Minister will concede that there is a significant greater cost of of this new system that we don't yet know.

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Well, as I said, this instrument doesn't cover London. And of course, doesn't cover London. And of course, there's no price to put on democracy. We should be aiming for democracy. We should be aiming for democracy always first. However, as I said to the noble Lord Hayward, I will do my best to find out if will do my best to find out if there is any financial impact of this instrument. The noble Lord Hayward asked me about the sector Hayward asked me about the sector being able to cope with the late change, and SB has been used in the past, extensively and recently, and will be deeply familiar to returning officers and their teams, and my department has been working very closely with the sector as they prepare for the changes arising from the English Devolution and Community Empowerment Act, and we will continue to support them in managing any changes once this instrument was made.

And as I said, we did consult with the Electoral Commission and they didn't have any concerns about this. So we're confident the change is straightforward and the sector will have no issues in implementing it. The noble Lord Hayward and the noble Baroness Pinnock, I think for very different reasons, but asked me about the public being informed about these changes. And the noble Lord Jamieson, I think, had some concerns in that area too. Electors will receive information on the voting system used by a number of methods, including guidance on postal voting statements in polling stations that they will read prior to voting.

More importantly, where there are three or more candidates at an election, the ballot paper itself will be clear that they have the option to select a second preference. I'm confident that electors will be informed of the change and understand their options when casting their vote, especially given that this is a voting system that has been used extensively in the past and will be well understood and indeed familiar to many voters in Greater Manchester, they used SV for almost all its elections, with the exception of 1 in 2024, reflecting its status as an established voting system.

The noble Lord Jackson and the noble Baroness Pinnock. Again, I expect for very different reasons, ask me about why using SV and not a different system, and the government has no plans at present to introduce alternative, single transferable vote to mayoral and PCC elections. The government acknowledges that different voting systems can be better suited to different types of polls and elections, and we take the view that SB is the right system to use for selecting single person executive positions. It requires the winning candidate to receive the majority of votes counted, and that makes sure that they've got a broad support across the area and a broader mandate from the people they're representing.

And a key advantage of the SB system over other preferential voting systems is that this was the system, as I said, widely used for mayors and PCCs before. So people are familiar with that system. And the other question I had was from the noble Baroness Pinnock around how the supplementary vote is counted with the supplementary vote. If no candidate gets over 50% of the vote, the top two candidates continue to a run off and all other candidates are eliminated when casting their ballot.

Ballot, voters can put a second choice who they would vote for in a runoff on the original ballot paper. If your favourite candidate gets through, your vote is counted for them in the runoff. If they didn't, but your second choice did, your vote goes to them. The runoff candidate with the most

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votes is declared the winner. And Minister. But the question I

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And Minister. But the question I asked was that in the order, it does not say the top two. It just does not say the top two. It just says the remaining candidates. Without defining what that should Without defining what that should mean, I assumed, as you have assumed, that it is the top two, assumed, that it is the top two, but I couldn't find that in in the order they just said the remaining

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candidates perhaps write to me. To write to the noble Lady to

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To write to the noble Lady to clarify that point. So in conclusion, the instrument is necessary to allow the SB system to necessary to allow the SB system to be implemented for combined county, sorry combined authority and combined county authority mayoral combined county authority mayoral elections. This was a commitment made in primary legislation, and it will ensure that those elected to will ensure that those elected to these positions have a broad base of support from their electorates, which we believe is of particular importance for these single executive offices.

I hope the committee will welcome these

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regulations and I beg to move. Yeah. The question is that this motion be agreed to, as many as are of that opinion will say content. To that opinion will say content. To the contrary, not content. The contents have it.

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Lords, I beg to move that the House do now adjourn.
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