Lords Chamber

Monday 29th June 2026

(began 2 months, 1 week ago)

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None Portrait Oral questions: Human rights and reputational risks presented by their public service contracts with Palantir Baroness Chakrabarti (Labour)
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requirements are met and no exclusion grounds apply. Palantir software is used globally, across
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Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
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Yeah. Well, can I can I just say >> Yeah. Well, can I can I just say to the noble Lord, Lord Lord Gove, in terms of the mayor, my understanding is the mayor and the understanding is the mayor and the commissioner have now reached an arrangement where the proof of concept with respect to the activity of Palantir within the Metropolitan Police is now. There's now a 12 month time period during which the. They will establish whether the proof of concept works and Palantir can move forward.

And both the mayor and the Metropolitan Police Commissioner have agreed that because as you. As the noble Lord says, the. The Metropolitan Police Commissioner believes it will help fight crime. But that's a matter for them to resolve that. But it does seem to me that they found a way in which both of them are happy to try and take it forward. Can I just say, of course, what I don't want to do is to underestimate sometimes the moral questions that governments have to answer.

But the noble Lord raised the issue of education, which he knows particularly well. But if I if I look at the issue with respect to health. 41 Icbs and 171 trusts have signed up to use the NHS Federated Data platform, over 100,000 extra patients have been seen. Hundreds of thousands of patients safely removed from the waiting list, and nearly 94,000 patients supported on their cancer journey. And that's the sort of dilemma governments need to resolve in order to try to find the best way forward.
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Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
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Hear, hear. Baroness is making, but the point I made right at the beginning is these contracts are with Palantir UK. And in terms of of the UK. And in terms of of the contracts that we've done with Palantir UK, of course they have to. Every contract, any Minister that has been here knows that the contracts that are signed and government on, on behalf of the government have to have a fit and proper process. We're not going to take on people to run things for us who have got criminal records of a particular sort, who have got don't pass the monetary test or other considerations around them.

We see as a security threat or any of those sorts of things. Of course, we wouldn't take them on, but the people who have, have, have, have, have gone through this process and have been given the contracts of part of the risk and assurance process have passed the tests that are set for them. And all I say again is, of course, the noble Baroness quite like to have an opinion, but let me just say to her, the consequence of not granting Palantir the contract, and which is perfectly entitled the noble Baroness is perfectly entitled to have that opinion.

But let me say to her, the consequence of that taking that decision has consequences as well. And the consequences of that would be many patients who are being seen now wouldn't be seen. Many crimes that are being solved would not be solved, and the operational abilities and capabilities of our armed forces would be undermined, because there isn't anyone else that can provide that capability. So I say to the noble Baroness,

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that's the side I'm on, and the noble Baroness can take the side on. Yeah, yeah.

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Yeah, yeah. Second Oral Question Lord Foulkes of Cumnock. Milord, I beg
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None Portrait Oral questions: Recommendations in 'Pursuing Recoveries and Preventing Reoccurrence: Final Report of the Covid Counter Fraud Commissioner' Lord Foulkes of Cumnock (Labour)
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Foulkes of Cumnock. Milord, I beg leave to ask the question. Standing in my name on the order of. >> Of course. >> My Lords, on the 23rd.

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My Lords, on the 23rd. Of this month I laid the government's response to the Covid Counter-fraud Commissioner's report
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None Portrait Business of the House
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You. helpful to the House I dated the House and the plan for consideration of the National Security State Threats Bill. Tomorrow, I will email all noble Lords with this information shortly to save a rush to write it down and to help colleagues not currently present in the Chamber Committee stage. All remaining stage will take place tomorrow and Marshalled List has been issued, and the Whips office are preparing groupings today in the usual way. Committee stage will take place as normal, with debates on groups of amendments.

However, given the bill has been fast tracked, the usual channels have agreed that issues should be resolved at committee, and expectation reports will be taken formally. That means if noble Lords feel they need to press amendments, Division should take place at committee. I know the Minister has been engaged a positively across the House to hopefully address concerns. If the Bill is unamended, a committee, we will proceed to a formal Report stage and Third Reading. After that, we will debate the Statutory Instrument and the associated motion on the Order Paper before taking a statement on steel trade measures as the last business.

If the Bill is amended, then it will need to be reprinted and prepared for Report stage once the bill is reprinted and in the printed paper office, there will be a 30 minute window for noble Lords to table amendments for report, which I expect to be tabled, will be debated in one group. I'll make a further announcement tomorrow. Today's list will be reissued and precise deadlines be advertised on the Annunciator. Given the time needed for printing in the bill. Tabling windows and the resulting preparation, the scenario of the statements will be taken before committee for takes taken after committee.

Stage four remaining stages would, however, have discussed the hope that, given the Standard Committee stage, no amendments will be retained for report and will be taken formally. My noble friend Lord Hanson of Flint remains very happy to discuss the details on the bill ahead of tomorrow's debate and will also find that useful. Thank you.

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My Lords. We come to some instruments previously debated in Committee Planning and Infrastructure Act 2025, Infrastructure Act 2025, Consequential Amendments Regulations 2026 and one Other motion Baroness Taylor of Stevenage. My Lords, with the leave of the House, I beg to move the motion House, I beg to move the motion standing in my name on the Order Paper. En bloc is that the two
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Lord Kamall Portrait Lord Kamall (Conservative)
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this statement on the report, which raises many troubling issues, and can I also add my thanks to Donna Ockenden and her team for their extraordinary work in conducting what has been the largest review of what has been the largest review of maternity services in the history of our NHS. Our thoughts are with the thousands of mothers, babies, the thousands of mothers, babies, fathers, partners and families whose experience lie behind this report and it is only because of their courage and their determination that these failures have finally been brought to light.

When in the past, I have spoken to families who feel that they have lost a relative or friend due to medical negligence, they often say to me that they are. They are reluctant to pursue justice since it adds to their grief. But also they point out that they often face hostility for raising concerns since they are seen to be criticising the NHS. My Lords, this is terrible indictment. No organisation, including the NHS, is, or perhaps especially the NHS, should be, above criticism and the findings expose years of failures in leadership, governance and culture, not just a few isolated cases of clinical failure.

Women were not listened to, families were dismissed, staff were unable to raise concerns in an environment where bullying and intimidation were embedded. Most disturbing of all, the report noted that evidence of these failings already existed, yet action was repeatedly delayed or avoided. However, my Lords, on these benches, we wish to be constructive in our response. Since maternity safety has challenged governments of all political persuasions. So we're the government and the healthcare system introduce measures that generally improve safety and strengthen accountability and listen to women families.

They will have our support. But, my Lords, the real test will be whether the report leads to meaningful and lasting change across every maternity service in England, because regrettable that many of the report's conclusions. They are not new. Previous inquiries in Morecambe Bay, Shrewsbury, Telford and East Kent identified many of the same underlying themes. Women are not being listened to, poor communication in adequate staffing and weak governance, and this report must become the point at which recommendations are accepted and demonstrated, demonstrably delivered.

So I have four questions for the noble Lady. The Minister. First, can the noble Lady, the Minister, outline if the National implementation Plan will include clear milestones and regular public reporting so that Parliament, families and clinicians can judge whether progress is being made? Secondly, how will boards be held accountable for creating an environment and a culture in which openness and patient safety genuinely come first? Thirdly, what steps has the government taken to ensure that maternity services have the workforce training and leadership they need to provide safe care? Now, I understand that the former Secretary of State felt that there should be more of a focus on technology than recruitment, and that is not necessarily a bad thing.

But could the noble Lady, the Minister, explain how this would work in maternity care? My Lords, I also welcome the government's recognition of the distressing findings to mortuary services. The treatment described in the report represents a lack of dignity and compassion towards bereaved families. The actions announced are important and I look forward to the noble Lady Minister to reassure the House that the lessons from these failings will be embedded across the NHS, and not just confined to Nottingham. And fourthly, noble Lady Minister will be aware that Henry had to use the Patient Safety Commissioner as increasingly frustrated that, having proposed a system of redress and compensation for those poor victims of valproate and pelvic mesh, that there still has been no movement from the government.

I wonder whether noble Lady Minister could update us on that. No women's experience of pregnancy or childbirth should be determined by their ethnicity, background, language or confidence in navigating the healthcare system. But this report highlights clear disparities, the evidence of racism and discrimination identified within the review is deeply concerning, and underlines the importance of ensuring that every woman receives safe, personalised and compassionate care. This is not asking for special treatment for anyone. It's making sure patients of all backgrounds are treated equally.

My Lords, trust in our maternity services will not be rebuilt just through apologies alone. It will be rebuilt when women know that they will be listened to. When families see concerns acted upon rather than dismissed. When staff are empowered to speak up without fear, when boards are judged by the safety they deliver, and when Parliament sees clear evidence that today's commitments have become tomorrow's reality, the families of Nottingham and other maternity scandals have carried this burden for far too long.

They should never have had to fight so hard simply to be heard. Over many years. They now deserve our determination that this report marks a genuine turning point, and if the government achieves that, they will have the support of all benches. I look forward to the noble Lady. The Minister's Response Chair.
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Baroness Pidgeon Portrait Baroness Pidgeon (Liberal Democrat)
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My Lords, the statement from the Secretary of State and the other Secretary of State and the other place before us today is distressing reading, as is the report by Donna Ockenden. I think this review shocks us all to the core, and it must shake the government into real action at every level of our health service and its regulation. Staff concerns dismissed a board which did nothing. Regulators failing in their duties. The simple refusal to listen to women and their families, such loss, trauma, negligence and damage, bullying, organisational failures and the horrendous misplacing of bodies.

I think words just cannot express this horror and what brave and resilient families to keep fighting for justice. I thank them all. But hearing the deeply moving testimony at the press conference last week about the mental health legacy for bereaved parents, one explained how she had lost all trust in the NHS and had the constant, triggering experience of having to engage in her daily life with the organisation she holds responsible for the loss of her baby. It's really hard to imagine.

So this review, and I'm sure Baroness Amos is wider of you to come, must draw the line. This has to stop. Mothers, babies, children and families must have the confidence and be provided with first class maternity services wherever they live in our country, and quality services that meet their needs, whatever their age or background, respect and dignity at the heart. And I welcome the task force chaired by the Secretary of State, ensuring implementation of recommendations in every trust will be crucial and to ensure whistleblowing throughout the NHS works.

And an independent patient voice must remain part of our health service to help hold NHS trusts to account. And we will revisit this point with the NHS Bill later this year in 2018. I understand over 50 members of staff wrote to the chair of Nottinghams board, stating plainly that there were significant safety concerns. The letter was not even discussed by the board. It went to a subcommittee and was buried, and in 2023, the chief executive found that the trust had never formally investigated staff shortages.

I just cannot get my head around this. As someone who sat on many different boards over over the years, this is not good practice. I therefore like to ask the noble Baroness, the Minister, what urgent work the government is undertaking to assess the competence of NHS trust boards and what changes may take place to strengthen them and ensure they carry out their serious role and responsibilities thoroughly and robustly. And the government must also take action to strengthen whistleblowing powers in the NHS.

My Liberal Democrat colleagues in the other place have tabled amendments to the health Bill, which would provide new powers for coroners and medical examiners to report suspected health failings. Will the government look to support these amendments to strengthen whistleblowing in the NHS? And finally, families need to have confidence in their local maternity services and they need to all be at the highest standard. So will the government commit to a maternity rescue package to deliver this, including 1 to 1 midwifery care for every woman in labour and consultant obstetricians present 24 over seven on every labour ward.

A big step change is needed to transform maternity services across the country, but every family and every individual can have confidence in. I look forward to the noble Lady. The minister's response.
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Baroness Merron Portrait Baroness Merron, The Parliamentary Under-Secretary for Health and Social Care (Labour)
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Well, my Lords, we find ourselves deeply affected, as we've heard from both frontbenchers, and I'm grateful for the tone and acknowledgement of the experiences of bereaved and harmed families who are at the absolute centre of this. As the noble Lady Baroness Pidgeon spoke quite rightly, she cannot get her head round many of the things. I'm sure we're all in agreement on that I actually shared the views of both front benches. I'm grateful for support for action and I absolutely agree with Lord the noble Lord, Lord Kamall, that the.

There's only one test action. And as the noble Lady Baroness Pidgeon said, it's also about confidence. It's also about step change. And of course, we all want to get it right. This is not recent. It is not isolated exactly. As both front benches identified. And it should not be the case that those who are bereaved and harmed should have had to have shown such courage and determination. This is an impossible circumstance that people are in, the noble Lord Lord Cromwell said.

People understandably, often don't wish to add to their distress. But the fact is, women, babies, families all terribly let down not as a one off, but by a system and a system that failed t transparent, or even worse, to make it even worse, provide the truth when things went wrong. And we are looking at 13 years since 2012. This is a sustained. Approach that was totally unacceptable. And I, on behalf of the government, want to say how deeply sorry I am and the government is for what every family has suffered and how in those that have been affected.

And I also want to thank parents and families for their courage and determination for sharing their experiences. Because without that, Donna Ockenden and her team, to whom I express great gratitude, could not have done the work that they did. They have been diligent and they have shown compassion and great detail, and it will make a difference. So to the noble Lord, Lord command, certainly the government is going to deliver a clear and deliverable plan by the end of the year, and it will indeed, as the noble Lord and the noble Lady have asked for, these will be system wide improvements so that everyone can have full confidence across maternity and neonatal services.

And yes, indeed, it will have milestones and transparency. How will this be done? The noble Lady Baroness Pidgeon has spoken about the task force. That is really important. It is personally chaired by the Secretary of State. There's a very good reason for that to give the absolute authority of his office. I'm the deputy chair of that task force, and it brings together many, many groups, including through the expert reference groups. But crucially, it does include affected families.

And also Michelle Welsh, MP for Sherwood, who herself is would describe herself as someone who has been harmed. In this terrible catalogue of heartbreaking experiences. And she is our first appointed maternity advisor to the Secretary of State. And how will we, through the task force, deliver the clear action plan that will make a difference? We're going to bring together the national recommendations from this review, but also Baroness Amos, independent review, established by the former Secretary of State, rightly, and that will report on Wednesday of this week.

And the work will also look at previous reviews. And it is right to say there have been many previous reviews and lessons clearly haven't been learnt. That is totally unacceptable. So through the National Maternity and Neonatal Task Force, it will be our duty to deliver that lasting change. I can refer to some immediate to the points raised by noble Lords on the front bench. The Secretary of State did announce last week where it straight away extending Martha's rule to all maternity and neonatal services.

And that means that every parent or caring person supporting a birth can request a rapid review from an independent medical team. If a baby or a mother's condition is deteriorating and they are concerned it is not being responded to, I think this is a very important step on the point of real listening, and I should also say to the points on mortuaries, I was also absolutely shocked to read the findings. They are chilling, so deeply distressing, and it is hard to believe that these things could ever be allowed to happen.

There is a life police investigation where two people have been arrested in recent times, and I know noble Lords can will appreciate. I can't say anything more apart from that. But there is also two immediate actions being taken human tissue authorities conducting an urgent national review of mortuary incident reporting and NHS England on on instruction from the Secretary of State is writing to all trusts to ensure that they consider the findings on mortuary care. From this report to pick up some of the questions that the frontbenchers have asked about to.

On the point about how about boards being accountable for an open culture and that patient safety comes first. That is their job. And indeed, there has been a change of leadership. Noble Lords will not be surprised to know, and the Secretary of State is meeting this week. The Chief Executive and interim chair to this point, and they are held accountable boards to ensure there's a patient safety culture through strict duties, independent oversight and targeted regulatory assessments.

Clearly, this was not the case here and in other areas, but I welcome the change in leadership and their commitment to and delivery of change of culture. And it's important to say that I'm grateful to Donna Ockenden for recognising there have been improvements, and she is right to point about the fact that more needs to happen and that, as I said earlier, this isn't just one thing in one area as some random situation. It goes so much deeper than that.

Noble Lord Lord Kamall asked about the workforce. One of the actions from the Nottingham report is that there should be developed a perinatal perinatal workforce tool and this, along with all the other recommendations, will be considered by the task force, as we have spoken of in terms of the urgent work that the noble Lady Baroness Pidgeon asked about to assess competence of NHS trust boards, for example, the Nottingham Trust has got a learning and improvement Board to oversee the required improvements and it is being chaired by Michelle Welsh MP.

That's supported by family board and a staff board. And I think that shows the model that we need to see in terms of strengthening whistleblowing as part of the work of the task force, we will indeed be looking at all parts of the health system when things go wrong, including how accountability is established and, if necessary, strengthened and on a maternity rescue package. Well, certainly continuity of care is the noble Lady Baroness Pidgeon spoke of is an action again in the report of.

From Nottingham, and it will be considered very closely by the task force. The noble Lord Lord Cromwell, asked about sodium valproate compensation, and indeed the Patient Safety Commissioner rightly continues to press on that I don't have a a very specific update for him, but as soon as I do, then I will be very glad to write to him. But, my Lords, it is impossible not to be affected by this report, but I consider that a luxury for me that I am affected in my.

How I feel, rather than what has happened to me, and I again wish to apologise for myself, but also on behalf of the government for the harm, the losses, the trauma that continues to this day, and I commit us to doing all that we can. And I'm grateful to have the support of the front benches in doing all that we can to make sure that this is not repeated.
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Baroness Merron Portrait Baroness Merron, The Parliamentary Under-Secretary for Health and Social Care (Labour)
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Yeah, yeah yeah, yeah. >> Yeah, yeah yeah, yeah. >> Well, I would certainly agree. Every, every woman in the case of maternity services does deserve safe, compassionate maternity care. And that is why we're so determined to drive urgent improvements in maternity services. It's worth noting that in this review, which is the largest ever of its kind, as the noble Lord Lord Kamall said that it considered the experience of over 2500 families and also over 830 staff.

Because I think it's important. Your Lordships' House also remembers how many staff have found themselves in situations that they would never have wanted to be in either. So I'm sure that noble Lady like me pays great tribute to the NHS staff who are many and in absolutely in the majority in doing the work that they do in a compassionate way. As the noble Lady has the experience. I can't comment specifically to society, but what I can say is from Donna Ockenden's conclusions.

There was something deeply wrong here and not listening. Culture, racism and discrimination. Not just well, to to women, to families and to staff

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and between staff. We cannot have that. My my, my Lords, my Lords.

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My my, my Lords, my Lords. The report describes a bullying and toxic culture. Just to continue and toxic culture. Just to continue this theme, with junior midwives not being sufficiently supported when dealing with complex cases and when dealing with complex cases and actually a culture not allowing them to refer such cases up the
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Baroness Merron Portrait Baroness Merron, The Parliamentary Under-Secretary for Health and Social Care (Labour)
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I'm so very sorry to hear the >> I'm so very sorry to hear the experience of the noble Lady, and I'm grateful to her for sharing I'm grateful to her for sharing that with your Lordships House. I'm sure that we all offer our condolences and understanding as far as we can to support her and her family, and how sorry I am for her loss. The noble Lady is right to talk about cover up. That did happen in this case and has also been identified through other reviews.

And certainly as Donna Ockenden conducts reviews into Leeds and Sussex, we will be able to find out what happened there. But we aren't waiting. And I do want to assure the noble Lady of that, and I think that the role of the regulators is worth speaking of because it has come up not by using the word but. But by how account is kept. So what I can say to noble Lords, the Secretary of State is meeting with the GMC, which we currently have a three month consultation on reforming it.

And the reason he's meeting, he wants to hear their personal account for failings in care. The National Midwifery Council has been undergoing a widespread programme of reorganisation change under new leadership. Again, much needed, but I can assure the noble Lady that as part of the taskforce, we're looking at all parts of the health system where things go wrong, but including how accountability is established because where it is avoidable, that's what we should be doing, avoiding that harm.
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Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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My Lords, I rise to move amendment number one in my name, and that of my noble friend Lord and that of my noble friend Lord Hunt of Wirral. My Lords, this amendment is very simple. It will confine the powers in this bill to genuine steel businesses. Those are undertakings consisting predominantly of the manufacture or processing of steel or of iron for the purposes of steel manufacture. As presently drafted, the definition catches any business which merely includes steel making as part of its operations.

That is a very broad formulation. It could, in principle, sweep up a diversified business in which steel was only a minor part of what it does. Businesses with a limited connection to steel production should not face uncertainty about whether it falls within the reach of these nationalisation powers. Now, I note that when this point was pressed in the other place, the Secretary of State was asked directly whether a business with only 1%, say of its operations in steel would be caught by clause one.

He did not say that it would not be. But a statement of intent is not a limit on the face of the Bill, and future governments are not bound by the assurances of this one. The government say these powers are intended for British Steel, and British Steel is obviously and predominantly a steel business, so this amendment should create no difficulty for that purpose. If the government's intention is genuinely not to use these powers against businesses with only a peripheral connection to steel, they should have no difficulty in accepting this amendment.

My Lords, I beg to move.
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Lord Redwood Portrait Lord Redwood (Conservative)
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Propose. Clause one, page one, line six. Leave out of or including line six. Leave out of or including and insert predominantly of.

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and insert predominantly of. My Lords, I fully support this amendment and I hope it will tease out from the Minister a little bit out from the Minister a little bit more about what the underlying purpose of the general legislation is, because I personally am not too enamoured of the idea that this should become a fully nationalised industry with the ability to acquire all sorts of other steel interests. And I felt that the idea of the government's policy arose out of the particular circumstances of British Steel at Scunthorpe, related to the question of blast furnace produced steel, where we're down to our last two blast furnaces and wasn't intended, I think, to build an electric arc furnace set of businesses where progress has already been made in establishing these in the private sector, or where there are plans in certain cases, for government grant aid to achieve an electric arc steel additional business by that combination of subsidy assistance and private capital.

So I would certainly hope the government will accept this quite substantial narrowing of what is such a broad piece of legislation, because there are many with general interests in steel, which we would not get too caught up in. But I'd also like clarification of whether there is any possibility the government might want to build a nationalised electric arc steel set of businesses, because that would be an expensive and difficult proposition.
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Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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My Lords. Firstly, let me thank >> My Lords. Firstly, let me thank all noble Lords for a very constructive engagement in advance constructive engagement in advance of of committee stages and also for all the amendments and valuable contributions that they will make during this Committee stages. My Lords, I turn to the amendments in the amendment in the name of noble Lords, sharp and noble Lord hunt, which seeks to introduce a narrow definition of a steel undertaking. I fully understand the purpose of the amendment.

The government has no desire for these powers to extend beyond what is necessary. They are exceptional powers for exceptional circumstances and should be exercised only where Parliament intended. However, I respectfully suggest that the amendment would not provide greater certainty. Instead, it risks introducing greater ambiguity into the Bill. The proposed test that a business must be predominantly involved in steel immediately raises difficult questions. As alluded to by the noble Lord Fox, predominantly by what measures turnover, assets, employees, production, profit or some combination of these.

The amendment provides no answer. That uncertainty would inevitably invite legal challenge precisely when swift and decisive action may be required. Businesses with significant steel operations could argue that they fall outside the definition because steel is not their primary activity. Equally, complex corporate structures could be organised to make the test easier to avoid altogether. In seeking to narrow the definition, the amendment risks creating loopholes that undermine the legislation's very purpose. The government's drafting avoids this difficulties. It provides a clear and workable definition that gives legal certainty while ensuring the powers are used only when genuinely needed to protect the public interest.

For those reasons, while I appreciate the spirit in which the amendment has been tabled, I cannot agree that it improves the bill. I know this is not what the noble Lords intended, and I can accept that the current drafting is broad. However, this definition closely follows that used in the Steel Industry Special Measures Act and ensures that there can be no dispute about its meaning. In practice, we do not expect many companies to fall within the current definition, so the amendment would have minimal effect.

I will repeat the government's position throughout the passage that it's strong, that it is strongly minded to use the powers to acquire British Steel if it is in the public interest, and that we do not have any plans to acquire any other steel undertakings. It is therefore very unlikely that they would be used in relation to any other company, let alone one primarily engaged in non steel activity. I hope this helps clarify the matter, and I respectfully request that the amendment be withdrawn.



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I'm grateful to all noble Lords who've spoken, and it was remiss of me to not also thank the Minister me to not also thank the Minister for his extensive engagement and his team in regards to the Bill. My Lords, this amendment is simple. I Lords, this amendment is simple. I don't, I'm afraid, agree with the noble Lords comments or indeed the noble Lord Fox comments. This is actually very straightforward. In actually very straightforward. In fact, I would refer noble Lords to the Merriam-Webster dictionary where it says that the word predominantly informal or technical predominantly informal or technical usage.

It can denote a precise majority, e.g. more than 50% or an even higher threshold e.g. 60 to 80%, depending on jurisdiction. I am not an expert on which jurisdiction we're in, but however, it's pretty clearly north of 50% this I'm afraid the way the bill is written, as we pointed out in. As I pointed out in my opening speech, it could be as little as 1%. My Lords, I've listened to the noble Lords objections to the wording of the amendment, and I'm very happy to work on tightening it up if he thinks that would help.

Because the amendment is simple, it would confine the powers in this bill to genuine steel businesses. Undertaking is consisting of predominantly of the manufacture or processing of steel, or of iron for the purposes of steel manufacture, which I think answers most of the noble Lords objections. And frankly, if those objections are relevant to my wording, they are also relevant to the wording that's currently on the face of the bill. So I don't really believe in the ambiguity argument. I'm afraid my Lords businesses with a limited connection to steel production should not face uncertainty about whether it falls within the reach of these nationalisation powers.

The present drafting does not provide that reassurance. It permits powers to apply to an undertaking which merely includes steel making or related iron production. As I've already pointed out, my Lords, for now, I won't press the amendment, but I would like further discussions with the Minister if he's amenable to see if we can find a way to tighten up the language, which both suits the government's purposes, and makes it clearer for all of those undertakings that we're discussing. undertakings that we're discussing. But for now, not moved.
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None Portrait Amendment:2 Lord Hunt of Wirral (Conservative)
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>> My Lords. >> I speak to amendments two, three

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I speak to amendments two, three and eight. Amendment two limits the public interest test to the public interest test to the specific factors listed in clause specific factors listed in clause two. On first reading, the test two. On first reading, the test looks robust. National security, the economy, the construction, maintenance and operation of critical national infrastructure. These are serious criteria, and one might think they provide a meaningful check on the exercise of what are some very significant powers.

But then one reads on clause two, page one, line 14. The test includes, but is not limited to those grounds. And so I would contend with those five words. The floor falls away if the test includes, but is not limited to the listed grounds, then surely in practice there is no test at all. Any Secretary of State, of any political persuasion at any time can conjure a reason and call it the public interest. So the amendment in my name and of my noble friend Lord Sharpe of Epsom, would remove those words and make the listed grounds exhaustive.

This amendment would ensure that when Ministers say these are exceptional powers subject to a robust public interest test, that is actually true, not merely true for now with this Secretary of State in these circumstances, but true on the face of the legislation, for every Secretary of State who follows. Now, the government may say, well, there need to be some other grounds, grounds beyond national security, the economy and critical infrastructure. Well, I would genuinely like to know what they are.

What situation could possibly arise that those three criteria do not already cover? If the government can answer that question, let them do so today. Let them set out on the record what additional circumstances they have in mind, because if they cannot, then these words should not be in the bill. We have a bill that, as we've just discussed in the first group, can capture businesses with only a peripheral connection to steel. We now have a public interest test with no effective limit.

So I ask the noble Lord, the Minister, to confirm that the powers in this bill could not be triggered simply because of industrial pressure, because, for example, a trade union had decided that the answer to a dispute is public ownership. Will he rule that out? And then turning to amendment three, the government's impact assessment describes the difficult environment in which the steel sector operates, including high domestic operating costs and a lack of long term investment.

It recognises that these pressures bear directly on the ability of UK steel producers to compete. Yet clause two refers only in the broadest terms to supporting the economy. That phrase could cover almost any intervention. It does not require Ministers to demonstrate that the intervention will leave the United Kingdom with a stronger, more productive or more internationally competitive steel sector. So there is a difference between preserving an undertaking for the moment and putting it on a sustainable footing for the future.

Nationalisation may avert an immediate crisis, but it should not become a means simply of transferring losses, risk and difficult decisions from a company to the taxpayer. The question must be whether public ownership could help to secure the investment. The modernisation, productivity and commercial resilience needed for this sector to compete successfully. There's also a point of consistency with the government's own drafting. The bill makes clear that the public interest test is not intended to be limited to the matters specifically listed.

It says that the test includes, but is not limited to, national security, critical infrastructure and the economy, as I said earlier. So the government have already chosen not to confine the public interest test in those circumstances. Why would they resist including economic growth and international competitiveness expressly within it? Growth is the government's stated number one priority. International competitiveness is plainly fundamental to the future of a sector exposed to intense overseas competition and high energy costs.

If the government consider national security and critical infrastructure important enough to name in the bill, surely growth and competitiveness should also be named. So I invite the noble Lord, the Minister, to explain why those two objectives do not appear in the Bill. How will the government assess whether an intervention is likely to strengthen competitiveness? Will that assessment include energy costs, investment productivity output, technological modernisation, export potential and the Undertaking's ability to operate sustainably without indefinite support from the taxpayer? And turning to amendment eight, the government have confirmed confirmed that they have already provided approximately £555 million to British Steel for working capital, including raw materials and salaries.

The National Audit Office reported that as at the 31st of January this year, the Department for Business and Trade had spent £377 million on its intervention and then at the then current rate of spending, total costs were expected to exceed £642 million by the end of this month. More importantly, the National Audit Office warned that if spending continued at the then current rate costs could exceed £1.5 billion by 2028 and that figure was before any potential transformation of the business compensation to the current owner or the eventual costs of exit.

Now, the Nao also found that the intervention had no clear end date, had not stabilised the company's finances and had begun without a clear exit strategy. But this bill, this bill is not simply emergency legislation to keep the furnaces operating over a weekend. It creates enduring powers to transfer businesses, assets, rights and liabilities into public ownership before those powers are exercised, the government must be able to demonstrate that the proposed course represents value for money.

The facts, since the emergency intervention underline why this matters. We are told that the business, in its present form is structurally unprofitable. We know that substantial decisions remain to be made on its future, including any transition in production technology, the cost of investment, the length of any transition period and the eventual route to a viable and sustainable business. The taxpayer, my Lords, needs protection against an open ended commitment. Now, the government may argue that the Treasury's managing public money framework already requires departments to consider value for money.

My Lords, I suppose I could look forward to the day when there is some evidence of the Treasury acting responsibly in this way, but I just ask the noble Lord, the Minister, to tell us what value for money assessment will be undertaking undertaken before a principal transfer power is exercised. Will it include the expected costs of compensation, operating losses, capital investment, decommissioning, restructuring and any eventual exit? So this amendment does not frustrate the government's ability to act where action is genuinely justified, it simply ensures that before nationalisation takes place, the Secretary of State is satisfied that it is a responsible use of

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taxpayers money. I beg to move. That as clause to page one. Line
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16:57
Lord Redwood Portrait Lord Redwood (Conservative)
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I was I welcome these three amendments. I think amendment two is a necessary slight curtailment. is a necessary slight curtailment. I think it would still leave the government with enormous scope, given how wide ranging the three cited reasons for public interest intervention are. And so I can't, like my noble friend, think of some other reason why they might want to do this that couldn't be adequately covered by the wide ranging proposals in existing text. I also agree that it would be a good idea to change the language through amendment three, to stress that intervention should, in the longer term, be interested in economic growth and and profitability and successful investment.

Because surely the government doesn't want a lame duck investment which costs a very large sum of money for a limited period of time, and then the government has to disappoint all those people who thought it was going to be kept going for a rather longer period, or that it might break through to profitability and success. But if I had to choose from between three, I hope my noble friend would particularly press the value for money one. Number eight, because I think it sums it all up.

And in the Second Reading debate, we did have some discussions looking at the general legislation, asking what is the medium and longer term future of blast furnace steel? Because as we've, I think, agreed across the floor of the House, Second Reading. And now the main reason for the past legislation, emergency legislation, and this legislation is a temporary cessation of closure of two very important blast furnaces, which are our last blast furnace making capabilities in the country.

But I believe, and I'd love to have the government either confirm or deny that it is still the government's medium to longer term intention to close all blast furnaces in this country, as previous governments have been doing, and to transfer to electric arc steelmaking, preferably with private finance and successful competitive private sector businesses doing that work. And in the previous exchanges, I think the Minister signalled that the government isn't wishing to build a nationalised electric arc business. These powers, although they, for understandable reasons, have to be general and most likely to be exercised in the case of blast furnaces.

So I think it would be helpful to the workers and helpful to taxpayers if there were greater clarity over the time period for keeping these blast furnaces open, and whether there are any limits on the costs that the government is prepared to run so that people could make proper plans concerning their their jobs and their futures in this important steel industry. And so taxpayers could have some reassurance. Now, as my noble friend has rightly done, he's he's quoted from the quite worrying National Audit Office report, which I, too, had the misfortune to have to read and discover how difficult this problem is and how expensive it is becoming and could become.

And there surely must be some limits to how much loss the government will compensate, and how much working capital and maybe additional capital investment it might put into two ageing blast furnaces if it's medium to longer term plan is to close them down anyway. And from the government's point of view, it obviously would be very bad politics if it paid hundreds of millions or even well over a billion to keep the blast furnaces going for another year or two, and then had to admit that they had to close just before a possible next election with the great disappointment of the workforce, who, after a year or two, might have thought that they were going to carry on financing these things indefinitely.

So I hope the Minister will will show some sympathy for this idea that there has to be a value for money test. Value for money audit. There always is in government anyway. But in this case, I think my noble friend is right to ask for a specific one. And I would have thought that the government would want to to set out both how it's going to report the escalating losses, because these are going to become very important matter, which will get picked up in normal public expenditure reporting.

But I would have thought, given the importance and sensitivity of this policy, it would be good to know that both houses will be kept informed on a regular basis with the the costs and therefore the impact it's having on public spending. I assume it's for the foreseeable future going to be taken out of the budget heading of 2.5 billion, which was available for modernising the steel industry. But you can't call this modernising expenditure. It is really a virement of money that was there to try and pump prime a more successful, more modern private sector.

And this money seems to be being drawn down now to subsidise for a couple of ageing blast furnaces, where there is still a huge gap between the value of the product they can produce to the customers and the costs incurred by manufacturing it on top of, I think, needing proper financial reporting to see how we're doing, we should surely be due some kind of business plan. Now, of course, the business plan would be redacted or edited because there may be commercially sensitive issues, and you wouldn't want to share all your details about who you might sell steel to at what prices and so forth.

But I think the the general outlines of the business plan should be made available to the public and taxpayers through both houses, so that we can see what what the intentions are, and we can then form our own judgements about whether that plan looks feasible. And we can also have some way of testing whether the government is on track or whether it needs some more help, or whether things might have gone wrong. And that would also be helpful for the government.

Ministers have placed themselves in a very important, but also very difficult position because they supervise this emergency intervention under pass legislation. They are now effectively having to sign off on all the costs, all the expenses and the marketing plans and all the rest of it of the staff they have chosen to put in to the Chinese owned plant. And they've also got to handle successful negotiations with the the Chinese owners, who I think are demanding unrealistic compensation.

But this country doesn't have a tradition of stealing people's assets who come here to invest from abroad. And that would obviously be very unfortunate precedent, because as a country, depending on a lot of inward investment, you wouldn't attract very much inward investment. If people thought that an act of Parliament could take their assets away from them, however impaired those assets might be without any agreement about the basis of of that transfer. So I would hope the government would look favourably on the need for some financial reporting, maybe quarterly, and would look favourably on the need to have constructed a business plan for its its own concerns and own interests, and be able to share at least the general outline of that plan with the with the wider public to give some reassurance that the intervention to date was well based and that any successful purchase of the assets or compensated acquisition of the assets from the current owner was also in the best interests and provided value for money.

Yeah.
17:05
Lord Fox Portrait Lord Fox (Liberal Democrat)
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My Lords, one of the things that the briefing from the high value Catapult team confirmed is the enormous difficulty there will be in creating a viable business from what His Majesty's Government intends to take control of in Scunthorpe, the age of its blast furnace, the potential cost of any replacement of a blast furnace, the expense of conversion to electric arc furnace if that's what what what is intended, and then the hugely competitive landscape, of course, in the global steel markets, these are just the headlines of the complexity.

But the choices go beyond blast furnace or arc furnace. If investment is found to install a new electric arc furnace, what will it produce? Will it aim to produce the full range of steels? We need long slats, rebar, etc. or will it specialise in particular steels that perhaps are more strategic and less easy to source? And if it goes down the specialisation area, the UK will probably need access to much more reduced direct reduced iron DRI. Likely this would have to be imported and it would be very high CO2 emission imports if it came from most countries, because making our own DRI would need a whole new bit of kit, which is itself very pricey.

So I say choices and making the right calls will determine if Scunthorpe has a long term future and what that future looks like, and it will determine whether it is indeed an investable prospect and whether it can attract private sector. So when the government begins assuming this bill becomes an act, and when the government starts to use the terms of this act to start to take ownership of this plant, it changes the focus of these choices because now the choice is rest.

Of course, there'll be a new board and a new management to run the plant, but the cost of those choices will rest with the UK taxpayers, at least at first. And we will be providing the capital. And we've already, as we've heard provided, made available £555 million in working capital. But clearly these sums could could increase massively at a scale. And it is the scale of risk that the government is taking on that is guiding my approach and our approach to this act, because this bill needs to have more government, more scrutiny from Parliament at all levels within within this act.

And what we will be doing from these benches is pushing those buttons. Now, these three amendments start at least to, to to open up that point around accountability. I am a bit intrigued because I don't always agree with the noble Lord hunt, but he normally internally consistent. But but the noble Lord hunt started out saying there should be no expansion of the terms of clause two and then put forward two pretty reasonable ones about growth and and expanding the economy.

I have one that I think the noble Lord Redwood would agree with, which is cost. We should have a clear understanding of the cost before the public interest test is is. So I completely disagree with amendment two because there needs to be a broader discussion around public interest. We need to understand the numbers around public interest. Otherwise we don't know whether it's interesting to the public. So I do not agree with with amendment two. I have some sympathy with the other two amendments, and I'm sure we will be talking more about public interest tests as we deal with other groups through the day.
17:09
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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Firstly, may I thank the noble >> Firstly, may I thank the noble Lord Lord Redwood and Lord Seton and and Lord Fox and Lord Hannan and and Lord Fox and Lord Hannan for their contribution to to this group. There have been several amendments to the Articulation of Public Interest test in clause two. This is a key clause in the Bill and a necessary. Safeguards to ensure that the powers are used proportionately in response to a clear intent, a clear need amendment two would limit the public interest factors that the Secretary of State may consider to those set out in.

On the face of the Bill, the government agrees that the three factors of national security, critical national infrastructure and support for the economy are likely to be the most relevant to the steel sector. Accordingly, the current approach ensures that they are given particularly particular weight when assessing whether to pursue an intervention. However, circumstances may arise in which a case for intervention may not be clearly made on the basis of these three factors. Yet it would be clearly in the public interest to take action.

We think it is a pragmatic to build some flexibility into the Bill. To address this issue, I turn to amendment three. It has been suggested that the third public interest factor should refer specifically to economic growth and international competitiveness competitiveness, rather than supporting the economy. With respect, I believe this is a distinction without a meaningful difference. It is largely a matter of drafting rather than substance. The phrase supporting the economy is deliberately broad. It clearly encompasses economic growth and international competitiveness, but it also recognises that the economy is more than growth figures alone.

It includes strengthening economic resilience, protecting strategically important industries, supporting employment, safeguarding supply chains, encouraging investment and ensuring the long term productivity capacity of the United Kingdom. By contrast, narrowing the text to economic growth and competitiveness alone could unintentionally exclude other legitimate public interest considerations that any responsible government should be able to take into account. There may be circumstances where intervention is necessary to preserve critical industrial, industrial capacity, capability or economic resilience, even where the immediate effect on growth or competitiveness competitiveness is less direct.

The government's intention is to provide Ministers with a sufficiently broad framework to consider the full range of economic factors that may arise. The existing wording achieves precisely that. It is flexible, comprehensive and future proofed, while fully capturing the objectives that the amendment seeks to emphasise. For those reasons, I do not believe the amendment would improve the bill. Government believes that protecting our sovereign capability in what is a foundational sector for the economy will help to underpin our resilience and leave us less exposed to volatile international trading conditions.

The government, therefore, cannot support the amendment. I now turn to amendment amendments tabled at Lord Oates, Lord Sharpe and Earl of Erroll and by noble Lord Fox all three. Noble Lords in different ways seek to require the Secretary of State to consider value for money or the impact on the public finances before exercising the principle transfer of powers. It's the. The. Your later amendment. I fully agree with the principle. I fully agree with the principle that the taxpayers money must be spent wisely.

Indeed, any decision to bring a steel undertaking into public ownership would be among the most significant interventions a government could make. Such a decision should never be taken lightly, and it would not be. However, these amendments seek to place into statute an obligation that already exists as a fundamental principle of government. Every significant spending decisions is subject to the rigorous disciplines of managing public money, as stated by noble Lord hunt. Treasury approval where appropriate, and establish accounting officer framework.

Ministers are already required to demonstrate that public money is being used properly, proportionately and with due regard for value for money. The question, therefore, is not whether value for money should be considered. It absolutely should, but whether it is necessary to restate an existing, well established constitutional obligation in this Bill. I do not believe it. This doing so would add no new safeguard, create no new accountability, and impose no duty that does not already exist.

More importantly, this legislation is intended to ensure that where a vital national interest is at stake, the government can act decisively. Decisions of this nature will always involve weighing immediate fiscal costs against a far greater economic and strategic costs of inaction. The loss of sovereign steel making capability, thousands of skilled jobs and critical supply chains, and industrial resilience could ultimately impose a far greater burden on the taxpayer than timely intervention would. My Lords, the government will, of course, continue to ensure that every decision made under the Bill is subject to the highest standard of financial discipline and accountability.

Those safeguards already exist, are robust and will continue to apply. I would like to refer to the noble Lord Redwood's and also noble Lord Faulks point about turning British Steel around, should we decide? And I say, should we decide in the public interest to transfer British Steel into public ownership, we would act swiftly to put in place a new board, to provide leadership to the organisation, and to be responsible for continued work to drive improvements in health and safety performance, continue work to to stabilise operations and manage costs.

Explore the options for long term viability of decarbonised steel making at Scunthorpe, and develop transport transformation plans in a way that manages the impact of that transition on the workforce in the local area. And I think we'll be discussing or debating more on this in the respective groups. Ten and 13, I think, in day two of committee. So for those reasons, I respectfully request that amendment be withdrawn.
17:16
Lord Hunt of Wirral Portrait Lord Hunt of Wirral (Conservative)
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My Lords, I'm very grateful to all noble Lords who've contributed to this debate and to the noble Lord, the Minister for his response. And can I just reiterate what the noble Lord Lord Fox, said earlier about the way in which the Minister has given us every opportunity to think through into the future and receive some very expert advice as to the way ahead. Now, just to summarise these three amendments, as has been pointed out, they they don't sit easily together, but they have provoked a widespread debate.

And I must say the noble and right Reverend Lord Sentamu was absolutely right to point out that mission creep should stop here. There shouldn't be ways that the noble Lord. The Minister could include all sorts of other reasons. And, of course, in amendment three I suggested to. But the noble Lord. The Minister carefully responded by not ruling them out and not ruling anything else in. So it does seem that either the noble and Right reverend Lord Sentamu is right, or Lord Fox is right, or the house is confused.

It. It has considered certainly all the various options, but it would be useful, as my noble friend Lord Redwood said, if we had friend Lord Redwood said, if we had greater clarity. Certainly some draft business plan that could look into the future and work out the way ahead. Value for money is, my noble friend, said sums. It sums it all up, and I think that although the noble Lord. The Minister thought the noble Lord Fox had signed amendment eight, either.

It has not come to my attention that he has. But I don't believe the noble Lord Fox has signed it. It may be. A later amendment seems to suggest that value for money is required, but I do. I have to say I remain far from convinced by the government's case. These amendments address three basic questions which ought to be answered before the state is given a power of this significance. First, in what circumstances will the power be used? Secondly, what is it intended to achieve? And thirdly, how will.

As my noble friend Lord Redwood pointed out, how will the taxpayer be protected? The government response seems to be that Ministers will behave reasonably, that the powers will be used sparingly, and that the existing public interest test provides sufficient protection. Well, as my noble friend Lord Sharpe of Epsom said in the previous group, this bill sends a message well beyond the immediate circumstances of British Steel investors considering whether to commit capital to the United Kingdom will examine not simply what Ministers will say today, but what the legislation permits tomorrow.

The government say those risks are mitigated by a clear public interest test. But the reality is there is no actual test, and I do believe there is much in this debate for the government to consider. But for now, I beg leave to withdraw the amendment. Is it your Lordship.
17:21
None Portrait Amendment:4 Lord Wigley (Plaid Cymru)
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That this amendment be withdrawn? Amendment is by leave withdrawn. Amendment is by leave withdrawn. Amendment three. Lord Hunt not moved. We come now to amendment

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moved. We come now to amendment four. Lord Wigley my Lord. I beg to move. Amendment four standing in my name and to speak to amendment 36, which is also in my name, and which is grouped with it, as are amendments. 29 in the name of the noble Lord. Lord Fox and amendments 30, 31, 43, 44, and 46 in the names of the noble Lord Lords Lord Sharpe and Lord hunt, I quote amendment four just to bring it to everyone's mind.

It's to add at end a line 20 on page one, a subclause D supporting the local economy of any steelmaking location which may be adversely affected by this act. And I would have thought that those words would commend themselves very much to this House. All of these have to do with the impact of the bill when enacted. All these amendments, they have to deal with that impact, which may be so significant to various aspects of the economy and indeed, on the communities which may benefit or may suffer directly or indirectly from this legislation.

And I shall look forward to hearing the opposition frontbench when they speak, particularly on amendment 43, on the possible impact of this bill when enacted on inward investment, a subject close to my heart as a noble Lord. Lord hunt will recall from prior incarnations, but I digress. Amendment four in my name specifically imposes a duty on the Secretary of State in relation to his responsibilities regarding the public interest to broaden that responsibility to include, via the proposed new subsection D, and, I quote, supporting the local economy of any steelmaking location which may be adversely affected by this act.

My Lords, I have deliberately drawn this new subsection widely and not confined it to Wales. As I know from our experiences in Wales, how badly steelmaking communities can be hit. Steelmaking communities across these islands when steel making is ended or run down wherever those communities may be located. I saw this with my own eyes when I was living in Merthyr Tydfil in the 1970s. At the time of the rundown of the steel manufacturing in nearby Ebbw Vale, the economic decline of the Blaenau Gwent area has been staggering, as the noble Lord, Lord Murphy mentioned in the Second Reading debate of this bill, it is now amongst the poorest areas, economically speaking, not only in Wales but throughout Britain, and so decisions arising from the operation of this Bill, when enacted, could have far reaching consequences for communities who have depended on steel in the past and who may be facing dire consequences of specific and deliberate action undertaken by the government through this act.

Then a duty surely lies on us to help safeguard those communities. There will my Lords inevitably be winners and losers as a result of actions taken under this legislation? Hard working, skilled industrial communities may be undermined through no fault of their own. Indeed, the decisions taken by the UK government may be in some regards for the good of the industrial base of these islands. But don't tell me that to an unemployed, skilled steelworker in Margam or Shotton, or Llanwern, or, for that matter, in Teesside or Sheffield or Doncaster, that this does not matter if the actions of the government in consolidating steelmaking in a limited number of locations has that not a knock on effect, then the government surely, surely has a responsibility to support those local economies.

Hard hit by Lord Rose. I cannot believe that a Labour government will not readily acknowledge this, and I invite them to accept amendment four, or at least to undertake to return at Report stage with their own amendment to secure the objectives I have outlined in amendment four. May I touch briefly on amendment 36 in my name, which is linked with this group I. That that provides a vehicle via clause 58 of this bill whereby financial aid outlined in amendment four can be channelled through local authorities in steel making areas hard hit by this bill so that they are compensated for the adverse effects on local communities arising from the exercise of the powers of this act relating to steel making in their own area.

My Lords, as I stated at Second Reading, I support the objectives of this Bill, but with all the goodwill in the world, there will inevitably be losers as well as winners, and as it will be by Act of Parliament that such far reaching changes will be triggered. Then surely it behoves Parliament to safeguard those who may be adversely hit as a direct consequence. My Lords, I beg to move.
17:26
Lord Fox Portrait Lord Fox (Liberal Democrat)
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Amendment proposed clause two, page one, line 20, and insert the words as printed on the Marshalled List. >> This is a mixed bag of amendments. I'm speaking primarily amendments. I'm speaking primarily to amendment 29 in my name, but actually to some of the other amendments here as well. Amendment 29 highlights the potentially distorting effects that Cbam carbon border adjustment mechanism would have on various elements of the steel industry, from supply from supplier to steel user. On the one hand, if applied fairly, Cbam could and should deal with the currently distorting global steel market, whereby Chinese steel, with a high carbon investment, is competing unfairly with greener steel in Europe and the United Kingdom.

So far, so good. But the effects of cbam on other steel users and manufacturers could, if applied wrongly, be very detrimental. That's why our international picture, and particularly our agreement or future agreement with the EU, will be so important in ensuring how manufacturers do not have one hand tied behind their back. Also, the way in which Cbam interacts with tariffs, which really hasn't been discussed terribly much, will also be very important. Also in the group, the issue of energy costs is, is, is, is is put in and but in truth cbam the EU energy costs fall outside, at least at the very edges of the scope of this bill, whereas I would say amendments four and 36 in the name of the noble Lord Wigley and amendment 44 from the Lord Sharpe and hunt are very front and centre within this bill.

Tata, for example, are making considerable investments on their own account and should not be disadvantaged disadvantaged by any publicly owned business. Similarly, the communities in which the industry is located are vital and must be a key part of decision making. However, the nature of the amendments in this group is almost like a snapshot, whereas in reality it's going to be a long term issue, which is why later on in in in committee, I have proposed a stakeholder advisory committee. And in amendment 22 and an explicit role for select committees in amendment 38, because this will be an ongoing issue that we need to have a parliamentary on ongoing review of.

So whilst I support elements and intentions within this group, I think the actual heavy work will be done in a different way going forward.
17:29
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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My Lords, I rise to speak to members 30, 31, 43, 44, 46 standing members 30, 31, 43, 44, 46 standing my name and that of my noble friend, Lord Hunt of Wirral. Can I thank the noble Lords Lord Wigley, who I

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thought made a very A powerful case and indeed Lord Fox for their previous speeches. My Fox for their previous speeches. My Lord, starting with amendment 30, this amendment goes to the valuation of a steel undertaking valuation of a steel undertaking and the need for that valuation to reflect the real commercial environment in which the undertaking will operate. And that environment, my Lords, is not fixed. It is being shaped by government policy and in particular by the new policy and in particular by the new steel trade measure coming into effect from the 1st of July.

Only days ago, the government changed the detail of that policy, relaxing the original proposal somewhat with tariff free quota reductions pulled back from the level first proposed. We will no doubt discuss that in more detail when the statement is taken tomorrow, and I do not intend to rehearse that debate now. But the fact is, the government's choices on trade policy will have a material effect on the commercial position and therefore the value of any steel undertaking. A tighter quota and a higher above quota tariff will limit import competition.

The way quotas are set will affect downstream industries, supply chains, customer relationships and the availability of particular steel products. The government cannot, on the one hand, present their trade policy as central to the future of UK steel and, on the other hand, resist any requirement for that policy to be factored into what a steel undertaking is actually worth. The need for clarity is made more acute by the uncertainty of recent weeks. Businesses have been trying to understand what the new quota levels will be, how quickly quotas may be exhausted, which products will be covered, and what the practical effect will be for producers and steel consuming industries alike.

So I would ask the Minister, does the government accept that the new steel trade measure will affect the value of steel undertakings, and if so, why should the independent value and not be required to consider it? Turning to amendment 31. Electricity costs are among the central determinants of the viability, competitiveness and future costs of future values. Rather sorry, not future costs, future value of steel and the position facing British industry is stark. The United Kingdom has had some of the highest industrial electricity prices in the developed world.

UK industrial users have paid substantially more than competitors in France and Germany, and on the most widely cited international comparison, around four times as much as businesses in the United States. For steel makers, the gap remains significant. That is particularly serious as the sector moves towards more electricity intensive production methods, including electric arc furnaces. A business may have the workforce, the plant, the orders and the ambition to modernise, but it cannot compete indefinitely if one of its principal input costs materially.

One of its principal inputs costs materially more than it does for its overseas competitors. And these costs, I'm afraid, reflect recent policy choices by the government. Indeed, the fact that the government provided some limited relief from network charges to eligible energy intensive industries rather demonstrates the point. My Lords, the government now says that further measures will bring prices closer to those in competitor countries. But closer is not the same as competitive, nor is a future scheme with questions of timing and eligibility eligibility still to be resolved.

An adequate basis on which to value a business today. This amendment would require the failure to consider the prices paid by UK steel producers, the disparity with comparator countries, and the effect of any support intended to reduce energy costs. That should include both the costs after existing reliefs and the risk that relief may be time limited, incomplete or dependent upon eligibility. It should also include a clear comparison with major competitor countries. So could the Minister please say whether the government's objective is genuinely genuine parity in industrial electricity prices with our principal competitors, and if not, what continuing cost disadvantage does the government consider acceptable for a strategic trade exposed industry? Can the Minister also perhaps explain how the value of valuer will assess the effect of support, which is prospective rather than guaranteed, particularly where broader measures are not expected to operate fully until 2027? The government's own impact assessment accepts the seriousness of this problem.

It states that energy costs threaten the sector's long term viability and its ability to compete. It also acknowledges that UK steel producers face higher electricity prices than comparable countries, and that contributes to the uncompetitive production costs and pressure, of course, on margins. My Lords, turning to amendment 43 as we raised a Second Reading, the government's own impact assessment recognises the risk of a chilling effect on investment if businesses and investors perceive a greater risk of state intervention. Points also made by my noble friend Lord Redwood very, very well, I thought in the last group, the United Kingdom has long depended on its reputation as a stable, predictable and rules based place in which to invest.

And the risk is that greater in the current climate, steel businesses are already dealing with high electricity costs, rapidly changing trade policy and significant regulatory burdens. Adding an open ended power of nationalisation can only increase the sense of risk for those considering whether to invest in the United Kingdom. If the government are confident that their actions will strengthen confidence and attract private capital, they should have nothing to fear from transparency. Amendment 44 addresses a basic point of fairness. If the government takes a steel undertaking into public ownership, that business must not receive selective advantages which place comparable privately owned steel businesses at an artificial disadvantage.

Without this safeguard, there is a clear risk of distortion through subsidies, preferential access to public contracts, more favourable favourable regulatory treatment or other support unavailable to private companies. The Minister in the Other place stressed the need for flexibility and for the government to act quickly. But flexibility need not mean unfairness. It is entirely possible to support a strategic undertaking in exceptional circumstances, while maintaining a level playing field for the wider sector. My Lords, amendment 46, if we accept the government's central argument that British Steel is a critical national infrastructure, that domestic steel production is essential to our national security, and without it we cannot build our navy, our jets, our submarines.

Then it must also accept the logic of what follows from that argument. You cannot declare something critical to national security and then leave it defenceless. Amendment 46 states that where the Secretary of State has exercised a principle principle transfer power, where steel has been brought into public ownership precisely because because it is in the public interest, the Secretary of State must have the power to prevent industrial action from destroying the very thing that public ownership was meant to protect.

My Lords, we have seen what happens when governments are too timid to act. We have watched the railways held to ransom by the RMT. We've seen it in healthcare, where the former health secretary himself felt compelled to call out what he described as cartel behaviour, and the government have made themselves more vulnerable still. The Employment Rights Act of 2025 stripped away strike safeguards that existed for a good reason. The ballot thresholds are gone. The government unlocked the door and then expressed surprise when it was pushed open.

If a steel undertaking is nationalised in the name of national security and a trade union then calls a strike that shuts down production, what will the Secretary of State do? Stand at the despatch box and explain that our defence supply chains have been severed because he did not want to upset the unions? Does the government seriously want domestic steel production halted because a union decides the moment of public ownership is the moment to press its advantage? My Lords, the government can't have it both ways.

They can't argue that steel is so vital to this country that it must be brought into public ownership and simultaneously argue that once it is in public ownership, it should be just as exposed to industrial disruption as any other businesses. The whole point of this public interest test, if it means anything at all, is that some things matter too much to be left to the ordinary run of commercial risk, industrial action that threatens critical national infrastructure is precisely such a risk.

So I invite the Minister to tell the House that the government have considered the risk. I invite him to explain what powers the Secretary of State would have on the day a strike is called at a nationalised British Steel to keep the blast furnaces lit. And if you cannot answer that question satisfactorily, I would suggest that this amendment provides exactly the answer that is needed. My Lords, I beg to move.
17:38
Lord Redwood Portrait Lord Redwood (Conservative)
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My Lords, I'm grateful to my >> My Lords, I'm grateful to my noble friend for raising the crucial issue of electricity prices, crucial issue of electricity prices, as the strategy is to convert more and more to electric arc furnaces. and more to electric arc furnaces. The price of electricity becomes the critical variant in determining how successful those businesses will be, how competitive their prices will be, whether they will generate cash and profit in order to reward those who ventured in them, or whether there will become problems for those.

Just as there obviously are problems in the in the British steel carbon based system through its blast furnaces. So I do hope that the Minister can give us a little bit more background by way of reassurance that, given that the steel strategy has been and is still to be based on electricity as the prime source of energy, there does need also to be a policy which will deliver consistently competitive electricity prices. And these prices at the moment, without specific and targeted subsidy intervention, are just way out of of sync with the electricity prices.

In the more competitive world of our major competitor countries. I also think it's very important that this group of amendments raises the issue of tariffs. Now, of course, anybody valuing the assets that might be acquired under this legislation or valuing what we already have by way of control and operating responsibility, will need to look at the impact of the tariffs. But I think it's a good idea to to stress this, because these are a very major change in the background for the conduct of steel businesses in this country.

And we cannot be sure exactly what the impact is going to be, because we have two types of impact coming in around the same time. There is the carbon border adjustment mechanism, which is effectively a fairly universal tariff based on carbon content of imported material, which is clearly going to apply substantially to this industry. And then there are the specific tariffs which this government has announced for shortly, targeting competitive steel coming into Britain with a very large increase in tariff on with a rather low protected quota, so that there will definitely be a substantial increase in cost for import.

Now, you could argue, as I presume the government does, that this is completely benign for our steel industry, because it means the combination of the immediate tariff and the soon to come cbam tariff will make imported steel so much less competitive, and therefore will help reduce the pressures on our existing electric arc furnaces in the private sector and the two blast furnaces now effectively under the control of the not in the ownership of the public sector. And there will be some relief as the.

The policy intends. But there can also be other consequences which a value would have to take into account, and that is that the higher the cost of imported steel, the more difficult it will be for all those many companies and industries that are using and adding value to steel in our wider steel using industry. And there will be limited scope for all of those users of imported steel to find exactly the right specifications of steel and the right availability and pricing from the rather limited scale industry that the United Kingdom now has as a steel producer.

And so there could well be financial difficulties, reductions in turnover and activity, or collapses of steel using businesses in the United Kingdom facing these very high tariff impositions on their main raw material. And if they are acquiring more by way of import than they are at home, and they can't immediately substitute, you could have the paradoxical effect that the tariff designed to protect the British industry, lost orders to the British industry, as well as to the exporting industry from abroad, because you could well have businesses here collapsing that are substantial steel users who were no longer able to carry on the business sufficiently to sustain their limited purchases from the UK because of the cost of the expensive imports.

So I think this does need careful policy examination, and I'm glad the government's had one rethink about the tariff quota arrangements for this, but I think it probably needs to be a bit more homework about the balance between the rather larger turnover at risk on steel using businesses in the United Kingdom, compared with the rather too small turnover available on steel production, and probably needs to consult a bit more widely over. Therefore, the the medium to longer term impact on steel demand from domestic as well as from imported sources interested in the proposals on impact on local economies, but I'm not quite sure what is in mind and how that would work out, because it's quite right, as the noble Lord has said, that there will have been impacts from previous closures or redundancies, and there could be future bad impacts as steel plants become more productive and need less labour, or as the final conversion is made from blast furnaces to electric arc, where there would clearly be a substantial loss of employment.

There will need to be assistance and help given to those who are losing their jobs, or who have lost their jobs in the past, but still haven't been able to retrain or find good alternative employment. But I think one needs rather more by way of detail, and I'm not quite sure that this bill is the right place to do that, because it relates to a series of of other government initiatives and government funds and programmes which are more generally available. But the noble Lord Lord Wigley might be right that they need need to be improved.

And that would be, I think, a subject for another conversation on another day.
17:45
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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My Lord sir. All noble Lords have raised a number of amendments to ensure a level playing field across the steel industry, and I across the steel industry, and I wish to thank noble Lords for their commitment to ensuring that this Bill positively impacts the UK steel industry. A number of amendments have been tabled on this topic, so with this in mind, I will begin by addressing the amendments to the Bill that have been tabled before. Turning to the new clauses proposed for the Bill, I'll consider amendments 29, 30, 31 together, as I believe they are intended to have the same effect.

Amendment 29 seeks to specify that compensation regulations under clause 544 B may allow the independent valuer to take into account external tariffs, as mentioned by noble Lord, Lord Redwood and the carbon border adjustment mechanism when valuing the steel undertaking, as mentioned by noble Lord Fox. Meanwhile, amendment 30 seeks to require that any valuation of are still undertaken. Take into account the steel import quota and tariff measure that is due to take effect from 1st July 2026. Amendment 31 would require an evaluation to take into account the anticipated effects of electricity prices.

I am sympathetic to concerns about the impact that these trade related measures and electricity costs may have on steel undertakings, and therefore on any compensation determinations made by an independent valuer in relation to them. Under any Compensation Scheme regulations. However, electron emphasised that the government considers it unnecessary to add these adjustments to a non-exhaustive list of examples of matters for a valuer to take into account under any compensation regulations, any valuation would reflect the wider economic and market context, including the trading environment in which the steel undertaking operates with, with or without tariffs, without the need to single out specific factors in primary legislation.

This means that the valuer will ultimately have discretion to determine what they consider to be relevant factors in making their determination. Valuing a steel undertaking would be complex. The independent valuer would necessarily have, or be advised by those who have expertise and experience in this area and would be well equipped to make informed decisions about the approach to valuation. For this reason, the government does not consider this amendment necessary. I turn now to amendment 43, which was placed a duty on the Secretary of State to report to Parliament on the impact of any nationalisation of a steel undertaking on inward investment in the UK.

I'd like to emphasise the commitments this government has already made to support investment in the steel sector. The Government's steel Strategy set out commitments to removing barriers to investment and creating a more supportive business environment, so that steel companies are better able to compete, are protected from carbon leakage and unfair trading practices, and have greater scrutiny, security and certainty. The government welcomes new entrants to the UK steel industry, which would foster a more competitive business environment. Government funding is available to support this.

I wish to reassure noble Lords that the impact of nationalisation would be taken into account in any impact assessment of the use of the transfer of powers. This is the most appropriate mechanism for reporting on any expected impact on the economy. Given the complexity, interlinking and scale of investment trends, it would be difficult to report further on the exact impacts of a single intervention. It is for this reason that we ask that this amendment be withdrawn. Amendment 44 seeks to ensure that the powers in the Bill do not confer any advantage on publicly owned steel undertakings, which could distort competition and trade.

I understand the noble Lord Lord Sharpe is concerned that this bill may unfairly distort competition and investment across the steel sector. However, I would like to reassure your Lordship that this is not the government's intention. Any financial assistance provided to publicly owned steel undertakings will be time limited, targeted and proportionate. Furthermore, we will continue to comply with domestic and international subsidy control obligations to avoid market distortions. I hope this clarifies that the government is committed to ensuring a level playing field between state owned and publicly owned steel companies.

This amendment is therefore not required. I refer to amendment four and 36, tabled by the noble Lord Lord Wigley. He has raised concerns about what he considers to be the potential adverse impact of the bill on local communities in steel making areas. Amendment four would create an additional public interest factor for the Secretary of State to consider, ahead of exercising the principal transfer of power. This would be to support the local economy of any steel making location adversely affected by the bill.

The government has introduced this bill to support domestic steel making, not to threaten it. Additionally, one of the three factors set out in the public interest test in clause two is supporting the economy, including any part of the UK economy. The same applies to membrane 52, which would allow financial assistance to be provided to compensate communities adversely affected by the bill. But Lord Singh do not expect the bill to have any adverse impact on local communities, so I do not consider this amendment appropriate.

My Lords, I would like to emphasise the noble Lord that the steel industry in Wales is the only part of the industry that industry, with a ring fenced fund. £500 million for Port Talbot to transform the steelworks, secure steel production at that site and secure the future of South Wales steel industry. This is a significant investment that will benefit the local community in that area for years to come. This demonstrates the government's confidence in the Welsh steel community and the crucial role that Tata plays in that community.

I refer now to amendment 46, tabled by the noble Lord Sharpe, and I understand its objective. We all want to ensure that any publicly owned steel undertaking can operate effectively, maintain production and continue to serve the national interest. On that objective, I do not believe there is any disagreement within the committee. Where we differ is in the means of achieving it. The amendment would give the sector a state the power to prohibit or restrict industrial action, where it was considered to pose a significant sufficient risk to the public interest.

The government does not believe that curtailing the workforce rights is either necessary or the right way to ensure, or to secure, a successful and resilient steel industry. The people who work in our steel plants are not an obstacle to operational success. They are the reason it is possible. They are skills, commitment and professionalism. Keep furnaces running, fulfil customer orders and sustain a strategic industry on which our economy and national security depends. The long term success of a publicly owned steel undertaking will be built on partnership with its workforce, not on restricting their rights.

Moreover, good industrial relations are an asset in themselves. Constructive engagement with employees and their trade unions is far more likely to ensure stable operations than legislation that risks damaging trust and co-operation. Indeed, imposing additional restrictions could counter could could prove counterproductive, making disputes harder to resolve rather than easier to resolve. The government established constructive relationship with the trade unions, representing workers at British Steel and across the wider steel sector. We value the role they play in representing their members and in helping secure the future for this vital industry.

Existing industrial relations legislation already provides a legal framework for industrial action. The government sees no justification for establishing a separate and more restrictive regime, merely because an undertaking has entered public ownership. Public ownership should not mean fewer workers rights. It should mean responsible stewardship of a strategically important industry, working with the skilled men and women whose expertise will determine its success. My Lords, I'd like to thank all the Lords for their amendments, which aim to ensure that the Bill does not distort the market to create inequality between public and private sector steel companies.

I hope I have reassured that the government remains committed to revitalising the steel sector. This should be achieved through co-investment from private and public sectors. I respectfully ask the amendment be withdrawn.
17:54
Lord Wigley Portrait Lord Wigley (Plaid Cymru)
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My Lords am grateful to the >> My Lords am grateful to the Minister for the response. On the whole range of diverse amendments whole range of diverse amendments that we have before us, and no doubt the opposition frontbench doubt the opposition frontbench will have their own opinions on which ones of these they may want to return to at Report stage, because there are important issues that undoubtedly have arisen from those amendments. If I could just respond to the amendment that we have before us.

That is amendment four support supporting the local economy of any steel making location which may be adversely affected by this act. Now then, I noted the words the noble Lord. The Minister gave in response that this may be taken to be covered by other words that are in this subsection and in other parts of the Bill, but with respect, words such as supporting the economy of the UK or any part of the UK is so general that it does not actually address the point that we are specifically addressing in amendment four.

And that is the impact on local economies of steel making locations which may be adversely affected by the act. Now, it may well be that some such locations are not adversely affected by the act. They may not be helped by the act, but they may be able to get on with it. But some almost certainly will be, and there should be express and specific provision to ensure that the needs of those areas are written on the face of the bill. Now, quite clearly at Committee stage, as we are today, we are only probing these matters.

But I really do ask the Minister if between now and Report stage, he would come back and consider that, because the reaction against this Bill and act will not be from the generality of the UK economy or regional economies. It will be from specific places that are in danger of losing out because of the changes, perhaps some inevitable changes, but changes that need to take place in order to facilitate the general objective of the legislation. So in withdrawing, begging the House to give leave to withdraw amendment four, could I ask the Minister to, between now and Report stage to consider that specific aspect? On that basis, my Lords, I beg leave

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to withdraw. Your Lordships pleasure. This amendment be with amendment is by leave withdrawn. Amendment is by leave withdrawn. Amendment five Lord Sharpe of Epsom Lord Hunt of Wirral.

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of Wirral. My Lords, I rise to speak to amendments five, six and 42. amendments five, six and 42. Standing in my name. In the name of my noble friend Lord Sharpe of
17:57
Lord Hunt of Wirral Portrait Lord Hunt of Wirral (Conservative)
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my noble friend Lord Sharpe of Epsom. These amendments go to three basic questions which ought to be answered before the government exercise powers of this scale. They are on what evidence is nationalisation justified? By what criteria will Ministers make that judgement, and what will be the financial and economic consequences? Now, amendment five would require an independent assessment before a principal transfer power is exercised, establishing that the proposed transfer is in the public interest.

That is not an attempt to prevent the government acting in a genuine emergency. It is an attempt to ensure that before private assets are transferred into public ownership, there is an objective check that the case has been made. The subs in the sums involved may be very substantial. Once the state acquires a business, it may assume not only its assets but its liabilities, its working capital requirements, its investment needs, and the risks of continuing operating losses.

These may be decisions with billions of pounds at stake. They should be based on evidence, not merely urgency or political pressure. Amendment six is the natural counterpart. It would require the Secretary of State to lay before Parliament the full criteria by which the public interest test has been judged. The Bill currently gives Ministers a broad discretion, and I believe Parliament is entitled to know how that discretion has been exercised before a transfer takes place.

What precisely has been considered? How? How have national security, economic consequences, competition costs to the taxpayer and the future viability of the undertaking been weighed? Those are not matters which should be left to assertion after the event. An amendment 42 completes that framework by requiring a published impact assessment before the Secretary of State exercises a power under the act. A proper assessment should set out the financial costs, the economic implications and the risks.

It should address the expected need for public funding, the consequences for competitors and supply chains, the effect on investment and the realistic alternatives available to the government. Now, the government may say that they will act responsibly. I hope they will, but this bill does create lasting powers, and ministerial assurances are just not a substitute for statutory safeguards. The Bill, as we have said before, risks leaving taxpayers with an open ended bill and that is most unsatisfactory.

I

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beg to move. Amendment proposed clause two, page one, line 28, and insert the page one, line 28, and insert the words printed on the Marshalled List.

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I am very glad my noble friend has raised the issue of impact assessment, because if the assessment, because if the government presses ahead with the acquisition of British Steel under this legislation, that could be the this legislation, that could be the first opportunity we have for a realistic impact assessment. And
18:01
Lord Redwood Portrait Lord Redwood (Conservative)
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yet the taxpayer has been responsible for the losses in working capital and investment working capital and investment funds for over a year now, with the lack of clear reporting we've lack of clear reporting we've commented on before, and we have an impact assessment for this piece of impact assessment for this piece of legislation. And it understandably says that there aren't really any costs or benefits to report because costs or benefits to report because there isn't a transaction. These are enabling powers which would enable the government to undertake and complete a transaction, but it would only be at that point that officials tasked with the difficult question of what is the impact, would be able to come up with some numbers, because we would then presumably have some visibility on the cost of acquisition, if any, and the operating costs and working capital costs that will go forward.

And that would be a very helpful thing in connection with this difficult investment at Scunthorpe, where, as we've heard earlier now has reported that we're already probably having £642 million of taxpayer expenditures up to current month, with a very high run rate going forwards. So I do hope the government will offer us reassurance, if not a new clause in the Bill, to say that there will have to be a proper and timely impact assessment, and that too, would clearly require proper due diligence, which I trust has been underway.

Now that the government is responsible for the business, and we would need to know that there had been a proper study of an abscess. The two blast furnaces, which were either built or last substantially modified in the early 1950s. So these are ageing assets. They've had deep maintenance in this century. But we would need a condition statement on that so that the government is reassured that however long it thinks it can run these blast furnaces for, is feasible in terms of the condition of the plant, and that in order to sustain the employment for the next month, month, year, whatever it may be, we would need to know that there won't be major maintenance required, or no question of having to call the furnaces down, because that is a dangerous and expensive process and would raise issues about how easy it would be to spend enough money to reinstate these particular assets.

And of course, it would also require proper reporting to the government, not not supplying all the detail to us, but proper reporting on market prospects and how the steel product produced at Scunthorpe is perceived and what the market opportunities in general terms might be, and other supporting documents. So I think it will require a serious impact statement for the benefit of democratic accountability. But more importantly, that will prove that the government has done its homework because the government shouldn't be taking on a plant like this unless it's got a condition report and a marketing report and and a proper cost examination and so forth that I and my noble friends have been referring to.
18:05
18:06
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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Oh my Lord, I thank the noble >> Oh my Lord, I thank the noble Lord Redwood, noble Lord Fox and noble Lord hunt for their noble Lord hunt for their contributions. The noble Lords and Sharp have tabled amendments five, six and 42 to provide for an independent person to assess the public interest. Further amendments tabled by noble Lords would require the government to publish both the criteria used to assess the public interest and its assessment on how those criteria are met before exercising the principle transfer of power.

Amendment 42 would require an impact assessment to be published before any intervention or the exercise of any power under this bill, as this amendments deal with similar issues, I will address them together. I will start by saying that I understand and sympathise with the desire for greater parliamentary and stakeholder scrutiny of a decision to intervene under the powers of the Bill. Stakeholder engagement is a key part of the government's policy approach to the sector, with Ministers regularly meeting key industry groups and representatives to the Steel Council and other forums.

The government has published an impact assessment alongside the Bill, explaining how the public interest test will be considered. A further impact assessment would be published alongside any secondary legislation exercising the transfer of power. The framework for decisions to intervene will stem from what has been included in clause two with regard to the three public interest factors. There is no attempt on our part to obfuscate or hide the criteria that will be applied. In practice, the government will not only consider whether a steel undertaking is engaged in activity that serves the public interest, it will also consider whether the activity is at risk of not receiving government intervention.

The government cannot support these amendments as it would create additional hurdles and process pre intervention in the kinds of situations this bill envisages, speed will be crucial. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances, be necessary to avoid uncertainty. Nonetheless, I am aware that there are strongly held concerns about this issue, and I can confirm that the government will consider options for Parliament to scrutinise decisions taken either at a time or of, or after the exercise of the transfer of powers ahead of Report stage.

I hope this offers some reassurance to noble Lords and with. And the noble Lord Lord Faulks, and I look forward to continuing further conversation with him ahead of report. With that, my Lords, I would ask the amendment be withdrawn.
18:09
Lord Hunt of Wirral Portrait Lord Hunt of Wirral (Conservative)
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I am very grateful to the Minister for his response, in particular his closing words. My particular his closing words. My hopes were raised when he started his speech by saying he understood everything that I had said and was sympathetic. Then the situation started to cloud a little as he said, but these would present additional hurdles at a time when speed will be essential. But then, he said the government would consider options between now and report.

And that's really what I was seeking to hear. And I very grateful to my noble friend Lord Redwood for putting it all in the historical context, because it's easy to forget the pace at which we entered this debate by being summoned to Parliament last April, April of last year. And as the noble Lord Fox reminded us, clause two is the crunch. It's a very key part of this bill. And just to remind colleagues, amendment five would require an independent assessment confirming that nationalisation is in the public interest before transfer powers can be used.

So as we approach that amendment, I, I can't obviously press the noble Lord, the Minister, on the options that the government is going to consider, but certainly it would be a way forward if we were to find a solution comparable to amendment six, which would require the Secretary of State to lay before Parliament. The criteria used to assess the public interest before using transfer powers. And then, of course, amendment 42, which would require an impact assessment.

So I'm I recognise the point the Minister has made about the practical difficulty of preparing a full assessment before the exercise of emergency powers, particularly as he explained, where Ministers may need to act quickly to prevent serious harm. But there cannot mean, and I do believe, the noble Lord. The Minister accepts this, that the financial consequences are treated lightly. The cost to the taxpayer of taking on a steel, undertaking its liabilities, its working capital needs and its future investment requirements may be very substantial.

And Parliament, as my noble friend Lord Redwood pointed out, Parliament has a proper understanding and an interest in understanding those costs and the risks being assumed, and the basis on which the decisions have been made. Parliamentary scrutiny should not be seen as an obstacle to action. It is surely a necessary part of ensuring that exceptional powers are used responsibly and transparently. So as we await the decision of the government. I would have hoped that he could have committed to publishing an impact assessment alongside the exercise of the power, and I will examine his words carefully, because I believe that assessment is the key.

It should set out the costs incurred, the economic implications, the liabilities assumed, future costs and the risks to the taxpayer. And so, in summary, there is much for the government to reflect on. And for the present, I beg leave to

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withdraw. The amendment. Is it your Lord True amendment

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Is it your Lord True amendment be withdrawn? The amendment is by leave withdrawn. Amendment six Lord Hunt not moved and Lord Sharpe. I Hunt not moved and Lord Sharpe. I beg your pardon. Amendment seven.

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beg your pardon. Amendment seven. Lord Fox my Lords, I rise to propose amendment seven and speak to amendments ten and 11 in my name. Agreement appears to have broken out. My Lords, the noble Lord hunt,
18:14
18:14
Lord Fox Portrait Lord Fox (Liberal Democrat)
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central to how we move forward, and I always suspected that the public interest test element was going to interest test element was going to be the hardest bit to resolve in this bill, and I think we're beginning to see that that might be beginning to see that that might be true now, following discussions, my understanding of how things would understanding of how things would go as the bill is, is, is, is currently formed. The the government will publish a public interest test immediately after the use of its transfer powers under this bill.

To their mind, this would focus, I think, on the underlying rationale for intervention in a particular steel under undertaking and to some extent show how it would be determined to be in the public interest. But as things stand, it's my understanding it would not address the cost of taking any asset into public ownership. The government will be saying to Parliament that it is in the public interest to nationalise asset X, Y, Z, but essentially at any cost or no cost or a cost, we're not going to tell you what it is now.

Now, my Lords, I think that self-evidently can't be true. There is a value to any asset which any acquirer must not pay. And I've sat around executive boards where potential acquisitions that are absolutely strategically perfect fits turn out to be too expensive. The board cannot sanction the acquisition of those assets. And the same has to be true to some extent. The the weighing is a different weighing, but the principle is exactly the same. So and furthermore, I think this the idea that there is a price strengthens the hand of the government negotiators to counterparties.

They will be able to say, Parliament will not wear this number. We need. We need a better number. So it strengthens negotiation. Now, the Minister talked about the need for speed, but there is there is, you know, repent, repent at, at, at, at leisure. If you move too quickly and and there is an element of speed, Parliament has demonstrated that it can move at speed. And I cite just before Easter 2025, when we did important things on behalf of the steel industry in a day.

So so we can both houses can move at speed, but both houses need the information in order to make those those decisions. So so I know what the Minister will say. It is a matter of sequencing. Established the public interest first and then negotiate the cost. And he will say more generally, as he already has, any acquisition under the bill will be subject to the usual managing public money principles. I would ask him how those principles differ from the principles that we use to safeguard the investment in HS2.

Moreover, the government has been clear that the modernisation of the steel sector is dependent on both public and private investment. And again, how will that play into the decision making? So, to be honest, this approach has made me more adamant that there needs to be changes to clause two in order to take this into account. The amendments in this group start to address the fundamental point. And whilst I acknowledge and welcome the reporting provisions in the Bill, these would take place post hoc, and I do not see that it's right to expect the Houses of Parliament to vote on regulations regarding nationalisation, without any indication of the cost attached to that, that nationalisation.

So in a later group, I will propose a role for select committees on this by amending clause 58. But these three amendments focus on clause two. Amendment seven is quite similar to the the noble Lord Sharpe amendment six, which is requires the Secretary of State to lay a statement before Parliament explaining the reasons for concluding that it is necessary to exercise the principle transfer power in the national interest before exercising that power. Amendment ten would require the Public Interest Test to consider the impact of nationalisation on the public finances.

In other words, how much does it cost? And amendment 11 will require the public interest test to consider the investability of the steel undertaking. In other words, how does the private sector get involved in this? Because that is the stated government aim for this particular legislation. Now we have to find a way of ensuring that the anticipated cost of any nationalisation is in an integral part of a public interest test, and one that Parliament can influence. Rather than be debating post hoc now, I'm very happy to discuss with the Minister ways of doing this with him and his team.

In the meantime, I beg leave to move.

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Amendment seven. Proposed clause two, page one, line 28, and insert the words

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line 28, and insert the words printed on the Marshalled List. My Lords, I'm very grateful to the noble Lord Lord Fox for bringing forward these amendments. bringing forward these amendments. As he has already observed, there are similarities with some other amendments of ours, and we're very happy to work together in clarifying those in the future. He could have also, of course, said that the Parliament will be acting
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18:21
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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My Lords. I thank noble Lord >> My Lords. I thank noble Lord Faulks noble Lord Sharpe for the contribution. Firstly, let me thank the noble Lord Fox for his constructive engagement over the past few weeks, and I understand he's trying to support the steel sector and the Bill and this bill, whilst ensuring value for money, which is also the government's of objective as well. My Lords, amendment ten will require the Secretary of State to take into account the impact of on public finances when applying the public interest test.

Of course, any decision to nationalise a steel undertaking should not be taken lightly, given the significant costs that may be incurred. However, the principle of securing value for money for a taxpayer is already well established embedded in government decision making. As I have said in the earlier group. So any decision to exercise the powers in the Bill is subject to the usual managing public money governance and the framework of accounting officer checks, which would include consideration of the impact on public finances.

I therefore respectfully suggest that incorporating this amendment into statute would not serve any particular purpose, but we are, of course, mindful of ensuring that the costs associated with the Bill are well managed. The noble Lord Faulks have also proposed an amendment 11. The Secretary of State should take into account the short and long term investability of a steel undertaking when considering whether to intervene in the public interest. I understand the sentiment behind amendment, but I do not think Investability should directly inform the public interest test.

If a steel undertaking is an investable prospect. In the short term, it is unlikely that there would be a case for government intervention, as the need could be met by the private sector. The intention of the Bill is not to crowd out private investment, but to act where private ownership has failed. Whether a steel undertaking is investable in the longer term is highly speculative, so I do not think it would be particularly helpful to form part of a statutory framework for the decision.

By intervening, the government would hope to turn a steel undertaking that is not investable into something that may become investable. To that extent, this is what the noble Lord hopes to achieve. We share that ambition, but I do not think the amendment is workable. I refer to amendment seven, which would prevent the Secretary of State from exercising the principal transfer of powers until a statement explaining how the public interest test is met had been provided to Parliament. I will begin by saying that I am sympathetic to the desire for greater parliamentary and stakeholder scrutiny of any decision to intervene under the powers and the Bill.

As I said previously, the government has published an impact assessment

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alongside the Bill Explaining how the public interest test will be considered. Any further impact assessment will Any further impact assessment will be published alongside any secondary legislation exercising the transfer of powers. The the transfer of powers. The framework for the decision to intervene will stem from what has been included in clause two with been included in clause two with regard to the three public interest. The government will not only consider whether a still consider whether a still undertaking is engaged in activity that serves the public interest, but will also consider whether the activity is at risk without government intervention.

My Lords, the government cannot support this amendment as it would create additional hurdles and processes pre intervention in the kinds of situation that this Bill envisage. As I said previously, speed will be crucial. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances be necessary to avoid uncertainty, uncertainty. And I take note of what noble Lord said regarding speed. Nonetheless, I'm aware that there are strongly held concerns about this issue, and I can confirm that the government will consider options for Parliament to scrutinise decisions taken either at a time of, or after the exercise of the transfer of powers ahead of Report stage.

I hope this is some assurance to the noble Lord and once again I ask the amendment be withdrawn.
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Lord Wigley Portrait Lord Wigley (Plaid Cymru)
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the whole they mention underpinning this bill in assessing the public interest, the Secretary of State, interest, the Secretary of State, when exercising his powers relating to a steel undertaking undertaking to a steel undertaking undertaking located in Wales, must consult the First Minister of Wales before First Minister of Wales before exercising such principal transfer powers. This, my Lords, is surely basic common sense, since many, if not most, of the responsibilities impacted by such transfers in Wales rest with Senator Cymru.

These powers include economic development, town and country planning, roads, education and training, and the environment and each and every one of these may and almost certainly will be impacted by consequences of transfer decisions. To those who argue that responsibility to cooperate already exists. I would say just this, that if the responsibility is spelt out on the face of the bill, that will trigger an earlier and a more thorough approach. Otherwise, it is so easy to treat such dialogue and mutual action as an afterthought.

And it should. My Lords, be a a cast iron statutory requirement. But as this brings me to the associated amendment. Amendment number 19 on the Order Paper, which provides powers to the Secretary of State, and I quote to modify the law in connection with property transfers. And this has a very serious provision in subsection 53 of providing for retrospective legislation. My Lords, this should always trigger alarm bells, shouldn't it, in whatever context it might arise, and as many legislative responsibilities which may be impacted by this are ones which are fully devolved to a Senate committee than any such regulations must only be made with the prior agreement of Senate Cymru.

This must be on the face of the act, otherwise I. The bill will be open to a Pandora's box of utter chaos. Amendment 50 specifically provides a route to avoid such consequences by requiring a prior agreement of Senate Cymru to any such regulations, which involve devolved powers, including this in the bill will avoid misunderstanding and unhelpful polarisation. So, my Lords, I beg to move amendment nine and I hear the Minister's response to both amendment nine and amendment 19.

List.
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Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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My Lords, in this group of amendments, the noble Lord Wigley amendments, the noble Lord Wigley has raised important concerns about the ways in which the Bill includes the Welsh Government and Legislature in decision making. Amendment. I would amend clause two on the public interest so that the Secretary of State would be Secretary of State would be required to consult the First Minister of Wales before exercising the principal transfer powers in relation to an undertaking located in Wales. I would first say that a government has been keen to engage closely with the devolved governments throughout the passage, and I am grateful for the approach taken by all parties in this engagement.

I am delighted to inform your Lordships that the Scottish Parliament granted its legislative consent to the Bill on 23rd June. I would like to record my thanks to Ministers and officials who worked swiftly to complete the legislative consent process ahead of the Scottish Parliament's summer recess. My Lords, I am happy to confirm that the government will ordinarily consult the relevant devolved Ministers if it is likely that the principle transfer powers will be used in relation to a steel undertaking with its principal place of business in Scotland, Wales or Northern Ireland.

If this is not possible, because swift action in the public interest is required, Ministers will engage with their ministerial counterparts at the earliest opportunity following the exercise of the principle transfer powers. My Lords, I also understand that my colleagues are Ministers and the Secretary of State for Wales will meet their counterparts in the Welsh Government tomorrow to discuss this Bill further. Amendment 90 will require the Senate to give approval to any proposed use of the modification power that will relate to devolved regulations.

I'm sympathetic. I'm against sympathetic to the sentiment of this amendment, and would like to reassure the noble Lord that modification power in clause 50 is targeted and limited to applications necessary to ensure the transfer of powers can be exercised effectively. It is not a general power to amend legislation. The drafting does not permit any changes to other laws unless they are for the purpose of ensuring the powers in the Bill can be exercised effectively. Whilst I cannot agree with these amendments, I would reiterate the government's desire to continue engaging closely with our partners in the devolved governments.

In particular, the government is continuing to discuss the Bill with the Welsh Government, and I hope to be able to provide noble Lords with further updates later in the bill's passage. I would, however, ask the noble Lord to withdraw his amendment.
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None Portrait Amendment:12 Lord Sharpe of Epsom (Conservative)
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because the sunset clause is intended to place a clear limit on exceptional powers. But the bill exceptional powers. But the bill allows the Secretary of State, by regulations, to substitute a different period for the two year different period for the two year limit. Subsection four makes clear that this can be done more than once, so in practice, therefore, the powers could be extended again the powers could be extended again and again and again, which gives no reassurance at all. Two years could become five years, ten years or become five years, ten years or longer.

And that's not a meaningful sunset clause. It's a potentially perpetual sunset clause, my Lords. It's an indefinitely renewable power. So what does that say about the government's confidence in their own ability to secure a viable, private sector led future for British Steel? If Ministers genuinely expect these powers to be exceptional and temporary, why do they require the ability to extend them without any stated final limit? And this goes directly to the concerns raised throughout our debates. The risk of open ended liabilities for taxpayers, uncertainty for investors, and a lack of clarity about the government's intended end point.

The Constitution Committee of your Lordships House has considered this point and has been unequivocal. My Lords, it said the use of delegated powers to bypass sunset clauses undermines their purpose and sets an unusual and unwelcome precedent. It recommended either that the final period of extension be set out on the face of the bill, or that there should be a statutory time limit each time the power is used. It would not prevent the government seeking additional time where there is a compelling case, but it would require Ministers to return to Parliament with a clear final boundary, rather than retaining power capable of perpetual renewal.

So will the Minister accept the Constitution Committee's recommendations and bring forward amendments before report? Will the government set a final limit on these powers and demonstrate that they have genuine confidence in securing a thriving, investable and private sector led future for British Steel? My Lords, I beg to move.

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A amendment. Proposed clause three, page two. Line ten. Leave

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three, page two. Line ten. Leave out subsections 3 to 5. My Lords, I, I would like to say

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My Lords, I, I would like to say that I do see the noble Lord Sharpe's point, and I would also like to commend him on getting
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Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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I want to say I agree with it, >> I want to say I agree with it, but anyway, firstly, look, let me let me thank Sharpe for his let me thank Sharpe for his contribution. Look, I, I note the Constitutional Committee's comments on this clause in their recently published report on the Bill. The inclusion of the sunset provision demonstrates the government's commitment to ensuring that powers remain on the statute books for as long as necessary to serve their purpose.

Ultimately, we want to see the domestic steel sector return to a more sustainable and stable state in which government intervention is unnecessary. As we have said, we do not currently see another use case beyond the possibility of British steel. We therefore hope that that the noble Lords get their wish and that there is no need to extend the sunset period. However, the current geopolitical landscape creates a volatile background or rather backdrop for this sector, making it difficult to anticipate what may transpire in the coming months and years.

We have therefore built in some flexibility to extend or shorten the two year sunset timetable. If circumstances change. We consider this a reasonable precaution to take. The drafting ensures there will be full parliamentary scrutiny on any change to the sunset period through the affirmative procedure, meaning that parliamentarians will be able to test and debate any regulations brought by government to extend the sunset. We anticipate needing to use this extension power only in extenuating circumstances. My Lords, I therefore request that the amendment be withdrawn.
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None Portrait Amendment:13 Lord Hunt of Wirral (Conservative)
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13, this amendment makes regulations transferring securities regulations transferring securities in a steel undertaking subject to the affirmative procedure. Amendment 14 makes regulations Amendment 14 makes regulations transferring property rights or liabilities of a steel undertaking liabilities of a steel undertaking subject to the affirmative procedure. Amendment 15 makes regulations on continuity obligations subject to the affirmative procedure, and amendment 18 in this group makes enforcement regulations subject to the affirmative procedure. But, my Lords, I will begin by referring to those amendments.

But speaking to the question of whether clause 50 should stand part of the Bill, this clause gives the Secretary of State a very broad power to modify primary legislation, secondary legislation and common law in connection with a share or property transfer. It may be used retrospectively and in some circumstances before Parliament has had the opportunity to approve the regulations. My Lords, these are considerable powers, particularly when we are discussing property rights, contractual rights and the compulsory transfer of businesses and their assets.

Now, my noble friend Lord Sharpe of Epsom has already referred to the report of the Constitution Committee and he speaks from some personal experience of knowing the dangers of ignoring the recommendations of that committee. Well, they are pretty clear about clause 50, and I quote from their report. We recommend that the broad powers granted to the Secretary of State in clause 50, subsection one, to modify the law in relation to share or property transfer by regulations should either be removed or significantly tightened to specify the circumstances in which such law may be modified.

Now, I believe the government should take that recommendation seriously. The government's Delegated Powers Memorandum sets out at some length why Ministers believe that a broad power may be needed. It refers to the complexities of company law, insolvency law, commercial law and supply chains, and the possibility that an obstacle to a transfer may emerge unexpectedly. A compulsory transfer may well give rise to legal complications, but the memorandum does not provide concrete examples of the circumstances in which primary legislation would need to be disapplied or modified.

If those circumstances can be identified, they really should be placed on the face of the bill, or at least the power should be more tightly defined. And then turning to amendments 13 and 14, the government's own delegated powers memorandum confers confirms that the transfer powers in clauses 4 to 29 are subject to the negative procedure. That is a very wide suite of powers. They concern not only the initial transfer of shares or property, they include the legal effect of those transfers, continuity arrangements, the conversion and delisting of securities, the position of directors and senior managers, licenses, termination rights, foreign property and supplemental onward reverse and connected transfers.

Amendments 13 and 14 focus on the Central powers the compulsory transfer of securities and the compulsory transfer of property rights and liabilities. Those are the acts by which the state takes control of a private business or part of one. Now, the government argued that the negative procedure is necessary because a transfer may be commercially sensitive and fast moving. It points to the risk that assets might be moved, contracts terminated, key personnel might leave, or counterparties might take action to frustrate the transfer.

Now we recognise that there may be genuine urgency in particular cases, but we do not accept that this makes affirmative scrutiny inherently obstructive. The Bill already demonstrates that Parliament can accommodate urgency, where it is genuinely necessary. Clause 50 provides for a made affirmative procedure. Ministers may act immediately where required, but Parliament must subsequently approve the regulations for them to remain in force. Why? Why should the government not use a comparable approach for the actual transfer of securities, property rights and liabilities? Indeed, the need for security is greater because once the principal transfer power has been exercised, the bill permits a range of supplemental onward, reverse and connected transfers without a new clause two public interest determination.

So Parliament should therefore have have a proper opportunity to scrutinise the initial act which unlocks that wider suite of powers. These amendments would not stop Ministers acting swiftly where there is real emergency, they should. They would ensure that compulsory transfers of private property and liabilities are subject to meaningful parliamentary approval. That is not obstruction. It's surely the minimum level of scrutiny appropriate for powers of this constitutional and commercial significance. Amendment 15 concerns clause 39 and continuity obligations.

Clause 39 allows the Secretary of State to make regulations specifying matters that are to be taken into account or disregarded when determining reasonable consideration, and the terms of arrangements that parties would be expected to make at arm's length. The government's memorandum says that this power may be used to provide detail about how consideration and terms are to be determined, and that its purpose is to ensure fair compensation for parties subject to continuity obligations. Well, that, my Lords, raises an obvious question why should matters going directly to fair compensation and the terms imposed on affected parties be left to the negative procedure? These regulations may determine what constitutes reasonable consideration and what terms can be expected from parties who may have little practical choice but to continue arrangements after a transfer.

It's our view on these benches that this should surely be done by the procedure. Amendment 18 concerns enforcement. Clause 45 permits regulations on the enforcement of obligations under share or Property Transfer Regulations. The regulations may confer jurisdiction on a court or tribunal. Now, again, the government says that this is necessary to ensure that obligations can be enforced from the moment of transfer, but the fact that enforcement may involve courts or tribunals makes scrutiny more important, not less, and therefore should be subject to the affirmative procedure.

I beg to move.
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Lord Fox Portrait Lord Fox (Liberal Democrat)
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Amendment proposed clause four, >> Amendment proposed clause four, page two. Line 30. Leave out negative and insert affirmative. >> My Lords, I have to say I was a

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My Lords, I have to say I was a bit grumpy when the Conservative Party tabled these amendments, which we tabled in in the Commons. which we tabled in in the Commons. But in retrospect, I'm very pleased. And no joking. That was a tour de force from the noble Lord hunt. It's his specialist area and it's his best speech on Henry the Eighth that I've heard. And all of the points, the points that I would have made, except that I'm not good enough to have made them.

So in that respect, I'm glad that he was the person proposing this rather than me. It's only the only thing that stops the noble Lord from being risen to the pantheon is that, having won affirmative powers, he and his colleagues never actually exercised them in through, through through fatal motions. And that, frankly, is the is is, is the only flaw in what we've just heard. I support in full. I, I, I can't assigned amendments 13, 14, 15 and 18 and my pen ran out when we got to clause stand part clause, clause 50.

But all of the points I think that the noble Lord made are valid points. And I hope the government is able to take on board both what he said and what your Lordships Committees have said on the on the

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basis of the shortcomings in this in this draft. Hear, hear. My Lords, before I turn to the

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My Lords, before I turn to the amendments in this group, I wish to quickly thank the members of the quickly thank the members of the Select Committee on on the Constitution for their report on this bill, which relates to this this bill, which relates to this grouping. The report recommended that clause 47 on provisions for dispute settlement should be set up dispute settlement should be set up more fully on the face of the bill. The approach to drafting here is in line with existing precedent under the Banking Act 2009, and reflects the approach taken for similar powers, such as enforcement powers.

We think it is appropriate to provide for dispute settlement on a case by case basis through regulations. Now, turning to the amendments in this group, the noble Lords have raised a number of amendments relating to parliamentary scrutiny and procedure for the transfer of regulation. In particular, noble Lords Sharp and noble Lord have tabled amendments that would change the parliamentary procedure for the principal share and property transfer powers, continuity, continuity obligations and enforcement powers from negative to affirmative. I understand the concern expressed by the noble Lord from the outset.

I would like to reassure all noble Lords that the government takes parliamentary scrutiny extremely seriously. For this reason, we have ensured that the number of substantial powers in the Bill, such as the compensation and tax powers, are subject to the affirmative procedure. However, government considers that changes to the procedure for transferring powers would adversely affect the government's ability to effect a smooth, a smooth transfer when necessary in the public interest. Steel is fundamental to the UK's industrial base and our national resilience, making it critical to secure supply.

Any delays, especially in a non-consensual transfer, would prevent the transfer from taking place, particularly if the transfer is uncooperative. I wish to draw noble Lords attention to the recently published report from the Delegated Powers Regulatory Reform Committee, which did not raise any cause for concern about these powers, including the level of parliamentary scrutiny attached to set out the necessity for the negative procedure for these powers. I will discuss them in turn. I will address amendment 13 and 14 together as they seek to amend the procedures for the share and property transfer powers, respectively.

It is absolutely important that the principle transfer powers can be exercised with speed and operational and legal certainty. The government expects that if these powers are exercised, it will be in a fast moving, commercially sensitive situation. The affirmative procedure would introduce a substantial delay, creating a vacuum in ownership. Such uncertainty would significantly affect the business, particularly the supply chains and third party contracts. Turning to amendment 15, which seeks to amend the procedure for continuity obligations, the continuity obligations in this bill are essential to ensure the company continues to operate as normal following the transfer, minimising disruption and maintaining operations at the steel undertaking.

This is achieved by imposing obligations on residual residual steel undertakings and their group companies to ensure that all services and facilities required by the transfer business continue to operate as normal. Any changes to the procedure would affect the effectiveness of the transfer. The government's primary objective with this provision is to ensure a smooth transfer of ownership, as I have set out. It is imperative that there be no delay to any transfer of a steel undertaking into public ownership.

Finally, turning to amendment 18 in the name of the noble Lord Sharpe, this amendment aims to amend the procedure for enforcement Regulation. Clause 45 gives the Secretary of State the power to make provisions in regulations for enforcement of obligations under the Share and Property Transfer Regulations. As with the other amendments, if the government considers it necessary to enforce obligations, it must do so at pace. Any delay in using these powers risks disrupting interrupting the transfer process and reducing its effectiveness. For these reasons, the government do not consider these amendments necessary.

However, I have also reflected on noble Lord Han's argument was it is critical that the government is able to preserve its ability to enforce as necessary. There is a reasonable rationale for further parliamentary scrutiny. I will ask that this amendment be withdrawn, but will consider this issue further ahead of Report stage. With regard to the notice that Lord sharp and Lord Han have given, indicating their intention to oppose a question, that clause 50 stand part of the Bill. This would remove the modification power in clause 50.

This power is not taken lightly, but it is a necessary measure to ensure that the transfer of powers under the Bill can be used effectively. The clause is precedent because the same power was used in the Banking Act 2009 to resolve complex companies in the financial sector. Given that the transfer powers will be used only in circumstances where a public interest test is met, it is crucial that government has the necessary tools to ensure that any such transfers can be effectively implemented to deliver the intended outcome.

The powers in part one of the bill interact with commercial company and insolvency law. This is the law that normally governs the consensual acquisition of companies or of their businesses. The legislative environment is therefore varied and complex, and because general legislation was not designed with compulsory transfers in mind as this bill, this bill envisages, there will be some tension between applying the bill's powers to a still undertaking and the highly complex private law that will inevitably cut across. Therefore, this clause provides the necessary power to modify other, other laws that may ordinarily interact with the transaction of this nature.

In order to integrate the bill powers into existing legislative, legislative, and commercial landscape. The use of the modification power is limited to the purpose of enabling the transfer powers to be used effectively. This is not a general power to amend legislation. It is targeted and limited. It cannot be used in isolation from the use of powers in respect of a particular still undertaking to amend or disapply laws, and it cannot be used to amend the Bill itself or act itself. In the absence of this powers, there's real and significant risk that the Secretary of State could not fully and effectively effectively implement a transfer.

This could result in an effective or an incomplete transfer to public ownership, affecting a company's ability to continue operation. If a smooth, smooth transfer is not achieved, the public interest aims could be undermined. Turning to its potential retrospective effect, the Bill permits it to be applied retrospectively, but does not require it preserving the possibility of applying this power retrospectively anticipates circumstances in which the transfer powers may need to be exercised at pace, and in which there may be limits on the ability to conduct the level of due diligence necessary to support acquisition.

Similarly, it may not be possible to identify all legislative interactions in the transfer scenario before making a transfer. This may mean that any secondary legislation made under may not fully affect the transfer that was intended. In such circumstances, it would be necessary to address this through the modification power, with the modification backdated to the time of transfer. The use of the power will be subject to affirmative procedure, unless there are particular circumstances that justify the Secretary of State proceeding on an affirmative basis, likely due to time pressures.

I hope this provides some clarity on the need to include the provision and instruct prospective effect. For these reasons, I respectfully

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ask that the amendment be withdrawn. Before the Minister sits down. On a number of occasions, the On a number of occasions, the Minister has painted a picture of a breathless process at which all of breathless process at which all of the. The. The the other organs of government have to operate at breakneck speed. Now we're talking largely taking the government at face value about a particular asset that we have been talking about for that we have been talking about for about 15 months since since since
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Lord Whitehead Portrait Lord Whitehead, Minister of State (Department for Energy Security and Net Zero) (Labour)
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>> My Lords, I beg to move that the Committee has considered the draft Climate Change Act 2008, International Aviation and International Aviation and International Shipping Order 2026. I thank the Committee for their consideration and the Draft Climate Change Act 2008. International Aviation and International Shipping Order 2026 was laid before the House on the 14th of April. This instrument makes the necessary regulations under the Climate Change Act to include emissions from the UK, share of international aviation and shipping in the carbon budget.

Six all subsequent carbon budgets and the 2050 net zero target. It formalises the government's long standing planning assumption that carbon budgets. Six starting in 2033, will be the first to include emissions from the UK share of international aviation and shipping. This has been the position of successive governments and in 2021, the previous government set carbon budgets. Six factoring in the UK share of international aviation and international shipping. And of course, it also reflects the advice of the Independent Climate Change Committee.

So this debate is not about whether we take action in these sectors. We already are. The government is committing committed to ensuring that long term growth in the aviation and shipping sectors is compatible with our climate obligations. We have been working multilaterally to reduce aviation and shipping emissions within the International Civil Aviation Authority, ICAO and the International Maritime Organisation, IMO. We are now formally reflecting this effort in our domestic legal framework for earlier carbon budget periods. International aviation and shipping were not formally included in a legally binding targets and instead we left headroom, setting tighter limits for other sectors in order to deal with the assumptions that those being in those targets in general.

We are now revising this approach by legislating to formally include these emissions in the overall emissions limit from carbon budget six onwards, accounting for international aviation and shipping emissions within the formal framework is clearer and more flexible than accounting for them outside the framework. It allows the government to choose the best overall pathway to meeting our targets. For example, if progress in reducing aviation emissions is faster than expected, it will make it easier to meet our targets overall. Equally faster progress in other sectors could allow more flexibility for international aviation and shipping.

Although aviation is hard to decarbonise sector, we are already taking great strides towards greener aviation. This includes implementing the sustainable aviation fuel mandate last year, providing a further £219 million to scale up SAF production through to 2030, and up to £2.3 billion over ten years for the Aerospace Technology Institute to support the development of more efficient and zero emission aircraft technologies. We are also driving cost effective decarbonisation through carbon pricing mechanisms, including the UK Emissions Trading Scheme, UK ETS and the Global Offsetting Scheme Corsia.

We are also committed to decarbonizing shipping through the UK Maritime Decarbonisation Strategy through investment in clean maritime technologies and support for low carbon fuels. The UK is proud of our leadership at the International Maritime Organisation, ensuring the sector fully contributes fully to our net zero ambitions, whilst maintaining the UK's competitiveness as a global maritime nation. And to note, this statutory incident does not alter the stringency of the UK's climate targets, nor introduces new sector specific targets or sets new policy requirements for the aviation and shipping industry.

Nor does it alter the climate considerations in the draft Heathrow expansion. National Policy statement. What it does support, supply and provide is legal clarity, something colleagues in the Environmental Audit Committee and the Transport Select Committee have called for repeatedly. Successive governments have pledged to legislate for this change as soon as parliamentary time allows, and now we are keeping our word. Now, my Lords, I recognise the amendment tabled by the noble Lord Moynihan for discussion today. The noble Lord raises two points of concern, which I shall address in turn.

Firstly, the noble Lord regrets that the draft legislation does not define a methodology for accounting for the UK's share of international aviation and shipping emissions for the purposes of carbon budgets. Now that omission is for good reason. Not prescribing a specific methodology now allows for continued methodological development. In the period before the Carbon Budget six period commences, that is 2033, and that will be in line with developments in international carbon reporting practice, on which the UK participates in ongoing discussions.

And that has to be an international discussion with the international agencies responsible for getting that right on an international scale. I am sure the noble Lord would not wish to tie the government to an outdated methodology out of sync with wider international practice, so it is not a question that there is no methodology. It is a question of making sure that the methodology is fit for purpose. When Carbon Budget six comes into being, and that final methodology will be determined separately by the Secretary of State before laying the first annual statement of UK emissions for the Carbon Budget six period.

In the meantime, I would refer the noble Lord to the Technical Annex of the Government's Carbon Budget and Growth Delivery Plan, which sets out the government's working assumptions on defining a UK share of international aviation and international shipping emissions when setting and making policies for future carbon budgets. And if he wants to cut to the chase fairly early, I would suggest that he refers to Technical Annex, paragraph 125 126 to do just that. Secondly, the noble Lord suggests that regulations will place additional costs on industry.

As noted earlier, this is an accounting change that clarifies how emissions are counted within UK targets. It does not set new policies for international aviation and shipping. The government will continue developing policies to reduce emissions in international aviation and international shipping, and these will be subject to their own assessments. Notwithstanding that, I would emphasise that the government is acutely aware of the importance of international aviation and international shipping to UK economic growth. We are committed to pursuing solutions that do not risk displacing emissions to elsewhere in the world, or damaging UK competitiveness.

Working closely with industry to ensure that our climate ambition is deliverable and affordable for them and passengers. Indeed, schemes like sustainable aviation fuel mandate are carefully designed to protect against excessive cost increases at the same time. Measures like the Sustainable Aviation Fuel Act and grant funding will tackle barriers to investment and support. UK manufacturers gain a share of the growing global advanced fuels industry with all the economic benefits that entails. I urge noble Lords to consider these points when, when and if they are considering voting in favour of motions tabled by the noble Lord.

The the. The measures formalising an approach supported by successive governments and they reinforce the credibility of the government's strategy for aviation and shipping decarbonisation, both domestically and internationally. And I beg to move.
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Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Conservative)
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regulations due to the nationwide effects that they will have on our economy in our way of life. This week, whilst not quite so wide week, whilst not quite so wide ranging, we regret that the Secretary of State is taking his economic wrecking ball to two specific industries. My Lords, specific industries. My Lords, before I speak to the economic impact that this order and other associated measures the government associated measures the government is taking will have. I will first note that the implementation of this order raises concerns.

The explanatory memorandum states, and I quote the exact methodology for determining the UK share of I s emissions for the purposes of measuring and reporting emissions for the CB6 onwards will be determined separately by the Secretary of State and before laying the first annual statement of UK emissions for the. The KBE CB six period, the government is putting the cart before the horse. International aviation and shipping will be expected to comply with regulations to help the government reach their net zero target without being told how and even when their emissions will be measured.

But I do note the noble Lord the Minister's explanation of the methodology of the calculation of emissions for carbon budget six period. My Lords, this is becoming a worrying trend within the Department. Two weeks ago, my noble friend Lord Moynihan rightly pointed out that the legislation brought forward to implement the row to Exchequer policy in Northern Ireland was done so without a comparable offer, having been agreed with the Northern Irish Assembly. Now entire industries are to be expected to comply with net zero policies without being told how to do so, regardless of the policy's aim.

That is not how to instill business confidence in the government's plans. I hope that the noble Lord, the Minister, can today outline when we can expect to see the accounting methodology and, more generally, reassure the House that the Department takes the practical implementation of policy as seriously as it does the principles behind it. Turning to the economic impact, my Lords, this instrument is merely a formalisation of the government's recent drive to ensure aviation and shipping compliance with net zero. It will set into statute the adverse effects that government policy is already having by carbon budget.

Seven shipping emissions are projected to have been reduced by more than 60%, at a net cost of more than £1 billion annually, and this is to be done primarily through fuel switching. To incentivize this transition away from carbon intensive fuel. The government has extended the UK ETS scheme to the sector at an upfront cost of more than a quarter of a billion. That is despite the fact that alternative fuels still cost four times more than conventional fuel. Whilst there are only two shore power facilities in the country.

My Lords, the industry has said that these shortfalls would be manageable if the government set out a clear revenue recycling plan to reinvest ETS proceeds into maritime transition, but it has yet to do so. The result is that the ETS scheme will operate as a tax, rather than as a decarbonisation incentive for the industry. That moves 95% of the UK's goods. I hope that the noble Lord. The Minister, can outline how net zero derived revenue will be recycled back into these industries in his response.

Similarly, my Lords, the aviation industry will be forced to transition not through economic incentives but through state mandated demand management. CB seven states that the supposed cost savings that net zero will bring the sector will come almost entirely through a reduction in demand operating capabilities. This will not happen naturally, but through and I quote, demand management that will increase ticket prices either directly through taxes or indirectly through technology costs. My Lords, that is a highly unnatural market distortion.

The industry will be forced to invest in net zero technology, and if that fails in reducing emissions, the government's desired extent, they will simply raise taxes. This too is expected to cost over £1 billion annually by CB six. My Lords, this order in incorporating these sectors into carbon budget accounting will now present an incentive for future regulations upon them. My worry is that aviation and shipping will now be seen as fair game to be sacrificed for the government's role drive to net zero.

Given the fact that the impacts of current regulations have already been highly damaging. I hope that the noble Lord, the Minister, will be able to reassure us that this order is entirely formal and that these sectors will not be subjected to future punitive measures.
19:43
None Portrait Deputy Lord Speaker. Lord Beith (Liberal Democrat)
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The original question was that the regulations laid before the House on the 14th of April be approved, since when an amendment has been moved by Baroness Bloomfield at the end to insert the words set out on the Order Paper. words set out on the Order Paper. The question I therefore have to put is that this amendment be agreed to.

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Some, though far from perfect. I'd like to actually start by

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I'd like to actually start by congratulating the Prime Minister on what has happened over climate policy over the last two years. Unfortunately, he seemed to forget Unfortunately, he seemed to forget it in his speech in Downing Street. But perhaps we could just remember that. Put on the record that the that. Put on the record that the last coal fire station was closed. Onshore wind has started again. We have a carbon budget. Seven agreed. The Future Homes Standard at last has been published.

Solar capacity has gone up substantially and we had a very successful AR seven round in comparison with AR six. And I was disappointed that the Prime Minister failed actually to mention these matters when he talked about his resignation in Downing Street last week. I think the thing that strikes me is that remembering back to the Climate Change Act itself back in 2008, everybody pretty well around the House regretted that at that time, it was pretty well impossible for all sorts of technical reasons and where we were in terms of the start of this process to actually include international air transport and international shipping.

It was seen as a hole in the system that needed to be repaired. As time went on. So here we were. Then back in 2021, when the carbon Budget six was agreed under the previous government, and they took that step on the carbon budget to order in 2021. Actually, to put this into practice at last. And hallelujah, from all of us that were waiting since 2008 for that to happen. And I congratulate the last government on achieving that.

It's a shame, in a way, that there seems to be this regression in terms of appetite, to make sure that the climate for our children and grandchildren is actually on the mend, rather than degrading from here. And let's be clear, we're actually kidding ourselves if we believe this sector can be left out of our equations. It accounts for something like estimated 10% of carbon emissions in terms of our own emissions or part of them, and globally, much more for airlines than for shipping.

But both are important and both are growing, which is the important thing. And as we know, if you don't measure it, you can't manage it. And if you don't manage it, it won't happen and it needs to happen. These are important sectors. So and I just actually say to the front bench of the opposition, this is one of the occasions where we are liberated from the European Union. This is a Brexit win in that in terms of airlines, the European Union still relies.

The Minister mentioned the scheme Corsia, which
19:47
19:48
Baroness Hayman Portrait Baroness Hayman (Crossbench)
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My Lords, it's a pleasure to follow the noble Lord, Lord follow the noble Lord, Lord Teverson, and agree very much with the final point that he made. But the final point that he made. But what I find, I find many things depressing at the moment about reactions to issues on climate reactions to issues on climate change, but one of them is the lack of enthusiasm about British innovation in ways in which we can grow green economy, we can tackle climate change, we can tackle emissions, and we have the intellectual firepower, and we have the companies and the individuals who are interested in doing that.

And yet here we are tonight with a perfectly reasonable proposition being put to us by the Minister to approve these regulations. I won't be insulting and say it's a bit of process ology, but it is part of the process and it's a process that's been going on for a long time. The it's certainly not new news. It was announced in April 20th, 2021, nearly four prime Ministers ago by the then conservative government. When the noble Lord, Lord Sharma, was our Cop26 president designate, and when the atmosphere and the cross-party consensus of the need to change and to make progress was very much accepted.

So what we're debating here tonight in terms of the regret motion, is that we're debating something that has been agreed for many years, decades actually, that has been accounted for in our forthcoming carbon budgets. And that industry has known about for many years. As I say, it is not new news. And I know that the noble Lord, Lord Turner, who I think could not be here this evening, would be telling us that he had discussions on this issue dating back to when he was chair of the PCC over 15 years ago, and I look forward to hear from the noble Lord, Lord deben, as a more recent chair Lord deben, as a more recent chair of the PCC.

I understand that the methodology is not yet perfect, but I think that was very clearly explained by the Minister why it was sensible to allow ourselves some room to develop that methodology, and I hope for it to be widely adopted by other people. But it makes no sense whatsoever for aviation and shipping to be left out of our carbon budgeting. They're important areas. There are areas in which there is progress being made, and there's areas in which we should be leading, not caviling about what is doing at the moment.

The rest of the UK economy is captured under our carbon budgets, and while there have been many arguments about the benefits and disbenefits about the the pace of transition, I've never actually heard it said that the simple act of having carbon budgets has specifically imposed cost on any industry, but what it will do is place a legal requirement on the government to ensure that these industries, alongside all other industries, reduce their emissions. And in fact, we've already legislated in the sustainable Energy Aviation Fuels Act to get starting here.

Enshrining this in law creates the legal certainty that businesses need, especially after the political upheaval of recent years, to invest and to innovate. So I think I'm tempted to say nothing to see here. I can see the whip would like me to sit down, and therefore, I will end by saying that if we do have to have a vote, which I consider unnecessary, I would certainly support the would certainly support the
19:52
Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb (Green Party)
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government. I'm sorry, I actually I'm very annoyed with the with the government and with the opposition. Keep talking about sustainable Keep talking about sustainable aviation fuel. That's a nonsense. It doesn't exist and it will never exist. However, I'm going to direct exist. However, I'm going to direct most of my remarks at the regret motion, which I think is absolutely motion, which I think is absolutely ludicrous, and I can't even believe we are debating something like this. It's climate denying nonsense, and It's climate denying nonsense, and it is time that everybody understood the science and actually started reading up on it.

It's we, you know, we've just broken. We've just had record temperatures for June and we could easily be into the hottest year ever recorded. And we cannot sit and talk about the economy being more important than the human ecosystem that the economy is destroying. We have to make the economy different. So here's a better suggestion for you to debate. We could start, for example, example naming those heat domes that sit over Europe in the way that we name hurricanes and storms.

We could call them Exxon and Texaco or BP or any other highly polluting fossil fuel company that created them. And when we talk about the economy, really, you know, what do you think will happen when we have the consequences of flooding, of heat, waves, of droughts? Do you seriously think that is going to benefit the economy? Absolutely won't. Insurance companies will be hit hard, food supplies will be devastated, and I will still be calling you clods. Now. Today we heard a really anodyne, supercilious answer from Defra about the danger to our food supplies, about food security, saying no, it's fine, it's all sorted out.

You don't have to worry your pretty little heads about it. That is absolute nonsense. We our food supplies are threatened and if we don't do something about it, we will be very, very hard hit. What the government is not doing on food supplies, on food security, is not actually warning the public on the issue. They are not moving fast enough. I spoke today to Tim Lang, who is a professor of food policy, and he wrote a report for the Sustainable National Sustainable Commission or something like that.

And it still hasn't been implemented. And I suggest the government gets on to it very, very fast. And the opposition, so that you can attack the government when they don't move fast enough on it. I my I despair at the fact that next year climate deniers are going to be saying exactly what this regret motion says next year, and I will stand here saying the same thing that I'm saying now, and we will not have moved forward. We will not have made ourselves safer.

We will have an economy that is slowly disintegrating because of the impacts of climate change. So please, could we if we do vote on this ridiculous motion, could we please all vote against it?
19:55
Lord Deben Portrait Lord Deben (Conservative)
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My Lord, I remind the House of my Declaration of Interests and the my Declaration of Interests and the fact that I was, for 11 years, chairman of the Climate Change Committee, appointed and reappointed and extended by conservative led governments. What is being proposed today was presented by the conservative government. The noble Lady who spoke here with me supported that, and I heard nothing of explaining why it has suddenly changed. This is just like last week where constantly the opposition is putting forward these things without explaining why they have changed their view from what was the conservative view of every conservative government.

Going back to the speeches that I used to write with Lady Thatcher. So let's just realize first that this was a conservative proposition. It's necessary. The Climate Change Committee proposed it because it is a necessary way of actually explaining why what is going to happen once we get the methodology right. But of course, we've got to work the methodology right with the IMO and the International Aviation Authority, and it's perfectly reasonable way to do this. And had there been a conservative government doing this a few years ago, they'd have done exactly the same thing.

So there is no need for us to argue about it. And then it's 10% of our emissions. I do have to say it's not acceptable to come to this House objecting to what the government is doing without an alternative. You have to say, if I don't do that, we're going to do something else. Now. I exclude Lord Moynihan of Chelsea for this, because he's never believed in climate change as being something that you need to fight. That is his position. He is entirely wrong about it, and we'll listen to him.

But the fact is, he's not blame worthy. Well, I do think the opposition is blame worthy if it's coming forward without an alternative to what we need to do now. The reality also is that this could become the largest emitting sector if it's left out, and it's stupid to leave it out because you need to have it in, and you need to help the industry to get through and make its proper contribution. You can't ask agriculture to make its contribution. You can't ask manufacturing to make its contribution.

If you're not asking the aviation industry and and the shipping industry. And indeed, only last week, the noble Lord, Lord Moynihan, was complaining about the fact that he thought that we were sending emissions abroad and shipping them here. Well, this is one of the things that we've got to get right in order to meet the proper complaint that he had made. And I have to say to my noble friend that to talk about this as an economic wrecking ball, if it is that it was one created by the Conservative Party.

So if it is an economic wrecking ball, this is what we did. Thank goodness we did, because it isn't an economic wrecking ball. What it is, is a means of enabling this country to play its proper part in ensuring that we have children and grandchildren with an economic system of any kind. I really do think this sort of general comment about how difficult things are ignore the fact that we are facing an existential danger, and thank goodness the voices who speak out on that side, including the Pope and the Laudato Si, all those who really do bother about the future of our society and of our children, are making it very clear that we have to make these changes.

This is a very modest thing for the noble Lord to have brought forward. I have real complaints about the government not moving fast enough, but I'm very pleased that it has moved as fast as it has. May I say it is not acceptable to argue about these issues unless you have an alternative, particularly when what is being proposed is something you would put forward yourself. If, my Lord, it's a privilege to follow the noble Lord, even on matters of climate change and the way he spoke, and with such passion and wisdom, I think is an example of this House at its best.

Climate change presents the greatest collective
19:59
Lord Bishop of Manchester Portrait The Lord Bishop of Manchester (Bishops)
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action problem of our age. Every nation, of course, would prefer others to act first, and that's why strong climate leadership matters. Hence, just as I found myself challenging the government for not doing enough earlier this afternoon doing enough earlier this afternoon in Committee stage of the Financial Services Bill. So I want to commend these regulations. Tonight, these regulations. Tonight, emissions from aviation and shipping have grown rapidly over the past 20 years. According to the Climate Change Committee, as the noble Lord has just said, the aviation emissions are projected to become the largest sector.

I think, by 2040. Legislation to specifically incorporate these industries into carbon budgets is therefore, in my view, the fair and proportionate thing to do. And those these regulations are not introducing new sector limits or altering targets, as the government have already said, they're fulfilling prior commitments set out in carbon budget six that's already been legislated for. And of course, carbon budget seven. Embedding these commitments in legislation empowers the government to hold these industries to account for their emissions. It sets a clear example to other nations of our commitment to international climate goals.

If we emit aviation and shipping from the budgets, that only weakens the credibility of our climate framework. It damages our position when it comes to international climate diplomacy, which is so important in this matter. Earlier today, when I was in the Grand Committee, one noble Lord sought to persuade us, if I understand the argument, but because there are other nations with a worse record on combating climate change than us, it would be detrimental to our competitiveness with them, and therefore a mistake for us to take carbon emissions seriously.

My Lord, Britain's role in the world should never be to seek to win some unsavoury race to the bottom. So to theology, if I may, most serious modern Christian theologians, including Lord Dyson, has just referred to the Pope of long discarded the old argument of dominion at its least pernicious. This assumes humans could disregard our impact on the environment because God had given it us to exploit, at its worst. Often found among ultra conservatives in the USA, it positively encouraged exhausting the planet's resources and the belief that destroying our environment would hasten the return of Jesus Christ.

Those views may be less often publicly stated now than 20 years ago, but I fear their malevolent presence still lurks behind some of the most vehement opposition to limiting carbon emissions. Yet, my Lords, we are not the planet's despotic overlords. We are a part of creation. We have a responsibility, as others have said, to pass on to future generations a world as beautiful as that which we inherited. We're already witnessing the noble Baroness Jones and has reminded us the effects of climate change through fluctuating weather patterns, pressures on food production, the more extreme climate events.

As time goes on, it will be the one the most vulnerable those experiencing poverty, as well as the generations after us, will feel the effects most strongly. This lunchtime, I was over at the Trussell Trust Food Bank in Hammersmith and Fulham for the launch of a much needed inquiry into the need for food banks, for which I'm a member of the panel. The rapid increase in prices of basic foodstuffs over recent times, so impacting on our poorest sisters and brothers, is a direct consequence of the increasing extreme weather, climate change that we're already experiencing and which last week we many of us lived through.

If you've been trying to take a service wearing fancy robes on Sunday in Manchester Cathedral, you'd be very much on my side. My Lords, the window of opportunity for action is quickly closing, but these regulations represent an important step towards ensuring that every sector fairly plays its part in meeting our climate commitments, and so I commend them.
20:03
Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Labour)
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My Lord, it's a pleasure to follow the right Reverend prelate, just on the orders themselves. I very much welcome it. Like Lord Teverson, they've been a long time coming, but it's good that we're now including aviation and maritime within the sixth carbon budget. It is going to be challenging, and I certainly understand the need for flexibility in methodology. And the Committee on Climate Change has set out some of the challenges that we are going to face, but that we should do it.

I'm absolutely convinced, my Lords, in a sense, this this debate really followed the last week's rather dispiriting debate, when the conservative opposition have essentially turned their back on net zero on any concern about climate change. And, my Lords, you know, Lord Moynihan, last week, the noble Baroness, in criticising the action of the government, said nothing about the impact of climate change. They said nothing about what they would do in relation to net zero. And, my Lords, I read the debate in the Commons because the Commons debated the last week and this week's SIS together, and shadow Energy Secretary Clare May got one mention of what the Conservatives would do to mitigate or adapt to climate change.

Instead, their sole response that, she said, was to get rid of carbon tax and to repeal the Climate Change Act, which as noble Lords here will know, we were the first country to establish a long term, legally binding framework. And, my Lords, are the Conservatives really serious about wanting to axe this landmark piece of legislation in 2019, they beefed it up for net zero under Mrs. May. I mean, Lords, it's just worth remarking, the last conservative Prime Minister stated, as Prime Minister, that energy transition and net zero are one of the greatest opportunities facing this country.

And my Lords, we come back to this issue of economic growth, and I thought Baroness Jones was absolutely right. I mean, the real catastrophe to prosperity and economic growth is climate change, not in the actions we're taking to try and mitigate and adapt to them. I know lawyers will have read the CBI report that came out a couple of weeks ago. Looking at the green economy. It's massive and it's part it's one of the only sectors that's really growing in this country.

And we can add aviation and maritime to that. But we now have 105 billion net zero sector, 1.1 million full time equivalent jobs. And they're good quality jobs as well. And my Lords, this issue about other countries taking advantage of the UK taking a leadership, this is absolute nonsense, my Lords. There is huge advantage for the UK to be a key player in a net zero economy. We know from the work of the International Energy Agency that actually, despite what some leaders say, actually many, many countries are speeding on with a transition to net zero.

And my Lords, we need to be part of that. And aviation and maritime needs to be part of that. So, my Lords, I very much support the the Statutory Instrument. And I think that tonight we're seeing that around the House. There is a strong consensus in favour of dealing with climate change and moving to net zero as fast as we can.
20:07
Baroness Foster of Aghadrumsee Portrait Baroness Foster of Aghadrumsee (Non-affiliated)
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My Lords, I declare my interest >> My Lords, I declare my interest as chair of Intertrade UK, which is beginning a piece of research on beginning a piece of research on ports and connectivity between Northern Ireland and Great Britain, which we believe is an important piece of work given what has happened in terms of the Windsor framework. But I want to concentrate my remarks on the shipping industry and indeed, the lack of methodology, which has been referred to by most of the speakers here today.

And that's not a criticism. It's just I think there's things that need to be put on the record in terms of when it comes to adopting a methodology to dealing with shipping, particularly in relation to Northern Ireland, because there's further carbon and climate policies are introduced, it is important that His Majesty's Government recognises the specific circumstances of Northern Ireland, and to ensure that the cumulative impact does not disproportionately disadvantage businesses and indeed consumers who rely on maritime services because around three quarters of our goods entering or leaving Northern Ireland do so by sea, meaning that additional costs imposed on shipping are borne ultimately by the exporters, the importers and, of course, the consumers.

So I would like to ask the noble Lord the Minister, does he and the government recognise that Northern Ireland have a particular geographic and economic circumstances which should be taken into account when the methodology is adopted in relation to shipping the existing UK ETS does recognise this. It has a 50% concession for Northern Ireland, Great Britain ferry routes. Of course, there's a zero concession for the Highlands and Islands, which we would say should apply to Northern Ireland as well, and the existing UK.

BTS comes into effect on Wednesday, the 1st of July. Just this week. I'm maintaining that concession for the industry is a priority and despite the concession that the UK BTS implementation is given to Northern Ireland traffic, it will add £9 million annually in additional costs to the shipping industry. And it is important that the government continues to monitor the real world economic consequences. And I hear voices saying that we shouldn't be worried about economic consequences. Well, frankly, I am worried about economic consequences for Northern Ireland.

And there is no standalone economic impact assessment of this sea. But given the reliance of Northern Ireland on the maritime services, its geography, its economic circumstances, it would be very helpful to all if the government would undertake a dedicated economic impact assessment for Northern Ireland, perhaps in conjunction with the Northern Ireland Assembly, because decarbonisation must be, of course, environmentally sustainable, but it must be also economically sustainable too, because if, as the government passes decarbonisation into law, we must ensure that climate policy doesn't inadvertently undermine our economic competitiveness across the UK.

But in this instance, in relation to Northern Ireland, I note from the Secondary Legislation Scrutiny Committee that both the Scottish and Welsh Governments have led legislation to include international aviation and international shipping in their carbon budgets. I wonder if I could ask the noble Lord, the Minister, what has happened in relation to the Northern Ireland Assembly? And lastly, and in finishing the noble Lord. The Minister in his opening, said that there would be flexibility between the different sectors impacted by this.

I would like to ask him, would there also be flexibility within the sectors, in other words, within international aviation and within international shipping? Given our unique position in the United Kingdom and I, I very much welcome the debate on this issue and look forward to the noble Lords response.
20:11
Lord Moynihan of Chelsea Portrait Lord Moynihan of Chelsea (Conservative)
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My Lords. >> I have three brief points to make and three questions for the Minister, and I hope in giving them to avoid the hysteria noticeable in to avoid the hysteria noticeable in some speeches this evening. My first point. This whole ETS approach is yet another failed attempt at. We know best. I could give many possible examples, but perhaps the most interesting recent one is that with the recent collapse of scenario RCP 8.5 on which must.

Much of the climate catastrophe claims have been made over the past couple of decades, with the complete collapse as being agreed as no longer plausible. Those claims, those catastrophes claims can now be seen as having been disinformation. My Lords, a good reason for the noble Lord even to understand why change is needed. A second reason by 2050, despite the net zero words, 50% of aviation fuel will still be fossil fuel. Another one so-called clean fuels. As the noble Baroness Jones so eloquently just told us, are not at all carbon zero to the Minister.

Does he agree that the whole ETS scheme is built on shaky foundations and is better off abandoned? My second point, the ETS market itself is a confected artifact. The intent was to create a free market in carbon, but in fact is all government controlled, and government control is the direct opposite of a free market. In the end, and at the moment, 100% goes to government. So it's just another tax. It doesn't reduce carbon generation. It just transfers it to another country.

Economic activity here, lower economic activity elsewhere higher. So will the Minister accept that ETS is in essence another way of generating tax to pay for more benefits? In the words of one of his own MPs, my third point. So it ends up as yet another hit to economic activity in the UK. Net zero has already hollowed out the economy, adding ETS for aviation and shipping just worsens it. The ETS carbon price has gone from £34 to £70, so there is a cost.

Despite what the noble Minister claimed, refineries have spent some £175 million on each year's aircraft operators over £200 million. There is a cost to all this. Our economy does suffer. While not a dent is made in global carbon emissions, Indian Air Force My Lords, recently increased their number from 74 to 164 airports, and they are adding another 50 airports. There is no ETS there, my Lords. So will the Minister agree that charging the ETS on aviation and shipping further damages our four remaining fineries on whom all the only entities that incur this are manufacturing entities in in the UK, further accelerating the de-industrialisation of our nation.
20:15
Earl Russell Portrait Earl Russell (Liberal Democrat)
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My Lord, I thank the noble Lord, the Minister, for introducing these regulations and all those who have regulations and all those who have spoken. My Lord, extreme heat records and regret motions do appear to be competing with one appear to be competing with one another for frequency at the present time. Last week, the UK broke the record for the hottest June day three days in a row, reaching 37.3°C on Friday, six NHS trusts declared critical incidents. The London Ambulance Service recorded its busiest day in its entire history.

Demand. Demand higher than even at the peak of the Covid pandemic. Europe is the fastest warming continent on earth, and forecasters are warning that future heat events are likely very soon. I find it genuinely difficult to hear arguments that we are doing too much, too fast on climate change. I want to say something about the politics before turning to a couple of comments for the Minister. I want to I want to return to the cross-party consensus on these issues, but I will challenge the unraveling of our climate policy when I hear calls from some to repeal the act, to abolish carbon taxes, to cut renewable subsidies, with no credible alternative offered in this.

In their place, it becomes very hard to sustain the view that opposition to every government climate measure is made in good faith. If the Conservatives challenge settled climate policy, they should expect a response. The challenge put both today and in our last debate by both the noble Lord hunt and Lord deben during was. If not this, then what? The policy assumptions underlying these regulations was not made by this government. It was made, as others have said in April 2021 by the then conservative government, announced personally by the Prime Minister, Boris Johnson, who declared that the UK would set what he called the most ambitious targets to cut emissions in the world.

That government confirmed explicitly that the six carbon budget would incorporate the UK's shares of international aviation and shipping emissions as an important part of its decarbonisation efforts. These regulations do no more than formalize that commitment in statute. The Conservatives have supported this policy in government. The question before this House is simply whether to honour it. I want to be clear about what this instrument does and does not do. It introduces no sector specific limits, no levies, no charges and no cuts on aviation or shipping.

It is an accounting measure. It formulates a framework already assumed in policy since 2021, and we are pleased to see it. If we exclude aviation and shipping from our accounting, we do not make those emissions disappear. We simply allow them to consume a disproportionate share of the UK's available carbon removals and offsets at the direct expense of agriculture and heavy industry. I have two comments for the Minister. First, on methodology. I really appreciate the way the Minister set that out. I welcome the fact that and I recognise the need for international negotiations.

I recognise those are also complicated. At the moment, I simply seek a reassurance that we will continue to work internationally on these issues, and that the government will continue to engage with the aviation and shipping industries to formulate and give them a formal role in that process. On economic impact. Similarly, I just really call on the government to continue to monitor the impacts of this and to continue to work with industry to make sure that these systems and these processes can be as streamlined as possible.

The honest answer to the noble Lord is concerned, introduced by the noble Baroness. Is this a clear framework actually helps these industries by giving investors the certainty and legal clarity, as the Minister said, needed to back sustainable aviation fuels and green marine technologies. Uncertainty is the enemy of investment. These regulations reduce it, my Lord. These regulations fulfil a commitment made by a Conservative Prime Minister that have passed the Commons already and align with our Climate Change Committee's advice. I support them and I urge the House not to support this regret motion.

 Thank you.
20:19
Lord Whitehead Portrait Lord Whitehead, Minister of State (Department for Energy Security and Net Zero) (Labour)
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I thank all noble Lords for their valuable contributions to this debate, and I must say I am greatly buoyed up by the tremendous speeches we have had this evening in support of this particular measure, and it has restored my faith that this House really is facing the right way on climate change, and really is behind measures to tackle climate change and get us to net zero. That's great. And in that sense, I. Recognise that I was perhaps gently chided by the noble Baroness, Baroness Hayman, for being rather proceduralist in my first comments.

I'd like to put that right by now by saying, hooray, we've got this, we've got this now. We hope we've got this now on the statute books. It is something that indeed, along with noble Lord Teverson, noble Lord, Lord demon, and and many others I know, I might say, including me, have been banging on about for many, many years. It, it always it always seemed that it was a terrible gap in our armoury as far as fighting climate change, that we were apparently allowing international aviation and international shipping to have a free pass as far as climate change contributions were concerned, partly in those days, because we couldn't think or people couldn't think easily of how to do it.

And this is one point behind, I think, which I think the noble Baroness, Baroness Bloomfield, did underline, and that is what we are saying about methodology is not because we can't think of what to do, but it is because this is still an emerging and developing consensus across the world, with the negotiations with the International Aviation Authority and the International Maritime Organization on exactly how this can best be done. Not that it can't be done, but to get it right.

So as far as aviation is concerned, then it's a question of getting a point to point arrangement where your contributions are relevant for the outward flight, and someone else's contributions are already available for the flight back. And how to establish that point to point arrangement internationally and make that work within each country that's agreeing. It is part of the discussions that are going on with the International Aviation Authority as far as shipping is concerned. Well, of course, and this is very relevant to the noble Baroness, Baroness Foster's contribution.

We are talking now about international shipping coming into climate change arrangements, and obviously, domestic shipping has been in there for a while. And indeed, the noble Baroness and myself were engaged in a interesting discussion just recently about exactly how Northern Ireland gets treated as far as domestic shipping is concerned, and a particular circumstances of Northern Ireland, which indeed, as the noble Baroness says. Has led to a half price arrangement as far as Northern Ireland shipping is concerned, in order not to be disadvantaged when compared with, say, shipping with the Republic of Ireland.

So there are things that can be put into place already in terms of taking particular account of particular circumstances, but the particular thing that has to be taken account as far as international shipping is concerned, is the fact that, of course, ships don't go one place and back to another place. They go perhaps to multiple places around the world. So how do you get a fair arrangement for what international shipping is paying in? Well, you go to international bunkering arrangements and things such as that, but there is still some work to do in getting that absolutely right.

So it is it is right that we don't put something down now on a Statutory Instrument and that we actually make sure, along with our international partners, that we've actually got this, this right on an international basis, because this has to be done on an international basis. It has to be done making sure that it is that people don't escape or get out of their obligations. And actually, it is fair to people all around. And of course, that's one of the answers to the fact that this is clearly not a wrecking ball to UK industry.

And indeed, as a noble Lord did mention, if it had been a wrecking ball, it would have been a wrecking ball firmly in the middle of the last Conservative government's arrangements for the economy, because that is what they did at the time. It is not a wrecking ball because it will be fair to everybody. And so this will be the

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basis on which international aviation and International shipping will continue. There won't be people who continue. There won't be people who will get a free ride on the back of it. It will be. It will be fair shares for everybody. And that's, shares for everybody. And that's, again, why it's important that we get the methodology absolutely get the methodology absolutely right. I don't think, my Lords, that I need to go on a great deal about the rest of this, this particular s I, because noble Lords in this chamber have made such a good case for it this evening, and I don't need to add to their particularly good case just to say that if there are any particular things that I have missed out in my contributions this evening, then I will certainly write to relevant noble Lords.

I would just say in conclusion, I absolutely don't agree that ETS is is a method of tax raising. It is, of course in the form of a tax, but it is a tax which works with the market rather than against the market in order to distribute properly how those particular contributions can be raised. And of course, it is a contribution which actually makes the cost of of high carbon activities higher than low carbon activities. That's one of the purposes, but it is not an unfair taxation for for particular groups of people or economies.

It is a fair market based method of making sure that the move towards a low carbon economy is distributed among all people. So this is, I think, a measure that should be passed by complete consensus among everybody in this chamber. And it is so important that that consensus is maintained, embedded in the Climate Change Act originally, and that has provided stability, certainty and credibility to our framework. These regulations don't raise our ambition or weaken it, but ensure that it is applied consistently.

I therefore urge noble Lords to support these regulations and in doing so, to uphold the United Kingdom's status as a global leader in tackling climate change. And should this matter be put to a vote, I would urge that this chamber votes solidly against the idea that there should be a regret motion attached to this.
20:27
Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Conservative)
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My Lords, I thank all noble Lords for their contributions to this important debate, and I do genuinely take note of their comments. It is the speed of the rush to net zero that is harming our industry. I accept Lord Hunt's entirely correct focus on the 1.5 million jobs and the contribution to the economy of the burgeoning green economy, green economy. But these benches are united on the focus, needing to be on cutting energy bills. Our grandchildren will equally never forgive us if we destroy our economy with high energy prices, and that must be a concern for us all.

We currently have electricity prices that are four times higher than those of the US. That is the issue we need to address. Do not ignore warnings from Tony Blair, who said that the net zero policies being pushed forward are unaffordable, ineffective and politically toxic. Or Gary Smith of the GMB, who recently said that the policy is being pursued by the government, are economic madness. Even the unite union said no ban without a plan. These points are worthy of consideration because the North Sea issue is very important.

Whilst everyone was distracted by Makerfield, an important referendum was in effect being undertaken in Aberdeen South. It was an overwhelming rejection of both measures that are in this climate change, carbon budget order and the current government's policy on the North Sea, which is referred to. But having said all the above, I beg leave to withdraw the motion. Standing in the name of my noble friend, Lord Moynihan.

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Is it your Lordship's pleasure. That the amendment be withdrawn? The amendment is by leave. Withdraw. The amendment is by leave. Withdraw. The question is that the original motion be agreed to. As many as that opinion will say content, that opinion will say content, content, content, content. The contents have it.
20:29
None Portrait Deputy Lord Speaker. Lord Beith (Liberal Democrat)
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>> My Lords, I beg to move the House to adjourn.
This debate has concluded
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