Steel Industry (Special Measures) Act 2025

Lord Jamieson Excerpts

Thursday 23rd October 2025 Lords Chamber

[Lord Jamieson (Con)]

My Lords, I congratulate the noble Baroness, Lady Lloyd of Effra, on her excellent maiden speech and I look forward to that of the noble Lord, Lord Stockwood, who has the difficult task of pulling together the various strands of this debate into a coherent strategy. I declare my interests as having worked at British Steel, being sponsored by it through university in the early 1980s. I was on the shop floor; my noble friend was in the boardroom at the time. Our paths did not cross. I am also in receipt of a rather small pension from British Steel, which I do not think would be classed as a financial interest.

During that time at British Steel, I was privileged to visit so many UK steel plants—Llanwern, Scunthorpe and all the Sheffield plants, which was where I was based —as well as having the opportunity to visit steel mills in Germany. There was a big contrast between them.

The issues facing the UK steel industry were already clear in the early 1980s. Although the Government had sought to modernise the steel industry in the late 1950s and 1970s, many of these decisions were short term and failed to be truly strategic. The noble Baroness, Lady Smith of Llanfaes, talked about Port Talbot, which was rebuilt in 1959 and was the largest steel producer in Europe, employing more than 20,000 people. But since that time, it has not had the investment or the modernisation it was due. My noble friend Lord Prior gave the example of steel having to be shipped from there to another place in Wales, and back. That is not an integrated steel plant, and it is not how you end up being world class.

In the late 1950s, a political decision was made to invest in two steel plants, Ravenscraig and Llanwern, because the Government could not decide where they wanted a single world-class steel plant. At the same time, the Dutch invested in Hoogovens in IJmuiden, and they built the plant that should have been built in either Llanwern or Ravenscraig, rather than splitting the two in half. That plant in Holland is still producing 7 million tonnes and still a world-class plant, whereas Llanwern and Ravenscraig have both been shut. Decisions made 30 or 40 years ago can have fundamental long-term impacts.

In 1979, a single blast furnace was built on Teesside, as my noble friend pointed out—he was building it. It was the largest in Europe, the most modern, the best and so forth. Unfortunately, the rest of the investment did not happen. You cannot run an effective, integrated steel plant on a single blast furnace. You cannot run it unless you have the full mix of hot-rolling mills, cold-rolling mills, rod mills and so forth. Again, that blast furnace shut in 2015. I refer to this history because it illustrates a point: for steel-making, you need world-class plants, and you need to think long term.

As I said, I spent most of my working time in the Sheffield area, where steel-making was based on electric arc furnaces, which, according to this debate and others, is the future. I agree. Sheffield has a great heritage in steel-making, being the place where the original Bessemer process was first commercialised. When I was there, the steelworks in the Sheffield area—Stocksbridge, Rotherham, Tinsley and Templeborough—were leading European producers of special steels from electric arc furnaces. This was and should have been a highly competitive position. These were added-value steels, there was deep knowledge and skills in the area, and an ample supply of raw material from the UK—scrap steel. These were well-managed operations, which were going through technological change as they moved away from the traditional rolling, bloom casting and billet casting to continuous casting, which is a substantial reduction in cost, as we moved away from the old electrical management systems of transistors and so forth to digital and automation of the processes.

That is a big change and one of the issues was that not enough was done. Since I left, very little has been done to improve those plants, which is why a number of them were shut. That was about investment and, to be slightly controversial, it was also about a workforce reluctant to embrace the fact that if you invest in this new technology, a continuous casting billet machine, for example, takes far fewer employees than a number of rolling mills. It needs to be embraced. One of the interesting things when I went to Europe and the German mills was the greater willingness of the workforce and unions to think long-term. It was not about securing jobs for today; it was about securing maybe fewer jobs but for the long term.

As my noble friend Lord Hunt and others have mentioned, the big issue in the UK is the cost of energy. It is the Achilles heel of the industry. As my noble friend Lord Hannan has pointed out, we may choose to have a more hands-off approach, but if we do not have cheap energy we will not have a steel industry; it is as simple as that. Energy can make up 50% of the costs of an electric arc furnace plant. When you are paying 25% more than Europe and probably double than in China, you are simply not competitive. I give as an example the fact that in the 1970s the UK produced nearly 30 million tonnes of steel and China produced about 20 million tonnes. Today, we produce just over 5 million tonnes, which is less than that single site in Holland, and China produces over 1 billion tonnes. Importing steel from China is not about addressing climate change. Manufacturing in the UK is much better for climate change than having it made in China.

The purpose of this debate is to talk about a long-term strategy for the steel industry and hence I gave a bit of background. If we are to have a successful steel industry in the UK, we need to take this seriously. We can have world-class plants, and I sympathise with the comments of the noble Lord, Lord Mohammed of Tinsley, about the tripartite industry based on Port Talbot, Sheffield and Scunthorpe. But to do this we need a proper strategy. Temporary life support does not work; it just ends up costing the Government money and the problem remains. The fundamental one is low energy costs. If we do not have this, we do not have a steel industry.

We also need modern, well-invested in plants that are world-class. That may be done by the private sector; it may be done with government helping to support some of those changes. It was very interesting to look at the Port Talbot plant. It is great that we have investment in a single, very large, efficient electric arc furnace. But it is not long-term competitive to have just one. You end up with the same issues they had on Ravenscraig. You need two and you need a proper integrated plant. I am not saying how we should get there or whether the Government should do that investment. But if you do not have that strategy, you will not have a long-term plant.

Finally, the Government need to create the right environment. Yes, it is about energy and having the right tax system that encourages investment and does not penalise employing people. They need to be robust when it comes to looking at tariffs. If we are going to successfully export specialist steels, we need a tariff system that does not penalise us. If we are going to demand very high standards in terms of climate and the environment of our steelworkers, we cannot be importing steel from someone else who pays no attention to those standards. That is about the environment.

I look forward to hearing what the Minister has to say. I hope those have been some helpful pointers.