Steel Industry (Nationalisation) Bill

Debate between Ashley Fox and Liam Byrne

2nd reading
Thursday 21st May 2026 Commons Chamber

[Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)]

I will be very quick, because I know that colleagues are keen to get in. I am going to speak against the amendment and in support of the Bill for the simple reason that a speech such as the one we have just heard from the shadow Minister may have just about cut the mustard five or six years ago, but it certainly does not work today in a world of weaponised interdependence. It does not work in a world where President Trump is back in the White House or where President Xi is prosecuting the sixth five-year plan, as he is. The critical point in this debate, which the Secretary of State made very well, is that we must have a sovereign capability to make steel. In today’s world, we cannot afford to have a critical steelmaker like British Steel in the hands of a Chinese firm; we cannot, as Ronald Reagan once said, be innocents abroad in a world that is frankly no longer innocent.

Regardless of those remarks, there are a couple of areas where I think the shadow Minister made some important points. I want to stress that although the Secretary of State is proposing some perhaps welcome statism, he must not forget the statecraft that is needed to make a success of this Bill. There are six areas I would like him to respond to very briefly, and I hope we will be able to strike a cross-party consensus around them.

First, it is important that the Secretary of State wills the means and not simply the ends. We have, as the shadow Minister said, already spent a lot of money on this. The transition to electric arc furnaces that the Secretary of State is proposing is not cheap—it is extremely expensive. I think we are hoping that a lot of that money will come from the National Wealth Fund, but he does not control the National Wealth Fund or the allocations that it makes. The National Wealth Fund has not said anything about guaranteeing money for the kinds of ends that the Secretary of State has in mind, and the Government have declined to explain what will happen if steel projects are not funded by the National Wealth Fund. We therefore need a bit more clarity about where the investment resources for the Secretary of State’s plans are going to come from.

[Sir Ashley Fox (Bridgwater) (Con)]

Does the right hon. Gentleman agree that it is unlikely that the National Wealth Fund, or indeed anyone else, would wish to invest in British steelmaking while our electricity prices are so very high? Does he agree that there is no point in this Bill until we fix the electricity market in this country?

[Liam Byrne]

The hon. Gentleman makes an excellent point that I am about to come on to. My point, I suppose, is that there is a case for this Bill. I think it is actually quite important, and the powers that it confers are also important, but if we are to get value for money from it, there have to be five other components, which I will come on to now.

The second area is lower energy costs. The British industrial competitiveness scheme is welcome, but it does not come online until 2027. Steelmakers, like much of our manufacturing industry, are saying very clearly to the Business and Trade Committee that there is a widening gap between UK wholesale electricity prices and the prices of our peers in the wake of the Iran crisis. My question to the Minister is: what further targeted support will be available to energy-intensive industries before 2027? As the hon. Member for Bridgwater (Sir Ashley Fox) rightly points out, that is an essential component of the package.

The third area that the shadow Minister was right to highlight is the issue of tariffs. This is now an urgent issue. The Committee heard evidence this afternoon at our own roundtable about the need to refine the tariff structures that have been put in place. The key thing is that we get a better deal with the European Union, to which we export 80% of our steel. It is about to cut tariff-free quotas by 47%, double tariffs from 25% to 50%, and impose melt and pour requirements. Unless we can get a deal in place with the European Union before the end of July, I am afraid that many of the good intentions behind this Bill will be confounded.

The fourth area is procurement. We must ensure that there is a proper demand curve from the UK state for the things that British Steel makes. In the British economy, British state procurement makes up £1 in every £6. Right now, despite the excellent changes in the Procurement Act 2023, we do not have a sufficiently clear forward pipeline. That has to change, not least because when we talk to defence companies—which are, of course, patiently awaiting the defence investment plan—and defence contractors, they still tell us that the kind of steel that they need to make the things that keep this country safe are not made in this country. Ensuring that there are advanced market commitments alongside the defence equipment plan, along with the range of other big, long-term ambitions that I know the Secretary of State has, is very important.

The penultimate area I want to touch on is scrap supply. The Secretary of State has ultimately come to the conclusion—wisely, I suspect—that we should shift to electric arc furnaces, but that kind of industry model will work only if there is a healthy supply of scrap. I think that Ministers are being just a tiny bit too complacent about whether we have the plans in place to source all that scrap. I know that there is a roundtable proposed for later this month, but as part and parcel of ensuring that the steel strategy actually works, can we have, at the very least, a read-out for Parliament about what scrap supplies will be kept in our country, rather than exported?

The final point I wanted to flag is about consolidation. One of the virtues of this Bill is that it bestows on the Secretary of State the power to ensure that there is consolidation in the UK steel industry for the future needs of the economy. In particular, it should allow us to take assets that have gone to firms that are currently out of business, and to rationalise the industry in a way that makes sense. I would like to hear more about what the Secretary of State is proposing when it comes to consolidating the industry.

Ultimately, in the world that we are in, when there are so many visible hands in the global economy interfering with the free market in steel, we will have to have a stronger visible hand. That is what the Secretary of State is proposing through this Bill. There will be a lot more work to do in the Bill’s subsequent stages to satisfy the House that he has got right the statecraft package behind this measure of statism. I look forward to hearing some reassuring noises on that point when the Minister winds up.