Steel Industry (Special Measures) Act 2025

Lord Bilimoria Excerpts

Thursday 23rd October 2025 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, at the outset of this debate on the Steel Industry (Special Measures) Act, I congratulate the Minister, the noble Baroness, Lady Lloyd, on her excellent maiden speech, and I look forward to the maiden speech of the noble Lord, Lord Stockwood.

I chair the Manufacturing Commission. Manufacturing used to make up 30% of GDP in the UK in the 1970s and now it makes up less than 10%. Yet the UK, with less than 1% of the world’s population, is the 11th largest manufacturer in the world in absolute terms—and it is high-quality manufacturing. When you think of manufacturing, steel is of course as large and heavy-scale manufacturing as you can get.

I come from the smallest minority community in the world: the Zoroastrian Parsis. There are just 100,000 of us in the world. We came as refugees from what is today Iran, in Persia, over a thousand years ago and settled in India, a country that gave us refuge. There are now just over 50,000 Parsis in India and 5,000 here in the UK. The Parsis have excelled in just about every field, including in industry. The most famous industrialist in India, I would say, is Jamsetji Tata, the founder of the Tata company. The Tata Iron and Steel Company was founded by Jamsetji Tata and established by Sir Dorabji Tata in 1907. It started producing steel in 1912. When this idea was put forward, a British official said,

“I will eat every pound of steel rail they succeed in making”.


Well, he certainly ate his words. Today, Tata, as a group, is valued at over $500 billion, one of the largest conglomerates not only in India but in the world. Of course, here in the UK, it is the owner of Tata Steel and Jaguar Land Rover.

We have a situation in the UK where the steel industry, as previous speakers have said, has struggled to be competitive with all the headwinds against it: tariff uncertainty; high energy costs; the decarbonisation challenges; and China. Let us get this into context: China dominates global supply of steel; 54% of steel in the world is produced by China, while the UK produces 5.6 million tonnes, or 0.3% of the world’s total. We have to get this in context.

There is a surplus of steel in the world, which has pushed down steel prices. On the other hand, energy prices rocketed after Putin’s invasion of Ukraine in 2022, which took place during my tenure as president of the CBI. I am now chair of the International Chamber of Commerce here in the UK and regional co-ordinator for Europe, and we are witnessing trade wars. The ICC, the largest business organisation in the world, with trade as its focus, is at the heart of the tariff and trade challenges that we face.

Here in the UK, right up front we have the 25% tariff on all steel imports. Our normal tariff is at 10%. Please note that that is five times higher than our tariff was with the United States, which was just 2% either way. It is completely irrelevant for us to have any tariff increases at all with the United States, because we have £60 billion of exports and £58 billion of imports from the United States in goods: that is balanced. In services, we have £130 billion of exports and about £50 billion of imports. We have a services surplus, but there are no tariffs on services. As it is, it is unfair for us to impose any tariffs at all, but there we have it—the 10% baseline and the 25% on steel. That 25% has been increased to 50%. Where do we stand on that? I ask the Minister to say whether we are going to be at 25%. We were told we were maybe going to be at 0% and then, with President Trump’s visit over here, we were hopeful that that 0% would be clarified. What is our tariff with the United States of America going to be?

Of course, the other point is that manufacturing steel is such an energy intensive operation and our energy costs, sadly, are some of the highest in the world, certainly the highest in Europe. We pay 25% more for energy than our competitors in France and Germany. We can quantify this in various ways but it is millions of pounds more. On top of that, we have decarbonisation. Steel, because of its processing, is a significant contributor to greenhouse gases. It is responsible for over 13% of UK greenhouse gases emitted from manufacturing and 2.2% of the UK’s greenhouse gases in total, yet the steel industry is only 0.1% of UK GDP. Decarbonisation is, of course, a priority; the steel industry is trying to do it and is playing an important role, because the steel produced is used in renewable energy infrastructure manufacturing—wind turbines and solar panels.

The blast furnaces at Scunthorpe were the only remaining virgin steel plants left in the UK. The electric arc furnace method produces much lower carbon emissions, but that depends on what source of electricity it uses. Many issues were raised when the Act went through Parliament. Reform UK, on the one hand, called for an immediate nationalisation of the British steel industry. The Opposition called for a sunset clause. Does the Minister consider that a sunset clause might be required? But the emergency measures were taken and the steel industry was saved. As for parliamentary scrutiny, we now get a report every four weeks. Will we have some sort of annual review of this procedure? The good news is that British Steel is seeking to enrol apprentices over the next three years, which is excellent. The cost to the taxpayer is now almost £200 million, but we have saved something and, of course, all the SMEs in the supply chain have also benefited.

Noble Lords before me have spoken about the steel strategy. Can the Minister confirm when exactly we will get the steel strategy? It was meant to be this year; will it be early next year? We have had our industrial strategy, which is great news and excellent, and we hope that this will establish a clear, long-term vision and how we will achieve it, and identify gaps, capabilities and investment decisions. We are all looking forward to it.

The BBC claims that the UK Government are in favour of merging all UK steel-makers into one organisation and not in favour of nationalising that entity. Can the Minister give any clarification on that rumour that has been circulated?

The Act that we are debating has prevented the closure of the Scunthorpe plant, which employs 2,700 workers. The Tata Steel plant at Port Talbot is a great example of partnership between government and business, with a £1.25 billion pound investment, of which the Government have given a £500 million grant. It is moving to an electric arc furnace, which will replace the blast furnace. This will reduce emissions—estimates are by up to 90%, certainly by 70%. It will secure 5,000 direct and supply chain jobs and will align steel production with net-zero objectives, but there will be temporary job losses. I urge the Minister to assure us that every help will be given in this transition period so that any temporary job losses are avoided.

On the extra energy costs, is there anything the Government can do to help our steel industry be more competitive? Then, of course, there is the challenge of the European Union, which I will come to in a short while. With an output of 6.9 million tonnes, 33,000 jobs and £2.5 billion in GVA, tariffs are a huge issue, but I make a point about the public/private partnership once again, and the subsidies. There are pros and cons in this, and the con is reliance on subsidies. Can the steel industry be self-sufficient without having to rely on subsidies? The European Commission is proposing a 47% cut in the tariff-free quotas. Will the UK be included in these tariff-free quotas? That would be a huge problem.

On steel clusters, the regional impact in Wales, in Yorkshire and the Midlands, and regional regeneration and training, we must avoid any transition causing local unemployment at all costs. British Steel and the Community union launched a “Save Steel, Buy British” campaign, seeking a level playing field, and the British Metals Recycling Association has its export flexibility and circular economy report. This is very important, because the UK metals recycling sector, just referred to, contributes £9 billion to GVA and supports 2,000 businesses and 15,000 direct jobs. It generates 11 million tonnes of ferrous scrap, but the UK consumes only 2.6 million tonnes; the rest is exported. Can we maintain export flexibility? At the moment, there are bans to certain countries. Can we create a supportive environment for this sector, which is vital to our steel industry?

The Minister, in her excellent maiden speech, spoke about Heathrow, as of course did the noble Baroness, Lady Hunter, in her excellent tribute—I pay tribute to her tribute, which was very good. The Minister mentioned the Heathrow third runway, which will require, according to my memory, 400,000 tonnes of steel: it should be British steel being used. What is going to happen about Heathrow? I remember sitting next to Sir Howard Davies when his commission recommended a third runway at Heathrow Airport. Correct me if I am wrong, but that was over a decade ago. We still have not decided which option to go for. I declare my interest: Surinder Arora is a close friend of mine and one of the country’s great entrepreneurs. He has put forward an option, Heathrow has put forward an option; let us make a choice and get that runway built as soon as possible.

Look at Gatwick, which now has a second runway. I always said we should not have either Heathrow or Gatwick; we should have both. I am delighted that the Government have done that. Let us make the decision with Heathrow as well. When I was in India just now with the Prime Minister, the announcement was made, on the day that we were in Mumbai, that India is opening its new Mumbai terminal for 90 million passengers a year, in addition to the terminal it already has. Go to Dubai Airport: that is what we are competing with. This is the greatest city in the world; we should have the best airport transport in the world.

The EU is the biggest customer of UK steel: 78% of all our steel goes to the EU. We must address this issue of tariffs. Again, I ask the Minister to clarify that. On one hand the steel-makers in the EU are very happy, but the automakers are very worried because the tariffs are going to cause their prices to go up and cause inflation.

To conclude, I will make one point about Tata Steel. Everyone talks about Port Talbot, but Tata Steel is all over the country: in Hartlepool, in Sheffield, in Corby, in Imperial College, in north England, east England, Swansea—everywhere. It is very important to make the point that the steel industry is not just one or two places; it affects the whole United Kingdom. It is one of the most important industries to our country, and I am delighted that the Government are giving it top priority.