Steel Industry (Special Measures) Act 2025

Lord Fox Excerpts

Thursday 23rd October 2025 Lords Chamber

[Lord Fox (LD)]

My Lords, there may be far fewer of us here today than there were in April, but the concentration of steel expertise was raised accordingly. That caused me to have to reach back in my own experience to at least try to come up with something. I worked largely for the users of steel, but in my last corporate role I worked for a company that owned an electric arc furnace in the United States to produce powder metallurgy from used cars. Standing in front of an arc as the electricity goes into the crucible, you can viscerally feel that power that is used to melt scrap metal; it is quite an experience, and it puts in context what these much larger arcs must be doing.

I congratulate the noble Baroness, Lady Lloyd, on her maiden speech. There were moments later on when I felt like I was gatecrashing a reunion but, leaving that to one side, I look forward to her role going forward in your Lordships’ House.

I was also delighted to be on the Benches when my noble friend Lord Mohammed made his speech because he established a point at the beginning: of course there are mills and plants, and there are supply chains, but they all lead to communities, which lead to families and people. That is why I turn to the noble Lord, Lord Hannan, and say: yes, we must be careful about nostalgia, but we have to remember where this industry has come from, what it has meant and what we have to do to try to make sure that its people can come along with whatever the future strategy is. I was grateful that the noble Lord, Lord Mohammed, put us in that position.

We have this debate today because of the amendment that we pushed for during the original passing of the Bill, and I hope it will bring some scrutiny. To that end, I will probe quite a few of the issues, and I hope the noble Lord, Lord Stockwood, will have the chance to answer every one of my questions and to give his maiden speech. But, if he is unable to do so, I hope that the people sitting in the Box behind him will be able to respond in due course.

As we have heard, there is plenty to discuss and there are plenty of questions to ask. A lot has happened since that debate in April, but some things have not happened. The blast furnaces in Scunthorpe were not shut down, which is a very good thing, and we should applaud that process. Then, in July, the US President did not double tariffs to 50%; that left the UK at 25%—but, of course, subject to future whim as yet unknown. These days, that seems like a win, but given that less than a 10th of our steel exports are to the USA, it is very much less significant than what may or may not be happening with our relationship with the European Union.

As we have heard, the EU’s 50-50 proposal would be pretty devastating to half of the 80% of our exports that go there. This was announced in October and, as we have heard, it is subject to approval from member states, the Parliament and WTO negotiations. It would cut quotas from the UK into the EU by half and create a new 50% tariff applied to all imports above that slashed quota. That would leave tariff-free exports at 18.3 million tonnes for the UK—a 47% reduction from 2024.

I of course associate myself with the cry from the noble Lord, Lord Liddle, for us to join a customs union, but, leaving that to one side, I was interested when the Minister said that, in the event that such a thing happened, the Government would take any necessary action. I wonder what legal framework the Government will apply to take any such action. The EU has trade defence instruments, but we do not have the same instruments—we chose not to adopt those post Brexit. So our relationship with trade retaliation and the WTO, and our stated aim to maintain international law, is quite a compromised position. I would be interested to hear from the Government how such retaliation measures could be justified within international law.

Turning back to the US, can I ask whether the Government are still working on their stated aim of securing 0% US steel tariffs, which was paraded at one point during the various discussions? Nothing has surfaced. Is this now officially dead?

When we look at this sector—we have heard about the various elements—it really is a sad tale, in many senses, of a sector in decline: of a rescue and sale, and re-rescue and further decline, in a series of downward steps to leave us in the position we are in now, with a very small steel industry, as we have just heard. Essentially, all our steelmakers face a huge challenge, and most if not all are being propped up by the Government. In response to the suggestion of the noble Lord, Lord Hannan, that we kick those props down and see what happens, I think we know what would happen if the Government did not act as they are and had not acted as they did.

On the future ownership structure, we heard from the Government—from Jonathan Reynolds—that they would like a sector partner going forward. Yet with honourable exceptions such as Tata, past experience has shown that the sort of businesses willing to take on the mantle of a partner are often ones that fail to come up with the capital model or to do what needs to be done. That will be a challenge for our new Investment Minister, and it would be useful to understand how he and his department will go about finding that sector partner and where they might look.

All this begs a question that each of you in many ways has probed: what is the future purpose of steel in Britain, and what will the strategy seek to make happen to deliver that future shape? The Government closed their consultation more than six months ago but have yet to present any outputs relating to strategy. June’s industrial strategy and the corresponding August advanced manufacturing sector plan referenced steel as an important industry but committed only to a future steel strategy. That provides no certainty or clarity for a sector that desperately needs things to cling on to.

I think there is, on paper, a Steel Council. Can the Minister tell us how many times it has met, whether it has reviewed a draft of the steel strategy and whether it has approved the strategy? Where will the strategy be signed off: by the Secretary of State, the Prime Minister or the Treasury? More than that, when it is eventually launched, how will the strategy be implemented? It is in implementation of strategy that we find so many shortfalls.

With steel we have seen something interesting: there was necessary frenetic activity in the run-up to the Government stepping in. There were dramatic tales of actions taken under the cover of darkness, if not by Johnny Reynolds then by some of his colleagues, to secure the future of the blast furnace. That is great—but there has not been much of a narrative since then. What is actually happening?

Moving on, I have more questions. Where are the Government in their negotiations with Jingye? The Minister painted a slightly rosy picture of their relationship with Jingye, which I find interesting and perhaps hard to understand. In my understanding, Jingye is seeking many hundreds of millions of pounds in compensation for what the Government have done. Have they ruled out handing any public money to Jingye, or is it just a matter of how much and when? If they agree to pay it any money, where will that money come from? Will it come from the steel rescue plan or from a separate Treasury fund? That steel rescue money is already in demand. As we have heard, £500 million has gone to Tata towards the installation of the electric arc furnaces, but in Scunthorpe costs are being incurred too. As the Minister said, £270 million has been provided, ostensibly for working capital and things such as raw material. But there will be ongoing costs, and it would be helpful to understand, given that the £270 million is a downpayment, the likely monthly ongoing cost that will be drawing down from the steel fund.

Looking forward, having saved the furnaces, the Government need to determine how that can ever be cost effective. That really relates to much of what we have heard already. In September 2024, Jonathan Reynolds told the House of Commons that the Government’s preferred option was a transition plan in Scunthorpe to more electric arc furnaces. If they started now, we would not have an arc furnace there until 2030. How is the blast furnace to arc furnace transition in Scunthorpe ever to be financed, and indeed be financeable?

In the short term, internal markets have been identified for the product in Scunthorpe, but most of those markets are things that have not happened, are not happening and may happen some time into the future. The whole structure of the market for Scunthorpe is not there. Given that the cost of Chinese and other steel is substantially cheaper for most of the sort of steel that has been identified for Scunthorpe, again, how do the Government square the circle on costs while maintaining what they want to do?

I will not go into energy costs, because your Lordships have done it so well, except to say that there are ways of reducing the cost of electricity by delinking it from the cost of gas—our leader, Ed Davey, has been very clear and detailed on that. That would be a start for the industry.

The steel industry has stood as a great pillar of British industrial strength, but we have had historical decline, policy drift, mismanagement, bad commercial marriages and external market pressures, which have put us, frankly, at the point of near-extinction. Perhaps it is the best of all possible worlds, unless we understand what the optimal activity is and what the optimal scale for that activity is across the country. That is what we are waiting for in the strategy. We have to decide what we are going to do, and it certainly is not doing everything everywhere. I ask the Ministers to take on board the absolute necessity to be focused in what we do.

This is an important industry; it is one that we value, but one that we need to target and focus. It is quite clear that we cannot remain where we are now. We need to know where we are going—and very soon.

--- Later in debate ---

[The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab) (Maiden Speech)]

My Lords, I am pleased to respond for the Government and I am grateful to my noble friend Lady Lloyd for initiating this debate. Based on the comments, it seems I am the only one who has not worked with her in a previous life, so I look forward to working alongside her in both the Department for Business and Trade and this House over the coming months.

I begin by thanking my noble friends Lord Glasman and Lord Kennedy for the generous introduction to the House and recognising the warmth and generosity of spirit with which my fellow Members and staff have welcomed me. It is the greatest honour of my life to take my seat among you. Honour is the right word because I know that, from where I come from, there are very few people who get to sit with noble Lords. As was mentioned, I grew up in Grimsby, after the Cod Wars of the 1970s. It was an industrial town like so many others and, as happened to so much in that generation, globalisation and international politics created unforeseen consequences for the town that I love.

My mum and my grandmother raised me and my three brothers alone. It is a strange synchronicity that she passed three years ago and it is her birthday today, which I only found out when my brother texted me this morning. Growing up, I never knew my dad. We grew up in a council house and, while we did not go hungry, there was a constant stream of red late-payment reminders coming through our letterbox. I remember often feeling cold and seeing frost on the inside of our windows in winter—in fact, I am still paranoid about the thermostat in my own home today, which drives my family mental.

Knowing what I know now, I realise these circumstances do not often lead to prosperity, yet here I am among noble Lords in the House of Lords. If noble Lords will indulge me briefly, I think it is important for me to pay tribute to the support that got me here today: my mother and grandmother, who in challenging circumstances always did their best for us; my three brothers, for keeping me grounded and connected to the town that I love; my wife and children for their love, laughter and security, which allowed me to go out in the world and be myself; importantly, the innumerable people who took a chance on me and backed me to succeed; and, finally, our welfare state, without which I would not be on this earth, let alone in this House.

It is because of those people and institutions—and, let us be honest, a little bit of luck as well—I was able to succeed in business, taking my life and career from the docks in Grimsby to call centres, eventually to the world of entrepreneurship, and even today I own a stake in my boyhood club, Grimsby Town FC. Incidentally, it gave me the previous greatest honour of my life when we beat Manchester United, which the noble Lord, Lord Rook, mentioned—I know the noble Lord, Lord Lamont, a fellow Grimsby Town fan, will appreciate that.

It is very fitting for me personally to be giving my maiden speech in a debate about steel. Just half an hour away from Grimsby lies Scunthorpe—our great football rivals, not least because of our similarities. We are both industrial towns but, while Grimsby’s economy struggled for decades to weather the shift in geopolitics and trade dynamics, Scunthorpe has a chance now to succeed, thanks to this Government’s intervention—not only Scunthorpe, but the region, which, thanks to the incredible work being done locally, is poised to capitalise on the opportunity of the clean-energy transition and the investment and good jobs that this transition will create. I understand our accomplishments are not a cure-all. There is still much work to do to ensure a bright future for our steel industry, but had we not undertaken those steps six months ago, the road ahead would look very different.

I had the privilege to be in the room in Scunthorpe with friends and the PM on the day the announcement was made, and the community was given a lifeline and a chance to begin their own renewal. If the people of those steel towns need hope for the future, they should look no further than Grimsby, which has begun its own renewal, at the centre of the nation’s offshore wind industry, which is bringing in good, well-paying jobs and raising living standards in the town. If there is one lesson from Grimsby’s renewal, it is this: progress is possible, but only when people come together, shoulder to shoulder, to play their part.

Before I come on to the comments about the steel industry in this debate, it would be remiss of me in my new role as Minister for Investment not to respond to the comments from the noble Lord, Lord Hunt, about disincentivising foreign direct investment. The recent evidence demonstrates that, even in the eight weeks I have been in the role, the UK investment environment is thriving. We are committed to a 10-year industrial strategy as a party. As an entrepreneur, I believe that we are in a situation for turnaround. We have a clear plan, we recognise the problem and now we need to execute. I am happy to have a follow-up conversation with the noble Lord on that matter, but it would be remiss of me not to mention that before I start.

I now turn to some specific points made in the debate. I want to start by recognising all the personal connections in the comments of those who spoke, particularly the noble Lords, Lord Mohammed and Lord Prior, and the noble Baroness, Lady Bloomfield, whose parents worked in the industry. As this is my first time addressing this House, I trust noble Lords will forgive me for oversights or questions unanswered. I appreciate the noble Lords, Lord Fox and Lord Sharpe, giving me the opportunity to reply to detailed questions in writing, which I will take them up on, so thank you for that.

As for when the steel strategy is coming, and the delay to the September steel council, raised by the noble Baronesses, Lady Hunter and Lady Smith, the noble Lords, Lord Hunt, Lord Mohammed, Lord Bilimoria, Lord Liddle and Lord Prior, and the noble Viscount, Lord Eccles, the Government are very clear that there is a future for steel-making in this country. That is why we intervened in April to keep Scunthorpe’s blast furnaces lit. The company is now hard at work to secure the future of British Steel.

This will not be without its challenges. Noble Lords will recall that Jingye acquired British Steel in 2010 at a time when the business was already in distress. Since then, it has faced persistent difficulty in market conditions, and regrettably, the company has not yet succeeded in returning the business to profitability. I support the comments recognising the incredible work of the management in this intervening and difficult period.

The support for British Steel has been mentioned. Although no long-term decisions have been made and taken in respect of the Scunthorpe site, I reassure the House that discussions with the owner are ongoing, and our policy and strategy work continues at pace to develop the optimal approach. This Government remain steadfast in their commitment to economic growth in north Lincolnshire.

For the avoidance of doubt, British Steel belongs to Jingye. The actions taken by His Majesty’s Government to date, including under those provisions of the special measures Act, do not constitute nationalisation. Rather, they represent a temporary, targeted intervention, designed to ensure the uninterrupted production of British steel.

That said, we have been very clear that securing the long-term future of steel-making in Scunthorpe will require significant investment. Such investment will support modernisation and decarbonisation, protect skilled jobs and safeguard the interests of the taxpayer.

On the question raised by the noble Lords, Lord Hunt and Lord Mohammed, on the sunset clause and the future of the special measures Act, noble Lords will recall that during the emergency debates on the special measures Bill, there were calls for a sunset clause in the proposed legislation to limit the duration of the Government’s powers to intervene in the steel industry. I recognise the ongoing desire for clarity regarding the future of the Steel Industry (Special Measures) Act.

As promised, the Government have been updating both Houses regularly on the powers in the Act and how they are being used. I further assure the House that once directions to British Steel are terminated, we will update Parliament on the repeal of the special measures Act.

On Tata Steel, raised by the noble Lords, Lord Hunt, Lord Bilimoria and Lord Murphy, and the noble Baronesses, Lady Bloomfield and Lady Smith, the decision to close the blast furnaces at Port Talbot was a commercial one, taken by Tata Steel in January 2024 under the previous Conservative Administration. By the time this Government took office, the process was already well advanced. Noble Lords will be aware that the first furnace ceased operations in June 2024 and the second followed in September.

However, we negotiated an improved deal with Tata after just 10 weeks in office, with better support and protections for workers, including the most generous voluntary redundancy package Tata has ever offered. We have since fully allocated the UK Government’s £80 million contribution to the Tata Steel/Port Talbot Transition Board to help people learn new skills, support the supply chain and protect people’s mental health. That this funding has been delivered in under a year is a testament to this Government’s commitment to the community impacted by Tata Steel’s UK transition to greener steel-making.

The electric arc furnace’s groundbreaking in July and the start of the work on the new pickle line in September are pivotal milestones demonstrating practical delivery of this complex project. These developments not only secure the future of steel production in Port Talbot but position the UK at the forefront of sustainable industrial transformation. At this point I would like to recognise the noble Baroness, Lady Smith, for her passion about her community and for her questions, which I deeply appreciate.

The topic of industrial energy prices came up often, raised by the noble Lords, Lord Hunt, Lord Mohammed, Lord Bilimoria, Lord Murphy and Lord Hannan. Since the 2010s, these prices have risen by more than 50% in the UK. Today, UK industrial energy costs are approximately 30% higher than those in Germany, 50% higher than those in France and more than four times those of the most competitive states in the United States.

Energy-intensive industries, including foundational sectors such as steel and metals production in Port Talbot and Scunthorpe, and vital industries such as glass, cement, steel and chemicals, are the backbone of our manufacturing economy. Due to their high-grade electricity usage, these sectors are particularly sensitive to increases in electricity prices. They employ around 400,000 workers and contributed £30 billion in gross added value in 2019, representing 1.5% of our national economy.

These businesses are indispensable to maintaining a resilient manufacturing base across the UK, which is why the Government provide relief to over 500 companies in these industries, supporting them with increasing industrial electricity prices due to the increased renewable policy costs. We do this through two key mechanisms: the British industry supercharger and the EII compensation scheme. These programmes ensure that our energy policy does not deter investment or production in the United Kingdom. They keep electricity prices competitive compared with international competitors and ensure that thousands of British jobs are safeguarded.

As part of our modern industrial strategy—

[Lord Fox (LD)]

My Lords—

[Lord Stockwood (Lab)]

I am aware that there are many questions; I guarantee that we will respond to them in full in writing.

As part of our modern industrial strategy, the Government have proposed deepening the support provided by our British industry supercharger by increasing the level of network charging compensation from 60% to 90% by 2026. We have consulted on this proposal and will respond in more detail in due course. This Government remain steadfast in their commitment to ensure that our energy-intensive industries are not disadvantaged by our transition to net zero. We will continue to support these sectors, which are vital not only to our economy but to our national resilience and prosperity.

I turn to the questions about global excess capacity and market-distorting practices by China, raised by the noble Lords, Lord Hunt, Lord Mohammed, Lord Bilimoria and Lord Liddle. As my noble friend Lady Lloyd of Effra set out in her remarks, we are calling out the practice of some countries that are choosing to flood the market with cheap steel in a bid to quash healthy competition. She joined Ministers from partner countries at the global forum on steel excess capacity in South Africa earlier this month, and the UK has lobbied hard to develop a comprehensive framework for joint action to redress global steel excess capacity by June of next year. The noble Lord, Lord Hunt, asked specifically about discussions with the WTO, and the UK regularly challenges China’s market-distorting practices during bilateral meetings, at the WTO’s subsidies committee and in other settings.

I turn to the topic of EU and US tariffs, raised by the noble Lords, Lord Bilimoria, Lord Murphy and Lord Liddle. The Government want to do everything they can to mitigate the impacts of tariffs raised by international partners. The UK will always defend its critical steel industry where required, and we will continue to explore stronger trade measures to protect UK steel producers from unfair behaviours.

On the recent announcement by the EU on proposed new steel trade measures on imports to replace the current steel safeguard, we are in close contact with the European Commission to understand the details of this proposal. This decision was not targeted to the UK but would be highly concerning for many steel producers and their workers, so we have been meeting with the steel industry to understand its impacts. As ever, this Government are committed to defending our critical steel industry.

Moreover, thanks to the strength of the UK-US partnership, the UK remains the only country to benefit from a preferential 25% tariff on steel and aluminium on all our exports to the US, avoiding the global tariff of 50%. That has reinforced the UK’s position as a trusted source of high-quality steel and aluminium. We have already committed up to £2.5 billion of investment, including through the National Wealth Fund, to rebuild the steel industry and continue to explore stronger trade measures to protect UK steel producers.

The UK has a robust trade defence system in place, including the UK’s existing steel safeguard measures. While the UK steel safeguard will expire in June 2026, in line with the WTO rules, we held a call for evidence from 26 June to 7 August to gather stakeholder views on the future policy options, and we are keeping all options under review to defend our critical industry. As set out in the trade strategy, the international trading landscape has rapidly changed, and we are sharpening our toolkit to respond to these increased threats.

To some of the points that the noble Lord, Lord Fox, made—I will have to write to him personally on many of them—I concur with his views on the fact that our families and communities should be at the heart of this debate. I remind the House that at present there are proposals and that we will not be drawn on the UK’s response to EU tariffs, but we will continue to take a cool-headed approach.

The UK Steel Council has met on three occasions, in January, April and July, and the next meeting is scheduled for 4 November.

On the question of our relationship with Jingye, the Government are engaged in a constructive dialogue with Jingye, in line with our commitment to a pragmatic commercial solution.

In closing, I just want to reiterate my thanks to all noble Lords who spoke in today’s debate. I want to convey my appreciation for their valuable contribution of insights and thank them for their generosity in allowing me to give written responses to many of the questions, particularly those asked at the end. I guarantee that we will provide written answers to anything I have missed.

My noble friend Lady Lloyd and I have set out the Government’s long-term vision for a strong, resilient, productive steel industry in this country that is primed for long-term success, driving growth in the communities that depend on our steel industry and help build it—the same communities that I spoke about in my opening remarks. The Government want them to feel and see the benefits of our plan for change and the decade of national renewal that we promised, and I look forward to working with noble Lords in that ambition.