Steel Industry (Special Measures) Act 2025

Lord Hannan of Kingsclere Excerpts

Thursday 23rd October 2025 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, I add my voice to the swelling chorus, the paeans of praise, to the noble Baroness, Lady Lloyd. It is no small thing to make your maiden speech at that Dispatch Box, and I enjoyed the way she conjured the image of the subterranean River Effra, encased under all those tonnes of tarmac and concrete, flowing slowly beneath our feet, arched over by those visionary engineers in the Victorian era who incorporated it into the drainage and sewerage system of London.

Something else that is flowing, subterranean, through this debate is the assumption that government help is intrinsically virtuous and beneficial: the assumption that, if there is a problem, it is for politicians to fix it. People in this line of work have, I suppose, a very natural predilection to want to look useful. This can lead us into the fallacy of saying, “Here is a problem. It needs something done. Oh, there’s a something. Let’s do that”.

But when has nationalisation ever been a long-term solution to an industrial problem—not least in the case of steel? The nationalisation did not work in 1949; the nationalisation did not work in 1967. That was not because the people who were put in charge of British Steel were the wrong people, bad people, selfish people or lazy people. I mean, some of them presumably were, by the law of averages, but no more than anyone else. That was simply because a government bureaucrat does not have the same incentives as somebody who actually owns an enterprise. We have seen that dynamic play out again and again. It is extraordinary, in a way, that this needs saying. But, when we had that emergency debate on the legislation back in April, I think mine was the only voice, along with that of the noble Lord, Lord Kerr of Kinlochard, to make the case in principle against government intervention. I think there were two or three in the other place, and that was it.

Thirty years ago, it would have been assumed that things were better left to the private sector. That change in our assumptions, that vibe shift, goes a long way towards explaining why our growth as a country has slowed. The one thing the Government can do is get out of the way, by which I mean: stop legislating to give this country the most expensive industrial energy in the developed world. The reason why we have uncompetitive, energy-intensive industry—not just steel but AI and everything in between—is a series of needless choices we have made that have pushed up the cost of electricity. You may say that this is a price worth paying, that it is either that or lose the viability of the planet; but then, admit that that is the trade-off. Please do not look surprised when energy-using industries then have to shed productivity and employment.

Energy is not just one among many commodities; it is the vector of economic growth. The story of the rise of human civilisation is the story of the fall in energy prices as we moved from fire to kerosene to modern electricity, nuclear and all the rest of it. We have become the only civilisation ever to try to rip out a modern energy infrastructure and go back to something more expensive. Of course, there are consequences when you do that.

I have heard, I think, two arguments for government intervention—forgive me if I am missing anything; one was to do with jobs and the other with security. We are too late on the jobs one. As my noble friend Lord Prior said, we are dealing now with the residue of an industry, no longer with the great global leader it would have been. I hope that noble Lords will not think me ungallant if I point out that the noble Baroness, Lady Lloyd, the noble Lord, Lord Stockwood, and I are all about the same age. We did not grow up with the rhythm of the clangs and groans and hisses of steelworks: it was already gone in the 1970s. The big decline in productivity and employment happened in the 1970s as a result not of trade but of technological advance. That meant that more produce could be turned out by fewer workers. In the 1980s, there was an increase in steel production in this country but a continuing decrease in employment because of efficiencies and those technological gains.

This is something the whole world has seen. Please let us not hold out the false idea that we can somehow go back, if we wanted to, to the levels of employment that my old friend, the noble Lord, Lord Mohammed, was conjuring in his speech about growing up in Sheffield. That world is not going to be brought back. The challenge for a responsible Government is, what do we find as alternatives? How do we carry on moving up the production chain? How do we carry on specialising in what we do best as a country? Yes, if you want to, you can prop up jobs, at great cost to everyone else, but it is worth looking at the figures here. According to the House of Commons Library, there are 37,000 people employed in our steel industry—about 0.1% of our workforce. Let us put that number in context by looking at the numbers employed in steel-using industries, in the sectors that will be most impacted by tariffs or government interventions that serve to push up the price of their steel inputs. There are 95,000 people working in aerospace, 166,000 working in car production, 476,000 working in agriculture and the better part of 2 million working in housebuilding. These are all industries that use steel and whose interest is in having as low a price as possible.

As for security, listening to the debate in this Chamber and outside you would sometimes think that we and China were the only two steel-producing countries in the world and that we need to protect ourselves against a massive influx of goods from a country that is a security threat and is dumping. Noble Lords may be surprised to learn that China is not one of our top 10 overseas suppliers. Our biggest suppliers are Spain, Germany and Belgium. Our fastest-growing suppliers, proportionately, are India, Vietnam and Turkey.

Actually, it is no bad thing that we are diversifying away from the European Union, given how unreliable a trading partner it has just shown itself to be with this threatened 50% tariff on our steel. I am not sure that it will actually go through with a 50% tariff on our steel. My guess is that it is part of its negotiating position in advance of the renegotiation of the TCA. It will be delighted by the response of the noble Lord, Lord Liddle, which is precisely what the threat was designed to elicit, and indeed by the ecstatic ululations from my noble friend Lord Deben, who is no longer in his place. At the very least, I think this is part of trying to get a better deal on fisheries and whatever, but, of course, what it would really like is for us to throw away our independent trading policy and, as the noble Lord, Lord Liddle suggests, join its customs union and subject ourselves to all of the greater tariffs from other countries.

We benefit as both an importer and an exporter. We benefit from having bigger markets. In raw figures, we export £4.8 billion-worth of steel every year, and we import £7.4 billion. By and large, we are exporting the more high-grade stuff and importing the cheaper stuff, but we benefit both ways around. It is better for us to have cheaper inputs and, of course, it is good for us to have the revenue. None of that will be assisted if we try to close ourselves off and become more autarkic. You do not become a more secure country by trying to produce everything yourself. You become a more secure country by having the widest possible diversity of suppliers, so that you are not vulnerable to a local shock or disruption, which might as easily happen on your own territory as anywhere else.

The thing that is really making us insecure is the squeezing of the private sector, the squeezing of the revenue-generating bit of our economy to fund the revenue-consuming bit of our economy, not least by measures such as this one that leave taxpayers on the hook for loss-making industry. The change in the size of the British state since the Guildford three were in Tony Blair’s office is extraordinary. Then, 34p in the pound was spent by the Government; now it is 45p in the pound. That is why we are not succeeding economically in the way that we used to, and until we address that, until we begin to reverse that imbalance, we are not going to be able to release the creative genius of our people.

I will leave noble Lords with this thought. We are not the experts here. There may be all sorts of people with experience in the steel industry, but that does not give them the same proximity and expertise that actual ownership and involvement in the industry does. If a bunch of people from Scunthorpe or Port Talbot or any of the other steelworks came here and said, “Here’s how you should change the composition of the House of Lords, here’s the time of day that you should have your committee meetings, and here are a few changes that we would suggest you make in the protocols of how you do debates”, we would no doubt thank them politely for their input, but we would maintain, quite correctly, that we are the experts here. Please let us have the modesty to accept that the same is true the other way around.