Steel Industry (Special Measures) Act 2025

Lord Sharpe of Epsom Excerpts

Thursday 23rd October 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, before I begin, I also add to the general praise for the noble Baroness, Lady Lloyd of Effra, for her excellent maiden speech, and I wish the noble Lord, Lord Stockwood, the very best for his, while also welcoming both to the House. As the noble Lord, Lord Stockwood, will not be followed, I take this opportunity to say how welcome it is to have someone with his business experience join the Labour Benches.

This has been a wide-ranging and extremely interesting debate. The one theme that is very clear and has come from pretty much all speakers across the House is the lack of the strategy. I think the noble Lord, Lord Fox, just summed that up rather well. The first of the questions that I therefore add to the long list from the noble Lord, Lord Fox is: can we please have a date for the strategy? When can we expect it, and when can we expect to discuss it?

In starting, I echo the words of my noble friend Lord Hunt of Wirral, and indeed several other noble Lords. The Government’s handling of the steel industry has, to put it mildly, been deeply unsatisfactory. The events of six months ago must not be allowed to repeat themselves. Your Lordships’ House was offered little clarity as Ministers rushed through emergency powers—powers granted, as my noble friend reminded us, without a sunset clause. As a result, we have no indication whatever of when or if this Act will be repealed, in spite of ministerial assurances at the time. Instead, the saying that “nothing is so permanent as a temporary government programme” seems to hang rather ominously over us. I therefore ask the Minister to tell the House precisely when the Government intend to bring this legislation to an end.

The agreement reached by the previous Conservative Government with Tata Steel in relation to Port Talbot should have provided this Government with a clear and successful template for transition. It is a partnership model that combined industrial realism with long-term vision, with a keen eye on steel security. Yet by all accounts the current Administration have not followed that example. Indications suggest that the key sticking point in the Government’s continuation of the negotiations, originally initiated under the previous Government, has been an insistence that the existing loss-making basic oxygen furnace operations be maintained throughout the transition phase. This is an approach that defies both commercial logic and fiscal responsibility, as my noble friend Lady Bloomfield of Hinton Waldrist highlighted.

I ask the Minister, specifically in relation to the events leading up to 27 March 2025, what proposal did the Government put to British Steel? What counterproposal did the company make in response? What contingency planning, if any, was undertaken to address the possibility of a breakdown in negotiations? It is now evident that Ministers were woefully unprepared for the outcome that followed.

We have to revisit the Government’s narrative concerning Jingye’s responsibilities. A proper under- standing of British Steel’s position is essential if that narrative is not to descend into distortion. During the first four years of Jingye’s ownership of British Steel, from late 2020 to late 2023, the Government’s operating losses and capital investments required injections of some £811 million in loans and equity, almost all of which were provided, in cash, by Jingye itself. The solvency of the business was wholly dependent on that continuing support. By the end of 2024, it is probable that British Steel’s combined intercompany debt, equity and assets exceeded £1 billion.

It is simply not realistic to expect any private enterprise to provide indefinite cash support to a loss-making operation of that scale. Jingye quite reasonably sought to restructure its business model to place it on a sounder financial footing, as any responsible company would, provided that it acted lawfully and with due regard to its other obligations. But instead of engaging constructively, the Government chose to declare a national emergency and seized effective control of the company, locking its directors out of their own plants and records, while simultaneously requiring them to retain their statutory and common-law duties to the company. That is an extraordinary and troubling position. It represents a clear violation of private property rights. British Steel and its directors had, until that moment, acted entirely within the law, yet they were treated as though they were the problem rather than the victim of government failure. As my noble friend Lord Hannan of Kingsclere argued so persuasively, we know where that inevitably ends.

It would not be the first time that a Labour Government have sought to blame private enterprise for the failures of the state, but here we are. The pattern is familiar: mismanagement, intervention and then the scapegoating of those who have invested, worked and strived to keep a British industry alive. Does the Minister accept that such an action represents a serious breach of private property rights? What precedent does this set for other foreign investors considering the United Kingdom?

The Official Opposition have made the point in your Lordships’ House and the other place numerous times since the Government took office that their energy policy is leading to skyrocketing electricity prices. We have heard a good deal about that around the Chamber today, including most persuasively from my noble friends Lord Jamieson and Lord Prior of Brampton. Britain and Europe are deindustrialising, largely because of high electricity prices—it is simply much cheaper to make things abroad. Meanwhile, exporting production in this fashion almost certainly makes global CO₂ emissions worse than if we made them at home. It looks very much as if we have a situation—which could only be created by a Labour Government—where the net zero-policy undermines net zero.

Having said that Europe is deindustrialising, it must also be said that it is streets ahead of us as regards steel. The EU steel and metals action plan aims at securing commercially viable melted and poured steel, partly through developing an effective carbon border adjustment mechanism which will help ensure competitive energy supply and cost. Are the Government looking at this as a possible model, without necessarily resorting to the suggestions of the noble Lord, Lord Liddle?

Recently, my noble friend Lord Hunt and I—this will please my noble friend Lord Eccles—met the British Metals Recycling Association, an organisation founded in 1919 that contributes over £9 billion in gross value added to the UK economy annually and supports more than 15,000 direct jobs across 2,000 businesses. It made plain to us its grave concern that the Government may consider pursuing restrictions on the export of recycled metals under the mistaken belief that this might somehow strengthen domestic steel production.

The evidence shows the opposite. Independent research conducted for the BMRA by the Centre for Regional Economic and Social Research at Sheffield Hallam University concludes that even modest constraints on exports would cause billions of pounds in lost economic value and tens of thousands of jobs to disappear over the next five years. A 50% export quota alone would, it estimates, result in a £4 billion loss in GVA and more than 23,000 full-time equivalent jobs lost. A total ban on exports to Turkey, which is our single largest market for recycled metal, would remove over £2 billion in value and jeopardise almost 7,000 jobs.

But the economic cost is only part of the story. The environmental consequences would be equally perverse. Restricting exports would not increase the recycling of metal in Britain; it would reduce it, by undermining the financial viability of recyclers who depend on global competition to sustain fair prices. It would mean less investment in cleaner, higher-grade feedstock and in the advanced sorting and quality systems essential for the production of low-carbon electric arc furnace steel. Indeed, the BMRA has warned, quite credibly, that if the sector’s viability were threatened, the unintended consequence could be an increase in things such as fly-tipping as end-of-life vehicles and electrical goods are dumped rather than recycled. Without access to international markets, the recycling industry cannot survive, let alone flourish and invest in the emerging technology that will make British steel greener and which, of course, is so necessary to the new electric arc furnaces.

The Government recently announced stronger trade safeguards on steel imports, claiming these measures will protect British jobs and rebuild our industrial strength. However, such a measure would have ramifications for the pound sterling and, as we know from experience, trading partners may respond with their own restrictions on UK exports, as evidenced, and as has been discussed by a number of noble Lords, by the EU recently announcing it will reduce tariff-free quotas on imported steel and hike tariffs from 25% to 50% on any excess imports. I look forward to the Minister’s answers to the questions from the noble Lord, Lord Murphy of Torfaen, on this subject.

This, in turn, will reduce access to global markets and lower overall trade volumes. By sheltering less competitive industries, we risk diverting labour, capital and energy away from high-value sectors such as aerospace, pharmaceuticals and renewables, ultimately weakening productivity and long-term economic growth. Steel is a vital input for industries such as construction, automotive and energy infrastructure, so higher steel prices would increase costs, reduce competitiveness and even push some firms to relocate. As always, protection for one sector can become a tax on many others, and protectionism and subsidies carry costs.

I conclude by asking a few very specific questions of the Government. Have they considered the potential impact of these safeguards on the competitiveness of other UK export industries? Have they assessed how higher domestic steel prices might affect downstream sectors, such as construction and manufacturing? What analysis has been done on possible retaliation from trading partners and the effect on UK exporters? Can the Minister confirm that the Government are considering, or will consider, the concerns outlined by the metal recycling association about export restrictions in the forthcoming steel strategy?

I move to a few broader questions. In his recent visit to China, did the new Secretary of State, Peter Kyle, talk to Jingye? If not, why not? If yes, can the Minister outline what was discussed? I may have misheard, but I will ask this anyway: I believe the noble Baroness, Lady Lloyd, said in her the opening speech that the rules have been changed so that British-made steel must be “considered” in public procurement. Can I probe a little more what “considered” means in practice? If it meant preferred, that would potentially leave us falling foul of WTO rules, but if it just means being considered, was it not being considered in public procurement anyway?

Where is the latest four-weekly report? I think the last one was delivered at the very beginning of September, and we are now seven weeks away from then. Finally, I reiterate, we need a strategy and then all these questions would, we hope, go away.