Steel Sector

Thursday 23rd April 2026 Lords Chamber

Question

11:07

Asked by

[Lord Sharpe of Epsom]

To ask His Majesty’s Government what steps they are taking to incentivise investment in and strengthen the long-term competitiveness of the steel sector.

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

My Lords, steel is a vital component of the UK economy. That is why the Government have published their first ever steel strategy, underpinned by up to £2.5 billion of funding, to create stable, competitive conditions and to secure the long-term future of British steel-making. The strategy will attract investment to strengthen long-term competitiveness. It will also introduce a robust new trade measure to counter the damaging effects of global overcapacity, and reflect the importance of steel for critical national infrastructure and defence. It will also lower barriers to investment, through energy, grid and planning reforms, and mobilise demand for UK-made steel.

[Lord Sharpe of Epsom (Con)]

I thank the Minister for his Answer but, on that “robust” trade measure, can he say what proportion of UK steel imports of finished steel will be covered by the proposed reduced quotas and increased tariffs? Is it the intention to exclude Tata Steel and other finishing mills from import tariffs on their semi-finished feedstocks?

[Lord Stockwood (Lab)]

I am grateful to the noble Lord for the advanced sight of his follow-up question; I also commend the forensic, technical nature of the Question. The trade measure to which he refers covers 20 categories of steel, including all steel that is made in the UK. That includes bright bar, wire and stainless steel. Categories that were not covered in the steel safeguard are all now in scope. This means that the measure protects 100% of steel production domestically in the UK, whereas the steel safeguard protected only 96%. We engaged extensively with industry when developing this measure, and have sought to balance the need to protect the domestic steel-making industry while maintaining secure, reliable supply chains for downstream businesses. We will continue to engage closely with industry as we implement the measure, and we have committed to reviewing it in the next 12 months to ensure that it is entirely fit for purpose.

[Lord Jones (Lab)]

My Lord, can my noble friend the Minister indicate what further helpful measures there may be for this beleaguered industry in terms of energy costs? Green taxes, which are necessary, have dealt severe blows to the long-term prospects for steel, and in Wales we have seen the erosion of tens of thousands of steel jobs. I also ask him to bear in mind that rail connections between steel producers are crucial: the giant steel plant at Port Talbot in south Wales, for instance, sends a daily steel train 150 miles to north-east Wales’s Shotton works. On that train, which is 26 huge wagons long, is hot-rolled coil. If the hot-rolled coil does not reach Shotton, there will be problems. I hope that he will bear that in mind.

[Lord Stockwood (Lab)]

On energy prices, the transition to green energy is absolutely critical for the sector. We remain as committed as always to sovereign energy supplies that can withstand the global shocks we are seeing through Iran and the war in Ukraine. We have that commitment and the only way we can bring down energy prices is with secure domestic supply. The noble Lord made a further point around the steel strategy in Wales. I refer him to the steel strategy; it is important that our steel industry is protected in the whole of the UK. The infrastructure he mentioned remains critical to ensuring that our steel industry can be competitive in the long term.

[Viscount Trenchard (Con)]

My Lords, would the Minister agree that steel produced by the electric arc furnace method cannot match the quality standards of steel produced in traditional blast furnaces? Therefore, British industry will still need to import a large proportion of its requirements from countries which still permit the operation of traditional blast furnaces. Can the Minister tell the House what proportion of British steel will need to be imported in that way?

[Lord Stockwood (Lab)]

On the consultation with the industry, the industry clearly states that arc furnaces are the future. They have a lower cost of production and lower overheads in terms of manpower. I cannot give an exact number on steel production. We are trying to make sure that we have the right amount of trade barriers in place to protect our own industry while allowing business to be competitive and import the steel that they require. That balance will be critical, but we will remain in consultation with the industry and review that if it does not satisfactorily prop up the industry and make it fit for the future.

[Lord Newby (LD)]

My Lords, I return to energy prices, which are obviously one of the main constraints for the growth of the British steel industry. Earlier in the week, the Government announced that they are breaking the link between gas and electricity prices, with a view to reducing electricity prices. To what extent does this new measure impact the steel industry in a positive sense? To the extent that it will, how quickly does the noble Lord expect the measure to take effect?

[Lord Stockwood (Lab)]

Energy supply and the sovereignty of our energy supply remain critical. All departments are currently looking at measures where we need to intervene in the near term to protect those industries with high energy demands, and to come up with the right practical solutions for the long term, which is our transition to renewables. That is a live conversation. We have had many meetings in the past week, and I think we will hear something in the coming days.

[Baroness O’Grady of Upper Holloway (Lab)]

My Lords, both sides of the steel industry have welcomed government plans to speed up grid connections and make it easier for developers to build their own grid connections. All that will help to boost investment. Will my noble friend the Minister commit to regular updates on progress on those commitments so that we know that it is happening? Will he join me in congratulating the “Save our Steel” campaign for defending jobs and the progress it has made so far?

[Lord Stockwood (Lab)]

I thank my noble friend for her question. The issue of grid connections partly sits in my department; the House might be interested to know that we have 800 gigawatts of demand in new projects to 60 gigawatts of supply. Grid connections and making sure that the grid is fit for the future will be a massive part of what we do. We also have a prioritisation process that helps prioritise the highest value projects, not just economically but socially. I would be happy to update the House on that.

As to the “Save our Steel” campaign, it is worth stating that the steel factory in Scunthorpe is close to where I grew up and I have many friends who work in the industry. I commend that organisation and the work that it does in ensuring that we do not lose sight of the fact this is not just an economic story for the UK but about real lives and communities. The work it has done has been excellent.

[Lord Hunt of Wirral (Con)]

My Lords, the Government’s steel strategy and procurement guidance require all government departments to consult UK Steel’s digital catalogue and consider whether the national security exemption in Schedule 2 to the Procurement Act 2023 applies. However, at the same time, the Government are asking the Ministry of Defence to find £3.5 billion in savings, even as our Armed Forces are being asked to prepare for a far more dangerous world. In the circumstances, does the Minister agree that this is a wholly perverse bureaucratic requirement to place on the MoD? If the Government truly accept that national security must now come first, will they exempt the MoD from these domestic steel procurement requirements so that it can source steel rapidly?

[Lord Stockwood (Lab)]

The noble Lord raises a critical question around how we balance the national resilience of our steel industry with security concerns; that balance is paramount. We remain in conversation with the MoD about making sure that this does not have a prohibitive impact on its procurement and access to products. Equally, it is really important that we utilise the UK Government’s procurement processes to ensure that we are prioritising UK products and services to meet the demand of all our government departments. There are a number of initiatives working on procurement, but I agree that we need to make sure that that perverse incentive does not drive the wrong behaviours.

[Lord Redwood (Con)]

Will the Government make any payments to the Chinese owners of the Scunthorpe works, or take on any of their debts, bearing in mind that, to effect the transfer, there will be enormous continuing losses to the taxpayer?

[Lord Stockwood (Lab)]

The Government remain in positive and constructive conversations with Jingye. I know that the noble Lord would not expect me to comment on the specifics of that deal. All I can say is that we are hoping for a positive outcome. The real importance for us is ensuring that we have a steel industry that is fit for the future and for private investment. That is our target aim at the moment.

[Lord Hamilton of Epsom (Con)]

Following on from my noble friend’s question, has the Minister made provision for ever-increasing amounts of taxpayer’s money to be paid into the steel industry?

[Lord Stockwood (Lab)]

The UK Government’s £2.5 billion commitment is provisioned for.