Steel Industry

Baroness Drake Excerpts

2nd reading
Saturday 12th April 2025 Lords Chamber

[Baroness Drake (Lab)]

My Lords, the Prime Minister is absolutely right to move quickly and ask Parliament to approve powers to protect and secure the UK steel industry. Urgent action today, which is what is before us, is absolutely in the interests of the nation and those communities where steel is such an important part of the local economy. They are feeling deep anxiety for their futures—we know it and can feel it.

Retaining our steel industry is integral to the UK’s economic growth—I have no hesitation on that point—and to our resilience as a nation at a time of growing geopolitical turbulence. The Government’s economic growth aspirations for our country mean that we need more steel, not less. We need a secure supply of steel for decades to come—for infrastructure, homes, energy, transport and for so many more reasons, particularly our country’s defence. We know we need to build a greater national defence capability as we adapt to our changing defence alliances and the emerging threats. Without that supply, we undermine our long-term economic security and lose our national resilience.

As my noble friend Lord Reid spelled out, if Scunthorpe ceases production, we will be the only member of the G7 without an ability to produce virgin steel—an unthinkable proposition. A lack or loss of capacity to produce our own supply of steel also poses a wider national security issue for our country. If we depend increasingly on China, India or other countries for our supply, we will be vulnerable to the actions of others who will seek to leverage and exploit that dependency. We must be in no doubt; recent world events have exposed such vulnerabilities all too clearly.

We need to expand and modernise our steel industry. Maintaining production in Scunthorpe through government intervention would save some 2,700 jobs at risk. It would also prevent the loss of many other jobs in the wider economy and supply chain. Failure to defend our steel industry would mean the loss of the high-value engineering that is delivering bespoke and customised products; the loss of high-value jobs; and the loss of knowledgeable, experienced and skilled employees—the very assets and people that are valuable for sustainable growth. We need more steel, not less, in our net-zero future—something the Prime Minister recognises. Steel can contribute to our decarbonisation, not only by reducing emissions from its production but through the use of steel in energy infrastructure and technologies that enable the transition to a net-zero economy.

Demand for steel produced using less carbon-intensive processes is increasing as a growing number of companies focus on reducing emissions in their supply chains—they are very focused on it. The UK could be well placed to lead on green steel-making, given that we have one of the largest scrap resources; given our progress on renewable energy; given the Government’s intention to introduce a carbon border adjustment mechanism in 2027; and given that they are now focused on an integrated power strategy for the nation as a whole, including all its economic elements.

A principal cause of high electricity prices for the steel industry was high gas prices, rather than the cost of net-zero policies. Nevertheless, the steel industry needs an affordable, sustainable and resilient energy supply to support productive investment. Will the Government’s steel strategy road map for the industry specifically address those energy supply needs, and will it strengthen the policy framework and strategy for building a net-zero steel sector?