Speciality Steel UK

Debate between Lord Fox and Lord Sarwar

Tuesday 15th September 2026 Lords Chamber

[Lord Fox (LD)]

My Lords, I congratulate the Minister on his new role, which is fast becoming that of a steel baron. As I said from these Benches during the passage of the nationalisation Bill—which, as the noble Lord, Lord Sharpe, pointed out, focused on British Steel—Liberal Democrats recognise that national security, energy security and food security are all intertwined, and that steel is critical to our renewable sector, defence and national infrastructure.

In one sense, yesterday’s announcement adds yet another complication to the Government’s attempts to ensure that the UK has a viable and strategic steel industry. In another, it was perhaps inevitable, and gives the Government a chance to consider two sides of the steel industry at the same time.

My first focus is on the timeline and how the Speciality Steel UK part fits with other activities. In the Commons, in answer to the question from my honourable friend Daisy Cooper MP, the Secretary of State said that he expects the process for Speciality Steel UK to take between four and six months. Can the Minister update your Lordships’ House as to the timeline for British Steel and the valuation process that is under way? Can he tell us whether there is any crossover between the two or whether they are discrete processes? The Secretary of State set out the different scale of the task to rejuvenate British Steel—in fact, he implied that any involvement of the private sector would be at some time in the future. Can the Minister confirm the Government’s thinking around private sector involvement in British Steel and how it would affect attempts to get private sector involvement in Speciality Steel UK? Can he also confirm the scale of investment that Speciality Steel UK will need to make it an attractive investment for the private sector?

Additionally, how does all this affect Tata Steel in Wales? The Secretary of State said that he hopes British Steel will follow Tata and install electric arc technology. How does Tata, which despite government support is investing a great deal of its own money into electric arc, compete with a government-funded competitor —competing for raw material at the very least, but also markets?

Moneywise, in the Commons, the Secretary of State said that the cost of nationalising Speciality Steel UK will be met from existing budgets. He went on to remind the House of the huge sums involved, but it is quite clear that this pot is emptying fast. Can the Minister undertake to bring detailed costings to this House, covering valuations of both this asset and the British Steel asset, as soon as they are available?

Daisy Cooper MP also raised in the Commons the issue of Europe. The steel sector generally, and tariffs and carbon border taxes specifically, all hinge on our relationship with the European Union. Can the Minister agree that having a much closer relationship with the EU could make many of these issues much easier to deal with and iron out? Can he tell us when the Government will be making substantive moves to achieve this closer relationship?

As the Statement observes, the Government of the noble Lord, Lord Sharpe, created the legacy that this Government inherited. Central to this legacy have been the structurally sky-high costs faced by this and other manufacturing industries. I know the Minister is new to his role, but I am sure that energy was one of the first things he was asked about when he took over. The Government have made some efforts to help some high energy users, but these bypass most manufacturers and, for those they affect, reductions are being cancelled out by other measures in the opposite direction happening at the same time. Can the Minister confirm and agree with me that, without new measures which substantially cut energy costs so that they are much closer to global competitors, it really does not matter who owns the steel industry because with costs like this the sector will always struggle to flourish?

I close by recognising the people working in the industry and their importance. They are vital; the UK needs their skills, and indeed needs many who have left the industry to come back. But these people need to know they have a future and that their industry has a future. The Government have made first steps in this, but there is a great deal to do. We on these Benches will support the Government where we can, to help pick up momentum and get this industry back on its feet.

[The Minister of State, Department for Business, Innovation, Science and Trade (Lord Sarwar) (Lab)]

My Lords, I am grateful for the contributions and serious consideration that the House has given to the future of Speciality Steel UK. I will come on to address some of the specific questions that both noble Lords have rightfully asked, but first I thank both noble Lords for mentioning the workforce and echo what they said. For the workforce, it is a time of particular anxiety. It is important that they know that, regardless of party politics, this House and the other place stand fully behind the fantastic workforce.

Before I get on to some of the detailed answers, it is important to clarify some of the facts on where we are and what the Secretary of State outlined yesterday. This is an important matter for the employees of the business, the communities surrounding its sites and the United Kingdom’s wider industrial capability. I therefore welcome the opportunity to clarify the Government’s position, explain the decision we have taken and set out the next steps.

Speciality Steel UK entered liquidation in August 2025. Since then, the independent court-appointed official receiver has been responsible for managing the liquidation process. A question was asked about how much that has cost to date. We have supported the official receiver with around £148 million to date, supporting staff and safety at the individual site. That funding has allowed the receiver to carry out his statutory duties. It has included maintenance of the site, as I said, and conducting a sale process for the business and its assets.

For more than 12 months, the Government have worked to facilitate a private sector solution, and the noble Lord is right to say that a private sector solution remains the first preference. As part of that process, the official receiver engaged with a number of parties interested in acquiring the business and its assets, and the party granted preferential bidder status by the official receiver subsequently sought government support in connection with its proposed acquisition of Speciality Steel. We engaged extensively with the bidder and its advisers, and considered the request in detail. To clarify, it was requesting upfront financial commitment from the Government. Following the work we did, we concluded we could not provide the support on the terms proposed.

This decision was not taken lightly. The Government carefully examined the proposal and explored whether an arrangement could be reached that would provide a sustainable basis for the future of the business, while offering appropriate protection for public money. Despite that extensive engagement, material concerns remained regarding the evidence supporting the proposed support package and the protections available for taxpayers.

I want to be really clear, because this is important: we are talking specifically about the financial support that was requested. That should not be interpreted as a wider judgment on the bidder itself or its other business activities, either here or elsewhere. Our responsibility was to assess the proposal before us, including whether it provided a suitably robust basis for intervention and the appropriate safeguards. Having considered those matters, we could not support the proposal on the terms put forward. However, that conclusion does not diminish the significance of Speciality Steel UK. The business occupies a unique place in the United Kingdom steel ecosystem. Its specialist capabilities have potential applications in advanced manufacturing, aerospace and defence. Therefore, it is of strategic importance. That is why the Government remain committed to the sites, the workforces, the local communities and the local economies that are impacted.

We believe, therefore, that the viable future options should be assessed properly before the range of possibilities is permanently narrowed. For that reason, the Government will engage with the official receiver’s sale process and develop a proposal for the public acquisition of Speciality Steel UK. Any engagement will respect the independence of the official receiver and its statutory responsibilities.

Developing a proposal does not remove the need for proper processes to be followed, nor does it prejudge the outcome of the work under way. The purpose of developing an acquisition proposal is to preserve control of the sites and maintain every option available while decisions are taken about their longer-term future.

Let me stress that public acquisition is not the endpoint and it is not the first preference. It would not in itself determine the permanent future of the business, its operations or its sites; rather, it would create the space required for detailed assessment of the available options. These include a sustainable future for Speciality Steel UK as a speciality steel-maker supporting advanced manufacturing sectors, the regeneration of the sites or a combination of the two. This Government will remain focused on engaging closely with the employees, the trade unions, the local communities, elected representatives, the mayor, industry experts and other interested parties. Again, I open that offer to noble Lords on all sides of the House too.

I recognise that noble Lords will want and expect proper safeguards for public money. They have that firm commitment from me and from the Secretary of State. All options carry significant costs—there is no point in pretending otherwise. The risks exist and significant costs exist. That includes the risk of immediate closure. We will develop our estimates as the work progresses. Again, I am happy to share those assessments as much as possible with noble Lords on all sides of the House.

I also recognise the desire for certainty, particularly among employees and their families. It would not be responsible to pre-empt the detailed assessment or suggest that decisions have already been taken where they have not, but equally it is important that potentially viable options are not lost by default. I believe the approach that the Government have set out yesterday and today strikes that right balance of giving reassurance to the workforce, of keeping every option on the table and making sure we have the back-up of a public acquisition option. That is the right and responsible course to take.

There were some specific questions that I have not addressed. I have already talked about the private sector preference being the first one. Secondly, we should accept that there is a global challenge around steel, not just a UK challenge. Thirdly, I recognise the challenge set out by both noble Lords that we have to drive down the cost of living and the cost of doing business as it relates to energy. That is of course of huge significance for us if we are going to make sure we protect our steel industry and other industries that are energy intensive. These are all considerations that are being made in advance of the Budget.

I noted that many questions from the noble Lord, Lord Sharpe, related to the Budget process. I imagine those are questions we will come back to as we get closer to, and arrive at, that Budget point. I also noted that he spoke about history and not repeating the mistakes of the past. All I would say is that he was very selective about which part of history he chose and which bits we do not want to repeat. There are other parts of our history that we do not want to repeat, and we need to learn lessons from them.

The noble Lord from the Liberal Democrats asked questions around finding longer-term private sector solutions. We will find those solutions only if we make the steel industry sustainable, if we get the energy crisis right, if we address the challenges around the broader cost of production, if we deliver the orders that are required for there to be manageable order books and a functioning business and if we back it up with the appropriate skills. The steel strategy is ambitious, but it is also deliverable, and we all have work to do to make sure that happens.

Let me repeat that I commit to work with noble Lords on all sides to make sure they are fully apprised of the situation as it develops. There is one final and slightly broader point about our relationship with the European Union, some of which will come from the UK-EU summit that we continue to work towards. There is also a wider lesson around the defensive and protection measures that the UK and the EU are grappling with in relation to their steel industries. The more the relevant Ministers and Governments across the continent work in lockstep on many of the same issues we are confronting together, the better it will be for our industry here in the UK and for steel industries across Europe.