Steel Industry (Nationalisation) Bill

Debate between Lord Fox and Lord Redwood

Report stage
Wednesday 8th July 2026 Lords Chamber

[Lord Fox (LD)]

My Lords, in moving Amendment 1, I will speak to Amendments 7, 9 and 24 in my name.

In Committee, I noted the difficulty of phasing the exercise of the principal transfer powers and the need for scrutiny by Parliament—there is a dichotomy. At the heart of my concerns then was that Parliament would potentially be signing a blank cheque. On the other side, there may very well be a need to move swiftly in the event that a decision is made to nationalise a steel asset.

The first three amendments in my name in this group go some way to brokering this compromise. They offer two different routes of addressing the issue of the Secretary of State’s obligations regarding the financial cost of any intervention. Amendment 1 directs this attention to Clause 2 and inserts an obligation on the Secretary of State to take into account the impact on public finances before exercising the principal transfer. However, during Committee and subsequent discussions with the Minister, it became clear that the Government feel they have some legal reservations about any modification of Clause 2. Therefore, Amendments 7 and 9 seek a similar action but focus on Clauses 4 and 15 respectively instead.

Overall, of course, government decision-making relies on tests that must be conducted by accounting officers. I expect the Secretary of State would have the impact on public finances in his or her mind at all times, and I am sure there would be some Treasury Ministers leaning over that particular Secretary of State in the event that any decisions were made. However, by putting this responsibility in the Bill, it will be easier to hold the Secretary of State and the Government at the time to account on the value for money of any issue. In the event that the Minister feels constrained in accepting Amendment 1, I hope he will accept Amendments 7 and 9.

Amendment 24 addresses a different issue and returns to pension liabilities, which we debated in Committee. It is clear that, in the event the Government exercise the principal transfer power enabled by the Bill, the pensions of all ex and current workers of that asset become an important responsibility. This amendment is clear in its assertion that Parliament needs a view on these liabilities. If the Minister is unable to accept this amendment, I hope he will take the opportunity to clarify the Government’s approach to pensions from the Dispatch Box. I beg to move.

[Lord Redwood (Con)]

My Lords, I am grateful to the noble Lord, Lord Fox, for reminding us of the importance of contingent liabilities and the need for the Government to complete due diligence before any acquisition. He rightly says that in a hypothetical case—not British Steel Scunthorpe—it might be necessary to move quickly, and then there will have to be some trade-offs. But if we are talking about British Steel Scunthorpe, there is obviously no need to move quickly. The Government moved very quickly many months ago, and there can still be proper analysis. I would hope, indeed, that as Ministers and their chosen executives are now responsible for British Steel, while they do not own the assets, they would have done a lot of this very important preparatory work on discovering the contingent liabilities.

Where in Amendment 11, the contingent liabilities are mentioned by category, there is an omission which could be extremely important: liabilities to employees for past problems with safety and health, and—God forbid that this does not happen—for any liabilities that might follow now that the business is under the operation or control of Ministers and their chosen executives, if some safety or other health problem arose. Where people are running these very large, industrial businesses, with the obvious threats of a very powerful fire in the furnace and the dangers of extremely hot liquid steel being moved around, it is crucial that Ministers and their chosen executives have taken all the right decisions on making sure people have the right protective clothing, there are the right protocols, and there is an absolute segregation for the employees from the risks. There also needs to be an understanding of whether there have been any longer-term health risks from the atmosphere around the blast furnace or the intense heat of some working conditions.

If Ministers have not already done so, they need to take this very seriously. Whenever I was responsible for a big plant, my main nightmare was that something would go wrong on safety, and that would be unforgivable. I am not expecting the Government to give ground on these amendments, but it would reassure the House and the wider public if the Minister could tell us more about where they have got to, at least in general terms, with exposing the contingent liabilities on pensions, safety and employee health, as well as with the other financial matters mentioned clearly in these amendments.

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[Lord Redwood (Con)]

My Lords, there will be an issue with the public interest case, if and when we get to the full nationalisation of British Steel at Scunthorpe. Many of us are unclear as to whether the Government’s aim is to find a medium-term or longer-term solution to the problem of how to keep the two existing blast furnaces running and keep a basic steel-making capability in the United Kingdom, or whether their policy aim is still—as with the previous Government and as is the case in south Wales—to move to closing the blast furnace and opening an electric arc furnace in a new plant, which may be on that land or somewhere else.

If it is the latter, it will be much more difficult to establish the public interest case for the complete nationalisation and transfer of the blast furnaces, because that will end in tragedy for the people working there, so it will no longer be the case that the main purpose is to keep the jobs. It will not resolve the issue of the electric arc furnace, because that will need separate grant aid and might even be better on a different site. We need to know more about the phasing. In the case of south Wales, the blast furnaces were closed before the electric arc furnace was available. If they did the same again at Scunthorpe, there could even be a period when the United Kingdom will not be making any steel at all on those two works, given the transition plan.

It would be very helpful if the Minister, who will have to take this policy on, gave us a little more on the Government’s thinking about the duration of the investment in the blast furnaces, and whatever information he has about the state of those plants and the ability to maintain continuous production there, and on the Government’s intention in their net-zero strategy, which implies that steel would have to be made in a different way.

[Lord Fox (LD)]

My Lords, because this is Report, I will not repeat my Committee speech. Briefly, Clause 2 is unchanged and Clauses 4 and 15 have been amended along the lines that the previous groups suggested and begin to bring the rigour at the start of this process. The request made by the noble Lord, Lord Hunt, for information after the fact, if it has to be brought forward, seems reasonable, but on that basis I do not support the amendments as they stand.

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[Lord Redwood (Con)]

My Lords, two years is quite enough for these powers, and it is generous of my noble friend to suggest allowing another two-year extension. As I understand it, these steel matters are being considered under a £2.5 billion multiyear estimate, which was meant to be for the modernisation of the steel industry. When it was originally agreed, people had in mind that this was going to be grant aid for new electric arc furnaces and other such investments—not to pay continuous and high losses on an older technology plant that may not have the long future we would like.

To get into better order with the Treasury, the Government might want to have some self-imposed restraint on the duration of this. We have been led to believe that the rate of loss is at least £500 million a year on the two blast furnace activities that are currently under the Government’s control but not in their ownership. That would be a totally unacceptable continuing rate of loss and would eat into what should be modernisation money. That would mean they would get to the end of this Parliament with very little improvement to show.

[Lord Fox (LD)]

My Lords, I am in slight confusion that I hope the Minister can clear up. My understanding of Amendment 6A is that it offers a one-term renewal of two years, meaning a four-year total for any sunset clause. I might have misheard what the noble Lord, Lord Sharpe, said. I am assuming that is what Amendment 6A is seeking to achieve.

If we are reassured by the Government’s assurances on their intention, in a sense we do not need this—but it is certainly helpful to have it. If my reading of Amendment 6A is correct and it moves it four years as a maximum, it will move it into the next Parliament, where the Liberal Democrat Government will take a view.

Steel Industry (Nationalisation) Bill

Debate between Lord Fox and Lord Redwood

Committee stage
Wednesday 1st July 2026 Lords Chamber

[Lord Fox (LD)]

My Lords, Amendment 23 is in my name. I was very pleased to hear what the noble Lord, Lord Hunt, just said, because I had put in my notes that I feel that this is an important amendment. I hope it is pushing at an open door.

In the previous debate, on Monday, the noble Lord, Lord Wigley, spoke of the effect on local communities. I agreed then, and this amendment would put in place a requirement for a jobs and industrial transition strategy to follow once the Secretary of State has exercised the principal transfer power in respect of the steel undertaking. I emphasise that this would be post exercising that power.

This amendment calls for the strategy to be laid before Parliament within six months—sooner, I would hope—from the exercise of the transfer powers. This published strategy must set out the Government’s investment and transition plans to protect employment, deliver a skills and reskilling programme and, if necessary, redeployment opportunities, and deliver real economic renewal, while supporting resilience in communities that are dependent on that steel undertaking. I am happy to discuss with the Minister ways of achieving this objective, but this process is aimed at ensuring that there is an explicit plan to which Parliament will be able to hold the Government to account.

[Lord Redwood (Con)]

My Lords, these are indeed important amendments. It is a tragedy what has been happening to our steel industry in this country. It suffered considerable decline under the last Government thanks to very high energy prices and decarbonisation, which turned out to be disruptive. In the last full year of the Conservatives, we were down to 5.6 million tonnes of manufactured steel—around half our requirement.

There has now been a further very big collapse, such that our output last year was, I think, around half of that in 2023—around 2.5 million tonnes—and we are heading for an even smaller output this year unless the business plan is provided, kicks in and starts to do something to help the ailing Scunthorpe business that we are talking about. I think we are united in our belief that this is not what we want from our steel industry. It means that we have a chronic dependence—in the last year, 7.1 million tonnes—on imported steel and we are heading to a position where we import practically all our steel. I fear we will discover that, unless we do something about electricity prices, even when electric arc production starts to kick in on a bit of a bigger scale, it will be very difficult to sell that steel at a profit because the electricity costs are unrealistic and uncompetitive, as well as the general carbon taxes and carbon costs, which have been adversely affecting the blast furnaces.

Given our common interest in saving jobs and having a better steel sector, I again urge the Government to provide that plan and that thought-through work, which should be shared without commercial secrets with the wider public and both Houses of Parliament. This would give us some confidence that there is a way out of this very deep tunnel that we are going down to producing less and less steel of our own.

The Government have clearly introduced very penal tariffs on importing steel from non-EU sources, with the 50% increase in tariff. They hope that that will change the situation but, because they have relaxed the quotas for the EU, I suspect that we are still extremely vulnerable to EU import competition at a time when our industry is not properly competitive. They will find that the tariffs will not protect the diminishing British steel industry, but that the much bigger and somewhat stronger steel-using industries in the United Kingdom will be very gravely affected, because more than half our imported steel may well have to come from sources that attract tariffs. That will be very penal and, therefore, will reduce the amount of steel-using activity that we can undertake.

I urge the Government to take some of these points seriously. I am glad that two sensible amendments have been put forward to concentrate this debate.

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[Lord Fox (LD)]

My Lords, I move Amendment 22 in my name, but just briefly, with your Lordships’ indulgence, let me first respond to the Minister’s response to Amendment 23. I think he is quite right that it is up to the management of the company to set its own course, but that course will have wider implications than simply the company itself. It will have implications on the community in which that company is located, and that is something the Government, local government, and indeed the Welsh Government if appropriate, have to be concerned about. That was very much part of the point I was bringing forward. There might be another way of doing this, and perhaps we can discuss it when we get to a later group, but I am pleased to hear the Minister’s relatively positive response.

Turning to Amendment 22, in a sense the purpose of this follows on from Amendment 23 and keys into some of what the noble Lord, Lord Redwood, was talking about just now. An area not covered to date is the need for the wider supply chain to have an explicit voice in what is going on here. We should remember that there are about 400,000 employees working in the steel-using community and about 40,000 in the steel production capacity, so this is a 10 times bigger part of our national wealth and we need to make sure that there is a place for steel users and producers to have a voice within the strategic decision-making going forward.

I believe the Government have a steel board, but it is not clear to me how the steel-users community feeds into that steel board. In what we have seen in the setting of tariffs, users seem to have a somewhat second-class status within the decision-making process. This amendment envisions the creation of a statutory stakeholder advisory committee, which would make sure that those producers are well represented in the decisions that Government make concerning the industry on things like tariffs. Union and community interests and those kinds of things should also be included.

I am very flexible about the approach taken to do this, but I feel there needs to be a formalised, statutory approach. We have seen with respect to the proposed tariffs that users are falling behind producers on the Government’s agenda. This amendment is there to ensure that users have a formal voice. Trade associations do a great job, but in the end Secretaries of State can and do ignore them on a regular basis. This amendment is there to add a voice for the manufacturers in any debate. I beg to move.

[Lord Redwood (Con)]

My Lords, I welcome the intent behind Amendment 22. We should not be careless about the interests of the steel-using industries. Many years ago, I was responsible for Darlington & Simpson Rolling Mills. In those days, that was a profitable and successful business, but the price of raw material was critical to that type of operation. I was very interested to learn from noble Lord, Lord Fox, that he thinks that there are 10 times as many people involved; that may well be an underestimate. When I was trying to do some research on this, I identified a number of sectors where steel use is an important part of cost, and I came up with about £200 billion of business activity in those areas, excluding construction, which is obviously the main steel user in the country. That was many times the amount of turnover we are talking about in trying to protect maybe 2 million tonnes of steel production in this country from our own resources. Both in setting the tariffs and in setting the plans, and in the details of any future nationalisation, we need to have fuller recognition than we have had so far of the legitimate interests and concerns of the steel-using industries.

I hope that Ministers will see that we are also interested in a report and audit on where we are at already. Although we have not nationalised British Steel and do not own the assets, we are otherwise completely responsible for the people who do those jobs and their families, for the safety and success of the production processes of those two ageing blast furnaces, and for that part of what remains of the British steel industry, so I think we are probably owed a bit more consultation and plan already.

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[Lord Fox (LD)]

My Lords, I will also speak to Amendments 25 to 28, 39 and 45, all in my name—I think I must have gone slightly mad at the time.

As promised when we touched on the contingent liabilities earlier, this group homes in on how such liabilities affect possible compensation in the event of nationalisation. As I set out at Second Reading, the possible environmental liabilities and future remediation costs for a site as large as Scunthorpe, let us say, are potentially huge. Scunthorpe has been there for a long time and is a very big site. The site has also employed a lot of people for a long time, and their pensions and any contingent liabilities should be fully understood by Parliament, as we discussed in the debate on the previous group.

Those contingent liabilities are likely to majorly impact the current and future valuation and sustainability of any steel undertaking. The current draft has evaluating the environmental liability as a voluntary exercise and the pension liability seems to have been ignored, but I take on board what the Minister has just said and perhaps withdraw that sense, as some elements seem to be covered.

Amendments 24 to 27 together would require that the payment of compensation could not be made until the Secretary of State had published a written estimate of the environmental liabilities of the steel undertaking provided to them by an independent valuer. Amendment 28 would require that the payment of compensation could not be made until the Secretary of State had published a written estimate of the pensions liabilities of the steel undertaking provided to them by an independent valuer.

Amendment 39 would require the Government to report on the compensation paid under any compensation scheme regulations made under Clause 52. Finally, Amendment 45 seeks to place a limit on financial assistance and compensation without additional parliamentary approval. This proposed new clause would prevent the Secretary of State paying more than £500 million—which I point out is quite a lot of money—in financial assistance and compensation under the Bill unless the House of Commons passes a resolution authorising them to do so. In this way, we would ensure that there was no blank cheque.

I am happy to approach these issues in other ways, as long as the material objective of this group of amendments is achieved. I beg to move.

[Lord Redwood (Con)]

My Lords, I am glad that the noble Lord, Lord Fox, has raised this; it was also something that I mentioned in our previous debates. In my experience of old industrial sites, the land under and around the plant is often heavily polluted and may contain toxic substances. Clearly, the Government need a report on that and would need to consider it not only when considering any possible compensation to a previous owner but as part of the costings of the whole project. Sooner or later, that land will have to be cleaned and if there is any current risk to water courses, it might be sooner rather than later that action would need to be taken. I trust that will all be properly investigated and has been properly investigated where we have already taken operational and financial responsibility for the plant in the case of Scunthorpe.

On other liabilities which can occur in these situations, which probably should be mentioned for the sake of completeness, it is a good idea to find out about current and retired staff to see whether any long-term health issues have arisen which can be attributed in any way to the processes they have been handling and the working conditions they have been in. Those, too, need sensitive treatment and can, if something has gone wrong, amount to significant sums of money.

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[Lord Fox (LD)]

My Lords, Amendment 37 is in my name. This amendment covers concerns regarding the level of financial assistance but also focuses on the relationship between the United Kingdom and the EU. I think we covered this in a previous group on Monday, so I am not opening up that, but I have some contributions that I hope are helpful to the noble Lord, Lord Sharpe. I am still reeling from his bombshell on the last group, but bear with me.

Clause 52(1)(a) says that the Secretary of State must make regulations for compensation. Clause 57 makes those regulations subject to the affirmative procedure. However, Clauses 58 and 59, on financial assistance, do not have such requirements to make affirmative regulations. It seems that there is an asymmetry here. If the Government are prepared to use the affirmative procedure for the compensation process then why is there not an affirmative process for the financial assistance process? If the Minister was prepared to give ground on that then many of the discussions that the noble Lord, Lord Sharpe, wishes to have about financial assistance would be had during the discussion of the affirmative resolution. That is a helpful and, indeed, balanced way of dealing with this issue.

[Lord Redwood (Con)]

My Lords, I am grateful to the two noble Lords on the Front Bench for setting out this challenge to the Government. When you have a company in loss that is really struggling, there is an absolute requirement for accurate, speedy and regular financial reporting. Many years ago, I was a chairman with a large group of industrial companies reporting to me. I am pleased to say that none of the subsidiaries reported anything like the losses or the cash haemorrhage of British Steel, and we could not have afforded such a thing. I remember that if I or the chief executive saw one of our subsidiaries in danger of going into loss or dipping into bad performance, it would be put on to monthly reporting and quite often weekly reporting. That was not just because we wanted to know the bad news early but because it started a conversation between us, and other senior directors and executives, and the leading executives of the ailing subsidiary around how they could generate more cash and revenue, win more business and reduce costs in the meantime. If there was no immediate prospect of increasing the revenues, they needed to reduce the cash outflow.

My advice to Ministers, who took responsibility for British Steel many months ago, is that they should be seeing that kind of information, because it is now their responsibility. They decided to undertake this action without advice on value for money, so they need to have that sort of detailed information in front of them. They or their representatives also need that informed conversation with the people they have entrusted with running this business to find out why, as I understand it, the numbers are still not going in the right direction. You need that information weekly, and certainly monthly, because these things accumulate. The National Audit Office has led us to believe that the losses in this business have already accumulated to £642 million.

The description that the Government have offered help with working capital is true, but I do not think it is the whole story. As I understand it, there is a massive trading loss, and taxpayers—through Ministers and the Treasury—are having to pay trading losses. That means the Government are both subsidising the customer, who is getting it too cheaply, and paying for costs that the business needs to meet, which the customer is not going to pay for. In addition, the Government may need to provide additional working capital to provide for the work in progress and the stocks and raw materials for the next bit of production. I would regard the loss as a different category from the provision of additional working capital to keep the business running, and I would be much more worried about the loss.

From my business experience with industry, my conclusion is that cash is the king. By all means look at the P&L—that will give you an indication—but a business has to generate more cash than it spends. Otherwise, it goes bankrupt. That is the fundamental discipline that Ministers, through their chosen representatives, need to impose on this business. They need to see the cash line of outflow starting to reduce—otherwise, they need a fundamental rethink of policy.

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[Lord Redwood (Con)]

My Lords, I support my noble friend. I have also referred to this in past interventions, so I need not say very much. Looking at the tragedy of the British steel industry under successive government policies, there is no doubt about it: the very high energy costs, carbon taxes, emission trading arrangements and CBAM coming in are the main reasons why we are not competitive and we have had this colossal collapse. If the Government will not accept that, they will never have a successful steel industry.

[Lord Fox (LD)]

My Lords, I will be equally taciturn. I have spoken a lot about CBAM, and I do not intend to repeat it. It occurs to me that if the Government become a major owner of the steel industry, they might become more sympathetic to some of the arguments that the noble Lord, Lord Sharpe, has just advanced.

Steel Industry (Nationalisation) Bill

Debate between Lord Fox and Lord Redwood

Committee stage
Monday 29th June 2026 Lords Chamber

[Lord Redwood (Con)]

My Lords, I fully support this amendment and hope that it will tease out from the Minister a little more about what the underlying purpose of the general legislation is, as I am not too enamoured of this becoming a fully nationalised industry with the ability to acquire all sorts of other steel interests.

I felt that the Government’s policy arose out of the circumstances of British Steel at Scunthorpe and the question of blast furnace-produced steel, where we are down to our last two blast furnaces. I did not think that the intention was to build an electric arc furnace set of businesses when progress has already been made in establishing these in the private sector and where there are plans in certain cases for government grant aid to achieve an electric arc steel additional business by that combination of subsidy assistance and private capital.

I hope that the Government will accept this quite substantial narrowing of such a broad piece of legislation, because there are many with general interests in steel whom we would not like to get caught up in this. I would also like clarification on whether there is any possibility that the Government might want to build a nationalised electric arc steel set of businesses. This would be an expensive and difficult proposition.

[Lord Fox (LD)]

My Lords, I thank the Minister, his team, the department and the two experts who came all the way from Coventry in 35-degree temperatures to educate the noble Lord, Lord Hampton, and me on the technology of steel. It has been very co-operative and I thank them.

I am slightly confused by how narrowing these words are: “of or including” versus “predominantly”. What is predominantly? Is it 60:40? Is it 55? I do not know. You have to look upon it with the body language of the Government. The Government have shown no tendency to go on a nationalisation rampage through all businesses that have ever touched a piece of steel. It is very clearly focused in one area, as the noble Lord, Lord Redwood, alluded to. Also, I remind noble Lords that there is a sunset clause in here which closes it after two years. So the talk of subsequent Governments does not have particular purchase and I am much more relaxed than the noble Lord, Lord Sharpe, on this.

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[Lord Redwood (Con)]

I am very glad that my noble friend raised the issue of an impact assessment, because if the Government press ahead with the acquisition of British Steel under the legislation, that could be the first opportunity we have for a realistic impact assessment. Yet, the taxpayer has been responsible for the losses in working capital and investment funds for over a year now, with the lack of clear reporting that we have commented on before.

We have an impact assessment for this piece of legislation. Understandably, it says that there are not any costs or benefits to report, because there is not a transaction. These are enabling powers, which would enable the Government to undertake and complete a transaction. But it would only be at that point that officials tasked with the difficult question “What is the impact?” would be able to come up with some numbers, because we would then presumably have some visibility on the cost of acquisition, if any, the operating costs and working capital costs that will go forward. That would be very helpful, in connection with the difficult investment at Scunthorpe, where, as we heard earlier, the NAO reported that there has already probably been £642 million of taxpayer expenditure up to the current month, with a very high run rate going forwards. So, I hope that the Government will offer us reassurance—if not a new clause in the Bill—to say that there will have to be a proper and timely impact assessment.

That, too, would clearly require proper due diligence, which I trust has been under way, now that the Government are responsible for the business. We would need to know that there had been a proper study of Anne and Bess, the two blast furnaces, which were either built or last substantially modified in the early 1950s. These are ageing assets. They have had deep maintenance in this century, but we would need a condition statement on that, so that the Government are reassured that however long they think they can run these blast furnaces for is feasible in terms of the condition of the plant. In order to sustain the employment for the next month, year or whatever it may be, we would need to know that there will not be major maintenance required or no question of having to cool the furnaces down, because that is a dangerous and expensive process and would raise issues about how easy it would be to spend enough money to reinstate these particular assets.

Of course, it would also require proper reporting to the Government—not supplying all the detail to us, but proper reporting on market prospects and how the steel product produced at Scunthorpe is perceived, and what the market opportunities, in general terms, might be and other supporting documents. It will require a serious impact statement, for the benefit of democratic accountability. More importantly, that would prove that the Government have done their homework, because the Government should not be taking on a plant like this unless they have a condition report, a marketing report, a proper cost examination and so forth, which I and my noble friends have been referring to.

[Lord Fox (LD)]

My Lords, I do not want to be the bringer of bad news to the noble Lord, Lord Redwood, but I suspect that it is pretty clear that the condition of the blast furnaces is poor and whatever happens, either to reinstate them to the level that would take them forward or to invest in electric arc, will take a lot of money. That is the point that we are focusing in on, and that is why we are focusing in on the public interest test. We have not yet gotten past Clause 2 yet, because this is the crunch.

I have a group of amendments in the next group, so I will reserve almost everything I have to say. The noble Lord, Lord Hunt, has already disobeyed his Amendment 2, because we are seeking to broaden the scope of the public interest test. With respect to the noble and right reverend Lord, Lord Sentamu, there is such a number of issues that have to be addressed within the particular field of potential investment that the public interest really requires focus. I will leave it at that for this group and then come back to these in the next group.

Steel Industry (Nationalisation) Bill

Debate between Lord Fox and Lord Redwood

2nd reading
Tuesday 16th June 2026 Lords Chamber

[Lord Redwood (Con)]

On a point of information—

[Lord Fox (LD)]

We do not do points of information at Second Reading.