Steel Industry

Lord Howell of Guildford Excerpts

2nd reading
Saturday 12th April 2025 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, it takes only a few minutes to see why British Steel is in dreadful trouble and chaos, and why we are where we are today. First, its costs are very uncompetitive indeed, especially the cost of electric power, as my noble friend Lord Hunt pointed out in his excellent opening speech. We have some of the highest energy costs for industry in the entire world—so we are told. Secondly, there is this premature and badly planned rush to go green—in all industries, not just steel—with various levies and additional costs at every point, and the cutting out of gas and coke, as we have heard, and all other cheaper alternatives.

We have to ask why electricity costs are so crushingly high that they are having this effect on our economy and the whole of our steel industry, including the giant Scunthorpe plant. It is a big plant by our standards. We are fed stuff about costs being linked to the world gas price. We are big importers of gas nowadays, but this is the sort of marginal-cost economic argument that, frankly, could be swiftly corrected. There has been talk about blame, and that applies obviously to the previous Government as well as this Government.

But again, world gas prices are falling quite fast right now and there is plenty of gas available throughout the world, both through pipelines from Norway and elsewhere and from LNG galore—although Mr Trump may put a stop to that, because most of it comes from shale gas in the United States. So, no, the exceptionally high price does not come from that, really. It comes from the fact that we have drifted as a nation into the most extravagant and costly patterns of electricity generation possible. The planned massive increase in reliance on renewables will therefore mean massive reliance when the wind around the UK does not blow—about 3,000 hours a year: slightly under one-third—mainly on new gas-fired plants, which we are sensibly looking at now, and new nuclear, preferably small, attractive to the private sector and built on time, to ensure that we continue to get a first-world, reliable, affordable power supply at a vastly higher level than hitherto, which we need in a modern industrial state.

In a few years it may be that cheaper hydrogen will help on this front, but, for the moment, there is no possible alternative to new gas-fired stations, which will have to be combined with carbon capture and storage facilities—one is being built and many more are needed—and new nuclear, which I hope will be small and attractive to private investors, in line with new technology and not in the white-elephant class, and a brand new transmission grid as well, at an estimated cost of £600 billion.

So no wonder our small steel-making sector—which, remember, is 0.3% of world production, as against China’s 54%—was going to be in severe trouble, and that, as the noble Lord, Lord Kerr, has just reminded us, will continue. Why? Because, whether Scunthorpe is saved or not, we will continue to import Chinese steel. Most products and services in the world have a Chinese component because most of the world is computerised and most computers have Chinese components of some kind, whether through services or actual production. I hope that the President of the United States understands this but, frankly, I do not think he does. Instead, I fear that he will lead us not to MAGA—Make America Great Again—but to Make America Small Again. That would be a tragedy that we must seek ourselves to help America recover from.