Steel Industry (Nationalisation) Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Wednesday 1st July 2026 Lords Chamber

Moved by

[Lord Sharpe of Epsom]

16: Clause 44, page 28, line 16, at end insert—
“(3A) On the day on which this Act is passed, the Secretary of State must lay before Parliament a consultation document on the proposed exercise of the powers under this section.(3B) The consultation document must invite representations from—(a) every steel undertaking affected by the provisions of this Act,(b) trustees or managers of any pension scheme in respect of which such an undertaking, or a group company of such an undertaking, is or was an employer,(c) persons appearing to the Secretary of State to represent members and other beneficiaries of such schemes,(d) trade unions representing employees of such undertakings,(e) the Pensions Regulator, and(f) the Pension Protection Fund.(3C) Before making regulations containing provision by virtue of this section, the Secretary of State must have regard to the interests of members and other beneficiaries of affected pension schemes, including the protection of accrued rights and the security of benefits.”Member’s explanatory statement
This amendment requires the Secretary of State to lay a consultation document before Parliament on the day the Act is passed, consult affected steel undertakings and pension stakeholders, and have regard to scheme members’ and beneficiaries’ interests before exercising the pension powers.

[Lord Sharpe of Epsom (Con)]

My Lords, my apologies: I was asleep at the wheel, much like the England defence. I rise to speak to Amendments 16 and 17 in my name and that of my noble friend Lord Hunt of Wirral.

I thank the Minister for his letter on Clause 44 and for meeting us to discuss the Bill and the ways in which it may be improved. I welcome his confirmation that the Government’s intention is for workers’ pension benefits to remain unchanged, but where the Bill gives the Secretary of State powers to modify or apportion pension rights and liabilities, transfer accrued rights between schemes, and amend scheme terms, workers and pensioners need more than an assurance of present intent. They need a clear legal safeguard, which my Amendment 17 would provide. It would ensure that regulations made under Clause 44 could not reduce the value of accrued pension rights or benefits, nor make the terms on which benefits accrue less favourable in future.

Amendment 16 addresses consultation and engagement. It would require the Government to consult affected undertakings, pension trustees and managers, scheme members and beneficiaries, trade unions, the Pensions Regulator and the Pension Protection Fund, and to have regard to the interests of members and beneficiaries, including the protection of accrued rights and the security of benefits. The Minister suggested that full consultation before the use of these powers may not be realistic where urgent action is required. We understand the need to avoid delay where a transfer must take place swiftly, but urgency cannot mean that pension stakeholders are simply bypassed. If consultation cannot practically take place before a transfer, will the Minister commit to a prompt and meaningful consultation afterwards, and in any event before any further pension regulations are made? Will he also confirm that the Government will engage formally with the Pensions Regulator, the Pension Protection Fund, trustees, scheme members and their representatives, so that any necessary arrangements are made to protect members’ accrued rights and the long-term security of their benefits? I beg to move.

[Lord Fox (LD)]

My Lords, I, too, am confused, because I thought Amendment 20 was in this group.

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[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, before I start, I am sure all noble Lords want to join me in wishing the England team the very best for the rest of the match this afternoon.

First, let me thank the noble Lord, Lord Sharpe, for his contribution and his amendments. Amendment 20, in the name of the noble Lord, Lord Fox, would require the Government to provide a statement to Parliament outlining the value of contingent liabilities and the steps they would take to minimise taxpayer exposure to them before an intervention. As I have set out previously, the Government are somewhat constrained in the procedural steps they can take before exercising the power in the Bill. This is why the transfer powers are exercisable by regulations subject to a negative procedure. We will likely be operating in a fast-moving commercial environment where intervention needs to be done at pace, and negative procedure transfer regulations do not require prior parliamentary approval before they take legal effect.

It is not appropriate to publish details of a private company’s contingent liabilities prior to nationalisation. If a steel undertaking is brought into the public sector, its financial position will rightly be subject to parliamentary scrutiny, including the publication of its annual report and accounts. Of course, the Government will take steps to minimise taxpayers’ exposure to liabilities wherever possible. Any decision to exercise the transfer powers will be subject to the usual principles of Managing Public Money and government approval processes.

Amendment 17, tabled by the noble Lord, Lord Sharpe, seeks to prevent any pension regulations from reducing accrued pension rights or benefits or worsening future pension terms. I thank the noble Lord for his amendment and understand his concerns that the Bill may adversely affect pension rights, benefits or terms for employees. I reassure the noble Lord that any use of these powers would be considered on a case-by-case basis, with the primary objective of ensuring alignment across pensions. These powers give the Government the flexibility to achieve this. Any changes to the terms would likely be due to regulatory changes where pension terms may need to be standardised or contributions adjusted. The Government would seek to consult regulators, unions and employees, where possible, on any future changes.

Amendment 16 seeks to require the Secretary of State to consult with affected steel undertakings and affected pension stakeholders before exercising the pension powers. To address the concerns raised by the noble Lord, Lord Sharpe, perhaps it would be useful to set out the Government’s intent behind Clause 44. Clause 44 is essential for managing the consequences of a transfer for pension schemes and for employees’ rights under a pension scheme. It enables the Government to make provision for pension schemes where the steel undertaking is or was an employer.

These powers are necessary and give the Government flexibility on a case-by-case basis to make suitable provision for pensions during the transfer. For example, the provision would enable the Government to modify terms in the event of regulatory changes where pension terms may need to be standardised upon transfer or contribution minimums adjusted. It also gives the Government flexibility on a case-by-case basis, if needed, to consider a fair division of pension liabilities between the transferer and transferee in complex transfers.

In the case of British Steel, if, after Royal Assent, the Government decided that nationalising British Steel was necessary in the public interest, this power would not be required. To the best of our knowledge, British Steel has a defined contribution scheme, so there is nothing to transfer or leave behind.

In relation to the requirement to consult before exercising these powers, I reassure the noble Lord that, wherever possible, the Government would seek to consult with regulators. However, a statutory duty to consult could delay the transfer of the pension schemes, causing uncertainty and concern among employees. That is exactly what the Government are trying to avoid. For those reasons, I do not consider this amendment necessary and ask for it to be withdrawn.

[Lord Sharpe of Epsom (Con)]

I am grateful to the Minister for his answers and to the noble Lord, Lord Fox, for correctly pointing out that I neglected to mention Amendment 20 on contingent liabilities. We will come back to that.

As regards Amendments 16 and 17, I am grateful for the Minister’s commitments, particularly on consultations where possible. Perhaps we could explore in another forum what potentially that will mean in practice. People’s pensions are their future and their security. It is vital that the Government ensure that workers’ pension rights are properly protected—I have no doubt at all that the Minister agrees with that—and that the relevant experts, regulators and representatives are fully consulted as these powers are exercised. We are merely trying to explore how that is done. I look forward to picking up that subject again in the future. For the present, I beg leave to withdraw Amendment 16.

Amendment 16 withdrawn.

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[Lord Wigley (PC)]

My Lords, I am delighted to support the amendment moved by the noble Lord, Lord Fox, and to be following the noble Lord, Lord Redwood. I am sorry the noble Lord, Lord Hunt, is not in his place at the moment, but both he and the noble Lord, Lord Redwood, will be very familiar with a project that took place in north-west Wales 40 to 50 years ago now—the construction of the pumped-storage scheme at Llanberis by the CEGB. The reason that is relevant is that, in the very early days of that project, the CEGB was wise enough to pull together trade union leadership and the local authorities in a regular meeting to review issues that were arising. Over the 10-year period of the construction of that exciting project, only about a week was lost due to industrial difficulties. The company, the CEGB, was working with the workforce and the local community, and problems were sorted before they boiled up to triggering strikes and all the rest. It is motivated self-interest to have such an approach to bring in these forces: with good leadership coming from the company involved and, yes, from central government but also from local government and from the trade unions within the company involved, so many problems can be overcome before they cause difficulties and boil up to something that they do not need to be. I believe such an approach should appeal to the Government, and I am very glad to support the amendment.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Fox, for this amendment. He is quite right to point out that decisions about the future of a steel undertaking affect a wide range of sectors that rely on secure domestic supply, including defence, construction, advanced manufacturing and critical national infrastructure.

National security has, rightly, featured prominently throughout our debates. If the Government are relying on that argument to justify the exercise of these exceptional powers, it is surely right that those with responsibility for defence and critical infrastructure should have a voice in the wider policy discussion. The number of workers potentially affected in the broader and wider supply chain, as cited by both the noble Lord, Lord Fox, and my noble friend Lord Redwood, is staggering.

It is difficult to argue that the steel-using community is really being consulted, as the noble Lord, Lord Fox, pointed out; that is certainly true of the representations we are getting from members of that community. I urge the Government on this occasion to have a careful think about what this amendment is trying to achieve. It recognises, as the noble Lord, Lord Wigley, has pointed out, the importance of the workforce and of local communities. Workers, their representatives and local authorities will understand better than most the consequences of a transfer for jobs, skills, supply chains and of course the local economy. It is difficult to see how the Government can judge properly what is in the public interest without hearing from the workers, communities, industries and strategic sectors most affected by the decision. I look forward to hearing the Minister’s response.

[Lord Leong (Lab)]

My Lords, I am pleased to inform noble Lords that we have equalised—so come on, England!

I thank the noble Lords, Lord Redwood, Lord Wigley and Lord Sharpe, for their contributions. I am grateful to the noble Lord, Lord Fox, for tabling Amendment 22, which would require the Secretary of State to consult a stakeholder advisory committee before determining whether an intervention under the Bill was in the public interest. I fully understand the motivation behind the amendment. Decisions of this significance should be informed by expert views, and I have considerable sympathy for the desire for strong parliamentary and stakeholder engagement.

However, as I said in relation to earlier amendments, the Government cannot support a statutory precondition of this nature. The powers in the Bill are intended for exceptional circumstances in which events may be moving quickly and decisive action is required. Introducing a mandatory consultation process before intervention could delay action at precisely the moment when speed is essential to protect jobs, safeguard strategic capability and secure the future of a steel undertaking. In some cases, a delay could undermine the very purpose of the intervention.

Nor do I believe that establishing a statutory advisory committee is necessary to ensure that the Government receive expert advice. My ministerial colleague, Minister McDonald, regularly maintains contact and extensive engagement with the sector through a wide range of established forums. This includes the steel council, the steel council working groups, the metals circularity group and a programme of industry round tables. Alongside those formal structures, Ministers and officials regularly meet with steel producers, downstream users, trade associations, trade unions, recyclers and other stakeholders throughout the supply chain. These relationships provide the Government with a detailed understanding of the opportunities and challenges facing the sector and ensure that policy is informed by those with direct operational experience.

I am also pleased to inform the Committee that we will shortly be inviting the UK Metals Council, which I understand is the largest downstream user group, to join the steel council, so we are reaching out to downstream users too. This will strengthen the representation of downstream users and ensure that their perspectives are fully reflected in future discussions about the sector.

The Government firmly believe that sustained engagement with industry is essential to delivering our steel strategy, but there is an important distinction between ongoing engagement and creating a statutory procedural hurdle that could impede timely intervention when the national interest requires it. For those reasons, while I fully recognise the amendment’s intent, I do not believe it would improve the Bill and I therefore respectfully request that the noble Lord withdraw it.

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[Lord Wigley (PC)]

My Lords, I want to speak briefly to Amendment 28, which deals with pension liabilities of the undertaking that has gone into state ownership. Some noble Lords will remember in our pensions Bill debates that we had the example of Allied Steel and Wire, where employees, who had been given all sorts of promises that they would be safeguarded, feel that they have been very badly let down. If the shadow of Allied Steel and Wire is to find its way to Scunthorpe, or any of the other locations where these questions may arise, the failure to safeguard the interests of those pensioners will militate against employees wanting to accept the course being taken by the Government unless provisions are written into the Bill of the sort provided by Amendment 28. There may be other ways of doing it, but certainly these assurances need to be given.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the noble Lord, Lord Fox, for tabling these amendments, which raise an important point of principle. Where the Government are taking a steel undertaking into public ownership, the environmental, pension and other contingent liabilities which may fall on the taxpayer should be clear to Parliament and, of course, to the public. The Minister in the other place suggested that further disclosure was unnecessary because the Government already had a reasonably good understanding of the potential liabilities and that the independent valuer would take them into account, but that is not the same as ensuring that Parliament can see the likely costs before compensation is paid and further public money is committed.

I was very taken with my noble friend Lord Redwood’s comments about the environmental impact. From memory—and I might have this date wrong—I think the oldest of the blast furnaces dates back to 1939, so it is inconceivable that that site is not contaminated in some way, which we probably do not have any accurate historical records for.

I have also recalled the reason why I was a bit lukewarm on my own Amendment 20. I hate to say this, and I hope I never have to admit it again, but it is rather because I preferred Amendment 27 from the noble Lord, Lord Fox—a shocking admission to have to make.

Environmental remediation, pension obligations and historic liabilities can amount to very substantial sums. The Government are using taxpayers’ money, and Parliament should be able to scrutinise the liabilities assumed alongside the compensation and support provided. For those reasons, the amendments make a valuable contribution to transparency and accountability, and I look forward to the Minister’s response.

[Lord Leong (Lab)]

My Lords, just to update the Committee, we are 2-1 up.

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Moved by

[Lord Sharpe of Epsom]

32: Clause 58, page 39, line 5, after “assistance” insert “of a total value of no more than £2.5 billion in the period ending on 15 August 2029”
Member’s explanatory statement
This amendment seeks to limit the financial assistance that can be provided under the Act.

[Lord Sharpe of Epsom (Con)]

My Lords, in moving this amendment, I will speak to Amendments 33 to 35, 40 and 41 standing in my name and that of my noble friend Lord Hunt of Wirral. These amendments address a basic question: if the Government are to provide financial assistance under these powers, what limit is there on the liability being placed on taxpayers? I heard what the Minister had to say in the previous group, but I will carry on regardless and probe a little further.

Clause 58 permits financial assistance in an exceptionally broad range of forms. This could be grants, loans, guarantees, indemnities, the acquisition of shares or assets, contractual payments or other expenditure. It is additional to any other funding powers available to Ministers. Yet the Bill contains no overall financial ceiling, no requirement for advanced detail to Parliament and no explicit statutory value-for-money test.

We understand the need for urgent support, but the Government’s stated objective is not permanent public subsidy but a viable, competitive, private sector led future for British Steel. That requires a business capable of attracting investors with capital, commercial expertise and a long-term commitment. To achieve that, public support must be disciplined, transparent and as limited as is consistent with the securing of the strategic objective. Otherwise, the Government risk creating a perverse incentive: a prospective purchaser may conclude that it need operate the business efficiently enough only to maintain access to public support, rather than to establish a genuinely sustainable commercial future. This would be an indefinitely subsidised business model, with the taxpayer carrying the risk.

Amendment 32 would place a £2.5 billion limit on financial assistance until August 2029. That figure reflects the Government’s own stated steel funding envelope in the steel strategy. Amendment 33 would provide a further test of proportionality by limiting assistance over five years to £1 million per employee. It is intended to ensure that support is targeted at transformation and viability, rather than becoming a substitute for a credible business plan.

Amendment 34 would require a detailed statement to Parliament before assistance is provided. Parliament should know the amount, form and recipient of support, its intended purpose and expected effect, and any conditions, repayment arrangements, guarantees, indemnities or other liabilities attached to it. That is particularly important where exposure may not appear as a simple cash grant. Guarantees and indemnities may create significant liabilities that only crystallise later. Taxpayers should not be asked to accept those risks without clear disclosure.

Amendment 35 would ensure that the Secretary of State is satisfied that financial assistance represents value for money. Value for money does not just mean ignoring strategic capability, national security, skilled employment or supply chain resilience. Ministers must weigh those against the costs, the liabilities, the alternatives and the likelihood that support will lead to a competitive business capable of standing on its own feet. In the other place, it was rightly argued that, if the Government believe in this intervention, they should be willing to set limits on it. Without such limits, taxpayers are simply being asked to sign up to an unlimited liability. The Government have already been providing working capital support and have been in discussion with potential private sector partners. Therefore, they should now have a clearer understanding of the likely financial assistance required, the risks involved and the route to a sustainable outcome.

I turn to Amendments 40 and 41. The Government have been providing monthly updates on working capital being provided to British Steel since the passing of the Steel Industry (Special Measures) Act 2025, which is welcome. It should be the same for financial assistance if British Steel, or indeed any steel undertaking, is nationalised. I beg to move.

[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.

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I hope I have been able to provide your Lordships with sufficient reassurance on this matter. I ask that the amendment be withdrawn.

[Lord Sharpe of Epsom (Con)]

My Lords, I am grateful to the Minister for his response, and I agree with him that the focus must be on operational challenges. But I think the Minister will have agreed very much with what my noble friend Lord Redwood said about cash flow. The Minister is a businessman and will know exactly what my noble friend was talking about. Therefore, the focus should not be solely on operational challenges; there obviously also has to be a very keen focus on the cash position. I would have thought that the transparency we are suggesting would aid the Government in that.

If one month is not right, as per Amendment 40, I am happy to have a conversation about what might be. But we think that 12 months is far too long a gap between reports. Far be it from me to help the Government in this regard, but I would have thought that it would minimise the potential for political shocks if there was a more of an ongoing dialogue with the British public about the state of play in any entity that is nationalised, as opposed to one-off bombshells on an annual basis—but I will leave that for the Government to ponder.

I am grateful to the noble Lord, Lord Fox, for his helpful comments about asymmetry—he is correct. I believe the Government’s heart may be in the right place on all this. We want to see growth, we want to see investment, and we want to secure jobs in the steel sector, but we are ultimately talking about taxpayers’ money. That is why we think there must be clear limits and proper discipline around this financial assistance. Support should not be simply open-ended with no clear ceiling, no transparent statements of exposure and no statutory tests of value for money. We would welcome further discussions with the Minister on how the Bill can better reflect those safeguards but, for the present, I beg leave to withdraw the amendment.

Amendment 32 withdrawn.

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Moved by

[Lord Sharpe of Epsom]

47: After Clause 60, insert the following new Clause—
“Exemption of iron and steel carbon border adjustment mechanism goods(1) Section 143 of the Finance Act 2026 (charge to carbon border adjustment mechanism) does not apply to emissions embodied in a CBAM good which is an iron and steel good for the purposes of Schedule 16 to that Act where the good is imported by a transferred steel undertaking for use in connection with the carrying on of its business.(2) In subsection (1), “transferred steel undertaking” means a steel undertaking in respect of which the Secretary of State has exercised a principal transfer power.”Member's explanatory statement
This amendment would exempt iron and steel CBAM goods imported for use by a steel undertaking brought into public ownership under this Act from the carbon border adjustment mechanism.

[Lord Sharpe of Epsom (Con)]

My Lords, I will speak to Amendments 47 and 48 in my name and that of my noble friend Lord Hunt of Wirral. These amendments address two costs which bear directly on the viability and competitiveness of a transferred steel undertaking: the carbon border adjustment mechanism and the United Kingdom emissions trading scheme.

Amendment 47 would exempt a transferred steel undertaking from the carbon border adjustment mechanism in respect of iron and steel goods imported for use in its business. Amendment 48 would disapply the United Kingdom emissions trading scheme in relation to installations forming part of such an undertaking. These amendments go to a wider question which has run throughout our debates: whether the Government’s approach will genuinely secure steel-making in this country or simply add further costs to an industry already exposed to intense international competition.

The Government’s impact assessment on the free allocation review makes the point. It accepts that reducing free allocations increases businesses’ exposure to carbon costs. It accepts that energy-intensive industries producing globally traded commodities are particularly vulnerable because they cannot simply pass those costs on to consumers. It also recognises the danger of carbon leakage—production, investment, jobs and emissions moving overseas, rather than emissions genuinely being reduced. The assessment says that the traded carbon price could be approximately £25 per tonne lower by 2030 if free allocations do not fall in line with the industry cap.

This is a policy choice, and it has consequences for industry. The steel sector has warned of the effect of reducing free allocations. It has described the proposed changes as an “earthquake moment”. The Government must listen to that warning. CBAM can affect imports into the domestic market; it does not protect a United Kingdom producer competing in export markets. Moreover, higher costs can be passed down the supply chain to downstream manufacturers, reducing their competitiveness and risking the relocation of activity and jobs abroad.

We have now seen the Government introduce new trade measures with substantial tariffs and lower quota volumes. The Minister in the other place, Chris Bryant, said:

“We are determined to make sure that we have a proper steel production industry in the UK, and that means that we have to take some tough measures”.—[Official Report, Commons, 30/6/26; col. 767.]


But thus far the tough measures appear to fall on downstream manufacturers and therefore, inevitably, on British consumers. The Government cannot impose new trade barriers and costs on those who use steel while also increasing carbon costs for domestic producers, and then claim to have solved the competitiveness problem. When will they get tough on the ideological net-zero policies which are imposing substantial costs on the steel industry?

The Government need to make a clearer choice. Do they want a steel sector which can compete, invest and employ people in the United Kingdom, or do they want to continue a policy framework which makes domestic production more expensive and pushes activity overseas? This is particularly important as they pursue electric arc furnace production. If they want greener steel, they must ensure that the electricity required to make it is available at a competitive price. It is no good requiring industry to electrify while maintaining a policy environment in which power and carbon costs make that transition commercially unviable.

The Government should not use nationalisation to shield themselves from the consequences of their own industrial and environmental policies. They should instead create the conditions in which steel can be produced competitively in Britain, with lower energy costs, realistic carbon policy and a serious commitment to preventing industrial activity leaving our shores. I beg to move.

[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 Leong (Lab)]

My Lords, I am grateful to the noble Lords, Lord Sharpe and Lord Hunt, for their thoughtful amendments on the UK emissions trading scheme and the carbon border adjustment mechanism and their impact on the steel sector.

A common theme across these amendments is the proposal that a publicly owned steel undertaking should be exempt from one or both of these measures. I understand the concerns that have been raised about the sector’s competitiveness and the costs faced by steel producers. However, I must be clear that the Government cannot support this approach. We remain firmly committed to industrial decarbonisation and to securing a competitive, sustainable and low-carbon future for the UK steel industry. The UK cannot build a resilient steel sector by exempting it from the very policies designed to support the transition to cleaner production and to create a level playing field against higher-carbon imports.

The UK emissions trading scheme and the carbon border adjustment mechanism are complementary policies. Together, they encourage investment in cleaner production, while ensuring that UK producers are not undercut by imports from countries with lower environmental standards. Exempting a publicly owned steel undertaking from these measures would not only undermine those objectives but create an uneven regulatory framework within the UK steel sector. With this in mind, I will turn to the amendments tabled by the noble Lords, Lord Sharpe and Lord Hunt.

Amendment 47 seeks to exempt a publicly owned steel undertaking from CBAM. I understand the noble Lords’ concern that CBAM will increase the cost of imported products for steel undertakings. However, I emphasise that the CBAM’s purpose is to ensure that imported carbon-intensive goods face comparable carbon prices to those of domestically produced goods. It will give industry the confidence to invest in the UK, knowing that its decarbonisation efforts will not be undermined. CBAM makes no exemptions for particular UK firms. Its intent is to target the problem of carbon leakage and ensure that highly traded carbon-intensive goods from overseas, including steel, pay a comparable carbon price to that paid by UK manufacturers.

Amendment 48 seeks to exempt a publicly owned steel undertaking from the emissions trading scheme. I am sympathetic to the fact that this also imposes a cost on activities that have significant emissions. However, as with Amendment 47, accepting Amendment 48 would provide preferential treatment based on ownership and undermine a level playing field across the industry. The transition to low-carbon steel must be fair, credible and consistent across all operators, whether publicly or privately owned.

I emphasise that the ETS includes targeted protections for energy-intensive, trade-exposed industries, including steel. Further protections will be introduced through CBAM from 2027. It is for these reasons that I cannot support these amendments and ask that they not be pressed.

[Lord Sharpe of Epsom (Con)]

I am very grateful to the Minister, but I have to admit that I am very disappointed in his response, and I wonder if he is a bit disappointed in the response that he had to give. It seems to me that you can either have decarbonisation or have a competitive steel industry, but at this precise moment in time you cannot have both; at this precise moment in time, they are mutually exclusive. That is not to say that we should not pursue net zero in the future—of course, we should—but this is a particularly exposed industry at a particularly critical time.

Commercial Payments Bill [HL]

Lord Sharpe of Epsom Excerpts

2nd reading
Tuesday 9th June 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I refer to my small business interests, as set out in the register. I welcome the chance to speak on this Bill for the first time, and I thank all noble Lords who have contributed. Most of all, I thank the Minister for his introduction, his previous engagement and the genuine expertise that he brings to this subject.

I begin by reaffirming the support of these Benches for the broad provisions of the Bill. Industrial strategy must allow smaller businesses to both survive and compete with larger firms, so entrenching good payment practices, tackling asymmetry in the construction industry and increasing the powers of the Small Business Commissioner are all sensible aims.

A number of interesting questions have been raised on late payment terms, specifically around the 45-day and 60-day limits. Good questions addressing this issue were asked by my noble friends Lord Lansley and Lord Holmes, the noble Lord, Lord Mendelsohn, and the noble Baroness, Lady Thornton. But I would like to press on this: the new payment term must inevitably be balanced against the ability of businesses to arrange their finances and pay. To assist the House, could the Minister outline the trade-offs between the 45-day and 60-day payment limits, which have already been considered in the decisions taken in the Bill?

I note, for example, that the impact assessment suggests that 350,000 more small businesses might be caught by a change from 60 to 45 days. Can the Minister confirm that those numbers are roughly correct? Has the impact assessment or any assessment that the Minister has seen looked at precisely what the financial impact of that would be for those businesses? I can see merit in both sides of the argument, but it would help the House to understand the logic behind the conclusions that have been made.

I also understand the logic behind a timeframe for resolving disputes. Businesses that delay payments should not be able to raise a dispute within the timeframe and then delay payment indefinitely, as the noble Baroness, Lady Kramer, has just noted. The existence of this possibility undermines the principle behind the new deadline for raising disputes. That said, I am cautious about the impact of a deadline on resolving disputes. The value of payment disputes that will fall under Clause 7 will have a very large range, so enacting an arbitrary timeframe of, say, 14 days would disincentivise large disputes being brought forward and divert resources towards ensuring they get resolved within the deadline. There is a risk of creating a bottleneck around whichever the dispute deadline would be. However, I recognise the worry associated with an open-ended resolution timeline, so if the noble Baroness and the Minister believe that this worry can be reconciled with my reservations, I would be very happy to work with them as the Bill progresses.

I take this opportunity to repeat the concern my noble friend Lord Hunt of Wirral raised about the scrapping of retention payments, which we otherwise support. In their impact assessment, the Government stated that they would seek to remedy the removal of this insurance option by

“working with industry to find other ways of making sure construction suppliers provide a good service”.

That is surely the right approach. Purchasers must have available means to seek redress in the case of defects or defaults, a point ably argued by the noble Lord, Lord Docherty of Milngavie. This is particularly the case in the public sector, as public money must have adequate protection against underperforming workmanship. I hope the Minister can today update the House on the steps taken with the industry towards providing that assurance. As the noble Lord, Lord Mendelsohn, noted, other public bodies and various public authorities, in particular, local authorities, can be habitual late payers. Public bodies must set an example when they are the ones driving reform. Can the Minister outline how the Government intend to cut back on late public payments? Can he also set out a timeline for phasing out public retention payments, perhaps before the three-year transition period culminates? There are a number of questions around this subject that deserve answers.

I also look forward very much to the debates on the points raised by my noble friend Lord Lansley, which had considerable merit. The noble Baroness, Lady Alexander of Clevedon, also raised some very good points about retention payments re-emerging as something else, so I look forward to the Minister’s views on what might be done to prevent that state of affairs developing.

I would also like to pick up on a point made by my noble friend Lord Leigh of Hurley on the definitions of micro, small, medium and large businesses. The Bill uses the Procurement Act 2023, alongside giving the Secretary of State powers to make definitions, but my noble friend is right to point to the Companies Act 2006, alongside the use of less complex entities by standard setters, not to mention the Enterprise Act 2016 and the Small Business, Enterprise and Employment Act 2015, which all use variations of definitions that essentially describe the same thing.

I would be grateful if the Minister reassured the House that the regulation-making power in Clause 3(7) will not be used further to deviate from any of the existing definitions of businesses. Perhaps more optimistically, does the Bill not present a chance to standardise the definitions of different sized businesses? We should use this opportunity to think about how we fundamentally categorise businesses, especially as low-headcount, high-turnover tech and AI businesses are in the ascendant. Using a full-time employee equivalent, rather than a simple nominal headcount, alongside a standardised turnover and balance sheet total amount, would be a more proportional and accurate way of categorising most businesses, although I recognise that there is some tension with the point I just made about new tech and AI-type businesses. It is needlessly bureaucratic that so many definitions exist across so much legislation. This has been a long-running issue on all sides of the House, so I hope the Minister will agree to work with us to resolve it through the later stages.

I recognise the concerns surrounding the Small Business Commissioner. A perfectly free and competitive market would, of course, negate the need for a third party to arbitrate disputes, but in the absence of such a market, we support expanding the remit of the commissioner’s office to deal with these instances. Moving responsibilities away from the courts is the right choice, but, as has been stated, this must come with sufficient resources. Similarly, in the absence of such a perfect market, I understand the concern that suppliers that raise consistent disputes or enter into proceedings with an influential customer may face being blacklisted. So, for the Small Business Commissioner to work as intended, it must have the trust of the businesses it works for, and this means ensuring against negative repercussions from raising a dispute. I thank the noble Baroness, Lady Kramer, my noble friend Lord Leigh and others for raising these concerns, and I hope the Minister will be able to address them. I also look forward to hearing the Minister’s thoughts on enforcement and resources, as noted by, among others, my noble friends Lord Hunt and Lord Risby. For example, does the Minister have any idea how many staff work for the Office of the Small Business Commissioner, what resources they currently have and whether they will be increased in anticipation of this new legislation?

As the noble Baroness, Lady Kramer, noted, a more fundamental concern with this part of the Bill is the expansive Henry VIII powers it gives to the Secretary of State. New Section 2G, inserted by Clause 18, permits a wide array of unilateral actions, including the ability of the Secretary of State to restrict the disclosure of information and exclude specific disputes. I understand that the former could be used to protect smaller businesses, but it could also be used to protect the poor practices of larger firms, so I would welcome some clarity on this. Similarly, I wonder whether the Minister could specify in which circumstances the Secretary of State would consider excluding disputes. This has the potential to be very wide-ranging, so some specificity would be appreciated. Indeed, if the Minister is able to give that clarity today, can he say why the specific measures are not in the Bill?

My noble friend Lord Leigh’s points about the UN goals and large companies’ practice with regard to forcing their suppliers to address these complex rules were of merit and worthy of further discussion. I look forward to the Minister’s views on them.

Overall, we have some concerns, but this Bill marks an important step in the right direction for this Government’s industrial strategy. It is orientated towards helping small businesses survive and thrive, and I look forward to working with noble Lords on both sides of the House in the coming weeks.

Steel Import Restrictions

Lord Sharpe of Epsom Excerpts

Tuesday 2nd June 2026 Lords Chamber

Asked by

[Lord Sharpe of Epsom]

To ask His Majesty’s Government what assessment they have made of reports that the United Kingdom’s proposed steel import restrictions may jeopardise the implementation of the UK-India Free Trade Agreement; and what steps they are taking to protect British exporters, consumers, investment, and the benefits secured under that agreement.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, the steel trade measure is being put in place to address the serious threat posed by global overcapacity to our domestic steel-making capability. Given the strategic and economic importance of steel, the Government cannot afford to leave the situation unaddressed. Today the DBT Secretary of State is in Delhi, seeking to further strengthen the relationship and bring the UK-India FTA into force as soon as possible, to ensure that the benefits are realised.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the Minister for the Answer, and it is reassuring to hear that the Secretary of State is in India. However, the fact is that the previous Government secured Brexit freedoms precisely to break free from EU protectionism and position Britain as a champion of global free trade. Within months of signing what Ministers themselves called a landmark deal with India, this Government have now announced steel tariff measures so damaging that senior Indian officials are threatening to withdraw important concessions.

For example, the Scotch whisky industry, one of Britain’s greatest exporting success stories, was on the cusp of seeing tariffs on its exports to India slashed from 150% to 75% immediately, falling further to 40% over the life of the agreement. We do not need a review in 12 months to tell us what 100 years of economic history already confirms: tariffs damage trade, raise costs and, ultimately, hurt the very industries and consumers they purport to protect. Will the Minister commit today to reversing the steel tariffs outright, saving the landmark deal and sending an unambiguous signal to British businesses and our global partners that Britain is open for business?

[Lord Leong (Lab)]

My Lords, first, we use tariffs only as a last resort, and only in circumstances where we have no other choice. Without action, we risk losing domestic steel-making capability, which would mean that we could not mean critical infrastructure and defence needs without relying fully on imports. Furthermore, as I am sure the noble Lord knows, we are not the only country that has tariffs: the EU has tariffs, Canada has tariffs and the US has tariffs.

On the point about whisky, we have signed a legal treaty with India that underpins the trade deal, and the liberalisation of whisky is a clear part of that. We will adhere to that and support the Scottish Whisky Association to ensure that India meets its obligation.

RMT Strikes: Impact on Businesses

Lord Sharpe of Epsom Excerpts

Tuesday 28th April 2026 Lords Chamber

Asked by

[Lord Sharpe of Epsom]

To ask His Majesty’s Government what assessment they have made of the impact on businesses, particularly high street businesses, of the RMT strikes on London Underground services which took place in April 2026 and are planned again for May and June; and what steps they are taking to mitigate any such impact.

[Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)]

My Lords, transport in London is devolved to the mayor and Transport for London, and any impacts of strike action on London’s transport network are for TfL to assess and manage. Nevertheless, the Government understand that this is extremely disappointing for passengers and businesses, and we encourage all sides to work together to resolve disputes as quickly as possible.

[Lord Sharpe of Epsom (Con)]

My Lords, I am grateful to the Minister for the Answer, but yesterday the RMT’s general secretary threatened to maximise strike disruption nationwide. This month’s Tube strikes have already cost small businesses an estimated £760 million. Do the Government now regret removing the 50% strike ballot threshold in the Employment Rights Act, thereby guaranteeing strike action across the country, at immense cost to small businesses?

[Baroness Blake of Leeds (Lab)]

I wonder if the noble Lord has forgotten how much money and revenue was lost during strike actions under the previous Government. We have to remember that the Secretary of State, when she came in, took swift action to deal with this, and I am pleased to say that the incidences have reduced dramatically. Obviously, there are discussions going on with RMT; it would be completely inappropriate for me to discuss that at the Dispatch Box.

National Minimum Wage (Amendment) Regulations 2026

Lord Sharpe of Epsom Excerpts

Tuesday 17th March 2026 Lords Chamber

Moved by

[Lord Sharpe of Epsom]

At end to insert “but this House regrets that the draft Regulations will make it harder for small businesses to take on staff, especially for first jobs and apprenticeships; risk worsening already elevated youth unemployment by further increasing the cost of hiring younger workers; and fail to reflect sufficiently the fragility of the youth labour market, at a time when the number of young people not in education, employment or training is approaching one million”.

[Lord Sharpe of Epsom (Con)]

My Lords, I am extremely grateful to the Minister for explaining and introducing this SI, to which I have tabled a regret amendment. But I am afraid I take a slightly different view from the one he has just explained.

Once again, we start with an ill-thought-out, anti-business measure by this Government. It is very interesting to note that the Minister, when he was explaining and introducing the instrument, referenced a number of government agencies that will be enforcing all sorts of fines and whatnot, but he did not really talk about its impact on business, which is regrettable. Quite frankly, this will end up being an anti-worker measure too, and it will price people out of the labour market.

No one on this side of the House opposes higher pay in principle. Of course we want people to earn more but, for that to be the case, there must be work to be had. A wage floor that is set without proper regard to hiring conditions, business confidence and the fragility of entry-level employment does not help the low paid if it helps price them out of a job altogether. That is why this SI is so troubling. From 1 April, the adult rate will rise to £12.71, while the rate for 18 to 20 year-olds will rise to £10.85 and the under-18 and apprentice rates will rise to £8.

The Government may pretend that there is no trade-off here, but everyone outside government understands that there is. If one sharply compresses the wage differentials—the Minister called them “discriminatory”—between inexperienced younger workers and older workers, one makes it less attractive to hire those with the least experience, the least confidence and the least established work history. The key word is not “discrimination”; it is “experience”. That is not only true for those aged 21 to 25 who are entering the workforce but especially true for 18 to 20 year-olds, many of whom rely on part-time, flexible and entry-level work to get that crucial first foothold in the labour market. Retailers themselves are warning that these local, flexible jobs are often the first step into work for young people, including Saturday jobs and short-hours roles around study or caring responsibilities.

--- Later in debate ---

I extend my thanks once again on behalf of the Government to the noble Baroness, Lady Stroud, and the Low Pay Commission. In closing, I would like to reiterate the positive impact that these regulations will have for millions of young people: an annual pay rise of around £900 for a full-time worker on the national minimum wage and one worth over £1,500 for a full-time worker between 18 and 20 years old. Making work pay will be among the proudest legacies of this Labour Government.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the Minister for his response. I was not expecting Confucius, but of course I defer to that ancient wisdom.

I listened very carefully to what was said, in particular by the noble Baroness, Lady Carberry of Muswell Hill. I think she said—she will correct me if I am wrong—that the Low Pay Commission found it difficult to separate the various cost pressures affecting the hospitality industry particularly, including the effects of higher or rising pay. I would argue, therefore, that that is not particularly evidence-based. It would seem slightly reckless to make that recommendation if you cannot determine the causes of the headwinds—but I will park that for the time being.

[Baroness Carberry of Muswell Hill (Lab)]

Perhaps I could recommend to the noble Lord that he takes time to read the Low Pay Commission’s report, which sets out its reasoning in full, and the evidence base it is drawing on. I may have made that point clumsily. I certainly did not mean to disparage the Low Pay Commission. I was trying to convey its sense that it could not find evidence to attribute any negative effects on the labour market for young people specifically to the national living wage as applied in the rates for those young people. It was trying to make an assessment of the extent to which the minimum wage rates were the cause of any detrimental effects on the labour market and could not find that it was the low pay rates which had that negative effect. The reasoning is set out in great detail in that report.

[Lord Sharpe of Epsom (Con)]

I thank the noble Baroness for that clarification. I will definitely make a point of reading that and perhaps return to it, depending on what I see.

I say to the noble Lord, Lord Hannett of Everton, who made some very good points, that the camel’s back is already broken when it comes to youth unemployment. It is at 16.1%—a point I made in my earlier remarks. That is higher than the EU average, which is a pretty woeful state of affairs. In answer to the noble Lord’s question, unemployment is at 5.2% now, but, as we also heard and as I reminded the House, the OBR has forecast that it will rise to 7%.

I am grateful to the noble Baroness, Lady Bennett of Manor Castle, for her remarks. I would also point her in the direction of the Resolution Foundation, which has a direct line into the Treasury; it was not just the Tony Blair Institute. For the time being, I rest my case on Green economics.

It is always a pleasure to hear from the noble Lord, Lord Sikka. I think his argument was, “If you agree with me politically, you have empathy; if you don’t, you haven’t”. In which case, I would argue that it is empathetic to try to keep people in jobs rather than price them out. That is empathy. I beg leave to withdraw my amendment.

Amendment to the Motion withdrawn.

Energy-Intensive Industry Electricity Support Payments and Levy (Amendment) Regulations 2026

Lord Sharpe of Epsom Excerpts

Wednesday 25th February 2026 Grand Committee

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the Minister for his detailed explanation, but it is difficult to consider this statutory instrument without reflecting on the circumstances that have made it necessary. The Government have presented these regulations as a modest and technical adjustment—an increase in the network charge compensation from 60% to 90%—but the scale of that increase speaks volumes. We are not dealing with marginal fine-tuning; we are witnessing the expansion of an emergency support mechanism designed to shield our most electricity-intensive industries from energy costs that have become structurally uncompetitive. If our electricity market were delivering affordable power to the productive economy, such levels of compensation should not be required.

The Government’s own impact assessment, and my noble friend Lady McIntosh of Pickering, have acknowledged that, even after the British industry supercharger package, UK electricity-intensive industries will still face costs of around £93 per megawatt hour, compared with roughly £60 per megawatt hour in France and Germany. I go back to the impact assessment, because the first sentence is also extremely instructive:

“Great Britain’s energy-intensive industries … continue to face some of the highest electricity prices in Europe, even after existing relief measures, due to higher network charges and policy costs compared to competitor countries”.


Those two words, “policy costs”, are extremely instructive. These charges are the result of policy choices.

A recent study by the Adam Smith Institute underlined the scale of the challenge. It showed that British businesses are paying nearly double the price of power paid by their French counterparts. The report identified as the most important factor in that disparity the United Kingdom’s reliance on what it described as

“a combination of expensive renewables and a gas backstop”.

The chief executive of the trade body Ceramics UK has said:

“The relentless drive towards net zero is moving far faster than either kiln or fuel technology. Despite massive investment by the industry, achieving decarbonisation is extremely challenging and will lead to further deindustrialisation”.


Of course, the impact assessment also refers to the decarbonisation issue.

The Confederation of British Industry has warned that high energy prices threaten the United Kingdom’s standing as a manufacturing nation. Pointing to the competitive disadvantage faced by British firms—

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

I do not imagine there is much clamour for me to start my speech again, so I will go back to where I got to; I made a note.

The Confederation of British Industry has warned that high energy prices threaten the United Kingdom’s standing as a manufacturing nation. It points to the competitive disadvantage faced by British firms relative to their continental counterparts. These are not the words of ideological opponents of decarbonisation; they are the considered assessments of employers who are attempting to maintain operations, jobs and investment in this country.

We have already seen troubling signals across energy-intensive sectors, including investment decisions delayed, production lines scaled back and uncertainty weighing heavily on the industries that form the backbone of our industrial base: chemicals, glass, ceramics and, most importantly, steel. Steel is vital for our construction, transport, defence and infrastructure, yet our steel producers have faced a combination of high electricity prices and carbon costs and political and policy uncertainty, which has left them at a clear disadvantage compared with their European competitors.

It is in that context that the continuing absence of a comprehensive steel strategy is so concerning. We were told that such a strategy would be forthcoming last year and then to expect it in spring this year. Spring has nearly run out, so where is it? We are still waiting. Businesses making multi-million-pound investment decisions cannot operate on the basis of repeated assurances and shifting timetables. I know that the Minister will not be able to answer the question of where the steel strategy is but perhaps he could write to us and let us know what is causing the hold-up.

The Government will say that the additional £100 million or so in relief and the estimated £131 million in annual savings for around 320 businesses demonstrate their commitment to protecting our industry. They will note that, as my noble friend Lady McIntosh of Pickering pointed out, the cost to households is forecast at no more than £1.50 per year. Yet the broader point remains: we are redistributing costs in order to compensate for a system that has produced persistently high electricity prices. Relief mechanisms may alleviate the immediate pressure but they do not address the underlying drivers of those costs or close the gap in competitiveness with Europe and our other competitors, particularly the USA.

As it stands, we will of course not oppose this instrument; the country and our strategic industries need this relief. However, we oppose the policy choices that have led to this most regrettable state of affairs.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their valuable contributions to this debate. As I said in my opening speech, the increased relief offered through the network charging compensation scheme will provide critical support for foundation sectors across Great Britain, including steel, chemicals, cement, battery and semiconductor manufacturing, helping ensure delivery of the Government’s modern industrial strategy. These EIIs are located right across the country and provide thousands of well-paid jobs, both directly and in the wider supply chain. The Government intend to carry out a review of the data underpinning the British industry supercharger this year in order to assess how the scheme continues to meet the needs of EIIs and to ensure that support continues to be directed at those sectors most in need of the aid.

I will address some of the questions posed by noble Lords but, before I start, I pay tribute to the noble Baroness, Lady McIntosh, for all the work that she has done in National Energy Action, especially the action for warm homes. I acknowledge her expertise in this area. To address the point made by the noble Lord, Lord Sharpe, historic reliance on fossil fuels has left the UK exposed to volatile global energy markets, a vulnerability obviously highlighted by Putin’s invasion of Ukraine.

[Lord Sharpe of Epsom (Con)]

Yes, but of course we could have exploited our own reserves in the North Sea, and that was another policy choice. So that is not strictly a fair argument.

[Lord Leong (Lab)]

Well, it is one of the arguments, I will accept that. At the same time, I accept the point that this is a policy decision that was taken. But the mission is to make Britain a clean energy superpower, whereby we will reduce this dependency by transitioning to a diverse energy system based on renewables and nuclear.

At the end of the day, we also need to address—as the noble Baroness, Lady McIntosh, asked—the cost to consumers. The Government will continue to fund the NCC scheme through the EII support levy, which is charged on all licensed electricity suppliers to Great Britain, as the noble Baroness mentioned. To offset this, the Government will bear down costs across the energy system to ensure that domestic and non-domestic energy consumers do not see a net increase in their electricity bills as a result of the uplift of the NCC scheme. We are also taking action to reduce costs across the energy system, helping to ensure that the British industry supercharger and the British industrial competitiveness scheme are delivered in line with our wider priority of providing affordable power for businesses and households. The Government’s clean energy superpower mission sets out a long-term plan to strengthen energy security and reduce electricity prices by expanding clean energy and improving interconnections with EU markets.

The noble Lord, Lord Fox, asked about the broken energy market. This is precisely why the Government have the clean energy superpower mission, which is, as I have just said, to strengthen energy security and reduce electricity bills by expanding clean energy and improving the interconnection with EU markets. The noble Lord, Lord Fox, also made a point about other businesses. The supercharger is currently targeted at the EIIs most prone to carbon leakage. However, the Government will undertake a review of the eligibility criteria for the supercharger this year—we are undergoing a review of the various sectors.

[Lord Fox (LD)]

I thank the noble Lord for his response. The supercharger is in itself a good thing, but unless it is combined with a real understanding of the financial mechanisms by which the market is organised, it will not deliver energy at a price that will be less than our competitors around the world. So there is a second part; it is not just the generation and the distribution but the financial engineering behind that which will make it work.

On the second point on other businesses, I am very glad that the Government are having a review, but could they hurry up? If you sit down with any manufacturing business, anywhere in the country—not the ones that are benefiting from this scheme but those that are not—it will list energy costs as its number one or number two major concern. If this review does not get on with it, some of those businesses—hopefully not too many—will not be there to benefit from whatever the review comes up with.

[Lord Sharpe of Epsom (Con)]

Before the Minister comes back in, can I add to the noble Lord’s question? Of course, it is not just the manufacturing businesses that we are interested in; we need to attract data centres, which have enormous power requirements. That is partly for sovereign security reasons, as regards how we maintain our own data and the integrity of that data. What is being done to attract those businesses here? What sort of financial mechanisms are in place? Are there any plans to expand this sort of scheme to businesses that are not yet located here but that we so urgently need?

[Lord Leong (Lab)]

I acknowledge all the points made by the noble Lords, Lord Fox and Lord Sharpe. I am aware of the increased energy costs. I congratulate the previous Government on actually setting up the supercharger scheme and building it up. Yes, we need to look at the financial scheme and everything else, but we have what we have now, and we are increasing the relief from 60% to 90% as a stopgap—if I can use that word—to help businesses now. We are going to undertake the review to look at what we need to do, as a whole—especially on the SME point mentioned by the noble Lord, Lord Fox.

The supercharger is open to SMEs as well as larger businesses, provided they produce an eligible product. Currently, of the 550 businesses eligible for the scheme, 60% of them are SMEs, so SMEs are not being disadvantaged and can access the scheme. The key criterion is that the business, regardless of its size, is in an eligible sector—one that is highly traded and electricity intensive—and meets the business test for the relevant scheme.

I turn to the point that the noble Lord, Lord Sharpe, made about net zero. As I said earlier, this is a policy decision. Our clean energy superpower mission is a long-term plan to increase our energy security and reduce electricity bills. This includes investing in clean energy and strengthening our connections to the EU energy market, capitalising on the economic opportunities of the net-zero transition.

The other point to make is that these changes support our mission to bring down bills down for good, with homegrown clean energy or clean power that we control, ensuring that industry reaps the rewards of lower energy costs. We are developing further policies to narrow the electricity price gaps for non-domestic users. We intend to consult on options to reduce electricity costs and make low-carbon heat the economically natural choice. This will give stakeholders a clear opportunity to shape the next phase of electrification policy.

The noble Lord, Lord Fox, mentioned data centres. I must admit that I am kicking myself, because I know the answer to this: we are aware that data centres use massive energy and water, and we have a plan. I will write to the noble Lord setting out what we are doing as far as data centres are concerned. He also asked about our steel strategy. I had a quick check on BBC Online and, according to the BBC, spring is in March, April and May, so we are still getting into it. I hope to share our strategy with the noble Lord then.

As I said earlier, we are building on what the previous Government have done as far as the supercharger is concerned. We are supporting energy-intensive industries by uplifting the relief, and these regulations go some way to supporting that. I commend them to the Committee.

Retail and Hospitality Sector

Lord Sharpe of Epsom Excerpts

Thursday 22nd January 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I join in the general congratulations and welcome to the four maiden speakers. I enjoyed all their speeches very much and I wish them all the very best. I also thank my noble friend Lady Monckton of Dallington Forest for bringing this debate to the House and for her most eloquent introduction. I also wish her well with her new pub venture.

The Government have been in power now for almost two years and, frankly, it has been nothing short of a disaster for our retail and hospitality sectors. I applaud the efforts of noble Lords opposite to tease out some of the illusory positives, but the facts speak for themselves. I shall start with the £40 billion tax rate in this Government’s first budget, which included the disastrous jobs tax. This measure has frozen hiring across the sector and has led to unemployment going up every single month under their watch. UKHospitality has reported that 90,000 jobs have been lost in hospitality since the jobs tax was introduced—90,000 jobs that would exist if the Government had listened to His Majesty’s Official Opposition about the costs of their policies.

The House will be pleased to know that I am going to disappoint the noble Lord, Lord Fox, and not relitigate the entire Employment Rights Act, but I say gently to the noble Baroness, Lady Jones, that there are hundreds of thousands of lower-paid workers who lack all security because they have lost their jobs. That is a consequence of the Government’s policies.

The scale of the damage extends far beyond hospitality. Overall, official figures from HMRC show that the 2024 Budget has led to more than 250,000 jobs lost, and unemployment is now reaching pre-pandemic levels. That is a catastrophic failure of economic policy that was entirely predictable and preventable.

On retail specifically, the numbers are equally alarming. According to analysis by the British Retail Consortium, the changes to national insurance rates and thresholds have added close to £2.5 billion in employment costs to retailers. In retail, they say it is now 10% more expensive to hire a full-time worker and 13% for a part-time worker. As has been observed across the House, many of us got our first start in the world of work in part-time retail work. I certainly did when I worked for Sainsbury’s while I was still at school. Think about what those numbers mean for young people seeking their first position, for students looking for part-time work and for those trying to get back into employment. The ladder of opportunity that was offered to all of us is being denied to them.

If our small businesses thought that the November 2025 Budget would offer some respite, they were sorely mistaken because instead of relief, they received yet another hammer blow. Britain’s high streets now risk being crushed by what the Federation of Small Businesses rightly called a “tax timebomb”.

I turn to the business rates that are affecting shops, cafés, pubs and hospitality across the board. Specifically on pubs, I too worked in a pub, it was one of my first jobs, and I say to my noble friend Lord Hannan of Kingsclere that I very quickly learned lessons there, including which regulars to serve and which to swerve. Analysis from UKHospitality shows that the average pub faces a 15% rise in business rates next year. That will increase to £7,000 more by 2028-2029 and £12,900 over the next three years. These are average numbers. Hotels, as has been noted by a number of speakers, are hit even harder, with bills rising by £28,900 next year and £111,300 by 2028-29, totalling £205,200 extra over the next three years. It is estimated that, without urgent action, 540 pubs will close this year.

It is inevitable that not only our pubs but our breweries are struggling. In 2025, there were around 100 fewer breweries operating in the UK than the year before, which is a stark sign of the pressures that the sector faces. The Society of Independent Brewers has warned that some independent breweries have seen their rateable values rise by as much as 300%, alongside new and rising costs that many simply cannot absorb.

During a Question yesterday, a noble Lord and union baron opposite suggested that brewers were making record profits. Where are they? This sort of attack on bosses is so 20th century, it is, frankly, embarrassing. I say again to noble Lords opposite: please look at the facts.

These pressures are being felt by heritage and rural businesses as well. Data from Historic Houses, as my noble friend Lord Harlech explained, shows that changes to business property relief and agricultural property relief are having a severe impact. Some 54% of heritage business owners say they will be unable to develop or diversify, while 41% report that they will have to make redundancies or freeze hiring altogether.

The FSB has urged Ministers to make full use of the relief available for small businesses and allow a 20 pence reduction in the multiplier used to calculate bills—rather than reducing it by just 5 pence—which would bring the discount back into line with the previous level. Following on from what the noble Lord, Lord Fox, said, I will ask the same question of the Minister: will the Government commit to do this?

No doubt the Minister will talk a little about the £4.3 billion of relief measures and tapers that were aired on Tuesday during that Question that I have already referred to. But that is the economic equivalent, surely, of giving with one hand but taking with the other, but just not quite yet. Are the Government really saying that these businesses will be in a better place to play in a couple of years’ time? If they are, they need to explain why they think that, especially after the implementation of further legislation such as the Employment Rights Act.

For weeks, we have watched the familiar post-Budget ritual unfold: a series of Treasury leaks on business rates, first relief for everyone and then relief only for pubs. As my noble friend Lady Neville-Rolfe rightly observed, one might have hoped that after the chaos ahead of the 2025 Budget, the Treasury and Chancellor would have learned that governing by leak creates uncertainty and undermines confidence. But, sadly, it appears that old habits die hard. Businesses need decisions, not briefings. They need certainty, not speculation.

In addition to all these costs, businesses across the UK face electricity prices that are among the highest in Europe and around four times higher than in the United States. These costs are undermining competitiveness, stifling investment and, ultimately, suppressing economic growth. The reason for these persistently high prices lies in the ideological approach to our energy policy, particularly the ever-growing subsidies layered across the system to support renewables, with the burden passed directly on to businesses. As an aside, it is worth noting that, in December 2025, 16% of hospitality businesses reported that energy prices were their top concern. This is very real, and these high prices are a direct consequence of government choices.

As my noble friend Lord Borwick noted, beyond economic pressures, retail crime is now a daily reality for too many small businesses. The Association of Convenience Stores reported over 57,000 incidents of violence against convenience store workers last year, forcing retailers to spend more than £250 million on security just to keep staff safe. Shop theft and violence persist because enforcement has failed and repeat offenders face too few consequences. That is why it is so disappointing that the Government rejected a Conservative amendment to the Sentencing Bill that would have ensured that repeat offenders usually go to prison rather than receive suspended sentences. Why did the Government reject this amendment? The Official Opposition, industry groups, the Federation of Small Businesses and UKHospitality have warned the Government, but they have so far refused to listen.

Our high streets are having a very hard time; some might say that they are dying. Our pubs are closing at an accelerating rate, jobs are disappearing, unemployment is rising every single month and small business owners, who took the risk to start their ventures, are being forced to scale back or shut down entirely. That is not just poor policy; it is a comprehensive assault on the very fabric of our communities and the livelihoods of millions of hard-working people. The Government must act, and they must act now.

To conclude, I will ask the Minister a few more questions. First, when will the Government publish the details of their turn on business rates, and will they ensure that pubs, retail and the wider hospitality sector all receive business rates relief? That would go some way towards answering my noble friend Lord Smith of Hindhead’s question on clubs. A recent report from Sky News suggested that the Government have warned the hospitality sector that publicly criticising government policy could affect the availability of concessions or support. Is that true? Can the Minister shed some light on this report? Representatives from the Valuation Office Agency told the Treasury Select Committee that policy teams across the Treasury and the Ministry of Housing, Communities and Local Government had access to data enabling judgments to be made about business rate multipliers and reliefs. Given this evidence, can the Government confirm that Ministers had the relevant information on the impact of business rates when these decisions were taken? If so, why has the Treasury suggested otherwise?

I remind the Minister of a couple of other questions that were asked, to which I would particularly like answers. My noble friend Lady Verma asked a very good question on how many hospitality businesses the Minister thinks will still be operating this time next year. My noble friend Lord Young of Acton asked a very important question about Section 21 of the Employment Rights Act, and I would be grateful if the Minister can give us his thoughts on that. With that, I close my remarks.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, can I make a request to the Minister? In the letter that he plans to write to us, can he explain how many consultations across the whole of government are currently being run? It is a huge number, and I would like to know what it is.

[Lord Leong (Lab)]

Is the noble Lord referring to on employment rights or does he mean across everything?

[Lord Sharpe of Epsom (Con)]

I mean everything across government.

[Lord Leong (Lab)]

I obviously do not have the figures here, but I will endeavour to find out and will write to the noble Lord accordingly.

Fair Work Agency: Small and Micro Businesses

Lord Sharpe of Epsom Excerpts

Wednesday 17th December 2025 Lords Chamber

Asked by

[Lord Sharpe of Epsom]

To ask His Majesty’s Government what assessment they have made of the potential impact of the proposed Fair Work Agency on small and micro businesses.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, this Government recognise the vital contribution that small and micro-businesses make to our economy. The Fair Work Agency will provide better support to the majority of businesses that want to do right by their staff to help them comply with the law. Assessing how best to support small businesses will be core to the Fair Work Agency. That is why we are putting business expertise at the heart of the agency through its advisory board.

[Lord Sharpe of Epsom (Con)]

My Lords, I am grateful to the Minister for his Answer, but small businesses continue to raise concerns about the Government’s one-size-fits-all approach to labour market policy. Can the Minister assure the House that in designing the structure of the Fair Work Agency, proper account will be taken of businesses with small or no HR departments?

Companies (Directors’ Report) (Payment Reporting) Regulations 2025

Lord Sharpe of Epsom Excerpts

Wednesday 15th October 2025 Grand Committee

[Lord Fox (LD)]

My Lords, I was surprised to hear the noble Lord, Lord Sikka, describe this SI as looking persuasive, as nothing he said prior to that indicated that that was how he felt. I will pick him up on one point on auditors, having been responsible for the content of dozens of annual reports at a corporate level: although the auditors may or may not have had a legal responsibility for directors’ reports and strategic reports, there is not a single directors’ report or strategic report for which I have been responsible where the auditors did not pick up and verify the points within. I am merely observing this; I do not think we need a debate on it because it is not relevant to the statutory instrument. It was just because the noble Lord brought it up.

Late payment remains a significant issue for UK businesses, as the Minister said—particularly small businesses but other businesses too. Our calculations show that, in 2024, small businesses were owed an average of £21,400 in late payments. This clearly has a significant effect on cash flow and it creates a real challenge.

Without cash flow, business viability is threatened and people are unable to invest in their businesses. Late payment undermines growth and drives some firms out of business. Some businesses use their suppliers’ balance sheets to fund their cash flow. We have seen notorious examples of this; for example, it seemed that Carillion’s entire business model was based on funding its activities through the cash flow of its supply chain. This sort of statutory instrument should be able to identify those operators effectively.

This legislation goes some way to strengthening transparency around how large companies pay suppliers. Here, I agree with the noble Lord, Lord Sikka: it is not a universal panacea but a small step, and we should be careful not to invest too much in this step. Businesses have been expected to report on a number of issues, such as their environmental performance and the number of women in particular roles, for many years, yet change at the corporate level has been very slow despite the transparency that was earned through legislation.

This SI should enable investors, auditors, shareholders and potential suppliers to get a better idea of what a company is about, as much thematically as definitively. If a company always files late numbers, that tells you something about how the business is managed; in some cases, one-off things may make that happen. As the Minister set out, though, there is more to be done. However, he did not mention the role of public procurement, which is vital to driving the right behaviours in business. I would like the Minister to talk about that and accept that the Government have a strong leadership role around public procurement and that there is still a lot of work to be done.

That said, taking into account its limited objectives, we support this statutory instrument.

[Lord Sharpe of Epsom (Con)]

My Lords, following on from the noble Lord, Lord Fox, so do we.

As the Minister rightly outlined, this instrument introduces new requirements for large companies to report annually, through their directors’ reports, on their supplier payment practices and performance. Although the content of these disclosures remains broadly in line with the existing reporting framework, the shift to include them in the directors’ report—alongside their existing publication on the government portal—is a notable development in terms of transparency and scrutiny.

We recognise the intent behind these regulations and support the objective of improving payment practices, particularly given the long-standing and well-documented impact of late payments on small businesses. At this point, I was going to take a detour into some statistics, but the noble Lord, Lord Fox, has shot my fox and quoted them already. We do have a few questions, though; they follow on from those asked by both of the previous speakers.

First, how will these new reporting obligations interact with enforcement? Transparency is important, but it must be coupled with accountability. Will the Government monitor compliance with these new requirements? Are there plans to review their impact in due course? I think I heard the Minister say that there is a plan to review these measures in due course; I would be grateful if he could confirm that.

Secondly, although the inclusion of this data in the directors’ report means that it will be seen by shareholders and auditors, does the Minister expect this alone to drive behavioural change? Beyond disclosure, what further steps are the Government considering to tackle poor payment practices where they persist?

Thirdly, we note that the instrument does not introduce changes to the underlying payment terms or practices; it merely brings reporting into a different format. Do the Government believe that there a risk that companies may comply in form but not necessarily in substance?

None the less, from these Benches, we continue to press for action to support small businesses and ensure that they are paid fairly and on time. On that, we share the ambitions of the noble Lords, Lord Fox and Lord Sikka. The problem of late payment is persistent, and while the measure may support transparency, it must not become a substitute for enforcement or cultural change. On that basis, we do not oppose these regulations. We urge the Government to treat them as part of a broader, ongoing effort to improve business practices and protect small suppliers.

[Lord Leong (Lab)]

My Lords, I am really conscious of what is happening in the Chamber, so I will try to be as comprehensive as possible and brief at the same time. I am really grateful to noble Lords across the Committee for their contribution. It is evident that we all agree that tackling late payments is crucial for driving the economy forward and I thank all those who have spoken in this debate. I will try and answer as many of the questions as possible, especially those from my noble friend Lord Sikka. If I have not answered all his questions, I will go through Hansard and write to him.

My noble friend Lord Sikka asked why there are so many places where businesses have to report on their payment method. This gives businesses two places where they can look for the same information. It should not increase costs, and it basically gives flexibility and the choice for businesses as to where they look for this information. I would say it is good that there is not only one place but various places that they can look for such information.

The noble Lord asked who enforces company law. I am sure that he will know that Companies House is also an enforcement agency, and we have invested a fair bit to ensure that it is able to enforce company law accordingly.

The point about directors’ reports not being audited is not correct. Auditors do audit directors’ reports under the Companies Act 2006. They must say whether information in the directors’ report is consistent with the annual accounts and must highlight any material misstatements or inconsistency.

The noble Lord also pressed on the Reporting on Payment Practices and Performance Regulations 2017, which also applies to LLPs. This requires large business in the UK to publish information biannually about their payment practices and performance to the GOV.UK portal. Initially introduced in 2017, these regulations were amended in 2024 and 2025 following a 2023 consultation. The current regulations do not apply to LLPs because LLPs do not publish a directors’ report.

The noble Lord, Lord Sharpe, asked about enforcement. The Financial Reporting Council has a responsibility to review the annual reports and accounts of large companies for compliance with accounting standards under the Companies Act 2006. Where potential non-compliance is identified or suspected, the FRC can write to the company for further clarification and will aim for voluntary amendment of the disclosure in subsequent periods. Where this is not possible, Section 456 of the Companies Act 2006 gives the FRC the power to apply to the court for a declaration that the directors’ report does not comply with the Act. In such circumstances, the court can order that the preparation and distribution of revised accounts be carried out at the directors’ personal expense.

The data produced by this report is analysed by the Department for Business and Trade and used to evaluate whether payment practices are improving. We can use this information to determine how beneficial the relations have been and where we can do more to help improve payment times. This regulation will be subject to statutory review on or before 6 April 2029.

Further, the Reporting on Payment Practices and Performance Regulations 2017 requires that large companies report their payment performance twice a year.

Jaguar Land Rover Cyberattack

Lord Sharpe of Epsom Excerpts

Tuesday 14th October 2025 Lords Chamber

[Lord Leong (Lab)]

My Lords, may I echo the words of the noble Lord about the late Lord Campbell? On behalf of the Government and this side of the House, I thank the late Lord Campbell for his public service to this country. He will be sorely missed in this House.

The National Cyber Security Centre has been working very closely with Jaguar Land Rover to provide support in relation to the incident. The NCSC response to the JLR incident is ongoing, but it is set to reduce as mediation takes place. Throughout the event, the NCSC has been capturing feedback to inform national and internal incident management practices. The NCSC will participate in a cross-government “lessons identified” process to review how best to improve the Government’s response, share information across partners and react to some of the unique pressures, such as those that the noble Lord mentioned. The NCSC would be happy to share aspects, depending on classification, of this process with noble Lords and other Ministers once it has been conducted.

[Lord Sharpe of Epsom (Con)]

My Lords, according to the National Cyber Security Centre’s latest report—and following on from the noble Lord, Lord Fox—in the year to September, there were 18 highly significant attacks, meaning attacks with the potential to have a serious impact on essential services. Given the increasing frequency of these attacks, can the Minister reassure the House that the Government’s plans for a centralised national digital ID database would not create a single point of potential failure, one breach away from exposing the entire British public to foreign espionage, hostile state interference or domestic data misuse?

[Lord Leong (Lab)]

I thank the noble Lord for that point. As far as private enterprise is concerned, the Government will not interfere in what private business organisations do. However, government can produce the tools and the guidance so that companies can have a more robust and resilient approach to cyberattacks. For example, the Cyber Governance Code of Practice shows a board of directors how effectively to manage the digital risks to the organisation. As I said earlier, all companies, if they have not done so, should conduct a comprehensive risk assessment of their digital and cybersecurity framework. They should apply for Cyber Essentials certification or the various other forms of certification and ensure that they have appropriate cyber insurance.