Steel Industry (Nationalisation) Bill

Lord Sikka Excerpts

2nd reading
Tuesday 16th June 2026 Lords Chamber

[Lord Sikka (Lab)]

My Lords, this enabling Bill paves the way for a possible nationalisation of steel companies, with a particular emphasis on British Steel, currently owned by the China-based Jingye Group. This nationalisation may or may not happen—we have to wait and see. The Bill allows the Government to transfer the shares or property of a steel company into public ownership, where doing so is in the public interest. The concept of public interest is inevitably highly contested, and competing meanings can be advanced. It would be helpful to have the Minister’s explanation of the detailed conditions that would actually satisfy the public interest test; that might enable us to discuss public ownership of other industries as well.

The Minister’s explanation would help to dissolve uncertainty for workers, suppliers and local communities. Prolonged delay of nationalisation would increase the cost to the public purse as, since April 2025, the Government have already been incurring significant costs to keep the Scunthorpe plant going. I support the public ownership of steel, as it is a crucial input for so many industries. The Scunthorpe plant is the last UK plant producing virgin steel, which is essential for the construction of buildings, railways and critical hardware such as submarine hulls and aircraft landing gear. The loss of the plant would leave the UK as the only G7 country without the capacity to produce virgin steel. A large number of direct and indirect jobs depend on the plant. Nationalisation and expansion of the steel industry would help to expand our industrial base.

The Bill raises lots of questions about the Government’s strategy. It would rescue England-based British Steel but allow the Port Talbot blast furnaces in Wales to be extinguished. People in Scotland have still not forgotten the Government’s failure to rescue the Grangemouth refinery. Can the Minister answer the charge of being England-centric? Can he assure the House that once the Scunthorpe plant is nationalised, it would not be re-privatised by a Labour Government?

The Bill also throws up other inconsistencies in the Government’s policies. Nationalisation of steel and rail passenger services is apparently in the public interest, but the same is rejected for water, even though water companies exploit people, dump raw sewage in rivers and are destroying human lives, marine life and biodiversity. Some 120,000 people a year are dying in fuel poverty, but there is no attempt to nationalise energy. Is it that the Government are prioritising corporate interests over the lives of the people?

Part 2 of the Bill establishes a framework for possible compensation for nationalisation. I assume that this would eventually require another Bill. Can the Minister clarify the position? As British Steel is financially insolvent—it is finding it very difficult to survive and its assets probably have no alternative use value—the chances are that any compensation offered for it would need to be fairly low. Any framework for compensation must recoup the £500 million or so spent by the Government to keep the Scunthorpe plant going. The real value of all subsidies and grants must be recovered.

The Jingye site in Scunthorpe is the second-largest single-site source of carbon emissions in the UK. It accounts for approximately 2.2% of the UK’s total carbon footprint. Surely the Government will insist that Jingye makes good the environmental damage before it exits the steel industry. If not, it would be helpful to know why the Government would not insist on that.

As expected, the Opposition Benches have focused on the possible cost of nationalisation and its impact on the national debt. That is really a one-sided argument because through nationalisation, Governments also acquire the assets of the enterprise in question, enhance economic resilience and improve supply-chain security. The tendency of the ONS is to show the net liabilities of publicly owned entities and ignore the assets. It does that for Network Rail, where its liabilities are shown in the national debt but its assets are completely ignored. That practice needs to change. If changed, the ONS calculation must net off a nationalised British Steel’s liability against its assets, which would result in a very small change to any national debt calculation. Can the Minister clarify the position and indicate whether how we measure the national debt would be changed?

The high cost of energy is a major obstacle, as many noble Lords have already indicated. It puts steel- making and other industries at a competitive disadvantage. The high cost is an issue all across households as well. We know that, in April, the Government extended what they called the British industrial competitiveness scheme, which reduces energy bills by about 25% for 10,000 companies deemed to be heavy users of energy. That scheme kicks off in April 2027, although discounts would be backdated to 2026. The scheme is funded by the public purse and is therefore likely to be temporary. In any case, it does not help small businesses, farmers and others who are totally excluded from it.

A bright future for steel-making and British industry requires a permanent reform of energy costs. That would require decoupling the price of gas-produced electricity from the rest, moving all levies to general taxation, and cuts in the profit margins of energy companies. This in turn would require scrutiny of the way that Ofgem calculates the weighted average cost of capital and all the assumptions that are used to generate those numbers. Noble Lords earlier mentioned many countries which have a competitive advantage in energy production, such as France, Norway, Sweden, Denmark, Germany, India and China. What they did not mention was that in these countries, a significant part of energy production is state-owned so, freed from the need to generate profits, they are able to simply break even, taking one year with another. That therefore offers their industries a competitive advantage and lower rates of inflation.

Public ownership of energy must not be a taboo for the UK. It could give the Government more economic policy options and help to address the competitiveness of our industries. I look forward to hearing the Minister’s reply.