Steel Industry

Baroness Jones of Whitchurch Excerpts

2nd reading
Saturday 12th April 2025 Lords Chamber

Moved by

[Baroness Jones of Whitchurch]

To move that this House takes note of His Majesty’s Government’s legislative proposals to ensure the continued operation of the steel industry in the light of the Steel Industry (Special Measures) Bill.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, the House has reconvened under exceptional circumstances, which merit an exceptional response from the Government. Our request to recall Parliament was not made lightly, and I am grateful to noble Lords on all sides of the House for being here today as the Government seek to pass this emergency legislation.

This legislation allows the Government to take control of British Steel’s blast furnaces, maintaining steel production and, by extension, protecting the company’s 3,500-strong workforce. I reassure noble Lords that, given the exceptional nature of a recall, the Government thought it better to limit the powers in the Bill—which are still significant—rather than introduce more complex matters of property rights and public ownership at the same time. This is not about nationalisation. We are keeping all options under review, and we will of course return to Parliament for further scrutiny should the need arise.

As noble Lords will know, since taking office, the Government have been negotiating in good faith with British Steel’s owners, Jingye. We have sought to prevent the early closure of the two blast furnaces at the company’s Scunthorpe site, which Jingye has claimed are no longer financially viable. We have worked tirelessly to find a way forward, making a generous offer of support to British Steel with sensible, common-sense conditions to protect the workforce and UK taxpayers, and to create a commercially viable company for the future. Jingye’s refusal to accept the deal on the table, and to accelerate the closure of the blast furnaces at Scunthorpe, has left us no other choice: we must now take control of the company’s blast furnaces.

Let there be no doubt: this Government will never hesitate to take action to protect this nation’s assets. We will not abandon the hard-working steel-making communities that have given so much to both our economy and country. Where vital industries are on the verge of collapse or where communities face devastation, we will always act in the national interest.

We do not accept the argument that steel-making has no future in the UK. As the Prime Minister asserted yesterday, our plan for change means that domestic demand for steel is set only to go up, not down. In the last few weeks alone, we have seen Heathrow Airport announce multi-billion-pound expansion plans requiring 400,000 tonnes of new steel. We have seen Universal Studios confirm that it will build Europe’s biggest theme park, and, where possible, it will use UK-made steel to make it. We need British steel for this and our critical infrastructure projects, from rail to renewable energy. We need it to keep Britain secure at home and strong abroad.

The legislation we are setting out today will also help end the uncertainty that has been hanging over British Steel’s Scunthorpe site for far too long. We know that rebuilding our steel industry brings its fair share of challenges, but we believe that they are worth facing and that we are more than prepared to overcome them. It is why we agreed a new deal with better protections for workers at Port Talbot within weeks of taking office, which will transform production and deliver a modern electric arc furnace. It is why we have delivered measures as part of the British industry supercharger to cut electricity costs for steel firms and bring prices more in line with international competitors.

It is why we have simplified public procurement, aligning it with our industrial strategy, which is putting UK firms, including those in the steel industry, in the best possible position to bid for and win public contracts. It is why we launched a consultation on our steel strategy as part of an effort to work with industry on overcoming difficult issues, such as high electricity costs and unfair trading practices, so that we can protect the UK’s industrial heartlands.

It is why we have taken the decision today to safeguard British Steel. Britain is a steel-making country. Steel-making has been fundamental to Britain’s industrial strength, security and identity as a global power. Today’s legislation will help ensure that we can retain that steel-making capability here in the UK, both now and for many years to come, and I urge the House to support it. I beg to move.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords not just for participating in this debate but for returning to this place in these exceptional circumstances. Before I respond to the comments that have been made, I reiterate the points made by the Prime Minister yesterday and by the Business Secretary in the other place today: the Government have always said from the outset of their negotiations with Jingye that we would keep every option on the table and act in the national interest to protect British jobs.

UK-forged steel built our railways, bridges and buildings. It is an integral part of our economic future, as it has been in our industrial past. That is why we need to pass this legislation today. I am therefore grateful to my noble friends Lord Reid, Lord Tunnicliffe, Lord West, Lady Drake, Lord Glasman and Lord Hanworth, and to my noble and learned friend Lord Falconer for reminding us how fundamental steel is to our infrastructure and our future economic growth plans. I also thank the noble Baroness, Lady Redfern, and my noble friend Lady Ramsey, who reminded us of the human cost of the potential closure of the Scunthorpe site. We reiterate our commitment to protecting jobs and communities impacted by that potential closure.

The noble Lords, Lord Hunt and Lord Moylan, complained about the urgency with which we have had to rush this legislation through. I think they do not appreciate the urgency of the situation we find ourselves in. Those blast furnaces were in danger of failing within days. That is why we are here today and why this action was so necessary. Like the noble Lord, Lord Fox, I am not inclined to take lessons from the party opposite, given their record over the previous 14 years. In her year and a half as the Business and Trade Secretary, Kemi Badenoch met UK steel companies on just three occasions. On the party opposite’s watch, UK steel production plummeted by 4 million metric tonnes between 2010 and 2023—an eye-watering fall of 42% in manufacturing. The UK went from the 17th largest steel producer in the world to the 26th largest over that period. The economic output of UK steel halved to £2.3 billion in that time. The noble Lord, Lord Hunt, heralded the use of coal and the opportunities that it would provide. I must remind him that it was his party that closed the coal mines and made us reliant on imported coal in the first place.

The noble Lord, Lord Moylan, asked if we would apologise. The Government will not apologise for acting in the national interest. As my right honourable friend said in the other place, this issue should have been resolved years ago. The situation we inherited across the board on assuming office is one in which most of our foundation industries found themselves in difficulty. Since 2010, UK crude steel production has almost halved. We know that rebuilding our steel industry after years of neglect will be a challenge, but it is one that this Government have grasped and it is why today, where others have shied, we have stepped up to take action.

I move on to some of the points that have been made. The noble Baroness, Lady Brinton, asked about the legal advice from the Attorney-General. It is the Government’s policy not to discuss advice provided to the Government.

The noble Baroness, Lady Coffey, asked about Teesside. Ultimately, British Steel has been responsible for commercial decisions regarding its location strategy. The Government were right to prioritise protecting as many jobs as possible during those negotiations, but it is not right to force job losses in Scunthorpe to benefit Teesside. However, of course we want to do the best we can by Teesside communities, so the Government are continuing to work with the Tees Valley Combined Authority and local partners on regional investment and growth opportunities.

The noble Lord, Lord Fox, asked about international law and our obligations. I can assure him that everything we do is in compliance with our international law obligations under the WTO, the GATT framework and international law more generally. I reassure him that we are entirely satisfied that these short-term powers are within the terms of our international law obligations.

The noble Lord, Lord Kerr, the noble Baroness, Lady Brinton, and others asked whether compensation would be paid. We need compensation provision within the Bill to preserve the investment climate and to comply with international standards, but the chances of compensation being recovered are slim because the powers are there to protect the company’s assets, not to damage them. Compensation would also have to be done via an SI, which would be subject to parliamentary scrutiny through the negative resolution.

The noble Baroness, Lady Brinton, also asked whether the Bill’s powers were overreaching for the Secretary of State. The powers are linked to what a relevant person could have done. Basically, they are to do anything that management is empowered to do, so they are there within those confines.

The noble Lord, Lord Hunt, the noble Baronesses, Lady Brinton and Lady Laing, and other noble Lords asked about the sunset clause. Because of the speed at which the legislation has been drafted and the uncertainty of the situation, it was neither necessary nor appropriate to set a timeline for these specific interventions. The current international situation is unpredictable, so a fixed sunset clause would not be workable or acceptable, as we might have to come back to Parliament and do it all again. We can, of course, revoke directions at any time in relation to a particular steel company once the need for intervention has passed. We would welcome working with the Business and Trade Select Committee to make sure we work with Members and keep them updated so that these powers are not in place any longer than is absolutely necessary. We understand the concern of the House about the use of these powers, and it is right that Parliament closely monitors this. We will be updating the House every four weeks on the use of these powers.

[Lord Fox (LD)]

My Lords, I thank the Minister for those words. What this House seeks, rather than an update, is the opportunity to invoke these powers in a way that they appear to be intended. They have been called emergency powers, and the Minister has called them short-term powers. Will the Government, within six months of this Bill coming into force, commit to having a substantive debate, in both Houses, to determine whether the Act will continue and to acting on any resolution of the House of Commons on the further continuation of those powers?

[Baroness Jones of Whitchurch (Lab)]

My Lords, I have been here on a number of occasions answering questions on the situation with steel. In the future, we will continue to engage as widely as we have done to make sure that Parliament is updated on these matters. As I have said, we will update the House every four sitting weeks on the use of these powers. I honestly think that, in these circumstances, that is sufficient.

[The Earl of Kinnoull (CB)]

The Business and Trade Select Committee, which the Minister just spoke of, is a House of Commons committee. Within our own House, we have the Industry and Regulators Committee. Are the Government proposing that they would offer the same service, as it were, to our committee as well?

[Baroness Jones of Whitchurch (Lab)]

I thank the noble Earl for raising that question. I am sure that we would be happy to consult with the relevant committees within your Lordships’ House as well.

A number of noble Lords, including the noble Lord, Lord Hunt, asked about the cost of providing these safeguards. We are directing British Steel to act in a way that safeguards its assets, and this funding should be provided by the company. If the Government need to spend money, we will look to recover that from the company if we can and where reasonable. We have committed up to £2.5 billion for steel, via the National Wealth Fund and other routes, and no further government borrowing is envisaged to support any intervention. The alternative would be importing steel at considerable extra cost to our economy. As noble Lords have pointed out, we would then be the only country in the G20 without domestic steel production. There is a cost either way, and we must balance those costs when we make decisions going forward.

The noble Lord, Lord Sikka, asked what was happening in Port Talbot and whether we are nationalising British Steel in response to this situation. As I made clear in my opening comments, we are not nationalising anything. We have put forward a Bill to ensure the continued safe operation of the blast furnaces. Without swift intervention, there was a risk of accelerated closure, jeopardising the safety and production outcomes of British Steel.

Tata Steel decided to close the blast furnaces at Port Talbot in January 2024 under the previous Government, and the decision to provide a grant agreement towards Port Talbot’s transition project was made by the previous Government. This transition was already well under way by the time we came into office. This is the point that the noble Lord, Lord Davies, made. However, I say to the House that we negotiated an improved deal with Tata, after just 10 weeks in office, with better terms for workers, future investment opportunities for the area and the highest voluntary redundancy package Tata has ever offered. Since then, we have provided more than £50 million directly to the local community, from the £80 million available from the UK Government to help people learn new skills, to support the supply chain and to protect people’s mental health.

The noble Lord, Lord Kerr, the noble Baroness, Lady Jones, and others asked about the endgame for British Steel. Our long-term aspiration for British Steel remains a co-investment agreement with a private sector partner to secure a long-term transformation. We are determined to see a bright and profitable future for steel-making in this country.

A number of noble Lords asked about energy prices and the cost of energy. The Government are committed to tackling high industrial prices in the UK. The British industry supercharger package of measures for energy-intensive industries came into force in April 2024 and brings energy costs for strategically important UK industries, including steel, closer in line with other major economies around the world, so that they remain competitive on the world stage. Once fully implemented in April 2025, the measures will save eligible businesses on average £24 to £31 per megawatt hour on their electricity costs. The total value of reduced electricity prices is estimated to be between £320 million and £410 million in 2025 and around £5.1 billion over 10 years. This will help keep business energy costs down.

To reiterate the point about future scrutiny of the implementation of the Bill, as the Secretary of State said in the other place, we are happy to engage with relevant committees, and I am happy to keep the House updated on these matters. We will continue to update the House every four sitting weeks on the use of these powers.

[Lord Hunt of Wirral (Con)]

Can I just say to the Minister how grateful we are that she understands the House’s concern about the use of these powers? As I understand it, she has told the House that she will return every four weeks to update the House on the use of the powers. However, she was intervened on by the noble Lord, Lord Fox, to suggest that she might go a little further than that and have a clear debate after six months. I still think that this whole question of a sunset clause is very relevant indeed. Can the Minister expand on what she said earlier—that she believes that a fixed sunset clause would not be workable or acceptable? Why not? It is generally accepted in this House that powers of this nature should have a sunset clause. Can she perhaps expand on that and give a little more detail before we consider whether to table such an amendment?

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thought I had answered that point. The Bill, as it stands here, is to deal with one emergency. As we know, it is a volatile sector and we might need to use those powers at other times. We will use them judiciously and with care, and, as I keep saying, we will continue to update the House as to the use of those powers. We do not feel that a sunset clause is necessary or desirable in this Bill. To clarify, my general comment to the noble Lord was that we would continue to engage with the Lords committees to make sure that they are fully updated with progress going forward.

In concluding this debate, I convey my thanks to all noble Lords for their thoughtful contributions and for helping us to pass this legislation so that we can retain steel-making capacity in the UK—for British workers’ security, for British industry’s future and for the future of British Steel workers and their families. That is our priority and that is how we intend to go forward.

[Baroness Brinton (LD)]

The Minister did not respond to my specific question about ensuring that the amount of any compensation paid under the terms of the Bill would be absolutely clear and stated to the public and to Parliament.

[Baroness Jones of Whitchurch (Lab)]

The noble Baroness makes a reasonable point. I am sure that we can accommodate that and make sure that that information is available.

[Lord Davies of Gower (Con)]

Can I just point out to the Minister that I asked a number a questions that she has not answered? Will she look at the record and write to me?

[Baroness Jones of Whitchurch (Lab)]

I apologise to the noble Lord—he was speaking more quickly than I can write. I will endeavour to respond to the points that I have not been able to respond to so far.

[Baroness Jones of Moulsecoomb (GP)]

Before the Minister sits down again, I made a specific point about whether nationalisation was one of the options on the table under review.

[Baroness Jones of Whitchurch (Lab)]

I make it clear that nothing is off the table. All options will be considered. I have also made it clear that this Bill is not about nationalising steel. If we need to take any further steps, we will obviously have to come back to the House with further proposals.

[Baroness Butler-Sloss (CB)]

What opportunity will this House have to reflect on the Bill?

[Baroness Jones of Whitchurch (Lab)]

Obviously, we have had a full debate today. As I said, we will come back regularly to report on progress to the House, including to the relevant committees of the House, so there will be plenty of opportunities to measure the implementation of the Bill as we go forward.

Motion agreed.