Steel Industry (Special Measures) Bill

David Davis Excerpts

2nd reading
Saturday 12th April 2025 Commons Chamber

[The Secretary of State for Business and Trade (Jonathan Reynolds)]

I beg to move, That the Bill be now read a Second time.

We meet in exceptional circumstances to take exceptional action in what are exceptional times. Our request to recall Parliament was not one we made lightly. I am genuinely grateful to hon. Members in all parts of the House for their co-operation, and for being here today as we seek to pass emergency legislation that is unequivocally in our national interest. I thank in particular the staff in Parliament for facilitating today’s sitting, and the Prime Minister, the Chancellor and the Home Secretary for their support. Indeed, we can take this action today only because of the restoration of economic stability and the dedicated resources for steel in the last Budget. I acknowledge my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin), the hon. Member for Brigg and Immingham (Martin Vickers) and all my hon. Friends from Teesside for their advocacy and engagement on this matter, throughout, on behalf of their constituents.

As hon, Members will know, since taking office, the Government have been negotiating in good faith with British Steel’s owner, Jingye. We have worked tirelessly to find a way forward, making a generous offer of support to British Steel that included sensible, common-sense conditions to protect the workforce, protect taxpayers’ money, and create a commercially viable company for the future. Despite our offer to Jingye being substantial, it wanted much more—an excessive amount, frankly. However, we remained committed to negotiation, but over the past few days, it has become clear that the intention of Jingye was to refuse to purchase sufficient raw materials to keep the blast furnaces running. In fact, its intention was to cancel and refuse to pay for existing orders. The company would therefore have irrevocably and unilaterally closed down primary steelmaking at British Steel.

I want to make it absolutely clear that, separately from any conversation about a possible deal to co-invest in new infrastructure, the British Government offered to purchase the raw materials in a way that would have ensured no losses whatsoever for Jingye in maintaining the blast furnaces for a period of time. A counter-offer was instead made by Jingye: that we transfer hundreds of millions of pounds to it, without any conditions to prevent that money, and potentially other assets, being immediately transferred to China. Jingye also refused the condition of keeping the blast furnaces maintained and in good working order.

Even if I had agreed to those terms, I could not guarantee that further requests for money would not then be made. In that situation, with the clock being run down, doing nothing was not an option. We could not, will not and never will stand idly by while the heat seeps from the UK’s remaining blast furnaces, without any planning, due process or respect for the consequences. That is why I needed colleagues here today.

[David Davis (Goole and Pocklington) (Con)]

From what the Secretary of State has described, it is beginning to sound as though Jingye is trying to manoeuvre the Government into a recompensed nationalisation. Will he make it plain that if it tries to manoeuvre us into nationalisation, we will pay not more than a penny for the business?

[Jonathan Reynolds]

To be clear, where there is a transfer of ownership to the state, we would always pay the fair market value for the assets. In this case, the market value is effectively zero, so I take the right hon. Gentleman’s point entirely. I would say that the intention of Jingye has not been to engineer that situation; its intention has been to keep the downstream mills, which colleagues will know are fundamental to our construction and steel industries, and supply them from China, rather than from Scunthorpe; that is the situation.

--- Later in debate ---

[David Davis (Goole and Pocklington) (Con)]

You will not need reminding, Mr Deputy Speaker, but I will remind the House of quite how unusual a day this is, for a variety of reasons. The last time we met on a Saturday was at a time of war, and the last time we put a Bill through in one day was at the beginning of the pandemic. That is how serious the disastrous circumstances in which we find ourselves are. I assume that this House will accept the Bill, so I will address my comments directly to the Secretary of State.

At one level, this is a “nationalisation in all but name” Bill, because of the powers it gives the Government. Indeed, it actually gives them more powers than a nationalisation Bill would. It will allow the Government to do things that they could not do under a nationalisation Bill. Frankly, I would have voted for one. I am not a fan of nationalisation, as the Secretary of State will know, but I would have voted for nationalisation. I will vote for this Bill, for a simple reason: it buys us time. People have to understand that this is a reprieve, not a rescue.

I do not agree with the hon. Member for Boston and Skegness (Richard Tice) on his strategic nationalisation argument. Nationalisation under these circumstances buys the Secretary of State time and leverage, and he needs to be able to use his judgment on how to use that time and leverage. We have had just a hint of a view of how complex a game Jingye is playing. In fact, if I were to recommend any amendment to the Bill, it would be an amendment to limit to one penny the amount of money that the Government could pay to Jingye, because then no court could challenge that amount, and Jingye would know full well that it was not in line to make money out of the British taxpayer. We have to look at this in strategic and tactical terms.

[Daisy Cooper]

Will the right hon. Member give way on that point?

[David Davis]

If the hon. Lady will forgive me, I will not, because lots of people want to speak. I will refer to something she said in a minute, so if she really needs to intervene, I will let her come in then. We are trying to manage a disaster—a disaster for Scunthorpe, which is local to me, as members of my community work at Scunthorpe. The knock-on economic effects will be felt much more widely than in one town; this will affect thousands and thousands of people all round.

This is also a disaster for our last primary steelmaker, and steelmaking has suddenly become more important. It was always an important part of national strategy, but Mr Trump has made it a vital, unavoidable piece of national strategy. We have to create a circumstance that allows the Secretary of State and the Government to manoeuvre us through that. As Members have said, that means having an energy policy that makes the plant viable—not just viable when it is owned by the state, but commercially viable. It means having an energy policy under which we do not have the highest energy costs of our competitors, which we do now. It also means that we have to think very hard about carbon supply. At the moment, the technology does not exist that allows us to make primary steel without carbon supply, so we have to think about that. Primary steel is a strategic supply, so we cannot rely on another country for it.

I want to see this Bill used in a way that gives the Secretary of State the time to deliver those things, but it must also give this House the right to see what he is doing and how the strategies are turning out. Nobody has got this right. If those on the Government Benches want me to, I can go back to 1997 and park blame, but I do not want to do that today. I want to make this viable. We have to get our energy, environmental and industrial policies all in line to make this work.

To put this in context, last year British Steel lost about £408 million—that was the September number. This year it is about £250 million. Neither of those are small amounts of money. The Treasury would shut down an operation if we just left something like that running inside the Government for very long. We need a new strategy that cuts our carbon emissions without exporting our industry to the rest of the world. I am afraid that most of our successes in carbon reduction over the last decade or two—or three—have been by dint of exporting industries to other countries, often with much worse records than us. In this case it would be China. China has 50% of the world market already. It has massive excess in steel capacity, and its steel capacity is the most carbon inefficient there is, so we would actually be worsening the circumstances.

[Liam Byrne]

The Business and Trade Committee has taken clear evidence that we need a carbon border adjustment mechanism, so that carbon-rich steel, such as that from China, is taxed much more heavily. Crucially, what is needed on the table are the steel safeguards from the Trade Remedies Authority to guard our markets from a flood tide of Chinese steel right now.

[David Davis]

I am afraid the right hon. Member is right. The difficulty is that we are in a new world. The terrible thing is—the House will only ever hear me say this once—that Trump has a small point in some respects, and we have to deal with the world as it is.

Moving on to the sunset clause, I can imagine that the instinct is not to put a sunset clause in the Bill, because we are dealing with a difficult negotiator, and putting in a sunset clause would be putting in a backstop. When we put a backstop on ourselves, we give the other side a negotiating advantage. In his speech, the Secretary of State mentioned that the Civil Contingencies Act 2004 would be a route. For those who have not read that legislation, we spent a year putting it in place under the Blair Government, and it has recourse to Parliament at every turn: Ministers are properly controlled, it must be transparent, and so on. I suggest to him that at some point he might organise a transition to that, so that the House has greater control. The Coronavirus Act 2020 did not have that—it missed all those defences—and look what happened to the policy as a result.

This is what I would like to see: recourse to Parliament over the actions the Secretary of State takes to manage the survival of Scunthorpe and the policies to ensure its viability and, in the post-Putin and Trump era, the security of supply. We want to see all those things, and we can organise legislation to permit them. I ask the Secretary of State to take the House into his confidence and do this properly.