Steel Industry (Special Measures) Bill

Jonathan Reynolds 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.

[Graham Stuart (Beverley and Holderness) (Con)]

Is it now the view of the Government that primary steel production in the United Kingdom is an overriding national security issue?

[Jonathan Reynolds]

As the right hon. Gentleman will know—we have had this exchange at the Dispatch Box before—I believe that the capacity for primary steel production is important. The steel strategy looks at new ways of ensuring that, and at not just protecting the past, but at what the future may bring. Direct reduced iron technology is of significant potential interest to us for the future. However, this situation—involving the last remaining blast furnaces, and the proposition put to us—is exceptional and unique, and I need all colleagues to recognise that.

The legislation ahead of us today is therefore a proportionate and necessary step. It allows us to take control of British Steel’s blast furnaces, maintaining steel production and, by extension, protecting the company’s 3,500-strong workforce. The Bill does not transfer ownership to the Government. We will have to deal with that matter at a later date. I took the decision that given the exceptional nature of a recall, it would be 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 this time.

[Sir Jeremy Wright (Kenilworth and Southam) (Con)]

The Secretary of State is taking extremely extensive powers for the Government, and they apply to what he describes in the Bill as “specified assets”. As far as I can see, they are not limited to blast furnaces or assets required for making virgin steel. Does he accept that he is leaving two hands on the tiller, when it comes to the operation of all the steelmaking companies to which the Bill may apply? In other words, he is saying that the Government can direct a company in relation to specified assets, but that company can do other things of its own initiative. Does he recognise that he is creating considerable legal complexity in the operation of those companies going forward? Why is that the right approach?

[Jonathan Reynolds]

I am extremely grateful to the right hon. and learned Gentleman for his thoughtful question. The fundamental purpose of the Bill is to allow me, as Secretary of State, and this Government to take control of this situation. The reason why this is the Steel Industry (Special Measures) Bill, and not a Bill specific to British Steel, is, as he will know, that the latter would be a hybrid Bill, and introducing that would be a far more complex procedure. With the clock being run down, that was not an available option.

The Bill broadly replicates the situation that would apply if the Civil Contingencies Act 2004 had been triggered, but rather than seeking to meet the threshold to trigger that Act, I am seeking parliamentary permission—the consent of this House and the other place—to take control, which I think is a better way forward. I want to make it clear to the right hon. and learned Gentleman and to the House that I want this to be a temporary position—I do not want these powers a minute longer than is necessary—but I need the powers to rectify and save the situation.

[Richard Tice (Boston and Skegness) (Reform)]

Given that the Secretary of State has inferred that the owner, Jingye, is not and has not acted in good faith, surely the right thing to do is to seize this great opportunity now, this weekend, and nationalise British Steel?

[Jonathan Reynolds]

A transfer of ownership to the state remains on the table. It may well, at this stage, given the behaviour of the company, be the likely option. However, our aspirations for British Steel remain a co-investment agreement with a private sector partner to secure a long-term transformation. The action I seek to take today is not a magic wand or a panacea. The state cannot fund the long-term transformation of British Steel, nor would it want to, but a failure to act today would prevent any more desirable outcome from even being considered, and that, again, is why we must act today.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I applaud my right hon. Friend for his decisive action in this matter. I have only had a chance to read the Bill for 10 minutes—[Interruption.] That is not a criticism; it is the natural procedure of this House. The Bill could not be laid until First Reading. The Bill talks about compensation. He has made the point that he is not planning to take over and run British Steel, which is not the desirable option, but has he done some sort of impact assessment on the potential range of costs to the taxpayer in these circumstances?

[Jonathan Reynolds]

I think my hon. Friend refers to clause 7, which deals with compensation. Again, let me be clear: this is a clause that we would put in any Bill. We are not Russia, and we do not sequester assets. The language in the clause—the legal definition—is something that we would use in most standard procedures. Going back to the question from the right hon. Member for Goole and Pocklington (David Davis), the effective market value of Jingye is zero, so there is no inconsistency between those two points.

[Samantha Niblett (South Derbyshire) (Lab)]

What is happening today is something that mining communities like Swadlincote, in my constituency of South Derbyshire, will be feeling deeply in their souls. It is something that they could have only dreamed of back in the 1980s, when they wanted a Government who had their backs and prioritised the national interest. Instead, they had a Conservative Government who sold them down the river. Does the Secretary of State agree that this is a pivotal moment in our history, because we have a Labour Government prioritising our people and the national interest?

[Jonathan Reynolds]

This is a significant moment. How a country handles economic transitions is not about nostalgia for the past—we have to embrace the future—but how we help our people, our industry and our nation get to that point is key. My hon. Friend and I come from similar places, and we have not managed these transitions particularly well in the past. We are meeting this weekend to discuss the potential loss of thousands of jobs, which is what was on the line. The fact that we do not accept that, and that we will do things differently, is a welcome change.

[Ed Davey (Kingston and Surbiton) (LD)]

We will scrutinise this Bill today, but we want to do so in a constructive fashion. Given the huge damage that President Trump’s tariffs have done to the British steel industry, accelerating this crisis, does the Secretary of State agree that any Member of this House who actively campaigned for President Trump’s election and cheered him on has behaved shamefully unpatriotically and should apologise to British steelworkers?

[Jonathan Reynolds]

I am extremely grateful to the right hon. Member and his party for their presence today. He will not draw me on the other principal issue that we have been dealing with at the Department for Business and Trade over the last few days, but to be clear, the issues around British Steel are about more than the imposition of tariffs. The tariffs are not welcome, and I do not think there is justification for them to be put in place. I believe that it is in our interests, but also in the US’s interests, to agree a position that removes those tariffs in the interests of steelworkers.

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I fully understand the nature of what the right hon. Gentleman is bringing forward. I also understand some of the requirements for speed in this case, and we can argue about whether this should have been done before. Having quickly looked through the Bill, I do not see a sunset clause. I ask about that not because I want the Government to set a particular date, but because such a clause would bring them back here to debate whether the process should be extended. It would therefore put a reasonable limit on Government activity without debate. Can he explain why there is no sunset clause in the Bill?

--- Later in debate ---

[Jonathan Reynolds]

I absolutely understand and welcome the right hon. Gentleman’s question. I do not want these powers for a minute more than is necessary. I cannot say at the minute, having drafted the Bill, the timeframe for which they will be required, but I will endeavour—and I commit at the Dispatch Box—to keep the House updated. Perhaps I will ask the Business and Trade Committee for its involvement, in order to make it clear how long we believe it will be. To be absolutely specific, where we make an order in relation to control of a steel undertaking, we can revoke the regulations once that control has been established and is no longer required.

[Several hon. Members rose—]

[Jonathan Reynolds]

I know there is huge interest, but I will make a little more progress and that might deal with some of the matters Members want to raise.

This is what it means to be a Government unashamedly on the side of working people—one that will never hesitate to take action to protect this nation’s assets and economic security. I understand that some have asked about precedent or referred to other troubled industrial situations. To be clear again, this is an exceptional and unique situation. The question for all Members is whether we as a country want to continue to possess a steel industry. Do we want to make the construction steel and rail we need here in the UK, or do we want to be dependent on overseas imports? As a Government, we are not passive in any way about the future of British industry.

[Stephen Flynn (Aberdeen South) (SNP)]

The Secretary of State has said this is “unique” and “exceptional” and made reference to energy transitions and thousands of jobs. In the Scottish context, many minds right now will be focused on the situation in Grangemouth, where we know that hundreds of jobs will be lost directly, as well as thousands in the supply chain. Were I, or perhaps even the local Member, the hon. Member for Alloa and Grangemouth (Brian Leishman), to bring forward a similar Bill to save Scotland’s only oil refinery and give the Secretary of State the executive power to do as he pleases—as he is doing with British Steel—would the Labour party back it as it is backing this Bill today?

[Jonathan Reynolds]

I am pleased for the chance to address this issue. The importance of Grangemouth is why this Labour Government have pledged £200 million to secure its long-term future. It is an important asset, but it is not the only remaining refinery; it is one of three crackers in the United Kingdom—that is important. Specifically, it is not a comparable situation, and the behaviour of the company is not comparable to the case of British Steel.

I also say to the right hon. Member, and indeed to all Members, that this is why we fought and fought again to secure the future of British shipbuilding by saving all four of the Harland and Wolff sites in England, Scotland and Northern Ireland. The right hon. Member will know that the commercial interest was not in the Scottish yards, but we held them together precisely because of our commitment to Scotland and the Union. It is also why within weeks of taking office we secured a better deal for the workers at Port Talbot. We have repeatedly acted, and we will continue to act no matter how hard the circumstances.

[Alan Gemmell (Central Ayrshire) (Lab)]

Does my right hon. Friend agree that the failure of the Tories and the SNP to develop an industrial strategy for Scotland meant that they had no plan for Grangemouth? They knew for over a decade about the problems at the refinery and did nothing. Does he agree that as soon as Labour came into power, we got to work and delivered support for the site, the workforce and the local community?

[Jonathan Reynolds]

I endorse my hon. Friend’s comments entirely. I do not believe there is a history of the SNP calling for the nationalisation of Grangemouth. It was, as ever, on the bandwagon. I think we all recognise that the SNP does not campaign on its record in running Scotland; it campaigns on grievance. My hon. Friend is absolutely right that the contrast is with a Labour Government in this place who are on the side of working people everywhere.

[Jessica Morden (Newport East) (Lab)]

The Secretary of State mentioned Port Talbot. I appreciate the unprecedented circumstances we find ourselves in today, when the Government have rightly moved quickly to safeguard primary steelmaking, and the Secretary of State will be very mindful of the extraordinarily difficult circumstances that the steel industry in south Wales has faced. I recognise the £80 million fund available, but can he make sure that south Wales and Llanwern benefit from their share of the £2.5 billion clean steel fund? Can that also be at the forefront of his mind?

[Jonathan Reynolds]

I am incredibly pleased to have the chance to answer the point my hon. Friend raises. The Port Talbot deal was originally negotiated by the previous Government. I did try to reopen it; I went to see Chandra in Davos and flew to Mumbai to talk to him about it. To be frank, I kept Port Talbot open on polling day, because it would have closed due to the industrial action that almost took place. The previous Government were nowhere to be seen, even before the result of the election was in. We were not able to reopen the deal, but we did negotiate a better deal. As a result, Port Talbot is in a stronger position than British Steel, because it has a long-term future in place. [Interruption.] This is because we improved on the deal that the Leader of the Opposition botched at the time. To be clear, the £2.5 billion green steel fund the Chancellor has put in place is in addition to the £500 million already going to Port Talbot. That is an incredibly important point.

[Sarah Owen (Luton North) (Lab)]

I thank the Secretary of State for giving way and for acting in the national interest—the complete opposite of the hon. Member for Clacton (Nigel Farage), who said he was against intervening to save British Steel two years ago. Does the Secretary of State think the hon. Gentleman said that in the British interest or in the foreign interests the Reform party seeks to serve?

[Jonathan Reynolds]

I believe that that is on the record. I hope to convince all colleagues today to support this action, which is in the national interest.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

When the blast furnaces in Port Talbot closed down last September, this Government could have taken exactly the same legislative action as they have chosen to take today. We will endeavour to amend the Bill to include Wales, because there is still the opportunity for this Government to make a real difference to the community of Port Talbot and the 2,800 jobs that have been lost there.

[Jonathan Reynolds]

I do not want to embarrass the right hon. Lady, but the blast furnaces have already closed at Port Talbot. They are not available to be saved —that situation has moved on. Let me stress again: Port Talbot is in a stronger position because it has that long-term future in place and the potential additional investments through the green steel fund.

[Several hon. Members rose—]

[Jonathan Reynolds]

I think I must progress, Mr Speaker. I can see your indication to do so.

[Dawn Butler (Brent East) (Lab)]

Will my right hon. Friend give way?

[Jonathan Reynolds]

I will take one more intervention.

[Dawn Butler]

I thank my right hon. Friend for giving way and for the considered way in which he is looking after the national interest. The steel unions—the GMB, Community and Unite—would like clarification that any board that is set up will have at its heart the steelworkers who have kept the steelworks going through thick and thin.

[Jonathan Reynolds]

We remain in close engagement with all the unions, which have been monitoring the situation closely. Again, I reiterate that the Bill is not in itself about a change of ownership; it is about a change of control to rectify the situation. However, I will certainly have regard to the comments my hon. Friend has made and, of course, the role of the workforce at all stages.

We will never accept the argument that steelmaking is a sunset industry. Steel is vital to every bit of the modern economy. Domestic demand for steel is set only to go up, not down. In the past few weeks alone, we have seen Heathrow airport announce multibillion-pound expansion plans requiring 400,000 tonnes of new steel, and Universal Studios confirm it will be building Europe’s biggest theme park and, where possible, will use UK-made steel to do so. This Government are backing the builders, not the blockers. With the action we take today, we have the chance to feed that boom with steel made in Britain.

The legislation we are setting out today will help to end the uncertainty that has been hanging over British Steel’s Scunthorpe site for too long. I welcome the Opposition’s support today for this recall, but this issue should have been resolved years ago. I believe they may now view it as a mistake to have given this essential national asset to this company.

I have to address the statement made by the Leader of the Opposition yesterday, which I do as a matter of genuine regret. She claimed that while she did my job, she negotiated a modernisation plan with British Steel to build an electric arc furnace at Teesside, followed by one at Scunthorpe. I wish to make it unequivocally clear to the House that the new Government inherited no such deal. We could not renege on that deal because it did not exist. On day one, I was told that there had been a lack of progress on this matter to date.

[Mrs Kemi Badenoch (North West Essex) (Con)]

rose—

[Jonathan Reynolds]

If such a deal was negotiated, somehow in secret, I ask the Leader of the Opposition to say how much money she agreed to give Jingye for this deal and what conditions were placed on it. To state the obvious, building two electric arc furnaces in two different locations would be more expensive than building one in one location, and, given that Jingye’s request to build two furnaces in Scunthorpe was for £1.2 billion in taxpayers’ support, what—

[Mrs Badenoch]

On a point of order, Mr Speaker. I would like advice on how to counter the points the Secretary of State is making, given that they are factually incorrect and a complete misrepresentation of the situation that he inherited.

[Mr Speaker]

It has just been clarified by your good self. I cannot make the Secretary of State give way when you want to come to the Dispatch Box, but I am sure that if he notices you doing so again, he may wish to.

[Jonathan Reynolds]

This is an excellent chance to clarify that. If the Leader of the Opposition agreed a deal with Jingye to cause massive job losses in Scunthorpe and transfer the jobs to a completely different place, and at higher cost than the request the company made to us, I think she should be able to tell us. I am more than happy to give way.

[Mrs Badenoch]

Labour cannot negotiate. We were negotiating a modernisation deal that would have had limited job losses, just as we had in Port Talbot. The Labour Government inherited a functioning commercial deal in Port Talbot, and the same would have happened with British Steel had we not had a snap election. What the Secretary of State is doing now is the union-pushed deal. They brought that deal to me—I said no; he said yes.

[Jonathan Reynolds]

This is genuinely revelatory. I say again: if Jingye’s request was for £1.2 billion to build at lesser cost in one place, what was the sum of money agreed by the Leader of the Opposition when she was Business Secretary to build in two places? It certainly was not in the accounts that the Chancellor had. I will give way. How much money was agreed to Jingye to close the jobs in Scunthorpe? I ask her.

[Mrs Badenoch]

When you are negotiating, you do not have—[Interruption.] Labour Members are cheering and laughing because they love this; they think that the public taking on billions of pounds in liabilities is fantastic. We had not finished the negotiation so there was no amount, but it would have succeeded better than the terrible plan that the Secretary of State has now.

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[Jonathan Reynolds]

Our friends in the press will follow that up and find out exactly how much money the Leader of the Opposition secretly promised to Jingye to transfer those jobs out of Scunthorpe. I think it might be wise, on all counts, for that statement to be withdrawn.

The situation we inherited across the board on assuming office is one where most of our foundation industries were in some substantial difficulty. Since 2010, UK crude steel production has almost halved, and we know that rebuilding our steel industry after years of neglect will be a challenge, but it is one that this Government have grasped.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

My right hon. Friend and I were in this House in 2015 when the Conservative party sat on its hands and kissed goodbye to the Redcar blast furnace and, with it, the state-of-the-art coke ovens that could have resolved this situation today. Before he sits down, will he say something about the Jingye activities at Lackenby and Skinningrove and how they will be impacted by today’s announcement?

[Jonathan Reynolds]

I am really grateful that my hon. Friend has been able to put that point on the record for his community, to avoid the kind of situation we have seen in lots of industrial communities, to be frank, over the years. This is why we take this action today in the national interest: to provide that bridge and that possibility to the future.

Specifically in relation to the downstream mills, even if we were willing to accept a situation in which they were supplied from a foreign country, as in this case, the confidence of consumers and businesses would surely be put at risk and it would bring into question the entirety of British Steel’s workforce and business and a huge part of our strategic assets. That, again, is why this decisive action today is necessary.

[Dr Caroline Johnson (Sleaford and North Hykeham) (Con)]

The right hon. Gentleman said that steel production is strategically important, and I agree. He said that we should be avoiding having to be reliant on imports, and I agree. However, his Government blocked production of the raw material metallurgical coalmine in the north-west. Will he now go back to his colleagues in Government and the company to encourage them to reapply so we can have security not just of steelmaking, but of the raw materials that are needed to make it?

[Jonathan Reynolds]

The hon. Lady will know that the company brought into question whether that coal was the right grade for blast furnace supplies. I remember several debates in this place about that. I should also make it clear—I think hon. Members understand this—that we are talking about two blast furnaces that date from the 1930s and 1950s. We must also be looking to the future, to new technology and new investments. Crucially, having the dedicated resources that this Government have put into steel is why we have the chance to look to the future with optimism. The UK steel industry is an outlier, in the sense that it is a much smaller proportion of our overall economy than in any major comparable economy, so of course there is potential, and we should look to the future. I would be more than willing to work with the hon. Lady as a local MP to do so.

[Mr Joshua Reynolds (Maidenhead) (LD)]

rose—

[Jonathan Reynolds]

I will give way one last time.

[Mr Joshua Reynolds]

I thank the Secretary of State for giving way. Once he has the powers in this Bill, I urge him to use them decisively and swiftly, but then, as he has said, we need to look to the future. Once we have secured Scunthorpe’s future, we need to discuss what happens next, which is clean energy, and investing in the global clean energy that the UK really could succeed in. Does he agree that the people of Scunthorpe have upheld their end of the bargain for decades, and now it is time that we in this House make sure we uphold our end too?

[Jonathan Reynolds]

The hon. Member puts it extremely well, if I may say so. The people who have upheld steel as the backbone of construction in the UK for decades deserve better treatment than they would have had if Parliament had not been recalled today to take this action, and we should all bear that in mind.

Whether it is at Port Talbot, via our upcoming steel strategy, via our work to improve public procurement, or in the introduction of our industrial strategy to tackle the most thorny issues of industrial competitiveness, where others have shied away, this Government have stepped up.

Let me conclude by saying that steel is fundamental to Britain’s industrial strength, our security and our identity as a primary global power. Today’s legislation will help ensure that we can retain that steelmaking capability here in the UK both now and for years to come. For British workers’ security, for British industries’ future and—without hesitation—in our national interest, and for the workers of British Steel and their families, this action is essential, and I commend this Bill to the House.

[Mr Speaker]

I call the shadow Secretary of State.

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[Daisy Cooper]

As the hon. Member knows, the three things that I have just outlined—British Steel being sold for a pound, British Steel entering insolvency and the Government’s Insolvency Service being left temporarily running the firm—all happened in 2019.

With Putin’s barbaric war in Europe and Donald Trump’s disastrous tariffs causing economic turmoil around the world, we must secure the future of steel production here at home. We Liberal Democrats welcome the sense of seriousness and urgency shown by the Government in recalling Parliament. We must work together to rescue our steel sector and the tens of thousands of jobs that directly and indirectly rely on it. But under the terms of the Bill, the Secretary of State is giving himself huge and unconstrained powers that could set a very dangerous precedent. I urge him to make a commitment, in the strongest possible terms, to repeal the powers that he is giving himself as soon as possible—within six months at the latest—and to come back to this House for another vote to extend those powers if they are still required after that.

[Jonathan Reynolds]

As I tried to articulate in my opening speech on Second Reading, I understand the gravity of the situation, which gives puts some context to the demands for further powers to be included in the Bill. The limitation, as wide as it is, is the right measure, and I can give the hon. Member my absolute assurance that I shall seek to do exactly as she says.

[Daisy Cooper]

I am incredibly grateful to the Secretary of State for giving that assurance, which is important in the context of what the powers in the Bill actually are.

Clause 3(4)(a) gives the Secretary of State the power to break into anywhere to seize assets. Clause 3(4)(c) gives the Secretary of State the power to take whatever steps he considers appropriate—not what a court or a reasonable person might consider to be appropriate—to seize or secure assets. Clause 4(3), on offences, makes it a crime for anyone not to follow the instructions of the Secretary of State, or to refuse to assist the Secretary of State in taking those steps without a “reasonable excuse”. However, a “reasonable excuse” is not defined in the Bill, no examples are given, and, quite frankly, it is hard to work out what defence of a “reasonable excuse” might be accepted given that, under clause 3(4)(c), it is whatever the Secretary of State himself considers to be okay.

Clause 6(1), on indemnities appears to give the Secretary of State and potentially any other person who is with him—a police officer, a civil servant, or a Border Force official—immunity from prosecution for using any of these wide-ranging powers. These powers are unprecedented and they are unconstrained. I am grateful to the Secretary of State for saying that that is precisely why he intends to repeal them as soon as possible.

More broadly, the Government must now also bring forward plans to guarantee the future of this vital sector. We know the steel industry is surrounded by crippling uncertainty. After decades of underinvestment and shocking indifference to our sovereign economic security, the previous Conservative Government have left our sovereign national capacity on steel diminished and endangered. Yet there is no chance that UK demand for steel will disappear. How absurd and irresponsible is it that we have a sustainable and enduring long-term market for British steel, but that our supply could keel over in a matter of days because of the failures of the failed Conservative party?

So looking ahead, let us remember that saving Scunthorpe is necessary, but not sufficient on its own. There have been significant discussions about the future ownership structure of this company. Given the precarious fiscal position in which the Government find themselves, it is important that all options on ownership are put on the table, so that this House can take an informed decision about what they mean for the public finances. I hope the Government will make a commitment that, in the coming weeks, they will bring forward a report that sets out options for future ownership of the plant.

Looking ahead, many big questions remain unanswered. Will the Government immediately designate UK-made steel a nationally strategic asset? Will they be using direct reduced iron, and, if so, will that form part of the UK’s plans alongside protecting the production of virgin steel at Scunthorpe? When will the Government bring forward a comprehensive plan to ensure that more British steel is used in vital infrastructure projects, from defence to renewable energy? Will Ministers work shoulder to shoulder with our European and Commonwealth partners to tear down trade barriers, including by negotiating a customs union by 2030? Will they develop initiatives to retrain and upskill workers across the country as we transition to greener methods of steel production? How do the Government intend to respond to calls from UK Steel for the Government to achieve the lowest electricity prices in Europe, parity with competitors on network charges, and wholesale electricity market reform?

This case should also raise concerns about the role of Chinese corporate interests in the UK’s national critical infrastructure. The decision by British Steel’s Chinese owners to turn down the Government’s offer of £500 million to support the future of the Scunthorpe plant has directly precipitated this crisis. We must now be clear-eyed about the risks posed by Chinese involvement in our country’s vital infrastructure. To that end, will the Minister tell the House when the Government’s promised UK-China audit will be released, and how the Government plan to strengthen protections for critical infrastructure? Can he assure the House that the Government have assessed whether there is any risk that Jingye, on behalf of the Chinese Government, has deliberately run down the plant to jeopardise the UK’s capacity to produce steel?

We are in a precarious position, and it is not as if there were no warnings. In 2022, the Royal United Services Institute think-tank said:

“Domestically produced steel is used in defence applications, and offshoring the supply chain may have security implications—for example, in a scenario where multiple allied countries rearm simultaneously at a time of global supply disruption, such as during a major geopolitical confrontation.”

The fact that Jingye has now closed down the supply of raw materials is further evidence that the plant should not have been sold to it in the first place. Quite frankly, the fact that some Conservative MPs are calling for nationalisation shows how far through the looking glass we really are.

Is not the Conservatives’ attitude abundantly clear? On national security, they cut troop numbers by 10,000; on food security, they undermined our farmers with unforgiveably bad trade deals; and on economic security, they left our country with almost no sovereign steel capacity. On security, the Conservatives left our island nation severely vulnerable, like flotsam in the sea, passively bobbing up and down or being bashed around by the tides of international events.

As for hon. Members from the private limited company Reform Ltd, they have a bit of cheek to claim to support UK steelworkers while cheering on their pal President Trump, whose punishing trade war is putting those steelworkers’ jobs at risk. Perhaps the company’s directors who sit in this House will come clean about whose side they are really on.

Time and again, we have seen the failures of an ad hoc, piecemeal approach to industry across all sectors, from the failure of our water companies to the shocking state of our housing nationally and the dismal situation of our health service. For too long, there has been no stability for these industries, which are constantly fixed on a short-term basis only, to the point where they are practically held together by string and tape and the dedicated workers who remain. We Liberal Democrats stand ready to help constructively to bring about an outcome that delivers real change.

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[Martin Vickers (Brigg and Immingham) (Con)]

It is a pleasure to follow the hon. Member for Great Grimsby and Cleethorpes (Melanie Onn), my Member of Parliament; on this matter we are in complete harmony. Before I talk about the local situation, which is what I want to focus on, may I thank the Secretary of State for giving me a call yesterday evening and outlining the proposals he would be bringing forward this morning? I did say to him that I would not be entirely uncritical, so I am sure he will not mind a few jabs here and there.

The local situation is extremely critical, as has been pointed out. The impact, not only on the workforce but on the wider economy of northern Lincolnshire, would be extensive. I have been a resident in the Grimsby-Cleethorpes area all my life, and I have seen the impact when a town loses its core industry. In the case of Grimsby, of course, that was the deep-sea fishing industry. When that decline happens—it has happened to so many towns up and down the country as a result of the decline in mining, shipbuilding and other heavy industries—it takes a generation or perhaps more for the town to fully recover.

That is the last thing I want to see happen in my neighbouring constituency of Scunthorpe, or to the hundreds of my constituents who work there. Those Members who were here for the Easter Adjournment debate—there were a handful—might have heard me say this only four days ago, but the site extends way beyond the bounds of Scunthorpe, into my Brigg and Immingham constituency. The site is the equivalent of 1,133 Wembley football pitches, which gives an idea of its size and of the amount of work that would be needed were the steelworks to close. There would be demands for vast Government investment over decades, in order to remediate the site and to provide new employment.

I said that I would not be entirely uncritical of the Secretary of State, so I refer him to my first urgent question on this matter, on 5 September last year. I said on that occasion:

“There have been widespread media reports suggesting that coke will stop being imported from October, which would mean production would stop in Scunthorpe by Christmas. There are rumours concerning the fact that employees will be given notice very soon. That is obviously creating great anxiety among those directly employed by British Steel and those in the supply chain, which in northern Lincolnshire extends to many thousands of people and many businesses.”—[Official Report, 5 September 2024; Vol. 753, c. 424.]

Thankfully, we have had a six-month reprieve from those threats in October, but I have to say, the Government have been a little dilatory on this. I appreciate that negotiations have been taking place and Ministers cannot give away their negotiating position, but I made this point as long ago as September, as well as when you granted me an urgent question on 27 March, Mr Speaker—only a couple of weeks ago—and surely the Government were beginning to realise at that point that the negotiations with Jingye were going nowhere.

[Jonathan Reynolds]

I am extremely grateful to the hon. Gentleman for putting that point on the record. It is precisely because of those concerns that we were able to have ready a legal route to intervene to directly offer support to purchase raw materials. What we could not have anticipated or expected was for a company to act in an irrational economic manner when such a clear, distinctive and generous offer was made.

[Martin Vickers]

I thank the right hon. Gentleman for his intervention. I would say merely that he has been party to the negotiations, and he must surely have realised that the company was not negotiating in good faith and expected his officials to prepare legislation, if required, to deal with the situation that we are now in. As others have said, this is crucial not just for thousands of my constituents who work at the site, but for the defence of the nation. I assume and hope that Defence Ministers have been lobbying the Secretary of State to make their concerns clear.

Locally, there is continuing concern. Like the Father of the House, my right hon. Friend the Member for Gainsborough (Sir Edward Leigh), I will support the proposals. I floated the nationalisation issue on 27 March, and I see this as a stepping-stone to that situation. To those who will perhaps demand nationalisation today, I would say that this is a very complex issue, and what matters more than anything else is the future of the workforce and the ability to produce virgin steel. Nationalisation legislation would not, I sincerely hope, be passed in three hours; it would involve a great deal of work.

Having got themselves into this situation, the Government are now taking the right action. There has been disappointment locally—to put it mildly—that the Prime Minister did not, following my question to him only 10 days ago, take up the option to meet a cross-party delegation of MPs to discuss the situation, but now that we are where we are, I fully support the Government, and I hope that they accept the sunset clause amendment, which would be prudent. I can assure them of my full support today, which they will continue to have when they act in the best interests of my constituents.

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[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I will try to be brief and stay focused on the Bill. Let me start by saying that we should all focus on the requirement to save the jobs of those 3,500 people who have this threat hanging over them. In fact, I understand from my hon. Friend the Member for Brigg and Immingham (Martin Vickers) that 2,500 people have already received a redundancy notice, and they will be very worried at the moment. Our thoughts should be with them today. Coming in on a Saturday is right if it saves their jobs. I am certainly prepared to vote for that.

The Bill does give vast powers to the right hon. Gentleman the Business Secretary and the Government. As others have said, I trust him personally—this is not an attack on him—but we in this House should never trust Government more than we have to. I have said this on both sides of the Chamber, by the way. I therefore urge him to have another look at the sunset clause, which I raised earlier. It is not saying, “We don’t trust you”; it is saying that sometimes Governments are taken down sidetracks, and before we know what has happened, the powers are beginning to be used for the wrong purpose. I urge him to introduce the sunset clause, or even to do so in the other place, to give the House real powers to come back. For everyone’s sake—even those on the Government Benches—I think that would be worth doing, because it would allow us to have a strong debate on how the powers are being used and would perhaps even enable us to influence what is taking place.

The reason for this debate is clearly the massively changed needs of this country, particularly after the event that we never thought would happen: Russia’s brutal invasion of Ukraine. As a result, weapons and arms are needed on an unprecedented scale, there is a plan to build up the armed forces, and they need the very high-quality virgin steel that is produced in this plant. Without it, we would have to import it. Frankly, China does not produce that quality of steel. The other reason is the tariff war now taking place, which has introduced 25% tariffs on the car industry, which is one of the biggest purchasers of steel. All those things make the Bill very much necessary.

We have another problem, which I hope the Government will deal with in the context of the Bill when they talk to the Department for Energy Security and Net Zero. Things have changed. The Prime Minister himself has said that the world has changed. We have been operating in what we considered to be a global free market. I have argued for some time that this is not a free market. Far too many countries such as China have abused the rules of the free market, subsidised their industries ridiculously and used slave labour to produce their products. When that happens, the free market is dead. We must recognise that we will have to deal with those whom we trust and who do not break the rules. That means a whole rethink of the Government’s China policy and of whether we need to rush to China for investment. We need to ensure that we deal with our industry at home and that we produce things again.

One problem is the energy costs our industry faces, which are really quite stark. Our industry is not just in competition with China; even the costs in Europe are far less now. I will give a short list. The costs in the UK are now the highest in the world, at $400 per megawatt-hour. Germany, which has the highest costs in the rest of Europe, is at $250 per megawatt-hour, while France and the others all have lower costs for producing energy. That energy is critical for the steel industry, and that is one of the big issues that the Secretary of State has to deal with. China, with its subsidies and broken free market rules, is at $60 per megawatt-hour. We should not attempt to compete with it; we must say that it is not competitive at all. [Interruption.] Exactly right, as my right hon. Friend the Member for Goole and Pocklington (David Davis) says.

Others are complaining about China right now. Countries in the far east, such as Vietnam and South Korea, are accusing it of dumping. What we have in China is something that will really hit us hard and make the Secretary of State’s job even worse: very simply, China is now suffering from the over-production of steel. Its housing industry has gone static, and that was one of the biggest users of the steel it produced. Where will that steel go?

By the way, it is no surprise that a Chinese company, Jingye, is involved. In pushing to shut down the blast furnaces in the UK, it knows that we will have to buy slab steel from China. That is not a coincidence; it is all part of the plan. That company is linked directly to the Chinese Communist party, and it is high time that we called that out. In his negotiations, the Secretary of State needs to remind Jingye that the reality is that it is not a private company. The previous Conservative Government should never have awarded it the contract, and I warned them about that. It is time for us to make sure that we deal with China at face value and do not accept the pretence that this company is private or in any way detached from its Government. That is a critical point.

There is much to be dealt with, and I urge the Government to listen to the House and to check all of this. Cheap Chinese steel is a desperate problem for us, and we need to work with other countries in dealing with it. We also need to get our costs down. On net zero, I hope that the Secretary of State will tell the Secretary of State for Energy Security and Net Zero that we cannot go on like this.

[Jonathan Reynolds]

This is such an important point, and I will be exceptionally brief, but the right hon. Gentleman knows from debates that he and I have been in that I am obsessed with the issue of industrial energy prices and by the very substantial rise from 2010 to 2024—a 50% real-terms increase. As I think he knows, the two fundamental issues are: first, our network charges and how we do those, which is different from other countries; and secondly, fundamentally, the marginal cost is set by the price of gas—the fossil fuel price—for the overall system. I am not completely rejecting everything that he is saying, but we must understand that key point: it is the gas price.

[Sir Iain Duncan Smith]

I am grateful for that, because it allows me to say something that I had not been planning to say: we sit on an island of gas, so why, for goodness’ sake, are we not drilling for it? We need it, and we will need it strategically. There is a need for strategic industry, and I agree with the Secretary of State on that. However, the issue does not stop there; it stops elsewhere, in the production of energy. I simply leave that point for him, and he can argue it with his right hon. Friend the Secretary of State for Energy Security and Net Zero.

I want to say one final thing. In the course of this Chinese company’s operations, I have talked to a number of people involved in the business, and its record on health and safety and on the abuse of the workers in the blast furnace area has been shocking. We should look into that much more carefully. The company has brought in cheap Chinese workers and pays them nothing like what it pays the British workers. Many of those workers have ended up burned and in great difficulty. I simply say that this is not a company we should be doing business with right now.

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[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Diolch yn fawr iawn, Dirprwy Lefarydd.

Today’s legislation to safeguard the UK’s last bastion of primary steelmaking capacity is of course to be supported, but what my party cannot support is this Government’s approach to steel in the UK, which deems that steel in Scunthorpe is worth saving but steel in Wales is not. Today is a bitter day for the people of Port Talbot, where the blast furnaces have been extinguished because Labour let that happen. Job losses there will take an estimated £200 million from the local economy in lost wages. People in south Wales have been loyally voting for Labour for decades. Do this Labour Government feel proud that those votes have been paid back by Tory-style deindustrialisation in Port Talbot?

Plaid Cymru has called consistently for nationalisation, but the Labour First Minister of Wales rejected our calls and described nationalisation as “pipe dreams”. Labour in Wales was quick to mock our proposal, which we made 21 times—over and over again—in Cardiff and here in Westminster. Now it is UK Labour policy.

The Government must set out how much of the £2.5 billion steel fund will be allocated to securing Scunthorpe, and how that compares with the amount given to support laid-off workers in Wales.

[Jonathan Reynolds]

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

[Liz Saville Roberts]

The right hon. Gentleman’s Government did not intervene in Wales.

[Jonathan Reynolds]

rose—

[Liz Saville Roberts]

I will take no interventions. His Government did not intervene in Wales. Under his Government, Scunthorpe gets security; Port Talbot gets a pittance. Plaid Cymru believes that Port Talbot should and could have received equal treatment alongside Scunthorpe. That is why we have tabled an amendment to include Wales in the terms of the Bill, and to highlight that the measures we are debating today could have been used to save the blast furnaces at Tata Steel in Wales. We will not let Labour hide from the fact that it owns the decision not to intervene to save Welsh steel when it had the opportunity to do so.

Workers and communities must be at the heart of any long-term solution for the steel industry. So far, Labour in Westminster and Labour in Cardiff have worked in partnership to dispatch thousands of Welsh workers to uncertainty and hopelessness. People in Wales will not forget today. It is a day of bitter disappointment for Port Talbot.