Steel Industry (Nationalisation) Bill

Lord Hunt of Wirral Excerpts

Committee stage
Monday 29th June 2026 Lords Chamber

Moved by

[Lord Hunt of Wirral]

2: Clause 2, page 1, line 14, leave out “includes (but is not limited to)” and insert “means”
Member’s explanatory statement
This amendment seeks to limit the public interest test to the areas set out in subsections (a) to (c).

[Lord Hunt of Wirral (Con)]

My Lords, I speak to Amendments 2, 3 and 8.

Amendment 2 limits the public interest test to the specific factors listed in Clause 2. On first reading, the test looks robust: national security, the economy and

“the construction, maintenance and operation of critical infrastructure”.

These are serious criteria that one might think provide a meaningful check on the exercise of what are very significant powers. However, when one reads on, Clause 2(2) says that the test

“includes (but is not limited to)”

those grounds. I contend that, with those five words, the floor falls away. If the test includes but is not limited to the listed grounds, surely, in practice, there is no test at all. Any Secretary of State of any political persuasion at any time can conjure a reason and call it the public interest.

The amendment in my name and that of my noble friend Lord Sharpe of Epsom would remove those words and make the listed grounds exhaustive. It would ensure that when Ministers say that these are exceptional powers subject to a robust public interest test, it is actually true—not merely true for now with this Secretary of State in these circumstances but true in the legislation for every Secretary of State who follows.

The Government may say that there need to be other grounds, beyond national security, the economy and critical infrastructure. I would genuinely like to know what they are. What situation could possibly arise that those three criteria do not already cover? If the Government can answer that question, let them do so today. Let them set out on the record what additional circumstances they have in mind. If they cannot, these words should not be in the Bill.

We have a Bill that, as we just discussed in the first group, can capture businesses with only a peripheral connection to steel. We now have a public interest test with no effective limit. Will the Minister confirm that the powers in the Bill cannot be triggered simply because of industrial pressure; for example, because a trade union decides that the answer to a dispute is public ownership? Will he rule that out?

On Amendment 3, the Government’s impact assessment describes the difficult environment in which the steel sector operates, including high domestic operating costs and a lack of long-term investment. It recognises that these pressures bear directly on the ability of UK steel producers to compete. Yet Clause 2 refers only in the broadest terms to “supporting the economy”. That phrase could cover almost any intervention; it does not require Ministers to demonstrate that the intervention will leave the United Kingdom with a stronger, more productive or more internationally competitive steel sector.

There is a difference between preserving an undertaking for the moment and putting it on a sustainable footing for the future. Nationalisation may avert an immediate crisis, but it should not become a means simply of transferring losses, risks and difficult decisions from a company to the taxpayer. The question must be whether public ownership can help to secure the investment, modernisation, productivity and commercial resilience needed for this sector to compete successfully.

There is also a point of consistency with the Government’s own drafting. The Bill makes clear that the public interest test is not intended to be limited to the matters specifically listed. It says that the test includes but is not limited to national security, critical infrastructure and the economy, as I said earlier, so the Government have already chosen not to confine the public interest test. In those circumstances, why would they resist including economic growth and international competitiveness expressly within it? Growth is the Government’s stated number one priority. International competitiveness is plainly fundamental to the future of a sector exposed to intense overseas competition and high energy costs. If the Government consider national security and critical infrastructure important enough to name in the Bill, surely growth and competitiveness should also be named. I invite the Minister to explain why those two objectives do not appear in the Bill. How will the Government assess whether an intervention is likely to strengthen competitiveness? Will that assessment include energy costs, investment, productivity, output, technological modernisation, export potential and the undertaking’s ability to operate sustainably without indefinite support from the taxpayer?

On Amendment 8, the Government have confirmed that they have already provided approximately £555 million to British Steel for working capital, including raw materials and salaries. The National Audit Office reported that, as at 31 January this year, the Department for Business and Trade had spent £377 million on its intervention. At the then current rate of spending, total costs were expected to exceed £642 million by the end of this month. More importantly, the National Audit Office warned that if spending continued at the then current rate, costs could exceed £1.5 billion by 2028—and that figure was before any potential transformation of the business, compensation to the current owner or the eventual costs of exit. The NAO also found that the intervention has

“no clear end date … has not stabilised the company’s finances”

and began

“without a clear exit strategy”.

This Bill is not simply emergency legislation to keep the furnaces operating over a weekend. It creates enduring powers to transfer businesses, assets, rights and liabilities into public ownership. Before those powers are exercised, the Government must be able to demonstrate that the proposed course represents value for money.

The facts since the emergency intervention underline why this matters. We are told that the business in its present form is structurally unprofitable. We know that substantial decisions remain to be made on its future, including any transition in production technology, the cost of investment, the length of any transition period and the eventual route to a viable and sustainable business. The taxpayer needs protection against an open-ended commitment.

The Government may argue that the Treasury’s Managing Public Money framework already requires departments to consider value for money. I suppose I could look forward to the day when there is some evidence of the Treasury acting responsibly in this way. Can the Minister tell us what value-for-money assessment will be undertaken before a principal transfer power is exercised? Will it include the expected costs of compensation, operating losses, capital investment, decommissioning, restructuring and any eventual exit?

This amendment would not frustrate the Government’s ability to act where action is genuinely justified. It would simply ensure that before nationalisation takes place, the Secretary of State is satisfied that it is a responsible use of taxpayers’ money. I beg to move.

[Lord Sentamu (CB)]

My Lords, Amendment 2 would replace

“includes (but is not limited to)”

with the word “means” so that we knew what we were describing. The worry is that leaving it as it is could create a public interest so large that there was a mission creep that I do not think should be in the Bill, which is trying to nationalise steel. We need to be slightly more economical in the words we are using, so that we need not fear that on another day, if another public interest was being taken into account, the definition would prove far too loose. The word “means” does the job: we know exactly what one is talking about, and it lists the three elements. The noble Lord, Lord Hunt, wanted to include two other areas but, for me, limiting it to those three objects seems to be where we should stop. The word “means” would stop mission creep.

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I turn to the point made by the noble Lords, Lord Redwood and Lord Fox, about turning British Steel around. Should we decide in the public interest to transfer British Steel into public ownership, we will act swiftly to put in place a new board to provide leadership to the organisation and to be responsible for continuing work to drive improvements in health and safety performance and to stabilise operations and manage costs. The board would explore the options for the long-term viability of decarbonised steel-making at Scunthorpe and develop transformation plans in a way that manages the impact of that transition of the workforce in the local area. We will be debating this more in groups 10 and 13 in day 2 of Committee. For those reasons, I respectfully request that the amendment be withdrawn.

[Lord Hunt of Wirral (Con)]

My Lords, I am grateful to all noble Lords who have contributed to this debate and to the Minister for his response. I reiterate what the noble Lord, Lord Fox, said earlier about the way in which the Minister has given us every opportunity to think ahead into the future and to receive expert advice as to the way ahead.

To summarise these three amendments, they do not sit easily together, as has been pointed out, but they have provoked a widespread debate. The noble and right reverend Lord, Lord Sentamu, was absolutely right to point out that mission creep should stop here. There should not be ways that the Minister could include all sorts of other reasons. In Amendment 3, I suggested two reasons, but the Minister carefully responded by not ruling them out and not ruling anything else in. It seems that either the noble and right reverend Lord, Lord Sentamu, is right, or the noble Lord, Lord Fox, is right or the Committee is confused. It has considered all the various options, but it would be useful, as my noble friend Lord Redwood said, to have greater clarity in the form of some draft business plan that could look to the future and work out the way ahead. Value for money, as my noble friend said, sums it all up. Although the Minister thought that the noble Lord, Lord Fox, had signed Amendment 8, either it has not come to my attention that he has or he has not signed it. It may be a later amendment which suggests that value for money is required.

I remain far from convinced by the Government’s case. These amendments address three basic questions which ought to be answered before the state is given a power of this significance. First, in what circumstances will the power be used? Secondly, what is it intended to achieve? Thirdly, as my noble friend Lord Redwood pointed out, how will the taxpayer be protected? The Government’s response seems to be that Ministers will behave reasonably, that the powers will be used sparingly and that the existing public interest test provides sufficient protection.

As my noble friend Lord Sharpe of Epsom said in the previous group, this Bill sends a message well beyond the immediate circumstances of British steel. Investors considering whether to commit capital to the United Kingdom will examine not simply what Ministers say today but what the legislation permits tomorrow. The Government say those risks are mitigated by a clear public interest test. But the reality is there is no actual test. There is much in this debate for the Government to consider, but for now I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

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Moved by

[Lord Hunt of Wirral]

5: Clause 2, page 1, line 20, at end insert—
“(2A) The Secretary of State may not exercise a principal transfer power unless the Secretary of State has commissioned an independent assessment of whether the exercise of the power is in the public interest, and that assessment has demonstrated that it is in the public interest.(2B) The Secretary of State may appoint such independent person as the Secretary of State thinks fit to carry out an independent assessment under subsection (2A), and may pay remuneration and allowances to that person.”Member’s explanatory statement
This amendment would require an independent assessment of whether the public interest test had been met before the Secretary of State could exercise the principal transfer powers.

[Lord Hunt of Wirral (Con)]

My Lords, Amendments 5, 6 and 42, standing in my name and that of my noble friend Lord Sharpe of Epsom, go to three basic questions which ought to be answered before the Government exercise powers of this scale. They are: on what evidence is nationalisation justified, by what criteria will Ministers make that judgment, and what will be the financial and economic consequences?

Amendment 5 would require an independent assessment before a principal transfer power is exercised, establishing that the proposed transfer is in the public interest. That is not an attempt to prevent the Government acting in a genuine emergency. It is an attempt to ensure that before private assets are transferred into public ownership, there is an objective check that the case has been made.

The sums involved may be very substantial. Once the state acquires a business, it may assume not only its assets but its liabilities, its working capital requirements, its investment needs, and the risks of continuing operating losses. These may be decisions with billions of pounds at stake. They should be based on evidence, not merely urgency or political pressure.

Amendment 6 is the natural counterpart. It would require the Secretary of State to lay before Parliament the full criteria by which the public interest test has been judged. The Bill currently gives Ministers a broad discretion. I believe that Parliament is entitled to know how that discretion has been exercised before a transfer takes place. What precisely has been considered? How have national security, economic consequences, competition, costs to the taxpayer and the future viability of the undertaking been weighed? Those are not matters which should be left to assertion after the event.

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[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Redwood, Lord Fox and Lord Hunt, for their contributions.

The noble Lords, Lord Hunt and Lord Sharpe, tabled Amendments 5, 6, and 42 to provide for an independent person to assess the public interest. Further amendments tabled by the noble Lords would require the Government to publish both the criteria used to assess the public interest and their assessment on how those criteria are met, before exercising the principal transfer power. Amendment 42 would require an impact assessment to be published before any intervention or the exercise of any power under the Bill. As these amendments deal with similar issues, I will address them together.

I start by saying that I understand and sympathise with the desire for the greatest parliamentary and stakeholder scrutiny of a decision to intervene under the powers in the Bill. Stakeholder engagement is a key part of the Government’s policy approach to the sector, with Ministers regularly meeting key industry groups and representatives through the steel council and other forums. The Government have published an impact assessment alongside the Bill, explaining how the public interest test will be considered. A further impact assessment will be published alongside any secondary legislation exercising the transfer of power.

The framework for decisions to intervene will stem from what has been included in Clause 2, with regard to the three public interest factors. There is no attempt on our part to obfuscate or hide the criteria that will be applied in practice. The Government will not only consider whether a steel undertaking is engaged in activity that serves the public interest; they will also consider whether the activity is at risk of not receiving government intervention.

The Government cannot support these amendments as each would create additional hurdles and process pre-intervention. In the kinds of situations that the Bill envisages, speed will be crucial. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances, be necessary to avoid uncertainty.

None the less, I am aware that there are strongly held concerns about this issue, and I can confirm that the Government will consider options for Parliament to scrutinise decisions taken either at the time of or after the exercise of the transfer of powers ahead of Report stage. I hope that this offers some reassurance to noble Lords, and I look forward to continuing further conversations with the noble Lord, Lord Fox, ahead of Report. With that, I ask that the amendment be withdrawn.

[Lord Hunt of Wirral (Con)]

My Lords, I am very grateful to the Minister for his response, particularly his closing words. My hopes were raised when he started by saying that he understood everything that I had said and was sympathetic. Then the situation clouded a little as he said that these amendments would present additional hurdles at a time when speed would be essential, but then he said that the Government would consider options between now and Report—and that is what I was seeking to hear.

I am very grateful to my noble friend Lord Redwood for putting it all in the historical context. It is easy to forget the pace at which we entered this debate, by being summoned to Parliament in April of last year. As the noble Lord, Lord Fox, reminded us, Clause 2 is the crunch. It is a key part of this Bill. To remind colleagues, Amendment 5 would require an independent assessment confirming that nationalisation is in the public interest before transfer powers could be used. Therefore, as we approach that amendment, I obviously cannot press the Minister on the options that the Government will consider, but it would be a way forward if we could find a solution comparable to that in Amendment 6, requiring the Secretary of State to lay before Parliament the criteria used to assess the public interest before using transfer powers—and then Amendment 42, which would require an impact assessment.

I recognise the point that the Minister has made about the practical difficulty of preparing a full assessment before the exercise of emergency powers—particularly, as he explained, where Ministers may need to act quickly to prevent serious harm. However, that cannot mean, as I believe the Minister accepts, that the financial consequences are treated lightly. The cost to the taxpayer of taking on a steel undertaking—its liabilities, its working capital needs and its future investment requirements—may be substantial. As my noble friend Lord Redwood pointed out, Parliament has a proper understanding and an interest in understanding those costs, the risks assumed and the basis on which the decisions have been made. Parliamentary scrutiny should not be seen as an obstacle to action. It is surely a necessary part of ensuring that exceptional powers are used responsibly and transparently.

We await the decision of the Government. I had hoped that the Minister would commit to publishing an impact assessment alongside the exercise of the power. I will examine his words carefully, because that assessment is the key. It should set out the costs incurred, the economic implications, the liabilities assumed, the anticipated future costs and the risks to the taxpayer. There is much for the Government to reflect on. I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

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[Lord Fox (LD)]

I will be very brief and speak with some support for the noble Lord, Lord Wigley. As far as I can tell, the Bill does not require legislative consent from either Cardiff or Edinburgh. Perhaps the Minister could confirm that. If it does not, the principle set out by the noble Lord, for both Wales and Scotland—I know that there may be industrial differences, but the two things apply—would be very important. I look forward to hearing what the Minister says in that regard.

[Lord Hunt of Wirral (Con)]

My Lords, I very much echo what the noble Lord, Lord Fox, has just said, and I thank the noble Lord, Lord Wigley, for his amendments, which raise very important points. There are considerable concerns about what is happening at steel plants in Wales and the consequences for the workers, their families and the much wider community. It is right that, where these powers may affect a Welsh steel undertaking or devolved responsibilities, Wales should be properly involved. I urge the Minister to respond positively to the concerns so rightly raised by the noble Lord.

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Moved by

[Lord Hunt of Wirral]

13: Clause 4, page 2, line 30, leave out “negative” and insert “affirmative”
Member’s explanatory statement
This amendment seeks to require regulations transferring securities of a steel undertaking to be subject to the affirmative procedure.

[Lord Hunt of Wirral (Con)]

My Lords, Amendment 13 makes regulations transferring securities in a steel undertaking subject to the affirmative procedure. Amendment 14 makes regulations transferring the property rights or liabilities of a steel undertaking subject to the affirmative procedure. Amendment 15 makes regulations on continuity obligations subject to the affirmative procedure. Amendment 18 in this group makes enforcement regulations subject to the affirmative procedure. I will begin by referring to those amendments but speaking to the question of whether Clause 50 should stand part of the Bill.

This clause gives the Secretary of State a very broad power to modify primary legislation, secondary legislation and common law in connection with a share or property transfer. It may be used retrospectively and, in some circumstances, before Parliament has had the opportunity to approve the regulations. These are considerable powers, particularly when we are discussing property rights, contractual rights and the compulsory transfer of businesses and their assets. My noble friend Lord Sharpe of Epsom has already referred to the report of the Constitution Committee, and he speaks from personal experience of knowing the dangers of ignoring the recommendations of that committee. The committee is pretty clear about Clause 50, and I will quote from its report:

“We recommend that the broad power granted to the Secretary of State in Clause 50(1) to modify the law in relation to share or property transfer by regulations should either be removed or significantly tightened to specify the circumstances in which such law may be modified”.


I believe that the Government should take that recommendation seriously.

The Government’s delegated powers memorandum sets out at some length why Ministers believe that a broad power may be needed. It refers to the complexities of company law, insolvency law, commercial law and supply chains, and the possibility that an obstacle to a transfer may emerge unexpectedly. A compulsory transfer may well give rise to legal complications, but the memorandum does not provide concrete examples of the circumstances in which primary legislation would need to be disapplied or modified. If those circumstances can be identified, they should be placed in the Bill, or at least the power should be more tightly defined.

On Amendments 13 and 14, the Government’s own delegated powers memorandum confirms that the transfer powers in Clauses 4 to 29 are subject to the negative procedure. That is a very wide suite of powers. They not only concern the initial transfer of shares or property but include the legal effect of those transfers, continuity arrangements, the conversion and delisting of securities, the position of directors and senior managers, licences, termination rights, foreign property and supplemental onward, reverse and connected transfers. Amendments 13 and 14 focus on the central powers, the compulsory transfer of securities and the compulsory transfer of property rights and liabilities. Those are the acts by which the state takes control of a private business, or part of one.

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[Lord Leong (Lab)]

I am happy to give that commitment in our further conversations.

[Lord Hunt of Wirral (Con)]

My Lords, I am grateful to the noble Lord, Lord Fox, not only for his generous praise, which I felt was completely undeserved, but for his support. At some stage, this great Chamber of ours will consider better ways to deal with secondary legislation. He will know that I gave quite a lot of support, when I chaired the Secondary Legislation Scrutiny Committee, to one of his noble friends who moved that there should be a new Bill—the Statutory Instruments (Amendment) Bill. But that is for another occasion. In the meantime, I thank the noble Lord for his strong support.

There is clearly much now for the Government to consider, in particular in view of the commitments made by the Minister. How do we achieve the right balance between acting swiftly where necessary and, at the same time, ensuring that Parliament has a meaningful role in scrutinising powers, particularly where they affect property rights, liabilities and commercial arrangements? I am sure these issues will merit further discussion as the Bill progresses. For the present, I beg leave to withdraw the amendment.

Amendment 13 withdrawn.