Steel Industry (Nationalisation) Bill

Lord Leong Excerpts

2nd reading
Tuesday 16th June 2026 Lords Chamber

Moved by

[Lord Leong]

That the Bill be now read a second time.

Northern Ireland, Scottish and Welsh legislative consent sought.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, steel is a historic British industry at the heart of our national story. For generations, steelworkers have forged not only steel but Britain’s prosperity. From Scunthorpe to Sheffield, from Port Talbot to Teesside, steel communities have powered our industrial success, strengthened our economy and contributed immeasurably to our national life. For those communities, steel is far more than an industry; it is a source of pride, identity and opportunity. It is a way of life, built over generations through skill, dedication and enterprise.

However, steel is not only about our past; it is fundamental to our future. Steel underpins our infra- structure, manufacturing base, energy networks and transport system. It is essential to the homes, railways and power stations that we build and the defence capabilities on which our national security depends. Steel is therefore not merely another sector of the economy; it is a strategic national asset. Its future is central to our economic resilience, our industrial strength and our ability to deliver the growth and prosperity that this country needs.

The global steel industry faces profound challenges. The volatile geopolitical climate, intensifying international competition and significant global overcapacity have placed enormous pressure on steel producers worldwide. British producers face those challenges while contending with energy costs that remain higher than those of most of their many international competitors. Recent events have highlighted the fragility of global supply chains. The pandemic exposed vulnerabilities that many had assumed did not exist. Russia’s invasion of Ukraine reminded us that economic and national security are inseparable. Increasing geopolitical uncertainty has underscored the importance of maintaining domestic industrial capability.

The lesson is clear: a modern industrial nation cannot afford to lose the capability to produce the materials on which its economy and security depend. Without intervention, the United Kingdom faces the prospect of being the only G7 nation unable to produce virgin steel from raw materials within its borders. That would be more than an industrial failure; it would represent a strategic vulnerability. That is why in March the Government published The UK Steel Strategy, setting out a commitment to revitalise the steel sector, restore domestic production to sustainable levels and secure the industry’s long-term future.

The strategy recognises that the Government have a vital role to play. It means tackling the drivers of high operating costs, including reducing industrial energy costs. It means maintaining a robust trade defence regime to protect British producers from unfair competition. It means working alongside industry to secure the investment that is needed to modernise and decarbonise steel production. It means ensuring that where strategically important steel-making assets are at risk, government has the tools necessary to act decisively in the national interest.

That brings me to the Bill before the House today. This Bill establishes a framework that enables the Government, where necessary and justified by the public interest, to bring steel undertakings into public ownership. This is an enabling measure. It provides the Government with the ability to intervene where strategic domestic steel-making capability is at risk and where such intervention is necessary to safeguard the national interest. As the Prime Minister has already made clear, the Government are strongly minded to use these powers in relation to British Steel, subject, of course, to the public interest test set out in the legislation.

The circumstances surrounding British Steel and the Scunthorpe steelworks are well-known to the House. Scunthorpe is the last remaining primary steel-making capability in the United Kingdom. It directly employs approximately 2,700 highly skilled workers and supports many thousands of additional jobs throughout the wider supply chain. The Government took decisive action last year under the Steel Industry (Special Measures) Act 2025 to prevent the premature and disorderly closure of the blast furnaces at Scunthorpe. I would like to place on record my gratitude to noble Lords across the House for their constructive and responsible engagement with that legislation. I pay tribute to the parliamentary staff whose efforts enabled Parliament to respond swiftly to an urgent national challenge.

The measures enacted last year served their immediate purpose. They prevented closure and ensured continued production. However, those powers were always intended to be temporary. Although they have enabled continued operation, they do not provide the flexibility required to undertake the longer-term restructuring, investment and modernisation that the business now requires. As matters stand, the Government believe that public ownership offers the most effective way to secure the company’s future and to enable strategic decisions to be taken in the long-term interests of the business, its workforce and the nation.

However, I emphasise that any decision to nationalise remains subject to the public interest test as set out in the Bill. The Government did not reach this position lightly. We engaged constructively and extensively with Jingye to pursue a commercial solution. Our clear preference was to secure the future of steel-making through agreement rather than through intervention. However, despite extensive negotiations, it has proved impossible to reach an agreement that would represent a responsible and proportionate use of taxpayers’ money. In those circumstances, the Government concluded that legislation was necessary.

Some noble Lords may reasonably ask whether nationalisation is the right answer. The Government’s response is straightforward. Nationalisation is not an ideological aim and it is not the first option either. It is a pragmatic tool available for use when the national interest requires it. The costs of losing our steel-making capability would far outweigh the costs of preserving it. Once blast furnaces are extinguished, once supply chains disperse and once specialist skills are lost, rebuilding those capabilities becomes extraordinarily difficult and expensive. Inaction carries consequences and dependency carries risks. The loss of sovereign industrial capability carries costs that cannot be easily measured in purely financial terms. That is why Governments around the world intervene to protect strategically important industries. Britain should be no different.

We believe that British Steel can succeed. With the right leadership, investment and long-term strategy, the company can be transformed. We have already seen the success of public ownership in the case of Sheffield Forgemasters. Recently, British Steel has secured important new contracts, including supplying rail infrastructure and supporting future energy projects. These are encouraging signs of the opportunities ahead.

Turning to the detail of the Bill, I recognise that it contains significant powers and that noble Lords will wish to scrutinise them closely. That scrutiny is both expected and welcome. The Government have consistently sought to ensure that the powers contained in the Bill are proportionate, necessary and appropriately constrained.

[Lord Redwood (Con)]

On a point of information—

[Lord Fox (LD)]

We do not do points of information at Second Reading.

[Lord Leong (Lab)]

I will continue. In developing this legislation, we have drawn heavily on the framework established by the Banking Act 2009, adapting well-established precedents, rather than creating entirely new mechanisms. The principal transfer powers are subject to a sunset clause and will expire two years after Royal Assent. This ensures that they remain in force only for as long as necessary to achieve their intended purpose. The Bill provides for compensation arrangements when powers are exercised. Compensation will be assessed independently, by a valuer appointed through an independent process. This ensures fairness, impartiality and proper protection for affected parties. The Government are committed to treating all investors fairly and consistently.

Many of the technical provisions contained within the Bill are designed to ensure that any transfer of ownership can be carried out smoothly and effectively. In practice, we are seeking through legislation to replicate many of the outcomes that would normally be achieved through a complex commercial transaction. That inevitably requires powers to address legal and operational issues arising from such transfers and to ensure continuity of operations. These powers are not novel; they follow established legislative precedent, and are solely intended to ensure that the legislation’s objectives can be achieved effectively.

The Bill is ultimately about the kind of country that we aspire to be. Do we believe that Britain should continue to produce the steel upon which modern economies depend? Do we believe that strategic industries matter? Do we believe that economic security, industrial resilience and national security are worth safeguarding? Do we believe that steel-making communities deserve a future? The Government’s answer to each of those questions is yes. The Bill demonstrates our resolve to safeguard a strategically important industry. It demonstrates our commitment to safeguarding jobs, supporting communities and securing Britain’s industrial future. It demonstrates that this Government are prepared to act decisively when the national interest demands it.

Today, we have an opportunity to send a clear signal to steelworkers, investors, industry and the country that Parliament is committed to preserving and strengthening Britain’s steel-making capability for generations to come. I look forward to the contributions that noble Lords will make during this debate and to the constructive scrutiny I know this House will bring to the legislation. I beg to move.

--- Later in debate ---

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions to this excellent, thoughtful and wide-ranging debate and for their very kind messages on my appointment. I was trying to count the number of questions asked, but I gave up at 45. I will try to respond to as many as possible within my allocated time. If I am unable to address every point raised, especially those relating to costs and technical issues, I will ask my officials to review Hansard carefully, write to noble Lords accordingly and place copies of those responses in the Library.

The quality of debate in your Lordships’ House is often remarked upon, and today’s proceedings have once again demonstrated the immense expertise, experience and commitment that Members bring to issues of national importance. There have been contributions from across the House and from all sides of the debate. While there may be differences of opinion about the means, there is a remarkable degree of consensus about the end—namely, that the United Kingdom should continue to have a strong and sustainable steel industry. That consensus matters.

Many noble Lords spoke of the challenges facing the sector, and the Government recognise those challenges. They are real and significant, and they are unlikely to disappear in the foreseeable future. As my right honourable friend the Secretary of State has made clear, we are determined to revitalise the UK steel sector, restore domestic production to sustainable levels and secure the industry’s long-term role in supporting economic growth. That means reducing industrial costs, which I will come back to later. It means supporting investment, modernising production and creating the conditions for a competitive and sustainable industry. It also means ensuring that government has the tools necessary to act when that strategically important steel-making capability is at risk. It is about ensuring that future generations continue to benefit from a British steel industry capable of supporting our economy and security.

The noble Lord, Lord Sharpe, asked about the company Jingye and the ownership of British Steel. While we are strongly minded to use the powers in the Bill to nationalise the company, no decision has been made and any decision will be subject to the public interest test. The Government have been providing ongoing funding to British Steel under the Steel Industry (Special Measures) Act 2025. We are publishing regular updates to Parliament detailing this funding. These funding arrangements will be set out in the department’s upcoming annual reports and accounts. We are committed to transparency on this issue.

On the point raised by the noble Lords, Lord Hunt and Lord Sharpe, for whom I have the greatest respect, blaming workers’ rights for unemployment is a caustic distortion of the real issue. It substitutes ideology for evidence and seeks conveniently to scapegoat, rather than confronting the structural changes that hold back employment. Fair pay and basic protections are not obstacles to growth; they are the foundations of a stable, productive labour market. Businesses that invest in their workforce through training, progression and decent terms tend to achieve stronger retention, higher productivity and better long-term performance. Responsible capitalism reduces the need for state intervention. However, where short-termism prevails and workers are treated as a cost to be squeezed rather than an asset to be developed, government has a legitimate role in setting fair minimum payments.

The noble Lords, Lord Hunt, Lord Bilimoria and Lord Fox, and my noble friend Lord Murphy raised the issue of tariffs. The Government support free and fair trade, but trade must be fair. Free trade does not mean surrendering British jobs to subsidised foreign competitors. It means ensuring that British firms compete on a level playing field, not with one hand tied behind their backs. British steel producers should not be expected to compete with heavily subsidised imports, dumped products or unfair trading practices that distort markets and undermine domestic production. Every major steel-producing nation takes steps to protect its industry from unfair competition. The United Kingdom cannot be the only country to leave its producers exposed while others actively defend their national interests. This is why we will continue to use the full range of trade remedies available to us, including tariffs, where justified, to ensure a level playing field, safeguard jobs and maintain British sovereign capability to produce steel.

The noble Lord, Lord Bilimoria, asked about the UK-India free trade agreement. The noble Lord will know that we are seeking to bring this deal into force as quickly as possible. We are working with India to ensure that all parties have taken all the necessary steps to bring the deal into force.

The noble Lords, Lord Redwood, Lord Bilimoria and Lord Fox, and my noble friend Lady O’Grady, raised points regarding green steel and electric arc furnaces versus blast furnaces. The Government are clear that the future of the steel industry is green steel. Electric arc furnaces in the UK are making the full range of steels, from commodity construction grades to stainless steel and specialised steel for defence and nuclear industries. There are still challenges in certain areas such as packaging steel, but we are confident that the industry will find the right solutions. If it would be helpful, I can arrange for a technical briefing on this point for noble Lords who are interested in this area.

Several noble Lords asked about energy-intensive industry. The British industry supercharger seeks to address this crucial issue, providing targeted relief to qualifying sectors to improve competitiveness, safeguard manufacturing and support decarbonisation objectives in the UK. From April 2026, the level of compensation offered by the network charging compensation scheme was increased from 60% to 90%. Reducing electricity network connection timescales is also a high priority for the Government. We are working very closely with Ofgem, the electricity system operator and network companies to accelerate network connections.

The noble Lord, Lord Bilimoria, asked about the transformation of British Steel and the noble Lords, Lord Hunt and Lord Frost, asked about the future of British Steel under public ownership. The Government’s ambition is straightforward: we want British Steel to become a successful and sustainable British industrial champion that the entire country can be proud of. Should public ownership proceed, it would provide the opportunity to take a longer-term view and put in place the leadership, governance and investment necessary to secure the company’s future and safeguard domestic steel production. We believe there is every reason to be optimistic. British Steel continues to have highly skilled workers, valuable industrial assets and significant commercial opportunities. Recent contract wins, as I mentioned in my opening speech, demonstrate that there remains strong demand for British steel and that the company has an important role in the future of our economy.

Several noble Lords asked questions on jobs. I fully understand those concerns. The Government’s objective is a sustainable steel industry capable of standing on its own two feet. That is the best guarantee for long-term employment and stability for workers and their families alike. The decisive action taken by the Government last year prevented the immediate loss of approximately 2,700 jobs and ensured a continuation of steel production in Scunthorpe. We recognise that the sector is evolving and that future technologies will shape the future of steel-making. That is why any transition must be managed carefully. It must support workers, protect communities and preserve our economic resilience. The Government will continue to work closely with trade unions, employees and local stakeholders through the process.

The noble Lords, Lord Wigley, Lord Bilimoria and Lord Murphy, asked about Port Talbot. The Government have no plans to acquire any other steel undertakings, but the Bill provides flexibility to intervene if a future need arises and the public interest test is met. The Government remain fully committed to securing the long-term future of steel-making in Port Talbot through Tata Steel’s £1.25 billion transition to a state-of-the-art electric arc furnace supported by up to £500 million of government funding.

The noble Baroness, Lady O’Grady, and the noble Lord, Lord Fox, asked questions on the EU. The global context has changed drastically since Brexit. We need a closer economic relationship that protects our collective industrial security. Both the UK and the EU are taking measures to improve the security and resilience of key sectors. We both face the same challenges, such as overcapacity and higher tariffs, which are distorting global markets. The historic UK-EU summit last year was the first of our annual summits that will take place to improve our diplomatic, economic and security co-operation following Brexit. The date of this year’s summit will be announced in due course.

The noble Lord, Lord Fox, asked about the chilling effect on investment. Let me address this head-on: the Bill does not create any chilling effect on investment. I can do no better than to quote my friend the Minister in the other place:

“We have carried out a very careful balance with this Bill to ensure that the steel industry is fully informed, understands our intentions and is supportive—and it is supportive”.—[Official Report, Commons, 21/5/26; col. 812.]


The Bill is explicitly framed as a targeted, last-resort response to a market failure. The Government are signalling that it is not intended for wider or frequent use, which narrows uncertainty to a specific context rather than the sector as a whole.

The noble Lord, Lord Redwood, asked about the environmental liabilities, and rightly so. Many environmental liabilities arise on closure. Government intervention is precisely about avoiding disorderly shutdown and managing safely the remediation, respectively.

Several noble Lords raised the issue of compensation. The Government are committed to respecting business rights and ensuring fair treatment. To be absolutely clear, the Government’s actions to date at British Steel, and any future actions, are solely about commercial reality and delivering our domestic steel strategy. They would not differ under an owner of any nationality. If the transfer powers in the Bill are exercised, a compensation scheme would be established to consider and pay compensation for any losses suffered by those affected. An independent valuer would be appointed to oversee this process and determine what compensation, if any, is payable. There is nothing to prevent an outcome of nil compensation, but this would be a decision for the valuer and would depend on the circumstances.

Let me address the issue of nationalisation, which was mentioned by the noble Baroness, Lady Noakes, and the noble Lord, Lord Sharpe. We propose this nationalisation on principle. Are other Peers prepared to accept the loss of the United Kingdom’s last remaining primary steel-making capability in the name of market purity? We believe in free markets, but no responsible Government can stand aside when a strategically vital industry and national security are at risk. This is not ideology; it is pragmatism. Every major industrial nation supports its steel industry. The question is not whether Governments intervene but whether they are willing to act in the national interest where circumstances require. Faced with the choice between preserving British steel-making and watching it disappear, this Government chose action.

The promise of privatisation was that private ownership would deliver greater investment, stronger productivity and better outcomes for consumers and taxpayers, yet too often we have seen the opposite, with underinvestment, short-term decision-making and strategic national assets left vulnerable when market conditions turned difficult. The reality is that, when privatisation succeeds, profits are privatised; when it fails, losses are socialised. Working people lose their jobs, communities pay the price and taxpayers are asked to step in. That is precisely why this Government are prepared to act when a strategically important industry such as steel is at risk. When the national interest is at stake, standing aside is not a responsible option. I commit to writing to the noble Baroness about the classification of British Steel—my officials will definitely write to her. We will provide annual reporting to Parliament on financial support, as is provided under the Bill’s powers.

I turn to Port Talbot, as mentioned by several noble Lords. The fire at Port Talbot was successfully contained and all personnel are safe. We will continue to monitor the situation closely while investigations are ongoing and the company moves from emergency response to recovery planning. Regarding grid delays, timelines are still evolving and are not yet finalised. We remain fully committed to securing the long-term future of steel-making at Port Talbot and are working closely with all parties involved to identify mitigations and explore options to accelerate delivery.

The noble Lords, Lord Sikka and Lord Fox, asked about the importance of foreign investment and our relationship with China. I wish to be clear that the Government have decided to introduce this Bill regardless of the nationality of the firm that owns British Steel, which is Jingye currently. The Government continue to welcome Chinese investment in the UK and do not consider the situation at British Steel to reflect our wider relationship with investors.

British Steel is a strategic asset, as I said earlier, for the UK’s steel production. It is critical to national infrastructure and to the local economy. Unfortunately, the Government could not find a way to save British Steel’s operation under its current ownership. Although this Government now need to take steps to secure UK steel capability, we are committed to doing so in a way that respects the rights of business.

Throughout this debate, one theme has recurred: the future of steel matters. It matters to our economy; it matters to our industrial base; it matters to our national security; and it matters to the communities whose lives have been built around steel-making for generations. The Bill before your Lordships’ House is not about preserving the past; as I said in opening, it is about securing the future. It is about ensuring that Britain retains the sovereign capability to produce steel. It is about creating the conditions for a modern, competitive and sustainable steel sector. It is about demonstrating that, when strategically important national capabilities are at stake, this Government are prepared to act.

Today, your Lordships have the opportunity to send a clear message to steelworkers, industry investors, and the country that Parliament remains committed to the long-term future of British steelmaking. I am grateful to all noble Lords for their contributions and for the constructive spirit in which this debate has been conducted. I look forward to continuing those discussions as the Bill progresses. I beg to move.

Bill read a second time and committed to a Committee of the Whole House.