Steel Industry (Nationalisation) Bill

Lord Leong Excerpts

Report stage
Wednesday 8th July 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

I rise to speak to Amendment 11 in my name and that of my noble friend Lord Hunt of Wirral. It is vital, as we have said throughout our consideration of this Bill, that there is clarity about the liabilities which may be acquired when the Government exercise a principal transfer power. That is particularly important in relation to environmental liabilities. Steelworks are substantial and long-standing industrial sites and any environmental liabilities associated with the transfer could represent a significant future cost to the taxpayer.

I am very grateful to the noble Lord, Lord Fox, for his amendments in this group, which rightly focus on the need to consider the public finances. We have consistently raised the issue of the costs associated with share and property transfers and pension liabilities when compensation is assessed. I thank the Minister and the Government for their engagement on these amendments, and I look forward to hearing what the Minister has to say and hope that at least some of these amendments will be accepted.

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

My Lords, before turning to the amendments before us, I begin by placing on record my sincere thanks to the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, for the constructive and collegiate way in which they have engaged throughout the passage of this Bill. We have not agreed on every point, but their contributions have been thoughtful, serious and rooted in a shared recognition of the importance of the UK steel industry. I am grateful for the time they have taken to meet with me to test the Government’s position and, for raising their concerns in such a fair and friendly spirit.

Responding to the points raised in this group, I will speak first to Amendments 7 and 9 in the name of the noble Lord, Lord Fox. Over the course of this Bill’s passage, I have had ongoing and constructive conversations with the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt, about the cost of nationalisation and the importance of parliamentary scrutiny. The noble Lords and I agreed that the Government must consider the costs of any nationalisation before exercising the powers. As I have stated to this House previously, existing public spending governance controls provide for this, with cost and value-for-money considerations embedded in the Managing Public Money principles and the well-established process of accounting officer tests.

However, the noble Lords have sought a statutory requirement on the face of this Bill. Through our conversations, I have been persuaded by their arguments, and I am pleased to say that the Government will support the amendment of the noble Lord, Lord Fox, which requires the Secretary of State to consider costs before exercising the share or property transfer powers in Clauses 4 and 15. We hope the House will agree. Our agreement on this issue reflects the commitment of noble Lords to ensure that this Bill is as comprehensive and effective as possible. It is an excellent representation of this House’s ability to work collaboratively, and I thank the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt, for their engagement on this issue.

The noble Lord, Lord Fox, has also put forward Amendment 1, which would require the Secretary of State to have regard to the public finances when considering exercising the principal transfer powers. Given that the purpose of this amendment is achieved through Amendments 7 and 9, I do not think this is necessary in addition.

The noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, have tabled Amendment 11, which would require the Government to provide a statement to Parliament outlining the value of contingent liabilities associated with a steel undertaking, and the steps taken to minimise taxpayer exposure to them, prior to an intervention. As I have set out previously, I have concerns about creating additional hurdles that must be cleared prior to the exercise of the transfer powers, given the likely need to act at pace. There is also a practical difficulty in publishing the details of a private company’s financial information prior to a nationalisation. None the less, the Government share the desire of the noble Lords to minimise the taxpayer’s exposure to liabilities as far as possible, and that will inform our decision-making. If a steel undertaking is nationalised, we would expect its annual report to include details of its liabilities, where relevant. We will discuss liabilities again in later groups today, and I look forward to that discussion. I hope that that helps to clarify the matter and provides the noble Lords and the rest of your Lordships’ House with sufficient reassurance.

Amendment 24, tabled by the noble Lord, Lord Fox, requires that where the Government have exercised the transfer powers, the independent valuer must prepare a written estimate of a steel undertaking’s pension liabilities and provide that to the Secretary of State, who should then publish the estimate before Parliament. Pension liabilities will of course differ for different companies. If the Government were to decide that it was in the public interest to nationalise British Steel, I reassure noble Lords that our understanding is that there would not be significant pension liabilities, as the company has a defined contribution scheme and so pensions would be funded from an existing pot. In cases where pension liabilities are relevant to the value of a steel undertaking that is subject to the powers under the Bill, the independent valuer should consider that as part of their assessment. None the less, publishing this in isolation would be unhelpful without the full context. The Government have already committed to publishing the outcome of any compensation scheme. Therefore, I do not consider this amendment necessary.

I hope I have been able to reassure noble Lords, even though there are amendments in this group that I do not support.

[Lord Fox (LD)]

My Lords, I thank noble Lords for their contributions to this debate. Before coming to the Minister’s words, I will pick up on the point made by the noble Lord, Lord Redwood, on health and safety. I turn his attention to Amendment 21, which returns to the issues of health and safety and environmental liabilities. Although his point does not need to be made again, the debate on that amendment is when the Minister can respond to it.

I thank the Minister for his response to Amendments 7 and 9; I believe that they will take scrutiny a step forward. His approach to accepting them is very heartening. It is therefore clear that, if we accept Amendments 7 and 9, we do not need Amendment 1.

On Amendment 24, I am reassured by the Minister’s comments on one particular steel asset. Although we do not expect it, in the event that the future Act is used for other assets, pensions may become an issue. Picking up on the point made by the noble Lord, Lord Wigley, particularly in Committee, there have been some missteps around employee pensions. It is very important that, whoever the Government of the day are, they do not make those missteps again and create the situation we have seen and on which the noble Lord commented.

On that basis, and in thanking the Minister for his acceptance of Amendments 7 and 9, I beg leave to withdraw Amendment 1.

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[Lord Fox (LD)]

My Lords, because this is Report, I will not repeat my Committee speech. Briefly, Clause 2 is unchanged and Clauses 4 and 15 have been amended along the lines that the previous groups suggested and begin to bring the rigour at the start of this process. The request made by the noble Lord, Lord Hunt, for information after the fact, if it has to be brought forward, seems reasonable, but on that basis I do not support the amendments as they stand.

[Lord Leong (Lab)]

My Lords, I am grateful for the contributions to this debate. Noble Lords have highlighted that the public interest test in Clause 2 is a vital part of the Bill and I very much agree. It is important that we get it right. Noble Lords have tabled several amendments to this clause and we have had fruitful discussions on them at previous stages, but I am happy to return to them.

Amendment 2, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would limit the public interest factors that could be considered by the Secretary of State to those explicitly set out in statute in Clause 2. As I have set out previously, the Government agree that these are likely to be the most pertinent issues in relation to an intervention in the steel sector. We have sought to strike a balance in the Bill between minimising the scope as far as possible and ensuring that we can adapt to evolving circumstances. That is why we think it is necessary to retain some flexibility to consider other factors that may be relevant to a particular case, which may be difficult to anticipate.

Let me be clear that the legal test in this clause places particular emphasis on the factors that are explicitly set out. Where the Government seek to rely on other factors, they will need to be satisfied that those factors mean that an exercise of the powers is necessary in the public interest. I therefore do not consider the amendment necessary and respectfully ask that it be withdrawn.

Amendments 3 and 5, tabled by the noble Lords, Lord Sharpe and Lord Hunt, would create procedural steps that would need to be fulfilled before the transfer powers are exercised. Amendment 3 would require the Secretary of State to commission an independent assessment of whether the public interest test has been met and for that assessment to be met prior to using the powers. Amendment 5 would require the Secretary of State to provide details of the criteria used to demonstrate the public interest. Both are difficult to reconcile with the likely circumstances under which the powers could be exercised. The Government will likely need to act at pace to deliver an effective transfer. However, the Government will commit to publishing a Written Ministerial Statement following an exercise of the principal transfer powers, which would include details of how the public interest test has been met. I hope that provides some reassurance to the noble Lords, even if we cannot meet the full ambition of their amendments.

Finally, Amendment 4, also tabled by the noble Lords, Lord Sharpe and Lord Hunt, would require the Secretary of State to be satisfied that the exercise of the transfer powers would represent value for money for taxpayers. The Government are mindful of the potential costs that could be incurred in relation to the nationalisation of a steel company. This consideration is already taken into account in government decision-making under the usual public spending processes, as I have set out previously.

Additionally, as we discussed in the previous grouping, the Government are supportive of Amendments 7 and 9 from the noble Lord, Lord Fox, which would require the Secretary of State to consider costs prior to the exercise of the principal transfer of powers. These amendments go some way to addressing the concerns raised by the noble Lord Hunt, and I hope that will provide some reassurance.

[Lord Hunt of Wirral (Con)]

My Lords, I am grateful to my noble friend Lord Redwood and the noble Lord, Lord Fox, for their comments. I am grateful indeed to the Minister for his reassurances and the commitment that he has given, which meet many of the concerns I expressed earlier. In those circumstances, I beg leave to withdraw the amendment.

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[Lord Fox (LD)]

My Lords, I am in slight confusion that I hope the Minister can clear up. My understanding of Amendment 6A is that it offers a one-term renewal of two years, meaning a four-year total for any sunset clause. I might have misheard what the noble Lord, Lord Sharpe, said. I am assuming that is what Amendment 6A is seeking to achieve.

If we are reassured by the Government’s assurances on their intention, in a sense we do not need this—but it is certainly helpful to have it. If my reading of Amendment 6A is correct and it moves it four years as a maximum, it will move it into the next Parliament, where the Liberal Democrat Government will take a view.

[Lord Leong (Lab)]

My Lords, I am very grateful to all noble Lords for their contributions. I will respond to the point from the noble Lord, Lord Redwood, on financial assistance when we cover financial assistance in the sixth group.

I am grateful for the points raised regarding the sunset provisions in Clause 3. The noble Lords, Lord Sharpe and Lord Hunt, have tabled an amendment that would limit any extension of the sunset period to two years. I have had helpful discussions with them on this matter. Throughout debates on this Bill, we have emphasised that the Government are strongly minded to use the powers in the Bill to nationalise British Steel, subject to the public interest test, and do not currently see a need to use them for other steel undertakings. However, the steel sector faces challenges that can be beyond the control of government or companies themselves. It is important that we reserve the possibility of intervening in this way if it is needed in the public interest.

The amendment from the noble Lords, Lord Sharpe and Lord Hunt, strikes a good balance, allowing the Government to preserve the powers if absolutely needed while limiting any extensions of those powers to a limited period and subjecting them to an affirmative parliamentary debate. We recognise the need for this level of scrutiny, and it is appropriate that any extension be limited to a short period only. I am therefore pleased to lend my support to the noble Lord’s amendment.

Amendment 6 withdrawn.

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[Lord Redwood (Con)]

My Lords, I support my noble friends on the issue of the affirmative resolution. I think it is a superior device, given the importance of the matters that could be brought before us. I also fully support the idea of a proper impact assessment, which should of course include the impact on Northern Ireland, which may well be different because of the Windsor Framework—an arrangement which, in another life, I opposed very strongly.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions and for ensuring the ongoing scrutiny of any steel undertaking that is subject to the use of the powers in the Bill. Before turning to the amendments tabled by the noble Lord, Lord Fox, I will reflect on conversations I have had with noble Lords from across the House in recent weeks as we have sought to secure agreement on the drafting of the Bill.

The noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, have provided detailed feedback on and suggestions for how parliamentary scrutiny can and should continue following any acquisition. Following consideration of their feedback, I am pleased to confirm the following government commitments, which reflect the importance of transparency and parliamentary scrutiny.

I confirm that a debate will take place in both Houses on the steel strategy and the impact of the Bill, within 12 months after Royal Assent. Alongside this, the Secretary of State will lay a quarterly Written Ministerial Statement for at least the first year that a steel undertaking is in public ownership, reverting to a slower rate after that. Where a Minister considers it appropriate, the Written Ministerial Statement may provide an update on jobs, communities and other issues; I will detail this further in subsequent groups. As I have already set out, the Government will lay a Written Ministerial Statement following the acquisition of a company, setting out how the public interest test has been met.

In addition to these commitments on the impact of the Bill, I can confirm that, following any acquisition of a steel company, the company’s new chair would be able to attend a Select Committee to set out their plans for the publicly owned steel undertaking. I hope that that reassures the noble Lord, Lord Redwood. Alongside the chair’s attendance, the Government will write to Select Committees, including the Business and Trade Select Committee, with information following any acquisition, and subsequently on any future plans for any steel undertaking that falls within the scope of the Bill’s powers, and to respond to any specific requests from a Select Committee. I emphasise that it is for the Select Committees to set their agenda. If the Government, or the chair of a nationalised company, are asked to provide information and attend meetings, we will of course do so. These commitments build on the statutory reporting requirement on financial assistance in Clause 59, the company’s annual report and accounts, and the quarterly Written Ministerial Statements, which I have already set out.

Any nationalised steel undertaking would not be exempt from the corporate reporting requirements set out in the Companies Act 2006. This Act contains various reporting requirements that vary depending on the size of the entity. The Government will work closely with the company and, where necessary, if there are any material changes to the company’s circumstances outside the regular reporting cycle, the Government will be able to ask the company to produce an interim report on that particular issue.

Noble Lords have also raised a concern about ensuring that stakeholders are appropriately engaged in decision-making. I will provide further detail on this later, but I emphasise that the Steel Council will continue following the publication of the steel strategy. The council is made up of representatives from across the sector, and they would include a representative from any publicly owned steel company.

In addition to our continued engagement with the sector, I recognise the importance of ensuring that there are opportunities for Parliament to engage with the sector. I therefore confirm that the Government will convene an ad hoc round table on the future of the steel sector six months after Royal Assent. I hope that this series of commitments reassures noble Lords that the Government are committed to ensuring that Parliament can scrutinise any publicly owned steel undertaking where appropriate.

I thank the noble Lord, Lord Wigley, for his continued engagement with the Bill. I reassure him that Minister McDonald, the Minister for Industry, recently met with Minister Price from the Welsh Government, and my officials continue to engage with Welsh Government officials to try to secure a recommendation of legislative consent for agreement on the Bill. I am grateful to the noble Lord, Lord Wigley, for the discussions on these matters, and I hope to update the House on the outcome of these conversations at Third Reading.

I thank all noble Lords who have taken part in debates on Amendments 12 and 13, and particularly the noble Lords, Lord Sharpe and Lord Hunt, for their constructive engagement with me over the past few weeks. The Government respect the concerns that have been raised. Throughout the passage of the Bill, we have been clear that the Government are committed to as much transparency as possible with regard to the powers in the Bill. We have listened carefully to the cases made during our debates to date and have considered where it may be possible to amend the procedure for the power without harming the Government’s ability to carry out their objective under the Bill.

I am therefore delighted to confirm that the Government will support Amendments 12 and 13, which amend parliamentary procedure for continuity of obligations and enforcement powers. Under these amendments, the power to make regulations in relation to certain aspects of continuity obligations will change from the negative procedure to a draft affirmative procedure unless the Secretary of State considers the made-affirmative procedure necessary, and the power to make regulations on the enforcement of obligations will change from the negative to the made-affirmative procedure respectively. This compromise reflects your Lordships’ House at its best.

I shall address the other amendments in this group. Amendments 8 and 9, tabled by the noble Lords, Lord Sharpe and Lord Hunt, set out the opposition to the parliamentary procedure associated with the exercise of the share and property transfer powers in Clauses 4 and 15 respectively. While I recognise the magnitude of these powers, I must emphasise that any use of the principal transfer of powers would need to be exercised promptly to ensure operational and legal certainty. I cannot overstate the importance of this. In a scenario where the Government chose to use these powers, they would need to be exercised at pace in a commercially sensitive environment. The affirmative procedure would introduce significant delays to the transfer process and create a lack of clarity regarding ownership. This in turn would significantly affect the business, particularly supply chains and third-party contracts. This must be prevented.

Amendment 14 was tabled by the noble Lords, Lord Sharpe and Lord Hunt, and they have indicated their opposition to Clause 50 remaining part of the Bill. I am afraid that I have to disagree unequivocally in this case. I have previously set out that removing the clause would risk undermining the effectiveness of the Bill. The Bill confers powers that interact with the complex area of commercial company and insolvency law in a way that was not anticipated during the drafting of the legislation concerned. There will therefore be some tension in the way that the powers are applied. Clause 50 allows us to smooth over those challenges and avoid any unintended consequences or obstacles to a successful transfer.

I am sympathetic to the fact that it is difficult to justify a power of this nature when its potential use is quite abstract at this stage. By its nature, it is intended to deal with unforeseen circumstances in non-consensual, highly atypical transfer scenarios, and I remind noble Lords that it was necessary in the Banking Act context as well. As an example, the power could be used to modify or disapply certain corporate laws, such as disapplying shareholder voting or approval requirements to prevent any delay to the transfer. That is not to say that we plan to use it in this way but merely to illustrate its potential utility. It is worth repeating that the power can be used only to ensure that the transfer of power can be exercised effectively. It cannot be used outside the context of nationalising a steel undertaking to change or amend other laws. The use of the power will be subject to the draft affirmative procedure except in particular circumstances that justify proceeding on a “made affirmative” basis. I hope that this provides some comfort regarding the issue.

Amendment 5, also tabled by the noble Lord, Lord Fox, would require the Secretary of State to provide quarterly Written Ministerial Statements to Parliament updating on the progress of the nationalised steel undertaking and the broader impact of the Bill. I thank the noble Lord for our discussions on this point, and I recognise the appetite for further parliamentary scrutiny of the approach to a nationalised undertaking. As I have already set out to the House, I can confirm that the Government will commit to provide quarterly Written Ministerial Statements to Parliament for at least the first year of a steel undertaking in public ownership. This reflects the Government’s commitment to ensuring that Parliament is appropriately informed about the progress of any publicly owned steel undertaking.

I turn to Amendment 16, and thank the noble Lord, Lord Fox, for his continued discussions on stakeholder engagement throughout the passage of this Bill. This includes the amendment he has tabled, which would require consultation with the stakeholder advisory committee on whether an intervention was in the public interest before exercising the powers in the Bill. I believe that the noble Lord and I agree that stakeholder engagement is critical to supporting the Government’s vision for the future of the steel industry and to ensuring appropriate scrutiny. As previously mentioned, I am pleased to confirm that we will shortly be inviting the UK Metals Council to join the Steel Council, which will ensure that the views of downstream users can be fed into engagement and discussions.

However, as I previously set out, any decision to exercise the transfer powers would need to be made at significant speed. The amendment would delay the exercise of the transfer powers, creating additional risks to the business viability and ongoing operations and uncertainty over ownership. In addition, there are commercial sensitivities associated with any decision to exercise the transfer powers, making it extremely difficult to consult in advance of a decision. While I cannot accept the amendment tabled by the noble Lord, Lord Fox, I will reflect on the range of ongoing engagement that Ministers and officials from my department undertake with industry and stakeholders.

A notable forum for engagement is the Steel Council, which I have already confirmed will continue following publication of the steel strategy. The council will support the delivery of the strategy by providing evidence and feedback on evolving or emerging policies that affect the sector’s competitiveness, and by providing strategic oversight of the working groups on research and development, investment and skills. Having considered the amendments tabled by the noble Lord, Lord Fox, I can confirm that the Government will convene an ad hoc parliamentary round table on the future of the steel sector six months after Royal Assent. I hope this reassures the House that the Government regard stakeholder engagement as critical to the revitalisation of the steel sector.

The noble Lords, Lord Sharpe and Lord Hunt, have tabled Amendment 40, which would require the Secretary of State to publish an impact assessment of the operation and effect of the Bill within two years of Royal Assent. This is straightforward for me to address. As the Government have already published an impact assessment for the Bill, in line with our Better Regulation Framework requirements, further impacts will be assessed as part of a post-implementation process or review. I reassure noble Lords that if the powers under the Bill are exercised, we will publish further impact assessments to accompany any transfer regulations. Following this, the Government will consider any further impacts in the post-implementation review. As I have already set out, the Government will ensure that a debate on the steel strategy and the impact of the Bill takes place in both the House of Commons and the House of Lords within 12 months of Royal Assent. This reflects our commitment to ensuring that parliamentarians remain well informed about our plans for the steel sector.

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Moved by

[Lord Leong]

17: Clause 53, page 34, line 26, leave out from “regulations” to “by” in line 27 and insert “must provide for any valuation for the purposes of the regulations to be carried out”
Member’s explanatory statement
This amendment would require (rather than enable) compensation scheme regulations to make provision for the role of an independent valuer and would focus more explicitly on their role in carrying out valuations for the purposes of the regulations.

[Lord Leong (Lab)]

My Lords, I am pleased to introduce a set of amendments that the Government have tabled. I hope that we have demonstrated throughout this Bill’s passage a willingness to listen to and engage with the concerns raised by your Lordships and to consider potential solutions. In tabling these amendments, we seek to address the concerns raised by the noble Lord, Lord Fox, regarding the discretionary nature of the appointment of an independent valuer. I previously noted that the Government intend to appoint a valuer whenever the principal powers in the Bill are exercised. We therefore consider the noble Lord’s suggestion to make this mandatory reasonable.

Amendment 17 will therefore make the required change by ensuring that any compensation scheme regulations must provide for the appointment of an independent valuer. The amendments that follow to Clause 54 make minor consequential changes clarifying that the valuer’s role is to carry out valuations for the purposes of the regulations, which is a critical step in determining any amounts of compensation. I hope that these amendments demonstrate the Government’s constructive approach and that noble Lords will support them.

Turning to Amendments 20, 21 and 23 from the noble Lord, Lord Fox, I am grateful to him for his engagement over the past few weeks on this and other points. These amendments would ensure that compensation scheme regulations must require the independent valuer to take into account environmental and health and safety liabilities when assessing the value of the relevant steel undertaking. I refer also to the points made by the noble Lord, Lord Redwood, earlier. I have said during the Bill’s passage that the Government will seek to address concerns from noble Lords as far as possible.

Many companies operating in heavy industries such as steel operate as normal with contingent liabilities. The precise cost associated with environmental liabilities would depend on many factors, including the extent to which land will be retained for future steel-making, kept safe or remediated for alternative light industrial use. None the less, we agree that the environmental and health and safety liabilities are likely to be an important part of any compensation determination and that this should be made clear in statute. I am therefore pleased to confirm that the Government will support these amendments, and I hope the House will support them too.

[Lord Fox (LD)]

My Lords, that was a very positive response from the Minister, and I thank him and his team for really listening to what we have been saying. Amendment 17 is an important step forward and I am pleased that he has tabled it. Amendment 21, as the Minister pointed out, makes something that might happen mandatory, taking on board fully the issues raised on another group by the noble Lord, Lord Redwood, and absolutely taking on board the issues I raised in Committee. I thank the Minister for his enthusiasm and look forward to this being added to the Bill.

[Lord Redwood (Con)]

My Lords, I too welcome this from the Government. I think they will find it very helpful because, should we move on to the full acquisition of British Steel at Scunthorpe, there remain, as I understand it, financial issues outstanding with the current Chinese owners. It will be very important to have an accurate and full account of all these long, deep-rooted and sometimes very expensive liabilities to provide some counter to what we read in the press is their rather extravagant idea of how much they ought to be paid.

[Lord Leong (Lab)]

I thank all noble Lords for their support. I want to share with noble Lords that the issue of health and safety is definitely a priority. At British Steel there has been a clear improvement in health and safety standards since the introduction of the special measures Act last year. This will remain a central priority going forward. Indeed, since the passage of the Act we have already spent some £8.1 million on essential improvements in this area, so we do take health and safety seriously and it is a priority for the Government.

Amendment 17 agreed.

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Moved by

[Lord Leong]

18: Clause 54, page 35, line 10, leave out “determining an amount of compensation” and insert “the carrying out of a valuation”
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).

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Moved by

[Lord Leong]

22: Clause 54, page 35, line 27, leave out “making a determination” and insert “carrying out a valuation”
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).

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Moved by

[Lord Leong]

25: Clause 54, page 36, line 1, leave out “determining the amount of compensation (if any) payable” and insert “carrying out a valuation”
Member’s explanatory statement
This amendment is consequential on my amendment to clause 53(1).

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[Lord Fox (LD)]

My Lords, I welcome the noble and right reverend Lord’s descent from the spiritual to the temporal, and indeed the financial. His contribution is appreciated. I also welcome all those who have not had the joy of participating in the steel Bill debate so far.

Before I speak to Amendment 31, I am going to speak to Amendments 34 and 37, which are in my name. I am happy to say that the Minister pulled the rug from under my feet with respect to Amendment 34 when he spoke to a previous group of amendments. Amendment 34 seeks to promote a role for Select Committees going forward. I am happy to say that the Minister has taken that suggestion on board to a large extent. It is important that Select Committees are able to get under the bonnet of this, to look at the nature and amount of financial assistance, the beneficiaries of that financial assistance, the purpose and the effect of that financial assistance, and the conditions of repayment. I am happy to say that the points the noble and right reverend Lord made about the nature of any support were covered by previous comments.

Amendment 37 would insist on a report to outline the impact of financial assistance provided under Clause 58, with a focus on the short-term and long-term investibility of any nationalised steel undertaking. In tabling this amendment, I hope the Minister can put on record again what he told us in Committee about the long-term aim of the Government regarding returning these public assets into private hands. It would help your Lordships if the Minister were able to repeat that.

On Amendment 31, the Liberal Democrats in the Commons tabled an amendment to cap financial assistance, but we are now dealing with a different Bill. The Government have accepted Amendments 7 and 9, where value for money is accepted as a criterion in the Bill. We have inserted rigorous quarterly reporting. The noble Lord, Lord Redwood, will remember from two groups back that that amendment has been accepted and we will have quarterly reporting. As we have just said, we have ensured a role for Select Committees in scrutinising any nationalised industry, and we have implemented mandatory valuation of contingency liabilities. That Bill is not the Bill we are talking about.

I am persuaded that flexibility is required. The noble Lord, Lord Hunt, put in a spirited performance and, at one point, was possibly auditioning for the role of Chancellor—when he talked about magic money trees, I thought he was pushing his name forward to become the next Chancellor of the Exchequer. But then, he seemed to very freely talk about spending £2.5 billion here and £2.5 billion there. My worry is that his £2.5 billion would become a target, rather than the limit. Given the controls that we have put into the Bill, we will not be supporting Amendment 31.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions, and I thank the noble and right reverend Lord, Lord Sentamu, for his support.

Amendment 32, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would require that details of any proposed financial assistance under Clause 58 be provided to Parliament before the assistance can be granted. The noble Lord, Lord Fox, has raised the issue of parliamentary scrutiny in respect of this clause in Amendment 34, which would require detailed proposals to be put forward before Parliament for a 90-day period and allow the Select Committee to make recommendations which the Government must respond to before any assistance is forthcoming. I understand that these amendments address the concerns of all noble Lords about the potential to incur costs in relation to the powers in this Bill.

As I have noted previously, there is a framework of public-spending principles and governance, designed to ensure that public funds are well managed, and the Public Accounts Committee holds government to account in this respect. Where the Government use the powers in the Bill to transfer a steel undertaking into public ownership, costs may be incurred from day one and will need to be funded to maintain an ongoing operation. It is vital that a steel company that is running production continuously does not face disruption due to funding shortfalls. That is why these two amendments cannot be accepted by the Government, despite the good intentions behind them. As set out in Clause 59, we will provide annual reports to Parliament detailing the costs incurred under the financial assistance provided. A nationalised company will also need to publish an annual report and accounts, as the department does, so this information will be available in several places.

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[Lord Sharpe of Epsom (Con)]

My Lords, I will speak to Amendments 38 and 39, standing in my name and that of my noble friend Lord Hunt of Wirral. On Amendment 38, I hope that the Minister can give a clear assurance that the future impact assessment will include an assessment of the effect of nationalisation on investment in the domestic steel sector.

On Amendment 39, the Minister gave assurances in Committee that financial assistance would comply with domestic and international subsidy control rules. I would be very grateful if he could put that reassurance more clearly on the record. Could he please confirm that the Government have assessed whether any proposed support could give rise to concerns under the domestic subsidy control regime, including any conversations that they have had with the Competition and Markets Authority? Could he also confirm that Ministers are satisfied that the proposed support will comply with the World Trade Organization’s subsidy rules? I look forward to the Minister’s response. I beg to move.

[Lord Leong (Lab)]

My Lords, the amendments in this group address inward investment and a level playing field. I emphasise at the outset that the Government are committed to ensuring that any publicly owned steel undertaking is subject to the same requirements and standards as any privately owned steel undertaking.

Amendment 38, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would place a duty on the Secretary of State to report to Parliament on the impact of any nationalisation of a steel undertaking on inward investment in the UK. I reassure your Lordships that the Government are committed to revitalising the steel sector and to establishing an investible and competitive business environment. To date, we have had positive feedback from industry on the Bill and the Government’s approach to nationalisation.

To be clear, public ownership is not an end in itself; it is a means of safeguarding our strategic domestic capability in exceptional circumstances. Our intention behind any intervention would be to make the changes necessary to put the steel undertaking on a sure footing and, where possible, return it to a position where it could attract private investment.

As I have set out previously, any use of the transfer powers would require an impact assessment. This would set out the impact of a nationalisation on the economy and, where appropriate, the Government would undertake post-implementation reviews. As I have confirmed, the Government will ensure that a debate on the steel strategy and the impact of the Bill takes place in both the House of Commons and the House of Lords within 12 months of Royal Assent.

Amendment 39, again in the names of the noble Lords, Lord Sharpe and Lord Hunt, seeks to require the Secretary of State to maintain a level playing field between publicly and privately owned steel companies. I sympathise with the concern expressed by the noble Lords and want to make it clear that the governance and regulatory treatment of any nationalised steel company will seek to ensure a level playing field.

To emphasise this, I state that any financial assistance would be time-limited, targeted and proportionate to avoid market distortions. The provision of any funding would comply with domestic and international subsidy control obligations. I hope this reassures noble Lords that the Government are committed to ensuring that any publicly owned steel undertakings will not be unfairly advantaged.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the Minister for his remarks. It was particularly pleasing to hear that the Government have received positive feedback from the industry. It is not for now, but I wondered whether the Minister might be in a position to be a little bit more specific and perhaps write to noble Lords who have taken part in the debate, outlining some of those positive comments. That would help to contextualise our future debates. I am also pleased, as we have discussed in earlier groups, that we will deal with post-implementation reviews and that there will be a debate within 12 months in both Houses. That is a very welcome development.

As regards Amendment 39, I listened to what the Minister said. I am particularly pleased that he assured us that the Government will seek to pursue a level playing field quite explicitly and to avoid market distortion. Those are incredibly important things for so many reasons, particularly when it comes to encouraging inward investment and ensuring that existing operations are not disadvantaged by anything that the Government do on behalf of the taxpayer. In the light of those assurances, I beg leave to withdraw my amendment.

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[Lord Fox (LD)]

My Lords, we debated CBAM and the ETS in Committee, so I will not add to that debate, but I will ask a question of the proposers which I did not ask then: how is a steel business affected differently by CBAM or the ETS, whether it is publicly or privately owned? The answer is that it is not. The Bill is about the potential public ownership of steel. We will have to have a debate about CBAM and the ETS. The Liberal Democrats often talk about energy prices but not in the context of this Bill, because it is about whether a steel entity is in public or private ownership, and frankly, the CBAM will affect them the same way, no matter where that ownership lies.

[Lord Leong (Lab)]

My Lords, I thank noble Lords for their contributions to this debate on the emissions trading scheme and the carbon border adjustment mechanism, which I will refer to as CBAM, and their impacts on the steel sector.

Notably, these amendments seek to exempt a publicly owned steel undertaking from both these environmental measures, thereby undermining the level playing field that the noble Lord mentioned in the previous group. At the outset, I emphasise the Government’s commitment to their industrial decarbonisation policies and to moving towards a green, decarbonised steel sector. Although I appreciate that there may be differing views on this issue, these amendments would completely undermine the Government’s objectives for these measures.

These commitments build on the statutory reporting requirement on financial assistance in Clause 59, the company’s annual report and accounts, and the quarterly Written Ministerial Statements, which I have already set out. Any nationalised steel undertaking would not be exempt from the corporate reporting requirements set out in the Companies Act 2006. That Act contains various reporting requirements, which vary depending on the size of the entity. Where relevant or material, our Written Ministerial Statements may refer to any wider contextual or regulatory impacts. In addition, as previously mentioned, the Secretary of State would have the ability, if needed, to request an interim report on a particular issue.

Amendment 41 seeks to exempt a publicly owned steel undertaking from CBAM. I understand the concern expressed by the noble Lord; however, I emphasise that CBAM’s purpose is to ensure that imported carbon-intensive goods face comparable carbon prices to those of domestically produced goods. It gives industry confidence to invest in the UK, knowing that its decarbonisation efforts will not be undermined. CBAM makes no exemptions for particular UK firms. Its intent is to target the problem of carbon leakage and ensure that highly traded, carbon-intensive goods from overseas, including steel, pay a comparable carbon price to that paid by UK manufacturers.

I understand the intention behind Amendment 42 and the desire to ensure that Parliament remains informed about the impact of carbon pricing policies on the steel sector. The Government are committed to supporting a competitive and sustainable steel industry while delivering our decarbonisation objectives. However, the UK emissions trading scheme and the carbon border adjustment mechanism are economywide policies designed to address carbon leakage and support the transition to net zero across industry as a whole, rather than for any particular company or ownership model.

The UK ETS Authority already keeps the operation of the scheme under review. The scheme contains statutory review mechanisms. The authority has committed to continued monitoring of both free allocation policy and the interaction between ETS and CBAM. The authority has also recently confirmed the extension of the UK ETS beyond 2030 and will continue to engage with industry and consult on future scheme design, ensuring that the impacts on affected sectors are properly considered. Given these existing review mechanisms, it is not necessary to create a separate statutory requirement for a particular transferred steel undertaking.

Amendment 43 seeks to exempt a publicly owned steel undertaking from the emissions trading scheme. I am sympathetic to the fact that this imposes a cost on activities that have significant emissions. However, as with Amendment 41, accepting Amendment 43 would grant preferential treatment based on ownership and undermine a level playing field across the industry. The transition to low-carbon steel must be fair, credible and consistent across all operators, whether publicly or privately owned. I emphasise that the ETS includes targeted protections for energy-intensive, trade-exposed industries, including steel. Further protections will be introduced through CBAM from 2027.

The Government remain firmly committed to both a competitive steel sector and our decarbonisation objectives. Exempting a publicly owned steel undertaking from ETS or CBAM would create an uneven playing field, weaken the integrity of these schemes and undermine efforts to tackle carbon leakage. Steel producers, regardless of ownership, should operate within the same fair and consistent framework. I hope that my comments reassure noble Lords.

[Lord Hunt of Wirral (Con)]

My Lords, I am very grateful to my noble friend Lord Redwood for highlighting the importance of ETS and CBAM. I say to the noble Lord, Lord Fox, that the British taxpayer has a right to know the effect of ETS and CBAM. I take his point that it would apply whether it was in the private or the public sector, but we are now dealing with a nationalised industry which is funded by the taxpayer, and the taxpayer has a right to know exactly what the effect of the UK ETS and CBAM will be on the costs, production, exports and competitiveness of the transferred steel undertakings.

However, I recognise that the Minister has done much to explain the method by which the Government are approaching this situation. We will keep it under careful scrutiny but, in the meantime, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Sharpe, raises a serious issue. There was a moment when I thought I had passed through the looking glass. Your Lordships on that side of the House were sitting on this side, and those Lordships who were here were sitting on that side of the House. The only thing that broke me from that reverie, far from it being the noble Lord, Lord Sharpe, at the Dispatch Box, was the noble Lord, Lord Callanan. He was proposing the Strikes (Minimum Service Levels) Act 2023, with which the Government of the day sought to do exactly as the noble Lord, Lord Sharpe, seeks with this amendment.

I ask the noble Lord, Lord Sharpe, how many times that Act was applied. How effective was it? The issue that he raises is important. Of course the security of the country is important, but this is not the way to ensure the security of our country. Having a proper partnership with the workers in the industry is the way in which you secure the security of this country.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions and the noble Lord, Lord Fox, for those words. As this is the last group of amendments, I thank all noble Lords for their constructive approach to the scrutiny of this Bill. In particular, I thank the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, for taking the time to meet me over the last few weeks. The way in which we have been able to collaborative to refine and improve the Bill truly shows your Lordships’ House at its very best.

Amendment 44 is in the names of the noble Lords, Lord Sharpe and Lord Hunt. Before I speak to it, I state that the Government take national security seriously; it is a priority. The amendment seeks to prohibit or restrict industrial action where there is a sufficient risk to the public interest grounds on which the steel undertaking is brought into public ownership. I understand that the intent of this provision is to ensure that any publicly owned steel undertaking can operate effectively without delay.

However, this is not the appropriate means to achieve this goal. I emphasise the absolute importance of workers’ rights. The steel workforce is the backbone of this industry. This Government are committed to protecting their rights and working with the trade unions and the workforce to ensure that operations are as effective and secure as possible. Noble Lords will know that I was closely involved in the delivery of the Employment Rights Act. Workers’ rights is an issue that is close to my heart. While political differences remain, we are not in the business of counterproductive approaches to industrial relations. As part of delivering the Employment Rights Act, our plan to make work pay, we are continuing to consult with businesses, trade unions and civil society to make sure we get the detail right. Several consultations are still live, including on reforms to zero-hours and similar contracts. This amendment is neither necessary nor appropriate to ensure that a publicly owned steel undertaking can operate effectively.

I hope I have convinced noble Lords of the reasons why the Government cannot support this amendment. I therefore respectfully ask that it be withdrawn.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the Minister for his response and, in particular, for the recognition of the central importance of national security in this matter. That is very welcome, but recognition is not the same as resolve. If the Minister truly accepts the force of the argument, the surest way to demonstrate that is not warm words at the Dispatch Box but acceptance of the amendment. I gently say to him that he could have strengthened his own case considerably by doing just that.

I am grateful to the noble Lord, Lord Fox, for pointing out my party’s admirable consistency, which sometimes we are criticised for. I suggest that nothing in this amendment would prevent any sort of proper partnership—to use the noble Lord’s words—with the workforce, which of course we would approve of and endorse as a first and foremost. The simple fact of the matter is that this is a different set of circumstances. We are talking here about the national interest and national security. They are of fundamental importance as regards this entire Bill, and that is why we have proposed this amendment.

To finish there would be to finish on a slightly discordant note, and I do not wish to. I am enormously grateful to the Minister for all his engagement and for accepting so many of our arguments. We are very grateful for the reassurances we have received from the Dispatch Box and the acceptance of some of our amendments, and we wish the Minister well in his future endeavours. I beg leave to withdraw the amendment.