British Steel

Lord Leong Excerpts

Monday 20th July 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, the Government’s record on steel over the past two years has, I am afraid, been disastrous. Due to their tax, energy and regulatory policies, they have failed to secure a viable private sector future for British Steel, and taxpayers are now on the hook through nationalisation. British Steel itself has warned that the shortfall between its emissions and its free UK emissions trading scheme allowances is an ongoing liability that threatens the viability of domestic steel-making. Yet, from 2027, the Government intend progressively to withdraw those free allowances as the carbon border adjustment mechanism is introduced. Does the Minister accept that imposing ever-higher carbon costs on one of the last primary steel-makers is incompatible with reindustrialising Britain? Will the new Prime Minister therefore abolish the UK emissions trading scheme and scrap the carbon border adjustment mechanism so that Britain can reindustrialise at pace?

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

My Lords, I am sure the noble Lord remembers that we discussed this at length during the passage of the Bill; I am sure he would not want me to reopen the debate. We are where we are with British Steel. I totally understand the need for transparency on costs, including carbon costs. As it stands, we will abide by our international obligations on CBAM; that stands as our policy and the noble Lord knows full well that that is the Government’s position. Having said that, any financial assistance to British Steel will be reported in the ordinary way. The Government will publish quarterly Written Ministerial Statements for at least the first year, giving contemporary information on the support provided. Ministers must also comply with Managing Public Money, Treasury controls and accounting officer duties. We will protect taxpayers while ensuring that British Steel has the stability needed to continue operating.

[Lord Fox (LD)]

My Lords, the Minister talked about transparency and I am pleased that we were able to insert those quarterly reports into the legislation. The Minister in the Commons, in answer to my colleague’s Urgent Question, spoke about the key step of appointing the chair and board of the new enterprise and their role in taking that business forward. When will those appointments be made? Until that happens, who will be accountable for corporate governance?

[Lord Leong (Lab)]

My Lords, British Steel is now a government-owned company with the Secretary of State as its sole shareholder.

[Lord Fox (LD)]

Who is the Secretary of State?

[Lord Leong (Lab)]

All will be revealed in due course. The noble Lord will know that we took control of British Steel on Thursday. As anyone will know, in any acquisition process there will be a nominal director who will be registered with Companies House until such time as a board of directors has been appointed. The Government are putting a new board in place that has commercial and industrial experience, which is very important: we need people with expertise running this. The priorities will be stabilising the operation, improving performance, protecting health and safety, developing a sustainable business plan, exploring private investment and ensuring that workers’ voices are central to the company’s future, including worker representation on the board.

[Lord Lamont of Lerwick (Con)]

My Lords, is not the decision by the Government to try to protect British Steel by imposing tariffs of up to 50% and reducing quotas down by 60% on imported steel a profound mistake? It harms steel processers and steel users. Let us not forget that steel users are much more numerous than are primary steel producers, and the steel processers and users of steel have to compete with foreign imported finished products. Is not what the Government have done a profound own goal?

[Lord Leong (Lab)]

No, it is not. Let us not forget that overcapacity and artificially cheap steel are why our steel industry is under such threat. Allowing cheap steel imports to enter the UK unchecked would only jeopardise domestic supply and the security of our UK supply chains for our critical infrastructure and defence. The measures put in place have been designed so that we will increase our domestic capacity, which is what the Government are trying to do.

[Lord Sikka (Lab)]

My Lords, I welcome the Government’s decision to nationalise British Steel, but I seek some clarification from the Minister on potential compensation to be paid to British Steel’s owners. Can he assure the House that the following factors will be taken into account: first, British Steel was insolvent, so the price is virtually knocked down; secondly, it received a vast amount of public subsidy, which will be recovered; and thirdly, its operations have done environmental damage, so the cost of that will be deducted from any compensation? I asked the Minister that question during the steel debate. I know he had lots of questions to answer, but I hope he has an answer now.

[Lord Leong (Lab)]

My Lords, the Government’s current view is that, given British Steel’s history of loss-making and its poor financial position, the commercial value of the business today is nil. However, compensation will not be decided by ministerial assertion. Regulations will be laid in the autumn to appoint an independent third-party valuer. That valuer will assess what compensation, if any, is owed and the Government will abide by that process.

[Lord Redwood (Con)]

On nationalisation, have the Government also taken responsibility for the historical debts and borrowings, pre-spring 2025, that the company incurred under Chinese owners? That is a very large historical debt that we should not have to share.

--- Later in debate ---

[Lord Leong (Lab)]

The noble Lord should probably reflect on the answer I gave to the previous question. We will appoint an independent valuer to take into consideration all aspects related to British Steel. Obviously, we have advanced British Steel £555 million for its running costs. That will also be taken into consideration by the independent valuer and we will abide by its final decision.

[Lord Razzall (LD)]

My Lords, today is a very significant day, as everybody knows. Will the Minister confirm whether this is a throwback to the previous Administration, or is this the first example of what the new Prime Minister calls governing as Labour? If so, does the Minister believe that this is the first of many such nationalisations?

[Lord Leong (Lab)]

My Lords, the answer to that is no. This is not an ideological nationalisation. It is a targeted, exceptional intervention to protect a strategically important company and capability that the country cannot afford to lose. The Government would have preferred a commercial solution, but that was not available on terms representing value for the taxpayer. The objective now is to stabilise British Steel, restore commercial and environmental responsibility and sustainability, and explore future private sector investment where that supports the national interest.

[Baroness Alexander of Cleveden (Lab)]

My Lords, I welcome that last answer. It is, of course, just a few minutes ago that we were discussing a Private Notice Question on the events in the Strait of Hormuz and the need for British naval support to try to keep it open. Given that our naval ships, submarines and planes all rely on steel, does my noble friend the Minister agree that, in what is self-evidently an increasingly unstable and uncertain world, acting to ensure the continuation of steel-making here at home is a vital part of our national security?

[Lord Leong (Lab)]

My Lords, the Government recognise that some specialist grades of steel used in precision engineering, aerospace, defence and advanced manufacturing are not currently produced in the UK, or are not produced in the required quantity or to the required specification. The steel strategy aims to increase the proportion of UK demand met domestically, including for specialist needs, as my noble friend mentioned. British Steel’s new board will need to consider how the company supports a wider industrial strategy and the needs of downstream manufacturers.

[Lord Redwood (Con)]

Can I confirm that the Minister said yes when I asked whether the state is taking responsibility for all the historical debts and borrowings?

[Lord Leong (Lab)]

My Lords, I said in my previous answer that we will abide by the independent valuer’s final valuation.

[Lord Fox (LD)]

My Lords, the important part of my question was: when does the Minister think that this board will be appointed? Can he give us a window for when that will happen?

[Lord Leong (Lab)]

It will be when the new Secretary of State is appointed.