Steel Industry

Lord Razzall Excerpts

2nd reading
Saturday 12th April 2025 Lords Chamber

[Lord Razzall (LD)]

My Lords, like many in your Lordships’ House, I lived through the history of the steel industry. In the 1970s and the 1980s, we had the debate over nationalisation, privatisation, nationalisation, privatisation, and in the past 10 years we have had a series of crises, culminating—until now, I suppose—with Port Talbot, where the last blast furnace was closed in 2024, leaving Scunthorpe as the UK’s remaining primary steel-making facility. Of course, Port Talbot has now been given planning permission for the construction of electric arc furnaces, but they will not come on stream until 2028.

I think it is accepted on all sides, with the possible exception of the noble Lord, Lord Kerr, and maybe the noble Lord, Lord Hannan, that steel is a nationally strategic sector that supports thousands of skilled jobs. As many noble Lords have said, if Scunthorpe is allowed to close, we will be the only G7 country without primary steel capacity. So where did it all go wrong? The noble Lord, Lord Moylan, called for the Government to apologise. Is he going to apologise for the previous Government’s behaviour with the steel industry in allowing it to lurch from near collapse to last minute rescue? Is he going to apologise for his Government scrapping the industrial strategy, or for approving the sale of Scunthorpe to what is probably a front for the Chinese Government?

Noble Lords would expect me to say that Brexit did not help. It reduced our capability to sell into Europe, which we had done with some success before Brexit. Of course, Trump has not helped with his 25% steel tariffs. I should say to the noble Lord, Lord Hannan, that the risk is not now of China selling only 7% to us, but that China will now use the opportunity given by Trump to dump steel on to the UK market.

What do we need? We need a real industrial strategy giving manufacturers certainty with clear plans for the steel industry. We probably need a complete overhaul of business rates, giving steel mills breathing room. We also of course need a new UK-EU customs union, reopening export markets for us with the EU and rebuilding our previously existing trade links.

In the meantime, any steps that the Government can take to keep Scunthorpe operational are obviously welcome to your Lordships—apart from one or two speakers—which will give time to implement the essential measures that I outlined above. From these Benches, we support this, but the big question remains, as one or two noble Lords have said. The Government earmarked £500 million to purchase new materials, which was turned down by the Chinese owners. However, if the Government have to nationalise the plant because no private sector interest has come forward, the funding costs will be huge. A new electric arc furnace costs £3 billion and Scunthorpe may need two—£6 billion will test the limit of the Chancellor’s fiscal rules.