Steel Industry

Lord Sikka Excerpts

2nd reading
Saturday 12th April 2025 Lords Chamber

[Lord Sikka (Lab)]

My Lords, the Minister said that the Government seek to take control of blast furnaces at Scunthorpe without taking control of British Steel. They are trying to avoid the words “nationalisation” and “public ownership”, but that is really where we are heading. British Steel’s most recent accounts show a falling turnover, increasing losses and a negative net worth. It is bankrupt and there should be very little compensation, if any.

Steel is essential for civil and defence industries. In a world of trade wars, we need to be self-sufficient. We need permanent public ownership of the steel industry. I do not support temporary nationalisation, under which the public purse revives the industry and the Government then hand it back to the private sector for more subsidies.

One of the reasons for the current crisis is that privatisation of essential industries has failed. The 1988 privatisation of steel by the Conservative Government was completely divorced from any industrial strategy, need for jobs and self-reliance. There are those who object to nationalisation but, at the same time, have been content for Governments to hand vast subsidies to the steel industry. This free money enables companies to acquire assets and income streams that enrich their shareholders, and they keep coming back for more.

Steel-making is in crisis because of the failure of other privatisations. Steel-making relies on extensive use of energy but our energy costs are absolutely extortionate. British businesses pay the highest price in the developed world for industrial electricity. It is twice the EU average, 2.6 times the Korean cost, four times the US cost and even more compared to China. In the last four years, the UK’s 20 biggest energy companies have made operating profits of £514 billion and, in doing so, have destroyed steel and other industries.

With the use of electric arc furnaces, UK steel would be even more expensive and uncompetitive. Some 34,000 gallons of water are used to produce one tonne of steel and water costs are extortionate too. No steel nationalisation or industrial strategy can succeed without control of the key costs. Can the Minister explain how the Government will control profiteering associated with energy and water industries?

Yesterday, the Prime Minister said that he will

“protect British jobs and British workers”

and added:

“Jobs. Investment. Growth. Our economic and national security are all on the line”.


Against this background, people in Scotland and Wales really deserve a straight answer. Grangemouth, Scotland’s only refinery, is set to close with the loss of thousands of jobs, but the Government have not sought to bring it into public ownership. Why? The Government did not prevent the closure of traditional steel-making at Port Talbot in Wales. Tata could have accompanied its electric arc furnace with another plant making direct reduced iron, as suggested by trade unions. Again, the Government did not support that strategy. Why not? The inevitable conclusion is that a London-based Government protect jobs in England but do not really care about job losses and decline in Scotland and Wales. Can the Minister please explain why the Government are willing to save the Scunthorpe plant but not Grangemouth or Port Talbot?