Steel Industry (Nationalisation) Bill

Lord Wigley Excerpts

Committee stage
Wednesday 1st July 2026 Lords Chamber

[Lord Redwood (Con)]

My Lords, these are indeed important amendments. It is a tragedy what has been happening to our steel industry in this country. It suffered considerable decline under the last Government thanks to very high energy prices and decarbonisation, which turned out to be disruptive. In the last full year of the Conservatives, we were down to 5.6 million tonnes of manufactured steel—around half our requirement.

There has now been a further very big collapse, such that our output last year was, I think, around half of that in 2023—around 2.5 million tonnes—and we are heading for an even smaller output this year unless the business plan is provided, kicks in and starts to do something to help the ailing Scunthorpe business that we are talking about. I think we are united in our belief that this is not what we want from our steel industry. It means that we have a chronic dependence—in the last year, 7.1 million tonnes—on imported steel and we are heading to a position where we import practically all our steel. I fear we will discover that, unless we do something about electricity prices, even when electric arc production starts to kick in on a bit of a bigger scale, it will be very difficult to sell that steel at a profit because the electricity costs are unrealistic and uncompetitive, as well as the general carbon taxes and carbon costs, which have been adversely affecting the blast furnaces.

Given our common interest in saving jobs and having a better steel sector, I again urge the Government to provide that plan and that thought-through work, which should be shared without commercial secrets with the wider public and both Houses of Parliament. This would give us some confidence that there is a way out of this very deep tunnel that we are going down to producing less and less steel of our own.

The Government have clearly introduced very penal tariffs on importing steel from non-EU sources, with the 50% increase in tariff. They hope that that will change the situation but, because they have relaxed the quotas for the EU, I suspect that we are still extremely vulnerable to EU import competition at a time when our industry is not properly competitive. They will find that the tariffs will not protect the diminishing British steel industry, but that the much bigger and somewhat stronger steel-using industries in the United Kingdom will be very gravely affected, because more than half our imported steel may well have to come from sources that attract tariffs. That will be very penal and, therefore, will reduce the amount of steel-using activity that we can undertake.

I urge the Government to take some of these points seriously. I am glad that two sensible amendments have been put forward to concentrate this debate.

[Lord Wigley (PC)]

My Lords, I am glad to have the opportunity to support Amendment 23, tabled by the noble Lord, Lord Fox, concerning a jobs and industrial transition strategy, which is very much in in line with the comments I made in our previous debate. The question of protecting skilled employment, in particular, and the need to reskill and deliver the tangible economic renewal, support and resilience in the local communities is very close to my heart. It is also very close to the minds of those in places such as Port Talbot who have faced insecurity in these matters. I hope that the Government, if they are not able to accept this amendment, will at least underline their agreement with its approach. I would be very surprised if it was not the Government’s approach, in fact.

When it comes to Amendment 21—I address this to the noble Lord, Lord Hunt, who moved the amendment —if a duty is placed to find a private sector purchaser as soon as possible then surely that has to be constrained very much more than in the amendment. What would the situation be if an overseas company in the private sector was to make a bid? As I see it, the whole logic behind the nationalisation that we have here is to defend the United Kingdom’s strategic interests as well as its economic interests. If an important part of the steel industry was to fall into overseas hands—perhaps a perfectly reputable company but an overseas company outside the control of anybody within the United Kingdom—would that not raise serious questions? These are issues that I put to the noble Lord, Lord Hunt, rather than to the Minister. I regard them as a serious weakening of the Bill’s strategic objectives, which I generally support.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Hunt, Lord Fox, Lord Redwood and Lord Wigley, for their contributions. I am very grateful that the noble Lords, Lord Sharpe and Lord Fox, are raising important questions about the future structure and operations of any steel undertaking that may be brought into public ownership under the Bill.

Before addressing their specific amendments, I should make this very important point: no decision has been made in relation to any particular steel company. Any decision to exercise the powers in the Bill can be made only after the Bill has received Royal Assent and only if the statutory public interest test is satisfied.

With that important caveat, I turn to the specific amendments before the Committee. Amendment 21, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would place a duty on the Secretary of State to secure a private buyer for any nationalised steel undertaking at the earliest opportunity. As a matter of corporate governance, however, we would expect responsibility for exploring future ownership options to rest with the company’s board and chair, working closely with Ministers, rather than being imposed as a statutory duty on the Secretary of State. More fundamentally, I reassure the Committee that the Government share the amendment’s underlying objective. As we made clear in the steel strategy, the long-term future of the UK steel industry depends on attracting sustained private investment.

Public ownership is not an end in itself; it is a means of safeguarding a strategically important asset when exceptional circumstances require government intervention. The Government do not envisage a steel undertaking remaining in public ownership indefinitely. Our objective would be to stabilise the business, restore its commercial viability and place it on a sustainable footing so that it is well-placed to attract private investment in due course.

That said, timing is critical. A company requiring nationalisation is, by definition, unlikely to be an attractive investment on day one. It will first need financial stability and operational improvements, and in many cases a revised strategic direction, before credible private investors are prepared to commit significant capital.

Throughout that process, Ministers and the company’s leadership would remain in close dialogue about its long-term future, including the most appropriate ownership model and opportunities for private investment when the conditions are right. I hope this reassures noble Lords that the Government’s ambitions align with the intent behind this amendment. We are happy to consider further whether there are appropriate ways to make that position clearer, but we do not believe that placing a statutory duty of this kind in the Bill would improve its operation.

I turn finally to Amendment 23, in the name of the noble Lord, Lord Fox, which would require the Secretary of State to publish a jobs and industrial transition strategy after the exercise of the principal transfer power. I fully appreciate the purpose of the amendment. If the Government were required to intervene to safeguard a steel undertaking, Parliament would rightly expect a credible plan for its future. The Government share that objective. However, the success of any nationalised steel undertaking will ultimately depend on strong commercial leadership, not on a strategy prescribed by legislation.

One of the Government’s first priorities would be to appoint a board and an executive team with the expertise, commercial experience and vision to restore the business to long-term sustainability. The detailed strategy for the company’s future—including its workforce, investment, operations and industrial transition—should therefore be developed by that leadership team in close partnership with Ministers, rather than being imposed from Whitehall via a statutory reporting requirement. That approach provides the flexibility to respond to changing commercial circumstances while ensuring that the company is run on sound business principles.

That said, I recognise the importance of parliamentary scrutiny. When a steel undertaking enters public ownership, Parliament should have appropriate opportunities to understand the company’s strategic direction and to hold the Government to account for its stewardship. I am therefore happy to reflect further on the most appropriate mechanisms to provide that transparency. I am grateful to the noble Lord for raising these important issues. I hope I have provided assurances about the Government’s approach. For the reasons I have set out, I respectfully ask that the amendment be withdrawn.

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[Lord Redwood (Con)]

My Lords, I welcome the intent behind Amendment 22. We should not be careless about the interests of the steel-using industries. Many years ago, I was responsible for Darlington & Simpson Rolling Mills. In those days, that was a profitable and successful business, but the price of raw material was critical to that type of operation. I was very interested to learn from noble Lord, Lord Fox, that he thinks that there are 10 times as many people involved; that may well be an underestimate. When I was trying to do some research on this, I identified a number of sectors where steel use is an important part of cost, and I came up with about £200 billion of business activity in those areas, excluding construction, which is obviously the main steel user in the country. That was many times the amount of turnover we are talking about in trying to protect maybe 2 million tonnes of steel production in this country from our own resources. Both in setting the tariffs and in setting the plans, and in the details of any future nationalisation, we need to have fuller recognition than we have had so far of the legitimate interests and concerns of the steel-using industries.

I hope that Ministers will see that we are also interested in a report and audit on where we are at already. Although we have not nationalised British Steel and do not own the assets, we are otherwise completely responsible for the people who do those jobs and their families, for the safety and success of the production processes of those two ageing blast furnaces, and for that part of what remains of the British steel industry, so I think we are probably owed a bit more consultation and plan already.

[Lord Wigley (PC)]

My Lords, I am delighted to support the amendment moved by the noble Lord, Lord Fox, and to be following the noble Lord, Lord Redwood. I am sorry the noble Lord, Lord Hunt, is not in his place at the moment, but both he and the noble Lord, Lord Redwood, will be very familiar with a project that took place in north-west Wales 40 to 50 years ago now—the construction of the pumped-storage scheme at Llanberis by the CEGB. The reason that is relevant is that, in the very early days of that project, the CEGB was wise enough to pull together trade union leadership and the local authorities in a regular meeting to review issues that were arising. Over the 10-year period of the construction of that exciting project, only about a week was lost due to industrial difficulties. The company, the CEGB, was working with the workforce and the local community, and problems were sorted before they boiled up to triggering strikes and all the rest. It is motivated self-interest to have such an approach to bring in these forces: with good leadership coming from the company involved and, yes, from central government but also from local government and from the trade unions within the company involved, so many problems can be overcome before they cause difficulties and boil up to something that they do not need to be. I believe such an approach should appeal to the Government, and I am very glad to support the amendment.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Fox, for this amendment. He is quite right to point out that decisions about the future of a steel undertaking affect a wide range of sectors that rely on secure domestic supply, including defence, construction, advanced manufacturing and critical national infrastructure.

National security has, rightly, featured prominently throughout our debates. If the Government are relying on that argument to justify the exercise of these exceptional powers, it is surely right that those with responsibility for defence and critical infrastructure should have a voice in the wider policy discussion. The number of workers potentially affected in the broader and wider supply chain, as cited by both the noble Lord, Lord Fox, and my noble friend Lord Redwood, is staggering.

It is difficult to argue that the steel-using community is really being consulted, as the noble Lord, Lord Fox, pointed out; that is certainly true of the representations we are getting from members of that community. I urge the Government on this occasion to have a careful think about what this amendment is trying to achieve. It recognises, as the noble Lord, Lord Wigley, has pointed out, the importance of the workforce and of local communities. Workers, their representatives and local authorities will understand better than most the consequences of a transfer for jobs, skills, supply chains and of course the local economy. It is difficult to see how the Government can judge properly what is in the public interest without hearing from the workers, communities, industries and strategic sectors most affected by the decision. I look forward to hearing the Minister’s response.

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[Lord Redwood (Con)]

My Lords, I am glad that the noble Lord, Lord Fox, has raised this; it was also something that I mentioned in our previous debates. In my experience of old industrial sites, the land under and around the plant is often heavily polluted and may contain toxic substances. Clearly, the Government need a report on that and would need to consider it not only when considering any possible compensation to a previous owner but as part of the costings of the whole project. Sooner or later, that land will have to be cleaned and if there is any current risk to water courses, it might be sooner rather than later that action would need to be taken. I trust that will all be properly investigated and has been properly investigated where we have already taken operational and financial responsibility for the plant in the case of Scunthorpe.

On other liabilities which can occur in these situations, which probably should be mentioned for the sake of completeness, it is a good idea to find out about current and retired staff to see whether any long-term health issues have arisen which can be attributed in any way to the processes they have been handling and the working conditions they have been in. Those, too, need sensitive treatment and can, if something has gone wrong, amount to significant sums of money.

[Lord Wigley (PC)]

My Lords, I want to speak briefly to Amendment 28, which deals with pension liabilities of the undertaking that has gone into state ownership. Some noble Lords will remember in our pensions Bill debates that we had the example of Allied Steel and Wire, where employees, who had been given all sorts of promises that they would be safeguarded, feel that they have been very badly let down. If the shadow of Allied Steel and Wire is to find its way to Scunthorpe, or any of the other locations where these questions may arise, the failure to safeguard the interests of those pensioners will militate against employees wanting to accept the course being taken by the Government unless provisions are written into the Bill of the sort provided by Amendment 28. There may be other ways of doing it, but certainly these assurances need to be given.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the noble Lord, Lord Fox, for tabling these amendments, which raise an important point of principle. Where the Government are taking a steel undertaking into public ownership, the environmental, pension and other contingent liabilities which may fall on the taxpayer should be clear to Parliament and, of course, to the public. The Minister in the other place suggested that further disclosure was unnecessary because the Government already had a reasonably good understanding of the potential liabilities and that the independent valuer would take them into account, but that is not the same as ensuring that Parliament can see the likely costs before compensation is paid and further public money is committed.

I was very taken with my noble friend Lord Redwood’s comments about the environmental impact. From memory—and I might have this date wrong—I think the oldest of the blast furnaces dates back to 1939, so it is inconceivable that that site is not contaminated in some way, which we probably do not have any accurate historical records for.

I have also recalled the reason why I was a bit lukewarm on my own Amendment 20. I hate to say this, and I hope I never have to admit it again, but it is rather because I preferred Amendment 27 from the noble Lord, Lord Fox—a shocking admission to have to make.

Environmental remediation, pension obligations and historic liabilities can amount to very substantial sums. The Government are using taxpayers’ money, and Parliament should be able to scrutinise the liabilities assumed alongside the compensation and support provided. For those reasons, the amendments make a valuable contribution to transparency and accountability, and I look forward to the Minister’s response.

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Taken together, I hope that I have given the noble Lord, and all noble Lords, the clarity required on this subject. I thank the noble Lords, Lord Redwood, Lord Wigley and Lord Sharpe, for their contributions on this group of amendments, and ask that Amendment 24 be withdrawn.

[Lord Wigley (PC)]

Before the Minister sits down, will he please address the question of why steelworkers in Scunthorpe, Port Talbot or anywhere else should have faith in the Government’s provisions for pensions when they failed to safeguard the pensions of Allied Steel workers in Cardiff and continue to do so?

[Lord Leong (Lab)]

I will have to write to the noble Lord, because I do not have specific information on that particular pension scheme.