My Lords, it is an enormous honour to address your Lordships’ House for the first time, in introducing today’s debate on the future of the steel industry. I start by thanking all those who have welcomed me: the Garter King of Arms, the Clerk of the Parliaments, Black Rod, their excellent teams, and the doorkeepers, who have already had cause to gently shepherd me in the ways of the House for the misdemeanour of trying to take notes when I came in below the Bar to observe noble Lords at Oral Questions.
I have heard much about the civility and respect in this House, and these values are important to me—the principle of airing arguments and debating positions openly and without rancour. I thank my supporters last week—my noble friends the Leader of the House, Lady Smith of Basildon and Lady Armstrong of Hill Top—and the Front Bench team for their support, particularly my noble friends Lord Leong, Lord Collins of Highbury and the Chief Whip, my noble friend Lord Kennedy of Southwark. I pay tribute to my predecessor, my noble friend Lady Jones of Whitchurch, for her tireless work on enshrining rights for decent work and embedding online safety rules, among many other areas. I am stepping into very big shoes.
On the face of it, there is perhaps not much that links my journey to this place with the steel industry. Perhaps, though, the common thread is the importance of the public and private sectors working together, and the importance of ensuring that our economy is providing decent jobs for all. For almost two decades, I have worked in the private sector and in development finance, latterly with British International Investment, the UK’s development finance institution. We focused on the dual mandate of providing a return to the taxpayer with measurable development impact. The business’s finance in emerging markets spans major renewable infrastructure supporting the green transition, manufacturing, and bringing added value to modern methods of agriculture, all underpinned with high ESG standards.
I have had the pleasure of seeing what access to the internet can bring to women business owners in Nepal, the connectivity that upgraded port infrastructure can bring to businesses in Africa, and how wind farms in Pakistan can be protected against floods through resuscitation of mangroves, at the same time bringing back fishing stocks for local fishermen.
Much earlier in my career, I had the privilege of working for the former Prime Minister, now Sir Tony Blair. I was guided by many in this House, notably my noble friends Lady Hunter of Auchenreoch, Lord Wilson of Sedgefield and, later, Lady Morgan of Huyton. That taught me the importance of rooting positions in facts as well as political arguments, but also that strong teams are built on laughter and mutual support, as well as hard work.
When it came to choosing the title I would take on joining the House, I must admit that I struggled a little. I was born in the south of England and have family roots in Wales. I enjoy nature, hiking and the living world. I live in south London and, over the past years, I have learned more about its local history and the Great North Wood that is still a corridor between the parks of Brockwell, Sydenham woods and Crystal Palace. I was intrigued by the waves of development and gradual urbanisation. I wanted something that connected the living environment, history and the places I live, and the somewhat mythical River Effra came to mind. Its course traced many of the places I have walked with our dog and family and, though now enclosed, it feeds into the Thames close to my cycle route to work.
My Lords, I am delighted to be following our newly appointed Peer and Minister, my noble friend Lady Lloyd, and I am most grateful to the usual channels for allowing me to do so. It is quite something to be standing at the Dispatch Box to make one’s maiden speech, never having been a parliamentarian before, and to do it so skilfully and eloquently. My noble friend has had a stellar career to date, in a wide range of jobs here and overseas, where people co-operate, deals are made and business gets done. She will bring all that wealth of experience to her role in your Lordships’ House.
I was my noble friend’s—or even Lloydy’s, as she was then—first boss. She is one of our Guildford three, along with James Purnell and Tim Allan, close schoolfriends, ferociously intelligent, who from 1990 came at various periods in their university holidays to work in Tony Blair’s office as researchers. She joined us permanently in 1993 aged 23, and stayed the entire course, one of the most consequential individuals of the Blair Administration.
My noble friend can grasp and synthesise detail, conscious of the bigger picture. She is not noisy or showy, but firm and straight, clear and crisp. She still has the face of an angel, but she also has—I hope I can get away with it in this debate—balls of steel, the late Baroness McDonagh’s famous pre-requisite for success in politics. We have all been on the end of my noble friend’s withering look, including, many times, Tony Blair, who said of her that
“most of all she was so transparently honest and fair to everyone that she exerted a calming influence on the madhouse”.
She will very soon discover that this House is of a very different order from that one, as I learned in the British Steel debate on Saturday 12 April this year, when I was a very new Member of the House and when the commitment to today’s debate was made.
My Lords, I rise swiftly to join the noble Baroness, Lady Hunter of Auchenreoch, in congratulating the noble Baroness, Lady Lloyd of Effra, on a magnificent maiden speech, if I am allowed to say that. I will return to the content in a few moments. It gives me an opportunity to join the noble Baroness in praising the Government Chief Whip for having agreed to this debate. It is important to remind ourselves of how this all happened and evolved.
I say to the noble Baroness, Lady Lloyd of Effra, that she has an impressive record of service and, in particular, a great deal of knowledge about the issues she will face in office. She has an unrivalled opportunity to bring substance to the promises made at the last election. I think everyone will wish her well in fulfilling the destiny that the noble Baroness, Lady Hunter of Auchenreoch, prophesied for her, although I am not sure that she will be happy with one or two of the other comments that the noble Baroness mentioned about her background, of which I was completely unaware. But I loved her tribute to the river network that London is proud to have. They will be raising a glass in the Effra in Brixton tonight to praise her outstanding contribution to this debate.
Going back to where we have come from, I say to the Government Chief Whip that, when we look back at what happened on that Saturday 12 April, when the noble Lord, Lord Fox, and I wound up a debate—I moved an amendment for a sunset clause and the noble Lord moved an amendment to have a debate in both Houses of Parliament—I praise the Government Chief Whip. The House of Lords was at its best that Saturday, responding so positively to the fact that we need this debate. I am just sad that the other place is not having what would have been—had the amendment of the noble Lord, Lord Fox, been accepted—a debate on this subject.
We really could not envisage that so little would have happened to bring about the steel strategy, referred to by the noble Baroness. In a way, this debate is not well timed—although we all thought it would be—because we have yet to receive the steel strategy. Where is it? It was referred to as a concept by the noble Baroness in her speech, but it is now over six months since we last debated the Steel Industry (Special Measures) Bill, which became an Act that very day. There have been six months of delay, drift and indecision, which I believe is a direct result of the Government’s inability to get a firm grip on a serious situation. So where is the plan?
My Lords, I join the noble Baroness, Lady Hunter, and the noble Lord, Lord Hunt of Wirral, in welcoming the noble Baroness, Lady Lloyd of Effra, to her place in your Lordships’ House. We look forward to her continued public service. I also look forward to the maiden speech of the noble Lord, Lord Stockwood, in closing the debate. It is an important debate—and it is a privilege for me to contribute—on the six-month review of the Steel Industry (Special Measures) Act 2025, as requested by my colleague and noble friend Lord Fox.
For me, this is not just a matter of industrial policy—it is personal. I grew up in Sheffield, the steel city. My grandfather melted the ore, my uncle rolled the slab and my father worked the lines. The clang of metal, the heat of the furnaces and the pride of skilled labour shaped my childhood. Steel is not just an abstraction to me—it is part of my family history and story. That is why I feel so strongly that the United Kingdom must retain a viable resilient steel industry. As one respected industry leader reminded me earlier this week:
“We can import most of what we need, but doing so would make us vulnerable, waste the vast quantity of scrap metal we produce each year, and send the wrong signal about Britain’s commitment to manufacturing”.
The House of Lords Library briefing makes clear that this Act was born out of urgency. When British Steel at Scunthorpe was on the brink of collapse earlier this year, the Government stepped in with emergency powers to protect our last remaining blast-furnace capacity. Those powers allowed Ministers to direct operations, secure supply chains and prevent mass redundancies. It was an extraordinary step, but it was necessary. Losing that capability would have meant losing control of a foundation industry critical to our infrastructure, defence and energy transition. Six months on, it is right that we take stock.
My Lords, at the outset of this debate on the Steel Industry (Special Measures) Act, I congratulate the Minister, the noble Baroness, Lady Lloyd, on her excellent maiden speech, and I look forward to the maiden speech of the noble Lord, Lord Stockwood.
I chair the Manufacturing Commission. Manufacturing used to make up 30% of GDP in the UK in the 1970s and now it makes up less than 10%. Yet the UK, with less than 1% of the world’s population, is the 11th largest manufacturer in the world in absolute terms—and it is high-quality manufacturing. When you think of manufacturing, steel is of course as large and heavy-scale manufacturing as you can get.
I come from the smallest minority community in the world: the Zoroastrian Parsis. There are just 100,000 of us in the world. We came as refugees from what is today Iran, in Persia, over a thousand years ago and settled in India, a country that gave us refuge. There are now just over 50,000 Parsis in India and 5,000 here in the UK. The Parsis have excelled in just about every field, including in industry. The most famous industrialist in India, I would say, is Jamsetji Tata, the founder of the Tata company. The Tata Iron and Steel Company was founded by Jamsetji Tata and established by Sir Dorabji Tata in 1907. It started producing steel in 1912. When this idea was put forward, a British official said,
“I will eat every pound of steel rail they succeed in making”.
Well, he certainly ate his words. Today, Tata, as a group, is valued at over $500 billion, one of the largest conglomerates not only in India but in the world. Of course, here in the UK, it is the owner of Tata Steel and Jaguar Land Rover.
We have a situation in the UK where the steel industry, as previous speakers have said, has struggled to be competitive with all the headwinds against it: tariff uncertainty; high energy costs; the decarbonisation challenges; and China. Let us get this into context: China dominates global supply of steel; 54% of steel in the world is produced by China, while the UK produces 5.6 million tonnes, or 0.3% of the world’s total. We have to get this in context.
My Lords, I begin by paying tribute to my noble friend Lady Lloyd, who gave a very elegant but very modest speech. I know from my experience in Tony Blair’s Government that she played a pivotal role in the machinery of government and all the successes of that Government. I wish her well and remind her that it is extremely unusual to make a maiden speech from the Dispatch Box. I am sure she will do a great job in the position she now holds. I also look forward to the speech of my noble friend Lord Stockwood at the end of this important debate on steel. He too has had a distinguished career, in business, and I am sure he will do a great job in the position he now holds as well.
My life has been mixed up in steel for nearly 70-odd years. My great-grandfather came from Ireland to work in the steel industry in my constituency of Torfaen, which was instrumental in developing the Bessemer process for steel-making. We had a steelworks, Panteg, which made great stainless steel, linked as it was to Sheffield. For 15-odd years, I taught in the college at Ebbw Vale, which relied almost exclusively on the steel industry and the people who worked in it. When that great steelworks in Ebbw Vale closed, the whole community was blighted and devastated. I will come in a few moments to Port Talbot, whose community relies so heavily on steel. In north and south Wales, coal and steel were our communities. It is not simply an issue of economics but of how the whole country of Wales was dependent on these industries for employment. Now we have Tata in Port Talbot, Llanwern and Trostre—just three, with some smaller ones elsewhere. In comparison with many years ago, it is very different.
Back in 2001, when I was Secretary of State for Wales, I and Stephen Byers, who was then the Trade and Industry Secretary, tried to save lots of that steel industry from the cuts made by what was then Corus. We partly failed but partly succeeded. The point is that this was the state trying to help what is in many ways our greatest industry—not very successfully, but we did our bit and managed to keep the industry going.
My Lords, I join other noble Lords in extending a warm welcome to the noble Baroness, Lady Lloyd of Effra, particularly given her Welsh heritage, and to the noble Lord, Lord Stockwood. It is never easy coming straight on to the Front Bench in the Lords, but I congratulate her on an excellent maiden speech and look forward to hearing more of her contributions.
The speech of the noble Baroness was welcome in its acknowledgement of modern methods of agriculture and green forms of energy generation, but it was rather at odds with the thrust of this Act, which pre-dates her introduction. The Steel Industry (Special Measures) Act 2025 has been presented to us as a lifeline—a bold intervention to protect jobs and revitalise Britain’s steel sector. Of course I applaud the efforts to preserve those 2,700 jobs and help keep those blast furnaces alight, but beneath its polished language lies a policy that risks entrenching inefficiency, draining public funds and stifling innovation.
I begin by acknowledging the immense contribution of our steel workers—particularly those in south Wales, who have endured enormous uncertainty. I particularly enjoyed the contribution of the noble Lord, Lord Murphy of Torfaen, who emphasised the contribution of steel to the communities of south Wales. My father ran the steelworks in Cardiff, so its importance has particular relevance to me. I visited Port Talbot’s site in the summer, but I got the impression there that the £80 million grant that we agreed for retraining is not yet being spent.
The recent decision by Tata Steel to extend its Christmas shutdown across the Port Talbot, Trostre and Llanwern sites, to which the noble Lord, Lord Murphy, has already alluded, is to be regretted. It will have devastating consequences. In some cases, steel-workers’ pay may be down to 65% of normal earnings, leaving families struggling at precisely the time of year when they need money for heating and for Christmas.
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I extend a warm welcome to my noble friend Lord Stockwood, who will also give his maiden speech today. He brings extensive practical business experience to the House. Together, we serve a Government who recognise that a strong economy must rest on strong foundations, whether that is our defence capability, energy security or domestic steel capacity, which we are discussing today.
That is why, earlier this year, when the future of British Steel was in jeopardy, we took decisive action to support continued steel production at Scunthorpe. We said that we could not and would not let the fires in the blast furnaces be extinguished, and we protected the 2,700 employees whose jobs were at immediate risk: the steel-making communities whose future depends on British Steel’s success.
We have stayed true to our word. Since our intervention in April, we have worked tirelessly to secure raw materials and avoid the blast furnaces having to close prematurely due to insufficient supplies. We have made available roughly £270 million as working capital for British Steel. That predominantly covers raw materials, salaries and invoices from SMEs in the supply chain—in other words, essential expenditure. Keeping workers safe and protected is our number one priority: indeed, the Government have spent almost £4 million on safety-critical matters at British Steel since April. This expenditure will form part of the overall cost of the intervention and be included in the Department for Business and Trade’s accounts for 2025-26.
British Steel has been working hard to reverse declining production and, in recent months, the company, with government funding, has been hiring new staff, including apprentices, to ensure the safe and continued operation of the blast furnaces. Our focus now is on working with Jingye to find a pragmatic and realistic solution for the future of the company. Once that solution is found, we can terminate the directions issued to British Steel and make a statement on the need to retain or repeal the special measures Act. Our ambition is to secure the long-term viability of steel-making at Scunthorpe and, indeed, the UK steel sector as a whole.
That is why, over the past few months, we have been putting in the hard work to set this key industry up for long-term success. That very much includes the economic prosperity deal we secured with the United States. As a result of that deal, the UK is the only country in the world to benefit from a preferential 25% rate on steel and aluminium exports to the US. This gives companies such as British Steel a 25% advantage over the competition and it strengthens our reputation as a trusted supplier of high-quality steel and aluminium for global markets.
Of course, we know that one of the principal reasons why our steel industry has struggled these past few years is global excess capacity—countries choosing to flood the market with cheap steel in a bid to quash healthy competition. We are calling that practice out. Indeed, earlier this month I joined Ministers from partner countries at the global forum on steel excess capacity in South Africa. The UK has lobbied hard to develop a comprehensive framework for joint action to address global steel excess capacity by June next year, and that is something my ministerial counterparts have agreed to. We must continue to act multilaterally.
On 7 October, the European Commission proposed a new steel trade measure on imports to replace its current steel safeguard. It will need to take this proposal through its legislative processes and member states, and through engagement with the WTO and with its free trade agreement partners, including the UK. I wish to reassure Members of the House, the sector and steel communities that we are taking this matter extremely seriously and are determined to find a solution. We will always defend our critical steel industry and have already engaged the EU at ministerial and official level to understand the details of this proposal. It is vital that we protect trade flows between the UK and the EU, and we hope there is a way to work with our closest allies to address global challenges, rather than adding to our industry’s woes. We reserve the right to take any action in response to any changes to our trading relationships. The Minister for Industry spoke to representatives of the steel industry on 9 October to listen to their concerns, and reconfirmed that we will do everything in our power to support a resilient and forward-looking steel sector.
Closer to home, we have been creating the right conditions for the UK steel sector to thrive. We are reducing electricity costs for steel producers by increasing network charge discounts through the British industry supercharger. We are strengthening current steel safeguard measures to support our producers, while ensuring that the UK maintains a steady and reliable supply. We are fulfilling our promise to create a pipeline of big infrastructure projects, such as the third runway at Heathrow. This will demand at least 400,000 tonnes of steel, primarily to reinforce concrete beneath tarmac. That is eight times the amount of steel used in the Sydney Harbour Bridge.
I know the House will agree that, when construction firms are building roads, runways and railways here in Britain, they should make full use of British steel wherever they can. Indeed, that is why we have changed government procurement rules. Our new steel public procurement notice will ensure that UK-made steel is considered for all public projects, and we are building on this momentum. We intend to publish a new steel strategy for the UK. The industry will require investment, modernisation and decarbonisation in order to compete in the global economy.
To that end, we accept the need to look seriously at options for primary steel-making in the UK. Late last year, we asked independent experts from the Materials Processing Institute to conduct a review into the viability of future primary steel-making technologies. Their findings and recommendations will also be published soon. It goes without saying that we would want to retain this capability here in the UK, but we have to be realistic. There has to be a strong business case, with the private sector, not British taxpayers, leading the charge. Our steel strategy will cover this and the additional steps we intend to take in creating the pro-growth business environment for UK steel.
We do not underestimate the scale of the challenges facing the steel sector today—whether that is in costs, competition or climate change. We cannot promise to solve all these challenges overnight, but equally, this Government will never watch from the sidelines; we will always be on the pitch. We have shown that in our intervention at British Steel. We have shown it in the actions we are supporting with Speciality Steels UK, where we are supporting the official receiver to find the right buyer who can offer the right support for the workforce and the company. We have shown it too in the much-improved deal we have secured for workers at Port Talbot, a deal delivered alongside £500 million of investment from the Government to support the transition to a low-carbon electric arc furnace.
With a Government committed to fixing the foundations of our economy, we will ensure that our steel sector plays a vital role in Britain’s future. I beg to move.
I was pleased then that the Government acted so decisively on what became a historic day. It was the first time I had been present for a debate in its entirety and, like me, my noble friend will come to appreciate the depth and spread of knowledge of noble Lords and the dignified and respectful nature of our exchanges. I advise my noble friend to listen to the many experienced people on all sides of the House. Some she may disagree with, but she will learn a lot from them, as they will surely learn from her.
My own contribution to this debate is not born from steel expertise, although I am familiar with the industry’s vital importance through my work at BP and Anglo American, and my association with Tata Steel when I was working at the Royal Academy of Engineering. I have declared these interests in the register.
The deal the Government struck with Tata over Port Talbot last year, as my noble friend said, involved £500 million of investment to support the transition to electric arc furnaces, better terms for workers, and £50 million of investment in the local community to help people learn new skills and support the supply chain. This has ensured the site’s long-term sustainability. My noble friend Lord Murphy will, in his own inimitable way, advocate much better for Port Talbot than I.
I was very pleased that the Act was passed with such strong cross-party support in April. I was proud that this House recognised the urgent need to safeguard national capability, as well as thousands of skilled jobs in Scunthorpe, the UK’s only remaining production capacity for making primary, or virgin, steel, which is essential for infrastructure, defence and energy projects. The Act extended beyond just saving the steelworks; it also began to set out a clear long term-vision for ensuring that the UK retains its sovereign capability. As many noble Lords have argued before, reliance on a volatile global supply would expose the UK to significant economic and security risks.
I commend the Government for standing up for UK steel-making and seeking a pragmatic commercial solution which supports decarbonisation, safeguards taxpayers’ interests and protects jobs—up to 34,000 direct jobs and 42,000 in the supply chain. I was cheered recently to read that British Steel is enrolling its first apprentices in over three years. As I have said, I have spent much of my working life in the engineering sphere and I will always advocate for it. Engineering is essential in steel production, and, in turn, steel is the backbone of civil engineering. The relationship is symbiotic. The steel industry is not just a supplier of raw material; it is a driver of engineering progress.
Regions with strong steel industries often become hubs of engineering excellence, fostering apprenticeships, innovation and advanced manufacturing. I used to do a talk in schools entitled “Naked in a Field” to highlight the prime importance of engineering. I could have said the same in relation to steel. Without either of them, there would be no buildings, bridges, skyscrapers, railways, wind turbines, pipelines, factories, machinery or tools.
Steel’s essential integration into every major engineering discipline makes it vital to national development, technological innovation and the transition to a sustainable future. Steel will be essential in the precision engineering of the new generation of small modular nuclear reactors, especially the reactor pressure vessel. The industry supports a highly skilled engineering workforce, including metallurgists; structural, mechanical, electrical and chemical engineers; mechanical designers; and process engineers. The Royal Academy of Engineering has in place R&D partnerships between academia, government and the steel sector.
I warmly welcome this Government’s commitment to supporting the future of our steel industry. Although I understand the phrase “considering all options” during this process of consultation, I urge Ministers to come forward sooner rather than later with their promised steel plan and its place in the Government’s 10-year industrial strategy. Many present and future engineering jobs depend on it.
I am looking forward to hearing from my noble friend Lord Stockwood, today’s other new Minister, also making his maiden speech from the Dispatch Box. I do not know how it works when a Minister closes a debate with his maiden speech, but in lieu of anyone following him to recognise his first outing, I warmly welcome my noble friend and know that he will be a tremendous asset to our House, as will my noble friend Lady Lloyd.
We have been promised and promised again a comprehensive steel strategy, and yet we are still waiting. So let us briefly go through the timeline. In December 2024, the then Secretary of State for Business, Jonathan Reynolds, told us that the Government would publish a steel strategy by spring this year. It would, he said,
“look seriously at the options to improve steel capabilities across the whole supply chain, including for primary steelmaking in the UK”.—[Official Report, Commons, 11/9/24; col. 40WS.]
As a result, when we came to debate this emergency legislation on 12 April, we tabled that sunset clause, and we were told by the then Secretary of State that it was unnecessary. He said that
“I do not want these powers a minute longer than is necessary”.—[Official Report, Commons, 12/4/25; col. 841.]
Well, it is now October, and I must ask: when precisely will these powers cease to be necessary?
Between February and March this year, the Government ran a consultation on the strategy. By July, we were told that it would be published later this year. Then, in response to a Written Question on 4 September, the Government repeated the same refrain: “later in the year”. Here we are, deep into October, and no hint of any such strategy has emerged. We really need to see this strategy.
I understand from meetings we on these Benches have been holding with those affected that there was an opportunity last month for the new Secretary of State to chair the body that would evolve the steel strategy. But then, at the last moment, the meeting was postponed, and it has still to take place. I just say this: when the Conservative Party was in government, we demonstrated a clear and practical commitment to Britain’s steel industry, not through slogans or sound bites but through targeted investment and partnership. It was a Conservative Government who provided the £500 million grant to support the transition to electric arc furnace production at Port Talbot, already referred to by the two previous speakers. I believe that was a forward-looking measure designed to secure jobs and ensure that British Steel remains competitive in a constantly changing global marketplace.
The Government must surely recognise that nationalisation is simply not sustainable, especially in its current form. British Steel was losing around £700,000 every single day, and it is now the taxpayer who must shoulder that burden. According to Sky News, the cost of full nationalisation is estimated to be between £4 billion and £5 billion, an extraordinary sum by any measure. The Office for National Statistics has provided the first official assessment of the impact of this decision on public finances. Its analysis makes for grim reading. The ONS concluded that the move to nationalise British Steel will increase public sector net debt by approximately £600 million, with a further £900 million of financial pressure expected under the Government’s own preferred fiscal measure. Nationalisation is not a solution—it is a ruinously expensive illusion. It places an enormous burden on the public purse while offering no credible plan for long-term competitiveness in one of our strategic industries.
I hope that all sides of the House will agree that we want to have a strong industrial base in Britain. The strength of our industry determines the strength of our economy, our communities and indeed our nation, yet this Government’s approach since the election has shown a profound misunderstanding of what it truly means to build that strength. What the Government do is, I fear, as damaging as what they fail to do. A whole series of policies are combining to make the United Kingdom an increasingly unattractive and, frankly, unaffordable place to invest. I refer of course to the so-called job tax, the ill-conceived unemployment Bill, which we will return to next week—rejected almost universally by business—and the Government’s rigid ideological pursuit of net-zero targets, pursued without realism or regard for competitiveness.
UK Steel has stated that the UK steel industry has a hand tied behind its back as it faces electricity prices up to 25% higher than its European competitors, let alone its global counterparts. Uncompetitive power prices pose a threat to jobs and future investment and threaten to harm the Government’s own net-zero targets. Just three days ago, the United States ambassador to the United Kingdom, Warren Stephens, said he had told the Prime Minister directly that if the UK aspires to attract more foreign direct investment from the United States then we must lower our energy costs. He went on to say—and I quote him verbatim:
“When I meet with British business leaders—whether on AI, technology, agriculture, or manufacturing—the message is the same: high energy prices are holding back growth”.
We have already had reference to Sir Tony Blair, not a man who has always echoed the Conservative Party on economic matters, but today he has been quoted as urging the Government to scrap their arbitrary clean power targets—a moment of clarity that Ministers would do well to heed, in particular the noble Baroness.
We understand that there are global challenges, particularly given China’s approach of heavily subsidising its steel industry. We know that makes it difficult for British steel companies to compete. The imposition of tariffs by the European Union is also unhelpful. While we may recognise that some forms of state aid can incentivise private sector investment, Ministers must be cautious about introducing large subsidies, all paid for by the taxpayer. Subsidy, especially excessive and sustained subsidy, inevitably distorts markets and leads to misallocation of capital, as resources are lured towards the production of inherently uncompetitive goods and services.
We have already heard about the World Trade Organization. We need to know what further discussions have taken place with it since China’s trade policy review and the UK’s statement that,
“we call on China to rejoin international efforts to remove market-distorting subsidies which support excess capacity in steel making”.
We look forward to the maiden speech of the noble Lord, Lord Stockwood. What do the Government intend to do to exert greater pressure, through the WTO, to ensure that China addresses its harmful and distorting subsidies?
The foundation of a strong industrial base, whether in steel or any other vital sector, lies in lowering the cost of production and creating the conditions in which businesses can compete and thrive. The principal challenge of our age in steel production is a technological one, but the necessary new technologies are now emerging, and we must decide whether we want to be at the forefront of them. If we want steel production, be it new steel or recycled steel, to become greener, we shall need more electric power, lots and lots of it, and at a price that is truly competitive. That will require investment and a truly national effort. Unfortunately, this Government are wilfully making the UK increasingly unattractive for both domestic and foreign investment, threatening skilled jobs across the country.
Steel is essential not only for our infrastructure and economic development but for our national defence. I am so glad that there is some form of consensus now, across the parties, that this is a question not only of emerging technologies, subsidies and tariff policy but of steel security. The Government must create an economic environment in which the steel industry—indeed, all industries—can thrive, expand and flourish, not merely hunker down and survive. The forthcoming November Budget and the long-delayed steel strategy must contain concrete measures to reduce long-term energy costs, restore our competitiveness, and give British industry the stability and confidence that it so urgently needs.
The Government deserve credit for acting quickly. The immediate goal of keeping the furnaces operating and safeguarding jobs was achieved. Production at Scunthorpe continues, apprenticeships have been resumed and a supply contract with Network Rail has been secured. Support has also been evident elsewhere: in Wales, with Tata’s transition plans at Port Talbot; and in South Yorkshire, where Government ownership of Sheffield Forgemasters and the stabilisation of the Liberty Steel assets have provided a vital safety net. These steps have kept the industry alive, but survival alone is not enough. We now need a clear plan for recovery, competitiveness and long-term renewal.
The truth is that the UK steel industry remains fragile. For decades, successive Governments have allowed competitor nations to erode our manufacturing base. The global market is oversupplied, prices are weak and, as we have heard, energy costs are punishing—often 20% to 25% higher here than in France or Germany. At the same time, China has used steel production as an instrument of economic power, flooding world markets and depressing prices. British producers are fighting simply to stay afloat, unable to generate the profits needed to modernise and decarbonise.
We cannot allow that cycle of decline to continue. We must now focus on the right structure for a sustainable, competitive UK steel industry. I give an example of one resolution of the current distribution of manufacturing capability that could be possible: flat production centred at Port Talbot; long production anchored at Scunthorpe; and specialist and high-grade steel concentrated in South Yorkshire, building on the expertise of Sheffield Forgemasters and the wider cluster of firms in and around the city. This balanced configuration would make the best use of regional strengths and existing infrastructure while preserving critical national capabilities.
In my own region, there is a real chance to build a coherent future. The assets at Sheffield Forgemasters, Liberty Steel and other local producers could be aligned to optimise production and share investment in technology and skills. I therefore call on the Government to establish a South Yorkshire steel task force, bringing together industry experts, local authorities, trade unions and private investors. Its job should be to develop a plan for collaboration, modernisation and growth across the cluster. Something similar could also happen around Scunthorpe and in south Wales. We have the skills, the tradition and the engineering excellence; what we need is co-ordination and commitment.
As we look beyond stabilisation, there are three key priorities that must shape government policy: competitiveness, decarbonisation and the investment environment. I start with the first, competitiveness. The single greatest burden on UK steel-makers remains energy prices, as we heard earlier. Unless industrial electricity costs are brought in line with those of our European competitors, we will never achieve a level playing field. I call on the Government to act decisively, whether through long-term pricing agreements, industrial tariffs or other measures, to ensure that energy is affordable and predictable. This is essential if the industry is to plan investment and attract private capital.
I move on to decarbonisation. Steel amounts to around 13% of the UK’s manufacturing emissions. Transitioning to cleaner processes is non- negotiable, but that shift—from blast furnaces to electric-arc furnaces and, ultimately, to hydrogen-based steel-making—requires huge upfront investment. Government support must therefore be sustained and strategic: capital grants, tax incentives and partnerships that enable the sector to innovate rather than retreat. Britain should lead the world in low-carbon steel, not watch others do it first.
In terms of investment and ownership, once stability is achieved, it is right that most of the industry should return to private ownership, with the exception of Sheffield Forgemasters, whose defence role justifies continued public ownership. However, no private investor will commit funds unless they have confidence in the policy environment. That means predictable regulations, fair trade policy, access to affordable energy and an unequivocal government signal that steel-making in Britain has a long-term future.
We must not forget the people and communities behind these furnaces. When steelworks close, it is not only a plant that closes, but a community that unravels. I know that from my own experiences, as my father lost his job in the Sheffield steel industry in the 1980s. The Government should learn from past mistakes and ensure that regional regeneration, retraining and skills investment are embedded in every stage of this transition. South Yorkshire, in particular, can become a centre for advanced and green steel technology, combining our historic expertise with the jobs of the future.
The United Kingdom produces millions of tonnes of scrap steel each year, yet we export much of it only to import finished steel back. That makes little economic or environmental sense. A modernised steel sector could turn that scrap into high-value products here at home, supporting a circular economy and reducing our dependence on volatile international markets. Retaining steel-making capability is also a matter of national resilience. From railways and shipbuilding to wind turbines and defence equipment, steel remains the silent foundation of modern life. Even if it is not made of steel, steel has almost certainly been used in its making.
The Steel Industry (Special Measures) Act gives significant powers to Ministers, including the ability to direct private operators and, in extremis, take control of assets. These powers were justified in an emergency, but they must remain temporary, transparent and proportionate. We must now move from emergency intervention to strategic renewal, from crisis management to confidence building. The respected industry leader whom I quoted at the start concluded that:
“Stabilising the UK steel industry is essential, but unless the wider environment allows manufacturers to compete globally, we will find ourselves back in crisis again”.
That warning must be heeded. We cannot keep repeating the same cycle of decline, rescue and retreat.
Steel built this nation, its bridges, its railways, its factories and its ships. It gave dignity and purpose to places such as Sheffield, Scunthorpe and Port Talbot. It can also help build the low-carbon, high-tech Britain of the future, if we choose to back it. So let us turn this six-month review into a new beginning. Let us give our steel communities the stability, investment and respect that they deserve.
There is a surplus of steel in the world, which has pushed down steel prices. On the other hand, energy prices rocketed after Putin’s invasion of Ukraine in 2022, which took place during my tenure as president of the CBI. I am now chair of the International Chamber of Commerce here in the UK and regional co-ordinator for Europe, and we are witnessing trade wars. The ICC, the largest business organisation in the world, with trade as its focus, is at the heart of the tariff and trade challenges that we face.
Here in the UK, right up front we have the 25% tariff on all steel imports. Our normal tariff is at 10%. Please note that that is five times higher than our tariff was with the United States, which was just 2% either way. It is completely irrelevant for us to have any tariff increases at all with the United States, because we have £60 billion of exports and £58 billion of imports from the United States in goods: that is balanced. In services, we have £130 billion of exports and about £50 billion of imports. We have a services surplus, but there are no tariffs on services. As it is, it is unfair for us to impose any tariffs at all, but there we have it—the 10% baseline and the 25% on steel. That 25% has been increased to 50%. Where do we stand on that? I ask the Minister to say whether we are going to be at 25%. We were told we were maybe going to be at 0% and then, with President Trump’s visit over here, we were hopeful that that 0% would be clarified. What is our tariff with the United States of America going to be?
Of course, the other point is that manufacturing steel is such an energy intensive operation and our energy costs, sadly, are some of the highest in the world, certainly the highest in Europe. We pay 25% more for energy than our competitors in France and Germany. We can quantify this in various ways but it is millions of pounds more. On top of that, we have decarbonisation. Steel, because of its processing, is a significant contributor to greenhouse gases. It is responsible for over 13% of UK greenhouse gases emitted from manufacturing and 2.2% of the UK’s greenhouse gases in total, yet the steel industry is only 0.1% of UK GDP. Decarbonisation is, of course, a priority; the steel industry is trying to do it and is playing an important role, because the steel produced is used in renewable energy infrastructure manufacturing—wind turbines and solar panels.
The blast furnaces at Scunthorpe were the only remaining virgin steel plants left in the UK. The electric arc furnace method produces much lower carbon emissions, but that depends on what source of electricity it uses. Many issues were raised when the Act went through Parliament. Reform UK, on the one hand, called for an immediate nationalisation of the British steel industry. The Opposition called for a sunset clause. Does the Minister consider that a sunset clause might be required? But the emergency measures were taken and the steel industry was saved. As for parliamentary scrutiny, we now get a report every four weeks. Will we have some sort of annual review of this procedure? The good news is that British Steel is seeking to enrol apprentices over the next three years, which is excellent. The cost to the taxpayer is now almost £200 million, but we have saved something and, of course, all the SMEs in the supply chain have also benefited.
Noble Lords before me have spoken about the steel strategy. Can the Minister confirm when exactly we will get the steel strategy? It was meant to be this year; will it be early next year? We have had our industrial strategy, which is great news and excellent, and we hope that this will establish a clear, long-term vision and how we will achieve it, and identify gaps, capabilities and investment decisions. We are all looking forward to it.
The BBC claims that the UK Government are in favour of merging all UK steel-makers into one organisation and not in favour of nationalising that entity. Can the Minister give any clarification on that rumour that has been circulated?
The Act that we are debating has prevented the closure of the Scunthorpe plant, which employs 2,700 workers. The Tata Steel plant at Port Talbot is a great example of partnership between government and business, with a £1.25 billion pound investment, of which the Government have given a £500 million grant. It is moving to an electric arc furnace, which will replace the blast furnace. This will reduce emissions—estimates are by up to 90%, certainly by 70%. It will secure 5,000 direct and supply chain jobs and will align steel production with net-zero objectives, but there will be temporary job losses. I urge the Minister to assure us that every help will be given in this transition period so that any temporary job losses are avoided.
On the extra energy costs, is there anything the Government can do to help our steel industry be more competitive? Then, of course, there is the challenge of the European Union, which I will come to in a short while. With an output of 6.9 million tonnes, 33,000 jobs and £2.5 billion in GVA, tariffs are a huge issue, but I make a point about the public/private partnership once again, and the subsidies. There are pros and cons in this, and the con is reliance on subsidies. Can the steel industry be self-sufficient without having to rely on subsidies? The European Commission is proposing a 47% cut in the tariff-free quotas. Will the UK be included in these tariff-free quotas? That would be a huge problem.
On steel clusters, the regional impact in Wales, in Yorkshire and the Midlands, and regional regeneration and training, we must avoid any transition causing local unemployment at all costs. British Steel and the Community union launched a “Save Steel, Buy British” campaign, seeking a level playing field, and the British Metals Recycling Association has its export flexibility and circular economy report. This is very important, because the UK metals recycling sector, just referred to, contributes £9 billion to GVA and supports 2,000 businesses and 15,000 direct jobs. It generates 11 million tonnes of ferrous scrap, but the UK consumes only 2.6 million tonnes; the rest is exported. Can we maintain export flexibility? At the moment, there are bans to certain countries. Can we create a supportive environment for this sector, which is vital to our steel industry?
The Minister, in her excellent maiden speech, spoke about Heathrow, as of course did the noble Baroness, Lady Hunter, in her excellent tribute—I pay tribute to her tribute, which was very good. The Minister mentioned the Heathrow third runway, which will require, according to my memory, 400,000 tonnes of steel: it should be British steel being used. What is going to happen about Heathrow? I remember sitting next to Sir Howard Davies when his commission recommended a third runway at Heathrow Airport. Correct me if I am wrong, but that was over a decade ago. We still have not decided which option to go for. I declare my interest: Surinder Arora is a close friend of mine and one of the country’s great entrepreneurs. He has put forward an option, Heathrow has put forward an option; let us make a choice and get that runway built as soon as possible.
Look at Gatwick, which now has a second runway. I always said we should not have either Heathrow or Gatwick; we should have both. I am delighted that the Government have done that. Let us make the decision with Heathrow as well. When I was in India just now with the Prime Minister, the announcement was made, on the day that we were in Mumbai, that India is opening its new Mumbai terminal for 90 million passengers a year, in addition to the terminal it already has. Go to Dubai Airport: that is what we are competing with. This is the greatest city in the world; we should have the best airport transport in the world.
The EU is the biggest customer of UK steel: 78% of all our steel goes to the EU. We must address this issue of tariffs. Again, I ask the Minister to clarify that. On one hand the steel-makers in the EU are very happy, but the automakers are very worried because the tariffs are going to cause their prices to go up and cause inflation.
To conclude, I will make one point about Tata Steel. Everyone talks about Port Talbot, but Tata Steel is all over the country: in Hartlepool, in Sheffield, in Corby, in Imperial College, in north England, east England, Swansea—everywhere. It is very important to make the point that the steel industry is not just one or two places; it affects the whole United Kingdom. It is one of the most important industries to our country, and I am delighted that the Government are giving it top priority.
I was very interested to hear the remarks of the noble Lord, Lord Hunt of Wirral. Over 30 years ago, I shadowed him when he held the job of Secretary of State for Wales. He will know how important steel is to the Welsh economy and community. He rightly referred to the contributions that his Government made before the general election—half a billion pounds towards investment in Port Talbot and the conversion to electric arc. I and others welcomed that. I would have preferred the blast furnaces to stay open, but Tata had made its decision and started closing them on the very day the general election was called. However, I think the future of Port Talbot is safe in a different way; eventually, 5,000 jobs will come with the development of the electric arc furnace and the rest of it.
The other point, which has been very well made, is that it is about not just the physical business of the industry—the plant itself—but what happens to the people who have been displaced in Port Talbot as a consequence of the change of direction. I am glad to say that this Government and the Welsh Government are putting together proposals, I think of over £80 million, to ensure that people are retrained and there are new jobs and businesses. This transition from what was then to what is to be in Port Talbot is considerable. Incidentally, I have some sympathy with the points made by the noble Lord, Lord Hunt, about the cost of energy. However important it is for our environment, it is causing us grave difficulties in the competitive world market.
The position in Port Talbot, Llanwern and Trostre has changed in the last few weeks. At one time, when the plants closed for Christmas, they did so for two weeks. They are now closing for five weeks. That has meant a reduction of some 65% in the income of those who rely on the steel industry in those towns. That is very unfortunate and is largely a result of two things. Despite the fact that we will benefit with regard to the tariffs from the United States, the effect worldwide has meant that China, Vietnam and other countries have dumped their steel into our country. This has an obvious adverse effect on our old steel industry. Coupled with that is the very bad decision of the European Union to impose a 50% tariff on steel from this country. The combination of both those things has resulted in the reduction of the workforce working over Christmas in Port Talbot.
What is to be done? The Government have a significant task to try to ensure that we can avoid the dumping of steel in our country. If that involves income tariffs, so be it. There should also be considerable negotiations with the European Union on whether it can reduce that 50% tariff to help save our jobs in the steel industry. I am sure my noble friend will do that, and I know that my constituency successor, the right honourable Nick Thomas-Symonds, the Paymaster-General, who has duties with regard to our relationship with the European Union, is pursuing it as well. There is a lot to be done and negotiated, and a lot relies upon it. No great country, least of all one that is a member of the G7, can be without a great steel industry. It therefore has to be saved. No part of our country is more affected than the country and the constituency that I come from, in Wales.
Let me be clear. Steel is vital to our economy: it builds our bridges, powers our industries and anchors communities across the nation. The question before us is not whether steel matters but whether this Act truly serves the future of British steel-making. Instead of investing in modernisation and sustainability, the Act prioritises short-term subsidies that prop up outdated plants and practices. Billions in taxpayers’ money is being redirected to cover corporate losses, without demanding real reform. Where are the binding conditions for green transition, digital efficiency or fair competition? None are adequately defined. We are, instead, pouring funds into a model that competes on volume rather than value.
I am proud of the previous Conservative Government’s commitment to low-carbon steel-making, with the plan for an electric arc furnace at Port Talbot, a £1.25 billion project part-funded by a £500 million Conservative Government grant, and I am grateful to the noble Lord, Lord Bilimoria, for acknowledging this. It is a crucial step towards low-carbon steel-making, with the potential to cut emissions by up to 90%, and to sustain 5,000 Welsh jobs and many more in the supply chain. One day, of course, I hope that the electricity on the site will be generated by nuclear power. Only the Conservative Government had the foresight to enable all this to happen. It is to be genuinely hoped that the current Labour Government will have similar foresight in their upcoming siting policy for new nuclear advanced technologies, which could be very relevant to Port Talbot.
Further, this legislation dangerously centralises decision-making in Whitehall. By granting extraordinary powers to the Secretary of State to override environmental and labour standards “in the national interest,” it sidelines local communities and weakens accountability. Steel towns such as Scunthorpe deserve consultation, not merely patronage.
This is not industrial strategy; it is industrial nostalgia. Britain cannot build its manufacturing strength by reviving a 20th-century model in a 21st-century economy. Without a clear path towards low-carbon steel production, research partnerships and fair international trade policy, the Act will leave us less competitive, not more secure. We should instead be channelling more funds into innovation: electrified blast furnaces, circular recycling systems and collaborative regional hubs that link industry with universities. That is how we build resilience, not through subsidies that delay the inevitable reckoning with global change.
Patriotism is not blind loyalty to failing structures; it is the courage to reform them. We must craft policy that supports both innovation and inclusion. The Steel Industry (Special Measures) Act 2025 does neither. Let us reject complacency, demand accountability and champion a truly modern industrial strategy. It is time to replace crisis management with the vision to move from reactive measures to a durable and just transition for British Steel that delivers not only for today’s jobs but for tomorrow’s generations.