The following Statement was made in the House of Commons on Thursday 25 June.
“With your permission, Madam Deputy Speaker, I wish to make a Statement on our steel trade measure, which will come into force on Wednesday 1 July.
Let me start with first principles. The UK needs a strong steel sector, both in production and downstream, but the whole sector is facing an existential moment. Fifty years ago, the UK produced 27 million tonnes of steel a year, and even in 2010 we produced 12 million tonnes, but in 2024 we produced just 4 million tonnes and met just 30% of UK steel needs.
No Government can or should ever accept such a sharp decline in an industry that forms the backbone of so many other sectors, including defence. We promised that, in government, we would do two things in tandem. First, we promised to launch a steel strategy to tackle all the key issues facing the sector in the round. That strategy, which we published on 19 March, includes up to £2.5 billion of government investment on top of the £500 million pledged for steelworks at Port Talbot, plus active support for this energy-intensive sector through the British industry supercharger. Secondly, we said that we would introduce a robust new steel trade measure that secures the future of the UK’s steel industry, to protect our ability to produce steel for defence and critical national infrastructure. Today, I will address the latter point.
There is an additional concern. Canada, the United States and the EU have already put in place similar toughened measures to protect their industries, so if we do nothing, or if we delay the introduction of new measures, we will immediately become the global dumping ground for cheap steel from across the world. Again I say: that would mean the end of UK steel production. That is why we must take similar action to the European Union, which announced its measure on 7 October last year. Earlier this year, we committed to introduce a 50% out-of-quota tariff on imported steel, and in April we published provisional quotas for several key categories of steel. This measure needs to work not just for our steel producers but for our manufacturers, who depend on steel—those who source it from the UK and those who source it from abroad. Our aim is solely to protect categories of steel that we produce in the UK, so we have deliberately excluded many categories from the measure. To be absolutely clear, nearly three-quarters of UK steel imports by value, and 53% by volume, are out of scope of this measure.
Why do we need the steel trade measure? A key part of the existential threat to UK steel production is global overcapacity, a lack of transparency about international subsidies and artificially depressed global prices, all of which price UK steel out of the market. For the past eight years, UK steel production has enjoyed some protection thanks to the UK’s steel safeguard, which it inherited from the EU. That allowed us to protect categories of steel manufactured in the UK with quotas and a 25% out-of-quota tariff. That protection, which was introduced by the previous Government, was clearly not sufficient, as our steel sector has continued to suffer. In the seven years under the safeguard, up to 2024, steel production has continued to fall by 3.3 million tonnes—a stunning further 45%.
We now face a key moment. That safeguard must legally expire on 30 June, as World Trade Organization rules firmly prevent an extension of a safeguard beyond eight years—it is precisely the same for the EU. If we put nothing in its place, our steel production sector will lose all its protection. That would not just bring our steel industry to its knees; it would kill it completely. That is why I promised the House that I would not allow a gap between the expiry of the safeguard and the implementation of our future steel trade measures. We are making good on that promise today.
There is an additional concern. Canada, the United States and the EU have already put in place similar toughened measures to protect their industries, so if we do nothing, or if we delay the introduction of new measures, we will immediately become the global dumping ground for cheap steel from across the world. Again I say: that would mean the end of UK steel production. That is why we must take similar action to the European Union, which announced its measure on 7 October last year. Earlier this year, we committed to introduce a 50% out-of-quota tariff on imported steel, and in April we published provisional quotas for several key categories of steel. This measure needs to work not just for our steel producers but for our manufacturers, who depend on steel—those who source it from the UK and those who source it from abroad. Our aim is solely to protect categories of steel that we produce in the UK, so we have deliberately excluded many categories from the measure. To be absolutely clear, nearly three-quarters of UK steel imports by value, and 53% by volume, are out of scope of this measure.
Today I announce the final design of our steel trade measure, which will take effect on the same day as the measures imposed by the European Union. The total quota volume will now be 3.2 million metric tonnes. That is an increase of over 560,000 metric tonnes of steel that can be imported tariff-free compared with the provisional volumes that we announced—a significant 21% uplift. Today’s announcement includes the final quotas in each category. Having listened to Members and industry, we have increased the quotas in several instances so as more accurately to protect categories of steel that are manufactured in the UK.
Some of the changes reflect the fact that the European Union remains our largest export market for steel and that we have highly interconnected supply chains. Since we announced our measure in March, we have engaged intensively with the European Union and UK industry. We have reached a mutual outcome with the EU as a result of those discussions. On our side, we will increase the EU’s quota access from the announced 1.58 million tonnes to 2.08 million tonnes, and the EU will announce quotas under its own measure shortly. That will provide stability for UK-EU steel trade from 1 July while we continue to work together to strengthen UK-EU steel trade in the longer term. We have also worked closely with our international partners, and we are committed to constructive engagement with them on our steel measure. We will continue to prioritise working with our partners to tackle overcapacity.
I want to be very honest with colleagues: there are tough trade-offs here. We are determined to ensure that steel continues to be forged and made in the UK by proud steel-making communities across the UK—in Port Talbot, Motherwell, Scunthorpe, Sheffield and on Teesside. The Labour movement was forged in these communities, just as steel was, and we will not let them down. But we know that businesses will sometimes need to find specialised steel that we simply cannot procure in the UK. In those cases, quotas have been designed to allow for imports and to ensure continued availability for UK businesses without unnecessary additional costs. To ensure continuity within supply chains for business, we are also introducing a transitional arrangement. That means that our new trade measure will not apply to steel under contract before 14 March, and imported between 1 July and 30 September. We will conduct a review after 12 months and actively monitor implementation of the measure from day one to ensure that it operates as intended and remains responsive to emerging evidence and stakeholder feedback.
There are some who think that steel is an industry of the past. Others think that the market alone should provide—‘Just buy it as cheap as you can, whatever the cost to British industry’. I could not disagree more, because I know how that script runs. We buy cheap this year and next year, and maybe for a decade. Unable to compete, our national steel industry dies in the meantime. Every single UK steel mill closes. Then suddenly, miraculously, the global price rockets, and we have nowhere to turn because we are caught in a trap of our own making. I fully understand the concerns of those who worry about this measure, and will seek to address them, but I say to them that this is in the interests of the whole sector—producers and users alike.
Finally, I will be hosting a drop-in surgery for Members on Monday 29 June from 3.15 pm to 5 pm, where colleagues can meet with me and officials to discuss any concerns and to understand the impact of this measure on the particular businesses in their constituency. I hope that will be of convenience to Members.
I would especially like to thank my officials, including Beth Sedgwick, Malte Werner and Chris Taylor, and the wonderful Lola Oates in my private office, for all the work they have done on this. I commend this Statement to the House”.
My Lords, this episode says a great deal about the attention the Government pay to the business community. For months now, manufacturers, fabricators, construction firms and businesses in aerospace, automotive and defence have warned about the consequences of the Government’s original proposals, yet meaningful changes have come only at the 11th hour, just days before the new regime is due to take effect.
Now, we warmly welcome the partial changes that have been announced. It is right that the Government have increased the overall tariff-free quota, that they have reduced the proposed reduction in quota volumes from 60% to 51%, and that they have removed 11 product codes where there is no UK production. But the core problem remains. The Government have left untouched the 50% tariff once a quota is exhausted. This will be passed through supply chains into downstream sectors and ultimately into higher prices for British consumers.
Additionally, the Government themselves accept that some commodity codes contain both UK-produced and non-UK-produced grades and sizes. This poses grave problems for UK importing businesses which depend on specialist steel products, alloys and certified grades not readily available from domestic suppliers. There is therefore no genuine case-by-case exemption for specialist steel unavailable from a UK mill. There is only a quota. That is particularly worrying for smaller, high-value manufacturers—specialist firms which import smaller volumes but depend on particular grades—which have no realistic option but to pay the tariff. This will inevitably damage the competitiveness of our downstream sectors.
My Lords, as someone who has spent most of his life in Sheffield and South Yorkshire, I know that this issue is not an abstract discussion about tariffs and trade policies; it is about the future of communities that have made steel, engineering and manufacturing part of their identity for generations.
South Yorkshire has always been more than a producer of steel; it has been the place of innovation. Today, alongside our proud steel heritage, we are home to one of Europe’s leading advanced manufacturing clusters. The work taking place at Advanced Manufacturing Innovation District, around the Advanced Manufacturing Research Centre, demonstrates what modern British manufacturing can achieve. Global companies such as Rolls-Royce, Boeing, McLaren and many others have chosen to invest there because of the extraordinary skills, research and engineering excellence that exists in our region. That is precisely why getting these measures right matters.
I welcome the Government’s Statement and in particular the improvements they have made following engagement with the industry, as we heard earlier. Increasing tariff-free quota volumes and removing product codes where there is no domestic production are sensible changes, and Ministers deserve credit for listening. We on these Benches have consistently supported action to strengthen British steel-making. A resilient domestic steel industry is essential for our economy, our nation’s security and our industrial future.
We also recognise the pressures created by global overcapacity and unfair competition. But if there is one lesson that Sheffield has taught us all over the decades, it is that our steel industry and our manufacturing succeed together. One cannot thrive if the other is weakened. The difficulty with these measures is the question of domestic non-availability. Many manufacturers in aerospace, defence, energy and precision engineering require highly specialised grades of stainless bar and cold finished bars that are simply not produced in the United Kingdom at the required grades, specifications, dimensions and commercially viable volumes. These businesses are not choosing to import because they are cheaper; they are importing because no British alternative is available.
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The Government have offered only a three-month transitional period, covering goods contracted before 14 March and imported between 1 July and 30 September. However, industrial supply agreements, particularly for specialist steel, can run for years. Firms that entered into good faith long-term contracts may still face a 50% tariff, simply because delivery falls outside an arbitrary three-month window. The Minister may say that there was no choice; that the existing safeguard expires today, 30 June; and that delay would expose British steelmakers to global overcapacity and subsidised imports. That is precisely why the Government should have brought forward a credible long-term plan earlier, rather than arriving at the deadline with an emergency measure which has needed significant revision in its final days.
The Government’s own strategy recognises the central problem of industrial electricity costs. Steel is energy intensive. If Britain wants a strong domestic steel industry, it needs electricity prices that allow British producers to compete, not merely survive behind a tariff wall. Will the Minister explain what further action the Government will take to bring industrial electricity costs down for steelmakers and steel users alike? Will the Government scrap the carbon price burden on energy-intensive industry, rather than allowing firms to face ever more complex costs through the UK emissions trading scheme and the future carbon border adjustment mechanism? Will the Minister also address the growing regulatory burden? Will the Government at last repeal burdensome ESG reporting requirements, including those requiring businesses to report on greenhouse gas emissions, non-financial information and sustainability statements?
Can the Minister also answer the following questions? First, the Government’s exclusions rest on a test of “no production, or production paused”. How does the Minister justify keeping specialist grades in scope when there is no UK-produced equivalent that can realistically be used, particularly in aerospace and defence, in which supplier certification takes years? Secondly, will the Government consider creating an expedited exemption or review process for businesses which can demonstrate that a product is unavailable from a UK producer in the required grade, form, quantity or certification standard? Thirdly, when will we see a genuinely durable steel strategy, one which addresses energy and carbon costs, investment, planning delays and regulatory burdens?
Finally, earlier today, there was an Urgent Question in the other place on the impacts of the steel tariffs on businesses in Northern Ireland. There is no domestic steel-making capacity in Northern Ireland, which means that many in Northern Ireland will feel they are being penalised without the benefits of protecting their own steel industry. Can the Minister confirm how affordable steel will continue to flow into Northern Ireland under these arrangements?
In summary, Britain needs a strong steel industry, but it also needs strong manufacturers, strong construction firms, strong defence supply chains and competitive exporters. The task for the Government is not to choose between upstream steel producers and downstream steel users—it is surely to ensure that both can survive.
My Lib Dem colleagues argued in the other place last week that downstream manufacturing supports around 300,000 jobs, compared to approximately 30,000 jobs in primary steel-making. We must therefore ensure that policies intended to protect one part of our industrial base do not inadvertently damage another that employs 10 times more people. In South Yorkshire, we understand those connections better than most. A component manufactured in Sheffield may end up in an aircraft engine, a Formula 1 car, a defence system or an offshore energy project. Those supply chains are complex, highly regulated and internationally integrated. Changing suppliers is not something that happens over a weekend, as we heard earlier; it requires years of qualification, testing and certification. For many firms, there is simply no immediate substitute.
I really hope that the Minister can provide reassurance that the remaining product categories, particularly categories 14 and 27, have genuinely been assessed against the reality of domestic supply, rather than simply the theoretical possibilities of production.
I also remain concerned about businesses that, as we heard earlier, entered contracts after March but before the final details were announced, only days before implementation. Manufacturers need certainty. Investment decisions are made over years and not weeks.
Finally, as the Government begin negotiations in the WTO Article 28 process, I hope they will retain a simple guiding principle: where specialist steel cannot be sourced domestically, permanent tariff barriers serve only to increase costs for British manufacturers without creating new British production. Sheffield’s history teaches us that British steel manufacturing succeeds through innovation, skills and partnership, not artificial shortages. Let us support British steel and British manufacturing, and above all, let us all ensure that industrial policy recognises that these sectors are partners in our nation’s success, not competitors for government support.