UK Steel Strategy

With permission, I will make a statement on the Government’s steel strategy. I begin by declaring my membership of Community and GMB trade unions.

Resilient economic growth is the main driver of social justice, and steel is essential to both. Steel underpins the key growth-driving sectors in our modern industrial strategy. It has strengthened and sustained communities in England, Scotland and Wales. The future of steel in Britain is about ensuring the future strength and security of our national economy.

We honour steel’s proud industrial past, but we do not live in it. We are ambitious and excited for Britain’s future steel sector. Steel is essential for advanced manufacturing, clean energy, construction, defence and digital technologies. Steel is vital for sustaining thousands of lives and livelihoods, with good jobs, apprenticeships and opportunities. Steel is central to communities in Port Talbot, Motherwell, Scunthorpe, Sheffield and Teesside.

This House will be acutely aware that Britain’s steel sector has experienced decades of decline, from the failures of Thatcherism that closed Consett and Ravenscraig and shrank Corby to the damage done by the Tories to Redcar and Port Talbot. Steel manufacturing in Britain serves as the starkest possible monument to the failure of Thatcherite monetarism and its record of industrial vandalism. By contrast, Labour has an activist industrial strategy that determinedly targets key industries, technologies and strategically important sectors for economic development, national security and resilience.

In the last five decades, steel industry employment in Britain has declined by 90%, from more than 300,000 jobs in 1970 to less than 30,000 today. We are closing that decades-long chapter of deliberate de-industrialisation and committing anew to strengthening and sustaining Britain as a steelmaking nation. High operating costs and global overcapacity have made it much harder for British steel companies to compete. Manufacturers have looked to cheap, imported steel to keep costs down. As a result, investment have tapered off, capabilities have reduced and communities have been let down. Crude steel production has declined by more than 50% in the last decade.

Faced with these challenges, previous Governments failed to present a long-term vision for steel in Britain. They were reactive, not proactive. They intervened to support specific companies at specific times, but failed to improve the general conditions for the industry as a whole. They lacked the necessary boldness, creativity and urgency. This Government will not make that same mistake. Far from believing that steel decline is inevitable, we embrace a future for British steel manufacturing as a staple of sustainable, resilient economic growth and our national security. While the industry still faces challenges today, we will do everything we can to help it adapt, grow and succeed into the future, and our actions on steel will be driven by what is best for our national interest.

Our steel strategy sets out a series of actions to reverse the failures of the past: to build a strong and resilient steel sector, backed up with £2.5 billion of Government investment. That is on top of the £500 million that we have pledged for the steelworks at Port Talbot. Our ambition is for domestic production to meet up to half of Britain’s domestic demand. To support that effort, we will introduce a new trade measure to replace the existing safeguard. From 1 July, overall quotas for imported steel will be reduced by 60% compared with the safeguard. All steel coming into the UK above those levels will be subject to a 50% tariff. This measure will apply to imported steel products that can be made in the UK.

This is not a decision that I have taken lightly. I have done so to shield Britain’s steel industry from the damaging effects of global overcapacity, to ensure that Britain’s steel industry contributes fully to our critical national infrastructure and our defence, and to shore up the UK’s resilience to global shocks. Without this action, the UK’s steelmaking capability faces real jeopardy, leaving us reliant on overseas suppliers. I will not let that happen. Steel is essential for our energy security, our transport infrastructure and our industrial strategy, and in this volatile geopolitical climate in which we find ourselves, that kind of dependence is weakness. Britain’s national interest requires the strength of British-made steel. The tariff will be implemented once import quotas have been fully met. I believe that is essential for the resilience of sectors reliant on steel imports, including the car industry, construction and defence. We will review the measure in 12 months to make sure that it is working effectively.

Our approach reflects months of engagement between my Department, the Steel Council, businesses and trade unions. I thank the trade unions that have helped us, officials in my Department who have poured their heart and soul into this strategy, and my ministerial team for their contributions and leadership. We continue to engage constructively with the EU to protect vital UK-EU steel trade given our highly interconnected supply chains. Beyond the trade measure, we are backing electric arc furnaces to shift to greener, decarbonised steel production. As we see at Sheffield Forgemasters, electric arc furnaces have the technical capability that we need to produce steel to the very highest of standards for nuclear, for aerospace and for defence. This is important, as traditional blast furnaces will eventually reach the end of their operational lives. [Interruption.]

Order. I want to hear what the Secretary of State has to say. I am also certain that constituents want to hear him. This is a very important statement.

It is okay, Madam Deputy Speaker. It is just that everyone is shocked to see the hon. Member for Boston and Skegness (Richard Tice) in his place.

Electric arc furnaces are important as traditional blast furnaces will eventually reach the end of their operational lives and a managed transition is vital to maintaining supply. That is why we took control of British Steel last year, and we are currently working with the owner on the long-term future of the site.

The UK has the opportunity to lead in clean, green steel, and we are going to seize it with both hands. That is why we are also changing the clean industry bonus, making it easier for British steel to be included in British wind farms.

Britain can recycle more steel. Making better use of scrap steel is fundamental to the sector’s future growth. Millions of tonnes are ready to be recycled. We are building the technology to do it right here in Britain. We are creating a more competitive business environment for steel, too. We are tackling the high cost of energy. Our supercharger is delivering millions of pounds in savings for steelmaking firms. These businesses will benefit even further next month thanks to the changes that we are making to the network charging compensation scheme, which will increase the rate of relief from 60% to 90%. We are taking further action to support foundational industries by addressing high electricity costs, with a view to boosting supply-chain resilience. Our British industrial competitiveness scheme could reduce bills for other businesses in the sector by providing a discount of up to £40 per megawatt hour, starting from April 2027.

Private sector investment is essential for the steel sector. It is vital for driving up capacity and capability. That is why, within 10 weeks of taking office, we negotiated a substantially better deal to support the transition to green steelmaking at Port Talbot. We are welcoming investment from new entrants to the UK market. The National Wealth Fund is there to support them.

I call the shadow Minister.

I thank the Secretary of State for advance sight of his statement. The Conservatives very much believe in a sovereign steel industry, but what we see today is a multibillion-pound shot in the dark, and it heralds the end of primary steel production in the UK. Just to set the record straight, there would no longer be any steel production in Wales without action from the last Government. This steel strategy has no plan to make the industry stand on its own two feet, and it risks a permanent state-funded drain on taxpayers.

British Steel was losing £700,000 a day when the Government took emergency action last year, and now the taxpayer is losing an estimated £1.3 million a day and there is a subsidy of £110,000 per job to keep the Scunthorpe blast furnace operational. This steel strategy does not include any exit strategy, risking a permanent drain on taxpayers, and now the Government are negotiating handing taxpayers’ money to a Chinese business that they said was worth nothing, while hitting British users of steel with a 50% tariff hike. Given that the previous Secretary of State said that British Steel had zero value, will the current Secretary of State confirm whether compensation will be paid to Jingye?

How are these new tariffs going to affect the cost of living for our constituents? How much will the tariffs raise? They represent a massive tax hike on our world-leading automotive, defence and aerospace sectors, which will make building homes, bridges and railways more expensive. Have the Government carried out any impact assessment on the tariffs, and will jobs not be lost in those other sectors?

The Government say in the strategy that electric arc furnaces are the future, but without competitive energy, green steel will simply become no steel. If electric arc furnaces are the future, when will the blast furnaces at Scunthorpe be decommissioned, and how many jobs will be lost in that process? Where will the £2.5 billion go? Is it all going into the Scunthorpe blast furnaces? How is this £2.5 billion spending spree fiscally responsible? What is the Secretary of State cutting to pay for it?

I am glad to see the hon. Lady at the Dispatch Box. It is always an honour to have exchanges with her, as it has been for quite some time.

The hon. Lady mentions Wales, but she seems to have no idea about the breadth and depth of the steel industry across Wales. She seems to think that there is only one steel maker, manufacturer and operator in Wales. There is not. She seems to be forgetting all about 7 Steel in Cardiff. That explains why the Conservatives in government failed to have a strategy and vision for steel and to support the sector because they did not even know who was making steel and where. This Government understand all our steel assets, and we are creating a strategy to make sure that all of them add up to more than the sum of their parts and that we have a domestic industry that is sustainable, secure and growing into the future.

The hon. Lady seems to want to exit from British Steel without any more investment whatsoever. That would be the worst of all worlds. She wants to strand an entire community. We will stand by that community and make sure that the steel industry and sector thrives into the future.

On tariffs, let me just explain to the party that used to be about free and fair trade that free trade depends on fair trade. Fair trade depends on not having overcapacity. We cannot have overcapacity and fair trade. Therefore, we must correct the market and offer protection where overcapacity is in danger of decimating one of our key industries for defence, security and future prosperity.

The worst thing that could be done for the British steel industry is to do nothing. All we have heard from the Conservatives is, “Don’t do any of the things that Labour is doing,” with no alternatives offered whatsoever. They are the “do nothing” party, and that is the worst of all worlds.

I thank my right hon. Friend for his statement. As he says, steel is national security and economic security. Can I just say, it is terrific at long last to hear a Government showing some mettle? [Hon. Members: “Oh.”]

The array of measures in the strategy is impressive, from tariffs to procurement and scrap, but there are some concerns among our precious automotive sector. Could my right hon. Friend outline some detail about how this will relate to EU measures and how it will support UK manufacturers facing “made in Europe” tariffs?

My hon. Friend is right to explain that this strategy is a holistic strategy. It looks at the industry as a whole and considers how all the assets can be brought together and given a sustainable footing. I will invest, modernise and protect where necessary.

On the questions about the EU, I have, of course, been in discussion with my EU counterparts. I met four EU commissioners in the last month and the vice-president. Next week we will have further discussions when we are in Cameroon for the ministerial meetings of the World Trade Organisation. These are important times for both the European Union and the UK. Our reset is important, and that reset work will continue. It is in both our interests to make sure that we invest in, protect and modernise our respective steel industries, and we should be doing so with as much co-operation as possible.

I call the Liberal Democrat spokesperson.

In 2024, Labour MPs across south Wales stood on a pledge to “save our steel”. They promised £2.5 billion for the steel industry, and they said that they had a plan. They began by saying that they would publish the steel strategy in spring 2025. Then it was autumn 2025, and now finally it arrives in spring 2026. We still do not know how much of that money will be spent in Wales. Will the Secretary of State confirm that to the House today?

In the meantime, British steel production has continued falling, and thousands of jobs have been lost across south Wales since the blast furnaces were turned off. I am not really sure that Labour understands the damage that its party’s failures are having across south Wales. Wales feels abandoned. Steel is in our blood. It is the backbone of our economy. But we are still losing jobs. Skilled workers such as welders are leaving, and tarmac companies are struggling to make asphalt. Consumer spending is falling. People in south Wales are fed up with broken promises. South Wales was promised that the electric arc furnace would be up and running by 2027, but we are now told that it will be 2028. Can the Secretary of State update the House on that deadline?

We need to see so much more urgency. Wales is desperate for the good jobs that the steel industry can provide. There is still—just about, if the Government move quickly—the opportunity to build a home-grown supply chain for the floating offshore wind sector. The Government have told me that they are not expecting to have that sector going until the mid-2030s. That is far too slow. That lackadaisical approach means that the energy that should be created through offshore wind will not be added to the grid until the mid-2030s. The Government must hurry up and deliver on their promises to south Wales.

The hon. Gentleman mentioned waiting for the steel strategy. The truth is that the steel sector has been waiting 80 years for a steel strategy, and this is the first time that one has been delivered. I think that showing a little bit of gratitude for what has been delivered today, on behalf of the sectors and businesses that he talked about, would be most welcome. I also point out that the 80 years over which there was no strategy included 2010 to 2015, when his party was in government.

Yesterday I was at Tata in Wales. The management, the ownership, the workers and the unions universally welcome this strategy and the £500 million that has already been put in to help transform the industry. That is the example of how we will move forward—with boldness, creativity and urgency.

This is indeed a welcome and bold steel strategy, and it stands in direct contrast with what happened under the Conservative party, which never had one. I thank all the Ministers involved, the industry and the unions. I declare an interest as a member of Community and GMB. As I am sure Minister will agree, this is a good start, but we should always aspire to be as ambitious as possible for our UK steel industry, our security and our infrastructure, as well as for the dedicated young workforce at Llanwern steelworks and 7 Steel UK. Will the Secretary of State work with industry to incentivise investments in projects that we do not currently make, so that we can reduce even further our reliance on imported steel?

I thank my hon. Friend for her thoughtful contribution, which is based on experience. Llanwern has a fierce advocate in my hon. Friend. I hope that she recognises that her campaigning over many years is reflected in the strategy. I can reassure her that this strategy is not the end; it is just the beginning. The investment, transformation and modernisation programme is only just starting.

Hundreds of my constituents work at the Scunthorpe steelworks, and hundreds more are reliant on the supply chain. They want certainty about their future. Will the Secretary of State give a clear indication of how long he anticipates the existing blast furnaces will be in operation? If the Government’s intention is to build arc furnaces, will they be established in Scunthorpe?

I am grateful to the hon. Gentleman for his thoughtful intervention. He has campaigned on this issue for a long time. I can reassure him that conversations with the owner are ongoing, and that the £2.5 billion that the Government have committed is for the transformation of the sector for a sustainable future. There will be more domestic demand, we will benefit from efficiencies and economies of scale, and we can start to rebuild and re-industrialise the steel sector. That benefits his community and other steel communities up and down the country.