Steel Industry (Nationalisation) Bill
House of Lords · Lords Chamber · 1 Jul 2026 · 135 speeches · Official Report
Committee (2nd Day)
Scottish l egislative c onsent granted . Northern Ireland and Welsh l egislative c onsent sought . Relevant documents: 1st Report from the Constitution Committee, 3rd Report from the Delegated Powers Committee .
Clause 15: Property transfer regulations
Amendment 14 not moved.
Clause 15 agreed.
Clauses 16 to 38 agreed.
Clause 39: Continuity obligations: consideration and terms
Amendment 15 not moved.
Clause 39 agreed.
Clauses 40 to 43 agreed.
Clause 44: Pensions
Amendment 16
Moved by
16: Clause 44, page 28, line 16, at end insert- “(3A) On the day on which this Act is passed, the Secretary of State must lay before Parliament a consultation document on the proposed exercise of the powers under this section.(3B) The consultation document must invite representations from-(a) every steel undertaking affected by the provisions of this Act,(b) trustees or managers of any pension scheme in respect of which such an undertaking, or a group company of such an undertaking, is or was an employer,(c) persons appearing to the Secretary of State to represent members and other beneficiaries of such schemes,(d) trade unions representing employees of such undertakings,(e) the Pensions Regulator, and(f) the Pension Protection Fund.(3C) Before making regulations containing provision by virtue of this section, the Secretary of State must have regard to the interests of members and other beneficiaries of affected pension schemes, including the protection of accrued rights and the security of benefits.”Member’s explanatory statement This amendment requires the Secretary of State to lay a consultation document before Parliament on the day the Act is passed, consult affected steel undertakings and pension stakeholders, and have regard to scheme members’ and beneficiaries’ interests before exercising the pension powers.
My Lords, my apologies: I was asleep at the wheel, much like the England defence. I rise to speak to Amendments 16 and 17 in my name and that of my noble friend Lord Hunt of Wirral. I thank the Minister for his letter on Clause 44 and for meeting us to discuss the Bill and the ways in which it may be improved. I welcome his confirmation that the Government’s intention is for workers’ pension benefits to remain unchanged, but where the Bill gives the Secretary of State powers to modify or apportion pension rights and liabilities, transfer accrued rights between schemes, and amend scheme terms, workers and pensioners need more than an assurance of present intent. They need a clear legal safeguard, which my Amendment 17 would provide. It would ensure that regulations made under Clause 44 could not reduce the value of accrued pension rights or benefits, nor make the terms on which benefits accrue less favourable in future. Amendment 16 addresses consultation and engagement. It would require the Government to consult affected undertakings, pension trustees and managers, scheme members and beneficiaries, trade unions, the Pensions Regulator and the Pension Protection Fund, and to have regard to the interests of members and beneficiaries, including the protection of accrued rights and the security of benefits. The Minister suggested that full consultation before the use of these powers may not be realistic where urgent action is required. We understand the need to avoid delay where...
My Lords, I, too, am confused, because I thought Amendment 20 was in this group.
Noble Lords
It is.
Unfortunately, the proposer failed to mention it in his speech. I signed it merely because I wanted to indicate that the contingent liabilities are an important part of the Bill as we discuss it. However, the main issues within this group are those that I will discuss later, in group 4. In that respect, I am going to keep my powder dry.
My Lords, before I start, I am sure all noble Lords want to join me in wishing the England team the very best for the rest of the match this afternoon. First, let me thank the noble Lord, Lord Sharpe, for his contribution and his amendments. Amendment 20, in the name of the noble Lord, Lord Fox, would require the Government to provide a statement to Parliament outlining the value of contingent liabilities and the steps they would take to minimise taxpayer exposure to them before an intervention. As I have set out previously, the Government are somewhat constrained in the procedural steps they can take before exercising the power in the Bill. This is why the transfer powers are exercisable by regulations subject to a negative procedure. We will likely be operating in a fast-moving commercial environment where intervention needs to be done at pace, and negative procedure transfer regulations do not require prior parliamentary approval before they take legal effect. It is not appropriate to publish details of a private company’s contingent liabilities prior to nationalisation. If a steel undertaking is brought into the public sector, its financial position will rightly be subject to parliamentary scrutiny, including the publication of its annual report and accounts. Of course, the Government will take steps to minimise taxpayers’ exposure to liabilities wherever possible. Any decision to exercise the transfer powers will be subject to the usual principles of Managing Public...
I am grateful to the Minister for his answers and to the noble Lord, Lord Fox, for correctly pointing out that I neglected to mention Amendment 20 on contingent liabilities. We will come back to that. As regards Amendments 16 and 17, I am grateful for the Minister’s commitments, particularly on consultations where possible. Perhaps we could explore in another forum what potentially that will mean in practice. People’s pensions are their future and their security. It is vital that the Government ensure that workers’ pension rights are properly protected-I have no doubt at all that the Minister agrees with that-and that the relevant experts, regulators and representatives are fully consulted as these powers are exercised. We are merely trying to explore how that is done. I look forward to picking up that subject again in the future. For the present, I beg leave to withdraw Amendment 16.
Amendment 16 withdrawn.
Amendment 17 not moved.
Clause 44 agreed.
Clause 45: Enforcement
Amendment 18 not moved.
Clause 45 agreed.
Clauses 46 to 49 agreed.
Clause 50: Power to modify law in connection with share or property transfers
Amendment 19 not moved.
Clause 50 agreed.
Amendment 20 not moved.
Amendment 21
Moved by
21: After Clause 50, insert the following new clause- “Duty to try to find a private sector purchaser for any nationalised steel undertakingWhere a steel undertaking has been subject to a principal transfer power under this Act, the Secretary of State must-(a) make all practicable efforts to find a private sector purchaser for the steel undertaking, and(b) lay a report before Parliament every six months which sets out progress made towards finding a private sector purchaser for the steel undertaking.”Member’s explanatory statement This new clause would put a duty on the Secretary of State to seek a private sector buyer for any steel company that has been nationalised, and report to Parliament on progress made every six months.
My Lords, Amendment 21, standing in my name and that of my noble friend Lord Sharpe of Epsom, would, ultimately, put into the Bill what the Government say is their objective. The then Secretary of State for Business and Trade said that the Government’s aspiration for British Steel was “a co-investment agreement with a private sector partner to secure a long-term transformation ”.-[ Official Report , Commons, 12/4/25; col. 841.] The future of British Steel cannot rest indefinitely on public ownership and continuing working capital injections, together with an open-ended commitment from the taxpayer. It must be a viable, competitive and investible business able to secure private capital for the investment and the transformation that it requires. Yet that objective does not appear in the Bill. There is no statutory duty on the Secretary of State to seek a private sector purchaser, no clear exit route from public ownership and no requirement to report to Parliament on progress. Without that discipline, there is a real risk that nationalisation becomes not just a temporary intervention to stabilise and restore business but an accumulating and indefinite cost to the taxpayer. If the Government are serious about a private sector-led future for British Steel, they should have no difficulty in accepting that duty. Amendment 23 from the noble Lord, Lord Fox, is very important indeed. It goes to the heart of concerns raised throughout these debates, including by my noble friend Lord...
My Lords, Amendment 23 is in my name. I was very pleased to hear what the noble Lord, Lord Hunt, just said, because I had put in my notes that I feel that this is an important amendment. I hope it is pushing at an open door. In the previous debate, on Monday, the noble Lord, Lord Wigley, spoke of the effect on local communities. I agreed then, and this amendment would put in place a requirement for a jobs and industrial transition strategy to follow once the Secretary of State has exercised the principal transfer power in respect of the steel undertaking. I emphasise that this would be post exercising that power. This amendment calls for the strategy to be laid before Parliament within six months-sooner, I would hope-from the exercise of the transfer powers. This published strategy must set out the Government’s investment and transition plans to protect employment, deliver a skills and reskilling programme and, if necessary, redeployment opportunities, and deliver real economic renewal, while supporting resilience in communities that are dependent on that steel undertaking. I am happy to discuss with the Minister ways of achieving this objective, but this process is aimed at ensuring that there is an explicit plan to which Parliament will be able to hold the Government to account.
My Lords, these are indeed important amendments. It is a tragedy what has been happening to our steel industry in this country. It suffered considerable decline under the last Government thanks to very high energy prices and decarbonisation, which turned out to be disruptive. In the last full year of the Conservatives, we were down to 5.6 million tonnes of manufactured steel-around half our requirement. There has now been a further very big collapse, such that our output last year was, I think, around half of that in 2023-around 2.5 million tonnes-and we are heading for an even smaller output this year unless the business plan is provided, kicks in and starts to do something to help the ailing Scunthorpe business that we are talking about. I think we are united in our belief that this is not what we want from our steel industry. It means that we have a chronic dependence-in the last year, 7.1 million tonnes-on imported steel and we are heading to a position where we import practically all our steel. I fear we will discover that, unless we do something about electricity prices, even when electric arc production starts to kick in on a bit of a bigger scale, it will be very difficult to sell that steel at a profit because the electricity costs are unrealistic and uncompetitive, as well as the general carbon taxes and carbon costs, which have been adversely affecting the blast furnaces. Given our common interest in saving jobs and having a better steel sector, I again urge the...
My Lords, I am glad to have the opportunity to support Amendment 23, tabled by the noble Lord, Lord Fox, concerning a jobs and industrial transition strategy, which is very much in in line with the comments I made in our previous debate. The question of protecting skilled employment, in particular, and the need to reskill and deliver the tangible economic renewal, support and resilience in the local communities is very close to my heart. It is also very close to the minds of those in places such as Port Talbot who have faced insecurity in these matters. I hope that the Government, if they are not able to accept this amendment, will at least underline their agreement with its approach. I would be very surprised if it was not the Government’s approach, in fact. When it comes to Amendment 21-I address this to the noble Lord, Lord Hunt, who moved the amendment -if a duty is placed to find a private sector purchaser as soon as possible then surely that has to be constrained very much more than in the amendment. What would the situation be if an overseas company in the private sector was to make a bid? As I see it, the whole logic behind the nationalisation that we have here is to defend the United Kingdom’s strategic interests as well as its economic interests. If an important part of the steel industry was to fall into overseas hands-perhaps a perfectly reputable company but an overseas company outside the control of anybody within the United Kingdom-would that not raise serious...
My Lords, I thank the noble Lords, Lord Hunt, Lord Fox, Lord Redwood and Lord Wigley, for their contributions. I am very grateful that the noble Lords, Lord Sharpe and Lord Fox, are raising important questions about the future structure and operations of any steel undertaking that may be brought into public ownership under the Bill. Before addressing their specific amendments, I should make this very important point: no decision has been made in relation to any particular steel company. Any decision to exercise the powers in the Bill can be made only after the Bill has received Royal Assent and only if the statutory public interest test is satisfied. With that important caveat, I turn to the specific amendments before the Committee. Amendment 21, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would place a duty on the Secretary of State to secure a private buyer for any nationalised steel undertaking at the earliest opportunity. As a matter of corporate governance, however, we would expect responsibility for exploring future ownership options to rest with the company’s board and chair, working closely with Ministers, rather than being imposed as a statutory duty on the Secretary of State. More fundamentally, I reassure the Committee that the Government share the amendment’s underlying objective. As we made clear in the steel strategy, the long-term future of the UK steel industry depends on attracting sustained private investment. Public ownership is not an end...
My Lords, the purpose of any debate in Committee is justified when the Minister responds by giving us the series of assurances that he has just done, and I warmly welcome his approach. He has clearly outlined that without a clear route towards private investment, this ownership, as I pointed out in moving the amendment, becomes an open-ended commitment. I thank my noble friend Lord Redwood and the noble Lord, Lord Fox, for their contributions, and I owe my good friend the noble Lord, Lord Wigley, an explanation, because this is very much a probing amendment. He is quite right that you can envisage various circumstances which are counterproductive, and that is why I warmly welcome the fact that the Minister has given such a clear commitment that there is no public ownership in perpetuity intended here. We are all determined to produce a plan which will last for generations to come and secure the future of our great steel industry, so I have no hesitation in seeking to withdraw the amendment.
Amendment 21 withdrawn.
Amendment 22
Moved by
22: After Clause 50, insert the following new Clause- “Stakeholder Advisory Committee(1) The Secretary of State must establish a Stakeholder Advisory Committee to provide advice on the exercise of principal transfer powers under this Act (“the Committee”).(2) The Secretary of State must ensure that the membership of the Committee includes representation from stakeholders, including but not limited to-(a) industries that rely on the supply of steel, including the defence sector and critical national infrastructure,(b) representatives of the workforce of the steel undertaking, and(c) local authorities for the areas in which the steel undertaking operates.(3) The Secretary of State must consult, and have regard to the advice of, the Committee before making a determination that the exercise of a principal transfer power is necessary in the public interest under section 2.”Member's explanatory statement This new clause requires the Secretary of State to establish a stakeholder advisory committee. The Secretary of State would be required to seek the committee’s advice before making a determination that the exercise of a principal transfer power under the Act was in the public interest.
My Lords, I move Amendment 22 in my name, but just briefly, with your Lordships’ indulgence, let me first respond to the Minister’s response to Amendment 23. I think he is quite right that it is up to the management of the company to set its own course, but that course will have wider implications than simply the company itself. It will have implications on the community in which that company is located, and that is something the Government, local government, and indeed the Welsh Government if appropriate, have to be concerned about. That was very much part of the point I was bringing forward. There might be another way of doing this, and perhaps we can discuss it when we get to a later group, but I am pleased to hear the Minister’s relatively positive response. Turning to Amendment 22, in a sense the purpose of this follows on from Amendment 23 and keys into some of what the noble Lord, Lord Redwood, was talking about just now. An area not covered to date is the need for the wider supply chain to have an explicit voice in what is going on here. We should remember that there are about 400,000 employees working in the steel-using community and about 40,000 in the steel production capacity, so this is a 10 times bigger part of our national wealth and we need to make sure that there is a place for steel users and producers to have a voice within the strategic decision-making going forward. I believe the Government have a steel board, but it is not clear to me how the...
My Lords, I welcome the intent behind Amendment 22. We should not be careless about the interests of the steel-using industries. Many years ago, I was responsible for Darlington & Simpson Rolling Mills. In those days, that was a profitable and successful business, but the price of raw material was critical to that type of operation. I was very interested to learn from noble Lord, Lord Fox, that he thinks that there are 10 times as many people involved; that may well be an underestimate. When I was trying to do some research on this, I identified a number of sectors where steel use is an important part of cost, and I came up with about £200 billion of business activity in those areas, excluding construction, which is obviously the main steel user in the country. That was many times the amount of turnover we are talking about in trying to protect maybe 2 million tonnes of steel production in this country from our own resources. Both in setting the tariffs and in setting the plans, and in the details of any future nationalisation, we need to have fuller recognition than we have had so far of the legitimate interests and concerns of the steel-using industries. I hope that Ministers will see that we are also interested in a report and audit on where we are at already. Although we have not nationalised British Steel and do not own the assets, we are otherwise completely responsible for the people who do those jobs and their families, for the safety and success of the production...
My Lords, I am delighted to support the amendment moved by the noble Lord, Lord Fox, and to be following the noble Lord, Lord Redwood. I am sorry the noble Lord, Lord Hunt, is not in his place at the moment, but both he and the noble Lord, Lord Redwood, will be very familiar with a project that took place in north-west Wales 40 to 50 years ago now-the construction of the pumped-storage scheme at Llanberis by the CEGB. The reason that is relevant is that, in the very early days of that project, the CEGB was wise enough to pull together trade union leadership and the local authorities in a regular meeting to review issues that were arising. Over the 10-year period of the construction of that exciting project, only about a week was lost due to industrial difficulties. The company, the CEGB, was working with the workforce and the local community, and problems were sorted before they boiled up to triggering strikes and all the rest. It is motivated self-interest to have such an approach to bring in these forces: with good leadership coming from the company involved and, yes, from central government but also from local government and from the trade unions within the company involved, so many problems can be overcome before they cause difficulties and boil up to something that they do not need to be. I believe such an approach should appeal to the Government, and I am very glad to support the amendment.
My Lords, I thank the noble Lord, Lord Fox, for this amendment. He is quite right to point out that decisions about the future of a steel undertaking affect a wide range of sectors that rely on secure domestic supply, including defence, construction, advanced manufacturing and critical national infrastructure. National security has, rightly, featured prominently throughout our debates. If the Government are relying on that argument to justify the exercise of these exceptional powers, it is surely right that those with responsibility for defence and critical infrastructure should have a voice in the wider policy discussion. The number of workers potentially affected in the broader and wider supply chain, as cited by both the noble Lord, Lord Fox, and my noble friend Lord Redwood, is staggering. It is difficult to argue that the steel-using community is really being consulted, as the noble Lord, Lord Fox, pointed out; that is certainly true of the representations we are getting from members of that community. I urge the Government on this occasion to have a careful think about what this amendment is trying to achieve. It recognises, as the noble Lord, Lord Wigley, has pointed out, the importance of the workforce and of local communities. Workers, their representatives and local authorities will understand better than most the consequences of a transfer for jobs, skills, supply chains and of course the local economy. It is difficult to see how the Government can judge properly...
My Lords, I am pleased to inform noble Lords that we have equalised-so come on, England! I thank the noble Lords, Lord Redwood, Lord Wigley and Lord Sharpe, for their contributions. I am grateful to the noble Lord, Lord Fox, for tabling Amendment 22, which would require the Secretary of State to consult a stakeholder advisory committee before determining whether an intervention under the Bill was in the public interest. I fully understand the motivation behind the amendment. Decisions of this significance should be informed by expert views, and I have considerable sympathy for the desire for strong parliamentary and stakeholder engagement. However, as I said in relation to earlier amendments, the Government cannot support a statutory precondition of this nature. The powers in the Bill are intended for exceptional circumstances in which events may be moving quickly and decisive action is required. Introducing a mandatory consultation process before intervention could delay action at precisely the moment when speed is essential to protect jobs, safeguard strategic capability and secure the future of a steel undertaking. In some cases, a delay could undermine the very purpose of the intervention. Nor do I believe that establishing a statutory advisory committee is necessary to ensure that the Government receive expert advice. My ministerial colleague, Minister McDonald, regularly maintains contact and extensive engagement with the sector through a wide range of established...
I thank noble Lords for their contributions to this short debate. It was stark that when the Minister went through his long list of parties that the Minister at the other end consults with, the vast majority of the ones that the noble Lord, Lord Redwood, and I were discussing came under the “other stakeholders” category, so it is encouraging that the UK Metals Council will be invited. I take the point about the nature of preconditions for any activity, and I understand the Minister’s reaction to that, but the purpose of the amendment was to make the point that users are underrepresented as it stands. We can wait and see whether adding the UK Metals Council is sufficient to reweight that, but I hope the Minister can go away and perhaps come back to us with a statement as to how users will become central to the Government’s philosophy in making plans, rather than being just another stakeholder, which is where they currently seem to be. Leaving that to one side, I beg leave to withdraw the amendment.
Amendment 22 withdrawn.
Amendment 23 not moved.
Clause 51 agreed.
Before we move to the next group, I want to point out that Amendment 25 in that group is in fact to Clause 54, not Clause 53 as printed on the Marshalled List. Clause 52: Compensation scheme regulations Amendment 24
Moved by
24: Clause 52, page 34, line 15, at end insert- “(5A) Compensation scheme regulations must include provision which specifies that payment of compensation may not be made until any written estimate under section 54(4A) is laid before Parliament.”Member’s explanatory statement This amendment and others in the name of Lord Fox require that payment of compensation cannot be made until the Secretary of State has published a written estimate of the environmental liabilities of the steel undertaking, provided to them by the independent valuer.
My Lords, I will also speak to Amendments 25 to 28, 39 and 45, all in my name-I think I must have gone slightly mad at the time. As promised when we touched on the contingent liabilities earlier, this group homes in on how such liabilities affect possible compensation in the event of nationalisation. As I set out at Second Reading, the possible environmental liabilities and future remediation costs for a site as large as Scunthorpe, let us say, are potentially huge. Scunthorpe has been there for a long time and is a very big site. The site has also employed a lot of people for a long time, and their pensions and any contingent liabilities should be fully understood by Parliament, as we discussed in the debate on the previous group. Those contingent liabilities are likely to majorly impact the current and future valuation and sustainability of any steel undertaking. The current draft has evaluating the environmental liability as a voluntary exercise and the pension liability seems to have been ignored, but I take on board what the Minister has just said and perhaps withdraw that sense, as some elements seem to be covered. Amendments 24 to 27 together would require that the payment of compensation could not be made until the Secretary of State had published a written estimate of the environmental liabilities of the steel undertaking provided to them by an independent valuer. Amendment 28 would require that the payment of compensation could not be made until the Secretary of...
My Lords, I am glad that the noble Lord, Lord Fox, has raised this; it was also something that I mentioned in our previous debates. In my experience of old industrial sites, the land under and around the plant is often heavily polluted and may contain toxic substances. Clearly, the Government need a report on that and would need to consider it not only when considering any possible compensation to a previous owner but as part of the costings of the whole project. Sooner or later, that land will have to be cleaned and if there is any current risk to water courses, it might be sooner rather than later that action would need to be taken. I trust that will all be properly investigated and has been properly investigated where we have already taken operational and financial responsibility for the plant in the case of Scunthorpe. On other liabilities which can occur in these situations, which probably should be mentioned for the sake of completeness, it is a good idea to find out about current and retired staff to see whether any long-term health issues have arisen which can be attributed in any way to the processes they have been handling and the working conditions they have been in. Those, too, need sensitive treatment and can, if something has gone wrong, amount to significant sums of money.
My Lords, I want to speak briefly to Amendment 28, which deals with pension liabilities of the undertaking that has gone into state ownership. Some noble Lords will remember in our pensions Bill debates that we had the example of Allied Steel and Wire, where employees, who had been given all sorts of promises that they would be safeguarded, feel that they have been very badly let down. If the shadow of Allied Steel and Wire is to find its way to Scunthorpe, or any of the other locations where these questions may arise, the failure to safeguard the interests of those pensioners will militate against employees wanting to accept the course being taken by the Government unless provisions are written into the Bill of the sort provided by Amendment 28. There may be other ways of doing it, but certainly these assurances need to be given.
My Lords, I am very grateful to the noble Lord, Lord Fox, for tabling these amendments, which raise an important point of principle. Where the Government are taking a steel undertaking into public ownership, the environmental, pension and other contingent liabilities which may fall on the taxpayer should be clear to Parliament and, of course, to the public. The Minister in the other place suggested that further disclosure was unnecessary because the Government already had a reasonably good understanding of the potential liabilities and that the independent valuer would take them into account, but that is not the same as ensuring that Parliament can see the likely costs before compensation is paid and further public money is committed. I was very taken with my noble friend Lord Redwood’s comments about the environmental impact. From memory-and I might have this date wrong-I think the oldest of the blast furnaces dates back to 1939, so it is inconceivable that that site is not contaminated in some way, which we probably do not have any accurate historical records for. I have also recalled the reason why I was a bit lukewarm on my own Amendment 20. I hate to say this, and I hope I never have to admit it again, but it is rather because I preferred Amendment 27 from the noble Lord, Lord Fox-a shocking admission to have to make. Environmental remediation, pension obligations and historic liabilities can amount to very substantial sums. The Government are using taxpayers’ money,...
My Lords, just to update the Committee, we are 2-1 up.
It was Harry Kane.
Harry Kane, thank you. The noble Lord, Lord Fox, has several amendments in relation to the compensation provisions in the Bill. I appreciate his careful attention to detail, which is a key aspect of this Bill, and will respond to the points raised in order. I will preface these points by noting that, if introduced, compensation regulations will be subject to the affirmative procedure, thereby providing opportunities for parliamentary scrutiny. Amendment 27 is on the approach to environmental liabilities in the compensation process. The noble Lord, Lord Fox, has indicated that this would prevent the payment of compensation until the independent valuer has delivered to the Secretary of State a written estimate of the environmental liabilities of the steel undertaking in question and the Secretary of State has published that estimate and laid it before Parliament. It is important that the independence of the valuation process is maintained. It is not appropriate for the inputs to the valuation exercise to be disclosed before the valuer reaches their determination. This may risk exposing the independent valuer to undue pressure while they are still deliberating on an outcome, thereby undermining the independence and fairness of the compensation scheme. None the less, the Government would have the power to direct the independent valuer to consider environmental liabilities in their determinations of compensation. We also intend to allow the final compensation determinations to be...
Amendment 26 would ensure that environmental and health and safety obligations are considered as part of the assessment of compensation. I hope that I can provide some reassurance on this point. As the Government anticipate that where the principal transfer powers are used to nationalise a steel undertaking, compensation scheme regulations would require an independent valuer to take these matters into account when conducting their assessment. I am not sure that the specific drafting of the amendment achieves the intended effect, but we can look at whether there is anything more we can do to bring clarity on this point.
Amendment 39 seeks to extend the reporting requirements for financial assistance so that they also cover compensation provided under Clause 52. However, in the case of compensation, the amount, if any, will be payable only once, based on the independent valuer’s determination, and will not change over time. As I have already set out, we will publish the amount of any compensation. The question of regular reporting does not arise, as no new information will be provided.
Amendment 45 would cap the amount the Government can pay as financial assistance or compensation. Financial assistance more generally will be covered in further detail in the following group, and I will cover it more fully then. However, a fixed cap of any kind of financial assistance would risk constraining the Government’s ability to respond effectively to circumstances as they arise. A cap on compensation will also cut the compensation process itself, which is a crucial safeguard of the Bill.
Taken together, I hope that I have given the noble Lord, and all noble Lords, the clarity required on this subject. I thank the noble Lords, Lord Redwood, Lord Wigley and Lord Sharpe, for their contributions on this group of amendments, and ask that Amendment 24 be withdrawn.
Before the Minister sits down, will he please address the question of why steelworkers in Scunthorpe, Port Talbot or anywhere else should have faith in the Government’s provisions for pensions when they failed to safeguard the pensions of Allied Steel workers in Cardiff and continue to do so?
I will have to write to the noble Lord, because I do not have specific information on that particular pension scheme.
My Lords, I thank noble Lords for their contributions-particularly the noble Lord, Lord Wigley, who was saying what I was thinking, but he said it with authority: he understands the issue for those workers quite viscerally. It was in my mind that some level of protection or safeguard needs to be there. I thank the Minister for his very thorough answers. They are so thorough that I will have to spend some time with Hansard , reading them through, to find out how much comfort there is in there. His comments regarding Amendment 25 were certainly encouraging, and I hope we can come to some sort of agreement. On the others, I will have to come back him later, but, with those comments, I beg leave to withdraw Amendment 24.
Amendment 24 withdrawn.
Clause 52 agreed.
Clause 53 agreed.
Clause 54: Further provision about independent valuation
Amendments 25 to 31 not moved.
Clause 54 agreed.
Clauses 55 to 57 agreed.
Clause 58: Financial assistance
Amendment 32
Moved by
32: Clause 58, page 39, line 5, after “assistance” insert “of a total value of no more than £2.5 billion in the period ending on 15 August 2029” Member’s explanatory statement This amendment seeks to limit the financial assistance that can be provided under the Act.
My Lords, in moving this amendment, I will speak to Amendments 33 to 35, 40 and 41 standing in my name and that of my noble friend Lord Hunt of Wirral. These amendments address a basic question: if the Government are to provide financial assistance under these powers, what limit is there on the liability being placed on taxpayers? I heard what the Minister had to say in the previous group, but I will carry on regardless and probe a little further. Clause 58 permits financial assistance in an exceptionally broad range of forms. This could be grants, loans, guarantees, indemnities, the acquisition of shares or assets, contractual payments or other expenditure. It is additional to any other funding powers available to Ministers. Yet the Bill contains no overall financial ceiling, no requirement for advanced detail to Parliament and no explicit statutory value-for-money test. We understand the need for urgent support, but the Government’s stated objective is not permanent public subsidy but a viable, competitive, private sector led future for British Steel. That requires a business capable of attracting investors with capital, commercial expertise and a long-term commitment. To achieve that, public support must be disciplined, transparent and as limited as is consistent with the securing of the strategic objective. Otherwise, the Government risk creating a perverse incentive: a prospective purchaser may conclude that it need operate the business efficiently enough only to...
My Lords, Amendment 37 is in my name. This amendment covers concerns regarding the level of financial assistance but also focuses on the relationship between the United Kingdom and the EU. I think we covered this in a previous group on Monday, so I am not opening up that, but I have some contributions that I hope are helpful to the noble Lord, Lord Sharpe. I am still reeling from his bombshell on the last group, but bear with me. Clause 52(1)(a) says that the Secretary of State must make regulations for compensation. Clause 57 makes those regulations subject to the affirmative procedure. However, Clauses 58 and 59, on financial assistance, do not have such requirements to make affirmative regulations. It seems that there is an asymmetry here. If the Government are prepared to use the affirmative procedure for the compensation process then why is there not an affirmative process for the financial assistance process? If the Minister was prepared to give ground on that then many of the discussions that the noble Lord, Lord Sharpe, wishes to have about financial assistance would be had during the discussion of the affirmative resolution. That is a helpful and, indeed, balanced way of dealing with this issue.
My Lords, I am grateful to the two noble Lords on the Front Bench for setting out this challenge to the Government. When you have a company in loss that is really struggling, there is an absolute requirement for accurate, speedy and regular financial reporting. Many years ago, I was a chairman with a large group of industrial companies reporting to me. I am pleased to say that none of the subsidiaries reported anything like the losses or the cash haemorrhage of British Steel, and we could not have afforded such a thing. I remember that if I or the chief executive saw one of our subsidiaries in danger of going into loss or dipping into bad performance, it would be put on to monthly reporting and quite often weekly reporting. That was not just because we wanted to know the bad news early but because it started a conversation between us, and other senior directors and executives, and the leading executives of the ailing subsidiary around how they could generate more cash and revenue, win more business and reduce costs in the meantime. If there was no immediate prospect of increasing the revenues, they needed to reduce the cash outflow. My advice to Ministers, who took responsibility for British Steel many months ago, is that they should be seeing that kind of information, because it is now their responsibility. They decided to undertake this action without advice on value for money, so they need to have that sort of detailed information in front of them. They or their...
My Lords, I thank all noble Lords for their contributions on this group. I will address each of the issues raised in turn. Amendments 32 and 33, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would impose a cap on the amount of financial assistance the Government could provide under the Bill. Amendment 32 seeks to place a statutory cap of £2.5 billion on financial assistance until 15 August 2029. Amendment 33 would apply a cap on a different basis, relating to the number of employees in a steel undertaking. Imposing a fixed cap of any kind on financial assistance would risk constraining the Government’s ability to respond effectively to evolving circumstances. It could ultimately undermine the very objectives the Bill is designed to achieve, namely the protection of our domestic capability in a strategically vital sector. The Bill contains proportionate and robust measures to ensure transparency and accountability in the provision of financial assistance. Clause 59 requires the Secretary of State to report to Parliament every 12 months on the use of financial assistance. Furthermore, as I am sure all noble Lords will know, any financial assistance provided by the Government will be subject to the established framework for managing public funds, including HM Treasury approval processes, departmental accounting officer responsibilities, and reporting to Parliament through the usual public spending controls.
A cap on compensation would also undermine the fairness and independence of the compensation process. An important safeguard in the Bill is that those affected by the exercise of principal transfer powers can receive compensation. This must be based on a reasoned assessment, rather than subject to an arbitrary cap. As I have said before, the Government are minded to nationalise British Steel, subject to the public interest test. In the Government’s view, British Steel currently has nil commercial value.
Amendment 38, in the name of the noble Lord, Lord Fox, and Amendment 34, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would require that, before providing any financial assistance, the Secretary of State must first put forward a proposal to Parliament for doing so, setting out the underlying details. Amendment 38 also stipulates that a Select Committee must have 90 days to provide any recommendations on the proposal before it can proceed. I respectfully suggest that these amendments are not realistic, given that financial assistance may need to be provided at pace immediately following a transfer. It is unlikely that there would be time for the parliamentary scrutiny envisaged by these amendments without imposing significant risks to the continued operation of the steel undertaking.
On a similar theme, Amendment 35 would limit Clause 58 by requiring the Secretary of State to provide financial assistance only if first satisfied that doing so would secure value for money. This does not need to be set out in statute because, as noble Lords will know, value-for-money considerations are already embedded in government decision-making. Financial assistance under the Bill can be provided only in connection with, or in consequence of, the exercise of the transfer powers. Funding will be subject to the usual government spending channels and guided by well-established Managing Public Money principles to ensure it is value for money and affordable. The Bill provides a provision for annual reporting on financial assistance to ensure transparency about any costs incurred by the Government.
Amendments 40 and 41 would increase the frequency of government reporting on financial assistance from annual to monthly. The Government recognise the importance of parliamentary oversight of public spending. However, the proposed frequency of reporting is disproportionate and would impose an additional burden on the department and a nationalised entity, when the focus should be on operational challenges. Reporting annually to align with the company’s annual reporting cycle is pragmatic and strikes the right balance between transparency and minimising the burden on the new company. The Government will also continue with their usual public spending reporting requirements, including the publication of the Department for Business and Trade’s annual accounts, which will include any costs incurred under this provision.
Finally, the noble Lord, Lord Fox, raised the question of how agreements with the EU may affect the value of a steel undertaking. Of course, the Government are mindful of the impact of international trade agreements on the steel sector, and there has been extensive discussion about recent measures on this issue. We all want to see all British steel companies thriving, and the same would of course apply to the Government’s approach to a nationalised steel undertaking. I assure the noble Lord that this is an issue that this Government and my fellow Ministers at the Department for Business and Trade take very seriously. However, it is not suitable to include this addition to the clause, which is focused on enabling the Government to provide financial assistance to a nationalised steel undertaking.
I hope I have been able to provide your Lordships with sufficient reassurance on this matter. I ask that the amendment be withdrawn.
My Lords, I am grateful to the Minister for his response, and I agree with him that the focus must be on operational challenges. But I think the Minister will have agreed very much with what my noble friend Lord Redwood said about cash flow. The Minister is a businessman and will know exactly what my noble friend was talking about. Therefore, the focus should not be solely on operational challenges; there obviously also has to be a very keen focus on the cash position. I would have thought that the transparency we are suggesting would aid the Government in that. If one month is not right, as per Amendment 40, I am happy to have a conversation about what might be. But we think that 12 months is far too long a gap between reports. Far be it from me to help the Government in this regard, but I would have thought that it would minimise the potential for political shocks if there was a more of an ongoing dialogue with the British public about the state of play in any entity that is nationalised, as opposed to one-off bombshells on an annual basis-but I will leave that for the Government to ponder. I am grateful to the noble Lord, Lord Fox, for his helpful comments about asymmetry-he is correct. I believe the Government’s heart may be in the right place on all this. We want to see growth, we want to see investment, and we want to secure jobs in the steel sector, but we are ultimately talking about taxpayers’ money. That is why we think there must be clear limits and proper...
Amendment 32 withdrawn.
Amendments 33 to 36 not moved.
Amendment 36A
Moved by
36A: Clause 58, page 39, line 7, at end insert- “(1A) Financial assistance under subsection (1) must be provided through regulations, specifying-(a) the financial assistance proposed to be provided, and(b) the estimated cost to public funds of that assistance.(1B) Regulations under subsection (1A) are subject to the affirmative procedure.”Member’s explanatory statement This amendment requires financial assistance under Clause 58 to be approved by a resolution of both Houses of Parliament before it may be provided.
My Lords, I thought it would be helpful, on this group, to bring together the necessary levels of scrutiny about which I have spoken on various other groups in various different ways. In moving Amendment 36A, I will speak to my Amendments 38 and 41A. As prefaced on the previous group, Amendment 36A would require financial assistance under Clause 58 to be approved by a resolution of both Houses of Parliament before it may be provided. By amending Clause 58, financial assistance under the relevant subsection would have to be provided through regulations specifying the financial assistance proposed to be provided and the estimated cost to public funds of that assistance. These regulations would be subject to the affirmative procedure. The Minister got his revenge in early on the previous group, because Amendment 38 outlines a mechanism by which parliamentary scrutiny of the public interest test and nationalisation could work. I propose a new clause after Clause 58 that would prevent financial assistance being provided until 90 days after information about the package of financial assistance has been made available to a Select Committee of the House of Commons or the House of Lords. I take the Minister’s point about timing, but this is a useful probing amendment to look at the role of Select Committees going forward in the scrutiny of this. I hope the Minister will have something broader to say if he continues to shoot down the principle of the timing of this intervention. This...
My Lords, this is a very important debate, and I thank the noble Lord, Lord Fox, for these amendments. It is not just a case of public understanding; I think the public would expect Parliament to hold the Government to account. In many ways, I hope we are pushing at an open door with these amendments. In an area potentially involving substantial financial assistance, the Government must be able to provide both Houses of Parliament with a clear indication of the estimated cost to public funds. Parliament must be able to scrutinise not only the principle of financial assistance but its scale, purpose, conditions and likely liabilities. The proposed 90-day period in Amendment 38, which we have already debated, strikes a sensible balance. It would allow an expert Select Committee to examine the proposals and make recommendations, while preserving the Government’s ability to proceed once that scrutiny has taken place. The noble Lord, Lord Fox, seemed uncertain several times as to whether it should be a Select Committee of the House of Commons or of the House of Lords. I have always been a great believer in Joint Committees. Something of this importance requires both Houses of Parliament to scrutinise it, and the best way to do that is through our expert Select Committee process. Parliament has enormous expertise which should be used in determining the appropriate level and form of support. That is particularly important where taxpayers may be exposed through grants, loans,...
My Lords, I am grateful for all the contributions in this group of amendments. Amendment 38 in the name of the noble Lord, Lord Fox, would require the Secretary of State, before providing any financial assistance, to put forward a proposal to Parliament for doing so, setting out the underlying details. The amendment stipulates that a Select Committee would have 90 days to provide any recommendations on the proposal before it can proceed. I respectfully suggest that this amendment is not realistic, given that financial assistance may need to be provided immediately following a transfer. It is unlikely that there would be time for the parliamentary scrutiny envisaged by this amendment without imposing significant risk to the continued operation of the steel undertaking. I appreciate the noble Lord’s intention in tabling this amendment but, for the reasons I have outlined, I ask that he does not move it. Amendment 36A would require the financial assistance power in Clause 58 to be exercised by regulations specifying the purpose and estimated costs. I understand the desire for further parliamentary scrutiny of the costs that might be incurred in relation to an intervention in a steel undertaking. The Government have been transparent about the costs incurred to date as a result of the intervention in British Steel under the special measures Act. Estimating future costs relating to nationalisation is more challenging because they would depend on decisions not yet taken about the...
My Lords, I thank the Minister for his positive response on the last amendment, and I understand the nature of his concerns on the first two. All roads point back to Clause 2 and the public interest test, frankly, so perhaps we should have another discussion about that. However, on that basis, I beg leave to withdraw.
Amendment 36A withdrawn.
Amendment 37 not moved.
Clause 58 agreed.
Amendment 38 not moved.
Clause 59: Reporting
Amendments 39 to 41A not moved.
Clause 59 agreed.
Clause 60 agreed.
Amendments 42 to 46 not moved.
Amendment 47
Moved by
47: After Clause 60, insert the following new Clause- “Exemption of iron and steel carbon border adjustment mechanism goods(1) Section 143 of the Finance Act 2026 (charge to carbon border adjustment mechanism) does not apply to emissions embodied in a CBAM good which is an iron and steel good for the purposes of Schedule 16 to that Act where the good is imported by a transferred steel undertaking for use in connection with the carrying on of its business.(2) In subsection (1), “transferred steel undertaking” means a steel undertaking in respect of which the Secretary of State has exercised a principal transfer power.”Member's explanatory statement This amendment would exempt iron and steel CBAM goods imported for use by a steel undertaking brought into public ownership under this Act from the carbon border adjustment mechanism.
My Lords, I will speak to Amendments 47 and 48 in my name and that of my noble friend Lord Hunt of Wirral. These amendments address two costs which bear directly on the viability and competitiveness of a transferred steel undertaking: the carbon border adjustment mechanism and the United Kingdom emissions trading scheme. Amendment 47 would exempt a transferred steel undertaking from the carbon border adjustment mechanism in respect of iron and steel goods imported for use in its business. Amendment 48 would disapply the United Kingdom emissions trading scheme in relation to installations forming part of such an undertaking. These amendments go to a wider question which has run throughout our debates: whether the Government’s approach will genuinely secure steel-making in this country or simply add further costs to an industry already exposed to intense international competition. The Government’s impact assessment on the free allocation review makes the point. It accepts that reducing free allocations increases businesses’ exposure to carbon costs. It accepts that energy-intensive industries producing globally traded commodities are particularly vulnerable because they cannot simply pass those costs on to consumers. It also recognises the danger of carbon leakage-production, investment, jobs and emissions moving overseas, rather than emissions genuinely being reduced. The assessment says that the traded carbon price could be approximately £25 per tonne lower by 2030 if free...
My Lords, I support my noble friend. I have also referred to this in past interventions, so I need not say very much. Looking at the tragedy of the British steel industry under successive government policies, there is no doubt about it: the very high energy costs, carbon taxes, emission trading arrangements and CBAM coming in are the main reasons why we are not competitive and we have had this colossal collapse. If the Government will not accept that, they will never have a successful steel industry.
My Lords, I will be equally taciturn. I have spoken a lot about CBAM, and I do not intend to repeat it. It occurs to me that if the Government become a major owner of the steel industry, they might become more sympathetic to some of the arguments that the noble Lord, Lord Sharpe, has just advanced.
My Lords, I am grateful to the noble Lords, Lord Sharpe and Lord Hunt, for their thoughtful amendments on the UK emissions trading scheme and the carbon border adjustment mechanism and their impact on the steel sector. A common theme across these amendments is the proposal that a publicly owned steel undertaking should be exempt from one or both of these measures. I understand the concerns that have been raised about the sector’s competitiveness and the costs faced by steel producers. However, I must be clear that the Government cannot support this approach. We remain firmly committed to industrial decarbonisation and to securing a competitive, sustainable and low-carbon future for the UK steel industry. The UK cannot build a resilient steel sector by exempting it from the very policies designed to support the transition to cleaner production and to create a level playing field against higher-carbon imports. The UK emissions trading scheme and the carbon border adjustment mechanism are complementary policies. Together, they encourage investment in cleaner production, while ensuring that UK producers are not undercut by imports from countries with lower environmental standards. Exempting a publicly owned steel undertaking from these measures would not only undermine those objectives but create an uneven regulatory framework within the UK steel sector. With this in mind, I will turn to the amendments tabled by the noble Lords, Lord Sharpe and Lord Hunt. Amendment 47 seeks to...
I am very grateful to the Minister, but I have to admit that I am very disappointed in his response, and I wonder if he is a bit disappointed in the response that he had to give. It seems to me that you can either have decarbonisation or have a competitive steel industry, but at this precise moment in time you cannot have both; at this precise moment in time, they are mutually exclusive. That is not to say that we should not pursue net zero in the future-of course, we should-but this is a particularly exposed industry at a particularly critical time.
I am afraid that the response made clear that Ministers are just not willing to make the difficult choices needed to secure a competitive future for what is an energy-intensive industry. The Secretary of State for Energy Security and Net Zero continues his net-zero agenda, and steel, which is one of our most energy-intensive but, as the Government themselves admit, strategically important sectors, continues to face rising costs and therefore declining competitiveness. We continue to urge the Government to abolish the emissions trading scheme and CBAM, and to allow industry to operate efficiently, at lower cost and with a better prospect of protecting jobs.
The alternative is the path that we have seen in the North Sea, where the Government’s net-zero policies are leading to thousands of jobs being lost every month. The Government should not repeat that mistake with regards to steel. If the Government genuinely want the United Kingdom to be a strong exporter of steel-and we do on this side of the Committee-they must first ensure that electricity and carbon costs do not make British production uncompetitive in this. We may well return to these issues at a later stage of the Bill, but for the present I beg leave to withdraw the amendment.
Amendment 47 withdrawn.
Amendment 48 not moved.
Amendment 49
Moved by
49: After Clause 60, insert the following new Clause- “Strategic reports: transferred steel undertakings(1) Chapter 4A (strategic report) of the Companies Act 2006 does not apply in relation to a company carrying on a transferred steel undertaking.(2) In this section, “transferred steel undertaking” means a steel undertaking in respect of which the Secretary of State has exercised a principal transfer power.”Member’s explanatory statement This new Clause would disapply strategic report requirements for companies carrying on transferred steel undertakings.
My Lords, I will speak to Amendments 49 to 55 standing in my name and the name of my noble friend Lord Sharpe of Epsom. As we have just discussed, the explosion of environmental, social and governance-ESG-red tape has created a vast and complex web of rules, which force businesses to comply with political targets at a cost to investment, job creation and, above all, the competitiveness of Britain. Admittedly, I should add a declaration of interest, as a practising solicitor in the City of London. This has undoubtedly created an explosion of work and therefore I should probably declare an interest. But I do not take any pride in the fact that ESG reporting requirements have become more and more burdensome and onerous. This is why I am delighted to confirm that His Majesty’s Official Opposition have committed to repealing a number of ESG reporting requirements, including those addressed by this group of amendments, so that unnecessary business costs can be removed and businesses can focus on investing, growing and creating jobs. However, if the Government are going to nationalise a steel undertaking, in order to minimise the cost of its transition, attract private sector investment and reduce the burden on the taxpayer, they should at least disapply these regulations in respect of that undertaking. British Steel employs more than 4,000 people and is, therefore, likely to be caught by a number of these costly and burdensome requirements. Amendment 49 would disapply the...
My Lords, I was planning to say nothing and I will say little more than nothing. I have a question for the noble Lord, Lord Hunt, which he can answer when he gives his response to the Minister. Can he remind me when most, if not all, of these measures were brought on to the statute book?
My Lords, the noble Lords, Lord Sharpe and Lord Hunt, have tabled a number of amendments regarding the deregulation of the steel sector. These amendments focus on three core areas of regulation: industrial action, environmental regulations and reporting, and company reporting. I recognise the concern from noble Lords that any publicly owned steel undertaking will face a significant array of reporting requirements. That is true, and the Government believe that these are necessary to ensure that any publicly owned company operates in a similar way to its privately owned counterparts. Any publicly owned steel undertaking must protect its workers’ rights, fulfil its environmental obligations and transparently report on its progress. At the outset, I make the general point that a company under public ownership is ordinarily treated as a public corporation-that is, it is run as a private company with an independent board of directors, operating under broad strategic direction from Government Ministers. It is right, therefore, that such a company is subject to the regulatory frameworks within which any similar private company operates. I also emphasise to noble Lords that amendments seeking to level the playing field within the steel industry are inconsistent with that position. Instead, the amendments in this section seek to give preferential treatment to publicly owned steel undertakings. I will now address the amendments directly. I believe that Amendments 50 to 52, 54 and 55...
My Lords, I should first deal with the question raised by the noble Lord, Lord Fox, who perhaps sought to point the finger at me as a Minister for having introduced some of these requirements. I was indeed a Minister for 16 years, and I cannot recall having introduced any of these requirements at any stage. In fact, the Minister answered the noble Lord by pointing out that, under Tony Blair, the Companies Act 2006 started a process of requiring companies to include many of the things we are now debating and discussing. That is his answer. Perhaps when the noble Lord next gets to his feet-perhaps sometime next week-he might tell us what Vince Cable, who inherited all those requirements, did about minimising the burden on business. Undoubtedly, at the present time, there is an overregulated regime facing the private sector, and in many ways, we are seeking to alleviate that burden as far as the new, nationalised steel industry is concerned, if the Government proceed down that road. I remain concerned that the Government do not recognise the cumulative burden that these requirements place on an energy-intensive and strategically important industry. If Ministers are serious about restoring a nationalised steel undertaking to competitiveness and attracting private sector investment, they should be looking to reduce unnecessary compliance costs, not preserve them. No doubt we will return to these issues at a later stage. For the present, I beg leave to withdraw the amendment.
Amendment 49 withdrawn.
Amendments 50 to 55 not moved.
Clauses 61 to 64 agreed.
House resumed.
Bill reported without amendment.
House adjourned at 8.01 pm.