Steel Industry (Nationalisation) Bill

Report

Scottish legislative consent granted, Northern Ireland and Welsh legislative consent sought. Relevant documents: 1st Report from the Constitution Committee and 3rd Report from the Delegated Powers Committee .

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Clause 2Exercise of principal transfer powers in the public interest

Amendment 1

Moved by

1: Clause 2, page 1, line 13, at end insert “and, (b) has had regard to the impact of exercising that power on the public finances.”Member’s explanatory statement This amendment would add a new condition that the Secretary of State must consider before exercising principal transfer powers.

Lord Fox (LD)My Lords, in moving Amendment 1, I will speak to Amendments 7, 9 and 24 in my name.

In Committee, I noted the difficulty of phasing the exercise of the principal transfer powers and the need for scrutiny by Parliament—there is a dichotomy. At the heart of my concerns then was that Parliament would potentially be signing a blank cheque. On the other side, there may very well be a need to move swiftly in the event that a decision is made to nationalise a steel asset.

The first three amendments in my name in this group go some way to brokering this compromise. They offer two different routes of addressing the issue of the Secretary of State’s obligations regarding the financial cost of any intervention. Amendment 1 directs this attention to Clause 2 and inserts an obligation on the Secretary of State to take into account the impact on public finances before exercising the principal transfer. However, during Committee and subsequent discussions with the Minister, it became clear that the Government feel they have some legal reservations about any modification of Clause 2. Therefore, Amendments 7 and 9 seek a similar action but focus on Clauses 4 and 15 respectively instead.

Overall, of course, government decision-making relies on tests that must be conducted by accounting officers. I expect the Secretary of State would have the impact on public finances in his or her mind at all times, and I am sure there would be some Treasury Ministers leaning over that particular Secretary of State in the event that any decisions were made. However, by putting this responsibility in the Bill, it will be easier to hold the Secretary of State and the Government at the time to account on the value for money of any issue. In the event that the Minister feels constrained in accepting Amendment 1, I hope he will accept Amendments 7 and 9.

Amendment 24 addresses a different issue and returns to pension liabilities, which we debated in Committee. It is clear that, in the event the Government exercise the principal transfer power enabled by the Bill, the pensions of all ex and current workers of that asset become an important responsibility. This amendment is clear in its assertion that Parliament needs a view on these liabilities. If the Minister is unable to accept this amendment, I hope he will take the opportunity to clarify the Government’s approach to pensions from the Dispatch Box. I beg to move.

Lord Redwood (Con)My Lords, I am grateful to the noble Lord, Lord Fox, for reminding us of the importance of contingent liabilities and the need for the Government to complete due diligence before any acquisition. He rightly says that in a hypothetical case—not British Steel Scunthorpe—it might be necessary to move quickly, and then there will have to be some trade-offs. But if we are talking about British Steel Scunthorpe, there is obviously no need to move quickly. The Government moved very quickly many months ago, and there can still be proper analysis. I would hope, indeed, that as Ministers and their chosen executives are now responsible for British Steel, while they do not own the assets, they would have done a lot of this very important preparatory work on discovering the contingent liabilities.

Where in Amendment 11, the contingent liabilities are mentioned by category, there is an omission which could be extremely important: liabilities to employees for past problems with safety and health, and—God forbid that this does not happen—for any liabilities that might follow now that the business is under the operation or control of Ministers and their chosen executives, if some safety or other health problem arose. Where people are running these very large, industrial businesses, with the obvious threats of a very powerful fire in the furnace and the dangers of extremely hot liquid steel being moved around, it is crucial that Ministers and their chosen executives have taken all the right decisions on making sure people have the right protective clothing, there are the right protocols, and there is an absolute segregation for the employees from the risks. There also needs to be an understanding of whether there have been any longer-term health risks from the atmosphere around the blast furnace or the intense heat of some working conditions.

If Ministers have not already done so, they need to take this very seriously. Whenever I was responsible for a big plant, my main nightmare was that something would go wrong on safety, and that would be unforgivable. I am not expecting the Government to give ground on these amendments, but it would reassure the House and the wider public if the Minister could tell us more about where they have got to, at least in general terms, with exposing the contingent liabilities on pensions, safety and employee health, as well as with the other financial matters mentioned clearly in these amendments.

Lord Wigley (PC)My Lords, I am delighted to support the amendment put forward by the noble Lord, Lord Fox, and I agree with his earlier analysis. As it happens, I agree with a lot of what the noble Lord, Lord Redwood, said on this as well. Whereas there may be certain safeguards in Scunthorpe, there is considerable worry in somewhere like Port Talbot arising from some of the experiences we have had, which I referred to in Committee. I hope the Minister will be able to give some assurances on this.

Lord Sharpe of Epsom (Con)I rise to speak to Amendment 11 in my name and that of my noble friend Lord Hunt of Wirral. It is vital, as we have said throughout our consideration of this Bill, that there is clarity about the liabilities which may be acquired when the Government exercise a principal transfer power. That is particularly important in relation to environmental liabilities. Steelworks are substantial and long-standing industrial sites and any environmental liabilities associated with the transfer could represent a significant future cost to the taxpayer.

I am very grateful to the noble Lord, Lord Fox, for his amendments in this group, which rightly focus on the need to consider the public finances. We have consistently raised the issue of the costs associated with share and property transfers and pension liabilities when compensation is assessed. I thank the Minister and the Government for their engagement on these amendments, and I look forward to hearing what the Minister has to say and hope that at least some of these amendments will be accepted.

The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab): My Lords, before turning to the amendments before us, I begin by placing on record my sincere thanks to the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, for the constructive and collegiate way in which they have engaged throughout the passage of this Bill. We have not agreed on every point, but their contributions have been thoughtful, serious and rooted in a shared recognition of the importance of the UK steel industry. I am grateful for the time they have taken to meet with me to test the Government’s position and, for raising their concerns in such a fair and friendly spirit.

Responding to the points raised in this group, I will speak first to Amendments 7 and 9 in the name of the noble Lord, Lord Fox. Over the course of this Bill’s passage, I have had ongoing and constructive conversations with the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt, about the cost of nationalisation and the importance of parliamentary scrutiny. The noble Lords and I agreed that the Government must consider the costs of any nationalisation before exercising the powers. As I have stated to this House previously, existing public spending governance controls provide for this, with cost and value-for-money considerations embedded in the Managing Public Money principles and the well-established process of accounting officer tests.

However, the noble Lords have sought a statutory requirement on the face of this Bill. Through our conversations, I have been persuaded by their arguments, and I am pleased to say that the Government will support the amendment of the noble Lord, Lord Fox, which requires the Secretary of State to consider costs before exercising the share or property transfer powers in Clauses 4 and 15. We hope the House will agree. Our agreement on this issue reflects the commitment of noble Lords to ensure that this Bill is as comprehensive and effective as possible. It is an excellent representation of this House’s ability to work collaboratively, and I thank the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt, for their engagement on this issue. The noble Lord, Lord Fox, has also put forward Amendment 1, which would require the Secretary of State to have regard to the public finances when considering exercising the principal transfer powers. Given that the purpose of this amendment is achieved through Amendments 7 and 9, I do not think this is necessary in addition.

The noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, have tabled Amendment 11, which would require the Government to provide a statement to Parliament outlining the value of contingent liabilities associated with a steel undertaking, and the steps taken to minimise taxpayer exposure to them, prior to an intervention. As I have set out previously, I have concerns about creating additional hurdles that must be cleared prior to the exercise of the transfer powers, given the likely need to act at pace. There is also a practical difficulty in publishing the details of a private company’s financial information prior to a nationalisation. None the less, the Government share the desire of the noble Lords to minimise the taxpayer’s exposure to liabilities as far as possible, and that will inform our decision-making. If a steel undertaking is nationalised, we would expect its annual report to include details of its liabilities, where relevant. We will discuss liabilities again in later groups today, and I look forward to that discussion. I hope that that helps to clarify the matter and provides the noble Lords and the rest of your Lordships’ House with sufficient reassurance.

Amendment 24, tabled by the noble Lord, Lord Fox, requires that where the Government have exercised the transfer powers, the independent valuer must prepare a written estimate of a steel undertaking’s pension liabilities and provide that to the Secretary of State, who should then publish the estimate before Parliament. Pension liabilities will of course differ for different companies. If the Government were to decide that it was in the public interest to nationalise British Steel, I reassure noble Lords that our understanding is that there would not be significant pension liabilities, as the company has a defined contribution scheme and so pensions would be funded from an existing pot. In cases where pension liabilities are relevant to the value of a steel undertaking that is subject to the powers under the Bill, the independent valuer should consider that as part of their assessment. None the less, publishing this in isolation would be unhelpful without the full context. The Government have already committed to publishing the outcome of any compensation scheme. Therefore, I do not consider this amendment necessary.

I hope I have been able to reassure noble Lords, even though there are amendments in this group that I do not support.

Lord Fox (LD)My Lords, I thank noble Lords for their contributions to this debate. Before coming to the Minister’s words, I will pick up on the point made by the noble Lord, Lord Redwood, on health and safety. I turn his attention to Amendment 21, which returns to the issues of health and safety and environmental liabilities. Although his point does not need to be made again, the debate on that amendment is when the Minister can respond to it. I thank the Minister for his response to Amendments 7 and 9; I believe that they will take scrutiny a step forward. His approach to accepting them is very heartening. It is therefore clear that, if we accept Amendments 7 and 9, we do not need Amendment 1.

On Amendment 24, I am reassured by the Minister’s comments on one particular steel asset. Although we do not expect it, in the event that the future Act is used for other assets, pensions may become an issue. Picking up on the point made by the noble Lord, Lord Wigley, particularly in Committee, there have been some missteps around employee pensions. It is very important that, whoever the Government of the day are, they do not make those missteps again and create the situation we have seen and on which the noble Lord commented.

On that basis, and in thanking the Minister for his acceptance of Amendments 7 and 9, I beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

Amendment 2

Moved by

2: Clause 2, page 1, line 14, leave out “includes (but is not limited to)” and insert “means” Member’s explanatory statement This amendment would limit the public interest test to the areas set out in paragraphs (a) to (c).

Lord Hunt of Wirral (Con)My Lords, I will speak to Amendments 2, 3, 4 and 5 standing in my name and that of my noble friend Lord Sharpe of Epsom. I have no wish to repeat at length the arguments made in Committee, but I feel that the Government should be clearer about the public interest test that lies at the heart of these powers.

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The Bill confers exceptional powers to transfer a private undertaking to public ownership. The test governing its use should, therefore, be precise, transparent and capable of meaningful scrutiny. It should not be so open-ended that businesses and investors are left uncertain about the circumstances in which it may be invoked. That matters particularly in the steel sector. Investors are already making decisions in an uncertain and intensely competitive global market. They will examine every detail of the legislative and regulatory environment before committing capital. A broad and undefined public interest test risks adding to uncertainty and damaging confidence in the United Kingdom as a place to invest.

We understand the Minister’s argument that in an emergency it may not always be practicable to undertake every assessment or publish every detail before a principal transfer power is exercised. However, can the Minister take this opportunity to reassure the House that, where that is the case, clear reasons will be published as soon as possible after the transfer? Parliament should be told why the Secretary of State considered the transfer necessary in the public interest, along with what factors were taken into account, what alternatives were considered, and the anticipated consequences for public finances, investment and the future viability of the undertaking. I very much look forward to hearing the Minister’s response.

Lord Redwood (Con)My Lords, there will be an issue with the public interest case, if and when we get to the full nationalisation of British Steel at Scunthorpe. Many of us are unclear as to whether the Government’s aim is to find a medium-term or longer-term solution to the problem of how to keep the two existing blast furnaces running and keep a basic steel-making capability in the United Kingdom, or whether their policy aim is still—as with the previous Government and as is the case in south Wales—to move to closing the blast furnace and opening an electric arc furnace in a new plant, which may be on that land or somewhere else.

If it is the latter, it will be much more difficult to establish the public interest case for the complete nationalisation and transfer of the blast furnaces, because that will end in tragedy for the people working there, so it will no longer be the case that the main purpose is to keep the jobs. It will not resolve the issue of the electric arc furnace, because that will need separate grant aid and might even be better on a different site. We need to know more about the phasing. In the case of south Wales, the blast furnaces were closed before the electric arc furnace was available. If they did the same again at Scunthorpe, there could even be a period when the United Kingdom will not be making any steel at all on those two works, given the transition plan.

It would be very helpful if the Minister, who will have to take this policy on, gave us a little more on the Government’s thinking about the duration of the investment in the blast furnaces, and whatever information he has about the state of those plants and the ability to maintain continuous production there, and on the Government’s intention in their net-zero strategy, which implies that steel would have to be made in a different way.

Lord Fox (LD)My Lords, because this is Report, I will not repeat my Committee speech. Briefly, Clause 2 is unchanged and Clauses 4 and 15 have been amended along the lines that the previous groups suggested and begin to bring the rigour at the start of this process. The request made by the noble Lord, Lord Hunt, for information after the fact, if it has to be brought forward, seems reasonable, but on that basis I do not support the amendments as they stand.

Lord Leong (Lab)My Lords, I am grateful for the contributions to this debate. Noble Lords have highlighted that the public interest test in Clause 2 is a vital part of the Bill and I very much agree. It is important that we get it right. Noble Lords have tabled several amendments to this clause and we have had fruitful discussions on them at previous stages, but I am happy to return to them.

Amendment 2, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would limit the public interest factors that could be considered by the Secretary of State to those explicitly set out in statute in Clause 2. As I have set out previously, the Government agree that these are likely to be the most pertinent issues in relation to an intervention in the steel sector. We have sought to strike a balance in the Bill between minimising the scope as far as possible and ensuring that we can adapt to evolving circumstances. That is why we think it is necessary to retain some flexibility to consider other factors that may be relevant to a particular case, which may be difficult to anticipate.

Let me be clear that the legal test in this clause places particular emphasis on the factors that are explicitly set out. Where the Government seek to rely on other factors, they will need to be satisfied that those factors mean that an exercise of the powers is necessary in the public interest. I therefore do not consider the amendment necessary and respectfully ask that it be withdrawn.

Amendments 3 and 5, tabled by the noble Lords, Lord Sharpe and Lord Hunt, would create procedural steps that would need to be fulfilled before the transfer powers are exercised. Amendment 3 would require the Secretary of State to commission an independent assessment of whether the public interest test has been met and for that assessment to be met prior to using the powers. Amendment 5 would require the Secretary of State to provide details of the criteria used to demonstrate the public interest. Both are difficult to reconcile with the likely circumstances under which the powers could be exercised. The Government will likely need to act at pace to deliver an effective transfer. However, the Government will commit to publishing a Written Ministerial Statement following an exercise of the principal transfer powers, which would include details of how the public interest test has been met. I hope that provides some reassurance to the noble Lords, even if we cannot meet the full ambition of their amendments.

Finally, Amendment 4, also tabled by the noble Lords, Lord Sharpe and Lord Hunt, would require the Secretary of State to be satisfied that the exercise of the transfer powers would represent value for money for taxpayers. The Government are mindful of the potential costs that could be incurred in relation to the nationalisation of a steel company. This consideration is already taken into account in government decision-making under the usual public spending processes, as I have set out previously.

Additionally, as we discussed in the previous grouping, the Government are supportive of Amendments 7 and 9 from the noble Lord, Lord Fox, which would require the Secretary of State to consider costs prior to the exercise of the principal transfer of powers. These amendments go some way to addressing the concerns raised by the noble Lord Hunt, and I hope that will provide some reassurance.

Lord Hunt of Wirral (Con)My Lords, I am grateful to my noble friend Lord Redwood and the noble Lord, Lord Fox, for their comments. I am grateful indeed to the Minister for his reassurances and the commitment that he has given, which meet many of the concerns I expressed earlier. In those circumstances, I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

Amendments 3 to 5 not moved.

Clause 3Sunset for exercise of principal transfer powers

Amendment 6

Moved by

6: Clause 3, page 2, line 11, leave out from “regulations” to end of line 12 and insert “extend that period for a further period not exceeding two years beginning with the end of that period.” Member’s explanatory statement This amendment would retain the ability for the Secretary of State to extend the principal transfer powers, but only in increments of up to two years at a time and only with the approval of both Houses under the affirmative procedure.

Lord Sharpe of Epsom (Con)My Lords, these amendments stand in my name and that of my noble friend Lord Hunt of Wirral. As we stated in Committee, we cannot have a perpetual sunset clause. A sunset that can be extended indefinitely and for an unlimited period at a time is not a meaningful sunset at all.

I welcome the Minister’s engagement on this aspect of the Bill. The amendment would provide an important safeguard by ensuring that any extension of the principal transfer powers can be for no more than two years at a time. That would provide greater certainty for investors, greater assurance for taxpayers and a clearer expectation that these exceptional powers are not intended to become a permanent feature of the Government’s industrial policy. It is also important that we have a Government who are confident in their stated aim of securing private investment for British Steel so that it can thrive on a commercial basis. Regular parliamentary approval for any extension will help to ensure that Ministers continue to focus on that objective.

I thank the Government for recognising these concerns and for working constructively with us to ensure that this amendment can be accepted. I beg to move.

Lord Redwood (Con)My Lords, two years is quite enough for these powers, and it is generous of my noble friend to suggest allowing another two-year extension. As I understand it, these steel matters are being considered under a £2.5 billion multiyear estimate, which was meant to be for the modernisation of the steel industry. When it was originally agreed, people had in mind that this was going to be grant aid for new electric arc furnaces and other such investments—not to pay continuous and high losses on an older technology plant that may not have the long future we would like.

To get into better order with the Treasury, the Government might want to have some self-imposed restraint on the duration of this. We have been led to believe that the rate of loss is at least £500 million a year on the two blast furnace activities that are currently under the Government’s control but not in their ownership. That would be a totally unacceptable continuing rate of loss and would eat into what should be modernisation money. That would mean they would get to the end of this Parliament with very little improvement to show.

Lord Fox (LD)My Lords, I am in slight confusion that I hope the Minister can clear up. My understanding of Amendment 6A is that it offers a one-term renewal of two years, meaning a four-year total for any sunset clause. I might have misheard what the noble Lord, Lord Sharpe, said. I am assuming that is what Amendment 6A is seeking to achieve.

If we are reassured by the Government’s assurances on their intention, in a sense we do not need this—but it is certainly helpful to have it. If my reading of Amendment 6A is correct and it moves it four years as a maximum, it will move it into the next Parliament, where the Liberal Democrat Government will take a view.

Lord Leong (Lab)My Lords, I am very grateful to all noble Lords for their contributions. I will respond to the point from the noble Lord, Lord Redwood, on financial assistance when we cover financial assistance in the sixth group.

I am grateful for the points raised regarding the sunset provisions in Clause 3. The noble Lords, Lord Sharpe and Lord Hunt, have tabled an amendment that would limit any extension of the sunset period to two years. I have had helpful discussions with them on this matter. Throughout debates on this Bill, we have emphasised that the Government are strongly minded to use the powers in the Bill to nationalise British Steel, subject to the public interest test, and do not currently see a need to use them for other steel undertakings. However, the steel sector faces challenges that can be beyond the control of government or companies themselves. It is important that we reserve the possibility of intervening in this way if it is needed in the public interest.

The amendment from the noble Lords, Lord Sharpe and Lord Hunt, strikes a good balance, allowing the Government to preserve the powers if absolutely needed while limiting any extensions of those powers to a limited period and subjecting them to an affirmative parliamentary debate. We recognise the need for this level of scrutiny, and it is appropriate that any extension be limited to a short period only. I am therefore pleased to lend my support to the noble Lord’s amendment.

Amendment 6 withdrawn.

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Amendment 6A

Moved by

6A: Clause 3, page 2, line 13, at end insert “, but may not be exercised so as to substitute a period that ends more than 2 years after the end of the period for the time being specified in subsection (1).” Member’s explanatory statement This amendment would provide that, where the Secretary of State extends the period during which a principal transfer power may be exercised, the extension may not be for more than two years.

Amendment 6A agreed.

Clause 4Share transfer regulations

Amendment 7

Moved by

7: Clause 4, page 2, line 29, at end insert— “(3A) When deciding whether to make share transfer regulations under this section in respect of a steel undertaking, the Secretary of State must consider the costs that the Secretary of State thinks are likely to be associated with the exercise of the power.” Member’s explanatory statement This amendment would require the Secretary of State to consider the costs associated with making share transfer regulations under clause 4.

Amendment 7 agreed.

Amendment 8

Moved by

8: Clause 4, page 2, line 30, leave out “negative” and insert “affirmative” Member’s explanatory statement This amendment would require regulations transferring securities of a steel undertaking to be subject to the affirmative procedure.

Lord Hunt of Wirral (Con)My Lords, I rise to speak to Amendments 8, 10, 12 to 14 and 40, standing in my name and that of my noble friend. I thank the Minister for working constructively with us on Amendments 12 and 13. It is vital that where the Bill confers regulation-making powers of real consequence, the default should be the affirmative procedure. Amendments 8 and 10 would apply that principle to the core transfer powers, regulations transferring securities, and regulations transferring property rights and liabilities. We understand the Minister’s argument that in exceptional cases powers may need to be exercised.

Turning to Amendment 40, I ask the Minister for a clear assurance that a thorough impact assessment will be brought before both Houses of Parliament after the various powers in the Bill have been used. Given the potential effect on taxpayers, workers, investment and the wider steel industry, they must assess whether these exceptional powers have delivered the outcomes claimed for them.

Finally, Amendment 14 would remove Clause 50. The Constitution Committee was clear that the broad power allowing the Secretary of State to modify the law in relation to a share or property transfer

“should either be removed or significantly tightened”.

That is a serious recommendation from an important committee of this House. The Government should either accept the committee’s recommendation or make much clearer in the Bill the limited circumstances in which such a power may be used. I look forward, therefore, to the Minister providing some assurance on Amendment 40 and on the Henry VIII powers. I beg to move.

Lord Fox (LD)My Lords, I rise to speak to Amendments 15 and 16 in my name, but first I speak in support of Amendments 12 and 13 in the names of the noble Lords, Lord Sharpe and Lord Hunt, which I have co-signed. Importantly, these would add necessary additional parliamentary control over continuity obligations and property transfer regulations. We moved similar amendments in the Commons that failed to attract sufficient support there.

Regarding Amendment 10, the Minister has convinced me that the need to quickly transfer property rights transcends the necessity of moving to an affirmative form of approval from a negative regulation. That is why I have not co-signed Amendment 10. I tabled Amendments 15 and 16 as it is important that Parliament must be kept informed once any nationalisation is effected. Amendment 15 would create a new clause causing there to be a report on principal transfer powers from the point at which those powers are exercised under the Act. It says that the Secretary of State must

“make a written statement to each House of Parliament setting out … the progress, and the operational and financial performance, of the steel undertaking in respect of which a transfer power has been exercised, and … the impact of this Act, including (so far as it is possible to assess) its effects on the steel industry in the United Kingdom, on employment and on the public finances”,

and that this duty

“continues until no steel undertaking remains in public ownership”.

I hope the Minister has something positive to say on this, which includes reflecting on how the communities and skills requirements are being met in whichever part of the UK is affected by any nationalisation and subsequent changes.

It is a shame that the noble Lord, Lord Empey, was not with us in Committee, because he would have participated in a debate on an amendment that was very similar to Amendment 15, which covers not only the territory of Northern Ireland but the whole of the United Kingdom. I feel that the noble Lord’s point is important, but if it is important for Northern Ireland then it is important for the rest of the UK. I think he will see that Amendment 15 seeks to bring that across our entire country.

Amendment 16 seeks to create a stakeholder advisory committee. I will not repeat my speech from Committee, but its aim is to have stronger input into the steel strategy from steel users. The Minister responded with news that the steel council may be augmented by additional new members. I hope he can elaborate some more on how the voice of steel users is reflected more effectively in order for the Government to avoid such issues as those that have been created by the steel tariffs.

Lord Wigley (PC)My Lords, I draw attention to a part of Amendment 16. I am delighted to see that the noble Lord, Lord Fox, has included the words

“industries that rely on the supply of steel, including the defence sector”.

That is one of the themes that is running, perhaps in the undergrowth, behind much of the thinking on the Bill. We must have a steel industry that is capable of responding, and quickly, in an emergency to the needs of the defence industry. The model has to be developed with that in hand. That is why I very much welcome the fact that that is written in the amendment.

Lord Empey (UUP)My Lords, my Amendment 45 arises from an exchange in the other place last week with the Minister, Sir Chris Bryant. Members will be aware that Northern Ireland’s situation is different in so far as, for goods, it is covered by the Windsor Framework. Therefore, EU quotas on steel obviously apply. The issue is that we have the preposterous situation of having quotas of steel flowing from one part of the United Kingdom to the other. These two regimes are clashing.

The Minister in the other place indicated that HMRC is

“taking steps to confirm the arrangements with industry”. Bearing in mind that this was happening with about 36 hours’ notice, it was a huge challenge for businesses and so on to get their heads around it. He went on to say:

“The Government will continue to provide guidance and support to traders moving goods from Great Britain to Northern Ireland through the trader support service ”.—[ Official Report , Commons, 30/6/26; col. 764.] That is another example of why we do not have a free internal market within the United Kingdom. Can the Minister confirm whether both these matters have taken place: has HMRC taken the steps to confirm arrangements with industry, and is the Trader Support Service providing that guidance? It was not available last week, which is why I tabled this amendment.

The other issue arising is speciality steels, because of the United Kingdom’s current limited ability to produce them and because some firms which intend to produce them are not actually doing so. I will give the Minister an example of our concerns. If a European company has a branch in our jurisdiction in Northern Ireland—for instance, Harland & Wolff—and has access under its quota arrangements to speciality steel for, say, the defence sector, which the noble Lord, Lord Wigley, mentioned and which is a particular issue in my mind, and it bids for defence work that will require a significant amount of speciality steels, those steels may not be able to be sourced within the United Kingdom. Our anxiety, therefore, is that competitiveness, price and other things could create difficulties.

I fully understand the rationale for having quotas, because there is huge surplus capacity throughout the rest of the world. We understand that that has to be managed but, given that we cannot necessarily get the steels from within the United Kingdom, can the Minister give an assurance that those steels will be available, that the quotas are adequate—whatever we say about having them in the first place—and that there is sufficient headroom to ensure that companies’ competitiveness will not be significantly damaged by the unavailability of those products within the United Kingdom?

Lord Elliott of Ballinamallard (UUP)My Lords, I support the amendment from my noble friend Lord Empey and will speak to the issue raised by the noble Lord, Lord Fox, in Amendment 15, which unfortunately does not cover the specific circumstances of Northern Ireland. I support Amendment 15, but my noble friend’s amendment goes further to, I hope, give protection to Northern Ireland.

The UK introduced a new steel trade measure on 1 July—

Lord Fox (LD)I have a point of information. The Bill has nothing to do with steel tariffs. We have had several Statements on steel tariffs in your Lordships’ House, to which I do not think the noble Lord spoke. I am happy to debate the effect of nationalisation on the Northern Irish market and to dispute that issue. However, the issue of tariffs is not covered in this legislation.

Lord Elliott of Ballinamallard (UUP)I recognise the noble Lord’s point about the tariffs, but the issue is that we need some protection, and my noble friend Lord Empey believes the only way to have that protection is through this amendment. There is no other mechanism for protection. We have had Statements and I have asked Written Questions, but the answers we have had are unsatisfactory. Why is it not reasonable to table an amendment to this legislation that could assist the processors and manufacturers in Northern Ireland?

Maybe the Minister will find another way of doing this. If he can then that would be extremely helpful to us, but we want to raise the issue and it is not beyond our reasoned power to do so. At the moment, there is no other way of doing that except through this legislation.

The tariffs are extremely important. We now have dual tariffs. We have not only EU tariffs, because we are part of the EU economic base, but UK tariffs. This is important in Northern Ireland, and we and our processors, fabricators and manufacturers will have to deal with it. It is unfair for the noble Lord to indicate that it is unreasonable for us to table this amendment—

Lord Fox (LD)I am just confused, because the wording of Amendment 45 from the noble Lord, Lord Empey, asks for an impact assessment on the likely effects on Northern Ireland, and the wording of paragraph (b) of my proposed new clause in Amendment 15 asks for an impact assessment of the effects on the United Kingdom, which, of course, includes Northern Ireland. I wonder what Amendment 45 brings in addition that is not covered by Amendment 15. Thereafter, I will shut up.

17:30:00

Lord Elliott of Ballinamallard (UUP)I thank the noble Lord for his intervention, but will he not agree that we are in a different situation in Northern Ireland from that in GB? We are under a double tariff. We are under a tariff from not only the European Union but the United Kingdom, which does not impact on those processors, fabricators and manufacturers in GB. So why is it not reasonable to ask for a special impact assessment for Northern Ireland? I think that is quite reasonable. I am surprised that the noble Lord has indicated that he does not want that. Surely, if he wants transparency and a reasonable outcome to this, it is only reasonable that we would have that impact assessment for Northern Ireland. I am happy to give way to the noble Lord if he wants to argue and demonstrate why that is not reasonable. If you are a Northern Ireland fabricator, like I have in my area in Northern Ireland, you will possibly have a double tariff now: one from the European Union and one from the United Kingdom. That is totally unfair and totally different—

Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)My Lords, I think we have given the noble Lord a fair hearing. I ask him to bring his comments swiftly to a close so that we can get on with the business in hand today.

Lord Redwood (Con)My Lords, I support my noble friends on the issue of the affirmative resolution. I think it is a superior device, given the importance of the matters that could be brought before us. I also fully support the idea of a proper impact assessment, which should of course include the impact on Northern Ireland, which may well be different because of the Windsor Framework—an arrangement which, in another life, I opposed very strongly.

Lord Leong (Lab)My Lords, I thank all noble Lords for their contributions and for ensuring the ongoing scrutiny of any steel undertaking that is subject to the use of the powers in the Bill. Before turning to the amendments tabled by the noble Lord, Lord Fox, I will reflect on conversations I have had with noble Lords from across the House in recent weeks as we have sought to secure agreement on the drafting of the Bill.

The noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, have provided detailed feedback on and suggestions for how parliamentary scrutiny can and should continue following any acquisition. Following consideration of their feedback, I am pleased to confirm the following government commitments, which reflect the importance of transparency and parliamentary scrutiny.

I confirm that a debate will take place in both Houses on the steel strategy and the impact of the Bill, within 12 months after Royal Assent. Alongside this, the Secretary of State will lay a quarterly Written Ministerial Statement for at least the first year that a steel undertaking is in public ownership, reverting to a slower rate after that. Where a Minister considers it appropriate, the Written Ministerial Statement may provide an update on jobs, communities and other issues; I will detail this further in subsequent groups. As I have already set out, the Government will lay a Written Ministerial Statement following the acquisition of a company, setting out how the public interest test has been met.

In addition to these commitments on the impact of the Bill, I can confirm that, following any acquisition of a steel company, the company’s new chair would be able to attend a Select Committee to set out their plans for the publicly owned steel undertaking. I hope that that reassures the noble Lord, Lord Redwood. Alongside the chair’s attendance, the Government will write to Select Committees, including the Business and Trade Select Committee, with information following any acquisition, and subsequently on any future plans for any steel undertaking that falls within the scope of the Bill’s powers, and to respond to any specific requests from a Select Committee. I emphasise that it is for the Select Committees to set their agenda. If the Government, or the chair of a nationalised company, are asked to provide information and attend meetings, we will of course do so. These commitments build on the statutory reporting requirement on financial assistance in Clause 59, the company’s annual report and accounts, and the quarterly Written Ministerial Statements, which I have already set out.

Any nationalised steel undertaking would not be exempt from the corporate reporting requirements set out in the Companies Act 2006. This Act contains various reporting requirements that vary depending on the size of the entity. The Government will work closely with the company and, where necessary, if there are any material changes to the company’s circumstances outside the regular reporting cycle, the Government will be able to ask the company to produce an interim report on that particular issue. Noble Lords have also raised a concern about ensuring that stakeholders are appropriately engaged in decision-making. I will provide further detail on this later, but I emphasise that the Steel Council will continue following the publication of the steel strategy. The council is made up of representatives from across the sector, and they would include a representative from any publicly owned steel company.

In addition to our continued engagement with the sector, I recognise the importance of ensuring that there are opportunities for Parliament to engage with the sector. I therefore confirm that the Government will convene an ad hoc round table on the future of the steel sector six months after Royal Assent. I hope that this series of commitments reassures noble Lords that the Government are committed to ensuring that Parliament can scrutinise any publicly owned steel undertaking where appropriate.

I thank the noble Lord, Lord Wigley, for his continued engagement with the Bill. I reassure him that Minister McDonald, the Minister for Industry, recently met with Minister Price from the Welsh Government, and my officials continue to engage with Welsh Government officials to try to secure a recommendation of legislative consent for agreement on the Bill. I am grateful to the noble Lord, Lord Wigley, for the discussions on these matters, and I hope to update the House on the outcome of these conversations at Third Reading.

I thank all noble Lords who have taken part in debates on Amendments 12 and 13, and particularly the noble Lords, Lord Sharpe and Lord Hunt, for their constructive engagement with me over the past few weeks. The Government respect the concerns that have been raised. Throughout the passage of the Bill, we have been clear that the Government are committed to as much transparency as possible with regard to the powers in the Bill. We have listened carefully to the cases made during our debates to date and have considered where it may be possible to amend the procedure for the power without harming the Government’s ability to carry out their objective under the Bill.

I am therefore delighted to confirm that the Government will support Amendments 12 and 13, which amend parliamentary procedure for continuity of obligations and enforcement powers. Under these amendments, the power to make regulations in relation to certain aspects of continuity obligations will change from the negative procedure to a draft affirmative procedure unless the Secretary of State considers the made-affirmative procedure necessary, and the power to make regulations on the enforcement of obligations will change from the negative to the made-affirmative procedure respectively. This compromise reflects your Lordships’ House at its best.

I shall address the other amendments in this group. Amendments 8 and 9, tabled by the noble Lords, Lord Sharpe and Lord Hunt, set out the opposition to the parliamentary procedure associated with the exercise of the share and property transfer powers in Clauses 4 and 15 respectively. While I recognise the magnitude of these powers, I must emphasise that any use of the principal transfer of powers would need to be exercised promptly to ensure operational and legal certainty. I cannot overstate the importance of this. In a scenario where the Government chose to use these powers, they would need to be exercised at pace in a commercially sensitive environment. The affirmative procedure would introduce significant delays to the transfer process and create a lack of clarity regarding ownership. This in turn would significantly affect the business, particularly supply chains and third-party contracts. This must be prevented.

Amendment 14 was tabled by the noble Lords, Lord Sharpe and Lord Hunt, and they have indicated their opposition to Clause 50 remaining part of the Bill. I am afraid that I have to disagree unequivocally in this case. I have previously set out that removing the clause would risk undermining the effectiveness of the Bill. The Bill confers powers that interact with the complex area of commercial company and insolvency law in a way that was not anticipated during the drafting of the legislation concerned. There will therefore be some tension in the way that the powers are applied. Clause 50 allows us to smooth over those challenges and avoid any unintended consequences or obstacles to a successful transfer.

I am sympathetic to the fact that it is difficult to justify a power of this nature when its potential use is quite abstract at this stage. By its nature, it is intended to deal with unforeseen circumstances in non-consensual, highly atypical transfer scenarios, and I remind noble Lords that it was necessary in the Banking Act context as well. As an example, the power could be used to modify or disapply certain corporate laws, such as disapplying shareholder voting or approval requirements to prevent any delay to the transfer. That is not to say that we plan to use it in this way but merely to illustrate its potential utility. It is worth repeating that the power can be used only to ensure that the transfer of power can be exercised effectively. It cannot be used outside the context of nationalising a steel undertaking to change or amend other laws. The use of the power will be subject to the draft affirmative procedure except in particular circumstances that justify proceeding on a “made affirmative” basis. I hope that this provides some comfort regarding the issue.

Amendment 5, also tabled by the noble Lord, Lord Fox, would require the Secretary of State to provide quarterly Written Ministerial Statements to Parliament updating on the progress of the nationalised steel undertaking and the broader impact of the Bill. I thank the noble Lord for our discussions on this point, and I recognise the appetite for further parliamentary scrutiny of the approach to a nationalised undertaking. As I have already set out to the House, I can confirm that the Government will commit to provide quarterly Written Ministerial Statements to Parliament for at least the first year of a steel undertaking in public ownership. This reflects the Government’s commitment to ensuring that Parliament is appropriately informed about the progress of any publicly owned steel undertaking.

I turn to Amendment 16, and thank the noble Lord, Lord Fox, for his continued discussions on stakeholder engagement throughout the passage of this Bill. This includes the amendment he has tabled, which would require consultation with the stakeholder advisory committee on whether an intervention was in the public interest before exercising the powers in the Bill. I believe that the noble Lord and I agree that stakeholder engagement is critical to supporting the Government’s vision for the future of the steel industry and to ensuring appropriate scrutiny. As previously mentioned, I am pleased to confirm that we will shortly be inviting the UK Metals Council to join the Steel Council, which will ensure that the views of downstream users can be fed into engagement and discussions.

However, as I previously set out, any decision to exercise the transfer powers would need to be made at significant speed. The amendment would delay the exercise of the transfer powers, creating additional risks to the business viability and ongoing operations and uncertainty over ownership. In addition, there are commercial sensitivities associated with any decision to exercise the transfer powers, making it extremely difficult to consult in advance of a decision. While I cannot accept the amendment tabled by the noble Lord, Lord Fox, I will reflect on the range of ongoing engagement that Ministers and officials from my department undertake with industry and stakeholders.

A notable forum for engagement is the Steel Council, which I have already confirmed will continue following publication of the steel strategy. The council will support the delivery of the strategy by providing evidence and feedback on evolving or emerging policies that affect the sector’s competitiveness, and by providing strategic oversight of the working groups on research and development, investment and skills. Having considered the amendments tabled by the noble Lord, Lord Fox, I can confirm that the Government will convene an ad hoc parliamentary round table on the future of the steel sector six months after Royal Assent. I hope this reassures the House that the Government regard stakeholder engagement as critical to the revitalisation of the steel sector.

The noble Lords, Lord Sharpe and Lord Hunt, have tabled Amendment 40, which would require the Secretary of State to publish an impact assessment of the operation and effect of the Bill within two years of Royal Assent. This is straightforward for me to address. As the Government have already published an impact assessment for the Bill, in line with our Better Regulation Framework requirements, further impacts will be assessed as part of a post-implementation process or review. I reassure noble Lords that if the powers under the Bill are exercised, we will publish further impact assessments to accompany any transfer regulations. Following this, the Government will consider any further impacts in the post-implementation review. As I have already set out, the Government will ensure that a debate on the steel strategy and the impact of the Bill takes place in both the House of Commons and the House of Lords within 12 months of Royal Assent. This reflects our commitment to ensuring that parliamentarians remain well informed about our plans for the steel sector.

17:45:00

I turn to Amendment 45, tabled by the noble Lord, Lord Empey. I will cover only the point about the impact assessment and will not touch on any of the tariffs or quotas that were mentioned, together with the contributions from the noble Lord, Lord Elliott. If noble Lords would like, I can write separately, but I will not go into those details in my speech. Amendment 45 would require the Secretary of State to publish an impact assessment of the likely effects of the proposed exercise of a power on Northern Ireland. I thank the noble Lord, Lord Empey, for his engagement with the Bill, and I assure him that any use of the Bill’s transfer powers will require an impact assessment. If the use of the transfer powers affected Northern Ireland, or Wales or Scotland, the effects would be captured in the impact assessment, as appropriate. As I have already noted, where relevant, the Government would consider further impacts during a post-implementation review.

Finally, I thank all noble Lords across the House for their commitment to ensuring that parliamentarians have the appropriate powers to scrutinise the Bill. I hope my comments reassure all noble Lords.

Lord Hunt of Wirral (Con)My Lords, this has been an important debate. I pay tribute to the Minister. His approach to the Bill has been exemplary. We may disagree, and we do disagree, but the Minister has set an example that will be difficult for his ministerial colleagues to follow. He has listened and cared deeply about all the points we have raised. I am sure I speak for the noble Lord, Lord Fox, as well as for my noble friend and friends across the House, when I say that the Minister has not only listened to us but responded in positive terms, and, where he has not been able to agree, he has explained why he cannot agree.

I thank the noble Lord, Lord Wigley, for making sure that we do not forget the vitally important Welsh dimension. I thank my noble friend Lord Redwood for always scrutinising the public expenditure side of the Bill.

I say to the noble Lord, Lord Fox, that, with him, I believe we have now received from the Minister a series of comprehensive assurances, particularly on the impact assessment, which will enable us to proceed in a positive way.

The noble Lords, Lord Empey and Lord Elliott of Ballinamallard, have raised issues that—as the noble Lord, Lord Fox, pointed out—do not fall directly within scope, but they do fall within the impact assessment. That is why it was important that those points were raised.

The Minister will argue that there is a case for a Henry VIII power in an emergency Bill of this kind. We remain concerned about the breadth of Clause 50 and the precedent it may set, but I am grateful to the Minister for his engagement with this debate, and I thank him. In the meantime, I beg leave to withdraw Amendment 8.

Amendment 8 withdrawn.

Clause 15Property transfer regulations

Amendment 9

Moved by

9: Clause 15, page 8, line 20, at end insert— “(3A) When deciding whether to make property transfer regulations under this section in respect of a steel undertaking, the Secretary of State must consider the costs that the Secretary of State thinks are likely to be associated with the exercise of the power.” Member’s explanatory statement This amendment would require the Secretary of State to consider the costs associated with making property transfer regulations under clause 15.

Amendment 9 agreed.

Amendment 10 not moved.

Amendment 11 not moved.

Clause 39Continuity obligations: consideration and terms

Amendment 12

Moved by

12: Clause 39, page 25, line 32, leave out “the negative procedure” and insert “— (a) the affirmative procedure, or(b) if the Secretary of State thinks it necessary to make regulations without using the affirmative procedure, the made affirmative procedure.”Member’s explanatory statement This amendment would upgrade, from negative to affirmative or in some cases made affirmative (see clause 61), the procedure for regulations about consideration and terms for the performance of continuity obligations (see clauses 33 to 38).

Amendment 12 agreed.

Clause 45Enforcement

Amendment 13

Moved by

13: Clause 45, page 28, line 37, leave out “negative” and insert “made affirmative” Member’s explanatory statement This amendment would upgrade, from negative to made affirmative (see clause 61), the procedure for regulations about the enforcement of obligations under share transfer or property transfer regulations.

Amendment 13 agreed.

Clause 50Power to modify law in connection with share or property transfers

Amendment 14 not moved.

Amendments 15 and 16 not moved.

Clause 53Independent valuation of compensation

Amendment 17

Moved by

17: Clause 53, page 34, line 26, leave out from “regulations” to “by” in line 27 and insert “must provide for any valuation for the purposes of the regulations to be carried out” Member’s explanatory statement This amendment would require (rather than enable) compensation scheme regulations to make provision for the role of an independent valuer and would focus more explicitly on their role in carrying out valuations for the purposes of the regulations.

Lord Leong (Lab)My Lords, I am pleased to introduce a set of amendments that the Government have tabled. I hope that we have demonstrated throughout this Bill’s passage a willingness to listen to and engage with the concerns raised by your Lordships and to consider potential solutions. In tabling these amendments, we seek to address the concerns raised by the noble Lord, Lord Fox, regarding the discretionary nature of the appointment of an independent valuer. I previously noted that the Government intend to appoint a valuer whenever the principal powers in the Bill are exercised. We therefore consider the noble Lord’s suggestion to make this mandatory reasonable.

Amendment 17 will therefore make the required change by ensuring that any compensation scheme regulations must provide for the appointment of an independent valuer. The amendments that follow to Clause 54 make minor consequential changes clarifying that the valuer’s role is to carry out valuations for the purposes of the regulations, which is a critical step in determining any amounts of compensation. I hope that these amendments demonstrate the Government’s constructive approach and that noble Lords will support them.

Turning to Amendments 20, 21 and 23 from the noble Lord, Lord Fox, I am grateful to him for his engagement over the past few weeks on this and other points. These amendments would ensure that compensation scheme regulations must require the independent valuer to take into account environmental and health and safety liabilities when assessing the value of the relevant steel undertaking. I refer also to the points made by the noble Lord, Lord Redwood, earlier. I have said during the Bill’s passage that the Government will seek to address concerns from noble Lords as far as possible.

Many companies operating in heavy industries such as steel operate as normal with contingent liabilities. The precise cost associated with environmental liabilities would depend on many factors, including the extent to which land will be retained for future steel-making, kept safe or remediated for alternative light industrial use. None the less, we agree that the environmental and health and safety liabilities are likely to be an important part of any compensation determination and that this should be made clear in statute. I am therefore pleased to confirm that the Government will support these amendments, and I hope the House will support them too.

Lord Fox (LD)My Lords, that was a very positive response from the Minister, and I thank him and his team for really listening to what we have been saying. Amendment 17 is an important step forward and I am pleased that he has tabled it. Amendment 21, as the Minister pointed out, makes something that might happen mandatory, taking on board fully the issues raised on another group by the noble Lord, Lord Redwood, and absolutely taking on board the issues I raised in Committee. I thank the Minister for his enthusiasm and look forward to this being added to the Bill.

Lord Sharpe of Epsom (Con)My Lords, I echo my noble friend Lord Hunt’s comments on the previous group. I thank the Minister for his engagement, and the Minister and the noble Lord, Lord Fox, for their amendments in this group. Amendment 17 is very welcome. It ensures that compensation regulations must provide for valuations to be carried out by an independent valuer rather than leaving that as an optional feature of the scheme. I also welcome the Government’s work with opposition parties to ensure that relevant liabilities are properly reflected in the valuation process. In particular, Amendment 21 ensures that environmental and health and safety liabilities must be taken into account, as my noble friend Lord Redwood powerfully articulated on an earlier group.

Lord Redwood (Con)My Lords, I too welcome this from the Government. I think they will find it very helpful because, should we move on to the full acquisition of British Steel at Scunthorpe, there remain, as I understand it, financial issues outstanding with the current Chinese owners. It will be very important to have an accurate and full account of all these long, deep-rooted and sometimes very expensive liabilities to provide some counter to what we read in the press is their rather extravagant idea of how much they ought to be paid.

Lord Leong (Lab)I thank all noble Lords for their support. I want to share with noble Lords that the issue of health and safety is definitely a priority. At British Steel there has been a clear improvement in health and safety standards since the introduction of the special measures Act last year. This will remain a central priority going forward. Indeed, since the passage of the Act we have already spent some £8.1 million on essential improvements in this area, so we do take health and safety seriously and it is a priority for the Government.

Amendment 17 agreed.

Clause 54Further provision about independent valuation

Amendments 18 and 19

Moved by

18: Clause 54, page 35, line 10, leave out “determining an amount of compensation” and insert “the carrying out of a valuation” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

19: Clause 54, page 35, line 11, leave out from “the” to end of line 13 and insert “carrying out of a valuation by an independent valuer.” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

Amendments 18 and 19 agreed.

Amendments 20 and 21

Moved by

20: Clause 54, page 35, line 16, after “(3)” insert “, (4)(b)” Member’s explanatory statement This amendment is consequential on Lord Fox’s amendments to clause 54(4).

21: Clause 54, page 35, line 26, leave out from “regulations” to “an” in line 27 and insert “— (a) must require;”Member’s explanatory statement This amendment would make it mandatory for an independent valuer to take environmental and health and safety liabilities into account when making a determination.

Amendments 20 and 21 agreed.

Amendment 22

Moved by

22: Clause 54, page 35, line 27, leave out “making a determination” and insert “carrying out a valuation” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

Amendment 22 agreed.

Amendment 23

Moved by

23: Clause 54, page 35, line 34, at beginning insert “may” Member’s explanatory statement This amendment is consequential on Lord Fox’s other amendment to clause 54(4).

Amendment 23 agreed.

Amendment 24 not moved.

Amendments 25 to 30

Moved by

25: Clause 54, page 36, line 1, leave out “determining the amount of compensation (if any) payable” and insert “carrying out a valuation” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

26: Clause 54, page 36, line 3, leave out from the second “to” to “in” in line 4 and insert “do so” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

27: Clause 54, page 36, line 10, leave out “determining the amount of compensation (if any) payable” and insert “carrying out a valuation” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

28: Clause 54, page 36, line 12, leave out from the second “to” to “in” in line 13 and insert “do so” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

29: Clause 54, page 36, line 19, leave out “make a determination” and insert “carry out a valuation” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

30: Clause 54, page 36, line 23, leave out from “in” to “in” in line 25 and insert “carrying out a valuation in relation to a relevant steel undertaking, to do so” Member’s explanatory statement This amendment is consequential on my amendment to clause 53(1).

Amendments 25 to 30 agreed.

Clause 58Financial assistance

Amendment 31

Moved by

31: 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 would limit the financial assistance that can be provided under the Act.

Lord Hunt of Wirral (Con)My Lords, in moving Amendment 31 I will also speak to Amendments 32, 33, 35 and 36 standing in my name and that of my noble friend. I support the similar sentiments and approach expressed in Amendment 37.

I do not wish to repeat the arguments made in Committee, but on these Benches we remain gravely concerned by the open-ended cost to the taxpayer that the Bill potentially permits. The Government have already announced £2.5 billion of taxpayer funding for the steel sector. That is the figure that Ministers have chosen to present as a demonstration of their commitment to rebuilding and modernising British Steel and the steel sector. Yet in this Bill they seek an unlimited power to provide financial assistance with no statutory ceiling whatever. I believe this is bad economics, bad politics and, unless some clarity is forthcoming, quite possibly bad faith too. If £2.5 billion is not enough, how much is? Is there any maximum figure at all that Ministers are prepared to put before us and then stand behind?

18:00:00

The Government have not explained from where further funding would be drawn. As must surely have dawned on this Government by now, there is no magical money tree. All decisions, in particular decisions on public expenditure, have consequences and opportunity costs. Would the money come from departmental budgets, the Treasury, the National Wealth Fund, or a further allocation which has not yet been disclosed to Parliament? Amendment 31 would cap financial assistance at £2.5 billion until August 2029. If Ministers believe they are going to need more than that, they should explain why and how much. I beg to move.

Lord Redwood (Con)My Lords, I am so glad my noble friend has raised once again this crucial and fundamental point. It is of great importance and of help to the Government.

When I have in the past had some responsibility for trying to recover the financial position of the odd distressed company—although nothing nearly as distressed as British Steel at Scunthorpe—I have always found it was an essential discipline to first of all institute very frequent reporting, because you need to signal to the executives undertaking the day-to-day work that the financial state of the company is at risk and that they need to give great priority to this. You need to help them get clarity over why cash is draining out of the business. This business, British Steel, which is under the operational control of the Government, is draining cash, we believe, at £500 million a year. That is a phenomenal rate of loss, which is going to have an obvious impact on the public accounts, at a time when we know that government money is scarce and there are many other priorities. We need to know rather more about why it is £500 million.

Is there any residual investment programme left? That would be the first thing to go when you are trying to save cash. Is it still committing money to raw material stocks? It clearly should not be allowing more material stocks. Does it have a very large stock of finished product which it is not able to sell? If that is the case, what is the plan for trying to move that stock on? What is the reality of the price level it is going to get for that stock? Obviously, stock is a mixture of volume and value, and you have to try to maximise the cash you can get for the stock you have got before you would normally go on to produce more. This plant has the particular problem that it has to keep producing, even if it is not able to sell enough of the product at a sensible price. You would expect regular reporting, certainly to the chief executive appointed by Ministers, but I would have thought that the Minister with day-to-day responsibility for this would know what is going on, and on the trading accounts, because a lot of the cash going out may be trading losses. You would want to see an urgent plan for selling more and economising on costs wherever you can, whether that is bought-in materials, the productivity of labour or other overhead costs that the business is incurring.

During the debates so far, I have not felt the Government’s urgency around this financial problem. Every pound that goes out of the door on losses that you are responsible for as a steel-maker is a pound that cannot be spent on the new and better industry that you really need in order to take the country forward. I am not blaming the Minister, who has been exemplary in his conduct and helpfulness—I am sure he wants, as we all do, a good outcome to this—but in those conversations within ministerial offices, it would be good if a Minister in the other place, for example, could make more Statements which showed that there was a plan and a determination to rescue this industry that we all wish to rescue.

In this group of amendments, there is talk of quarterly reporting. That is a big enterprise in terms of people and scale of loss. Quarterly reporting is quite common and normal now in the public quoted sector. It is a good discipline, even for the most profitable businesses in the world, because people like to make sure the trends are still good and the managers are in charge of it. I would have thought that quarterly reporting was the bare minimum, and if it was somebody’s day-to-day responsibility then they would obviously need rather more frequent reporting than that.

The public deserve quarterly reporting from this industry, which they now have a substantial operational stake in. I urge the Minister to think about more regular public clarity. I hope that such detailed, short-term regular reporting is going on. It would be good to get some good news out of the Government that they are applying the right kind of financial disciplines to control the outflow of cash. If they do not control the outflow of cash, it will end in tears and redundancies.

Lord Sentamu (CB)My Lords, I want to simply question Amendment 31. In Clause 58(2), there are many different ways in which the Government can provide assistance, such as

“by way of grant, loan, guarantee or indemnity … by the acquisition of shares or any other interest in, or securities of, a body corporate, … by the acquisition of any undertaking or of any assets … pursuant to a contract, or … by incurring expenditure for the benefit of the person assisted”. I am one who believes that we should plan for the future and make sure we do not spend above our means. However, it seems to me that, in a Bill of this nature, putting a tag of £2.5 billion by the end of 15 August 2029 is a restricting element and it does not give me confidence that we are actually interested in nationalising steel.

There are so many unknowns. During the debate when we were all summoned by the Prime Minister to rescue the steel industry in Scunthorpe, it was quite clear that the books were not very encouraging—but this is a national asset, so what do you do? It seems to me that to put that amount in the Bill is almost legislating for failure. If, for example, it is £2.6 billion, not £2.5 billion, what would happen? Would the whole thing collapse? Putting figures in the Bill is not good for legislators. We have got the Exchequer and all kinds of other people for that. Let us not try to conduct this Report as if we are the Treasury—we are not. I urge the noble Lord, having flagged it up, to nevertheless withdraw his amendment. I would find it difficult to support.

I remember being in Birmingham when Rover collapsed. BMW announced that it would build the Mini there but left the other plant. The Government were being asked for only £600 million to keep the plant. They were already in agreement with China to sustain it, but, because of the laws around government support for businesses from the EU, the Government found that they could not, and the plant went.

I always respect the noble Lords, Lord Hunt and Lord Sharpe, because of their wisdom. However, if they do not mind me telling them this, as a Cross-Bencher rather than one of those rarefied Lords spiritual, I think that they are losing a little of what I have always taken them for—just no.

Lord Fox (LD)My Lords, I welcome the noble and right reverend Lord’s descent from the spiritual to the temporal, and indeed the financial. His contribution is appreciated. I also welcome all those who have not had the joy of participating in the steel Bill debate so far.

Before I speak to Amendment 31, I am going to speak to Amendments 34 and 37, which are in my name. I am happy to say that the Minister pulled the rug from under my feet with respect to Amendment 34 when he spoke to a previous group of amendments. Amendment 34 seeks to promote a role for Select Committees going forward. I am happy to say that the Minister has taken that suggestion on board to a large extent. It is important that Select Committees are able to get under the bonnet of this, to look at the nature and amount of financial assistance, the beneficiaries of that financial assistance, the purpose and the effect of that financial assistance, and the conditions of repayment. I am happy to say that the points the noble and right reverend Lord made about the nature of any support were covered by previous comments.

Amendment 37 would insist on a report to outline the impact of financial assistance provided under Clause 58, with a focus on the short-term and long-term investibility of any nationalised steel undertaking. In tabling this amendment, I hope the Minister can put on record again what he told us in Committee about the long-term aim of the Government regarding returning these public assets into private hands. It would help your Lordships if the Minister were able to repeat that. On Amendment 31, the Liberal Democrats in the Commons tabled an amendment to cap financial assistance, but we are now dealing with a different Bill. The Government have accepted Amendments 7 and 9, where value for money is accepted as a criterion in the Bill. We have inserted rigorous quarterly reporting. The noble Lord, Lord Redwood, will remember from two groups back that that amendment has been accepted and we will have quarterly reporting. As we have just said, we have ensured a role for Select Committees in scrutinising any nationalised industry, and we have implemented mandatory valuation of contingency liabilities. That Bill is not the Bill we are talking about.

I am persuaded that flexibility is required. The noble Lord, Lord Hunt, put in a spirited performance and, at one point, was possibly auditioning for the role of Chancellor—when he talked about magic money trees, I thought he was pushing his name forward to become the next Chancellor of the Exchequer. But then, he seemed to very freely talk about spending £2.5 billion here and £2.5 billion there. My worry is that his £2.5 billion would become a target, rather than the limit. Given the controls that we have put into the Bill, we will not be supporting Amendment 31.

Lord Leong (Lab)My Lords, I thank all noble Lords for their contributions, and I thank the noble and right reverend Lord, Lord Sentamu, for his support.

Amendment 32, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would require that details of any proposed financial assistance under Clause 58 be provided to Parliament before the assistance can be granted. The noble Lord, Lord Fox, has raised the issue of parliamentary scrutiny in respect of this clause in Amendment 34, which would require detailed proposals to be put forward before Parliament for a 90-day period and allow the Select Committee to make recommendations which the Government must respond to before any assistance is forthcoming. I understand that these amendments address the concerns of all noble Lords about the potential to incur costs in relation to the powers in this Bill.

As I have noted previously, there is a framework of public-spending principles and governance, designed to ensure that public funds are well managed, and the Public Accounts Committee holds government to account in this respect. Where the Government use the powers in the Bill to transfer a steel undertaking into public ownership, costs may be incurred from day one and will need to be funded to maintain an ongoing operation. It is vital that a steel company that is running production continuously does not face disruption due to funding shortfalls. That is why these two amendments cannot be accepted by the Government, despite the good intentions behind them. As set out in Clause 59, we will provide annual reports to Parliament detailing the costs incurred under the financial assistance provided. A nationalised company will also need to publish an annual report and accounts, as the department does, so this information will be available in several places.

18:15:00

Amendment 31, tabled by the noble Lords, Lord Sharpe and Lord Hunt, would cap financial assistance under Clause 58 at £2.5 billion for the period until August 2029. I do not think that a cap would be helpful at this stage. Where the Government exercise the transfer powers to nationalise a steel undertaking, our objective would be to stabilise the business and make operational improvements. We would work closely with its leadership team on its long-term future, with the aim of revitalising the business and returning it to commercial viability. This will require significant government investment. Imposing an arbitrary cap in a Bill would only constrain the Government’s ability to deliver effectively on their policy objectives. A cap is also a blunt instrument: it does not ensure that money is well spent, which I understand to be the noble Lords’ more pressing concern.

Amendment 33, also tabled by the noble Lords, Lord Sharpe and Lord Hunt, would require the Secretary of State to be satisfied that any financial assistance would offer value for money before it was provided. I have already made the point that value-for-money considerations are embedded in government decision-making. As we discussed in a separate group, the Government are prepared to include a duty on the Secretary of State to consider costs when deciding whether to exercise the principal transfer powers. That duty offers something similar to this amendment, so I do not think it is necessary in addition.

Amendments 35 and 36, also in the names of the noble Lords, Lord Sharpe and Lord Hunt, and Amendment 37, in the name of the noble Lord, Lord Fox, address the reporting provisions in Clause 59. Amendments 35 and 36 would require the Secretary of State to present quarterly reports to Parliament on financial assistance provided under the Bill. I have separately noted the Government’s commitment to provide quarterly Written Ministerial Statements to Parliament, updating on progress in relation to any exercise of the principal transfer powers. I confirm that this would include an update on costs, which I think aligns with the intention of the amendments. I hope that provides some reassurance to noble Lords.

Amendment 37 would require reporting to consider the impact of the financial assistance provided on the short- and long-term investability of the steel undertaking. I share the noble Lord’s ambition to ensure that public money put into a steel undertaking would be used to improve its commercial position. As I have said previously, and as I am more than happy to state again, it is not the Government’s intention to retain a nationalised steel company on the public balance sheet indefinitely. Where the powers in the Bill are exercised, it will be with a view to consider how a positive future can be achieved, including whether there are future opportunities for private investment once a business has been turned around. I do not think that the reporting mechanism in Clause 59 is the right place to reflect this ambition, but it is right that it would form part of the thinking for government and a nationalised company. We will look at how that is best communicated to Parliament.

To conclude, I hope I have been able to reassure noble Lords on the amendments in this group, which I will not support.

Lord Hunt of Wirral (Con)My Lords, I am very grateful to the Minister, in particular for those additional comments. I and my noble friend Lord Sharpe—as well as, I believe, the noble Lord, Lord Fox—have been reassured by how the Minister has termed the positive future that we all want to see. However, as my noble friend Lord Redwood pointed out, the Government have still not provided Parliament with a clear limit on the potential exposure facing taxpayers. I do not know whether the Minister has any aspiration to become a Treasury Minister. To become one, you have to believe in caps—there is no other way to become a Treasury Minister.

I say to the noble and right reverend Lord, Lord Sentamu, that the Government just have to come to Parliament. If they require more money, they should ask Parliament for more money. At the moment, they have said that £2.5 billion is necessary. If there is a need for more money, it is perfectly open to the Government to come to Parliament and ask for it. Without a clear limit, there is a real risk that the cost could run into tens of billions of pounds.

Lord Sentamu (CB)Therefore, if they can come to Parliament to ask for it, do not put the limit in the Bill. That is what the noble Lord seeks to do in his Amendment 31.

Lord Hunt of Wirral (Con)If the noble and right reverend Lord does not support this amendment, it will be unnecessary for the Government to come and ask for more money. It is only when there is a cap that the Government have to be accountable to Parliament. For the reasons I have outlined, and because taxpayers should never be asked to sign a blank cheque, I wish to test the opinion of the House.

Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op): My Lords, before we divide the House, I need to inform the House that there have been intermittent network issues on the estate. Because of the small risk that this may cause temporary disruption to the pass readers and the Division system, I have agreed with the usual channels to extend the time for Divisions from eight to 10 minutes.

I ask all noble Lords to ensure they firmly tap their pass on the pass reader. If in doubt, they should tap their pass a second time. The system will only record a vote once. If we all remember that beep means you have voted and no beep means no vote, we will all be fine.

1|18:22|95|202|Division on Amendment 31|Amendment 31 disagreed.||0|0

18:35:00

Amendments 32 to 34 not moved.

Clause 59Reporting

Amendments 35 to 37 not moved.

Amendment 38

Moved by

38: After Clause 60, insert the following new Clause— “Report on the impact any nationalisation of steel undertakings has had on inward investment to the United KingdomWithin six months of the day on which this Act is passed and every subsequent six months, the Secretary of State must lay a report before Parliament which sets out the impact that nationalisation of any steel undertaking under this Act has had on inward investment to the United Kingdom.”Member’s explanatory statement This new clause would place a duty on the Secretary of State to report to Parliament on the impact any nationalisation of steel undertakings has had on inward investment to the United Kingdom.

Lord Sharpe of Epsom (Con)My Lords, I will speak to Amendments 38 and 39, standing in my name and that of my noble friend Lord Hunt of Wirral. On Amendment 38, I hope that the Minister can give a clear assurance that the future impact assessment will include an assessment of the effect of nationalisation on investment in the domestic steel sector.

On Amendment 39, the Minister gave assurances in Committee that financial assistance would comply with domestic and international subsidy control rules. I would be very grateful if he could put that reassurance more clearly on the record. Could he please confirm that the Government have assessed whether any proposed support could give rise to concerns under the domestic subsidy control regime, including any conversations that they have had with the Competition and Markets Authority? Could he also confirm that Ministers are satisfied that the proposed support will comply with the World Trade Organization’s subsidy rules? I look forward to the Minister’s response. I beg to move.

Lord Leong (Lab)My Lords, the amendments in this group address inward investment and a level playing field. I emphasise at the outset that the Government are committed to ensuring that any publicly owned steel undertaking is subject to the same requirements and standards as any privately owned steel undertaking.

Amendment 38, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would place a duty on the Secretary of State to report to Parliament on the impact of any nationalisation of a steel undertaking on inward investment in the UK. I reassure your Lordships that the Government are committed to revitalising the steel sector and to establishing an investible and competitive business environment. To date, we have had positive feedback from industry on the Bill and the Government’s approach to nationalisation.

To be clear, public ownership is not an end in itself; it is a means of safeguarding our strategic domestic capability in exceptional circumstances. Our intention behind any intervention would be to make the changes necessary to put the steel undertaking on a sure footing and, where possible, return it to a position where it could attract private investment.

As I have set out previously, any use of the transfer powers would require an impact assessment. This would set out the impact of a nationalisation on the economy and, where appropriate, the Government would undertake post-implementation reviews. As I have confirmed, the Government will ensure that a debate on the steel strategy and the impact of the Bill takes place in both the House of Commons and the House of Lords within 12 months of Royal Assent.

Amendment 39, again in the names of the noble Lords, Lord Sharpe and Lord Hunt, seeks to require the Secretary of State to maintain a level playing field between publicly and privately owned steel companies. I sympathise with the concern expressed by the noble Lords and want to make it clear that the governance and regulatory treatment of any nationalised steel company will seek to ensure a level playing field.

To emphasise this, I state that any financial assistance would be time-limited, targeted and proportionate to avoid market distortions. The provision of any funding would comply with domestic and international subsidy control obligations. I hope this reassures noble Lords that the Government are committed to ensuring that any publicly owned steel undertakings will not be unfairly advantaged.

Lord Sharpe of Epsom (Con)My Lords, I am very grateful to the Minister for his remarks. It was particularly pleasing to hear that the Government have received positive feedback from the industry. It is not for now, but I wondered whether the Minister might be in a position to be a little bit more specific and perhaps write to noble Lords who have taken part in the debate, outlining some of those positive comments. That would help to contextualise our future debates. I am also pleased, as we have discussed in earlier groups, that we will deal with post-implementation reviews and that there will be a debate within 12 months in both Houses. That is a very welcome development.

As regards Amendment 39, I listened to what the Minister said. I am particularly pleased that he assured us that the Government will seek to pursue a level playing field quite explicitly and to avoid market distortion. Those are incredibly important things for so many reasons, particularly when it comes to encouraging inward investment and ensuring that existing operations are not disadvantaged by anything that the Government do on behalf of the taxpayer. In the light of those assurances, I beg leave to withdraw my amendment.

Amendment 38 withdrawn.

Amendments 39 and 40 not moved.

Amendment 41

Moved by

41: 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 new Clause 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.

Lord Hunt of Wirral (Con)My Lords, I will also speak to Amendments 42 and 43 standing in my name and that of my noble friend.

As we stated in Committee, the carbon border adjustment mechanism and emissions trading scheme will have a material effect on the domestic steel sector. The Government will no doubt argue that the CBAM and ETS are necessary to meet their net-zero objectives and that they will not harm British industry. We may have significant disagreements on that point. However, what cannot be disputed is that these measures will affect steel undertakings in this country. The question is whether that effect will be positive or negative on costs, production, exports and international competitiveness.

In Committee, Ministers suggested that the business environment, including the ETS and CBAM, would be relevant to valuation. But that is not the same as a clear assessment of the practical effect of these policies on the future of domestic steel-making. I therefore invite the Minister to confirm that the future impact assessment to which the Government have referred will include a full assessment of the effects of the CBAM and ETS on the domestic steel sector.

If the Government are right that these measures will protect industry, support investment and improve competitiveness, they should have no difficulty at all in providing that assurance. If, however, that assessment shows that these measures are damaging production, exports, investment or competitiveness, that would also give the Government the evidence needed to change course, and that is why I wish to move this amendment. I beg to move.

Lord Redwood (Con)My Lords, I am very grateful that my noble friend has raised this important point. We would probably not be having these big debates about steel nationalisation if the United Kingdom in recent years had had competitive energy pricing, and if it had not gone in for carbon pricing and carbon taxes that can have an adverse bearing on energy-using industries. However, we are where we are, and so my noble friend is right to ask the Minister to give some reassurances. We seem to be involved in overtaxing carbon and then having to subsidise those businesses that suffer as a result.

Of course, the CBAM is an EU-designed scheme which we are copying, to try to offset the impact that very high carbon and energy costs have on domestic economies and industries, by imposing a similar tax or tariff on the imported goods from countries that do not impose such carbon taxes and carbon additions to the energy they are using in industrial plant. That does help in some way for the domestic steel-producing industry; it becomes a problem for the domestic steel-using industry where it is having to import steel beyond the tariff-free quota provided under the CBAM. We note that the tariff-free quota is skewed to favour European producers, rather than other producers around the world who might be otherwise cheaper or more advantageous.

18:45:00

I therefore hope that the Minister will consider very carefully what the right structure will be for a steel industry owned in whole or in part by the Government, because it is a strange money-go-round to charge too much for energy and then have to give it back by way of grant, showing losses in the business you own.

Lord Fox (LD)My Lords, we debated CBAM and the ETS in Committee, so I will not add to that debate, but I will ask a question of the proposers which I did not ask then: how is a steel business affected differently by CBAM or the ETS, whether it is publicly or privately owned? The answer is that it is not. The Bill is about the potential public ownership of steel. We will have to have a debate about CBAM and the ETS. The Liberal Democrats often talk about energy prices but not in the context of this Bill, because it is about whether a steel entity is in public or private ownership, and frankly, the CBAM will affect them the same way, no matter where that ownership lies.

Lord Leong (Lab)My Lords, I thank noble Lords for their contributions to this debate on the emissions trading scheme and the carbon border adjustment mechanism, which I will refer to as CBAM, and their impacts on the steel sector.

Notably, these amendments seek to exempt a publicly owned steel undertaking from both these environmental measures, thereby undermining the level playing field that the noble Lord mentioned in the previous group. At the outset, I emphasise the Government’s commitment to their industrial decarbonisation policies and to moving towards a green, decarbonised steel sector. Although I appreciate that there may be differing views on this issue, these amendments would completely undermine the Government’s objectives for these measures.

These commitments build on the statutory reporting requirement on financial assistance in Clause 59, the company’s annual report and accounts, and the quarterly Written Ministerial Statements, which I have already set out. Any nationalised steel undertaking would not be exempt from the corporate reporting requirements set out in the Companies Act 2006. That Act contains various reporting requirements, which vary depending on the size of the entity. Where relevant or material, our Written Ministerial Statements may refer to any wider contextual or regulatory impacts. In addition, as previously mentioned, the Secretary of State would have the ability, if needed, to request an interim report on a particular issue.

Amendment 41 seeks to exempt a publicly owned steel undertaking from CBAM. I understand the concern expressed by the noble Lord; however, I emphasise that CBAM’s purpose is to ensure that imported carbon-intensive goods face comparable carbon prices to those of domestically produced goods. It gives industry confidence to invest in the UK, knowing that its decarbonisation efforts will not be undermined. CBAM makes no exemptions for particular UK firms. Its intent is to target the problem of carbon leakage and ensure that highly traded, carbon-intensive goods from overseas, including steel, pay a comparable carbon price to that paid by UK manufacturers. I understand the intention behind Amendment 42 and the desire to ensure that Parliament remains informed about the impact of carbon pricing policies on the steel sector. The Government are committed to supporting a competitive and sustainable steel industry while delivering our decarbonisation objectives. However, the UK emissions trading scheme and the carbon border adjustment mechanism are economywide policies designed to address carbon leakage and support the transition to net zero across industry as a whole, rather than for any particular company or ownership model.

The UK ETS Authority already keeps the operation of the scheme under review. The scheme contains statutory review mechanisms. The authority has committed to continued monitoring of both free allocation policy and the interaction between ETS and CBAM. The authority has also recently confirmed the extension of the UK ETS beyond 2030 and will continue to engage with industry and consult on future scheme design, ensuring that the impacts on affected sectors are properly considered. Given these existing review mechanisms, it is not necessary to create a separate statutory requirement for a particular transferred steel undertaking.

Amendment 43 seeks to exempt a publicly owned steel undertaking from the emissions trading scheme. I am sympathetic to the fact that this imposes a cost on activities that have significant emissions. However, as with Amendment 41, accepting Amendment 43 would grant preferential treatment based on ownership and undermine a level playing field across the industry. The transition to low-carbon steel must be fair, credible and consistent across all operators, whether publicly or privately owned. I emphasise that the ETS includes targeted protections for energy-intensive, trade-exposed industries, including steel. Further protections will be introduced through CBAM from 2027.

The Government remain firmly committed to both a competitive steel sector and our decarbonisation objectives. Exempting a publicly owned steel undertaking from ETS or CBAM would create an uneven playing field, weaken the integrity of these schemes and undermine efforts to tackle carbon leakage. Steel producers, regardless of ownership, should operate within the same fair and consistent framework. I hope that my comments reassure noble Lords.

Lord Hunt of Wirral (Con)My Lords, I am very grateful to my noble friend Lord Redwood for highlighting the importance of ETS and CBAM. I say to the noble Lord, Lord Fox, that the British taxpayer has a right to know the effect of ETS and CBAM. I take his point that it would apply whether it was in the private or the public sector, but we are now dealing with a nationalised industry which is funded by the taxpayer, and the taxpayer has a right to know exactly what the effect of the UK ETS and CBAM will be on the costs, production, exports and competitiveness of the transferred steel undertakings.

However, I recognise that the Minister has done much to explain the method by which the Government are approaching this situation. We will keep it under careful scrutiny but, in the meantime, I beg leave to withdraw the amendment.

Amendment 41 withdrawn.

Amendments 42 and 43 not moved.

Amendment 44

Moved by

44: After Clause 60, insert the following new Clause— “Industrial action affecting a transferred steel undertaking(1) Where the Secretary of State has exercised a principal transfer power in respect of a steel undertaking, the Secretary of State may prohibit or restrict industrial action affecting that undertaking if the Secretary of State considers that the industrial action creates, or is likely to create, a sufficient risk to the public interest in respect of which the principal transfer power was exercised.(2) An act done in contravention of a prohibition or restriction under subsection (1) is not protected by section 219 of the Trade Union and Labour Relations (Consolidation) Act 1992 (protection from certain tort liabilities).(3) Industrial action in contravention of a prohibition or restriction under subsection (1) is not protected industrial action for the purposes of section 238A (participation in official industrial action) of that Act.”Member’s explanatory statement This amendment would enable the Secretary of State, following the exercise of a principal transfer power, to prohibit or restrict industrial action only where it creates a sufficient risk to the public interest grounds on which the steel undertaking was brought into public ownership.

Lord Sharpe of Epsom (Con)My Lords, when we debated this amendment in Committee, the Minister suggested that it was somehow about industrial relations. It is not. This amendment is about our national security. The Prime Minister himself has warned the House and the country that we may face aggression from Putin’s war machine against a NATO ally before the decade is out. Let that sink in. It is not “if” but a real and growing risk, on our watch, in this decade.

What is the Government’s answer when it comes to the very steel from which we forge our warships and our defences? Their answer, apparently, is that production could grind to a halt whenever a strike is called—no matter the stakes, no matter the moment, no matter who benefits from Britain’s weakness. This amendment does not abolish the right to strike. Let no one on the Benches opposite pretend otherwise. It says something far narrower and far more reasonable: that, where the Secretary of State has taken a steel undertaking into public ownership precisely because of its importance to the public interest, industrial action which threatens that public interest cannot simply proceed as though nothing were at stake. Where the risk is sufficient and where the ground for public ownership was the public interest itself, the Secretary of State may act to protect it.

We are told again and again that this Bill is about safeguarding a strategic national asset. Very well, we accept those arguments—but let us mean them. You cannot claim with one hand that steel production is too vital to be left to the market and with the other hand leave that same production exposed to disruption whenever it suits a dispute wholly unconnected to the nation’s defence. You cannot have it both ways.

If a strike stopped the plates and the girders needed for a Royal Navy hull at the very moment that the Prime Minister’s own warning came to pass, would the Government stand by, hands tied by statute, and watch it happen? If the answer is no, the Government should accept this amendment today rather than legislate the problem into existence and hope it never arrives. In an earlier group, the Minister used as a defence how difficult the industry is and the massive external pressures that it faces. This is an issue that is within the Government’s potential control. They should accept this amendment. We on these Benches are not afraid to say what needs to be said. In an uncertain and dangerous world, national security must remain a priority. I urge the Government, in the interests of national security, to accept this amendment. I beg to move.

Lord Fox (LD)My Lords, the noble Lord, Lord Sharpe, raises a serious issue. There was a moment when I thought I had passed through the looking glass. Your Lordships on that side of the House were sitting on this side, and those Lordships who were here were sitting on that side of the House. The only thing that broke me from that reverie, far from it being the noble Lord, Lord Sharpe, at the Dispatch Box, was the noble Lord, Lord Callanan. He was proposing the Strikes (Minimum Service Levels) Act 2023, with which the Government of the day sought to do exactly as the noble Lord, Lord Sharpe, seeks with this amendment.

I ask the noble Lord, Lord Sharpe, how many times that Act was applied. How effective was it? The issue that he raises is important. Of course the security of the country is important, but this is not the way to ensure the security of our country. Having a proper partnership with the workers in the industry is the way in which you secure the security of this country.

Lord Leong (Lab)My Lords, I thank all noble Lords for their contributions and the noble Lord, Lord Fox, for those words. As this is the last group of amendments, I thank all noble Lords for their constructive approach to the scrutiny of this Bill. In particular, I thank the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, for taking the time to meet me over the last few weeks. The way in which we have been able to collaborative to refine and improve the Bill truly shows your Lordships’ House at its very best.

Amendment 44 is in the names of the noble Lords, Lord Sharpe and Lord Hunt. Before I speak to it, I state that the Government take national security seriously; it is a priority. The amendment seeks to prohibit or restrict industrial action where there is a sufficient risk to the public interest grounds on which the steel undertaking is brought into public ownership. I understand that the intent of this provision is to ensure that any publicly owned steel undertaking can operate effectively without delay.

However, this is not the appropriate means to achieve this goal. I emphasise the absolute importance of workers’ rights. The steel workforce is the backbone of this industry. This Government are committed to protecting their rights and working with the trade unions and the workforce to ensure that operations are as effective and secure as possible. Noble Lords will know that I was closely involved in the delivery of the Employment Rights Act. Workers’ rights is an issue that is close to my heart. While political differences remain, we are not in the business of counterproductive approaches to industrial relations. As part of delivering the Employment Rights Act, our plan to make work pay, we are continuing to consult with businesses, trade unions and civil society to make sure we get the detail right. Several consultations are still live, including on reforms to zero-hours and similar contracts. This amendment is neither necessary nor appropriate to ensure that a publicly owned steel undertaking can operate effectively.

I hope I have convinced noble Lords of the reasons why the Government cannot support this amendment. I therefore respectfully ask that it be withdrawn.

Lord Sharpe of Epsom (Con)My Lords, I am very grateful to the Minister for his response and, in particular, for the recognition of the central importance of national security in this matter. That is very welcome, but recognition is not the same as resolve. If the Minister truly accepts the force of the argument, the surest way to demonstrate that is not warm words at the Dispatch Box but acceptance of the amendment. I gently say to him that he could have strengthened his own case considerably by doing just that.

I am grateful to the noble Lord, Lord Fox, for pointing out my party’s admirable consistency, which sometimes we are criticised for. I suggest that nothing in this amendment would prevent any sort of proper partnership—to use the noble Lord’s words—with the workforce, which of course we would approve of and endorse as a first and foremost. The simple fact of the matter is that this is a different set of circumstances. We are talking here about the national interest and national security. They are of fundamental importance as regards this entire Bill, and that is why we have proposed this amendment.

To finish there would be to finish on a slightly discordant note, and I do not wish to. I am enormously grateful to the Minister for all his engagement and for accepting so many of our arguments. We are very grateful for the reassurances we have received from the Dispatch Box and the acceptance of some of our amendments, and we wish the Minister well in his future endeavours. I beg leave to withdraw the amendment.

Amendment 44 withdrawn.

Amendment 45 not moved.

House adjourned at 7.02 pm.