Research and analysis

RPC opinion: impact of Steel Industry (Nationalisation) Bill

Published 5 June 2026

Lead department: Department for Business and Trade

Summary of proposal: to grant the government powers to take ownership of steel undertakings where the specified public interest test is met

Submission type: impact assessment - 26 January 2026

Legislation type: primary legislation

RPC reference: RPC-DBT-26127- IA -(1)

Date of issue: 22 May 2026

RPC opinion

Fit for purpose:

• the impact assessment evidences the problem under consideration and has generated a sufficient long-list and short-list
• the department has provided a good assessment of the overall impacts from the policy, in line with RPC guidance for primary legislation
• whilst some of the analysis for impacts from use of the legislation is limited, overall, the qualitative discussion of the proposed option used to justify the preferred approach is sufficient

RPC summary

Rationale: Green

The impact assessment (IA) evidences the problem under consideration, referencing published statistics, case studies and international comparisons. However, some of the evidence could be presented more clearly. The argument for intervention is focused on market failures as the market is characterised by significant market distorting practices. The IA provides good objectives and theory of change diagram.

Identification of options: Green

The department has generated 3 options for its long-list but could benefit from using the Green Book’s Options Framework Filter (OFF) to further develop this. The department has used critical success factors to generate the short-list and justify discarding the other longlisted options. The IA provides a sufficient small and micro business assessment, explaining that most steel producers are large and the policy is expected to benefit all businesses by securing continuity of steel supply.

Justification for preferred way forward: Green

The department has provided a qualitative assessment, consistent with RPC guidance for primary legislation. The qualitative discussion of the proposed option and indicative analysis used to justify the preferred approach is sufficient.

Regulatory scorecard: Weak

The department indicates a neutral impact from the preferred option on all key areas, as the introduction of the primary powers alone are expected to have a minimal direct impact. However, the scorecard should also provide a summary of its assessment of the total expected impacts from both the primary and secondary legislation. The IA also discusses the potential impacts from exercising the secondary powers in the scorecard. The IA could also consider how government intervention will impact the overall market for steel.

Monitoring and evaluation: Satisfactory

The department outlines the data sources which will be used to underpin the review. The IA could detail the metrics that will be gathered through these.

Summary of proposal

The UK government is committed to maintaining the viability of domestic steel production, recognising its role in national infrastructure, defence, clean energy, and industrial supply chains. This IA supports proposed legislation that would grant the Secretary of State (SoS) powers to take ownership of steel undertakings where the specified public interest test is met. These powers are intended to provide government with the option to intervene, should it be judged necessary in the public interest.

The proposed legislation provides contingency powers to be used only if it is determined to be in the public interest to do so. The baseline for assessment includes the Steel Industry (Special Measures) Act (SISMA) and targeted subsidies. SISMA does not provide for longer-term control or ownership of assets, also it does not enable investment or allow government to plan ahead or take timely action to improve assets. The proposed legislation will repeal SISMA, replacing its short-term emergency powers with a framework for nationalisation. This ensures government can act pre-emptively and plan for long-term sector stability.

The IA includes 3 options in its long-list:

• do nothing - us existing SISMA powers: This option would rely on the powers already available under the Steel Industry (Special Measures) Act (SISMA), the limitations of which are set out above

• expand SISMA to provide increased control (but not ownership): under this option, SISMA could be amended or expanded to grant government greater operational control over steel assets, potentially allowing for more active management and intervention than the status quo, but still falling short of enabling government ownership or exploring possible long-term investment

• introduce new primary legislation: this option involves enacting new legislation to provide the Secretary of State with powers to take ownership of steel undertakings where the public interest test is met

Rationale

Problem under consideration

The IA outlines the problem under consideration; the UK steel sector is facing a decline, threatening the continuity of strategically important operations. The department evidences this problem, explaining how the UK steel industry supports critical national infrastructure, including defence, transport and offshore wind, with the latter expecting to require 25 million tonnes of steel by 2050 alone.

The IA also references a range of published statistics to illustrate the structural challenges within steel sector, including evidence on its increasing trade deficit in the UK (from £2.6 billion in 2023 to £2.0 billion in 2024) and the employment reduction in the sector in recent decades. The IA also draws on case studies from recent history to support the highlight the sectors vulnerability, such as the 2015 Redcar steelworks closure.

However, some of the evidence appears mixed, and the IA could benefit from presenting this clearly. For instance, the IA states that the steel industry’s importance to the economy has declined (by over 85% between 2000 and 2024) and could clarify how this finding aligns with the overall rationale for intervention.

The IA could also draw more on the evidence provided by the Redcar closure to support the problem under consideration, including data such as jobs lost and the downstream impacts on the local economy and domestic steel supply.

The IA also draws on international evidence in its rationale, referencing the approaches to support the steel sector in the EU and the USA. Whilst there are differences between the proposal, these include the EU’s state aid rules and public grants and the USA’s public investment and tax incentives.

The IA also references existing legislation to support the case for intervention, including the precedent of the Banking Act (2009) which allowed the government to intervene in failing financial institutions. The IA could be improved by including any evidence on the effectiveness of this previous legislation, including post-implementation reviews. This would further support the case for intervening in steel.

Argument for intervention

The IA’s argument for intervention is focused on market failures, as the global steel market is characterised by significant market distorting practices such as subsidies and overcapacity. Whilst the IA explains that subsidies undermine fair competition for steel producers, the IA could clarify how this forms an argument in favour of the proposal, which is designed to be used specifically after subsidies have been implemented.

Furthermore, the logic of the strategic rationale for intervention would also apply even if UK steel production were being outcompeted by entirely fair means. The Department also references the existence of coordination failures, as the transition to low-carbon steel requires complimentary infrastructure across the value chain.

The IA also argues that there is information asymmetry between the UK government and steel companies, as the government holds a broader picture of national resilience and strategic supply‑chain risks. The IA would be improved by providing relevant evidence to support this argument and explaining why any information asymmetry cannot be solved through better information.

Objectives and theory of change

The IA provides sufficient objectives, which broadly meet the SMART framework. The IA could be improved by outlining indicators which might measure the success of each objective and ensuring the objectives are time-bound. The IA provides a good theory of change, clearly setting out how the inputs of the proposal are expected to link to the final impacts.

Identification of options

Identification of the ‘longlist’ of options 

The department has generated three options for its long-list, including a do-nothing option, the option to expand SISMA Powers and the preferred option to provide new primary legislation to provide the government with powers to take ownership of steel undertakings where the public interest test is met. The department details these options in the IA, describing qualitatively what they would involve.

However, the IA could provide further detail on these options, particularly setting out how the public interest factors involved in the preferred option will account for the scope and guardrails considered within SISMA, as the impacts of the measure will be shaped by how broad these triggers are. Whilst the minimal long-list is justified given the primary powers in consideration, the IA could benefit from clarifying this.  

The assessment could also be improved by including detail on the process behind developing the long-list of options, such as how research and other evidence have been used to form these policies. The long-list of options could benefit from using the Green Book’s Options Framework Filter (OFF), which could help present the long-list in greater detail whilst retaining a clear and concise structure.

Furthermore, as the department also references the Banking Act as a precedent to this legislation, the IA could benefit from reflecting similar banking resolutions in its long-list options. For instance, the IA would benefit from considering intermediate instruments (such as targeted asset acquisition, special administration regime and golden share) in its long-list.

Justification for the shortlisted options 

The department has used critical success factors to generate the short-list and justify discarding the other longlisted options. The assessment justifies the selection of the short-list option, and the IA explains clearly the reasoning behind this and justifies why other long-list options are not viable for short-list appraisal.

In particular, the IA explains that its approach diverges from Green Book guidance (to have multiple separate options in the short-list), as continuing with SISMA powers were not carried forward into the short-list because they provide only short-term, reactive powers and lack the scope for long-term planning or strategic intervention. This makes SISMA an unviable alternative under Green Book criteria.

The IA could benefit from aligning all of the critical success factors with those set out in the Green Book. For instance, the ‘cost-effectiveness’ criterion could be redefined as a value for money critical success factor, and the ‘speed/certainty’ criterion as a supplier capacity critical success factor.

The department assesses each option qualitatively and provides a binary pass/fail assessment against each criterion. However, the IA could benefit from explaining the measurement criteria that have been applied to form this assessment and would benefit from including incremental variance between the different ratings, perhaps using a red/amber/green rating system.

Consideration of alternatives to regulation

The department has considered non-regulatory policy alternatives in its long-list, explaining that these have been discounted as the new powers are intended to provide a backstop only if in the public interest. The IA could benefit from detailing the specific alternative policies that have been considered.

The IA also references existing non-regulatory tools such as subsidies and restructuring support, stating that these have failed. This demonstrates that non-regulatory tools would not be sufficient to meet the intended objectives of the policy. The IA could be improved by providing additional detail on these tools, further discussing why they were not successful. This would be helpful to understand the economics of the intervention and the policy options. 

Small and micro business assessment (SaMBA) and medium-sized business (MSB) assessment 

The department has provided a sufficient SaMBA. The IA justifies why exemptions for SMBs are not appropriate, explaining that steel undertakings of strategic national importance are typically large enterprises and small and micro businesses (SMBs) are not directly in scope, as they do not own or operate assets critical to national infrastructure, defence, or supply chains.

Furthermore, the department notes that the policy is expected to benefit all businesses by securing continuity of steel supply and allowing the steelmaking assets to remain operational. However, the IA could also consider the potential distributional impacts that would occur if the powers were used for one firm over another, particularly if this was for a larger firm.

The IA also considers the potential impact of the proposal on SMBs, explaining that they may be indirectly impacted by their role in steel-related services (for example, logistics, engineering, maintenance). If this is the case, these impacts are expected to be positive, through the support for sector stability.

Nonetheless, the department does well to consider potential mitigations to address any unintended disproportionate burdens on downstream SMBs, including streamlined reporting or targeted guidance.

Justification for preferred way forward

Appraisal of the shortlisted options

According to the Better Regulation Framework and RPC guidance, IAs for primary legislation should describe examples of the potential scale, and the nature of impacts, for how legislative powers are expected to be used at secondary stage. The IA has sufficiently met this requirement.

The IA explains that the new primary power itself does not result in significant direct costs or benefits and will only generate impacts if the powers are exercised. The department discusses some minimal qualitative impacts from the primary legislation, including the chilling effect on investment and the positive impact on supply chain confidence.

The IA has then provided a high-level assessment to illustrate the likely scale impacts expected if the policy is enacted via secondary legislation. The IA’s approach is consistent with RPC guidance and Better Regulation Framework expectations on assessment of the impacts of the primary legislation, where there is uncertainty over the contents of the related secondary legislation. These impacts include the costs to government from acquisition expenditure, capital injections and administrative overheads, as well as avoided closure costs, and the safeguarding of jobs. There will also be carbon emissions impacts. Whilst these costs remain non-monetised, the IA provides a sufficient qualitative discussion, setting out the nature of the impacts and how they might occur.

However, whilst this assessment is sufficient, the IA could have gone further to indicate the scale of some of these impacts. For instance, the IA could have provided a rough cost of the government expenditure expected, based on other similar expenditures. The IA also states that the carbon emissions impacts depend on future decisions made by a steel company but could provide further clarity on the types of impacts that may manifest. The department could then attempt to monetise these impacts using the Green Book’s carbon values.

The department also provides a good description of how the secondary legislative powers could be used by explaining how the public interest test could be met. This helps to further indicate the scale of potential impacts at secondary stage legislation.

The IA states that the public interest test could be met where there is clear evidence of risk to the UK’s national security, critical national infrastructure or the economy as a whole. The IA could be improved by explaining how the public interest test will be designed to avoid the identified risks of moral hazard and crowding‑out of private capital, rather than just asserting that the criteria will be transparent.

Selection of the preferred option

Despite the uncertainties in the secondary legislation, the department provides a good justification for the preferred option of implementing primary powers. Overall, the department has reasonably made the case for introducing the new powers relative to the do-nothing option, as the do-nothing option could result in the collapse of domestic steelmaking capability.

The department explains that the powers provide a mechanism for targeted and proportionate intervention as a last resort, enabling government to act, if and when necessary, safeguard strategic industrial assets, protect skilled employment, support long‑term investment, and strengthen national resilience. Overall, while exercising the powers may require significant public investment, the strategic and socio‑economic benefits (particularly in scenarios where unmanaged closure would cause severe and lasting harm) are likely to outweigh the associated costs.

Regulatory scorecard

Overall, the department has largely focused on the costs and benefits of the precautionary powers created by primary legislation in the scorecard. The regulatory scorecard also provides a summary of its assessment of the total expected impacts from both the primary and secondary legislation. This approach is consistent with RPC and Better Regulation Framework requirements on assessment of the impacts of the primary legislation.

Part A

The department indicates a neutral impact from the preferred option on total welfare, business and households as the introduction of the primary powers alone are expected to have a minimal direct impact on these areas as the powers are only enabling.

Nonetheless, the IA also discusses the potential impacts from exercising the secondary powers in the scorecard. Within total welfare, these are government costs from acquisition, the avoidance of closure and the safeguarding of jobs.  All impacts are non-monetised, so should be moved from the monetised impacts to the non-monetised impacts section of the scorecard.

The impacts on business are non-monetised, and the department details the impact on supply chain stability and increased confidence in the scorecard. However, the IA could consider monetising and including familiarisation costs for business associated with familiarising with the primary stage legislation.

Similarly, the impacts on households are non-monetised, and the department discusses the secondary impacts of safeguarding jobs and avoiding price spikes in the scorecard. As safeguarding jobs is also included in the total welfare section of the scorecard, the department could consider which section these are best placed in. If they are expected to directly impact households’ budgets, they could be included solely in the household section. The department also discusses the potential impact on prices, explaining that households as consumers may gain from avoiding price spikes if the supply of steel is kept constant.

The IA explains that whilst the enabling powers alone are not expected to have a distributional impact, distributional impacts are likely, as steel production is often concentrated in lower socio-economic regions, with the workforce predominantly male. Therefore, the new legislation could help support economic resilience in these regions and amongst the male gender group.

The IA could be improved by providing evidence on the regional distribution of steel production to illustrate the scale of this distributional impact. The IA could also consider the regional impacts that would occur if the powers were used for one firm over another.

Part B

The department indicates a neutral impact of the preferred option on business environment and natural capital and decarbonisation, as the primary legislation is not expected to directly impact the ease of doing business or impact environmental outcomes. Nonetheless, the IA discusses the possibility of the policy announcement causing a relative stabilising or chilling effect for business investment.

However, despite the bill only containing enabling powers, the regulatory scorecard should provide a summary of its assessment of the total expected impacts from both the primary and secondary legislation, as the department has done in other areas of the IA. This could include the impacts of the preferred option on carbon emissions.

The IA could also expand the business environment impacts, considering how government intervention will impact the overall market for steel and competitiveness of the industry. For instance, the department could consider how the policy will impact the supply of steel, how this will align with demand side possibilities in a competitive market equilibrium and how this will affect all economic agents involved.

The department indicates an uncertain impact of the preferred option on international considerations, as again, whilst possibly influencing investor perceptions in the short-run, the enabling powers do not have direct impacts on trade or investment. The IA briefly discusses the long term impacts from the secondary legislation, such as the potential risks if the proposal is seen as a market distortion.

Monitoring and evaluation

The IA confirms that a post-implementation review will be conducted within 5 years of the bill coming into force and outlines the data sources which will be used to underpin this review, including Office for National Statistics (ONS) industrial and employment statistics, and company-level reporting from steel undertakings.

However, the IA could benefit from providing further detail on this data and how it will be gathered, including detailing the specific metrics which will underpin these data sources. In particular, the IA could give examples of what the company level reports will include and what data the DBT steel sector reports include. The IA should also confirm how stakeholders feedback will be captured (e.g. through interview or survey).

The IA sets out the high-level research questions that will shape the future evaluation, but could benefit from linking these to the SMART objectives identified earlier in the IA. The IA does well to consider external factors which may impact the review, stating that an earlier review may be triggered if these occur.

The department also considers the challenges involved with gathering stakeholder feedback (such as access to sensitive information) but could benefit from considering how it will address these.