Future of UK steel still not secure - government committee

21 December 2015

The future of Britain's steel sector is still not secure, despite increased action by ministers to address both domestic and EU-wide policies that cripple the industry, according to a government report published on Monday.

Nearly 4,000 UK steel jobs were lost in October - equivalent to about a fifth of the sector's workforce - as Tata Steel and Caparo Industries buckled under pressure from decade-low steel prices.

The crisis prompted EU ministers to hold talks at Britain's request, and forced the UK government to pledge action on some of the industry's concerns on high energy costs, green taxes, business rates and cheap imports, notably from China.

"Increased (government) activity has not yet translated into measurable impact. Nor will current measures be enough to provide certainty for the future," said the UK Department of Business Innovation and Skills select committee report.

"Government must now work with industry to establish what a sustainable future for UK steel looks like, and then commit to taking the necessary measures to help deliver it."

Britain received European Union approval on Thursday to compensate energy-intensive industries such as steel for the cost of green taxes like the renewables obligation, Britain's main incentive mechanism for large-scale renewable projects.

The compensation was estimated to be worth 240 million pounds by 2020 for the steel sector.

Commenting on the report, Gareth Stace, director of industry body UK Steel, said: "It is essential we do not lose the current momentum."

"Immediate priorities are the tackling of Chinese dumping of cheap steel at EU level and a firm commitment from government to ensure that all major procurement projects use British steel. Business rates must also be reformed."

In October, Britain said it would allow more time for steel plants to meet EU rules on emissions, which would have cost millions of pounds in additional costs in January. It also issued new guidelines aimed at encouraging government procurers to buy British steel.