Government promises support for British steel producers

28 October 2015

The government has pledged to help the struggling British steel industry compete with foreign rivals by backing measures including a lowering of energy costs and reducing business rates.

Anna Soubry, the small business, industry and enterprise minister, said she would act on five demands from the industry to stave off further job losses in a sector that has seen thousands of redundancies since September.

“The industry is not asking the government for any money. All they want from us is to give them the chance to compete on a level playing field,” she told a committee of MPs. “It’s not the job of government to tie people up. All these guys are looking for is a level playing field and I agree with them.”

She added: “I have an absolute determination to keep steel in this country.”

The five actions sought by the industry are: the implementation of an energy compensation package to bring down the cost of energy to that enjoyed by rivals; the reduction of business rates in line with those of competitor countries; more time to meet directives on emissions; more support on anti-steel dumping measures; and more support for local producers in large construction projects, although EU rules bar domestic bias in government procurement decisions.

Asked if she supported a preference for UK steel suppliers on infrastructure projects even if it led to higher construction costs, Soubry said: “I would say buy British because it’s quality.”

The minister was speaking to MPs after the head of UK Steel, the industry trade body, warned the government that the industry was at a critical crossroads and ministers must decide whether they were prepared to do everything they could to prevent further job losses.

Sajid Javid, the business secretary, held an emergency steel summit in Rotherham this month, and on Tuesday called for an EU-wide steel meeting.

Gareth Stace, director of UK Steel, told a business, innovation and skills select committee hearing: “Time is not on our side.”

“Ever since the business secretary called for the emergency steel summit two weeks ago the clock has been ticking. Time is rapidly running out and the steel industry needs assurances from government that it is going to deliver on its promises.”

The industry is reeling from the double impact of high energy costs and the dumping of steel from heavy producers such as China. Since September, 5,000 jobs have been lost or put at risk after announcements by Tata Steel, the owner of Britain’s largest steel plant in Scunthorpe, and SSI UK, which owns the Redcar steelworks, and Caparo Industries, many of whose subsidiaries have gone into administration.

UK steelmakers are seeking compensation, promised in the budget this year, for UK green levies that make the cost of electricity for UK users higher than for their European counterparts.

The business secretary has promised to try to negotiate these packages with the European commission, which needs to ensure they do not breach state aid competition rules.

Stace said the government had flagged the correct course of action but must follow up its pledges. “Ministers, up to and including the prime minister, are saying the right things about compensation, making sure there is action on unfair dumping of steel and ensuring building projects in the UK use British steel – but the practical reality is that these measures must be driven home and delivered.”

Stace’s pleas were echoed by Luis Sanz, UK chief executive of Celsa Steel, Tor Farquhar, group human resources director for Tata Steel UK, and by Roy Rickhuss, the general secretary of the Community trade union.

Farquhar said: “The margins are very small, so any one issue like energy gets magnified and becomes a problem in a low-margin business.”