UK help for steel mills not enough to secure sector's future

22 December 2015

Government action to address domestic and European Union policies that cripple Britain's steel sector are still not enough to secure the industry's future, a parliamentary committee report said on Monday.

Nearly 4,000 jobs were lost in the British steel industry in October alone -- equivalent to about a fifth of the workforce - as Tata Steel buckled under pressure from decade-low steel prices, while SSI UK and Caparo Industries shut up shop.

The crisis prompted EU ministers to hold talks at Britain's request, while the UK government pledged 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 report from parliament's Business, Innovation and Skills committee.

"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."

After months of lobbying, Britain received EU approval last week 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. Heavy industries in Britain pay some of the highest energy costs and green taxes in the world.

In a change of stance, Britain voted in favour of extending EU anti-dumping duties on wire rod imports from China in October. Prime Minister David Cameron also raised the issue of subsidised Chinese steel imports with the country's president, Xi Jinping.

The government's department for Business, Innovation and Skills (BIS) defended its response.

"We have taken clear action on relief for energy costs, anti-dumping, procurement and EU emissions directives, meeting key industry asks," said a spokeswoman for BIS.

"SSI UK had lost over 600 million pounds in just three years... and the price of the steel it produced had halved in the past year alone. If the BIS Select Committee had a magic bullet that could have saved the plant against these conditions, they certainly kept it to themselves."