Government needs a clear strategy to support the steel sector
4 min read
Steel is crucial to the UK’s economy, defence and infrastructure – yet we have fallen behind globally, writes Nic Dakin
Two-thirds of the steel used today wasn’t around 15 years ago. Steel is an innovative, flexible, highly recyclable product that will be a crucial part of our future. If the UK is serious about being a strong, independent country able to play its full role in the world, it must have its own independent steel making capacity. It is essential for our own infrastructure and defence security. Strong economic world powers have strong steel sectors. The US tops the league table for strongest steel sectors, with China second, Japan third and Germany seventh; the UK comes in at a humiliating 30th. We can’t afford to slip further down this table if we want to play our full part in the world.
It is therefore right that the government stepped in quickly to provide an indemnity for British Steel after it went into liquidation due to the threat of a no deal Brexit and its impact on European customer confidence. Thanks to the fantastic workforce and management, and the patience and commitment of the supply chain, the business has performed very well over this last, difficult month. This should give confidence to potential bidders to come forward with strong ambitious plans to take the whole business forward.
Over the last few years we have bounced from one steel challenge to another. Too often steel policy responds to the urgent needs of now, rather than setting out a strategic path forward for this crucial industry. After the closure of Sahaviriya Steel Industries (SSI) in Redcar in 2015, the UK’s strategic steelmaking assets there are now unfortunately lost forever. The cost of cleaning up the site, alongside the human cost of huge job losses at the heart of the Northern Powerhouse, will be with us for a very long time. The UK needs a government that will put in place a plan for steel, instead of lurching from one crisis to another. This plan should respond to the five strategic asks made by steel MPs, trade unions and employers with one loud, consistent voice.
The threat of a no-deal exit from the EU is what has sparked the current crisis. So, there is an urgent need to secure certainty on the timely provision of UK specific quotas within EU steel safeguards. This should be a major priority for the new prime minister.
Secondly, we must provide a level playing field on electricity prices for UK steel compared to our European neighbours. It’s not enough for the government to say that it has given some of the higher-than-our-competitor energy taxes back – we need some innovative approaches to levelling energy costs. These might include maximising the level of relief on renewables levies allowed under state-aid rules, looking at a German/French style network cost reduction, and providing an exemption from the Capacity Market levy, as the Polish government is now in the process of doing.
Thirdly, something ought to be done about the much larger level of business taxes that steel pays in the UK.
Fourthly, there is more to do to maximise public procurement of UK steel. It was good to see the enthusiasm for industry’s new Steel Charter launched recently. All government departments, bodies and infrastructure projects purchasing large quantities of steel should sign up to the UK Steel Charter, committing to specific and ambitious actions to increase the levels of UK steel used in public projects. The guidelines should also be extended to cover all major public procurement and infrastructure projects. The good practice exemplified by Network Rail and Heathrow should be the rule, not the exception.
The fifth ask would be to use the UK’s €250m share of the Research Fund for Coal and Steel (paid for by industry levies), returned after Brexit, to secure an ambitious programme of innovation for the UK steel sector.
With the implementation of these five critical goals, we can secure a more prosperous and long-lasting future for steel making in Britain and compete on a level playing field internationally. Other countries have managed to implement these changes, so why can’t we?
Nic Dakin is Labour MP for Scunthorpe and chair of the APPG on Steel and Metal Related Industries
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