We cannot afford to lose the British steel industry
The announcement of the likely loss of 440 jobs at Liberty Steel is a devastating blow.
My sympathies lie with those loyal steelworkers who have given their all to the industry, with their families who rely on these well-paid and meaningful jobs, and with the towns for which the local steelworks is the beating heart of their community.
Sadly, it’s the latest in a long line of setbacks for an industry which is continually being let down by the UK government and forced to compete with one hand tied behind its back.
The more steel we import the more we undermine our ability to stand on our own two feet
Put simply, we as a country – from the top of government all the way through society – must wake up to the reality that steelmaking is a foundational industry that is the bedrock of our entire manufacturing sector. It makes the vehicles we drive, including the smart cars of the future. It is in the buses and trains that we travel to work in. It is the cutlery in our kitchen that we eat our meals with. It builds the ships and tanks that keep our country safe, and the infrastructure projects that keep our country moving and keep our energy flowing, from HS2 to wind turbines.
Indeed, the world will use more steel in the net zero century ahead than we do today. It is the very definition of a twenty-first century industry.
It is equally critical that we recognise the absolute necessity that we make our steel here in Britain. In the age of Vladimir Putin's invasion and China's aggression, it is madness to surrender our sovereignty by off-shoring our steel-making capability to authoritarian regimes that wish Britain harm.
And that’s before we get to the grotesque environmental impact of importing steel thousands of miles from steelworks that are far more carbon intensive than ours.
It’s a pretty simple equation, really: the more steel we import the more we undermine our ability to stand on our own two feet, the more good jobs we lose and the more we damage our planet.
This doesn’t mean that British steelmaking can remain as it is. Steelmakers, such as Tata Steel who own the Port Talbot plant in my Aberavon constituency, aren’t just accepting of the need to modernise – they are enthusiastically embracing the cause. They recognise the need to reduce carbon emissions in order to meet net zero targets, not least because they don’t want their British plants to fall behind the rest of the world and become uncompetitive in the new economy. In this they have the full support of the workforce who want to see their proud industry thriving for generations to come.
But no steel industry can go on this journey alone; it has to be done in partnership with government. Just look at what’s happening around the world: the Canadian government has invested $900m in Arcelor Mittal’s future, the Spanish government is backing a hydrogen-based steel plant, and the German government will provide €1bn for Salzgitter. Indeed, across 10 important modernisation policies, France and Germany have each implemented six, and Britain zero.
The clock is ticking. Every day of dither and delay is another day that our competitors gain an advantage as they forge ahead with the de-carbonisation of their production processes.
Some say the government can’t afford to provide the financial support that’s needed but consider the cost of doing nothing. When the Redcar steelworks went under in 2015 the IPPR calculated that it would cost the government £4.6bn – hardly surprising given that 33,000 people are directly employed by Britain’s steel industry, 88 per cent of whom are their household’s main earner, with an additional 40,000 people working in the steel supply chain.
The government simply must recognise the necessity of reaching an agreement with British steelmakers, a deal which must also include action on uncompetitive electricity prices. The government’s announcement last Monday that it was reducing energy cost support for heavy industry has left British steelmakers facing costs 63 per cent higher than their German counterparts.
We also require a Carbon Bordon Adjustment Mechanism (CBAM) – a technical piece of policy, but one that is absolutely crucial as it will prevent the dumping of cheap, dirtier steel in British markets once the European Union implements its own CBAM later this year.
The Liberty Steel announcement is a stark illustration of the cost of the UK government sitting on its hands and doing next to nothing for 13 years. Ministers have offered the occasional sticking plaster, but they have never sought to heal the gaping wound at the heart of the steel industry – the absence of an industrial strategy that would enable government and industry to work in partnership to forge a strong future for this strategic and foundational industry.
Labour has committed to establishing a £3bn Steel Renewal Fund, but with a general election unlikely this year, we need the incumbent government to step up to the plate and take action now.
Aberavon’s steelworkers make the best steel money can buy and they must be allowed to continue doing so. In the coming weeks the APPG for Steel will be meeting both the minister responsible for steel and the Secretary of State, and I’ll be making these points forcefully.
For our national resilience, for levelling-up and for our green industrial revolution – Britain, we need our steel.
Stephen Kinnock is the Labour MP for Aberavon and chair of the APPG on Steel.
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