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Government's inertia leaves steel industry on verge of 'terminal decline'

A cross-party committee of MPs says the government didn't react quickly enough to the industry's concerns.

by Rebecca Smith
Last Updated: 08 Feb 2016

The steel industry likely has a few choice words on the government's response to its recent woes, after a series of closures led to over 5,000 job losses (and more on the way). Now a new report from parliament's Business, Innovation and Skills (BIS) committee has added more fuel to the fire, saying the government didn’t react sharply enough to warnings raised by the industry.

Labour's Iain Wright, chair of the BIS committee, said the closures and job losses ‘have dealt a major blow to the UK steel industry’ and warned that it was now ‘on the verge of terminal decline’.

‘For too long the government failed to be alert to the alarms raised by the industry and act at home to maintain a steel industry in the UK when other European countries were acting to safeguard their own strategic steel industries,' he said. 

There was though, some blame directed at Britain’s steel industry with manufacturers failing to spot long-term trends in global production. While the report acknowledged the government had been working hard to address the challenges since Redcar, it had not yet translated into measurable impact for those in the industry.

The government’s response to the report wasn’t particularly reassuring either. It said it had taken ‘clear action on relief for energy costs, anti-dumping, procurement and EU emissions directives, meeting key industry asks’. While it claimed to be doing ‘all it can to help the industry’, it deflected responsibility by saying it couldn’t dictate ‘the commercial decisions, operations or financial performance of private companies’.

Which of course won’t be of much comfort to those who have lost their jobs during the closures of steel plants in Redcar, Scunthorpe and Lanarkshire, nor the steelmakers who have repeatedly said the burden of carbon and other taxes has been stifling their prospects. But the report does put further pressure on the government to answer questions on how it has been handling the steel crisis. It wasn’t alert to the impact of collapsing steel prices and didn’t push for EU action on cheap Chinese imports.

The future for the steel industry now looks underwhelming at best and irreparable at worst, with its prospects damaged by the ‘irrevocable loss’ of capacity and skills. The report doesn’t shy away from judging the government – saying that given the importance with which ministers themselves have held the steel industry, it was ‘regrettable’ they were not able to give more attention to investigating the potential for maintaining existing facilities and preserving the skills base.

When the SSI plant’s closure at Redcar in October did spark the government to take more urgent action, the response was found to be inadequate. Instead of looking at what could be done to save the plant, the government focused on compensating those affected.

‘Industry isn’t looking for a hand-out, it’s looking for a level playing field: for too long there was little action from the government, with some asks from the industry taking years, if at all, to deliver,’ Wright added.

The Department for Business, Innovation and Skills pointed out that SSI UK had lost over £600m in three years, had accumulated even greater debts and the price of the steel it produced had halved in just the past year. ‘If the BIS Select Committee had a magic bullet that could have saved the plant against these conditions, they certainly kept it to themselves,’ it concluded rather pointedly.

Steel manufacturers have been seeking specific policy changes on business rates, energy prices, procurement and emissions for some time. But if the response to this report is anything to go by, they may be left wanting. 

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