Credit: Ben Salter/Flickr

Tata Steel is cutting another 1,000 jobs

Questions remain over whether the government's response to the steel industry's crisis is too little too late.

by Rebecca Smith
Last Updated: 01 Apr 2016

Last month the government faced a bit of a hammering for its slow-moving response to the steel industry’s concerns and the situation seems to be worsening. Tata Steel has announced another 1,050 cuts today, following the 1,200 it chopped back in October – blaming plummeting steel prices.

This next round of cuts will be felt hardest at Port Talbot, where 750 workers are to lose their jobs, apparently in an effort to save the Welsh site. It is currently the biggest steel plant in Britain but is reportedly losing £1m a day.

In the last six months, about a sixth of the steel industry's workforce has been laid off. Speaking to the BBC, Gareth Stace, the director of UK Steel, said the job losses were ‘[another] wake up call... to the government’.

The closure of SSI's Redcar plant in October did trigger government action, but a report from parliament’s Business, Innovation and Skills (BIS) committee said politicians didn’t do enough to consider what could be done to save the plant – instead focusing on compensating those involved.

First Minister Carwyn Jones has ruled out direct intervention, saying it would be too expensive for the Welsh government to take a stake in Tata - 'we're talking here about many millions of pounds'. In a debate on BBC Radio Wales, Jones said, 'We need to make sure the UK government comes forward with an effective package on energy costs'.

The government hasn’t been totally inert; there have been emergency summits and at the end of last year Britain secured EU approval for rebates on companies' energy bills  a boost long sought-after by the industry.

The government pledged action to help, but as a rebate on green levies to industries is considered state aid under EU rules, the subsidy needed approval from Europe. The aid is expected to cover between 60 and 70% of the industry’s green taxes – cutting its power bill by around £3.9m a month. It was an important step, but the continued sorry state of the industry does beg the question whether the government has done enough.

As China’s economy is slowing and its appetite for steel is falling, Britain has been feeling the effects of an international market swamped with Chinese exports. Tata (along with other firms) has complained about China selling its steel at scale and at a loss and wants that stream of imports restricted.

The government response to the BIS report was that it couldn’t dictate ‘the commercial decisions, operations or financial performance of private companies’ and was doing ‘all it can to help the industry’. But to many in the sector that doesn't look like very much.

It may be thinking the market should be left to resolve itself, but the government hasn't yet voiced such a definitive position. As it stands, drip-feeding help is leaving the industry frustrated at what appears an uncommitted, half-hearted approach to a bleak situation.

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