The current crisis in United Kingdom steelmaking has exposed the ‘northern powerhouse’ for what it is truly is – a sham. Behind the government’s claims to be creating a ‘march of the makers’, rebalancing the economy away from financial services towards manufacturing and regional growth, stands a laissez-faire government with no interest in supporting strategic national industries. In the face of a challenging global steel market, they have stood by and let British industry bear the brunt of the economic headwinds from China without protection.
In my constituency of Redcar on Teesside the full consequences of government inaction have been felt. 175 years of steelmaking came to an end in just 10 days with the immediate loss of 2,200 jobs and thousands more in the supply chain now at risk. The second largest blast furnace in Europe is being left to go cold instead of being mothballed and the productive coke ovens have been allowed to collapse before interested parties could prepare a proper bid. It is industrial vandalism at the hands of a government who do not value our manufacturing base and the skilled jobs it provides. The crisis now threatens to embroil the whole of UK steel as other firms slash jobs.
It does not have to be this way. While it is true many of the global pressures on the industry are out of state control, there are steps the government could have, and still can, take to help the industry develop resilience in a turbulent market. They just need the political will to do it.
Action on business rates and energy compensation would level the playing field with our European competitors. Working with Europe to implement anti-dumping measures to protect our industry from cheap, subsidised Chinese imports as the United States has done to great effect. An active industrial policy that ensures British steel producers can benefit from procurement in national infrastructure projects. Not slavishly following European Union regulations to a degree not matched by other member states.
It is to mine and my colleagues’ frustration that they have sat on their hands and not acted sooner. UK Steel, Community Union and members of parliament have been calling for action for months. When the government eventually called a steel summit to address the crisis, on the back of demand from Labour MPs, it was held after the official receiver had announced the closure of Redcar steelworks. A minimal investment in the plant could have given the breathing space to address the crisis, find a buyer and secure its future.
Ministers are now going out of their way to court Chinese investment, offering up contracts on UK infrastructure projects like HS2 and nuclear power. Steel has a role to play in all of this. On Teesside it was also at the heart of plans for Europe’s first industrial carbon capture and storage network. Instead, the British steel industry is left fighting for its survival amid a flood of cheap steel from subsidised Chinese furnaces.
Throughout the crisis the minister responsible for the ‘northern powerhouse has been noticeable by his absence and a passing reference to the crisis as ‘a tragic distraction’. It appears the project is nothing more than a brand, upon which ministers can hang good news stories. Our steel industry needs more than just warm words and empty promises. It needs government to actively support British industry and manufacturing. If they can find the will, it is not too late.
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Anna Turley is member of parliament for Redcar and shadow minister for civil society. She tweets @annaturley
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Cutting business rates and green taxes would help but not in a timeframe that would assist Redcar now. I’ll gloss over who put those green taxes in place in the first place, as Ms Turley did.
It cost SSI £1bn to take Redcar out of the mothballed state it was put into by Tata in 2008 so doing so is not a magic bullet. The liquidators would have needed to consider whether there was any realistic chance of a future investor being willing or able to make that sort of investment to bring Redcar back into production. Given that SSI seemed to be at risk of not even paying workers for their final weeks of work and redundancy payments the costs of mothballing the plant probably weren’t something they could bear without breaching their statutory obligations to their workers.
Anti-dumping cases take a long time to work their way through the processes and there hasn’t been anything published to show that the Chinese (or others) have been selling steel in the UK at below production cost.
“An active industrial policy that ensures British steel producers can benefit from procurement in national infrastructure projects.” – what does this even mean? It is simply illegal for the UK to devise procurement strategies which guarantee the use of British steel. One of the more prominent cases of HMG trying to favour domestic production was in the procurement of the windows for MPs’ offices where ultimately there was a successful challenge from French glass companies.
And ultimately, there was no room for the government to provide any aid for rescuing or restructuring SSI in Redcar and paying the costs of mothballing would have fallen within that definition. Ignoring EU law or interpreting it favourably to the national interest would not have been realistically possible because here the law is so incredibly crystal clear – rescuing steel works from bankruptcy has been illegal since 1952 (or in our case since we joined the EEC). https://botzarelli.wordpress.com/2015/10/20/steel-yourself/
I wonder whether Ms Turley will be campaigning for EU exit. Or perhaps learning a bit about EU state aid and procurement law then being brave enough to tell things to her constituents in a straight way rather than to sound like she’s helping them but in fact having absolutely nothing to offer in practice.
Although I am perfectly comfortable in letting the Conservative governments accept blame for this state of affairs, I cannot but help think that the roots of the problems lie with previous Labour strategies built into the twin Blair thinking of absence of any industrial strategy (other than the market) and complete paralysis in the face of the EU excuses for never acting independently. I suspect it is going to take so many similar painful lessons for working people before most Labour MPs wake up from their stupor. Let’s hope it happens before UKIP replaces them in former industrial areas.