How many steel crises does it take to get this government to realise it needs a proper long-term industrial strategy?
That is the question many of us were asking this week as ministers were hauled in front of the House of Commons yet again to explain what support the government are putting in place to help our ailing steel industry. A crisis that first came to a head at Redcar steelworks last autumn has now embroiled mills from Dalzell and Clydebridge to Scunthorpe and Port Talbot and many plants in between, threatening tens of thousands of jobs. While this crisis has its roots in the global overproduction of steel, the government’s laissez-faire attitude towards industry has been a catalyst which now puts the bedrock of British manufacturing at risk.
For many months prior to warning signs at our steelworks in Redcar, the industry and members of parliament representing steel communities in parliament had been lobbying the government for action to tackle some of the issues holding steel producers in Britain back. We had called for support with the burden of environmental levies, especially the carbon price floor, which has hit energy- intensive industries like steel particularly hard. France and Germany introduced compensation schemes for their steel producers, but similar support in Britain has been very slow to come on-stream. Since 2013 Germany has handed out 40 times the amount of energy subsidies to its high-energy producers.
Other key demands have been changes to business rates, which also leave Britain at a disadvantage as our rates can be six times higher than those of our European competitors. As recently as the budget last month, the government missed an opportunity to correct this issue. Some progress on levelling the playing field in public procurement rules, another one of our asks, has finally started to be made. Yet still too many contracts are given to our competitors because of the cost burden on British firms, including the Ministry of Defence using Swedish steel for armoured cars and ships.
These measures would not have solved the wider problem of excess steel but had they been implemented two years ago our steelmakers would have been in a much stronger position to weather the storm.
The crux of the problem is a mentality in government, and the Department for Business in particular, that overvalues the effectiveness of market forces and undervalues the role of the state in backing British industry. Hiding behind the flimsy excuse of state aid rules are ministers who simply do not believe in using the levers of the state to ensure a level playing field for British manufacturers. Firms who simply desire a fair trading environment. Nowhere is this seen more than the government’s continued opposition to scrapping the Lesser Duty Rule which would allow a more robust response by European countries to the problem of cheap, subsidised Chinese steel being dumped on the global market.
In prioritising the courting of Chinese investment in infrastructure projects like High Speed Two and nuclear, Conservative ministers have failed to pay attention to the needs of vital UK industries. On UK steel they have been asleep at the wheel, leading to the extraordinary situation of the business secretary being on a trip to Australia while Labour MP Stephen Kinnock and Roy Rickhuss of Community trade union flew to Mumbai to meet Tata bosses about their plans to cease UK operations. Even senior figures at Tata Steel expressed frustration at the lack of action from the British government.
The battle to save our steel is a battle for the future of British industry. Steel underpins our manufacturing sector from automotive to aerospace, is a key component in infrastructure projects from HS2 to Trident, and British producers make some of the highest quality steel in the world. We cannot allow this to be undermined by contracting out our steel production abroad. Much ground has been lost by the government’s inaction but there is still time to act. British steel has a future if it develops the will to save it.
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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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