Skip to main content

UK Steel Industry

Volume 600: debated on Tuesday 20 October 2015

The steel industry across Europe and around the world is facing challenges on a scale unprecedented in recent history. The situation facing the people of Redcar, Scunthorpe, and other communities across the UK where the local economy is built on steel is unbearably difficult.

There is no straightforward solution to any of the complex issues involved, but this Government have no intention of simply standing aside.

We have already announced a package worth up to £80 million to support people who have lost their jobs as a result of SSI’s liquidation, and to mitigate the impacts on the local economy.

We have asked Amanda Skelton, chief executive of Redcar and Cleveland council, to chair a local task force. We have ensured money is in workers’ pockets quickly via the redundancy payments service. We have brought workers and opportunities together at a jobs fair, at which more than 1,000 vacancies were showcased by more than 50 local employers. We have provided additional flexibilities to local FE colleges to allow people to take up training to enhance their future job prospects. And we have set aside money to fund those proposals from the task force which will make an immediate and lasting impact on the local economy.

We will do what we can to soften the blow of any further redundancies among steelworkers.

Alongside our immediate help for laid-off steelworkers, we are also taking steps to ensure there is a future for Britain’s steel industry in what is an exceptionally difficult market. Excess capacity in global steel is enormous—about 576 million tonnes last year, almost 50 times the UK’s annual production. The price of steel slab has fallen by a half in the past year alone. And in the three years since SSI restarted production at Redcar, the plant has lost more than £600 million.

There are limits to what we can do in response. No Government can change the global price of steel or dictate foreign exchange rates.

To identify where progress can be made, on Friday I hosted a top-level summit with the key players from the UK steel industry. Bringing together industry leaders, trade unions, Members of Parliament and senior figures from Government, the summit created a framework for action that will help us to support steelworkers now and in the future.

We will drive up the number of public procurement contracts won by UK steel manufacturers and their partners through fair and open competition. This Government are committed to a major programme of infrastructure spending, and while we must always secure the best possible deal for British taxpayers that does not have to mean the lowest price. The new Public Contracts Regulations give us more scope to offer greater flexibility around how we include social and environmental considerations in our procurement activities. We intend to help other Departments and business take full advantage of these flexibilities building on what was learnt from projects like Crossrail.

We will consider what lessons can be learned from other countries in the EU and beyond. This will include the resilience of the steel sector in competitor countries and market penetration of national manufacturers.

We will look at what Government can do to boost productivity and cut production costs. This includes addressing energy and environmental costs, regulation, skills and training. An extensive review of business rates is already under way and the Government will look very closely at all proposals.

These steps will come on top of action we have already taken. For example, we have already paid out more than £50 million in compensation to energy-intensive industries in the steel sector. We also plan to offer further compensation in respect of feed-in tariffs and the renewables obligation; this constitutes state aid, which must be approved by the European Commission. The approval process is under way but it is taking longer than anticipated, and longer than I would like. My Department is working closely with the Commission to answer their concerns and impress upon them the importance of prompt approval.

I also plan to meet Commissioners next week to reinforce our concerns about unfair trade issues and gain their support for further action. We have already taken action by voting to support the extension of duties on wire rod and will continue to consider future cases on their merits where there is clear evidence to support doing so.

We showed, following SSI’s closure, that we will not hesitate to support local partners in dealing with the impacts of large-scale redundancies. I am sure that also applies in Scotland and Wales where some of the responsibilities are devolved.