Redcar closure is wake-up call for steel industry

THE loss of the Redcar steelworks is a warning signal to government and industry that a hands- off approach to industry will not work. Ministers and officials, industry leaders, MPs and unions gather at a summit in Sheffield today. Business people who are used to making decisions and taking action will be expecting a lot more than tea and sympathy.

The steel industry in Britain is lean and mean. It employs 30,000 highly-skilled people and underpins many other areas of manufacturing and their supply chains. Its very survival is inextricably linked to ambitions to rebalance the economy.

Ministers can act decisively in support of the industry. That doesn’t mean subsidies or unfair state support. It means taking action to ensure that steel producers are on a level playing field with their EU competitors and are not operating with one hand tied behind their backs.

It also means rolling back some of the disproportionate policy costs that artificially inflate electricity prices, which in Britain are some 82pc higher than the EU average for heavy users like the steel industry.

We estimate that policy costs alone this year will add an additional £30 per megawatt hour to electricity bills. That equates to more than 30pc of the total costs, placing a huge burden on the sector.

This approach to decarbonisation, piling taxes and penalties on business, is at best illconsidered, at worst insane.

Because of the impact on steel and other intensive users of energy, it is a significant threat to the British economy’s long term well being.

Added to this the Chinese have been dumping their excess steel on the market. This has caused the price of steel to plummet and has provided these imports with an unfair advantage.

Ministers must commit to fully delivering the compensation package which was promised in 2014, which offsets the costs of the renewables obligation, and which would significantly cut the cost of energy for intensive users.

The full implementation of the energy inten- sive industries’ compensation package, as permitted under EU state aid rules, could cut the cost of energy by £50m a year.

Such a commitment would be a statement of intent from the Government and it would create a breathing space for steel-makers.

The Government should also look urgently at removing plant and machinery from the business rates calculation as this is adding additional costs to British manufacturing companies.

We strongly support the Government’s backing for projects from high speed rail through to new energy plants to what we hope will soon be a new hub airport.

These projects need British steel and our government must insist, as our competitors do, that they contain a proportion of local content.

It’s time for ministers to really show their ‘metal’.