IAIN WRIGHT: Action needed to save steel industry

A reader says steel used in the HS2 project should  be made in the UK. See letter
A reader says steel used in the HS2 project should be made in the UK. See letter

There was a further bitter blow this week to the Hartlepool economy and the wider British steel industry, as Tata announced 62 job losses at the town’s pipe mill.

This is part of a wider programme of redundancies, involving over 1,000 job losses at steel plants across the country, including 750 at Port Talbot in South Wales.

My initial concern is for the 62 workers who are about to lose their jobs. This is naturally a truly anxious time for them and their families.

There is a parliamentary debate about the future of the steel industry later this week, and I will ask the Minister directly if special support will be given to these workers.

However, these job losses have an impact much further and deeper than the people directly affected. Hartlepool’s economy suffers, because these workers and their families will understandably be spending less in the town. Many of the workers may consider moving away to secure new employment, which results in a further reduction in Hartlepool’s economic strength.

There is also a major blow to the capacity and capability of the British steel industry. It seems that a day doesn’t go by when further job losses in the industry are being announced. We have had the closure of SSI in Redcar and job losses at other Tata plants at Scunthorpe and Lanarkshire. Sheffield Forgemasters, a specialist steel supplier, has in the past couple of days announced 100 job losses.

It is clear that the British steel industry is in real crisis. Wave upon wave of job losses and plant closures have undermined the very survival of the entire industry in the UK.

There are a number of reasons for this. The Chinese economy is slowing down, and the capacity of the Chinese steel industry to use their own steel production domestically has reduced. This has led to Chinese steel being unleashed onto the world markets, meaning that the price of steel has halved.

In addition, the price of oil has recently plummeted, from about $100 a barrel to below $28 this Monday. While this might give a bit of a boost to motorists in the form of cheaper petrol, it does have implications for our manufacturing capability.

Oil companies are halting investment, and given that most of what Tata pipe mills in Hartlepool produce is used in the oil and gas industry, that fall in the oil price has very serious repercussions in terms of job losses in the town.

So can anything be done? Are these just global forces which can’t be addressed?

I’m not suggesting that the British Government can control the global price of steel or how much the price of oil is traded on the world’s markets.

However, the Government could try to level the playing field between the price of producing steel in Britain and in the rest of Europe. Energy costs and business rates mean that producing steel is much more expensive in Britain than in the likes of France, Germany or the Netherlands.

In addition, the cheap Chinese steel has been alleged to have illegal subsidies, meaning that it is being sold cheaper than it costs to produce. Britain should be doing more in Europe to ensure that this matter is dealt with effectively.

I chair the Business, Innovation and Skills Select Committee in Parliament, and just before Christmas we produced a report into the Government’s report into the steel crisis. We found that a lack of action on the part of the Government, in contrast to other European countries, has helped leave the UK heavily exposed to cheap Chinese steel. We also found that the prospect of future growth in the steel industry has been seriously damaged by the loss of capacity and skills. We on the Committee believed that the Government should have done more to maintain existing facilities and preserve the skills base to ensure that when the upturn comes, skills, jobs and assets have been retained for the benefit of Britain. That seems even more relevant in the light of this week’s of job losses.

The British steel industry should be seen as of strategic importance. However, day by day, we are witnessing further declines in the industry. Unless concerted action is taken, I’m afraid we might be seeing the last days of steel being produced in our country.