Government criticised for failing to act over steel industry alarm bells

The former SSI plant in Redcar.
The former SSI plant in Redcar.

The Government has been accused of failing to be alert to alarms raised by the steel industry before firms starting cutting thousands of jobs.

A committee of MPs said other European countries took action to safeguard their steel industries, but there was “little action” from the UK Government.

Thousands of jobs have been lost in recent months, including at steel company Caparo, based in Brenda Road, Hartlepool, and following the closure of the SSI plant in Redcar.

The Business, Innovation and Skills Committee also criticised UK governments for failing to push for European Union action, which it said left firms exposed to the dumping of cheap imports from China and a global over-supply of products.

The European Commission last week approved state aid compensation for energy-intensive industries which is estimated to be worth £300million a year, including £45million to steel companies.

The Government said the move would give steel firms greater certainty around energy costs.

But the committee said Whitehall did not have effective warning systems in place to detect and tackle mounting problems in the industry.

The report said the Government’s initial response focussed on compensation for the workers rather than trying to save the plant.

Committee chairman Iain Wright, the MP for Hartlepool, said: “The steel industry is now on the verge of terminal decline.

“For too long, the Government failed to be alert to the alarms raised by the industry and act at home to maintain a steel industry in the UK when other European countries were acting to safeguard their own strategic steel industries.

“Industry isn’t looking for a hand-out, it’s looking for a level-playing field. For too long there was little action from the Government, with some asks from the industry taking years, if at all, to deliver.

“The Government have now woken up to the steel crisis and have begun to take action, but this recent activity still needs to translate to concrete results for the industry and the communities they sustain.

“The Government have relied on crisis management rather than ongoing engagement with the steel industry.

“Steel is a strategic industry and ministers have recognised its strategic importance. The inaction with steel doesn’t bode well for other strategic industries if they were to face a crisis.

“Lessons need to be learned from steel. The Government therefore needs to take a far more active approach in the future in assisting British industries and manufacturing.”

The committee said the issue of Chinese dumping will have to be tackled if the UK steel industry is to have a viable future.

Gareth Stace, director of UK Steel, said: “This is a welcome and supportive report from the committee which highlights the highly damaging cocktail of factors which have hit the steel industry during the course of this year.

“The key is for government and all stakeholders to work together on delivering action to ensure we have a sustainable future for the steel industry in the UK. It is essential we do not lose the current momentum.”

Roy Rickhuss, general secretary of steelworkers’ union Community, said: “Only in recent months has the government been stirred into action and even now it remains to be seen just what will be delivered.

“The compensation for energy intensive industries that was delivered last week was a long time coming. Meanwhile we have seen thousands of jobs be threatened or disappear.”

A Business Department spokesman said: “While the Government is doing all it can to help the industry, the government cannot dictate the commercial decisions, operations or financial performance of private companies.

“SSI UK had lost over £600 million in just three years, had accumulated even greater debts and the price of the steel it produced had halved in the past year alone. If the BIS Select Committee had a magic bullet that could have saved the plant against these conditions, they certainly kept it to themselves.”