Unfortunately the UK steel industry has started 2016 in as challenging a situation as it ended 2015. Since the PM responded to my request for a Steel Summit (which was held in October) the situation has got worse rather than better. And this week has seen job losses announced both by Tata in South Wales, Hartlepool and Corby and at Sheffield Forgemasters. Steel MPs secured another debate in the House of Commons yesterday to urge the government to do more to support the UK steel industry. In my contribution I reflected on the Conservative Government’s response to the asks from UK Steelmakers and trade unions and urged them to do more. Here is an update on what has been delivered in relation to the asks:
Reducing energy costs: 3 years after it was promised the Government has now cleared the way for giving compensation on the Carbon Floor Tax to steel producers. Even with this compensation steel producers in the UK will pay more energy taxes than their competitors in Europe and at the moment no money has yet reached any steel producer. So the Government is to be applauded for finally moving on this but it still needs to move faster.
Tackling procurement so that UK steel used in government funded projects: The procurement guidance has been re-written and is much improved but until this guidance is used it will only be worth the paper it is written on. Government needs to follow this through and make sure that contractors on Government funded projects are using the guidance and that UK steel is benefiting. The news this week that EDF does not appear to be following the guidance in relation to Hinckley Point nuclear station is very disappointing.
Taking capital investment costs out of business rates: The Scunthorpe site currently pays around £15 million a year in business rates compared with only £3 million a year that is charged for Tata’s larger site in the Netherlands. The fear is that the government has knocked this issue into he long grass while it continues to consult on a new way forward for business rates.
Finding ways for government to support investment in new skills and technologies: Positive discussions are taking place about how grants or counter-cyclical loans could be used to support investment into new technologies. This needs to come to fruition otherwise we will get more cases where contracts are going abroad – such as a recent defence contract – because the right sort of steel product can’t be made in the UK. It is also important that we continue to invest in new skills and there is a real danger at the moment that precious engineering and technical skills will be lost to the industry and not be there when needed to take advantage on new demand.
Tackling Chinese Dumping: The Conservative Government has been reluctant to take action to protect the UK market from imports from Communist China. Under pressure it has supported limited steps in the EU to take some action but there is a need to go much further. There is a real worry within the UK and EU steel community that China will be granted Market Economy Status by the EU and that will result in more Chinese steel being dumped in Europe. It is the UK and Germany that are currently acting as cheerleaders for Communist China in Europe.
To be fair to the Conservative Government they have moved from a position 6 months ago when they were unwilling to recognise a problem to a position now where they are making all the right noises. We now need these warm words to be translated into effective action. It is a job started not a job finished.
With fellow local MPs and North Lincolnshire Council Leader I met with Greybull Capital yesterday. They were very positive about the management and workforce at Scunthorpe who they believe are worth investing in for a positive future. Tata and Greybull are currently aiming to conclude the due diligence process and transfer of ownership by the end of March 2016. This is a challenging timetable. The devil will be in the detail and I suspect it won’t all be plain sailing. But I have had discussions this week with each of the key stakeholders in the process: Tata, the trade Unions and the government. All of them are keen for the process to be successful but each of them recognises there will be difficult issues to deal with.
In relation to the current job losses locally the Task Force has been effective in bringing together all the key partners to give maximum support to steelworkers and their families affected. The trade unions and management, in particular, are to be congratulated on managing a very difficult situation as effectively as possible. There is another Jobs Fair on Friday 29 January 2016, 10am – 4pm