Government accused of 'little action' over safeguarding steel industry

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.

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 £300 million a year, including £45 million 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.

Thousands of jobs have been lost in recent months, including the closure of the SSI plant in Redcar, and cuts in Scunthorpe and Lanarkshire.

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 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.

"Immediate priorities are the tackling of Chinese dumping of cheap steel at EU level and a firm commitment from Government to ensure that all major procurement projects, from rail to tidal barrages and airports, use British steel to give this vital UK industry confidence for the long term.

"Business rates must also be reformed to avoid some of the penalties steel companies and other manufacturers face if they invest in plant and machinery."

Unite national officer Harish Patel said: "Inaction by the Government at an industry-wide level and a failure to intervene at SSI in Redcar has seen a needless loss of skills to the steel industry and left many families facing an uncertain future.

"Our steel industry is a strategic asset to our economy and needs to be at the heart of an active industrial strategy. Government ministers have no time to waste and need to turn words into action to secure the future of the steel industry and avoid being seen as doing too little, too late.

"We must never again see a situation where a viable asset like Redcar is lost to the nation because of the Government's ideological opposition to strategic intervention."

Roy Rickhuss, general secretary of steelworkers' union Community, said: "This report is a damning indictment of the government's record on the steel industry. For years, along with UK steel producers, we have been calling for specific action to support the industry to enable it to survive and compete in a challenging global market.

"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 this report rightly recognises that the steel industry has been subject to complex global challenges which no one simple solution can solve, it also recognises the significant steps this Government has taken to help our steel industry.

"We have taken clear action on relief for energy costs, anti-dumping, procurement and EU emissions directives, meeting key industry asks.

"Whilst 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."