Government Intervention in Steel Industry Criticized
A prominent former advisor to Margaret Thatcher has branded the government’s recent efforts to rescue the UK’s steel industry as a “tragedy,” asserting that the intervention is detrimental to both workers and taxpayers.
Lord Redwood, who previously headed the former Prime Minister’s policy unit, ed concerns that a complete abandonment of blast furnaces could leave the nation vulnerable. “If the UK abandons blast furnaces, every time we need steel for a warship or for defence supplies, we will need to find enough old saucepans and end-of-life cars to put the steel into the melting pot,” he stated.
Costly Nationalization and Uncertain Future
Last year, emergency legislation was enacted, marking the first Saturday sitting of Parliament since the Falklands War, to halt the closure of British Steel’s blast furnaces. This legal maneuver enabled the nationalization of the company. According to the public accounts committee, the financial support extended to the company had reached £484 million by the previous month.
Lord Redwood highlighted the significant financial burden, saying, “The British Steel tragedy is costing UK taxpayers a fortune at a time when the government needs to control its spending and get better value for money.”
Analysis from the National Audit Office indicated in March that maintaining the operation of British Steel’s Scunthorpe site, which houses the UK’s last two blast furnaces, incurs a daily cost of approximately £1.3 million.
Dual Financial Pressures and Employee Concerns
The government is reportedly facing significant financial strain on two fronts: attempting to curb operating losses and addressing demands for compensation from China. Lord Redwood added, “Worse still, the employees who were told their jobs are saved are in the dark about how long the government will go on operating these furnaces and paying the bills.”
The Conservative peer criticized the government’s strategy, deeming it “bad for taxpayers, bad for the employees and bad for the ministers that took the bad decisions.” He emphasized, “We all want to keep the jobs and keep UK virgin steelmaking capability. This is not the way to do it.”
Net Zero Policy’s Impact on Industry
Lord Redwood also directed criticism towards the government’s net zero policy, arguing that it has inflated energy prices and is consequently sacrificing key industries. “Our steel industry, like ceramics, petrochemicals, glass, fibreglass and much else, is being sacrificed on the altar of decarbonisation and dear energy,” he contended.
He explained that losses at the Scunthorpe plant are exacerbated by energy costs significantly higher than those in China or the US, countries that do not restrict their use of coal, oil, and gas. “The UK’s mad net zero dogma says we should not burn it ourselves but should import all the things that need someone to burn fossil fuel instead,” he observed, adding that this practice increases global carbon dioxide levels due to increased diesel and aviation fuel consumption for imports.
Tariffs and Future Outlook
While increased tariffs on imported steel are set to be implemented next month, Lord Redwood remains unconvinced of their effectiveness in aiding UK steelmakers. He warned, “Adding high tariffs to imported steel as the government is now doing to try to protect the nationalized business will drive more UK steel users out of work and their employees out of jobs.” He urged a swift change in policy, stating, “The government needs to change its stance quickly while there is still some steel industry left to save.”
Government Response
A spokesperson for the Department for Business and Trade affirmed the government’s commitment to the sector. “Securing the long-term future of the UK steel sector is in our national interest,” the spokesperson stated. “While this will require both public and private investment, we’ve taken the first step towards securing steelmaking by introducing legislation which will grant us powers to take ownership of British Steel.” The department acknowledged the challenges faced by the sector regarding energy costs, noting that the modern Industrial Strategy is aimed at reducing electricity expenses for industries across Great Britain, including steel.
