UK Steel comment on State Aid approval for EII package

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Commenting on the granting of EU State Aid approval for the Energy Intensive Industry compensation package announced by BIS today, Gareth Stace, UK Steel Director, said:

“This is a hugely significant and welcome announcement which will bring some much-needed relief to a steel sector saddled with spiralling energy policy costs which has undermined its competitiveness.

“We are relieved that compensation payments can finally now start for most of the steel sector and that we now have long term certainty of relief following the commitment to permanently exempt the sector from renewables policy costs.

“But this is far from job done. The dumping of Chinese steel continues and must be stopped.

“The business secretary has done well to deliver this first stage of the state aid package. But the Government cannot afford to let up on ensuring that all major procurement projects, from rail to tidal barrages and airports, all use British steel to give this vital UK  industry confidence for the long term. And ministers can do more by reforming business rates to exclude some of the penalties steel companies and others face if they invest in plant and machinery.

“Government must also act decisively over the next year to ensure exemption from policy costs start promptly in April 2017. We must not allow this process to again get caught up in a regulatory quagmire in Brussels.”

The package is worth approximately £45m per annum to the steel sector. In total it is worth approximately £300m a year to the Energy Intensive sector.

The measure was one of five key asks UK Steel has been campaigning for since the start of the steel crisis: 

  1. Fully implement the Energy Intensive Industry Compensation Package, ahead of April 2016. The sector is currently still paying 70% of the policy costs that the full Package aims to address

  2. Bring Business Rates for capital intensive firms in line with their competitors in France and Germany. UK companies are currently paying between five and 10 times more than their EU competitors

  3. Fully consider derogation requests from the sector on a realistic timetable to meet increased commitments under the Industrial Emissions Directive. Under current proposals, the cost of meeting revised permits for the sector are estimated at up to £500m by 2019

  4. Continue to back EU-level action on anti-dumping measures which support the UK steel sector against the rapid rise in global imports

  5. Support local content in major construction projects.

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