Commenting on the announcement by SSI of a halt in production, Gareth Stace, Director UK Steel, said:
“This is an extremely worrying development. It comes just 24 hours after the Government agreed to hold a crisis summit about the UK steel industry and this cannot happen soon enough. I trust ministers will put in place the machinery to get on with this as a priority and that they will bring tangible offers of support. The time for warm words has passed.
“I am pleased that the Business Minister, Anna Soubry, has said in Parliament that she and the Chancellor will make representations to the Chinese Government about the issue of Chinese steel being dumped in the European market, when they visit China next week.
“There are other measures the Government can take now to help ease the problems facing the entire UK steel industry. If they don’t act decisively, then the damage to one of the most important industries underpinning our entire manufacturing sector will be irreversible.
“In the short-term we need a clear indication from Government that it will honour its commitment to compensate steel and other energy intensive industries from the cripplingly high cost of energy – and to do so earlier than April next year. Failure to do so could mark a potentially disastrous tipping point for the industry."
Notes to editors
A number of the issues currently impacting on the Steel industry are outside government control, the exchange rate for example. However, there are five key actions that government can take, in the very short term, where it can demonstrate its commitment to the steel industry.
- Fully implement the EII Compensation Package, ahead of the committed April 2016. The sector is currently still paying 70% of the policy costs that the full Package aims to address
- 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
- Fully consider derogation requests from the sector on a realistic timetable to meet its 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
- Continue to support action, at an EU level, on anti-dumping measures, where it can be shown to support the UK steel sector, against the rapid rise in global imports
- Support for local content in major construction projects to support the UK steel sector
The introduction of the EII compensation is especially critical to place UK industry on a level playing field with EU counterparts as, in the absence of any compensation measures it is estimated that the 2015 costs of climate change policy in electricity bills would be in the region of £600 million a year to EIIs.
At the 2014 and 2015 Budgets the Chancellor committed to the introduction of compensation measures with regards to the costs of the Renewables Obligation and the small scale Feed in Tariffs. But there are growing concerns over the length of time it has taken to obtain State aid clearance as well as the security of the budget. It is imperative that the Spending Review announcement allays these worries and confirms the budget for the package.