Member Article

Government criticised for ‘slow reaction’ to steel crisis by MPs

A parliamentary committee has said the the UK government ‘failed to be alert to the alarms raised by the [steel] industry’ and act to maintain the sector while other European countries safeguarded their own strategic steel industries.

The crisis that saw the closure of several steel plants in the UK including SSI in Teesside and Tata Steel in Scunthorpe and Scotland, resulted in more than than 5,000 job losses this year.

The government not respond to the steel industry’s warning signs, including reduced demand, falling prices and international competition from the likes of China, according to a report backed by all MPs on the business, innovation and skills committee.

Iain Wright, the Labour chairman of the committee, 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.”

Wright continued: “My concern is that the government should have explored much more thoroughly options to keep the Redcar plant open to retain the industrial assets and the skills rather than washing its hands too quickly, allowing it to close down and inflict severe damage on future manufacturing capability.

“Failure to consider effective mothballing not only undermines capability for the UK steel industry in the future but could cost the taxpayer a fortune in clean-up costs.”

The committee blamed complacency from successive governments for the failure of the steel industry, but it noted that the the current government was slow to act on proposals put forward by the sector, including breaks from business rates and high energy bills.

Wright added: “The government has 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.”

“While 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.”

The official rejected the committee’s criticism over the government’s handling of Redcar’s closure and said SSI UK had suffered £600m of losses in three years and amassed high debts.

“If the select committee had a magic bullet that could have saved the plant against these conditions, they certainly kept it to themselves,” the official added.

This was posted in Bdaily's Members' News section by Ellen Forster .