Rhetoric and Reality

Grahame Morris writes:

There is no better illustration of the gap between the rhetoric and reality than the Government’s failure to support our steel industry. The UK steel industry is in crisis.

While George Osborne was in Shanghai this week selling the UK energy sector to the Chinese Government, steel production on Teesside could come to an end after 160 years.

One of the main reasons cited for the steel crisis is the action of China dumping excess steel onto international markets.

Eurofer – the organisation that represents European steel producers, stated:

“Chinese import pressure and unfair trade practices are certainly the root causes underlying the pressures that steel plants, such as Redcar, are facing. China now sells its excess steel to the EU at prices that do not even cover the costs for raw materials and material transformation.”

The closure of the UK steel industry would result in the direct loss of 30,000 skilled jobs as well as impacting thousands of jobs in the supply chain.

The loss of steel production in the UK would be acutely felt in our industrial heartlands, which are already blighted with high unemployment and a lack of highly skilled jobs.

The North East would be particularly vulnerable, with steel production already suspended on Teesside.

There will be irrecoverable damage to our regional economy with the weakening of our manufacturing sector undermining efforts towards rebalancing the economy.

The UK Government cannot continue to watch from the sidelines uninterested. Other countries have recognised the importance of steel.

In Italy the steel industry has been nationalised, while other countries have addressed issues relating to costs, taxes and imports.

While other countries intervene to support their industry, UK steel producers face a financial penalty in excess of £400 million a year compared to competitors due to exchange rates, energy costs, air pollution targets and business rates.

These additional costs, alongside Chinese steel dumping have limited the export market, while also undermining the UK’s domestic market.

Despite promising to rebalance the economy, the financial and service sector led recovery has left steel consuming sectors like construction at below recession levels. A failed unbalanced recovery has left UK steel demand at 75 per cent below pre-recession levels.

The Government’s insistence on a fully open domestic market has left UK steel production vulnerable to unfair trade practices and a refusal to support the industry by promoting smart local procurement to address the decline in domestic use of UK steel which now accounts for only 20% of the market, compared to 90% in the 1970s.

The loss of UK steel would further erode the UK’s manufacturing base and leave the Government’s promise of a Northern Powerhouse in ruins.

The economy will never be rebalanced if the Government sits idle during a crisis in UK manufacturing and allows the long-term competitiveness of the UK economy to be undermined.

It would cement the decline of UK manufacturing, resulting in the further loss of skilled employment, as well as damaging research and development within the UK, which is nearly wholly based in the manufacturing sector.

The Chancellor has chased headlines with his Northern Powerhouse rhetoric and now families in steel producing communities are demanding real action.

Therefore, I would urge the Chancellor to use his time in China to do more than just sell off UK energy production and access to our financial markets, but to support and promote the real economy and ensure the UK retains what is remaining of our manufacturing base.