This article was first published on Huffington Post.
“We face a systematic industrial massacre” said the EU’s Industry Commissioner, Antonio Tajani in September 2013. Over the last year his prediction has come true. The UK’s steel industry is on its last legs, deprived of oxygen, gasping for air.
We have learnt, following a board meeting in Mumbai, Tata Steel is planning to sell or close its entire UK business. 80,000 jobs depend on the UK steel industry, 5,000 people have already been made redundant since September last year. 25,000 people are directly employed in steel manufacturing with 15,000 of them employed directly by Tata Steel. The remaining 65,000 jobs are in the supply chain.
These aren’t just jobs, they are people’s lives, with generations of families working in the same factory, and they are the lifeblood of communities throughout Britain. To keep these jobs and communities alive, Tata’s plant in Port Talbot, South Wales requires a buyer by the beginning of May. There is some suggestion the little-known Mark and Nathaniel Meyohas brothers are preparing a deal to revive British Steel – this could be announced today. The deal could include the possible purchase of the Scunthorpe steelworks. However, there is only a glimmer of hope of saving the entire company, including Port Talbot, due to the £1 million black hole in the firm’s books every single day. Any purchase would result in significant job losses, with huge chunks of the business cast aside, unless help from the Government is provided.
There has been a deafening silence from our Government for many years now on how to support our steel industry. Why is this? Because there is little they can do. The Welsh First Minister Carwyn Jones met with the Prime Minister today to discuss the issue and will apparently continue to meet, but so far, no solutions are proposed. EU state-aid rules mean it would be impossible to cut the crippling £15 million-a-year business rates at the plant. He has also said Brussels’ diktats have meant Tata Steel could only be offered relief of just £50,000 a year. (Business rates targeted at particular sectors are considered by Brussels to be selective state aid.) Then, some pension experts believe EU rules could thwart the Government providing a solution to Tata’s £2 billion pension liabilities. The former pensions minister Steve Webb has warned long-serving workers could see their pensions cut “very dramatically” if the business collapses before a buyer is found. Nearly all forms of support the Government could have given to assist our steel industry are governed by EU law. In areas where it could have acted, it hasn’t – making a bad situation even worse.
The Government could have slashed or abolished business rates for steel firms, but it will now pay the price of not doing anything; it will learn you cannot get blood from a stone. The plant and machinery should have been excluded from business rates, because this is a clear tax on investment. The rates punish steel makers, because if they were to invest in blast furnaces to make themselves more competitive, they would be hit by higher business rates.
The Government and ministers did not reduce rates or help the steelworks, because they do not care. They only care about the banks and their mates in the City. Beleaguered Business Secretary Sajid Javid summed up his position clearly: “If banks go bust there is an impact on the entire economy that every single person and business will feel. That doesn’t mean we should do the same for every single other industry.”
In fairness to the Government, there is precious little they can do while we are in the EU, as the vast majority of power is in the hands of the unelected bureaucrats in Brussels. The main problem is the Chinese dumping of steel, which has become so cheap now – we cannot afford to produce it at a competitive price. China happily sells its steel below the cost of production to keep Chinese steelworkers in their jobs – something we cannot do with the EU breathing down our necks with restrictions. As a result, China produces 800 million tonnes of steel to the UK’s 11 million tonnes. America has successfully managed to prevent Chinese dumping by increasing tariffs on Chinese steel to 266%, compared to the EU’s tariffs of a pathetic 9%. Our Government hasn’t helped either by blocking the proposal to increase steel tariffs to 66%. To add to the agony over the weekend China imposed a tariff of 46.3% on specialist steel made in Port Talbot.
We should be able to decide our own tariffs in this country by our own elected Government, which we could hold to account by voting them out in an election if they refused to introduce a high tariff. We cannot do this while we are members of the EU.
Another policy which has devastated our steel industry is the enormous hike in energy prices to comply with EU rules, which has set targets to reduce carbon emissions. Germany forces their customers to pay this cost, and the UK forces the steel manufacturers to pay it. Both options are unacceptable. We at Get Britain Out have a solution – scrap the targets!
The Prime Minister could have demanded the protection of British steel in his so-called EU renegotiation ‘deal’, by suspending the state aid rules in relation to the UK steel industry. This is a power available to the EU. But if you don’t ask, you don’t get.
Tata Steel has said it would cost £2 billion to save the steelworks in Port Talbot – a cost they are unwilling to bear. If we leave the EU we can save the net £10 billion we give to the EU every year. and spend some of it on making our steel industry competitive again, while saving many thousands of jobs. Additionally, the £172 million overspend on the foreign aid budget could keep the plant open for 6 months!
Sajid Javid held his first official talks yesterday with the metals tycoon Sanjeev Gupta – who reopened a steel mill in Newport last year. Mr Gupta has said it would take years to turn the business round, but he is apparently offering a rescue deal which could save the 4,000 jobs at Port Talbot if the government assists in his ambitious plan – running into hundreds of millions of pounds – to close down the blast furnaces, and switch to scrap metal-burning electric arc furnaces. He has said Brexit will help the steel industry as “the Government doesn’t have the freedom to act because it has to go through Brussels. Everything takes forever.”
According to London Mayor Boris Johnson, the government would be able “to rescue the British steel industry” in the event of a Brexit. He has said leaving the EU would mean “We would have more money and more freedom to rescue the British steel industry – and we might even succeed”.
A solution is needed urgently. Our Government must step in to protect our steel industry in the face of the serious problems the EU is constantly throwing at us. This is not protectionism; it is a classic example of capitalism failing because of the disgraceful policies of another country. We must fight fire with fire. It is clear this cannot be achieved while we are members of the EU. If you care about the British steel industry then you must vote to Get Britain Out in the EU referendum on June 23rd.