North East Connected

I’m steeling myself to fight for Tata’s British workers

Business Secretary writing in the Sunday Times.

On Friday I had the privilege of meeting some of Britain’s hardest-working men and women.

The people of Port Talbot, many of them second or even third-generation steelworkers, are quite rightly immensely proud of what they produce. For more than a century their plant has been at the heart of Britain’s steelmaking industry, supplying raw materials for engineers and builders around the world.

Today, every can of Heinz beans, every 1p and 2p coin in your pocket, every Nissan Juke car can be traced back to south Wales. The steelworkers I met aren’t asking for much. All they want is to be able to carry on doing what they do so well. And my message to them is equally straightforward: as business secretary I have done, am doing and will continue to do everything within my power to save their jobs.

Of course, the challenges facing the steel industry are vast and complex. Around the world, production of steel is 30% higher than demand. In China alone, excess steel capacity is 25 times the UK’s entire annual production. Since Henry Bessemer created the modern steelmaking process in 1856, the UK has produced roughly 1.6bn tonnes of steel. It has taken China just 2 years to turn out the same amount.

India, Indonesia and other emerging economies have also ramped up production, using abundant local supplies of both raw materials and cheap labour. Meanwhile, demand in Europe and around the world has yet to return to pre-crash levels. And when unprecedented supply of a commodity is met with sluggish demand, prices inevitably fall, and the international price of steel has halved over the past 18 months.

Faced with this perfect storm, British steelmakers are struggling to compete. Before it folded last year, the Thai owner of the Redcar steelworks ran up more than £0.5bn of debt. Tata has invested heavily to make Port Talbot more efficient and productive, but it too is facing challenging conditions.

You can’t fix that with a plaster – a temporary patch that could peel away at any moment. What we need is a long-term, sustainable solution. One that supports Britain’s steel industry without undermining the jobs of workers in other sectors. That’s exactly what I’m working to deliver.

Since 2013, we’ve paid £160m to the UK steel industry to mitigate the impact of climate-change policy, including giving more than £50m in compensation to Tata. But I want to go further, so in the autumn statement we announced a lasting exemption from climate-change costs for the steel industry, a move that will save the sector £400m by 2020.

I’ve been working with the EU to protect our steel industry from unfair trading practices, including demanding higher tariffs on some Chinese products. Measures imposed in January on reinforcing steel bar imports are already starting to have an effect: imports in January 2016 were 99% down on the same period last year. The UK demanded, and secured, special flexibility over the imposition of new EU emissions rules, protecting the steel industry from another burden it can do without.

And under measures announced today, British steel companies will be able to compete on a level playing field for contracts across the public sector. Last October, we changed the rules so that all central government departments must consider the social and economic impact of the steel they source across all major projects. Now we’re extending that rule to the entire public sector. With £300bn due to be spent on major infrastructure projects over the next 5 years, this will let all buyers take into account the true value of British steel.

Contractors working for the public sector will also be required to advertise their requirements for steel so that UK firms can compete.

I’ve also set up and will co-chair a new Steel Council, bringing together government, industry and unions to plan the best route to recovery for Britain’s steel industry. It’s all about taking real action designed to save jobs, which is precisely why I’ve been I’ve been in near-constant contact with the senior management of Tata since I took up this post last May, building relationships and underlining my support for the sector.

That groundwork paid off a few weeks ago, when I was told by Tata that it was considering the immediate closure of Port Talbot. In the days that followed I worked relentlessly to convince them that it was in everyone’s interests to keep the plant open and find a new buyer. I also made it very clear that the government will do everything it can to help attract a buyer, to support the new owners and to make sure steelmaking continues at Port Talbot as it has done since 1904.

Unlike some previous business secretaries, I’m not a career politician. I spent most of my adult life in international business, working with large employers to help them secure investments and create jobs. I know how they work, I know what makes them tick, and I know how they like to do deals.

I’m using every ounce of that experience to work with potential buyers and deliver a viable solution that creates a sustainable long-term future for the sector. There are no easy answers and the challenges we face are great, but I will continue to give everything I’ve got to save our steel.

The people of Port Talbot, and other steel communities across the UK, deserve nothing less.

Original article published in the Sunday Times.

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