Labour's attempt to rescue the steel industry has been condemned as a “tragedy” which is bad for both workers and taxpayers by one of Margaret Thatcher’s key advisers. Lord Redwood, who led the Iron Lady’s policy unit, fears that if the UK abandons blast furnaces “every time we need steel for a warship or for defence supplies we will need to find enough old saucepans and end of life cars to put the steel into the melting pot”.
Last year the Government passed emergency legislation – in the first Saturday sitting of Parliament since the Falklands War – to prevent the closure of British Steel’s blast furnaces. The change in the law allows British Steel to be nationalised and, according to the public accounts committee, by last month the cost of supporting the company had hit £484 million.
Lord Redwood's Criticism
Lord Redwood said: “The British Steel tragedy is costing UK taxpayers a fortune at a time when the Government needs to control its spending and get better value for money.” The National Audit Office reported in March that the cost of keeping open British Steel’s Scunthorpe site – which is home to the UK’s last two blast furnaces – is around £1.3 million a day.
Lord Redwood said the Government is “fighting on two expensive fronts to cut the operating losses and to see off Chinese demands for compensation”. He added: “Worse still, the employees who were told their jobs are saved are in the dark about how long the Government will go on operating these furnaces and paying the bills.”
Impact of Net Zero Policy
The Tory peer blasted the Government’s approach as “bad for taxpayers, bad for the employees and bad for the ministers that took the bad decisions,” adding: “We all want to keep the jobs and keep UK virgin steel making capability. This is not the way to do it.”
Turning his guns on the Government’s net zero policy for forcing up the price of energy, he said: “Our steel industry, like ceramics, petrochemicals, glass, fibreglass and much else, is being sacrificed on the altar of decarbonisation and dear energy. The losses at Scunthorpe are greatly magnified by our energy being so much dearer than Chinese or US energy – countries that have no restraint on burning coal, oil and gas when needed. The UK's mad net zero dogma says we should not burn it ourselves but should import all the things that need someone to burn fossil fuel instead. This of course increases world carbon dioxide levels by all the extra diesel and aviation fuel burned to get the things to us.”
Tariffs and Future Outlook
More steel imports will be hit with tariffs from next month but Lord Redwood does not believe the policy will help UK steelmakers. He warned: “Adding high tariffs to imported steel as the Government is now doing to try to protect the nationalised business will drive more UK steel users out of work and their employees out of jobs. The Government needs to change its stance quickly while there is still some steel industry left to save.”
A spokesperson for the Department for Business and Trade said: “Securing the long-term future of the UK steel sector is in our national interest. While this will require both public and private investment, we’ve taken the first step towards securing steelmaking by introducing legislation which will grant us powers to take ownership of British Steel. We fully recognise the challenges the sector is facing on the cost of energy, which is why our modern Industrial Strategy is cutting electricity costs for industries across Great Britain, including steel.”
