The future for UK steel

Apparently Tata are losing £1million every day on their UK steel operations. It is not surprising therefore that they are considering the viability of keeping the plants going. It has been suggested that the Government should take over the UK steel plants. There are problems with this idea though. Firstly, our membership of the European Union would prevent it because of the state aid rules. Secondly, if Tata cannot make steel profitably what is there to suggest the government could. The reality is that too much steel is being produced in the World for present consumption levels. The result is that the price falls. UK manufacturers who use steel are benefitting from the lower steel prices and would not take kindly to being forced to buy higher priced UK produced steel. This might mean they would have to increase the prices on their products and if they then cannot sell them perhaps they too would be looking to the government to bail them out.

Understandably, people recall the fact that two banks were given state aid during the banking crisis but what people do not mention is that since then the banks in question have seen massive changes and huge cuts in the workforce. The bailout was not a cost free option.

Published by David Nuttall

Business and Political Consultant

5 thoughts on “The future for UK steel

  1. David,

    What stops our government intervening in this sector, yet we could be involved in the banks ?
    Why can France partially own EON, for example and yet our hands are tied ?

    Why are we supporting China’s rights within EU, whilst they have risen the cost of our steel within China ?

    Why can’t we commit to using our steel, within infrastructure changes within this country, our extra cost must surely be out weighed by the benefits of high skilled/high paid jobs and the spending power that brings the relevant areas ?

    Do you think the business secretary has the right knowledge base/experience to be handling such a task as this ?



    1. Dear Steven,
      Thank you for your query.EU rules prevent governments from providing state aid to private companies without EU approval. This is what happened with the banks. The EU ordered that as a result of the aid being provided the banks would have to be broken up which is why TSB was separated from Lloyds and why Williams and Glynn Bank will separate from the Royal Bank of Scotland. I suspect that the French government has always had a stake in EON so the rules would not apply. Just as for example the UK government owns Channel 4.
      I do not agree the Government has been supporting China in the EU.
      The government has gone has far as it can under EU rules in requiring the public sector to consider using steel produced in the UK.
      Finally, I do think the Secretary of State has sufficient experience in these matters. like all Ministers he will also have many highly paid civil servants advising him.

      1. David,

        Thank you for taking the time to respond,

        It was good to see the government offering to own upto 25% this week hopefully that will help find a buyer,

        I just hope that this urgency when it comes to manufacturing etc continues as now U.S. the time we need the focus,



  2. Strategically (defence) there must be some argument for the ability to manufacture our own steel. Pity Mrs T bought ‘the market/competition etc.,’ bit as the be all and end all. What is a shame is that no politician of any colour stays in power long enough to have a strategy! The E U as you well know won’t let you subsidise anyway, except when you live in France or Germany and then it’s OK to own Utility companies and support as required. Ahh what a waste – makes you wanna weep!!!!!!

  3. the reality is your party are courting the Chinese so will do anything to curry favour, hence the block voted for on steel penalties via the EU.

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