The government has acted too slowly in seeking EU approval of a compensation package for the UK steel industry, the head of the industry’s leading trade body has said.
Giving evidence to MPs at a hastily convened select committee to discuss the steel crisis yesterday, UK Steel director Gareth Stace said business secretary Sajid Javid should not have waited to ask the European Commission for approval for the government’s energy-intensive industry compensation package.
Mr Javid was due to meet Brussels officials today (28 October) to ensure the compensation scheme, which would help steel manufacturers pay green levies on energy bills, does not fall foul of EU state aid rules.
Mr Stace told MPs: “The process cannot take three or four months; the secretary of state needs to come back tomorrow from Brussels with a political outcome that says, ‘Yes, we’re going to get approval and the government is going to start paying the package in full.’”
Asked by the committee whether Mr Javid should have gone to the EU sooner, Mr Stace said: “Yes, the application [to approve the package] has been in since the beginning of this year.”
He added: “This application is a simple application… so why did this process not take a month or two, not months and months and months? It could take months and we just don’t have that time.”
According to Mr Stace, the inability of the government to deliver the compensation package is costing the UK sector £4.5m in energy bills each month.
Speaking at prime minsiter’s questions today, David Cameron pledged to refund manufacturers in full the costs of complying with EU energy regulations if the commission ruled the relief package was legal.
During yesterday’s committee hearing, Tata Steel human resources director Tor Farquhar said: “I cannot recall a time when [the situation] has been graver.”
Tata recently axed 1,200 jobs from plants in Scunthorpe and Scotland, the latest in a series of cutbacks across the UK for the steel giant this year.
Mr Farquhar said that, while there were no immediate plans for more plant closures, he could not rule out further job losses, adding: “We are under massive pressure.”
The government last week announced a £9m support package for those affected by the job losses in Scunthorpe.
Another 2,200 jobs were lost on Teesside when SSI closed its Redcar mill earlier this month.
Tom Blenkinsop, MP for Middlesbrough South and East Cleveland and chair of the all-party group for steel and metal-related industries, echoed Mr Stace’s warning.
He said the industry “is in one of the most grave situations it’s ever been” and brought attention to the “unprecedented” level of imports – the so-called ‘dumping’ - of steel from China.