Scunthorpe Steel Crisis: The Future of UK Steel

An emergency episoide of 'The Bench Report today as we explore the critical debate in Parliament surrounding the future of Scunthorpe Steelworks following British Steel's worrying announcement of potential blast furnace closures and job losses. 

We examine the government's immediate response to support affected workers and their conditional offer of substantial financial aid to British Steel aimed at securing a sustainable future for the industry. 

Understand the government's strong preference to maintain blast furnace production until alternative, greener technologies like arc furnaces are operational. We scrutinise the vital role of steel in the UK's defence sector and national security and the potential ramifications of losing primary steelmaking capabilities. 

This episode also looks into the complexities of international trade and tariffs affecting the steel industry, and considers the long-term vision for a robust and competitive UK steel sector, including the development of a national steel strategy and discussions around alternative production methods. 

We also touch upon the calls for potential national intervention and the crucial involvement of trade unions in shaping the future of Scunthorpe.

Key Takeaways:

• British Steel has announced plans that could lead to the closure of blast furnaces at Scunthorpe.
• The government has offered a significant conditional financial support package to British Steel.
• Maintaining blast furnace production in the interim is a government priority.
• The future of Scunthorpe Steelworks has significant implications for the UK's defence capabilities.
• The government is developing a long-term steel strategy with £2.5 billion of investment.
• International trade and tariffs pose ongoing challenges for the UK steel industry.
• Support for affected workers and local communities is being mobilised.
• All options, including potential nationalisation, are being considered.

Source: Scunthorpe Steelworks Volume 764:

Chapters

• 0:59 Immediate response of Government
• 1:37 Long term financial support
• 2:50 Keeping the blast furnaces open
• 3:48 Impact in the defence industry
• 5:45 Global competition
• 6:50 Steel strategy
• 7:43 Criticisms of government's approach
• 8:28 Alternative solutions
• 9:17 Conclusions

Transcript

Welcome to another bench report exploring UK politics straight from the benches. We are your hosts, Amy and Ivan. As always, do read through the episode notes as a guide to today's discussion. Now today's deep dive. Focuses on the urgent situation at Scunthorpe Steel Works.

This is following British Steel's announcement of their plans to close blast furnaces. And other steel making assets. Which could potentially lead to a lot of redundancies. Lot of people losing their jobs. So what we are gonna explore for you today is what this potential closure reveals about the state of UK industrial policy.

Big question. Huge question. Yeah. How about the national security considerations, particularly those related to steel production? Right.

Because we need steel. Exactly. And we're also looking at the future of skilled jobs in traditional industries. Yeah. So we're gonna navigate these parliamentary discussions, extract the key insights for you.

So to start, what was the government's immediate response when this news broke? So the minister for industry, Sarah Jones, she immediately expressed her concern As you would expect. Yeah. For the British steel workers and their families. And she confirmed that contingency plans were activated.

So you've got teams from the department for work and pensions Right. And the department for education going to Scumthorpe to provide on the ground support. So they're taking it seriously? They're taking it seriously, and they're also requesting direct access to the British steel sites. Okay.

So that's the immediate kind of response. Immediate boots on the ground. Putting out the fire as it were. But what about the the bigger picture, the long term strategy? Well, the minister said that they were already committed substantial funding to support British Steel.

So we're talking big money here. They've money 2,500,000,000 for The UK steel industry. Wow. That's a lot. It is.

And in fact, she highlighted that a generous conditional offer of financial support had been presented to British Steel. I picked up on that word conditional. So what does that actually mean? So it's not a blank check. It's not just, here's £2,500,000,000.

Go and have fun. Right. There are conditions attached to this offer. Such as? So things like public accountability Makes sense.

Legal requirements, you know, dotting the i's and crossing the t's Yeah. Local impact. So the impact on the community in Scunthorpe. Safeguarding jobs, making sure that as many jobs are saved as possible. Of course.

That's a huge priority. And the long term commercial viability of the company. So it's gotta be sustainable. It's gotta work. It can't just be a temporary sticking plaster.

Right. They wanna fix the problem, not just put a bandage over it. Exactly. And the minister urged British Steel to reconsider its closure plans and accept this offer. So they're really pushing for them to take this deal.

They are. Okay. So that's the financial side of things, but there's also the issue of production capacity. And the blast furnace. Particularly the blast furnaces and whether or not they should stay open.

So Martin Vickers, he raised the question of, you know, should these blast furnaces continue producing steel until the electric arc furnaces are ready? Because that's the alternative. That's the alternative. And he stressed the need for, you know, keeping up production for the defense sector. Right.

We need steel for our military. We need steel for tanks and ships and all that. Yep. The minister responded by saying that the government does prefer the blast furnaces to remain open. Okay.

So they are in favor of keeping those going. Because they're worried about customer confidence. Confidence. If the supply is disrupted. And she even referenced the bombing of the blast furnaces in Ukraine.

That was a big deal. It showed how important it is to have the steel making capacity, not just for defense, but also for infrastructure. Right. Rebuilding after a crisis or or even preventing problems in the first place. Exactly.

Yes. So it's a national security issue. Absolutely. Okay. Well, that brings us to the impact on the defense industry.

Yeah. Greg Smith, MP, he was concerned about the impact of this closure on Britain's defense industry and national security. I can't imagine. He emphasized the need for primary steel production in The UK. Right.

So not just relying on imports. Not just relying on imports. And sir Edward Lee, he went even further. He said that producing virgin steel So that's steel made from raw materials Steel made from raw materials, not scrap metal. Is a vital national interest Especially in times of war.

Okay. So they're really emphasizing this point about The UK being able to produce its own steel for its own defense. So how did the government respond to this argument about national security? So the minister acknowledged that steel making is really important for defense and security. As we've been discussing.

But she also mentioned that there might be alternatives like direct reduced iron using hydrogen. So it's another method of producing iron, which can then be used to make steel. Okay. And she pointed out that the infrastructure at Scunthorpe is quite old. So it might need to be modernized anyway.

Exactly. And then later in the debate, Graham Stewart, another MP, he asked the minister directly, do you recognize that domestic virgin steel production is a national security imperative? Wow. So he's really pushing her on this point. She's pushing her on this point.

And would the government consider things like nationalization or golden shares? So that's like the government having more control over the company? More control to protect the tax payer. Wow. So what did the minister say to that?

So she referenced the track record of the previous government, and she said that the current government wants to have the right mix of steel production methods. Okay. So not necessarily just sticking with the old blast furnaces? Not necessarily. And she also made the point that a lot of the steel used in defense is actually made in electric arc furnaces already.

Oh, interesting. So we're already using that technology. We are. Okay. Well, that's the national security side of things.

But what about the global competition angle? So Liam Byrne, MP, he brought up trade remedies. Okay. Where is that? So, basically, they're safeguards against things like dumping.

Okay. So that's when other countries flood the market with cheap steel. Exactly. And he urged the Trade Remedies Authority to implement stronger safeguards against diverted Chinese steel. Because China's a big steel producer.

Huge steel producer. And he said that The UK should be doing what the EU is doing We're just implementing safeguards. Okay. So is the government gonna do that? The minister said that the Trade Remedies Authority would widen its review of steel defenses.

So they are taking action? They are. And Sonia Kumar, MP, she pointed out that The UK produces less steel than many European countries. Right. And China's obviously the big player.

China's the elephant in the room. Yeah. And she suggested that supporting small and medium sized enterprises, SMEs Okay. Would help them to be more competitive. That makes sense.

And the minister agreed saying that trade and overcapacity would be considered in the steel strategy. Right. So there's a steel strategy coming out. What can you tell us about that? So it's gonna be published in the spring, and it's gonna have up to £2,500,000,000 of investment.

There's that number again? It's a big number. Yeah. It's gonna consider things like stimulating demand for UK steel Makes sense. Research and development into new technologies Okay.

Scrap utilization, making better use of scrap metal, trade Of course. Overcapacity Huge issue. Carbon leakage. What's that? So that's where companies move their production to countries with less strict environmental rules.

Ah, okay. I see. And site availability, making sure there are places to actually build these new steel plants. Okay. So that's a very comprehensive plan.

It is. And Matt Western, he called for a long term vision for this plan. Twenty five to thirty years. Wow. That's a long time.

It is. But he said that's what's needed. Right. The investors need that certainty. Exactly.

But not everyone was happy with the government's approach, were they? No. John Cooper, MP, he was pretty critical. What did he say? He said that there hasn't really been a coherent industrial strategy in the past.

Okay. So he's not convinced that this time is different? Not convinced. And he questioned what signals the government's been sending to the industry. And he even suggested a golden share, for those who don't know what that is.

So it's basically a way for the government to have some control over the company. Like a veto power. In a way, yes Okay. To protect the taxpayer. Right.

But the minister defended the government's approach saying that they are developing a comprehensive strategy that's different from what's been done before. Right. And she emphasized that the offer to British Steel is conditional. So it's not just a freebie? Not just a freebie.

Okay. Well, aside from criticism Right. Were there any alternative solutions proposed? There were so Lawrence Turner, he mentioned a multi union plan for Scunthorpe, and the minister said she would discuss it. So she's open to ideas.

She's open to ideas. And Clive Jones, he emphasized green steel. So that steel produced in an environmentally friendly way. Exactly. And he said we need a long term approach to that.

Right. And Richard Tice, he had a really radical idea. They'd on me. He said the government should take British Steel into public ownership. Wow.

Nationalize it. But the minister pushed back on that. She said the Scumthorpe plant is losing a lot of money. Right. So it's not a simple solution.

Not a simple solution. And she emphasized again the potential of electric arc furnaces. As a more efficient alternative. Exactly. So it sounds like a really complex situation with lots of different perspectives.

It is. It's about jobs. It's about national security. It's about the economy. It's about the environment.

It's about the global steel market. It's about the role of government. And what for you are the key takeaways from this? I think for me, it's the competing priorities. You've got the immediate needs of the workers and their families.

Right. But then you've got these huge strategic questions about national security. Long term viability of the industry. The global market and the government's trying to balance all of this with the need to be responsible with public money. That's a tough job.

That's a tough job. And it really highlights this ongoing debate about the role of government in supporting industries. In the twenty first centuries. Please subscribe to the bench report to spark your passion, stay informed, and change the world. Find us on social media at bench report UK.

Take care.