Labor has called on the government to commit to ‘buying from the British’ when sourcing steel for major infrastructure projects such as railways and nuclear power plants.
Projects such as the HS2 high-speed railway and the Hinkley Point C nuclear power plant are expected to buy more UK steel as part of the policy, which is backed by industry under pressure.
Labor also wants the government to set a target for UK steel content in major public works and give UK steel privileged status in contracts.
The government this month set up a steel buying task force led by former Barclays chairman Lord Grimstone to look at ways to boost the industry, which is seen as a key supplier of defense as well as infrastructure. The government has identified a need for almost 5 million tonnes of steel over the next decade for infrastructure.
However, it has so far stopped directly mandating that public projects use UK-based suppliers such as Liberty, or rivals such as Indian-owned Tata Steel or British Steel, which was rescued there. a year ago by Chinese Jingye.
Stronger ‘UK buy’ guarantees in contract notices would increase the direct benefit to the UK from infrastructure spending, said Lucy Powell, shadow minister for business and consumers.
“Having a national steel capacity is the cornerstone of our national security, economic prosperity and our fight to tackle the climate emergency, but ministers fail to support Britain’s steel industry with weak sourcing practices that undermine these efforts, ”she said.
The intervention of Labor is accompanied by questions which weigh on the future of Liberty Steel, the third largest steelmaker in the United Kingdom. Liberty’s owner, industrialist Sanjeev Gupta, is trying to secure new loans after the collapse of its main lender, Greensill Capital. Gupta’s GFG Alliance is trying to negotiate a standstill agreement with Greensill trustees.
A promise to buy more British steel could potentially help Liberty Steel. For example, steel bars produced at Rotherham would be candidates for the construction of railways such as HS2 as well as offshore wind turbines.
Many workers in Rotherham have been fired due to declining demand, especially from the aerospace industry during the pandemic. It is understood that about a third of Liberty’s 5,000 workers have been laid off as the company seeks to keep cash in the business until it can find new funding.
The Labor Party said its analysis of government data showed that £ 25million, nearly a quarter of steel spending on infrastructure, went abroad in 2018-19, the latest year for which figures are available.
UK Steel, an industry lobby group, supported the call to stay in the UK where possible. He calculates that 1,000 tonnes of steel produced in the UK directly support around 4.5 jobs. Overall, there are around 33,000 British steelworkers, plus 74,000 other workers in closely related jobs, the lobby said.
“The government should always seek to promote UK basic industries, such as steel, through sensible, targeted and job-stimulating public procurement,” said Gareth Stace, managing director of UK Steel.
“When government-funded projects buy foreign steel, that money is lost forever to the UK economy. We welcome the proposals which keep UK taxpayers’ money in the steel communities and in the UK economy. “
David Bailey, professor of business economics at the University of Birmingham, said an increase in UK purchases would help the industry, but added that government action was also needed on trade tariffs and energy costs which are 62% higher than German competitors, according to industry calculations as of 2019.
“The UK government was hiding behind state aid rules,” Bailey said, referring to EU law. “He has no excuse not to act now. “
A spokesperson for the Department of Business, Energy and Industrial Strategy said: “Steel will play a critical role in providing the infrastructure necessary to drive a green economic recovery and create jobs,” highlighting wind farms, nuclear power plants and electric cars.
“The government is currently reviewing its public procurement rules to ensure that the system is better able to meet the needs of this country, while respecting our international obligations,” said the spokesperson.