Labour proposes £600m fund for steel

This £600m fund would aim to support companies struggling with soaring energy costs, with Labour having forced a vote through Parliament on the 11 January to scrap business rates and reduce the number of firms struggling with debt.

Labour stated, “This fully-funded measure would be paid for through the party’s plan to fix the broken energy market, which includes a one-off windfall tax on record North Sea oil and gas profits.’’

Shadow business secretary Jonathan Reynolds commented, “Soaring energy bills, a wave of cancellations and crippling inflation have left British firms unnecessarily on the brink. The Government has been asleep at the wheel, with British firms, especially those energy-intensive businesses, paying the price. The Conservatives’ ambivalence towards British business is simply unacceptable.’’

Last month, the Daily Mirror, a UK tabloid newspaper, warned how the UK’s ‘disproportionately high electricity prices have cost UK steelmakers an extra £90million this year’ and £345m over the last six years, which is ‘the equivalent of almost two years’ capital investment in the sector.'

“Uncompetitive and unaffordable electricity prices for the UK’s steelmakers have been a thorn in the side of its ability to invest in British steelmaking for many years, and the increasing disparity between UK and European prices now halts in its tracks our ability to decarbonise'' commented Gareth Stace, director-general of UK Steel.

''Last year, we paid £90m more than our German competitors for electricity. Right now, UK steel producers are having to take difficult decisions daily on whether to pause production based on the cost of electricity. This is no way to efficiently produce steel”, Stace continued.

A Government spokeswoman said, “We remain absolutely determined to secure a competitive future for our energy intensive industries and in recent years have provided them with extensive support, including more than £2bn to help with the costs of energy and to protect jobs. Our priority is to ensure costs are managed and supplies of energy are maintained. We have various funds in place to support businesses with high energy use to cut their bills and reduce carbon emissions, including the £315m Industrial Energy Transformation fund.”

However, it remains unclear if funding from the government has had, historically, much positive effect on the UK steel industry – with the industrial energy transformation fund being followed by a 9% decline in economic output from its introduction in 2020. With the current tariffs in place, new strategies to prevent further struggles for the industry are more necessary now than ever before.