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UK steel industry in crisis after lack of support in budget, union warns PM

The government’s failure to support the ailing UK steel industry in last week’s budget has put thousands of jobs at risk, the prime minister has been told.

In a letter to Rishi Sunak, shared with the Guardian, the trade union Unite said it was “disappointed” that the government had not announced plans to tackle the “serious threats facing the sector”.

Amid a recovery in global manufacturing this year that could bypass the UK steel industry without much-needed investment, Unite’s general secretary, Sharon Graham, said: “It is your government’s official policy to grow foundation industries like steel, make them more internationally competitive and secure more jobs in them throughout the UK, but there is no sign that this is actually happening.

“Instead, the UK steel industry is shrinking, becoming less competitive and losing skilled jobs,” she added.

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She welcomed plans to inject £600m into the industry to keep the UK’s last four steel blastfurnaces going and a transition from coal to lower-emission energy sources.

But even this sum fell far short of the “billions of pounds” that France and Germany are offering their own steelmakers, she said. She also called for tougher measures to ensure more domestically produced steel was used in UK infrastructure, as well as action to tackle “profiteering” from energy firms.

“This is a threat to thousands of workers and their families across Wales, the Midlands, the north-east and beyond. It is also a threat to the very heart of the communities that surround them. And it is a threat to the future of our national security and our broader manufacturing and construction industries,” she said.

The shadow business secretary, Jonathan Reynolds, said Labour would review key infrastructure projects, promising that a Labour government would “buy, make and sell” more steel in Britain to secure thousands of jobs.

“Labour understands the vital role steel plays in our economy,” he added.

Tata Steel, which operates two blastfurnaces, at Port Talbot, has repeatedly warned it may have to shut one or both of them unless more support is forthcoming.

Polling by the Indian-owned company, shared with the Guardian, shows strong public support for investing more in decarbonising UK steel and prioritising domestic output over foreign imports.

“Keeping our domestic steel sector is overwhelming popular with the public who want to see the government invest in UK steel to support jobs and manufacturing,” said a spokesperson.

Kemi Badenoch, the business and trade secretary, said earlier this month that the government would support domestic steel production. However, the budget contained no concrete measures.

“We have already taken action to protect the industry from unfair trade and reduce the burden of energy costs, including £800m in relief for electricity costs to the steel industry,” said a Department for Business, Energy and Industrial Strategy spokesperson.

“This is on top of a range of other competitive funds worth over £1bn to support efforts to cut emissions and become more energy efficient.”

Concern about the health of the steel industry was mounting even as a key barometer of manufacturing conditions showed a pickup in orders and output during the final quarter of last year and into the beginning of 2023.

The balance of output activity improved to +21% from +5%, where any positive figure reflects growth. Domestic orders jumped from 2% to 20% and exports rose from -6% to 12%, according to the closely watched regular survey by the trade body Make UK and the accounting firm BDO.

However, Make UK and BDO are still predicting the manufacturing sector will contract by 3.3% this year.

Richard Austin, BDO’s head of manufacturing, said the government had done very little to “address the immediate threats to UK manufacturers resulting from the heavy burden of energy costs”.

Punishing energy costs, particularly in the past year, are among the factors behind the long-term decline in the British steel industry, which is also facing competition from foreign imports and the expensive challenge of decarbonisation.