Row breaks out over closure of Redcar steel plant

Billy Bambrough
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Earlier this year the SSI steel plant at Redcar was shut after no buyer was found, with the loss of 1,700 jobs. (Source: Getty)

The government's handling of the closure of the Redcar SSI steel plant earlier this year has become the source of a row in the halls of Westminster.

A report out today from the Business, Innovation and Skills (BIS) select committee found the government did not do enough to save the plant from closure at the height of the steel crisis earlier this year.

Iain Wright MP and BIS committee chair, said:

My concern is that the government should have explored much more thoroughly options to keep the Redcar plant open to retain the industrial assets and the skills rather than washing its hands too quickly, allowing it to close down and inflict severe damage on future manufacturing capability.

The steel industry is facing pressure from a glut of cheap steel in the global market coming out of China and a slowdown in emerging market demand for materials.

“This approach is concerning should other vital plants the UK steel industry also face closure as a result of the global pressures on the industry,” Wright added.

The BIS department hit back at the committee’s claims, arguing “the government cannot dictate the commercial decisions, operations or financial performance of private companies”.

A BIS spokesperson said:

SSI UK had lost over £600m in just three years, had accumulated even greater debts and the price of the steel it produced had halved in the past year alone. If the BIS Select Committee had a magic bullet that could have saved the plant against these conditions, they certainly kept it to themselves.

Industry body UK Steel has backed the report, arguing the government should have done more to protect the plant.

Gareth Stace, director of UK Steel, said: “The key is for Government and all stakeholders to work together on delivering action to ensure we have a sustainable future for the steel industry in the UK. It is essential we do not lose the current momentum.”

Influential think tank the Institute of Economic Affairs (IEA) has sided with the government’s decision not to bail out the steel works.

Mark Littlewood, director general at the IEA, said: "It's unsustainable for the government to prop up a steel industry which is no longer competitive internationally. Politicians are right to try and ease the burden for those facing job losses, but government intervention to support a failing sector is not the answer."

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