Saving steel?

It was good news to read over the week-end that the UK government has not given up on the UK steel industry. The industry and others including me have long been explaining that very high energy costs and business rates are big handicaps to the UK industry. It has also been well known that there is massive overcapacity worldwide, led by the large investments in steel in China, which has slashed prices for the product. If the UK persists with much dearer energy than leading competitors it will be our industry which closes, whilst the CO2 will be produced elsewhere with the jobs and the profits.

The Chinese currently account for around one half of world steel output. They have announced plans to cut up to 150 million tonnes of annual capacity, almost as much as the entire EU industry makes each year. Such reductions will make a big difference to future prices as they are implemented. It could mean that the current low level of steel prices will be temporary, with prices rising again as capacity is reduced. World demand for steel is likely to rise from here as advanced economies gradually recover from the slump of 2008 and as more emerging economies raise living standards. As they do so more people want and can afford cars, domestic appliances and other products with a steel content.

The issue is how will the UK manage to get its energy costs down to assist the industry? Can it do so enough to make a material difference? The government is talking of subsidising the energy costs more, as it has started to do. It’s not an ideal solution, but given the large interventions made in our energy markets to push prices up it may be the only short term fix. The government will of course need clearance from the EU to do so.

Government is in a stronger position when it comes to business rates and other domestic impositions. There it could take some action to allow the industry to keep more of its revenues.

The government has pledged to buy more UK steel as part of UK public sector contracts. Several of the large infrastructure and equipment programmes have a substantial steel content.

It may also be necessary to help create cheaper energy on a longer term basis if the work to save steel is to endure. I have often written on how this could be done, after two decades of expensive interventions the other way. The sooner we do this the better. It is our only hope of keeping and expending our industry.

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  1. Lifelogic
    Posted April 5, 2016 at 5:42 am | Permalink

    Indeed, move to low energy prices for all as soon as possible. UK energy is absurdly expensive, caused by the EU and the absurd Milliband, Huhne, Davey & Rudd greencrap religion direction. Leaving the EU will of course also help hugely. Obsorne’s idiotic Hinkley Point C project is also the wrong nuclear project and need to be revisited. Hopefully post Brexit the institutionally greencrap DECC can be closed down and replaced by half a dozen sensible engineers.

    Matt Ridley is exactly right on on both issues.

    • Leslie Singleton
      Posted April 5, 2016 at 12:30 pm | Permalink

      Does anybody have the faintest idea why Cameron doesn’t at the very least tone down the scarcely believable Climate Change Act………because I certainly don’t? Nothing we did or didn’t do would have the slightest affect on the global environment and the good stuff about leading the way is barking not to say suicidal.

      • Lifelogic
        Posted April 5, 2016 at 3:55 pm | Permalink

        Indeed by he tied himself to the hug a husky, green crap photo of and is at heart a Libdem. Who else would employ Huhne, Davey and Rudd yet fire Owen Patterson?

        • fedupsoutherner
          Posted April 5, 2016 at 8:48 pm | Permalink

          Who else would employ Huhne, Davey and Rudd yet fire Owen Patterson?

          Only an idiot.

        • Lifelogic
          Posted April 6, 2016 at 7:40 am | Permalink

          I meant:-

          Indeed but Cameron tied himself to the hug a husky, green crap photo op and is at heart a LibDem. Who else would employ Huhne, Davey and Rudd and yet fire Owen Patterson?

    • Bazman
      Posted April 5, 2016 at 6:54 pm | Permalink

      You do not believe in evidence based policy so engineers will be seen as misguided, self seeking and not sensible by you in a pseudo scientific fantasy race to the bottom. Pollution? As in filth, dirt, not even including CO2. Where does this fit in? We do not all live on and island sucking up subsidised landlords rent.

  2. Ex-expat Colin
    Posted April 5, 2016 at 5:57 am | Permalink

    For everything the EU disallows in terms of money…tot it up and deduct from payments to them with interest and costs.

    BBC R4 tells us Remain is gaining…they would wouldn’t they. Currency drop by 15% coming….be worried.

    • John B
      Posted April 5, 2016 at 9:30 am | Permalink

      On the subject of Remain opinion polls, there was a very good telecast debate on last night hosted by Northern Ireland Small Business Association with Owen Patterson and Kate Hoey against Vernon Coaker and John Stevens. Before the start, the audience of mainly business people were about 55% sure that Remain was better for the UK as a whole compared with Leave on 33%, with the rest undecided. At the end of the debate, Remain had shrunk to 40% and Leave had gone up to 50%. Interestingly, the audience still thought Remain would be better for their own business, although the margin was much reduced compared with at the start of the debate.

      Remain trotted out some of the usual scares (mainly uncertainty – over jobs, trade, currency, influence etc) although Stevens did try to put a few more positive points, but the overall tone of their message was downbeat. The Leave case sounded much more positive and ambitious. As in the Farage v Clegg debate, the scare stories were easily de-bunked and the final resulting vote was unsurprising.

      It would be good if Cameron could be on TV to properly debate Remain against Leave since, when people can hear the main arguments on both sides, I’m sure considerable numbers of Remainers and Don’t Knows will swap to be Leavers, with few, or none, switching the other way. Sadly, I’m not holding my breath for such a debate!

      • John B
        Posted April 5, 2016 at 11:09 am | Permalink

        I should have said the Remain attitude was “defeatist” rather than “downbeat”.

      • Lifelogic
        Posted April 5, 2016 at 12:57 pm | Permalink

        It would indeed be great if Cameron could be on TV to properly debate Remain against Leave – Especially for the leave side if “no if no buts to the tens of thousands”, “cast iron” tried to defend remain given he has no rational arguments to put and a history of lies and ratting.

        It is very clear he has not a single sensible argument to put other than “they will beat us up even worse if we leave”.

        It is clear that the UK population want far lower immigration, a return of real democracy, better protection from terrorists, cheap energy, lower taxes and a far stronger economy – They surely they will vote for Brexit won’t they?

        If we actually get out after the Brexit vote is another matter.

      • fedupsoutherner
        Posted April 5, 2016 at 8:46 pm | Permalink

        That is what we need. Our politicians to stand up and state their case for leave or stay. Then we would see the Remainers looking more stupid than they do now.

  3. Mark B
    Posted April 5, 2016 at 6:31 am | Permalink

    Good morning.

    It looks to me that we are slowly returning to the 1970’s, what with subsidies for business and the like.

    What is being proposed here, is that the private citizen, through taxes on their energy bill, subsidies the rich corporate business’s. A bit like those landed people our PM knows who get money for having windmills that produce no electricity on their land.

    This form of ‘Corporate Socialism’ must stop !

    I also notice that we need the permission of the EU to do this. What if they say no ? What is it that our government is prepared to do to save ordinary peoples jobs ? They saved the banking industry. Perhaps politicians like richer people like themselves to those poorer people who vote for them ?

    We need to rid ourselves of the Climate Change Act. We need to look at alternative means of producing cheap energy. One such way, is to use smaller nuclear reactors like those used in our submarines. Rolls Royce make these in the UK and they have a 100% safety record. They can be sited close to steel works, which require large amounts of energy, for their purpose alone. This would indeed help them to be more competitive and keep jobs in the UK.

    We also must ask ourselves what industries we need to protect. Steel, aluminium, chemical, food producing, communications, energy generation and supply and water and sanitation are vital industries that ALL modern or aspiring to be modern nations MUST have. If we still believe the UK should be a nation, in or out of the EU, then this MUST be the stated aim of ALL governments.

    PS Sorry to our kind host and readers for the long post

    • Lifelogic
      Posted April 5, 2016 at 8:48 am | Permalink

      Indeed we are as you say returning to the 1970’s, what with subsidies for business and the like.

      Just like Heath, 98% Healey and Wilson. Misguided government intervention into almost everything. Osborne (just like Ted Heath) even thinking he is the man to decide on national wage levels, a record peacetime trade deficit, higher and higher tax rates yet raising less and less revenue, a massive debt (still increasing hugely by the day), dire public services (such as the NHS GP where you cannot even book advance appointments and killing thousands).

      An intervention by Government has to be paid for, usually by taxing other better run companies and individuals. The net effect is nearly always causes more harm than good and a huge damaging distortion of the market.

      As Thatcher almost said – the problem with socialists (like Cameron & Osborne) is they run out of other people’s money – to piss down the drain.

      They are also, almost always, either liars, hypocrites or totally lacking in logic reason and an understanding of human nature.

      • hefner
        Posted April 5, 2016 at 2:00 pm | Permalink

        Lifelogic, you obviously do not have the “Patient Access” app, where putting your NHS registration number gives you an access number made of your registration in your surgery and the surgery code. This is widely available, works well and give you the list of appointments from the different doctors in your surgery, usually between 5 and 20 days ahead. It works in Reading, and I think over most of Berkshire.

        • Cheshire Girl
          Posted April 5, 2016 at 3:44 pm | Permalink

          I think Ive got that. I registered on the web. Got Patient Access, and am able to make an appointment for two to three weeks ahead, if I wish. There is a choice of Doctors and the appointments that are available. I like this service very much, rathet than ringing up to be told the appointments have all gone. Granted, this system is not suitable if you need the see a Doctor the same day, but if it is not an urgent matter and you can wait a few days it is ideal. I’m not sure how widely it has been advertised. Quite a few of my friends did not know about it, but several of them are not on the web anyway.

          • stred
            Posted April 6, 2016 at 8:26 am | Permalink

            Two to three weeks is a long time to wait if you think you have a cancer. The delay could kill you. If you have pneumonia and are vulnerable you will probably be either better or dead in 3 weeks. I was turned away with a severe ear infection once and my eardrum burst. Three weeks is a disgrace. I don’t want a bloody app or a huge expensive medical centre with a receptionist who assumes I am a scrounger and, if I ever get through or see one, the doc gawping at a computer: I wan’t to see a good competent GP who doesn’t have to ask the computer what to do and within a day.

        • Lifelogic
          Posted April 5, 2016 at 4:00 pm | Permalink

          I fortunately life somewhere where you pay a small fee to see the doctor and we can always get an appointment – just like animals can get to see a vet in the UK.

          Many UK doctors I know actually ration the slots by making patient ring each morning at set time (often to hear an engaged tone). Wonderfully efficient system, after all I am sure the patients have little better to do.

      • Bazman
        Posted April 5, 2016 at 6:44 pm | Permalink

        We are still waiting for your opinion the truly massive subsidy to in the form of housing benefit. Not a squeak so far from. Its much more than the massive subsidy to the energy industry which is not all to windmills by along way. Energy auctions paying massively over the odds to fossil fuel suppliers. Stupid nuclear power policy, but again all dwarfed by a bonkers, absurd, socialist, lunatic, subsidy to the rental industry. I will keep repeating this as often as your own answering posts do.
        Another point put to you and ignored is that a fee may well cause problems as peole are put off going to the doctor leading to more costly and serious treatments in the future as well as contagious diseases going undetected longer. There is much evidence for this, so denialist calls of scaremongering will not wash. You do not own the facts.

        • Lifelogic
          Posted April 7, 2016 at 4:17 am | Permalink

          Housing benefit subsidy is a subsidy to provide accommodation for poorer tenants, it is not a subsidy for landlords. It usually does not even cover market rents anyway. It does not apply to my tenants anyway.

          Just as job seekers allowance is not a “subsidy” for Tesco it is a subsidy for the unemployed to enable them to feed themselves.

          • Bazman
            Posted April 7, 2016 at 6:58 pm | Permalink

            Struggling there aren’t we? Tesco is not responsible for the amount of food available and job seekers does not inflate the price of food.
            Your tenants pay more due to housing benefit inflating the market as well past and present government policies giving benefit to landlords at the expense of the house buyers.
            Answer the points in this previous post put to you by commentators. You obviously must have missed this?
            Not me Guv! Is not good enough.

      • stred
        Posted April 6, 2016 at 8:34 am | Permalink

        What is the difference between a subsidy and a negative subsidy, such as adding taxes to a business to the extent that it has to close. If this happens the taxes will not be availabe to the government and so it may as well cancel the negative subsidy and the business will then have a zero subsidy. If this is useful to the idiots finding themselves in a panic trying to find a way to avoid closing a strategic industry before the referendum, it is freely available to use.

    • hefner
      Posted April 5, 2016 at 8:52 am | Permalink

      Re: submarine nuclear reactors: the most recent PWR3 is quoted at £50m/unit more than PWR2 (which equip most of the present Trident-carrying submarines). PWR2 was itself quoted at 270m/unit.
      I’ll let people in the know make the calculations showing that providing PWR2 or PWR3 to produce energy to steel and other energy-heavy industries is indeed cheaper than other solutions.

      • Bazman
        Posted April 6, 2016 at 6:20 pm | Permalink

        Submarine nuclear reactors would never be allowed on land and for good reason.

        • Lifelogic
          Posted April 7, 2016 at 4:19 am | Permalink

          Clearly they could be rather safer on land than at sea.

          • Bazman
            Posted April 7, 2016 at 7:00 pm | Permalink

            We will put one near your house then if they are safe enough in that case.

    • stred
      Posted April 5, 2016 at 8:58 am | Permalink

      The prospective new owners are saying that they would convert the blast furnace to produce steel from our scrap, which currently we send to China. This will save a lot of CO2 as tranport adds to it. However, this requires modification and uses more electricity, in which case it will be even more important to keep costs down.

      Mark’s idea of putting a nuclear powered ship or perhaps an old sub in the Bristol Channel sounds like a good way to do this. I imagine all the Welsh green Goughs will be down from mid Wales to protest. The steelworkers would have to see them off. Another idea would be to build a private CCGT station on the site. It could then help stop blackouts when the wind stops in the middle of a freezing winter.

      • Mark B
        Posted April 5, 2016 at 12:36 pm | Permalink

        Thank you, but it is NOT my idea. It was the idea of Dr. Richard North at EUReferendum.

        And they do not need to be put in ships or another submarine. They can be housed in closed land based accommodation.

        • ian wragg
          Posted April 5, 2016 at 3:12 pm | Permalink

          The PWR would have to be sighted near to copious amounts of water for emergency cooling.
          As someone who served on nuclear subs I think it’s an excellent idea but they would need to be placed in “farms” near the sea or rivers pretty much like the conventional coal stations.
          I don’t think air cooled fin fan cooling would be safe in an emergency.
          I did point this out to RN before I was banned from his site. It appears there is no room for debate.

          • stred
            Posted April 6, 2016 at 8:16 am | Permalink

            The Russians have been using nuclear generators on ships to power towns. The advantage is that they can be ordered and positioned quickly. The water is available. If they are worried about a fault, they can be moved. All that is necessary is a short undersea connector. Some may even be available for hire. But the first thing our civil servants would do is call Brussels to ask if it was ok.

      • Ian Wragg
        Posted April 5, 2016 at 1:36 pm | Permalink

        Even if you build your own power station you are subject to the carbon floor tax. The station would have to run at max capacity to be economic and a good feed in tarrif negotiated.
        It should be cheaper to buy bulk power from the grid especially off peak but no doubt the EU wouldn’t allow that.

        • stred
          Posted April 6, 2016 at 8:41 am | Permalink

          Well, cancel the negative subsidy or carbon floor tax (see above) on the grounds that they won’t get it anyway if the steelworks closes. Then they can get capacity payments from the grid and stop making stell if we are about to freeze during a blackout.

    • acorn
      Posted April 5, 2016 at 1:12 pm | Permalink

      Best of luck trying to buy a PWR3 reactor, that will power our next fleet of top secret SSBN submarines. BTW Submarines don’t generate a lot of electricity, the 30 – 70 MW steam turbines are connected directly to the props.

      Iron and Steel plants used to generate there electricity themselves, like Refineries, using blast furnace / coking process gas. According to DUKES, it was about 50% last year.

      DUKES also says that the median price in the EU, for large electricity users was 5.63 pence per kWh. In the UK it was 9.78 p/kWh. The high UK price has nothing to do with EU regulations, it is the result of privatisation of the industry, on an island in the North Sea, which is short of about 8,000 MW of inter-connectors.

      Reply Its not privatisation but EU/Uk regs closing down cheaper power and insisting on dearer generation

      • hefner
        Posted April 5, 2016 at 5:52 pm | Permalink

        Sorry to disagree with JR:
        In “Energy, the State, and the Market: British Energy Policy since 1979”, by Dieter Helm (Official Fellow in Economics at New College, Oxford; member of the Dept of Trade and Industry’s Energy Advisory Panel from 1993 to 2003? year of publication of his book; was Chairman of the Academic Panel of DEFRA; director of Oxford Economic Research Associates Ltd (OXERA), advisor of governments, regulators, and major companies in both the UK and internationally), chapter 10 on nuclear privatisation, p.186-203, there is an interesting quote:

        “The history of nuclear privatisation has been the very gradual triumph of economic reality over managerial optimism. Although economics was never the prime rationale for the civil nuclear programme, it was to be its undoing {a lot more details on this in Chapter 2 of the same book for any interested reader}. Privatisation of the electricity industry in 1990 spelt the end of the nuclear industry’s future, at least as long as it was built around large-scale technologies , such as the PWR and for as long as markets were liberalized.”

        So putting the problem at the door of the EU as JR does, whatever the EU’s foibles, is very “questionable”.

        Reply I don’t see your quote makes your point. It is the EU anti carbon policies that has delivered us with dear energy and de industrialisation.

      • acorn
        Posted April 5, 2016 at 6:46 pm | Permalink

        To your reply.
        So under the same rules as the other 27 member states, UK electricity is 73% dearer than it is in the EU. Bearing in mind that the Germans are shutting down 8 GW of German nuclear electric (and burning Lignite instead)? That is when they are not importing a net 7,000 GWh of French nuclear electric.

        Hypocrisy Rules OK. 😉

    • fedupsoutherner
      Posted April 5, 2016 at 8:44 pm | Permalink

      One such way, is to use smaller nuclear reactors like those used in our submarines. Rolls Royce make these in the UK and they have a 100% safety record.

      Isn’t this what the French do so that they have cheap and reliable energy? If they can do it why can’t we? It seems anything tried and trusted is being overlooked for things that just don’t work. How stupid is that?

      Meanwhile, the turbines and blades are arriving for the latest wind farm to be erected opposite my home. Oh, the excitement. Can’t wait to see how much more attractive the view will be from my home. I’m sure it will impress future buyers. Not!! The two wind farms already up were being paid to shut down over Easter along with many others. I wonder how many millions were paid out for nothing?

  4. Denis Cooper
    Posted April 5, 2016 at 6:33 am | Permalink

    Maybe the best solution would be to rename it as Tata Steel Bank, then it could be more eligible for some kind of state bailout.

    • Anonymous
      Posted April 5, 2016 at 8:47 am | Permalink

      Why didn’t I think of that !

      Vv good.

    • Yosarion
      Posted April 5, 2016 at 9:58 am | Permalink

      That started in 2008 when the banks were not allowed to fail, and the world wide printing of money, quantitative devaluing.

  5. matthu
    Posted April 5, 2016 at 6:35 am | Permalink

    With a foreign aid budget of 0.7% of GDP and a good Panamanian lawyer, I have every confidence the government can come up with a good scheme.

    (Just as the EU will continually manage to bail out Greece – as long as the UK remains a member of the EU, that is.)

  6. bluedog
    Posted April 5, 2016 at 6:48 am | Permalink

    ‘…but given the large interventions made in our energy markets to push prices up it may be the only short term fix. The government will of course need clearance from the EU to do so.’

    ‘When will they ever learn?’ To quote the late German chanteuse Marlene Dietrich. One future use of the electric-arc furnaces should be to melt down and reprocess hundreds of thousands of tonnes of scrap-metal from totally uneconomic and inefficient wind-farms. An economically rational government would introduce a wind-farm scrapping bounty.

    HM Government should prepare a comparative document as part of the Brexit debate, in which EU mandated energy costs are clearly compared with what could be achieved by supplying base-load power through the cheapest available energy sources. Ideological inhibitions about fossil fuels are simply not an option in a ruthlessly competitive global trading environment.

    Given the equally ruthless political manipulation of the EU, expect a special EU grant for the British steel industry, enabling the Remainiacs to declare themselves solely responsible as saviours of the steel industry.

    • acorn
      Posted April 5, 2016 at 6:20 pm | Permalink

      I wish UK steel plants would get into recycling, we have got mountains of metal scrap in Southampton Docks. Five containers come into Southampton, full of lovely imports.

      One of those containers will go out of Southampton with real UK exports. Two will go out empty. One will go out full of waste paper; and, one will go out full of scrap metal.

      That is nothing to do with the EU; but, it has everything to do with the extremely poor management of the UK economy, by the Westminster Punch & Judy club, over the last three and a half decades.

      My biggest fear for Brexit is, we will be dependant on 650 “carpet-bagger” MPs, who could not qualify to run a check-out at Tesco; cosily embedded in and a lucrative parliamentary system, that was out of date a century back.

      But at least Brexit could start the destruction of the EU and the Euro. Then we can all start again with the EFTA model.

    • fedupsoutherner
      Posted April 5, 2016 at 8:38 pm | Permalink

      “To quote the late German chanteuse Marlene Dietrich. One future use of the electric-arc furnaces should be to melt down and reprocess hundreds of thousands of tonnes of scrap-metal from totally uneconomic and inefficient wind-farms. An economically rational government would introduce a wind-farm scrapping bounty. ”

      This is the best idea of any on this page!! Mind you, this idea would need common sense and you can’t find any of it with Cameron and Co.

      • acorn
        Posted April 6, 2016 at 5:10 pm | Permalink

        Just a little out of date fedup. The price of wind turbines and solar farms has dropped considerably (on a LLC basis) over the last five years. That is why DECC is desperately cutting back the ROC and FIT tariffs, to keep the RoI below 8%.

    Posted April 5, 2016 at 6:59 am | Permalink

    The Steel industry will-it-won’t it British-Steel-English-Steel, nationalised-privatised-nationalised like Education and Health Care, has been a political football all my life.
    One tires of hearing of it like one wearies of learning about the possibility of water shortages on this rainy isle whenever we get a couple of hours sunshine in any one week.

    Pity the seas to Russia are not more shallow. We could salvage much of the steel we need from the Arctic merchantmen sunken in their convoys in World War Two.
    So Mr Sajid Javid, the Business Secretary, is winging his way to Mumbai formerly known as Bombay. Names change. But still Mumbai sounds an odd place to go to save a Welsh Steel mill called Port Talbot. And we’re still not entirely sure whether we’re pronouncing it properly. Is it a Welsh, Norman-French or German name? Mr Javid should ask them in Mumbai. They are more likely to know.

    • hefner
      Posted April 5, 2016 at 2:08 pm | Permalink

      Talbot was a British scientist heavily involved in the development of photography.

  8. alan jutson
    Posted April 5, 2016 at 7:14 am | Permalink

    Amazing isn’t it.

    The reason one of our Private Industries is failing, is due to Government taxes, and EU Power and Environmental policy.

    This time we have highlighted Steel.

    How many others does Government Policy hold back ?

    Why does it always take a crisis for the penny to drop.

  9. Antisthenes
    Posted April 5, 2016 at 7:40 am | Permalink

    The UK steel industry is in trouble but the German one is not. That points to two things. One being that being part of the EU appears to work for Germany but not for us. So as I have said before EU one fit all solutions do not work. The other reason is that Germany is better at producing steel than we are. They have better productivity and their unit costs must be lower despite having to follow the same EU rules as us. It is telling that they are adamant about not buying any of our steel plants.

    Germany disadvantages us as well because they have the euro the weak exchange rate of which allows them to keep their export prices low. A double edged sword as having a weak currency may be good for exports but it is bad in other ways. If the UK joined the euro (heaven forbid) on that there would be a level playing field but I doubt if the UK joined it would remain as weak as it is now. It is the poor performance of other euro-zone members that is keeping it artificially low so benefiting Germany. Enter the UK and another strong economy can only do one thing and that is boost confidence in it and so it will strengthen.

    I think the EU should kick us out now in case we stay in and join it’s currency and upset Germany’s apple cart. And the rest of course as it will have even more harmfull effects than it is having now. I think it would be the final nail in Greece’s coffin as she should have ditched the euro a long time ago,. Not even joined it in fact. On many other matters we are more trouble than we are worth. They really only need us for our contribution. I believe parting of the ways would be mutually beneficial.

    • Ian Wragg
      Posted April 5, 2016 at 1:40 pm | Permalink

      German heavy industry is exempt from environmental taxes. Only private consumers pay and last year 350,000 were cut off for non payment of bills

    • bigneil
      Posted April 5, 2016 at 2:24 pm | Permalink

      Staying in will only bring demands from Juncker to remove our Schengen “wall”, add on the EU’s thumbs up to Turkey – and with 75m heading West our housing problem will quadruple, our benefits bill will bankrupt us and the NHS will die in months. (We will have lost our nation ed)

    • a-tracy
      Posted April 6, 2016 at 9:13 am | Permalink

      Transporting steel must cost a lot of money, I wonder why the Indian firms productivity is less than in Germany, do we produce less per worker or are our machines less efficient?

      I read that turning garbage into energy is successful for the Nordics perhaps we should do a bit of co-ordinated energy creation.

      So if we exempt our heavy industry from environmental taxes to save a couple of thousand jobs, (how much UK tax does the steel industry contribute?) the likely repercussion is hundreds of thousands more people in fuel poverty without heating.

  10. fedupsoutherner
    Posted April 5, 2016 at 7:53 am | Permalink

    John, your last paragraph is the most relevant. It is really time to get a positive stance on energy production and stop subsidies for renewables which are pushing prices up for consumers and businesses alike. We need to repeal the climate change act immediately and push for gas. God knows why we have shut down our coal stations when Germany is ploughing ahead with theirs. Renewable energy has been a disaster for Germany and other countries. Spain said it was the biggest financial failure ever. Why do we continue to throw money away with these short term industries which are mainly owned and built by foreigners when we see our REAL industries creating REAL jobs go to the wall?? The evidence is out there now for all to see that renewables, in particular wind and solar just won’t be good enough and back up will always be needed. Both have to be subsidised now. We have the most expensive energy costs in Europe and they are set to rise even further because of carbon taxes etc. This nonsense has to stop before there is no industry to power. I see that if the steel industry doesn’t have to pay the carbon taxes then it will be passed on to the consumer. Nice one Cameron. Doesn’t anyone think about the implications of anything anymore?

  11. agricola
    Posted April 5, 2016 at 8:06 am | Permalink

    If the Chinese are dumping steel then tariffs should be raised to prevent it. In fairness to them they are reported to be closing more steel producing capacity than the EU has collectively. Our government in particular should not then be allowed to hide behind the imposed tariff and continue to impose their Carbon Price Floor (CPF) tax. According to our own Department of Energy and Climate Change the CPF tax is set at four times that which pertains in the EU. Presumably this is government trying to appear whiter than white while enjoying a nice little earner to the disadvantage of the energy consuming public as well as industry.

    Having said that, it is calculated that electricity cost in steel making amount to 6% of total costs. Perhaps the other 94% should be looked at more critically.

    My conclusion is that green energy and climate change policy has been a disaster for all energy consumers. A disaster imposed by an evangelical government who have used an unproven theory to impose tax in much the same way as speeding cameras are used to raise money for little benefit. Were all these taxes devised to compensate for the ever reducing tax take from tobacco? I have read equally credible theories that global temperatures are likely to decline in the future.

    None of it would be necessary if the government had a coherent plan for the provision of energy from nuclear and shale gas. The need for all the clever little taxes would be negated had they had a serious plan to reduce the size of government resting on the backs of their productive citizens. I conclude that the government are equally culpable with the EU in creating this burden on steel production in the UK.

    Reply You understate energy costs in steel making

    • bigneil
      Posted April 5, 2016 at 2:15 pm | Permalink

      “Presumably this is government trying to appear whiter than white while enjoying a nice little earner to the disadvantage of the energy consuming public”
      – Sounds like another Panama to me. – -rename everyone (except themselves ) as Jack. – As in “I’m all right Jack . . . . . .”

      • ian wragg
        Posted April 5, 2016 at 3:16 pm | Permalink

        I’m looking forward to seeing some of the names who have been stashing money offshore. It seems Daves dad has been at it and no doubt more of the great and good who constantly preach to us are involved.
        Let us hope there will be some confiscation and bankruptcies as a result.

        • bluedog
          Posted April 5, 2016 at 7:47 pm | Permalink

          It’s going to be a long hot summer. Fashionably dressed politicians will be wearing their Panama hats.

        • fedupsoutherner
          Posted April 5, 2016 at 8:32 pm | Permalink

          Yes, the greed of the rich knows no bounds. We would be hounded over a couple of hundred or less but they get away with millions. Even if they paid their tax they would still be rich. It’s as bad as Greece where the rich didn’t pay their tax and stood by while their country suffered.

        • stred
          Posted April 6, 2016 at 9:14 am | Permalink

          Not everyone who ‘stashes’ money offshore is great and good. Iam small, nasty and earn less than the average but had a euro account in France and put some money into it to buy a house there. My bird could not make her mind up and eventually the money laundering law came in and the French bank gave me a month to close the account. The only place I could find was a British bank’s offshore euro account. Then Scooter Boy double taxed CGT and started a low level wealth tax, Since then the money has devalued and is earning 0.5% which has to be reported and taxed.

          Another person I know had a business and sold it for a ludicrous amount to a French company, then tried other businesses unsucessfully and retired. He has a choice of staying in a country run by Blair/Brown wasters and now their heirs and paying half of what he made to be wasted, or buggering off to a sunny tax free part of the world. He is no longer has a British passport but kept his savings. Not so much ‘aggressive’ tax avoidance as ‘defensive’ in my opinion. Meanwhile HMG did everything possible to make it profitable for wealthy foreigners to come and live here and avoid the same taxes which caught him and made him leave.

  12. forthurst
    Posted April 5, 2016 at 8:11 am | Permalink

    “It was good news to read over the week-end that the UK government has not given up on the UK steel industry.”

    …until June 24th. The loss of the steel industry by design, as scheduled in the Wreck the Economy of the UK Act 2008, needs to be delayed until after the Referendum if the CMD regime is to dupe the English, Welsh and Scots, make steel, to vote to continue with the destruction of their country, their culture, their sense of being a people. Meanwhile thieving banksters are busy trading spurious ‘carbon credits’, the mechanism for destruction of proper industries on the even more spurious grounds that anthropogenically originated carbon dioxide is either a cause of climate change or actually anywhere near as significant in volume as that emitted by the oceans, but that it is ok for orientals to emit the very same amounts of gas in operating the industries bequeathed by the laws originated by the destructive Brussels regime.

  13. agricola
    Posted April 5, 2016 at 8:13 am | Permalink

    While it is laudable that state financed enterprises should use as much home grown product as possible, in this case steel, what assurances will be negotiated with Tata that they will not be importing Indian or Chinese steel for their production of vehicles in the UK, but using UK made steel.

    Reply They have been using British steel for Land Rover/Range Rover I believe. The new steel owners will need to continue the contracts.

    • Lifelogic
      Posted April 5, 2016 at 9:56 am | Permalink

      If the state contract specify using British Steel when it is more expensive (as it then probably would be) it will push up contract costs so the government will then have to tax other profitable businesses to fund this. Usually this will rather cause more harm than good in the end.

    • trt
      Posted April 5, 2016 at 10:23 am | Permalink

      I’m not sure forcing car makers to use expensive steel is a long term strategy any more than forcing steel makers to use expensive electricity was.

    Posted April 5, 2016 at 8:28 am | Permalink

    Despite reading your book JR, “Public Enterprise in Crisis: The Future of Nationalised Industries”, first published in 1980, I do feel the Tory Party should not be frightened stiff of nationalising the British Steel Industry, in this instance..

    Capitalism aint what it was. Many feel we are living in the days of laissez-faire of entrepreneurial zest, flare and innovation. But as the various colours of US libertarians point out, that era has gone. Some of them hope for a renewed idyllic capitalist past. Hell, you can’t keep reinventing the cornflake and coca-cola from tiny spare rooms and corner drug-stores. Nor a Facebook from a student bedsit.But even without EU red tape, the British Parliament is reasonably good at making restrictive regulations on business activity too.
    Those of us having worked in private companies can tell many a tale of waste of raw materials, time and even where profit didn’t seem to matter half as much as carrying out dumbcluck orders cascading down the management chain.I can recall one important financial enterprise where crucial customer data , in-part , was kept in paper files stuffed non-alphabetically in cardboard boxes adjacent to someones desk the existence of which became virtually non-existent whenever that particular worker was on holiday or absent due to ill-health.
    So, some form of interim state intervention and control in the steel industry may work to a point unless under control of Corbynistas who would use it in the future as a public cash-drain and for the building of political dependency favouring its own electoral progression in its traditional fiefdoms.

    Reply I think the EU/UK state has a duty to offset its damaging interventions so far with dear energy, high taxes etc. I do not see how owning the shares and appointing the management will help. Just look at the poor performance of Network Rail where this is being tried again.

  15. Anonymous
    Posted April 5, 2016 at 8:44 am | Permalink

    We shouldn’t put it past the Chinese that they could be hollowing out Western industry. We close our steel production, they then put up their prices, what will we be able to do about that ?

    – We will become a low wage country soon enough. Mass immigration of cheap labour, tax avoidance and automation will see that welfarism/minimum wage nonsense will collapse and wages will fall.

    – We could well be leaving the EU and be free of the greencrap costs soon too.

    Isn’t it premature (and a bit arrogant of the Remainers) to be giving up on Port Talbot so soon ? It’s as though they assume that they will get their way on the 23rd and Steel in the UK will continue to be overpriced by its energy costs.

    How tragic if Port Talbot closes and a month later we are free of those costs !

    Even so. That area will end up subsidised by the UK taxpayer whether it makes steel or whether it does not make steel.

    • fedupsoutherner
      Posted April 5, 2016 at 8:28 pm | Permalink

      If I have to pay subsidies for anything I would rather it be something that could benefit the UK rather than green crap.

  16. ChrisS
    Posted April 5, 2016 at 8:52 am | Permalink

    Most politicians ( present company excepted, of course, ) have no more idea of how to create conditions for business to thrive than they have of how to organise a single currency that can work. Profit is an alien word to them as well.

    The sheer lunacy of driving up energy costs all around the EU to levels totally out of kilter with those of our major industrial competitors has always been obvious to most of us who deal in real money.

    In Britain, successive idiots have been parachuted into the misnamed energy and climate change portfolio, enthusiastically backed by dedicated green civil servants who naturally gravitated to the department. Together they made sure that we gold plated every bit of EU legislation to make UK energy the most expensive in Europe.

    When CMD arrived on the scene, he foolishly backed the green lobby with his new tree logo and did even more damage than Miliband E. had managed by foolishly allowing the LibDems to run the department. Huhne and Davey made it three in a row. What a disaster for British business.

    Miliband E. and Huhne with no relevant experience whatsoever and were clearly out of their depth but Davey has no such excuse : he has an Msc in Economics and worked as a Management Consultant ! Yet he did nothing to put things right and the damage to business continued unabated.

    Even today when we are seeing the damage done to steel-making communities and our economy played out on our TVs, the green lobby is unapologetic and no real change of policy seems likely.

    Even the Hinkley Point power station is not being seriously reconsidered. Cameron should insist on dumping the ruinously expensive new and untried technology and insist on building several new plants of a tried and tested design. We can then have electricity at the low prices prevalent in France thanks to their chain of 54 production line nuclear stations.

    So the Green Crap will continue.

    Let’s hope that CMD’s love affair with Scotland doesn’t get in the way of stopping Sturgeon and her cronies building hundreds of extra wind turbines that English taxpayers will have to subsidise indefinitely.

    In the meantime Gordon Brown’s ludicrously generous feed-in tariff is giving me a very nice tax free and index linked return of 15% on my 4Kw solar panel array.

    Best investment I ever made. Thanks for your contribution, everyone !

    • fedupsoutherner
      Posted April 5, 2016 at 8:27 pm | Permalink

      Best investment eh? It is you and people like you who saw how to make a profit from the demise of others that have got us into this mess. How can you go on about renewables when you are part of the problem? Don’t forget that everyone is paying your subsidy just like you are paying for Scottish wind farms. Everyone is on a lose, lose. By the way, another one is going up now so more to pay for while so many were paid to turn off over Easter. Madness! Yet Cameron carries on with this farce. He has made such a mess of things that many Tory voters wont’ bother again.

  17. Wingsovertheworld
    Posted April 5, 2016 at 8:59 am | Permalink

    Surely the ECJ would take a dim view of us providing incentives for UK businesses to purchase UK steel?

  18. Antisthenes
    Posted April 5, 2016 at 9:21 am | Permalink

    If you wish to understand more why the EU is a very bad thing I suggest you go here It explains far more eloquently than any other source I have come across the reasons why the EU should not exist and while it does we are far better out of it. Telling is the fact that Europe after the fall of the Roman Empire split into a multi-state region and did not become a China or an India. In so doing it prospered and developed into an advanced civilisation. The point being Europe functions better being a region of individual states and will continue to do so if not fettered by the political and economic union that the EU seeks.

    • hefner
      Posted April 5, 2016 at 2:26 pm | Permalink

      Interesting read. Thanks a lot for the link.

  19. Ian Wragg
    Posted April 5, 2016 at 9:25 am | Permalink

    After the referendum the steel industry will be allowed to wither and die. Another win for the eco loons as we decarbonise the economy.
    Next comes the power industry as we shut down the remaining fossil fuel stations.
    We are rapidly being turned into a third world economy with full government and EU involvement.

  20. Bert Young
    Posted April 5, 2016 at 9:41 am | Permalink

    I regard Steel production as “vital”. We must protect it in the same way as investment in our Armed Services . Of course the pricing of it must be controlled and it should not in any way be handicapped by EU regulations or artificial Energy imposed costs . World volume production and competition has created extremely low prices , however , there is never a case to allow our production levels to go down the drain . We must never respond to any sort of trade blackmail .

  21. ian
    Posted April 5, 2016 at 10:16 am | Permalink

    According to you and the government we have been recovering from a down turn for the last 7 years but if it was not for hundred billions of debt, assets sale and tax increases on vat and so on there would of been no recovery in fact the last four quarter of GDP come to 1.8% growth according to the figures what that means is that all growth in this country has seen has all been on the back of debt and assets sale,

    As for going forward with council and association house sale and more assets sales which they say will be spent on new housing but I cannot see that, what see is more mortgages for banks and more debt on the books and more PFI with council tax going up as they live the lie.

  22. Graham
    Posted April 5, 2016 at 10:33 am | Permalink

    It’s very unlikely that Germany (the short name for the EU) will allow any UK competition for its own growing manufacturing base – subsidised as it is by cheap energy (using lots of dirty coal).

    Given that Cameron couldn’t negotiate himself out of a paper bag I would say that our steel industry is finished never to return just like most of our other heavy engineering.

    • MickN
      Posted April 5, 2016 at 12:40 pm | Permalink

      I was thinking along very similar lines. If Cameron negotiates as good a settlement with Tata as he did with his efforts to change our membership of the EU then may God help the steel workers!

      • alan jutson
        Posted April 5, 2016 at 3:53 pm | Permalink


        I Guarantee the taxpayers will pick up the Pension liabilities.

        We may also pay for modification to the steelworks as well.

        Then it will be handed to a new owner for nothing by TATA.

        Result Taxpayer picks up the bills for both sides.

        TATA get rid of a loss and huge liabilities for nothing, the new purchaser gets an updated steelworks for nothing, and with no ongoing charges/liabilities

        Cameron spends money every time he goes abroad, so probably thinks its about time he spent some at home.
        Well at least it is for some of our workers benefit for a change.

        Then perhaps Wales will be given more devolved powers as well.

    • fedupsoutherner
      Posted April 5, 2016 at 8:20 pm | Permalink

      I hope the non existent drop in CO2 emissions is worth it. Somewhere and somehow people want the destruction of the UK and one would think it were Cameron and Osborne. All this climate rubbish could stop tomorrow if they were really concerned about workers and our economy. They all live in fairy land but of course their jobs are safe and even if they are voted out there will be something they can do that pays lucratively for few hours. Just like all the others!!

  23. ian
    Posted April 5, 2016 at 11:37 am | Permalink

    What you should being doing is going to the unions, city of London, fund mangers and companies who use steel in this country with promise to cut the rates and the climate tax never mind about the EU and get the beat price for a buy out and they can put shares up for sale to the public after the buy out if they want to spread out the cost.
    You can put 100 shares in your own pension fund you run.

  24. Dennis
    Posted April 5, 2016 at 11:46 am | Permalink

    JR, I can’t find if you have answered my query , please do so here:-

    You have previously stated that it is the UK government which is the customer for British steel. Would you please explain this? – thank you.

    Reply When the UK government buys a warship or invests through 100% owned Network Rail in replacement rails it is buying steel!

    • ian wragg
      Posted April 5, 2016 at 3:19 pm | Permalink

      But as you well know, John, the procurement for public contracts goes on the EU website. That’s why we have French and German trains etc etc.
      There is no guarantee that British products will be used.

    • Dennis
      Posted April 5, 2016 at 3:35 pm | Permalink

      Oh I see, the only customer (your implication) for British steel is the government, no one else. I thought there would be other customers, silly me.

      Reply Of course there are plenty of other customers

  25. ian
    Posted April 5, 2016 at 11:55 am | Permalink

    and then get management to slim line it down and build it back up so it makes a good profit, most of the fund manages will be down to see how management is doing and overseeing their investment.

  26. Anonymous
    Posted April 5, 2016 at 12:43 pm | Permalink

    Anyone noticed how quiet the broadcast news is on the immigration crisis ? (Now we’re close to the referendum)

    • bluedog
      Posted April 5, 2016 at 7:45 pm | Permalink

      Note too that the Daily Telegraph seems to have shut down its reader comments columns completely. The commentary of the vox pop was virulently Eurosceptic and in favour of Leave. State encouraged censorship? It will be interesting to see whether or not anti-EU DT columnists such as Janet Daley are muzzled too.

  27. ian
    Posted April 5, 2016 at 2:00 pm | Permalink

    Trillion have been on the move out of Virgin islands, Bahamas, Switzerland and other tax heavens and moving to the USA, seen as a better tax heaven for foreigner to go to for secrecy than other places that are now under pressure, place like Nevada, Wyoming and south Dakota, lead by the oldest European bank, so the only money that will left in the old tax heaven will be money that you can account for and still pay no tax.
    Who would of thought it, the country that has highest money invading laws in the world on it own people.

  28. ian
    Posted April 5, 2016 at 3:47 pm | Permalink

    The leader of the con party said he never had anything out of offshore, how does he thing he was brought up then, private schools, nannies, clothes, holidays, food, house when he got older because never had a high paying job to afford the house he has even on a mortgage, he make me laugh.

    etc ed

  29. ian
    Posted April 5, 2016 at 4:00 pm | Permalink

    you would have to be the top 1 percent of earn to clear that type of money after tax, in the ninety and no way was he a 1 percent in his twenty.

  30. ian
    Posted April 5, 2016 at 4:06 pm | Permalink

    you need at least 250 to 300 thousand pounds before tax to live like that, hand made suit at 3000 pounds a time.

  31. turbo terrier
    Posted April 5, 2016 at 5:23 pm | Permalink

    The issue is how will the UK manage to get its energy costs down to assist the industry?

    Start Fracking and sod them all, the greenies and their like.

    Push has gone to shove and the sooner that CMD wakes up to the fact the better. If he wants to draw attention away from the tax evasion issue then be brave, if it is at all possible, repeal the crazy Climate Change Act.

    But then he could just resign and walk away, if only we could be that lucky?

  32. JoeSoap
    Posted April 5, 2016 at 5:44 pm | Permalink

    Interesting to see that Leeanne Wood is remarkable by her absence now her “Waylls” needs some real help….

  33. Iain gill
    Posted April 5, 2016 at 6:00 pm | Permalink

    It’s also the anti pollution regime, and not just carbon all pollution. We don’t believe in unilateral nuclear disarmament why should we think unilateral use of the toughest anti pollution regime is going to work?

  34. Know-dice
    Posted April 5, 2016 at 6:05 pm | Permalink

    Off topic 🙁

    Mr Redwood, can you correct the BBC’s figures for them please…

    Once again they use the 2014 figures which are at least £1.2 Billion lower than will be paid this year…

  35. Kevin Lohse
    Posted April 5, 2016 at 6:32 pm | Permalink

    Dear John. It is not ,”the Government’ who will be subsidising lower energy costs for industry, but the taxpayer and consumer, who will have to pay more unless there is a fairly dramatic re-think of out energy policy. There is already far too much fuel poverty in the UK, subsidising industry would make things worse. Gas-fired generation can be quickly brought into use in large quantities and there is very chance that fracking will supply ample fuel once the present global glut of fossil fuel is past. If Germany can be building lignite-burning power stations at a great rate, then the UK can build state-of-the-art thermal coal-fired stations to provide cheap, freely available energy.

  36. Bazman
    Posted April 5, 2016 at 7:25 pm | Permalink

    British made steel may well be seen as in trouble and maybe finished, but about five years ago I applied for a job that puts metal tyres on the rollers you see of white hot steel coming out of rolling mills. They had contracts all over the world and showed me all the steel mills they had done work for. It was surprising to see that there was so many in often countries you do not think of being steel producers and given the belief that steel is largely finished. Not so it seems. Many of the workers in this company were Poles and the work was based here with trips abroad to carry out contracts. Interesting, exciting and often risky work, laughed and talked about with the directors, engineers, technicians in an informal interview, but for me the works was to far away from my house and the rate they where willing to pay not enough. About three years later they phoned me to offer work again. At the same rate..

  37. The Active Citizen
    Posted April 6, 2016 at 3:10 am | Permalink

    You’re all missing the most obvious solution to low-cost power for the UK steel industry.

    The Government should redirect all production runs of its ‘unbiased’ reports on EU membership, as well as the millions of pro-EU leaflets destined for UK households, and use them as fuel for power stations.

    If this fuel source is used whenever a north-westerly blows, it should ensure Brussels inhales the full benefit of our opinions about their policies.

    Following June 23, this strategy could be enlarged to include the millions of lengthy documents sent to the UK by the EU over the last 43 years, thereby giving us cheap energy for the next generation.

  38. David Price
    Posted April 6, 2016 at 4:38 am | Permalink

    I am involved in a small concern that builds machines that include specialist steel components. I guess we will end up paying more for this material directly in addition to indirect subsidy costs as you save “our” steel and I’ll be forced to stop doing what I do.

    If you really want to save these strategic industries and ensure they are sustainable you need to encourage and support those enterprises. big and small, that use their output and services. So why, for example, was AFV manufacturing outsourced to Sweden and Germany? Did you not think it might impact precursor industries?

  39. Margaret
    Posted April 6, 2016 at 12:52 pm | Permalink

    Saving steel but not British steel ……Mr S Javed in Mumbai is at least is trying to organise a commonwealth buyer where we could expand with their help. Still sad though that we are selling out on our own.

  40. Sue Doughty
    Posted April 7, 2016 at 11:52 am | Permalink

    But steel is no longer made like that. It is like the iron age in Port Talbot. It needs massive upgrade and renewal, modernisation to make it automated with fewer men working there. But then the Trades Unions would complain and dah de dah here we go again.

  41. Stephen Norris
    Posted April 14, 2016 at 5:22 pm | Permalink

    You state in your Guardian article that Britain will be £10 billion better off, however, we will not receive the £5 billion rebate that Margaret Thatcher negotiated for deprived areas and research and we will not receive the £4.5 billion for the farmers. So does your budget allow for paying these from the £10 billion? I think not. In addition I predict we will lose at least £10 billion of trade with the EU which is just 1 month of trade. If we are going to find the trade elsewhere, why have we been unable to do so, so far? My experience in trade and sales is that no-one is sat waiting for us to leave the EU and give us business. When it comes to running business we are not the best. A huge amount of our exports are vehicles, but we hardly own any of those businesses any more and when times are hard in Germany, France & the US it will be the UK factories that close.

    Reply Yes, the rebate and money back us on top of the money we don’t get back, so tests all available on Brexit as well.
    The EU does not plan to impose tariffs or other new barriers on their trade with us.

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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