Climate Change Act under fire as steel industry contracts

steel09:23 Monday 19th October 2015
BBC Radio Cambridgeshire

PAUL STAINTON: Somebody contacted the show this morning, it was Rob in Bretton in Peterborough, with a bit of a rant saying ‘It seems to me we can prop up banks, but we just let our steel works close.‘ And then UKIP’s Nick Clarke, former Leader of Cambridgeshire County Council claiming that climate change, the Climate Change Act has significantly raised household energy bills, and contributed to the demise of the steel industry, a second major player in which is to announce major job losses in the coming days we think.
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Tata Steel expected to announce 1,200 jobs going in Scunthorpe, just a week after nearly 2,000 jobs were declared at risk in Redcar. And Rob in Bretton, as I mentioned, called in. Unions are asking for the Government to step in and save the industry. Well, how simple is that? Let’s speak to Jonathan Aylen, who’s a steel expert from Manchester University. Jonathan, morning.
JONATHAN AYLEN: Good morning.
PAUL STAINTON: So we spent billions propping up our banking industry, yet we’re not going to spend billions it seems propping up more traditional jobs. Is it easy to do that anyway? Is it easy to step in if you’re a government?
JONATHAN AYLEN: Well I think Rob (from) Bretton’s got an excellent point. The banks acted completely irresponsibly and were bailed out seven years ago. They partly nationalised HBoS and RBS and Lloyds to guaranteed their solvency. And here you have two firms, SSI which is closed up on Teesside and now Tata Steel. Both have invested in their industries. They’ve both innovated, which is the kind of thing these modern manufacturing firms are expected to do. They train their workers. They export. And then their dilemma is completely ignored. So Rob (from) Bretton is dead right. There’s no justice.
PAUL STAINTON: One of the problems caused, it’s because the price of steel has dropped through the floor. Now UKIP’s Nick Clarke, a leading local politician, says a lot of this is to do with the Climate Change Act significantly raising bills.

JONATHAN AYLEN: Well he does have a point. There is a clear contradiction within Government policy between the Climate Change Act which is directed towards discouraging energy use, and penalising producers who emit a great deal of carbon dioxide – and steel making and cement making industries like that inevitably do – and the Government policy which wants to encourage manufacturing and exports. And of course the great contradiction here is that you’re closing down industries that are efficiently and well run in locations like Britain and Europe, and driving production to far less efficient producers in say the Far East, in China or even in Russia, who emit much more greenhouse gases per ton of steel made and use much more energy. So it’s a total confusion on the part of Government policy, that they would penalise efficient producers and direct global consumption to people who are far less efficient. You actually exacerbate the climate change problem.
PAUL STAINTON: Yes. It’s a contradiction isn’t it?
JONATHAN AYLEN: Yes.
PAUL STAINTON: But isn’t the biggest problem that China’s slowing down so therefore there’s less market for steel, so the price goes down?
JONATHAN AYLEN: There’s obviously a perfect storm in the global steel market. There’s far too much supply chasing far too little demand at the moment. And it is obviously a problem of China, where the steel industry has grown to prodigious size over the past fifteen years. But there are also other exporters very active in this market. The Russian rouble has heavily depreciated, making their producers much more competitive in the export sector. So it’s very difficult for an economy that abides by high labour standards, high environmental standards, that aims towards quality manufacturing, to sustain their position. There’s no doubt about it.
PAUL STAINTON: Should politicians save these jobs? What would it take? What would they have to do? And how long would we have to bail them out for? Until the price of steel goes back up?
JONATHAN AYLEN: Well I don’t think the politicians can do much frankly, that’s perhaps a general statement. But they could certainly ease the position. They could ease the position on energy prices. They could ease the position on business rates, because you have this paradox that the more you invest and the more valuable the site becomes, the more the business rates go up.
PAUL STAINTON: Yes.
JONATHAN AYLEN: So they could certainly pursue some sleights of hand that would make the situation much more comfortable.
PAUL STAINTON: If they don’t, is the steel industry dead in this country?
JONATHAN AYLEN: No I think there are some areas that are remarkably strong. There are all sorts of specialised products for instance made actually at Scunthorpe, where there are rumours of job losses. The tyre cord and tyre bead in your car comes from there. The rails on Network Rail that people commute on, these are all very sophisticated products made at Scunthorpe, rolled there, that command premium prices. The engineering steels that go into aerospace or your car engine or especially Formula 1 racing cars. Not much volume but a hell of a lot of value. So there are some very sophisticated up-market products made by sites like Scunthorpe, which can sustain them, even in times of global surplus, because quite simply very few other people can make these sorts of products.
PAUL STAINTON: Jonathan, thank you very much. Jonathan Aylen, steel expert from Manchester University.

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