Britain’s steelmakers received a boost on Thursday when the EU approved a multimillion pound package of state aid to help with the cost of green taxes.
The government said Brussels had agreed to rebates for energy-intensive industries, reducing electricity bills for sectors including chemicals, paper, cement, glass and ceramics.
In total, the deal is estimated to be worth £380m a year, according to the Department for Business, Innovation and Skills. The EEF manufacturers’ organisation said it was worth £300m.
Energy-intensive industries have long argued that environmental taxes impose a financial burden their international rivals do not face, threatening the UK’s competitiveness in manufacturing.
The issue shot up the political agenda this year because of a crisis in the UK steel industry that has resulted in mill closures and thousands of job losses.
Sajid Javid, business secretary, had come under pressure to obtain state aid clearance from Brussels, allowing the government to refund the cost of the Renewable Obligation and Feed-in Tariffs for some companies.
Compensation has already been paid for the indirect costs of the EU Emissions Trading Scheme and the UK-only carbon price floor.
Steel industry representatives welcomed the announcement but pressed the government for further action.
Gareth Stace of UK Steel said: “We are relieved that compensation payments can finally now start for most of the steel sector . . . [But] the dumping of Chinese steel continues and must be stopped.”
Steelmakers blame their troubles on a combination of the strong pound, falling world prices for steel, high energy costs and cheap Chinese imports.
Mr Stace also called on the government to ensure that major infrastructure projects — rail, a tidal barrage and airport expansion — use UK manufactured steel. EU competition rules bar favouring domestic companies, though the government has revised procurement guidelines.
Another demand is to exclude plant and machinery from business rate calculations. A review of the rates are due next year.
About 4,800 jobs have been axed or are directly at risk in the steel industry, out of a workforce that numbered 30,000 at the start of the year.
The historic Redcar steelworks in north-east England closed permanently in October, while nearly 2,000 positions are earmarked for redundancy at sites owned by Tata Steel in Wales, South Yorkshire and Scotland.
George Osborne, the chancellor, announced in November that the compensation arrangement will be replaced with an exemption following EU approval, expected by April 2017.
Source: http://www.ft.com/