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Friday, April 01, 2016

Did the UK Tory Government sacrifice British steel to secure better relations with China?

To be frank I have been seriously unimpressed with the reaction of UK Tory Ministers to the crisis encompassing the UK steel industry. Media interviews with Ministers have produced bland, non-committal statements that have led me to question whether they are just going through the motions. We do not get the impression of a real commitment to saving the industry.

We are also getting mixed messages. One Minister says they are ruling nothing out whilst another says that nationalisation, even for the short term is not an option. And of course for all the talk about tackling the dumping of cheap steel, it was UK Ministers who stopped the EU taking more severe action with the Chinese.

And that is the subject of this piece in The Times. They report that Tata has accused David Cameron of sleepwalking into the steel crisis by helping China to block EU efforts to increase tariffs on its cheap imports.

That an executive from the group told a Commons committee weeks ago that British support for China could lead to an “even greater steel crisis”, underlines their lack of confidence in the UK Government.  The report adds that EU officials are also privately critical of Britain over its reluctance to raise tariffs for China, which it has been wooing to try to generate better trade links.

The paper says that senior Tata officials are said to be amazed at the prime minister’s failure to heed their warnings that China would dump cheap steel on the market, undercutting Britain. In the light of this revelation the failure of the Business Minister to travel to Mumbai in person earlier this week takes on much greater significance.

In addition, Britain did not seek EU permission to give steelmakers exemptions from green taxes on power consumption in earnest until December, long after German steelmakers had secured the breaks. The government instead put priority on subsidies for the Chinese-backed Hinkley Point nuclear project.

If UK Ministers are floundering then perhaps it is because their own role in helping this crisis develop has dawned on them. They need to put that right by acting decisively now, putting the full weight of the Government behind a rescue package and not allowing ideology or their relations with China get in the way.
I'm sure China is a major factor.

Another is Javid's explicit desire to reduce raw material costs to some UK manufacturers (I would dearly like to know who these are; perhaps they include the contributors to Conservative party funds who blocked support to Sheffield Forgemasters). It is noticeable how the government changed its expressions of support for Port Talbot after Javid came back from his jolly in Australia.

But this is very short term thinking. China will be able to raise its prices again when the EU is no longer capable of supplying its steel needs from its own resources.

More devolution makes this a particularly Welsh problem.

If this was happening in the NE of England the English taxpayer would have few qualms about stumping up the costs for whatever the government thought necessary. After all, these people are one and the same, they sing the same national anthem, support the same national football team, fight together in wars, laugh at their shared history, plan for the future together and generally rub along well enough.

But what of the Welsh? We have always wanted to be viewed a little differently. And so it comes to pass.


I rather think the words kow tow were missing from your observations on the Tory Government's approach to their relations with China. Reparation for the unequal treaties of the 19th century perhaps.
If we have a vision, imagination optimism and think of the future why not use Welsh steel to regenerate Ravenscraig in Scotland, a site that has been a waste ground for a long time. An infrastructure for the future Sanjeeb Gupta has made enquiries into Port Talbot. The Government must be lent on
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