David Cameron will come under pressure today to prevent further steel plant closures as MPs claim that taxpayers face clean-up costs of billions of pounds.
Insolvency experts warned last night of “significant distress” across the industry as Tata Steel confirmed that it will lay off 1,200 workers in Lincolnshire and Scotland.
Unions said that the industry was gripped by fear. Companies blame a flood of subsidised Chinese steel for worsening a crisis that coincides with the state visit of Xi Jinping, the president of China. Mr Cameron is braced for a Commons clash over the issue at prime minister’s questions today.
Sajid Javid, the business secretary, said he would not “stand by”, and suggested major steel-hungry infrastructure projects such as HS2 could help. He stressed that there were limits on what the government could do to save the industry from global forces.
Labour is likely to demand that Mr Cameron speeds up EU approval for moves to subsidise steel companies’ energy bills to stave off imminent closures. Officials admitted it could take weeks before the package passed a Brussels test on state aid.
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Mr Cameron also faces questions on the cost of allowing the plants to go out of business after Anna Soubry, the small business minister, admitted that taxpayers would cover the bill to clean up the Redcar plant, which closed with the loss of 2,200 jobs.
Ms Soubry insisted that the liquidation of its Thai owners, SSI, made a temporary shutdown of the plant impossible but accepted that it also meant there was no prospect of recovering the costs of cleaning up the site.
Unions estimated that it would cost £500 million to redevelop the land for other industrial uses, prompting Stephen Kinnock, Labour MP for Aberavon, to warn that further closures could see clean-up costs run into the billions.
Tata Steel, the Indian-owned company that owns much of what used to be British Steel, blamed the UK and Chinese governments for the job losses and said the industry was in a struggle for survival. Unions said the British and Chinese premiers meeting in London “should hang their heads in shame”.
Tata said it is to cut 900 jobs at its main Scunthorpe steel mill and a further 270 in its plants south of Glasgow. The cuts come after 720 redundancies at Tata Steel Rotherham.
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This week 1,700 jobs, mainly in the West Midlands, came under threat when Caparo Industries, the group owned by former Labour peer Lord Paul, fell into administration.
Tata said the latest job cuts were “in response to a shift in market conditions caused by a flood of cheap imports, particularly from China, a strong pound and high electricity costs”. It said that imports from China had quadrupled, causing steel prices to fall steeply.
The industry has warned that carbon emission penalties levied by the Treasury on top of steelworks’ usual energy bills are hobbling the sector.
Roy Rickhuss, general secretary of the steel union Community, said: “The government should hang its head in shame at today’s news.
“The cruel irony of the prime minister welcoming the Chinese premier as UK steel jobs are cut partly due to Chinese steel dumping will not be lost on the UK’s steelworkers and their communities.”