A poll for the Unite union found that 56 per cent of people in the UK are in favour of using public money to take a stake in the steel industry and help safeguard its future. Do you believe the government should intervene?
Yes Richard Selby, director of Pro Steel Engineering
The government should intervene in the steel industry. The price of steel is just beginning to recover, and investment from the UK government would ensure a full recovery – giving a boost to a fragile industry that we rely on heavily for jobs, especially in Wales. Government-funded relief should focus on helping steel firms with business rates and energy tariffs.
In a difficult climate, these are huge costs to those working within the industry and could be the breaking point for a struggling firm.
The industry also has a huge problem with cheap imported steel, particularly from China, which is dumped on world markets below cost price. A government subsidy could allow British steel manufacturers to lower the cost price to compete with cheaper suppliers. Italy’s steel industry was facing a dire future until the government intervened.
Government intervention will be easier if and when we leave the EU. As the EU produces more steel than it needs, member states have agreed to let uneconomical producers go bust. There are exceptions to this rule, such as if the loss of the industry will result in a “serious disturbance to the economy”, which would happen if we lost our steel industry. As a country dependent on its manufacturing sector, we cannot allow that to happen. @prosteeleng
Richard Selby is a member of IoD South Wales
No Chirag Shah, CEO of Nucleus Commercial Finance
Government intervention in the UK steel industry is an inefficient response to the mechanics of the free market. The odds are stacked against the sector’s survival: higher labour and energy costs compared to other countries, as well as old pension liabilities, mean the industry is struggling. But the knee-jerk reaction to call on government to step in and save the day is not the solution.
There is no guarantee that nationalisation of the steel industry will succeed in keeping the sector afloat. No one has quantified the level of government support that is needed, nor what is required to make the UK steel industry competitive, not to mention that the EU does not allow state support of a business if it would distort competition in the single market. It’s a potential rabbit hole that could get deeper and deeper, diverting public funds from services such as transport, education and health, and pushing them towards an uncertain sector.
Rather, the onus is on the private sector to step in and help one of its own if it’s considered viable, though this does require the sector to do its due diligence and decide how risky the investment is. Time will tell if the British steel industry will survive, but we live in a capitalist economy and this means that, ultimately, the market should decide whether or not an industry survives, not the government. @nucleusfinance
Steel industry intervention – your views
Should the UK steel industry be bolstered with government cash? Let us know your views below