Committee publication · Correspondence · 1 April 2025
Letter to the Secretary of State for Business and Trade relating to a plan for Steel, 1 April 2025
From: Business and Trade Committee
Inquiry: Industrial Strategy
Summary
The Business and Trade Committee writes to the Secretary of State for Business and Trade on 1 April 2025, providing formal advice to inform the Government's forthcoming steel strategy. The letter establishes five tests against which the Committee will scrutinise the strategy's content and delivery, covering long-term vision, trade safeguards, procurement, energy costs, and scrap steel supply, emphasising the urgency of action given pressures on British Steel's Scunthorpe blast furnaces.
Key findings
- Global excess steelmaking capacity is rising sharply; the OECD expects it to increase significantly in 2025–2026, with projections of 630 million tonnes by 2026—around 100 times UK production—adding severe downward pressure on prices and profitability.
- US 25% steel tariffs (effective 12 March 2025) are already forcing UK customers to cancel orders or seek alternatives; the Committee is more concerned that cheap steel diverted from the US market could flood the UK.
- Energy costs remain the single largest competitive disadvantage for UK steelmakers; electricity prices in the UK have been persistently higher than in France and Germany despite successive government support schemes.
- Only two-thirds of government-purchased steel is made in the UK; the Committee notes the public procurement pipeline omits steel requirements for offshore wind, solar, carbon capture & storage, and hydrogen projects.
- The Committee requests three-monthly progress updates from the Secretary of State on steel strategy delivery and any significant developments, and urges immediate ministerial pressure on British Steel to reach a deal keeping Scunthorpe's blast furnaces operational.
Tone
ProceduralTopics
Key actors
Jonathan Reynolds MP, Sarah Jones MP, Jon Bolton, Alasdair McDiarmid, Rajesh Nair, Tata Steel, British Steel, UK Steel
Notable line
“"managing the next 12 months, if not two or three months, is critical" 4 , not least because of the imperative of keeping the blast furnaces at Scunthorpe in operation.”
Key Quotes
“The new strategy must be a timely response to the pressures our industry faces.”
“If we allow the blast furnaces to close—to run down at Scunthorpe—essentially we are cutting off that customer base. If we are serious about wanting to maintain steelmaking in the UK, particularly for critical applications such as infrastructure construction, we need to try to maintain that supply chain, keep that supply chain in place.”
“… it is unreasonable to assume that the structural global overcapacities and their negative trade-related impact on the EU's steel industry, which triggered the use of the safeguard, will disappear on 1 July”
“… the problem is due to both the high wholesale cost of electricity and the extent of network charges.”
“… single biggest element" of the UK's "lack of competitiveness", which "outstrips every other element or factor of production." 28 • UK Steel recently …”
Source · parliament.uk record ↗