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Report accuses Government of 'washing its hands' of Redcar steel crisis

The closure of Redcar's SSI plant left 2,200 people out of work, with thousands more in the supply chain Photo: ITV Tyne Tees

A government business committee has criticised the Department for Business, Innovation and Skills for 'failing to be alert' to the crisis, which has engulfed the UK steel industry.

Thai owned SSI closed its Redcar plant two months ago after its UK arm, SSI UK, went into liquidation amidst mounting debts.

It left 2,200 steelworkers out of work with an estimated 4,000 more jobs lost within the wider supply chain across Teesside.

Today's report claims that the Department for Business, headed by Business Secretary Anna Soubry, focussed too closely on seeking compensation for redundant steelworkers rather than working harder to rescue the plant.

The vast site, now under the management of the Official Receiver, sits dormant.

The chance of it ever being recovered for future use is now regarded as "unrealistic".

Equally, the cost of cleaning up the derelict plant is widely agreed to be in the hundreds of thousands of pounds.

Hartlepool MP Iain Wright chaired the committee which has released the report:

My concern is that the Government should have explored much more thoroughly options to keep the Redcar plant open to retain the industrial assets and the skills rather than washing its hands too quickly, allowing it to close down and inflict severe damage on future manufacturing capability.

Failure to consider effective mothballing not only undermines capability for the UK steel industry in the future but could cost the taxpayer a fortune in clean-up costs.

This approach is concerning should other vital plants the UK steel industry also face closure as a result of the global pressures on the industry. "

– Iain Wright MP, Hartlepool, & Chair of the Business, Innovation and Skills Committee
SSI Steelworkers fought to save the Redcar plant, today's report accuses ministers of 'allowing it to close down' Credit: ITV Tyne Tees

The report also claims that a 'lack of action' at European Union level as well as a failure from British Government to push for EU action left the UK industry exposed to the dumping of Chinese steel in Britain.

It found that this, together with the global oversupply of steel, created a 'perfect storm' for the UK steel industry, leaving it vulnerable. The report also claims that ministers did not investigate the potential for maintaining existing facilities and preserving the skills base.

The Redcar plant now sits idle, with chances of it ever re-opening now considered 'unrealistic' Credit: ITV Tyne Tees

The Government have now woken up to the steel crisis and have begun to take action.

But this recent activity still needs to translate to concrete results for the industry and the communities they sustain. The Government have relied on crisis management rather than ongoing engagement with the steel industry; they now need to commit to taking the necessary measures to ensure a sustainable future. Steel is a strategic industry and Ministers have recognised its strategic importance. The inaction with steel doesn't bode well for other strategic industries if they were to face a crisis.

Lessons need to be learned from steel. The Government therefore needs to take a far more active approach in the future in assisting British industries and manufacturing".

– Iain Wright MP, Hartlepool and Chair of the Business, Innovation and Skills Committee
Business Secretary Anna Soubry spent days in Redcar during the crisis in October Credit: ITV Tyne Tees

In a statement responding to today's criticism, a spokesperson from the Department for Business, Skills and Innovation said:

“While this report rightly recognises that the steel industry has been subject to complex global challenges which no one simple solution can solve, it also recognises the significant steps this government has taken to help our steel industry.

We have taken clear action on relief for energy costs, anti-dumping, procurement and EU emissions directives, meeting key industry asks. Whilst the Government is doing all it can to help the industry, the government cannot dictate the commercial decisions, operations or financial performance of private companies."

– Spokesperson for Department of Business, Innovation and Skills
Once a global giant of the steel industry, Redcar's steel plant is now in the hands of the Official Receiver Credit: ITV Tyne Tees

Meanwhile, regarding the report's claims that the Department for Business could have done more to save the Redcar plant, a spokesperson told ITV News Tyne Tees:

"SSI UK had lost over £600m in just three years, had accumulated even greater debts and the price of the steel it produced had halved in the past year alone. If the BIS Select Committee had a magic bullet that could have saved the plant against these conditions, they certainly kept it to themselves."

– Spokesperson for Department of Business, Innovation and Skills