Men of rubber and matters of steel!

In a great example of how performative and detached from reality politics is, Parliament was recalled from recess today and a Bill was rushed through both chambers to keep the loss-making British Steel plant at Scunthorpe going. It is essentially a holding position until this business is nationalised and brought under control of the British Government. No private company wants to buy this loss making business so only insane politicians would think this a good idea to make the tax payer fund it.

The crunch question is WHY is British Steel a loss making and to the surprise of almost no one (other than legacy media commentators!) a key reason is Government policy.

The fact of the matter is that efficient British steel production faces significant challenges due to high energy prices and net zero tariffs, which undermine its competitiveness and sustainability. Both of these barriers to successful production are the consequence of Government policy, so the Government is in fact “saving” British Steel from Government!

Steel manufacturing is inherently energy-intensive, relying on processes like blast furnaces and electric arc furnaces that demand vast amounts of electricity and gas. In the UK, energy costs have soared making it one of the most expensive places in the world to manufacture anything. These highly elevated costs directly inflate production expenses, squeezing profit margins for an industry already competing with lower-cost producers in countries like China.

Net zero tariffs, such as carbon pricing and emissions trading schemes, further complicate the equation. Designed to incentivise de-carbonisation, these policies impose additional financial burdens on steelmakers transitioning to greener technologies, like hydrogen-based or carbon capture systems. The upfront capital for such innovations is immense, and tariffs increase operational costs during the transition, particularly when global competitors face fewer or no such penalties.

High energy prices deter investment in efficiency upgrades, as firms prioritise short-term survival over long-term modernisation. For British steel to remain viable, it needs affordable, reliable energy and without this, the sector faces a vicious cycle: high costs reduce competitiveness, leading to job losses and reduced output, further weakening economies of scale.

I believe that you can have Net Zero ideology OR you can have efficient manufacturing. The UK Government is committed to the former yet pretends we can have the latter. It will nationalise this loss making enterprise (£700k loss per day) and the tax payer will pick up the cost. Government is a scam.

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