The UK government has decided to abandon plans for a cash grant competition aimed at funding innovative new steel projects, which was part of a broader strategy to support the steel industry. However, officials maintain their commitment to a £2.5 billion investment in the sector, indicating that alternative funding avenues will be available for businesses.
The decision to cancel the grant competition comes as the government prioritizes support for struggling steelworks, with the objective of improving their profitability and competitiveness. This follows a series of financial challenges faced by the UK steel industry, including high energy costs, increased tariffs, and global overproduction.
Maintaining domestic steel production is considered vital for national security by government officials. Currently, four of the six major steel companies in the UK receive state financial support, which was part of Labour’s electoral pledge last summer.
The Department for Business and Trade (DBT) had planned to announce the grant competition in conjunction with the upcoming steel strategy, which is expected to focus on identifying investment opportunities. However, significant costs incurred from taking over the management of British Steel in Scunthorpe and covering wages at Speciality Steels UK (SSUK) have impacted the feasibility of the grant proposal.
Despite the cancellation of the grant scheme, funding for steel projects may still be accessed through the government’s National Wealth Fund, which has £27.8 billion allocated for industrial and clean energy initiatives. These projects will need to incorporate private financing and will face competition from other sectors.
Government support for the steel industry also includes assistance with energy costs. However, concerns remain regarding the long-term financial stability of the sector, particularly in light of recent EU tariff announcements that may adversely affect British steelmakers. There are discussions within the government about potential private sector mergers among steel companies, although any such plans would require cooperation from current owners.
The situation regarding British Steel has become complicated, with ongoing government management following concerns about its ownership and financial viability. SSUK has also been placed under the oversight of a government-appointed liquidator, while efforts continue to find a suitable buyer.
Source: https://www.bbc.com/news/articles/c4g35rzlgjvo?at_medium=RSS&at_campaign=rss