The Port Talbot steel works in Wales. © Press Association Images
The Port Talbot steel works in Wales. © Press Association Images

Public sector buyers must take into account 'true value' of UK steel

Public sector contracts that source steel will be forced to consider a range of “social” factors rather than price alone as part of new measures the UK government believes will aid Britain’s beleaguered steel industry.

The announcement, made in the wake of Tata Steel’s decision to sell the Port Talbot steel works (pictured), are aimed at levelling the playing field for British steel producers and allowing them to compete against cheap, principally Chinese, imports.

Tata has refused to guarantee it will not close the Port Talbot site in South Wales, which employs 4,000 people, if a buyer is not found.

Since October 2015 central government departments have been told to consider the social and economic impact – rather than just the price - of the steel they source.

But now all public procurement involving steel will need to consider factors such as responsible sourcing and the training suppliers give to their workforce.

The steel’s carbon footprint, the health and safety of a supplier’s staff and the social integration of disadvantaged workers must also be taken into account.

“This will allow buyers across all major projects to take into account the true value of British steel, including its social impact,” said the Cabinet Office.

Contractors working for the public sector will also be required to advertise steel tenders so that UK firms can compete to win deals.

A list of approved steel suppliers who will be forced to meet stringent criteria around health and safety, environmental impacts, responsible sourcing, supply chain management and training the workforce, will be established.

The aim is for the government and its contractors to use the list to further level the playing field for UK steel suppliers.

Sanjeev Gupta’s Liberty House company has become the frontrunner to buy Tata’s UK steel business including the Port Talbot steelworks.

A Liberty House statement said: “While (Port Talbot’s) downstream operations will be of interest we’re clear that taking on the iron and steel making facilities present a huge challenge.
“Our engagement will depend very much on what Tata and the Government are prepared to do to help save these businesses."

In reports Gupta has been quoted as saying that he believes Port Talbot’s jobs can be saved but the huge blast furnace at Port Talbot represents an obstacle to the purchase.

Liberty House believes the British steel industry’s future depends on recycling scrap steel with arc furnaces rather than melting down huge imported slabs with blast furnaces.

Meanwhile Labour has presented a four point plan which it claims will “rescue the UK steel industry”.

Labour said it would aim to stabilise the industry and provide security for steelworkers, create a level playing field for steel by reviewing business rates and energy costs.

It would also fast-track key infrastructure projects requiring large amounts of steel and engage with the workforce, management and customers to turn around the industry. 

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