Category: British Politics Facts and Figures

This document was issued by the House of Commons Library on 28 May 2025.

House of Commons Research Document (in .pdf format)

The document issued by the House of Commons Library in March 2025.

Text of Document (in .pdf format)

SUMMARY

🔧 Overview

The UK steel industry is facing significant challenges due to global overproduction, high domestic energy costs, and the pressing need for decarbonisation. It remains strategically important to the UK economy, both in terms of national security and supporting green infrastructure, but its output and workforce have declined dramatically over the past decades.

📊 Economic Contribution (2023)

• Gross Value Added (GVA): £2.3 billion

• Employment: 33,900 to 40,000 jobs (depending on data source)

• Firms: Around 1,160 steel businesses

• Share of UK economy: 0.1% of total output and employment

🌍 International Context

• UK’s share of global steel production: 0.3% (5.6 million tonnes)

• China’s share: 54% of world production

• EU’s production: 7%, with the UK ranking 8th among EU steel producers

🛒 Trade

• Exports (2023): 3.2 million tonnes, worth £5.4 billion

• Imports (2023): 5.5 million tonnes, worth £7.3 billion

• Trade deficit: £1.9 billion

• EU trade: 68% of exports and 71% of imports

⚠️ Key Challenges

1. Global overcapacity has driven down prices.

2. High energy costs make UK steel less competitive.

3. Trade barriers and tariffs, especially post-Brexit and from the US (Trump’s 25% steel tariff reinstated in 2025).

4. Decarbonisation pressures require costly transitions to low-carbon production.

5. Job losses linked to the closure of traditional blast furnaces (e.g., at Port Talbot and Scunthorpe).

6. Dependency on imported steel raises national security concerns.

🏗️ Industry Restructuring

• Tata Steel (Port Talbot): Moving from blast furnaces to electric arc furnaces (EAFs); 2,800 job losses expected.

• British Steel (Scunthorpe): Similar EAF transition; potential reduction in primary (virgin) steelmaking capacity.

🌱 Decarbonisation & Green Steel

• Steel contributes 13.4% of manufacturing emissions and 2.2% of total UK emissions.

• EAFs (powered by renewable electricity) are preferred over traditional coal-based methods.

• Technologies being explored: hydrogen reduction, carbon capture (CCS), electrolysis.

• The UK lacks firms using hydrogen-based DRI, while Sweden leads in this tech.

🏛️ Government Policy

Labour Government (2024–present):

• Promised a new steel strategy in Spring 2025.

• Created a £2.5 billion fund for green steel through the National Wealth Fund.

• Launched a Steel Council with industry and union reps.

• Emphasising public procurement, investment, and net-zero transition.

Previous Government (Conservative):

• Introduced steel procurement policies.

• Offered energy cost relief (£730m since 2013).

• Initiated trade remedies to prevent steel dumping.

• Set up decarbonisation programs but criticised for slow progress.

🔋 Energy Costs

• UK energy prices are significantly higher than EU counterparts.

• Energy-intensive firms like steel have received compensation, but industry calls for structural reform.

🛡️ Trade and Protection

• UK has steel safeguards post-Brexit (in place until 2026).

• US tariffs on UK steel exports reinstated in 2025 are expected to hurt exports.

• Sector supports a UK Carbon Border Adjustment Mechanism to level the playing field.

📅 Future Outlook

• Industry transition may result in fewer but higher-skilled jobs.

• UK aims to be a global leader in green steel, but needs substantial public-private investment and policy consistency.

• Debate continues on retaining primary steelmaking capacity for national resilience.