Press Release

Aberavon MP Says Steel firms face threat from Unfair Carbon Tax

6th May 2011

Aberavon MP Hywel Francis has taken part in a delegation of MPs from Wales and Yorkshire together with representatives of UK Steel and the steel union, Community. They met the Environment Minister, Greg Barker MP.

Dr Francis said,

“The Government is proposing to bring in what it calls a carbon floor price which is a tax on fossil fuel (coal and gas) power stations. What this means is that the cost of electricity will increase dramatically especially for the steel melting shops that use an enormous amount of electricity. UK Steel reckons the steel industry will have to pay an extra £16.2 million in 2013/14 and an extra £32.3 million in 2015/16”

Dr Francis added,

“Steel has had a dramatic turn-around thanks to increased demand from China, Brazil, Turkey, India and the growth economies of Europe like Germany. But the Government cannot ask the steel industry to find an extra £30 million plus in taxation without putting a question mark over the industry’s future”

In talks at the Department of the Environment and Climate Change, Hywel Francis called for an increase to the climate change levy rebate for steel firms and to open up the electricity market to greater competition to force down prices. In addition, since this increased burden on steel comes as a result of a Government tax, Ministers should bring in direct compensation for electro-intensive industries which is permitted under EU rules.

He told Environment Minister, Greg Barker, that it was an illusion to assume that steel plants would stay forever in the UK. The decisions on future investment of our three major steel employers, Tata, Celsa (South Wales) and Outukumpu (Sheffield) are all taken in foreign countries –India, Spain and Finland. If the Government creates an anti-steel climate certain consequences will be drawn whatever the work of the employees and their unions.

Dr Francis stated,

“Ministers need to think out of the box and learn from more nimble EU policies that do not threaten manufacturing. The Government’s ambitions to rebalance the economy will come to naught unless there is a major Ministerial rethink on the application of a carbon reduction tax which so directly threatens the modern steel industry.”

Dr Francis finally added,

“I am supporting the broad campaign across the country led by my own Union, Community and by steel MPs to stop this unfair tax which could destroy so many steel jobs locally”


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