In the News

Tata may close Port Talbot steelworks without a £1.5bn subsidy

Geoff Riley

22nd July 2022

This is a good article to use when evaluating the benefits and costs of government subsidies.

Steel production in the UK accounts for 11% of C02 emissions from the UK's industrial sector and around 2.5% of total emissions.

Multinational producer Tata Steel wants to invest in two electric arc furnaces which recycle scrap steel and are less carbon intensive than blast furnaces. But, according to Tata, the economics does not stack up unless the government is prepared to provide financial support of £1.5 billion.

Across their UK operations, Tata Steel employs 8,000 people. So the future of their major steel plant raises important regional economic issues.

The Trade Union GMB which represents many of the workers employed at the Port Talbot steelworks in Wales argued that "UK steel is a critical part of the nation's industrial infrastructure and central to our national security . . . It's essential the government act quickly and show they are serious about this vital industry."

Should any subsidy come with the government receiving a stake in the business and a seat on the board? Or, is there a sufficient case to be made - given the strategic importance of steel as a manufacturing industry - for what remains of steel production in the UK to be nationalised?

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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