UK steel sector calls for Government procurement support

Photo: UK Steel

To provide a policy blueprint for the Government’s Steel Strategy, UK Steel has published a new report, Public Procurement of Steel: Time for new thinking for a thriving industry which contains a range of proposals to improve the uptake of UK-made steel in taxpayer-funded projects and highlights the opportunity for the Government, as the single biggest purchaser of steel in the UK, to further support its steel sector by procuring the steel it buys from UK steelmakers rather than buying steel from overseas.

As the largest buyer of steel in the UK, the Government has a unique opportunity to support the domestic steel sector. However, the latest data reveals that one third of the steel it procures is imported, costing UK taxpayers £1.5 billion annually rather than supporting UK steel producers. Over the next decade, Government steel requirements will exceed £4.3 billion without even accounting for major initiatives such as carbon capture and storage, hydrogen infrastructure, nuclear energy, and offshore wind.

To shine a light on these missing sectors in Government figures and to show the real opportunity for both the Government and the British steel sector, UK Steel commissioned an independent report from LumenEE to identify the total steel needed for the rapid expansion of the UK’s offshore wind sector, out to 2025.

Offshore wind experts LumenEE estimate that up to 25 million tonnes of steel will be needed in the next 25 years for offshore wind investment around the coast of Britain. This single opportunity alone is worth approximately £21 billion in steel purchases. This case study in just one sector shows the massive opportunities for the UK industry across the wide metals supply chain if there was a supportive procurement policy environment.

To ensure that taxpayer money stops being spent on importing foreign steel for major infrastructure projects, UK Steel is setting out five key recommendations to ensure that, where reasonably possible, steel made here in the UK stands at the front of the queue when Government is making purchasing decisions on steel. A change in culture is needed to reap the benefits of Government-funded steel procurement. To do this is a win for the Government, for the UK steel sector and for the highly skilled, well-paid jobs that our sector provides. Buying steel from abroad is letting taxpayers’ money leave our shores, where it could be better spent here, turning our sector around and building the UK economy.

Drive growth
Change is clearly needed so that offshore wind demand and the ways it can drive growth for the steel sector and the UK are built into the forthcoming Steel Strategy. Data gaps should be filled to better plan for projected demand in other key markets and evaluate disparities in national steelmaking capacity and capability to meet these needs.

Better data and a full understanding of the challenge will shape the much-anticipated Government Steel Strategy and ensure the Government can strategically invest its £2.5 billion National Wealth Fund share earmarked for our sector.

Key recommendations to boost domestic steel purchases include:

1. Public Procurement Contracts — the UK Government should use the contribution our steel industry makes to national security to mandate or incentivise the use of UK-made steel, where possible, for projects of energy, defence, and related infrastructure via domestic content stipulations in contracts where public funding or subsidy is involved utilising World Trade Organisation (WTO) opt-outs.

2. Contracts for Difference (CfDs) — in future auctions, the Government should evaluate the bidders’ contributions to sustainability, resilience, and local content, with these criteria applying to at least 30% of the volume auctioned annually, as the EU is currently implementing without challenge in its Net Zero Industry Act.

3. Nationally Significant Infrastructure Projects — these should be required to adhere fully to the Procurement Policy Note for Steel5 and, given their criticality for our economy, be subject to local content requirements of not below 30%.

4. Procurement Policy Note for Steel (PPN) — the existing PPN should be strengthened to require developers and public bodies to justify why they did not use UK-made steel, if it was available, and require a mandatory consultation of the forthcoming UK Steel Digital Catalogue.

5. Investment in steel supply chains — a public-private partnership should drive investment into steel supply chains, which will attract inward investment, create jobs, drive economic growth, and ensure the UK develops resilient supply chains in the face of uncertain geopolitics.

Prioritises homegrown production
Gareth Stace, UK Steel director-general, said: “The UK steel sector stands ready to partner with the Government to build a strong Steel Strategy that prioritises homegrown production. Strategic procurement can transform taxpayer investment into a win for the economy, safeguarding well-paid jobs and revitalising our industry.

“The LumenEE findings on offshore wind alone illustrate what is at stake: £21 billion in steel purchases that could drive a major upturn in UK production. Without decisive action, we risk losing this opportunity and continuing to fund foreign competitors instead of our own economy.

“Incorporating our recommendations into the Government’s Steel Strategy will not only reduce reliance on imported steel but also position the UK as a global leader in ‘green’ and resilient supply chains. By addressing data gaps and planning for future demand, the UK can ensure its £2.5 billion National Wealth Fund fuels a thriving steel sector that meets the challenges of a ‘net zero’ future.”

www.renewableuk.com RenewableUK CEO Dan McGrail said: “UK Steel’s report, and work produced by www.lumenee.cc LumenEE, could not be more timely. The technical findings illustrate the components our sector will need for the next quarter of a century and work in lockstep with the template set out in the Industrial Growth Plan paper. This is the first time that the offshore wind sector’s technical steel requirements have been laid out for Government, the renewable industry and suppliers to see, component by component. If the Government and steel industry carefully invests the £2.5 billion steel fund in response to this huge growth area, then the wind industry’s Industrial Growth Plan, UK steel production, fabrication and national supply chains can all fall into step as a huge economic boon for the UK.”

Anil Sayhan, Offshore Wind Growth Partnership Programme director, said: “The Bill of Works is a pivotal resource in defining the offshore wind industry’s steel requirements. The report fulfils a key Industrial Growth Plan action and identifies a 25 million tonne opportunity to supply UK offshore wind farms. We look forward to working closely with steel manufacturers and fabricators to help them capitalise on the significant opportunities presented in the Bill of Works to foster a stronger UK supply chain.

“OWGP is deeply committed to advancing a sustainable, robust, and competitive UK supply chain. We extend our thanks to UK Steel for publishing this insightful report and for inviting us to contribute our expertise through the Bill of Works advisory board.”

Jonathan Clemens, British Constructional Steelwork AssociationCEO, said: “The British Constructional Steelwork Association (BCSA) membership represents structural steel fabricators and the associated supply chain. Our membership must attain the coveted Registered Quality Steelwork Contractor (RQSC) assessment by demonstrating a professional approach to all aspects of their businesses and providing fabricated steel solutions that last.

“The BCSA believes this to be an important report detailing a way in which the UK Government and industry can work together and align to provide skilled jobs over the next three decades through a UK-based supply chain providing a vital more sustainable energy source and a greener economy. BCSA membership represents the highest standards in quality and competence with respect to fabricated steel for the construction industry and civil engineering projects, with the offshore market proving to be an area for growth and investment.”

Alasdair McDiarmid, Community assistant general secretary, said: ”UK Steel’s new report lays out practical steps the UK Government can take on procurement to ensure that Britain buys more of its own steel, providing value to the taxpayer while safeguarding our strategic industry and jobs for the future. The recommendations put forward to reform processes for awarding public contracts, maximising the use of locally-sourced steel and updating national procurement guidance, are all common-sense measures which the Government could adopt swiftly.

“We also endorse the accompanying LumenEE report, which rightly highlights huge opportunities relating to Britain’s unprecedented future investments in wind turbine manufacturing. This is the kind of transformational investment we have been calling for over many years, and has enormous potential to strengthen UK supply chains and deliver high quality jobs right across the country.

“As the LumenEE report references, the proposed investments in wind power infrastructure support a powerful case to invest in Britain’s capacity to make the steel the industry will need. This is a massive opportunity to create a prosperous end-to-end green domestic supply chain, and to harness the capabilities that already exist in UK steelmaking.

“Investing in green infrastructure is essential for our economy and our planet, and it cannot be delivered without a strong and sustainable British steel industry. That is exactly why we need to use steel produced here in the UK to green our economy and bring jobs to our communities.”