The UK steel industry stands at a crossroads, with significant opportunities awaiting a shift in procurement strategies. The steel sector, which is crucial to the UK economy, is calling on the government to prioritize the use of domestic steel in taxpayer-funded projects. According to a new report by UK Steel, there is a multibillion-pound opportunity for growth in the steel industry if the government changes its approach to public procurement. The report, titled Public Procurement of Steel: Time for New Thinking for a Thriving Industry, advocates for a strategic shift towards buying more UK-made steel, particularly for major infrastructure projects.
Currently, the UK government is the largest purchaser of steel in the country. However, approximately one-third of the steel it procures is imported, amounting to an annual cost of £1.5 billion to taxpayers. Over the next decade, government steel requirements are expected to surpass £4.3 billion. This includes essential investments in projects such as offshore wind farms, carbon capture and storage, nuclear energy, and hydrogen infrastructure. With proper policy changes, UK Steel believes these funds could be directed to support domestic steel production, which would provide a boost to the UK economy and help create thousands of jobs.
One of the most compelling cases for boosting domestic steel procurement comes from the offshore wind sector. The UK is one of the world leaders in offshore wind energy, with ambitious plans to expand capacity in the coming decades. The LumenEE report, commissioned by UK Steel, estimates that up to 25 million metric tons of steel will be required over the next 25 years for the expansion of offshore wind farms. This represents an opportunity worth approximately £21 billion in steel purchases. With the right procurement policies, this could result in a significant increase in demand for UK-produced steel, benefiting both the industry and the broader economy.
To tap into this vast potential, UK Steel has laid out several key recommendations for government action. These include mandating or incentivizing the use of UK-made steel in projects related to energy, defense, and infrastructure. The report also suggests strengthening procurement guidelines to ensure that UK-made steel is given priority in public contracts. For instance, it proposes that at least 30% of the steel volume in government contracts should be sourced from UK manufacturers. Additionally, the government should use its £2.5 billion National Wealth Fund to invest in the UK’s steel supply chains, ensuring that they are robust and resilient in the face of global economic uncertainties.
Incorporating these recommendations into the government’s forthcoming Steel Strategy could transform the UK’s steel industry. By addressing data gaps and understanding future demand, the government could make more informed decisions about steel procurement. UK Steel believes that aligning procurement policies with domestic production capabilities could provide a win-win situation: it would reduce reliance on imports, support skilled jobs in the UK, and strengthen the country’s industrial base. Furthermore, the potential for growth in the offshore wind sector alone underscores the need for urgent action. If the UK can capture even a portion of the steel demand for offshore wind, it could significantly improve the outlook for the steel sector.
The report also highlights the importance of collaboration between government and industry to ensure the success of these initiatives. UK Steel’s Director-General, Gareth Stace, emphasized that strategic procurement could not only revitalize the steel industry but also contribute to the UK’s green transition. Investing in domestic steel production is vital to meeting the country’s net-zero goals, as the industry plays a crucial role in the development of renewable energy infrastructure. In particular, offshore wind requires a range of specialized steel products, such as heavy gauge plates, rebar, tensioning strands, and castings. By ensuring that these components are sourced from UK manufacturers, the government could support the growth of a sustainable, domestic steel supply chain.
Other key stakeholders in the renewable energy and steel sectors are also backing the call for reform. Dan McGrail, CEO of RenewableUK, praised UK Steel’s report for highlighting the steel requirements of the offshore wind industry and the potential for collaboration between the steel and renewable sectors. Similarly, Anil Sayhan, Director of the Offshore Wind Growth Partnership, stressed the importance of a strong UK supply chain to meet the steel demands of offshore wind projects. Both industry leaders see the government’s support as critical to unlocking the full potential of these industries and ensuring long-term growth.
The benefits of prioritizing UK-made steel go beyond just economic growth. By fostering a stronger steel industry, the UK can also improve its national security. Steel is a vital material for infrastructure, defense, and energy projects, and increasing domestic production would reduce the country’s dependence on foreign suppliers. This could help mitigate risks associated with global supply chain disruptions and ensure that the UK is better equipped to meet future challenges.
In conclusion, the UK steel sector is poised for significant growth, but realizing this potential requires a change in government procurement policies. By prioritizing UK-made steel in public contracts, particularly for major infrastructure projects like offshore wind farms, the government can create thousands of jobs, boost the economy, and strengthen national security. The recommendations put forward by UK Steel, if implemented, could pave the way for a more resilient, sustainable, and prosperous steel industry that benefits the UK for decades to come.
