Uk steel companies fear missing out on contracts to build the hs2 high-speed railway, despite boris johnsons promise to put them at the front of the queue, after officials said eu rules prevented them from setting domestic content targets.
The first phase of the 106bn hs2 programme, from london to birmingham, requires about 1.3m tonnes of steel for bridges, viaducts, tracks and stations. trains are due to run by 2031.
With the government betting on infrastructure spending to spur economic recovery following the covid-19 crisis, the prime minister has pledged to do absolutely everything we can so that uk steel manufacturers are at the front of the queue for the great projects we are going to construct.
But industry bodies have said the tendering framework used by hs2, the publicly-owned company delivering the scheme, does not prioritise use of uk-made steel and structures.
Both hs2 and the government have indicated that public procurement law, based on an eu directive, means the project cannot discriminate by location.
Government officials hinted the situation might not change much next year after the brexit transition because of world trade organization commitments.
This restriction raises doubts about how much of hs2s budget, which has more than tripled since the first estimate, will benefit the uk economy. at least 10bn worth of contracts have already been announced and construction work formally began last month.
It is also likely to reignite the debate around state aid government subsidies or special help for industries an area where the uk has pushed for greater flexibility in trade talks with the eu.
The british constructional steelwork association, which represents fabricators that bend, cut and weld the metal, wants 90 per cent of the 400,000 tonnes of structural steelwork it estimates will be needed for the new railway to be uk sourced.
Theres plenty of competition in terms of steel contractors who have the right capability in the uk, said association chief executive david moore, who has written to ministers and hs2 to request a minimum local content requirement.
In the absence of a requirement for minimum uk content, the prime minister risks failing to deliver on his promiseto put uk steel manufacturersat the front of the queue for major infrastructure projects, he said.
Hs2 said it and the main contractors took into account wider social, economic and environmental benefits when tendering, adding that some steelwork contracts had already been awarded to uk suppliers.
Over 95 per cent of hs2s supply chain is uk-based, with two-thirds of those smes. the project already has 10,000 workers on it and recently announced 22,000 more job opportunities, with more to come, it said.
Uk procurement law does not permit public sector bodies to set targets for goods and services based on country specific locations, it added.
The government said 98 per cent of hs2 contracts had been awarded to uk-based companies so far, adding that ministers had asked hs2 to make it easier for uk steel producers and indeed all other potential domestic suppliers to compete for work.
Government officials said that following the uks departure from the eu, there was an opportunity to reform procurement rules to create a more flexible regime.
But they added that any new system would have to comply with international obligations and treat on an equal footing suppliers from countries with which the uk has trade agreements that include a public procurement element, such as japan.
Hs2 does not directly purchase steel; it is done by the four main contracting consortiums undertaking the major civil engineering work.
Uk companies became concerned after one of the main contractors, the eiffage-kier-ferrovial-bam (ekfb) joint venture, awarded a contract for 9,000 tonnes of steel bridgeworks to a french supplier that is a subsidiary of eiffage.
Seven fabricators had tendered for the contract, including two from the uk. hs2 ltd wrote in a letter to the bcsa that the type of metal required weathering steel plate could not be procured domestically to the required size.
However, according to people familiar with the situation, two uk steelmakers british steel and liberty steel had previously told hs2 that they could supply the material.
Ekfb said: the weathering steel plate tender did not exclude uk fabricators, who were asked to quote but were unsuccessful. importantly, the uk fabricators who quoted were sourcing their plate from european mills, not uk.