State Papers: Cork Irish Steel plant's State aid package caused rift between Bruton and Major

The European Commission had recommended allowing State aid for Irish Steel together with all the EU member states excluding the UK

State files show Mr Bruton accused Mr Major of allowing his government to go along with an argument put to them by British Steel that aid for the State-owned Haulbowline steel plant (pictured) would lead to significant job losses at British Steel’s plant in Shelton near Stoke-on-Trent. Photo: Richard Mills

Taoiseach John Bruton complained to the British prime minister, John Major, in December 1995 that the British government’s plans to veto a State aid package by Ireland for the struggling Irish Steel plant in Cork could sour relations between the two countries and even impact on the Northern Ireland peace process.

State files show Mr Bruton accused Mr Major of allowing his government to go along with an argument put to them by British Steel that aid for the State-owned Haulbowline steel plant would lead to significant job losses at British Steel’s plant in Shelton near Stoke-on-Trent.

In a letter to Mr Major on December 14, 1995, the Taoiseach said a veto by the UK on the proposed State aid for Irish Steel would “have the most serious implications for relations generally between our countries”.

Mr Bruton warned:

This inevitably would cause difficulties in regard to our joint dealing with the Northern Ireland situation. 

He claimed public opinion in Ireland would regard a veto by Britain in relation to Irish Steel as “a gratuitously hostile act towards a friendly country.” 

The Taoiseach claimed only 10% of products being made by Irish Steel were also being produced at the Shelton plant, while Irish Steel had agreed to cap production of such products at their then level of 35,000 tonnes. He pointed out that the company had also given an undertaking not to expand into other products within the Shelton range.

The Irish government had proposed a 100% privatisation of the Haulbowline steel plant with a once-off payment of IR£35m in State aid, including a write-off of a 10-year-old non-performing loan of IR£17m.

In his letter, the Taoiseach reminded his British counterpart that any provision of State aid required the unanimous consent of the EU Council of Ministers following a positive recommendation from the European Commission.

Mr Bruton pointed out that the Commission had recommended allowing State aid for Irish Steel together with all the EU member states excluding the UK. He reminded Mr Major that much more significant aid packages in relation to six plants in Portugal, Spain, Germany and Italy had not been blocked by the UK.

“European policy for all countries would become extremely difficult if narrow self-interests were pursued,” said Mr Bruton. The Taoiseach said he was convinced the arguments advanced by British Steel were invalid as Irish Steel’s operations would have no direct or indirect effect on British Steel’s Shelton plant.

“There is no issue of saving one set of jobs at the expense of another,” he added. Mr Bruton urged Mr Major to reconsider the British government’s stance on the issue and not block the proposals to provide further State aid to Irish Steel.

He claimed persisting with the veto would “have the most damaging consequences to our relationship and will make our continuing cooperation on all other matters extremely difficult.” 

The Haulbowline Island Amenity Park which was opened in January 2021. It has previously operated as Irish Steel, then as Ispat before the steel plant finally closed its doors permanently in June 2001. Photo: Larry Cummins

Several days later, the Taoiseach wrote again to Mr Major to state that the Irish government needed “a UK person” to be able to deal with them “without constant reference to British Steel.” Mr Bruton said the Irish government could do a deal but were unable to do so until they knew there was also a willingness by the UK to move on a similar basis.

Irish Steel was eventually sold by the State to Indian tycoon Lakshmi Mittal for £1 in 1996. The plant, operating under a re-branded name, Ispat, finally closed its doors permanently in June 2001 with the loss of 450 jobs.

A new public facility, Haulbowline Island Amenity Park, was opened on the site of the former steel plant in early 2021.