Planned steel investment grants will no longer go ahead

Government plans to give businesses a cash grant for innovative new steel projects have been abandoned.

Ministers insist they will stick to a manifesto pledge to spend £2.5bn on the steel industry - and there will be alternative ways for businesses to access funding.

But a competition that would have awarded grants for new ideas will not go ahead after a decision was made to prioritise supporting loss-making steelworks instead.

The government says it wants to "create a competitive business environment" for the steel industry by helping the nation's remaining steelworks become profitable businesses.

The UK's steel industry has faced major financial difficulties in recent years due to high energy prices, increased tariffs and a glut of steel in the global market.

Maintaining the ability to produce primary steel is seen by Downing Street as an important issue of national security.

Four of the UK's six main steel companies currently receive some form of financial support from the state.

Labour pledged to spend £2.5bn on the steel industry in its election manifesto last summer.

That was expected to include a competitive process in which companies could bid for government grants for steel projects.

The Department for Business and Trade (DBT) had hoped to officially announce that plan when it publishes the government's steel strategy next month.