A re-nationalisation of the British steel industry has been ruled out by the government, but there is a chance for the workers to step in and take control.
Fifteen thousand jobs are under threat at Tata Steel, which said its UK arm is now valued at “almost zero”, according to the Financial Times. And with other steelworks in crisis too, the future of the entire industry in the UK is under threat.
The answer to saving Tata – and other struggling steelworks – is a co-operative. A co-operative owned, or part-owned, by employees will secure jobs and ensure profits are reinvested back into the organisation, while the steel industry itself will not be under threat – so long as the demand is there.
Two problems have led to the downfall of British steel:
- It’s cheaper to manufacture steel in China. In answer to this, the EU has been looking at imposing a higher tax on imports into the EU
- A £15bn pension fund – which is one of the top 20 liabilities in the UK.
Traditionally, a company in crisis can be bought out by employees and formed into a worker co-op. But Tata is reportedly looking to off-load the entire operation with no cost – but with a promise to invest £125m into the pension fund over the next two years.
So, there is no “worker buy-out” as such, though a robust business plan and financial support is needed. Employee-owned organisations of this size do exist. John Lewis, at £9bn and 87,000 employees, is the biggest example, but there are others such as engineering consultants Mott MacDonald Group (15,000 employees) and Arup Group (11,000).
But there is not an exclusive need to make this an employee-owned enterprise.
There are many other stakeholders, and even members of the public, who can invest in the future of British steel. According to thinktank IPPR, there are another 25,000 jobs downstream that could be impacted by the loss of steel. So there are stakeholders to consider.
‘The UK’s steel workers need the government to be as proactive in helping the steel industry as it was in bailing out the banks in 2008’
The cost of balancing the British steel books is eye-watering. A simple, and crude sum, of 40,000 workers divided by the £15bn pension fund sees an investment of £375,000 each. (There’s also the cost of production to look at too).
Naturally, this is not feasible, and this is where the government should step in. The New Economics Foundation argues that a government bail-out, as was done for the banking industry, is the only (non-private) way.
Its environment director David Powell said a bail-out is the minimum the government can do. In a blog, he says: “The UK’s steel workers need the government to be as proactive in helping the steel industry as it was in bailing out the banks in 2008.”
According to the NEF, such a bail-out could create some time to find a solution to save the steel industry, and the UK economy.
But a bail-out cannot sustain an unprofitable industry which, according to press reports, is losing £1m a day.
The government says it is considering all options to save the 15,000 jobs. Has it considered the co-operative model? Will it work?