Can we save the steel industry?

The British steel industry is reeling from the news that Tata Steel is to sell all its businesses in the UK. The Mumbai-based company says it can no...

The British steel industry is reeling from the news that Tata Steel is to sell all its businesses in the UK.

The Mumbai-based company says it can no longer continue operating here after losing around £2bn in five years, in part due to an abundance of steel produced cheaply in China for international markets.

Within hours of the announcement, calls for government intervention came loud and clear from politicians and trade unions taking up the fight to save thousands of jobs, looking for a viable plan for survival.

The New Economics Foundation (NEF), an independent think-tank which promotes economic, environmental and social justice, is among those calling for a government bail-out to buy time so that a proper long-term strategy for saving jobs can be decided.

David Powell
David Powell

Associate director of environment, David Powell, believes co-operative models could help save the day for the British steel industry and that the iconic steelworks of Port Talbot – where 5,500 of Tata’s 15,000-strong workforce are employed – could be the catalyst for a rescue operation.

Mr Powell said: “We need to guarantee a future for the steel industry and there are all sorts of different things to consider including new private ownership or co-operative ownership. We are not against renationalisation but technically there are challenges. EU state aid rules allowed the government to bail out banks, but with something like the steel industry it is much tougher unless there are major security issues.”

Labour leader Jeremy Corbyn was among the voices calling on the government to consider renationalisation as an immediate solution.

This was echoed by shadow chancellor John McDonnell, whose ‘four-point plan’ also included calls for business rate support, and public procurement to buy more British steel for state infrastructure projects. An online petition calling on the government to save the steel industry gained over 100,000 signatures in 24 hours.

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

Prime minister David Cameron insisted nationalisation was not the answer, as did business secretary Sajid David – putting them at odds with small business minister Anna Soubry, who had said it might be a temporary solution while a buyer was sought. As pressure continues to mount, there is no plan currently on the table.

The NEF points out one of the main solutions proposed is for higher tariffs to be imposed on steel imports to the EU – as they have been in the US.

The steelworks at Redcar were bought by Tata and then closed in October 2015. [Photo: Archangel12/Flickr]
The steelworks at Redcar were bought by Tata and then closed in October 2015. [Photo: Archangel12/Flickr]
“Until this is addressed, any new owner – whether private, co-operative or nationalised – risks perpetual buffeting by global forces,” said Mr Powell. “But the UK has been criticised by the EU for resisting attempts to crank up tariffs.

“Whatever happens, 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.

“It’s possible that a very different way of running the Port Talbot plant can be found – like a new co-operative model of ownership, as we set out in our 2013 report with the TUC outlining an industrial strategy for Wales.

“The root causes of the UK steel crisis go back decades, during which successive governments’ attention has focused on one sector: finance. While the interests of the City have been prioritised and the freedom it demanded granted, the government has been forced to step in to mop up the crisis that resulted. And the dominance of finance has hurt other sectors, such as steel.

Editorial: A co-operative answer to the steel crisis?

“Areas like Port Talbot have been left to stand or fall on the decisions taken dispassionately in boardrooms on the other side of the world.”

While the government is exploring other ways to take action, they could look north, to Scotland.

Holyrood’s pro-active approach to the steel crisis has succeeded in saving jobs. A task force set up last year led by First Minister Nicola Sturgeon and backed by Co-operative Development Scotland has helped clinch a deal whereby commodities trader Liberty House is now poised to buy Scotland’s last two big steelworks from Tata Steel.

Last year, Tata said it would mothball the two plate mill facilities in Motherwell and Casbuslang, which have roots dating back about 130 years, with the loss of 270 jobs.

Ms Sturgeon told the Scottish parliament final negotiations were under way to secure a deal that would see the Scottish government buy the plants and then immediately sell them on to Liberty for the same amount. It is understood the price will be a nominal amount, and Liberty will take on the liabilities of the plants and the costs of additional investment.

Port Talbot's steelworks [photo: Ben Salter/Flickr]
Port Talbot’s steelworks
[photo: Ben Salter/Flickr]
To attract a buyer the Scottish government last month said it would reduce business rates on the two sites for one year. Relief will be available to any new operator provided the sites continue to be used for steel production. It has also invested £195,000 to keep some workers on standby at the plants.Similarly – and following lobbying by North Lincolnshire MPs – Tata is also in talks with investment group Greybull Capital to sell its long products business based at the Scunthorpe steelworks, which makes goods such as rail tracks and beams.

But the rest of Tata’s empire looks doomed to closure, affecting 15,500 workers at its other UK plants, including South Wales, Rotherham, Corby and Shotton. In Wales alone, it is estimated up to 40,000 people could be affected by the closure of Port Talbot.

David Powell called on proper, sectoral and regional industrial strategies.

He said: “This challenge is very real in areas beyond the steel sector – for example the need to wean high-carbon areas like Aberdeen from fossil fuel jobs to a sustainable, employment-rich future. One of the reasons why our team is looking at this is we need steel to build a low- carbon economy.

“Vulnerable industries desperately need leadership and a hands-on approach from government – particularly if they need to transition fast to ultra-efficient processes or future proof green energy industries.

“The government has to help Port Talbot – now.

“But bailing out a proud and nationally important industry isn’t really a plan: it’s what you do when you’ve actively decided not to have a plan, until it’s virtually too late.”

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