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Save our Steel. The Case for Nationalisation

4th April 2016

Save our Steel. The Case for Nationalisation

By Mick Brooks

The threatened closure of the Tata Port Talbot steel works puts 15,000 jobs directly at risk. All in all 40,000 jobs could go, with the British steel industry decimated and working class communities devastated.

The Tory government has shown incompetence and worse in the face of the crisis. Sajid Javid, the minister directly responsible, went off on a jolly to Australia in the full knowledge that a vital Tata board meeting was poised to take a decision on the industry’s future.

Critics have pointed out that:
• Warning signs such as the closure of Redcar were completely ignored.
• UK steel was made to pay much higher business rates than its competitors.
• Energy prices are much higher in the UK than elsewhere.
• There was no instruction to public bodies to buy British where possible.
• The UK has consistently argued against protective tariffs on Chinese steel in the councils of the European Union (EU).

The Tories have disadvantaged the domestic steel industry in every way possible. Now they say they will reverse some of these policies. Too little, too late.
Is this just indifference? When Javid finally met the steel workers he hushed them up with talk of ‘commercial sensitivities’. The Guardian suggests (02.04.16) that “the purpose of the meetings had been to ‘muzzle’ outspoken figures fighting to save jobs in south Wales.” In other words the Tories are taking advantage of the desperation of trade unionists and community leaders to co-operate to save steel jobs in order to stop them speaking out and fighting the closure effectively. If true this is contemptible, but all too typical.

There is also suspicion that the Tories are soft on China because they are dependent on Chinese expertise to build and run their Hinckley white elephant nuclear power station in Somerset. Their behaviour has been abject.

But even if the government had been prepared to stick up for British steel jobs, there is a global crisis to deal with. The world is awash with steel. China has been blamed. Chinese industry is 70% state owned. These state owned corporations have privileged access to loans from the state owned banks. A free world market in steel is a fiction. Every country is striving to protect its own steel industry by all means necessary.

China produces half the world’s steel, 806 million tonnes last year. But this is likely to fall to 783 million tonnes in 2016 because of global overcapacity. China will drop 23 million tonnes this year, more than twice the UK’s total output. Chinese steel workers are also suffering from the crisis.

Overcapacity has provoked a full scale price war. The USA has imposed tariffs of 266% on some Chinese steel products! The EU has a much slower, more bureaucratic procedure to protect the European steel industry from unfair competition, made worse by sabotage from the UK.

Protective tariffs may be necessary as a short term emergency measure; but they are in any case by no means sufficient to save British steel. It is quite clear that private ownership has failed the industry.

Even before the Second World War it was evident that British steel was falling behind its main rivals, Germany and the USA. The industry was briefly nationalised by the 1945-51 Labour government but immediately privatised when the Tories took office afterwards. The Restrictive Practices Court discovered in 1964 that the industry was effectively run by a cartel, the British Iron and Steel Federation, a price-fixing ring which ran as a conspiracy against the public. Ten firms produced 80% of British steel. The Wilson Labour government renationalised the industry in 1967, but made mistakes in doing so.

The British Steel Corporation (BSC) was loaded with excessive compensation to the private owners. For instance Colville’s share price was28 shillings (£1.40) in 1965, yet the old owners got 47/6d (£2.37) per share. Interest payments to the capitalists who had sucked the industry dry burdened BSC for years to come, as did the longstanding lack of investment. In addition BSC was run just like a capitalist firm by managers recruited from the private sector. There was no attempt to tap the enthusiasm of the workforce for a new beginning in the industry by introducing workers’ control.

Lord Melchett was one such Chair of BSC. He joked that if there was no investment within ten years British steel could be turned into an industrial museum for visitors from Japan to marvel at. Most notoriously Ian MacGregor was appointed as Chair in 1980 by Margaret Thatcher. At that time there were142,000 workers in the industry,  MacGregor’s brief was to close plants, slaughter jobs and take on the unions. That is what he did. He then went on as head of the Coal Board to take on the miners in the 1984-85 strike. 

The steel industry was privatised by Thatcher in 1988 and merged with a Dutch firm to form Corus. At the time this was the third biggest steel maker in the world. The decline of UK steel continued in private hands, and British steel was sold to the Indian firm Tata in 2007. Now it seems Tata wants to pull out. Private steel owners have been afflicted by chronic short-termism. The steel industry has been passed around like a parcel from one owner to another
It has been the plaything of private interests for too long. In 1947 Labour published a pamphlet contemplating steel nationalisation. It stated: “In controlling this industry, upon which the whole economy depends, these men are answerable not to the nation but to sectional interests, interests which look upon steel as just a way of making money – like dance halls or snack bars.”

This remains true. The nation needs steel. The steel industry must be nationalised, but not like last time. British steel needs workers’ control and management. We need to work out democratically what sort of steel industry we need and develop a long term plan not just to save the jobs but also to formulate a long term growth strategy for the future.

Polls show that 62% of the population supports steel nationalisation. They are right. The Tories will ask, ‘How can we afford nationalisation’? The alternative is to pay workers to rot on the dole and destroy working class communities. We can’t afford NOT to take over steel.

When the banks such as RBS, HBOS and Lloyds TSB failed in 2008, the Labour government pumped money in - billions of our money. Northern Rock was nationalised outright. In total we shelled out £1.2trn. The Labour leadership felt that we needed the banks. An industrial country needs a steel industry much more than bankers who gamble with our money and come crying to the taxpayer to bail them out when they lose.

The Tories have ruled out nationalisation. They intend to butcher the industry. But in the last budget they handed out money to the rich in the form of cuts in Capital Gains Tax, Corporation Tax and Income Tax for high earners. The money is there. The need is there. It’s time to take over the steel industry.