Thursday 31 March 2016

Conservative Steel Hypocrisy

It's a perfect storm for the Tories. The latest episode in the ongoing crisis in the steel industry caught the government entirely on the hop, with practically the entire cabinet basking in sunnier climes or doing whatever MPs normally do during their Easter break. Scurrying back to London overnight to show the cameras that they're taking the awful news about Port Talbot entirely 110% genuinely seriously, they catch themselves in another bind by straight away ruling out the most sensible policy: the immediate nationalisation of Tata Steel holdings in the UK. Politically, it's like damping down a fire with a litre of paraffin.

The politics of the situation couldn't be more stark. The Tories' strongest gambit has always been their cruel-but-competent line, and it seems enough voters have allowed them to get on with it as long as a) they're not the ones at the sharp end, and b) the Tories appear to have got the engine running smoothly and it's motoring the country in the right direction. This is where things are starting to get tricky.

Their bloody-minded treatment of the junior doctors, the forced u-turn on bashing the disabled, and now their seeming willingness to let 40,000 steel and supported jobs disappear is widening the pool of folk at the sharp end. These are "the strivers", not the skivers. The second is their "vision thing", the much-heralded but entirely vapid "long-term economic plan" is supposedly about Britain's manufacturing renaissance, a rebalanced economy both away from the South East and financial services, and some nonsense about "march of the makers". With all these infrastructure projects in the pipeline and the decision to replace Trident to be taken soon, to have the core base of your manufacturing economy facing shutdown is a headache the Tories could do without, especially when they're singly ill-equipped to deal with it.

There is a cultural/political dimension over the refusal to do for Port Talbot what Labour did for the banks. Part of it is their utter indifference to the fates of the industrial worker. "They do not give a shit", as Paul Mason puts it. And part of it is their deeply skewed, deeply sectional view of how the world works. Taking at face value Tata's claim that Port Talbot is losing just under a million a day (a figure that, rightly, isn't entirely accepted by all concerned), should the government take it on the tax payer could lose up to £350m/year. I say lose, but this money would support tens of thousands of jobs, keep communities viable, prevent many thousands from developing physical and mental health problems, and still churn out a useful product at the end of it. All this is invisible to the Tories, and yet they have zero issue with a £2bn loss for RBS last year, contributing to a colossal £50bn flushed down the proverbial since 2008. What's good for finance isn't good for strategic heavy industry, it seems.

From the Tories' point of view, confronted with China flooding global markets with cheap steel (they have to keep the mills running at the price of severe social dislocation and likely unrest) there is little point having a British steel industry. If steel gets nationalised, then what industry will next ask for a bail out? And what would that do to the chancellors finely-tuned (cough) figures? Well, that's assuming the Tories are spinning a wrong but honestly-held view. The evidence suggests otherwise. It transpires that the Tories have spearheaded efforts to prevent the European Union from doing anything about Chinese steel dumping - in other words, this isn't the headwinds of the global economy mindlessly wrecking all in its wake, the destruction is aided and abetted by our government. Just think about the absurdity of it for a moment: a right wing Conservative government is letting a strategic industry collapse to curry favour with the world's leading communist power. There is profaning the sacred, and then there is this.

The question remains whether they're willing to take another political hit for their intransigence. It's worth noting Jeremy Corbyn was on the ground immediately traipsing around and offering a very clear Labour view - not bad for an "ineffective leader". Meanwhile, all the government can do is dither and mouth platitudes about finding the best solution, which will probably mean throwing subsidies and guarantees at a buyer whereby the profits are privatised and the losses effectively nationalised. Unfortunately for them, coming on top of all their recent difficulties it's hard to see how continued inaction won't inflict considerable political damage to their rapidly re-toxifying brand. It's the least that they deserve.


Boffy said...

I'm not sure for whom renationalisation would be "the most sensible policy." It may be for British capital, because in the past such nationalisation has been the means of slashing jobs, as happened with the coal industry after 1945, using public money to put in the investment that previous owners had failed to do, before then selling off what is left. I'm not sure that such a policy is very beneficial or sensible for the steel workers, or other workers who pay for that policy by their taxes.

The steel crisis has not arisen over night, and it is part of a failure to develop an EU wide industrial strategy, which is the minimum required to plan these huge industries over the longer-term, and avoid the continual eruption of these crises.

If the figure of £1 million per day is anywhere near accurate, I would suggest a better solution for workers would be to take that £365 million a year figure, multiply it by say 10 years, and then hand the resultant £3.7 billion to the 40,000 workers who are likely to lose their jobs. That's about £100,000 each. I'm sure those workers would make better use of that money than a string of chancers taking over the steel industry, as happened in the past with BL, or than a series of hatchet men like Michael Edwards or Ian McGregor, brought into a nationalised steel industry would

Lidl Janus said...

Can't really agree with Boffy, as this is a weird instance in which to deploy helicopter money (which his plan amounts to).

I'd go with (assuming a spherical economy in a vacuum) nationalisation, but conditional on a) share ownership for employees upon privatisation, and b) a clear plan for diversification and modernisation (i.e. make some or all of the place do something other than steel (which is clearly proving unprofitable) - solar panels, 3D printing, something to do with graphene, whatever). Also c) don't do all the horseshit detailed as current government policy in the original blog post, obviously. Perhaps also d) announce it as a first wave of wider South Wales economic development, which might head off the whole State Aid bullshit (which is probably a government excuse for not doing anything anyway, but still).

Igor Belanov said...

@ Lidl Janus

The UK steel industry isn't restricted to South Wales.

Stu said...

Just an aside, the Brown Government didn't bail out RBS and HBoS to save a few thousand jobs in financial services. It bailed them out because they held the current accounts, savings, and mortgages of half the UK population, not to mention the accounts of a significant proportion of UK businesses large and small. And letting them die would probably tip the entire sector over affecting the rest of the population. And of course banks employ a lot of people on quite ordinary salaries.

If it were just a few sharp-suited investment bankers who would have faced the chop they'd have let it go. The Tories let Barings go bust after Leeson, and Darling let Lehmans go bust (he could have backed a Barclays-fronted rescue).

Chris said...

"And letting them die would probably tip the entire sector over affecting the rest of the population. And of course banks employ a lot of people on quite ordinary salaries."

This is why all banks should be brought under state control. You can't have a sector so crucial to everything else being run for private interest.

The other thing is that if the banks had been allowed to die the vast majority of savers would not have lost their savings because up to £35k of those savings were guaranteed.