This Ain’t Tetley, Tories
Tata’s decision to finally exit the steel industry in Britain has managed to rip the mask off a deep malaise in the British industrial policy. It has also exposed a permanent fault in the current government’s austerity policies.
Usually, I’d expect at least some amount of rancour against a large foreign company putting over 15,000 jobs at risk. It’s perhaps a testimony to Tata’s track record in Britain that nobody — not workers, not unions — have been demanding its head on a platter. Instead, the villain of this piece has been cast in steel as the Tory government, its new industry minister Sajid Javid, and chancellor of the exchequer (finance minister) George Osborne’s mania for China.
There’s widespread outrage that at the time everyone in the steel industry knew that the Tata board was meeting, and its British operations were on the agenda, Javid was in Australia, later admitting that he was taken by surprise, and PM David Cameron was on holiday in the Canary Islands.
Add that to the fact that Tata’s top bosses were sitting in London for months in advance, and that it’s not the Tata style to give up on something, and the accusations about Javid begin to make sense.
Unlike his predecessor Vince Cable, Javid has neither the ‘India’ understanding nor the personal relationships that both Cable and Tony Blair’s industry minister Peter Mandelson had.
Besides, it’s fairly clear that Cameron and Co didn’t expect Tata to take such an extreme step, as it was seen to badly hit their reputation in Britain. The Tatas have walked away with a reputation for integrity and honour, and pouring billions of investments into keeping the plants going. At the end of the day, it ended up with Indian shareholders of Tata Steel and lenders subsidising Welsh workers, while the workers’ own government not lifting a finger to help.
The grouse against the British government has been clear for a while. First, as part of its clean energy policy, energy costs in Britain are among the highest in Europe, making its steel plants uncompetitive. Next, the biggest problem the global steel industry has is dumping by China. The US has put prohibitive anti-dumping tariffs, but Britain has been at the forefront of blocking the EU from doing so.
Domestically, most blame this on Cameron and Osborne’s obsession with China, ‘kowtowing’ to everything Chinese. This hasn’t been very popular, now that the Chinese have put tariffs on European steel. It’s fairly well known that the Tata management has for years been asking the British government for help within the proper EU parameters. But why would cost-cutter Osborne bother? The Tatas were taking the losses.
Now the government will probably have to foot a much higher bill if it wants any buyer to take over Port Talbot: share costs of modernising, reducing the energy bill and, most critically, taking on the enormous pension bill that the Tatas inherited from Bri- tish Steel. They’ve also announced they’re going to encourage state entities like the National Health Service (NHS) to buy British.
Duh. If you’d been spending enough on infrastructure and boosting domestic demand, that’s what you should have done long ago. And no, if the energy policy objective is cleaner steel, then the government should pay the higher prices for cleaner steel, instead of buying the cheap stuff from China.
With 15,000 — and another 25,000 more, in the supply chain — workers probably losing their jobs, the question isn’t whether Britain should or should not have a steel industry. If these plants shut, the bill in welfare alone is enormous. Moreover, Britain would lose a highly technical skill base (there’s very little steel production anyway).
What’s become obvious is that however Thatcherite Javid wants to be, if government policies on, say, Chinese imports or energy prices are directly affecting a private manufacturer’s operations, the government had better start taking more responsibility.
The Tatas have walked off at the right time. It’s not just about Port Talbot or crisis management. Without a clear and coherent industrial and manufacturing policy — which the Cameron government does not have — there’s very little any private buyer will manage to achieve.
Boss, how’s business?