A RESCUE, YES, BUT AT WHAT COST?
THErE is a bitter irony in the fact that the selfstyled saviour of British Steel is a Chinese conglomerate. For China has driven our industry to the edge of destruction by its unscrupulous practice of dumping cheap steel on to world markets.
Having forced our producers to their knees, the Chinese are now buying up much of what remains of our battered steelworks at a knock-down price.
not only that, they are doing so with the blessing of our Government and the promise of taxpayer support as a sweetener.
Of course, the proposed deal with Jingye will come as a huge relief to many families in the town of Scunthorpe, where the steelworks dominate the local economy.
But – and I wish for their sake that this were not the case – there are some very difficult questions about this takeover.
For a start, the timing. Is it mere co-incidence that the announcement – manna from heaven for Boris Johnson – comes smack bang in the middle of the election campaign?
Perhaps the Government hoped no-one would be churlish enough to object to a solution that promises to save so many jobs.
Believe me, I can imagine how they are feeling in Scunthorpe.
My late father was an electrician in a Teesside steelworks and, when he was made redundant in the 1980s, he lost so much more than a job.
His self-esteem and sense of purpose ebbed away and he drifted into despair, a story that was all too common. I wouldn’t wish that on any other family.
Li Ganpo, the former Communist official turned industrialist who is chairman of Jingye, insists he will be a benign owner. (So, of course, did his predecessors including the private equity barons at Greybull, who were the last people to try to make a profit from British Steel.)
In a presentation he made to UK officials a couple of weeks ago, Li Ganpo talked about how he will ‘create a splendid future.’ His chequebook, he says, is open for investment and he even promised: ‘We will never sell British Steel to another buyer’ – a pledge that may come back to haunt him.
The reality is that Chinese steel producers have a history of being highly predatory.
Only last month the European Commission said it had opened an investigation into whether China and Indonesia are dumping hot-rolled stainless steel in the EU.
As the British Steel bid landed, we learned that the City is rapidly becoming the world’s biggest centre outside China for trading in its currency, the renminbi. That is cause to celebrate but we cannot afford to be starry-eyed. Yes, China is changing fast, but it remains a repressive communist regime, as the violence on the streets of Hong Kong shows all too clearly. There has already been a row over allowing telecoms firm Huawei to supply equipment for the UK’s new 5G network because of the potential security risk.
Handing over control of a large player in a strategic industry such as steel to a Chinese buyer is equally controversial.
BEIJInG is using its growing economic clout to consolidate power. It does not invest in ailing steelworks in Scunthorpe or indeed in anything else out of benevolence, but to further its own interests.
If the Jingye deal does go ahead then at the very least the UK Government should retain a golden share and a seat on the board. Jingye should have to give binding undertakings on jobs and investment and guarantees to supply-chain firms.
British Steel has few options but to see this proud industry, once the envy of the world, parcelled off in a cut-price sale to the Chinese is nothing short of a national tragedy.