The return of a Tory MP from Redcar, whose steel plant closed in 2017, is a symptom of a feeling of abandonment in many former industrial communities. Brian Parkin brings another update on the sorry saga of the fire-sale disposal of British Steel. The Tory government acts with disregard as yet another strategic industry goes to the wall, and the future of thousands of workers and their communities are put up for sale to the lowest bidder. But models for resistance do exist and must be popularised.
Since last May, 5,000 steel workers in Scunthorpe in Northern Lincolnshire and Skinnigrove in Teesside have been waiting for the outcome of horse-trading over the ‘rescue’ plan for British Steel. In July, Ataer Holdings, a manufacturing venture wing of the Turkish armed forces pension fund was named as the favourite bidder. However, Ataer failed to meet the pension fund and future investment commitments, and in November the bid was dropped.
In 2015 a shady venture capital company called Greybull Capital, operating from a Sloane Street address in London’s West End, acquired 70% of the steel making plant from the outgoing owner TATA. Greybull, with no previous manufacturing expertise other than quick raid takeover and shut-down raids, took over the entire UK capacity of long section rolled steel manufacturing. Their bid of less than £200 million was entirely debt financed. Although it was obviously a wide-boy rip off, the bid was largely uncritically supported by the Community and Unite unions.
The bulk of the operations are in Scunthorpe, where some 4,000 workers produce ‘basic’ steel at two enormous blast furnace plants, smelt large volumes of scrap steel at electric arc furnaces. At Skinnigrove, slabs of ‘raw’ steel are rolled into long sections used for construction and railway track.
For Greybull, the challenge was too good to miss. The sale price was a give-away and the plants had full order books. Furthermore, compliant ‘partnership-culture’ trade unions seemed to guarantee a pacified workforce. Meanwhile, the Tories paid scant attention to Greybull’s past record of having driven the Comet retail group, along with Monarch Airlines, into the ground. They wanted a short-term industrial disaster to be hushed up, regardless of even mid-term risks or consequences.
Carbon credit unworthy
As both a venture capital and asset-stripping operation, Greybull had no long-term interest in their British Steel acquisition. They thought they could rely on profits from the existing order books, interest from any associated real estate sales, and subsidy income transferred into revenue realisations. Along with a waiver on any pension fund liabilities and a 12-month wage freeze, they could simply claim money for nothing. But there was more.
Metal manufacture, like power generation, is a carbon emitting operation, for which carbon ‘caps’ are set, or carbon ‘credits’ can be bought or sold on a commodity market. For its forthcoming Financial Year (then 2018-19) British Steel was allocated £150 million of carbon credits. However, when they saw that the revenues from carbon credit sales were currently looking more lucrative than from sales of steel, Greybull sold off their UK carbon allocation to make a killing. Then, gambling that at a later stage the traded price of steel would rise, they requested the UK government to give them a grant to buy back their carbon credits in order to resume steel production.
The UK government refused. Without carbon subsidies, Greybull’s British Steel operations were rendered uncompetitive. Greybull duly declared British Steel to be a loss-making liability and announced the closure of its UK steel making foray. They then walked away scot-free from any liabilities, including pensions or redundancy payments.
Receivers and deceivers
Since the Greybull fiasco, the British Steel workers have continued to work in the pay of the UK Insolvency Service, a taxpayer funded scheme, pending a successful bid. Meanwhile, all information regarding potential bidders is put into ‘due diligence’ in order to prevent public scrutiny stopping the government making a quick sale. This is also intended to keep the workforce quiet, since any final redundancies that occur while on the UKIS payroll will mean no length of service or final salary redundancy pay.
First there was a bid from Ataer, but after 10 weeks of confidential talks that was withdrawn. Then in October 2019 a new bidder in the form of Jingye – a Chinese industrial conglomerate chaired by Li Ganpo, a former chairman of the Chinese Communist party – came forward with a £50 million offer. The bid promises a long-term investment of £1.2 billion, provided drastic cuts in production costs can be agreed. However, although a ‘private’ enterprise, Jingye still has to obtain the approval of the Hebei (Province) Bureau of Commerce and the Hebei development and Reform Commission prior to obtaining final approval from Beijing.
However, Jingye has a relatively low ranking (47th place) in world steel manufacturing operations. There is some suspicion the Jingye could be only going through the motions of a British Steel purchase in order to create European market space for Chinese finished steel products. The possibility has certainly occurred to the French government, who regard the British Steel plant at Hayange in northern France as a key supplier of rail track to the state-owned SCNF rail company, as well as to municipal tramway operations.
Bets and debts
Should the Jingye deal go through, there would still be the significant matter of clearing the outstanding debts of the formers British Steel operation. These include raw materials, port and harbour dues, rail freight charges, power bills and general supplies. Should these prove to be difficult to reschedule or write-off, Jingye would be starting its UK steel operation with a considerable debt burden.
Where it comes to employee terms and conditions, Jingye has clearly stated that ‘considerable savings would be sought’. This spells further gloom regarding the future viability of the Iron and Steel Industry Pension Scheme. The scheme, for which past private steel operators Corus and TATA have failed to take responsibility, currently stands at a £13.5 billion deficit. The scale of the deficit is so large that it is put beyond the financial scope of the government funded pension rescue service.
Despite its former scale, the UK steel industry has a history of union submissiveness and compliance with employer diktat. This goes back many generations when the ‘iron masters’ used a combination of patrician corporatism with outright threats to keep the union, the British Iron and Steel Allied Kindred Trades Association (BISAKTA), in an enforced junior partnership mode. Although most of the steel industry was nationalised in 1947 along with other key industries, the Iron Masters, retaining their organic relationship with the Tory party hierarchy, continually and partially successfully lobbied for the reprivatisation of ‘their’ industry.
But it was in post-war phases of private ownership that the glaring under-investment of a strategic heavy industry became obvious. It is only due to the renationalisation of the steel industry in 1968 that the bigger and more technically advanced remnants to this day survive. However, in 1981 a new Tory government with a radical economic strategy of privatisation and a programme of confrontations with the unions, launched an assault on the steel industry. An ensuing strike in defence of plant capacity and jobs, and for the retention of the industry in state ownership, was ‘led’ by a totally toothless and supine union leadership, whose most notable official was the aptly named Sir Bill Sirs.
The union refused to engage in picketing or call on the TUC for coordinated assistance, and the defeat of the strike served the industry up on a platter for both privatisation and massive capacity cuts. This also whetted the appetite of the government for breaking the miners in a provoked strike three years later.
Since the 1981 strike defeat, a rolling programme of plant closures have seen Shotton, Lackenby, Corby, Don Valley, Newport and the mighty Ravenscraig works all close. The huge blast furnace operation at Redcar in North Yorkshire closed as recently as 2017. All gone, and without a single day of action from the unions.
The previous round of steel closures saw Redcar go without a fight. It has left behind it a community now famous for being one of the main centres of crack-heroin addiction in the UK. In 2019, the newly deindustrialised constituency returned, for the first time, a Tory MP.
Scunthorpe still offers some hope, albeit a tenuous hope, but only if the workforce breaks from a union leadership devoted to cap-in-hand partnerships and a determination to satisfy any private sector shark with the promise of a compliant and submissive workforce.
There are some recent examples of such a break, however small in scale and short-lived. In the winter of 2017 workers at the BiFab yards in Burtisland, Methil and Lewis, Scotland, occupied their workplaces as a response to a wholesale closure and loss of jobs dedicated to the construction of renewable energy units.
Similarly, at Harland and Wolff in Belfast, another occupation against closure was accompanied with the demand that production should be swung over to renewable energy technologies. These actions sent a signal of hope to others facing arbitrary and the wholesale loss of employment. However, in both instances, without wider support and thus the ability to extend the action, both disputes ended in fizzle-out defeats.
But all need not be lost. Facing a new Tory government with a huge working majority, many socialists are now saying that the game is up, until the next general election at least. But however big the Tory majority, they will not be allowed to govern in a vacuum. They will be confronted by events and processes that will at times be beyond their comprehension, let alone their control. There will be resistance and it is the job of revolutionaries to give that resistance both hope and direction.
That is why the struggle has to shift gear. The passive hope that a new Greybull Capital, Jingye or any other such carpet bagger might come to the rescue is futile. Equally, the dependence on compromising union officials with partnership deals just won’t cut. Both approaches will sacrifice the power of autonomy of the workforce, diluting resistance as well as setting them up for a mauling at the hands of the next gangster who comes along.
Occupations, nationalisation, workers’ control
Socialists have to be the advocates of ideas and actions that unite, encourage and win gains for our class. Therein lies the route to confidence, organisation and solidarity. In times when morale is high and the bosses are on the defensive, a strike, or even the threat of a strike, can be enough to win real and concrete demands. But now is not such a time – and given the scale and threat of a ruling class back-lash – such limited actions will often have to be augmented by different means.
Work-place occupations, which take the means of production hostage, also give a base from which the workforce can solidarise and from which the actions can radiate to other workplaces via pickets and deputations.
The demand for nationalisation, places the fight for jobs and for transition to alternative production (for instance in renewable technologies) in the wider social domain. It creates a wider public arena from which the actions can be politicised and made popular.
The demand for workers’ control can expose the unfitness of those who manage industry on behalf of capital. It is an illusion to imagine there can be a workplace of socialism within a sea of capitalism, but such ideas and actions could be indispensable in raising class-consciousness and confidence. Such ideas proved to be incendiary material in spreading workers’ confidence in the Portuguese revolution of 1974-75.
Never too late
The future of the steel plants at Scunthorpe and Skinnigrove is not yet certain. But what is certain is that without a fight the remaining units of British Steel will fall into the hands of free-booting capital or close altogether for want of investment interest or government action. But the prospect of over 5,000 steel workers, their families and their wider communities being mobilised around an occupation based on radical demands, could be inspirational for the wider working class.
In the event of closure, the experience of Motherwell, home of the Ravenscraig steel works, or Redcar, offer a clear warning. Communities robbed of confidence, cohesion and pride. But an alternative is possible, based on solidarity from which the seeds of a better future can be sown. Whatever the odds, such are the ideas upon which a long overdue resistance must be forged.