A recent briefing paper from the Industrial Communities Alliance, an umbrella organisation of local authorities largely from former steel and coal mining communities, starkly states, ‘The UK steel industry is in a life and death struggle’. Corby borough council is a member of the alliance and does not need reminding of what that life and death struggle looks like. In 1980, at the time of the steelworks closure, the combined steel and tube plant in Corby employed some 11,500 people. The impact of that closure had a devastating impact on the town and surrounding area. Overnight thousands of people were thrown on the dole. The individual impact of the closure was cushioned by what were at the time relatively generous redundancy payments. Money from Europe, in the form of what were known as ‘make up’ payments, provided those who took lower-paid jobs or education courses with 80 per cent of their former steel salaries for two years. However, many of those people never worked again. I worked at British Steel in Corby throughout the 1970s, but left before the hammer fell. So I was not directly affected, though I had many family and friends who were.
The recent announcement by Tata of its intention to sell its UK steel business brings those dark memories flooding back, because steel never really left Corby. The tubes part of the business stayed and employs some 540 people still. Tata remains one of the biggest employers in the town, in what is a successful business making high quality tubes for the construction industry. The London Eye, the Wembley Stadium arch and the Olympic stadium were all built with steel from Corby.
It is true that things have changed in Corby and changed for the better. The town is virtually unrecognisable from the desolate and desperate place it had become in the early 1980s. We have been on a massive journey of growth through regeneration. In just over 10 years our population has increased from around 50,000 to 67,000 today. I recently showed Alison McGovern around when she visited Corby to talk to me about the importance of Labour councils. She told me that what preconceptions she had about Corby when she arrived had been completely dispelled by the time she left. That level and pace of growth brings huge challenges in terms of housing, infrastructure and jobs.
This means we can ill-afford to lose the sort of secure, well-paid jobs that Tata and its predecessors have provided over many years in Corby. Particularly as one of our other skilled employers, the luxury boat builder Fairline, closed recently with the loss of over 100 jobs. And Corby is still a place where people make things. A recent Office for National Statistics survey described it as the ‘manufacturing capital’ of Britain. Some 25 per cent of all employed people are engaged in manufacturing of one sort or another. Not just boats and steel. I am always reluctant for Corby to be held up as an example to others such as Redcar or Port Talbot. It often goes along the lines of, ‘Well, if they can do it, you can do it’. It is insulting to places like that facing the almost unimaginable devastation of the closure of their main industry to be told, ‘Don’t worry, things will get better’. It has taken Corby 35 years and, let’s not forget, significant public investment by the last Labour government, to get to where we are today. And it has not been without attendant social and human cost along the way.
That is why it is crucial that the UK government has a strategy for its manufacturing industry including, vitally, steel. The knock-on effect of losing those steel jobs would have a devastating impact on the supply chain that serves Tata locally. It would blow a huge hole in our local economy and no doubt lead to the closure of other small businesses. The total job losses could well top over 1,000 and not just the 540 currently working for Tata. It would also have a severe impact on our council budget. Tata is one of the single biggest contributors of business rates in the Corby area. This would, of course, lead to a strain on our ability to continue to provide the level of council services that our residents have come to expect. And here I agree with our local Conservative member of parliament who recently called on the government to implement a business rates holiday. We could still do that, as long as the government compensated us for the loss of income. With the reform of local government finance and the phasing out of revenue support grant from central government by 2020, councils like ours will be heavily dependent on revenue raised by business rates. A blow such as the loss of Tata Steel or other similar big employers could impoverish councils almost overnight.
As I write this it has become clear that nationalisation of UK steel, even as a temporary measure while new buyers are sought, has been ruled out by the government. This simply is not good enough. It would be a dereliction of duty by this government if it lets the UK steel industry die. If they will not take a public stake in the industry then they have to help level the playing field in which the UK steel industry operates. They must tackle the cripplingly high energy costs which energy intensive industries in the UK like steel face. They should stop dragging their feet and support EU attempts to impose higher tariffs on cheap Chinese steel currently flooding the European market. And they should have a proactive procurement policy that uses British steel for major British infrastructure projects, such as HS2.
If government ministers fiddle while the UK steel industry burns they will not only threaten our economic security but our national security will be at risk also.
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Tom Beattie is leader of Corby borough council. He tweets @TomBeattie2010
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So is Progress’ view that we should (a) nationalise steel or (b) abstain from nationalising steel?
British steel was destroyed by rising production costs, compared to foreign firms.
High tariffs are just a subsidy that won’t fix the root problem, production costs.
There is no reason why a British steel worker should enough a higher standard or living than a Chinese steel worker.
Britain can not compete in labor intensive industries because of the high relative level of living standards demanded by British workers.
Steel is effectively dead in Britain.
Workers in the steel industry should acquire skills available to them in British society that Chinese workers can’t acquire if they want to maintain their standard of living.
I think the argument is that there is not a level playing field when short term foreign government interventions pays a contribution to production coats and distorts the market for short periods in order to eliminate competition. Following their creation of near monopoly power, prices are then increased to reflect their newly created dominance.
As a matter of fact the article calls for an end to a level playing field.
There is no monopoly power in steel because it is produced all over the world.
If you study the history of steel production it mirrors that of cloth production, both move to the area with the lowest production costs. The low costs come either from the most efficient production methods or cheaper labor.
Great Britain trails the other steel producers of the world in both key areas, cost of labor and efficient production methods, as does the United States for that matter.
Government policy in both nation’s in fact contributed to these developments.
The difficulty with the strategy which chooses to implement a business rates holiday is that it acts as a temporary financial prop to the short term private capital decision – makers, in whose hands the future still lies. British Labour needs to be pro active if it is not to left to the whims of those with no longer term interests in the company or the economy. In my opinion any intervention needs to be accompanied by corresponding decision – making powers (olden shares) which supports private capital which is here for the long term.