On Tuesday Tata Steel announced its intention to sell the entire Strip Products division of its UK steel business, including the Port Talbot works in my Aberavon constituency.
It is impossible to overstate the importance of the Tata Steel announcement, on both local and national levels. Locally, the Port Talbot plant is the beating heart of the community and economy, and nationally steel is a vital foundation industry: it is fundamental to the cars that we drive, the homes in which we live, the offices in which we work, and the bridges that we cross. Just under 11,000 men and women are directly employed by Tata Steel Strip Products division, and once you take supply chains into account that number rises to around 40,000 jobs. So, it’s no exaggeration to say that the decisions that were taken in Mumbai this week were amongst the most important business decisions in our postwar history.
I travelled to Mumbai for the crucial Tata board meeting this week, as part of a delegation that was headed by Roy Rickhuss, general secretary of Community, the steelworkers’ union. While I am deeply disappointed that Tata chose to reject the turnaround plan, we can take some heart from the fact that we secured our primary objective, namely to ensure that the UK continues to be a country that produces steel.
The top priority now is to find a responsible buyer, and it is imperative that the UK government now does everything it can to support Tata Steel through the sale process. To do this there must be a set of temporary financial support interventions to help Tata Steel get through this interim period before we find a buyer.
There needs to be a realistic timeline for that, which should be in terms of months not weeks. The more support that the British government provides to Tata Steel, the more time that will be bought. Of course there are no risk-free options in this situation and it is possible that a buyer will not be found in the right timeframe, in which case we must do whatever it takes, including looking at nationalisation.
Since getting back to the UK from Mumbai, I have been infuriated by the spectacle of the leave campaigns cynically attempting to hijack and exploit this crisis for their own advantage.
Their central argument seems to rest on the absurd claim is that if only the UK were to leave the EU, then we would be able to protect the British steel industry.
The reality is that the European commission has been trying to tackle the steel crisis for years now, but has consistently been hamstrung by a British government fighting tooth and nail to undermine those efforts.
The government is not only actively working against the commission’s attempts to toughen up its anti-dumping measures, where it has been the ringleader of a backroom campaign against trade defence reform, it is also lobbying hard for China to be granted market economy status (MES). MES would mean the World Trade Organisation would consider China to be a market economy, and we would therefore be unable to impose effective tariffs on dumped steel from the 80%-state-owned Chinese steel industry.
Ever since 2010 when the prime minister declared he would “make the case for China to get market economy status”, he and George Osborne have been Beijing’s chief cheerleaders in Europe. Cameron and Osborne know that the granting of MES would dramatically reduce the European commission’s ability to impose tariffs on dumped Chinese steel.
These are not party-political points. These are the views of the steel industry itself. It has repeatedly urged the government to act, and to stop promoting China’s cause in Europe.
But it is not just on MES and trade defence instruments that the government has undermined the ability of the EU to help the steel industry. The Conservatives’ ideological opposition to accessing the European Globalisation Adjustment Fund (EGF) has removed our ability to help those steelworkers who have been made redundant.
The EGF is designed to help national governments with regeneration following redundancies and global shocks. Britain is the only major EU member state never to have accessed the fund.
The Treasury has made it clear that it would block any application to the EGF on behalf of steelworkers. Let that sink in for a minute: George Osborne is blocking moves to apply for ring-fenced EU finance to help retrain and re-skill workers, and to invest in Port Talbot.
The EU accounts for over half our steel exports. A Brexit based on the so-called “Canada model” would mean paying hefty tariffs on every tonne of steel that we sell into the EU, which would surely be a killer blow for an industry that is already struggling to compete. And we would not only be hit by tariffs, we would also lose access to the 53 countries that have a trade deal with the EU.
Or perhaps the leave campaigns think that a Brexit based on the so-called Norway model would solve the steel crisis? Well, the Norway model would enable us to continue tariff-free trade with the EU, but that just leaves you having to accept EU directives and regulations without being in the room when they are being shaped. This could cause considerable problems for the steel industry, as it would have to accept new and evolving legislation, without having had any opportunity to influence its development in Brussels.
The chaos and uncertainty that would be unleashed by Brexit also weighs heavily on the UK steel industry. What impact would Brexit have on the order book? Will it be a Canada or a Norway model? Could Brexit open up the floodgates to Chinese dumping even further, as we will be out on our own, lacking the leverage and shelter that being part of a trading bloc of 500 million people brings?
Sajid Javid’s attempts to scapegoat the EU for his own failure to engage effectively will not wash. The fact is that he and his colleagues have been asleep at the wheel, and as a result thousands of steelworkers all over the country now find themselves facing a deeply troubling and uncertain future.
I therefore hope that the leave campaigns will now stop peddling mistruths and start facing up to the fact that we are in this crisis not because of Europe, but because of a Tory government that has singularly failed to stand up for British steel.