Steel: Back From The Brink

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They say a week is a long time in politics; well, try 9 months. Back in March I flew out to Mumbai with Roy Rickhuss and other leaders of Community, the main steelworkers' union, to present the workforce’s turnaround plan to Tata Steel’s Board. The response we received was negative, and the next day Tata announced their plans to sell Strip Products UK, the heart of which is the Port Talbot works, in my constituency, unleashing months of uncertainty that has had a terrible impact on thousands of steelworkers and their families.

But we have come a long way since then, and it’s encouraging to see the company now recognising what we always knew: Britain’s steel industry is the greatest in the world, and with the right support and investment it has a bright, dynamic future.

The package announced this week, which will be subject to a workforce ballot in the New Year, is based on some impressive commitments, including:

  • continued operation of the two blast furnaces at Port Talbot, for a minimum of five years;
  • £1billion over ten years, to ensure Port Talbot and downstream sites remain at the leading edge of twenty-first century steel-making;
  • a jobs guarantee, avoiding compulsory redundancies and placing the British workforce on the same footing as their colleagues in the Netherlands.

The production, jobs and investment elements of this deal represent a historic victory for pragmatic trade unionism. And the professionalism of the unions is matched by that of the workforce who have consistently broken production records, continue to make the best steel that money can buy, and who have done so much to put the business back on an even keel.

But not every element of the proposed deal is positive. Tata wants to close the British Steel Pension Scheme, replacing it with a defined contribution scheme, based on 10% contribution from the employer, and 6% from employees. The transition from the BSPS to the defined contribution model represents a significant challenge for the workforce, and will play a central role in determining whether they decide to support the deal.

The package on the table offers a platform from which we can build an industry that can move from surviving to thriving. Retaining the two blast furnaces in Port Talbot ensures primary steel making, and the £1billion investment plan will go a long way towards building the competitiveness and productivity of Port Talbot and the downstream sites.

While Tata Steel, the workforce, trade unions, steel MPs and steel communities have been stepping up to the plate, what has the British government been doing? Precious little. 

For over a year the government’s approach to the steel industry had been a toxic combination of incompetence and indifference. Until we shamed Sajid Javid back from his Easter jolly in Australia, Cameron's government was content to sit back and see a fire sale of Tata’s UK operations.

And now we see more of the same from May’s government. She and her Business Secretary, Greg Clark, have complacently pointed to the exports boost we’ve seen resulting from the value of the pound. But you cannot build a successful industry on the back of currency fluctuations. We must make the steel industry profitable and sustainable on a structural basis.

The underlying challenges of illegal Chinese dumping, uncompetitive energy prices, inadequate procurement policies and the government's failure to come forward with a proper industrial strategy for steel remain, and will grow more acute as time goes on.

What a contrast with the Welsh Government, who have worked with the unions and company, showing real leadership with £8million put towards an £18million investment in the power plant, bringing down Port Talbot’s energy costs, and £4million invested in skills.

The Save Our Steel campaign assembled steelworkers, steel communities, steel unions and Labour steel MPs (who have raised steel in Parliament over 300 times in the past year), and it’s had a real impact. We’ve seen the creation of a new Department, with 'Industrial Strategy' in its name, we’ve seen changes, albeit limited, to procurement guidelines, and early steps on trade defence. But far more must be done.

Let's hope the positive developments of this week are a wake-up call for the government. Let's hope they help Theresa May and Greg Clark to finally understand we need an active and engaged government, ready to stand up for this vital foundation industry.

Whilst all those who wish to see the consolidation and growth of Britain's manufacturing base will have welcomed this week's announcements, there are still profound concerns about the long-term future of steel, the most vital of our foundation industries. This long-term future can only be secured if the government starts to show the courage and leadership that is so urgently needed.

This is certainly not a time for complacency. This is a time for action.