The government’s rejection of a £170 million bailout for GFG Alliance, including Liberty Steel, will deepen the worry felt by steelworkers, suppliers, customers and the communities which rely on these good well-paid jobs for prosperity.
Any government rescue package would have been surprising given the opaque and complex finances of this multinational company, including with Greensill Capital’s administrators. That’s why Labour has been calling for a Plan B from government for weeks. It’s all the more urgent now, so that customers and suppliers are supported, and don’t lose confidence in the business because of the growing uncertainty about its future. Death by a thousand cuts, in lost orders, will not leave a business to save.
Labour believes any plan should keep all options on the table, including public ownership, and should not be blinkered by ideology. Domestic steelmaking is a cornerstone of our economic prosperity and national security.
Urgent and clear reassurance is now needed from Ministers. Yet the Business Secretary hasn’t got a Plan B let alone a plan for the steel industry. His government is resistant to decisive intervention now to save jobs and livelihoods in places including Rotherham, Stocksbridge, Hartlepool and Newport.
The Liberty plants are cutting edge, having made the switch to electric at great cost. We cannot afford to lose this green steel-making from our shores.
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We need a long-term strategy for UK steel, one which protects any investment made by the taxpayer to prop up the operation of these plants.
If, as now looks likely, Liberty Steel falls into administration, the Official Receiver should be appointed for the whole business, while a medium-term plan is put in place. It’s not in our economic security interests for Liberty to be sold off cheaply as this government allowed with British Steel, after a £500 million bailout by the taxpayer. The taxpayer should benefit in the good times as the industry recovers from Covid-19 rather than just picking up the tab through the bad.
UK steel-making is viable if given the chance. The pandemic has hit demand hard for the specialist steel which Liberty makes, with aerospace orders falling sharply in particular. There are also crippling long-term issues for UK steel production that the government has shirked for too long. Over many years Conservative ministers have failed to address important issues such as high energy costs which have stymied investment. The failure to offer a Buy British guarantee for UK steel in our infrastructure projects means that millions of pounds of orders that could boost our communities have gone abroad and the Clean Steel Fund, to help industry transition, has been kicked down the road.
It’s because of this very difficult UK investment context, exacerbated by Covid-19, that public ownership should not be discounted. We’ve seen the steel industry lurch from one disaster to another because the government has failed to set out a strategy over its decade in power to secure the steel industry’s foundations and help ensure it has a strong and prosperous future.
Our domestic steel-making capacity, vital to our future infrastructure projects and our world-leading industries like aerospace and automotive, should be seen as critical to our economy as our railways. The model of the East Coast rail line is a better one for the government to draw on.
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Alongside this, the body language of government is a body blow to manufacturers. They’ve scrapped the industrial strategy and sacked the Industrial Strategy Council. Ministers can’t wait to get back to business as usual, with the partnership with business we’ve seen during Covid-19 a blip rather than the building block of a new, more resilient economy.
Ministers must reverse ten years of ambivalence and bring forward an ambitious plan for steel including at the Liberty Steel plants.
Steel runs through the veins of so many proud industrial towns. It has built our modern world. Ministers must back British steel so it can help to power our recovery.
Lucy Powell MP is the Shadow Minister for Business and Consumers