Matters

Aditya Chakrabortty writes:

Every so often a society decides which of its citizens really matter. Which ones get the star treatment and the big cash handouts – and which get shoved to the bottom of the pile and penalised

These are the big, rough choices post-crash Britain is making right now. A new hierarchy is being set in place by David Cameron in budget after austerity budget.

Wealthy pensioners: winners. Young would-be homeowners: losers. Millionaires see their taxes cut to 45%, while the working poor pay a marginal tax rate of 80%. Big business gets to write its own tax code; benefit claimants face harsh sanctions. 

When the contours of this new social order are easy to spot, they can cause public uproar – as with the cuts to tax credits. 

Elsewhere, they’re harder to pick out, though still central. It is into this category that the crisis in the British steel industry falls. 

It would be easy to tune out the past few weeks’ headlines about plant closures and job losses as just another story of business disaster. 

But what’s happening to our steelworkers, and what we do to protect them, goes to the heart of the debate about which people – and which places – count in Britain’s political economy.

If Westminster lets the UK’s steel industry die, it’s in effect declaring that certain regions and the people who live and work in them are surplus to requirements. That it really doesn’t matter if Britain makes things. That the phrase “skilled working-class jobs” is now little more than an oxymoron.

That’s the criteria against which to judge MPs, as they continue to take evidence today on the crisis and then debate options.

What does this crisis look like? Imagine coming to work on a September morning – only to find that you and one in six other employees in your entire industry face redundancy before Christmas. That’s the prospect facing British steelworkers.

Motherwell, Middlesbrough, Scunthorpe: some of the most kicked-about places in de-industrialised Britain now face more punishment.

Mothball the SSI plant in Redcar and it’s not just 2,200 workers that you send to the dole office and whose families you shove on the breadline.

An entire local economy goes on life support: the suppliers of parts, the outside engineers who used to do the servicing, the port workers and hauliers, the cafes and shops. Within days of SSI’s closure, one of Teesside’s biggest employment agencies went into liquidation. 

Steel is a fundamental part of manufacturing, so that the closure of a handful of steelworks in Scotland and the north endangers businesses in Derby and Walsall. 

At the West Midlands Economic Forum, the chief economist Paul Forrest calculates that about 260,000 jobs in the Midlands rely on steel for everything from basic metals to car assembly and aerospace engineering.

He believes that the closures at Tata, SSI and Caparo leave 52,000 local manufacturing workers at direct risk of losing their jobs within the next five years.

That’s just after the past few weeks – the UK Steel director Gareth Stace thinks that more plants face closure “within months”.

Join up these predictions, and Britain is entering the early stages of yet another industrial catastrophe. It could finally sink a sector, steel, that actually helps reduce the country’s gaping trade deficit.

With that will go another pocket of well-paid blue-collar jobs. Chuck in employer contributions to pensions and national insurance, and the total remuneration per SSI staffer is £40,000 a year. Just try getting such pay in a call centre or distribution warehouse, even as a manager.

Imagine what would happen if manufacturing were centred around the capital, and its executives had Downing Street on speed dial.

Actually, you needn’t imagine – merely remember the meltdown of 2008.

Then Gordon Brown was so desperate to save the City that the IMF estimates he propped it up with £1.2 trillion of public money.

That’s the equivalent of nearly £20,000 from every man, woman and child in the country doled out to bankers in direct cash, loans and taxpayer guarantees.

That’s what the state can do when it decides a sector matters.

In 2011 David Cameron stormed out of a Brussels summit rather than agree to more regulation on the City. When it comes to steel, his ministers shrug at the difficulties posed by the EU’s state-aid rules.

Michael Heseltine even declares this a “good time” for Teesside’s workers to lose their jobs in Britain’s “exciting” labour market. Let them eat benefits!

True, the problems in the steel industry aren’t confined to these shores. They’re driven by a world economy coming off the boil and China dumping its excess steel output on the global market.

Yet other European governments are being far more aggressive in confronting them. Italy’s prime minister, Matteo Renzi, bailed out a huge steelworks last December. 

Germany’s Angela Merkel ensures that steel producers are cushioned from higher energy prices. Just how lame, by comparison, is Cameron? 

Here’s an example: the European commission runs a publicly funded globalisation adjustment fund that can grant over £100m a year for precisely the sort of situation British steelworkers now face.

The Germans, the French, the Dutch: they’ve all drawn down many millions apiece. The British? European commission officials told me this week that they had never so much as seen an application from the UK.

Here’s a giant pot of money – into which Whitehall can’t even be bothered to dip its fingers.

Once our steel capacity is gone, it’s gone – and with it goes a big chunk of what’s left of our manufacturing base.

Whole swaths of the country that have only just got off their backs after Thatcher’s de-industrial revolution will be knocked to the floor all over again.

The choice is stark.

Westminster can sit on its hands, pretend it can’t do anything about the supposedly free market in steel (in which the single biggest player is the Chinese Communist party), and let tens of thousands of families go to the wall.

Or our political class acts as if its job is actually to protect people from market fluctuations – and keep the steel industry afloat by extended bridging loans and capital investment in return for public stakes.

A return to British Leyland? No: a far cheaper and smaller rescue than RBS and HBOS. 

Free-market fundamentalists will decry this as a wage subsidy to steelworkers. But the alternative is to wind up paying far more in benefits to thousands of unemployed workers and their families.

Besides, the state already shells out billions in hidden wage subsidies, through the tax credits and housing benefit that taxpayers give to employees of poverty-pay firms such as Sports Direct and Amazon. 

What’s being proposed here is open, transparent support to employees in normally high-paying and high-skilled jobs.

To keep a vital industry from disappearing for good. And to show that it’s not just the City that matters.