There are emergency sessions of both houses of Parliament today, the first since the Falklands War in 1982.
The purpose of these sittings is to pass emergency legislation that will permit the government to take control of the UK steel industry. This, for all practical purposes, now amounts to the British Steel plant in Scunthorpe. This is under threat of closure because of the mounting losses being suffered by its owner, who perpetuates the once great name, British Steel. The company is now Chinese-owned.
I am aware of the technical reasons why the government does not want the steel furnaces to close down because negotiations with the plant's owners are in disarray. These things are, I understand, hard to start again, but it is staggering that matters have reached this stage.
I have not seen the proposed legislation. As far as I know, no one has as yet. But discussion of what is proposed last night suggests that this legislation is not about nationalising British Steel at this moment, but is instead about taking control of the company and gaining access to information about it, whilst, I very strongly suspect, guaranteeing payments on its behalf. In particular, I presume that the legislation is required to guarantee payment for a cargo of coke that will be used to keep the furnaces running, which cargo is not being landed at present because those who have shipped it are not sure that British Steel can make payment. I presume, therefore, that the government will be acting as guarantor, at least.
A whole array of thoughts arise as a result of this.
Firstly, and most obviously, the fact that this emergency situation has arisen is the clearest indication of a breakdown in thinking within the Labour government. It is an obvious sign of Labour being unable to formulate a strategy with regard to this issue and pursue it. It has, instead, had to undertake emergency measures that makes no sense at all when, if steel is of strategic significance, as both Labour and the Tories say, a plan for the perpetuation of steel production in the UK should have been in place a long time ago, not least when the Port Talbot plant was also under threat. This emergency sitting of Parliament is, in that case, a very clear sign of Labour's inability to plan.
Secondly, it is also a sign of Labour's ridiculously inappropriate focus. It is, apparently, vital that we have a plant that can manufacture steel because this, supposedly, is critical to our defence industry, although as I understand it, to pretend that a steel plant can make any variety of steel, at will, is quite absurd. Having one steel plant in this country will not ensure that our defence industry can secure all the steel it needs from British plants. Even if Scunthorpe remains open, the steel that it makes will not necessarily be of the type or types required for defence manufacturing purposes. Worse still, because successive UK governments have, anyway, as a consequence of requirements of competition law, been placing contracts for the manufacture of UK armament requirements with other countries for decades, this argument has no substance to it in any event.
Third, in that case, it has to be presumed that this policy is all about jingoistic nationalism, and to be candid, that is unappealing.
Fourth, there is the fact that this plant is in an isolated part of the East Coast, and that is perfect Reform territory. I very much doubt that there would be so much anxiety if this closure did not create a perfect opportunity for Reform to win another seat. I cannot disassociate what is happening today from that idea, and that deeply troubles me. Are Labour really that desperate?
Fifth, let no one pretend that this is about a concern over job losses. Wes Streeting is very casually, and utterly inappropriately, cutting vastly greater numbers of jobs in the NHS than will be saved by this emergency legislation today, so no one should pretend that that is the issue of Labour's concern.
Sixth, let me make the obvious point that if this is not nationalisation, it just shows Labour's utter inability to believe in itself, and the power of the state. Instead, if it is a package of support for the private sector, it will continue to reveal its fawning admiration for neoliberal capitalism.
Seventh, it would appear that this plant is financially non-viable, as is all steel manufacture in the UK in existing plants. If the government had an industrial policy, why isn't it establishing steel manufacturing in this country using electric furnaces? Wouldn't that make sense, or is that too much to ask of these small-brained people?
Eighth, if this is a priority, why aren't children in poverty also in that category? If Steel is a matter of concern requiring that £500 million be conjured out of thin air to save British steel, why can't money likewise be created for real need?
The more I look at this, the more it is evident that today is all about Labour's failings, and it should be ashamed that it has reached the point where it needs to recall Parliament for such a peripheral issue, and the fact that this so clearly indicates its inability to both govern and manage.
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I wouldn’t want to make decisions on the basis of the UK having no companies running electric furnaces.
Parliament can leave alone and let Jingye close and sell their site in due course because they can’t sustain the losses, we can intervene to keep it in Jingye ownership and the blast furnaces running with direct subsidies, or we can buy the site and operate it with direct subsidies but at what price.
I’m confused as to which outcome would be the neoliberal option.
The second
I understand that all our steel railway lines come from Scunthorpe. (HS2?)
Workington used to be where they made the steel rails (in the North West) closed in I think 2006, so you may be right RobertJ – that was under New Labour.
As for the post, if the events as you portray them are accurate, then all I see is tinkering – tinker, tinker tinker, but never actually get to the heart of the problem. The recall smacks of subterfuge to me or virtue signalling. Whether it actually changes anything we’ll see, but when you consider the amount of sofa government that goes on (making deals usually not in our interests), what exactly is all this about?
Great post.
Thanks
Hypocrisy once more from the Labour Government. They cannot/will not intervene in the closure of the Grangemouth oil refinery, despite their well documented promises before the last General Election, the only one in Scotland, because “It’s a private company”, yet here all the stops are pulled out to save a “private” company based in England. How any Scot can vote for this cabal of lying, corrupt, cheating crooks is beyond me.
As it looks now this Scunthorpe business is going to lose Labour next year’s Senedd election. Holyrood election’s been long lost for them.
“indication of a breakdown in thinking within the Labour government. It is an obvious sign of Labour being unable to formulate a strategy with regard to this issue”
Last bit of the 1st sentence contradicts the “unable to formulate strategy”.
LINO had 2+ years to think about what to do in gov. The warning signs for steel were evident ++2 years ago. There is a need to have some sort of primary steel capacity in the country – bolstered by a fit-for-purpose recycle steel strategy. LINO were and are functionally unable to address this.
The problem is that there is NOBODY in gov’ with the capacity to “formulate strategy” – in turn, there can be no “breakdown in thinking” because, as current events show – there never has been any thinking – tactical or otherwise – because LINO has nobody in gov, functionally capable of doing this. (apologies for the repetition)
All 8 points – I agree with. What the current fiasco shows is that, once again we have a “trolley” gov – rattling down the crisis isle, time are time.
Starmer (& his minder McSweeney) and Reeves and Streeting – pathetic creatures, unfit for gov, unfit to hold elected office, creatures of foreign big business. Traitors.
Thanks, Mike
Making steel is a complicated process with many stages. And steel is not a uniform product. What type of steel do you need, for what function?
Blast furnaces don’t produce steel. They produce pig iron. To do that, they need raw materials – iron ore, coke, limestone, etc. And ideally those bulk materials would all be available nearby. So where does Scunthorpe source its raw materials?
The coking ovens in Scunthorpe were closed down a few years ago. So that all needs to be imported.
And then the output from the blast furnace (impure cast iron) needs to be processed to produce whatever products are required – stainless steel, carbon steel, long or flat products, or whatever. So which are we making and why? Rails for trains? Wires? Plates for ships or cars?
The UK’s steel production is minuscule. About 4 million tonnes in 2024. About the same as Sweden or Finland. The Netherlands is about 6, Austria and Belgium and Poland all about 7, France and Spain about 11, Italy 20 and Germany nearly 40 MT. The world production is a both 1,800 million tonnes each year, with more than half in China, about 8% in India and around 4% in each of Japan, Russia and the US. The UK is less than a quarter of a percent. 2 parts in a thousand.
As far as I can see there is no primary production of iron or steel
in many counties – Switzerland or Ireland or Portugal, for example – but some of them have arc furnaces that take in iron or steel of one sort (recycled, or from their neighbours) and produce different streets of higher value.
So what is the argument for primary production from ore in the UK? Do we expect we might be unable to import iron or steel from say France or Germany?
Perhaps we should just shut down these blast furnaces and make the jump to electric arc furnaces or direct reduction. And even if we do need to keep them as a strategic reserve, why can’t we close down the blast furnaces (in the same way that they are shut down for maintenance) ready to reopen?
Thanks
@Andrew great summary. Without blast furnaces many specialist steels can not be directly produced. In my first industry job in the 1970’s we coveted a specialist steel from a railway steel production run (I think from Port Talbot). That steel, with precise properties, was rolled into a form at the heart of a scientific instrument, these now retail for around £3M a piece. The UK was making 20+ of these instruments a year in the 1980s, when I moved on. I’m sure other key industries in the UK require all sorts of specialist steels; the technical knowledge from the UK steel makers was essential in developing that high performance instrument. Once lost that enabling knowledge/skill is gone perhaps for ever.
Thanks Tony. But do you need to start with smelting iron ore to pig iron to make specialist steels? Or can you start with a basic iron produced more efficiently elsewhere? Many counties do that. With worldwide overcapacity, do we want to invest in maintaining British capacity for national security reasons? Do we actually create the specialist steels we need today to make tanks or artillery barrels or shells or aircraft? And where are we getting the tungsten and titanium and other critical elements we need?
This is a little old but it seems there are still at least four electric arc furnaces operating in the UK – Celsa in Cardiff, Liberty in Rotherham, and Marcegaglia and Forgemasters in Sheffield. But look at the rest of Europe. Nothing in Ireland. A couple of arc furnaces in Portugal, a few in Greece. One blast furnace in Spain. Etc. So what do we want?
https://www.eurofer.eu/assets/Uploads/Map-20191113_Eurofer_SteelIndustry_Rev3-has-stainless.pdf
Ther seem no obvious answers to tour questions
We have to see today through the lens of jingoistic nationalism
It maeks no sense oherwise
Apologies for wading in (again). TonyB and Andrew make very good & valid points.
Direct reduction (an old tech btw – Germany already makes 0.5MTonnes per year using reformed nat gas). UK could take this route to make up the diff between recycled and basic need. Or it could take this route: https://www.bostonmetal.com/
Key point: we need to have a fit-for-purpose recycling industry (which uses elec arc) that allows the UK to meet most of its steel needs & which uses low-cost renewables.
This can be done. But, as the current gov shows, it is incapable of anything other than acting like an out-of-control super-market trolley – bashing down the isles only capable of reacting to events. The discussion should be: so what level of primary steel production is appropriate, and what do we need to do on the re-cycling front to deliver the steel that the UK needs. This is organisational stuff FFS. It’s not hard, But. The current crop seem incapable of even this.
I am bemused as to why this is not the plan.
Ed Conway has published a long informative piece today: ‘ The Strange, Unsettling Story of British Steel
…I had been trying, without much success, to get access to British Steel for years. Having visited Tata before its closure, I wanted to be sure that, if we were going to become the world’s first industrialised nation to end primary steelmaking then at the very least such a historic moment needed to be scrutinised and, at the very least, documented…
Eventually, however, I managed to gain access into the site for Sky News…’
https://edconway.substack.com/p/the-strange-unsettling-story-of-british
Thanks
Brilliant analysis and informative responses.
Why now? What’s different?
Conlab industrial plan is to destroy collective power, via decimation of British industries which were the beating heart of unions. Replacing this with mass privatisation and financialisation of UKs assets industries, utilities, housing, public services.
Indeed Sir Kid Starver and his acolytes seem more bothered about saving their own comfortable seats on the gravy train.
Scotlands poorest children are 35% better off than England’s. According to BiS. At least a mitigation of Wasteminster cruelty.
Afaik it is only possible to produce certain grades of steel via the blast furnace/ pig iron route due to the additives in steel scrap which is what electric arc furnaces use
Watch Richard Tice shoot yet another “left” wing fox – nationalisation. (He wants British Steel nationalised.)
https://www.gbnews.com/politics/politics-news-richard-tice-reform-british-steel-emergency.
At least – he does THIS week but he doesn’t really… well, its a bit complicated…..
https://www.mirror.co.uk/news/politics/british-steel-shut-north-east-35045278
perhaps best not to embarras the man?
Surprise, surprise, Tice is a bit of a millionaire hypocrite (a necessary entry qualification for Reform UK MPs) but populism is all about zeitgeist, so today it’s nationalisation (for steel but not Thames Water or the buses according to Arron Banks Regional metro mayoral Reform candidate for WECA), which will somehow be achieved simultaneously with small government and reduced taxes.
If you see a Reform UK candidate out selling snake oil between now and 1st May do ask them about this.
If you see a Labour candidate ask them why Starmer only acted on Scunthorpe once the emergency credit on the prepay meter got down to the last pound and why Scunthorpe is different to Port Talbot or Grangemouth, and when is Labour going to re-nationalise Thames water? That should produce some agile manouevres.
Shows the anarchy of capitalism in spades.
If Trump had not set out the case for industry and manufacturing in the US, and turned the world economy upside down in the process, Labour would never have contemplated this move. Irony is an understatement.
The Germans built their economic power on industry and manufacture, and this did not move any British Government to defend key manufacturing industries, for decades (well, save for the Supergun affair, that could have unravelled Thatcher’s Government, perhaps – if anyone had ever found out what was really going on; the vast Whitehall Inquiry fudged it, of course). All that matters is the City; and however bad it is in Britain for everyone else, it goes on; protected, bailed-out, TBTF, and privileged – forever.
There are only six Oil Refineries left in Britain; and only one in Scotland (Grangemouth), producing about two=thirds of Scotland’s oil products. It was first opened over 100 years ago. Scotland is still an oil producer, with an important oil industry (which cannot be switched off tomorrow; and the industry possesses most of the technical, engineering and financial capacity for the future development of green energy that is required to make it work). Grangemouth is about to be closed; given current uncertainties over UK energy supply, and the disaster area that is Britain’s energy regime, and its absurd fake domestic oil “market”, run by monopolies – the energy providers, not the energy suppliers who only supply you, the domestic user, with nothing more than an invoice – allowing the producer-provider to make easy monopoly profits (to put the argument no higher); that is a mistake. It is not a smart political move to make the case for Scunthorpe, but not Grangemouth either, but Labour is not smart.
Finally, the contrast with steel in Scunthorpe rather underscores the point that this is not about industry or security, but politics and flag-waving.
Much to agree woth
This emergency move feels less about saving steel and more about political survival. If steel is truly strategic, where was the long-term plan? Parliament recalled over this shows Labour’s lack of foresight, and the hypocrisy in ignoring bigger crises like child poverty or NHS cuts. If we can suddenly find £500 million for this, we can find it for real public needs. Disappointing priorities and short-sighted governance.