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Tata steel crisis calls for cool heads and long-term thinking Tata steel crisis calls for cool heads and long-term thinking
(about 1 hour later)
Where once there was torpor, now there is hyper-activity. A government that a week ago seemed to be washing its hands of the steel industry in accordance with pure free-market dogma is now rushing around trying to find a buyer for Tata Steel’s UK operations. Where once there was torpor, now there is hyperactivity. A government that a week ago seemed to be washing its hands of the steel industry in accordance with pure free market dogma is now rushing around trying to find a buyer for Tata Steel’s UK operations.
Clearly, the days are over when Anna Soubry, the No2 at the business department, was seen as the right minister to field questions about the future of Port Talbot on BBC Radio 4’s Today Programme. The crisis is now also above the pay grade of Soubry’s somewhat chastened boss, Sajid Javid. David Cameron himself has taken charge. Clearly, the days are over when Anna Soubry, the No2 at the business department, was seen as the right minister to field questions about the future of Port Talbot on BBC Radio 4’s Today programme. The crisis is now also above the pay grade of Soubry’s somewhat chastened boss, Sajid Javid. David Cameron himself has taken charge.
Related: Steel crisis: Sajid Javid calls on Tata chief to back sale processRelated: Steel crisis: Sajid Javid calls on Tata chief to back sale process
Hyper-activity should not, of course, be confused with sensible policy action, and there is a danger that a government in headless-chicken mode could be just as dangerous as a government in laissez-faire mode. Hyperactivity should not, of course, be confused with sensible policy action and there is a danger that a government in headless-chicken mode could be just as dangerous as a government in laissez-faire mode.
There are clearly reasons for quick and decisive action. Tata is leaking cash and the prime minister is leaking support. The crisis has been a gift to those campaigning for a no vote in the EU referendum, which is now only two and a half months away.There are clearly reasons for quick and decisive action. Tata is leaking cash and the prime minister is leaking support. The crisis has been a gift to those campaigning for a no vote in the EU referendum, which is now only two and a half months away.
But that doesn’t mean that ministers should accept the first buyer who comes along. Trade unions are rightly deeply sceptical about a takeover by Sanjeev Gupta’s Liberty House commodities group, since it would involve the closure of the blast furnace at Port Talbot, with long-term implications for the UK steel industry. But that does not mean that ministers should accept the first buyer who comes along. Trade unions are rightly deeply sceptical about a takeover by Sanjeev Gupta’s Liberty House commodities group, since it would involve the closure of the blast furnace at Port Talbot, with long-term implications for the UK steel industry.
If a decent offer does not come along, ministers could do worse than to look at the suggestion made by David Bailey, of Aston Business School and Paul Forrest, of Birmingham City University. That would be to take Tata Steel into “conservatorship”, the model used in the US to bring back to health strategically significant businesses that have run into short-term difficulties but are seen as having long-term viability.If a decent offer does not come along, ministers could do worse than to look at the suggestion made by David Bailey, of Aston Business School and Paul Forrest, of Birmingham City University. That would be to take Tata Steel into “conservatorship”, the model used in the US to bring back to health strategically significant businesses that have run into short-term difficulties but are seen as having long-term viability.
Conservatorship involves the state taking responsibility for the debt and daily running costs of a troubled company but allowing day-to-day operations to continue under the existing corporate structure. Bailey and Forrest believe this would provide enough breathing space to take action in the five areas that would help steel through its current problems: energy costs; EU emissions regulations; procurement; business rates; and unfair dumping by China.Conservatorship involves the state taking responsibility for the debt and daily running costs of a troubled company but allowing day-to-day operations to continue under the existing corporate structure. Bailey and Forrest believe this would provide enough breathing space to take action in the five areas that would help steel through its current problems: energy costs; EU emissions regulations; procurement; business rates; and unfair dumping by China.
This approach carries none of the ideological baggage of full nationalisation but would increase the chances of a sale, a management buy-out, or a public-private joint venture that would better safeguard the future of the industry in Britain. This is a time for cool heads and long-term thinking. Under pressure though the government is, ministers should not assume that the only choice is between a bad deal and no deal. Categorically, that is not the case. This approach carries none of the ideological baggage of full nationalisation but would increase the chances of a sale, a management buyout or a public-private joint venture that would better safeguard the future of the industry in Britain. This is a time for cool heads and long-term thinking. Under pressure though the government is, ministers should not assume that the only choice is between a bad deal and no deal. Categorically, that is not the case.