Over 40,000 jobs are at risk if TATA walks away from the colossal steel works of Port Talbot in South Wales. The government has been left looking flat-footed and indecisive by TATA, with ministers unsure about whether to return from overseas trips and then sending out mixed messages about whether state intervention is merited or not.
It was welcome to see Vince Cable on the news talking up intervention last night, but from my clear recollections that was not always his position. Although Vince and the Liberal Democrats are not directly relevant to this debate anymore, the 2015 general election saw to that, his journey on this issue is a lesson worth observing.
The Labour government of 1997 to 2010 may not have had an interventionist reputation, but it was nimble and muscular when jobs and the UK economy were at risk. Nationalisation of the banks during the crash was a high profile example, but not the first example.
Vince Cable and I crossed swords on the issue of intervention in 2002, I had been the MP for Gloucester for about a year and he was the Lib Dems’ Trade and Industry spokesperson. The issue wasn’t steel; it was energy, British Energy to be precise. Thousands of jobs were at stake, over 1,000 of them in my own constituency, which was home to the company’s headquarters. A slump in wholesale energy prices had led to severe financial trouble and so the company, with my support, approached the government for financial aid.
Vince vocally opposed this at the time and felt that it was not the role of the state to act in such a muscular way to save the company. I’m glad he’s changed his view but the view he held a decade ago is still shared by some in the Tory government. In the case of British Energy we ended up moving very quickly to emergency legislation and a four clause bill on the floor of the House which allowed the government to loan money to the company, with an initial £650 million injection.
By September 2004 the government’s investment was over £3 billion and the company was reclassified as a public body – de facto nationalisation.
The Labour government didn’t nationalise for the sake of it, it did so to protect the UK economy and save highly skilled jobs.
Today, Port Talbot supports thousands of highly skilled jobs and the plant’s collapse would result in an economic shock wave.
British Energy was eventually restructured and new investment came in through EDF and the company was returned to good health in the private sector.
The experience hopefully taught many a seasoned politician an important lesson: used wisely, government intervention will work.