The emergency rescue of British Steel is a significant moment for this government, highlighted by the first Saturday sitting of parliament since the Afghan crisis four years ago.
It will cost huge sums for hard-pressed taxpayers at the expense of creaking public services. So it has been accompanied by the usual overblown rhetoric sprayed around at such pivotal moments, as Sir Keir Starmer rushed to Scunthorpe to tell relieved workers how he saved their plant. “Our industry is the pride of our history – and I want it to be our future too,” he proclaimed, insisting he was “turning the page on a decade of decline”.
Obviously it would have been uncomfortable for this Prime Minister, amid his talk of promoting growth and protecting national security, to have seen the country that invented coke-fuelled blast furnaces become the first industrialised nation to close them all down.
Steel is an industry that provided jobs for more than 300,000 people half a century ago; today, it employs barely one-tenth of that number. Yet have no doubt: this is a desperate move that raises serious political questions, from the cost of net zero environmental policies in driving up energy prices through to the failure of landmark privatisations from the Thatcher era.
Behind the depressing decline of British Steel, however, lie two profound issues that torment our country. Most obvious is the murky role of China’s dictatorship, determined to defeat democracy and yet aided by a procession of kowtowing British politicians. But in the background we see again the dark shadow of private equity, a grisly form of vulture capitalism that has such destructive economic and societal impact from the high street through to mental healthcare. Although very different issues, both are exposed by this hasty state intervention – and they should be confronted if Starmer’s bravura rhetoric is remotely rooted in reality.
Scunthorpe is the last site left in the UK that makes blast furnace steel. It was run for five years by a Chinese firm named Jingye, which bought British Steel out of insolvency with promises to inject capital, save jobs and modernise the plant.
Yet this mysterious firm – run by a former teacher turned Communist politician – is not even among the dozen biggest Chinese steel producers. Its attempt to take over a French subsidiary site was blocked by Paris to protect “a strategic asset”. And in reality it has risked little equity, obtained precious insights into an efficient British manufacturer and then reportedly demanded a £1bn bailout under threat of shutting down the furnaces while selling off raw materials.
Bear in mind China is a brutal dictatorship where business, like the military, must be subservient to Communist party interests – as even tech titan Jack Ma found to his cost after criticism of their financial system led him to disappear and lose control of Alibaba.
square IAN BIRRELL
Trump's tariffs mark the end of the most successful economic creed in history
Read MoreIts companies are weapons in a fight for global dominance, just like the parts made in its factories for Russian drones killing Ukrainians. From electric car batteries through to solar panels, its manufacturing output is massively subsidised by a state that engages in dumping cheap goods and cyber theft to gain industrial, military and technological advantage over the West. Its trade is neither free nor fair – and sometimes boosted by slave labour. Yet we have seen a succession of Tory and Labour ministers prostrate themselves pitifully before this vile regime.
Just as our politicians fail to stand up to grotesque Communist chiefs in Beijing, so they fail to rein in the damaging excesses of corrosive capitalism exemplified by the rapacious private equity sector. These financial wizards extract wealth by loading up targets with debt to buy them, then cutting costs and staff while flogging off assets in order to sell for a quick profit. This vampiric model leaves a trail of shattered firms, shuttered shops and lost jobs in its wake, while skimming off billions into tax havens. Yet it has been allowed to extend its tentacles even into services for children, defence, elderly care homes, psychiatric hospitals and vets’ practices.
British Steel went bust before under the control of Greybull Capital, which paid £1 to purchase the firm in 2016. It invested also in electrical retailer Comet, which had cost taxpayers £45m when collapsing three years earlier, and ran Monarch Airlines when it went under with debts of almost £500m, sparking the biggest repatriation of stranded Britons since the Second World War. Greybull claimed to have rescued the steelmaker, secured significant funding and restored it to profitability only for “additional blows dealt by Brexit-related issues” to prove “insurmountable”. Yet the Financial Times reported that Greybull put in just £20m of its own capital, while elsewhere it was reported to be taking the same annual sum in management fees and loan interest payments – as well as collecting generous government grants.
I was in Bedford at the weekend, seeing a town centre still scarred by the closure of Debenhams department store four years ago. This famed retail chain was killed off by the pandemic after more than two centuries – but fatally wounded by a private equity consortium that loaded the firm with debt while pocketing £1.2bn in dividends in less than three years of ownership. One US study suggested healthy companies taken over in these sort of leveraged buyouts are 10 times more likely to go bankrupt within a decade.
Yet the pin-striped vultures of private equity have invested in at least 50,000 firms worldwide, using their immense influence and wealth to stifle political restraints – even over their activities in the most sensitive public services such as fostering of vulnerable children and care of citizens with learning disabilities.
Now we see the collapse of another celebrated British brand, leading to another costly state rescue mission. So will our leaders ever wake up to the cause of such catastrophes that stoke the fires of political populism – and steel themselves to challenge the real villains behind this latest crisis, both at home and abroad?
Read More Details
Finally We wish PressBee provided you with enough information of ( China and private equity are cannibalising Britain )
Also on site :
- Palestinian activist Khalil denied release for son’s birth, wife says
- Education Ministry rehabilitates 70 schools since Assad regime’s fall
- Pope Francis’s will in full: Pontiff’s final wishes and place of burial