Starmer's steel deal shows Swinney how nationalisation should work RECENTLY, I had the rather good fortune of flicking through an economic tome which was discussing the pros and cons of nationalisation.To be fair I was on holiday in a rather hot country and there was nothing else to do but lie on a sun lounger and read whatever was available.A compelling read it certainly wasn’t but it helped pass the time before the sun started to go down and I could think about dinner.Economists have never agreed on the benefits of nationalisation and history is littered with failed examples, particularly in the UK.But the two leaders currently occupying Bute House and Downing Street certainly seem to be in agreement that it’s a good thing.And in many cases it is a god thing but it’s what you do with the assets as a Government after it is been taken into public control that is the important thing.It is here that John Swinney and Sir Keir Starmer diverge dramatically if recent events are anything to go by.Last week, a £500 million five-year deal was struck between Network Rail and British Steel to help save the Scunthorpe steelworks.British Steel is to supply 337,000 tonnes of rail track, which will secure thousands of manufacturing jobs.Why this is important is that it comes just two months after the UK Government used emergency powers to prevent the blast furnaces from immediate closure.Transport Secretary Heidi Alexander, said it “truly transforms the outlook for British Steel and its dedicated workforce in Scunthorpe”.British Steel is to supply a minimum of 337,000 tonnes of long and short rail.A further 80-90,000 tonnes is to be provided by other European manufacturers and deals are expected to be announced shortly, the Department for Transport (DfT) said.In March, Chinese firm Jingye, which bought British Steel in 2020, proposed to shut Scunthorpe’s two blast furnaces and other key steelmaking operations.This came despite months of negotiations and a £500 million co-investment offer from the UK Government.As a result, Jingye launched a consultation which it said would affect between 2,000 and 2,700 jobs.In April, the UK Government used emergency powers to take control of British Steel and continue production at the site.The Scunthorpe plant has been producing steel for Britain’s railways since 1865.The Network Rail contract, worth an estimated £500 million, starts on July 1 and is set to provide the company with 80% of its rail needs.To ensure security of supply, Network Rail is set to award smaller contracts to some European manufacturers, who will supply specialist rail products alongside British Steel.The agreement is the first major public procurement since the emergency legislation was passed.Both Network Rail and the Scunthorpe steel plant are both owned by the UK Government and the swift deal is clearly a direct benefit of being nationalised.No need for public procurement rules when both sites are state-owned.   The Government sees it as being complimentary to the UK and US trade deal which aims to lower tariffs and protect jobs across key sectors, including steel.The deal also compares to the complete and utter horlicks that the Scottish Government has made following nationalisation of key industries.Ministers, of course, took over the stricken Ferguson Marine shipyard in Port Glasgow iin 2019 after it collapsed into administration.It seemed to be the right decision as the shipyard’s main customer was the state-owned ferry body CMAL, so a steady stream of orders should have been expected.Instead the yard is facing an uncertain future after losing out on several publicly funded ferry building contracts.Now ministers have even halted a vital subsidy for the yard that is needed to bring in vital work to keep it alive, it can be revealed.The development has raised alarm that the yard  will not survive beyond any delivery of the much-delayed and over budget CalMac ferry Glen Rosa.The yard’s business plan to 2029 assumed that the Scottish Government would sanction a direct award of the small vessel replacement programme. It was an integral part of a plan to deliver a “sustainable, profitable, efficient and competitive yard”.After it was decided that the £175m contract would go to a competitive tender, CMAL, the state-controlled ferry procurer declared in March that the job to build seven new loch-class electric ferries would go to Poland.It previously awarded two other ferry contracts worth to £220m to Cemre Marin Endustri A.S (Turkey) - with Ferguson Marine again losing out.Transport secretary Fiona Hyslop confirmed a “substantial subsidy” was needed to allow it to get a direct uncontested contract to build seven new small ferries and secure its future.But she admitted in correspondence with former community safety minister Ash Regan that that subsidy was not justified.Ms Regan has raised concerns that it was “not the direct award that’s the issue it’s the unwillingness to put public money behind a public asset”.Ferguson Marine has been dogged with issues with the delivery of  ferries Glen Sannox and Glen Rosa which were due online in the first half of 2018.The last estimates suggest the costs of delivery of the vessels for CalMac will have soared to more than five times the original £97m cost.The shipyard firm currently employs more than 400 staff including over 100 sub-contractors.Goodness knows how they might be feeling, knowing full well that the Scottish Government is in the process of sinking the yard once and for all.For all the arguments against nationalisation, no book on economics will ever list sheer incompetence by Government ministers as a reason it will fail.While there are very good reasons that the yard is struggling, one of the main reasons is the sheer complexity of the two ferries which have made them very difficult to build.As it was the current administration that insisted on the specifications of being dual fuel and ‘green’ then it seems extremely harsh for ministers to now throw the workforce under a bus.Sir Keir Starmer’s Government has shown exactly how nationalisation should work for the benefit of the workforce and the economy as a whole. For it to be a success, there has to be a will, strategy and above all, economic competence amongst ministers.   Ministers at Holyrood have shown none of that and the Ferguson’s workforce and islanders have been left high and dry as a result.   

Alan Simpson

Herald Scotland

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23.06.2025