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The British Steel disaster will be repeated unless there is urgent reform

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The collapse of British Steel Limited, with the potential loss of at least 5,000 jobs, has once again exposed deep fault lines in the government’s laissez-faire economic ideology and in Britain’s shareholder-centric model of corporate governance.

The government clings to its do-nothing approach, justifying its rejection of financial support, a bailout or public ownership of British Steel because these options would be illegal under the EU state-aid laws.

Yet the UK government conjured up billions of pounds to bail out banks through loans, guarantees and an extensive quantitative-easing programme. It brought the East Coast rail service and other lines back into public ownership. None of this was opposed by the EU.

The government doled out millions of pounds worth of contracts to ferry companies, even the ones without any ferries, but is not bothered about rescuing British Steel and the economic and social infrastructure around it.

The British government is a major shareholder of Royal Bank of Scotland and could have used this to secure finance for BSL, but chose not to do so. Perhaps blaming the EU for domestic woes is part of the Conservative strategy to bolster its Brexit credentials, or perhaps it is just not concerned about deindustrialisation.

Where the government is clearly culpable is in failing to keep the operations of BSL under closer scrutiny. The company’s owner, Greybull Capital, a private equity concern, has a history of buying companies with a promise of resuscitating them, but........

© The Guardian