Liberty Steel, the third largest steel manufacturer in Britain, is faced with potential collapse after Greensill Capital, its main financial backer, went into administration. At estimated 5,000 jobs are directly under threat.

Sanjeev Gupta, head of the Gupta Family Group (GFG) Alliance that owns Liberty Steel, has admitted that GFG was in debt to Greensill to an amount coming to "many billions", which has been a precipitating factor in the demise of that company. Greensill entered insolvency on March 8 after its insurance was withdrawn by Tokio Marine and its funds were stopped by Credit Suisse and GAM, triggering the crisis at GFG and Liberty.

Greensill was in the business of "supply-chain finance". Greensill would purchase goods from suppliers, paying them immediately on delivery, on behalf of companies such as GFG Alliance, which would go into debt to Greensill to receive those goods. Similar to the now-infamous sub-prime mortgage schemes, Greensill further packaged up this debt and sold it to larger investors, making big scores for Greensill's owners. This supply-chain finance scheme proved just as fragile as its sub-prime counterpart. In another twist, former Prime Minister David Cameron has been under investigation over lobbying on behalf of Greensill, including allegedly sending personal messages to Chancellor Rishi Sunak. It is reported that some 50,000 jobs may be impacted by the collapse of Greensill.

GFG Alliance itself is an international business empire employing over 35,000 people, holding various companies involved in the metals industry. As well as Liberty Steel, it owns the SIMEC Group, Wyelands financial services, and Jahama Estates. Liberty Steel began buying up and restarting production at various British steel mills in 2015, beginning with Newport. Liberty Steel bought Tata's specialty steel division for £100 million in 2017, which included the plants at Rotherham, Stocksbridge, Brinsworth and Wednesbury. Liberty currently owns 12 plants across Britain.

Steel has been produced in towns such as Rotherham since the middle of the 19th century. Now the work has ground to a halt and many workers have been placed onto furlough. The future of steel production in these towns has long been precarious, particularly since the privatisation of British Steel. The Liberty Steel empire-building buyout of Tata's facilities was the latest lifeline, and now that is in crisis. Closure would be devastating for such steel towns, which could be destroyed as communities. The public authority, the government, has a responsibility to ensure that steel production continues.

A subsequent request made by GFG for a £170 million government loan to bail out Liberty Steel was rejected due to the "opaque" nature of the business. It is reported that a solution similar to that used to rescue British Steel Ltd in 2019 is one option being kept open, where the company declared insolvency and was taken over by the Government Official Receiver until a new private owner was found.

In other circumstances, the government does provide massive bailout money, and provides subsidies, to private business in what are essentially pay-the-rich schemes. In the case of Liberty, the government turned down the plea, and the future of this significant section of steel production owned by the company hangs in the balance. This in itself underscores the issue of who decides what is or is not deemed worthy.

The threat of closure comes on top of huge cutbacks in steel production at places like Redcar, Port Talbot and Llanwern in recent years. Yet steel production is a key part of the socialised economy. As Unite assistant general secretary for manufacturing Steve Turner said, "Steel is a foundation industry and is essential for the recovery of the UK economy as we rebuild from Covid-19." Such a foundation industry should not be wrecked, and if a solution is not found, the government will stand accused of neglect. The government must change its approach and respond to the need to secure the capacity for steel production, guarantee livelihoods and secure the manufacturing base, as part of changing the direction of the economy.

The issue here is not whether or not the government bails out Liberty Steel. The government should not be using public money to rescue a private empire-building project that has failed, particularly in such murky circumstances. Public money does not come from nowhere, it comes ultimately (currently indirectly and inefficiently via mainly personal taxation) from the new value workers produce, and workers will not have it used for what would amount to another pay-the-rich scheme.

Liberty Steel representatives of Community the union, meeting in January to discuss the future of the steel industry

At the same time, there is a need for investment in key foundation stones of the socialised economy such as steel production. The economy must be directed with the aim of meeting the material and cultural needs of the population. It is clear that an economy cannot be built to ensure the claims of society on it without a manufacturing base, which requires basic materials such as steel. There is still a huge requirement for steel and this will continue into the foreseeable future. Steel is still ubiquitous, not least in machinery and infrastructure. Steel remains a basic necessity for the functioning of the economy.

For such investment, the government should certainly not be borrowing from private investors, which would amount to a further pay-the-rich scheme. Rather, it could borrow from itself via a not-for profit public investment bank, and pay that borrowing back over a period of time by claiming from the new value produced by workers in the socialised economy. Further, because it is paid out of that new value, it is the workers who must have the decisive say.

Whether the funds raised are used to prevent production from collapsing, or to take over the steel mills as a public enterprise, it is workers' own new value that is being put to that use. Workers demand their rights and demand to have a say. Government support, for example, should bring with it terms and conditions under the workers' control and in their favour, aimed at opposing the destruction of the steel industry. It has to be aimed consistently at building the socialised economy, and building the steel industry within it. Rather than private empire-building, it is about building a steel industry as part of building a modern socialised economy.

If public well-being is not put at the centre of considerations of the economy, then what is the aim of an economy? The government should realise that for an economy to thrive, or at least to find a way to resolve its crisis, then it cannot be that more is taken out of the economy than is invested in it. A new direction would be to plan for an economy that produces for people's needs, which entails increasing the manufacturing base. Steel manufacturing is a vital part of the economy and should be maintained. The working class with its independent programme has the project of becoming the decision-making power and building such an economy.

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