Scunthorpe Crisis Is Not A One-off

UK has to be ready to save strategic industries through comprehensive state intervention

There were dramatic scenes on Saturday when steelworkers at Scunthorpe, home to Britain’s last two functional blast furnaces, locked Chinese managers out of the plant – after claiming they were about to sabotage production.

Parliament was recalled to rush through legislation giving the government control over the plant, after its Chinese owners, Jingye, were accused of attempting to sell a vital shipment of coking coal to another Chinese company, in order to prevent its use to keep the plant alive.

Right now, the situation is on a knife edge. The technicalities of keeping Britain’s virgin steelmaking capability alive are complex. Government officials are in the plant and apparently contemplating giving a military escort to the relevant supplies.

But what the Scunthorpe crisis shows is that – from defence, to industrial strategy – we are just not in Kansas anymore. I understand why the British government has to use highly circumspect legal language, to avoid leaving itself open to a huge bill for acquiring a facility that is worth nothing financially, but Scunthorpe is headed for nationalisation. The sooner this is stated openly the better.

With the world’s attention focused on Trump’s trade war, this is not just a little local difficulty, or a hangover from bad decisions in a previous era. The Scunthorpe crisis is part of the same unfolding global crisis that Trump has triggered – and is a good illustration of how 30-odd years of neoliberal economic strategies have weakened Britain.

Recalibrating UK national power

Since 1945 the source of UK national power has been its ability to leverage its strengths within the multilateral system, namely:

• its P5 status and nuclear deterrent;

• its deep, open, technologically advanced and highly-skilled economy;

• its geopolitical influence via NATO, IMF/World Bank/WTO, Five Eyes, the Commonwealth and until 2016 the European Union

• the position of London as a global financial centre, backed by rule of law and a transparent UK corporate legal system

• English as a global language, leading to the global marketability of UK higher education

• the excellence of its armed forces and security services, who despite their small size are capable of expeditionary and global operations, when backed by US strategic enablers like space and intelligence;

• the stability of its democracy, allowing the UK’s cohesion as a multinational state.

As a result, though the UK has at times acted unilaterally to project power – as in the Falkands War – its model of power projection has been through alliances.

It has chosen to make develop its nuclear deterrent alongside that of the USA; it has refrained from protectionism, even during the current tariff war; it has sought to play leading roles within the multilateral institutions like NATO, the IMF and the EU when it was a member.

As a byproduct of strategic reliance on multilateralsm, the UK has avoided the creation of deep military reserves, and kept the armed forces only lightly present in civil society. Until 2021 it followed a policy of “global competition by default” for its military procurement – abandoning the attempt to retain national defence champions, or sovereign capability, except in CASD and aerospace.

It also opened its university sector to market forces and to large-scale foreign student attendance.

Meanwhile, during the period of neoliberal globalisation, the UK took a relaxed attitude to the centrifugal forces that were developing within its democracy – namely Scottish and Welsh nationalism and political Islam – each of which now have significant electoral bases.

However, the multilateral system, and the rules-based global order it underpins, is rapidly falling apart.

As a result, many of the factors that were once counted as strengths have to be understood as weaknesses – some of them urgent.

Trade war is not a metaphor

The logic of the global situation now points towards the emergence of rival, relatively closed trading blocs; rivalry over critical minerals and the territories they are located in; on top of the rejection of the international rule of law and universal principles of human rights enunciated by Putin and Xi in February 2022.

The most obvious threat is of global recession and financial crisis beginning in Q2 2025 – with all blocs and major states primed to respond with zero-sum strategies. Beyond that there is a clear danger that trade war and rivalry over natural resources leads to military coercion and the threat of war between peer adversaries.

Because “trade war” is not a metaphor. Trump is practising trade coercion, using the same logic of “compellence” as that outlined by Thomas Schelling in the 1960s.

When every major country has reframed the global situation as zero sum – ie if you win I lose – we will begin rapidly to see the normally separate spheres of defence, culture wars, trade and finance be used for leverage against each other. America’s criticism of the UK for enforcing protection of abortion clinics from harassment, for example – or Trump’s ludicrous demands for sovereignty over Greenland.

What I am worried about now is the following:

• The UK’s choice to shape its armed forces as the “sharp edge” of USA’s bigger military mass, and to leave parts of the CASD capability dependent on US goodwill, leaves us with forces ill designed for either independent power projection or leadership in Europe, and probably needing to proliferate the means of delivery for the deterrent at sub-strategic level (see this excellent paper by my Council on Geostrategy colleagues).

• The openness of our economy – and our previous willingness to tolerate deindustrialisation – leaves us vulnerable to action by bigger, more protectionist blocs. The Scunthorpe crisis, where ministers are having to acknowledge CCP involvement in the company that owns the plant, is a case in point. But there is more to come.

• The marketisation of higher education has left UK universities struggling for cash, and reliant on the business of creating human capital for other, now rival, countries; while political pressure from anti-Israel and pro-Russian groups has made university leaderships wary of taking part in the vital, state directed mil-tech research needed to maintain strategic advantage.

• Multiculturalism is under stress, leading to the fragmentation of voting and the emergence of anti-democratic political projects and narratives at both extremes. You cannot project a national, unifying strategy amid a damaging culture war.

Four Strategic Options

I wrote in March that there are four grand-strategic options facing the UK.

• The first is the hubristic “Global Britain” position outlined by Boris Johnson in his 2020 Greenwich speech, which has been shut down by subsequent events;

• The second is the Farage-NatCon position of becoming part of the US bloc, and accepting Trump’s demands;

• The third is a strategic orientation to Europe;

• The fourth is to become “Little Britain” – energy self-sufficient, disarmed and probably thereafter broken up – which is the undeclared position of the Greens, Corbyn and the nationalist parties.

Everything in Labour’s DNA tells it to avoid making this strategic choice between Europe and the USA. Since the end of the Second World War it has followed the basic instincts of Ernest Bevin – to keep the USA invested in the collective security of Europe.