The partnership that failed

June 19, 1997

In september 1995 I watched Tony Blair's extraordinary conference speech: "A young country," he said, "must build the economy of the future—no more bosses versus workers, but partnership at work." I once believed in partnership at work in industry. It was 1975, the year I joined Charles Villiers at British Steel, when Eric Varley appointed him chairman. Villiers had just published a pamphlet called We all Live Here, a guide to a mixed economy which was "social, fair and democratic."

To transform British Steel Villiers proposed a "steel contract." I still have his handwritten notes: "We propose partnership of all who work in British Steel. This would be negotiated by their representatives." The apex of the contract was to be a steel council. Worker-directors would join the main board—these were the days of the Bullock report on industrial democracy.

For two years Villiers and I worked hard to achieve this, along with two British Steel executives, Bob Scholey and David Grieves. The prize was to be a joint management-and-unions approach to the changes needed to catch up with the Germans and the French, and a humane approach to the closure of older plants.

It did not work. The craft unions were sympathetic but the steelworkers' union, the ISTC, led by Bill Sirs, did not want to share responsibility. It procrastinated and was overtaken by events. The European steel crisis exploded and losses spiralled. I helped Villiers and Scholey plan with Varley and Gerald Kaufman the procedure for negotiating closures at local level, lubricated by large payments to senior workers; 25,000 jobs went in the last months of the Labour government in 1979.

In the first year of Thatcher's government Villiers and Scholey accelerated the process of change, provoking the expensive and painful 13-week steel strike. Most decent opinion was horrified: I remember trying to persuade two bright young Tory backbenchers (William Waldegrave and John Patten) that all this was necessary. Nor was it easy explaining it to the Islington South and Finsbury Labour party.

About 45,000 people left British Steel in the first nine months of 1980. The industrial journalists thought this was the beginning of the end, and expected a surge of imports. Then Keith Joseph appointed Ian MacGregor as chairman. But the strike was the watershed. Management began to change things, without too much "consultation or participation." Llanwern, once famous for overmanning and unofficial strikes, began to feature in Tory political broadcasts thanks to its productivity turnaround.

Back in 1976 I had visited German steel managers and suffered the pained look in their eyes as the nth British visitor sought to find out just why their manning was so much better. As the 1980s progressed, and British Steel achieved serious profits and privatisation, the Germans became concerned about their own costs: it was not easy within the framework of Mitbestimmung to achieve the rationalisation needed on the Ruhr. By March 1997 Krupp-Hoesch was using Deutsche Morgan Grenfell to launch a contested takeover of Thyssen to achieve faster rationalisation. Steelworkers demonstrated and the proposals were withdrawn; but something similar will happen anyway.

The last picket line I crossed was in Warsaw in 1994, when Solidarity steelworkers struck for nine weeks because they feared the new controlling Italian shareholder. A bishop intervened, and output is now pouring into the car companies operating in Poland.

In Britain the partnership of Blair's 1995 conference speech evolved into his stakeholder speech a few weeks later when he spoke of the "vision of the company as a partnership in which each employee has a stake…" Now in 1997, he leads us into the European social chapter, which states that "information, consultation and participation for workers must be developed along appropriate lines." It is the world of Jacques Delors, whose guru was the leftwing catholic, Emmanuel Mounier.

I look back again at Villiers's 1976 notes. He—the catholic social democrat—had then believed all this passionately. I believed it too, but with an edge of youthful cynicism. Now, the 1980s over, British Steel can inform, consult and participate—it is the Germans who have the problem of achieving faster change. British Steel's enemy is no longer the unions—it is the Treasury and an overvalued exchange rate.

I was not surprised to see that stakeholding did not get into the Labour manifesto. It is too close to the partnership I wanted in 1976. Today's top managers grew up in the 1970s and 1980s and bear the scars. Our new government may achieve some partnership, works councils will certainly become commonplace. But managers, like Tony Blair, will retain the power to achieve change. A "young country" does not suffer amnesia.

Christopher Beauman