Britain’s Apex Predator Problem
A retrospective look at British Steel
These essays are meant to be provocative, and based on both a red team principle and my love of the Oyster Club. It is my aim to stress test Westminster concepts, learn from the feedback I receive, and introduce new ideas occasionally.
I am a firm believer in putting pen to paper, or fingers to touchpad, as a means of refining thinking. I will certainly get things wrong, but that's how I learn. I do not have all the answers for the questions I pose in my writing.
These views are mine and mine only: they do not represent my employers.The nationalisation of British Steel is being treated primarily as a geopolitical and/or energy security story: Chinese ownership, national security, industrial resilience, Net Zero costs. While absolutely important, I suspect that this framing, and much of the commentariat and political conversation, appears downstream of a deeper, more structural problem. Britain is not set up to deal with private sector firms that behave like apex predators, firms that are highly focused, well-advised, and designed to extract value quickly from systems that move slowly.
In short: the ecosystem creates situations further upstream for these firms to leverage by failing to take a strategic approach to key sectors and incentives. Profits are privatised, liabilities are socialised.
To be clear: these firms are not acting in bad faith, nor are they ‘evil’. In fact, they are often exceptionally competent, run by intelligent leaders and boards composed of regular people. Some operate with differences shaped by their country of origin - and we should be sharp about governance issues here - and obviously there is a clear divergence in incentives and timelines between infrastructure giants and private equity.
I’m loosely delineating the pair and oversimplifying in the process:
P.E operates on defined exit horizons, targeting arbitrage, operational overhaul, and near-term gains. In normal speak: buying undervalued assets, cutting costs, and aiming for quick financial returns. Their work can be seen negatively in headlines outlining job cuts and branch closures, or positively in injecting pace and direction into flagging companies.
Infrastructure giants, by contrast, entrench themselves in the state’s long-term architecture: shaping markets, influencing regulation, and acquiring leverage through scale, continuity, and indispensability. They do not seek a quick exit: they embed into utilities, transport, telecoms, and logistics. These are slow-moving, capital-intensive sectors where alternatives are few, disruption is costly, and the state ultimately guarantees continuity. Their influence is not just economic but political: over time, they reshape the operating assumptions of the public sector itself.
P.E. seeks return, then exit. Infrastructure giants seek control, then influence. The former extract rapidly; the latter entrench strategically.
Both are often advised by elite legal, financial, and lobbying teams, and they understand how to operate in complex regulatory and political environments. They know how to extract leverage, and crucially, they can often afford to walk away once returns diminish. They play by, and often push against, the incentives and rules set out in Britain. And when it suits them, they know how to access public funding, and in some cases, individuals who previously helped regulate their industries.
ENTER THE STEEL
British Steel’s woes began decades earlier, with financial engineering, aggressive cost-cutting, and leveraged ownership.
British Steel tells this story clearly
1967–1988: Nationalised as British Steel Corporation, consolidating major UK producers
1988–1999: Privatised under Thatcher
1999–2007: Merged with Hoogovens to form Corus
2007: Acquired by India’s Tata Steel
2016: Sold to Greybull Capital for £1
2019: Liquidation begins; 5,000 direct jobs and 20,000 supply chain jobs at risk
2020–2025: Acquired by Jingye; repeated pleas for state support; eventual nationalisation to prevent collapse
British Steel’s collapse didn’t begin with geopolitics or its eventual acquisition by Jingye (more on that from outgoing Spectator journalist
here, and former Security Minister here).Cindy observes Jingye’s dire performance back in China:
“In 2023, the company saw a 24 per cent drop in year-on-year profits, according to Fortune. The entirety of the Chinese steel industry has been struggling since the real estate crisis and as previous overcapacity comes to a head.”
while Tom correctly notes the soaring energy costs in the UK:
“UK manufacturers face industrial energy costs of £66 per megawatt-hour – 32% higher than Germany’s £50 and 53% above France’s £43.”
which was also a point British Steel raised in its own press release:
“UK steelmakers like us pay up to 50% more for our power than our competitors in France and Germany. And unlike many steel-producing countries - such as France, Italy, Spain, and the UAE - Britain does not have a mechanism to protect energy-intensive industries (EIIs) from high wholesale prices.”
On the point about leverage I made earlier with regard to infrastructure giants (I’m lumping British Steel into this category), Business and Trade Secretary Jonathan Reynolds told Parliament:
“Now even if I had agreed to [Jingye’s] terms, I could not guarantee that further requests for money would not then be made.”
THE WIDER LANDSCAPE
The same pattern seems to be visible across multiple sectors, some of which are strategically important, and others which are not. Thames Water continued to extract value in the form of dividends to its shareholders, including foreign sovereign wealth funds, while taking on significant debt and approaching the point of collapse.12 Debenhams was acquired in 2003 by a private equity consortium including TPG, CVC Capital, and Merrill Lynch. They took £1.2 billion in dividends despite owning the company for less than three years, and ballooned its debt by x10 to over a billion pounds.3 Capita won huge outsourcing contracts including with the army and NHS, paid dividends while loading debt, then buckled under its own complexity.4 The proposed sale of Arm, a rare British sector technology gem, to Nvidia was eventually blocked - but only after drawing significant criticism and political pressure from the US among others.5 In 2008, British bank Barclays avoided a government bailout by raising £7 billion from Gulf sovereign wealth funds; one of them, Abu Dhabi’s International Petroleum Investment Company, then sold £3.5 billion shares without alerting the bank, causing its share price to plummet.6
In each case, the firms behaved rationally, but the state failed to see the risk early or intervene in time. And I would argue that when it comes to companies which sit outside of strategically critical sectors - retail rather than water, let’s say - there’s still important impacts. Job losses hit communities, warp incentives governing politician’s time, cause change to the Parliamentary timetable, hinder our economy, and damange societal harmony writ large. They undermine the belief in the democratic system too. These are hard to quantify I suspect.
This isn’t simply about speed. It’s about institutional design. Successive British governments are slow to act, often reactive rather than strategic, and tend to change priorities with each new turn of leadership. There is no clear, multi decade framework for deciding which sectors are strategically important until a crisis emerges. And by then, the damage is often done: the asset has been weakened, critical capabilities lost, or long-term risks locked in.
WHY?
Part of the issue appears to be ideological. The UK has spent decades believing that markets allocate capital better than governments, that openness is always a strength, and that state intervention should be minimal. But in a world where capital moves fast and geopolitical competition shapes investment decisions, that model leaves the UK exposed. Like many ideas that underpin the orthodoxy of Westminster, this assessment exists from a bygone era.
Even the United States, the ultimate apex country, has shifted. Under President Trump’s return to office, Washington has declared a national economic emergency and imposed a 10% universal tariff on all imports, with higher rates for countries like China. The new regime is focused on retrenching supply chains through trade barriers rather than industrial planning. This marks a break from the investment-heavy approach seen under Biden and signals a wider global turn toward protectionism. For Britain, it means the US is no longer a reliable model of strategic industrial support. The UK will need to chart its own path: one that recognises risk early and builds resilience before crisis forces a reaction.
There are different ways to interpret what’s going wrong. A Marxist lens might say this is accumulation by dispossession, where strategic value is extracted and losses are socialised. A more institutional reading is that the British state simply isn’t built to cope with high-speed, high-leverage actors. Either way, the result is the same: by the time the government intervenes, it’s usually too late.
Geopolitics certainly matters. But by focusing only on the foreign angle, the Chinese buyer Jingye, allegations of CCP sleight of hand at play, and the national security risk in isolation, we arrive too far downstream to properly analyse the larger problem. Britain keeps mistaking symptoms for causes. If we want resilience, we need to recognise that some firms will always act like predators - to their credit - and that some sectors need to be proactively protected from extreme free market behaviour. The system needs to be able to handle them. Right now, it can’t.
Closing views and open questions:
I’m grateful to SW1 folk, macro economists, general ‘vibe checkers’ and others for giving this a read. Some of the points they raised I’ve tried to begin to answer in italics, but others are included below, and I’m always interested in learning more:
“What would you do instead?” I don’t know. I’m trying to read widely as to how other countries manage to utilise SOEs effectively.
“What criteria would you embed in a modern industrial strategy to insulate some of the sectors you’re worried about - what would that regime look like?“ [Potentially we should be auditing all 17 categories that sit under the National Security and Investment Act]
“This analysis may be right for strategic assets, but arguably the story writ large in the British economy which no politician can say is that we’ve got a long tail of unproductive businesses: not enough creative destruction. “
> paid dividends while loading debt
Buying cheap, shedding costs and selling off sounds predatory. This seems fraudulent.
Excellent article. 👍