The Economist 04Apr2020

The EconomistApril 4th 2020 Britain 23

O

n march 9thBritain’s steel industry

received some rare good news when

Jingye Group, a Chinese firm, completed its

purchase of British Steel, saving some

3,000 jobs in Scunthorpe and Teesside. But

a lot has changed in three weeks. “That

feels like three years ago,” says an industry

insider. “In three weeks’ time I’m worried

Britain won’t really have a steel industry.”

Steelmakers have seen demand fall by

as much as 40% since car production shut

down and most construction projects were

suspended. Firms report that the drop is

similar to the one experienced in the bank-

ing crisis of 2008. But that shock came after

years of buoyant growth, when company

balance-sheets were in ruder health. This

time the industry faces an imminent li-

quidity crunch, but with cash levels al-

ready dangerously low.

The Treasury has put in place a package

of support for firms across the economy

built on two core ideas: access to cheap fi-

nance to tide firms over, and support for

wage bills to maintain employment in a

downturn. Treasury officials are keen to

stick to the principle of broad support for

businesses, rather than to bail out specific

companies. Firms have been quick to

praise the government’s efforts, but there is

growing frustration that a “one size fits all”

approach may leave too many gaps.

Rishi Sunak, the chancellor, has an-

nounced up to £330bn ($410bn) of govern-

ment loan guarantees (worth 15% of gdp)

for firms, but none of that is likely to reach

the steel industry. The government is run-

ning two lending schemes. The first, deliv-

ered through banks, covers firms with an-

nual turnover of up to £45m and is meant

to support small- and medium-sized enter-

prises. The second, administered via the

Bank of England, is aimed at larger firms

but is open only to investment-grade bor-

rowers. The main British steel firms’ turn-

over is too high for the smescheme but

they lack the credit rating to use the larger

version. Many high-street retailers find

themselves in a similar quandary.

The jobs-retention scheme too causes

problems. Closing steel plants temporarily

is not something that is often done. It can

take 8-12 weeks safely to mothball a blast

furnace, “It’s not just a last resort, it’s often

terminal,” says one boss. In common with

other businesses, the industry would

prefer a more flexible furlough arrange-

ment in which workers’ hours can be cut,

with the government helping cushion the

blow to incomes.

Steel may directly employ only 32,600

workers, fewer than the pub chainjdWeth-

erspoon. But the jobs are clustered together

and the workers tend to earn around one-

third more than others in their localities.

Britain’s new political geography may offer

some hope (see map). Much of existing

steel employment is concentrated in and

around former “red wall” seats that

switched from Labour to Conservative at

the last election. Even the chair of the All-

Party Parliamentary Group on Steel is now

a Tory. Steel may be the latest industry ar-

guing its case for more support, but it is un-

likely to be the last. 7

Steel looks like falling through the

gaps of state support

The steel industry

Braced for trouble

Steel plants

“Red wall”

constituencies*

Scunthorpe

Teesside

Conservative

Labour

Lib Dem

SNP

Plaid Cymru

Green

Britain, general

election result

By constituency, 2019

Sources: Make UK;

Electoral Commission

*Based on 2005 general election

G

ood lucktrying to get in touch with a

company these days. Those calling

British Airways about a refund will find

themselves hung up on by an automated

system, immediately after they hear the

words, “we appreciate your understanding

at this time”. Virgin Media emailed its 5.5m

cable and broadband customers to ask

them to avoid calling. Banks, insurance

companies and this newspaper have issued

similar requests to customers seeking sup-

port, directing them online instead.

While call numbers have shot through

the roof, call centres are closing. Coronavi-

rus has put the industry, which employs

some 1.3m Britons, or about 4% of the

workforce, in a particularly tight spot. Only

10-20% of call-centre employees typically

work from home, reckons Ann-Marie Stagg

of ccma, an industry body. Many call cen-

tres take payments, making home-working

risky from a legal perspective. Yet if an on-

site employee catches coronavirus, hun-

dreds more may be taken offline, at least for

a while. A Sky call centre in Cardiff was

closed for a day after one worker was diag-

nosed with it in March.

In February Virgin had a dozen call cen-

tres. Now five overseas centres—in India

and the Philippines—are closed. The rest,

in Britain, remain open, but staff numbers

fluctuate as workers fall ill or take time off

to care for their families. Abby Thomas,

who runs customer service for Virgin, says

that the company just doesn’t have as many

people as it needs to answer calls. Last

month it announced 500 new jobs to sup-

plement its 2,350 domestic call-centre

workers. Meanwhile, the firm has rede-

ployed resources: sales calls have been sus-

pended, agents who normally handle cus-

tomer retention have been assigned

service jobs. Staff have been spread out

across several floors, every second desk is

kept empty and the cafeteria has been

closed (workers are brought lunch at their

desks instead).

Running homeworkers is tricky. “How

do you manage home agents effectively

when you have no direct visibility?” asks

Charlie Mitchell of Call Centre Helper. Oth-

er obstacles include security concerns

around customer information; complying

with rules for payment processing; and

caring for staff who might be taking call

after call with no breaks.

But it is not impossible. Sensée, as an

entirely work-from-home call centre oper-

ator, has several financial firms as clients,

and also works for the government. It

keeps an eye on staff with webcams, de-

mands that workers’ desks be kept clear,

and commandeers their computers so that

no screenshots or prints can be made. Its

staff has grown from 700 in February to

1,100 last week and “probably 1,500” in the

next few days, says Mark Walton, its boss.

Other operators are reconfiguring their

processes, often overnight. Serco, a big

contractor for the public sector, has moved

more than a third of its call-centre workers

to home-working. Ascensos, a Scottish

firm with 1,200 employees in Britain had

ten such positions a month ago; now 600

employees work from home. Virgin has

1,800 laptops ready to go for when it is

forced to send employees home. Ms Stagg

says several insurance firms she has spo-

ken to are preparing for 100% home-based

call centres, even if it means providing few-

er services over the phone. “They are hav-

ing to make the choice: do we give no ser-

vice or do we give some service,” she says.

The future of the industry is on the line. 7

Call centres are overwhelmed, under-

staffed and overhauling how they work

Call centres

Please hold