What part of Britain is not for sale?
Sunday Mail, April 3rd 2016
This week the future of the steel industry moved centrestage, Scottish parties have finally started talking tax, and the Tories version of what they call a ‘national living wage’ came into force.
British steel used to lead the world. In 1875 it accounted for 40% of world production. The industry employed 320,000 people in 1971, which has fallen to 24,000 now. It produced 24 million tonnes in 1967, down to 12 million tonnes today.
Tata Steel – an Indian company based in Mumbai who bought Corus in 2007, an amalgamation of British Steel and a Dutch firm – employ 15,000 of the current 24,000 jobs in the UK industry.
The world has a huge steel surplus – the product of Chinese industrialisation, low costs and state subsidies. The US Government has put up protective trade barriers to protect domestic steel from Chinese competition. But the EU, egged on by the UK, has argued against any such action.
This is about many things – high quality, high skilled jobs; good apprenticeships; the future of manufacturing; whether the UK has any kind of industrial policy and what role, if any, government has beyond rhetoric and retraining.
Conservative policy has to be indicted. Cameron and Osborne have an open door policy to China. They believe Britain has no strategic sectors which have to be kept in British hands. Foreign investment is seen as appropriate for running any part of the economy.
Osborne – known as ‘a Fifth columnist for Beijing’ in Brussels – has been courting Chinese investment to build new nuclear power stations and the publically subsidised Hinkley Point. Chinese money has invested in HS2 rail, the property market, Falkirk based buses and telecommunications with links to the surveillance sector, potentially risking national security.
A number of factors have come together in the steel crisis. First, this is a problem of globalisation and the world economy eight years after the crash with central bank intervention and soft money not rebooting Western growth.
Second, is the EU’s prohibition on state aid to industry and avoidance of imposing tariffs on Chinese steel encouraged by the UK. Third, energy taxes are offloaded onto traditional industries such as steel – making them uncompetitive – which it is possible to get EU exceptions from, but which Britain has not applied for.
All this is wrapped up in the dogma of anti-state, deregulated capitalism. The respected ‘Financial Times’ declared in an editorial that ‘The state should do nothing to save the steel jobs.’ ‘The Economist’ were equally defiant, saying, ‘Any bailout by the state would run intro trouble. Spending to keep the plant itself in business would just prolong the inevitable.’
The Scottish Government has with its limited powers tried a different approach. This can be seen in how it acted in the Grangemouth-Ineos crisis, buying Prestwick Airport, and in the last week, the purchase of the two Lanarkshire steel works in Clydebridge and Dalzell by Liberty House, facilitated by the devolved administration.
This tragedy isn’t just about the current Conservatives, or even the last thirty years. It is a summation of the anti-industrial culture evident when Britain was the world’s leading economy. Then its ruling elites turned their noses at industry and manufacturing as dirty and unworthy of gentlemen.
Such snobbery still exists today in the predominance of the City of London: the most subsidised part of Britain. The City does not make anything physical or tangible. This is related to the UK having a Balance of Payments deficit since 1983 – reaching a record high of £96.2 billion last year – 5.1% of GDP.
All of this has come home to roost while Cameron focuses on the EU referendum. Out of political embarrassment they may be forced to do something. But make no mistake every sinew of Cameron, Osborne and Business Secretary Sajid Javid wants to do nothing.
The UK badly needs a proper industrial strategy – but that requires not just overthrowing the last thirty years of dogma, but the dominance of the City and the anti-industry bias at the heart of Britain’s establishment.
Britain needs a different state – not just politically and constitutionally – but economically – which isn’t short-term and instead champions investment, research and innovation. There have been numerous attempts and failures to do so. Macmillan and Harold Wilson first attempted this in the 1960s. They were followed by the corporatist approach of Ted Heath and then Tony Benn in the 1970s. Thatcher and Blair forsaked this territory, before Vince Cable and Michael Heseltine made one last effort under the coalition, with little chance of success.
The British economic miracle of the last few decades mesmerised many of our elites and opinion formers, yet is nothing but a mirage. It hasn’t raised living standards for the many, or transformed economic growth, but only extended insecurity and anxiety.
We need to stop saying Britain ‘open for business’ equals allowing any international interest to walk in and buy any part of the country. A pro-jobs and industry attitude would be very different to what we currently see: standing up in the EU, with China, and global forums, and saying about certain parts of the economy, ‘Britain is not for sale’.