Andrew Griffith is the Shadow Secretary of State for Business and Trade, MP for Arundel and South Downs and a former FTSE100 Finance Director and COO.
Governments should not run businesses. That is a truth almost universally acknowledged by Conservatives after the last time Ministers tried, and failed, to buck the realities of the free market.
Back then Britain was trapped in the depths of the socialist 1970s. It was a time when the heavy hand of the state was the first port of call, when unions ruled the roost, and an indebted Britain almost went bust. As the Government gears up to nationalise British Steel again, that refrain sounds awfully familiar.
When Labour ministers last ran British Steel, the odyssey culminated in over £1 billion worth of loses in a single year. This time will be no different, and that’s precisely why Conservatives will oppose them.
Steel matters, it’s one of the building blocks of a functioning economy, and that is precisely why it can’t be left to Ministers with little experience of the real world and even less of running a business. The deindustrialisation of Britain is a national emergency and the only way to reverse it is to stop meddling in the markets and get back to reality.
The very reason British Steel is struggling is because of decisions made in Whitehall. The decision to focus on net zero rather than our own energy security has pushed up energy costs to the point where Labour is now lifting sanctions on Russian oil and gas to keep planes flying. The choice to heap more taxes and red tape on employers has cost over 200,000 people their jobs and made our exports more expensive. None of this will be solved by nationalisation. On the contrary, it will be made worse.
When Ministers take over a business like British Steel, they also take on incentives that directly contradict their responsibilities toward the rest of the economy. We are already seeing them try to tilt the playing field in favour of their new jobs as steelmen.
From 1 July, tariffs on steel imports from our allies in Europe and Turkey will double while quotas will be cut by 60 per cent. This Trump-style move includes types of steel which the UK does not even make. The intention is clearly that every manufacturer, every steel producer that imports low value scrap to make high value exports, every consumer, will be penalised in favour of one business. The result will be that more manufacturing jobs move abroad while we open ourselves up to retaliatory tariffs.
The alternative, which Ministers know they cannot afford, is to keep paying the £1.2 million a day in taxpayer cash that has been handed to British Steel since Labour’s botched nationalisation attempt in April of last year. In total, £484 million worth of your taxes has been spent, with little to show for it. On top of this, the cost of decommissioning and land remediation at the Victorian-era Scunthorpe site, which should be the responsibility of the current Chinese owners, will become that of His Majesty’s Government. Those costs could easily run to £2 billion.
Why would the Government need to decommission the blast furnaces? Because despite what ministers may imply, they have no intention of keeping them on. It sounds mad, but it’s true. The plan set out in the Government’s Steel Strategy is not to retain our primary steel-making capacity. Instead, the Government will transition to electric arc furnaces which cannot make the same grades of steel as blast furnaces can. That is almost certainly because blast furnaces use coal, and this Government really hates coal.
At present, the coal used by British Steel is imported from half-way around the world – as far away as Japan. The iron ore from which the steel is made is similarly imported from Australia or South America. As long as this continues, the idea that British Steel provides a sovereign capability that could resist a global conflict is as farcical as hoping to run our fighter-jets with Russian jet fuel.
The new nationalisation bill which the Government hopes to use to take over British Steel is itself not fit for purpose. It combines some of the worst excesses of a Government that doesn’t respect Parliament. First, it doesn’t just apply to British Steel. It will allow the Government to nationalise virtually any steel business, whether it makes steel or merely processes it. It includes a sunset clause, but also a power for Ministers to extend that sunset indefinitely.
Much like the Bill Ministers used last year to take control of British Steel without taking ownership of it, the Government will claim this is a temporary measure. It’s already obvious from their legislation that it will become permanent.
The legislation also combines awesome powers for Ministers to change any law, any contract, and even common law with the stroke of a pen with minimal scrutiny. While the Prime Minister made much of the “public interest test” that would be applied before the powers are used, a glance at that test reveals it is so broad as to be meaningless. Crucially, it also does not include a financial test.
The real solution should be obvious. Remove the barriers that have made countless steel makers and manufacturers in this country struggle. Cut industrial energy costs by scrapping net zero, the Climate Change Act, carbon taxes, and energy levies. Produce more energy by building nuclear power stations and drilling in the North Sea. If we need coal to make steel then allow it to be extracted in this country, rather than importing it from Japan. The Government is unwilling to do any of this, so it follows that the problem will only get worse and the bill will keep rising.
Under Kemi Badenoch, Conservatives will not make the same mistakes as we have in the past. We will tell the truth. We will not shy away from the tough choices that our political class prefers to avoid making. At times, that may mean doing things that are not popular. The truth is not always popular. In the long run, however, the truth wins out.
The truth is that we should not be nationalising British Steel. It won’t protect the blast furnaces, it won’t fix the fundamental problems that caused it to struggle in the first place, and it won’t make us any more independent. What it will do is cost us all an enormous amount of money which we do not have. The Treasury already spends close to £120 billion a year servicing the £2.8 trillion national debt. This can’t go on.
Unlike Labour, we are not proposing that the blast furnaces be shut off. We know that there are buyers interested in British Steel. We believe that with the right policy changes there is a prospect of a commercial buyer who would run the site properly, invest in jobs, and keep our primary steelmaking capacity. We laid out countless such policy changes in our Alternative King’s Speech last week and we have a strong record supporting private companies to make steel in the UK.
Instead, Labour will make taxpayers spend billions just to shut the blast furnaces off. It’s a shoddy deal and we won’t support it.
Andrew Griffith is the Shadow Secretary of State for Business and Trade, MP for Arundel and South Downs and a former FTSE100 Finance Director and COO.
Governments should not run businesses. That is a truth almost universally acknowledged by Conservatives after the last time Ministers tried, and failed, to buck the realities of the free market.
Back then Britain was trapped in the depths of the socialist 1970s. It was a time when the heavy hand of the state was the first port of call, when unions ruled the roost, and an indebted Britain almost went bust. As the Government gears up to nationalise British Steel again, that refrain sounds awfully familiar.
When Labour ministers last ran British Steel, the odyssey culminated in over £1 billion worth of loses in a single year. This time will be no different, and that’s precisely why Conservatives will oppose them.
Steel matters, it’s one of the building blocks of a functioning economy, and that is precisely why it can’t be left to Ministers with little experience of the real world and even less of running a business. The deindustrialisation of Britain is a national emergency and the only way to reverse it is to stop meddling in the markets and get back to reality.
The very reason British Steel is struggling is because of decisions made in Whitehall. The decision to focus on net zero rather than our own energy security has pushed up energy costs to the point where Labour is now lifting sanctions on Russian oil and gas to keep planes flying. The choice to heap more taxes and red tape on employers has cost over 200,000 people their jobs and made our exports more expensive. None of this will be solved by nationalisation. On the contrary, it will be made worse.
When Ministers take over a business like British Steel, they also take on incentives that directly contradict their responsibilities toward the rest of the economy. We are already seeing them try to tilt the playing field in favour of their new jobs as steelmen.
From 1 July, tariffs on steel imports from our allies in Europe and Turkey will double while quotas will be cut by 60 per cent. This Trump-style move includes types of steel which the UK does not even make. The intention is clearly that every manufacturer, every steel producer that imports low value scrap to make high value exports, every consumer, will be penalised in favour of one business. The result will be that more manufacturing jobs move abroad while we open ourselves up to retaliatory tariffs.
The alternative, which Ministers know they cannot afford, is to keep paying the £1.2 million a day in taxpayer cash that has been handed to British Steel since Labour’s botched nationalisation attempt in April of last year. In total, £484 million worth of your taxes has been spent, with little to show for it. On top of this, the cost of decommissioning and land remediation at the Victorian-era Scunthorpe site, which should be the responsibility of the current Chinese owners, will become that of His Majesty’s Government. Those costs could easily run to £2 billion.
Why would the Government need to decommission the blast furnaces? Because despite what ministers may imply, they have no intention of keeping them on. It sounds mad, but it’s true. The plan set out in the Government’s Steel Strategy is not to retain our primary steel-making capacity. Instead, the Government will transition to electric arc furnaces which cannot make the same grades of steel as blast furnaces can. That is almost certainly because blast furnaces use coal, and this Government really hates coal.
At present, the coal used by British Steel is imported from half-way around the world – as far away as Japan. The iron ore from which the steel is made is similarly imported from Australia or South America. As long as this continues, the idea that British Steel provides a sovereign capability that could resist a global conflict is as farcical as hoping to run our fighter-jets with Russian jet fuel.
The new nationalisation bill which the Government hopes to use to take over British Steel is itself not fit for purpose. It combines some of the worst excesses of a Government that doesn’t respect Parliament. First, it doesn’t just apply to British Steel. It will allow the Government to nationalise virtually any steel business, whether it makes steel or merely processes it. It includes a sunset clause, but also a power for Ministers to extend that sunset indefinitely.
Much like the Bill Ministers used last year to take control of British Steel without taking ownership of it, the Government will claim this is a temporary measure. It’s already obvious from their legislation that it will become permanent.
The legislation also combines awesome powers for Ministers to change any law, any contract, and even common law with the stroke of a pen with minimal scrutiny. While the Prime Minister made much of the “public interest test” that would be applied before the powers are used, a glance at that test reveals it is so broad as to be meaningless. Crucially, it also does not include a financial test.
The real solution should be obvious. Remove the barriers that have made countless steel makers and manufacturers in this country struggle. Cut industrial energy costs by scrapping net zero, the Climate Change Act, carbon taxes, and energy levies. Produce more energy by building nuclear power stations and drilling in the North Sea. If we need coal to make steel then allow it to be extracted in this country, rather than importing it from Japan. The Government is unwilling to do any of this, so it follows that the problem will only get worse and the bill will keep rising.
Under Kemi Badenoch, Conservatives will not make the same mistakes as we have in the past. We will tell the truth. We will not shy away from the tough choices that our political class prefers to avoid making. At times, that may mean doing things that are not popular. The truth is not always popular. In the long run, however, the truth wins out.
The truth is that we should not be nationalising British Steel. It won’t protect the blast furnaces, it won’t fix the fundamental problems that caused it to struggle in the first place, and it won’t make us any more independent. What it will do is cost us all an enormous amount of money which we do not have. The Treasury already spends close to £120 billion a year servicing the £2.8 trillion national debt. This can’t go on.
Unlike Labour, we are not proposing that the blast furnaces be shut off. We know that there are buyers interested in British Steel. We believe that with the right policy changes there is a prospect of a commercial buyer who would run the site properly, invest in jobs, and keep our primary steelmaking capacity. We laid out countless such policy changes in our Alternative King’s Speech last week and we have a strong record supporting private companies to make steel in the UK.
Instead, Labour will make taxpayers spend billions just to shut the blast furnaces off. It’s a shoddy deal and we won’t support it.