In Labour's hands, British manufacturing never stood a chance

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2 days ago

The delay of the UK's long-awaited industrial strategy should hardly come as a shock. This country's approach to such matters has long been confused. At times, it has been utterly non-existent.
Industrial policy was so muddled during the twilight years of a dying Tory government, that it often seemed like ministers were making it up as they went along.
Knee-jerk responses to major crises – such as the one that saw Sheffield Forgemasters nationalised when someone in Whitehall suddenly realised the £40bn programme to build the Royal Navy's next-generation nuclear missile submarines was in jeopardy –became the norm in the absence of any joined-up thinking.
The decision of Boris Johnson to scrap the industrial strategy council and replace it with the 'Build Back Better council' – one of many utterly hollow slogans the Tories desperately dreamed up as their popularity collapsed – seemed like the moment that the UK threw in the towel on any pretence of a clear industrial plan.
Remarkably, the situation has deteriorated even further under this Labour Government.
Rather than 'reigniting Britain's industrial heartlands' as Keir Starmer claimed on the basis of very little, shortly after taking power, the current Cabinet is in danger of presiding over the complete disappearance of UK manufacturing.
In the hands of clueless Labour ministers obsessed by net zero and entirely arbitrary green targets, swathes of the industrial base are vanishing before our eyes, and there is no plan to stop it.
The consequences for entire towns built on factory production, and surrounding communities, will be utterly devastating.
Since Labour won the general election, the list of major manufacturers that have raised the white flag has ballooned into a who's who of UK industry. Port Talbot's blast furnaces have closed, threatening the very existence of that region's biggest employer.
At British Steel, the situation is even more alarming – its vast Lincolnshire steelworks is now controlled by the Government, forced to step in after years of neglect by Chinese owners, yet with no discernible sign that the site has a viable future.
The closure of Grangemouth, Scotland's only remaining oil refinery, in the coming weeks, is in danger of being missed altogether – except of course by the hundreds of people employed there.
True, owner Ineos has a reputation for ruthless cost-cutting across its empire, but billionaire owner Sir Jim Ratcliffe has warned repeatedly of the existential crisis facing the chemicals industry as a result of what he describes as 'decarbonising by de-industrialisation'.
Others that failed to grab the same headlines, but whose loss to the nation's output will be no less severe, include the Olefins 'cracker' facility in Teesside. A feature of the local skyline for half a century, it reportedly stands on the brink of closure after its Saudi Arabian owners halted a multimillion-pound upgrade.
The future of the North Sea, cement, glass, paper, ceramics and other so-called foundational industries are all similarly bleak – the result of long-term neglect, complacency, short-term politics, and confused decision-making.
The idea that salvation lies in Britain's unquestioning embrace of all things net zero is the great lie of this century. Ed Miliband's 'green jobs' promise is a fantasy. Where employment is being created by clean energy projects, many thousands more are being destroyed on the altar of his fanaticism as companies buckle under the exorbitant costs of the transition.
But it's not just the renewables revolution that is at fault, the UK's energy policy has long been a complete catastrophe. Time and again, sky-high energy costs are being blamed for crushing the life out of heavy industry as production lines are shut down or entire factory complexes mothballed altogether.
The shadow of the green levy monster looms large but factory bosses also blame surging gas prices for the destruction. Throw excessive network charges into the mix and British companies are grappling with the most punishing energy bills in the world, leading to an extraordinary collapse in output.
The figures, published in The Telegraph last weekend, are truly astonishing. In the UK, industrial electricity costs have shot up by three quarters in three years and industrial gas prices have more than doubled. Meanwhile, the output of energy-intensive industries has tumbled by a third.
It is the equivalent of having not one, but both hands fastened behind the back and your shoelaces tied together. Faced with energy bills five times greater than their US counterparts and three times higher than European rivals, British industry stands little chance of competing globally.
It is therefore impossible to overstate how much there is riding on the industrial strategy this time around. Recent history from both sides of the political divide suggests there is little reason to be hopeful given the number of unconvincing iterations of industrial policy that have come before.
Yet the overwhelming message from UK manufacturers is that energy costs are a tangible problem that can be addressed.
The blizzard of Government-imposed green levies and taxes that companies must contend with, such as the climate change levy, renewables obligation, feed-in tariffs, alone leaves plenty of room for meaningful action.
The bold move would be to bring forward a planned tax on carbon intensive goods imports of cement, fertiliser, aluminium, iron and steel set for 2027, at the same time as expanding it to other key sectors such as glass and ceramics.
Fears that the tariff will push up prices for consumers cannot be overlooked but, at the same time, a policy of penalising domestic producers while goods pour in from countries that continue to pollute at will seems like self-harm on a grand scale.
There are encouraging signs that this Government is actually listening for once. Rachel Reeves told an audience at the annual CBI dinner last week: 'We know that one of the questions is how we make energy more affordable, especially for … intensive energy-using businesses where the price compared with other countries … is just too acute.'
But the time for talking is clearly over. The crisis in manufacturing means Britain's industrialists will no longer stand for ministers trying to fob them off with easy soundbites.
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