The 400,000 jobs Ed Miliband could destroy

Telegraph

17-07-2025

The story of British manufacturing, particularly energy-intensive manufacturing, in recent times has been one of woe. The primary steel sector faces collapse. Jim Ratcliffe, the CEO of Ineos, has declared that the British chemical industry is coming to an end.
The travails of industry have become a case study for different factions to blame their rivals. Left-wingers argue that deindustrialisation is the legacy of Margaret Thatcher's policies. Those on the Right, meanwhile, lay the blame at the reforms of Clement Attlee and his post-war successors, from nationalisation, the 1945 Distribution of Industry Act and the 1947 Town and Country Planning Act.
While Britain's twentieth century was marked by policy mistakes, at the turn of the century, it had the fourth-largest manufacturing base in the world in terms of gross value added. We were a significant energy exporter and had stable and competitive electricity prices.
Where did things go wrong? In 2000, we, alongside the rest of the Western world, made a faustian pact with the Chinese Communist Party, where we offloaded our low-value-added industrial production in exchange for cheap goods. It was not thought then that, by 2020, Chinese manufacturing would account for 35 per cent of global production, and dominate high-value added sectors like batteries, electric vehicles and drones. We also thought little about how Chinese overcapacity would put huge downward pressure on process industries like chemicals and steel.
The other major factor has been the lack of a coherent energy policy. Over the past century, we have gradually increased our energy bills with various levies and carbon-related taxes, all to facilitate the rollout of intermittent renewables. While external shocks to gas prices in recent years brought the issue to the forefront, our industrial energy costs had become globally uncompetitive since 2008.
The net zero strategy of decarbonising the power sector via levies has proved short-sighted. While electricity in 2023 accounted for 42 per cent of energy expenditure, it represented less than 20 per cent of calorific consumption, with the remainder primarily coming from methane (natural gas) and petroleum products. British electricity is over 400 per cent more expensive than gas. It is for this reason that wider efforts at electrification are failing. Installing heat pumps has been painfully slow, while the government's drive for electric vehicle adoption did not meet its targets in 2024.
While gas and coal costs have been relatively stable, they have been hit by discretionary carbon costs. Prax Lindsey, the Hull-based refinery that recently entered receivership, had emission trading scheme (ETS) costs (accounting for free allowances) exceeding 100 per cent of its operating profit in 2023.
The Prax Lindsey closure is just one example of the not-so-slow-motion collapse in Britain's energy-intensive industries. Since 2022, we have seen three ammonia plants shut down, two refineries close, and one of our remaining three olefin crackers abandoned. Wigan's Electric Fibre Glass, our largest fibre glass manufacturer, announced its closure.
In metals, the blast furnace at Scunthorpe has effectively been nationalised, and Liberty Steel's plant in Rotherham has been idle for a year. The government is attempting to stave off the bleeding by increasing levy exemptions and making targeted bailouts. They are right to be worried. Home Secretary Yvette Cooper's constituency of Pontefract, Castleford, and Knottingley has three glass factories.
The energy-intensive industries sector, outlined in my report for the Jobs Foundation, is a significant component of the economy outside of London. It has over 400,000 workers, a turnover of £170 billion, and a gross value added of nearly £40 billion. It provides relatively high-paid work in the areas it operates, and is critical to thousands of manufacturers further down the supply chain. If it falters further, there is no silver lining.