Last weekend saw an unusual parliamentary event – the recalling of both houses. Recalling parliament in expensive, so it is not done without very good reason. And the reason? Tackling the crises at the British Steel site in Scunthorpe, owned by the Chinese investor Jingye.
It was a fair enough. This is the last blast furnace in the UK that produces virgin steel, and to allow it to cool off would be to lose the facility all together. Once lit, blast furnaces cannot be switched off. Without this, the UK would have no capacity to produce steel from iron ore, and leave us at the whim of steel exporters – most notably, China.
The problem the UK has, that was exposed in last weekend’s British Steel intervention, is that we have the highest energy costs in the world. That damages our energy hungry manufacturing sector. Just as worryingly, with the emergence of energy hungry new technology and data farms that service AI, our high energy costs affect our future ability to compete at any level.
We have contradictory policies. The government wants steel manufacturing, but the 3,000 employees of British Steel attracted a huge hike in costs with Labour’s jobs tax, coming in last week. And the Scunthorpe plant needs coal to run it. Labour closed our last coal mine – Whitehaven – when they decided not to progress the application this year.
The British Steel plant has, in effect, been nationalised. The government has demonstrated it can intervene on a privately owned business “in the national interest”. It is a worrying development. Whilst I appreciate the specific point, we do need to consider what this means for future investors into the UK. Knowing that your investment capital is no longer protected by law, would you still be inclined to invest in the UK. We shall see.
Of course, there are other models of public ownership. Nationalisation never worked in the past, and those old enough to remember the bad old days would agree that the UK economy and public finances did well after the privatisation programme of the 1980s. But, where there are clear customers for a business, such as the water utilities, I would certainly welcome a debate around mutual ownership, where every customer of a company like Thames Water has a vote on its future. We are familiar with the model, as many of us have building society accounts. It is always worth looking at alternatives to nationalisation.