De-industrialisation

The latest round in the ongoing saga of the complete failure to understand the concept of a national energy security policy is being played out against the backdrop of the rump British steel industry.

Successive governments - of varying colours - have failed for years to get a grip, with the result that while similar nations, like France, Germany, Italy, all continue to produce at reasonable levels in global terms (and the behemoths of China, India, US, Japan, Russia, South Korea top the international league tables), Great Britain currently produces something like 0.25% of the global total. Not a massive success story……

Now, I’m emphatically not an expert on the steel industry (although I do have a soft spot for it, as my father and grandfather made an extremely healthy living out of it, which was all to my benefit), but I think I can see from where a large part of the current problems emanate.

Industrial electricity prices in Britain are around twice those of France and Germany, and about four times those of the United States. That makes it quite difficult to produce competitively. Why should that be? After all, Britain is an island built on coal, and has significant offshore oil and gas fields, as well as onshore gas, just waiting to be fracked. Ah, but since Ed Miliband’s 2008 Climate Change Act and Theresa May’s legally binding commitment to ‘net zero’ by 2050 (which, incidentally, was rushed through Parliament with a minimum of debate), we’re not allowed to use those.

Now, Miliband delights in telling us that our electricity is expensive because we are reliant upon buying fossil fuels from ‘petro-dictatorships’, and that until we have purged coal, oil and gas completely from our energy mix, the prices will remain high (this, by the way, is the same man who promised - in order to get elected - that domestic energy costs would drop by £300 per annum). This is nonsense, on so many levels.

First, just as a matter of fact, our major sources of oil and gas are Norway and the US - not generally regarded as dictatorships. Secondly, if we were allowed to use our own domestic resources, then although the product is sold at an international price, the (currently 78%) corporation tax on North Sea production would provide a comfortable buffer, and the more politically stable producers there are, the more stable the market will remain. Thirdly, if he is really concerned about being in thrall to dictatorships, why has he recently signed deals welcoming Chinese participation in wind and solar energy generation in this country?

I’m sorry if I seem to be harping on about the same subject again and again, but the problem is not going away. The position of the British Steel company now is that it has two blast furnaces in Scunthorpe, which seem to be hanging on to life by the skin of their teeth, while coking coal is shipped halfway round the world to feed them, instead of coming from Cumbria, a couple of hundred miles away. (And before anyone points at the slightly high sulphur content of what would come out of Whitehaven, that is easily solved by blending.) The effective CEO of the company is now a man called Jonathan Reynolds, the Business Secretary - a man with absolutely zero commercial experience, who “can’t remember” that he actually never qualified as a solicitor, and yet who will apparently be able to ensure the smooth running of a steelworks which pays way more than it’s competitors for its energy. I can’t see this ending well.

Then we should also think of other industries - look at Ineos’ coming closure of Grangemouth, and Jim Ratcliffe’s comments on the future of the chemical industry in Britain (and he probably has a tad more knowledge of how to run a major heavy industrial business than all of our government added together); then there’s ceramics, cement, cars. We are seeing a massive de-industrialisation, to be replaced with what?