It could be backing the hottest start-ups in Artificial Intelligence. It could be nurturing space businesses, or flying taxis, or at least something with a functioning website. If the British government wants to put money into industry, there are lots of different options it could choose. But no. It turns out that it will back steel manufacturing with taxpayer’s millions. The trouble is, it will just be throwing money away – and a failing British Steel is the last thing it should be buying.
If nationalisation was the answer, then British Steel would be one of the biggest companies in the world
If nationalisation was the answer, then British Steel would be one of the biggest companies in the world. The Wilson government nationalised the industry way back in 1967, Mrs Thatcher privatised it in 1988, it was briefly nationalised again in 2020, privatised again when it was sold to Chinese owners, and now it may be nationalised all over again. The company, which employs 4,000 people at its plant in Scunthorpe, is preparing a £1 billion rescue plan, and with ministers locked in negotiations over who will pay, taking it back into full state control is one of the options under discussion.
And yet, over all that time, British Steel has declined from one of the world’s major producers to a minnow. There is no reason to think state ownership will help it now. In reality, manufacturing steel has become hopelessly uncompetitive in the UK, partly because labour costs are high, but largely because we have some of the most expensive energy in the world (thanks to our net zero targets). Sure, a few thousand jobs might be saved until the next crisis, but it is very hard to see the company reviving or helping the UK economy to start growing again. It will just prove a colossal waste of money.
During the election campaign, Labour talked a lot about an activist industrial strategy, about supporting the businesses of the future, and about backing technology. In office, it turns out it is more interested in throwing a few hundred million at a business in rapid decline simply to keep its friends in the trade unions happy.
The government has huge demands on its finances right now. A failing steel company demanding more and more subsidies is the last thing it needs. The best thing to do now would be to close it down. British steel making has been a sorry saga of state mismanagement, and the best thing to do now is to leave British Steel to whatever fate awaits it without any further help from the government.
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