Britain steels itself for closure
We should be thankful that the UK government cannot afford to subsidise Chinese-owned British Steel.
Just what is it about steel-making? Almost every tinpot African dictator used to insist on having a steel furnace, as if it were some badge of manufacturing machismo, a proof that his country was going to join the big boys. We in the UK were much less distracted by such vainglorious projects, and over the years, domestic steel-making has shrunk almost to the point of irrelevance.
Yet still it clings on. The confusingly-named British Steel, having been rescued once by the Chinese, is on the brink of shutdown because the owners say they need more than the £500m on offer from the UK government to modernise. The money would be part of the £2bn estimated cost of remaking the plant in Scunthorpe to produce “green” steel, which emits less CO2 than the current blast furnaces.
We have been here before, many times. In this case the unions are emphasising the 2,700 jobs at risk in the event of closure, and it’s hard to blame them. Others are pointing to the fact that steel, almost literally, underpins everything we do, from buildings to cars and (fashionably) weapons. We would indeed be lost without it, obviously, but we would be lost if we had to live on the UK’s output of energy or grain.
Rather more lost, in fact. It’s accepted without fuss that the UK will always be a big importer of food, like any other crowded country. Steel, though, seems to be visceral. This may be one reason why there is such a chronic surplus of it across the world - it’s not just African despots who want their own blast furnaces. The UK currently produces just 1 per cent of global output. We would have to fall out with most of the world's countries to find ourselves short of supply.
Against that background, the over-stretched taxpayer might give thanks that a £1bn subsidy to a Chinese-owned company is a subsidy too far. Even if the £500m offer had been accepted, a price of £185,000 per job saved looks like green madness. Besides, history is not on the steelmen’s side. The key reason why Scunthorpe is losing money hand over fist is the cost of energy.
As any industrial user knows only too painfully, gas is ruinously expensive compared to the price paid by our competitors, at least four times that in the US. The Gadarene rush to green nirvana means that no big user of energy can survive in the UK without a sweetheart deal, paid for by the rest of us through the hidden charges on our bills.
Even if our pockets are picked to keep Scunthorpe alive, it would inevitably be back for more to cover its on-going losses. So we should be thankful that the government cannot afford this indulgence. The unfortunate employees should be given handsome redundancy payments, with some of the rest of the money saved used to rejuvenate the neighbourhood - for the future, not the past, as some politician is bound to say.
