British Steel is demanding emergency funds from taxpayers to the tune of a £75m loan, only two weeks after receiving another £100m loan. This should be opposed. Not only is it doing a disservice to employees of British Steel, but it is also a gross burden on the taxpayer, and fundamentally makes no sense.
Most sympathise with the 4,500 people the firm directly employs, and the further 20,000 people indirectly impacted through their supply chains. Everyone undoubtedly wants to ensure that the best outcome is achieved both for them and the country, ensuring long-term prosperity for individuals.
However, propping up a failing industry to save jobs is a poorly thought through strategy to achieve these aims: it doesn’t help the employees, the economy or future generations, and it simply harks back to the failed industrial strategy of the 1970s – and we all know how that one played out.
The British steel industry is in decline, for a variety of reasons, and to think that this trend will suddenly change is simply delusional. This is an old, polluting industry, not high-tech manufacturing or a service industry that will trailblaze our economic future.
The idea that allowing a generation of young people to foster skills in a rapidly declining industry and that this position constitutes the moral high ground is ludicrous. It simply perpetuates the problem, kicking it into the long grass for our children’s generation to deal with.
If the government does go ahead with the latest loan, it would cost £43,000 per employee of British Steel – why can’t this money be used to retrain workers and apprentices to develop new skills necessary for the creation of higher paying jobs, rather than to line the pockets of large, failing corporations?
The British public rightly opposed bank bailouts – as does the Adam Smith Institute – and steel subsidies are yet another example of a private company trying to extort money from the British public.
The public isn’t sick of the free market, as is commonly claimed, but they are sick of crony markets; large corporations using their wealth and connections to acquire large sums of taxpayer money, while spinning the narrative to purport to show their genuine concern for hard-working individuals when their true motivation is profit, now at our expense.
British Steel is owned by Greybull Capital, the same firm that owned Monarch airlines as it went bust. We are being asked to bail out their bad business decisions while they use their innocent employees as a human shield with which to pressure the government. This practice must be brought to an end, for the benefit of all.
The failure of British Steel to operate independently without these handouts is the market’s method of signalling they are inefficient. Chinese firms can produce and sell steel at a cheaper rate because they are more efficient – to our overall benefit, not detriment, as some critics would have you believe.
Basic economic theory has time and time again proven this essential point, originating with Adam Smith’s thesis on specialisation and trade and David Ricardo’s on comparative advantage. Explicit subsidies to corporations create inefficiencies and uncompetitiveness in private and public enterprise.
These subsidies are policies no one should be proud of championing. The subsidisation of a failing, polluting company like British Steel is tantamount to throwing away hard-earned public cash to a company thoroughly undeserving of it. It diffuses costs by forcing taxpayers to shoulder the losses and inefficiencies, and quite why Labour leaders Corbyn and McDonnell think this is progressive is genuinely beyond comprehension. Subsidies are a policy for the few, not the many.
This is even more concerning when considering their views of nationalisation, which would have even more severe effects than these subsidies are having. There is nothing moral about subsidising unsustainable companies.
At a time when there are plenty of demands on the public purse string, from funding the NHS in the context of an ageing population to police forces across the country trying to respond to new forms of crime with their draining resources, it’s actions and policies like these subsidies which bring to the fore the failures of our politicians to look after our long term interests. We need to implement policies which look to our future, not our past.
Crony capitalism of this form allows large corporations and unions to exert a disproportionate influence on government policy, cementing their rent-seeking position to the detriment of consumers, us, the British public.
Ardently opposing these subsidies while simultaneously supporting retraining for the workers affected is the only long-term, sensible option. Refuting this is to oppose those very workers the long-term health of our economy and sound economic theory itself. The Conservatives shouldn’t be the instigators of Corbyn-lite policies. They need to look forward, not nostalgically backwards, if they are to win.