A vital British industry can have a viable, long-term industrial future, insists Ashok Kumar
One of the enduring legacies of Thatcherism, which still evokes painful memories, is the closure of large parts of industry and particularly the coalmines. Although “new” Labour was founded on the basis of accepting many parts of Margaret Thatcher’s legacy, I was confident in 1997 that our manufacturing base would continue to be central to economic growth. When Labour came to power claiming that we had too narrow an industrial base, manufacturing accounted for more than 20 per cent of the economy. However, by 2007, that share had declined to 12.4 per cent. Based on this, we have not been able to reverse manufacturing decline.
The importance of manufacturing – and the steel industry in particular – is too often understated. Manufacturing acts as a multiplier across all boundaries of the economy. It encourages the development of skills and an infrastructure to support them. It promotes innovation, research and development.
The news that iron and steelmaking activities at Corus’ Redcar and Lackenby plants are to be mothballed could be devastating for this country and the Teesside region in particular. That is why, along with other Teesside MPs, I have gone to great lengths to urge the Government to do everything in its power to save steelmaking on Teesside.
Steelmaking has been central to the local economy since mid-Victorian times. The building of the furnace in Redcar was a great British achievement. Its purpose was to make iron for feeding to the Lackenby basic oxygen steel plant and the associated continuous casting plant. Both were then state-of-the-art steelmaking and processing plants. As a result of regular upgrading, they are still world-class plants today. They deserve more than consignment to the scrap heap of past manufacturing glories.
In the form of a response package to developments at Corus, the Government has already directed funds to help Teesside. But the steel industry is so crucial to the national and local economy that much more must be done to save the plant. There are 1,700 local jobs at stake and up to 8,000 more are dependent on Teesside steelmaking.
It has been claimed that European Commission state aid rules prohibit Government intervention. However, there is an exemption to this, whereby a state may extend rescue aid which allows the provision of a loan based purely on commercial considerations. This is in line with the purpose of the rules, which is to guard against protectionism and subsidies. In any case, the cost of any fine imposed by the European Court of Justice for a breach of these rules is often less than the social and economic cost of not taking action. We found ways around these rules when the banks were rescued. State aid was justified on the basis that the banks are commercially viable in the medium to long term, but experienced extraordinary, short-term difficulties.
The same can be said for steelmaking on Teesside. It is not as if the productivity and performance of the steel industry in general and Teesside Cast Products in particular have been declining in the long term. The opposite is true. TCP was once seen as the future of steelmaking. The consortium which recently tore up its agreement to purchase almost
80 per cent of the plant’s output until 2014 was initially so impressed with TCP that it tried to buy a stake in it.
It is the global economic downturn, causing the demand for steel to dry up, which has led to the current situation. That is
why Government intervention to keep
the plant operating and people in their jobs would not be in vain. As soon as the global economic recovery is underway, demand will increase and TCP will again a crucial part of steelmaking.
This issue is crucial for Labour. The Tories’ proposed approach is to reduce the deficit and cut corporation tax to boost manufacturing, but this is the same formula which failed so drastically under the previous Conservative Government.
MPs in the region are working hard with the whole community to prevent the plant from being mothballed. There was a new sense of hope when it was announced that 120 of the threatened jobs had been saved and mothballing had been postponed until the end of February.
The Labour Party was founded on the belief that the state should be used as a means to deliver positive social and economic change. My constituents ask why the Government went to such lengths to bail out the banks, but seems unwilling to do the same for this crucial steel plant. I find it difficult to give them a satisfactory answer.
People in the north east had high hopes for industry and manufacturing when Labour came to power in 1997. If the Prime Minister does not do everything he can to save the Redcar steel complex, they will feel that Labour has deserted them. When the history books are written about this Government, the closure of a world-class steel plant must not be regarded as its legacy for Teesside.
Ashok Kumar is Labour MP for Middlesbrough South and East Cleveland
