Cameron’s Northern Powerhouse Is A Farce: The Real Powerhouse Is In Brussels

This has been a devastating year for the steel industry and particularly so for the workers and their families who have lost jobs as a consequence of the low world price and high costs in the UK.

With job losses at Tata in Scunthorpe and Rotherham as well as Redcar, Cambuslang and Motherwell, we are in real danger of having no steel industry left to speak of.

High input costs, taxes and regulation make producing steel in this country more and more expensive: the outgoing plant manager at Tata Steel Scunthorpe estimated the cost of environmental levies alone at £130 million per annum.

Meanwhile, China is dumping its excess of steel on the global market, forcing down the price. It is a strategy which the Chinese have been honing for years: buying up mineral rights in developing countries whilst preserving their own for the right time – now.

The news around here is, ‘Don’t worry, there are jobs in renewables.’

Unless, of course, you are Conservative MEP Amjad Bashir who told viewers of the Sunday Politics yesterday that too much steel was being produced, so hard luck to those who have lost jobs. Never mind the Conservative introduced carbon floor price or the huge business rates which help make us uncompetitive and distort the market; workers, you all make too much!

Even Scunthorpe Labour MP Nic Dakin realised it wasn’t the free market to blame but the sort of left wing government interference measures, usually described by economists to ‘balance negative externalities’, which had been an axe blow to the industry. Not that Labour would do anything about them.

With a low selling price and high costs, the gap between what the UK can afford to sell steel at and the market price is growing wider.

And this means job losses. It means whole communities blighted with the satellite jobs which come with industry feeling the hit from those job losses as whole streets suddenly become unemployed.

There has been a lot of talk but little action by MPs, businesses and unions; the latter of course who happily accepted green taxes without thinking of the consequences to the very workers they are supposed to represent.

EU state aid rules prevent us taking over steel mills and running them as a going concern. It stops us providing short term funding for wages or improvements in manufacturing which could improve production and lower costs. In short, it stops us putting even a temporary halt on job losses while other options are researched.

In 2017 we are going to have a referendum on our EU membership. That’s the year after next. In legal terms, no time at all.

It means theoretically we could choose to ignore EU state aid rules, knowing that by the time any fines or court action come our way, we could have chosen to wave goodbye to Brussels and their overbearing, job costing rules and regulations.

The other option is to do nothing. Just as the EU did nothing to stop Chinese dumping. Just as they did nothing when companies said energy prices were making them uncompetitive. We can break EU rules on state aid to keep our mills going till 2017.

Heavy industries are so capital intensive we cannot risk short term cash flow issues or silly rules wrecking them: unlike service sector jobs and small businesses, they can’t just put a halt on production and start again in a few weeks.

We bailed out banks which we should have let fail, which did not take heed of their lending or their lending ratios despite the average A-level economics student being able to predict what was going to happen to credit.

So we should allow the UK government to compensate industries crippled by high energy taxes now; and get permission from the EU later if we choose to stay in, or not at all if we are sensible and choose independence.

There’s a reason David Cameron has been unable to deliver on his ‘northern powerhouse’ and that’s because the real powerhouse is in Brussels at the European Commission. The government has actually delivered the reverse: as unemployment figures drop in the south, they rise in the north and this trend will continue if we do not bring about a real change in the fortunes of our manufacturing and heavy industry sectors.

The EU may say it decides on state aid, but it’s the British tax payer who will be funding the unemployment and housing benefits and schemes to try to get these workers back into other jobs, and to help them keep afloat when their salaries are taken away from them. What will be more expensive in the long run? Fines we may not have to pay if we vote to leave the EU or a generation of unemployment in communities where the steel industry used to be the central hub in providing work, income and pride?