Personally Speaking (Tristram Hunt MP): 'Government should stand up for UK manufacturing'
SO here we are once again wondering whether there is a future for British manufacturing.
The Tata steel crisis has caught the Government either asleep at the wheel or supremely uninterested in developing an effective industrial policy.
And in the case of Business Secretary Sajid Javid it is difficult to avoid the conclusion it is the latter.
This, after all, is a man who gave an interview to the Financial Times not long after his appointment suggesting he did not like the term “industrial strategy” because it implied the Government might prioritise some sectors for support.
If a private buyer is not forthcoming one senses Mr Javid would be extremely comfortable writing down 40,000 jobs as the will of the free market.
The irony is that much of the crisis is explained by market interference halfway round the world.
China is rebalancing its economic model towards consumption rather than industrial production.
As such, its enormous steel industry has run out of domestic suppliers and is now ‘dumping’ cheap steel onto the global market at below production prices, a practice outlawed by the World Trade Organisation.
There is a process for dealing with this: the European Union raises tariffs to protect European jobs and factories.
In fact, such action has already had a positive impact here in Stoke-on-Trent, when the Chinese tried the same trick with ceramics.
Unfortunately, our Government is currently bending over backwards in pursuit of Chinese money.
In February, it blocked EU attempts to increase tariffs on steel imports on ‘free market’ grounds. Free market grounds which go curiously missing every time the EU tries to increase competition in the financial services industry and undermine Britain’s advantage in banking.
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The point of all this is that ultimately there is no such thing as a totally free market when it comes to trade.
The UK has had an active industrial policy for decades. It is just that instead of choosing engineering or high-value added manufacturing we chose property development and banking.
Hopefully, the Tata crisis will shift thinking. Because there is growing concern that a crucial factory here in the Potteries could be the next to face uncertainty.
Premier Foods, which employs hundreds of workers making Mr Kipling’s ‘exceedingly good’ cakes at a plant in Trent Vale, has opened buyout negotiations with American food giant McCormicks.
Discussions are very much at an early stage. But the murmurs coming from the hedge fund class in London suggest that this vital North Staffordshire employer could soon fall into foreign ownership.
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There is nothing wrong with this in itself of course. Foreign investment – as with Toyota at Derby, or VW at Crewe – has turned around much of our automotive industry.
However, in food production the truth is it so rarely turns out that way. When Kraft swooped in to buy Cadbury’s they closed down its Somerdale factory near Bristol.
Nestle moved the production of ‘Smarties’ chocolate sweets to Germany. Even HP sauce – which still features the Houses of Parliament as its logo – is now manufactured in the Netherlands following a Heinz takeover.
Given this shoddy record, it is little wonder the Bakers, Food and Allied Workers trade union have demanded immediate clarification about what this will mean for local jobs.
Whether this appeal cuts any ice with bosses set to pocket a £6m windfall from the sale is open for debate.
But the key question here is how long must we watch British industry asset stripped by foreign capital without a serious rethink?
Especially as there is an increasing body of evidence to suggest this hampers our ability to clamp down on multinational tax avoidance and there is little evidence that the Mergers and Acquisitions mania actually improves productivity.
Britain is, by some distance, the world leader in allowing foreign ownership. Not just of companies but also the technological patents which could help future wealth creation.
Nobody else, not America let alone France or Germany, is anywhere near as permissive.
So why do we take such a lax approach? No doubt Mr Javid would refer to some high-minded ideological principles, but the fact is that one industry based in the City of London does extremely well out of financing mergers and acquisitions. We are still very much picking winners.
When the Tories came to power we were the sixth biggest manufacturing country in the world. We now stand 11th, behind Italy and France.
It is time the Government stood up to financial interests. It is not just steel jobs under threat if they don’t.