The large steel slab works at Redcar is in serious trouble. The collapse of steel prices allied to the loss of customers and demand leaves its future in doubt. The local MP calls for government support, but when cross examined the support he seeks is small and limited. A better system of trade credit insurance and retraining grants are unlikely to save the plant. The government has made it clear there can be no general subsidy, and no nationalisation of the assets.
Two large conglomerate banks acquired too many foreign banks and investment banking business by merger, and over expanded their loan books. They were given access to unbelievable sums of public money, were part nationalised, and are now allowed to grow fat at the taxpayers expense. The CEO of one has just been given a pay package that could amount to an eye watering £9.7 million, all signed off by Ministers who tell us bankers’ bonuses need to be curbed. Instead of acting as lender of last resort and telling the banks they had to cut costs and sell off surplus businesses to survive, the authorities rolled over and subsidised their crazy ways.
How does this apartheid treatment of business marry with Labour’s values, or indeed with commonsense and fair play?
Ministers tell us they will do whatever it takes to protect jobs and see people through the recession. Tell that to the 2.4 million now out of work, and say it again to the workers at Redcar.
So what should they be doing? They should not have subsidised and nationalised RBS and LLoyds/HBOS. There was a much cheaper and better way of avoidng the collapse of Nat West and HBOS, and one which would have meant those banks would now be further down the road to having sustainable and profitable businesses than they currently are.
Nor should the government nationalise and subsidise a steel works which has lost its main customers. What it should be doing is seeing how it can help British business reduce its cost base to become more competitive, and using public spending to boost sensible infrastructure investment that we need which will use local steel, concrete, aggregate, bricks and tarmac. It would have more scope to do that – and more scope to cut dangerous levels of borrowing – if it had not decided to waste so much taxpayers money on banks that got it wrong.