What happened to the nationalised steel industry?

Labour nationalised steel after the war, only for the Conservatives to denationalise it when they came to office in 1951. Labour renationalised it in 1967 and  ran a grand investment strategy through to the end of the 1970s when it had to be abandoned  because it created massive overcapacity. The Conservatives bought into the Labour investment led approach for their period in office of 1970-74.

In 1950 the nationalised industry produced 16 million tonnes of steel. By 1965 the competitive private sector industry restored by the Conservatives had got output up to 27 million tonnes. The Labour government on nationalising it decided to build an industry capable of 35 million tonnes of output. They signed off on a bold plan to put in five major integrated works  at Redcar, Scunthorpe, Ravenscraig, Llanwern and Port Talbot. and to develop in Sheffield.

By 1978-9 the industry was only selling 17.3m tonnes, 10m less than the privatised industry had managed on a much smaller capital base a decade earlier. It had however received a whopping £2674 million in interest free  capital from the taxpayer and £350 m of write offs, to allow it build five large integrated works despite their inability to sell the steel they could make.

This ushered in a long period of agonising decisions to close each of the works or parts of each of the works in turn as they struggled to get costs and output down to match the poor levels of demand . Large numbers of redundancies followed and the complete withdrawal of the industry from places like Corby and Ravenscraig.

The tragic story of nationalised steel leads a commentator to ask how could state planning get their forecasts for demand so wrong? Why did the costs of putting in the extra capacity escalate so  badly, making the steel even more uncompetitive? Why did Labour end up closing so much down and making so many redundant? The strategy was bold, well financed and well intentioned. The result was an industry unable to compete with German steel, and later with Asian product, that spent years agonising over cuts and closures. The taxpayer lost large sums.

 

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113 Comments

  1. sm
    Posted January 8, 2018 at 5:35 am | Permalink

    Nationalising services and manufacturing tends generally – despite all the grandiose utterances – to be about serving political short and longterm aims rather working for the good of the consumer.

  2. Duncan
    Posted January 8, 2018 at 6:19 am | Permalink

    Let’s put to one side the issue of nationalisation for one moment and focus on the political strategy Labour always implement when they get their hands on the keys to the Treasury.

    Labour, when in office, will always try to construct a public sector that increases the grip of itself, its allies while trying to expand their electoral base. Buying political support using our money is the only way this party can survive since its ideas have proven so bereft of reality and simply not grounded in nature

    They see nationalisation, which is little more than spending taxpayers money, as a means of reinforcing the power of its backers (unions) and drumming up electoral support amongst those those these nationalised entities will employ

    They also understand that the Tories will, when in office, privatise these bankrupt, wasteful entities. This process always leads to damaging political headlines for the Tories which is of course the effect intended by Labour.

    What we see is Labour abusing the taxpayer for political gain. This party will sacrifice the interests of taxpayer (higher taxes, more debt to repay in the future due to wasteful spending), consumer (higher prices, poorer service) and worker (redundancy as the state entity falls into bankruptcy)

    While MT saw the taxpayer as a human entity who should be protected from the abuses committed by the politically inspired spending of both parties, Labour see the taxpayer as little more than the servant to be whipped into servitude

    The Tories need to expose the scam of political spending by Labour when in office. They need to show the electorate how Labour use the Welfare State for example to encourage dependency, dilute self-reliance and turn people into labour robots

    The Tories should legislate to prevent the re-nationalisation of all privatised industries. The cost of nationalisation would be an abuse of the taxpayer. The cost to the consumer of such services would increase to finance the cost of the debts of nationalisation and to pay for the inevitable inefficiencies that would ensue as the unions implement their strangulation strategy of such industries

    The Tories need to implement a strategy that completely mirrors that of Labour. They need to make nationalisation financially and structurally impossible to achieve without bankrupting the treasury

    We need a party wedded to reality not Keynesian politics where spending our money is seen as a procedure rather than the abuse of each individual taxpayer who has to get up each morning to work twice as hard to finance the pathetic political games of each party

    It is the waste of scarce resources which I find offensive. Private sector discipline keeps this nation afloat. The UK would be bankrupt if the private sector behaved in the way the government behaves.

    Stop spending our money for political purposes, which I define as the spending of taxpayer funds to achieve any political objective, and spend it purely for public provision

  3. Tasman
    Posted January 8, 2018 at 6:38 am | Permalink

    You seem to have stopped talking about Brexit since Mrs May agreed to hand over billions and to keep our laws in alignment with the EU’s so as to solve the Irish problem

    • Mitchel
      Posted January 8, 2018 at 9:54 am | Permalink

      My Christmas holiday reading was “The Fall of Paris” by Alistair Horne,a beautifully written account of the siege of Paris during the Franco-Prussian War and the subsequent revolution by the Paris Commune against the government which had capitulated to the Prussians.

      Marx eulogised about the Commune(although mostly the Communards weren’t Marxists) and Lenin analysed obsessively the events of it’s short history in order to avoid their errors for when his turn came(which,indeed,he did).I would say on the basis of Lenin’s analysis,the Brexiteer revolutionaries have repeated most of the mistakes of the Communards.

      As,no doubt,dear comrades,the great man,were he still around,would be telling us!

    • Hope
      Posted January 8, 2018 at 10:29 am | Permalink

      It is best not to discuss the capitulation or how we read that May needs to brief the DUP each week following her underhand stint to treat N Ireland differently to the red of the U.K. In deferring to the EU on ALL four pillars which were her alleged red lines, wiped out without a fight. She is keeping the U.K. In the EU by another name using the traitors and Labour to do so.

      Will there be an even balance of leave ministers in the cabinet following her reshuffle? I doubt it. Currently 19 out of 26 being remainers! Is that what we voted for? Leadsom is far better than her; charisma, intelligent and trustworthy.

    • Denis Cooper
      Posted January 8, 2018 at 11:32 am | Permalink

      Yes, it does seem that she has followed the new Irish government in surrendering to the implied threat of Irish nationalist terrorism. However there would be another perfectly reasonable solution available if she wanted to propose it and the EU was prepared to accept it, a simple solution which would not involve the UK remaining subject to all EU law, including the 80% or so of EU law which is not relevant to our trade with the EU, just for the sake of that trade which corresponds to maybe 10% of our economy. Of course it is quite possible that the EU would reject that solution, out of its stupidity and spite, but we and the rest of the world won’t know that unless she actually proposes it.

      • Denis Cooper
        Posted January 8, 2018 at 1:43 pm | Permalink

        This is why it’s all getting a bit boring – from a year ago on this blog:

        http://johnredwoodsdiary.com/2017/01/18/the-waning-of-germany/#comment-852633

        “I think we may need UK legislation to guarantee to the EU governments that our exporters into their markets will always comply with their requirements, but with its application restricted to exporters to the EU and not affecting the great majority of UK businesses which do not intend to serve those foreign markets.”

        That is how we could achieve about 97% freedom from EU laws, with the 3% residue applying only to those companies, about 6% of the total in the UK, which choose to export to the rest of the EU, while at the same time avoiding the need for any new border inspections of our exports.

        After all at present while we are in the EU most border inspections of our exports to the rest of the EU have been rendered unnecessary because our own Parliament has passed laws, starting with the ECA72, which are then effectively enforced, so basically it would just need Parliament to pass and enforce new laws with a much more selective application.

        • Hope
          Posted January 9, 2018 at 9:04 am | Permalink

          You are quite correct Dennis. However this about keeping the U.K. In the EU in all but name without a voice to show other EU countries how it made an example of the U.K. May going along with it is the real story and Leave MPs sitting on their hands. We voted out knowing there was going to be a possible down turn because Cameron and Osborne told us so! Although we doubted their veracity as serial liars, we still thought it is worth it!

          • Denis Cooper
            Posted January 9, 2018 at 11:08 am | Permalink

            It is beginning to look like that, despite the pronouncements from Theresa May and others.

            However we have to be careful not to get taken in by the lies from the Remoaners as repeated in the mainstream media.

            Or even elsewhere, for example here is Open Europe headline carelessly misinterpreting a statement by a minister in the Commons yesterday:

            https://openeurope.org.uk/daily-shakeup/david-davis-consulting-lawyers-over-eus-no-deal-planning/

            “UK could rejoin existing EU Customs Union post-Brexit, says Treasury Minister”

            That is NOT what he said.

      • LenD
        Posted January 9, 2018 at 12:07 am | Permalink

        Denis..what you propose is absolute bunkum..if you think the EU chiefs have nothing else better to do than to start allowing UK to cherry pick the laws that it will have and to discard the ones that it won’t is crazy stuff and by this now I know you are losing the plot. OUT is OUT and that is where we are going..the way Junker and others are talking “read my lips” there will be no deal that will in anyway meet our needs..but it’s what we voted for and what some of the leading brexiteers including a lot of brexiteer supporters writing in this blog want..so you’ll get your wish soon enough..and will probably be amazed come the Autumn to see no deal on the horizon..nothing..zilch..only perhaps a government change when Mrs May finally realizes she has run out of steam..in the meantime..why don’t you lay off the brexit stuff and give us all a break

        • Rien Huizer
          Posted January 9, 2018 at 10:12 am | Permalink

          You forgot to mention that the more UK media crow about for instance Italian ministers or eccentric German MEPs apparently supporting some kind of gesture to Davis (Canada +++) the slimmer the chances are that there is an EU consensus that can be converted into unanimity in order to secure at least a MOU about the future relationship with enough detail to define the terms of a transition period. The UK misconception is that the UK has leverage. That is not the case, except in some areas and wrt some countries. But that is not enough to get unanimity. Without unanimity there cannot be a new treaty. Everyone knows this but some people tend to play agnostic. Davis’s job is to sign on the dotted line or not at all, Fox has no job until the time Davis is finished. Johnson should confine his activities to high politics for which he does not have the temperament. Unfortunately this reshuffle does no good at all.

        • Denis Cooper
          Posted January 9, 2018 at 10:56 am | Permalink

          Why is it “absolute bunkum” to suppose that the present UK laws which obviate the need for border inspections of our goods exports to the EU could be replaced by alternative UK laws to obviate the need for border inspections of our goods exports to the EU? Would that be because your friends in the EU have no intention of fulfilling their international obligations under the EU treaties and other treaties?

    • Plato fish
      Posted January 8, 2018 at 6:27 pm | Permalink

      Tasman
      The only reason we who voted to leave the EU as we vote on many things then allow the result of the vote to carry on as the matter is closed is that undemocratic forces are completely unwilling and mentally unable to accept democracy. In a proper democracy those Parliamentarians who will not even now accept the referendum would be disallowed as individuals from ever again standing as MP. We do not live in a proper democracy yet. Parliament is mostly peopled by the undemocratic ones.
      One day, it is to be hoped such anti-democratic people can be persuaded to go live in EU Dictator Land which is down to their moral and ethic standards of the complete obliteration of the human spirit. We just need to make sure they do not nick any glasses from the bars in Parliament before they leave.

    • Denis Cooper
      Posted January 9, 2018 at 11:23 am | Permalink

      I find it hard to understand why this comment is unpublishable.

  4. Mark B
    Posted January 8, 2018 at 7:01 am | Permalink

    Good morning

    I do not have the answers to the questions our ki d host raises but, I seem to remember a BBC TV programme by Jeremy Clarkeson, What killed the UK car industry ? His conclusion was that a lot of factors did. Poor management, powerful and politicised trade unions, cheaper and better foreign products.

    The steel industry was always going into decline when both the car and ship building industries where in themselves in decline.

    But politicians of both sides, although very well meaning, made serious errors by interfering in markets. Labour did it for political reasons as many of the workers were in Labour areas, especially coal mining, another failure. The Conservatives did it for political reasons to keep private enterprise going.

    MT realised that you could not sacrifice good parts of the economy to keep the bad parts going.

    Today we are back to the 1970’s in terms of political thinking. The Statists in the Tory Party, along with Labour, want to keep inefficient industries running and have grand pointless projects, probably using Chinese steel.

    It is as if Ted Heath never went away.

    • Lifelogic
      Posted January 8, 2018 at 10:06 am | Permalink

      Indeed Thatcher, Tebbit and a few others realised this. If you take money from one successful industry or individual to subsidise another failing areas of the economy you clearly make the overall economy weaker still. Perhaps making the stronger bits of the economy unable to compete as well.

      Indeed the grossly excessive taxation that we have under Brown/Darling/Osborne/Hammond (that is nearly always wasted or misdirected by them) can render a whole economy unable to compete (other than the black economy that is).

      Expensive religious energy handicaps nearly all industries in the UK but this government (lacking almost anyone with any grasp of science, engineering or economics) just love it.

      Let us hope Libdim, remainer and climate alarmist Grieg Clark goes today be is nearly as bad as Ken.

      • Lifelogic
        Posted January 8, 2018 at 2:09 pm | Permalink

        Or at least he should be kept away from anything to do with energy, industrial strategy, Brexit or industry.

        It seems he was president of Cambridge University Social Democrats so he does not seem to have changed his lefty, pro EU, big government, climate alarmist politics very much.

      • Andy
        Posted January 8, 2018 at 10:50 pm | Permalink

        Exactly. A good example is Greece. Their version of NI is roughly 50%, so many people I know are employed officially for x number of days and then are ‘laid off’ and paid in cash off books. More than 4,200,000 Greeks now have a debt to the State and it is owed something in the order of 100 billion Euros. In other words more than half the working population owe the State. That is where ‘Socialism’ leads you, perhaps not immediately, but in the end.

    • Iain Gill
      Posted January 8, 2018 at 10:14 am | Permalink

      Yea but the markets are interfered with in other ways.

      Our unilateral expensive approach to anti-pollution measures, and safety, pushes up the price of production here, and the price of electricity on which it depends, and mostly has just exported the pollution and less safe working practices to other countries more willing to put up with it. It has certainly not reduced net world pollution, or industrial injuries, it has just killed industry here and the jobs that go with it.

    • forthurst
      Posted January 8, 2018 at 5:15 pm | Permalink

      The motor industry had poor management because the best managers left when they realised that firstly it was impossible to manage when firebrand trade unionists were able to halt production at a plant on a whim and that neither the Labour Party nor the Tory Party had any intention of treating the issue of industrial relations as vital to the future of the country. The Tory Party did not actually support the ‘bosses’ and neither did the Labour Party support the ‘workers’. The constituency of the Tory Party was that of those that did not get their hands dirty and that of the Labour Party, the Trade Union bosses. As long as they were funded the parties would rather not stick their heads above the parapet.

      The failure of both main political parties to come together to address a major issue facing the country demonstrated that the FPTP electoral system had created two parties neither of whom were fit to govern and two parties who could never come together in the public interest (unless they were fighting a war of choice).

      Our electoral system is far more to blame for our unnecessary failures both in managing the economy and in foreign policy than anything else because it has produced extraordinary gyrations in policy contingent on small changes in voting. . The history of the steel industry is a perfect casebook example of this.

    • bigneil
      Posted January 8, 2018 at 6:40 pm | Permalink

      Re the car industry. In the 70s my brother used to repair cars. One ( early new ) was a complete bodyshell replacement and rebuild. Every panel on the original had been damaged in a crash but the mechanical bits were ok. Of course the old bodyshell needed cutting up. As the shell was cut up small coins were found in sealed parts. He got over £1.20 in small coins from that one car alone. Clearly they could only have been put in as the panels were being welded together to form the original shell. Can you imagine the unsolveable rattles as you drove over every bump/hole in the road? This vehicle was built in the West Midlands – now shut many years. Industrial suicide.

  5. Lifelogic
    Posted January 8, 2018 at 7:21 am | Permalink

    Indeed, once something is run by the government they stop responding to customers and respond more to political pressures. Politicians trying to buy votes with other taxpayers’ money.

    Not helped by the government’s hugely damaging and totally misguided expensive energy religion either. Again driven by politics and an irrational belief system.

    So the reshuffle will promote more women and diversity. Could we not just have the best people for the jobs please for a change? Kwasi Kwarteng could usefully replace the economically illiterate, IHT ratter, 15% stamp duty, pension pot, landlord and tenant mugger Philip Hammond for example.

    • a-tracy
      Posted January 8, 2018 at 11:41 am | Permalink

      Lifelogic, if the Conservative Party put people up for positions as Ministers they should have been sure they were all capable of taking on Ministerial positions, male or female, what you are suggesting here “So the reshuffle will promote more women and diversity. Could we not just have the best people for the jobs please for a change?” is that the females put forward to the associations to elect are not the best people for the job. If so then the party hierarchy need to prove to you and other male voters that may question women’s capabilities that their selection choices for seats were sufficiently stringent. It is our male MPs that seem to be in trouble all the time with time on their hands for none work time activities.

      • Lifelogic
        Posted January 8, 2018 at 7:00 pm | Permalink

        I have no objection to women doing any job if they are the best person to do so. But not if they have evicted a rather better candidate due to him not having a womb. Lady Thatcher did an excellent job and Ann Widdecombe was even one of the saintly few who voted against the idiotic climate change act.

        But currently I get the impressions most women in the government are there because they are women not for any sensible reason. Theresa May herself has a compass 180 degree out on nearly every issue – she is clearly not remotely a Conservative in any real sense at all. Not that I find the men have a very high calibre either.

        If, for example, you want say 50% of physicist, engineers, construction workers, chess players, or computer scientists to be women you would need to have really massive anti-male discrimination – this as so few women actually choose to even study these subjects. You would also damage these industries hugely. Computer studies for example is 90% male, so if you want 50/50 there you would have 8/9 of the males having to work in a different field!

        James Damore, a 28-year-old former Google engineer even got fired for stating the blindingly obvious truth in a very mildly stated internal memo.

        Google gender breakdown for different A level subjects.

        • a-tracy
          Posted January 10, 2018 at 8:11 pm | Permalink

          ‘50% of physicist, engineers, construction workers, chess players, or computer scientists to be women you would need to have really massive anti-male discrimination’

          Yes I agree with you BUT how many MPs have these qualifications? I guess you think these people run the World but they don’t.

          Female dominated jobs like Nurses, primary school teachers, social workers, are you saying the Country relies on them less than engineers and computer scientists and shouldn’t be represented.

          What about more equal representative professions like Doctors, Dentists, High School Teachers, news presenters, journalists, Chemists, biologists etc. don’t they deserve to be fairly representative?

          I think the push for equality in the manner you prescribe is actually doing women down, we need to find a way to find people for the job that are the most suitable from their varied specialities even if those skills are creative. I’ve always worked in a male dominated workforce the men I work with never question my ability and I find it surprising now that just because an MP has a womb it is presumed she’s not a capable minister before she’s even started. The male MPs in the Conservative party chose Mrs May and the people elected her in her own right even though she took poor advice on a piss poor campaign probably from a majority of men around her, it’s about time she started to trust her own judgement more and speak up more.

          Esther McVey needs to stop taking c**p and shine a light the nasty messages she gets and press charges on those threatening her life.

  6. Stred
    Posted January 8, 2018 at 7:41 am | Permalink

    There was a story about the Russian bread ministry coming to London in the 50s to find out what we had done after the war to produce enough for everyone. They were surprised to be told that the reason was that we didn’t have a ministry. But we still have one for the health market with management from top to bottom.

  7. Miss Brandreth-Jones
    Posted January 8, 2018 at 7:45 am | Permalink

    If the private companies are so much better at performing then the managers can be employed in the public sector. I do not believe in bringing the whole house down when there are remedies to keep it standing.

    In the reshuffle I hope that Mrs May and her advisers do no become too radical.The NHS brought lots of inexperienced , but supposedly qualified ( by paper ) in ,whilst we had to sit and watch whilst they were bringing it down . We were thrown away just as we were to take up management positions using experience of what works and what doesn’t and all of a sudden the young were the future. Of course they are but they are the future not the present . They have to find out for themselves what actions bring disaster.

    • Lifelogic
      Posted January 8, 2018 at 9:30 am | Permalink

      It is not the managers, it is the system. You can move an excellent manager from the state sector to the public sector and once there he/she will realise that they do not get on by rocking the boat or producing efficiencies. Few in the state sector actually wants that. The state sector rarely has real output of significant value anyway.

      In the state sector it is even harder to ever fire anyone or get them to perform so usually few managers even bother to try. In most of the state sector the customer has little choice but to put up with the particular state “service”.

      • Miss Brandreth-Jones
        Posted January 8, 2018 at 1:16 pm | Permalink

        Not at all. One cannot blame systemic problems or else we would never get anywhere.The public do have a lot of say in service and many are sacked in a whim or a dislike. In fact far too much and what is more they are not well informed and go along with the flow .I have been employed by both and can see which works best . You have a strange outmoded view of public service and in fact Dr Redwood also has a public service post as do all our politicians.

  8. Nig l
    Posted January 8, 2018 at 8:10 am | Permalink

    Closed shop, restrictive practices and manning levels?

  9. Richard1
    Posted January 8, 2018 at 8:11 am | Permalink

    Yup, you could go through every nationalised industry in the U.K. and elsewhere and see similar results. The reason of course is nationalised industries do not make decisions based on the two dynamics which Adam Smith showed more than 200 years ago is the only way to ensure prosperity: market prices and competition. A film about Communism in the Soviet Union shown recently had interviews with former commissars incredulous that the huge slave Labour camps in Siberia which they ruled over, producing such products as steel, have all now closed. It’s the same phenomenon – even well intentioned state direction can never allocate resource as the market will. Young people contemplating voting for Corbyn and McDonnells nonsense who don’t remember nationalisation in the U.K. should note this.

    • Mitchel
      Posted January 8, 2018 at 12:07 pm | Permalink

      The labour camps may have closed but Russia is still a major steel producer-fourth or fifth largest in the world from memory.

  10. jerry
    Posted January 8, 2018 at 8:14 am | Permalink

    “By 1978-9 the industry was only selling 17.3m tonnes, 10m less than the privatised industry had managed on a much smaller capital base a decade earlier.”

    That tells us not one thing about the nationalised i industry, it merely tells us what the then current market was, for all we know a private steel industry might have been in the same boat, indeed due to world wide economics they probably would have been. If you wanted to lay some context as to why there was a downturn in sales then perhaps you should have dealt first with the like the failed UK privately owned car industry (nationalised in 1975), or the failed privately owned ship building industry (nationalised in 1977), both being major customers of steel.

    “This ushered in a long period of agonising decisions to close each of the works or parts of each of the works in turn as they struggled to get costs and output down to match the poor levels of demand”

    But that would have happened either way, at the time, hence why the 1979 on Tory govt. also had a policy of weakening the trade unions.

    Oh and of course you are going say all this John, against nationalised industry, not because of any rational arguments based on facts but because you were “Mr Privatise” in the Thatcher govt. before you became an MP, that was your speciality, so you are hardly going to be unbiased, even for a party political politico!

    Reply The Nationalised industry got its forecasts horribly wrong. If it had been producing good value steel it could have exported more. The private industry did not forecast a big rise in demand and potential output and did not build lots of extra capacity that it could not fill.

    • jerry
      Posted January 8, 2018 at 8:53 am | Permalink

      “Large numbers of redundancies followed and the complete withdrawal of the industry from places like Corby and Ravenscraig.

      Both closed totally during the 1079-97 Tory govt, quite frankly your final paragraph could sit better as criticism of your own govts policies. not those of the 1974-79 Labour govt you try and chide!

      Reply The closures started under Labour owing to the catastrophic mistake over capacity

      • Rien Huizer
        Posted January 8, 2018 at 11:08 am | Permalink

        There is an interesting lesson in the steel industry case (more interesting than coal imo) : national governments should never interfere in industries operating on a global scale and producing -essentially- a commodity product. Ther is no way to build international competitive advantage in an industry that converts iron ore into iron and steel. There may be national advantage in how to add value to that and that may well be close to an industry where national advantage is feasible. That is how Japa, Korea and now China have positioned their steel industries, aa part of a (virtual) vertival integration of manufacturing industries dependent on steel with given price and product properties. That steel made shipbuilding for export possible, was subsidized by locally used construction steel prices and temporary surpluses could be dumped in the global market, especially countries where demand for steel per capita had declined and hence the rationale for a local primary (not primary, mini mills continue to be feasible if energy prices are competitive) steel production. Where is the UK export shipbuilding industry, where is the UK owned car industry, who makes white goods in Britain, how much rebar per head is used, etc? A mug’s game at the taxpayer’s expense if you are not careful.

      • Iain Gill
        Posted January 8, 2018 at 5:05 pm | Permalink

        Dont think its party political, the Conservatives have made plenty of mistakes along the way, De Lorean, Rover, the list is endless of companies handed public funds which did not produce the desired results.

    • Peter
      Posted January 8, 2018 at 11:57 am | Permalink

      Exactly it followed the post war decline in British manufacturing. Nationalisation is an irrelevance when looking at declining sales of British steel.

      At one time Britain produced a quarter of the worlds shipping. With the disappearance of that market demand for British Steel was inevitably reduced. Whether it was nationalised steel or privately produced steel is neither here nor there.

      Reply World steel demand rose – nothing to stop us exporting. You will see the same pattern in other nationalised concerns. Shipbuilding was also nationalised!

      • Peter
        Posted January 8, 2018 at 1:29 pm | Permalink

        World steel might well have risen but low cost producers like Korea were in the ascent in both steel and shipbuilding and other areas of heavy industry.

        It is all very well to sing the praises of the free market, but without protection of high cost home industries they will inevitably lose out to countries that can easily undercut them.

        That is nothing to do with nationalisation.

    • jerry
      Posted January 8, 2018 at 2:54 pm | Permalink

      @JR reply; But was it actually “extra/over capacity”, or, was it investment to modernise and hopefully compete, closing older plants, modernising others or building new, the two are not the same.

      Also any govt. (assuming it cares…) has to consider whether to allow people to be made redundant or not, and unemployment claims use taxpayers money just as subsidies and/or investment does, then of course there are wider knock-on effects as retail sales suffer that cause other economic side effects.

      It was such subsidies (and import restrictions, for that matter), not efficiencies, that allowed certain other countries, less wedded to the free-market principle, to corner the market as the world-wide demand for steel rose after the economic turmoil of the 1970s, and they did the same with ship building too.

      Ship building failed in this country because it wasn’t nationalised sooner, by the time it was the industry was already in terminal decline because it could not compete with cheaper state subsidised ship building in many other countries!

      The Nationalisation debate is not a simple If/Else argument.

    • Mark
      Posted January 9, 2018 at 3:47 pm | Permalink

      I believe the British Steel demand forecasts are now a standard case study in business schools. I recall having seen them as examples of bad forecasting back in the late 1970s. They were straight exponential growth extrapolations, fitted no doubt by a highly numerate statistician who had no idea about the real world. Come to think of it, that sort of analysis seems to inform much government policy to this day.

  11. Lifelogic
    Posted January 8, 2018 at 8:22 am | Permalink

    Only five sensible members of the House of Commons voted against the Climate Change Act Christopher Chope, Philip Davies, Peter Lilley, Andrew Tyrie, and Ann Widdecombe.

    What chance do steel and other high energy industries have when the Commons is stuffed with nearly 99% of scientifically illiterate, ignorant dopes with little or no understanding of industry?

  12. Blue and Gold
    Posted January 8, 2018 at 8:29 am | Permalink

    The taxpayer lost around £134 million on an unnecessary referendum, around £135 million on an unnecessary election, £1 billion as a bribe to keep the Conservatives in government.

    All this JUST for a political party, not for the best interests of the country!!

    Reply A referendum the voters wanted and voted for

    • Lifelogic
      Posted January 8, 2018 at 9:36 am | Permalink

      If this keeps Corbyn’s Labour out it will be a bargain. May need to find some positive vision to do this. So far she shows zero vision and is still heading totally the wrong (PC, high taxation, red tape spewing, gender pay gap reporting, big government, EU appeasing) way.

    • Iain Gill
      Posted January 8, 2018 at 5:07 pm | Permalink

      yes the voters wanted and voted for some real action on immigration, and our subsidy to Brussels, neither of which the government has delivered on having just caved in to the EU.

  13. Bert Young
    Posted January 8, 2018 at 8:51 am | Permalink

    Johns’ concluding observations on Germany and China are the real pointers to the failure of British Steel . Germany has dominated the supply and demand of Steel in Europe for many years , this position was climaxed by the introduction of heavily subsidised priced steel from China . A combination of these 2 events was enough to shatter the existence of the industry in this country – an industry that was not highly rated for its overall management at its best .

    Pouring money into Steel from the Government was always a bad mistake ; it was always more of a political motivated raison d’etre than anything else . Today we face the consideration of having to back a basic supply product for our manufacturers ; if the source was cut off we would be in dead trouble . Ruling out the Chinese import would be a part solution and creating a deal with the Germans would be another . We cannot put our heads in the sand .

  14. Ed Mahony
    Posted January 8, 2018 at 9:09 am | Permalink

    There is the danger, however, of viewing nationalisation/privatisation primarily through the reactionary prism of opposing socialism, which could result in impractical, reactionary, ideological thinking.

    Yes, let’s oppose socialism, but our primary objective must be to be practical in our approach to nationalisation/privatisation, using them as tools, on a bespoke basis, with the goal of creating the most stable + strong economy and country we can, and where checks and balances are involved to avoid abuses in general, and where our approach may or may not involve opposing socialism, but where our approach to socialism is secondary to our goal of creating the most stable + strong economy and country we can.

    Reply So what was good about the way they nationalised Steel? I gave you a practical appraisal of what happened,not an ideological tract

    • Ed Mahony
      Posted January 8, 2018 at 9:16 am | Permalink

      And the best way of giving socialism fresh oxygen is to become overly reactionary to it!

      • sm
        Posted January 8, 2018 at 10:34 am | Permalink

        Well Ed, the other way (Cameron’s, and now May’s) has been tried, and isn’t working.

        And it is hardly over-reactionary to point out that the majority of all attempts to nationalise enterprises from farming to steel manufacture, whether in the UK, China, Cuba, N Korea or the USSR, are hardly shining examples of success.

        • Ed Mahony
          Posted January 8, 2018 at 2:14 pm | Permalink

          We’re all opposed to socialism / communism. I don’t know why you mention Cuba etc?!

          And we all support free market capitalism. I think where we disagree is how we implement free market capitalism. This is where the nuances and interesting debate lies, and a debate which can lead to, i think, a strong, stable, growing economy and country or a country with booms and busts and lots of long-term economic, political and social uncertainty.

        • Ed Mahony
          Posted January 8, 2018 at 2:19 pm | Permalink

          I don’t see what Cuba and Communism has to do with Cameron and May.

          The real problems facing the West and the UK are:

          – globalisation and losing power to global companies
          – automation putting people out of jobs
          – rise of China and others – new competitors to our economy and jobs.

          To focus on socialism / Communism is a red herring, i think

          • Ed Mahony
            Posted January 8, 2018 at 2:24 pm | Permalink

            And one way for the UK to remain competitive as an economic, global power is to try and assert itself as a high tech country.

            We have London (financial services), just as the US has New York (financial services). And the US has California and Silicon Valley and we have … not a lot regarding the high tech industry (compared to Silicon Valley at least).

            Other countries in the West realise the high tech is key and are trying to meet this challenge. But we in the UK seem stuck in the past.

        • Dennis
          Posted January 8, 2018 at 3:44 pm | Permalink

          sm, so “the majority of all attempts to nationalise enterprises from farming to steel manufacture, whether in the UK, China, Cuba, N Korea or the USSR, are hardly shining examples of success.”

          So these attempts were not successful leaving them in private hands then, which are not successful.

    • Ed Mahony
      Posted January 8, 2018 at 11:55 am | Permalink

      You’re missing my point.
      I agree with you 100% about your point about the way they nationalised steel. But we all agree that socialism is flawed. However, nationalisation itself isn’t socialistic. Take an extreme case – roads. It’s obviously only possible to privatise some roads. Just as it just makes bad economic sense to fully nationalise the railways 100%. And that privatisation has to be implemented carefully and with checks and balances otherwise you end up with people in the private sector abusing their contracts as we’ve seen in the railways here in the UK to a degree.

      Reply Most European countries have toll roads for motorways. The winning objection to privatising UK roads is the current absence of any direct user charges, with people sceptical the government would abolish the taxes it does impose on road users were it to want to change systems.

      • Ed Mahony
        Posted January 8, 2018 at 12:06 pm | Permalink

        And this relates to the point that we need government investment to invest where private companies won’t but where the government investment sows the fertile soil for private companies to invest in.

        For example, if the government wants to create a Silicon Valley in the UK then it must help businesses to do this by investing in roads, railways (to a degree), the building of beautiful new towns (to a degree) etc, invest in skills, invest in schemes to bring entrepreneurs together, and so on – things that will help tech companies spring up in a particular area / help foreign investors invest in a particular part of the country and so on.

        This is what I call creative, soft, government investment (and in particular in the high tech industry) and the government must do this as opposed to take the line that all government investment is wrong, and sort of connected to the idea of nationalisation as if all nationalisation and government investment is somehow wrong.

      • Ed Mahony
        Posted January 8, 2018 at 2:11 pm | Permalink

        I never said I was opposed to troll roads (I’m in favour! – but under the right conditions).
        Regards

  15. Lifelogic
    Posted January 8, 2018 at 9:15 am | Permalink

    You ask;- How could state planning get their forecasts for demand so wrong?

    Well they are not staking their money on the outcome. The state planners get paid right or wrong. So they respond in general by telling their political masters want to hear. They probably do not want to hear that the business needs to fire half of the staff, be able to use cheap on demand energy (and for government to cut out all the green crap and move to easy hire and fire) and to invest X million in better mechanisation.

    • Lawrence John
      Posted January 8, 2018 at 12:41 pm | Permalink

      Exactly. To be honest, private enterprise very seldom get their forecasts right either (I say this after a lifetime of facing targets in the IT industry), but what they do – very effectively – is respond to the situation, increasing or decreasing capacity as required, all the while striving to drive demand.
      Now, members of the Government know that ‘loyalty to the leader’ is a far more important qualifier than success in your role. For example, abject failures when in charge of, say, Transport and Defence, for example, could easily lead to a promotion to a role like Chancellor of the Exchequer, for a loyal follower.
      So there is no real incentive to get it right, it seems to me that the Cabinet is not filled with the most talented, just those most loyal to the PM of the day.

  16. Iain Gill
    Posted January 8, 2018 at 9:37 am | Permalink

    Thats not the full story.

    Steel businesses depend on pollution quotas.

    A lot of the quotas given to UK steel businesses have been transferred abroad to other countries by people who have bought the UK businesses basically to get their hands on those quotas.

    Also a lot of the best intellectual property about best ways of making steel (at the detail level) designed by UK workforces have similarly been moved abroad by people who bought UK steel making to get their hands on that IP.

    And of course the pollution and safety regime here also pushes up the price of electricity here compared to abroad.

    So it the way anti-pollution, safety, and intellectual property is handled in a multi national way that is in need of review, with a level playing field in these areas the UK workforce is a world beater. As it is we have no chance and we are just going to decend into 3rd world status or some pseudo services ecomomy.

    • David Price
      Posted January 8, 2018 at 2:39 pm | Permalink

      Quite so. It is not a level playing field and the free enterprise dogma ignores the issue of trying to compete against foreign competitors who are state backed with funds and orders.

      The true costs of the lost direct and indirect jobs and skills is never included in the equation. It is not just the ship welder who loses their job, it is also their baker and milkman.

    • Diogenes
      Posted January 8, 2018 at 8:53 pm | Permalink

      As you say: that’s not the full story.

      You seem to be saying that the problems arise because the UK, which follows all rules, regulations, safety, environmental laws, etc has basically been shafted out of work by other countries where these regulations are not or well less applied. But don’t you know that Britain was at the origin of a lot of these laws, regulations, and Intellectual property rights. Have you ever considered that the UK businesses bought by/sold to foreign entities followed this course because either the bosses of these companies were inadequate and the companies had become weak relative to the competition and/or the British state never bothered much to try safeguard them, particularly not making sure the rules/regulations were properly enforced.

      It has been said many times that the UK is at the forefront of some service industries. But services (not hairdressing or plumbing) are the domain most at risk of so-called globalisation, given the huge numbers of math/physics/economics graduates produced (in their hundreds of thousands every year) by universities and institutes in countries like India and China. Next time you go and see your accountant, ask them where the low-level accountancy they do for you or your company is really done in-house or whether it is produced (during the British night, daytime in India) by companies like InfoSys in Bengalore.

      Similarly for investment advice, some local investment analysts might add up a little bit of expertise here and there (specially on the bill they will produce for their expert advice), but the background work (and research) might be done some thousand miles away from the UK.

      So I am all ears when we finally get more information on the new relationships that the UK will (try to) get with the RotW.

      • Iain Gill
        Posted January 9, 2018 at 10:21 pm | Permalink

        you raise important points

        but a large part of the problem has been the ever faster leaking of the best British intellectual property to places like India and China, and not just production process detailed techniques, but also things like software.

        to operators who are quite prepared to run their plant without paying the relevant software licences and so on.

        it is precisely these things that are the problem with the current model, and stop the UK being competitive.

        to remain a first world country we need to protect our intellectual property, leading techniques, borders, and so on much more, and we need to be tougher with competitors who pollute more than we do or run factories with substandard safety kit.

        these are the very issues government trade reps should be worried about!

        • Diogenes
          Posted January 11, 2018 at 10:42 am | Permalink

          Thanks a lot for your answers.
          From what I could read, there has been both leaking (stealing of IP rights) but also selling off of the same when companies originally based in the UK moved to other parts of the world signing contracts giving/sharing the IPRs to/with their new partners. It has happened in particular for steel.
          As said above, I wait and see, but it might be very difficult to go back on 30 years plus of rather poor industrial policies.

          • Iain Gill
            Posted January 12, 2018 at 10:00 am | Permalink

            yes but its ongoing in other parts of business, not just steel. we have to do better at protecting our intellectual property, look at safety and pollution in an international multilateral context and not just pretend that ramping up standards here helps the net world position, and so on.

  17. nhsgp
    Posted January 8, 2018 at 9:40 am | Permalink

    What’s happened to the nationalised pension systems?

    State pension, civil service pensions.

    10 trillion pounds of debt hidden off the books. Zero assets.

    Add in the other debts and 205 bn pounds a year go on the debts. 30% of taxation.

    Hence you get austerity, wealth inequality and pensioner poverty.

    But John you want to hide that. No official published number and the OBR, ONS, NAO, Treasury and Cabinet office say they are not going to repeat the last exercise in publishing the numbers.

    Hence the public are shafted.

    Reply There is nothing hidden about future pension commitments – or future NHS commitments etc. Nor is there anything hidden about the likely future taxation which will pay for them.

    • Iain Gill
      Posted January 8, 2018 at 12:59 pm | Permalink

      a lot of state guarantees were, and probably still are, hidden, for instance there is a state guarantee on the BT pension fund. if the investments BT makes for its pensioners fail then the taxpayer picks up the tab. etc.

    • stred
      Posted January 9, 2018 at 10:36 am | Permalink

      There is an interesting article in this weeks Spectator by Jon Moynihan about the public sector pension deficit, which is growing rapidly. Last year the Treasury had to find £15bn to plug the gap. Overall taxpayers will contribute £33bn. Local Government contributions take this to £42bn. The increase in lifespan could increase this by far more.

      But then its only about what Mrs May agreed to bung to Junker and Co when she scuttled over and smiled to them.

  18. alan jutson
    Posted January 8, 2018 at 9:45 am | Permalink

    Afraid you cannot beat the supply and demand equation which usually regulates price.

    All the investment in the World is of no use if you are not efficient enough, and competitive enough on price with similar quality products which are available elsewhere through the World.

    There were only ever a limited number of subsidised Home Government contracts you could have bid for in past years (when we built ships, bridges and railways ourselves) but you cannot even do that whilst in the EU, as its illegal to favour home production which is subsidised, under present law.

  19. 37/6
    Posted January 8, 2018 at 9:58 am | Permalink

    I have never said that nationalisation is good for everything.

    Our vital, strategic, national infrastructure, however, cannot be left to business. These discussions tend to gravitate towards the national rail network.

    The argument for rail privatisation is predicated on the myth that BR was useless.

    It wasn’t. It was highly productive with what it was given. It was awful because it was starved of funding.

    Yes. We have shiny new trains and projects on our partly privatised railway now but look at the subsidies.

    (I happen to think widespread electrification is a big mistake – power station closures, you see.)

  20. alan jutson
    Posted January 8, 2018 at 10:14 am | Permalink

    Further to my comment about the NHS administration in recent postings.

    Last appointment with Consultant was on 20th November 2017 when we agreed a follow up appointment for today which I put in my diary at the time.

    I have today received a letter, supposedly typed on the 21st November to explain in some detail the last Consultation, and the agreement we made for a follow up appointment for today.

    Says it all really about the inefficiency and the state of the administration in the NHS.

  21. Anton
    Posted January 8, 2018 at 10:47 am | Permalink

    Looking at things from Singapore we can see that the UK government is going into overdrive..mrs May now scking ministers in order to put a new minster in place to oversee things in case UK leaves the EU with no deal..heres the thing you guys voted for a complete break with the EU so what do you expect..jez the world is looking on and can hardly believe what is happening..you don’t k ow what you want, the UK government with all the red lines doesn’t know what it wants and now we have JR on about whether it was right to denationalise stteel industry..jeez give us a break

    Reply There has been plenty on this site about EU issues. The question of whether the UK should nationalise more is a live issue thanks to the main opposition party.

    • Blue and Gold
      Posted January 8, 2018 at 2:58 pm | Permalink

      Well said Anton. Britain is the World’s basket case, led by Right wing fanatics.

  22. Epikouros
    Posted January 8, 2018 at 10:47 am | Permalink

    The state cannot react to changing circumstances. It cannot be efficient in the use of resources, it does not care about cost or wastage and it cannot accurately forecast demand. Yet many believe that the state should control the means of producing goods and services by having direct control over them. Many socialist regimes have tried this approach and have failed miserably and have either sunk into oblivion or into a permanent state of impoverishment or wisely reverted to employing private enterprise. Considering these truths how can it be that there are still many who call for the nationalisation of many of our industries and businesses. The mind boggles and makes for despair for the sanity of large swathes of the human race.

  23. Andy
    Posted January 8, 2018 at 10:54 am | Permalink

    And then came Brexit – and there was no UK steel industry left. Bravo.

    Reply Even you cannot think the decline of our steel industry had anything n to do with Brexit! The main closures all occurred when we were firmly an EU member

    • Lawrence John
      Posted January 8, 2018 at 12:45 pm | Permalink

      Typical Remainder! Nothing, but nothing did more damage to the British (and European) steel industry than the ridiculous EU Carbon emissions laws. The EU may as well have simply passed a law requiring all companies to move their steel plants to the East, that was the nett outcome !

    • Denis Cooper
      Posted January 8, 2018 at 1:50 pm | Permalink

      Of course he doesn’t think that, JR, he just sees it as another good anti-Brexit lie and hopes that he might manage to get away with it.

    • Anonymous
      Posted January 8, 2018 at 2:37 pm | Permalink

      You sleep-walked onto the Brexit fist, Andy.

      Bravo !

      In a democracy you cannot keep treating the feelings and sentiments of the majority with contempt and expect there to be no consequences.

      You have to disenfranchise the public *before* you treat them like dirt.

    • Andy
      Posted January 8, 2018 at 5:51 pm | Permalink

      My point is that Brexit will finish the steel industry off. And, frankly, we all know that is part of the agenda of the hard-right. Minford even said so. Manufacturing dies with Brexit. Sad.

  24. Roy Grainger
    Posted January 8, 2018 at 11:20 am | Permalink

    Nationalisation creates a monopoly supplier of a particular service or product. Although much of the rail industry is effectively nationalised already there is still the chance for operating franchise holders to be replaced if they perform poorly. With a single monopoly rail supplier bad service can continue indefinitely with no penalty at all and no incentive to improve it. Nationalisation also hands enormous power to the unions which is why I remember industrial relations being particularly bad in the 1970s with frequent strikes across the entire nationalised sector.

    • Peter
      Posted January 8, 2018 at 1:44 pm | Permalink

      Train operating companies now run a highly-rewarded, risk-free franchise. If it was more widely known the amount of the subsidies they receive it would only reinforce the public wish for renationalisation.

      Separation of the nations train service into a publicly-owned, debt-laden, Network Rail (it can never be re-privatised now, nobody would take it on) and train operating companies and a rolling stock company is sheer madness.

      Fragmentation, lack of transparency and a built in opportunity to try to shift blame are the end result

  25. ian wragg
    Posted January 8, 2018 at 11:32 am | Permalink

    The expansion of steel came as the buyers of said material were going into decline. Shipbuilding almost died after launching the QE2 in 1967, the last ocean liner to be built.
    Car and motorbike production declined after Japanese cars where found to be more reliable and always cheaper. Short sighted governments, much like today with immigration allowed mass imports which decimated our industries.
    We now have a more or less foreign owned vehicle industry, we buy foreign trains and rolling stock together with power generating equipment.
    The governments have always been anti British and this continues today with their handing over £billions to Brussels with no quid pro quo.

    • hans chr iversen
      Posted January 8, 2018 at 5:45 pm | Permalink

      this music is really getting very monotonous, we have heard it so many times before

  26. a-tracy
    Posted January 8, 2018 at 11:46 am | Permalink

    My question is – who elected the board of directors? Who were these people that spent taxpayers’ money making products they hadn’t got sales for? Was there a Sales Director during this period – who was it? Was s/he held responsible by the Government of the day? If not why not?

    If s/he couldn’t sell at the prices it was costing to make the product was this fed back to the Chair and MD was it minuted? Who were the people responsible? What did they do about the lack of sales did they go on trade missions? Were they held responsible for their failure and accountable to the taxpaying shareholders? In other words were they dismissed, shares dissolved what happened did they just get retired off with nice fat taxpayer-funded pensions? My guess is that like most public people holding positions of responsibility they never answered for their personal failings and it never takes their personal money down with them as they have no skin in the game and that is what is wrong with nationalisation.

  27. Iain Gill
    Posted January 8, 2018 at 12:41 pm | Permalink

    The Farage comments coming out of his chat with the EU negotiators are worth listening to.

    He is saying they have no idea the role that open doors immigration played, and it seems the UK government has not been pushing this issue at all (which is staggering but believable).

    Makes a lot of things more understandable.

    • Chris
      Posted January 8, 2018 at 4:10 pm | Permalink

      Nail hit on head, Iain. Uncontrolled mass immigration is the elephant in the room. What fools we have in charge, apparently.

    • Chris
      Posted January 8, 2018 at 4:36 pm | Permalink

      Very interesting article on Breitbart with interview of Farage by Raheem Kassam about his meeting with Barnier. Barnier was apparently incredulous when Farage told him that so many people voted to stop uncontrolled mass immigration and to regain sovereignty. Barnier apparently was under the illusion that we were just wanting to get our money back e.g. he quoted the £350 million slogan on the side of the bus.

    • mancunius
      Posted January 8, 2018 at 7:18 pm | Permalink

      Cameron did raise the issue with almost every EU country leader – he got nowhere, and Merkel was particularly obstructive. But they all knew what was at stake, although at the time they fell in with Merkel’s narrative that it was merely David Cameron trying to win the next election.
      That the EU are now pretending they simply had no idea at all guv, and if only Cameron had mentioned it they’d have been soooo understanding, but he didn’t – that should not surprise us. Par for the Brussels course. (Or however many courses they eat.)

    • rose
      Posted January 8, 2018 at 8:54 pm | Permalink

      It just isn’t polite to talk about it.

  28. Edward2
    Posted January 8, 2018 at 12:44 pm | Permalink

    Having worked in a steel using industry for three decades I saw the slow decline of British Steel.
    So much money was wasted keeping old steel plants open for political reasons when that money should have been re directed into building new plants elsewhere.
    Due to unreliable delivery and inconsistent quality control we moved to non UK steel.
    Despite it not being cheaper.
    In fact German steel as more expensive per ton.
    Politics in constituencies where plants operated meant tough decisions were delayed or never taken.
    A sad tale of state ownership.

  29. Peter
    Posted January 8, 2018 at 2:21 pm | Permalink

    “The tragic story of nationalised steel leads a commentator to ask how could state planning get their forecasts for demand so wrong? “

    Not just socialised, pro-nationalisation Labour Party state planning though.

    Look at Welsh trains. Supposedly privatised, but bureaucracy still holds sway. Arriva trains have had the franchise since 2003 on a ‘zero growth franchise’. Since then passenger numbers have gone from 18million to 30 million per annum.

    However, the service is lumbered with insufficient, old, unreliable rolling stock but the TOC cannot/will not replace them with better trains or increase the number.

    Meanwhile Arriva have decide that the new Cardiff Metro service is more trouble than it is worth and they are not bidding to continue operations in Wales after 2018. So the process starts again. Whether it will be better remains to be seen, but the service so far has offered no glowing endorsement of the joys of privatisation.

  30. nigel seymour
    Posted January 8, 2018 at 2:24 pm | Permalink

    I suppose we should keep our blood pressure down and get used to all opposition voting down everything that has Brexit attached to it?

    “This Bill – also being referred to as the Customs Bill – allows the Government to create a functioning customs, VAT and excise regime for the country after we have left the European Union. However, Labour, the SNP and the Lib Dems have all signalled their intention to oppose the Bill, which hardly represents constructive engagement with the legislative agenda required to ensure a smooth Brexit.”

  31. David Price
    Posted January 8, 2018 at 2:44 pm | Permalink

    This didn’t happen in a vacuum, British Steel was having to compete against foreign state subsidised steel producers for business in their state subsidised users.

    Not just Steel but many other UK companies in other industries, and it continues. The asset stripping of skills and enterprises has continued because the City finds it easier to turn a profit on selling the skill than supporting the sale of what that skill produces.

  32. Peter
    Posted January 8, 2018 at 2:53 pm | Permalink

    “The taxpayer lost large sums.”

    When East Coast Rail was brought back into public ownership it took less subsidy than the other fifteen TOCs. It brought in money to the exchequer. It was shifted back to private ownership as quickly as possible.

    Why? Because it was an embarrassment to free market ideologues. It is not always just about cost.

  33. Posted January 8, 2018 at 3:03 pm | Permalink

    Tax payer this, tax payer that.

    I’m 48 years old and my taxes haven’t funded anything not one thing.

    We’ve left the gold standard so my taxes don’t fund government spending. The taxes I pay are used to help stop inflation as my taxes are destroyed in the overnight interbank market every night of the week so the BOE can meet its overnight interest rate.

    SO is everyone elses.

  34. Posted January 8, 2018 at 3:09 pm | Permalink

    How could Milton Friedman get it so wrong ?

    Supply side monetarists said the central bank could control the money supply. The whole economic theory depended on it. When they tried it they quickly realised the central bank could do nothin of the sort.

    Yet, the carried on regardless and look at the mess we are all in.

    Supply-siders believe that people only eat because farmers grow food. And they only live in homes because homebuilders build homes. And they only desire health care because medical practitioners offer it.

    A very strange economic theory indeed.

    What supplied side monetarists did achieve though was to increase how much they take out of everyone’s pay packets every month by 43%. In the form of economic rent seeking.

  35. Mactheknife
    Posted January 8, 2018 at 3:26 pm | Permalink

    I agree with what most of John has said. However with regards to other countries in so called “competitive privatised” companies, its a little naïve to think that they did not and do not continue to receive government subsidies.

    Even in the EU today, the German coal industry has received “environmental grants” which are supposedly to improve their environmental impact, yet its widely acknowledged these are nothing more than subsidies.

    For us to have a so called balanced economy today we need to bring back manufacturing and to do that we need to reduce our costs and improve efficiency. Yet the government seem hell bent on keeping the green taxes and levies in place which cripple our industry with extra cost.

  36. Prigger
    Posted January 8, 2018 at 4:09 pm | Permalink

    The human consequences of the ups and downs of the steel industry. I haven’t words for.
    In fixed large scale industry/communities, it led to many domestic man-wife disputes….and…and…and…and…
    Like a share portfolio, our work and jobs should have diversification. Even within travel-to-work-time areas.

  37. Ed Mahony
    Posted January 8, 2018 at 4:58 pm | Permalink

    Dear Mr Redwood,

    Thought of a good reason why we need a state sector (and of course we need a private sector).

    Let’s agree that people should earn more in the private than state sector.

    Let’s also assume that society is split between the strong and the not-so-strong. That is just science. No-one can argue with that. The state sector fits well the not-so-strong. If there was no state sector, these people might have all kinds of mental and health issues and perhaps go on the dole and/or end up costing lots to the NHS. And/or they are ‘strong’ people but who want to wind down, and perhaps do charity work in their neighbourhood (charity work that could save the government a lot of money).

    Also, let’s assume that many mothers like the choice of working in the state sector over the private sector as the state sector is less of a drain on their energy and focus, which they can then spend on their children instead.

    Another reason for the importance of mix of state and private sector.

    • Ed Mahony
      Posted January 9, 2018 at 8:34 am | Permalink

      Btw, looking at facts + figures, Sweden, Norway, Denmark and Finland all have relatively high levels of public sector workers, and all enjoy high levels of GDP per capita. Japan and S Korea, on the other hand, have relatively low levels of public sector workers, and have relatively lower GDP per capita than the Scandinavian countries.

      Let’s not forget that these Scandinavian countries haven’t just escaped the economic problems we’ve seen elsewhere in the world, they have, just as importantly, escaped the social ills seen elsewhere in the world, in particular the social ills of the USA (and this is important as some/many tories look to the USA for their economic model, whilst, in my view, ignoring America’s great success in the high tech industry – Silicon Valley and the great jobs and revenues it brings).

  38. Lindsay McDougall
    Posted January 8, 2018 at 5:36 pm | Permalink

    Some 40 years on, we now have a so called Conservative government that believes central government is the institution best able to define and implement an industrial strategy. Will they ever learn?

  39. MikeP
    Posted January 8, 2018 at 5:57 pm | Permalink

    I guess steel is a good example of the UK needing to “move up the value chain”, manufacturing specialist steels that require particular expertise and different production techniques – Stainless Steel for example, since we’re unlikely to be able to compete with Asian steel, let alone Germany’s. Specialist alloys, for example for our aerospace industry, are also a good bet.
    I wonder if you’ll be devoting a section in this series on roads? It seems amazing that we still have only one privately financed (I think?) toll road on a major route. We might even be able to attract private finance to help with town bypasses where ANPR could be used to collect toll charges – Wokingham’s southern distribution road would be a perfect test site for this – I wonder if you or Mrs May had any views on road capacity to carry traffic from the new housing development she visited recently?)

  40. bigneil
    Posted January 8, 2018 at 6:47 pm | Permalink

    ” The taxpayer lost large sums. ”

    Don’t we always? – – Spending ( throwing away ) billions of other people’s taxes is so much easier when the resulting loss won’t affect the person doing the throwing. Wonder why we are never told how many actual non-working non-contributing immigrants are sat here costing us billions annually? Rhetorical question.

  41. mancunius
    Posted January 8, 2018 at 7:21 pm | Permalink

    Btw, when the meagre deal was concluded in Febuary 2016, Merkel then had the cheek to remark that she’d use some of those bits herself (such as restricting or cancelling the benefits of migrants’ children living abroad).

  42. John
    Posted January 8, 2018 at 7:55 pm | Permalink

    Lets not omit the EU Commission here. China began dumping cheap steel from early 2013?

    The US imposed punitive tariffs near immediately as its allowed to under WTO rules on dumping.

    The EU? Well I understand in 2017 they agreed to impose punitive tariffs after much of the steel producing industries had suffered or disappeared. I’m not sure whether they need to ‘Ratify’ that decision made very late, if they do then who knows when or if it will come about.

  43. David Ashton
    Posted January 8, 2018 at 7:56 pm | Permalink

    If my memory serves me correctly. British Steel were making a negative added value. The cost of raw materials and services was higher than the sales value of the steel they were selling. They would have made a smaller loss if they had closed the plants and continued to pay their staff.

  44. Nil spotted
    Posted January 8, 2018 at 8:05 pm | Permalink

    Mrs May’s newbies in the reshuffle are almost as well-known and recognised by the public as Corbyn’s front bench.

  45. Icy End
    Posted January 8, 2018 at 8:24 pm | Permalink

    The BBC’s China Editor has resigned…and another polar vortextural icy cold blast to our internal life-giving vapours is the breaking news that Anna Soubry has stated today in Parliament “We we would be better off in the Customs Union”
    It doesn’t just rain it sleets it down!

  46. Gawd!
    Posted January 8, 2018 at 9:48 pm | Permalink

    Another reading of some bill in Parliament today. The same arguments. It does not matter what the subject, cross-border trade, defence, Universal Credit, Policing, human rights,polar bears’ failure to catch the Ark as too few of them were running due to privatisation, it all comes back to remoaners moaning and moaning and yes,moaning. Same arguments for two years.
    Why not close Parliament down until 30th March 2019? Remoaners have absolutely nothing more to contribute on anything at all that they have not bored the nation with past commonsense.
    The first thing an independent Sovereign Parliament can do is stop this sort of nonsense and get Parliament working at least on the American model in a business-like fashion. You vote on something, that’s it. End of discussion and debate for a Parliament, at least.

    • Denis Cooper
      Posted January 9, 2018 at 11:11 am | Permalink

      Correct. Eighteen months is long enough for them to mourn their loss, now if they had even a trace of patriotism they would be contributing not obstructing.

  47. RT
    Posted January 9, 2018 at 12:22 am | Permalink

    With regards to our existing steel industry, outside the EU we would be better able to protect it from cheap oversea, subsidised producers in Eastern Europe.

  48. Peter D Gardner
    Posted January 9, 2018 at 2:06 am | Permalink

    What does it say about human nature that successive democratically elected governments in a free economy in the 1980s right through until the 2010s still refuse to learn the lessons so clearly demonstrated by communist countries, that centrally planned nationalised industries do not work? What drives such people to repeatedly sacrifice the lives and wellbeing of others in pursuit of their misguided belief in concepts proven to be wrong.
    It used to be a clear distinction between socialists and conservatives. The former believe that a small number of people know how all of us should live our lives and they should have the power to impose that view on the rest by force of law. The latter had no such ambitions, but saw their role as safeguarding the individual’s freedom from those in power who would impose on it.
    We should bring back true conservatism and curtail the activities of the overbearing and interfering state that seems to appeal to far too many progressive and pro-active ambitious conservatives than is healthy for society. Cut public expenditure to 20% of GDP and make defence and security at least 25% of that.

  49. KatC
    Posted January 9, 2018 at 3:44 am | Permalink

    Well tne way you’re going looks like it won’t be too long before McDonnell economics wiil be in situ..i believe he want to nationalise everything again..make a workers paradise of what’s left..and UK leaving the EU at the same time..time to look for another passport

  50. The PrangWizard
    Posted January 9, 2018 at 1:46 pm | Permalink

    I would like Mr Redwood to provide us at some time with a list of what he regards as strategic industries and then discuss how they are owned and managed.

    As for the railways I understand that Chiltern Railways is successful and is expanding its operations. It is owned by Deutsche Bahn which is effectively owned by the German government.

    Is Chiltern a private company in Mr Redwoods book, or a nationalised one – certainly though not this nation’s – but no doubt most welcome here as Mr Redwood is a big fan of ‘inward investment’. I am not because we have sold far too many of our assets using those words as short term cover for cash and commissions, leaving us on the defensive.

    It is all about the quality of management, courage and vision, and we’ve had some dismal examples of that and incompetent government leadership, which continues.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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