Andrew Griffith: Labour’s plans for British Steel are pure, old-fashioned nationalisation

Andrew Griffith is the Shadow Secretary of State for Business and Trade.

We should be under no illusions as to what happened in Parliament last week. During only the sixth Saturday sitting since the Second World War, British Steel was nationalised – but in a botched manner, by ministers who clearly don’t know their ingot from their elbow.

What were initially trailed by Labour as mere emergency powers to allow ministers to ‘direct staff’ at the company were revealed on the day to be profound and perpetual rights. The Secretary of State and his officials will be directing everything bar the tunes whistled by workers (Keep the Red Flag Flying, perhaps?) as they shovel coke into the furnace, while the Chancellor pays the fast-mounting bills.

Labour’s abject failure to plan (despite warnings from many current and former Conservative MPs) gave Parliament an impossible choice.

We are a responsible Opposition and letting the furnaces go would have been a costly mistake which we were not prepared to allow. It would have seen us as not just the only G7 country unable to supply itself with primary steel, but the only one in the G20 as well.

Nonetheless, there should be no blank cheques and when Labour return to Parliament (as they must) to clear up the travesty of a Chinese owned company being underwritten by further tax rises and cuts to front-line public services, we will be demanding that they be honest about their poor choices and bungled negotiation.

The Government were not victims of circumstance. They could have averted this outcome by picking up the sensible, British Steel-preferred, plan we were negotiating, planning permission for which had even already been granted.

Instead, they chose to appease their union-paymasters by pursuing a high-risk gamble: a Scunthorpe-only alternative that was more expensive and less certain. Now the unions have what they always dreamed – a Labour-run plant where they call the shots.

Even as the Labour frontbench try to dodge the word nationalisation, the act they wrote speaks for itself.

The dividing line between what is and what is not publicly owned is demarcated by the Office for National Statistics. Given the sweeping and open-ended nature of the powers in the Steel Industry (Special Measures) Act, my belief is that the line was crossed at midnight on Saturday.

The Chancellor’s conspicuous failure to deny this speaks volumes too. The powers in the Act surpass all the main tests the statistical organisation uses when determining whether to classify an organisation as public or private sector. In fact, it meets more tests than many existing public sector bodies.

And who picks up the tab for this? Who pays for the near million pounds every day that British Steel currently loses? Whatever the Government say, I predict that it won’t be China-based Jingye.

Fixing British Steel is indeed within Whitehall’s power – but not like this. It faces the same problems as most major industry players from automotives to chemicals.

High industrial energy costs must be slashed by sacking ‘Red Ed’ Miliband and scrapping his loony de-growth policies; the ‘jobs tax’ must go, or at least be paused, in these critical sectors; planning rigmarole and lefty-lawyer blockers must be shown the door.

Similarly, a blast furnace without coking coal is like a coffee machine without beans. Labour must now grant permission for a colliery in Cumbria to provide some of the coke that Scunthorpe’s furnaces need, rather than importing it from halfway around the world.

Life imitates art. Hank Reardon, the hero owner of Reardon Steel in Atlas Shrugged, said: “If I don’t get coal, I can’t make steel. If I don’t make steel, Taggart stops moving. Everything collapses around that.” Nationalising British Steel without fixing the underlying problems that got us here is like trying to bail out a sinking ship with a teaspoon: very wet, and very futile.

This is no surprise, Labour nationalised British Steel before in 1967 and throughout the Seventies racked up billions in losses as a result.

When businesses are nationalised, that essential link between capital and responsibility is broken: budgets are not adhered to, because there is always more taxpayer cash around the corner; productivity plumets, because union officials have a tap straight into the veins of Labour ministers.

We already know that when Labour negotiates, Britain loses. Consider the Chagos Islands, Astra Zeneca’s new factory, huge public sector pay rises, and the failure to secure a deal with the US. Only the unions and foreign powers walk away smiling from Labour’s deal table.

Conservatives are the only party which understands the dangers of nationalisation, because a generation ago we were the party that unleashed a generation of successful private enterprises and public ownership through publicly traded shares.

And when Labour’s new sticking plaster becomes a permanent sore, we will once again be the only party that can rip off the band aid.