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No Industrial Policy: UK Relations With China Epitomise What Ails Our Economy

Labour MP Paul Flynn speaking in the House of Commons today asked Tory Business Secretary Sajid Javid, “Why is the UK behaving like a simpering spaniel to the Chinese by rolling over and licking the hand that beats it?”  Flynn was referring to the news that China’s dumping of steel onto the international market. #


This sentiment was reflected by Simon Jenkins in the Gruniard who imagined someone querying a Chinese visitors motives for investing in UKPLC. The envoy might say, “I would ask how come if you British are so clever your David Cameron and George Osborne come knocking endlessly at our door, bowing and scraping for cash? They have a stash of vanity projects we know no sane capitalist will touch….They are so stupid they offer us profits and guarantees against risk”.

Can you imagine the furore if a Labour Government had bowed and scraped the way the Tories have at the feet of China? The patriot card would have been played faster than it would take Iain Duncan Smith the time to sneer at a disabled person worker passing by his Office window. (As an aside it was fascinating to watch the ways in which Anna Soubry contorts her face to show contempt for all and sundry as she sits behind Javid at the dispatch box).

Flynn’s claim that the selling of excess steel by China onto the European market, thus flatlining prices and forcing UK based companies to either mothball plants, or shut them completely is actually a bit of a canard. The reason our steel industry is in complete disarray comes back to something Ed Miliband identified in the 2010 Labour Leadership Race.

Speaking in Scunthorpe during August the former Cabinet Minister told a meeting of Labour Party Members and activists, “The truth is that as a Government we (Labour) were too managerial and not bold enough…. we came far too late to a structured industrial policy”.

This was an astonishing admission, but one which rang true to the audience. One of the Brown Government’s few concrete achievements was a strategy to protect and expand the UK car industry via First Secretary of State Peter Mandelson‘s Car Scrappage Scheme. 

At the height of the Global Financial Crisis in 2008, the Labour Government’s policy of deliberately running a deficit budget (as is being proposed by new Canadian Prime Minister Justin Trudeau to end Austerity and stimulate their economy) saw Mandelson pump just £300 million of state aid into the Midlands based UK car industry.

The Daily Telegraph, notorious haters of Labour were forced to admit in March 2010 the Government funded scheme, “has sent consumers flooding back to struggling showrooms, triggered the sale of 396,000 new cars and pulled the motor industry back from the brink of crisis.” The lessons are obvious and Miliband was right to identify a cogent industrial policy as being the cornerstone to UK success.

The fact that he did absolutely nothing about it during his disastrous five years as Labour Leader is testament to the Party’s obsession with not upsetting the Markets (bless ’em) and appearing tough on economic discipline, whatever that is. Last week Ed Miliband defied the Whips Office and voted FOR Osborne’s illogical and ill thought out “law” to ban future deficit budgets.

When Margaret Thatcher came to power, manufacturing accounted for almost 30% of Britain’s national income and employed 6.8 million people. By 2010, it was down to just over 11% of the economy, with a workforce of 2.5 million.

In November 2013 the Guardian newspaper revealed to the public a shocking fact. Since the Tories victory in the 1979 general election a staggering 2/3rd s of Britain’s manufacturing sector had disappeared.

This was the biggest de industrialisation by any country in the world. From a nation that once claimed to be the workshop of the world this was a massive shift in the way our economy was shaped as the UK went into the new century. Is our future now reliant on the vagaries of the service and retail sectors, both are which notoriously volatile and prone to the very thing Gordon Brown wanted to abolish, debt fuelled boom followed by a painful and extended bust? These sectors are totally in the hands of that nebulous concept of consumer confidence, which always lags way behind recoveries in other areas such as construction and manufacturing.

De industrialisation, the Tories will tell you, was something to liberate the working classes from the drudgery and danger associated with heavy industry and activities such as mining.

Sir Keith Joseph, Thatcherism’s ideas man set his stall out in a 1974 speech which he called, “Growth Means Change”. His thesis was that British industry was “over manned” with “too low earnings and too little profit and too little investment”. In his opinion, and this became set in stone under the Thatcher government, the solution to the UK’s economic problems lay in shedding factory workers, which would make industrial companies more competitive and free up labour for new businesses elsewhere in the economy. “This is growth,” Joseph said. “Whether the new work is in industry, commerce or services, public or private … The working population must choose between narrow illusory job security in one place propped up by public funds or the real job security based on a prosperous dynamic economy.”

The key phrase is, “propped up by public funds.” The neo-liberal position is that the state should have a minimal input, especially financially in the economy. The UK in the 1970’s relied on jobs in the manufacturing sector which was largely nationalised, (in fact it was the Tories who nationalised ship yards in Scotland and the North East in order to save jobs under Heath) and this state responsibility was anathema to Joseph and his disciples such as Thatcher.

So when Thatcher came to power in 1979, Keith Joseph was made Industry Secretary and set about the rapid deconstruction of the UK’s industrial base. A staggering 20% of jobs were lost in just two years as state subsidies were reduced whilst an over strong pound meant that UK exports fell dramatically.

Figures published in 1993 and quoted by “Socialist Review” show that in the recession of 1979-81 British manufacturing industry suffered even more than during the 1930s: manufacturing fell by as much as 19.6 percent. Between one fifth and one quarter of the manufacturing sector’s equipment and capacity were destroyed and 1.7 million jobs were lost.

What is more telling is the difference between the UK and Japanese economies at this time, between 1979 and 1987 manufacturing output rose by 67 percent in Japan and manufacturing employment by 7 percent. In the UK output grew by 0 percent and manufacturing employment fell by 27 percent in the same period.

This de industrialisation affected the north of England and the Celtic UK nations disproportionately as these areas were the strong holds of heavy industry, mining and making things such as cars, ships and aircraft. It is no coincidence that this sector was heavily unionised, something that Thatcherism loathed as it meant the free market was subject to regulation via pay deals and taking health and safety seriously.

The nadir for the North came in November 2013 when the Economist Magazine said, “Governments should not try and rescue town such as Middlesbrough and Hull. Instead they should support the people that live in them. That means helping them to commute or move to places where there are jobs.”

Scotland has suffered from de industrialisation and a report published by NHS Scotland in 2008 concluded, “ de-industrialisation causes economic and social upheaval,and impacts on population health. There are relatively higher rates of teenage pregnancy and motherhood, and higher numbers of low birth-weight babies,and higher income inequalities. The report also blamed, “‘neo-liberal’ economic policies pursued by the UK, higher levels of economic inequality and higher proportions of potentially vulnerable households.”

The 2001 film, “Billy Elliot” neatly sums up the devastation caused by the Thatcher government. Set in the pit village of Easington, Co. Durham we see the emasculation of the men as their industry is laid waste, the bitter inter family feuds caused by the miners strike, and the fact that the only future for the young people lies elsewhere. The BBC visited the village at the time of the films release and found it was the “whitest place in the UK”. This was due to two factors, the exit of the working age population to seek employment and the fact there was nothing whatsoever to attract people to live there as no jobs whatsoever had been created, even in the retail and service industries.

The idea that the UK was going to be rescued by so called e jobs, and small private sector businesses was blown out of the water when the Centre for Research on Socio-Cultural Change at Manchester University calculated that, between 1998 and 2007, the bulk of the new jobs in the the north, Wales and Scotland came from the state via local government and jobs in the NHS.

As the last General Election approached former Independent editor Andreas Whittam-Smith, no friend to the Left, wrote  about the plight of the UK workers, “the situation facing the nation’s poor is this. 5.5 million adults go without essential clothing. About 2.5 million children live in homes that are damp. Around 1.5 million children live in households that cannot afford to heat their home. More than one in five adults has had to borrow in the last year to pay for day-to-day needs.”

By any stretch of the imagination this is a complete and utter scandal. It makes no sense either, even if you are an arch Capitalist. Such deprivation kills demand at birth and if people aren’t buying “stuff” where’s the profit? Never mind the human misery. That’s the last thing on the minds of the Establishment.

There is an alternative. It’s called Socialism and involves having a logical, planned economy which works in the interests of everyone, not just a narrow tranche of elites where we see 1% of the world’s population own more than the other 99% put together, according to OXFAM. A world where if you are on the UK minimum wage this puts you in the top 12% of earners worldwide.

Jeremy Corbyn and John McDonnell must prove that the talk of a Socialist Labour Party as they outlined at a Left Platform one day Conference in February, and as voted for in an absolute land slide in September becomes a reality and not just idle words. I for one will fight for that even if I am banned from the Labour Party for a minimum of five years.


About dermotrathbone

Writer and co author "Through Red Lenses". Activist Unite the Union, Save Our NHS Hull. Fan of Yorkshire County Cricket Club, Hull FC, Munster and Ireland Rugby. Views are mine alone and may not reflect the organisations concerned.


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