Coalition’s manufacturing ‘neglect’ worries Teesside

By Alex Stevenson

The coalition government’s lack of investment in Britain’s manufacturing sector is letting down millions of workers, a Labour MP has claimed.

Tom Blenkinsop, whose campaign to hold Middlesbrough South and Cleveland for Labour was dominated by the mothballing of the Redcar blast furnace earlier this year, told he wanted to see ministers prioritise the sector more.

He admitted frustration as he acknowledged many on Teesside viewed the collapse of efforts to find a buyer to keep the plant operating as “Labour’s failure”.

Manufacturing contributes £160 billion each year to the economy, which makes up around 13% of Britain’s GDP. It sustains 2.8 million jobs and is responsible for 53% of UK exports.

But there has not yet been a clear plan for manufacturing outlined by the new government, leading critics to accuse it of focusing on the financial and retail sectors of the economy instead.

“I’m not very clear on what the coalition’s policy in terms of manufacturing is,” Mr Blenkinsop said, as he questioned the effectiveness of measures contained in George Osborne’s emergency Budget for the sector.

These included the annual one per cent decrease in corporation tax for the next four years from 28% to 24%.

“It doesn’t really kick in for the chemical and steel industries, which rely on individual investment,” Mr Blenkinsop explained.

“It doesn’t provide the long-term revenue foundation which manufacturing needs. It allows businesses in the financial and retail sectors to have quick turnaround in cash flow but it’s not really bespoke for manufacturing.”

The Department for Business, Innovation and Skills (Bis) denied it was ignoring the manufacturing sector.

In addition to the corporation tax the emergency Budget included an extension of the ten per cent rate for capital gains tax from the first £2 million to the first £5 million of lifetime gains, it pointed out.

A spokesperson said: “Where we will make a difference is by supporting manufacturing through having an enterprise-friendly tax system, supporting free trade, encouraging competition and investing in capabilities not companies.”

But Mr Blenkinsop remains unimpressed. He also criticised the dropping of capital allowances, which saw firms engaged in investment projects receiving relief from their tax levels.

The Labour MP denied capital allowances were a form of “government meddling”, saying their purpose was to put in place “firm foundations for long-term investment”.

The Redcar plant, mothballed in February by its owners Corus, had not seen any significant investment since it was privatised by Margaret Thatcher’s government.

“It’s not an advocation of nationalisation but it’s certainly an example of a system which provided long-term investment as opposed to a system which doesn’t at all,” he said.

Speculation that the blast furnace could be rescued if a buyer can be found is increasing, with at least one company viewed as a potential purchaser.

Many are angry with the way Corus’ management has approached the issue, complicating the sale by seeking to retain elements of the business, understands.

“I think many people saw the mothballing of the Teesside Cast Products site as Labour’s failure. There’s no denying people thought that. Some still do,” Mr Blenkinsop said.

“But within that vacuum period people weren’t aware and still aren’t aware of the ridiculous negotiations that have been prolonged… the government of the time was always trying to help whoever was interested in buying the site to buy it.”

The site is the only one in Britain owned by Corus which has growing markets in Asia, as opposed to the rest of Europe.

“The facts are that site is tenable,” Mr Blenkinsop insisted. “What the coalition government will now find is rather than the simple platitudes they were dishing out in Redcar, saying we’ve got a plan, it’s a far more complicated situation than they bargained for

“I await with interest what their industrial strategy is – because I still don’t know what their strategy is for Corus TCP or what they’ve actually done.”

The government emphasised that decisions on any offer to purchase the Teesside plant were a commercial matter for Corus.

But a spokesperson said: “In respect of the mothballed Teesside Cast Products site, we hope a new partner can be found for this plant.”

Mr Blenkinsop had a relatively short run-in as a Labour candidate before the general election following the unexpected death of his constituency’s former MP Ashok Kumar in March.

Mr Kumar, whose close contacts with Corus’ parent company Tata helped his efforts to lobby the government on the issue, told in January the company had “lost all confidence” in ministers’ ability to rescue the plant.

“They’ve been going in and out for a year and Bis have given them tea, sympathy, sandwiches, patted them on the back and off they went. They are fed up,” he said.

The Redcar plant was mothballed the following month.