When George Osborne became Chancellor he said he had a clear plan: he was going to “re-balance the economy,” reports Labour Council Leader, David Ellesmere.
We had become too reliant on the City and the service sector. We needed to increase the contribution of the manufacturing and construction.
In his 2011 Budget, he declared the job was all but done. Britain would be “carried aloft by the march of the makers.”
The past week has shown this claim to be nonsense. Like virtually every other economic target George Osborne has set himself, he has missed this one by a mile.
Britain’s manufacturers shed jobs and had to cut prices last month. Manufacturing output is actually lower now than when he delivered his “march of the makers” Budget.
The economy is even more unbalanced than before.
We have a massive “balance of payments” deficit. Last year we bought £96 billion more goods and services from the rest of the world than we sold to them. This is the highest deficit since records began in 1948.
This can’t go on indefinitely. Sooner or later we will either have to export more or import less. If we can export more then that’s good news - we’ll be better off as a country. If we have to solve the balance of payments deficit by cutting imports, then our standard of living is going to fall.
So what are the chances of us exporting more? The sorry tale of the Government’s response to the crisis in the British steel industry doesn’t give much cause for hope.
The whole Government has been completely wrong-footed.
It’s not clear whether this is just down to incompetence - a strong possibility - or whether “free market” ministers believe that our steel industry should go to the wall if it can’t compete.
That’s certainly a line I’ve heard from some commentators. In their view, if the Chinese Government, in their wisdom, have decided to flood the market with cheap steel then we should just take advantage of it. If our steel makers go bust then, so what? That’s just competition.
Let’s leave aside the obvious social cost of the loss of tens of thousands of jobs and the wholesale destruction of steel communities which this view ignores. Even on its own terms, it is extremely wrong-headed and short term.
The Chinese Government isn’t giving us cheap steel “in its wisdom”, but because they have made a huge miscalculation in the amount of steel they need to produce. They are already starting a programme of massive lay-offs. Steel production will fall, prices will increase and, if our steel industry has been destroyed by cheap imports, there will be no competition.
We will then have no control over an industry that is vital for our nation’s defence and infrastructure.
David Cameron has said he will do “whatever it takes” to protect British steel. But actions speak louder than words.
“Whatever it takes” apparently doesn’t include the possibility of nationalisation - even for a temporary period to stabilise the company - and it doesn’t include tariffs on Chinese steel being dumped on the market at below the cost of production.
If this is supposed to get us into China’s good books, it isn’t working. They have just slapped a 46% import tariff on British steel.
We shouldn’t be surprised. Why should the Chinese government do us any favours? They are looking after the interests of their own manufacturers.
If only the British Government was prepared to do the same for ours.