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As British steel industry goes into meltdown, government faces some burning questions As British steel industry goes into meltdown, government faces some burning questions
(35 minutes later)
Nobody should expect the government to write an open-ended, taxpayer-funded cheque to support the steel industry. But it is reasonable to expect ministers to be alert to a crisis at its early stages and to avoid making a bad position worse. On both counts, the government has questions to answer.Nobody should expect the government to write an open-ended, taxpayer-funded cheque to support the steel industry. But it is reasonable to expect ministers to be alert to a crisis at its early stages and to avoid making a bad position worse. On both counts, the government has questions to answer.
Back in January, David Cameron boasted that the UK’s steel production was higher than in Labour’s last term in office “because we have a car industry that is growing, an aerospace industry that is growing, and construction is growing.” Those words now read as blinkered disregard for pressures that were obvious at the time. It is not fresh news, for example, that the steel price has plunged and that China is dumping its excess production on world markets.Back in January, David Cameron boasted that the UK’s steel production was higher than in Labour’s last term in office “because we have a car industry that is growing, an aerospace industry that is growing, and construction is growing.” Those words now read as blinkered disregard for pressures that were obvious at the time. It is not fresh news, for example, that the steel price has plunged and that China is dumping its excess production on world markets.
Nor was the steel industry engaged in old-style special pleading. Its main request has been for the government to hurry up and implement a series of measures it had already agreed, including a compensation package for energy-intensive industries. UK Steel, the trade body, estimates that electricity prices in the UK were 82% higher than the EU average for extra-large consumers in the first half of this year, a gap that has doubled in two years.Nor was the steel industry engaged in old-style special pleading. Its main request has been for the government to hurry up and implement a series of measures it had already agreed, including a compensation package for energy-intensive industries. UK Steel, the trade body, estimates that electricity prices in the UK were 82% higher than the EU average for extra-large consumers in the first half of this year, a gap that has doubled in two years.
Now that crisis has arrived at three steel producers – SSI, Caparo and Tata steel – there are finally signs of activity in Westminster, in the form of summits and a dispatch to Brussels to speed up the energy-relief measures. Sadly, it looks too little, too late. Whatever the state-aid rules say, it’s hard to believe the governments of either France or Germany would have treated their steel industries in such a hands-off manner. Now that crisis has arrived at three steel producers – SSI, Caparo and Tata – there are finally signs of activity in Westminster, in the form of summits and a dispatch to Brussels to speed up the energy-relief measures. Sadly, it looks too little, too late. Whatever the state-aid rules say, it’s hard to believe the governments of either France or Germany would have treated their steel industries in such a hands-off manner.
Legal & General fires warning over Hinkley Point white elephantLegal & General fires warning over Hinkley Point white elephant
When, after a final round of grandiose political rhetoric, we are invited this week to celebrate China’s decision to push several billion quid in the direction of Hinkley Point, remember that George Osborne turned to Beijing to fund his nuclear experiment only because other investors decided long ago that the project carried the stench of financial folly.When, after a final round of grandiose political rhetoric, we are invited this week to celebrate China’s decision to push several billion quid in the direction of Hinkley Point, remember that George Osborne turned to Beijing to fund his nuclear experiment only because other investors decided long ago that the project carried the stench of financial folly.
Take Legal & General, which has a fair claim to be the biggest investor in what Osborne has branded the “northern powerhouse”. L&G has put £15bn to work in direct investments in infrastructure assets where payback times are long, such as Media City in Salford and a major regeneration scheme in Leeds. In short, L&G is the type of UK institution that is favourably disposed towards big projects where financial backers sacrifice liquidity in the hope of realising a better risk-adjusted return – exactly the supposed profile of nuclear plants.Take Legal & General, which has a fair claim to be the biggest investor in what Osborne has branded the “northern powerhouse”. L&G has put £15bn to work in direct investments in infrastructure assets where payback times are long, such as Media City in Salford and a major regeneration scheme in Leeds. In short, L&G is the type of UK institution that is favourably disposed towards big projects where financial backers sacrifice liquidity in the hope of realising a better risk-adjusted return – exactly the supposed profile of nuclear plants.
Now look at chief executive Nigel Wilson’s analysis of Hinkley Point: “Nuclear energy is low carbon, but the costs are too high. The £25bn estimates ... make it look like an expensive white elephant. It will be slow to build, produce prohibitively expensive power at over £100 per megawatt hour to be subsidised over 30 years – plus nuclear fuel decommissioning costs which, according to the Whole of Government Accounts, cost the taxpayer £80bn.”Now look at chief executive Nigel Wilson’s analysis of Hinkley Point: “Nuclear energy is low carbon, but the costs are too high. The £25bn estimates ... make it look like an expensive white elephant. It will be slow to build, produce prohibitively expensive power at over £100 per megawatt hour to be subsidised over 30 years – plus nuclear fuel decommissioning costs which, according to the Whole of Government Accounts, cost the taxpayer £80bn.”
In practice, even a slice of Hinkley Point might be too big for any UK private-sector investor. But you get the point: if even committed UK enthusiasts for long-term infrastructure think the project is a waste of financial resources, it very probably is.In practice, even a slice of Hinkley Point might be too big for any UK private-sector investor. But you get the point: if even committed UK enthusiasts for long-term infrastructure think the project is a waste of financial resources, it very probably is.
Asda switches off click and collectAsda switches off click and collect
The first victim of Asda’s latest “renewal” programme is the plan to open masses of “Click & Collect” pick-up points, including at London tube stations. This is not surprising. Click and collect adds costs for the supermarket and ensures the punters stay out of the stores and away from promotional offers. From the retailer’s point of view, the economics of the service are terrible. What’s more, there is little evidence that customers are crying out for pick-up points. What’s wrong with getting the stuff delivered to your home? The first victim of Asda’s latest “renewal” programme is the plan to open masses of click and collect pickup points, including at London tube stations. This is not surprising. Click and collect adds costs for the supermarket and ensures the punters stay out of the stores and away from promotional offers. From the retailer’s point of view, the economics of the service are terrible. What’s more, there is little evidence that customers are crying out for pickup points. What’s wrong with getting the stuff delivered to your home?