He is a tax exile, he lives in Monaco, and, perhaps worst of all, he supported Brexit. As Sir Jim Ratcliffe, the founder of the chemicals giant Ineos, accuses the Labour government of ‘economic vandalism’, there will be plenty of MPs, and probably even a few ministers, who will dismiss it as an embittered rant by an over-entitled billionaire. The trouble is, he is also about to close down three perfectly efficient petrochemical plants, and unless Andy Burnham and his team can come up with a way to bring energy costs down they will end up presiding over deindustrialisation on a scale that even Mrs Thatcher, the one politician they most dislike, would have found unacceptable.
We are witnessing a wave of deindustrialisation on a scale that has not been seen since the 1980s
The closure of yet more factories is the last thing an already fragile British economy needs. But Ineos, one of the largest manufacturers still operating in Britain, has said that three plants in Hull, which between them employ 4,000 workers, may soon close. The reason? Britain’s ‘ridiculously high energy prices’ according to Ratcliffe. The businesses are perfectly efficient by global standards, the workforce is disciplined and focused, and there is plenty of demand for the detergents, textiles and drugs they produce. But they simply can’t operate with energy that is now 12 times the price in the United States, and eight times the price in China. Instead, they will have to be closed down, and everything they make will be replaced by imports. Production has already been paused at two of the plants and the third is set to come offline in the coming days.
This is hardly an isolated example. Last month it was Denby Pottery. Cement production has fallen to 1950s levels, as has car production, both high-energy industries. Pierce by piece the manufacturing base is being ripped apart.
In reality, we are witnessing a wave of deindustrialisation on a scale that has not been seen since the 1980s. The crucial difference, however, is this: whereas many of the factories that closed 40 years ago were fundamentally uncompetitive, and had no real future, this time around they are perfectly viable, apart from sky high energy costs. At some point, the Burnham government will need to come up with a serious plan for fixing that. Given that successive British governments have spent 20 years driving up energy costs it is not going to be easy.
But it isn’t impossible. We could fully reopen the North Sea, start building nuclear power (with the same costs as South Korea), relax the net-zero targets, and even allow fracking. All of those would increase domestic supply, as well as generating tax revenues that could be used to subside factories that would otherwise close. It won’t be easy to sell to the party, and it is a lot harder than taking pot shots at a tax dodging billionaire. But if it doesn’t happen soon, Britain won’t have any industry left.
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