By Rab Bruce’s Spider

So a steelworks in Redcar is to close with the loss of 1,700 direct jobs plus who knows how many more in the area due to the knock on effect of the closure.

It’s a devastating blow to the economy of the North East of England and to the families of the workers and the question must be asked as to whether it could have been avoided.

The worldwide collapse of commodity prices is no secret and the simple fact is that this is affecting businesses everywhere. If the Redcar plant was not viable economically, it is no surprise that it has been forced to close.

It would be unrealistic to expect the UK Government to step in to help every business that was struggling financially so it is no real surprise that no help has been forthcoming so far but one can’t help the feeling that the Government could have done more.

As this site has mentioned in the past, all Governments choose which of their industries to subsidise. The current UK Government has chosen to subsidise the nuclear energy industry and may have good reasons for doing so, although the level of help they are prepared to provide seems out of proportion especially when the main beneficiaries will be the French and Chinese nuclear energy providers.

At the same time, the UK Government has chosen to stop subsidising the renewable energy sector which seems an odd decision given the worldwide clamour for a reduction in carbon emissions and calls for cleaner energy.

The issue with the closure of a large steelworks is that Britain used to subsidise its steel industry. This was stopped by Margaret Thatcher’s Tory Government with the result that most of Scotland’s heavy industry has disappeared over the past few decades. Now, that collapse has reached Redcar.

I don’t know enough about the financial state of the business but I can’t help wondering whether the cost of keeping the business going would outweigh the inevitable extra burden the State is now going to need to meet in Unemployment, Housing and other Benefits as well as retraining programmes for the workers who have lost their jobs.

The other effect of the closure is that it will mean an even greater reliance on the financial sector in London to sustain Britain’s GDP. This, of course, is in keeping with Tory ideology which places its emphasis on the money markets and disdains manufacturing. It’s a very narrow view and results in a lop-sided economy which is vulnerable to global downturns. And there are plenty of economists predicting such a downturn. Let’s hope they are wrong.

In the meantime, though, the events in Redcar don’t really sound much like George Osborne’s Northern Powerhouse, do they?