David Cameron is a worry. He has only been Prime Minister for a few weeks and he is already getting carried away with his own rhetoric. It is difficult to rationalise his words and actions. Returning from the G8 and G20 meetings in Canada his message was, the world does not owe us a living and the UK will have to reboot its economy in order to survive. His three point plan for recovery is; get to grip with the deficit; slash benefits to make work pay; and kick-start international trade. In relation to the last point he said that British businessmen and diplomats must do more to attract foreign investors and develop business opportunities abroad. This corresponds with Chancellor Osborne’s Budget plan to reduce the size of the public sector and increase the size of the manufacturing and export sector.
How can this be reconciled with the decision earlier this month by LibDem Treasury Minister, Danny Alexander, to axe a commitment by the outgoing Labour government to make an £80million loan to Sheffield Forgemasters. This was described by LibDem Deputy Prime Minister and Sheffield Hallam MP, Nick Clegg, as a calculated ploy by Labour to win support in Sheffield just ahead of the election. If the timing of the announcement of the loan was a calculated partisan act it would indeed be reprehensible. It also seems ridiculous for the Government to borrow money and then lend it for a commercial operation. David Cameron justified the axing of the loan, which he ventured offered little value for money, by saying that commercial banking should stump up the money. The reality is somewhat different and Nick Clegg, as a local MP, should know that.
The proposed loan was not a bail out for a failing company. Sheffield Forgemasters is the largest privately owned steel and engineering company in the UK and has a worldwide reputation for supplying high quality forgings and castings for the aerospace, power generation, nuclear, oil exploration and the defence industries. It is highly successful and in order to give the UK a leading role in developing a new generation of nuclear power stations it decided three years ago to build a 15,000 tonne forging press that would be the biggest in the world. Only two other presses are anywhere near that size, and they are both in the Far East.
Raising a commercial loan was difficult for a number of reasons with the credit crunch proving an obstacle. Despite the Government and the generating industry supporting the project, the banks were not keen to provide funds. The banks seem to prefer consumer lending. Every alternative model of funding was explored to raise the capital that was twice the valuation of the company. The management of Forgemasters were cautious and prudent as they did not want a repeat of the previous experience six years ago when the company had to be rescued because of mismanagement and the greed of private sector funding.
The project was cleared by government departments and the Treasury as good value and sound use of public money, but was then delayed for months because the EU rules on state aid had to be cleared. The new Coalition Government cancelled the loan without any recourse to Forgemasters to discuss alternative methods of funding. This despite Vince Cable, as the new Industry Minister, declaring that he would force the banks to lend to business. Is this what David Cameron calls rebooting the economy and kick-starting the export industry? It looks more like putting the boot in.
The new government seems keen to help foreign firms develop low carbon cars in the UK. Nissan has been given £20million and General Motors has been awarded £30million to build electric cars. Where is the help and support for British manufacturing? The Engineering Federation has been critical of the last government’s lack of focus. In 1997 manufacturing was 20.4% of GDP but only 13.5% in 2009. It employed 4.2 million people in 1997 but now employs 2.6 million. Rolls-Royce was particularly scathing, commenting that most countries had an industrial strategy. The UK is ranked sixth in the manufacturing league table behind the US, China, Japan, Germany and Italy. If the UK is to move up the world rankings it is vital that projects like the Forgemasters press are given total support. If the UK stumbles, others like Germany will be only too pleased to step in. It is hard enough competing with the likes of China and Japan; we then have the problem of protectionism in the USA.
When Obama gave Cameron a lift in his helicopter on the way from the G8 to the G20 meetings it is to be hoped that the Premier put the President straight and expressed his displeasure on a number of issues. Not only about the lack of support for the Falkland Islands or Obama’s verbal assault on BP and his high jacking of dividends, but also about unfair competiton that excludes Rolls-Royce and their European aerospace partners from winning orders in the US.
Obama has personally vetoed legislation that would fund a second alternative engine for the F35 Joint Strike Fighter. British Aerospace is a main partner with Lockheed Martin in the development and manufacturing of the advanced fighter. R-R is in partnership with General Electric to develop the alternative engine with an initial £334million earmarked by Congress. The US company United Technologies will now monopolise the £69billion contract to supply engines for the expected 3,000 fighters. Then we have the blatant reawarding of an in-air refuelling tanker aircraft contract for the US Airforce to Boeing. This contract worth £77billion was won by European Airbus and their US partner Northrop Grumman. Boeing lost but then objected, playing the jobs for Americans card. The Pentagon reassessed the project and set new conditions, resulting in Northrop Grumman withdrawing and Boeing being awarded the contract.
Before completing his second term in 1961 as President, General Eisenhower warned about the power of the military-industrial complex in the US. It seems that nothing has changed. It is no reason for the UK to kotow to the US. David Cameron needs to be firm, with his actions matching his words.