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Jeremy Hunt insisted the UK would not adopt Joe Biden’s “subsidy bowl” approach to economic policy, on the day he signed off on a £500m subsidy package for Tata companies to modernize the UK steel industry.
The chancellor has declared that the UK has an “industrial strategy”, a term that Prime Minister Rishi Sunak has been reluctant to use, but that it will be “level-headed” and will not lead to sweeping large-scale government subsidies.
In an interview with the Financial Times, Hunt admitted that the UK needed to invest in switching to electric arc furnaces to reduce carbon emissions and protect strategic industries.
He said Tata’s payment of up to £500m to him was only agreed after he received a “very credible commitment” from the Indian company to invest a further £750m in developing its tower in Wales. Factory in Port Albert.
“We think this is very important for the long-term viability of Wales and British Steel,” he said, adding that talks were also ongoing with British Steel, which has a similar operation at its Scunthorpe site.
“We’re not at the same stage with them yet,” Hunt said, referring to talks with China’s Jingye, which owns British Steel and is also seeking hundreds of millions of pounds in subsidies.
“Our approach will be very similar,” Hunter said. “If we can get the right deal for the country, protect our future as a steelmaker and be good for the local area and the people who work there, we will be prepared to do a deal. But it has to be the right deal.”
But Hunt said the country’s generosity did not mean Britain would try to emulate the Biden administration’s $369 billion inflation-cutting bill, a package of subsidies and tax credits to help the United States move toward a net-zero carbon economy.
“We are very clear – we are not going to pursue an IRA subsidy bowl approach to economic policy,” he said. “We are very stubborn. We will do what is in Britain’s long-term interests.”
Mr Hunt said the UK’s approach to encouraging the transition to green energy – including a system of “contracts for difference” that guarantees the price of energy output – was preferable to policies adopted by the US.
He also said he would not take it for granted by handing out huge subsidies to support five key sectors – technology, creative industries, life sciences, advanced manufacturing and the green economy – which he believes are vital to the UK’s future. economy.
“If you were asking whether we were going to provide substantial subsidies for all five sectors, that’s not how I would interpret today’s announcement,” Hunt said. But he added: “Where there is a strategic opportunity to make progress, we will seize it.”
Sunak has been criticized by former business ministers for his low-key approach to industry, but Hunt insists the government’s industrial strategy is “dynamic”.
He said all the priorities identified by former Conservative business secretary Greg Clark in his “modern industrial strategy” – scrapped by Sunak when he became chancellor in 2021 – were still being implemented.
“The UK government has a very comprehensive approach to industrial strategy,” he said, adding that all governments like to “express things in their own way”.
Hunt’s autumn statement in November is expected to set out more details of a reborn industrial strategy, including Lord Richard Harrington’s review of foreign investment.
Meanwhile, the chancellor confirmed he was working with Sunak to address cost overruns on the HS2 rail project and refused to commit to building the line from Birmingham to Manchester.
“With any large infrastructure project, let alone the largest infrastructure project in the country, you would expect us to have conversations about managing cost overruns.”
Asked whether the entire rail project would be built, he said: “I won’t go into details.”
Mr Hunt declined to say whether welfare and pension spending would be cut in his autumn statement, a move that could create some room for tax cuts in next spring’s budget.
He also refused to confirm whether the pensions triple lock would remain in place in the next Conservative manifesto, but admitted that on current trends the UK government would be “completely unsustainable in its current form” by the 2070s.
Hunt will set out plans to boost Britain’s productivity and overhaul public services over the coming year. “We have to rethink how we run the country,” he said.
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