The UK government has intervened with a £120 million public support package to secure the future of the Ineos ethylene facility at Grangemouth, a move hailed by Prime Minister Keir Starmer as a commitment to British industry. However, this last-minute rescue has sparked intense debate over whether there is a coherent national strategy for heavy industry or merely a pattern of reactive, piecemeal interventions.
A Vital Plant Saved, But Questions Remain
Prime Minister Starmer stated the deal demonstrated a clear pledge to "back British industry" and ensure communities like Grangemouth can thrive. The argument for saving the ethylene plant is strong on its own merits. The facility is critical for chemical production across the UK, supplying materials for medical-grade plastics, advanced manufacturing, and the automotive and aerospace sectors. Without it, the nation's already diminished chemicals industry would face severe disruption.
Yet, the rescue raises immediate questions about the government's broader industrial policy. What defines "places like Grangemouth" that warrant protection? The government allowed the site's oil refinery to close this year, converting it to an import terminal. Meanwhile, ExxonMobil's ethylene plant in Mossmorran is slated for closure in February after unsuccessful talks with ministers. Conversely, the government earlier took control of British Steel in Scunthorpe. The inconsistency makes it difficult to discern any guiding principle for state intervention.
Disjointed Policy Undermines Industrial Aims
If the ministerial goal is to arrest deindustrialisation while pursuing decarbonisation, current policy appears fragmented in several key areas. Firstly, the delivery of promised energy cost relief for industry is lagging. A scheme touted to cut electricity bills by up to 25% for 7,000 firms grappling with some of the world's highest industrial energy prices will not arrive until April 2027—over halfway through the current parliament.
Secondly, North Sea oil and gas policy sends mixed signals. While no new exploration licences will be granted, the extension of the Energy Profits Levy (windfall tax) until 2030 discourages investment needed to maintain existing sites, even as other licences are tweaked for viability. The tax is failing to meet revenue forecasts, according to the Office for Budget Responsibility.
Thirdly, plans to tackle "carbon leakage" through a Carbon Border Adjustment Mechanism from 2027 seem insufficiently broad. The mechanism, coordinated with the EU, will not initially cover chemicals, and the inclusion of refineries is merely under consultation, despite their recognised role in energy security.
Reactive Measures Outpacing Strategic Vision
While the previous Conservative government was also prone to ad-hoc crisis management, the current Labour administration's approach, despite its stated "modern" vision, appears similarly reactive. Deindustrialisation events are unfolding faster than policy-making. The Grangemouth ethylene plant rescue, though justified for its economic importance, highlights a systemic issue: the absence of a clear, proactive, and joined-up strategy for the UK's foundational industries.
The challenge is not unique to Britain, with much of Europe facing similar pressures. However, the patchwork of decisions—saving one plant while another closes, announcing long-term support schemes with distant start dates, and maintaining contradictory fiscal policies—suggests that for now, the UK's strategy for heavy industry remains one of firefighting rather than foresight.
