Talks: Kemi Badenoch in Israel, an attractive market for the UK
Kemi Badenoch, the business and commerce secretary, has changed her mind about steel. The UK, she said, must find a way to support our industry, as it is vital to the long-term strength of the economy.
“The reality is that steel is very, very difficult, but we need steel, certainly from an economic resilience perspective,” she says. “We can’t just decide that we’re going to rely on China. But how to ensure that this is profitable, not only for businesses and communities, but for taxpayers is a very complex question.
Her latest remarks are quite a reversal from her blunt comment last month that landed her in hot water after just one day in her new job at the Business Department.
Labor reacted with predictable outrage to his statement that ‘nothing is ever taken for granted’ when asked if we really needed to make steel in the UK.
Although she is now taking a more supportive line, her initial response exposed the harsh reality in a sector believed to be on the verge of receiving £600million in government aid. This rescue package will be just the latest subsidy to keep it alive in the face of mounting pressure from cheap international imports.
Steel is just one of the new headaches facing Badenoch, one of the unsuccessful Tory leadership candidates who lost to Liz Truss and is the third person to take on the business record of the Office since September. She added the business portfolio to the business role she already held, which last week took her to Israel where she was interviewed by The Mail on Sunday. Another tricky task will be to tell Chancellor Jeremy Hunt what business thinks of his plans to raise corporation tax – and explain to them why the government seems determined to go ahead.
Companies, which are already squeezed by soaring costs and rising interest rates, are clamoring for the planned 19% to 25% increase in April to be scrapped.
“I would be lying if I said they didn’t tell me they wanted a corporate tax cut,” Badenoch says. “But we also saw what happened when we tried to cut taxes in a way that the markets didn’t find acceptable last September. What this government wants is sound money and we need to make sure we balance the books.
The government also appears to have made progress with the Windsor framework, resolving thorny issues over Northern Ireland. Some hoped it would help the UK strike a trade deal with America.
That’s not the case, according to Badenoch, who says the momentum for a deal under Donald Trump has faded under the Biden administration.
“The truth is, the United States doesn’t do trade deals with anyone. They have close relationships with trade unions who believe that FTAs [free-trade agreements] take away their jobs.
“Obviously I would love to have an FTA between the US and UK, but what I’m not doing is just chasing after the US if there are multiple opportunities.”
Among those opportunities is a trade deal with Israel, hence his trip last week. Negotiators are seeking to replace a three-decade-old deal inherited from the EU that Badenoch said “treats Israel like an agrarian economy.”
Today, Israel’s glut of tech start-ups and its multibillion-pound infrastructure plans make it an attractive market for the UK to pursue a services-focused deal.
And Badenoch, 43, knows what she’s talking about. After studying engineering at university, she began her career in the computer industry, where she was a software engineer; she then moved into finance and served as digital director at The Spectator before entering parliament in 2017.
This FTA with Israel could see Britain upstage other major economies whose trade deals with the country currently focus on goods. Elsewhere, however, there is some catching up to do. The US Inflation Reduction Act (IRA) pumps hundreds of billions of dollars in subsidies into renewable energy and other green industries.
Europe has responded with plans for its own massive state aid programme. But Britain seems caught in the middle. Badenoch has already expressed his frustration when he wrote to his American counterpart last December to claim that the IRA would hit global supply chains for batteries, electric vehicles and renewable energy. She maintains her skepticism today, but says her answer would be ‘under the radar’ and ‘you will soon see the fruits of it’.
“We may have to re-examine exactly how we maneuver policy options to respond to what other countries are doing.”
But she played down the idea of heavy subsidies for any particular industry. This, she says, “means someone else is not getting anything.”
In addition to her other roles, Badenoch serves as Minister for Women and Equalities. She helped lead a recent government-backed study of women leaders, which tracks the progress of female directors on corporate boards.
More than 40% of seats on the FTSE 350 board are now held by women. But when asked how she felt about the slow progress at the top of blue chip companies, where there are just nine female FTSE 100 CEOs, she quickly turned the question around.
Hot topic: Britain’s steel industry depends on subsidies
Her constituents, she says, ask her why she cares “to take care of wealthy women rather than us on the ground.” We’ve had a lot of good work on women on boards,” she adds, citing a series of reviews by high-profile people in the city to break the glass ceiling. But, she says, ordinary women are less concerned with scaling corporate heights than with finding decent child care.
She studies “what we can do to make life easier for parents and help employers support their workers”. Badenoch, mother of three young children, talks about her personal experience.
Her work takes her all over the world and her husband Hamish, who has a senior position at Deutsche Bank, is “very active”. He wrote entertainingly in The Spectator magazine about her life as a political wife, including emptying the dishwasher and giving advice on what to wear in leadership debates, remarking that she “always has looks amazing.”
Unlike one of her recent predecessors as business secretary, Jacob Rees-Mogg, she is not against working from home. Nor does she follow the Rees-Mogg practice of leaving notes on empty desks of officials. “But we have to make sure people are actually doing the work and there are other ways to do that,” she says.
“There are loads of people who come into the office and don’t do anything either,” she jokes.
Surely she’s not talking about the people in her office? Badenoch lets out a hearty laugh.
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