Small business minister Anna Soubry has come under fire from two influential think tanks after she suggested that the UK's steel sector should not be treated as a "totally" free market.
Writing in the Sunday Times Magazine, Soubry recalled her early discussions with Prime Minister David Cameron: “Like him I believe the blast furnaces at Port Talbot and Scunthorpe should stay open. The days or nationalising industries are over, but we don't have a totally free market either.
“We just need to bring the right people together to take it forward. I'm a social liberal conservative and, to me, capitalism must be compassionate too.”
However, the Institute for Economic Affairs has hit back at Soubry's claims.
An IEA spokeswoman told City A.M.: “The days of nationalising state industries are over precisely because of the strength of free market economics, which has led to globalisation and lifted countless numbers of people out of poverty across the world.
“It is our globalised steel market which means UK output is no longer competitive; whilst this is of course distressing for workers, lower prices globally are to the benefit of consumers. We simply should not substitute jobs that are not sufficiently productive to allow any industry to survive.”
Adam Smith Institute executive director Sam Bowman added: “If the private sector does not see a future for the steelworks there is no justification for the state using taxpayers' money to prop it up.”
“The best way to help Port Talbot's workers is to help them to get into new industries that will be economic in the long-term – something the government has heretofore done very little to help with.”
A spokeswoman for the department of Business, Innovation and Skills told City A.M. that Soubry's position on government interventions more broadly remains unchanged.
She added that the government would be prepared to take a 25 per cent equity stake in the UK operations of Tata Steel, which it first announced in late April.
“We have always said that the private sector should remain in the private sector.
“And we have previously said we don't think that nationalisation is not going to be the solution, but we are not ruling anything out either. The world's best steel companies all operate in the private sector.”