* 'Left behind' towns promised investment boost in March 11
budget
* Support from former Labour-voting areas key for PM Johnson
* Regeneration of shuttered Teesside steel works shows
challenges
By David Milliken
MIDDLESBROUGH, England, March 2 (Reuters) - Looming over the
skyline of Teesside in northeast England stands the rusting hulk
of what used to be Europe's largest blast furnace, which shut in
2015 with the loss of more than 2,200 jobs.
Attempts to bring investment and employment back to what was
once one of England's industrial heartlands will be a test for
Prime Minister Boris Johnson's plan to help 'left-behind' areas.
His government's first budget on March 11 will make
increased infrastructure spending in the north of England, and
other underperforming regions, a focal point of Britain's
post-Brexit economic strategy.
While most workers from the SSI blast furnace have found new
jobs, they had to accept big cuts in pay or move away, said Paul
Warren, a former steelworker and national organiser for the
trade union Community.
"Some people haven't recovered still. It has torn families
apart," he said. "You had a job for life, a good pension. Then,
that's it, gone."
Johnson swept to victory in December's election with votes
in areas such as the Tees Valley that historically backed the
Labour Party, but switched to the Conservatives because of his
pro-Brexit policy.
The area's mayor, Conservative Ben Houchen, said the party
will not hold on to the region unless it improves living
standards.
"The Conservatives have been lent the votes of local people,
and if we don't get it right - and if Boris Johnson doesn't get
it right - I absolutely believe that they'll all go Labour again
in five years' time," he said.
The Tees Valley has received 360 million pounds ($470
million) in extra public funds since Houchen became mayor in
2017, mostly to help buy and clean up land around the old
steelworks and attract new businesses.
Houchen is asking for another 80 million pounds from
Johnson's first budget to revamp nearby Darlington train
station. It has a direct high-speed link to London, but can only
handle two trains an hour to the rest of the Tees Valley, partly
following the route of the world's first steam railway.
After years of austerity, Johnson has already given the
green light to a high-speed rail project between London,
Birmingham and further north – at more than 100 billion pounds.
There is speculation that in his budget next week Chancellor
Rishi Sunak will relax fiscal rules to fund the spending Johnson
has promised.
But reducing inequalities between Britain's regions – by
some measures the worst in western Europe - is likely to require
more than new railways, roads, bus services and broadband as
pledged by Johnson.
Bank of England Chief Economist Andy Haldane says regional
differences in wages are as wide as they were a century ago, and
a major academic report on Thursday said an extra 200 billion
pounds in spending over the next 20 years was needed.
REDEVELOPMENT
Middlesbrough's median full-time wage of 26,200 pounds a
year is 14% below the national average and in the Tees Valley
economic output per person is 25% below the national level.
Unemployment at 6.8% is much higher than the national rate
of 3.9%, while Middlesbrough's male life expectancy at 75 years
is below the national average of 79.
For an area already in decline, the closure of the SSI
steelworks in 2015 was a blow to its core.
Former Conservative prime minister David Cameron refused to
save the plant after its Thai owners went bankrupt. It shut so
fast that molten steel solidified in the blast furnace instead
of being drained out, making the cost of a restart prohibitive.
"It was industrial vandalism," says Community's Warren, who
had worked in the industry since he was a 16-year-old trainee
in 1987.
Steelworkers, who earned around 35,000 pounds a year plus
overtime, were lucky to find new work locally that paid 24,000
pounds as employers slashed salaries, he said.
Almost five years on, there are no new jobs on the SSI site,
bar a few security guards and safety workers.
Local mayor Houchen hopes this will change soon. Two weeks
ago, the South Tees Development Corporation, a public body he
chairs, acquired the SSI site from the firm's creditors.
The development corporation now has control of 7 square
miles of mostly former industrial land on the south bank of the
River Tees, the largest such site in Britain, and it is moving
ahead with possible new investments and job creation.
On Friday a group of European oil companies led by BP
said they would evaluate the technical and commercial case for a
plant on the site to capture and store carbon dioxide emissions
from the region's chemical industry and a new gas power station.
This could create or safeguard 5,500 local jobs, and add 450
million pounds a year to the area's economy, by the middle of
the decade, subject to government support.
Houchen also wants to bring back steelmaking jobs as part of
Teesside's rejuvenation, and is planning to attract a new
electric arc furnace, which melts scrap metal.
RISKS
But some fear the days are already numbered for Teesside's
steel industry.
British Steel, which has had multiple owners since its
heyday as a state firm that made 90% of the country's steel,
runs a mill near Middlesbrough that made beams used in London's
Shard skyscraper and the new World Trade Center in New York.
Now the company is in liquidation, with its wage bill funded
by the government while it tries to secure a buyout from China's
Jingye Group.
Like SSI, its collapse would have a major impact on local
businesses such as AV Dawson, which operates a port, rail yard,
warehouses and a haulage business in Middlesbrough.
"That is a massive concern for us," says Charlie Nettle,
commercial director of AV Dawson.
Broadly, Nettle supports Houchen's efforts to boost the
profile of the Tees Valley area and strengthen transport links,
including by taking the loss-making local airport into public
ownership.
"He's got a lot to live up to, to make sure he delivers,"
says Nettle.
For others, including Middlesbrough's Labour member of
parliament, Andy McDonald, progress has been too slow.
"We've been promised lots of shiny things and massive
investment in infrastructure.... But the substance is where are
the jobs? Somewhere over the hill."
(Reporting by David Milliken; Editing by Giles Elgood)
BP (BP.)
