Across the Midlands and north of England – and in pockets of the south – there are once proud single-industry towns laid low, with no determined effort to make good what once was. It could be Chatham and Rochester in Kent – or Birkenhead, Wigan or Mansfield further north.

They survive as economies in which the main business is providing the foundational goods and services necessary to get by – supermarkets, petrol stations, hospitals, care homes. But there are few thriving private sector companies in 21st-century industries, a paucity of opportunity, and wages are below the national average.

Last week, as British Steel went into receivership, Scunthorpe was set to join them. Two thirds of its citizens voted for Brexit three years ago, and so unintentionally helped accelerate the insolvency and potential closure that duplicitous Leave politicians – including our expected next prime minister, Boris “fuck business” Johnson – said that Brexit would avert. Or it would, they argued, be only transitional pain before the sunlit uplands of immigrant-free, global free trade brought riches back to these threatened communities.

It was and is nonsense. Some in Scunthorpe, especially those retired or near retirement, can still be found parroting the Brexiter trope that if only Brexit had happened sooner, unlocking the El Dorado of global markets, British Steel would have been saved. The truth is that EU buyers have fallen away, knowing that after a no-deal Brexit steel exports from Britain into the EU will necessarily pay the EU’s common external tariff. Nor are there compensating markets in the protectionist US, China and India with whom Brexiters tout imagined, golden, free trade deals.

In particular, what broke British Steel was £2.6bn of revenue it expected to receive under the EU’s carbon trading scheme, now frozen because of a threatened Brexit.

The business secretary Greg Clark. Photograph: Mark Thomas/Rex/Shutterstock

The business secretary, Greg Clark, a thoughtful politician doubtless to be replaced in a Johnson cabinet by some Thatcherite throwback babbling about deregulation and the magic of markets (Jacob Rees-Mogg? Dominic Raab? Steve Baker?) is honourably trying to salvage something from the wreckage. But the public loans and public special purpose vehicles he proposes are after-the-event initiatives cramped by the reality that a no-deal Brexit will eviscerate British Steel’s trading prospects. What’s more, the company’s vital reinvention – around making decarbonised steel, say – and a general revived manufacturing industry requires a purposed industrial strategy on a much larger scale than what we have.

In any case, British Steel has been battered enough by the private sector so uncritically beloved by rightwing Brexiters. Clark has to deal with its owner, the private equity firm Greybull Capital, which bought British Steel for £1 in 2016 and runs it from a Knightsbridge office via a holding company based in Jersey.

Private equity or, as the US investor Warren Buffet calls it, “private debt”, is a $5tn worldwide industry that owns ever more of western business, especially in the US and UK – bought by huge loans (serviced by the taken-over companies) run for no nobler purpose than vast personal self-enrichment. The recipe is well-known: aggressive lay-offs and wage freezes, targeted cost reduction, balance sheet and cash-flow manipulation to maximise tax breaks – and then selling off or breaking up what is left. Or walking away largely scot-free if it fails. It could be Debenhams or Toys R Us that were laid waste by private equity – now it is British Steel. Scunthorpe’s chances were always slim.

Greybull will say in its defence that at least it stepped up to the plate in 2016 when Tata, British Steel’s former owner, was prepared to close the plant completely. There are too few British firms prepared to try to turn round companies in trouble, Greybull’s defenders say; and its fees and charges are lower than the extortionate private equity average. It was making progress, but what transfixed it were the uncertainties of Brexit and a world steel glut.

Within its terms Greybull has a point. Private equity may be brutally hardnosed, but Britain’s public financial markets are no less brutal – and even more short term. The UK has constructed a financial and ownership system in which it is ever harder for businesses that try to create long-term value to act responsibly to the communities in which they are located. Besides this, private equity can offer temporary if callous stability – an extraordinary condemnation of the wider system.

The high-speed rail network HS2 is set to be put on 'pause' by a scorched-earth Tory government

British capitalism needs a wholesale makeover and, on top, a proactive government taking its responsibility for creating societal missions in which it will invest on a huge scale. Business feeds off such mission-driven investment; it can’t act on its own.

One such “mission” is the high-speed rail network HS2, set to be put on “pause” by a Johnson-led Tory government, despite the appeal last week by leaders across the north for its urgent implementation. The cost is said to be prohibitive. But add up the costs of not doing it, an essential precondition for any industrial strategy. Then there are the other costs: bailouts to failed companies, handouts to stricken communities, the loss of a potential domestic market for steel, income support to millions unable to find decently paid jobs and, above all, the sense that to be born in large parts of the north is to be patronised and neglected by the Tory south. Instead of reactively picking up the pieces after another insolvency, Britain needs to be proactively creating conditions in which there are fewer of them.

It is a mindset change that’s required, a new era of driven public investment working alongside a capitalism conscious of its societal purpose. Until that happens, communities like Scunthorpe face dismal futures. Do any of the Tories pitching for the prime ministership think along these lines? It would be great if they were even asked – but don’t hold your breath.

• Will Hutton is an Observer columnist