It may not be immediately clear what Michael Heseltine, Andrew Adonis, corporate director Andrew Churchill and the TUC’s Frances O’Grady have in common, but last week’s TUC After Austerity debate showed they all believe active government has an important role to play in securing future growth, and that national consensus (around this issue at least) is possible.
Frances opened the debate by setting out the TUC’s support for smart, active industrial policy where government is brave enough to identify key strategic sectors and use its skills, procurement and regional policies – as well as its capital – to deliver it. She also discussed the importance of securing new means to include worker voice in national and local policy debate, and of addressing the chronic lack of investment finance available to many of Britain’s growing businesses.
Heseltine provided a welcome reminder of the importance of focusing on how government can help the entire UK economy, and of not simply equating industrial policies with manufacturing. He also discussed local economic development, and the need for national government to provide clear strategic direction. Considering the importance of our relationship with Europe, he chose to attack the ‘delusion’ that EU membership is somehow preventing us from accessing other huge global markets.
Adonis drew attention to the links between Heseltine’s recent work, and Peter Mandelson’s reign at BIS, when New Industries, New Jobs first set out a welcome change in the direction of more active government. He also discussed the vital importance of apprenticeships, and increasing their numbers across the economy (including in the public sector). Infrastructure investment, local democracy as a means to enable and support it, and the use of public procurement to secure economic benefit, were also key themes.
Finally, Churchill, managing director of engineering firm JJ Churchill, provided an important employer view – for him low tax mattered, but good skills policies were more important, and government leadership on industrial policy work is lacking. He called for a proper department for the economy – and drew parallels between business and government. The implication was that if companies were run in the same way as the government’s industrial policies, then businesses would go bust.
So everyone agrees we need an industrial policy. But is there also a shared diagnosis of exactly what it should include? Of course not.
There are some shared priorities. Jobs and quality apprenticeships were a persistent theme – everyone felt we could and should do far more. But even here there is healthy debate as to where the role of ‘active’ government stops – a key reason Germany has so many more apprentices than the UK is that German employers are mandated to provide places, a policy solution which seems unlikely to engender broad agreement in the UK. Procurement is also an area where everyone felt government should be smarter – but, again, the TUC’s calls for living wage clauses to help drive up the incomes of lower-paid workers are unlikely to be the priorities of those further to the right.
On regulation and tax there was – unsurprisingly – disagreement. Heseltine’s belief that there is an automatic relationship between deregulatory measures and growth is certainly not shared by unions. This is not to say that better and simpler regulation is not important, but given our jobs market is one of the most flexible in the OECD, it’s hard to see how further reductions in employment rights could provide the solution to our ongoing problems.
But on the need for government to recognise it has a key role in enabling growth, provide cross-departmental leadership and work actively with industry to tackle shared problems, there was consensus. Within this framework debate will go on – but a shared commitment to active government is welcome.
The big worry is that, despite this increasing agreement, the coalition’s response (or at least the Conservative section of it) remains half-hearted. Even without a global recession we would have faced huge challenges and competition in the years ahead – five years of stagnation have put us even further behind, but the sorts of significant change we need aren’t happening.
We are to have a state investment bank, but with its funding curtailed for years into the future. Our green investment bank remains a limited fund, with borrowing powers limited by the shifting sands of the chancellor’s debt target. New procurement policies are welcome, but we remain locked in conflict with the race to the bottom on cost. And the government distracts itself with ‘shares for employment rights’ schemes rather than looking seriously at the social and economic policies that could really work to boost employment participation in the years ahead. A new consensus on industrial policy may be emerging – it’s a shame that much of the government remains outside of it.
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Nicola Smith is head of economic and social affairs at the TUC. She tweets @NicolaTUC
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