Labour’s approach to business has a powerful social democratic message of growth. It deserves a broad welcome.

Last night Chuka Umunna spoke to the Engineering Employers’ Federation. At the heart of his speech lay a vital question: What should Britain’s economy look like 15 or 20 years from now?

There is cross-party agreement on the nature of the challenges we face – stronger competition from developing markets, securing investment in our people and innovative products while reducing the national debt, and while creating growth in cities and regions too often been left behind, but the policy agenda that will rise to the challenge is heavily disputed.

For the Conservatives the answer lies in an enfeebled, enervated state, a government sharply pruned to give business the space to grow, to flourish. This is the logic that lies behind George Osborne’s recent speeches on austerity, seeing fiscal consolidation not as post-crash prudence, but rather as unique opportunity to remove from business the burden of social support.

For the right, this is a crisis too good to waste.

This argument must be opposed by the left. I am a fiscal conservative, but I am a fiscal conservative because I believe in a state confident in its ability to fund its commitments to social solidarity over the long term, not because I believe a weak state creates prosperity.

The core social democratic insight on the modern economy is that, just as many of our individual, human risks are best dealt with together as a society, the same is true of our economic performance. The social support the Conservatives regard as a burden to business, we recognise as essential to liberating human and economic success. This insight underpins Umunna’s speech, and provides the platform for the active, growth-supporting state he outlines.

Naturally, we need a fiscally sustainable state, and Labour’s fiscal stance must be careful. But for a social democrat that cannot be sufficient.

Can we imagine a successful Britain without strong schools, without support for entrepreneurs in inner cities, without aid for apprenticeships, without, fundamentally, a socialisation of the barriers that prevent broad growth, from innovative science to investment in people?

Surely, without such a state we will fail to meet the economic challenges of the next 20 years .

Speaking to the Engineering Employers’ Federation, Ummuna gave a clear answer to that question. We will not succeed as well as we could without an active state.

Umunna set out four pillars for such a strategy under Labour.

First, a emphasis on transforming skills provision, giving businesses a greater say in the provision for training in return for genuine commitment to supporting skills and apprenticeships themselves, while also helping smaller businesses with what you might call the ‘cost of trading’ crisis – whether soaring business rates or late payment by big business customers.

Next, there is an consistent emphasis on innovation – from the catapult centres to the technology strategy board, so that government is supporting and encouraging business to invest in developing the innovation breakthroughs that will create competitive products for the next generation.

An emphasis on innovation requires support for investment in the long term, so the third pillar is encouraging a longer-term outlook by both business and government. Here, initiatives like a British business bank, support for the UK supply chain and a regional industrial strategy can make a big difference, as can the use of government procurement to drive innovation by smaller businesses.

Finally, there is the need to look outward, and build partnerships with growing economies and businesses, encouraging them to invest in the UK rather than setting up barriers like unworkable immigration policies, while recognising that countries like Brazil and India will not be willing to cede all innovative value-creation to the wealthy west. Creating academic, industrial and innovation partnerships will be essential, which is why Britain’s science base is so crucial to our future.

Umunna’s speech and the clear support this agenda receives from the Treasury and education teams represents an encouraging, important agenda for the long term.

One thought for the future, though. Our ideological opponents will paint this as simply another manifestation of Labour’s desire to spend. So it is crucial that we identify clearly how these interventions make an impact on the economy. If there is one final pillar we might add for the active state to help grow the economy, it is an emphasis on impact, audit and efficiency.

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Hopi Sen is a Labour blogger who writes here, is a contributing editor to Progress, and writes a fortnightly column for ProgressOnline here

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Photo: Jane Gray