Government economic policy: another step away from neo-liberalism
Kenneth Clarke and Vince Cable have both attacked the Government’s paper yesterday outlining a new industrial strategy. Cable called it “old labour corporatism” while Clarke went for the thoughtful “platitudinous waffle”. They are both wrong.
Peter Mandelson, the driving force behind the paper, is genuinely rethinking Labour economic policy for a very different era when the UK can no longer rely on financial services and construction to drive growth and will have to compete in areas that have been neglected for years such as engineering innovation and high value manufacturing. A shift like that cannot be delivered by the market alone especially when other governments are much less shy of giving their leading industries the odd helping hand. My guess is that even the Tories would end up pursuing a pretty similar approach were they in power. The TUC has, of course, argued for this approach for years.
It is, however, still amazing to me to read passages like the following in a paper produced by this Government and from BERR no less:
(T)he credit crisis has vividly brought home the crucial importance
of strong regulatory frameworks. Markets are extremely powerful tools but
they cannot always be relied upon automatically to serve the long-term public
interest … Government has a fundamental role in setting the regulatory
and legal frameworks in which markets can operate fairly and effectively.
This means a readiness to address market failures – or the failures caused by
uncoordinated Government action – where these may significantly constrain the
economic performance of our businesses … (I)n future
there should be no barriers of mindset that hold back sensible and prudent
There is still a great deal to be done on this agenda – not least secure serious resources for it (something the paper is rather light on to say the least) but another break with the New Labour past has been set in black and white.