From the TUC

Growth Review: a TUC Response

29 Nov 2010, by in Economics, Pensions & Investment

HM Treasury and BIS have published their “growth review” this afternoon. As mentioned in my post earlier today, we had been expecting a Growth White Paper until as recently as last week, when the Financial Times reported that civil servants did not think they had enough substance on economic growth for a White Paper. That is a serious charge: we have a government that has pursued deficit reduction with such vigour, but does not have a substantive narrative on economic growth. Simply assuming economic growth will happen without government support in these most difficult of economic times would be a major risk. Furthermore, the first 20 pages of today’s review describes actions already taken by the government, in areas such as stability, dynamism in markets, access to finance, planning, better regulation, innovation, competition, infrastructure, procurement, tax and skills.

This leaves only two pages, literally, to discuss the growth review. To go from an expectation of a full-blown White Paper to a two page discussion is underwhelming in anybody’s language.

But those two pages have important implications.

One major announcement is that from now on, the Chancellor and the Business Secretary will require every Government Department to present Action Plans for sustainable growth across sectors of the economy and for all sizes of business, focusing on areas where there are clear opportunities to improve the UK’s performance , and where the Government can make a difference. This is an important development. The TUC has called for such an approach in its discussions with BIS and we welcome it now. It has never made sense to us that, for example, the Department of Transport can procure trains to carry us around the country, but it has no particular interest in how the way it procures those trains could support British industry. Does anybody seriously believe that that happens in Germany or France? EU law would prevent the Government from crudely buying British, but there is much more that can be done through procurement and other policy areas that would allow the totality of government to support British industry. Of course, the language of today’s growth review is passive: it speaks of Government Departments supporting “efficient and dynamic markets”, showing that their approach “values stability, certainty and simplicity” and that new policies “remove distortions rather than create new ones”. In our campaigning over the coming months, the TUC will seek to make our industrial policy more active. Nevertheless, today’s recognition that not only BIS, but all Government Departments, have an interest in economic growth is an important breakthrough.

The review then says that the Government will focus on priorities for action in the following issues in the run-up to Budget 2011: planning; trade and investment; competition; regulation; access to finance; and corporate governance. Those are important issues, but we also need government action on investment, skills, innovation and on building the industries of the future. If we are serious about growth in the age of globalisation, we cannot duck those issues. Indeed, we need to meet them head-on, again as our European counterparts do.

The Government will also review the potential for action in six industrial sectors: advanced manufacturing; digital and creative industries; business and professional services; retail; construction; and healthcare and life sciences. These are vital sectors and the TUC stands ready to take part in these reviews. Questions we want to raise, in relation to advanced manufacturing, for example, will include: What is the current health of advanced manufacturing in the UK? How much does it contribute to GDP? How many jobs does it produce? How can we make it bigger and more successful? What are the UK’s particular strengths (we are geographically well-placed for green economic growth built around wave and wind power, for example, while we have an excellent heritage in automotive and aerospace sectors)? What do other governments do to boost their advanced manufacturing sectors and what lessons can we learn?

And where this requires government investment, in the way that other major manufacturing nations invest in strategic sectors, we will call for that investment. A half-hearted approach to growth will be a failed approach to growth and the TUC will remind the Government of that in the weeks and months to come.

2 Responses to Growth Review: a TUC Response

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    Nov 29th 2010, 6:32 pm

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  2. Creative destruction – a 21st century progressive growth story | Left Foot Forward
    Dec 1st 2010, 5:52 pm

    […] will drive long-term growth in the UK economy? With the growth white paper now kicked into the long grass, it looks as if the government doesn’t have an answer to this […]