Suppose George Osborne were to champion industry tomorrow…
Sir Howard Davies, formerly of CBI and FSA fame, has an interesting comment piece in today’s FT. As is always the case with Davies, there are bits I like and bits I don’t, but I was struck by the following passage:
“The chancellor is lucky, too, in that the industrial policy ideas emerging from the camp of Vince Cable, the Lib Dem Business Secretary, have so little substance. The leaked letter in which he complained of the lack of a growth strategy did not propose one, or present any substantial policy challenge to the Treasury. Previous business secretaries have been far more ingenious and troublesome. So the backdrop against which Mr Osborne will open his red box could be a lot worse.”
If I were surveying the UK political scene having just landed from Mars, I’d be puzzled as to how the lack of industrial policy ideas could be described as “lucky” for the man in charge of the nation’s coffers, or a Minister seeking to boost industry (which is sometimes described as the ‘real economy’) is somehow “troublesome”. But those of us well versed in the silo culture of government are past any such surprises. However, I’m not quite sure this comment is fair. Sometimes the direction of travel is just as important as the destination and even six months ago, industrial policy was the idea that dare not speak its name. So at least the concept is on the table, which I think amounts to progress. Howard Davies would have been on safer ground to have argued that whilst we have seen some movement on the principle, in the next year we need to see some policy ideas to bring it to life.
The TUC has put foward its own thoughts on industrial policy in recent weeks. Our Budget Submission, which we launched last week, called for a strategic investment bank for the UK, for the Green Investment Bank to be given immediate borrowing powers, for action to enable procurement policy to support British industry, as happens in France and Germany, and for fiscal action to boost corporate investment. In the longer term, our policy paper, ‘German Lessons’, has sought inspiration from Rhineland Capitalism where, among other things, the Social Market Economy brings together government, industry and unions in common support for German industry – with impressive results.
We debated ‘German Lessons’ at a meeting in the House of Commons last week. Paul Everitt, Chief Executive of the Society of Motor Manufacturers and Traders, made the point I’m trying to emphasise here, that industrial policy can only really work if the Treasury, as well as the Department for Business, is behind it. This is surely correct. Is it beyond us that the department responsible for economic growth and the one in charge of the wider economy could sing from the same hymnsheet? I can’t believe that’s true. 23 years after the late Industry Secretary, Nicholas Ridley, famously said, “What is the DTI for? I’ve got bugger all to do and thousands of staff to help me do it”, there is emerging agreement that the (sadly renamed) Department for Business has plenty to do, even if civil service cuts mean its staffing levels are dangerously low. But it cannot seriously move if the Treasury doesn’t move with it.
Chuka Umunna, the Shadow Business Secretary, also spoke at our Parliamentary event last week. He is thinking increasingly interesting thoughts about industrial policy, as can be evidenced from his recent speeches, but he too will need to get Ed Balls on side if a future Labour Government is to make progress. A Budget – and a Chancellor – for industry. That really would be music to my ears!