The Coalition’s growth gap
News is usually made by things that happen, not by things that don’t happen. So don’t expect blanket coverage of today’s FT story that the Coalition’s proposed Growth White Paper, the positive balance to the pain and possible destruction of the government’s spending cuts, will not now appear is expected.
Yet this news is as important as it is damaging. The FT reports that a discussion paper will be published, hopefully in the next two weeks, but the detailed blueprint to entrench economic growth that business and unions have long awaited is not to happen. And if the news is bad, the reason for it almost beggars belief: there will not be a Growth White Paper because “the government [does] not have enough serious content” to warrant one.
Let us recap a little.
The Coalition took office and immediate set out plans to slash public spending. The TUC and many noted economists warned that this threatened the economic recovery. Some predicted a double-dip recession. Others warned of years of sluggish growth. Putting aside the crystal ball economics, we can say at the very least that the economy has taken a pounding in the last few years, the deficit reduction plan poses great risks and that action needs to be taken to entrench growth as much as possible.
David Cameron gets it. He wanted to launch a White Paper to coincide with his speech to the CBI conference last month. But BIS and now, according to the FT, George Osborne say they need more time. Waiting for this White Paper is becoming like Waiting for Godot. Cameron must be fuming.
The White Paper was supposed to be the forerunner to other important initiatives. Without it, what can we expect from the new Manufacturing Framework? What will happen to the Green Investment Bank? More generally, how can we hope to compete with Germany, already growing strongly again, or the US, investing heavily in science and education, let alone China, India or Brazil? Can anyone imagine Ministers in Berlin, Washington, Beijing or Delhi sitting around and scratching their heads but not having ideas to promote growth?
Ironically, today’s FT story is placed alongside coverage of a report, published by the EEF manufacturers organisation and the Royal Bank of Scotland, calling for the creation of hundreds of large manufacturing companies during the coming decade, if the UK is to fulfil its growth potential and create a more balanced economy. I haven’t read the EEF/RBS report, but on the basis of the FT synopsis, I agree with it 100%. That simple aim could be the headline target for a Growth White Paper. The TUC published a paper seeking to learn lessons from French industrial policy last year, and we have one looking at initiatives in Germany on the way. The Work Foundation highlights the potential of knowledge driven industries.
Disagree with the EEF, the TUC or the Work Foundation. But the one thing we have in common is practical ideas for growth. The only body short of ideas is the one that matters most: the Coalition Government!