From the TUC

TICs: one piece of the industrial policy jigsaw

17 Mar 2011, by in Economics

Vince Cable launches the Government’s Technology and Innovation Centres (TICs) today. These centres, based loosely on the German Fraunhofer model, help companies access the best research from leading universities, thereby improving their productivity and, ultimately, making them more successful. Fraunhofer Institutes are part of Germany’s well-established support system for industry. TICs are a good idea. The TUC has consistenly supported their introduction and we welcome them again today. The first TIC will focus on advanced manufacturing, a crucial sector for any rebalanced UK economy. What is more, we welcome the comment from Vince Cable, a man who chooses his words carefully, that UK manufacturing “has considerably greater potential”.

TICs have enough money – to start with. Their budget is a long way below their equivalent in Germany – TICs have £200m over four years, compared to the £379m (433m euros) each year that Fraunhofer Institutes receive from the German federal and Lander (regional) governments. There are, of course, many more Fraunhofer Institutes than there will be TICs, at least to start with. But TICs will need to raise more money and quickly. That money will come from the private sector and if companies are going to stump up the cash, they will have to be convinced that the results will be worth it. In short, TICs need to hit the ground running.

Fraunhofer Institutes are one piece of the industrial policy jigsaw in Germany. German manufacturers also enjoy longer term relationships between banks and industry, the KfW investment bank and, let’s be frank, active government support. I’ve blogged before about the way the German Government helped to develop Germany’s growing green industrial sectors, putting them in prime position to lead the world in this crucial area the future. What do we have? So far, a promise to clamp down on employment rights, as if that adds up to a growth strategy. I realise that the more zealous Thatcherites will believe that will work, but it’s hard to think that the sensible politicians in the Government, be they Conservative or Lib Dem, will have any faith in this approach.

We are expecting the results of the Government’s growth review to be published alongside the Budget next week, so I will obviously return to this theme then. In the meantime, today’s announcement on TICs is to be welcomed. It is an important piece of the industrial jigsaw, but it is only one piece. We need the whole picture if we are to rebalance the economy and compete in the age of globalisation.