From the TUC

Industrial Policy: Unions Lead The Way

30 Sep 2011, by in Economics

I enjoyed Martin Kettle’s reflection on Ed Mililband’s Labour Conference speech in this morning’s Guardian. It covered lots of ground but, if you’ve followed my blogs before, you will guess that I want to pick up on Kettle’s comments about a role for industrial policy.

Martin Kettle puts the case for “well argued and flexible new models of workplace co-determination of the kind that have done so much for German companies”, rather than “an expanded role for unions”. Germany, of course, has both. Its workplace co-determination model has been hugely successful (more about this in the TUC’s forthcoming report on industrial policy in Germany and the UK, which will be published towards the end of this year) but, whilst officially German employee representatives could be anybody, in practice they tend to be union members.

I share Martin Kettle’s enthusiasm for a focus on new thinking about industrial policy from Andrew Adonis, and Kettle is right to describe this as “crucial to any long-term reimagining of the UK economy”, but he is a little ungenerous in describing industrial policy as “a subject riddled with old ideas, especially in the unions”. The TUC published its paper, ‘An Industrial Strategy for the United Kingdom’ back in 2005, but nobody, including Ministers and employers, would support us. If I had a pound for every time I heard the phrases “Tony Benn” and “British Leyland” in response, I could have afforded to retire. Since then, Peter Mandelson has given us ‘New Industry, New Jobs’ and many of the same people who used to howl in objection now think industrial policy is a thoroughly sensible idea. But Martin Kettle is right to suggest that we need to know what a modern industrial strategy might look like.

So here’s my starting point. The Government, the State, the Country, call it what you like, has an interest in steady growth, good jobs and high skills. It follows that it has an interest in the growth of those industries that can deliver that growth, those jobs and those skills. The Thatcherite consensus, which Ed Miliband has started to distance himself from this week, believed that the market would magically deliver exactly the kind of growth, jobs and skills that we need. Our competitors, in France, Germany, the Scandinavian countries and, yes, the United States as well, did not share this view. The UK’s approach, along with its excessive enthusiasm for financial markets, has left us with a deindustrialised economy that doesn’t know how it will pay its way in the coming years.

So the UK needs to build those industries of the future and government has a role in helping to make that happen. Government procurement can help to build the skills and the capacity that we need. Long term investment funding, via an investment bank akin to Germany’s KfW or France’s Fonds Strategique D’Investissiment, to support those industries that are not all safe bets but will often be world leaders, is essential. Developing apprenticeships that have genuine parity of esteem with academic qualifications is necessary. And on those rare occasions where the state has to step in, to protect jobs and skills, it must do so, as the KfW is likely to do to protect Germany’s investment in EADS. As well as supporting the jobs in question, such action sends a message that, when push comes to shove, Government’s will not stand idly by and watch important industrial projects die. That sends a powerful message to today’s and tomorrow’s investors.

I won’t pretend unions get it all right, and we certainly need to be challenged. But more than any other stakeholders, we have put industrial policy on the agenda. And we have kept it there.

One Response to Industrial Policy: Unions Lead The Way

  1. Geoff Hayward
    Oct 3rd 2011, 1:18 pm

    Germanys co-determination has already helped UK employees join Supervisory Boards. The UK has at least 4 employees on such bodies via the “European Companies” (SE) route, I am one of them and have been for about the last 5 years.
    Its a small start, but hopefully it will grow.