Our panellists respond to Cable’s plans for a government-backed ‘business bank’ and refocus on industrial policy
Frances O’Grady: ‘The worry is we’ve heard this before’
Brendan Barber’s keynote speech to the TUC said that policymakers should learn the economic lessons of the Olympics: government can pick winners, invest and plan for growth. So today’s speech from the business secretary, Vince Cable, is certainly welcome. Unlike some members of the coalition he understands that, to generate growth and drive up living standards, there is a lot more that government can do than simply getting out of the way.
Cable is right that Britain needs a modern industrial policy, something neglected by governments in Britain for much of the last 30 years. His comments on supporting key sectors and reforming procurement rules are steps in the right direction. By setting a strategic direction and using its power as the biggest actor in the economy to support British business, the state can help to shape the direction of the economy.
But the worry is that we’ve heard this before. The business secretary is right to be looking at the case for a British business bank, but his proposals lack detail and may just amount to a rebranding of some existing programmes. The government has been talking about a growth plan for two years; it’s time they got on with it. We need to build a new economy, one that is balanced, sustainable and works for ordinary people. Achieving that will mean an active role for government.
And while Vince Cable may be moving in the right direction, business does not simply face credit problems. It needs confident public and private customers, and that’s up to the chancellor.
• Frances O’Grady is the TUC’s general secretary elect
Aditya Chakrabortty: ‘Today’s speech is full of holes’
For most of the past three decades, the merest suggestion of the need for a British industrial strategy would get you rubbished by politicians of all main parties. The result has been to leave Britain occupying a disastrous niche: we are the only major economy not to have an industrial strategy; the only G8 country not to have a national investment institution (yes, that includes the US) and now virtually the only advanced economy not to have a serious regional development policy.It’s against that background that we should read today’s speech by Vince Cable. As I’ve been asked to keep it brief, I’ll make three brief points.
1. It’s big. Here you have a cabinet minister who just a few years ago wanted to scrap the DTI, now in charge of its successor department – and taking his first steps towards establishing an industrial strategy. This is a major advance – especially in the context of a Conservative-led coalition that has spent most of the past couple of years thinking that the way to encourage businesses was to blah on about “attitude” and the need to cut red tape.
2. It’s not big enough. Today’s speech is full of holes; the government admits as much. How much money might any of this cost — and where will it come from? Which sectors do the coalition think are worth developing and why? Cable is very weak here, using catch-alls like “advanced manufacturing and “knowledge-intensive services”. And, the biggest question of all, what is an industrial policy for? I would say that one of the highest priorities of any such strategy ought to be creating good new jobs, but Cable’s speech made scant reference to employment.
3. Other nations are thinking bigger. Spain has picked out key sectors to develop to rebuild itself after the housing crash. Japan has done that — and been thinking about how to direct monetary policy to these new industries. One of the things that helped the SNP take Holyrood at the last elections was its rhetoric about how to reorient the North Sea oil industry towards developing green energy. But from Westminster, we have an interesting speech delivered over lunch that highlights some intriguing new policy directions – and possible lines of conflict within the coalition. It’s nowhere near enough.
Look, I don’t know want to knock today’s announcement: it’s sunny out, and I respect Vince Cable and his team. Besides, a serious consideration of the need for an industrial strategy is to be encouraged. But all this timid step shows is the vastness of the ground Britain has to make up.
• Aditya Chakrabortty is the Guardian’s economics leader writer
John Cridland: ‘We need a renewed emphasis on specific sectors’
Vince Cable says he’s planning a government-backed bank to increase lending to businesses. When it comes to business lending at affordable rates, the Government has already launched myriad financial initiatives, including Funding for Lending. For smaller firms, these have been hard to penetrate, which is why the Confederation of British Industry (CBI) recommends a “one-stop shop” to make the whole process easier.
I’m not convinced we need a state business bank on the high street, but the Government can add to what banks do. There is a critical need for an aggregation platform which bundles loans and allows medium-sized firms to raise money in the bond market.
A successful industrial strategy needs to build on what the UK is good at, with a renewed emphasis on specific sectors like automotive, aerospace and creative industries.
Despite our size, the UK is a world leader in many sectors and if we are to secure significant growth in the decades to come, the government must give them the science, the skills and the infrastructure to stay ahead of international rivals.
Politicians of all persuasions need a laser-like focus on the importance of a stable and nurturing policy environment. A coalition of the willing around new world-beating technologies could achieve a step change in our industrial future.
• John Cridland is the director general of the CBI
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