Denham on growth
Like Will Straw (http://www.guardian.co.uk/commentisfree/2011/jan/18/labour-jobs-growth-john-denham) I was in the audience for John Denham's Smith Institute speech about business and growth - http://www.smith-institute.org.uk/growth.
Unlike Will I thought it was rather good.
The constraint of needing to bat away some questions on detail pending the Labour Policy Policy Review process that Liam Byrne is leading may be frustrating. But it would be more frustrating if Denham was giving us all the answers now without any opportunity for input from members, industry (he specifically asked business to contribute ideas) or trade unions. If he was preempting the Policy Review there would rightly be an outcry that the review was a farce. And I'd have my doubts about the quality of policy solutions being developed at such speed after an election defeat.
What Denham did do was to very effectively critique the government's failure to adequately support industry.
He set out Labour's ideological position on business: like the Tory-led Coalition we would have looked to the private sector to boost growth and balance our (far smaller) cuts to the public sector, but we would have in intervened to support that growth, and our calmer approach to deficit reduction would have provided a better environment for businesses to grow in. Because it is "the party of growth, Labour is today, as we sought to be in Government, the party of business and of private sector success."
And he gave us a direction of travel on policy which is consistent with Peter Mandelson's industrial activism, but builds on it. There was a clear restatement of Labour's regional policy, in contrast to government policies that will particularly harm the north, and a Regional Growth Fund that is absurdly small. Government grants and loans are important but "A coherent active industrial policy involves a great deal more than public finance. Without a coherent strategy for each key growth sector, public investment is unlikely to bring the fullest returns. But the case for additional strategic investment is and will remain powerful." He reiterated that Labour will be "investing £7.5bn by the end of the Parliament in supporting growth and jobs, funded by a fairer contribution from the banks." He particularly argued that Labour would have done more to support construction and universal broadband roll-out. He warned that the current manufacturing growth caused by the weak pound and focused in existing strong sectors is not enough and we need to develop new strengths in advanced manufacturing, low carbon industries, creative industries and other services, using instruments like "investment in fundamental and applied research, support for the translational of new technologies into marketable products, the right IP regime for innovation, ensuring the financing mechanism from bank lending, public support, government contracts, and venture capital are in place and appropriate, and addressing strategic skills." He showed quite a sophisticated understanding of the role of supply chain companies in automotive and aerospace.
It's one of the tragedies of the 13 years of Labour Government that for the first eleven of them Treasury trumped DTI by many multiples in the Whitehall power stakes, and focused the country's economic development on an unsustainable financial services boom rather than technology and manufacturing. This was despite the unions (particularly my own union Amicus, now part of Unite) strongly making the case for manufacturing. It was only when the power balance changed with Mandelson making BIS temporarily a big player in Whitehall that we got a real focus on manufacturing, partly in response to the economic crisis - but by then we were in our final two years in power.
Hopefully based on today's speech we will start our next period in power already committed to manufacturing growth, not discover it 11 years in.
Tragically until then BIS is, to quote Denham, "a department apparently without influence or clout. Indeed, whilst the record of failure in regional policy, higher education, bank lending and bankers bonuses is lengthy, it is hard to identify a single pro-business, pro-growth policy which BIS has successfully championed against the opposition of the Treasury or other departments like CLG."