By Tim Page, Senior Policy Officer at the TUC.
This morning [26th July], the former Foreign Secretary and Conservative Party Leader, William Hague, has stepped into the debate about the nature of the UK’s industrial strategy. Hague’s intervention, in this morning’s Daily Telegraph, has been prompted by the new Prime Minister, Theresa May’s, welcome commitment to such a strategy as part of her developing economic narrative. Hague cannot trash his new Leader’s central idea, so instead he seeks to define it in such a way as to render it meaningless. His analysis of the problem that industrial strategy is trying to solve, however, is well worth a conversation and is one with which the Left, as well as the Right, needs to grapple.
William Hague begins by noting that “In Britain, and all over the Western World, huge numbers of people feel the system no longer works for them”. After a discussion of populist policies and politicians, Hague continues: “Above all, the pace of technological change seems set to jump into a faster gear with the arrival of artificial intelligence – computers which learn as they go along, and have the potential to disrupt of make redundant the jobs, training and qualifications of hundreds of millions of people… More livelihoods are going to be upset, more professions transformed, more skills made obsolete and more new ones required than ever before in the history of the human race.”
Hague is right about the scale of the challenge – although the whiff of panic that accompanies his article (whose headline speaks of “chaos”) isn’t helpful – fear of technology accompanied the industrial revolution and every major step change in scientific and technical knowledge that followed, but all resulted in more jobs created and lost. Hague is also correct that this should lead to a battle of ideas. His claim that “If the Conservatives can produce the next wave of successful ideas, their political dominance for another generation will be assured” is true, but that prize is available for the Left as well.
So what are those ideas? William Hague’s suggestions are certainly not new – he simply returns to Thatcher: “It might well be a good idea to have an ‘industrial strategy’”, he says, hedging his bets, before adding: “but not if it is going to be focused on picking businesses to support and spending too much time worry about who owns what.” Tax reliefs for small businesses, support for science, faster broadband and pilot projects to train and educate people in a new way, as well as low taxes and great infrastructure – “but absolutely not civil servants trying to plan the future of the economy”.
Let’s take those things one at a time. We can agree on the need to support science and this is one reason why, as a matter of urgency, the new government must seek to ensure the role of UK scientists in EU funded research projects post-Brexit. We have continuity in that the previous Science Minister, Jo Johnson, retains his post and this challenge should be at the top of his in-tray. Nobody could disagree with faster broadband or great infrastructure. For this reason, the TUC hopes for a positive decision regarding the future of Hinkley Point on Thursday and for an early announcement on airport capacity in the South East.
But William Hague’s Thatcherite love of free markets is part of the problem, not the solution. Of course we need successful private companies, but if we are really to meet the scale of the challenge that Hague outlines, relying on Adam Smith’s “hidden hand” will not do. The economist Mariana Mazzucato is best known for debunking the idea that innovation is a purely private sector activity and, writing in the Guardian with Michael Jacobs last week, she said: “markets are not external forces that bind firms to inevitable choices. They are created by the decisions made inside private and public institutions, as well as pressures from civil society. So not only can policymakers fix ‘market failures’, but they can also reshape and create markets for better ends.”
Mazzucato and Jacobs add that, “if growth is not low carbon, it cannot be sustained at all”. The TUC makes this argument in our new publication, ‘Powering Ahead’, which develops the case for a sustainable industrial strategy. Learning from the experience of Germany and Denmark, ‘Powering Ahead’ calls for active government, working with the private sector, in support of a target that 50 per cent of the UK’s energy comes from renewable sources by 2050. A drive for the UK to build more, much more, of the technology to deliver that target should be led by HM Treasury and the new Department for Business, Energy and Industrial Strategy, working together. And government support must be given to bring those companies and technologies into the communities of the UK that used to form our industrial heartlands but where, since the demise of heavy industry, new job creation has been sparse or not at all. That is the best antidote to a situation where “huge numbers of people feel the system no longer works for them”.
In Germany and Denmark, visionary politicians, working with companies and trade unions, put their shoulders to the wheel and make these things happen. An apostle of Thatcher might dismiss this as civil servants trying to pick winners, but if Theresa May really wants her government to be “at the service or ordinary working people”, as quoted by William Hague in the Daily Telegraph, she can learn more from the Christian Democrat tradition of Germany, the Social Democrat tradition of Denmark or even the UK tradition of Heseltine than she can from Thatcher and her sons.