has been a chorus of complaints that the government does not have an industry
strategy - as though this were to be deplored. I happen to be a Historian by original
discipline and wanted to do research into the causes of growth, comparing economic
theory with reality. My tutor, Maurice Cowling, set about dissuading me. He
said I would find the answers in the real world and come back to Cambridge when
I had found them. The attitudes of those who were happy to offer me immediate post-graduate
places persuaded me he was correct.
I was then lucky enough to have three challenging
years of systems engineering "apprenticeship" with STC and ICL followed by two years
at the London Business School and the opportunity to lead the most successful of
the industry strategy exercises that was the legacy of Tony Benn's Ministry of Technology.
Later I had five years as Corporate Planner for a UK-owned multi-national, including
helping organise inputs to the "industrial strategies" of nations around the
world. Comparing their approaches to that of the UK did indeed lead me to some
most important is that British industry nearly always does best when Whitehall
does least. "Planning" is all-too-often a euphemism for protecting the past
from the future. An "industry strategy" is a euphemism for giving jobs to economics
graduates not wanted by the private sector as investment analysts or corporate
planners assisted by consultants touting for future business and lobbyists
seeking grants to position their employers. The failure of UK government attempts
to pick winners (over the past century !!!) gives no confidence that the
Coalition Government can do any better. Even when ministers and officials pick
the right race course they choose the wrong horses, train them the wrong way
and enter them in the wrong races.
1978 - 9, I was part of the policy team (reporting via Ian Lloyd to Sir Keith Joseph)
that looked to IT and Communications as the drivers of UK economic recovery. We
called for Telecoms Liberalisation and Privatisation, a major government supported
awareness campaign (it became IT 82) and a Micro in every school by 1982. I
then watched as DTI turned low-cost success into expensive failure, draining
enthusiasm with "challenge programmes" and initiatives while hobbling
indigenous growth with:
- "investment protection" regulation that routed funding via remote pension funds and trusts while excluding the hands-on "angels" and informed local investors who are at the heart US success,
- "tax avoidance" measures which make growth companies pay tax before they have positive cash flows and reinvestment for growth, let alone to give a return to equity investors
government procurement routines which actively discriminate against innovative
new UK businesses in favour of overseas competitors which can quote their own governments
as lead customers.
Then came the Labour Government destruction of the enthusiasm inspired by the Micros in Schools programme, with mandated teaching on how to use an imported suite of proprietary office software. Finally, DTI and Ofcom set about reversing the Conservative policy of liberalisation leading to an open and competitive market. They may not have talked about reversing privatisation but, unless Ministers take action soon, current BDUK policy will re-create a BT-led cartel akin to that of AT&T and the baby Bells which the OFTEL regime was designed to avoid.
The time has come to look back at what has worked in the past, (as well as what has never previously worked and is unlikely to do so this time round) and allow market forces to redress the failures of planning and regulation.
The four areas where I would most like to see a commitment to action in the Budget in order to help bring about a market driven, investment led economic recovery without calling for spend that HMG cannot afford are: