Speaking here on Wednesday night Peter Mandelson made the case for an activist industrial policy. The question, he argued, was not whether Government policy engages with industry – inevitably, in a hundred and one ways, it does – it is whether that engagement is appropriate and effective. Peter put particular emphasis on looking in the round at how Government shapes the environment for business. It was a comprehensive and subtle speech and I hope that business voices will take up Peter’s invitation to debate these issues constructively.
Since the speech, the Government has intimated that it would be willing to provide support to the ailing UK car industry, probably in the form of long term loans. Government can’t avoid judgements about what are strategic industries. This was underlined by the contrast between the responses to the car industry and the collapse of Woolworths; ‘something must be done’ in the former case; ’bowing to the inevitable’ in the latter. Governments have to pick winners in the sense of identifying those industries which are strategically important, which genuinely need help now and which have a strong chance of being able to prosper in the longer term. What Government has to avoid is picking losers, or as Peter put it, losers picking Government.
But if money is to be made available to back industry I hope it won’t just be big sums for big companies and sectors. The Government should also be creating a major investment fund for social enterprises, especially those focussed on the urgent task of a fundamental re-imagining of core public services. More specifically, we need innovation that enables the public sector to deliver better outcomes with the same (or fewer) resources, by better mobilising the capacity of civic society. As I said to Peter on Wednesday, achieving a step change in public service productivity is vital not only to public welfare but also to national competitiveness.