WILL INDUSTRIAL STRATEGY HELP PRODUCTIVITY ?

 

 

 

WILL IT LAST ?

The latest government industrial strategy was launched this week. Let’s hope it lasts. History tells us it won’t. Business is certainly sceptical having made investment decisions in the past based on Whitehall plans which ministers lose interest in after the first sound bites have gone away or a new set of young advisers have come up with a new plan for a new minister.

The other reason past initiatives to boost productivity, wages and the Northern economy have disappeared is because of changes in government. The use of state control during the war led to the Attlee government’s confidence in a nationalisation programme. The Thatcher government reversed this and until 2008 it was generally accepted that capitalism and the private sector would guarantee economic success. All that changed after the crash and ten years on we are reaping the whirlwind of people’s distrust in markets, experts and globalisation.

This Industrial Strategy shows that the Conservatives are now committed to the state having a real role in intervening in the economy. To a considerable extent this has been driven by the success the Labour leader Jeremy Corbyn has had in identifying people’s distaste for rampant capitalism.

That brings me back to the question businesses are asking, will it last? Possibly if Greg Clarke, one of the abler members of the Cabinet stays in post and if Jeremy Corbyn doesn’t get into Downing Street. His industrial strategy based on nostalgia for the Attlee days would look very different.

PRODUCTIVITY.

The industrial strategy is targeted at the construction industry, life sciences, driverless cars and artificial intelligence. So, there is an emphasis on high tech jobs. The question is will this help with our chronic lack of productivity. Most companies in the North operating at the cutting edge of research are productive but 60% of jobs are in retail and manufacturing which is where the productivity problem really lies. There are 40% more jobs in retail than pharmaceutical. The industrial strategy is too narrow to address this widespread problem.

It is also in danger of being southern focused. Currently only 10% of research spending is in the North. The investment by healthcare giant MSD in Manchester is to be welcomed but confidence in the Northern Powerhouse is shaky at the moment. There is a growing sense outside the Manchester and Liverpool conurbations that the whole project is city based. Of course, one answer to that is for counties like Lancashire and Yorkshire to stop squabbling and get their act together. But the piecemeal approach of governments since 2010 to devolution has not helped. Transport for the North (TfN) is a big step forward but in outlining its new powers recently, the government document contained weasel words about “formally considering” TfN’s statutory transport strategy and TfN’s right to be “consulted” on rail franchises. It does not have the same powers as transport for London.

Finally, there has been a bitter reaction from local government. Whilst mayoral areas will have full control over their local industrial strategies, other councils feel they have been excluded from playing a role at the expense of the Local Economic Partnerships (LEPs). This despite the fact that ministers are calling on LEPs to address problems relating to their leadership, governance and accountability.

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NORTHERN RAIL: ARE THE TORIES SERIOUS ?

 

AWKWARD TIMES AT MANCHESTER CONFERENCE.

The May government is rattled by the growing perception that they are not serious about the Northern Powerhouse. So, it perhaps would have been easier for the Conservatives to be meeting in their other conference city, Birmingham. The city has been confirmed as the UK candidate for the 2022 Commonwealth Games following the election of a Tory West Midlands mayor. In Greater Manchester we elected Andy Burnham who has expressed his outrage at the decision to downgrade the electrification of the Leeds-Manchester rail line whilst giving the go ahead to Crossrail 2 in London.

We know the government is rattled because last week I was present at a meeting in Manchester where the Transport Secretary, Chris Grayling, came out fighting over his government’s transport spending. He told a startled business audience that he was going to slay some myths and rattled off a whole series of road improvements from Cumbria to Cheshire before tackling rail. His argument seems to be that electrification could be an old hat solution and bi-modal trains with state of the art technology could be the answer.

The issue is sure to come up at a conference where the Tories are reeling on many fronts. Whereas I saw Jeremy Corbyn lauded at every turn in Brighton for losing the General Election, Theresa May comes to Manchester having “won” but with the worst Conservative campaign in living memory. The Tories are past masters at preventing unrest breaking out on the conference floor but there is sure to be some raking over of the General Election coals at the fringe meetings.

Europe will also be an issue to watch at the Manchester conference. The prospect of us effectively being in the European Union until 2021 has angered the hardline Brexiteers. There will be plenty of them in Manchester Central. The Tory activists who come to conference have always been very Eurosceptic.

Besides the Northern Powerhouse, the poor election campaign and Europe, the main challenge for the Tories this weekend will be to answer the growing opposition to austerity and cuts. Labour is shamelessly promising everything to everyone, even acknowledging that if they came to power there could well be a massive run on the pound. Nevertheless, they seem to have caught a tide of opinion against pay curbs, high rents and homelessness. The Tories’ austerity programme has been in place for over seven years now and people are fed up. There are some signs that ministers are recognising this but that can spell danger. Small concessions don’t necessarily assuage the anger. They can make matters worse as workers take industrial action to push for more and the uncertain tone from ministers gives the impression that the government is running out of ideas and is past its sell by date.

Jeremy Corbyn said in Brighton that he was a Prime Minister in waiting. It was a bold, some would say fanciful claim, but if the Cabinet infighting over Europe doesn’t stop, if the cracks are on display in Manchester, there can be no certainty over what might happen this winter.

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‘ELF AND SAFETY JOKE ANYONE ?

 

CHANGING TIMES.

The General Election result indicated a turning of a corner in the sentiment of the nation, the reaction to the dreadful Grenfell Tower fire, confirmed it.

The tide of anti-State, anti EU feeling is on the ebb. People are beginning to realise that a lot of “red tape” is there to protect people and keep them safe. I doubt if ministers will be calling for three regulations to be abolished for every new one in the future. That’s not to say business should not continue to identify silly or bureaucratic impediments to commercial transactions. But where regulations are in place to protect people, we should recognise their purpose and remember the poor victims of Grenfell Tower.

On Europe, a YouGov poll this month showed most people now think it was wrong for us to vote to leave the EU.

Tory and Labour politicians need to take this changing world into account. There are signs from the Queen’s Speech that the Conservatives will modify their austerity agenda and use some of the £23bn slack in the government coffers available to 2021 to fund schools and public sector pay rises.

It is going to be down to Labour to reflect the changing sentiments on Europe. Apart from that poll, there were two developments this week which show the stupidity of leaving the EU. On the very first day of the Brexit talks we had a taste of the EU’s strength. The idea that we could negotiate future trade in parallel with the divorce terms was blown out of the water. Then came the Queen’s Speech and the revelation that eight huge pieces of legislation are going to be needed over the next two years to implement this wholly negative exercise.

So, whilst we fail to deal with pressing issues like the future of social care, MPs will be up all night repatriating powers over nuclear waste or money laundering which having a glaring need to be done across the EU.

THE CROWNLESS QUEEN.

The low-key State Opening of Parliament seemed appropriate. The Queen didn’t ride to Westminster in her golden carriage and the crown rested on a table beside the monarch as she delivered the paired down proposals of the government. She looked as if she was being delayed in getting to Ascot and the whole occasion which usually anticipates a new government with interesting proposals was flat and dreary.

There is considerable anxiety that government momentum behind the Northern Powerhouse has drained away. We’ll get a better sense of that following an important transport conference in Manchester on Monday. But in the Queen’s Speech I only noticed a bill to extend HS2 from Birmingham to Crewe and a reference to the new industrial strategy.

Business needs to speak out about issues around skills, productivity and the Northern Powerhouse. I don’t know if bosses felt restrained by the election campaign. They shouldn’t have been because that is the very time to speak out. Anyway, the net result has been that business and the economy were topics that dare not speak their name.

Theresa May could stumble out of office at any time but I still think she’ll last two years. People who think Boris Johnson is the answer should listen to his car crash performance on “PM” on Radio 4 on Wednesday. His “wing it” approach to policy was effectively exposed. The nation should tire of this clown.

 

LAUGHING STOCK OF EUROPE.

 

THE WRECKERS: CAMERON AND MAY

 

David Cameron and Theresa May have reduced this country to a laughing stock in Europe. From being a leading member of an organisation of 500 million people, we are now reduced to being a disorganised beggar pleading for reasonable terms to leave.

Cameron called the referendum for narrow party advantage to fend off UKIP. May invented fictional opposition to her Brexit strategy to call an election when we all knew it was about hammering a Corbyn led Labour Party. They should never be forgiven for these actions.

I would like to claim that this result shows that the British people are thinking again about their decision to leave the EU, but voters have turned in greater numbers to Labour, who support Brexit, than the Lib Dems who offered a second referendum.

It is a fluid picture as I write but what sort of UK delegation will turn up in Brussels in a week’s time? The 27 are ready with their terms. What are ours apart from the fatuous mantra mouthed by the discredited May that “Brexit means Brexit”?

I suspect we will hear less insults hurled at our European friends as they present the departure bill and as the extraordinary complexity and difficulty of leaving the EU in these political circumstances become obvious even to Nigel Farage.

AUSTERITY BACKLASH: BUSINESS IMPLICATIONS.

Business was either ignored or threatened with higher taxes by all parties in this election. The fact that we have a huge deficit was also not discussed as we listened to a welter of promises of increased spending by all parties.

Jeremy Corbyn confounded my predictions as he benefited from a backlash against austerity, a poor Tory campaign and a surge of young voters. They were frustrated last year when the old took away their future in Europe and were determined to have a say this time.

But amid the Corbyn euphoria let us remember this is Labour’s third election defeat. They are still well behind the Conservatives in number of seats. Corbyn is claiming that he has reframed British politics. He means that there is an appetite for a high tax, big spending unilateralist government. I don’t believe it. This may be the maximum vote a fully socialist manifesto can achieve but Labour moderates are now trapped with Jeremy Corbyn as leader.

The net result is uncertainty at Westminster and uncertainty in the Brexit talks. The Confederation of British Industry chief, Carolyn Fairburn, said she was stunned.

LIB DEMS AND SNP.

The Lib Dems are in slow recovery. Tim Farron failed to sell the second referendum effectively and lacked the gravitas required. Vince The Cable is back in the Commons and should become leader.

One certainty in an uncertain world is that Scotland will remain in the UK. I’m a big admirer of Nicola Sturgeon but she misread the Scots appetite for a second referendum

“NOT ANOTHER ONE”!

I recall the famous Bristol lady’s reaction to May’s calling of this snap election as I wonder what her reaction would be to another General Election in the autumn.

There is already talk of another poll to achieve a government with an overall majority. I think that would be very unpopular with people who in various parts of the UK have been voting continuously since 2014.

Also let us remember 1974. The voters delivered a hung parliament in February and changed their mind very little in October when they gave Labour a majority of three. We have to try and make this awkward result work.

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