Commentary: Private sector solution to Britain's ills

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Thirty medium-sized companies yesterday launched the UK Industrial Group. Its members are all manufacturers and according to its director-general, David Turnbull, it 'was born out of a frustration with the decline and state of the UK economy'. The group says that it has a 'simple and clear vision and objective - that the UK economy must establish a strategy which would enable it to achieve a balance of trade surplus, sustainable on a regular basis'.

Specifically, the group says the scale of the problem should be established sector by sector; that manufacturing should be raised to the top of the national agenda; and that our culture should be changed by generating 'a genuine interest and passion for manufacturing throughout'.

The aim for trade surplus is a little odd, as there is no reason why a country with free access to world capital markets should regularly run a surplus. But this is to cavil: Britain's trading performance does need to improve. We need to reduce our deficit, and to earn enough foreign exchange to ensure that the normal resumption of imports in a growing economy does not lead to a sterling crisis.

Ministers should therefore listen to these managers. They belong to the British equivalent of the Mittelstand, the layer of companies that forms Germany's economic heart. It is a weak heart in Britain, and it needs all the oxygen it can get.

The snag is that the group's solution seems to be based on slamming the last 13 years' policies into reverse. It will spend the next year producing a document that will tell the Government what to do: unless it is careful, this will suffer the same fate as the 1985 House of Lords select committee report on industry. The committee analysed the problems, then shot itself in the foot by saying that the Government should increase R&D subsidies; set up a body involving the CBI and TUC to decide industrial policies and (ha]) stop exchange rates bouncing up and down.

The Lords report was ridiculed by ministers for its corporatism, and there is a danger that this new paper will do no better. It should not, if it is to stand any chance with ministers (for which read the Treasury) even mention the word 'strategy'. Justifiably or not, it is a word that is instantly translated into 'subsidy' and filed in the waste-paper bin.

Instead it should come up with ingenious private sector solutions. Companies could counter Britain's anti-industrial culture, for example, by stepping up links with schools. They could improve export support by boosting chambers of commerce, German-style. They could boost training: it has been said before, but it cannot be said too often. The private sector solution might not be the best one, but at least it will be taken seriously.