Labour to beef up industrial policy in run-up to next election

Denham says coalition's business team has 'no idea' how to create a climate for growth

The shadow Business Secretary, John Denham, has signalled a lurch to the left in the Labour Party's industrial policy, setting out an interventionist approach to resuscitating Britain's struggling economy.

Mr Denham, talking in his Westminster office, indicated that Labour will reposition itself under Ed Miliband's leadership by aggressively drawing battle lines with the free marketeers of the coalition.

"Good government can create the right conditions for economic growth," he said. "Vince Cable [the Business Secretary] has always been pretty much free market and against active industrial policy. The Government has no real view of how to create conditions for the successful growth of private companies and there's no strategy for jobs."

In an admission that Labour has moved away from the market-led years of Tony Blair, Mr Denham said that "the world moves around you but the principle is always that private business needs to succeed".

Mr Miliband recently announced a two-year policy review, which will see Labour map out its core ideas ahead of the 2015 general election. The Labour leader said last month that the party had not fundamentally changed since Mr Blair took power in 1994.

Beside the shadow Chancellor, Alan Johnson, Mr Denham is undertaking a series of meetings with business organisations and small firms which will intensify in the new year. "The starting point to the policy review is the extent to which the odds are stacked against small companies," he said. "We want to move towards a more balanced economy. We will be challenging the Government's failure to produce any kind of growth White Paper."

Mr Denham said that the coalition's muddled thinking was demonstrated by its inconsistent attitude to tax breaks. The Chancellor, George Osborne, said last month that he will implement the "patent box", which drastically reduces corporation tax on profits on newly patented products to promote R&D investment. Pharmaceuticals giant GlaxoSmithKlein has said that it will invest £500m in manufacturing plants in Britain as a result of the reduction from 28 to 10 per cent. But, the coalition has ignored pleas from the UK's £2bn video games industry to provide tax breaks comparable to those in Canada. The industry argues that this could save or create more than 3,500 jobs.

These differences showed that the Department for Business was "all over the place, with no consistent understanding" of how to boost the economy, Mr Denham claimed.

Mr Denham argued that small firms had been hurt by the failure to introduce net lending targets for nationalised banks, despite the coalition agreement in May highlighting this as a policy option. "The targets seem to have been dropped with nothing brought in in their place," Mr Denham claimed. "Eight months after the election there has been no progress on lending to small businesses."

Mr Denham, 57, who resigned from the cabinet in 2003 over the Iraq War, also blasted the abolition of Regional Development Agencies as "pathetic". He believes that that the replacement Local Enterprise Partnerships (LEPs), comprised of private- and public-sector groups with the budgetary freedom to support local enterprise, will be so small that they will not have the clout of their predecessors. Mr Denham has previously claimed that nearly 800,000 businesses and 21 million people will be excluded by the first round of LEPs, with only 24 approved.

The proposed privatisation of Royal Mail and the coalition's decision to contract it to the country's 11,000-strong Post Office network for only five years post-privatisation, was also questioned by Mr Denham. About 30 per cent of the Post Office's revenue comes from Royal Mail and Mr Denham warned that without that "intra-business agreement" the network would fall to just 4,000 commercially viable branches.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea