Labour's industrial revolution
Market forces must make way for interventionism, says Mandelson
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Independent Minds
New Labour will today abandon 12 years of support for market forces by unveiling an interventionist strategy under which the Government will subsidise the growth industries of the future.
In an interview with The Independent, Lord Mandelson said the drive could create hundreds of thousands of jobs in hi-tech and low-carbon industries over the next 10 years, to compensate for the smaller financial services sector that will emerge from the current recession.
The new strategy marks a reversal of the Government's free-market approach since Labour won power in 1997, as ministers follow the bailout of Britain's ailing banks by intervening in other key areas of industry.
The Business Secretary said: "If markets fail or don't work efficiently, government has a role to play – as we saw in the financial markets." He insisted: "The Government's job is not to substitute for markets or displace the private sector. We are not into bailing out the past, but removing the barriers to investing in the future."
His "strategic plan" will be a central part of a "going for growth" Budget to be announced by Alistair Darling on Wednesday.
It could lead to hundreds of millions of pounds of taxpayers' money being used to fund the expansion of "green" industry. Projects funded could include wind, wave and nuclear power, and electric and hybrid cars. Digital communications, pharmaceuticals, life sciences, aerospace, business services and electronics may also be in line for such "green" funding. As well as providing direct aid, all government departments will shape tax and regulatory policies to help these firms.
Ministers will use the Government's huge purchasing power – £175bn a year – to buy as many British goods and services as possible. They insist that a "buy British" policy will not breach European Union rules on state aid and public contracts.
Today's "New Industry, New Jobs" report, to be launched by Gordon Brown, the Skills Secretary, John Denham, and Lord Mandelson, calls for "a new activism" in industrial policy.
It is designed to provide a more upbeat message, as Mr Darling admits the economy will not recover in the second half of this year as he forecast last November.
The Chancellor is expected to predict it will contract by about 3.5 per cent this year before starting to grow again at the end of the year. Another gloomy set of unemployment figures will be released three hours before they are overshadowed by the Budget.
In his interview, Lord Mandelson said: "It is not enough to limit the damage of the recession, however vital this is. We need also to provide a vision of the opportunities and advantages of the UK in the world economy at the upturn and beyond."
Claiming the interventionist approach would help Britain emerge more quickly from the downturn, he said: "We have to grow our way out of this recession, not simply sit back on our hands, do nothing about it and let events take their course." The shift is designed to answer criticism from business that other governments, notably France, are doing more to help their domestic industries than Britain is. "We cannot be the odd one out," Lord Mandelson said. He insisted the change would not mean "economic nationalism", because the Government still supported open markets and free trade.
The Business Secretary added: "To justify government action, there will have to be a real opportunity to make a difference, and any government initiative must make a genuine long-term impact to give value for money to the taxpayer."
Other proposals include: ensuring that high-growth, high-innovation firms get the financing they need; more government support for exporters; more aid to turn bright ideas into "world-beating" products; and exploiting opportunities created by university researchers.
The document insists the Government will not "pick winners", opt for state ownership of industry, "override market forces or ignore market signals". Its new activism "does not imply a fundamental change in our view of the relationship between the market and the state.... However, the way the Government sees its own role in the market needs to change in order to deliver a more coherent and effective approach." This means "a readiness to intervene where necessary" by "supplementing" rather than "substituting itself for the market" and "correcting significant market failures."
It says the credit crunch showed that markets cannot be relied upon to serve the public interest. "In future there should be no barriers of mind-set that hold back sensible and prudent intervention," it adds. "This is not activism for its own sake." While not denying Britain "the huge benefits of free enterprise," the Government recognises that the private sector "has important limits."
Lord Mandelson said that "government has to act, as other governments do, in removing the barriers holding business back".
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Comments
Subsidising and continually bailing out old-world previous successes is unlikely to get us anywhere as during the last 50 years the world has brought online ever greater manufacturing overcapacity, with ever higher productivity.
"The hope for the future lies in incubating new products and services, in other words, in entrepreneurship. To do that, flexibility and adaptability must be the hallmarks of the economy and government policy. Legions of small businesses should be encouraged to form. Many ideas need to be tested in the market place in order to come up with the 20 to 30 major innovations that will create vigorous economic growth. Unfortunately, that is not likely to be the path that policy takes." - TGR
... a policy that got us into this mess in the first place.
There never was a free market, without government meddling.
These idiots have the opposite effect to the Midas touch, all they touch turns to dross.
I couldn't understand why Brown brought Mandy, a bitter enemy for years, back from Brussels: now we know, the prat makes Brown look competent, at least from a distance.
It is difficult not to be sceptical about this announcement of a redeeming second industrial revolution based on green technology and the inventive genius of our people; to conclude that either it will prove to be unsubstantial spin, or that that large amounts of public money will be wasted on graft and "picking winners".
However, the country's economic future depends of high-tech industry and the world's future depends on the development of green technology, so any real benefit to industry is to be welcomed.
Suddenly, or rather by the end of the decade, Britain will be blooming with high-tech and green industries. Enough to compensate for the demise of the financial sector. This is to be achieved by 'investing in growth' in other words your money.
Firstly, it means overhauling the German lead in renewable technology and somehow - just how beats me - matching both Asia and the USA for high tech products. Britain is so far behind in both spheres that Mandelson's boast of filling this gap in ten years is pie in the sky.
It reminds me of old Harold and his white heat of technology.
Secondly, there is a dangerous destabilising agenda which Mandelson says he is not implementing, then admits he is.
He denies a fundamental change in the relationship of the state to market forces, then talks about the changing role of government if it is to deliver. In other words intervention, exactly what he has just said he won't do.
It amazes me that Mandelson and his compadres in NuLabour still think we are fooled by such claptrap.
He will engineer the market in favour of UK companies while saying he will honour free market competition. You can't have both.
We already have an example of how this policy fails. The European chipmaking industry survives purely because the likes of Germany and others pour billions into subsidies to attract Asian and American companies. This worked for a while, money does talk.
Now it has collapsed with foreign companies moving back to their home states. All that happened was that certain European nations regarded chipmaking as a strategic industry and were prepared to distort the market with bribes to ensure that they had a share of this industry.
It is mealy-mouthed of Brown and Mandelson to rage against protectionism and market distortions when they are embarking on precisely such a policy to prevent Britain from entering a new dark age of stagnation.
In the chip industry nations have been fighting a war of 'economic nationalism' for years. Now Mandelson just when this war has been lost to the Asians is about to charge forth spewing money and the battle cry of 'we shall not be denied'.
This thing of Mandeslon is nothing more or less than a portectionist manifesto. He will skate as close as he can, and as only he knows how, to the edge without getting a slapdown from the EU competition commissioner.
Labour have never done anything to create employment except creating non jobs for their friends in the public sector, which produce, nothing.
IR35 is a pain - to those unaware of what IR35 in a nutshell it means I am self-employed when it suits the government and employed when it suits the government. It means I paid 43% tax on my overall salary last year, although there are dodgy ways of getting around it - one recent way was to route the money through an offshore company who would make interest free loans of the bulk of the salary which would be written-off in the future (though this could not be written into the contract or it would become taxable) and charge about 10% overall for this service, leading to an overall taxation of a few percent; but the government said that they would plug this hole and retrospectively tax anyone who had used it - they did plug it but did not retrospectively tax it (something they have yet to do with any changes in taxation law) but I have heard that though some people had the loans "written off" some found the loans recalled... People who have used schemes like this have also told me that the Inland Revenue constantly harrass them even after stopping using these schemes - I wonder if Richard Branson and Philip Green are harrassed by the IR by their failure to pay their fair share of taxes?
The Government has just signed a contract with TCS of India to outsource and off-shore the provision of the replacement of the Child Support Agency IT system. This means that hundreds of high-tech jobs will now be created in India NOT Britain.
Mandy seems to be upto his old spinning tricks.
See: http://www.computing.co.uk/computing/an
If this class is not dealt with then no amount of government intervention will prevent the same thing happening again. Our memory of political events is very tenuous to say the least, while the scourge of our society be it politicians' ineptness, the financial classes or organised crime can feel comfortable again in the knowledge that we are stupid enough to encourage such behaviour as long as there are crumbs to be had and we can turn the other way.
Great news after the weak Easter. I really mean WEAK. I have done the spreadsheets, VISICALC, May I please send my CV to The papers for onward transition to the Lord. I am nearly 70 and can see the bright future in front and back.
I thank you
Firozali A. Mulla
They've burned down the economy and now are all dressed up as fireman, 'as keen as anyone' to put out the flames and 'move on'...
We can't let the vandals switch costumes.
Do not be fooled, Mandelson has shown in the past that he serves his masters well in screwing the people of Britain and has been rewarded accordingly... Don't interpret a string of politically correct slogans as evidence the man has turned over a new leaf... Any government worth anything would be doing all they can to place this traitorous individual behind bars, not in some comfy Geoffrey Archer lag pad but the deepest darkest hole we can find...
And does anyone actually believe any of this will actually happen?
Mandelson is such an accomplished liar, he's utterly shameless, a symbol of everything that's wrong with our ruling class.
Absolute tosh from a bunch of chancers who have run out of money and ideas - roll on next May so they can be drummed out of office.
They are absolutley 'bailing out the past'. Another pack of lies and spin
This is all meant to justify proping up the housing bubble so Brown thinks he has a good chance of being elected.
Remember the times when Ford gave us one model. Same colour, same size, same everything. We went bananas. Then came the competition and broke the bone of the Ford and All wanted the variety. That changed the members and the Government with the new economy ideas. We need that. New Ideas. Honest. Your remark is construct, idea creating. myths that explain the origin of the universe, or cosmos. The origin of the cosmos forms one of the principal themes of mythology... creation of new devices, objects, ideas, or procedures useful in accomplishing human objectives. The process of...
I thank you
Firozali A. Mulla
IDIOTS
Coming from a Govt that implemented IR35 at the bequest of the 'Big four', a Govt that allowed the outsourcing of tens/hundreds of thousands of IT jobs to India and China and a Govt that allows tens/hundreds of thousands of Indians and Chinese IT workers to be shipped into Britain the idea that this Govt will create 'hundreds of thousands' of jobs is a sick joke.
Labour have never done anything to create employment except creating non jobs for their friends in the public sector, which produce, nothing.
Can you tell me what's wrong with the above apart from the fact it offends the Labour party?
I can see why no one bothers writing on the 'Independent'