Hamish McRae: There are positive lessons we can draw from these dreadful events in London

Every country in the world faces a terrorist threat. Deal with this well and we enhance our reputation
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When coping with any disaster the aim must surely be not just to prevent a recurrence but also to learn enough from the experience to bring real and lasting gains as well.

There are plenty of examples in the history of conflict, however terrible, where side effects have benefited society as a whole. Frequently, military technologies end up having peacetime applications: radar technology, for example. But there is one important instance in London itself where the challenge of terrorism led to large benefits for the community: the so-called "ring of steel" cordon that was thrown round the City of London after the IRA bombings.

That enabled the City not only to make itself more secure against terrorism, it also brought environmental benefits including a reduction in street-level pollution and a fall in the level of other crimes. So the City was able to use a disaster that might have wrecked its international business to push through changes in security that might otherwise have taken a decade to establish. As a result, it became not just an even more successful financial centre. It also reaped lifestyle advantages for the people who lived and worked there.

Let's try and apply this approach to the dreadful events of the past three weeks. I can't pretend to have thought through the full consequences of these events, still less the positive lessons that might eventually be drawn. But I can see a framework for thinking about what might, in a positive sense, be done. This falls into three main questions: What can be done about security? What can be done about human capital? And what can be done about competitive advantage?

The security question is the most immediate. Things will have to be done to enable us to protect ourselves. Some of these things will be intrusive and disruptive. Just as tighter security on air travel has made it a less pleasant way of getting about the world, so too will enhanced security make it less pleasant to move about in Britain. It is hard, at first sight, to see much that might be positive.

But pause a moment. There should be positive outcomes from a more thorough and thoughtful approach to security. Surely in fighting terrorism we can think of ways of tackling other things most of us are worried about. Two simple examples might make this clearer.

One is to use technology to reduce vehicle crime. We need, for example, to make sure that vehicles are properly insured. Small bombs can be carried in rucksacks but large ones (and we have to assume there will be some of those) need to be transported. We will have to track vehicles, and the people who drive them, to a much greater extent than we do now. Why not also make our roads safer?

Another is to improve public order. The UK has more security cameras per head of population than any other large developed country. We are seeing the benefit of these in tracking the bombers. There is huge concern about the lack of order in, for example, city centres at night but we have not begun to think systematically about the best ways to use surveillance to make public places nicer and safer.

It will take months to plan this properly and the application of the principle will be very difficult. But the principle is simple: when carrying out some change in security procedure that is needed for anti-terrorist reasons, why not see what other advantages can be squeezed out at the same time?

Human capital. The country is going to have to know much more about the movements of people who live here and who comes in and out. It will be necessary to know much more about all of us, immigrants and citizens alike. We are an exceptionally open society and it would be tragic were that openness to be eroded. To preserve that openness we will need to be more honest with ourselves about the sorts of skilled people that we want to attract and that other sort of "skilled" people we want to repel. To put the point bluntly: we need more Brazilians working hard as electricians and fewer preachers of hate living on benefit. At the moment we seem to have policies making it hard for the former and easy for the latter.

Every society now needs to be a magnet for clever, talented energetic people. The UK seems to have stumbled on policies that make it something of a magnet. That is one of the reasons, not the only one, why the economy has outpaced much of continental Europe. But we have been haphazard in the framing of policy and pretty hopeless at its application. We have a system that breathes though its loopholes but now those loopholes will to some extent have to be closed.

At the very least, we have to be careful not to damage the economy as controls on migration are tightened. But that seems a terribly negative way of thinking of our management of human capital. We need to think positively about controls so that in some areas, the UK becomes an even stronger magnet than it is now.

That leads to the whole question of competitive advantage. A reasonable level of security is crucial to economic success, quite aside from what the lack of it does to our personal welfare. The UK's economic renaissance, while remarkable, is quite narrowly based

By coincidence yesterday, David Willetts, the Shadow Trade and Industry Secretary, made a speech arguing that, despite the economy's apparent success, the UK's strategic position was quite weak: we had low levels of business output and the lowest level of business investment since 1965. As a general point, I think that must be right - though my own concern is more that we are too dependent on a narrow set of industries, in particular financial services, education and communications. We earn our living by making a lot of noise, by being measurably the most international economy on earth - more books published, more international money managed, more international flights.

Much of our success lies in our being a high-profile country. But that self-evidently makes us a high-profile target. Less self-evidently, it makes us particularly liable to damage by terrorism; more so than, for example, the United States. It has an even higher profile, but also a broader economic base.

Every country in the world faces a terrorist threat. That gives us an opportunity. Deal with this threat well - in a measured, competent, tough but orderly way - and we enhance our reputation. We justify our profile. The better we can deal with the causes of terrorism as well as the consequences, the more we will have to teach others. This will be terribly difficult, of course, but think of the prize: a better life for the citizens of this country and the chance of nudging the world in the right direction rather than the wrong one.

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