Supporting business: let's follow northern Europe

The UK needs to raise its game.

As the UK economic recovery continues to stutter, calls for a return to an active industrial policy to restore the competitiveness of British business grow louder. We are increasingly looking to Germany and other northern European economies to understand how they have managed to weather the global recession more successfully than the UK.

One lesson that the UK could take from our northern European competitors is the way they support businesses to expand and innovate. Very little of this support has traditionally been available in Britain, with governments paying scant attention to the choices that employers make about how to compete, despite the impact this has on innovation, resilience, wages and the quality of goods and services. 

Labour’s Business Link service was designed to fill this gap but its impact was patchy, often lacking operational knowledge of local markets and a real understanding of how SMEs work. Instead of reforming Business Link into a service capable of promoting growth and innovation among British firms, the Coalition has simply reduced it to a generic website and phone line. This is in marked contrast to the tailored and practical business support available in a number of other European countries.

The failure of business support in the UK is rooted in the hands-off approach to industrial policy evident over the last three decades. Over this period, skills and training have been the only areas of business support deemed suitable for government intervention, an approach exemplified by the previous Labour government, which put adult skills policy centre-stage in its strategy for economic competitiveness and social inclusion. This was based on a misguided belief that a more highly qualified workforce would, by itself, drive innovation, competitiveness and resilience in the "knowledge economy". Substantial investment in adult skills coupled with targets to increase qualification rates among the adult population followed.

The impact of this new activity and funding was limited by Labour’s reluctance to consider how skills are used in the workplace, and what else drives innovation and competitiveness, like access to finance and market intelligence. As a result, a stubborn third of employers fail to invest in staff training and training rates have actually fallen over the last decade. Many UK firms have retained low-skilled, task-based production processes where training and workforce development are largely irrelevant to the bottom line. Studies suggest these kinds of business models are more prevalent in Britain than in many northern European countries. Such firms are profitable but could be less resilient to changing economic conditions. Levels of innovation also tend to be lower, and, for employees, the work is badly paid and repetitive. 

Countries like Germany, Finland, Norway and Australia have stolen a march on the UK by experimenting with different ways of supporting businesses to raise their game. Employers are supported to invest in new ways of working, access finance and develop new products, as well as to develop a well-skilled workforce. In one example in Finland, a local catering service was helped to restructure its business so that catering assistants took on a role in planning meals, budgeting and purchasing ingredients. Procurement costs fell and productivity improved, and the ability to use new skills raised motivation among staff. A simple training programme divorced from the need to reorganise the production process is unlikely to have delivered the same results.

Just like in welfare, extra support should be matched with extra conditions. To access public money for training and business support, employers would have to join local employer associations and commit to raising wages for trained staff or sharing the cost of training. But the specific deal would be left to local partners and employers to negotiate, taking skills policy and funding out of the hands of centralised quangos. In the UK, this kind of tailored business support delivered by people who know about business – whether in employer associations, professional bodies or local chambers of commerce – is the missing link that will ensure investment in skills delivers sustainable economic gains.

Kayte Lawton is Senior Research Fellow at IPPR. No Train, No Gain: Beyond free-market and state-led skills policy by Tess Lanning and Kayte Lawton is available here.

The Uk could take cue from Europe, Getty images.

Kayte Lawton is senior research fellow at IPPR.

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Why Barack Obama was right to release Chelsea Manning

A Presidential act of mercy is good for Manning, but also for the US.

In early 2010, a young US military intelligence analyst on an army base near Baghdad slipped a Lady Gaga CD into a computer and sang along to the music. In fact, the soldier's apparently upbeat mood hid two facts. 

First, the soldier later known as Chelsea Manning was completely alienated from army culture, and the callous way she believed it treated civilians in Iraq. And second, she was quietly erasing the music on her CDs and replacing it with files holding explosive military data, which she would release to the world via Wikileaks. 

To some, Manning is a free speech hero. To others, she is a traitor. President Barack Obama’s decision to commute her 35-year sentence before leaving office has been blasted as “outrageous” by leading Republican Paul Ryan. Other Republican critics argue Obama is rewarding an act that endangered the lives of soldiers and intelligence operatives while giving ammunition to Russia. 

They have a point. Liberals banging the drum against Russia’s leak offensive during the US election cannot simultaneously argue leaks are inherently good. 

But even if you think Manning was deeply misguided in her use of Lady Gaga CDs, there are strong reasons why we should celebrate her release. 

1. She was not judged on the public interest

Manning was motivated by what she believed to be human rights abuses in Iraq, but her public interest defence has never been tested. 

The leaks were undoubtedly of public interest. As Manning said in the podcast she recorded with Amnesty International: “When we made mistakes, planning operations, innocent people died.” 

Thanks to Manning’s leak, we also know about the Vatican hiding sex abuse scandals in Ireland, plus the UK promising to protect US interests during the Chilcot Inquiry. 

In countries such as Germany, Canada and Denmark, whistle blowers in sensitive areas can use a public interest defence. In the US, however, such a defence does not exist – meaning it is impossible for Manning to legally argue her actions were in the public good. 

2. She was deemed worse than rapists and murderers

Her sentence was out of proportion to her crime. Compare her 35-year sentence to that received by William Millay, a young police officer, also in 2013. Caught in the act of trying to sell classified documents to someone he believed was a Russian intelligence officer, he was given 16 years

According to Amnesty International: “Manning’s sentence was much longer than other members of the military convicted of charges such as murder, rape and war crimes, as well as any others who were convicted of leaking classified materials to the public.”

3. Her time in jail was particularly miserable 

Manning’s conditions in jail do nothing to dispel the idea she has been treated extraordinarily harshly. When initially placed in solitary confinement, she needed permission to do anything in her cell, even walking around to exercise. 

When she requested treatment for her gender dysphoria, the military prison’s initial response was a blanket refusal – despite the fact many civilian prisons accept the idea that trans inmates are entitled to hormones. Manning has attempted suicide several times. She finally received permission to receive gender transition surgery in 2016 after a hunger strike

4. Julian Assange can stop acting like a martyr

Internationally, Manning’s continued incarceration was likely to do more harm than good. She has said she is sorry “for hurting the US”. Her worldwide following has turned her into an icon of US hypocrisy on free speech.

Then there's the fact Wikileaks said its founder Julian Assange would agree to be extradited to the US if Manning was released. Now that Manning is months away from freedom, his excuses for staying in the Equadorian London Embassy to avoid Swedish rape allegations are somewhat feebler.  

As for the President - under whose watch Manning was prosecuted - he may be leaving his office with his legacy in peril, but with one stroke of his pen, he has changed a life. Manning, now 29, could have expected to leave prison in her late 50s. Instead, she'll be free before her 30th birthday. And perhaps the Equadorian ambassador will finally get his room back. 

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.