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.

Photo: Getty Images
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I'll vote against bombing Isis - but my conscience is far from clear

Chi Onwurah lays out why she'll be voting against British airstrikes in Syria.

I have spent much of the weekend considering how I will vote on the question of whether the UK should extend airstrikes against Daesh/Isis from Iraq to Syria, seeking out and weighing the evidence and the risks.

My constituents have written, emailed, tweeted, facebooked or stopped me in the street to share their thoughts. Most recognised what a difficult and complex decision it is. When I was selected to be the Labour candidate for Newcastle Central I was asked what I thought would be the hardest part of being an MP.

I said it would be this.

I am not a pacifist, I believe our country is worth defending and our values worth fighting for. But the decision to send British Armed Forces into action is, rightly, a heavy responsibility.

For me it comes down to two key questions. The security of British citizens, and the avoidance of civilian casualties. These are separate operational and moral questions but they are linked in that it is civilian casualties which help fuel the Daesh ideology that we cannot respect and value the lives of those who do not believe as we do. There is also the important question of solidarity with the French in the wake of their grievous and devastating loss; I shall come to that later.

I listened very carefully to the Prime Minister as he set out the case for airstrikes on Thursday and I share his view that Daesh represents a real threat to UK citizens. However he did not convince me that UK airstrikes at this time would materially reduce that threat. The Prime Minister was clear that Daesh cannot be defeated from the air. The situation in Syria is complex and factionalised, with many state and non-state actors who may be enemies of our enemy and yet not our friend. The Prime Minister claimed there were 70,000 ground troops in the moderate Free Syrian Army but many experts dispute that number and the evidence does not convince me that they are in a position to lead an effective ground campaign. Bombs alone will not prevent Daesh obtaining money, arms and more recruits or launching attacks on the UK. The Prime Minister did not set out how we would do that, his was not a plan for security and peace in Syria with airstrikes a necessary support to it, but a plan to bomb Syria, with peace and security cited in support of it. That is not good enough for me.

Daesh are using civilian population as human shields. Syrians in exile speak of the impossibility of targeting the terrorists without hitting innocent bystanders. I fear that bombing Raqqa to eliminate Daesh may be like bombing Gaza to eliminate Hamas – hugely costly in terms of the civilian population and ultimately ineffectual.

Yet the evil that Daesh perpetrate demands a response. President Hollande has called on us to join with French forces. I lived in Paris for three years, I spent time in just about every location that was attacked two weeks ago, I have many friends living in Paris now, I believe the French are our friends and allies and we should stand and act in solidarity with them, and all those who have suffered in Mali, Kenya, Nigeria, Lebanon, Tunisia and around the world.

But there are other ways to act as well as airstrikes. Britain is the only G7 country to meet its international development commitments, we are already one of the biggest humanitarian contributors to stemming the Syrian crisis, we can do more not only in terms of supporting refugees but helping those still in Syria, whether living in fear of Daesh or Assad. We can show the world that our response is to build rather than bomb. The Prime Minister argues that without taking part in the bombing we will not have a place at the table for the reconstruction. I would think our allies would be reluctant to overlook our financial commitment.

We can also do more to cut off Daesh funding, targeting their oil wells, their revenues, their customers and their suppliers. This may not be as immediately satisfying as bombing the terrorists but it is a more effective means of strangling them.

The vast majority of the constituents who contacted me were against airstrikes. I agree with them for the reasons I set out above. I should say that I have had no experience of bullying or attempts at intimidation in reaching this decision, Newcastle Central is too friendly, frank, comradely and Geordie a constituency for that. But some have suggested that I should vote against airstrikes to ensure a “clear conscience” ’. This is not the case. There will be more killings and innocent deaths whether there are UK airstrikes or not, and we will all bear a portion of responsibility for them.

A version of this article was originally sent to Chi Onwurah's constituents, and can be read here