Vince Cable is right to support British business in procurement

Have Britain’s politicians finally realised that EU rules are not an impediment to an active industrial policy?

Today Vince Cable told the BBC that the British government must be more "strategic" in how it procures, so that "as much as possible goes to British businesses". Far from incurring the wrath of the European Union, the evidence suggests that this new course of action would see Britain finally joining the European club.

Since 2000 the European Commission has initiated only 10 infringement proceedings against the UK for procurement violations. In contrast it has initiated 63 against Germany, 52 against Italy, 31 against Spain, 20 against France and 12 against the Netherlands. Infringement proceedings are initiated when the Commission believes that a member state has broken the rules. Britain is an outlier when it comes to procurement; strategic support for domestic firms is the norm.

Not only is "strategic" procurement the norm but it does not necessarily result in a protectionist "race to the bottom". Despite Germany topping the infringement rankings, German firms are also the most successful in winning foreign procurement contracts in Europe. German firms captured 26 per cent of the market between 2007 and 2009, Dutch firms captured 10 per cent, Italian firms 7 per cent and French firms 5 per cent. British firms came in second with 17 per cent of the market.

As well as procurement, Vince Cable also talked about supporting strategic industries, such as aerospace, where the UK has a comparative advantage. Financial support for domestic firms or industries, like discriminatory procurement, is also supposedly banned by the EU. However, here again the evidence suggests that Britain’s approach is out of kilter with the rest of Europe.

According to the European Commission, in a typical year between 1992 and 2010 Britain spent only 0.45 per cent of its total public spending on the economy on manufacturing, including many of the sectors, such as life-sciences and aerospace, which the Business Secretary touted. In contrast, in a typical year over the same period France spent 7.67 per cent, Germany spent 13.29 per cent, Italy spent 8.66 per cent and Spain spent 16.36 per cent. In terms of total spending in support of their economies, Germany spent, in a typical year between 1992 and 2010, £16.64 billion more than the UK and France spent £9.17 billion more.

In supporting their manufacturing sectors many of these countries incurred the ire of the Commission. As of June 2010, the last data available, Spain had 15 cases of state aid that had been determined illegal by the European Commission and needed paying back, Italy had 14, Germany had 7 and France had 5. The UK had only 1 case of state aid declared illegal. Once again, Britain is an outlier.

It is ironic that the UK, a country regularly singled out for its ambivalence, even opposition, towards the European Union is often found to be one of the most committed adherents to EU rules. When Bombardier failed to win the Thameslink procurement contract last year, politicians of both parties blamed one another and the EU rules. Vince Cable’s pronouncement today hopefully indicates that British politicians are finally realising the folly of this. When it comes to conducting an active industrial policy, EU rules are no impediment, just ask Europe.

Stephen Clarke is a Research Fellow at Civitas

Vince Cable. Photograph: Getty Images

Selling Circuits Short: Improving the prospects of the British electronics industry by Stephen L. Clarke and Georgia Plank was released yesterday by Civitas. It is available on PDF and Amazon Kindle

Photo: Getty
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Unite stewards urge members to back Owen Smith

In a letter to Unite members, the officials have called for a vote for the longshot candidate.

29 Unite officials have broken ranks and thrown their weight behind Owen Smith’s longshot bid for the Labour leadership in an open letter to their members.

The officials serve as stewards, conveners and negotiators in Britain’s aerospace and shipbuilding industries, and are believed in part to be driven by Jeremy Corbyn’s longstanding opposition to the nuclear deterrent and defence spending more generally.

In the letter to Unite members, who are believed to have been signed up in large numbers to vote in the Labour leadership race, the stewards highlight Smith’s support for extra funding in the NHS and his vision for an industrial strategy.

Corbyn was endorsed by Unite, Labour's largest affliated union and the largest trades union in the country, following votes by Unite's ruling executive committee and policy conference. 

Although few expect the intervention to have a decisive role in the Labour leadership, regarded as a formality for Corbyn, the opposition of Unite workers in these industries may prove significant in Len McCluskey’s bid to be re-elected as general secretary of Unite.

 

The full letter is below:

Britain needs a Labour Government to defend jobs, industry and skills and to promote strong trade unions. As convenors and shop stewards in the manufacturing, defence, aerospace and energy sectors we believe that Owen Smith is the best candidate to lead the Labour Party in opposition and in government.

Owen has made clear his support for the industries we work in. He has spelt out his vision for an industrial strategy which supports great British businesses: investing in infrastructure, research and development, skills and training. He has set out ways to back British industry with new procurement rules to protect jobs and contracts from being outsourced to the lowest bidder. He has demanded a seat at the table during the Brexit negotiations to defend trade union and workers’ rights. Defending manufacturing jobs threatened by Brexit must be at the forefront of the negotiations. He has called for the final deal to be put to the British people via a second referendum or at a general election.

But Owen has also talked about the issues which affect our families and our communities. Investing £60 billion extra over 5 years in the NHS funded through new taxes on the wealthiest. Building 300,000 new homes a year over 5 years, half of which should be social housing. Investing in Sure Start schemes by scrapping the charitable status of private schools. That’s why we are backing Owen.

The Labour Party is at a crossroads. We cannot ignore reality – we need to be radical but we also need to be credible – capable of winning the support of the British people. We need an effective Opposition and we need a Labour Government to put policies into practice that will defend our members’ and their families’ interests. That’s why we are backing Owen.

Steve Hibbert, Convenor Rolls Royce, Derby
Howard Turner, Senior Steward, Walter Frank & Sons Limited
Danny Coleman, Branch Secretary, GE Aviation, Wales
Karl Daly, Deputy Convenor, Rolls Royce, Derby
Nigel Stott, Convenor, BASSA, British Airways
John Brough, Works Convenor, Rolls Royce, Barnoldswick
John Bennett, Site Convenor, Babcock Marine, Devonport, Plymouth
Kevin Langford, Mechanical Convenor, Babcock, Devonport, Plymouth
John McAllister, Convenor, Vector Aerospace Helicopter Services
Garry Andrews, Works Convenor, Rolls Royce, Sunderland
Steve Froggatt, Deputy Convenor, Rolls Royce, Derby
Jim McGivern, Convenor, Rolls Royce, Derby
Alan Bird, Chairman & Senior Rep, Rolls Royce, Derby
Raymond Duguid, Convenor, Babcock, Rosyth
Steve Duke, Senior Staff Rep, Rolls Royce, Barnoldswick
Paul Welsh, Works Convenor, Brush Electrical Machines, Loughborough
Bob Holmes, Manual Convenor, BAE Systems, Warton, Lancs
Simon Hemmings, Staff Convenor, Rolls Royce, Derby
Mick Forbes, Works Convenor, GKN, Birmingham
Ian Bestwick, Chief Negotiator, Rolls Royce Submarines, Derby
Mark Barron, Senior Staff Rep, Pallion, Sunderland
Ian Hodgkison, Chief Negotiator, PCO, Rolls Royce
Joe O’Gorman, Convenor, BAE Systems, Maritime Services, Portsmouth
Azza Samms, Manual Workers Convenor, BAE Systems Submarines, Barrow
Dave Thompson, Staff Convenor, BAE Systems Submarines, Barrow
Tim Griffiths, Convenor, BAE Systems Submarines, Barrow
Paul Blake, Convenor, Princess Yachts, Plymouth
Steve Jones, Convenor, Rolls Royce, Bristol
Colin Gosling, Senior Rep, Siemens Traffic Solutions, Poole

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.