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

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Tony Blair might be a toxic figure - but his influence endures

Politicians at home and abroad are borrowing from the former prime minister's playbook. 

On 24 May at Methodist Central Hall, Westminster, a short distance from where he once governed, Tony Blair resurfaced for a public discussion. Having arrived on an overnight flight, he looked drawn and puffy-eyed but soon warmed to his theme: a robust defence of liberal globalisation. He admitted, however, to bafflement at recent events in the world. "I thought I was pretty good at politics. But I look at politics today and I’m not sure I understand it."

Blair lost power in the summer of 2007. In the ensuing nine years, he lost reputation. His business ventures and alliances with autocrats have made him a pariah among both the public and his party. A YouGov poll published last year found that 61 per cent of voters regarded Blair as an electoral liability, while just 14 per cent viewed him as an asset. In contrast, John Major, whom he defeated by a landslide in 1997, had a neutral net rating of zero. It is ever harder to recall that Blair won not one general election (he is the only living Labour leader to have done so) but three.

His standing is likely to diminish further when the Iraq inquiry report is published on 6 July. Advance leaks to the Sunday Times suggest that he will be censured for allegedly guaranteeing British military support to the US a year before the invasion. Few minds on either side will be changed by the 2.6 million-word document. Yet its publication will help enshrine Iraq as the defining feature of a legacy that also includes the minimum wage, tax credits, Sure Start, devolution and civil partnerships.

Former leaders can ordinarily rely on their parties to act as a last line of defence. In Blair’s case, however, much of the greatest opprobrium comes from his own side. Jeremy Corbyn inclines to the view that Iraq was not merely a blunder but a crime. In last year’s Labour leadership election, Liz Kendall, the most Blair-esque candidate, was rewarded with 4.5 per cent of the vote. The former prime minister’s imprimatur has become the political equivalent of the black spot.

Yet outside of the Labour leadership, Blairism endures in notable and often surprising forms. Sadiq Khan won the party’s London mayoral selection by running to the left of Tessa Jowell, one of Tony Blair’s closest allies. But his successful campaign against Zac Goldsmith drew lessons from Blair’s election triumphs. Khan relentlessly presented himself as “pro-business” and reached out beyond Labour’s core vote. After his victory, he was liberated to use the B-word, contrasting what “Tony Blair did [in opposition]” with Corbyn’s approach.

In their defence of the UK’s EU membership, David Cameron and George Osborne have deployed arguments once advanced by New Labour. The strategically minded Chancellor has forged an unlikely friendship with his former nemesis Peter Mandelson. In the domestic sphere, through equal marriage, the National Living Wage and the 0.7 per cent overseas aid target, the Conservatives have built on, rather than dismantled, significant Labour achievements."They just swallowed the entire manual," Mandelson declared at a recent King’s College seminar. "They didn’t just read the executive summary, they are following the whole thing to the letter."

Among SNP supporters, "Blairite" is the pejorative of choice. But the parallels between their party and New Labour are more suggestive than they would wish. Like Blair, Alex Salmond and Nicola Sturgeon have avoided income tax rises in order to retain the support of middle-class Scottish conservatives. In a speech last August on education, Sturgeon echoed the Blairite mantra that "what matters is what works".

Beyond British shores, political leaders are similarly inspired by Blair – and less reticent about acknowledging as much. Matteo Renzi, the 41-year-old centre-left Italian prime minister, is a long-standing admirer. "I adore one of his sayings,” he remarked in 2013. “I love all the traditions of my party, except one: that of losing elections."

In France, the reform-minded prime minister, Manuel Valls, and the minister of economy, Emmanuel Macron, are also self-described Blairites. Macron, who in April launched his own political movement, En Marche!, will shortly decide whether to challenge for the presidency next year. When he was compared to Blair by the TV presenter Andrew Marr, his response reflected the former prime minister’s diminished domestic reputation: “I don’t know if, in your mouth, that is a promise or a threat.”

The continuing attraction of Blair’s “third way” to European politicians reflects the failure of the project’s social-democratic critics to construct an alternative. Those who have sought to do so have struggled both in office (François Hollande) and out of it (Ed Miliband). The left is increasingly polarised between reformers and radicals (Corbyn, Syriza, Podemos), with those in between straining for relevance.

Despite his long absences from Britain, Blair’s friends say that he remains immersed in the intricacies of Labour politics. He has privately warned MPs that any attempt to keep Corbyn off the ballot in the event of a leadership challenge would be overruled by the National Executive Committee. At Methodist Central Hall, he said of Corbyn’s supporters: “It’s clear they can take over a political party. What’s not clear to me is whether they can take over a country.”

It was Blair’s insufficient devotion to the former task that enabled the revival of the left. As Alastair Campbell recently acknowledged: “We failed to develop talent, failed to cement organisational and cultural change in the party and failed to secure our legacy.” Rather than effecting a permanent realignment, as the right of the party hoped and the left feared, New Labour failed to outlive its creators.

It instead endures in a fragmented form as politicians at home and abroad co-opt its defining features: its pro-business pragmatism, its big-tent electoralism, its presentational nous. Some of Corbyn’s ­allies privately fear that Labour will one day re-embrace Blairism. But its new adherents would never dare to use that name.

George Eaton is political editor of the New Statesman.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad