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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To win power, Labour needs to start talking about giving it away

From the House of Lords to First Past the Post, the Labour Party must seek reforms to return power to the people.

The signs were there in 2010. The British electorate failed to give any single party a majority in the Commons, delivering what amounted to a vote of no confidence in Westminster. Since then, voters have taken every opportunity to inform to those sitting on the green benches that they are not content.

The independence referendum in Scotland was closer than many had predicted. The Labour leadership election [in 2015] brought another rejection of the Westminster way of doing things when hundreds of thousands joined the party to elect a leader who opposed the New Labour platform. But David Cameron assumed that the Conservative Party was immune to this spirit of insurgency. Confident that he and his chums could convince the electorate of the wisdom of EU membership, despite decades of anti-Brussels headlines, he rashly called a referendum without considering the implications of defeat.

As with the election of Jeremy Corbyn, those who felt that their voice was no longer heard at Westminster saw the referendum as an opportunity to have their say. Driven by a dispiriting sense that they had lost control of their fate, to the extent that they felt this was no longer their country, they voted to make the rest of us feel the same.

The urge to dismiss this as nothing more than spite should be resisted. These voters feel vulnerable. If we are to believe the majority of them when they say they are not racists – and I do – then we must accept that their complaints about immigration mask other concerns. My hunch is that if they were asked to rank security of employment, of housing and of health care in order of importance, each of these would be a higher priority than security of our borders. And the terrible irony is that a Brexit driven by free-market libertarians is likely to create an economy that is even less secure for low-paid workers and those who rely on support from the state.

If the Labour Party hopes to engage with those vulnerable voters, it needs to win back trust by first showing that it trusts the people. Labour should make accountability its watchword, giving all employees statutory rights, especially those kept on precarious terms by profiteering corporations. A reformed voting system would stop parties listening only to the voices of those living in key marginals. A democratic upper house would offer another opportunity for engaging with people from beyond the Westminster bubble. Devolving power to the English regions, giving them the final say over housing, employment and health care, would allow voters to take back control over their lives and also create a better balance between London and the rest of the country.

To win power, Labour first needs to start talking about giving it away.

Billy Bragg is a musician and campaigner

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition