There is an alternative: governments can do what markets cannot

To succeed in age of globalisation, British manufacturers need a government that rejects laissez faire Thatcherism.

In the wake of Baroness Thatcher’s funeral last week, there has been much revisiting of the 1980s and her legacy. Though there are disagreements as to the benefits of her approach, there is one thing on which we can all agree: for better or worse, she did change Britain.

One impact of the revolution her policies unleashed was that too much of our manufacturing base was undermined. Nevertheless, Britain remains the ninth largest manufacturer in the world today, and a global leader in many areas of advanced manufacturing. The best of British manufacturers have shown they can meet the challenge of global competition.

For example, since Labour’s establishment of the Automotive Council – and the continued backing of it by this government – Britain has confirmed itself as a great place to make cars. The sector has attracted investment on an unprecedented scale and is on track to break the record for car production set in 1972.

What it means to be a leading manufacturer is changing as well, as the divide between the service and manufacturing sectors has become blurred. Last week I visited Rolls Royce, a global leader in aerospace. The majority of Rolls Royce’s revenues are generated not from manufacturing but from after sales service contracts. This shows how the benefits of a strong manufacturing base can spill over into other sectors, generating more of those well paying and satisfying jobs that our economy needs.

So the potential is there to grow our manufacturing base further. But British manufacturers need a government that backs their ambition. They need a proper, modern industrial strategy – demanding in its ambition and effective in its execution. This is not something which sits comfortably with laissez faire Thatcherism.

George Osborne – a disciple of the laissez faire approach - promised a "march of the makers". But overall, and despite a significant fall in the value of the pound, the reality simply has not matched his rhetoric. The latest trade figures were terrible, with the recent fall in exports reflecting a downward pattern that started in October 2011 according to the ONS. Companies with cash lack the confidence to invest. Firms needing finance to expand can’t get it.

One of the maxims of the neoliberal economic revolution Thatcherism unleashed was that governments must be subservient to markets. There was, Mrs Thatcher said, "no alternative". Recent history warns of the limits of this approach. It is also becoming abundantly clear that globalisation, far from limiting the space for governments to act, is making such action more important. It is not surprising that northern European economies which have pursued industrial strategies and applied a different model to Thatcherism have largely maintained their shares of expanding global trade through policies that work together to reinforce areas of national strength. 

Governments can do what markets cannot: they can help firms work together to address shared problems over skills or R&D, even as these businesses compete fiercely for custom. Governments can give direction and support to the animal spirits that drive investment and innovation. Through strategic use of procurement powers, governments can provide clear market signals, allowing British-based firms like Bombardier, whose plant in Derby I have also recently visited, to develop the capabilities needed to win public contracts. Public contracts can be used, after all, to advance public goals: to train apprenticeships, to encourage innovation, and to boost local employment.

Baroness Thatcher’s passing has revived strong memories of a bygone era. Yes, she changed Britain, but changed circumstances mean our country’s economy now needs something different too - there is an alternative and we must grasp it. 

 

A Vauxhall employee works on a vehicle on the production line at the Vauxhall car factory in Ellesmere Port, north-west England. Photograph: Getty Images.

Chuka Umunna is the shadow business secretary and the Labour MP for Streatham.

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I believe only Yvette Cooper has the breadth of support to beat Jeremy Corbyn

All the recent polling suggests Andy Burnham is losing more votes than anyone else to Jeremy Corbyn, says Diana Johnson MP.

Tom Blenkinsop MP on the New Statesman website today says he is giving his second preference to Andy Burnham as he thinks that Andy has the best chance of beating Jeremy.

This is on the basis that if Yvette goes out first all her second preferences will swing behind Andy, whereas if Andy goes out first then his second preferences, due to the broad alliance he has created behind his campaign, will all or largely switch to the other male candidate, Jeremy.

Let's take a deep breath and try and think through what will be the effect of preferential voting in the Labour leadership.

First of all, it is very difficult to know how second preferences will switch. From my telephone canvassing there is some rather interesting voting going on, but I don't accept that Tom’s analysis is correct. I have certainly picked up growing support for Yvette in recent weeks.

In fact you can argue the reverse of Tom’s analysis is true – Andy has moved further away from the centre and, as a result, his pitch to those like Tom who are supporting Liz first is now narrower. As a result, Yvette is more likely to pick up those second preferences.

Stats from the Yvette For Labour team show Yvette picking up the majority of second preferences from all candidates – from the Progress wing supporting Liz to the softer left fans of Jeremy – and Andy's supporters too. Their figures show many undecideds opting for Yvette as their first preference, as well as others choosing to switch their first preference to Yvette from one of the other candidates. It's for this reason I still believe only Yvette has the breadth of support to beat Jeremy and then to go on to win in 2020.

It's interesting that Andy has not been willing to make it clear that second preferences should go to Yvette or Liz. Yvette has been very clear that she would encourage second preferences to be for Andy or Liz.

Having watched Andy on Sky's Murnaghan show this morning, he categorically states that Labour will not get beyond first base with the electorate at a general election if we are not economically credible and that fundamentally Jeremy's economic plans do not add up. So, I am unsure why Andy is so unwilling to be clear on second preferences.

All the recent polling suggests Andy is losing more votes than anyone else to Jeremy. He trails fourth in London – where a huge proportion of our electorate is based.

So I would urge Tom to reflect more widely on who is best placed to provide the strongest opposition to the Tories, appeal to the widest group of voters and reach out to the communities we need to win back. I believe that this has to be Yvette.

The Newsnight focus group a few days ago showed that Yvette is best placed to win back those former Labour voters we will need in 2020.

Labour will pay a massive price if we ignore this.

Diana Johnson is the Labour MP for Hull North.