Glasgow has been dealt another hammer blow on the jobs front, with confirmation of 4,600 redundancies at the heart of the city’s economy. A skilled, dedicated and experienced workforce faces a future on the dole as government economic policy comes home to roost. Is this the death rattle of shipbuilding on the Clyde? No, just the impact of government cuts on Glasgow City Council since 1996. The future of Govan continues to fray the nerves of the Labour establishment in Scotland, but why does it matter so much? After all, a hospital such as the Glasgow Royal Infirmary employs more people. The answer? Govan is a touchstone for Labour as it wrestles with the same economic forces that shut the Ravenscraig steelworks and the Rosyth dockyards.
A generation ago, the UK economy was reeling from the effects of spiralling inflation and fierce competition from south-east Asia. A student at the time, I was struck by a powerful statistic that has stayed with me ever since. During the 1970s, the UK spent £200m on research and development in new technologies; Japan invested an incredible £5bn over the same period. The trademark of UK industry in the 1960s and 1970s was a reluctance to invest for the long term, and the problem persists to this day.
A lot has changed in 25 years. Labour was swept from power and replaced by a new Tory philosophy; the cuckoo of free- market economics pushed one-nation Conservatism out of the nest. Industrial policy became redundant and Labour was cast into the political wilderness for a generation. Monetarist policies held sway on both sides of the Atlantic.
The free market was crowned king, but the debate over economic policy and the role of government remained, stoked occasionally by Tories such as Michael Heseltine. Should the hidden hand of market forces be given free rein? Or should government and industry work together to regulate the market? Striking the right balance on intervention is never easy: too much stifles innovation, too little could mean a return to the atavism of the 1980s.
Labour is still struggling to define its Third Way on economic policy. Apart from Tony Blair, no one seems to know what it means, although Labour’s early days in office proclaimed it plainly enough. The government’s first, audacious act was to give up its control of interest rates and make the Bank of England independent. Margaret Thatcher at the height of her powers could never have imposed such a decision on a Tory Cabinet, but Gordon Brown carried it off without a murmur. A pledge to stick to the impossibly tight Tory spending plans followed; so, too, did the decision to rely on private finance to fund essential public investment. Early entry into the euro was ruled out until the economic conditions were right. So what changed? The steady hand on the tiller pleased the City, but manufacturing was brought to its knees as the strength of sterling took a heavy toll.
A quick glance around my own home illustrates the success of Japanese manufacturing today: televisions, videos, stereos, radios, PlayStation, Nintendo, computer games. Customers queue up for the next generation of products because Japan has built up a reputation for quality, reliability and value for money.
Japan’s economic success is built upon long-term strategic goals, a “can-do” approach and a partnership between government and industry. Laissez-faire is not in the political vocabulary.
New Labour has reinvented itself as the party of business, but what is not clear is whether this means the City, or the people who build and make things. The party regards itself as an eclectic mix of opposites, an exciting fusion cuisine: in favour of business, pro-choice, pro-incentives and competition; yet caring, sharing, fair and socially inclusive. But what does this mean when hard choices have to be made?
Labour is now between a rock and a hard place. Being part of the jeering crowd was easy when the Tories held power; but now the boot is on the other foot. Govan is a defining issue that will force the party to decide where it stands. Labour’s head says “let the market decide”, but its heart yearns for a short-term fix, which is where the Third Way should come into its own. Is Govan worth saving? Should the government try to influence exchange rates, establish a national investment bank, actively promote new industries to replace the old or join the euro? Whatever it does, the government needs a strategy that commands political as well as commercial support. As it is, large areas of manufacturing industry face a slow, agonising death.
Govan is an acid test because of what it says about Labour and the real economy. Call-centres and assembly plants are fine, but they are no substitute for indigenous hi-tech industries. With government providing direction and leadership, Govan in some form can survive and prosper. Political will can move mountains sometimes, but there has to be clarity and belief in what the politicians are trying to achieve. What does “New Labour, New Britain” stand for when push comes to shove? We are about to find out.
Content from our partners
Related
