Industrial Policy

Earlier this week I went to a Young Fabians policy commission on the economy. It was great to be able to discuss the application of left wing political ideas to our current recessionary woes. It made me think about a few things, so I thought I’d set it down here –

Hard Infrastructure – Roads, Rails, Bridges, Ports. This isn’t just about moving containers full of finished product around but people (quickly, cheaply and at times which are useful). Many business parks around the country have bus services which stop for the day at 4.30 in the afternoon. Trams and nationalised railways services, aimed at moving people from A to B, rather than making profits from on-train retail surely have to be a good idea?

Another aspect of the necessary infrastructure is non-local; provision of reliable, low cost and secure supplies of electricity will be absolutely fundamental to encouraging the next generation of industrial cluster. This requires large scale, long term investment in building power plants and maintaining the national grid. A key source of competitive advantage in the ‘new’ economy could easily be having the greenest (i.e. lowest associated carbon footprint) electricity in Europe. We have significant wind energy resources, converting this into cheap, green power would be a boon to industrial users (in particular Data Centres), where electricity is the main input. It’s also widely accepted that if we don’t get a number of new nuclear power plants into construction very rapidly, the lights will go out – something that would certainly put me off locating a new production facility in the UK. There is certainly a case for a ‘national plan’ to ensure that we retain the skills necessary to build and maintain critical national infrastructure, such as nuclear power plants, road, rail (including rolling stock), IT, telecoms (and arguably nuclear weapons, submarines and aircraft carriers too) etc. This is also a commercial imperative; at the present time the UK effectively finds itself in a bidding war for the construction of nuclear power plants. Most of western Europe needs to build new nuclear power plants over the same time scale we do, given the limited resources only the highest bidders are likely to get their plants completed and turned on before the lights go out.

Skilled workers are vital – here I feel the best payback is from encouraging science and engineering at the university level. If the government is serious about ‘enabling the British economy for the 21st century’ etc. then university courses that attract this ‘knowledge infrastructure’ benefit should be subsidised (not subject to even higher tuition fees). This ties in with the need to create an indigenous skill base for critical occupations (in the same way that the NHS trains doctors). There is always potential for people to leave the country after benefiting from a free university education, but this is just part of the deal with free movement of people between countries (especially those with sought after qualifications and skills). Another interesting idea suggested to me recently by one of my true-blue Tory friends (cheers Charlie!) was a 2 year ‘national service’ type plan, where the state would offer a free university education in exchange for 2 years of public service – I think this is a great idea as it cements the ‘deal’ between the state and the individual, whilst providing a platform for much needed improvements to social cohesion and integration, in exchange for free higher education.

Moving to the start of the educational spectrum, provision of free child care facilities should be a fundamental part of all future industrial developments. I don’t know, but I get the impression that childcare costs are massive, access to such facilities in business and industrial parks is poor and there is significant scope for improvement. Quite how this should be implemented, I’m not sure. Section 106 planning agreements could be used to ensure that developers fund the physical construction of new childcare facilities. However I feel that what is needed is more than just the creation of buildings, a full build-own-operate-turnkey solution, that works with local employers and parents to provide an excellent service, free at the point of use.

Finally, on the subject of the formation of specialist clusters I think it’s a great idea. However, I think it should be implemented at the national level, rather than through RDA’s (or whatever they’re call these days) to prevent competition for scarce resources. Porters Diamond Model is to my knowledge absolutely the best thing yet written down about how to grow your own cluster. Cambridge is certainly an EU hotspot for sci/tech start ups, it has VC’s and incubator type lab/office space – as well as the UK’s best university. Quite how much credit any government can take for this success I don’t really know, I suspect it was in large part due to the people who are/were there doing it for themselves. The other key point is how a cluster gets to the critical mass stage and grows organically without the need for buckets of cash and encouragement. Probably we need to try the rather unscientific approach of creating a good number more ‘new clusters’ across a range of sectors, on the basis that at least one of them might one day succeed. The core ingredients to each must be a university with international recognition in the chosen sector, and the availability of reasonably priced office/lab/land for development.

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