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Vince Cable Industry Policy Letter to PM

Vince Cable Industry Policy Letter to PM

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Published by: DigitalPolitico on Mar 06, 2012
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09/17/2013

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--~--------------------------
BIS
I
DepartmentforBusiness
..Innovation
&
Skills
TheRtHonVinceCableMP
PRIMEMINISTERDEPUTYPRIMEMINISTER8February2012INDUSTRYPOLICYIknowyouhavebeengivingsomethoughttothesubjectofindustrypolicy.asI.have,
arm
Iwanttosharemyviewswithyou.MichaelHaseltinehasbeenparticularlyhelpfulinencouragingcreativethinking.Theterm"industrypolicy"hasacquiredabadreputationintheUKasaresultofmisguidedandclumsyinterventionisminthe1970s:"pickingwinners"(often.losers);statesubsidies;"economicpJanning".Therewerehowevermoresuccessful,albeitdifferent,experiencesinFrance,Gennany,Korea,JapanandSingapore.OneofthemessagesIhearfrombusiness-thislastweekinalongconversationwithRatanTataandCyrusMistry-isthatwehaveswungtoofarintheoppositedirection.WehaveunitedtheGovernmentaroundaneconomicstrategywhichattractswidespreadsupport;restoringfiscalcredibilitywhichenablesloosemonetarypolicy;anexportdrivecentredonemergingmarkets;awarmwelcomeforinward·investors;anambitiousinfrastructureplan;astrongcommitmenttobusiness-relevantskillsandapprenticeships;universitiesputonasoundfinancialfootingforteaching,researchandbusinessengagement;andabetterprocessforstemmingandcuttingredtape.OurGrowthReviewhasidentifiednumerousactionpointsandpolicychanges-aswiththeplanningsystem-which·Couldspeedupgrowthinthemediumtolongtenn.Inalloftheseareas,weareagreedonthewayforward;theprioritynowisimplementation..Isensehoweverthatthereisstillsomethingimportant.missi",Q.;_§.,.compellingvlsion._.ofwhere
the
cotrntrytS-headn,gbeyondsoilingoutthefiscal'mess;andaclearandconfidentmessage
about
howwewill"earnourlivinginfuture.AfterthebestpartofadecadeinShellI·knowenoughaboutthedifficuftiesoflongtermplanningnotto
be
seducedintobelievingthatwecanpredicttheeconomicoyclesandmarketdrivencompetitiveforcesofthefuture.Butthatexperiencedidteachmetheimportanceofthinkingadecadeortwoahead,beyondtheelectoralangle,whichourtopindustrialistsareclamouringfor.Wecan
be
morestrategic.andtheeconomicbackdropwillincreasedemandsthatwe·areambitious.
1VictoriaStreet,LondonSW1HOET
Enquiries
+44
(0)
2072155000
IMinicom
+44
(OJ
2072156740
IContact
uswww.bis.gov.uk!corytact·us
'--7
---------------------
'
 
RecentbadnewsfromBombardier,BAESandRioTintoAleanwillnotbethelast"withpotentiallydifficultannouncementsfromGeneralMotors
and
theknock-onfromthepossibleJossof
the
Typhooncontract.Noneofthese
can
beblamedonthe_Coalition,butthepolicies
we
inheritedhave
played
arole:notably,ourprocurementrulesinthecase
of
Bombardier,
but
alsoourpfanning
rules
inthe
case
ofPinewoodStudiosbeingdeniedplanningpennission.Togethertheypointtoalackofstrategic_pro-growththinkinginpreviousadministrations,which
we
mustnowaddress.Marketforcesareinsufficientforcreatingthelongtermindustrialcapacitiesweneed.DespitethebiggestdevaluationsincetheWar,improvementintheUK'stradebalancehasbeendIsappointing.TheLabourboomandbusthollowedoutthesupplychainsonwhichexportersandinwardinvestorsdepend.Andwhilecontroversy,ragesoverbankers'bon-uses,themuch
Qigger
problemisthelackofconfidencebusinesseshaveintheirabilitytofindaffordablefinancingforfutureinvestment,
All
inall,wemustlayoutastrategicvisionforwhereourfutureindustrialcapabilitiesshouldlie,andhowtodeliver
it.
So
muchforanalysisandcriticism(includingselfcriticism)_Whatisto
be
done?
1-
havefivesug'gestions.FirsttheGovemmentcanshowmoreleadershipinidentifyingandsupportingkeytechnologies.Wehaveafantasticscientifictradition.inthis-country,andtechnologyleadershipmustdriveeconomicactivityinthefuture.Thisgovemmenthasdone-"somegoodthings--protectingsciencespending;launchingthefirstwaveof"Catapult"centres,supportingthegrowthafTech
City
andshiftingresourcestowardsSTEMsubjectsandApprenticeships.-Sutouractionsare,frankly,ratherpiecemeal.Therearelotsofindividualf)mdingdecisionsthat·lacksupportinotherpolicyareas,orare
not
followedthroughsystematically.TheTechnologyStrategyBoard,whichworkswithbusinesstodeliverpriorities,
is
operatingonashrinkingcorebudgetandtherebymissing.valuableopportunities.Therearegapsinthe.
UK
innovation"system,notably
a
lackofsupportforlargescaledemonstrationof
new
technorogies.AlloOhiscallsforastrongersteerfromgovemmenttobuildcertaintyandhencetheconfidencetoinvest.
Soa
betterresourcedoperation
is
needed,explicitlybringingtogether
the
Gove·rnment'stechnologypriorities!
and
makingtherightlinkswithotherlevers
across
government.Second,andmorecontroverslally,weshouldbe
willing,
toidentifyBritishsuccessstories,asidentifiedthroughsuccessintrade,andexplicitlygetbehindthematthe-highestpolitical
level,
Withoutinanywaypickingwinners,itispossibletoidentifysomelooselydefinedsectorswhichrnerltcloseattentionandbacking:
o
"advanced"manufacturing'andrelatedservicesForexample,theaerospaceandautomotivesectorsareeachanlmportantUKsuccessstory.Beneaththeseindustriesarebroadsupplychainsandkeyrelationshipswithothergrowthareaslikecompositesandplasticelectronics.ButovercapacityintheEuropeancarindustry.andthepotentialretreatofBAEandEADSfrom
UK
 
production,areputtingthisatrisk.Wehavestructuresinplacetodiscussthesechallenges-theAutomotiveCouncilandtheAerospaceLeadersGroup-butmustsoondecidehowmuchsupportwecangive.
I
donotsupportuspropping
up
clearlyfailingenterprises.
But
whencommercialdecisionsofinternationalcompaniesmightcausethedeclineofawideindustry,weneedtoplanhow
to
developaproperstrategicpartnershipthatretainscapabilitiesinthiscountry.
o
Digital/creativeindustries:Inthisareaofhugepotentialtherearealotofquietsuccessstories,largelywithoutdirectgovernmenthelp;theUKleadstheworldine-cornmerceforexample.Wehavetakenimportanteartysteps,including'therolloutofsuperfastbroadbandandCopyrightreform.ButtheCreativeIndustriesCouncilwhich~eremyandIhaveestablishe.disidentifyingseriousproblemswhichmakeglobal-championslikeARMtheexceptionratherthantherule.DespitefantasticSMEs,
we
haveproducedno-Amazon,noGoogJeandnoIntel.Keyissuesareinfinanceandskills,includinghowourequitymarketsfunctionthatleavetoofewpotentialgiantstoexpandorganicallyratherthansellup.oTradedservicesarecrucialtorebalancingtheeconomytowardsexports.Theseincludeprofessionalandbusinessservicessuchasarchitects,consultants,accountantsandlawy'ers;tourism;higherandfurthereducation;largepartsofthefinancialssectorwhichwerelargelyblamelessinthecrisis.Astheglobaleconomyexpandsthese
will
becomeevermoreimportant.Butthegovernmentdoesnotyethaveaclearstrategyforhowtoaddressthepressingissues,suchashowtodesignourimmigrationcapforrapidglobalgrowth,orimprovefuturelanguage
skillS,
oEnergyindustriesandlowcarbon:inrecentyearstheoilandgasexplorationindustryfeelsithasbeentakenforgranted,despitegeneratingvastinvestmentandsupportingimpressivesupplychainswithunexploitedpotential(shalegas).WeneedtoremainsensitivetotheScottishdimension,withtheperceptionthatAI~xSalmondcaresandLondondoesn't.Whilewearemakingmovestopromotethenextgenerationofrenewables(nuclearandoffshorewind),thereisasyetlittleattentiongiventosupplychainissues.Wealsoneedtomakestrongerlinksbetweenpoliciestoreduceenergyuse-liketheGreenDealandsmartmeters-andjobs
and
growth.AndtheUKhasthepotentialto.createaleadershippositioninanumberofimportantareasofthe
low-carbc:m
transportrevolution~Thisllstofsectorsisnot,ofcourse,exhaustive.Itismeanttoillustrateareaswhereweneedamorestrategicandproactiveapproachusingallofth,egovernment's-policylevers-ratherthansimplyrespondingtocrisesaftertheyhavedeveloped,orwaitingtoseewhat
the
marketdictates.Furtheranalysisoffuturetrends...:suchas,thedemographictransition,andtheneedforfutureinfrastructure-oughttoyieJd.othersignificantareasthatdemandasimilarstrategiCapproach.

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