Peter Mandelson – industrial policy and public service reform

December 19, 2008 by
Filed under: Politics, Public policy, The RSA 

Speaking here on Wednesday night Peter Mandelson made the case for an activist industrial policy. The question, he argued, was not whether Government policy engages with industry – inevitably, in a hundred and one ways, it does – it is whether that engagement is appropriate and effective. Peter put particular emphasis on looking in the round at how Government shapes the environment for business. It was a comprehensive and subtle speech and I hope that business voices will take up Peter’s invitation to debate these issues constructively.

Since the speech, the Government has intimated that it would be willing to provide support to the ailing UK car industry, probably in the form of long term loans. Government can’t avoid judgements about what are strategic industries. This was underlined by the contrast between the responses to the car industry and the collapse of Woolworths; ‘something must be done’ in the former case; ’bowing to the inevitable’ in the latter. Governments have to pick winners in the sense of identifying those industries which are strategically important, which genuinely need help now and  which have a strong chance of being able to prosper in the longer term. What Government has to avoid is picking losers, or as Peter put it, losers picking Government.

But if money is to be made available to back industry I hope it won’t just be big sums for big companies and sectors. The Government should also be creating a major investment fund for social enterprises, especially those focussed on the urgent task of a fundamental re-imagining of core public services. More specifically, we need innovation that enables the public sector to deliver better outcomes with the same (or fewer) resources, by better mobilising the capacity of civic society. As I said to Peter on Wednesday, achieving a step change in public service productivity is vital not only to public welfare but also to national competitiveness.

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3 Comments on Peter Mandelson – industrial policy and public service reform

  1. Panacea on Sat, 20th Dec 2008 12:07 pm

    2. Yes you have good Experiance in the public relation..And now a days this is best businees to get more profits…Which i always like…

  2. Robert on Sun, 21st Dec 2008 10:30 pm

    3. Yes to not just big sums for big business. As well as supporting social enterprises, the government could better support a raft of small businesses which have stronger comparative advantages than the UK car industry, and which are suffering most for a lack of access to finance. The cost-effectiveness of support to small businesses, sensible targeted, is likely to be greater than supporting big business, a point John Kay made in a quietly profound column last week: http://www.johnkay.com/political/582

  3. David Donald on Tue, 28th Apr 2009 11:26 am

    4. Productivity in human services is an interesting notion. I assume we get higher productivity from barbers and hair stylists by having fewer barbers doing more heads per hour – and in more minimalist surroundings to cut overheads. Sounds attractive? The re-allocation of real national resources away from public services sounds really scary… although I can see how it benefits bankers and tax exiles.

    To measure efficiency we must first determine what constitutes effective work. (So friction in an engine is negative but highly positive in a brake). Productive efficiency in economics is a metaphor – and should be treated carefully. So more kids per teacher and more patients per doctor will usually be a loss rather than a gain.

    So glad that Peter has discovered that manufacturing matters and that industrial policy is important and useful. So we are in the position of having to re-develop high value added manufactures. What does that imply for our trade policies? Even the classical theories give us hints let alone List or Senghass. The history of world trade development demonstrates the need for an actively administered trade policy to complement industrial policy…

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