by Angela Eagle
We have a serious problem with loneliness in our societies, especially among older people. Our current bizarre solution of warehousing older people in insufficiently funded ‘care’ homes means we abandon huge amounts of knowledge, experience and wisdom. By re-conceptualising work as a gift to society, we can start to unshackle ourselves from existing approaches that are failing. We might, for example, think about ideas like co-locating adult social care facilities with nurseries. In pilot projects being tried around the world, the results have been dramatic. The kids thrive. And the elderly people thrive too. It has near-miraculous results. The Atlantic, reporting on one scheme, described the effects on people who might otherwise be abandoned to a slow, mean decline:
[A] resident with advanced Alzheimer’s whose speech was incomprehensible garble was able to speak in complete, fluid, and appropriate sentences the moment she was wheeled into the baby room. ‘You could immediately see that she had accessed some part of her brain that had raised several kids,’ [the director] says.
It is that kind of swashbuckling policy-making that will drive the betterment of our society over the coming decades, remoulding our social settlement to meet the demands of the future rather than reflecting the shape of the past. Meeting the challenges posed by demographic change to ensure that we offer all our older citizens the security of a guaranteed high-quality standard of social care means a major change in funding to provide it and a big change in the status of caring jobs. A move away from the low-pay, no-skill model which blights the care sector today is long overdue.
CONCLUSION
A fair and just society pays attention to how those who work are treated. For far too long the weakening of the trade unions has allowed the spread of exploitative jobs and created an economy which is increasingly failing to provide good jobs and secure living standards. Until rights and protections are strengthened, there is little prospect of this improving. The war on trade unions has not helped, but rather hindered societal fairness and even economic progress. That is why regulation of the labour market has to be at the centre of any attempt to create a fairer and more productive society.
CHAPTER EIGHTEEN
A MODERN INDUSTRIAL STRATEGY
For many years, the UK has had no industrial strategy worth the name. Perhaps more so than any other advanced economy, the UK has failed since the 1970s to adopt a coherent approach to the management of this vital part of the economy, preferring, as we have shown, to leave it to the ‘free market’. The very notion of having a strategy for building our industries and strengthening the economy was anathema to the Hayekian politicians who came to power in 1979. They would have purred with approval at his words in The Fatal Conceit: The Errors of Socialism:
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralising decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralisation actually leads to more information being taken into account.
Hayek believed that decisions taken throughout an economy, based on locally held information, would always add up to a better outcome for all than if it was planned centrally. However, as is almost always true in politics, for all the superficial attractiveness of any particular nostrum, the best solution usually lies somewhere in between two ideological poles. If markets are left to their own devices, without any guiding hand to correct their many errors, you end up with the sort of economy we’ve had in the past few decades.
Once the cradle of the Industrial Revolution and the workshop of the world, UK manufacturing has been allowed to decline so that it now makes up only 10 per cent of Gross Domestic Product, down from 25 per cent in the 1970s. Services – which covers a huge range of activities from logistics, hospitality, communications, government activities including the NHS, and, more obviously, financial services and business services, like consultancy – now accounts for 80 per cent of our economy. Just financial services alone – an industry in which Britain and, in particular, London, is a world-leader, comprises around 12 per cent of GDP and 11 per cent of all taxes paid in the country.
These changes to our economy and the decline of manufacturing has led to profound geographical inequalities. Entire areas of once-proud industrial heartlands have been allowed to go to rack and ruin while those in the cities thrive in the service-based industries that have established themselves in urban centres. The Hayekian belief that leaving free markets to work their magic will inevitably herald a revival of those left-behind regions and local economies, returning prosperity to these areas, was simply not borne out by reality.
Moreover, the UK now runs an ever-widening trade deficit, which means we import more than we export. A surplus on trade in services is outweighed by a deficit on trade in goods. In 2016, the UK’s exports of goods and services totalled £555 billion and imports totalled £595 billion, making our overall trade deficit £40.7 billion (2.1 per cent of GDP). It should be noted that the EU accounted for 43 per cent of UK exports of goods and services and 54 per cent of imports, which explains the sheer panic we have been witnessing over post-Brexit trading arrangements. If barriers were erected to that trade, we could find ourselves in real trouble very quickly.
After a long period without anything resembling a cogent UK industrial strategy, rather like buses, three of them suddenly came along at once. The first made an appearance in 2008, when the then Labour Industry Secretary Lord Mandelson reestablished an important new framework for active government intervention and involvement in our economy, something he had witnessed working successfully in other EU countries during his time as Trade Commissioner. Quite often, Britain’s failure to have an industrial strategy had been blamed by the Conservatives on European Union ‘state aid’ rules. However, the rules were never as rigid, didactic or far-reaching as the Eurosceptics had claimed. Lord Mandelson rightly believed it was essential that the government become more active in the aftermath of the global financial crash because of the urgent need for economic renewal. And since the bank bailouts, it was now very clear that the dangers of a bloated financial sector posed a larger threat to financial stability than had previously been appreciated by policy-makers and politicians alike. If it is to minimise the chances of a repeat of a catastrophic market event, the UK needs a safer and more sustainable balance between its financial sector and the rest of the economy.
After Labour lost the election in 2010, Lord Mandelson was followed by Vince Cable, who essentially continued what Labour had begun – especially when it came to the system of ‘catapults’ designed to help innovation in particular chosen sectors where it was thought the UK had a comparative advantage. The prospects for continuity took a turn for the worse, however, when the Conservatives won a majority at the 2015 general election. Sajid Javid, the new Business Minister, was revealed as a man who would not allow himself to utter the words ‘industrial’ and ‘strategy’ in the same sentence, and whose ministerial office featured a rather large and forbidding portrait of Margaret Thatcher. Even he – however reluctantly – was persuaded that the government had a role to play during the Tata Steel crisis, when he found himself excoriated on the front pages of the national newspapers for going on holiday instead of attending a crucial board meeting in India just as the UK steel industry teetered on the brink of extinction. As the then shadow Business Secretary, Angela got the chance to see Javid’s Thatcher portrait for herself. She found it deeply ironic that it was under Maggie’s disapproving gaze that she sat discussing state intervention with a Conservative Secretary of State to save steelmaking capacity in the UK from the utter destruction to which Mrs Thatcher’s ideological dogmas had contributed.
Following the shock and upheaval caused by the Brexit vote in 2016, the new Prime Minister Theresa May
and her Business Secretary Greg Clark have seemed to embrace more enthusiastically the idea that the UK should have an active industrial strategy. This was something that Mrs May has often mentioned, beginning with the speech she made to launch her bid to be elected Conservative leader. After she became Prime Minister, she merged the Business and Skills Department with the Department for Energy and Climate Change, creating a new platform from which to launch an active industrial strategy. Since then, there has been a transformation in the rhetoric coming from the government – even some reasonable analysis published by the newly renamed Department for Business, Energy and Industrial Strategy. However, much talk, many press releases and even a modestly received White Paper later, it is clear that there is an embarrassing gap opening up between the rhetorical flourishes and the policies that are actually being contemplated. Instead of a roaring lion, it seems that the government have laboured to bring forth a tiny little mouse of an industrial policy. Modest and worthy it may well be, but it is not nearly radical or transformative enough to deal with the problems the UK must solve, especially against the darkening backdrop of a possible ‘hard’ Brexit.
THE ROLE OF TRADE UNIONS
Over many years, the Trades Union Congress and those unions who organise in manufacturing and the private sector – including Unite, the GMB, Community and the CWU – have been strong and consistent advocates of a new industrial strategy. As trade unions, they are all at the forefront of the partnership approach at the workplace which is essential to the most efficient functioning of companies and the fair treatment of their workers. The utility of this partnership approach has been proved time and time again in such sectors as automotive and aerospace, in telecommunications and pharmaceuticals. The insights trade unions bring as a result of their direct workplace experience are invaluable. The design of any industrial strategy must therefore include a strong voice for the workforce through their trade unions if it is to maximise the chances of successful implementation and delivery. Yet the government’s November 2017 White Paper, entitled ‘Industrial Strategy: building a Britain fit for the future’, barely mentions employees at all, let alone their trade union organisations.
When the BEIS Select Committee visited Sweden as a part of their inquiry into the government’s industrial strategy plans in 2016, this ‘social trust’ between the government, industry and unions was emphasised to them.60 Likewise, the TUC made similar points in the evidence it gave to the Select Committee during the course of its enquiries looking at the government’s early proposals in the industrial strategy Green Paper of January 2017. The resulting White Paper fails completely to acknowledge that the dogma of market fundamentalism is the real cause of much of the weaknesses it correctly identifies: excessive pay, low and stagnating productivity and flat-lining real wages.
THE ROLE OF AN INDUSTRIAL STRATEGY
The fact that even the UK Conservative Party has finally admitted the need for the UK to develop an activist industrial strategy marks, at the very least, a rhetorical break with their market fundamentalist doctrines. Their heart can never be in it, however, because they don’t really believe that strategic interventions by the state can be legitimate or effective, except in those rare areas where the market obviously fails. How then should those who do believe in a role for an activist government shape a successful industrial policy? What would a democratic socialist industrial strategy look like?
OVERARCHING AIMS
Once the decision has been taken to take back control of the direction of economic and industrial policy from the arbitrary chaos of the ‘free market’, it is essential to define the aims of such a policy. Measurable indicators of success should also be set out so that the efficacy of the strategy can be evaluated and be subject to democratic scrutiny as it develops. There should be a national conversation about it. It should also be considered and discussed by national and local government, companies and their stakeholders, as well as by civil society.
Democratic socialist values offer essential guidelines for the desired outcome of such a strategy. Considerations of fairness and equity would suggest that the rewards of economic activity should be more fairly distributed between women and men, between regions and nations of the country, between social classes and between ethnicities. In other words, the aim of an industrial strategy should be to achieve inclusive growth. This means it should take place first in the regions and the sectors where the poorest live and work. Opportunity should be accessible to all and everyone should have the chance to contribute to the society in which they live and be supported to make a meaningful input. The task of forging a new industrial strategy should be pursued in co-operation with a wide range of economic and political actors. This means that there should be an influential voice for trade unions, local government and industrial sectors at the table where the decisions are being taken. This planning effort should encompass new forms of accountability to a wider group of stakeholders than just those who own shares in companies. Success will require a new settlement at work based on partnership and democratic voice. This will include worker and consumer representation on boards, to break up the male groupthink that all too often predominates in the boardrooms of today. This new inclusive method of building the strategy and the way it is put into effect by the government is an important part of this new approach. Building institutions that encourage co-operation and planning to take root at sectoral, regional and local level will embed the new infrastructure needed to transform the way that our economy works.
In its discussion paper on industrial strategy, the IPPR’s Commission on Economic Justice suggested an attractive and timely mission for a transforming industrial strategy. The aim, it said, should be:
To change the structure of investment and production in the UK economy – its composition, direction and geography. The ultimate goal should be to achieve a more innovative, sustainable and inclusive pattern of economic growth which generates decent jobs and rising incomes for average and below average income households in all parts of the country.
We couldn’t have put it better ourselves.
TAKING BACK CONTROL – THE CHALLENGES WE FACE
Britain is at a crossroads and in need of a radical and fundamental break with the status quo. We do not currently have a society which is economically, socially or environmentally sustainable, and this needs to change. Even without the debilitating effects of forty years of domination by market fundamentalist ideas, we would need fundamental structural reform to cope with the four major challenges which lie ahead.
These challenges are:
The disruptive nature of the Fourth Industrial Revolution, especially for jobs;
The challenge of decarbonising our economy to deal with the threat of climate change;
Coping with our ageing society;
And now the dangerous and immediate uncertainties and complications of Brexit.
If we are to survive and prosper in this rapidly changing world, we need a radical and profound change from the failing free-market status quo. We have to take back control and stop outsourcing our decisions to the arbitrary and unfair outcomes of ‘market forces’. We know that the solutions of the market are neither ethically nor economically superior and they have come at a huge social cost. Our current system is not working for the many. It is unfair and unsustainable and it must be reformed.
Our growth potential as an economy has slowed to historically low levels. We are more unbalanced as an economy by region, by social class and between consumption and production than we have been for a very long time, and these trends are worsening. Despite excellence in higher education and scientific innovation, we have become a low-pay, low-skill economy, with stagnating levels of productivity as our competitors make progress at our expense. We have greater levels of poverty and lower levels of adult skills than many of our competitors and our neglected national infrastructure is creaking at the seams. The prevailing faith in market dogma has delivered the worst of all worlds. We have lost ground, l
ost growth potential and we are failing to recover quickly enough after the near-collapse of the global financial system.
A look at the current economic forecasts reveals our predicament. At the November 2017 Budget, the Office for Budget Responsibility downgraded its growth forecasts for the UK to under 1.5 per cent for the next five years. This is in the context of a 2 per cent annual growth rate which would have been regarded as very disappointing for most of the post-war period. As a result, the OBR predicted that by 2021/22 we would have an economy in which Gross Domestic Product per person will be 3.5 per cent smaller than they were predicting only a year earlier in March 2016. That is a £65 billion shortfall on the previous year’s forecasts.61 They adjusted downward their forecasts on real annual earnings, too, which they now expect to be £1,400 lower on average than they were expecting last year. They go on to predict nearly two decades of flat-lining real earnings. Meanwhile, inflation is at 3 per cent, which effectively signals a return to falling living standards. And if you were hoping for a pay rise to help plug the gap, you’re not in luck. The prospects that Britain will get one any time soon was downgraded from a previous unfulfilled yet modest assumption of 1.7 per cent a year to a mere 1 per cent. And even this is being seen by some analysts as too optimistic given current performance (0.3 per cent in 2017). Thus, Britain has suffered the slowest recovery from recession since the Napoleonic War and the largest squeeze on living standards since Victorian times. Little wonder, then, that unsecured consumer debt is currently at £200 billion and now rising at the fastest rate since the crash. As the Bank of England have noted with some consternation, it is up an alarming 10 per cent in the past year during the time when real wages are falling at 0.4 per cent.62 As Andrew Bailey, chief executive of the Financial Conduct Authority, has noted, this is not ‘irresponsible spending’: it is individuals on zero-hours contracts using credit cards to pay essential bills or buy food. Our low-wage economy and insecure labour market are leaving millions of people in work on the edge of catastrophe, fighting to provide necessities, unable to accumulate any savings to fall back on. It has reached a point where one in four of our children are now growing up in poverty. How can this be acceptable in what is still one of the world’s largest economies?
