More like this
Open up the factories and get Britain moving again
Neil Clark: As the recession goes on, it's time we stopped banking on financial services
It's certainly not the sort of news that Gordon Brown wanted to hear just before Christmas. Official figures released yesterday show that despite the Brown government‘s efforts to boost the economy, Britain has remained in recession for a record-breaking sixth quarter.
As The First Post's business correspondent Edward Helmore reports today, the economy shrank by 0.2 per cent between July and September - meaning that Britain is now the only G20 nation still mired in recession.
Why have we got it so bad while our European neighbours are already enjoying a return to economic growth? The opposition have of course been quick to pin the blame on Gordon Brown and Chancellor of the Exchequer Alistair Darling. But the problem runs deeper than two individuals. The reason why Britain is still in recession, while France and Germany are not, is because of the type of economy we run.
Britain, since the election of Margaret Thatcher in 1979, has been a country where manufacturing industry - and a diverse, mixed economy, has been sacrificed at the altar of free market dogma. We have allowed important industries to close, or be sold overseas - mistakenly pinning our hopes on a burgeoning financial services sector fuelling long-term economic growth.
Our continental rivals have pursued a more balanced, less-ideological approach. Unlike Britain, France, Germany and Italy have maintained a strong industrial base. Six of the top 14 automobile manufacturers in the world are from those three countries. Europe‘s largest engineering company - Siemens - is German; the largest energy company - EDF - is French and 85 per cent owned by the French government.
It's instructive to compare the economic policies of Nicolas Sarkozy, France's right-wing President, with those of his Conservative counterparts in Britain. Sarkozy has attacked the "speculative capitalism" of hedge funds and other financial predators and railed against market fundamentalism. He has called for greater state intervention in the economy and has done all he can to protect French manufacturing during the economic downturn.
In Britain meanwhile, the Conservative Party remains wedded to free-market, laissez-faire ideology, defending the role of hedge funds and private equity companies, opposing state intervention to help industry and remaining blase about famous British manufacturing companies, such as Cadbury, being taken over by foreign-owned rivals. When Lord Mandelson was involved in a public argument with Sarkozy over issues of free trade and protectionism last year, British conservative commentators revealingly sided with Labour's EU Commissioner and not with the French President.
The great tragedy for the British economy was that instead of breaking with free market dogmatism when they came to power in 1997, New Labour continued on the path laid down by Margaret Thatcher. In fact, under Labour, manufacturing declined at a faster rate than even under the Conservatives. Labour in government presided over a reckless credit boom and did nothing to stop the rise of the worst kind of financial spivvery in the City of London.
But despite the change in rhetoric since the slump kicked in, the government continues to champion the disgraced financial services sector. Shamefully Labour - together with London mayor Boris Johnson and the Conservative party - is fighting attempts to introduce tougher EU-wide regulation of hedge funds.
It doesn't have to be like this. In the 1960s the Labour government's pro-manufacturing policies, aided by the devaluation of 1967, led to a 20th century record balance of payments surplus of £550m in 1970, the year they left office.
An ‘I'm Backing Britain' campaign, to encourage economic patriotism, was endorsed by Prime Minister Harold Wilson, while an innovative Selective Employment Tax was levied on service industries, the revenue going to subsidise export industries.
What is needed for Britain to achieve long-term sustainable growth is for the Labour Party to once again put industry first and end its disastrous 12-year love-in with the City. And for the Conservatives to jettison Thatcherism - a most unconservative ideology - and follow the more dirigiste Gaullist policies followed by Sarkozy in France. Or, failing that, a third party to come to power which will make a clean break with the deeply flawed economic policies of the past 30 years.
Britain was once known as ‘The Workshop of the World'. If we are to return to prosperity, we urgently need to get the factory gates open again. ·
Comments are now closed on this article
Comments
So one more problem caused by that stupid, single minded woman. The apologist citing the high rate of attritrition in the labour rule should realise that the damage was done singlehandedly by the woman who was 'not for turning' and idiot Blair merely presided over the last rites in his role of vacuous idiot.
This woman who was wrong in nearly all of her policies singlehandedly destroyed Britain and before anyone gets the idea I am a Blair/Brown supporter I consider Blair a cheating, lying, vacuous conman and Brown a vacillating buffoon.
MrsT abolished manufacturing, and coal mining, to embrace the service industry - the ultimate in taking in each others washing.
For ancient history buffs Clark's mention of "..I'm Backing Britain' campaign, ..(and).. Selective Employment Tax.." was a great laugh for end of year drunks. Is he too young to recall them massive shedding of jobs that caused?
NOT taken up by light manufacturing as intended for the simple reason that Britain was already overpaid for widget making.
I'm only surprised that he didn't mention Wedgie Benn's "White Heat of Technology" dream for real nostalgia.
Do tell which industrial revolution you imagine is going to compete with China and WHY we would want it turning our now clearing skies back into soot laden smog.
By the way HarlanL, you've messed your antigreen script by including nukes in the "won't keep the lights on" meme. In fact, wind, solar & wave would be worthwhile new industries as they do not need a huge industrial base. The essential point is that they are local so any unemployed mechanic, fitter or anyone else who knows which end of a spanner to hold, would be able to get involved at their local level and let megabiz die the death it richly (sic!) deserves.
You know, there's only one problem with this:
"In fact, under Labour, manufacturing declined at a faster rate than even under the Conservatives."
It's untrue. I'll grant you that manufacturing has declined under Labour. Peak manufacturing output was in 2005. But manufacturing output did not decline under the Conservatives. Manufacturing output was higher in 1991 than it was in 1979, higher in 1997 than it was in 1991*.
In fact, in 1991 and again in 1997 manufacturing output in the UK was higher than in every previous year ever.
So it's extremely diffucult to talk about the "decline in manufacturing".
What you might mean is:
1) Decline as a percentage of the economy. This has been happening everywhere just as it did with agriculture a century ago. Services had simply been growing faster than manufacturing.
2) The decline in manufacturing employment. This is what is known, technically, as a "good thing". It reflects rising productivity and means that we can get ever more manufactured goods from ever fewer people. This is the very definition of what it means "to get richer". More production from fewer resources.
* Yes, I know, some won't believe this. Go and look it up at the ONS. It's called the Index of Production.
The principal problem is that you have a talentless ponce masquerading as the "Business Secretary" and deciding Govt Police - a nasty thieving little scrote who has never done a day's work in any kind of "business", and who hasn't a clue about it. This fool's idea of what a "business" might be consists of a couple of technical-college students getting together to start an internet consultancy. The idea of actually manufacturing anything is far too uncouth for the useless stream of yellow PISS that is Lord Mendelssohn of Foy.
So, er, what factories is Britain full of, just waiting to be re-opened?
They are gone, dead, buried.
Who would rebuild them? What would they produce? Who in this country has the skills, expertise, training, etc. to work in them?
France, Germany, USA, Italy (hardly an economy to emulate), had maintained, developed, adapted their existing manufacturing base. We would essentially be starting from scrap in many areas, woefully, and too far, behind a world that has moved on.
This is a pipe dream, as if a wave of a wand can magic up... what, exactly? Whisk us back to the 1960s?
Where's The Doctor when you need him, eh?
Britain has shot it's final bolt.
Brown bet the next Parliament's budget on banking being able to bail us out of this economic slump. That's it, the money's gone.
Even if we had factories lying idle, just waiting to be re-juvinated, we couldn't afford the cost.
Thatcher's economic revival was built more on flogging off our petroleum resources rather than financial wizzardry.
North Sea oil and gas could have powered us through this century if it had been preserved for our use.
Energy was the foundation of Britain's economic success--first steam and coal, then oil and gas--upon which munufacturing was built.
Wave, Wind, Nuclear, solar.. won't even be able to keep our lights on, let alone power some conjured-out-of-thin-air manufacturing renaissance.
Britain's decline has been long, with bursts of defiant resistance, but wer are now truly buggered.
Some good points made here, on a subject which I've been banging on about for years, but i'm sorry to say that Neil Clark and all the rest of us are wasting our time commenting on the problem whilst we have an outfit in Europe telling everyone what they can, and cannot, produce and manufacture and we are left with a few lame industries propped up with vast amounts of our money - to save a few jobs! Take just one small (actually, large) example, wheelie bins, millions and millions of 'em, and growing like Topsy.
Now, you would think that, if for no other reason than trying to save the planet, by the reduction of shipping things around the globe, we would be making them here - in Great Britain. No chance, they're all made in Germany.
I live in the rural Cambridgeshire. The area used to have a vast area of orchards, but not any more. Fruit is shipped in from all over the rest of Europe - more fossil fuel consumed. And this sorry tale of woe just goes on and on because we have a Government which lacks the guts to do anything about it. One gets the impresion that if Brussels says 'jump' Gordon Brown asks 'how high and how long do you want me to stay in the air!'
How is it that Britain was the richest country in the world between 1815 and 1914? So rich that the Americans never caught up to her wealth until the 1970's. Why was London the clearing house of the world were all bills were paid and all discounts received? Because of the smartness of the boys in finance which in turn promoted the growth of industry through a gold standard and the Real Bills Doctrine as explained by Adam Smith in 'The Wealth of Nations". Government going to war in 1914 ended that run. So the factories don't come first, the money to open the factories comes first after the speculators see a probable profitable outcome. Beating up the finance industry does not open factory gates. Blaming the banks for the recession is absurd when Socialist government spending fueled by printing lots of paper money is the root cause. Only by returning to gold as money can this problem be fixed.
Factories are not as glamorous places to work as inside glass covered buildings in the City. Manufacturing real goods takes hard work and bad pay. In the UK, people had been led to believe that a consumption based economy is far better than a production based one. That is why many people despise China so much. They buy Chinese items but call them crap while no local alternatives are even here. These economic hard times, which could get worse, might force people to reassess their opinions of the economy they want to have and force the government to support production of real goods and services and not phoney rich-quick financial scams such as derivatives trading, CDS etc etc.
About time we started to look at creating real jobs in British factories. In my opinion there would be another significant benefit to opening up British factories, and that is the impact on the environment. Instead of buying products from second rate factories that pollute the atmosphere, and then shipping them around the world causing more pollution, we could buy products manufactured in the UK. These factories would almost certainly be better controlled, from an environmental point of view, and the transport related emissions would also be reduced significantly.
I would say "buy British" but we probably don't make it here anymore!
Excellent article Neil. The only problem is that 99% of the media would attack any politician who would dare blaspheme against lady Margaret and her hedge funds, despite the fact that most of Britain's social problems have been caused by de-industrialisation.
I find it really funny that at the head of this article the editor has chosen an old photograph (my guess pre-1930s) of shipbuilding workers to illustrate his piece. What Neil writes is true of course, but the dream of any of the three major parties changing tack will remain just that - a pipe dream. The die is cast : Britain is fast going down the pan with all the paper money-men, pen-pushers & hangers-on with it.
As you say the drop of in manufacturing production has been sharpest under Labour. Mrs Thatcher reduced over manning and inefficiency primarily, allowing some manufacturing to flourish.
The problem is that the expansion of the state and the financial sector have swallow resources of human talent that are no longer avaialble in the private sector.
THanks to Labour's cam,paign to increase its payroll vote some parts of the country are almost soviet in their state employment rates - making life impossible for private industry to attract and retain talent as the state is such a generous and safe employer its impossible to compete against.
The real villain here is the increase in the side of the parasitic state and the way like a cancer it staves industry of talent and resources.