Mandelson calls for more state activism to replace 'light touch'
Business Secretary admits Labour was 'spooked' about regulating the City
By Andrew Grice Political correspondent
Thursday, 5 March 2009
The Government will have to intervene more in the business world after
the recession to ensure Britain equips its industries for the future,
Lord Mandelson said last night.
The Business Secretary said New Labour had been too cautious about
interfering in the private sector when it took power in 1997 as it tried
to prove its economic credentials. He said Gordon Brown's ill-fated
"light touch" City regulation would have to be replaced by a more active
"right touch" system as he called for "a new balance" between the state
and the private sector.
Lord Mandelson's blueprint for "industrial activism", outlined to a City
audience at the Mansion House, is bound to provoke criticism that he
seeks a return towards an Old Labour agenda in which Labour governments
in the 1960s and 1970s intervened directly in business. He denies
wanting the state to "pick winners" but believes that the Government
will need to invest in hi-tech firms and growth industries to fight back
after the downturn.
Insisting that the recession could provide a huge opportunity for
Britain plc, he argued: "We will restore and rebuild, and we will emerge
stronger and better. But we will emerge a different country. The shape
of our economy, the drivers of its growth, our approach to the
relationship between the private and public interest. These need to
change."
Lord Mandelson said Britain would "fight its way back" by focusing on
its strengths in hi-tech manufacturing, aerospace, automotive,
biosciences and precision engineering; business, computer and financial
services and the strongest creative sector in the world. "Kate Winslet
was just the beginning," he said. While he rejected "British
protectionism and economic nationalism" , he said Labour would need to
use the strategic role of government better to ensure high-value jobs
and economic growth. "We've too often devalued our ability to build a
stronger private sector through activist public policy," he said,
"deferred to private-sector expertise without the balancing assumption
that government must have a parallel expertise in shaping the world in
which private enterprise operates. We've been so spooked – often rightly
– by the very idea of 'state intervention' that we've been too cautious
in asking what more we can do as a country to equip ourselves to compete
in a global economy."
Calling for "responsible capitalism", he said it would require "a new
sense of public responsibility and of the public interest in Britain. A
sense that the same basic rules of responsibility and merit apply across
the board. That a dynamic capitalist economy is not an end itself but a
means to a stronger and more cohesive and prosperous society. A
capitalism that builds for the long term as well as rewarding in the
short term."
For banking, that would mean "a sounder, more sober model that would
shape the expectations of a generation of businesses, especially small
firms.
He promised a renewed focus on public sector reform and productivity,
such as his controversial plan to sell off 30 per cent of the Royal
Mail.
Then and now
"The case for economic reform rightly stresses the virtues of market
opening, competition and liberalisation – pursuing the classic liberal
consensus of 1990s Europe." Speech in Warsaw, 2002
"We used to talk about light touch: now it's going to be about the right
touch... A dynamic capitalist economy is not an end itself but a means
to a stronger and more cohesive and prosperous society." Mansion House
speech last night
http://www.independ ent.co.uk/ news/uk/politics /mandelson- calls-for- more-
state-activism- to-replace- light-touch- 1637715.html
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