It’s fair to say that Theresa May’s first couple of months as Prime Minister featured a few moments that raised eyebrows – and a few moments which put some backs up – in the business community.
Take two examples. First there was her proposal, issued during the leadership campaign and repeated at the Conservative Party Conference, for workers on boards. It led some to raise concerns about government meddling in corporate governance. Others worried that it would in practice mean trade union, rather than simply worker, representation at board level, which some sectors weren’t too keen on.
Then there was her pledge of a “proper industrial strategy”. To many (including, I confess, me) these words conjure up troubling images of Ministers picking winners, all too often on the basis of nostalgic views of industry rather than any real insight into the future of the economy. Consider an industrial strategy in, say, 2000 – it couldn’t have foreseen or prepared for the hugely valuable announcements we’ve just seen by Facebook, Apple and Google, for example, for the very good reason that the former company didn’t exist and the latter companies’ major revenue-raising products had yet to be conceived. Would the old Department for Trade and Industry have successfully foreseen that by 2016 the Secretary of State for Transport would have to consider the regulatory environment for parcel-delivering drones? The trouble with this model of “strategy” is two-fold – the future is unknowable, and Whitehall isn’t very good at guessing – and therefore it can do harm as well as good.
If the first few months raised some fears in business, the last couple of days ought to have offered some reassurance.
For a start, May’s speech to the CBI yesterday included a distinct watering down of the workers on boards plan:
“…while it is important that the voices of workers and consumers should be represented, I can categorically tell you that this is not about mandating works councils, or the direct appointment of workers or trade union representatives on Boards. Some companies may find that these models work best for them – but there are other routes that use existing Board structures, complemented or supplemented by advisory councils or panels, to ensure all those with a stake in the company are properly represented. It will be a question of finding the model that works.”
The microphones didn’t pick up any audible sighs of relief, but you can bet a few were issued in the room nonetheless.
There was also some welcome clarification on the terms by which her industrial strategy should be judged.
The prefix “proper” still appeared, but only once – it seems to be being superseded by the word “modern”. There’s a subtle but meaningful distinction there – while “proper industrial strategy” might be muttered by John McDonnell, wistfully imagining smokestacks and re-opened mines, May’s “modern industrial strategy” is about something very different:
“It is not about propping up failing industries or picking winners, but creating the conditions where winners can emerge and grow. It is about backing those winners all the way to encourage them to invest in the long-term future of Britain. And about delivering jobs and economic growth to every community and corner of the country.”
Those words will help to calm some pinstriped nerves – as will the fact that she took the opportunity to appeal for business to contribute to the writing of the strategy. A Government that refuses to be prescriptive about which businesses matter, and avoids the pitfalls of trying to scry out the future, but instead seeks to establish positive conditions for business to grow is rather more reassuring.
Doubters would perhaps have been less worried had they read the then-Home Secretary’s speech to ConservativeHome back in 2013. Even back then she was at pains to reject “beer and sandwiches…[and] failed seventies-style corporatism”.
Yes, there was still a call to “map out…established and developing industries”, but her other four proposed priorities were much more fundamental. They were the development of better training and skills, plotting better infrastructure to support existing industrial clusters, reforming public sector procurement to better aid the British economy and a “relentless” focus on both tax benefits for entrepreneurs but also harnessing private sector innovation in public services.
Of all these ideas, the focus on education and skills seems to be the most promising. No government can know exactly what the future holds, but it is clear that a better-educated, more skilled workforce will be both better equipped and more able to adapt to whatever new opportunities might spring up. Instead of picking winners (or, rather, betting on what Whitehall hopes will be winners), we should ensure that Britain is more likely to produce winners in the first place.
Setting a strategy is not the same as choosing objectives. It’s fine to say “we want an economy that works for everyone”, but the Government must now work out how to get there. A key realisation in doing so is that for the economy to work for everyone, as many people as possible must be fit for the most productive work they can do. To fulfil that strategy requires us to refocus our education system.
The pre-trailed announcement on new funding for scientific research is a welcome first step on that path. And Michael Gove’s education reforms will also bear fruit by raising the rigour and outcome of the core education received by millions of young people – not least in ending the scourge of adult illiteracy.
But there must also be something in the middle ground between support for the very cleverest and essential education for all. The ConservativeHome Manifesto proposed a major resource shift away from the obsession that all must go to university and towards support for vocational education. When graduates are in large supply and there is a shortage of all sorts of skilled workers, there is an imbalance in our educational priorities.