Labour wants partnership with business
Economic growth and partnership with business were core themes of Labour’s annual conference in Liverpool this week, which the party said was its biggest in its history.
The state will share the investment risks but must also have a share in the rewards, leader Sir Keir Starmer said.
Manufacturing and related issues featured in several of the conference’s many fringe events – in contrast to the Conservatives’ last week. Shadow business minister Jonathan Reynolds and other repeatedly stressed the importance of having an industrial strategy. Labour plans Great British Energy, a publicly-owned clean energy company.
There seemed to be much optimism and little dissent at the conference, beyond a few locals outside the secure zone muttering about Starmer being “just another Tory, another Tony Blair”.
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Pace of technology
Starmer said that Labour would have to “build a new Britain out of the trauma of collective sacrifice” as in 1945, to “modernise an economy left behind by the pace of technology” as in 1964, and to “rebuild a crumbling public realm, as in 1997. He wanted to “win the race for the jobs of the future”.
His speech brought to mind Harold Wilson’s “white heat of technology” speech of almost 60 years ago. Arguably, trades union resistance to change blocked what Wilson had hoped for; as well as under-investment by business, which again is a concern.
Starmer said that “government must steer the ship on industrial policy”, a crucial part of any plan for growth, and he pledged long-term stability for researchers, investors and innovators. Referring to Labour’s proposed National Wealth Fund which will provide £1 investment for every £3 from the private sector, he said: “As we share the risk, we must also share the rewards.” It will be interesting to see if this translates into new conditions on support for business from, for example, Innovate UK and the High Value Manufacturing Catapult.
Starmer said that a “new generation” of Technical Excellence Colleges with stronger links to their local economies, training “lab workers in Derbyshire, automotive engineers in Wolverhampton, computer scientists in Manchester, nuclear technicians in Somerset, builders in Staffordshire, toolmakers in Hull”.
Shadow chancellor Rachel Reeves said that “you cannot trust the Tories with the economy ever again”, referring to the Truss tax cuts and ensuing chaos a year ago, which she said Rishi Sunak had failed to repudiate. Her wording recalled Rishi Sunak’s warning the week before that Labour could not be trusted on security.
Government spending on consultants had increased almost four-fold in six years, she said, and she promised to more than halve it over the next parliament.
Reynolds told a fringe meeting on manufacturing that Labour is looking at changing the rates system so that it does not deter investment in plant. He added that Labour rarely gets “an outright request” for a reduction in tax. Plastics is one of several sectors which, he said, “is an industry with a very strong future”.
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Buying British
A lively fringe event entitled “Is Manufacturing Labour’s Future” heard Stephen Kinnock, shadow immigration minister, arguing for greater investment in UK steel-making. There were concerns about the quality of British management, which rates poorly in international comparisons. Torsten Bell, chief executive of the Resolution Foundation, said that manufacturing was important but did not have great potential for growth. Also, higher-value manufacturing depended on complex international supply chains with the EU, which Brexit undermined. Many SME manufacturers were content not to expand, he said.
A session entitled “Sovereign Capability: How can we Make, Buy and Sell British”, sponsored by Babcock International, heard GMB general secretary Gary Smith called for more defence spending to be with UK firms and for greater account to be taken of the taxes paid by UK workers and companies awarded contracts.
Neither the EU nor WTO constrained the government on ship-building contracts in the way the government had claimed, he said. People are “tearing their hair out at the lack of an industrial plan”, he said.
Babcock’s John Howie, chief corporate affairs officer, said that the UK had the most open defence procurement system in the Western world and had become a net importer for defence.
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Trade
Labour repeated its intention to have a much better relationship with the EU. But in fringe events, the difficulties were clear.
UK diverging from the EU on regulations and standards was much discussed. Asked where the UK should diverge, shadow trade minister Gareth Thomas said that “where there is a strong business case to change, absolutely we should look at it”.
Much less discussed – but much more important, it was suggested – is the EU moving away from the positions the UK adopted when it left. Questioned, Thomas said that the civil service had to be resourced to monitor that issue.
A better relationship with the EU is a priority, and a better trade deal than the trade and co-operation agreement (TCA), which is widely seen as a long-term drag on the economy. It was the floor, not the ceiling, of Labour’s ambition. But no-one seemed to be raising expectations of early success in re-opening in the TCA. The UK will have to persuade the Europeans that it is in their interest – for example to agree mutual recognition of conformity assessment bodies. At a fringe meeting on trade, a prominent lawyer noted that the European Commission would have to seek and gain a negotiating mandate from the 27 members states to even start re-negotiation of the TCA.
Brussels is not the only route to trade with continental Europe, however. Several shadow ministers made a point of saying that Labour is working hard on bilateral relations with individual EU members states, to promote trade.
Labour’s top three areas for getting closer to the EU are on professional standards, a new veterinary agreement, and a security pact. It also wants to transform the position for school trips and students between the EU and UK, shadow foreign secretary David Lammy said.
Thomas noted that the Tradeshow Access Programme for supporting smaller firms to export had been cut over six years and then closed. He made no commitment but this is clearly an area that Labour is looking at.
“There is a sense that the government isn’t supporting exporters,” Thomas said. He was told by firms that the online offer is “completely woeful” and that they use websites of other countries, such as the US.
Labour is planning a trade white paper, with the export strategy integrated with the industrial strategy.
At a fringe event, John Carroll, head of international at Santander UK Corporate and Commercial, raised issues around China. A survey by the bank showed 58% of manufacturers have a dependence on China in their supply chain; but the UK lacks a coherent approach to China, he said.
It was noted that India is producing one million engineering graduates a year and gaining but it is not clear to Labour what India is seeking from a trade deal with the UK.
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Metro mayors
Seven of Labour’s current and aspiring metro mayors presented at an event, chaired by West Yorkshire’s Tracy Brabin, who said that “the identity of the North is being shaped by Labour mayors”. They (and the Conservative’s Andy Street in the West Midlands) want more financial and regulatory powers influence in areas such as skills and, evidently, research and innovation budgets relevant to their areas.
The mayors are increasingly involved in trade issues, including attracting investment into their areas from abroad. The relationships between central and regional government are becoming increasingly significant, mirroring the trend in recent years between central and devolved government.