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Who benefits from regulating incomes?

Tuesday 4th Apr: First Tuesday Current Affairs discussion

Discussing First topical issue (Mark Iddon) and Second topical issue (Simon Belt)

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But many are still to be convinced that the government will deliver actions commensurate with the rhetoric. Or even that it can. In the previous Coalition government former Chancellor George Osborne had made similar promising noises about rebalancing the economy and a ‘march of the makers’, but little changed in practice. Can we expect better from the new government? Much of what has been suggested so far is not new. Terry Scuoler, head of the EEF, the trade body for manufacturing companies said of the government’s recent 132-page Green Paper ‘The jury is still out. It is not an industrial strategy. It is a summary of where we are.’


Does this revival of industrial strategy offer a more effective escape from low growth? Thirty years ago industrial policy was universally rejected as the hubris of governments thinking they could plan for a better economy. The failure then of ‘picking winners’ is a lesson everyone says they have learnt from. Can the outcome be different this time? Is there an appropriate mix between state and market for reviving the economy? The objective is no longer to identify ‘national champions’ but to create better conditions for business. What constitutes these ‘better conditions’? For example, can more infrastructure spending be a successful catalyst for economic improvement? Can more funding of technical training make a real difference?


The Green Paper included an explicit commitment to drive economic growth across the whole country. It noted now regional disparities were wider in Britain than in other western European nations. Furthermore these divergences across Britain were wider now than in the 1990s. Can the pledges made help cities and regions lagging behind London and the national average close their productivity gaps? What prospect is there that the Northern Powerhouse and the Midlands Engine will become more real?


Or is the rehabilitation of industrial policy simply making a virtue out of existing state support for the economy? Twenty years ago William Nester argued that every nation has an industrial policy, whether it admits or not. All major industries are now deeply involved with and dependent on government activities. Does the new enthusiasm for industrial policy risk more propping up of weak existing businesses? Is it possible to distinguish government economic intervention between saving old industries and firms and encouraging innovative investing in new ones? Or is all this effort futile anyway? Is it time to get used to living with slower growth and accept that rising productivity may not be the given of modern times that we had come to expect?


Some background readings

Inclusive growth in Greater Manchester: an agenda for the new Mayor, Joseph Rowntree Foundation 24 January 2017



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