WHILE winning few friends in the North East following his visit to the IPPR North conference last week, Andrew Stunell clearly articulated the coalition Government’s attempt to abdicate any responsibility for economic progress or failure in the region.
According to the communities and local government minister, the region has “all the tools it needs” at its disposal to secure growth. If it were not blatantly obvious before, it is now absolutely apparent that the coalition parties are withdrawing active Government support for the economic wellbeing of the region.
This is their prerogative, of course, it is a fundamentally political perspective about the role of the state.
This is often portrayed in the context of “propping up” industry, through grants and other financial support, or, as many businesses would claim, “burdening” employers with “extensive” regulation.
Stunell confirmed that it is the aim of the current government to “get out of the way” of business as much as possible – “allowing” businesses to prosper: the implication being that this is all government needs to do to support growth. This was in stark contrast to the shadow business minister John Denham who earlier in the day outlined a broad and thoughtful description of the ways in which an actively interventionist government could support economic development.
The idea that supporting a dynamic economy is best achieved by doing nothing is a notion that has been shot down by recent history – all commentators are calling for greater banking regulation in the global wreckage caused by unfettered financial speculation.
The fact is that active government can create an environment for entrepreneurship to flourish and for successful private sector businesses to grow.
From providing business support for those seeking to develop new businesses and innovative ideas, through investing in the transport infrastructure to supporting investment in skills and pump-priming private sector development – as in Nissan and the forthcoming Hitachi train manufacturing programme in County Durham, which last week attracted over 1,000 businesses interested in joining the supply chain – Governments can and should make a difference.
There is a much broader role than what it can do financially. What the Government decides to do on energy policy and pricing will have a dramatic impact on potential growth in the renewable energy sector – an area of huge interest and potential in the North East. Again, in this area, Government can act positively or detrimentally to industrial development: the decision to defer financing of the Green Investment Bank until the public spending deficit is reduced will only delay the kind of economic growth that is necessary to balance public spending.
Prioritising deficit reduction over economic growth is a classic catch-22 that exposes the Government’s economic policy as a woeful mess.
Don’t invest in growth until the deficit is reduced, but fail to reduce the deficit by not investing in growth.
The Government doesn’t need to get off business’s back, but it does need to get behind it a good bit more.
Kevin Rowan is regional secretary of the Northern TUC