Ed Miliband Speech: Made In Britain, the Case for Patriotism not Protectionism

Posted on 6 Mar 2012

Ed Miliband MP, Leader of the Opposition and Leader of the Labour Party, addressed over 500 manufacturers at a conference held by EEF, the manufacturers’ organisation, and The Manufacturer.

He said:

Can I say what a privilege it is to speak to the first EEF Annual Conference.

Too often, the story that is told of British manufacturing is of a sector in decline.

But if you look around the room, what strikes me are the success stories we don’t talk about often enough.

Rolls Royce, the second-largest producer of civil aircraft engines in the world.

A thriving automotive industry, a successful semiconductor industry and biotech sector, a successful food industry and a world centre for design.

But you know better than I that this success has been achieved against the odds.

Against the odds because while your international competitors have governments standing with them through an active industrial policy, you too often have seen governments of both parties standing by.

Against the odds because while you seek to build yourselves up decade by decade, too often you are judged quarter by quarter.

Against the odds, because while we rightly celebrate having a leading financial centre, our financial sector has too often let down our real economy.

And against the odds, because while other countries celebrate and exalt the success of their inventors, designers and makers, too often you have not been given the respect and status you deserve in our education system and wider culture.

Of course, in the short term the priority to help you is economic growth.

That is why, for example, we have said that we would offer a tax cut to all small businesses taking on extra workers as part of our five point plan.

Our recovery has to be led by you in the private sector fuelled by investment and exports.

That means British companies competing and winning in tough global markets.

But the financial crisis must be a wake-up call to stir us to action in the long-term.

It has exposed deeper problems in our economy.

In my view, a thriving and diverse manufacturing sector is central to the challenges revealed by that crisis.

The challenge of paying our way in the world.

Of creating good jobs at good wages.

And the challenge of building an economy on long-term productive wealth creation, not short-term predatory speculation.

In short, how we build a more responsible capitalism.

An economy which works for all the working people of Britain.

We can only do this if we change our attitude as a country, and that includes government.

Let me explain what I mean.

Governments of both parties have been right for decades to oppose protectionism – propping up lame ducks or putting up trade barriers.

Economic protectionism is what governments reach for when they don’t believe firms can compete.

And we will never return to those days.

But too often opposition to protectionism became an excuse for believing that the best way to help British business was to stand aside entirely.

Opposition to protectionism was right.

But opposition to industrial activism was wrong.

From our government to our culture, we need pride and patriotism if our British firms are to succeed.

Patriotism is about an active government using all the means at its disposal to give competitive British firms every chance to succeed.

Patriotism means recognising they can and do compete with the best in the world – and the belief that they deserve our backing.

Patriotism means supporting fair competition, so that British firms make it onto the pitch to compete in the first place, something governments in other countries take for granted.

The patriotism we need is about pride in firms headquartered here in Britain but also in internationally owned firms that choose to locate and invest here.

A patriotic policy, for example, means enabling a foreign-owned subsidiary to persuade its Japanese, Indian, US or German boardroom to invest in Britain.

We should not be embarrassed about the need for more patriotism in our economic policy.

We care about supporting British firms because it is crucial to jobs and growth in this country.

Now let me explain what I think we need to do to meet the challenge of a patriotic economic policy.

First, therefore, Government needs to understand its proper role in supporting British business.

British manufacturing has had to develop without the long-term support that has been in place in other countries.

If we want to understand that there is a difference between protectionism and patriotism we should compare what happened in the car industry in Britain in the 1970s with the recent recession.

In the seventies, we did prop up loss-making lame ducks.

Thirty years later the government provided support, but not to prop up companies that were uncompetitive, but to prevent the recession destroying fundamentally healthy British plants.

That was because government, unions and management worked together and Peter Mandelson recognised the need for a change in attitude.

We see the response today; the new Nissan investment is a culmination of that approach.

The Business Department stopped being a sleepy backwater and became a great office of state.

What’s the lesson I draw from this?

To work, an active industrial strategy must have real vision, real drive right across government.

And I don’t think the Government gets it.

From Sheffield Forgemasters, to Bombardier, to BAE Systems, I think they’ve let British business down.

They’re still wedded to the old rules which says that government should get out of the way.

A proper industrial strategy cannot become a reality if other parts of government act as a roadblock to this approach.

In particular, in energy they have done huge damage.

Ripping up the feed-in tariff.

Undermining the investment prospects of the wind industry.

Putting at risk Britain’s chance of leading the world in low carbon technology.

It’s been true in the defence industry too, where the Government has abandoned any commitment to an industrial policy.

So how should government show that it understands the need for an active industrial policy?

It means using all the tools at government’s disposal, including the money we spend already.

The United States government spends fifteen times as much as we do as a proportion of national income on commissioning innovation and product development from high-growth, hi-tech companies.

We should be using the power of procurement to support innovation and jobs here in Britain.

The new approach also understands that regulation can be a barrier to job creation.

But it also can help provide certainty to create new markets, such as with zero carbon homes or car emissions standards.

And government needs to make tax decisions supporting investment, as we did on the R & D tax credit and the patent box.

Above all, it is about having a shared, long-term vision between public and private sectors, involving every department, not just BIS.

If Germany can have industrial policy certainty for decades, we should be able to have it for more than a four or five year electoral cycle.

Just the other day I heard from a manufacturer who pleaded with some policy consistency over decades.

“You know what’s going to happen in Germany” he said.

Our manufacturers need to know what’s going to happen here too.

That means that across government, departments have to work together.

That’s why I’m proud to say that our Shadow Business Secretary Chuka Umunna is working in coordination with Ed Balls at the Shadow Treasury, Jim Murphy our Shadow Defence Minister, Maria Eagle at Transport, and others.

But to provide the environment for business to succeed, we also need to recognise that it is not simply Government that has been too short-term in its approach.

The rules of the game, the nature of corporate governance, are at fault too.

We can’t encourage manufacturing investment for the long-term with rules which are geared to speculation for the short-term.

Rolls Royce had to battle against institutional shareholders during the 1990s, so that its management could make the long term investments that have made it such a success today.

Sir Terry Leahy has said: “Many investors don’t want to get under the skin of the business or don’t have the patience for long-term value creation.

And of course, we see takeovers that aren’t about building up a business like Kraft Cadbury.

And this approach is not serving British business or our economy: lower levels of investment in the UK than in our European competitors.

This has to change.

But these are complex issues.

Of course, takeovers can often be a good thing – bringing inward investment and helping to turn around a failing business.

And nobody can blame investors for wanting more information on the companies in which they invest.

It is because these issues are complex, the Labour Party is today establishing a review by the engineer Sir George Cox, former Director General of the Institute of Directors and currently a director of the New York Stock Exchange.

He will chair a review of what is impeding long-term decision making in British corporate life.

It will be comprehensive, looking at all the major issues, going where the evidence takes it.

I hope you will contribute to George’s review which will seek to build on John Kay’s work.

The third issue we must confront if we are to back British firms is the way our financial system works.

The other day in Scotland I talked to a wind turbine manufacturer who complained that while he had employed 20 people in his firm it could have been 30 if only he had got the loan he needed from a leading British bank.

If he had lived in Germany, the US or Singapore he would have been more likely to be able to get that loan.

You know that similar stories can be heard from thousands of other businesses around the country.

The patriotic answer for the future is that we need a banking system that enables him and thousands like him to succeed.

If you have done the work, come up with the innovation, built up a business over a number of years, you shouldn’t be discriminated against because your business is considered too small or because you’re in a sector that is unfamiliar to the banks.

Banks should be competing not just in how many derivatives they create but in how many small firms they serve.

So we need a much more diverse and competitive banking system which is more rooted in our communities.

The largest four banks provide 85% of SME accounts in the UK, whereas in Germany only 14% of business loans come from the large commercial banks.

That’s why we are calling for the Government to bring forward a review of the competitiveness of our banking system.

It also means sharing the insight of countries like Germany and the United States that in response to the failure of the market, government has a role to play too.

And why we are looking at plans for a British Investment Bank.

This would see government stepping in with state-guaranteed finance channelled through banks and private investment firms when the market won’t provide.

The fourth and final area where we have not shown enough pride in supporting our businesses is in our culture and education system.

The latest example of that came only the other day.

The Education Department announced it was downgrading the Engineering Diploma in schools from one that was worth five GCSEs to just one.

A diploma supported and respected by employers.

What signal does that give to young people thinking what they might do in the world?

That people at the top do not regard this as a “proper subject” or as a “proper qualification”.

The British engineering sector needs to recruit an extra 2.2 million engineers over the next 10 years.

How can we do that when we have this snobbery getting in the way?

I met with a small group of EEF members last week. They told me that they thought manufacturing has a real image problem with children and young people today.

But they said to me that if they can get access to young people and show them what an exciting career there is to be had in manufacturing, it’s an image problem they know they can redress.

I’ve heard too many manufacturers also say they want to get into schools to show children just how exciting a career in manufacturing and engineering can be, but sometimes they get a lukewarm or a cold reaction.

Schools should be letting industry in not shutting it out.

But we shouldn’t leave it just to industry alone to show just how great manufacturing can be.

Government should be playing its part too.

By looking at the way our curriculum works.

And by supporting employers trumpeting British business success.

Yesterday I was speaking to the CEO of Stoves.

He launched a fantastic new initiative, a Made in Britain Mark which has been signed up to by over 350 British manufacturers.

This campaign has been running for almost a year and we’ve heard nothing from the Government.

This is something that deserves cross-party support.

There should be a standard Made in Britain mark that is backed, not just by industry, but by government.

This is not about a backward-looking ‘Buy British’ campaign.

This is not about making consumers feel bad if they don’t buy products from British businesses.

It’s about something else.

The CEO of Stoves said something which stuck with me.

There are three words we don’t hear enough, or see enough.

Those words are “Made in Britain”.

We can’t recognise or celebrate our strength in manufacturing unless we know what is designed, invented and made here.

It is about building the brand of British manufacturing around the world, and supporting our exporters, particularly to new markets in the BRICs.

It is about inspiring our young people with what is possible through engineering innovation and excellence.

Let me conclude.

I make you this promise.

The next Labour government will put British design, British invention, British manufacturing at the heart of our economic policy.

When I talk about how we need to encourage productive forms of business behaviour to help those, it is you who I am thinking about.

We need to back those who invest, invent, sell, make – the producers of this country.

So patriotism is not about protectionism.

I have no interest in going back to those days.

What I want to do, however, is to ensure the British Government supports British manufacturing.

We cannot have a government that stands aside.

We need to seize this moment:

We must rise to the challenge of the financial crisis and pay our way in the world.

And we must recognise our opportunity.

We still have: world-class universities, an adaptable workforce and a proud history of openness to foreign investment.

We need to take this opportunity.

I look forward to working with you to make this happen.