The shadow strategy

Posted on 29 Aug 2013 by The Manufacturer

Shadow business secretary Chuka Umunna speaks to Jane Gray about the Labour vision for industrial strategy.

Yesterday, Chuka Umunna, the business minister in waiting, visited Manchester-based Duo, a manufacturer of polythene packaging, as part of an extensive “fact finding mission”.

In recent months he’s been scooting around the country, visiting factories to get the inside scoop on opinion and feeling in manufacturing businesses about the economic environment. He’s also been in to Further and Higher Education institutions to get a feel for progress on tackling industry image and skills gaps.

The titbits Mr Umunna gleans will inform the 15 or so speeches he is due to give at the Labour Party Conference in September he promises, and will inform Party policy making on a wider scale. Umunna seems driven by the concept of “joined up” politics stating that “If we can’t achieve it now, in opposition, there is no hope for us when we are physically segmented into different departments should we be elected to government.”

Umunna’s drop in with Duo was spurred, not only by the firm’s exemplary performance in recent years – leading to strong exports and re-investment this year – but also by its startling experience in finding access to finance for those growth investments against the odds.

“I do not see business policy and industrial strategy as the preserve of the Business Department. For us it is going to be a whole government activity.”

The story, though frustrating for Duo, is a gift to an Opposition politician in the run up to conference season and a swiftly approaching General Election – and while it may not be the norm, it certainly does endorse the impression that the current government and British banks, have failed to solve this sticky problem.

“What we have here is an absurd situation where a successful, profitable, medium sized company is having to go to Italy to take advantage of the schemes their government provide for businesses in order to get their growth finance,” Umunna told TM following a morning shadowing Duo’s MD, David Brimelow .

“We cannot allow this kind of thing to continue,” he ruled. “The situation exists, in part, because we are the only G8 country without a state backed investment institution to help support small and medium sized businesses.”

What about the Business Bank announced by Business Secretary Vince Cable as part of his five pillar industrial strategy in September last year?

Umunna is unimpressed. “It is not a bank as one would usually understand a bank to be. It is more akin to a fund and it is run out of the offices of the Business Department in Westminster – it is not a standalone institution.

“The other problem with the Business Bank is that it doesn’t really have a transition mechanism for getting its scheme out to businesses around the country.” Umana says a network of regional institutions is needed to back-up a national organisation.

“We [Labour] are utterly committed to establishing a proper British investment Bank alongside a network of regional banks. Without this British companies will not get the support they need in order to grow a different kind if economy,” he continues. “Our suggested model draws inspiration from the German Sparkassen.”

So what else would Labour do differently to support promising, productive companies like Duo should it win power in the next Election? And perhaps more importantly, what would it maintain – how would it prove it believes in a long term strategy for industrial competitiveness?

Seeking consensus politics 

Umunna is keen to speak about Labour’s commitment to altering the political establishment in Britain in order to encourage consensus politics on big issues that require long termism – especially infrastructure investment, both transport and digital.

“The thing that has tended to stand in the way of decisions on infrastructure is the failure to find political consensus.

“We’ve commissioned Sir John Armitt, who headed up the Olympic delivery authority to carry out an investigation for us into how, institutionally we can achieve more consensus so that these long term decisions can be made,” he says.

When can we expect to see the review? “Shortly,” says Umunna.

But in the meantime, there are other things he can assure would remain unchanged under a Labour Government – mostly because they were Labour ideas in the first place.

“I have praised the current government, and in particular Vince Cable for carrying on with many of the things that Peter Mandelson put in place – like the Technology Strategy Board and the Catapult centres which are a successor to the Technology Innovation Centres that we started to implement when we were in government. A number of our export schemes they have carried on with too. I think that is a good thing.”

Defining a difference

That said, Umunna believes Labour’s plans for other areas of business policy would represent a significant departure from the current government’s approach.

Umunna runs through a range of tax and welfare policies where he feels the current government is failing and – with regards to the introduction of the Shares for Benefits Employee Ownership rules tomorrow (Friday August 30) – he says that while Labour supports the idea of more employee ownership, he sees “no reason why people should have to give up any of their fundamental rights at work,” in order to have it. He says it is a “ludicrous scheme”.

With stronger relevance to business leaders, Umunna singles out government procurement as a feature of Labour policy which will be a real departure from the Coalition practice. The party is clearly keen to avoid any brouhahas like the one kicked up in 2011 over the Thameslink train building contract which went to Siemens rather than Derby-based Bombardier.

“Government is one of the biggest players in the economy,” says Umunna. “It spends over £240bn a year and we should be using government procurement to back our industry.

“The French the Germans and the Dutch take into account the impact on jobs and growth when making their procurement decisions and this is allowed under EU rules as long as it is not the only criteria used in procurement.”

Labour would put procedures in place to make sure this was always the case in Britain too promises Umunna.

Energy is another policy area where Labour would make bigger tweaks to the existing policy framework and support mechanisms. Umunna is particularly critical of the current structure for Feed in Tariffs with regards to business. He claims that the Government decisions in this area have put the UK solar industry “in some peril”.

Labour would aim for more policy certainty states Umunna – though this is also the expressed ambition of the current government and is clearly easier said than done.

Returning to the theme of joined-up politics however, Umunna says that he has worked very closely with Labour Energy Secretary Caroline Flint, to align business and energy policy at design phase. He also references work with the shadow transport and defence secretaries.

“I have been quite clear that I do not see business policy and industrial strategy as the preserve of the Business Department. For us it is going to be a whole government activity.”