Category Archives: Contemporary British history

Industrial strategy, past and present

On Monday 23 January, Theresa May and her business secretary Greg Clark launched their ‘industrial strategy’ green paper, promising that their proposed strategy would not be on the lines of the ‘fatally flawed‘ approach of the 1970s, which sought on the whole to protect industries and firms in difficulties as a result of the economic crises of that decade (and thus protect jobs) rather than to help encourage the industries of the future.

The government’s attempt to embrace the idea of an industrial strategy as opposed to more narrowly focused and ad hoc ‘industrial policy’ is welcome. Indeed it is almost certainly essential given the degree to which the economy will have to be reconfigured as a result of Brexit. The promised long-term vision is a necessary starting point, and if the assurances of a partnership between government, ‘innovators, investors, job creators, workers and consumers’ across the United Kingdom actually comes about this will be a significant step forward.

Later, I will be blogging about the contents of the green paper but before that I want to question the government’s reading of history. Industrial strategy predates the 1970s, and anyway it’s really an exaggeration to talk of a wide-ranging and coherent strategy for industrial development in that decade. In fact, the era of industrial strategy par excellence is the 1960s. I’ve written on this in the current issue of the journal Juncture, arguing that the era was much more successful in promoting growth and productivity than is generally acknowledged, and there is a short summary version of this piece to be found on the PolicyBristol blog.

A brief perusal of the current green paper suggests its aims are considerably less ambitious than those of the 1960s, not least in terms of government spending on infrastructure and on encouraging private sector investment. Assuming the strategy implemented looks something like the current policy proposal, its likely achievements are likely to be correspondingly more limited.

 

Brexit requires radical change in the UK political system

An updated version of this piece can be found on the PolicyBristol blog.

What have we learned in the eight days since Britain voted to leave the EU by a margin of 3.8 percentage points?

The country has jettisoned the foreign policy followed by all governments since 1961 yet the political class is paralysed even as the country drifts into dangerous economic waters. Put bluntly, nobody has a clue about how Brexit is to be achieved (or about what a ‘hard’ Brexit might involve). This is a moment of catastrophic political failure on a scale unprecedented in modern British history and it calls into question fundamental features of the country’s political system.

First, it is clear nobody has the slightest idea how the exit is to be accomplished.

Those campaigning for a Leave vote had no plan for how an exit from the EU might be achieved in a way that would not impose lasting damage on the country by crimping exports to countries that represent 45% of our overseas trade.

Astonishingly, no serious contingency planning had been put in place within Whitehall (it is not as yet clear whether senior Civil Servants as well as ministers are to blame for this). Whitehall, which I understand was in chaos before the referendum as it woke up to the real possibility of Brexit, is having radically to reconfigure and reorientate itself, though it lacks many of the skills demanded by Brexit.

So far there is no sign of clear real plan of action.

Second, many of the predictions of the much derided ‘project truth’ are proving accurate.

The pound has collapsed to a low not seen for 35 years – not a bad thing for exporters but a serious loss for international investors in our economy, and in our government’s debt, that may have consequences for their confidence in UK economic management.

There are serious concerns that the widespread economic uncertainty is leading to large scale cancellation of investment, creating the conditions for recession. Many large firms are already implementing plans to redeploy parts of their business and workforce to the Continent.

By any standards this is a very serious economic challenge. In the long-term, as Mr Carney said earlier this week, the economy will adjust but there are clear and large risks in the near- and medium-term.

Third divisions within British politics are paralysing the construction of workable solutions to the economic and foreign policy crisis.

  • Leave campaigners had no plan partly because they did not really expect to win but mainly because they were themselves divided between those for whom control over immigration and protection for British workers was the overriding priority and those for whom free-trade was the main goal: aims that are irreconcilable without leaving the European Economic Area because membership of its single market is dependent on the acceptance the free movement of people as well as of goods and services within it.
  • The Conservative party is similarly divided and as a result has embarked on a leadership election at just the time when, as the governing party, it should be concentrating on leading the country.
  • Labour’s internal battle between the hard Left and its soft Left and Blairite remnants has reignited with a vengeance. Preoccupied with its civil war it is failing to fulfil its role as an Opposition party in Parliament. And the impasse between the party in Parliament and the leader and his supporters amongst the membership means the party may soon split.
  • The only party with a clear policy is the SNP: which is clearly planning to use Brexit as the means by which to achieve independence, thus signalling the end of the United Kingdom as we know it.
  • Profound divisions in Northern Ireland have the potential to reemerge in an ugly way as the division of Ireland becomes once again a physical reality.

Because of the political chaos there is almost no political leadership (George Osborne’s acceptance of the need for deficit financing to maintain growth notwithstanding).

Parliament has not properly debated the consequences of the referendum vote, and at present has no plans to do so.

At the moment we are essentially reliant on a lame-duck Prime Minister and on Civil Servants and the Bank of England to fill the policy vacuum. The Bank has risen to its challenge admirably, though its governor has warned of the limits to its capacity to keep the economy on an even keel. Civil Servants are plainly doing their best, but in the absence of a clear and politically legitimate steer on how to handle the crisis they risk being left politically very exposed if things go wrong.

Our politicians are clearly failing us.

This is about more than the mendacity of some unscrupulous politicians (on both sides of the referendum, though the winner of that inglorious competition was plainly Boris Johnson – a man for whom the linked concepts of hubris and nemesis appear to have been invented).

We have to acknowledge that the howl of rage that was the Leave vote said something about the politics of this country.

The plain fact is that the political system no longer adequately represents the interests of large swathes of the British electorate.

For many years the first past the post electoral system proved effective at forcing the two main parties to consolidate and mediate interests on both sides of the political divide, and ensured that the competing political visions that resulted were tested at the ballot box.

On the whole that system worked well in the quarter of a century after 1945 when between them the two main parties were taking between 87 and 97 per cent of the vote.

It began to work less well as substantial numbers of people began to lose faith in those parties and we first saw the rise of a significant third party (in Feb 1974, for example, the Liberals took nearly 20 per cent of the vote), then the creation of the SDP (in alliance with the Liberals in 1983 taking over 25 percent), then the rise of the SNP, the Greens, and, more lately the growing vote for UKIP.

One may not like UKIP, but the fact that it gained only one MP in 2015 with 12.6 per cent of the vote was clear evidence of the failure of the current electoral system to give voice to large numbers of people. So too was the fact that Labour hoped to win that election with a ’35 per cent’ strategy.

A system that can deliver a government opposed by 65 per cent of voters on a turnout of only 61 per cent (as happened in 2005) is plainly broken. We have turned a blind eye to this for decades; the Brexit vote has made that failure all too obvious.

At the same time, ‘Europe’ has proved a particular problem for the main political parties. Both have at times been fundamentally divided on whether to support membership of the EC/EU and over time the parties have reversed their positions. Only the Liberal Democrats have been consistently pro-EU, only UKIP consistently anti- – and look where that got them in terms of Parliamentary representation.

So we now have to ask serious questions both about the UK’s electoral system and about the ability of its two main political parties to mediate interests and consolidate them into policy programmes supported by a large proportion of the British electorate.

Last week I argued that today’s generation of politicians were facing a crisis akin to that of May 1940. I continue to think this.

The political challenge of unravelling Britain’s close political relationship is immense (people better informed than I estimate it will take a decade). At the same time Brexit poses a substantial economic challenge to an economy not yet fully recovered from the financial crisis of 2007-8.

Yet our politicians stand by. And it is the political vacuum that makes the situation so dangerous.

There will be a wealth of human misery caused by yet another recession. Many, particularly amongst those who voted Leave, will be disappointed further in their political representatives. Add that to the sense of disenfranchisement and the fear and xenophobia whipped up by the referendum and we have the making of something truly nasty.

In short, I think we need political action, we need it now, and we need it to be effective and enduring.

I continue to believe that this probably requires a rapid and significant realignment of British party politics around its centre and I am coming to the conclusion that it may also demand the reconfiguration of both its electoral system and representative institutions.

The EU referendum crisis is this generation of MPs’ ‘Narvik’ moment

In the wake of the EU referendum result the UK faces a crisis unparalleled in peacetime. The financial crash of 2008 was bad enough, but at least our political system was not then in melt-down. Today, half a century of carefully crafted foreign policy has crumbled to dust. Each of the two major parties has descended into civil war, with each riven by differences of opinion about the costs/benefits of EU membership. The economy, still fragile eight years on from the 2008 financial crisis, teeters on the edge of another recession (as does that of the EU, which has also been badly weakened by events in the UK both economically and politically). More than this, the divisions within the country are so severe that the very existence of the UK in its current form is now clearly in doubt.

One has to go back to May 1940 to find a moment when the country last faced an existential crisis like this – with the loss of Norway to Nazi Germany. This was a shattering blow for British strategic policy and it precipitated a loss of confidence in the government’s ability to prosecute and win the war. Over two days of debate in the House of Commons between the 7th and 8th of May 1940 (the ‘Narvik’ debate) it became clear that around a hundred Conservative MPs had lost confidence in their leader and, though the government won the vote, the effect was devastating. Within two days the country had a new prime minister and a government of national unity.

I think there are lessons here for today’s MPs.

  • It is up to MPs to react to the referendum result and to decide on the way forward. We should remember that the result is advisory not legally binding.
  • Parliament was and remains sovereign (despite much recent rhetoric to the contrary). The actual decision to leave must be taken by Parliament. MPs, and only MPs, either individually or collectively have the power to determine what happens now.
  • The Queen appoints a prime minister who can command a majority of the House of Commons.
  • The prime minister does not have to be a party leader (for example, Churchill did not take over the leadership of the Conservative Party until October 1940).
  • Particularly in times of emergency good MPs remember that their function is to represent what they see as the best interests of their constituents (and by extension of the nation), not just the interests of those who voted for them.

As Burke famously put it in his address to the electors of Bristol in 1774,

“Parliament is not a congress of ambassadors from different and hostile interests; which interests each must maintain, as an agent and advocate, against other agents and advocates; but parliament is a deliberative assembly of one nation, with one interest, that of the whole; where, not local purposes, not local prejudices, ought to guide, but the general good, resulting from the general reason of the whole.”

It is pretty evident that an immediate, effective and enduring party political response to the crisis is not going to be constructed, the parties being themselves divided over the issue and presently each at war with each other over who should be leader. MPs are going to have to work this out for themselves.

Which leads on to another major issue: is the present party system fit for purpose? For 70 years ‘Europe’ has cut across traditional party allegiances – indeed it might be argued that this is precisely why we find ourselves in the mess we are presently in. Perhaps the time has come to think creatively about how interests might be represented better politically. Perhaps, in short, the time has come for new parties and a new government to emerge out of the political rubble. But if that is to happen it needs to happen quickly.

Research resources for the contemporary British historian

I’ve added a new page to the site: a guide to research resources that will be of interest to historians of contemporary Britain. It used to reside elsewhere, in a slightly different form, and a few of the links may need updating – but I aim to get them all checked over the summer. At some point I might even get around to blogging in earnest …