20 Sep How can we build a more resilient economy? Ask our experts
On Tuesday 27th September, Renaissance are partnering with Progressive Britain to bring you our third event in our series on “Labour and the Nation”. You can join us at Labour Party Conference in Liverpool, by signing up here.
“Good Jobs, Everywhere”, will focus on how the role Labour’s pro-business policies can play in driving growth all across the country – with a particular focus on the party’s ‘make, buy and sell more in Britain’ policy.
In March, our first ‘Labour and the Nation’ discussion looked at the importance of building resilience into the economy, with Labour’s ‘Make, Buy and Sell’ policy also featuring heavily. So, ahead of our third event in Liverpool, why not recap on what our experts had to say in that discussion…
James Murray MP, Shadow Financial Secretary to the Treasury, set out Labour’s ambition for an economy in the national interest:
“Labour’s ambition is clear. We want to build an economy in the national interest.
“Firstly, this means building an economy based on decent wages, strong terms and conditions, and with good jobs across different parts of the country. We want to make sure that people don’t have to leave their local area or town to get a good job. Government must work with the private sector to put in the right investment in and deliver this. It won’t happen by accident.
“Secondly, is about investment in the challenges we face, with none bigger than the climate emergency. We would invest £28bn on the green transition, including insulating 19 million homes and therefore saving people money on their fuel bills. We’re talking about onshore and offshore wind turbines, and putting in electric charging points in every part of the country. This is about telling a positive story about sustainable growth.
“Thirdly, our pledge to make, buy and sell more in Britain. We would use the leavers of government to make sure that we are growing British businesses and ensuring that public procurement and public investment is creating opportunities here in Britain.
“This is also about creating a level-playing field, because British businesses playing by the rules and paying their fair share of tax are losing out to multi-national companies overseas who shift profits overseas and don’t pay their fair share of tax in the UK. I’ve been putting pressure on the British government to strike an international deal with other countries to have a level playing field on the taxing of multinationals.
“The make, buy and sell more in Britain policy is at the heart of everything we do. People understand that it is in our national interest.”
Chi Onwurah MP, Shadow Minister for Science, Research and Innovation set out why innovation is critical to resilience:
“The key to a resilient economy is innovation. The speed of the AstraZeneca vaccine is a good example.
“Tech and R&D-intensive sectors are proven to be more resilient.
“The Tory Government are holding us back – we are well below the rest of the OECD on public and private investment, making us a low-growth economy. Labour’s target is to go above the OECD target of 2.4% to spend 3% on R&D because we need to be world-leading.”
“NESTA research shows that R&D supports growth and resilience, and that all parts of the UK should benefit from investment in R&D. R&D prepares our economy for different [versions of] the future and to respond, with climate change being a clear example.
“But unfortunately R&D investment by this government seems to be focused on the Golden Triangle of Oxford, Cambridge and London rather than across the country.
“We also need to get better at building world-leading companies. A lack of late-stage support and access to capital undermines start-ups.”
Kate Dearden, Community Union, spoke on the role of the steel industry in building Britain’s resilience:
“Steel and manufacturing have a crucial role in building a more resilient economy.
“Steel added £2billion to the economy in 2020. The industry employs 33,700 people across the UK directly, and 42,000 in the supply chain.
“Highly paid, skilled steel jobs pay workers 45% more than the average – with jobs largely in South Wales and Yorkshire.
“The pandemic, and now the terrible invasion of Ukraine by a leading lobal gas supplier, has really brought home our reliance on international supply chains and how fragile that makes us.
“We’re in a world of heightened international tensions. If we fail to support our steel industry we will be extremely vulnerable. We have to maintain our manufacturing capacity at home.
“And to become a net zero economy – which is crucial – we will need a strong and green steel industry. Imports from Chinese add 50 times more CO2 to the atmosphere than our domestic steelmaking. Offshoring steelmaking would simply offshore emissions.”
David Offenbach, Labour Business and author of Takeovers and the Public Interest, said that the national interest must be taken more seriously in company takeovers:
“We need to encourage ‘venture’ capitalism not ‘vulture’ capitalism. There are more hostile takeovers in Britain than in any other advanced economies. But it’s not just hostile takeovers but the agreed takeovers when directors get very fancy benefits for getting the deals through. In 2021-21 there was £150bn of private takeovers, largely by US private equity companies, often based in tax havens, with no control over what happens next.
“One example – Apollo, a US private equity company – bid £17m for Pearson Longman, a company started in Britain, following attempts to buy Morrisons. Now it is after Boots. One can see that Britain is wide open.
“Harold MacMillan once said that we have to protect Britain’s family silver. But aside from the new national security law, there are only three areas of English law where a government is entitled to intervene in a takeover – media plurality (eg Murdoch interventions), financial stability (Lloyd Bank takeover in 2008) and public health emergency (only added during Covid).
“For example, despite Morrisons being critical for food security and employment, pension fund trustees had no right to intervene, local councillors had no right, and workers has no right.
“We need a new public interest or national interest test to be added.
“This should be part of a wider reform package which is not just regulation but looking at the whole structure of companies and company law.”
Paul Lindley OBE, entrepreneur and founder of Ella’s Kitchen, asked us to step back and think about what the economy is actually for:
“We need to set the question of ‘what is the economy for’? We need a more just economy and one that works for the long-term.
“It is there to create prosperity and wealth, but for who? But how does it drive innovation? How does it serves the basic needs of all of us? Business needs to be seen as something that improves people’s lives.
“What I’ve learnt is that businesses don’t exist – they are a piece of paper. People exist. Businesses is not about economics – it is around psychology and behaviours, so we can make and improve products that help people improve their lives.
“The word ‘company’ is about people but we have morphed it into something that is unhuman. The Labour Party must get more ‘human’ back into business. It is the people that create the wealth, people that innovate and people that do business. If we start to forget that we are screwed!
“We are on the way to a broken economy, because there is plummeting trust in big business such as Carillion. We had the PPE scandal, the oligarchs and an economy that is not generating rising earnings with young people poorer than their parents.
“We need change:
“Firstly, we need to change the metrics of success – away from short-termism. As human beings we need long-term security of our country, from our pensions to environment. Yet companies use quarterly reporting and instead should really look beyond the next five or seven years.
“Secondly, the way capital is owned must change. Within the existing system we can encourage more worker ownership through share options, to give a worker the sense that they are part of the company and invested in it.
“Thirdly, the government could create a Sovereign Wealth Fund to invest in the long-term success of British businesses.
“Fourthly, let’s calculate the value of a company doing well for life improvement. “What is the value of this company or industry towards public health or education?” In the early days of capitalism these were the measures: quality of lives over the quantity of GDP (which is a blunt instrument).
“Fifthly, B-Corps – like Ella’s Kitchen – show how you can change your company structure to serve the triple bottom line of people and planet, alongside profit. The Better Business Act is supported by progressive businesses, which says that we should change the Companies Act 172 to take away shareholder primacy to ensure that business owners have equal responsibility to their shareholders and local communities equally.”