Simon Horner is public affairs manager for the British Private Equity and Venture Capital Association and writes here in a personal capacity.
The British Right is generally more sceptical about industrial activism than their opponents. The Right cite the painful history of British Leyland’s nationalisation and near oblivion through to its eventual rescue by the Chinese in the guise of Nanjing Automobile, as far removed from the British State as you could imagine. The British Left look wistfully across the channel at France’s Nestle, and Germany’s BMW and wonder whence our promotion and defence of national champions? But is there a sensible role for the state here that goes beyond questions of shielding national corporate treasures?
‘Picking winners’ is a hackneyed phrase but it is an instructive one. The reason why doing so is often a mistake is not because such interventions destroy some capitalist shibboleth. It is because it is top-down and short term, not bottom-up and strategic. It is also an answer to a question that should never be asked. Take Sheffield Forgemasters. This was an established company that reached a position where it would live or die on Government support. The fact that Ed Milliband justified it because ‘it was only a loan’ is neither here nor there. This is a classic example of picking a loser.
So what can a Government do if not this? Peter Mandelson’s rhetoric earlier this year of a ‘new industrial activism’ sent chills through anyone who can still remember life under Heath and Wilson’s industrial policy. But the content was far more soothing. He wrote in February:
“We need a strategic lead and vision from government that commits this country to change and in doing so sets the right frameworks for the private sector and uses public investment strategically”.
Few but Milton Friedman himself could be spooked by this. But what intervention is available, particularly such that an economic liberal could be comfortable?
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