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Winning by a Thousand Steps

Submitted by on 13 Sep 2011 – 17:05

Lord Richard NewbyLord Richard Newby, Co-Chair of the Liberal Democrat Parliamentary Treasury Committee

One of my favourite sports books is Clive Woodward’s “Winning”. In it, he explains how England won the 2003 Rugby World Cup, not just because of the innate abilities of the players, but because he meticulously made hundreds of small changes and innovations to the way in which the team played.

The same approach explains how long-established companies keep ahead of the competition. But it must also be the approach which the Government takes in improving the competitiveness of the British economy. There is no single silver bullet which will transform our international competitive position, but a large number of more modest improvements will, if taken together, have a transformative effect.

The Government appears to have recognised this and set out many specific proposals in its Plan for Growth. Three which deserve particular welcome are:

  • A lower regulatory burden. Reducing regulations is much more difficult than introducing new ones. One area where the Government has signalled a decisive break from the past is in the area of employment law where the industrial tribunal rules are being changed. In order to reduce the spiralling number of cases and their associated costs, unfair dismissal claims will not be possible until the employee has been working for a firm for two years (up from one). The first stage of the process will also in future involve compulsory mediation at ACAS, which will avoid costly tribunal hearings altogether in many cases
  • Supporting more apprenticeships than any previous government. For as long as I’ve been involved in politics there has been pressure for greater emphasis on technical education and training. This Government has provided additional funding in this area and, as a result in its first year, there have been 103,000 additional apprenticeships .This step change which needs to be repeated in future years
  • A recognition that the BRICS countries are crucially important to our future economic wellbeing. It is extraordinarily depressing that our exports to Ireland have been higher than to the BRICS countries combined. This is partly because Governments have not been prepared to devote time and effort to promoting our wares to these countries. Cabinet Ministers, led by Vince Cable have begun to put this right by leading delegations to these countries. But we’ve still got some way to go – when Chinese Premier Wen visited the UK a couple of months ago he signed deals worth £1.4bn. He then went to Germany and signed deals worth £15bn.

Whilst these are really positive developments, there is much more to be done and other decisions by Government have been les helpful or haven’t gone far enough.

Three where more action is necessary are:

  • Rebalancing the economy away from London and financial services. This is an urgent requirement if we are not toe see an increasingly divided country. It was therefore a mistake to abolish the Regional Development Agencies. The Local Economic Partnerships which have replaced them are not only less well financed, but lack the clout to drive forward economic development for the regions as a whole. Pared down versions of the RDAs, private sector led and concentrating on their core mission of promoting economic growth should now be re-established for the Midlands and Northern Regions
  • One of the sectors where the UK has a world leading position is in higher education. This market has grown rapidly in recent years and there is every reason to believe that it can continue doing so. The Government has made some sensible changes to restrict entry to the UK to students attending either bogus or very low quality “colleges”, but in its cack-handed attempts to cap immigration it has placed restrictions on foreign students, for example, against working whilst they are studying here. This could significantly reduce the attractiveness of the UK to many who would otherwise study here – to their detriment and ours.
  • The establishment of the Green Investment Bank is a major plus, because, by common consent, we need to put several hundred billion pounds into energy, transport and other infrastructure projects over the next decade. Investment in this area also creates jobs in the short term. It is therefore regrettable that the Government intends that the Bank will not be able to attract private sector investment until at least 2015. Until then it is limited to the £3bn which the Government will contribute. The reason given, that such external funding would add to the Government’s indebtedness levels, may be technically correct, but fails to acknowledge the urgency of the situation. The Bank should be able to attract external funds as soon as it’s established next year.

None of these changes will have immediately visible effects on headline economic indicators and no doubt in the meantime we will hear repeated calls for tax cuts and spending increases to “put the economy back on track”. But it is the thousand small steps which will lead to sustainable economic growth as surely as they led to that famous rugby triumph.