Anthony Painter

Despite its anodyne title- Going for growth: building Britain’s future economy- Lord Mandelson’s speech to the Work Foundation was a strong exposition of the need for strategic intervention to foster growth. When he’s not saving Prime Ministers, it would seem the the Secretary for Business, Innovation and Skills (I’ll save you the joke about all his other titles made so tamely on Newsnight by Jeremy Paxman last night) is doing serious thinking about the role of the state in supporting, diversifying and moving the British economy up the value chain.

There is lots of regional specialisation, coordination, aligning underlying strengths with economic opportunity, public-private financial support to help grow promising technology companies, and incentives for those who hold patents to grow their companies. It is a strong mix and not a moment too late.

If the economy is to shift away from a risky concentration of resources and capital on financial services then these types of intervention are necessary. If the growth is to be spread across the UK then regional coordination backed by financial muscle is critical.

The element of the analysis which is most appealing is the role of universities in promoting growth. The Government has doubled investment in science but now the challenge is- as Lord Mandelson put it- to ‘get more D out of our R and D.’ In Germany, spin-offs from academic research are second nature and this is a fundamental element of their economic success. It is why they will, in all probability, end up leading in green technologies as well. This is exemplified by the part (40%) government funded Fraunhofer Society which invests in applied science in area as diverse as solar energy and digital media. It has an annual budget of €1.2billion and companies within the Society have good relationships with the state. It is smart state intervention for the modern era.

As a follow up to Lord Mandelson’s speech opposition spokespeople will have the opportunity to outline their policies to the Work Foundation in coming weeks. You do wonder whether the Conservative faith in the free market and determination to abolish the Regional Development Agencies, who will be a key broker in all this, will be convincing. It’s difficult to see how. We are going into a different era of state-market relations and there is no sign that the Conservatives understand this.