Ian Lang – secretary of state for trade and industry

Ian Lang’s style at the Department of Trade and Industry is, necessarily, quite a contrast to that of his predecessor. Michael Heseltine’s flamboyant, evangelical approach to the cause of manufacturing gave Lang a hard act to follow and it is unrealistic to expect him to leave his stamp on the department in quite such an […]

Ian Lang’s style at the Department of Trade and Industry is, necessarily, quite a contrast to that of his predecessor. Michael Heseltine’s flamboyant, evangelical approach to the cause of manufacturing gave Lang a hard act to follow and it is unrealistic to expect him to leave his stamp on the department in quite such an emphatic way.

But he is generally considered to have carried out his duties with skill since his move from the Scottish Office nearly two years ago. In particular, he showed himself a combative performer when he led the Government’s defence to the Scott report in the House of Commons.

There is little evidence of that side of Lang during our interview. Nor is there much sign of the man who shared the limelight with John Cleese in Footlights as a student at Cambridge University. Instead, he appears reserved and, unusually for a politician, appears to think about the questions and give a considered response rather than launching immediately into a set spiel.

But he keeps stressing the message which has so far been buried by the cash for questions controversy in this election campaign: the Government’s record on the economy.

He sums up his stance: `I’m in favour of freeing up markets, minimising the burdens of regulations of business and rejecting the European social model that has so overburdened industry in European countries and made them so uncompetitive.’ He promises a `sustained long-term commitment’ to research funding, and to small businesses.

One question in particular needs no reflection. Given Labour’s claimed success in cultivating the business community vote, what is his message to those Conservative supporters who may be wavering?

`The most important thing manufacturing industry wants is a stable economic base from which it can plan, invest and compete. To provide that has been our objective. It is an objective we have achieved – our objective is now to sustain it.’

In the past few years, he says, the Conservatives have delivered a sustained period of low inflation, low interest rates, falling unemployment and an expanding manufacturing base. `We have got the right ingredients, the right mix; we’ve got to sustain that to help the recovery in manufacturing to gain strength and become more entrenched. The worst thing that could happen would be to have a change of Government, with a change of policies, which would undermine the confidence that has delivered that success.

`The sort of thing that would undermine it would be signing the European Social Chapter and the rest of the European social model, the national minimum wage, and reforms to give new powers to trade unions. All these measures are against the grain of what businesses need to sustain their present success.’

What policies, specifically, would the Conservatives seek to build on if re-elected? `We would deliver more of the same, which has been so successful. We would continue with the development of Business Links, we would continue to give substantial help and encouragement to exporters, we would continue above all to maintain the stable economic base on which it’s all founded.’

The strong pound is threatening to undermine that stable base and is increasingly alarming industry. Does he share industry’s worries on this?`Rapid currency movements always create uncertainty and difficulties but a stronger pound has offsetting benefits, including lower inflation and reduced import prices, which are a major component of exports – it is not all a one-way street. I understand the difficulties that some exporters face but because of the improved competitiveness and improved investment in recent years, many exporters are still able to compete in terms of quality and price despite a stronger currency.’

There is continuing concern that industry is not investing enough. How can the Government encourage that?

`I think the best way to encourage it is to create the kind of stable, competitive and confident environment in which business is prepared to invest. And total investment in industry has risen faster during our period in office in this country than in France or Germany and most of our European competitors.’

How close is the UK to achieving the Conservatives’ avowed aim of becoming the enterprise centre of Europe?

`I think we’re well on the way to it. Many of our European competitors already salute us with that title. Others pay us the highest compliment of all, which is to come and invest in this country instead of in their own. We have 40% of all US, Japanese and Korean investment coming into Europe; we are the second largest market for mobile international investment anywhere in the world. That is recognition of our improved competitiveness. We’ve closed most of the productivity gap between the UK and Germany that existed when we came into office 18 years ago.’

But if our economy is such a success, why do the likes of Ford and BMW need Regional Selective Assistance grants to persuade them to invest or keep open existing factories?

RSA grants `seek to help bring employment to disadvantaged areas, to remove the areas of market failure in the economy’, he says.

`It is sometimes necessary to have a financial component in the overall package of what we offer to mobile investment projects to persuade them to come here rather than to some other country. But it’s a modest component.’

Lang accepts the argument, however, that manufacturing cannot compete on a basis of low wage employment with the emerging economies of south east Asia.

`The future isn’t in large scale low level manufacturing assembly, it’s in advanced high-tech added value products,’ he says.

He cites initiatives like the DTI Innovation Unit, Technology Foresight and the Information Society Initiative as important efforts in a strategy to encourage industry to invest in technology for the future.

He rejects the suggestion that the Foresight initiative has lost its momentum. `If you talk to anybody involved in the detailed work, they will tell you the exact opposite. The first round of applications and awards [for the Foresight Challenge] created huge excitement and interest. But then there is the development process thereafter, which is less high profile but is still involving an enormous amount of work. The Foresight initiative is becoming strongly ingrained in manufacturing industry.’

Combining the Office of Science and Technology with the DTI has, he says, `worked well so far’. `It’s the kind of change which needs several years before you can pass judgement on it, but I have managed to protect the science budget despite the rigours of recent public expenditure rounds. I’ve also managed to protect the portion of that budget going into basic research.’

The balance between applied and pure research, with 60% of research council funding going into Foresight-related projects, is `about right’, he says.

What of dialogue between industry and Government? Is there a case for a closer partnership as in Japan, where the Ministry of Industry gets together with industry leaders to develop strategies and identify technologies which need support?

`I do believe that industry and Government should talk to each other extensively but I don’t believe in institutionalising unnecessarily such relationships. At present we have massive contact with industry – we have 80 sectoral units in DTI who maintain a massive database on all aspects of what industry does – but we do it with a light touch.’

The annual Competitiveness White Paper is here to stay, he says. `I believe the three white papers have had a very beneficial effect on industry’s attitudes. There is now a widespread recognition that competitiveness is a vitally important component of industrial success. The self-disciplines imposed by these white papers have been beneficial not just to industry but to Government too.’

Lang, who worked as a director of an insurance firm in between university and being elected as an MP in 1979, says the message to small businesses is: `Our agenda is the same as theirs’.

On suggestions that Business Links will not be economically viable once start-up funding is exhausted, Lang says: `It is important that they should seek consistently to minimise their administrative costs and to raise as much from charging as the local economy will sustain. The best Business Links recognise this and are now achieving good targets.

`The total value of schemes delivered is very substantial, and there will always be a need for a range of Government supported schemes to be delivered through the network.’

Finally, what can be done about skills shortages? `In reality the evidence of them is very limited and considering the substantial and sustained growth in the economy that we have achieved in recent years, I think it is a tribute both to industry and to Government that we have managed to anticipate and meet these shortages with improved training arrangements.

`This is not to say there isn’t a shortage of good engineers. There are opportunities in engineering as a career which are not being fully taken up.’ He points out that the unemployment rate for qualified engineers is 2.5%, less than half that among graduates generally, and about a third of the total overall unemployment rate. `Moreover the starting salary of a qualified engineer is substantially higher, about £3,000, than for people with qualifications in other sections of industry. So there are opportunities there that people are clearly not fully aware of.

`That’s why initiatives such as Action for Engineering and the Year of Engineering Success to try to improve the image of engineering are so important.’

If Lang holds the Galloway and Upper Nithsdale seat, and if the Tories win the election, would he like to continue in his present post?`Oh yes, I’ve barely got started.’