Yet another paper tiger for business?

Question: what’s woolly on regulation and lacking an overall big idea? Answer: a goverment white paper.

With its new competitiveness white paper,the Government claims to be creating a framework to help British firms flourish. But as David Fowler reports, despite praising some measures, industry doubts Labour’s commitment

When Michael Heseltine was trade and industry secretary, competitiveness white papers were surrounded by razzmatazz — partly because they were a Heseltine invention. For the 1996 one he dragooned in practically the whole cabinet for the launch, including the prime minister.

Under Labour they’ve been more low-key, and there have been only two. The first, in December 1998, saw industry secretary Peter Mandelson first use the phrase ‘the knowledge-driven economy’ just days before his first cabinet resignation.

Last Tuesday Stephen Byers and David Blunkett unveiled the second, a joint effort by the DTI and the Department for Education and Employment.

After five white papers since 1994, it’s legitimate to ask what they achieve. Is there more to it than including a few references to high-tech clusters, encouraging spin-offs and start-ups, and commercialising university research; and adding a bit about addressing the skills shortage, revitalising the regions and helping smaller businesses?

Byers and Blunkett said the latest white paper was about redefining the relationship between government and business. The role of government, said Byers, is not to dictate to business but not to leave everything to market forces either. ‘There should be a partnership to equip both businesses and individuals to cope with change.’

Blunkett wants to redefine the government’s role within the global economy as ‘active government without clumsy intervention’. It should support people going through redundancy, unemployment and back into work again. ‘The greatest security comes from assisting people to cope with a changing world. Improving skills is the way we can achieve that,’ he said.

Industry has found plenty of sensible stuff in the white paper — particularly the approach to skills, a response which seems to endorse Byers’ and Blunkett’s attempt at ‘joined-up thinking’.

‘The government is right to acknowledge that its strategic objectives should be geared to developing a highly-skilled workforce that can adapt to changing demands, rather than old-style intervention,’ said Digby Jones, the CBI’s director-general. A spokesman for the Federation of Small Business said: ‘This white paper stands out because of its stress on education and training.’

But the British Chambers of Commerce said the white paper lacked a big idea and missed a chance to re-establish the government’s pro-business credentials. ‘It’s not the giant leap business is hoping for,’ said BCC director-general Chris Humphries. ‘The measures on skills, regional development and innovation all push the right buttons. However, for what is potentially the last white paper before an election, it is too limited.’

Copies of the white paper can be found at: www.dti.gov.uk/opportunityforall

So how does it rate?Here are the main points, plus our verdict

Regions

The regions, said Byers, are ‘a great untapped resource. They should be at the forefront of a modern industrial strategy. We can’t afford to have them underperforming.’ Initiatives include:

A network of university innovation centres linking business and university research. The centres, to be focused on sectors of strategic importance to the region, are expected to become ‘hubs for enterprise’ which will commercialise world-class research. The DTI is contributing £30m to setting up the first five centres, announced last week, and will make more cash available ‘from a range of funds’ to get more centres off the ground.

Technology institutes, two in each region, to bring together universities, local colleges and groups of companies. These will develop courses mainly at technician level and support the transfer of new technologies and business practices to companies.

A £75m incubator fund, managed by the Small Business Service. It will develop 75 incubators by 2004 to provide suitable premises, advice and finance for new and growing business. Set up in the managed environment of an incubator, 80% of businesses are still around after five years, compared with just 33% who try to go it alone.

A Manufacturing Advisory Service, which will have two areas of activity: First, creating regional centres bringing together the DTI, the SBS, RDAs and Business Links to act as focal points for small business support. This will be supplemented by a network of advice centres which will seek out small companies to ‘stimulate interest in best practice manufacturing methods and technologies’.

RDAs will develop strategies for success in their region. The aim will be to encourage the growth of successful clusters, building on work by the DTI to identify existing clusters.

Not surprisingly, small companies are all for the Manufacturing Advisory Service, though no-one is sure quite how it is supposed to work. But talk of clustering is a turn-off. ‘Much of the stuff on clusters goes over our members’ heads — they’re not that type of company,’ said an FSB spokesman. The CBI warned that the Manufacturing Advisory Service ‘needs to reinforce what’s already happening’, rather than causing duplication and confusion.

Digby Jones added: ‘The enhanced role for Regional Development Agencies will allow them to bring a new cohesion to regional economic development.’

Regions star rating JJJJ

Skills

Radical new approaches to teaching and learning and much more extensive links between education and business are promised.

Initiatives include:

A major rationalisation of vocational qualifications up to technician level by autumn 2001, investing £100m to develop vocational subjects in colleges, and more resources for Modern Apprenticeships.

A programme to put 10,000 people annually through new advanced training programmes in IT skills to develop a workforce ‘with world-beating skills’.

Targets for employer training, plus £45m for a smaller, stronger network of National Training Organisations.

An extra £150m for literacy and numeracy training.

This section went down particularly well with smaller companies. ‘We’re quite pleased with the emphasis on education and training, especially Modern Apprenticeships and vocational GCSEs,’ said a spokesman for the Federation of Small Business. ‘A lot of training initiatives recently have been focused on high technology, but our members are more worried about shortages of traditional skills, which Modern Apprenticeships address. Vocational GCSEs address concerns that schoolchildren are not taught about business early enough.’

The CBI’s Digby Jones welcomed the promised extra spending on raising technical skills, but added: ‘The target for reducing the number of adults with literacy and numeracy problems could have been much more ambitious and challenging.’

Skills star rating JJJJ

Global ambition

The white paper sets out its aim of ‘strengthening the UK’s engagement with the wider world’ and winning ‘the global battle for world-class talent’.

Initiatives include:

Launching schemes to attract business talent and ideas to the UK: an Enterprise Scholarship, and a scheme to encourage British entrepreneurs abroad to establish innovative companies in the UK.

Strengthening support for British business in global markets.

Launching a detailed study on European economic reform.The BCC said: ‘We welcome the white paper’s focus on exporting, and support the drive to push economic reform in Europe.’

The main short-term objective, it said, should be to develop credible regulatory impact assessment procedures. The government should also push for reform of the process by which the European Commission approves state aid.

Global ambition star rating JJJ

Investment in new technology

The aim here is to spread the benefits of new research and technologies to business.

Initiatives include:

Providing £90m to promote commercial exploitation of ‘basic technologies’ — nanotechnology, quantum computing, sensors and photonics — as well as e-science and genomics.

Providing £30m to accelerate the take-up of broadband technology by businesses and households.

Encouraging development of more resource efficient and environmentally friendly products and energy systems, including a solar photovoltaic demonstration programme.

Providing £30m to increase awareness and understanding among all businesses of the challenges and opportunities of e-business.

The BCC welcomed the e-business moves, but warned that unnecessary regulation could get in the way. Again, small business, many of which are behind on internet use, will be glad of any help they can get.

Investment star rating JJJ

A climate for enterprise and growth

‘The UK must have a regulatory and financial environment that is second to none in fostering enterprise and growth,’ says the white paper.

Initiatives include:

relaxing insolvency rules so ‘honest individuals who go bankrupt have a better chance of starting again’ more quickly.

a more commercial approach to rescuing companies in short-term financial difficulty.

a new ‘pro-competitive’ role for the Office of Fair Trading to spot existing and proposed regulations that hold back dynamic markets.

continuation of the Small Business Service’s ‘think small first’ strategy to require government departments to consider the implications for small businesses when developing policy or regulations.

This was an area that business was less happy with. Of the OFT’s new powers the BCC said: ‘It’s not clear if they will relate at all to the growth in employment legislation and the use of unnecessary regulation rather than codes of practice or self-regulation.’

The CBI criticised what it saw as a lack of ‘specific commitments to roll back the tide of red tape that prevents many companies from creating the jobs of the future’.

Climate star rating JJ

And the overall verdict? Many good points, but woolly on regulation and lacking an overall big idea.

Overall star rating JJJ