Memo To: Margaret Beckett; From: Roger Liddle; Subject: Labour's Industrial Policy

Article excerpt

How will industrial policy be different under Labour? Not a bad question to ask in the week the government produces its third Competitiveness White Paper, reporting annual progress on Michael Heseltine's pledge to intervene on British industry's behalf before breakfast, lunch and dinner. But not perhaps the easiest question to answer in a week when Kim Howells' appeal to embrace competition is branded an unqualified endorsement of Conservative economics, and John Prescott's Regional Policy Commission makes a string of proposals for industrial micro-interventionism.

Be in no doubt that Kim Howells starts from the right place. "Fairer and more vigorous commercial competition" is the best available means of making our industry more successful and enabling companies to create jobs.

While the Conservatives mouth the language of competition, their commitment to promoting it has been at best patchy--just look at the green papers on strengthening competition laws, published in 1989 and 1990 but shelved until a few months ago when they were recycled as another half-baked consultative paper. Yet to some on the left of centre, to attack the government for failing to push more competition is almost countercultural-a brazenly opportunistic attempt to out-flank the Conservatives on the right.

This attitude of mind ignores an important strand in Labour's past. For evidence I took down from the bookshelf my battered, second-hand, 1951 edition of Facts and Figures for Socialists (an impressive 450-page briefing from the Labour Party's Research Department). The Attlee government was not ashamed of its anti-monopoly rules: no longer "will monopolies be able to operate behind closed doors. Anti-social restrictive practices will be exposed and prohibited."

The 1948 Act setting up the Monopolies Commission would, according to the then president of the board of trade, the young Harold Wilson, "put an end to boycotts, stop lists and discrimination; deal similarly with loyalty rebates, special discounts and other forms of preferential terms" and give the government powers to address "conditional sales and other forms of conditional supply". Almost half a century later, our competition law is still too weak to make the spirit of these pledges effective. A good example is the continued abuse of market dominance in the deregulated bus industry, despite the Office of Fair Trading's strenuous efforts.

That some Labour spokespeople feel embarrassed in propounding the virtues of competition is yet another example of the deplorable statist legacy of the 1970s and 1980s. Yes, markets fail. But in that period Labour used the existence of market failures of justify an obsessive attachment to wholly inappropriate forms of public intervention. Too often Labour forgot that governments can fail as well as markets. Well-intentioned industrial policies were frequently captured by interest groups and manipulated by business people who became more adept at lobbying governments for orders, favours and subventions than winning market share. …