2014, Labour’s year of…entrepreneurship

2014 is going to be a crucial year for the Labour party, and for one nation Britain.

As the economy emerges from three years of stagnation, Britain needs a growth strategy that goes beyond the short term. Labour has been undertaking a wide-ranging policy review, and over the next year it will form the basis of our winning manifesto in 2015.

What we also have now is the opportunity to be ambitious and create a state that is fit for purpose – which operates as an efficient enabler of growth and public service delivery.

For too long the state has been portrayed as a burden, a cost to the nation, an essential institution that followers of Nozick would begrudgingly reconcile themselves to as a “minimal state, limited to the functions of protection against force, theft, fraud, enforcement of contracts, and so on.” However, this narrow view, which still informs many on the right, is in danger of costing Britain in the long term. The debate is not merely one of size, but about form and function.

The next Labour government will inherit responsibility for a range of public goods and services, with a much-reduced amount of public money to spend on them. The coalition has used the language of austerity as the trojan horse for a smaller state without a clear vision of a future Britain or the kind of state we need to design. They have used the global financial crash, not as an opportunity to build a more resilient economy, but as an excuse to cut the size of the state for ideological reasons.

The act of stewardship and care of public resources will require huge diligence and skill. Labour will make different choices to secure a strong and sustained recovery that delivers rising living standards for the many, not just a few at the top.

Labour sees the state as a strategic partner for the private sector, not its antagonist. Labour’s Small Business Taskforce’s report An Enterprising Nation contains excellent policy proposals. Delivering them will require a more agile and responsive state that understands and works with business. For Britain to fulfill its potential, we need an ‘entrepreneurial state’, which is adaptable, agile, capable of acting with rapidity, and which above all is efficient. This must still be a state whose direction is guided by progressive politics, so that public resources help achieve inclusive outcomes.

Our view of the state goes beyond administrator and bureaucrat. The state is also an economic actor that enables innovation, and where necessary, takes risks and steps in as facilitator or even market creator in new growth sectors. Labour’s policy of implementing a British Investment Bank and a network of regional banks is a great example of this, giving us the tools to support firms to access the finance they need to innovate, grow and potentially support the small innovations that could be game changers of the future, which cannot succeed through the private sector alone.

In her excellent book “The Entrepreneurial State” Mariana Mazzucato has developed the concept of the entrepreneurial state. Mazzucato shows how the radical innovations that have changed our lives, from railroads to the internet, have been through ‘entrepreneurial’ state investment, and she points out the race currently underway with the green industrial revolution. China’s “green development” strategy sets it apart; the UK’s woeful track record over the last three years under the Tories has started to see Britain lose its position.

In March 1993, shortly after his election as president of the USA, Bill Clinton launched the National Performance Review of the state’s services and programmes. His stated goal was ‘to make the entire Federal Government both less expensive and more efficient, and to change the culture of our national bureaucracy away from complacency and entitlement toward initiative and empowerment. We intend to redesign, to reinvent, to reinvigorate the entire national government.’

In this, the Clinton Administration was hugely influenced by Reinventing Government by Osborne & Gaebler, and the ideas of New Public Management. Labour took Whitehall through its own transformation programme, with enhanced coordination and deeply expert programme managers in the Cabinet Office. But it is now time to go beyond management, and incorporate innovation into our vision of the future. To deliver a true one nation Britain, we have a duty to make sure everything we do represents value for money, is fair and efficient, and strengthens our society and economy. That’s what the entrepreneurial state is all about.