Memo to Ministers: Business, Innovation and Skills

Ed Miliband launched the Labour Party’s manifesto for the General Election by telling the nation that a Labour government will “change the way the country is run and who it is run for.” Behind Number 10, the most important department in delivering this fundamental shift in the power dynamic of wealth and power in this country will not be the Treasury, but the Department for Business, Innovation and Skills.

This is a short note on why (should the British people give the Labour the chance to govern on May 7^th) the next Labour Business Secretary must take a leading role in this economic rebalancing, and how – with a gentle nudge towards a few Fabian research papers and publications – they can do it.

Changing the way the country is run means changing the way government works. And the bold plan Ed Miliband and his shadow cabinet, including Shadow Business Secretary Chuka Umunna, have set out requires a new focus on delivering social goals not just through the state, but through the market too. That requires a better relationship between government and business.

The public are clear that radical change is needed. Polling published in the Fabian Policy Report All of Our Business showed that 67% agree that:

“Britain’s recent problems have exposed fundamental problems with the way our economic system works. The ways in which government, banks and major companies operate will have to change radically before prosperity is likely to return to British families.”

This public desire for change in the way in which government, banks and major companies operate has been a driving force behind Labour’s time in opposition. Now it must be so in government.

Writing in The Shape of Things to Come, the Fabian collection on what an Ed Miliband-led government might look like, Umunna called for a “more productive, more responsible capitalism to underpin a more inclusive and cohesive society.” It is in this vein that the next Labour Business Secretary can lead a transformation of government, and therefore the outcomes that government is able to create.

One clear beneficiary of such a transformation will be Britain’s low paid workers. While implementing Labour’s planned rise in the National Minimum Wage will instigate an important new activist relationship between the Business Secretary and the Low Pay Commission, there is much more to do to prevent further slide into what Inequality 2030 calls the UK’s ‘low pay, low productivity economic paradigm’. A previous blog of mine cites a few of these areas, including retail productivity, social care funding and trade union membership in the hospitality sector.

The Treasury and social security system can’t create this more productive, more responsible capitalism alone. A new partnership between government and business, brokered by an active Labour Business Secretary can.

And how might this partnership work? Well, that’s all set out in the Fabian research report In It Together. A Labour Government commits to working more in tune with business by, for example, ending policy surprises, seeking business champions for polices, and celebrating responsible business practices like environmental achievements and fair remuneration schemes. And in return, businesses agree to form, measure and deliver on certain social and environmental targets. Future Fabian Society work will be looking at how this approach can work at a sectoral level.

Finally, if the Business department is to change the country, it needs to change itself first. Here, it is worth comparing notes with the last Labour Business Secretary. When Lord Mandelson returned from Brussels to run BIS, he did so with a new zeal for industrial activism. The next Labour business secretary needs to pick up this baton.

A Labour government serious about changing the way this country is run and who it is run for will need to deliver social change through the state and the market. This is why if a Labour government is elected on May 7^th, the role of the Secretary of State for Business, Innovation and Skills will become one of the most important jobs in Britain.