UK: Undermanaged, underdeveloped, underinvested, undereducated ... sinking Britain. (4 of 4)

UK: Undermanaged, underdeveloped, underinvested, undereducated ... sinking Britain. (4 of 4) - The most damaging assessment comes from the AEU's Jordan. He argues forcefully that the improvements of the early 1980s were one-off "gains through disaster",

Last Updated: 31 Aug 2010

The most damaging assessment comes from the AEU's Jordan. He argues forcefully that the improvements of the early 1980s were one-off "gains through disaster", by their nature unsustainable. Growth without enlisting the workforce became impossible - "The climate of fear was used up. In any case, you only get the benefits of flexibility once." At that point, says Jordan, investment should have taken over as the motor of improvement.

"Disgracefully, that didn't happen until Lawson's giveaway Budget. The ultimate irony is that on the back of that Budget, companies finally invested in ways that would hang them." Even then there were serious doubts about whether the investment had strategic as opposed to short-term cost-saving intent. Now we are back to the bad old days. This year manufacturing investment will shrink by around 15%, bringing it back to a level well below that of 1979.

The other major failing is in training and education. Only in the UK, points out Harvey-Jones, is an offer of training taken to be a criticism of present performance. In general education the situation is no better, partly because there is a 15-year time cycle before any change can work through the system. The arguments have been sufficiently rehearsed not to need repeating here. But apart from the quantitative elements (too few engineers, too narrow academic achievement, insufficient emphasis on the practical), it is worth pointing out, with Harvey-Jones, that the most crippling handicap for an undereducated, class-bound society is the "pathetic aspirations of individuals. I don't believe schools should turn out cannon fodder for industry. The worst is that far too many people believe they are preordained to fulfil a destiny which is way below their capacity."

On top of all of this comes recession. The import of cyclical peaks and troughs can easily be exaggerated. It would be naive to think that cycles had been abolished for ever. In this case, in some industrial sectors the tide may already be turning, and in any case in 1991 it is plumper service companies that are undergoing the drastic weight-reducing regime that manufacturers endured a decade ago. Furthermore, serious companies will continue to make strategic investment in the knowledge that, in Parnaby's words: "Once business picks up, it's much more difficult to do. The Lucas attitude is let's use present difficulties to accelerate the pace of change."

There are, however, two important and interconnected points to make about the recession. The first is that it is unique to the UK. This means that, at the sharp end of competition, UK companies are labouring under an inflationary and interest rate handicap which does not restrict anyone else. As Young puts it: "Our competitors have two years to go marching on." For British manufacturers, adds McWilliams, "it's like starting a race by stepping three steps backward".

The second and deeper point is that this recession was a government-inflicted wound. There is no good supply-side reason why interest rates should be at 13.5%. The present difficulties, which companies are paying for by freezing their much needed investment plans, are entirely a demand-side mistake made for the sake of a symbol economy which UK governments unfailingly elevate over the real one.

In the 1980s, sums up Harvey-Jones, "we got better relative to ourselves. But relative to others, we had a decade of genteel sliding down the helter skelter of world competitiveness." To reverse that still needs sustained attack on the multiple causes of Britain's decline and fall: underinvestment, undereducation, insufficient management and unbalanced R and D. In those circumstances the last thing that the country can afford is another series of economic experiments leading to a dead stop. To hell with experimentation. There is a simple test for the 1990s: let us get the trains running on time.

(Simon Caulkin is a freelance writer.)

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