Prem Sikka opens by referring to the mistakes of the past – the Thatcherite industrial strategies pursued by Conservative and New Labour governments have pursued Since the 1980s the key elements have been the privatisation of publicly-owned assets and promotion of light-touch regulation.
He sees that financial speculation has encouraged short-termism, which is deeply embedded in British industry and systems of corporate governance. The tenure of CEOs and major companies has shrunk, and shareholders want quick returns. British businesses have become an open bazaar with gas, water, electricity companies, as well as Cadbury and others falling into foreign hands and continues:
“The huge distance between the owners and customers resulted in rip-off prices, low investment and virtually no improvement in productivity. Yet the government has no effective policy for addressing ownership, control, mergers and takeovers of British industry.
“The government’s recent White Paper on industrial strategy (left) offers the same failed ideology, as the government hankers for ‘free trade with the whole world’: Free from what, one might say – regulation, duty to stakeholders, consumers and society and product safety?
“Historically, the UK economy has been built by a mixture of private investment and direct state intervention. All too often, the private sector has shown little appetite for long-term risks and the state had to build airlines, telecommunications, biotechnology, nuclear and computer industries. It also rescued and reinvigorated railways, water, gas, electricity, shipbuilding and many others.
Brexit uncertainties are dissuading many companies from investing in the UK – even more reason for the government to invest directly in our key sectors. Sikka’s proposals:
- Ensure that small businesses are not ripped-off by banks and put into premature receivership – abuses well documented by the Tomlinson report.
- Implement Labour’s idea of a National Investment Bank for industrial rejuvenation.
- Insist that a certain amount of bank lending, at a reasonable cost, be reserved for small businesses.
- Confront the problem of short-termism; government could insist that 50% of the membership of unitary boards should consist of stakeholders with long-term interests (e.g. employees, customers of utilities, banks, etc).
- Or embrace a German-style two-tier board structure which gives employees a clear say in business.
- Government could reduce pressures from speculators by insisting that anyone holding shares for less than 12 months is not eligible to vote.
- They could provide resources to promote alternatives to corporations in the form of mutuals, co-ops, employee owned and not-for-profit enterprises.
Sikka stresses that we need to invest in new technologies, green industries, artificial intelligence and much more and asks: “But would the private sector do it?”
Read Prem Sikka’s critique of the recent White Paper here: https://leftfootforward.org/2017/11/the-governments-industrial-strategy-relies-on-a-discredited-economic-model/