Could there be a more vivid cautionary tale for Vince Cable and others who yearn for interventionist industrial policies than the Commons Public Accounts Committee’s report on the failures of the Regional Growth Fund? This £1.4 billion bundle of largesse was created in April last year at the instigation of Nick Clegg and as a sop to those who regretted the axing of Labour’s regional development agencies. It boasted a board chaired by Lord Heseltine and including Lords Storey, Shipley and Monks. Never heard of ’em? They are, respectively, the former heads of Liverpool and Newcastle city councils and the TUC, so ideally qualified to act as Dragon’s Den judges overseeing the selection of promising companies to back on behalf of the taxpayer — alongside, among others, the deputy chairman of G4S, the outsourcing company that so spectacularly failed to meet its Olympic commitments. The only sensible name on the list was the venture capitalist Jon Moulton, who must have wondered whether he had been cast in a savage new satire from the makers of Twenty Twelve.
It turns out the Fund has channelled just £60 million towards promising businesses so far, creating just 2,440 jobs and ‘safeguarding’ 2,760 more — against a target of 36,800, which Clegg claimed would be multiplied many times over by ‘private-sector leverage’. This model quango has no doubt also kept in work most of the army of second-rate ‘consultants’ who used to leech their living from RDA budgets. Meanwhile, the private sector as a whole has managed to create more than half a million new jobs during the Fund’s existence, without its help and despite the burden of employment law that Cable is so reluctant to reform.
We have heard this week several sermons on the lessons of the London Olympics. Undaunted by the Regional Growth Fund embarrassment, Cable apparently wants to surround future business winners with state-funded advisers just as athletes are surrounded by coaches — great news for all those consultants. And TUC chief Brendan Barber says the Games have proved the value of state planning and provision. Both are wrong. The remarkable feat of delivery and organisation we have seen this summer is not to be belittled, but it was done at arm’s length from government: the ‘minister for sport’, Hugh Robertson, has been all but invisible throughout. A far more important lesson has been about personal effort. Truly talented, driven, self-confident individuals, whether athletes or entrepreneurs, can rise to any challenge; all they need government to do is to provide access to the field of play at reasonable cost, without bureaucratic barriers. Then the winners will pick themselves, and the nation will cheer them on.
Not taking sides
It’s hard to take sides in the $80 billion merger wrangle between the commodity trader Glencore and the mining group Xstrata, because there’s something slightly repulsive about both companies, the people that run them and the kind of capitalism they symbolise. The deal has long been expected: Glencore floated last year primarily to create listed shares with which to buy the two-thirds of Xstrata it did not already own; both companies are Swiss-based for tax reasons and their respective bosses, Ivan Glasenberg and Mick Davis, are long-time allies. But now they seem to be falling out with each other and key shareholders over who will hold power and how huge a pay-off (£170 million was the opening bid) should go to Davis and his crew. The spectacle became even more unedifying last week when Tony Blair was called in to mediate with recalcitrant Qatari investors, at a fee said to be £150,000 for three hours’ work. The only certain outcome is that the rich men at the table will come out even richer.
Striking lucky
‘Luck looms large in the Irish psyche and it’s what they need right now — an oil find, perhaps — plus a bit less attention from world markets and media,’
I wrote from Dublin in December 2010, at the height of Ireland’s financial crisis. Since then, the Republic’s response to impending national bankruptcy has been considerably more phlegmatic and purposeful than that of Greece or Spain, making it much less eye-catching for headline writers. And I’m intrigued to see that an Irish company really has struck offshore oil, in an area of the Atlantic south of Ireland and west of the English Channel. Providence Resources, run by Tony O’Reilly Jnr, has found ‘more than a billion barrels’ in the Barryroe field: it is ‘waxy’ oil which solidifies when it comes to the surface, but new technology and rising oil prices make it viable for exploitation.
That news item prompted me to ask how the rest of the Irish economy is faring. As in the UK, signals are mixed and opinions differ as to whether austerity is good medicine or pure poison. Ireland’s unemployment rate stands at around 15 per cent (ours is 8 per cent) and its major banks are still in intensive care. The IMF forecasts 0.4 per cent growth in Ireland for this year compared with just 0.2 per cent in the UK, but 1.4 per cent for both next year. Export-led recovery being the Holy Grail these days, the comparison most favourable to Ireland is in growth of export volumes since the onset of the downturn in 2008: up almost 10 per cent for Ireland despite being locked into the euro, only 0.1 per cent for the UK despite a more competitive pound.
But then one of the UK’s biggest markets for physical exports is Ireland, while Ireland’s biggest source of new export earnings is UK-generated revenues for Google and other internet firms which book their dealings in Ireland for tax purposes. Perhaps the true level of continuing distress is best expressed by this headline from the Finfacts business news website: ‘Irish Government announces Envelope Supply Company to create 32 jobs in Kilkenny by end 2014’. All we can conclude is that the Irish are battling through just as we are, and wish them luck with their black gold in the Celtic Sea.
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