BONUS: Is British Politics Ready for the Economic Challenges we face? | with Peter Mandelson

Peter Mandelson is former European Trade Commissioner and Secretary of State. Prior to this, he held a number of Cabinet posts under Tony Blair and Gordon Brown and was one of the architects of New Labour. Peter spoke to Wadham College on Tuesday 28 February on the topic 'Is British Politics Ready for the Economic Challenges we Face?' This talk was hosted by Robert Hannigan, Warden of Wadham College and is now released in podcast format.

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Transcript

Transcript of Peter Mandelson’s address:

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Robert,

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very dangerously when we were talking

about our approach to this event,

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said to me that I should speak

for as long as I want, which is,

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I must say, a very dangerous thing to say

to a politician, even a sort of slightly

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dated politician like me.

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If I become an ex-politician now or not,

I don't know what

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I am really. But

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it's very nice to be back here in Oxford.

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I was at St Catherine's

a long, long time ago.

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Funnily enough, I was talking about

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- being openly gay -

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when I went back to my college,

I was doing an event

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a bit like this,

but with not quite so many people,

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and I was asked what it was like

to be at Oxford in the 1970s.

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Sort of socially,

did I enjoy the university socially?

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And I said, to be perfectly honest,

I found university social life

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very public schooly and very straight.

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And as I was neither of those things,

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I found it a bit

challenging on occasions,

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but it's

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otherwise I did enjoy my time,

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particularly at my own college.

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And so it's nice to be back here.

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Nice to be back in Wadham.

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The last time I was in Wadham

was in about 2019, and I came to talk

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to a meeting of the Labour Club. Now.

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So you

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said I can talk for as long as I want

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Robert, in fact,

what I'm what I've prepared myself to do

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is to talk to you really about

and to make three broad points to you

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about the sort of economic situation

we’re in and politics

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just to kick off our discussion

and then you can take the discussion

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literally in any direction that you want.

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But the first point

I think I would make to you

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and it's connected with Brexit

inevitably,

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is that

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Britain's economic options

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now are fairly limited.

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But this doesn't in my view,

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mean that there are no political choices

to be made.

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I mean, we have very serious

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long standing chronic economic weaknesses

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in this country,

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but at the heart of the economic dilemma

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that we face, making everything else

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much worse than it would

otherwise have been,

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is the reality that getting on for nearly

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7 years following the Brexit referendum

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we are no closer now

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to answering the very basic question

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of what

Britain's economic model should be

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now that we are no longer members

of the European Union

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of a single giant

market of its customs union

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in which we have enjoyed so much trade

and so much investment

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and so much prosperity

for getting on for nearly half a century.

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I mean, we were as members of the European

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Union, a European hub

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economy of a very major

and significant kind

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that decided basically to

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rip itself away from its spokes.

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That's what we did

in leaving the European Union.

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And that membership of the EU

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and the single market,

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has been a crucial component

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of Britain's economic model,

basically the foundation of it

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since the 1970s,

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because what it did was to expose us

to competition both at home and abroad

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in our largest market,

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basically Europe was our home

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market

exposed us to greater market competition,

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which boosted our dynamism as an economy,

our productivity,

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as well as our performance

in so many other different ways.

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And we've lost that motor.

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And it also, of course, made us home

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for very many foreign investors

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who came, brought their production

here to our country

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in order to get frictionless access

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to the European single Market.

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Like all those Japanese car manufacturers

who came here in the late seventies

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and the eighties, well,

many of them have packed up and left

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already, and others are wondering whether

now they have any alternative to doing so

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in the future.

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And basically out of the European Union,

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our trade and businesses

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are faced with very costly red

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tape at record levels.

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we've become short of workers

in Britain

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following both our leaving

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the European Union

and of course 5 or 6 million

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adult workers in the country

have decided since COVID that they

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no longer want to be part of the labour

market.

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Investment levels in our country

are now 30,

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30% lower than they were.

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Prices are higher.

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The freedom to make trade deals

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in with countries

in other parts of the world

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has made no difference, discernible

difference to our trade performance

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as a country and the dividends

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promised from regulatory autonomy,

which we were promised,

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if you remember, during the referendum,

have so far proved

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extremely elusive.

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So

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we are in a real pickle economically.

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And it's true

that our economy is being hit by

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the forces of the pandemic

and of course the Ukraine

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war and

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disentangling the effects,

the impact of both

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those sets of forces from Brexit

is not straightforward.

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I accept that.

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But the truth is that we were struggling

before COVID, and we were struggling

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before Ukraine in the aftermath

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of the Brexit referendum,

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we went to the bottom of the G7 league

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table where we still are

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today,

and the Bank of England has revised down

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to 1%

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our economy's trend rate of growth.

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This means, amongst other things,

that we will be unable

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to finance public services

at an acceptable level in our country.

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It means that we will be asking

our public services to do more and more,

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but for less financing because our economy

and its revenues will be smaller

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as a result of the decision

we took to leave the European Union.

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Now we can, and in my view, I think should

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acknowledge more

openly the pain that Brexit is causing us.

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And I think we should seek as ambitiously

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as possible

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to improve

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the trade and cooperation agreement,

the Brexit deal

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that Boris Johnson,

remember that oven ready deal

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that he negotiated

with the European Union,

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we should do everything we can

to negotiate

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improvements of it at the margin

wherever we can.

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And I'm glad that Keir Starmer has said

that a future Labour Government

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will do precisely that.

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But the truth is this,

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and it's something

that we have to face up to

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if we build up

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sufficient trust between ourselves

and the European Union,

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we can try and negotiate

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certain adjustments to the deal

that we negotiated

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originally, certain adjustments

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to our European market access.

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But the truth is that without actually

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re-entering Europe's single market,

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the legal entity of the single

market and the customs union,

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any adjustments

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that we're able to negotiate

with the European Union

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will not make any fundamental difference

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to our economic position.

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And I have to just share with you,

but it's something

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that we might discuss

during the course of of this event.

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I don't see any likelihood

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politically of either a cross-party

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or a public consensus emerging

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which favours single market re-entry,

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by Britain in the foreseeable future.

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And here's the point:

If we can't reach a consensus

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as a country

that we might want to reconsider

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re-entering the single market,

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I don’t mean rejoining the European Union,

I mean going back into the single market

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and the customs union,

if we can't as a country find a consensus

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in favor of doing that, I can tell you

the member states of the European Union

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are not going to entertain the idea

for one minute.

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The last thing they want to do is to start

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having to reengage with Britain,

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which is operating

like a sort of seesaw up and down.

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One minute

we want this, the next minute we don't.

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Unless there is a fixed,

settled consensus in this country,

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across governments, across parties,

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the European Union is simply not going

to start renegotiating with us

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whether or not we're going to be

in the single market in the future.

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So we are stuck

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and we're going to have to make our bed

and we're going to have to lie on it.

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But and this is the second observation

I want to make to you.

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I don't believe that

we have to lie on our bed

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in a sort of

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semi comatose or paralyzed state.

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I mean, at some stage

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we have got to push the reset button

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economically in this country.

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We can't sort of stay in this sort of glum

state

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forever, sort of not knowing what to do

and how to come to terms with the fact

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that basically we need to create

a new economic model in our country.

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Now, obviously, as I have explained,

we start with a sort of self-inflicted

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disadvantage economically.

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But here's the point: there are

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new markets,

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new technologies emerging.

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from very exciting advances

that are taking place

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all around

us, advantages, advances in clean

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growth technology,

for example, in life sciences

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and medical and health technologies,

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in AI, in quantum computing.

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And the point is that whole new

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markets are opening up

around these new technologies,

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and whole new industries can be built

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within those markets.

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And these are the markets

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and these are the industries

that we've got to find as a country,

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fresh, new competitive advantages

in the future

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in order to make our living

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in the world in different ways.

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And our task is to create new UK

businesses

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and supply chains

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in those industries, in those markets,

along with our world class

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services and creative industries

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that we have in this country,

and by these means

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pursue new routes back

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to economic growth.

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And the UK has multiple world

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leading science and innovation sectors

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rooted in

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major research based universities

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like here in Oxford.

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And we need to keep our

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tall poppies, tall

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in Oxford

and other research based universities

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and not cut them down,

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our great universities

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have now become our principal source

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of future innovation and prosperity

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in our country.

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And that means a university like Oxford -

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but there are many others around

the country - are going to have to play

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a much bigger role in driving growth

and creating prosperity, which governments

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have then got to distribute more fairly

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in the future.

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The truth, though,

is that at the moment

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these strengths that we have

are not being fully realized.

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Take the vaccine discovery

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that took place here in Oxford

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and the manufacture of it, which showed

what can be done.

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you know, when we take the research

base of a university like Oxford

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proper coordination in and investment

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by the government, the private sector,

and then manufacturers very, very quickly

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on a great scale

and a great public service

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like the National Health Service

distributing that vaccine around the country.

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The fact is that since the great success

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of the vaccine discovery here in Oxford,

in many ways we've gone backwards

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since. I mean, the great sort of regulatory

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push and intensity

that was devoted to making sure

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that the approval, the clinical trials

took place and the approvals were made

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and moving that then right off

into the private sector for manufacturing,

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it's all sort of become much slower

and slower. Now,

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our future prosperity

as a country is going to depend on that

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sort of invention, that sort of innovation

in very many other sectors taking place

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and government's got a very important role

in championing that,

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in helping to plan and coordinate it,

to invest in it,

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and also to procure it

in the case of public services

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so that markets get the right signals

and production takes off.

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In my view, the UK's universities

need much greater collaboration

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with industry and public services

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focused on economic progress.

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We might even become standard setters

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in the world in many of the innovations

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that are coming from our science base.

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But we've got to concentrate on that

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and we've got to be very,

very serious and focused as a country

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and therefore as a government

in making sure this happens.

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Which brings me to my third

and last point,

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and that is in all these matters,

politics,

00:18:04:15 - 00:18:07:00

politics matters.

00:18:07:15 - 00:18:10:11

You know, we've got to see an end

to sort of wishful

00:18:10:11 - 00:18:14:11

thinking in this country, you know, this

dreaming of magical solutions

00:18:14:11 - 00:18:17:14

that are suddenly going to sort of pop up

and enable us

00:18:17:14 - 00:18:20:24

to earn our living

and be successful once again.

00:18:21:08 - 00:18:26:10

No, we've got to really get our brains

in gear

00:18:26:18 - 00:18:32:06

and really start thinking through

and working out how we can take advantage

00:18:33:12 - 00:18:34:19

of the

00:18:35:04 - 00:18:38:17

resources we have, the people

we have, the science base

00:18:38:17 - 00:18:43:10

we have, the technological developments

that are at our disposal

00:18:43:16 - 00:18:47:04

and how we can commercialize those

and to convert them

00:18:47:21 - 00:18:51:14

into both private sector and public sector

00:18:52:04 - 00:18:53:21

success.

00:18:54:16 - 00:18:58:08

We are simply not going to succeed in

00:19:00:00 - 00:19:03:08

building our future prosperity

on the shoulders

00:19:03:14 - 00:19:06:15

of our great universities in this country

00:19:07:02 - 00:19:10:01

without a fully supportive, consistent,

00:19:10:12 - 00:19:13:07

joined up set of policies,

00:19:13:20 - 00:19:17:17

of investment, of regulatory change,

00:19:17:17 - 00:19:21:20

of planning system changes, of reskilling

00:19:21:20 - 00:19:23:24

our population

00:19:24:16 - 00:19:27:12

brought together in a framework

00:19:27:12 - 00:19:29:04

by the government.

00:19:29:04 - 00:19:33:19

And at the moment

the domestic and international investor

00:19:34:06 - 00:19:37:19

community is put off

00:19:37:19 - 00:19:39:23

bluntly by the sort of

00:19:42:00 - 00:19:45:17

political uncertainty,

the regulatory uncertainty

00:19:46:14 - 00:19:49:21

that we have demonstrated

to the rest of the world, I'm afraid

00:19:50:01 - 00:19:55:04

abysmally

for what has now been years of dysfunction

00:19:56:03 - 00:19:58:18

since the referendum took place.

00:19:59:03 - 00:20:04:07

You know, of course, the government's

immediate priority is to focus on macro

00:20:04:07 - 00:20:08:11

economic management

and stabilizing our economy, given,

00:20:08:16 - 00:20:11:20

you know, the great success of Liz Truss

00:20:12:10 - 00:20:14:23

and her great chancellor.

00:20:15:20 - 00:20:18:22

But the point I want to make to you

is that the political leaders

00:20:18:22 - 00:20:21:22

need to understand that the condition

00:20:22:13 - 00:20:28:21

for driving future UK

growth is generating that investor

00:20:28:24 - 00:20:32:24

confidence and belief in Britain

once again

00:20:34:01 - 00:20:36:06

in Europe, in Asia

00:20:36:14 - 00:20:38:24

and other parts of the world.

00:20:39:08 - 00:20:41:15

And this requires a much bigger plan

00:20:42:05 - 00:20:45:13

from the government than halving inflation

00:20:45:13 - 00:20:49:16

and getting public debt

on a declining path,

00:20:49:16 - 00:20:51:19

as the Prime Minister

00:20:54:20 - 00:20:57:21

Now, it will not surprise

any of you to hear that

00:20:58:16 - 00:21:02:00

I believe that this sort of catharsis

00:21:02:18 - 00:21:05:01

that we require in this country

00:21:05:01 - 00:21:07:06

it's got to come

from a change of government.

00:21:08:09 - 00:21:09:10

The good news is

00:21:09:10 - 00:21:12:17

that there is an alternative 

government on its way.

00:21:13:04 - 00:21:16:21

The bad news, I'm afraid, is that

there won't actually be a general election

00:21:16:21 - 00:21:20:05

until sometime in the middle

or back end of

00:21:21:02 - 00:21:23:06

of next year.

00:21:24:02 - 00:21:25:21

But I want to make

00:21:26:02 - 00:21:29:00

one other point to you, if I may,

00:21:29:00 - 00:21:32:11

about governments

and how they succeed,

00:21:32:20 - 00:21:36:11

whether they be Labour governments

or Conservative governments.

00:21:37:16 - 00:21:40:14

If you look at our post-war history

00:21:41:11 - 00:21:43:07

as a country,

00:21:43:21 - 00:21:46:04

there is, I'm afraid, a very

00:21:46:04 - 00:21:48:08

unfortunate theme

00:21:48:08 - 00:21:51:14

running through our politics.

00:21:51:14 - 00:21:55:17

Our political system sort of thrives on

00:21:55:22 - 00:21:57:23

zig zag policy-making

00:21:59:05 - 00:22:02:06

it thrives on sort of stop

00:22:02:06 - 00:22:05:00

go economic management,

00:22:05:13 - 00:22:11:11

constant reinvention of the wheel,

creating constant policy

00:22:12:01 - 00:22:15:09

uncertainty and rapid swings of the policy

00:22:16:11 - 00:22:18:18

cycle which undermine

00:22:18:18 - 00:22:25:04

any attempt, you know, to put in place,

you know, a sustained set of policies

00:22:25:04 - 00:22:29:06

that will bring the reform

and the modernization of our economy

00:22:29:22 - 00:22:33:02

and the realization of our economic

00:22:33:02 - 00:22:36:13

competitive advantages that we need to do.

00:22:36:22 - 00:22:41:08

The truth is that two conditions

seem to be endemic in our approach

00:22:41:08 - 00:22:46:21

to government in this country,

and both of them have got to be addressed.

00:22:47:03 - 00:22:49:22

One is chronic, short termism

00:22:50:15 - 00:22:53:14

and the other is hyper innovation.

00:22:54:08 - 00:22:56:19

I mean, a not invented here syndrome,

00:22:57:10 - 00:22:59:21

not only between successive governments,

00:23:00:06 - 00:23:04:23

but indeed between successive ministers

in the same department

00:23:05:07 - 00:23:09:20

constantly having to reinvent the wheel

and to do things differently,

00:23:10:13 - 00:23:14:03

which prevents policies

having any chance of a success,

00:23:14:17 - 00:23:16:23

of being rolled out and implemented

00:23:17:12 - 00:23:20:06

in a consistent long term way.

00:23:20:22 - 00:23:25:05

And these two sort of pathologies

that have afflicted our country

00:23:25:05 - 00:23:29:12

short termism

and lack of continuity, i.e.

00:23:29:12 - 00:23:32:10

giving policies a chance to work

00:23:33:05 - 00:23:39:15

I think they've deeply afflicted

our country's political economy since

00:23:40:19 - 00:23:42:13

throughout the post-war

00:23:42:13 - 00:23:47:12

era, and it's given significant advantages

to other countries

00:23:47:22 - 00:23:51:20

who think in a very much more long

term way.

00:23:52:05 - 00:23:58:00

You don't have this sort of sense of

constant sort of turmoil and reinvention.

00:23:58:00 - 00:24:03:11

And, you know, and as I say,

when I think of the industrial policies

00:24:04:08 - 00:24:05:10

that I introduced

00:24:05:10 - 00:24:10:04

when I had to come back to the government

after the financial crisis in 2008,

00:24:10:04 - 00:24:13:10

the industrial activism that I brought in.

00:24:14:03 - 00:24:18:14

But it's the same it's

been the same over very many decades,

00:24:19:01 - 00:24:21:12

constant chopping and changing

00:24:22:06 - 00:24:24:17

in the last ten years

00:24:24:17 - 00:24:28:24

when what the policies

I was pursuing in 2008,

00:24:29:03 - 00:24:34:10

2009, and 2010 needed at least a decade

of consistent application

00:24:34:17 - 00:24:38:07

to have any chance of realizing a success

00:24:38:21 - 00:24:43:21

that we we needed

actually the possibly the two postwar

00:24:43:21 - 00:24:48:18

examples of two prime ministers

who were exceptions to what I have said.

00:24:48:19 - 00:24:51:04

One was probably Thatcher,

00:24:51:04 - 00:24:53:20

who did actually drive

00:24:53:20 - 00:24:59:12

through three terms,

a sort of mission to, as she put it,

00:24:59:16 - 00:25:04:00

to free up the economy

and to introduce market forces

00:25:04:00 - 00:25:07:13

and free up the private sector,

the businesses in this country,

00:25:07:21 - 00:25:11:15

at the expense,

I might say, of a much less equal society,

00:25:12:11 - 00:25:14:17

and at great social cost,

00:25:14:17 - 00:25:18:18

but nonetheless,

she thought the priority was freeing up

00:25:18:18 - 00:25:22:04

the economy and she went for it

over a quite a period of time.

00:25:22:04 - 00:25:23:15

That was not short termism.

00:25:23:15 - 00:25:27:20

And the other exception I'd say was Blair, who wanted

00:25:27:20 - 00:25:32:09

a shake up in the sense the supply side

of public service.

00:25:32:09 - 00:25:35:20

He wanted to bring the same sort of reform

and modernisation

00:25:35:21 - 00:25:40:07

to our public sector

that Thatcher had brought to the private.

00:25:40:16 - 00:25:44:03

And he too had a

chance to do that in a fairly

00:25:45:05 - 00:25:46:07

long term way.

00:25:46:07 - 00:25:48:05

Anyway, last point.

00:25:48:05 - 00:25:51:12

Therefore we need a new prime minister,

a new government

00:25:51:12 - 00:25:55:01

who's going to serve

for at least three terms

00:25:55:01 - 00:25:58:19

if we're going to stand any chance

at all

00:25:59:02 - 00:26:02:11

of seeing through the really in my view,

00:26:02:11 - 00:26:05:09

quite radical, quite deep seated changes

00:26:05:18 - 00:26:09:17

that we need in our country

if we're going to reinvent ourselves.

00:26:10:01 - 00:26:12:24

for our success and prosperity,

00:26:13:09 - 00:26:15:23

during the course of this century.

00:26:16:04 - 00:26:17:23

Thank you very much.