Mandelson calls for 'industrial activism' to revitalise Britain after the recession

• Allegra Stratton, political correspondent
• The Guardian, Wednesday December 3 2008
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The business secretary, Peter Mandelson, will set out plans for a new age of "industrial activism" when he gives the annual Hugo Young memorial lecture today, saying the government must do more to support services and manufacturing for after the recession, when the country will be "an even tougher place to do business in".

In the Guardian lecture, Mandelson will take a break from his department's current preoccupation with getting the banks to resume lending to paint a picture of Britain on "the other side" of the recession. He will say: "We will get through the downturn. But on the other side we will encounter an even tougher place to do business in and we need to be fully prepared."

Mandelson will sketch out a new doctrine of "market-driven industrial activism" to ready the economy. Aides describe this as a model that would see the government, in partnership with the private sector, driving what they call "available streams of the economy" to support growth sectors. Low-carbon technology, civil nuclear plans and high-tech manufacturing are all likely to be boosted.

Today's speech will build on a defence of Britain's manufacturing base the business secretary mounted last week at the Confederation of British Industry (CBI), in which he said he "hated" Britain being described as a "post-industrial economy" since the UK was the sixth-largest manufacturer by output. Though the future for the country may not lie with "mills and smokestacks", he told the CBI, it lay with the "next industrial revolution and the low-carbon and post-carbon technologies that will define the 21st century."

According to the Purchasing Managers Index published on Monday, British manufacturing shrank in November at the fastest rate since records began in 1992, making it the third month in a row to see a record decline. In October the CBI said optimism among British manufacturers was at its lowest level for three decades.

Today Mandelson will defend the government against claims its industrial policies were becoming overly statist, something critics say repudiates the modernisation platform on which Labour was elected in 1997.

He will say: "For New Labour this is a critical moment to renew and think further about how Britain adapts to globalisation and the tougher economic challenge we are facing. Not to retreat from the strong and abiding commitment to open economies and free markets that New Labour made in 1994. Certainly not to be hubristic that big government is back: I don't believe it is or should be. But to define urgently what smart government can do to resolve not just the present crisis but to guarantee Britain's future prosperity."

Mandelson will also acknowledge the government's attempts to steer business through the recession may have frustrated some. He will say: "While the government is doing a lot to back enterprise and support entrepreneurs, some of its efforts appear to business as insufficiently joined up and often overlapping."

Last night a business department spokesman said rights to flexible working would be going ahead. The business secretary caused controversy only three weeks into his job when he announced a review of the rights, on account of businesses fearing they would be unable to afford it during a downturn. Yesterday an aide said the review had wrapped up and they were "happy for it to go ahead".

It will not be included in the Queen's speech tomorrow since it does not require primary legislation.

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