For completeness, here's Lord Mandelson's response to the criticism levelled by yesterday's FT leader:
From Lord Mandelson of Foy and Hartlepool.
Sir, I welcome the FT’s argument for the government’s role in building the competitive advantages of UK-based manufacturing (“Building Britain’s industrial base”, editorial July 29). I agree that the principles for such action need to be well defined. The framework for the decisions we are now making was set out in the “New Industry New Jobs” paper in April.
The best “industrial policy” Britain has ever developed is its enterprise environment and the openness of its product and labour markets. Beyond this, I see our key role as creating the right strategic signals and creating the right policy framework to give the private sector the confidence to invest.
We are focusing on cross-cutting technologies and Britain’s capability to test and develop innovative new products. At the heart of this is our huge investment in the UK’s science base. It is why our advanced manufacturing package this week invested in platform technologies with a huge range of applications across UK supply chains such as composites, silicon design and plastic electronics.
We have focused on doing only what the market alone won’t – usually because the benefits can’t be captured by a single company. No company can sensibly bear the cost of an industrial biotech demonstrator facility, but Britain will struggle to develop strengths in renewable chemicals without one. So in June we funded one, and will help small companies use it.
As far as capital for industrial innovation is concerned, we see the role of government as making sure smart investments get made, not turning itself into an investment manager. So finance initiatives such as the Innovation Investment Fund use public investment to leverage private funds, and venture capital specialists do the work of identifying and funding opportunities.
As the FT argues, the game is not picking winners. It is making sure winning companies get the support they need. Investing in national capabilities, not national champions.
Peter Mandelson,
Business Secretary