Britain must reinvent itself

‘We should seize the opportunity presented by Brexit to reinvent ourselves’

“Global Britain” means what, exactly?  We hear that our goals are support for free trade, human rights, democracy and international law. Some would add leading on climate change. But these are mere slogans without an animating vision of how to achieve them. As a nation we need a strategy and an implementation plan.

We should seize the opportunity presented by Brexit to reinvent ourselves. In the 19th century, the Empire was carried by Britain’s prowess in the first industrial revolution. We achieved our status as the world’s leading power in a period of considerable international instability. In the 21st century, we should position ourselves as a leading science, technology and innovation hub in the fourth industrial revolution. We have many of the necessary assets, including the brainpower in our universities, the depth and flexibility of our capital markets and the user-friendliness of our legal system. I see no reason why, with focus, organisation and partners, we should not be very successful. I would also argue that unless we make such an effort and find new ways of earning our living, we are likely in 20 years’ time to find ourselves paddling in economic and political backwaters. The darkening global scene only strengthens the argument for bold action.

Globalisation was initially built on the export of Western goods and services eastwards. The integrated technological platform that resulted is now at risk. The sharp practice of state-led Chinese businesses, cyber-enabled intellectual property theft and growing authoritarianism are matched by Western, especially American, fears of a loss of political and technological dominance. Growing grass-roots mistrust in democracies has undermined confidence in economic interdependence to the extent that the current terms of trade are increasingly seen as endangering national security. The pressure is on for diversification of suppliers away from China and protection of the science and technology critical to our future.

The increasing misalignment between security and prosperity is becoming unsustainable. Pursued to extremes by the West and China, it could lead to economic decoupling and a greatly raised risk of military conflict. The price of hostility would be high in every respect. Our strategy should avoid erecting wholesale barriers to trade and contact with China, but at the same time focus on strengthening the diversity and resilience of key supply chains and protect the security of our most important intellectual property, research and technology. It is remarkable that there is no American-led strategic discussion of these issues with allies. Public rebukes on issues such as Huawei are not a policy.

Britain should not wait on others to devise a strategy. We should take the initiative. We have a quite well-conceived but insufficiently understood industrial strategy, which has at its core the ambition of increased investment in science, technology and innovation as the basis for future wealth creation. Data sciences, energy storage and regenerative medicine are among the priority areas. The government proposes to support this by an infrastructure programme which is essential to increase economic opportunity nationwide and improve productivity.

Important elements in the creation of a science and technology hub are thus in place: a good start. But they are not pulling together powerfully enough and momentum is lacking. The system is too risk-averse. Government controls funding too tightly. Competition in the awarding of grants to universities is laborious and slow. Too little capital goes to help small- and medium-sized enterprises scale up. Business generally needs to relearn the art of training its employees and spend more on research and development, in cooperation with academia. The recent budget recognises some of these shortcomings.  Research funding has been materially increased and, drawing on the American model, the Chancellor has endorsed the creation of an ARPA (Advanced Projects Research Agency) for “blue skies” research.   The US agency has had freedom to invest in high risk projects, not all of which have succeeded.  It is essential that the UK version is similarly free of apron strings.

Moreover, industrial strategy should be more closely connected to our infant trade policy and national security policy, which need to include—as was the case in the Cold War—the safeguarding of liberal values. We need to regulate the terms of trade in such fields as the bio-sciences which are capable of serious misuse by authoritarian regimes. This government has put new trade agreements with the US, other Five Eyes countries and such countries as Japan and Singapore high on the list. We should also try for bilateral research agreements with those EU countries that are interested.

In sum, we should bring domestic and overseas policy more closely together, engaging in long-term trusted partnerships with allies in which values and capabilities are aligned in shared national security and wealth-creation policies. Relationships of this kind could add significant stability to this country’s foreign and security policy and give the UK the scale it needs to be industrially much more self-reliant.

In the world of regulation, it would also enhance our chances of being a rule-maker rather than a rule-taker. Post-Brexit, it will be a mistake to try to replicate Britain’s former relationship with the European Union without the underpinning of EU membership—not that Brussels will let us do this anyway. Nor can we turn the special relationship with the United States, exceptionally important as it is to us, into an exclusive building block: even without the complication of the present incumbent of the White House, we are too different in culture and scale for this to work well.

In the short life span of governments, quick wins are prized. Rebasing and rebalancing the economy at home and aligning wealth creation with national security interests cannot be done overnight. We have to stick at it, which means government taking a long view. And it takes two to tango. Have we the energy and the imagination to create a sufficiently compelling proposition that friends and allies want to partner with us? Our openness to international trade and cooperation is one of our great assets and we should exploit it—not by hanging onto old patterns of behaviour but by seeking new ways forward.

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