The pursuit of recovery has understandably taken precedence over rebalancing the economy. The original idea of the Coalition was to shift from too much reliance on a debt financed public sector, to more reliance on an energetic private sector. Within the private sector, there was a wish to reduce dependence on financial services and banking, and increase the share of manufacturing. I was always very happy with these aims, with the possible amendment that I did not wish to see actions taken to curtail successful activities in the service sector, but rather wished to see better conditions to allow faster growth in manufacturing as the best way of rebalancing within the private sector.
As we have seen over the last three years the government has not stuck to the task of rebalancing. Real public spending continued to rise, with the pace only recently slowing down. Instead of just being bombarded with complaints about too little spending, there have been many still writing in against HS2, high overseas aid budgets, the waste of the European budget, misdirected spending in a variety of public services and much else, whilst the modest steps so far taken to curb the gr0wth in welfare spending have led many to want the government to achieve more in cutting welfare bills.
Nor has the government done enough to trigger a major manufacturing revival. The task has been made more difficult by the continued recession in Euroland, a prime market for industry. It has also been deferred by the high and rising energy prices, which have made high energy using industries less competitive and also made it tougher for any well automated factory. There has been no breakthrough with reducing the costs of EU regulation. The Coalition has watched as new law is heaped on new law, often making it dearer to do business in the EU. The policies needed to raise educational and training standards and produce a new generation of engineers, physicists, chemists and mathematicians of the kind modern industry needs by definition will take time to come to fruition.
The government does need to concentrate on a supply side revolution. Productivity has been poor in the UK since the crash. There are still sectors where competition is weak or non existent thanks to government interference. Our transport networks are not as good as we need. The government is now turning its attention to water, to power, to roads and to broadband. It needs to do so. The march of the makers the Chancellor vividly wanted will depend on a better approach to education and training, to transport, to energy and to competitive markets. Above all it needs cheaper energy to bring about, something the Chancellor is keen to achieve.