The Economist Asia - 27.01.2018

The EconomistJanuary 27th 2018 Britain 49

T

HE Palace of Westminster isone of the most depressing places

on Earth at the moment. The only people in a good mood are

swivel-eyed Brexiteers and fever-brained neo-Marxists. Every-

body else is miserable: frustrated by the intellectual vacuum at

the heart of the government and worried that Britain may be

drifting to disaster. Michael Heseltine, a Tory grandee, laments

that “we have effectively no government”. Nicholas Boles, a for-

mer minister, says thatTheresa May “constantly disappoints”.

The reason for the depression is the failure of centrist politi-

cians to answer the questions posed by the two great wake-up

calls of the past decade. The financial crisis demonstrated that

Britain was dangerously dependent on a single, volatile industry.

Brexit proved that millions of people felt that the country was not

working for them. Mrs May has shown signs that she has heard

the alarms, talking about launching a “modern industrial strat-

egy”, helping the “just-about-managing” and spanking snout-in-

the-trough bosses. But she has failed to turn words into deeds.

The comfort is that there is more to the country than Westmin-

ster. Bagehot recently escaped from London to visitthe Universi-

ty of Warwick and discovered a world that is every bit as pro-

blem-solving as Westminster is problem-bogged. Builders are

hard at work on a vast National Automotive Innovation Centre

which is due to open later this year. The wider region is also en-

joying a revival. In May the West Midlands acquired its first elect-

ed mayor, Andy Street. Coventry has just won a national compe-

tition to succeed Hull as Britain’s city of culture.

But this slice of Middle Britain offers more than just a collec-

tion of new buildings and initiatives. It offers the outline of a new

governing philosophy. This philosophy is centrist in the sense

that it tries to build on the best ideas of the past 40 years, such as

recognising the creative power of business. But it is reformist in

that it acceptsthat the old model put too much emphasis on Lon-

don and finance, and forgot about making growth inclusive. Call

it reform-centrism.

Reform-centrism’s starting-point is to build links between the

knowledge economy and ordinary firms. Britain has an old prej-

udice against linking high minds with low deeds like making

things. That prejudice used to be expressed in its preference for

training its ruling class in subjects such as classics and history.

More recently, it has encouraged the idea that the country’s future

lies in finance and other services. In 1980 Warwick attracted an

academic-entrepreneur, Kumar Bhattacharyya, who thought this

was nonsense and set about turning Warwick into one of the

world’s leading centres for research in manufacturing. The War-

wick Manufacturing Group is now an ever-expanding set of

buildings housing cutting-edge research into smart cars, 3Dprint-

ing, robotics, materials science, biomedicine, cyber-security and

much else. It gets 95% ofits funding from industry.

The focus on practical knowledge allows reform-centrism to

deal with three big problems. The first is Britain’s lack of inclusive

growth. Lord Bhattacharyya helped to persuade Tata to buy an

ailing Jaguar Land Rover from Ford in 2008. JLR is now Britain’s

largest carmaker, accounting for 30% of production. Warwick of-

fers apprenticeships that allow students to earn degrees while

working for local firms. The second is productivity growth, which

has been disappointing for decades and flat since 2008. Warwick

works with 1,000 world-class companies and advises more than

1,800 small and medium-sized ones. The third is regional imbal-

ance. Stuart Croft, the vice-chancellor, talks about the importance

of “place-making”—that is, building on the region’s strengths and

tackling its weaknesses. He argues that Mr Street’s arrival as

mayor has turbocharged place-making. The West Midlands has

long suffered from regional fragmentation and political rivalry.

Mr Street, a Tory mayor on Labour turf, is an “extremely energetic

symbol of collaboration”.

Warwick is not alone. Dozens of universities across the coun-

try have forged close relations with business. Sheffield Universi-

ty’s Advanced Manufacturing Research Centre is pioneering new

ways of 3Dprinting and building modular nuclear reactors. Man-

chester University is beginning to feel like a British version of

MIT, with its industry-focused institutes and business-sponsored

research programmes. The University of Surrey has a space cen-

tre. The West Midlands is one of six areas that acquired mayors

last May, including itserstwhile rival, Greater Manchester.

Made in the Midlands, wasted in Westminster

These research centres have driven a striking manufacturing re-

vival. Britain recently saw itslongestsustained growth in manu-

facturing output since 1994. It is also a world leader in niches such

as satellites, drones, aeroplane wings and racing cars. More For-

mula One teams are based there than anywhere else. Success in

manufacturing is no longer a matter of economies of scale and

cheap labour. Instead it relies on things that play to Britain’s ad-

vantages: bright ideas, clever design and rapid customisation.

There is only one problem. However hard you try, in an over-

centralised country you cannot get away from Westminster poli-

tics. Brexit, a policy that started life as the hobby-horse of a Tory

clique, could be the biggest shock to manufacturing since the sec-

ond world war, disrupting supply chains, ruiningjust-in-time de-

liveries, forcing companies such asJLR to think again about being

based in Britain, and, on top of all that, making it harder for uni-

versities to attract world-classacademics. In launching his criti-

cisms ofMrs May’s do-nothing government, Mr Boles borrowed

one of George Orwell’s more obscure phrases about “boiled rab-

bits”, who lack both courage and convictions. Another Orwell

phrase is perhaps even more apposite: that Britain resembles

nothing so much as a “rather stuffy Victorian family”, where “the

young are generally thwarted” and “most of the power is in the

hands of irresponsible uncles and bedridden aunts”. 7

The Midlands engine

Westminster may be brain-dead butsome parts of Britain are buzzing with ideas

Bagehot

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