Johnny Reynolds and the Department of Economic Affairs

Thank-you again for registering. In the first two days since my announcement, hundreds have joined you. I am not going to be writing to you every couple of days but I thought I would drop you a line now about the big picture since we are at a specially pregnant moment with a new Prime Minister taking the reins.

Last Tuesday, as the new Cabinet settled into their offices, a friend at DSIT DBIST sent me this message:

“Johnny Reynolds all staff speech comparing his new department to George Brown under Wilson...”.

What is the import of this?

In 1964 Harold Wilson set up the Department of Economic Affairs under George Brown. The goal was to institute national economic planning, bypass traditional Treasury control and achieve 4 per cent annual GDP growth. Borrowing from the French model, a National Plan would direct capital investment, modernise industry and raise productivity. 

Thus Reynolds’ language chimes with Andy Burnham’s recently. In his first speech as Labour Leader, Burnham said, “Four decades of the neoliberalism that began in the 1980s have not been kind to the places that built our Party, nor to the communities across the UK in rural and coastal areas.” And in his first speech as Prime Minister, he said, “We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last forty years. A new political model and a new economic model. In the 1980s, Britain took some wrong turns. Political power was centralised, economic power privatised, large parts of the country de-industrialised, and they still haven’t recovered.”

This is the sort of language that many Labour Party members wanted to hear from Ed Miliband and Jeremy Corbyn when they were leading the party – but didn’t. Rhetorically, it is a break with the era that started with Margaret Thatcher in 1979 and this is not without consequence, as the rupture with Tony Blair has made clear. 

The question is, what is this going to lead to in terms of concrete policy? The answer to that will come when Burnham’s 10-year plan is announced towards the end of the year. However, it is already clear that we are in moment of unusual fluidity.

Reynolds is not diluting or demurring from Burnham’s agenda. He is embracing it. And the things that derailed the Department for Economic Affairs 60 years ago seem unlikely to wreck the Department for Business, Innovation, Science and Trade today. The DEA failed due to a balance-of-payments crisis and an institutional turf war with the Treasury. This time round, the government has no intention of defending the value of sterling and the Treasury may have already lost the turf war thanks to the creation of Number 10 North, the revival of Gordon Brown’s National Economic Council and Burnham’s evident desire to drive economic policy himself.

Optimistically, this could give science and research generally new recognition as genuine drivers of growth. Pessimistically, there is at the same time an unmistakable threat to the UK’s science base. The budget of the business department is now dominated by the line for UKRI that funds science and other kinds of research in universities. Without additional funds, the risk is that this money is diverted to support more immediate economic goals. With university research already being squeezed by the loss of income from overseas students, that could be calamitous.

Either way, research in Britain is now deeply embroiled not only with higher education but also industrial strategy. This is the world we are now in.

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