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Cameron could ask Sarkozy for a steer on how to make UK industry stronger

Posing alongside Minis with union flags on the top is all very well, but the PM could learn some tricks from the French dirigiste

There was a convenient political and economic symmetry to David Cameron’s summit with Nicolas Sarkozy last week. Lauding a balanced relationship that has wobbled in recent months, the PM cited an Anglo-French business agreement that provided further proof that Britain’s economy was tilting back towards manufacturing. Rolls-Royce, one of our industrial jewels, will earn up to £400m by helping France’s Areva build four nuclear reactors on British soil for its compatriot EDF.

But the deal looks about as balanced as Monsieur Hulot on a unicycling holiday. Where Rolls-Royce stands to make about £100m per power station, Areva could make around £1bn, underlining the financial benefit of having a world leader in the field of nuclear technology – or indeed any field. Areva is making the stations’ steam supply systems – the beating heart of the plants – while Rolls is “supporting” its French partner by providing parts and engineering and technical services.

Rolls is a world-leading manufacturer of aircraft engines that fly millions of passengers around the world every year. But given Britain’s aim of reducing carbon dioxide emissions by 80% by 2050, shouldn’t we have a world-leading maker of nuclear power stations too?

Areva has built 104 in countries including Finland and China, demonstrating the export boost that comes from having domestic industrial giants. Nurtured by the French state’s commitment to nuclear power, Areva and its 48,000 employees sell expertise around the globe. Repeated here, that scenario could help to chip away at our £100bn trade deficit.

It is perhaps unfair to pick on nuclear power because in France alone, there are export giants in multiple sectors. We could also single out many other areas where the UK lacks indigenous champions – civil aerospace, motoring and renewable energy. Cameron and Nick Clegg proudly showed off a union-flagged Mini in Paris, but the marque is owned by Germany’s BMW.

It’s worth dwelling on the French theme. When Sarkozy and Cameron paid tribute to each other’s strengths last week, the British PM failed to mention that despite being a fellow rightwinger, his counterpart is a dirigiste, like his predecessors. The presence of Areva, Alstom, Peugeot-Citroen and GDF Suez alone on the world stage is a ringing endorsement of a politically aggressive industrial strategy. Britain’s industrial policy, by contrast, consists of throwing bit-part government contracts at a Victorian train factory in Derby owned by a Canadian multinational.

There is a compelling trickle-down logic to fostering national champions, particularly if manufacturing, at 10% of GDP, is to make a meaningful dent in the 75% of the economy that is commanded by services.

Lee Hopley, chief economist at UK manufacturers’ organisation the EEF, believes there is a genuine rationale to the idea of creating our own industrial big hitters, if only for what follows in their slipstream. “It is important for every economy to enable companies to grow into large ones. That is not just because they are dominant and can produce things that economies need and governments buy, like defence or energy infrastructure. They also support growth in important supply-chain businesses, which in turn can help smaller companies to do things they otherwise would not be able to do, like targeting export markets,” he says. “We have a gap at the top.”

Hopley stresses that non-UK manufacturers have brought good things to these shores, including competition. But because of that gap at the top, exemplified by a laissez-faire approach that lets the market shape our industrial sector, British manufacturing is a sclerotic mix of world-class outfits like Rolls-Royce and much smaller firms. As much as this government trumpets the “march of the makers”, it simultaneously disavows “picking winners”.

Every little helps

It was spectacularly bad – or good if you are a glass-half-full sort – timing for Tesco to choose last week to trumpet the creation of a “corporate responsibility committee”. The highfalutin aims of this new group, led by newish chairman Sir Richard Broadbent, include figuring out how to honour some rather amorphous concepts in a way that commands “respect and confidence” and protects the company’s reputation as a “good citizen”.

Let’s hope Broadbent and co log on to Twitter, because last week the supermarket’s good name was being trashed. Some shoppers even threatening to boycott its stores after a job centre advert was circulated across social networks that appeared to show Tesco was leaning on Britons receiving unemployment benefit to stack its shelves in the wee small hours.

The description of that night-shift position as “permanent” – which would have been illegal – turned out to be an IT error, but it fanned the flames of the bitter controversy surrounding business’s involvement in government-sponsored unpaid work experience schemes for the unemployed that come with strings attached – including the threat of benefits being docked.

Surely Tesco could have foreseen that instead of being viewed as charitably offering a helping hand to the unemployed, it would be accused of exploiting cut-price labour? (Let’s not forget last month’s shock profit warning, which was blamed on underinvestment, including cuts to staffing levels that affected customer service.) After all, a week’s jobseeker’s allowance barely runs to a trolley-load of groceries in its stores and – like its supermarket peers Sainsbury’s, Asda and Morrisons – it will hire thousands of paid workers this year anyway.

On Friday, Tesco asked the DWP to remove the threat of losing benefits, to “avoid any misunderstanding about the voluntary nature of the scheme”.

By now the Twittersphere may have picked a new target for its powerful rage. But the lasting effects of this row on Tesco’s reputation” will be one for the new committee to ponder. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds