Jeremy Warner's Outlook: Fine words, but where's the money going to come from?

The age of government activism is back. Or is it? Once you've waded through the grandiose-sounding principles and statement of objectives, yesterday's government paper purporting to set out an industrial strategy for the future – New Industry, New Jobs: Building Britain's Future – doesn't add up to a hill of beans, or given its focus on creating "green-collar" jobs, one might even say a hill of green beans.

The document pretends to herald a new era of direct intervention by government in business, similar to the level of support supposedly offered in other advanced industrialised nations, but to longstanding observers of the outpourings of the Department of Trade and Industry – now renamed the Department for Business, Enterprise and Regulatory Reform (BERR) – it falls only into a tedious tradition of vacuous waffle.

Nor is there anything revelatory about its promise of more activism. Michael Heseltine, the last Tory President of the Board of Trade, famously promised to intervene "before breakfast, before lunch, before tea, before dinner". Budgetary constraints meant he didn't get very far.

What he did do was to try to encourage the creation of "national champions" on the European and Japanese model, and his approach to government was corporatist. He was much less Thatcherite when it came to free markets than New Labour.

Lord Mandelson, the main sponsor of yesterday's paper, says he is not interested in national champions, nor does he want to revisit old theories or invent new ideology in managing the economy. "This is not about government seeking to override market forces or ignore market signals", the paper says. But if not that, then what? Ministers are gloriously vague.

Having been forced to intervene to save the banks, the Government now claims to have seen the light and promises similar activism in support of new technologies and the move to a low-carbon economy. Can ministers not see that there is a world of a difference between bailing out the banks and subsidising industry?

Failure to rescue the banks from oblivion would have ended up trouncing the whole economy. The Government had little choice. Political intervention through subsidy and favour in support of private sector job creation is a different ball game, with a poor track record. Most action of this type has turned out to be at best a waste of public money. By distorting markets and crowding out commercial endeavour, it can also have much more negative consequences.

I don't want to argue too much with the document's stated aims, most of which seem on the surface to be harmless and noble enough. I've long urged that the Government should adopt a more coherent industrial policy, so it would ill become me to rant against it now.

After years of government neglect, ministers promise to pay more attention to manufacturing industry. That can be no bad thing. Policy has deliberately been set to support the City, but there has been little if anything for industry. To the contrary, from pensions to taxation, policy has seemed intent on undermining it.

It is also perfectly reasonable to ask where the jobs of the future are going to come from. The prosperity induced by rapid expansion of the financial services industry has proved something of an illusion. As Germany and Japan have discovered to their cost, high dependence on manufacturing is scarcely a panacea either, but Britain plainly needs a more balanced economy, so policies that encourage manufacturers and put more in the way of public funds into industrial training are to be lauded.

But do we really want to return to National Enterprise Board investment in computers, microchips and other grandiose government projects forged in the desperation of the 1970s or Harold Wilson's more optimistic "white heat of technological revolution"? Few if any of these investments created long-term wealth. The same was true of public investment in nuclear power, where tens of billions of taxpayers' money went down the drain.

Governments do have a role to play in helping business: it is in providing adequate infrastructure, healthcare, social support, training and education, and macroeconomic stability. Yet infrastructure is one area of public spending which is being slashed – from 2 per cent of GDP to 1.7 per cent.

Even if the Government felt inclined to invest in a new generation of Inmoses and ICLs, where is the money going to come from? However Britain's future is built, one thing we can be certain of. There's going to be very little public money for it. Perhaps that's why Lord Mandelson's plans are so vacuous. Frankly, there's nothing in the kitty for grand projects.