Monday, 18 March 2013

Business & politics - why Heseltine is wrong


There's a sort of conservatism - let's call it the "business right" - that sees politics through the prism of a thing called either "business and industry" or else "business and commerce". This viewpoint produces familiar comments such as:

"We need more businessmen in politics"


"Government needs to be more businesslike"

Or indeed any number of variants on this theme where the essential premise is that "business administration" is somehow a superior construct to "public administration". And, this being so, that we have only to introduce such administration to government to bring about a miraculous transformation in the efficiency and effectiveness of public services.

Moreover, by bringing in business people, we get a sudden rush of initiative, enterprise and other fabulous business virtues. Thus we get boards established, run on corporate principles and populated by private sector folk - the holy grail of public services and public investment being "business-led" is met. And we rejoice for it will be but a short while before the benefits of such initiative is felt by all!

This is the essence of Michael Heseltine's politics. The lion-maned, millionaire businessman (and politician) does not believe in free markets, free trade and free enterprise. Heseltine believes in "business", in industrial strategies, in subsidies, in picking winners. Above all, Heseltine believes that government should harken to the cries of the business establishment and fund their schemes (while putting those business 'leaders' on the boards that administer those programmes).

And it seems like the Coalition plans to adopt Heseltine's approach:

"In line with Lord Heseltine’s report, today we have also announced a package of wider support that is a big vote of confidence for our industrial strategy, particularly the aerospace, automotive and agri- technology sectors. This support not only gives businesses certainty, but shows the Government is determined to back those sectors where Britain can deliver and compete on a global scale in partnership with industry."

Weirdly, Heseltine pretends that all this is somehow radical, new and change-making. It's almost as if the old interventionist has written George Osborne's script for him:

 “We asked Lord Heseltine to do what he does best: challenge received wisdom and give us bold ideas on how to bring government and industry together. He did just that, and that is why we are backing his ideas today.”

I fail to see anything at all in Heseltine's proposals that "challenge received wisdom" or indeed do anything but repeat what Heseltine has proposed off and on since the 1970s. Hand control of planning to unelected boards, pour money into regeneration, create new regional quangos and define a privileged set of industries that benefit from government largess (chiefly the property development industry).

In the North we have had thirty years and more of this 'partnership with industry'. It hasn't delivered salvation - indeed with each passing year the North slips a little further behind the rest of the nation. It's true that some already successful business folk get to sit on grand boards - the latest being Local Economic Partnerships - but these boards achieve little even when (as with the Regional Development Agencies) they're given loads of money to spend.

Challenging received wisdom would have meant a very different approach. Rather than a snuggly little relationships with the grandees of big businesses, we might work instead with the real enterprise of millions. Instead of a grand board proposing sweeping nonsense about "green industry", "creating the technologies of the future" and other such tommyrot, we might have teams of coaches working with real people in the communities of the North. Helping people realise their aspirations, navigating start up businesses through the thickets of red tape, linking them to networks of other businesses and building a new economy on real enterprise rather than random guesses about "those sectors where Britain can deliver and compete".

This isn't about whether GDP or GVA grows but more about helping Mary, Steve, Iqbal and Samara to get their idea to work. It's about helping a bunch of young people without great qualifications to achieve something of their aspirations - whether that's to be a singer on a cruise ship or to run a successful computer repair business.

The "business right" - rather like the Fabian left - does not recognise free markets but only business markets. We're in a 'global race' rather than a peaceful, pleasant exchange of value with others. Countries, regions, cities, even neighbourhoods, 'compete' - that Porterian 'dog eat dog' philosophy dominates thinking. At no point do we consider that the object isn't actually competition but the successful operation of comparative advantage.

We have a government set in the belief - the hubris - that there are a set of levers that, if pulled in the right pattern, will result in success. And the rhetoric of liberty, of allowing people the space to succeed, is pushed aside in favour of a business-led quangos and investment in privileged sectors.

I have only one prediction. Just like every other time we've followed Michael Heseltine's advice, every time we've adopted "business-led" regional strategies, these policies will fail.



Anonymous said...

Well said, Simon

And another source of funding for the army of coaches could be the £32bn being spent on whitewashing the elephant of HS2

Anonymous said...

Well said, Simon

And another source of funding for the army of coaches could be the £32bn being spent on whitewashing the elephant of HS2