Business & politics - why Heseltine is wrong

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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"

And:

"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.

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In case you wondered what the Leeds City Region Local Economic Partnership was for...

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I received an "on the day" briefing (how I love these snappily trendy titles PR folk use) from Bradford's Department of Regeneration about this:

Government policy is aimed at achieving a rapid transition to a low carbon economy in the UK. To assist with this the Leeds City Region Local Enterprise Partnership (LEP) has recommended the creation of a Green Economy Panel, a new advisory body tasked with working across the city region partnership to support the development of a low carbon economy.

My heart skipped with joy. I could see the planet's temperature easing at this momentous decision. The organisation charged with driving (how the public sector and quangocracy love that word) forward the "City Region's" economic development has set up a panel. That's right folks - a whole panel:

The Panel will work closely with the LEP to embed low carbon activity within the LEP’s activity and will be responsible for delivering the low carbon priorities identified within the LEP plan and the city region’s Green Infrastructure Strategy. It will also provide the LEP, other city region panels and partners with information and advice on how best to adapt to the impacts of climate change.

This is all wonderful news. We all know - those who have studied and suffered at the coalface of regeneration - that the best way to drive economic growth, indeed "green" economic growth, is to set up a Panel!

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Leeds City Region needs enterprise, excitement and initiative - not sure that's what its getting

Yesterday – following their extravagant summit -  I wrote many a fine word about the problems with Leeds City Region LEP. The unrepresentative, public sector majority board, the Leeds-centric nature of the emerging strategy and the manner in which the ‘plan’ merely revisits the failed plans and strategies of the past thirty years. We appear to have learned little in that time and to have grown an exoskeleton of impenetrable regeneration babble to excuse that lack of learning.

But rather than a diatribe about this, I want to comment on how these bodies can be made to work – but only if we ignore the dominant ‘shiny regeneration’ approach to economic development.

If Local Enterprise Partnerships (LEPs) are to work, it won’t be through fine words and setting targets over which the Partnership has absolutely no control.  And it certainly won’t be by staging a few cosy fireside chats with self-selected business audiences or by buttering up some big property developers or retailers in the hope that they’ll wave their magic business wand and create that “dynamic, low carbon economy” everyone seems to want.

The clue – if we need one – lies in the name. In those two words – “local” and “enterprise”. This isn’t about the nonsensical and mythical “competitive advantage” game (that Porter has so much to answer for) or the Jane Jacobs for property developers that the Centre for Cities peddles. Success comes because people – local people succeed. Success comes from having an enterprising, creative and innovative population.

This isn’t about fast trains, enterprise zones or “City Region Strategies”, it’s about stomping around local communities talking to local folk, chatting with the corner shopkeeper, listening to the aspirations of these neighbourhoods. That’s where the growth will come from – not in revisiting the broken windows fallacy but in the enterprise and initiative of ordinary people.

If the LEPs simply become ways to divvy up grants and to farm the development taxes everyone seems so keen on (which are just another drag on economic growth), then they will fail. So a few bits of the ‘city region’ will benefit from this cash injection while the fundamental problem – our lack of enterprise compared to successful places – is simply not addressed.

Here are a few things I think that a LEP should do:

1. Extend the successful community-based enterprise development work done in Bradford across the city-region
2. Create a network of enterprise colleges under the ‘free schools’ model – concentrating this in the poorest communities
3. Establish a business microfinance system – lots of businesses need a little as £500 to get going and the LEP could help support this sort of lending
4. Sponsor and support business networking, local business hubs and enterprise support – working at the local level

The essence of this is that it is focused on people rather than on grand projects, big business or the ever elusive inward investment. If we have successful, exciting people, we will get successful and exciting businesses. And this will attract more excitement, more success and more business. And that growth in “gross value added” we all seek.

But most importantly, it will be fun.

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