Michael Heseltine’s plan for economic growth, ‘No Stone Unturned’, is more use to Labour than to the Conservatives. An implicit indictment of government policy, it is profoundly at odds with ascendant rightwing Conservative thinking. With little of its recommendations to be adopted as policy, it merely highlights existing shortcomings.
For Labour the plan offers valuable lessons, exposes narrow Conservative interests, and holds out hope of making common cause with business.
Enabling the economy
Heseltine starts from the ‘shared responsibility for creating wealth’. Both private and public sectors have a part to play and both contribute economically. It’s how they best work together, not one at the price of the other.
The UK’s fundamental challenge is sustaining and evolving sufficient competitive economic capabilities. These are driven by ‘know’ factors: capital investment; R&D; innovation; deploying new technology; finance availability; skills; and infrastructure. And the UK is underinvesting in them all.
Government needs to be the ‘catalyst, enabler and partner’ for business by providing strategic leadership, facilitating structures and public investment. Conversely, Heseltine sees little use for tax cuts and deregulation. Investment in our economic capabilities is the overriding priority.
All this contrasts with the prevailing Conservative mindset of leaving growth to the market. Here business is seen in a contextual vacuum, driven only by tax ‘incentives’. Shortfalls of capabilities, investment and empowerment simply fade into the background.
But Heseltine doesn’t go deep enough. The ongoing loss of economic strengths and capabilities is only touched on; and little on the UK’s decades of underinvestment and market misallocation of resources. There’s yet greater need to invest in our underlying capabilities; and yet more need for government proactivity.
A national growth strategy
Critical for Heseltine is a ‘national growth strategy’ to provide a clear strategic framework and implementation plan for sustaining and evolving new business capabilities.
In partnership with business, government is to provide: strong, confident leadership and direction; the enabling structures to empower the full enterprise cycle; and public money for research and development, business investment, skills and infrastructure.
All these are essential cornerstones for a forward-looking economic-industrial policy – but more music to Labour ears than Conservative ones.
But Heseltine’s plan then fails to deliver. Spending no more than at present, it’s undermined by the lack resources. Wanting to provide the strategic and enabling means, it falls far short of the mark.
Delivery structures
Heseltine’s key enabling structures are an empowered central government agency providing strategic direction and devolved regional delivery.
To address government departments pursuing disparate uncoordinated policies, he recommends a standalone central government agency focused exclusively on economic development. This, however, falls short of a full blown ministry and ends up little more than a coordinating office. It’s not up to enabling ‘government to work together coherently to drive through the change required’.
Delivery is to be devolved, focused and coordinated through the regions. The thinking is that this will release untapped energies and more effective use of resources.
But geography is the wrong axis of devolution and focus. Business above all operates vertically by industry and markets. Strategic planning and investment are also best addressed through this lens. Effective delivery and enabling structures are therefore better devolved and focused vertically by industry.
Reaction and inaction
Heseltine’s plan is supported by many in business. But the City is disdainful; the prime minister disinterested; and chancellor unenthusiastic. While paying lip service and taking up one or two lesser recommendations, the substance of the plan is to be discarded.
The Conservative right is now ideologically ascendant and the party’s dominated by City finance and existing wealth (mainly inherited). It’s more about the plutocracy of privilege than the meritocracy of business and success it means for Heseltine. In this sense the plan exposes increasing discontinuity between good business and existing wealth; between collective economic interests, including business, and those of a minority.
Much of business isn’t happy. It’s experiencing firsthand the collapse in demand and investment; and knows the realities of unavailable finance, competitive erosion, poor infrastructure, capacity constraints and skills shortages. Heseltine is more in tune with business than the chancellor in calling for robust growth policies.
Government inaction also adds to the impression of a prime minister captive to failing policies. Given the pressures to move yet further to the right and a wilfully purblind chancellor, it’s unlikely there will be any change in the present economics by a thousand cuts. Certainly not the proactive policies advocated by Heseltine.
Enlightened policy
Labour, however, can take a lot from all this. The essentials of Heseltine’s thinking provide the start of a sensible, workable economic-industrial policy. Conversely he doesn’t go far enough. To succeed a growth plan needs to be bolder, better resourced and driven home.
Politically Heseltine’s report highlights Conservative vulnerabilities. More importantly, it offers potential for Labour finding common cause with business in a more progressive economic approach. This can be woven into the political narrative by distinguishing and driving a wedge between ‘(sound) business’ and ‘(selfish) wealth’.
So thanks for the help.
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