Heseltine's revealing report

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Lord Heseltine's recent report on economic growth is no help for working class people - but it shows how the state props up the private sector, writes Jack Farmer

If you've heard about ageing Tory peer Michael Heseltine's recent report on economic growth, entitled No Stone Unturned, you'd be forgiven for assuming it must be boring, specious and right wing. In fact, you'd be more than forgiven - you'd be right.

But there are a few interesting points to be gleaned from this government-commissioned report, because it brings into the open arguments within the ruling class about the way British capitalism should be structured - and especially what role should be played by the state.

Heseltine, defence secretary in the 1980s who acquired the nickname Tarzan, is known for advocating a more interventionist approach from government in the free market than Margaret Thatcher was ever prepared to stomach.

In his introduction Heseltine says that "to invite criticism is a sign of strength", but in this case the commissioning of his report is undoubtedly a sign of the government's weakness. The coalition came to power stressing the absolute necessity of huge public spending cuts. Part of chancellor George Osborne's strategy, as he has frequently reiterated, is to reassure big business and the financial markets that the government is on their side by stubbornly sticking to his spending plans, come what may.

But that approach is losing what little credibility it once had. The economy is stagnating and Britain's borrowing has ballooned when it was supposed to have shrunk. In response the government has announced more cuts and a longer period austerity. Osborne is widely expected to announce further welfare cuts in his autumn statement. But Britain's ailing economy has forced the government to acknowledge the need for a "growth strategy". It is this weakness that led Osborne to commission this report.

Labour seemed pleased with its findings; Heseltine's complaint that he keeps hearing that Britain "does not have a strategy for growth" provided Ed Miliband with ammunition. But socialists shouldn't celebrate economic growth: the restoration of bosses' profits doesn't automatically lead to an improvement in working class people's lives. This report is written by a member of the ruling class, for the ruling class, to help the ruling class. Though supportive of the tiresome right wing dogma that free market competition and privatisation create greater efficiency in public services, Heseltine's report nonetheless illustrates some of the many ways in which the state props up the private sector.

The main theme of the report is decentralisation. Heseltine proposes granting sweeping powers to "local enterprise partnerships" (LEPs) to spend public money. These bodies, which exist at the moment but don't have a lot of power, would be handed £58 billion to spend as they pleased. LEPs would have some local politicians on them - but the emphasis would be to bring onboard plenty of unelected business people from the private sector.

LEPs would bid for funding from central government for specific projects. In other words, they would be pitted against a each other in a never ending competition for cash. As Heseltine explained in an interview with the Financial Times, "It is a competitive process, so some will get relatively more, some relatively less." In other words, the likely outcome would be a polarisation of central government funding. So much for rebalancing resources towards impoverished regions.

Heseltine went on to explain the attitude he would expect LEPs to take as a result of this competitive process: "If it's a choice between a brand new school, when we've got perfectly adequate schools, or an industrial estate to exploit the growing skills of the university, we'd rather have the industrial estate."

At the heart of No Stone Unturned is a strategy for further moulding public services and using more public money to directly feed economic growth - in other words, profit.

Given this, you might imagine Thatcherite Tories would be delighted. Not so. The reason for this is that Heseltine is happy to openly acknowledge that the state is an indispensable tool in support of British capitalism - something which flies in the face of Tory claims that businesses are held back by regulation and state interference.

The idea that the free market works best left to its own devices - and that governments need to get out of the way of business - has been a key claim made by most of the ruling class since Thatcher came to power. And it matters: it has been the main justification for privitisation and in the injection of competition and profiteering into public services. For all his bluster and lame rhetoric ("Excellence in industry, commerce, academia - extend it", "England's cities pulsing with energy - unleash it" and so on) Heseltine's report is a testament to the fact that the state keeps capitalism on life support, especially during a recession. Not just through tax breaks - expensive infrastructure, well educated workers and government handouts to businesses are all indispensable prerequisites for profit making.

But does this mean that, if implemented, Heseltine's recommendations might benefit working class people, if only as a side effect? Not at all. No Stone Unturned may ruffle a few Tory feathers, but in substance it is entirely in keeping with their strategy of driving privatisation and competition into public services, as part of a method for reducing workers' living standards and therefore restoring profits.

Tarzan's call for a war footing on the crisis should be answered - by strikes against austerity.