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EUROPE not the problem but the COALITION sucking the regions dry

14 Jan

Met with Neil McKinroy, director of CLES to share thoughts on the dynamics underpinning regional economics and finances in northern cities. We met in Pinchjos (see new app on http://www.pinchjos.co.uk) always a good place to meet if your in Manchester. I was interested in CLES’s work on whole system analysis which seemed to coincide with my own perspective on how local economic strategies.

Several good reports have been published recently on regional economies by IPPR North, CRESC which show that the North is not only suffering from continuing industrial decline and public sector cuts but also from government’s own commissioning  and investment policies. Perhaps we need to spend more time on how money flows and what type business is benefitting and which are not. Julie Froud et al at CRESC (University of Manchester) showed in a recent article ‘Must the ex-industrial region fail?‘ that between 1997 and 2010 43%of all private sector jobs created were in London and virtually none were in the North East.  They report a widening gap between incomes between those in Yorkshire & Humber, & West Midlands and the South east-  and  say government is the problem and adding to the  worsening of the north /south divide. http://www.cresc.ac.uk/sites/default/files/Bringing%20home%20the%20bacon.pdf

 IPPR North launched ‘Northern Prosperity is a National Priority‘ in Leeds in November which talks about the untapped potential in the northern cities, given that the North has  an economy twice the size of Scotland – a fact largely ignored in Whitehall and the London media. The narrative about the North is largely negative and the region is in desperate need of its own investment bank. 85% of the Coalition’s infrastructure investment is in the Southeast.  While Manchester, Leeds, York and others have leadership committed to innovation and change, without investment in integrative infrastructure, innovation and sustainable private sector growth they are hampered by the government complacency and forms of outsourcing which are taking out as much as they are putting in.

The purpose of good governance is surely find corrective mechanisms to support connectivity and fairness across the UK and to support the growth of SMEs, innovative supply chains and regional resilience. In the Southwest over 85% of all the private sector economy is in small businesses – which are greatly affected by their access into companies and the public sector. One of the things I learnt from the research on government’s procurement was that local, small enterprises in any sector are frozen out by the current gearing of public procurement, because government  is looking to transfer financial risk to larger corporates that have the assets to cope with delivery problems. This public procurement model is sucking the life out the private sector as well as undermining much public service provision. http://www.mbs.ac.uk/cgi/apps/research/working-papers/view/?wld=239

Another example of how business financing is influencing the flow of capital from local firms into larger companies is in energy innovation. A medium sized company in Chester – developing eco-boilers was told by investment banks that financing the manufacture of the boilers would necessitate that they set up another company to become an energy supplier to compete with existing utilities. They did this and are now a competitor in the energy market, based in London employing highly paid traders; meanwhile the core business of technical innovators are removed from the heart of their business and are waiting for the manufacturing of the boilers to fail. What is clear in this case and many  others, is that the problem for growing companies developing innovative eco-products is not just a matter of finance but of understanding the current power of investment bankers to determine their business models.  Just as public procurement is geared to corporates are the expense of local, smaller companies,  investment finance is determining what is financed, the location of companies and what constitutes innovation.

According to CRESC economies in the ex-industrial areas depend on replumbing the financial circuits rather than national loan schemes etc.  I think the way outsourcing is working at the moment reinforces that view. They suggest that local leaders and activists could champion investment in regional infrastructure in particular social housing & mobilise pension funds into regional infrastructure and initiate new financial circuits.  I would add that regional banks are urgently needed to support SMEs and social enterprise;  current public procurement criteria changed,  devolvement of public finances from some departments into the regions for welfare benefits, FE training etc to regional commissioners,  and critique of the influence of investment bank power over utility companies and innovative new firms.

It is not Europe which is the problem but the current Coalition government – even Vince Cable thinks national schemes not regional potential

The Greek tragedy continues- perhaps locality innovation and sustainable development might work better than ‘austerity and sustructural reform and

14 May

The News continues to be frustrating because so few people appear to have anything to say about how to help the Greek people or anyone suffering from ‘austerity’ – It was interesting that as Michael Portillo treked between Germany and Greece in a TV programme last week he could find hardly anyone in either country who wanted to leave the ‘euro’ –  if he’ d been touring the UK finding UKIP members would not have been difficult.  This is a conundrum for the British who do not have the same commitment to European Project.

The question of how to both stimulate an economy through investment in people and be part of the ‘euro’ determined by the Germany economy is difficult to answer. Most leaders appear to be commentators rather than leaders – good at analysing the state of play rather than coming up with serious alternatives and options for both sides to contemplate.

Will Hutton ( Sunday the Observer) at least outlines the dynamic in a way that acknowledges both the strength of popular anger in Greece, Spain etc and the Germany fear of inflation and frustration with those less able to organise themselves.

The lack of imaginative leadership in this situation appears to come from the fact that perhaps some of the solutions involve changing the way business and international finance works, which only the technocrats have full knowldege of but little interest in changing. Perhaps understanding how Germany itself works could be instructive.

I sense that Will Hutton’s knowledge of Germany underpins the fact that he can see possible alternatives. For instance, Germany values skills as well as HE, has locality investment banks that take a longer term view of investment return and value local SMEs and local governance. I’d like to know more, because in the UK we do not value these things and assume that the social values, local connections and human development are not teh concerns of business or finance, and that social investment comes when individuals want to be philantropists rather than because social values and economic interests are embedded in how business and the banks works.

Perhaps, its time to promote the good sense of Germany’s local goverance and atttitudes to education and training.

I’m trying to make sense of the dynamics at work here and transactional analysis might help.

Austerity is never going to help Greece and the parent (Germany) has to work out whether it wants to ban one of its children or help it grow?. Greece is paying the price for its own poor leadership and governance, especially in the regions where hopeful, young civil servants leave after  six monthes and escape to the States because nepotism rules not good governance. Its not austerity that Greece needs but good leadership, administrative capabilities and a confidence in a more sustainable economy. If couched in this way perhaps the frustrated parent might give way and finance not ‘structural reform’ but locality innovation, SMEs and governance.

 

 

Local Government has become innovative and sexy in Yorkshire

20 Nov

Local Govenment Yorkshire and Humber held their annual innovation awards in Wakefield last week, where compere Danni Hewson a BBC North presenter said, “local government had become ‘sexy'”. As a judge of the innovation awards for four years I know the quality of the LGYH ‘Making A Difference’ applications has improved dramatically, the competition is great with each council submitting proposals for outstanding achievements in community cohesion, improving localities and partnership.

Wakefield did particularly well this year but so did Rotherham and some district councils which is not easy for them when competing with so many cities.  Rotherham won joint first prize for  their response to the economic downturn for the most innovative town centre, recently praised by Mary Portas, with Kirklees for their ‘recession board’ .  Sheffield won for outstanding locality transport improvement and Craven DC for innovative partnership working which has generated 85 social housing units in Greenroyd Mill. Wakefield were rewarded with prizes for the Hepworth Gallery’ and Councillor of the Year’. Bradford’s Magic Project, a partnership between the Police, Fire and Rescue and the local authority is combatting extremism, violent crime and dangerous driving through emotional therapies- won the award for strong and harmonious communities.

Local Government Yorkshire and Humber (LGYH) ensured that these awards open to all services and smaller district councils. South Yorkshire Fire and Rescue were rewarded for their exceptional peer mentoring  and the Public Servant of Year Steph Brown is making a huge difference to young people in North Lincs where she herself had been a ‘looked after child’.

LGYH is recognised by local leaders and chief executives in the region to be the agency that has stimulated and sustained collaborative leadership across the region, a fact mentioned at the Awards by the new LGYH Chair Cllr Peter Box (Wakefield ldr) and Cllr R0ger Stone (Rotherham ldr) former LGYH Chair and the Cllr Tom Fox ( Scarborough ldr).  Carole Hassan LGYH chief executive, a champion of place-based innovation presented awards to the chief executives in the region who had most contributed to regional collaboration.

However, in spite of their success, there was a sense in the room that this could be the last LGYH Innovation Awards event  -like all intermediary bodies LGYH is being significantly downsized and by April 2112 will be much smaller and less likely to have the capacity to play a strategic innovation role in the region. This is a shame because as the quality of the awards show – innovation capacity is not developed by more and more isolated and individual pilots and projects, but through year on year development of a confidence and energy for social innovations that are only possible because of a maturing of connectivity and partnership: between business and public services, across localities and between partners in a region. This is particularly the case in the North – where cities cannot beat the economy into revival through competition, no firm is an island but part of a complex set of relationships between education, training, local government and business. The unique role of local government, stimulated by intemediaries like LGLH, is in being the key to collaborative thinking and practice across business and the public sector. LEPs have a long way to go before they have matured enough to usurp LAs in this regard.

Intermediaries such as LGYH do not have to be bureaucratic institutions to broker  the connections and opportunities for creative exchange or provide the challenge for  more creative solutions, but they do need the resources and the recognition of a role in strategic innovation thinking.

There is a real innovative energy in Yorkshire and Humber for partnership across Parties, between business, communities and public services – but it is unlikely this energy can develop into more innovative governance if the innovative leadership and knowledge exchange capacity,  contracts. Some competitive chief officers may think they can do better alone or with long-distance partners, but international links are not a substitute for locality grown relationships, for this is where innovative shared services, financial tools etc can be taken to scale in way that is not about efficiencies alone but adds ‘public value’ and creates  an wider ecosystem for innovation.

I hope common sense prevails, for amidst the gloom of financial crisis, the Far Right, community alienation and riots, there is a growing confidence in local government that stems not from individual council perfection but from a recognition that collaborative leadership underpins new forms of public governance and provide the backclothe for sustaining public sector innovation. 

Well done LGYH and Yorkshire and Humber Local Authorities

See awards www.lgyh.gov.uk

Will Manchester Innovation Network Survive when Knowledge Capital Closes /

4 Feb

Yesterday, Knowledge Capital in Manchester brought together innovators from across the city; social entrepreneurs, consultants, researchers, digital companies mostly from small organisations. Sir Richard Leese opened the event attended by about 100 people, many reported how the KC exchange network had helped them and regretted that this was their last event.  Along with manyother connecting bodies, KC will close at the end of March 2011 due to public sector funding cuts.  Participants discuss a future exchange network:  most wanted a network between those with common interests,  easy navigation between networks and some investment in bridge-building across busines and  public innovators and with the universities. Manchester Business School had a strong presence at the event which was appreciated and those from fron those leading public engagement from www.manchesterbeacon.orgwww.mimit.org.uk  and corridor connects. People mentioned new initiatives – like James Duggan a post-graduate in Education who is now helping NESTA adn NEF with their Co-production roadshow   http://www.coprodnet.org/wiki/Nesta_Co-productionRoad Show 

There is a need for some minimal resource for organising connection with those outside of the common interest group,  to those ‘who don’t hear about their work or get what they do.’  There is a wall between the mainstream and innovators in all sectors and innovators  find ‘getting to market’ difficult. However, it is not just individual businesses that need to be innovative but those in leadership positions who can help evolve new business and public co-systems. As an example of this was the Sharp Project in the Northern Quarter, Sue Woodward gave a brilliant presentation on how the Sharp Project work, it doesn’t provide space for any creative digital industry, only those  who can see the benefit of collaboration and exchange. 

Exchange does not require heavy investment but it does involve some investment. At present, few in public bodies or business are promoted or rewarded for such activity, yet this is the work that adds most value to the  supply chains, particularly where the chain is weak. The problem for most social enteprise and SMEs  is their lack of access into national or global markets> To emphasise this point  one speaker talked about how the ‘geeks’ in the northern quarter were not at the meeting because they were not comfortable with socialising.  If HE and business recognised the potential of these innovators, who are the same people thay created facebook, google etc they would find ways of reaching out to them.

Perhaps it takes a community organiser like Obama to appreciate the need for building bridges back into communities.  Cathy Garner Director of KC had organised for a link to Professor Richard Seline who linked us into the White House – where the chief economic advisor described the new US strategy for supporting SMEs and entrepreneurs  –  this strategy includes£2 billion investment, tax breaks, incentives, mentors, outreach and investment in connectors. Meanwhile in the UK small businesses such as Pinchjos are being crippled by NI tax contributions, VAT and increases in supplies. 

There is  tendency in Britain to talk about supporting innovative small enterprises but in reality giving them very little. Often this is because the experience of  being an innovator  is not appreciated by those who work in large corporations or public institutions. Small social enterprises do not have the contacts or the time to connect – yet, they can see the benefits of collaboration adn attend the Innovation Network – there should be more capacity within the civil service and public insitutions to reach out, along the lines of the Beacon Projects and an understanding within politics of the need to invest in building connections and developing collaborative capacities. Something we referred to in Place Based Innovation. www.nsg.gov.uk/whitehallinnovationhub.