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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

Ashburton Buzzing

8 Sep

Ashburton Food and Drink Festival today was a treat – in its second year it had a real buzz. The sun shone on traders from local and organic farms,producers like Incredible Vegetables and Sharpham Wine and Cheese, Il Vulcano and Dartmoor Chilli Farm had some great products and knew their stuff, but they also were all talking about the importance of local connectivity.

Ashburton Cookery School, this week named as cookery school of year, gave jokey demonstrations to a packed tent throughout the day.

Ashburton has become a place where people come to shop because of the number of independent shops – and good places to eat. There is a even a graphic novel shop.

Over the summer I have joined the Ashburton Pool Cafe group set up to ensure the pool’s future – its a hidden asset to the town – an open-air pool surrounded by grass and a play area but difficult to find. Expensive for Teignbridge to fund it is only open for a couple of months and shuts tomorrow on the 9th Sept until next year. The cafe has been a way of getting more people to use the pool and has been a lot of fun. I shall miss making pizza twice a week!!!

Report on DWP procurement recommends locality commissioning

5 Sep

Image My recent report on the Work Programme procurement model incentivises large companies at the expense of smaller, local more innovative suppliers, many of whom are suffering cash flow problems. 

The DWP Work Programme Procurement :delivering innovation for efficiencies or for claimants is available on http://www.mbs.ac.uk/cgi/apps/research/working-papers/view/?wld=239 looks at the impact of the procurement model on the capacity of more innovative suppliers to appropriate, response and holistic services to long term claimants. It’s conclusion is that the ‘payment by results’ and two-tier model of prime,large contractors and specialist subcontracors looks neat from a policy maker’s perspective but is not delivering results and is frustrating both large and small companies

Within recession finding a job is difficult even for those with experience and extremely difficult for anyone who is vulnerable and is a long term unemployed claimant. What makes a different to those outside of the labout market is a whole range of services and easy access to new experience and training- such support is best provided by local agencies working together with the third sector(vol orgs) and local training providers and business.

The Work Programme is driven from the top through a vertical supply chain that makes such local integration extremely difficult. Local consortiua in Manchester and Cornwall complain that prime contractors are ignoring the significance of their inter-agency support and innovation. Existing innovative agencies have found that becoming a sub-contractor does not ensure work and many with contracts are suffering cash flow problems because their contribution to a person’s development is not paid for until a clamiant remains in work for  over 12 weeks.

There are many suppliers who remain very committed to the programme and are doing good work but few smaller contractors are able to function in a way that delivers more innovative services. Financial incentives and this type of supply chain are devised to persuade large companies (prime contractors) to carry the risk of lengthy delays – moving the financial risk of the programme from the taxpayer to  large companies with considerable financial assts. The size of their contracts and poor results have resulted in a lot of very negative press publicity.

However, the problem is not just with a few large companies creaming off huge contracts but with the government procurement practices and commissioning frameworks which allow this to happen.

This report analyses the whole system and way that the procurement model is affecting the capacity of smaller, enterprises to delive integrated and holistic personal services. And as such is relevant to the public procurement of personal services generally. The two-tier model which is geared towards contracting with fewer and fewer large companies at the expense of local suppliers in all sectors- the current public procurment model is actually undermining locality innovation and thereby locality resilience among the unemployed and small business and the third sector.

There has to be a better way of supporting people back to work that through a two-tier procurmment model. The report recommends locality commissioning  and the devolvement of DWP funds to locality partnerships which have integrated strategies for enterprise and training and development. 

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.

 

 

Are we serious about socialising business?

25 Apr

There is a good post today on the Guardian Leaders’ Network @socialenterprise.guardian.co.uk on gulf between the government’s rhetoric about the John Lewis model and Mutuals – few public servants are coming forward to take over services and those that start the process are withdrawing when they discover its difficult, hard work and investment is hard to find.

Transforming public services:is the feeling mutual? http://bit.ly/lid2xV

Anyone who has been involved in setting social enterprises knows that it isn’t easy. Policymakers from all Parties tend to gloss over the complexity of implementation, the fact that demands champions, perseverance and the ability to persuade others to get involved, invest and work collaboratively.   Women are good at the latter but often lack the contacts and experience in raising finance.

Where is the finance?

On an other track-

Innovation prizes are speeding ideas and innovation both locally and internationally – A friend Helen Storey, a real innovator has been nominated for her and Tony Ryan’s  Catalytic Clothing by the Conde Nast Innovation and Design Awards. Catalytic Clothing has sprung from a project on sustainable fabrics and the fashion industry which Helen used to be part of. You can vote for her on http://www.cntraveller.com.magazine/innovation-and-design/ida-awards-2012-voting-form.

where are the women mayoral candidates?

15 Apr

Leading marketing companies are telling TESCO they need a woman ceo to make the company less macho and customer friendly.  The qualities of women leaders are recognised by African countries and promoting a woman, Ngozi Okonjo-Iweala the Nigerian Finance Minister as a leading contender for the post of president for the World Bank. Read excellent article by FT editor on West Africa www.ft.com/12dayswestafrica.

In  spite of a growing confidence in women’s leadership in transformation and governance, why are the women standing for mayor in London ignored? and are there women candidates for mayoral posts in the regions ? The problem for women is that they had to have succeeded and be a celebrity to be even acknowledged.

Meanwhile, apparently senior men in local government are complaining that too many women are securing local government executive jobs !!! Are they serious? Or is that when women are recognized for their transformative abilities, men comfortable with the status quo cry foul play because surely it is their right to be leaders inspite of their abilities.

For some reason it continues to be unfashionable to discuss gender politics within the UK – ” We’ve passed that” Women leaders are important in Africa and the South but not in Whitehall, Manchester or Berkshire. Tory women especially claim that if women who shout about the lack of women in leadership positions they must be ‘weak’ and that ‘they did it’ on their own – in fact the cultural shift that had taken place over the past 20 years and opened doors for them is largely due to other women campaigners.

Unfortunately, women’s equality was usually based on the unfairness argument (which of course it was/is) but as important is the arguement that any just and fair society requires men and women in leadership positions, on boards and in government. Women are not only competent managers they are increasingly needed in governance roles in communities, companies and politics. And while women are increasingly gaining executive positions in the public sector but they have not yet broken into corporation or political decision-making, and consequently the culture in Westminster and the boardroom remains conformist and complacent in practice.

While a single woman leader usually can successful lead a system, it needs more of a critical mass to transform systems and cultures. Those countries where women play a leading and equal role throughout society, such as in Iceland, then you can feel the difference in approach to problems and to life. The value system shifts from WASPish single track ambitions to social considerations and an interest in the impact of policies on people. I would welcome anyone visit Iceland it is interesting. 95% of women work and childcare is free.

There is a growing recognition that women are at the heart of change in countries undergoing transition – why don’t we recognise that Britain is also undergoing transition and that not to promote womenleaders here will reinforce an economic and social trajectory that is centralist and backs corporations rather than local connectivity, small business and social enterprise.

Where and if mayors are to be adopted, lets make sure we search for EXPERIENCED WOMEN CANDIDATES !!!

The crisis in capitalism calls for local banks & stronger local governance

3 Feb

When George Osborne pronouces a crisis of confidence in international capitalism, the majority of the public are angry about bank bonuses and Lord Mandelson recants on ‘being relaxed about wealth’ – then, you know there’s a real opportunity for socialising business and for greater governance locally as well as nationally and internationally.

Development through ‘any old supermarket’ is not good enough – there are investors out there who are interested in making a difference. There is a growing realism that ‘making money from gambling’ is ultimately unrewarding – investing in places and people is more motivating for Bill Gates etc than a bonus. The problem is that we are uncertain of the mechanisms to achieve this- too much company law rewards and accounting practice are based on assumptions that short-term financial gain is the only way to measure success.

The crisis of the banks is not just about money and debt – it is also about a set of institutions that have lost their connectedness to society, and particularly to the communities they serve, not just their individual customers. Even though, economic revival, especially in the regions, depends on SMEs – the banks continue to ignore very small businesses (which are sunk without family support) and are refusing funds even established larger companies. Their risk aversion that the corporation not the local economy.

Less tribal and more imaginative local governance could inspire  more innovative ways of supporting open-learning, local services and small businesses and along the way inject some life into local democracy.

A look at the some of the assumptions embedded in economic development thinking reveals that new start-ups and social enteprise need connectivity to supply chains, not competition;  – access to funder who care about what want to do and about what impact the business will have locally; –  business and enterprise are just as dependent on public services and infrastructure as are the public.

Collaborative leadership has become a necessity not wishful thinking -but an essential ingredient of developing a more humane society where people’s interdependence is acknowledged and valued.

What would make the most difference to SMEs and social enterprise across the country are local banks that lend on the basis on local innovation and local returns.

Theres hoping that Eden and Cornwall come up trumps with their bid for a local Green Investment Fund. Be brave BIS give Cornwall a boost.

Doing a session on commuity leadership in Eden on Sunday at their Locality Planning Camp