Regional Growth Fund: Has the East Midlands been short-changed again?

The government may face accusations that it has turned its own philosophy on its head with the results of the second round of bidding for the Regional Growth Fund.
This, if you remember, was the £1.4 billion pot of money designed to cushion the blow of the loss of regional development budgets.
The East Midlands didn’t do well in the first round of bidding. In Notts, only one small project was approved, cash which will help a science company expand.
But local politicians – and, significantly, the Derbyshire-Nottinghamshire Local Enterprise Partnership – comforted themselves that the lion’s share of the money, some £900m, was going to be handed out in the second round.
All sorts of local projects submitted bids, a number of them related to small business growth. In Notts, only one bid succeeded again, cash for the Worksop wire rope manufacturer Brunton Shaw..
The decisions released today suggest that the dead hand of national politics has played a part. Derby will, quite rightly, be celebrating the success of the £50m Derby City bid. But it’s difficult not to wonder whether the Bombardier fiasco was in the back of the minds of ministers signing off these decisions.
Giving Derby a second kick in the teeth would have been a political disaster. So good luck to Derby - £50m represents a massive opportunity to make up ground lost through a series of big business setbacks.
Yet it also appears to fly in the face of Conservative philosophy, which suggests the best way to grow a sustainable economy is to avoid an over-dependence on public money.
There was bound to be disappointment in this exercise. While £900m was on offer, the value of the 492 bids nationally totalled more than £3.3 billion.
The point has also been made before that the East Midlands isn’t viewed as a weak economy, so more money is likely to go further north (indeed, nearly 40% of the bids came from the North East and North West).
Yet the East Midlands does appear to have come off badly from this exercise. One of the key measures is the number of direct and indirect jobs which successful bids will support. In the East Midlands it’s 1,400 direct jobs, 7.800 indirect. This is smaller than any other region, including the booming South East.
Three other questions are raised by the RGF result in the East Midlands. One is where this leaves the LEP, which needed a big project to give it some purpose – does the Derby City bid provide that or not?
The second revolves around Boots and its enterprise zone. The company is thought to have put in a bid for £200m. It got nothing, so where does that leave plans for a zone launched personally by David Cameron and Nick Clegg?
It certainly raises the stakes on the fight to win government funding for the dualling of the A453, which Boots views as crucial to the future of its Nottingham site.
The final question is one which seems to have dogged so many civil service business decisions, most notably Bombardier: did it enforce the rules around RGF decision-making literally, or did it interpret them in a way which ensured a desirable result?

Give way...or give up?

It’s long been my belief that the way road signs are erected has little to do with the safe and organised flow of traffic and everything to do with council departments justifying their budgets.

On top of that, it’s turned into a nice little earner for the industry which makes them.

I reached that conclusion years ago after a drive down Southwell Road West in Mansfield where, in the space of around a quarter of a mile, it appeared someone had fly-tipped half of that year’s road sign production.

There were so many that it was impossible to take in all the advice they were giving. Worse, some repeated the same message so often that you began to wonder whether you were living in a goldfish bowl and going round in circles.

And on top of that, they made a clean, simple road look like officialdom had simply emptied a dustbin all over it.

It was confusing, it was annoying, it was wasteful. And it was just one road. You’ll all have your own favourite roads, dual carriageways, alleyways even, where signs are either completely overdone or totally unnecessary. Or both.

So, I was thrilled to hear yesterday that Transport Minister Norman Baker hoped to “dramatically reduce” the number of road signs in the wake of the biggest review into this nice little earner in 40 years.

Let me quote the Minister: “Sometimes the jungles of signs and tangles of white, red and yellow lines can leave people more confused than informed. This expensive clutter can also leave our roadsides looking unsightly and unwelcoming, so the changes I am announcing today will help councils cut the number of signs they need to use.”

I couldn’t have put it better myself – a clear acknowledgement that councils and highway authorities spray white and yellow paint around like it’s going out of fashion, and appear oblivious to the fact that every new sign is yet another unsightly distraction.

It sometimes seem as if highway teams lurk round corners giving virgin tarmac five minutes to set before they dive in and stab it to death with signs in triplicate.

So, Mr Baker’s announcement is going to bring an end to this ridiculous and expensive little industry, right? Not exactly...

Elsewhere in his announcement are a number of phrases which, I confidently predict, highway authorities will leap on and use as a justification for continuing to litter our countryside with ugly and unnecessary statements of the bleedin’ obvious.

I quote:

“These new measures will significantly cut red tape by allowing councils to put in place frequently used signs without needing to get government permission every time.”

Which may be translated at the town hall as: You’ve got licence to plant more signs.

Or:

“There will be new signs to alert drivers to parking spaces with charging points for electric vehicles and councils will be able to indicate estimated journey times on cycle routes, to help people plan their journeys.”

Which translates as: You can also plant a whole load of new signs alongside the ones you already litter the pavement with.

There is a miserable predictability about all this. A government minister admits there is a problem we’ve known about for years and announces clear and decisive action...which will make no difference whatsoever.

I would love to think councils will leap on this as an opportunity to do things differently at a time when they are painfully short of money.

The cynic in me suggests that they simply can’t stop themselves telling you what to do, and that the desire to preserve departments and budgets means this is a habit they can’t kick.

Cynicism aside, there’s a serious point to all this. Road signage and layouts have in places become complicated to the point where they are distracting and difficult to understand. Planting huge yellow signs which shout ‘Speed Kills’ seems almost ironic.

Roadsides are no place for sloganeering.

The Smell of Fear

I wouldn’t bother looking at the TV news if I was you. It’s not very nice. Draw the curtains and make a cup of tea instead.
Over on the continent, you have a sovereign debt problem about to be turned into a banking crisis by political incompetence. Which, I guess, is what happens when you try to get a room full of chalk and cheese to agree on anything.
Over in the USA, the Republican Congress’s determination to turf Barack Obama out of the White House means both sides can't agree on any long-term solution to the USA’s gargantuan budget deficit before the 2012 Presidential vote. Which is certainly brave, but may turn out to be stupid.
With those two elephants in the room, do we even need to talk about the UK’s flat-as-a-pancake GDP? Thought not.
Much as I’d like to dismiss the problems over in the Eurozone – and the political turmoil in particular is a gift to Europhobes – it presents a clear and present danger to our frayed economy. Despite all the talk of China, India, Russia and Brazil being the Next Big Thing in exporting, the amount of money we earn from them is dwarfed by what we routinely rake in from the likes of Ireland, France, Germany, Holland, Belgium etc.
They are our closest trading partners in every sense, and we need to do more with them.
So, imagine a situation where your business partner on the continent says he can’t pay you this quarter and isn’t currently able to finance any new orders. Unfortunately, that scenario is no longer completely in the realms of fantasy land.
The Eurozone crisis is a story of world financial markets ruthlessly chasing down governments and banks who haven’t given a straight answer to the question ‘When are you going to pay off your debts?’. Greece borrowed so much that, whatever the eurozone might pretend, markets have already decided it can’t pay.
So the next question is what happens to the people it and other debtor nations owe money too? That’s where some European banks come in, and they now find themselves in the same situation that UK banks did in 2007-2008: carrying huge debts that they do not have enough of their own capital to cover.
This, though, isn’t the problem. That lies with European governments. Between them, they can decide to let Greece default on its debts and provide banks with all the funds they need to cope. It won’t be pretty, but it can be done in an organised fashion.
It can, but will it? European institutions are not used to taking decisions quickly, when you dissect those decisions they often turn out to be fudges open to localised interpretation, and there is a history of allowing exceptions through opt-outs or different groupings.
What do world financial markets do when confronted with the failure to answer serious questions about debtors? They take the decision themselves.
That’s what is happening at the moment. When indebted European banks go out into the money markets and seek routine funding to support their cash flows they are being told ‘Fine – but the price has gone up’.
This is exactly what happened here in 2008 when the London Interbank Offered Rate – what banks charge each other for lending money – shot up overnight. UK banks responded by clamping down on lending out the money in their own accounts, and the results of that are still being seen in our own dismal GDP figures.
You’ve seen the Bank of England announce today that it will drop another £75 billion into the UK economy through further quantitative easing. That will help us in the medium to longer-term, and may assist some measures of business confidence.
But only when the European question is answered will we be able to look forward.
The Eurozone may yet get cajoled, pushed and kicked into a categorical pledge to support financial institutions come what may and to accept that Greece won’t pay back some of its debts.
That in itself won’t be a get-out-of-jail card. But the alternative is…well, if the alternative happens I’d send the TV set back.

A deflating experience

Let me introduce you to a business my wife came across during a fraught journey down the M1 the other week.

Welcome to the world of roadside recovery.

My wife suffered a heart-in-mouth blowout while driving our children down to friends and a recovery firm contracted by the Highways Agency took her car to a motorway service station. They charged her £145 for the pleasure.

On the steep side, may be, but it is a charge allowed by the Highways Agency contract, which does not like to see vehicles stuck or tyres being replaced on the hard shoulder. Indeed, one of the first things the Agency tells you is that you’ve got two hours to shift yourself.
Understandably, my wife was stressed out by the whole experience, had two children to care for and asked the recovery man for help to change take the damaged wheel off and put the spacesaver spare on. So he did. It took just over three minutes.
And they charged her £80.
To begin with, he said they wanted paying in cash and kindly pointed out a cash till which she might like to fetch the money from. Eventually, after liaising with 'the gaffer', they accepted a credit card. Which is what she’d used to pay for the Highways Agency fee in the first place.
Cash or credit, a rate which equates to £1,600 an hour for taking one wheel off and putting another one on is, I’m sure you’ll agree, very nice work if you can get it. Better, indeed, than many corporate lawyers charge.
And much better than the professional tyre depot in Northampton which eventually took the flat tyre off the wheel, fitted a new one and balanced the wheel for good measure. They took 22 minutes and charged £65. For parts AND labour.

For some reason, I find the tyre depot far easier to recommend than the Highways Agency-approved Crouch Recovery.

You won’t be surprised to hear that I contacted Crouch Recovery to inquire about their scale of charges.

They kindly agreed to reduce it to £60, which takes that theoretical hourly rate for wheel-swapping down to a miserly £1,200. They protested that they had to cover the costs they had invested in equipment and training. I pointed out that since the wheel-swap was discretionary and not part of the Highways Agency contract their costs had already been covered in the £145.

There was no response to that. There is none: it is an unreasonable charge because it bears no relationship to the service delivered.

The message here is simple. If you travel through the M1 in the East Midlands, make sure you’ve got your own breakdown cover. Otherwise it won’t just be a tyre that deflates.

There is a postscript to this. My wife took a call from the Highways Agency last week asking for some feedback about the way the service had been delivered by their appointed agent.

As the French might say, la vengeance se mange très-bien froide.

Another country



Henley: good for rowing and shopping



A few weeks back I blogged about the difficulty that lurks behind the theory that our High Streets would be so much better if only they were full of independents rather than the same old chains.

It’s an entirely understandable lament based on concerns that High Streets all over the country are at risk of looking the same wherever you go. Choice without choice, so to speak.

But the idea that you can somehow regulate these Clone Towns out of existence is flawed in my view.

Chains proliferate because people like using them. People prefer the lower prices they tend to offer. And, as I discovered in Alnwick in August, a street full of independent retailers isn’t necessarily an attractive one. It can be utilitarian, drab, even off the pace.

Yet there are places where independents not only thrive but make very good money, and I was in one of them at the weekend.

I knew Henley when I was a lad, having grown up just outside Reading and rowed on the Thames at Henley for the school boat club. It was an affluent enclave even in those days, benefiting from a mix of old money and London commuters.
Multiply that by any factor you care to name now. As you drive through the downland in Berkshire and West Sussex you see carefully managed countryside dotted with paddocks, maneges and gravelled drives leading to characterful piles. It seems like Olde England, but is too carefully cultivated for that.
Put simply, there is not only no recession in this part of the country, it is in fact motoring along as if economic life is perfectly normal and rudely healthy.
Henley town centre, which gravitates gently down towards a river frontage and past the old Brakspears brewery buildings, is dominated by independent shops, restaurants, cafes and galleries. Many are so slick and well-presented that you would easily mistake them for a hip, new chain.
They combine classy fascias with clever window displays showcasing upmarket goods, often without price labels – a sure sign of high-end disposable incomes.

It is also a sign of independent retailers who know how and where to make good money, who understand the power of brand and display, who are good at sourcing fashionable quality, who know their market well, who know how to provide an experience rather than a simple sale.

I suspect Henley is also a well-managed retail centre capable of saying no to things it doesn’t like, with independent retailers making enough money to afford the rents on prime locations. Some national chains were there, but they were having to play by Henley’s rules.

An affluent town in the healthy South East is a total contrast to Alnwick. Places like Henley are microcosms of the now considerable gulf in wealth and economic performance between London and the South East and the rest of Britain. It is, I'm afraid, another country.

But they also tell another tale about independent retail, suggesting that it can thrive in exclusive catchments, but will always struggle elsewhere.

For independents to make a significant comeback in smaller towns and cities – especially as you travel further north – they would need local or national government support of one form or another, through either property-related incentives or help with marketing and training.

But that won’t guarantee success. I go back to what I said about Alnwick: for an independent retailer to genuinely thrive, it has to be extremely hard working, commercially savvy and uncompromisingly committed to succeeding.
People like that are rare. And those that do decide to go down the independent retail route may well be tempted by the internet rather than the High Street because it’s a cheaper way to trade.
Retail is about customer demand, not political ideals. In this climate in particular, it’s also about hard economic facts of life.

The Goodwood School for Real Racers

When I was a kid I followed motorsport in a big way, watching Formula One on TV, visiting the British Grand Prix and the International Trophy when they were at Silverstone and the British round of the European Formula 2 Championship at Thruxton (which was just down the road from where I grew up in Berkshire).

I used to read Pete Lyons’ Grand Prix reports in the weekly mag Autosport, also lapping up page-after-page of reports about sportscars, touring cars, rallying and club racing. On top of that I also bought Motor Sport, the monthly magazine ‘which gave its name to the sport’. Its obsession with pre-war racing was a bit too much for me, but Denis Jenkinson’s Grand Prix reports were brilliant for the way they punctured some of the commercial egos who stalked the sport (he referred to the Players-sponsored Team Lotus as Team Shambles)

These days, the idea of shelling out £150-200 to sit a quarter of a mile from the track ‘watching’ a Grand Prix is the wrong side of silly street for me. I still watch it occasionally on TV, but long for the days when the sport looked and felt like racing rather than a corporate brand strategy developed in a wind tunnel.

Which is what took me down to Goodwood in West Sussex at the weekend. This is the time of year when Lord March stages the second of his increasingly successful representations of motor sport the way it was. July sees the Festival of Speed, where drivers past and present fling all sorts of metal (and carbon fibre) up a hillclimb outside Goodwood House. And September sees the Goodwood Revival.

It’s called Revival for two reasons. One is that it brings back into use a legendary racing circuit which waved goodbye to racing in the late 1960s when Freddie March (the current Lord March’s dad) decided he could no longer carry on ploughing money into modernising the track. The other is that the event is a celebration not just of motor sport in decades past but of life in the 1930s, 40s, 50s and 60s.

So it mixes road and track cars and bikes from those decades with Second World War aircraft, displays of motoring memorabilia (presented as they used to be), and invites the crowd to enter into the spirit of things by dressing in period costume (which thousands did, some to impeccable lengths).

Best of all, it brings these priceless motoring icons within touching distance of the paying public. You can walk within inches of classic sports racing cars worth millions (I made a bee-line for Pink Floyd drummer Nick Mason’s Ferrari 250 GTO) and rub shoulders with drivers and riders (Sir Stirling Moss was busy signing autographs). Unlike F1 drivers doing their corporate duty (something Lewis Hamilton is honest enough to admit he loathes), they turn out because they love it.

And ‘it’ in this case is Racing. The rare metal they drive may be worth fortunes, but they hammered round the track as if they were chasing a championship-deciding win – sometimes with eye-wateringly expensive consequences.

For my money the most impressive spectacle came at the start of the Whitsun Trophy, a race for mid 1960s Le Mans-style sportscars. Standing at Madgwick, the circuit’s first corner, we saw a 30-strong field take off like the Charge of the Light Brigade and hurl itself at the bend.

Leading the field were two Lola T70s, cars which hid F1-style chassis technology under a sports car body driven by massively powerful Chevrolet V8 engines. These monsters attacked the same piece of track with a commitment which meant only one was going to get round it. Sure enough, one went spinning across the tarmac, with other Lolas, Ford GT40s and Ferraris scattering in all directions.

The one thing which gave me hope that Formula One hasn’t completely lost touch with what it is meant to be was the fact that one of the scattering cars was being piloted by Adrian Newey, the designer whose genius has left Red Bull’s Sebastian Vettel untouchable.

He thrashed round in an impressive manner, lunging up the field in a beautiful 1965 GT40 which he keeps for those weekends when he’s not busy out-thinking everyone else in motor sport.

But F1 would have to gulp down a pack of simplification pills if it was to get anywhere near the spectacle we saw at Goodwood. We were closer to the action, the cars weren’t glued to the tarmac in the way today’s winged wonders are, and the drivers were out for some serious fun.

They – and the Goodwood Revival - are what motor sport should really be about: Racers.

Are big bonuses in big firms small beer?

It’s September, and politics is slowly but surely getting back into full swing. Hence the national media has largely lost interest in ‘riots’ in the regions.
So today we’ve seen a renewed debate about whether the Government needs to inject a few quid into the economy and a report by the High Pay Commission suggesting FTSE 350 directors have been lunching on big bonuses while their companies have been going nowhere fast.
The debate about the economy will run and run, but reports which suggest the rich are getting richer while the rest of us struggle is more likely to lodge in the public psyche because it plays to that well-known prejudice that life’s not fair.
Two points about the Commission’s report.
One is that the High Pay Commission isn’t actually a Commission in the naturally understood sense. While Commissions are traditionally set up by government to hold open inquiries into matters of serious public concern, the High Pay Commission is infact a one-year project set up by a London think-tank called Compass, which styles itself as ‘promoting left-wing debate’.
Those origins are reflected in the Commission’s membership and experts panel, which doesn’t include any high-profile business owners or business organisations, and is comprised mainly of academics, consultants and writers concerned with equality and civil society. It also has strong media connections, including former Guardian and BBC journalists.
Nothing wrong with that – everyone is entitled to a view and I’m guessing it’s unlikely the FTSE 350 would collectively invite public inquiry into how much its executives trouser each year in handsome bonuses.
All the same, the name is a bit misleading without explanation.
My big beef is that this self-elected, well-connected body puts so much emphasis on a sector which is unrepresentative of business at large.
So we’ve had another day of headlines about business which encourage the public to think that the commercial world is full of nothing but ruthless fat-cats who are out to screw you for everything they can get.
And that’s an unrepresentative cliche. The High Pay Commission would score some more relevant points if it asked the UK’s vast army of private business owners what they think of their Stock Market cousins. They’d get some pithy responses, I can tell you.
But missing a trick is not the point.
Most businesses are run by people who work their socks off, take considerable personal financial risks, and do it because they are motivated by a desire to make it on their own rather than squirrel away enough readies for a yacht in the Med.
The High Pay Commission may be making some valid points. But stopping FTSE bosses lining their pockets is unlikely to make life better for the public at large. The media focus on it is all a bit London-centric.
Right now, a Commission into what government could and should be doing to provide a cogent business support service for small firms would be far more useful and far more relevant to where our economy is at.