I suspect that George Cowcher, the chief executive of Derbyshire & Nottinghamshire Chamber, is probably being his normal diplomatic self when he says that Conservative party politicking about an EU referendum is “extremely unhelpful”.
While it’s true to say that businesses are unlikely to shed any tears if there was a bonfire of EU red tape tomorrow, Britain’s relationship with the Union is currently number 99 on the list of the top 10 challenges they face.
Businesses really do get riled by the time and money it takes to satisfy rules simply to get the job done (especially when the EU is meant to be a barriers-down single market), but what they crave more than anything else is stability: if we know what the rules are and they’re the same for everyone then they’ll usually grin and bear them.
The spectacle of politicians down in London spending OUR time and money jawing about an EU referendum might well strike businesses as not just indulgent but also irrelevant to where the economy is at right now.
What about business rates revaluation, what about energy and raw material costs, what about infrastructure, what about the availability of funding and the cost of new facilities, what about sorting UK government red tape?
Derbyshire & Nottinghamshire Chamber is the third biggest in the country, so the views of the businesses who comprise its membership ought to count for something.
Those views, expressed through its respected Quarterly Economic Survey, are that two-thirds of businesses want the UK to stay in the EU. What they want to change is the UK taking more control over some of the one-size-fits-all rules governing issues like employment.
The EU is not good at persuading ordinary people of its value, and has recently had a nasty habit of asking the same question a different way when people give it an answer it doesn’t like. As an institution, it has seemed both wrong-footed and lead-footed amidst the Eurozone crisis – a crisis that has had a painful impact on ordinary people in Greece and Spain.
Not being part of the eurozone has unquestionably helped the UK’s sluggish economy, allowing us to manipulate both interest rates and currency value in a way individual Eurozone countries cannot.
But businesses largely believe being a part of the wider EU at worst doesn’t make any difference, at best has its merits. If the Chamber’s survey is anything to go by, it’s the rules they quibble over, not club membership.
Showing posts with label Derbyshire and Nottinghamshire Chamber. Show all posts
Showing posts with label Derbyshire and Nottinghamshire Chamber. Show all posts
Wednesday, 15 May 2013
Wednesday, 25 April 2012
A political recession?
So, the UK is back in recession. Let’s all panic and head for the hills…
Or is it? There are four possible responses to today’s news that an initial estimate suggests the UK economy contracted by 0.2 per cent in the first three months of 2012.
One is political: government policy has failed and the coalition “cut too far and too fast”. The usual hot air, in other words.
The second is geographical: while London, the south and east have steamed ahead, the rest of the country never really climbed out of recession anyway (the further north you go, the more the economy becomes dependent on public money).
The third is scientific: quite a few economists and statisticians simply don’t believe the ONS figures because this general measure has been consistently at variance with what surveys about specific business sectors say. The ONS’s methodology may be a bit flawed.
The fourth is from business: how come the Office for National Statistics says the economy contracted 0.2 per cent when the Derbyshire & Nottinghamshire Chamber’s own survey of the same period said business had regained nearly everything it lost last year?
It really does pay to put the politics to one side, because in a climate like this it generates far more heat than light.
Not for the first time I should also point out that today’s figure is merely an initial estimate based on an analysis of only 40 per cent of the data which ultimately goes into a GDP figure. It will be revised at least three times, and for technical reasons the first quarter of a year is often harder to judge than others.
There is particular concern about the ONS’s assessment of the construction industry. It says weakness here is one of the key reasons for the fall back into recession. Yet the industry itself suggests the picture is not that bad.
And on the very same day that the ONS fingered weak manufacturing as another contributory factor for technical recession, the CBI said there were signs of a bounce back in manufacturing activity during the same period.
Indeed, the CBI has gone on record this morning with its usual diplomatic language, saying it is "surprised" by the ONS figures.
That's putting it mildly. There is a clear conflict between what the ONS is suggesting and what some industries are saying themselves.
Unarguable facts are that our economic recovery is very sluggish and geographically patchy: some sectors are doing better than others, some parts of the country are better than others, some of what we have lost won’t come back because the economy has changed, Eurozone economies still haven’t properly sorted their debt issues.
One more unarguable fact: businesses themselves are sick to the back teeth with supposed media ‘recession porn’ – an obsession with negative economic news.
So the fight over recession is largely political. As tough as it is, business is getting on with the job.
Or is it? There are four possible responses to today’s news that an initial estimate suggests the UK economy contracted by 0.2 per cent in the first three months of 2012.
One is political: government policy has failed and the coalition “cut too far and too fast”. The usual hot air, in other words.
The second is geographical: while London, the south and east have steamed ahead, the rest of the country never really climbed out of recession anyway (the further north you go, the more the economy becomes dependent on public money).
The third is scientific: quite a few economists and statisticians simply don’t believe the ONS figures because this general measure has been consistently at variance with what surveys about specific business sectors say. The ONS’s methodology may be a bit flawed.
The fourth is from business: how come the Office for National Statistics says the economy contracted 0.2 per cent when the Derbyshire & Nottinghamshire Chamber’s own survey of the same period said business had regained nearly everything it lost last year?
It really does pay to put the politics to one side, because in a climate like this it generates far more heat than light.
Not for the first time I should also point out that today’s figure is merely an initial estimate based on an analysis of only 40 per cent of the data which ultimately goes into a GDP figure. It will be revised at least three times, and for technical reasons the first quarter of a year is often harder to judge than others.
There is particular concern about the ONS’s assessment of the construction industry. It says weakness here is one of the key reasons for the fall back into recession. Yet the industry itself suggests the picture is not that bad.
And on the very same day that the ONS fingered weak manufacturing as another contributory factor for technical recession, the CBI said there were signs of a bounce back in manufacturing activity during the same period.
Indeed, the CBI has gone on record this morning with its usual diplomatic language, saying it is "surprised" by the ONS figures.
That's putting it mildly. There is a clear conflict between what the ONS is suggesting and what some industries are saying themselves.
Unarguable facts are that our economic recovery is very sluggish and geographically patchy: some sectors are doing better than others, some parts of the country are better than others, some of what we have lost won’t come back because the economy has changed, Eurozone economies still haven’t properly sorted their debt issues.
One more unarguable fact: businesses themselves are sick to the back teeth with supposed media ‘recession porn’ – an obsession with negative economic news.
So the fight over recession is largely political. As tough as it is, business is getting on with the job.
Thursday, 17 November 2011
Youth unemployment: A shocking truth
A few thoughts on the political hot potato of youth unemployment.
To have more than a million 16-24 years olds not building up experience of work and contributing to the economy is pretty grim, whichever way you look at it.
History shows that the longer young people are out of work the more difficult it becomes to get them into the habit.
Grimmer still is the fact that the UK’s struggle to get school leavers through the workplace door appears to have been around for much longer than politicians would have you believe.
Buried away in the Office for National Statistics data published yesterday was an Excel spreadsheet which shows the path of youth unemployment since the last recession in the early 1990s.
In the early 90s recession, youth unemployment peaked at just over 900,000 in 1992. It then commenced a long, downward path as the economy gathered speed again, bottoming out at just over 500,000.
But that was in 2001. And the ONS’s figures show that while it has risen steeply since 2008, it was already on a marked upward path which had begun in 2003.
Between 2003 and 2007 it rose from under 600,000 to over 700,000. Right in the heart of the economic boom.
There is also a clear divide in these numbers, one which was also glossed over yesterday.
The unemployment rate among 16-17 year-olds (i.e., GCSE school leavers) hovered around the 20 per cent mark from the turn of the century and wasn’t much lower in the decade before that. Among 18-24 year olds (the A-level to college/university period), it fell from around 15 per cent to around 10 per cent before starting to edge up again from 2005 onwards.
I won’t pretend to know why it is that we’ve had an upward trend in youth joblessness that predates the crunch (though it might suggest when the true stresses in the economy first began to emerge), but there was an interesting contribution yesterday to the debate about solutions.
Derbyshire & Nottinghamshire Chamber of Commerce has been reporting for some time that its Quarterly Economic Surveys have been consistently flagging up a problem with the quality of young people turning up for job interviews.
The problem is that these job candidates lack both basic skills – literacy and numeracy – and an understanding of what it takes to hack it in the working world.
To cut to the chase, it’s suggesting that schools’ relentless focus on driving up exam results has missed a crucial element in the bigger picture of what makes a good employee: that attitude counts just as much as attainment.
The Chamber’s got to be careful that it isn’t accused of tarring all kids with the same brush and suggesting school leavers are a generation of feckless Facebook addicts.
That is a tabloid cliché which won’t help identify a solution.
I know that because the same day the unemployment figures came out, I spent the evening at the Nottingham Post’s inaugural Student Awards. It was an inspiring occasion, with young students from city schools and academies proudly receiving awards for a range of stunning achievement which covered everything from academic brilliance to community involvement and immense sporting and creative prowess.
So we should not lose sight of the fact that great things can and do happen in Nottingham’s schools.
But those ONS numbers point to an urgent and serious issue. The jobless rate among 16-17 year-olds has been rising relentlessly since the early part of the last decade, and is heading into territory which points to a fundamental failure underneath apparently improving educational attainment figures.
That points towards wasted lives and economic under-achievement
The Chamber says the Ofsted inspection regime for schools should be changed so that it also measures how good schools are at preparing people for the working world.
It may be a step in the right direction. But schools – and business – may need to make some giant leaps.
To have more than a million 16-24 years olds not building up experience of work and contributing to the economy is pretty grim, whichever way you look at it.
History shows that the longer young people are out of work the more difficult it becomes to get them into the habit.
Grimmer still is the fact that the UK’s struggle to get school leavers through the workplace door appears to have been around for much longer than politicians would have you believe.
Buried away in the Office for National Statistics data published yesterday was an Excel spreadsheet which shows the path of youth unemployment since the last recession in the early 1990s.
In the early 90s recession, youth unemployment peaked at just over 900,000 in 1992. It then commenced a long, downward path as the economy gathered speed again, bottoming out at just over 500,000.
But that was in 2001. And the ONS’s figures show that while it has risen steeply since 2008, it was already on a marked upward path which had begun in 2003.
Between 2003 and 2007 it rose from under 600,000 to over 700,000. Right in the heart of the economic boom.
There is also a clear divide in these numbers, one which was also glossed over yesterday.
The unemployment rate among 16-17 year-olds (i.e., GCSE school leavers) hovered around the 20 per cent mark from the turn of the century and wasn’t much lower in the decade before that. Among 18-24 year olds (the A-level to college/university period), it fell from around 15 per cent to around 10 per cent before starting to edge up again from 2005 onwards.
I won’t pretend to know why it is that we’ve had an upward trend in youth joblessness that predates the crunch (though it might suggest when the true stresses in the economy first began to emerge), but there was an interesting contribution yesterday to the debate about solutions.
Derbyshire & Nottinghamshire Chamber of Commerce has been reporting for some time that its Quarterly Economic Surveys have been consistently flagging up a problem with the quality of young people turning up for job interviews.
The problem is that these job candidates lack both basic skills – literacy and numeracy – and an understanding of what it takes to hack it in the working world.
To cut to the chase, it’s suggesting that schools’ relentless focus on driving up exam results has missed a crucial element in the bigger picture of what makes a good employee: that attitude counts just as much as attainment.
The Chamber’s got to be careful that it isn’t accused of tarring all kids with the same brush and suggesting school leavers are a generation of feckless Facebook addicts.
That is a tabloid cliché which won’t help identify a solution.
I know that because the same day the unemployment figures came out, I spent the evening at the Nottingham Post’s inaugural Student Awards. It was an inspiring occasion, with young students from city schools and academies proudly receiving awards for a range of stunning achievement which covered everything from academic brilliance to community involvement and immense sporting and creative prowess.
So we should not lose sight of the fact that great things can and do happen in Nottingham’s schools.
But those ONS numbers point to an urgent and serious issue. The jobless rate among 16-17 year-olds has been rising relentlessly since the early part of the last decade, and is heading into territory which points to a fundamental failure underneath apparently improving educational attainment figures.
That points towards wasted lives and economic under-achievement
The Chamber says the Ofsted inspection regime for schools should be changed so that it also measures how good schools are at preparing people for the working world.
It may be a step in the right direction. But schools – and business – may need to make some giant leaps.
Monday, 22 August 2011
Sickies, slackers and an Age of Entitlement?
Business has never been easy, but these days it is punishingly tough. In many companies there are fewer people doing more and more, and increasing costs eating away at standstill prices.
While I’m on the cynical side of when-the-tough-get-going strategies (because that’s what you should be doing anyway), there’s no question that work these days is about working harder and longer without additional reward. Can it be anything else in this climate?
Apparently it can. There’s a suggestion that at least a few people think a four-day week, cruising through the day and dashing for the door at 5.30 are all you need to do to bring home a good wage.
Who are they? According to George Cowcher, they are our future. What the chief exec of Derbyshire & Nottinghamshire Chamber is referring to is a generation of kids, some of whom seem to think that work means money for the taking.
Now, I normally take a pretty sceptical view of those who shake their head and mutter dismissively about ‘the young people of today’ or suggest it wasn’t like this in my day etc.
But George Cowcher isn’t that kind of bloke, and he was referring to the hard evidence consistently flagged up in a survey of small businesses in Nottinghamshire and Derbyshire.
His starting point was the continuing puzzle of consistently improving exam results versus the consistently poor standards of literacy and numeracy displayed by people who turn up for job interviews.
That, he believes, may be down to the generation of kids who went through schools before a heavy emphasis was placed on those key skills. Exam passes are one thing, practical everyday skills another.
But the apparently poor work ethic is less straightforward. According to Mr Cowcher, at its worst this manifests itself in people who think it’s OK to throw sickies on Mondays because they’ve overdone the pop at the weekend. But it also extends to graduates who think a degree is the automatic route to a handsome pay packet…even when they can’t keep a phone conversation going and rely on a Word spellchecker for their communications skills.
“It is surprising in this climate,” he told me. “But there is a cohort which doesn’t see work as the major driver in their life and wants something for nothing.”
There is a debate here to be had about whether a decade of economic growth, easy credit and the rise of the consumer economy has led to an era of entitlement, an age when people grow up thinking that a high standard of living is something you are entitled to rather than something you have to work your socks off for.
It may be that we’re going through a period of adjustment, and those that go through the educational system from 2007 onwards will emerge with a more realistic expectations about the relationship between rights and responsibilities.
In my experience, there have always been people who think the world owes them a living and moan loudly when it isn’t served up on a plate. And debates like this have a habit of occurring in cycles.
But you can also criticise individual businesses for the way they took their foot off the gas - and their eye off the ball - during a bubble that was never likely to last.
The surprise for me was someone like George Cowcher – an experienced operator who usually chooses his ground very carefully – delivering some unequivocal criticism.
Does he have a point?
While I’m on the cynical side of when-the-tough-get-going strategies (because that’s what you should be doing anyway), there’s no question that work these days is about working harder and longer without additional reward. Can it be anything else in this climate?
Apparently it can. There’s a suggestion that at least a few people think a four-day week, cruising through the day and dashing for the door at 5.30 are all you need to do to bring home a good wage.
Who are they? According to George Cowcher, they are our future. What the chief exec of Derbyshire & Nottinghamshire Chamber is referring to is a generation of kids, some of whom seem to think that work means money for the taking.
Now, I normally take a pretty sceptical view of those who shake their head and mutter dismissively about ‘the young people of today’ or suggest it wasn’t like this in my day etc.
But George Cowcher isn’t that kind of bloke, and he was referring to the hard evidence consistently flagged up in a survey of small businesses in Nottinghamshire and Derbyshire.
His starting point was the continuing puzzle of consistently improving exam results versus the consistently poor standards of literacy and numeracy displayed by people who turn up for job interviews.
That, he believes, may be down to the generation of kids who went through schools before a heavy emphasis was placed on those key skills. Exam passes are one thing, practical everyday skills another.
But the apparently poor work ethic is less straightforward. According to Mr Cowcher, at its worst this manifests itself in people who think it’s OK to throw sickies on Mondays because they’ve overdone the pop at the weekend. But it also extends to graduates who think a degree is the automatic route to a handsome pay packet…even when they can’t keep a phone conversation going and rely on a Word spellchecker for their communications skills.
“It is surprising in this climate,” he told me. “But there is a cohort which doesn’t see work as the major driver in their life and wants something for nothing.”
There is a debate here to be had about whether a decade of economic growth, easy credit and the rise of the consumer economy has led to an era of entitlement, an age when people grow up thinking that a high standard of living is something you are entitled to rather than something you have to work your socks off for.
It may be that we’re going through a period of adjustment, and those that go through the educational system from 2007 onwards will emerge with a more realistic expectations about the relationship between rights and responsibilities.
In my experience, there have always been people who think the world owes them a living and moan loudly when it isn’t served up on a plate. And debates like this have a habit of occurring in cycles.
But you can also criticise individual businesses for the way they took their foot off the gas - and their eye off the ball - during a bubble that was never likely to last.
The surprise for me was someone like George Cowcher – an experienced operator who usually chooses his ground very carefully – delivering some unequivocal criticism.
Does he have a point?
Thursday, 30 June 2011
Bombardier: How Best Value turned into a monster
Derby’s not normally my turf, but I don’t think there can be many people in business around here who haven’t heard about the Government’s decision to give a £1.4bn London rail contract to Siemens in Germany.
They’ll do a fine job, I’m sure. But so could Bombardier in Derby – which, in case the civil servants who signed off this process have forgotten, is just up the road from London.
The decision to send the contract abroad makes sense if you believe in the absolute purity of markets and that European competition rules are sacrosanct. However, the long-term collateral damage those rules are likely to deliver to Derby – one of the UK’s major manufacturing cities - suggests that if you follow this argument to its logical conclusion you’ll also be comfortable with vultures picking over the corpses of the dead. It’s a cost-effective way to get the job done, yes, but the bones left behind are a stark reminder of what you’ve lost.
I’m not going to rehearse the gory details of this awful deal (my colleagues at the Derby Telegraph have, as ever, done a brilliant job documenting the shocking reality).
What is worth wider attention is a letter sent by Derbyshire & Nottinghamshire Chamber to David Cameron about the issues which this decision raises.
The letter has been written by Chamber president Ian Morgan, who, as chairman of bus firm Trent Barton, knows a thing or two about transport; indeed, he’s part of a consortium which will run the next tram lines in Nottingham. He doesn’t go in for the ritual condemnation of the EU – he points the finger directly at Whitehall.
I quote: “My Chamber believes that your Government and the previous government are prisoners of highly paid civil servants in London who devise and operate a procurement process prejudicial to manufacturing in the United Kingdom. This ‘London centric’ view takes no account of the need to sustain and build manufacturing activity in the country as a whole.”
This is a serious accusation, and it plays to a widely-held suspicion that while EU rules are bad enough, the way they are enforced by Whitehall makes a bad situation worse.
Morgan says that when Ministers decided to award the £1.4bn Thameslink contract they were not aware of who the bids had come from – in other words, they were making the decision blind. This sounds like a sensible way to avoid accusations of bias – but Morgan claims that a blind process is NOT a requirement of EU competition rules. In any case, I have great difficulty believing that civil servants specialising in transport infrastructure couldn’t have guessed that Bombardier would be one of the bidders.
Morgan also suggests that the main justification for the decision – that it represents best value for taxpayers – is also a disastrously one-eyed interpretation of where the value lies.
Again, I can do no better than quote the letter that has landed on David Cameron’s desk this morning: “Now that we know that one of the consequences of your Government’s decision to award the contract to Siemens may be the closure of the last train manufacturer in the United Kingdom, we would ask that you publish the comparative value of awarding the contract to Siemens against the cost of the destruction of the train manufacturing industry in the United Kingdom.”
Transport secretary Philip Hammond has sought to suggest that he has done no more than confirm a decision delivered by a process set up by the last government. That doesn’t make it right.
Neither is it jingoistic to suggest that this simply wouldn’t have happened in France or Germany. All of the trains, trams and buses procured in France are made or assembled there. And Morgan says 90 per cent of German transport procurement is German.
No one is suggesting that government should support industrial dead ducks; this isn’t the 1970s and Bombardier is not an industrial dinosaur where bad practices are propped up by subsidies. Derby has been a centre for transport engineering expertise for decades, which is why a global firm like Bombardier is based there.
The truth is that the way the public sector interprets best value rules has been a problem for years, all the way from Whitehall to your local council. I can remember a Nottingham-based public body which managed to send a contract all the way to Bournemouth for a routine service which could easily have been done (and done better) in this city.
The only way the Bombardier decision will deliver any real value to the UK is if it leads to a change in the way these rules are interpreted. Civil servants – and politicians – have got to get it into their heads that the maintenance of technical knowledge and specialist manufacturing capacity have an economic value that goes far beyond the price of a single contract - or, indeed, a grotesque obsession with administrative purity.
They’ll do a fine job, I’m sure. But so could Bombardier in Derby – which, in case the civil servants who signed off this process have forgotten, is just up the road from London.
The decision to send the contract abroad makes sense if you believe in the absolute purity of markets and that European competition rules are sacrosanct. However, the long-term collateral damage those rules are likely to deliver to Derby – one of the UK’s major manufacturing cities - suggests that if you follow this argument to its logical conclusion you’ll also be comfortable with vultures picking over the corpses of the dead. It’s a cost-effective way to get the job done, yes, but the bones left behind are a stark reminder of what you’ve lost.
I’m not going to rehearse the gory details of this awful deal (my colleagues at the Derby Telegraph have, as ever, done a brilliant job documenting the shocking reality).
What is worth wider attention is a letter sent by Derbyshire & Nottinghamshire Chamber to David Cameron about the issues which this decision raises.
The letter has been written by Chamber president Ian Morgan, who, as chairman of bus firm Trent Barton, knows a thing or two about transport; indeed, he’s part of a consortium which will run the next tram lines in Nottingham. He doesn’t go in for the ritual condemnation of the EU – he points the finger directly at Whitehall.
I quote: “My Chamber believes that your Government and the previous government are prisoners of highly paid civil servants in London who devise and operate a procurement process prejudicial to manufacturing in the United Kingdom. This ‘London centric’ view takes no account of the need to sustain and build manufacturing activity in the country as a whole.”
This is a serious accusation, and it plays to a widely-held suspicion that while EU rules are bad enough, the way they are enforced by Whitehall makes a bad situation worse.
Morgan says that when Ministers decided to award the £1.4bn Thameslink contract they were not aware of who the bids had come from – in other words, they were making the decision blind. This sounds like a sensible way to avoid accusations of bias – but Morgan claims that a blind process is NOT a requirement of EU competition rules. In any case, I have great difficulty believing that civil servants specialising in transport infrastructure couldn’t have guessed that Bombardier would be one of the bidders.
Morgan also suggests that the main justification for the decision – that it represents best value for taxpayers – is also a disastrously one-eyed interpretation of where the value lies.
Again, I can do no better than quote the letter that has landed on David Cameron’s desk this morning: “Now that we know that one of the consequences of your Government’s decision to award the contract to Siemens may be the closure of the last train manufacturer in the United Kingdom, we would ask that you publish the comparative value of awarding the contract to Siemens against the cost of the destruction of the train manufacturing industry in the United Kingdom.”
Transport secretary Philip Hammond has sought to suggest that he has done no more than confirm a decision delivered by a process set up by the last government. That doesn’t make it right.
Neither is it jingoistic to suggest that this simply wouldn’t have happened in France or Germany. All of the trains, trams and buses procured in France are made or assembled there. And Morgan says 90 per cent of German transport procurement is German.
No one is suggesting that government should support industrial dead ducks; this isn’t the 1970s and Bombardier is not an industrial dinosaur where bad practices are propped up by subsidies. Derby has been a centre for transport engineering expertise for decades, which is why a global firm like Bombardier is based there.
The truth is that the way the public sector interprets best value rules has been a problem for years, all the way from Whitehall to your local council. I can remember a Nottingham-based public body which managed to send a contract all the way to Bournemouth for a routine service which could easily have been done (and done better) in this city.
The only way the Bombardier decision will deliver any real value to the UK is if it leads to a change in the way these rules are interpreted. Civil servants – and politicians – have got to get it into their heads that the maintenance of technical knowledge and specialist manufacturing capacity have an economic value that goes far beyond the price of a single contract - or, indeed, a grotesque obsession with administrative purity.
Tuesday, 12 April 2011
RGF: A growing controversy?
This £1.4bn pot was set up by the government in the wake of its decision to get rid of regional development agencies like Emda.
While emda at one stage had an annual budget north of £150m, the amount of money Nottinghamshire and Derbyshire have managed to squeeze out of the RGF is a pitiful £1.6m. Out of 38 bids made for projects in the two counties, only one was successful.
The successful bid relates to the planned expansion of Molecular Profiles in Nottingham. Levering £8.4m of its own, the pharmaceutical research company plans to open a new building at Nottingham Science Park and create up to 65 new jobs.
This is a significant vote of confidence in an important sector for Nottingham, and Molecular Profiles CEO Nikin Patel is to be congratulated.
But what about everyone else? There are rumblings and machinations about why the 37 other local bids failed, but I suspect ours is not the only region where this soul-searching and teeth-gnashing is taking place.
Today’s announcement covers only the first of three rounds of funding bids, and has accounted for £450m of the £1.4bn available. So there is still £950m to bid for. It is the second round, which is underway now and closes shortly, which will see the lion’s share of the cash allocated.
We don’t know yet whether any of the unsuccessful bids from the first round will be considered again, but the word from Derbyshire & Nottinghamshire Chamber is that they had expected four of the 38 bids to be successful in round one – which suggests to me they will be looked at again.
I suspect the issue is that the Government's preference will be for projects which create wuick jobs, rather than trophy projects like physical infrastructure, which may only work in the long-term. It wants quick wins.
Just to complicate matters, the second round of RGF bidding coincides with the start of bidding for £19m of European Regional Development Fund cash available to the East Midlands. This is being administered by emda, though the word is that bids for this can be 'aligned' with bids for RGF money. Baffled? You're not alone...
There is a degree of paranoia in the East Midlands about its weak identity, and Business Secretary Vince Cable found himself having to reassure the region this morning that the decision was not a personal slight. That’s one to ponder – I’m not aware he has visited Nottinghamshire or Derbyshire since taking office.
There are some fairly blunt questions the government has to answer, though. It is almost certain that some of the bids will have failed precisely because the guidance from Whitehall about what they were looking for was far from clear.
That, in itself, is symptomatic of the government’s tendency to make policy on the hoof: having decided long ago that it did not want to put money into regional development agencies, it had no clear plan for what might fill the administrative void these organisations were bound to leave behind.
I blogged last week about the decision to maintain some parts of the Government Office for the East Midlands operation, and the concerns that – when put together with emda’s demise – it left the region voiceless in Whitehall.
For business, the most important part of the Government operation is the new regional representative for Mr Cable’s department, Rowena Limb. A robust conversation with her about Nottinghamshire and Derbyshire’s expectations for the next round of RGF money will be important.
So will an invitation to the Business Secretary, so that he can come and inspect for himself this unexplored corner of the Midlands. You know what we need to say when he finally does battle his way through the undergowth and find us: Dr Cable, we presume...
Wednesday, 9 February 2011
Happy days are here again...not
So billions of pounds' more money is going to be thrown at business - with £76bn of it reserved for smaller firms! Yippee, all our problems are over, eh?Afraid not. I was chatting to George Cowcher, the chief executive of Derbyshire and Notitnghamshire Chamber a few minutes ago and he says it isn't the amount of money that's the problem - it's the interest rate you have to pay on it.
But surely interest rates are on the deck, aren't they? Base rates are, yes - these are the rates on which the Bank of England is willing to lend. Then there's the inter-bank rate, which is the margin when cash shifts between financial institutions. Then there's the rates ordinary joes in business and on the street pay.
Right now, they are a long way north of that pitifully low base rate. Borrowing at a commercial rate is very expensive.
So, banks are still acting like a load of money-grabbing vultures, then? Sorry, but that isn't a fair picture either.Banks are making a proper commercial assessment of the ability of lenders to pay back loans. In the current economic climate the risk of default is bound to be higher (as the insolvency and business failure rates continue to show).
So a prudently-run financial institution will put a higher price on the loan to make sure the risk of loss is overcome earlier in the loan's life.
As Cowcher points out, this is what banks didn't do before the credit crunch. And look where that got us - banks still have billions of rotten loans sitting on their books to this day (and many of these distressed loans will probably be terminated this year).
Only if the government was willing to underwrite some of this business lending is it likely that the amount handed over would increase significantly. A government grappling with deficit and debt - and politically committed to so-called 'sound' money - is unlikely to do that.
So, we are where we are and George Osborne's statement today doesn't change that.
That doesn't mean businesses are necessarily caught in a financial Catch-22. There are plenty of small and medium-sized firms out thdere - particularly older, family-owned enterprises - who never over-borrowed in the good times because their cultural outlook says it's wrong to 'work for the bank'.
They have money sitting in the bank, where it's probably not doing much for them. If they are in manufacturing, this year may well be the year when they do invest in prudent expansion.
And many will do it without borrowing a penny.
Wednesday, 2 February 2011
Business enterprise: set phasers to stun
It looks like there’s a groundswell building behind this, with Derbyshire & Nottinghamshire Chamber of Commerce launching their own wish-list of things the government should do to help the private sector build the economic recovery which it says it wants to see.
To be fair to the Chamber, it is not jumping on a bandwagon here. At the end of December last year, its chief executive, George Cowcher, called on government to make 2011 a year for growth.
The Chamber – the third biggest in the country, remember, and a fairly big player round here – has now put some flesh on the bones of that wish-list.
So far, it is less specific than the measures set out by Sir Richard, but what is interesting is that it sings to that age-old business torch song, less is more.
In other words, one of the biggest contributions government might make to the economy is to stop thinking it can solve every problem under the sun by passing a new law.
A fair few business people are of the view that the ‘initiativitis’ which afflicted the last government meant it did rather too much of that, almost to the point where it was trying to codify common sense.
John Dowson, the Chamber’s imposing policy director, told me yesterday that while there are some signs that the coalition is trying to strip out some of the nonsenses, others are still slipping through.
So the biggest difference government could make is to adopt what he called an ‘enterprise state-of-mind’ – understanding the entrepreneur in everything it does and perhaps designing regulations with an approach based on the principle of ‘how easy will this rule be to comply with’.
That’s a tough ask – not least because there are those in government who genuinely believe they already do this…
Nevertheless, the detail of what the Chamber is asking for does contain some interesting suggestions.
It wants a simpler planning regime for what are obviously business or industrial sites so that they can expand more easily. So provided a change to a building falls within clear guidelines it just gets nodded through rather than going through the often long-winded planning cycle.
It wants government and agencies like UK Trade & Investment to put a whole lot more effort into making it easier for small firms to export. One of the big issues here is Export Credit Guarantees, which have been criticised for focusing too much on big businesses.
This mirrors Sir Richard Lambert’s concern that government policy for business and industry has an unfortunate habit of locking on to the activities of sectors and businesses which are already doing well – of picking winners rather than identifying entrepreneurial growth potential.
My understanding is that government – led by Vince Cable – is hard at work on some kind of business growth initiative which will be unveiled in March. You don’t need to be a political analyst to work out that the main theme in the Budget will be that now the cutbacks have been identified, Government will now take steps to assist growth.
It has some catching up to do on two fronts. While it’s said the right things about a business-led recovery, those measures which do affect firms have been cack-handed – think LEPs and the immigration cap. That betrays a disjointed approach.
Secondly, if the March growth strategy is to work it should take an enterprising approach which recognises that government is best assisting, not doing, and that it is small to medium entrepreneurial Britain that holds the key to long-term growth, not the usual corporate titans.
To borrow from the Starship Enterprise, if it isn’t going to lose the economic argument then it needs to set those policy phasers to stun.
Subscribe to:
Posts (Atom)