Westminster fiddles while the economy burns?

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.

LEP faces a turning point



George Cowcher: a key voice on the LEP

At some stage in the autumn the board of Nottinghamshire and Derbyshire Local Enterprise Partnership, officially called D2N2 but otherwise known as a LEP, will meet to discuss its priorities.
While it has a lot of priorities at the moment, it has no budget and no full-time staff. So those priorities are going to be slimmed down.
There’s something else it is drastically short of, too: widespread support in the business community. Granted, some of the biggest corporate names have given it time (Bombardier’s Colin Walton leads the board), and Derbyshire & Nottinghamshire Chamber of Commerce chief exec George Cowcher has been its main voice.
But there are widespread concerns that the LEP has simply not penetrated the psyche of your average business in the two counties.
I know from conversations I’ve had with civil servants that there are concerns that the wider business community has not bought into the LEP concept on any level.
I’ve seen a report drawn up by consultants which also says there is evidence that businesses don’t ‘get’ what the LEP is about.
In an article in the Post on Tuesday, Glenn Crocker, the chief executive of Nottingham’s BioCity, will say that many see the LEP as a “toothless irrelevance”, though he also says very clearly that he does not believe it should be written off.
There are three problems here.
One was identified by George Cowcher himself: businesses have got to wake up to the fact that the days of the East Midlands Development Agency, which had £150m a year to spend on the regional economy, are dead and buried. Businesses, organisations and sectors which relied on an emda funding stream have got to stand on their own two feet; there will be no grants to chase.
Mr Cowcher also tacitly admitted the second: the LEP needs to work much, much harder at raising its public profile. The £50,000 odd it has been given by government to support the development and maintenance of economic data is all well and good, but what purpose does it serve when the LEP is largely silent between board meetings?
The third is the contradiction at the heart of government economic policy. It wanted rid of emda because, in addition to wanting to save money, it did not believe a government agency should be leading business by the nose. Its view, which does make long-term economic sense, is that a sustainable economy is built around businesses which grow naturally.
But, as we’ve already seen, the central message from the organisation which has stepped into this void boils down to this: ‘We’re not emda’.
And if the mantra now is that businesses should help themselves, why will they vest time and money in the LEP? Look at what happened in the first round of bidding for the Regional Growth Fund (what was that about the death of regional economic policy?): one Notts business, Molecular Profiles, secured funding by making a bid itself. Not one of the 38 bids from the LEP - a body set up by government - was accepted by that government.
That may be because the local authority economic development people who give their time to the LEP were stuck in an emda mindset, wanting money for infrastructure, buildings and projects when the government was looking to back businesses creating jobs quickly.
The same problem cropped up in other LEP areas. So why was the process allowed to go so wrong for so long? All it has done is eat away at potential enthusiasm for the LEP concept.
The consultancy report I referred to earlier does make a powerful case for the existence of an organisation which furthers cross-county economic development activity and whatever government thinks about regional policy, it does believe business should have a powerful say in that.
Whether you feel strongly about government intervention in the economy or not, it seems common sense for businesses and local authorities to talk about what’s happening to the local economy, and for them both to make decisions based on solid evidence about the size and shape of the commercial landscape they operate in.
If the LEP is to mean anything, then it needs to be much more visible. It needs to hold events, to talk publicly, to get in the face of government, to produce the odd report – albeit within a sharply focused brief which avoids duplicating what other bodies already do.
There is another event in the autumn which could prove pivotal for the future of the LEP. It is the day when Government announces the results of the second round of bidding for the Regional Growth Fund (and don't ask when because no-one knows yet).
This time, £900 million is available across the country, and I know the LEP has made some hefty bids related to both business support activity and the tourism industry.
If those bids succeed, then the LEP has its sense of purpose.
If they fail again, then it’s surely back to the drawing board - for the Government as well as the LEP.

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?

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.