What to do next? Is Sheffield City Council making the wrong decision?

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Town and City centre developments are looking pretty fragile as business propositions, us folk in Bradford still sit, fingers crossed, awaiting action from Westfield over the Broadway site. And meanwhile in Sheffield:

Developer Hammerson today announced it was pulling out of long-awaited plans for a new retail quarter in Sheffield.

 The company said it has agreed with Sheffield City Council that it "would end its development agreement" on proposals for the Sevenstone scheme.

The scheme - just cracking open the egg when I was in Sheffield doing my Masters - has been stalled since 2008 "because of the recession" (no mention of the longer-term trends in retail here). It seems to me that this decision from Hammerson reflects the reality of retail investment - other than in exceptional circumstances it's simply not viable right now.

However, Sheffield City Council, wedded to the 'shiny regeneration' model like most big city councils has this to say:

Leigh Bramall, the city council’s cabinet member for business, skills and development, said the authority was still committed to developing Sevenstone.

He said: "The people of Sheffield have waited long enough for a new retail quarter.

"We have the land assembled, utilities in place, have established the level of funding available, and methodology to inject the funding to undertake supporting public works.

"We have confirmed a scheme is viable and so we will now be seeking a new development partner to move the project forward in the shortest time possible."

I wish the city luck with this approach and, knowing the politics and institutional myopia that so restricts regeneration, hope they find a new development partner.

My question is this. If Hammerson - not exactly a small or insignificant developer - can't make the development stack up with an anchor like John Lewis and the promise of £45 million in public subsidy, what makes the Council think another developer will fill the void?

Perhaps a different approach would help us all rethink the regeneration of City centres?

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All business conducted within the law is good business...

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What is it about politicians wanting to pass moral judgement about business? Today it’s Nick Clegg’s turn:

The Deputy Prime Minister will launch today a campaign for a “well-rewarded workforce”, saying that businesses owned by their staff are more dynamic and have higher morale.

He wants to encourage companies to follow the model of John Lewis, the department store group which is owned by its employees and distributes its profits between them.

Mr Clegg’s call for “responsible capitalism” will come as City firms are preparing to pay executives billions of pounds in bonuses, despite pledges from politicians to curb excessive pay and growing hardship among ordinary families.

Those words – “responsible capitalism” – echo the sentiment of interventionist politicians down the years.  From Heath’s “unacceptable face of capitalism” to Miliband’s crass distinction between ‘producers’ and ‘predators’, we find politicians seek political capital from the making of moral distinctions between ‘good’ and ‘bad’ businesses.

None of this is to say that it’s a bad idea to reward employees with shares – this cements their interest in the firm’s success and acts as a spur to profitability. But it is a matter for the owners of businesses not a concern of government – granting some sort of “right” to demand that the company gives shares to employees is a pretty gross intervention in those businesses however much we might think it a good idea.

It is simply not the role of politicians – however well-qualified we make think we are – to pass moral judgements about capitalism. I can respect someone who believes that capitalism is immoral – they are wrong but honestly wrong – but the person who says that some capitalism is bad and some capitalism is good is trying to have his cake and eat it.

For my part, I believe that capitalism is inherently moral since it is the only form of economic organisation that reflects the primacy of individual choice and preference. All other forms – those imposed by governments in a futile search for man’s perfectibility – are immoral since they require that some people are told “no you can’t make that choice”.

And when we look at the distinction made between ‘good’ and ‘bad’ business, it has more to do with the effectiveness of the different firms’ public relations than a real understanding of the morality or otherwise of that business. We like John Lewis because it does nice advertising and runs Waitrose (where the supermarket-hating commentariat prefer to shop) – if Provident Financial adopted the same ownership approach would we suddenly approve of selling expensive loans to poor people?

People start businesses with the intention of making themselves some money not as some noble social project. If people didn’t do this all the lovely stuff we take for granted – you know, the schools and hospitals – wouldn’t be there. If smart young people didn’t work eighty-hour weeks on trading desks the City of London wouldn’t be the world’s biggest financial centre producing £100 billion and more in added value.

If we start pretending that business isn’t about earning a living, if we begin to force our prejudices onto business owners, we set off down a road to a less wealthy, less creative, innovation-free society. Rather than condemning the city trader for his money, we should celebrate the fact that an ordinary guy from Dagenham or Sidcup can make that kind of cash and enjoy the good life that goes with it. It is wrong to make some moral distinction between the hedge fund manager and the artisan baker, to pretend that one is ‘good’ and the other ‘bad’.

All business conducted within the law is good business and the only irresponsible businesses should be businesses that fail.

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Some thoughts on the Co-operative Party and their misplaced ideas

Given that Labour are saying “co-operative party principles” will be included in the Labour Manifesto for the coming election I thought it might be worthwhile looking at those principles and at their practical implications. And I do so from the perspective of someone who favours mutual organisations, community ownership and new models of service delivery – something I share, it seems, with David Cameron.

The Co-operative Party has helpfully published their guide – “A Co-operative Party Agenda for a Fourth Term” (so no question as to who they’ll be backing despite the enthusiasm from all three main parties for mutualism). I thought I’d pull out some of their suggestions and give a considered view set against our mixed experience of co-ops.

Promoting co-operative and mutual enterprise. The underlying argument here – although it isn’t quite put that way –is that co-op and mutual models of business are superior to “capitalist” models of business. These models are dubbed “social” – presumably implying that the joint stock company is anti-social. There is no attempt made beyond glib statements about service and lies about profits (co-ops and mutuals are profit-making organisations) to explain the basis for this distinction. In my view Government should not involve itself in how private citizens and private organisations choose to organise themselves yet it is clear that the Co-op Party wished to force unspecified co-operative “values” on private firms and to “reconnect them with stakeholders and society”. Nowhere in all this is there a word about the consumer, the customer – the most important stakeholder in any business.

Employee-ownership. John Lewis has a lot to answer for! This for-profit, quite pricey general store and supermarket chain is held up as a paragon of socialist virtue. We’re told that this shows just how effective employee-ownership can be. Truth be told though – for the amount of real control employees have over the management of John Lewis – the “employee-ownership” model is just a glorified bonus scheme. Don’t get me wrong – if firms wish to organise this way they can – and it clearly works for some organisations. But there is no evidence of more social or economic benefit compared, let’s say, to being owned by faceless Swiss gnomes or big-hatted Texan billionaires.

Remutualisation. Ah, here’s the cheap shot! Those wicked Tories allowed all those nice cuddly building societies to get turned into banks – and look what happened! We must turn Northern Rock back into a mutual organisation pour encourager les autres! Excuse me but do you remember what those mutual organisations were like? Do you recall how unaccountable, producer-led, unresponsive and lazy they were? Mutual organisation works pretty well at the level of the working mans club (or Conservative Club for that matter, most of which are mutuals) but scale it up to a multi-billion financial organisation and you can forget real accountability. These organisations become run purely for the interests of the management not the member or the customer. And certainly not for any wider “stakeholders”. A quick look at the US savings and loan scandals shows just how vulnerable mutuals are to managerial abuse.

Land reform. Now we get the real lefty stuff. Introducing a land value tax to replace council tax and business rates. Apparently the reason for the strange behaviour of the UK’s property market is because the existing property taxes create a system that favours the developer over the user. Leaving aside the scale of destruction in our property sector during this recession, this argument not only shows profound ignorance of how land is valued but ignores the primary reasons for our distorted property market. And those reasons? Our planning system and our preference for freehold models of residential ownership. If the Co-op Party wanted a really radical approach that would allow for more affordable housing in places where people want to live, then they would be proposing the privatisation of property rights through the repeal of the Town & Country Planning Acts and associated guidance and secondary legislation.

Trade Justice. As we might expect from the UK’s biggest recipient of Common Agricultural Policy cash, the Co-op is firmly in the protectionist camp. OK, they call it trade justice but what they mean is that we carry on the protectionist agriculture policies that puff up the Co-op's profits while assuaging our guilt at the damage this does to poor African farmers by promoting so-call “fair trade”.

There is some good stuff in the Co-op ‘manifesto’ too – mutualising the health service would take us back closer to the private (mostly charitable) delivery that existed prior to Labour nationalisation of health and there are some interesting ideas about increasing participation. However, the Co-op's connection to the Labour Party holds it back – they seem obliged to continue to nod in the direction of groupthink and to promote the failed initiatives of socialism.

It seems to me that trying to make party political capital out of the idea of mutuality and co-operation is misplaced. And it also seems to me that, for all the talk of engagement and participation, the one thing not proposed here is the real transferring of power from centralised, monolithic and failing government to ordinary people. Now that would be radical!

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Regeneration: just give us the money and go away...it'll be good!

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David Barrie runs a company that does this:

...designs, directs and consults on initiatives that enable transformational change and capital growth in cities and communities

Anyway David Barrie knows a lot about regeneration and has said in his blog that: Urban regeneration needs a new narrative

I’m not so sure what we need is a “new narrative” (whatever that means) in regeneration but rather a considered review of the economic geography underlying the continuing challenges that face us as a society. And to ask whether the acronym soup managing regeneration – RDAs, HCA, BURA, CLG, LOCOG, LGA and so forth – are helping or hindering the process. And to ask at what level we deliver regeneration and for whom.

The truth of economic geography
If you map the poorest places in England in 1968 – when as we all know “poverty was rediscovered” and urban regeneration began – and compare that map to the poorest place in England 40 years later there is an enormous overlap. All those carefully targeted regeneration millions have served to change very little. The Joseph Rowntree Foundation produced such as study, “Poverty, Wealth & Place in Britain: 1968-2005” – and on page 38 of the main report are a set of maps that should make every regeneration guru and poverty campaigner hang their heads in shame. They demonstrate that our chosen preference in regeneration – targeting extra cash resource (controlled by us regeneration experts) towards carefully defined “deprived” places has failed.

To illustrate this let me tell you the story of Robert Brown. Robert’s from inner city Leeds - born in Harehills and brought up mostly in Chapeltown. When I knew him as a young ideological researcher he always swore he would not desert his “roots” and would stay in Chapeltown. Some while later I ran into Robert again – and where was this older, more successful researcher living? Harrogate. And why? Because he had a family and didn’t want the risks of bringing them up in a place with violence, drugs and crap schools.

The hindrance of the agency
Regeneration agencies are too often arrogant, directed by central policy not local need and subject to the problems that come with manipulation for local political gain. No matter how we try to be inclusive, to allow “participation”, we end up with a load of initials competing and coalescing in a mad world of bids, paperwork, reporting and review. A mad world that keeps many of us in well paid jobs trying to translate that gobbledegook so ordinary people can understand it better (or maybe at all) - and maybe get just a little benefit from all the spending.

OK I hear your mutterings: “Simon’s an elected member and would say all that. He just wants to be in charge, that’s all.” (As an aside when did this horrible term “elected member” come into vogue? The word you want is Councillor – simple, eh!). Well no – I would like ordinary folk to be allowed to get on with stuff, to be supported and to make their own choices about the places where they live. Not to have choices foisted on them by well-meaning apparatchiks who have no real or long-term interest in that local place. And bear in mind that – unlike all the regeneration gurus – I have to put myself up for election.

In his blog David Barrie tips us “new mutualism” and public service partnerships. These all sound very grand – the John Lewis approach (a good piece by Janet Daley in today’s Sunday Telegraph on this). But the flaw in this line is the continuing denial of a role for competition. John Lewis succeeds not because it is a worker-owned business but because it is good at what is does in a very competitive market (and please can we stop calling it a social enterprise – it’s no more one of those than Tesco - it makes profits and pays dividends to its owners; it's what businesses do). Government – and the regeneration moths fluttering round its every word – obsess about structures, business models and processes. Just give communities the money and trust them to do good work with that cash - and work for those communities not big agencies, consultancies or on the development of important national strategies.

Consumer-led regeneration avoids producer capture
We do not need assorted RDAs, we do not need the HCA or the TSA or any of the regeneration quangos. And we don’t need national strategies, regional economic strategies (all of which are the same any way) and all the paraphernalia of modern regeneration. We also need to stop listening to Eversheds, CBRE, DTZ and all the other private consultancies. They’re very clever but just want to get nice big consultancy contracts when all is said and done. These are producers not consumers of regeneration.

This producer capture of regeneration delivery (and indeed all services operating outside a competitive environment) is the problem. Changing the organisational model changes nothing unless it increases the power of consumers (that’s you and me folks) – it may create a different set of winners and losers among those producing regeneration services but it does not produce a “new narrative” let alone better outcomes for poor people and poor communities.

A real new narrative would be to see regeneration delivered by community groups, entrepreneurs, parish councils, sports clubs and groups of people who just want to see something done. Do you think all the important acronym-loving folk in the regeneration industry would let us do that? Please - we'd be good!
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