A new year is a good time to set out new directions. We make resolutions that involve changing our behaviour and generally seek out ways in which this new period of time is different and distinctive from the last one. Given the dreadful economic outlook which hangs like a huge grey cloud over all of us, there has never been a better time to rethink the way we do even the most fundamental things.
Traditionally, anyone hoping to start a new commercial venture has an anxious time, putting together a business case to present to an investor, normally a bank, order to obtain funding. If that hurdle is cleared, the next step is usually for the request to be referred up the chain of command until the final agreement is given by a regional or even national office. So by the time the crunch decision comes, the people who have the final say are far removed from the environment in which the initial application was made. This means that most business decisions are made on a theoretical model, rather than on the practicalities faced 'on the ground'.
A good example of the problems this can bring has come recently in Monmouth. A new coffee shop has opened, a branch of Cafe Nero. Now let me say that I have nothing against Cafe Nero and have sampled their latte many times during my time in Bolton and in other places too. Unfortunately, around the time that this chain cafe has opened, two locally owned and run cafes have closed. This is not just another case of market forces taking their natural course. It's a situation that takes money out of the local economy. When a chain opens, the profits it makes are distributed in the form of dividends to shareholders, wherever they may be. When a locally owned business makes money, the profits are usually recycled into the local economy, supporting local suppliers and distributors. I'm no expert on Cafe Nero's purchasing policy, but it would not be unusual for large businesses to buy in bulk and deliver. So milk, for example, will come from the cheapest source nationally, rather than helping to guarantee the survival of a local dairy.
It's my feeling that local issues need local solutions. If someone wants to start a business locally, then decisions about it should be made as close to home as possible, including issues about investment. The Bank of England recently printed a great deal of money in a process known as 'Quantatative Easing', money which was given to banks to lend to businesses, but the majority of which is sitting securely in bank vaults. That money was intended to kick start the economy, but will not achieve the objective unless it is put into the hands of people who know where it needs to be used. We need community investment partnerships, made up of councillors, members of business organisations and voluntary groups to decide what kind of businesses towns need. Forget large and unwieldy regional development bodies, allow locally elected people to take charge of their towns and counties. Give them the power to attract businesses to their areas. Allow community investment partnerships to decide where resources need to be allocated. And most importantly, give them the money to back people who want to create local jobs and local services.
At the moment, the QE money is serving no purpose. Even if it was used for investment, the decisions would be made a long way from local communities. I'd rather see someone with business ideas going to a local partnership to ask for loans and grants to help them get started and the QE money could fund that. Yes, there may be an issue of overlap, with people having vested interests, but this is important too. Of course the local butcher does not want a competitor on his doorstep, but why should his voice not be heard? Surely two identical businesses in a small community is a bad thing anyway? One example of that here in Monmouth goes back to coffee. You would need more than two hands to count the amount of places you could buy a cup around the high street. If you're after a new cd, however, forget it. Diversity keeps the shoppers coming and keeps a town alive. Local people know that, so it is they who should be making decisions on the direction of their local economy.
Of course, there's always an issue of trust when financial matters are concerned. Could we have faith in local people not to misappropriate large sums of cash? Or perhaps, in the wake of the expenses scandal and the financial crisis, we should leave this money in the hands of politicians and banks. Just a thought.
liamstubbslabour@hotmail.co.uk
Twitter: @liamstubbs
Facebook: Liam Stubbs Labour
Traditionally, anyone hoping to start a new commercial venture has an anxious time, putting together a business case to present to an investor, normally a bank, order to obtain funding. If that hurdle is cleared, the next step is usually for the request to be referred up the chain of command until the final agreement is given by a regional or even national office. So by the time the crunch decision comes, the people who have the final say are far removed from the environment in which the initial application was made. This means that most business decisions are made on a theoretical model, rather than on the practicalities faced 'on the ground'.
A good example of the problems this can bring has come recently in Monmouth. A new coffee shop has opened, a branch of Cafe Nero. Now let me say that I have nothing against Cafe Nero and have sampled their latte many times during my time in Bolton and in other places too. Unfortunately, around the time that this chain cafe has opened, two locally owned and run cafes have closed. This is not just another case of market forces taking their natural course. It's a situation that takes money out of the local economy. When a chain opens, the profits it makes are distributed in the form of dividends to shareholders, wherever they may be. When a locally owned business makes money, the profits are usually recycled into the local economy, supporting local suppliers and distributors. I'm no expert on Cafe Nero's purchasing policy, but it would not be unusual for large businesses to buy in bulk and deliver. So milk, for example, will come from the cheapest source nationally, rather than helping to guarantee the survival of a local dairy.
It's my feeling that local issues need local solutions. If someone wants to start a business locally, then decisions about it should be made as close to home as possible, including issues about investment. The Bank of England recently printed a great deal of money in a process known as 'Quantatative Easing', money which was given to banks to lend to businesses, but the majority of which is sitting securely in bank vaults. That money was intended to kick start the economy, but will not achieve the objective unless it is put into the hands of people who know where it needs to be used. We need community investment partnerships, made up of councillors, members of business organisations and voluntary groups to decide what kind of businesses towns need. Forget large and unwieldy regional development bodies, allow locally elected people to take charge of their towns and counties. Give them the power to attract businesses to their areas. Allow community investment partnerships to decide where resources need to be allocated. And most importantly, give them the money to back people who want to create local jobs and local services.
At the moment, the QE money is serving no purpose. Even if it was used for investment, the decisions would be made a long way from local communities. I'd rather see someone with business ideas going to a local partnership to ask for loans and grants to help them get started and the QE money could fund that. Yes, there may be an issue of overlap, with people having vested interests, but this is important too. Of course the local butcher does not want a competitor on his doorstep, but why should his voice not be heard? Surely two identical businesses in a small community is a bad thing anyway? One example of that here in Monmouth goes back to coffee. You would need more than two hands to count the amount of places you could buy a cup around the high street. If you're after a new cd, however, forget it. Diversity keeps the shoppers coming and keeps a town alive. Local people know that, so it is they who should be making decisions on the direction of their local economy.
Of course, there's always an issue of trust when financial matters are concerned. Could we have faith in local people not to misappropriate large sums of cash? Or perhaps, in the wake of the expenses scandal and the financial crisis, we should leave this money in the hands of politicians and banks. Just a thought.
liamstubbslabour@hotmail.co.uk
Twitter: @liamstubbs
Facebook: Liam Stubbs Labour
An argument that makes a lot of sense. Unfortunately the 'credit unions' of yesteryear failed to survive the crash of the late 80's. Perhaps if there was the political will to make this happen it would? It almost sounds like it could be a 'Big Society' policy, but would that get you into trouble? ;)
ReplyDeleteThanks Mark! A lot of Credit Unions have survived, but they do need to be publicised and supported by Government both central and local.
ReplyDeleteAs for the 'Big Society', as I've said before, no-one (not even Cameron and Norman) seems to know what this means beyond cutting public spending.
My ideas fit in more with another 's' word - (whisper it) socialism!