Private companies and local government can have a shared interest in regeneration
Part five – Local priorities for economic regeneration: an Enfield view
Alan Sitkin, Senior Lecturer, Regents University London
The first four blogs in this series highlighted the austerity-related obstacles to regeneration that I encountered during my tenure as Cabinet Member in London Borough of Enfield. It is right to share with readers an honest account of the challenges impeding the implementation of the kinds of social democratic policies needed to revive a recently de-industrialised London borough like Enfield.
At the same time, it would be misleading to convey the impression that all economic development efforts are doomed to fail because the Conservatives have depleted the public sector coffers. Since regaining power, public spending has fallen from 44.9% of GDP in 2010/11 to 38.4% in 2017/18). If you are in politics for the right reasons, then you never give up fighting for a better world. The model of inaction they were advocating was never an option for our Labour administration.
Academics would call our attitude “optimisation under constraint”; the Guardian called it “the Enfield experiment”; we called it re-inventing the state.
Positive local action in the 2010s started with the simple observation that just because Cameron and later May starved local government of cash didn’t mean there was no cash in the British economy. It just meant that non-financial corporations were sitting on piles of cash – £651 billion at the end of 2016, up from £579 billion a year earlier – part of which would previously have been handed over to the state had the UK not been turned into a mini-tax haven (with corporation tax dropping from 28% in 2010 to 19% at present). The policy implications of this situation seemed pretty obvious to me – if we were not going to get funded indirectly by companies, via the proceeds of corporation tax, we’d have to go get companies’ funds directly.
Concretely, this meant organising frequent and unmediated interactions to persuade businesses that it was in their interest to spend their cash on our regeneration aspirations. I was always surprised when people said how unusual that approach is in the UK. As Hall and Soskice observed, the state and the private sector negotiate tough but fair deals in many successful coordinated market economies worldwide. I always found that model more intelligent and progressive than the extreme politics of either hating or loving everything business does.
Of course, getting businesses to agree to spend their money on public aspirations would only work if we sold them the idea that they would also benefit from this. That excluded topics such as wages (see NPI blog nr. 2 in this series) where companies saw no reason to internalise costs that may have created general socio-economic well-being but also hit their bottom line. There were other areas of mutual interest, however, where I was able to get them to agree to consider our regeneration policies seriously. Here is one.
Readers of this series will have noted the problems that a local authority like Enfield faces in funding the vocational training required to upskill low-paid local residents so they can take advantage of better paid jobs that our inwards investment teams were trying to bring to the borough. A prime example is the ca. 10,000 jobs that our Meridian Water project would require over the 20 to 25 years required for its construction. As a Council, we were focused on ensuring that as many Enfield residents as possible - young but also older – benefited from these career opportunities.
When potential recruits think about construction, however, they mainly focus on jobs climbing scary high scaffolding in cold weather at 5am. Many construction professions (starting with plumbers and electricians) offer good working conditions and make people a good living. The challenge was getting Enfield’s unemployed and under-employed to want to move into these professions and sign up for the vocational training they require.
The previous blog in this series spoke to the difficulties of funding such training where FE colleges cannot be assured that enough learners will avail themselves of the offer to justify its cost. This was immensely frustrating to me as the regeneration guy. Everyone agreed with the policy - but no one would stump up for the chicken before the egg.
No one, that is, except for companies who were confident that they would be getting long-term contracts from the Council allowing them to chart their own future staffing needs. This approach was particularly useful in the construction industry, which has long suffered serious labour shortages – a bad situation exacerbated by Brexit’s ugly hassling of Eastern European workers. Facing the risk that they might not find enough workers to build the developments they were bidding on, these counterparts were much more willing to stump up for training programmes.
In good business logic, the elimination of a risk has value, i.e. it is something worth paying for because it creates a benefit (or in this case, prevents a disbenefit). In this area, the company and the Council had joint interests and we were both aware of it. Possibilities opened up through an umbrella called the “Built Environment Training Centre”. The structure would coordinate business needs, training provisions and social progress. It would drive deeply into Enfield society. It would help a lot of people.
Sadly, disagreements with the prospective lead developer about other matters unrelated to staffing meant that the Training Centre remained an unfulfilled aspiration. But it was an aspiration that enjoyed widespread support. I have never forgotten the many possibilities opened by this one deal, which can serve as a model for other deals based on a similar logic. In the end, this was nothing other than the old sales trick that my Dad taught me as a kid: always put yourself in the shoes of the other person. It creates empathy. And that’s a good thing.