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Inward Investment – What’s the problem?

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Inward investment – the short cut to a prosperous and fair city where all of our communities can flourish?

But, what exactly is it?

It is the process where an investor believes that this is the best place to put their money to get a secure and sufficient return.  They may invest by setting up a factory or, more likely these days, an office or call centre.  And most cities employ specialist teams to attract inward investment – to present the best case for their city or region as an investment proposition.

But it can go further than this.

We may be able to offer specific incentives to investors to bring their money and their jobs to our city.  We may provide them with low or no-cost infrastructure, or other benefits such as an enterprise zone where they may enjoy high speed broadband, simplified planning requirements  and reduced business rates.

So inward investment becomes a highly competitive, and sometimes very expensive process to get those scarce investors to being their money to our city.  Inward investment teams are under pressure to deliver, and the dynamic gets interesting as sassy ‘investors’ play country off against country, region against region, city against city and even neighbourhood against neighbourhood.  But just look at the prize for the winners.  They get ‘investment‘ and even better ‘jobs‘.

But, we must remember the investment comes because there is an expectation of a return.  And it has to be a good return.  The net flow of cash over time will be out of the local economy and into the pocket of the inward investor and their shareholders.

But, inward investment brings many gifts…

Inward Investment brings Wealth to the City

This of course is true.  But it does little to distribute wealth.  It concentrates it with the lucky few.  Inequalities of wealth and health are, in my opinion, increased by inward investment rather than decreased.  It drives social stratification and is unlikely to be a great policy for a city that wants all its communities to thrive.

Inward Investment Brings Jobs to the City

This too is true.  But usually the jobs that go to local people are largely low skill, low wage. Often inward investment can increase local unemployment rather than decrease it as investment tends to create relatively few jobs and automates as much as possible.  Lets face it if employment costs are a large part of your business and you require large volumes of low skill workers then you are not going to be looking at the UK.  And if you do create high wage, high skills jobs what are the chances of local people being able to take them up?  It is likely that these jobs will go to incomers too.

Inward Investment Builds Houses

Very true.  Inward investors may take over a problem community – demolish or refurbish it and turn it into an aspirational address.  House prices are driven up and often beyond the reach of many local people

Inward Investment Creates Dependency

We become a blue collar community reliant on employers and investors.  They become powerful influence on the politics, economics and education in our communities as they demand more and more ’employability’, better and better conditions for business.  We end up with much time and energy being put into retaining our 100 largest employers and continually tipping the playing field in favour of ‘business’…. Becoming a dependent client class I believe has negative impacts on the wellbeing of community and acts as a significant barrier to the development of innate potential as we are shaped to meet the demands of employers.

Loss of Local Control

Not only are we dependent on the presence of inward investors in our communities but we cede control to them.  They manage their investments on the ground and if they choose to create redundancies in our communities there is precious little we can do about it.

Inward Investment is Fickle

The mobility of much modern business means that inward investors can go almost as easily as they come.  You might have to have very deep pockets to retain them in the face of all that competition for their ‘jobs’.

Inward Investment can Undermine Local Business

By competing for talent and skills and by driving up land values and costs beyond the reach of local independents.

It Plays a Zero Sum Game

If an inward investor moves from one part of the county to another there is not net gain in jobs.

Put More Strain on Local Services

Schools, hospitals, roads and other infrastructure may all face increasing demand as a result of inward investment. These costs are seldom met by the inward investor but is funded from other budgets.  Meanwhile in the community that the investor has just left services may lose viability and be forced to close.

It is Resource Hungry

Playing the inward investment game is a high stakes, high cost business. Renting a yacht at MIPIM and taking a high powered delegation there does not come cheap.  But that is just surface.  Someone has to pay for the business rate subsidies and the infrastructure demanded.  And every pound spent on helping an inward investor to realise a profit is a pound that is not spent elsewhere in supporting the local community and its economy.

But I am not Against Inward Investment…

It has a role to play in bringing ideas, innovation and fresh blood to our city.  What I am against is a political and business narrative that says it is really the only game in town, and one that says it is the only strategy worthy of real investment.   Instead of economic hunting perhaps we need to look at nurturing the potential our own communities a little more, and recognising that there is much more to creating sustainable and fulfilling lives than the ever increasing growth of GDP and a touching faith in the trickle down fairy.

 

 

Leeds as a twin track city…

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This was at the heart of the debate of the Inner South Leeds Area Committee meeting recently.

In short, our residents die too early, our streets are full of fast food take-aways, our air is polluted by the motorway and we need a new sports centre.

What should we do about it?

We will put health at the heart of local government and tackle it…

This is classic Visions of the Anointed Stuff!

I can be pretty sure that if I knocked on 1000 doors in south Leeds and asked ‘what keeps you awake at night’, or ‘what is it that really stops you from living the way you would want?’, not many would say,’Well, if only I could live as long as those folk in leafy north Leeds, or even those exotic southerners in Kensington and Chelsea!’ (K&C has the highest life expectancy of any local authority in the UK I believe).

These are the concerns of the health professionals and the public health statisticians. They are not the everyday concerns of local residents. And, if we want to do meaningful development work we have to start with these everyday concerns. Of course if we wish to build service empires around the ‘healthy living’ agenda…

We also know that the real determinants of longevity are, at root, not based in health, but poverty. Raise disposable incomes, raise educational attainment, help people build lives of meaning and dignity and they will live longer. This hints at the need for a more systemic understanding of quality of life in the city and more person centred approaches to development rather than just getting funding for some more smoking cessation and cancer screening services.  We need to work with potentials and aspirations not just problems.

One councillor got close to the mark when he said we must put more effort into the education of children and young families. But this must be education of a very particular kind. An education that is not led by a curriculum but by the very real concerns of local people.  An education that is not driven through the traditional mechanisms of schooling and assessment but on the streets.  And what about the rest? How do we offer them real opportunities for change – IF that is what they want?

The outrage at the number of fast food shops in South Leeds is understandable. Lots of fast food, bookmakers, pawn shops and off-licences no doubt, because these are the legal, affordable ‘pleasures’ of the poor. No doubt there are plenty of illegal ones too. These are not the causes of poverty and early mortality – but the symptoms. These are the industries that have learned to profit from the poor. Danone and Grameen are learning how to do the same but supplying yogurt rather than alcohol. Perhaps they offer us some clues? Closing down the bookies, off-licences and credit shops would be like excising chicken pox with a knife. Its just going to leave nasty scars and not deter the pox. The fast food outlets and the bookies did not make people poor and susceptible to an early death. They are there because people are poor and unhealthy!  Planning restrictions on peoples pleasures are not the way forward.

Nor will building sports centres or ventilating the motorway help. The challenge of regeneration is primarily one of psychology rather than physiology and infrastructure. Until individuals and communities change the way they see themselves, as full of potential and possibility rather than full of problems (obesity, cancer, addiction, unwanted pregnancies etc) then we can build all the facilities we like and they will not be used by the people we most want to help.

Instead of using twin track Leeds statistics to argue for further investment in infrastructure, sports centres, swimming pools, clinics and whatever other ‘solutions’ our respective empires can offer, we should use this opportunity to shut up, listen carefully and respond with all our might to local residents who want to make a difference in their own lives and the lives of those who they love.

Get that ball rolling and things might just start to change.