UK

Lessons from across the pond

Across the Pond

The rise in unemployment for two consecutive months and the Bank of England announcement that interest rates will be increasing sooner rather than later are a couple of bits of headline news that would suggest that George Osborne’s ‘austerity drive’ may not be securing the economic miracle that the chancellor and some of his supporters claim.

Indeed, the notion that the only way out of recession was George’s way is not all together true.

Critics of the alternative economic plan, which is to spend more on public services, infrastructure and subsidised job creation, will point to some of the less impressive performances of EU nations such as France to prove their point.

They do, however, ignore the impressive economic results and growth that has been delivered with a far more expansive spending programme by the fastest growing G8 economy, the USA.

President Obama has never bought into the austerity obsession that has been the rallying call of Angela Merkel, George Osborne and Europe’s mainstream centre right.

Last year was the strongest year for jobs growth in the US since the 1990s. Businesses have created over 11 million jobs in the last five years. Since 2010 the States has put more people back to work than Europe, Japan and every other advanced economy combined. These jobs are not all in the service sector either. Indeed, manufacturing is the fastest growing sector in modern day America.

The advantage Democrats have in the USA over opponents of austerity in the UK is that firstly Labour were in charge of the national administration when the ‘crash’ hit the economy back in 2007; secondly, Labour failed to articulate a coherent or consistent argument as to why it wasn’t to blame for that crash; and third, perhaps most importantly, the centre left in the UK has never had a charismatic leadership figure to present an alternative view anyway.

As Labour prepares to elect Jeremy Corbyn as its next leader, George Osborne can sleep very comfortably at night, secure in the knowledge that he will continue to have no serious political opposition for the foreseeable future. The economy may hit a few bumps in the road, and austerity will take many more victims before his plan is done. But, politically, there is nobody the chancellor or the government need to worry about in terms of calling them on it.

Meanwhile, across the pond, centre left politics look set to continue to dominate as the Democrats, advocating the New Democrat philosophy that was first adopted by Bill Clinton in the early 1990s, are on course to take the White House once again.

Tell me lies, tell me sweet little lies

Ballot

“The truth – you can’t handle the truth.” So responded Jack Nicholson to a question posed to him by Tom Cruise in the movie ‘A Few Good Men.’

It is a line that David Cameron and George Osborne would probably articulate to the great British public given half a chance, because it is the very fact that they have been telling ‘the truth’, as they see it at least, that they have not moved significantly ahead in the polls as they had anticipated by this stage of the General Election campaign.

The downbeat message of Osborne and the Prime Minister may paint an accurate picture of where the UK Plc’s finances are, but it is difficult to get anyone particularly enthused to support another five years of hard slog and austerity.

So, with this, the Tories, with almost gay abandon, decided to go on a bit of a spending spree this week, promising a host of positives including Rail fare freezes, £8 Billion extra for the NHS and a big announcement offering everyone in the public sector 3 days off to volunteer during the year, at a cost of – well who knows?

The Conservatives lead when it comes to ‘managing the economy’ is fairly healthy in all opinion polls; but even so these ‘bag of a fag packet’ commitments have allowed Labour to level the charge of a Tory Party scrabbling around for attractive goodies to hand out before the election, without having any clue as to how they will be paid for.

Labour itself is so paranoid about its reputation in managing the country’s finances, that they have put themselves into a ‘triple lock’ discipline over future fiscal policy that was spelt out on the first page of its Manifesto, launched in Manchester on Monday.

Other than protecting the NHS budget and overseas aid, you will go a long way to find any Labour spending commitment worth talking about.

Not quite ‘carry on regardless’ more ‘re -arranging the deckchairs on the Titanic’ would be a fairly accurate description of the oppositions approach to its economic policy offer to the electorate, with the usual rhetoric of hammering those with ‘the broadest shoulders’. An increasingly confident looking Ed Miliband and his would be Chancellor Ed Balls will be hoping that they don’t meet the same resistance to a very similar Labour message trotted out by Neil Kinnock and John Smith in 1992. History tells us that parties that promise tax rises have not fared particularly well in UK General Elections.

The lack of ambition contained within the Manifestos of the only two political parties who can form a government basically demonstrates a realistic view from them as to where we are in terms of public finances. But, it is not a particularly exciting message, and it is failing to turn the voters on.

Instead, for ‘vision’ and fantasy politics, those who have a wanton desire for radicalism over reality have opted to support fringe parties who, quite frankly, can say what they want and promise what you want with no fear of having to carry out their barmy policies. It was a trap the Liberal Democrats fell into five years ago but, unusually for them, it came back to bite them on the bum – no tuition fees anyone?

This time around it is the Greens offering billions of pounds of public spending; Farage’s mob promising to rid the country of pesky foreigners and the SNP building a whole nation’s economy on oil, despite the falling price of the black stuff in recent months.

Between them, the so-called minor parties are currently polling around 35% of the vote accumulatively, which tells me that a significant number of UK citizens do, indeed, prefer ‘sweet little lies’ to the brutal truth. Who would be a politician?

The UK is getting more enterprising – The North must catch up

Uk Enterprise

Britain is getting great at starting business again and rediscovering its entrepreneurial spirit. The latest statistics on start up’s show an all- time record for new company incorporations here – a massive 581,173, which is an increase of almost 10% on the previous year. That bastion of enterprise that is most often held up as the example to us all, the United States, suffered 70,000 more business closures than start- up’s in 2014. Government initiatives such as entrepreneurs’ relief and the Enterprise Investment Scheme, introduced by the last Labour government and continued by the coalition, have also helped small businesses grow. And get this – according to the Centre for Entrepreneurs one reason Britain has become such a hotbed for start-up’s is immigration. A survey it undertook last year showed that one in seven businesses here are run by migrants. A ‘hats off’ to StartUp Britain and the more recently launched GREAT campaigns. Both organisations are doing a damn fine job in promoting all that is good about starting your own business, and growing it!

But it’s still not enough, and in the North of England we are still failing to encourage and support enough people to have a go and setting up on their own.

There has been a massive push over the past five years to provide support to what are commonly known as ‘Gazelle’ type businesses – those companies that have been established for a time, and with the right mentoring and coaching can meet their ambitious growth potential.

This has been a reasonably successful approach, led by initiatives such as the Growth Accelerator, who partnered Downtown last week for the ‘Limitless’ conference that we hosted with 100 plus delegates in Liverpool.

However, just as I would argue that it is a mistake made too often to focus on big business, which make up a tiny percentage of the UK business community, I would equally express concern at the start up agenda being neglected.

The next round of European funding has just landed and negotiations are taking place as to what projects should be going forward and supported. I hope that the objective of creating a more entrepreneurial culture in the North is a big part of the new programmes that are agreed.

We need to start to see the establishment of tomorrow’s Gazelles today.

The Big Partnership

Big Partnership

There has been much talk in recent weeks from government ministers, shadow ministers and political commentators about the creation of a Northern ‘super city.’

Evan Davies presented this solution to the growing North – South divide in his two part documentary ‘Mind the Gap’ earlier this year, and it is something that has been picked up by the chancellor George Osborne and Labour’s Lord Adonis who has the brain the size of the planet, in recent policy papers.

There is no suggestion that there should be any administrative governance arrangements for the whole of the region at this point; but clearly there has been a warming towards the establishment of city region or metro mayors. Scotland’s continued drive for devolved powers has no doubt impacted on the latest Westminster thinking.

But equally there has been a recognition that there is no sense in talking about bridging the economic gap between London and the rest of the UK unless you recognise the need for huge investment in big infrastructure projects north of the Watford gap, and that one of the essential ingredients for this to work is the need for the big northern cities to work in a more co-ordinated and cohesive way if those schemes are to be delivered effectively.

Business leaders are sceptical about the ability of politicians to put aside long standing city rivalries and parochialisms in order to create this new panacea. However, evidence on the ground is that there is genuine and positive dialogue taking place between Leeds, Manchester and Liverpool.

This week Leeds chief executive Tom Riordan tweeted; ‘Very good meeting with Sir Howard Bernstein aligning Leeds & Manchester plans on HS2 and HS3. Transpennine working stronger than I have ever seen.’

Meanwhile, the chief executive of Liverpool Vision Max Steinberg announced last week that Liverpool and Manchester will be sharing a stand at MIPIM UK in October.

Conversations are leading to tangible actions and outcomes, and the ‘One North’ document that is due to be released on 5th August will further accelerate the process of the North working together in a far more collaborative fashion.

All of this is great news for the region, for the economy and for business. It is an agenda Downtown has been promoting for ten years. It is an agenda the North’s private sector should be vociferously welcoming and supporting.

The British Dream

British Dream

I attended an event this week where Labour’s Shadow Business Minister Chuka Umunna talked about ‘the British Dream’.

He was describing how his view of entrepreneurs was of those people who wanted to work hard, get on and be their own boss. The British Dream exists but, in his opinion, unlike Americans, we are too reserved to talk about it too much.

True though this undoubtedly is, there are other differences between the UK and the States that we need to learn from if we are to create the enterprise culture or the ‘new generation’ of entrepreneurs that Chuka and other leading politicians from all party’s talk of.

Business failure is almost a necessity for someone who wants to go on to achieve success and is accepted as part of the entrepreneurial journey in America and is obviously an approach that we need to adopt and embrace.

The work that they have done in the States to encourage and support women to set up their own businesses is effective and innovative.

And the other big thing that America does so much better than us is celebrate success. And when they find a hero, the Yanks admire them; do what they can to support them; promote them; and on occasion ignore, or at least forgive, any behaviour that is not in keeping with their iconic status. Can you imagine a British Prime Minister enjoying the rehabilitation that Bill Clinton has enjoyed post Monica Lewinski for example?

There is much for us to learn from the American culture if the ‘British Dream’ is to translate into reality for more than the relatively few individuals in the North of England, who see starting a business, making a difference, making money and becoming an entrepreneur as a genuine route for them.