Enterprise Zone - blessing or curse?

The subject of Enterprise Zones is the “hot” business topic of the moment with the news that areas within Lowestoft, Beccles and Great Yarmouth have been bestowed with this favoured status in the latest round of Government announcements.

There is no doubt that anything which is designed to support the economy in these areas is to be welcomed, especially given that the focus of this zone is on the vital renewable energy sector which is still in its infant stage.

Before looking at what this could mean for the local economy, we need to go back some 30 years to the first round of Enterprise Zones, which were introduced in the early 1980’s as an answer to the recession which the country was in the grip of following years of industrial decline. Even then the concept was nothing new with the idea first arising in the USA in the late 1960’s. It may surprise many, that both in America and the UK, the principle was invented and espoused by those on the left of the political divide but it required a Conservative government to bring it to reality.

Then, as now, there were financial and planning incentives for companies to locate in these “favoured” areas. However it should be noted that the financial incentives are relatively modest and short term and it would be a very foolish business person who would make a long term location decision based solely upon Enterprise Zone status. What being an EZ can do is remove a barrier for growing and ambitious businesses and speed up the pace of recovery and/or investment into an area.

The real challenge with such temporary incentives is to turn Great Yarmouth and Lowestoft into competitive business locations to both retain and recruit more companies to the area. This will require much more work than simply marketing land with “benefits” attached. It will require a complete change in mindset for politicians, business people and the local workforce to ensure that the benefits are lasting and that the inward investment does not turn into outward losses once the incentives cease.

NWES was itself born in Lowestoft during the era of Enterprise Zones and since 1982 it has helped create over 15000 new businesses and transform the lives of many local people. It is a combination of people and places which breed success and one cannot work without the other. As such the lure of EZ status needs to be coupled with a strong business support structure provided by organisations such as ours, designed to provide companies with the skills to survive and grow at a quicker pace than they would otherwise have done.

It is easy to get carried away with forecasts of job growth – which can often lead to disappointment when they fail to be reached. The evidence of the eighties zones is that of a total of 63000 jobs created only 13000 were new jobs – the remainder merely being displaced from neighbouring areas.

So how can the EZ status provide a long term benefit for the area? A major difference between the current crop of zones and the previous is that each of the areas has based their application upon favouring a particular market segment – in our case renewables. This should avoid the displacement seen in areas such as Dudley which saw farmland transformed into a shopping complex putting many local traders out of business. To cement businesses into the area we need to attract major investment which it is difficult to move and this means infrastructure.

The Local Enterprise Partnership and councils have a task ahead of them which will require them to be fleet of foot and willing to concentrate effort and resource in the EZ, perhaps to the short term detriment of other places and schemes.

-         Planning needs to be overhauled with clear policy for the area available within the next 2-3 months and a guarantee that the planning process will not last more than a few days and weeks for eligible schemes.

-         Where infrastructure is needed it takes priority over ALL other schemes

-         Coherent marketing messages need to be ready within the month and distributed widely to potential interested parties

-         Local businesses need to be properly engaged to avoid short term displacement, negative comment and curtailed investment

-         Workforce training needs to be a priority in the targeted sector of energy

-         A strong economic development team needs to be assembled at short notice drawing far and wide for the very best professionals in the sector

-         A strong business support offering is required to meet skills and funding gaps inhibiting investment

-         The leading lights in the energy sector need to sing the praises of Great Yarmouth and Lowestoft as we will be in direct competition with Humberside for he same investment.

The task has only just begun and all that the EZ status gives us is a head start, but for business that is usually all they need and if we are to avoid the mistakes seen in previous generations we need to grasp the opportunity for this area to be the centre for the UK renewables industry and not lose out to other more entrepreneurial locations as happened with the oil and gas exploration sector in the seventies.

History can act as a useful guide for the future of Great Yarmouth and Lowestoft and there can be no excuses for not taking full advantage of this helping hand to transform the local landscape and finally break the dependant nature of these great towns.

Some words of encouragement for your LEP

Over the years I have had the privilege, honour and sometimes curse (!) of sitting on a number of public/private Boards and committees. My thoughts go out to all those who have recently chosen to sit on the Boards of the Local Enterprise Partnerships (LEPs). From my experience I would like to offer a few words of encouragement and warning designed to help each LEP achieve its aims and objectives.

These thoughts are in no order of importance and purely reflect my own experiences:

 - Set out your aims and objectives straight away
 - Be clear as to what you can and cannot achieve - do not try to be "all things to all men"
 - Do a few things well rather than many things badly
 - You are not a council committee so do not behave like one!
 - In setting up your constitution remain faithful to the simple premise of "one person one vote" and ensure that there is a private sector majority of members
 - In no circumstances agree to a constitution which gives public sector "founder members" the right to overturn a majority vote
 - Run the meetings just like a private sector Board - tight, focussed and make decisions rather than procrastinate
 - The public sector has an important role to play so make use of the knowledge held and do not set out to duplicate functions
 - If other quasi organisations are "backed into" a LEP as an executive or similar do not just accept that it is fit for purpose. Start a full review and if necessary reappoint or renew.
 - Have a simple informative website but do not spend silly money on it
 - Insist on a 75% rolling attendance rate from all members or they are voted off
 - Public sector members are generaly appointees and as such there may be a rapid churn due to elections, reshuffles etc. Where possible gain commitment for continuity or decisions will stall
 - Ensure that everyone around the table has authority to vote on all matters i.e. no deferring to gain cabinet/member etc approval
 - If the public sector funds the executive it is reasonable for them to request some ground rules. Agree them at the outset to avoid misunderstanding later.
 - You are local ENTERPRISE partnerships - so address Enterprise and do not get sidetracked on peripheral matters
 - Do not get sucked in to publicity campaigns unless they are integral to the core aims or you get tainted and alienate a wide cross section of the community
 - Be sensitive to political situations but make the right decision not the politically expedient one
 - Be open and transparent to avoid conspiracy theories - publish all Board minutes on the website etc
 - Be bold - no-one remembers people who do not make a difference
 - Think about who needs your help most - large corporates or pre start businesses - do not get sucked into the "glamour" of association with big names
 - Think carefully about what you want the executive to do - keep it small and tight
 - Do not directly deliver ANYTHING - enable others to do this

And finally before you make any decisions just ask yourself what your answer will be when your 8 year old grandson asks exeactly what did you achieve on the LEP?!

I wish everyone the best of luck and great success in achieving all that you set out to do - your country needs you!

Youth unemployment - why?

The latest unemployment figures make depressing reading if you are under 24, with 1 in 5 young people now being unemployed. Whilst the headlines will trumpet this fact, the reality is that youth unemployment has been on an upwards trend for many years, even in the "boom" times. Indeed given the greater numbers of university entrants now, perhaps the real amount of young people "not in employment" is much higher.

So why has this come about? For too long now younger members of society have been poorly treated by our generation, which seems to have forgotten the reason and importance of education as a preparation for the world of work. An obsession with league tables and exam passes, which can easily be manipulated, has led us to produce a cadre of young people who emerge into the real world of earning a living with the wide eyed gaze of a new born baby.

Now is the time to put aside ideological and political standpoints and agree a cross party approach to education which will not be touched for the next 10-15 years. If there is one element of our society which is calling out for a carefully thought through and implemented strategy it is education. For too long we have tolerated political tinkering (from all parties), the creeping influence of ideological views, poor teaching and incorrect investment.  Despite this there are numerous examples of clear thought, inspirational teachers and an understanding with business - just not enough to make a real difference.

I have taken a keen interest in the links between education and industry for many years now and can understand the frustration on both sides who are encumbered with a state of affairs which is not remotely fit for purpose. Perhaps the only league table that should be produced is how many pupils are engaged in gainful employment within 12 months of leaving school or university. At least then we can judge which schools prepare their young people for life beyond education. Of course there are many more factors to take into account but without a clear vision as to the purpose of education, from primary school to university, we are destined to retain high youth unemployment which is a crushing burden on society. If only a fraction of this money was invested into preventing unemployment everyone would be better off.

However any readjustment cannot be subject to the winds of political change, hence the need for a national education strategy agreed by all and with safeguards enshrined in legislation which prevents political meddling!

I employ 90 people - with a young average age. Recently we advertised entry grade positions and had 400 applications. Most were rejected through not meeting the simple instructions requested, poor spelling and CV's produced in something akin to text speak. Those individuals who were successful have been a delight to work with; enthusiastic, hardworking, willing to learn and bursting with potential. Academic qualifications do not mean a thing if there is no personality or social skills to accompany them - this is where many young people fall down.

We have a wonderful resource in our young people but now is the time to harness this and use it to build a bright future. The question is how many self interested politicians, antiquated union barons and short sighted CEO's will put aside their posturing to secure a great future for every young person leaving education?

Is Corporate Governance taken seriously?

In many ways the UK is considered a beacon when it comes to Corporate Governance - principally as a result of the 2010 Corporate Governance Code - but is it any more than window dressing?

Too many organisations - private, public and third sector - pay lip service to this important aspect of running a Board and company. Usually it is "added in" to a minor sub committee to report on once a year; and yet corporate governance has the ability to enhance the prospects of any company.

It is all about driving an enterprise forward whilst at the same time exercising prudent control.This must be obvious to all directors? Not really and little is likely to change when directors are often chosen via a "closed shop". Until we open our minds to the recruitment of directors and apply much more imaginative ways of selection, induction, development and appraisal then corporate governance is unlikely to change very much.

We have some building blocks in place - a sound Companies Act (2006), a patchy Corporate Governance Code (2010, a weak regulatory framework and some appalling laws which cut across the afore mentioned. How we arrange these blocks will dictate if we are heading for another spectacular collapse along the lines of RBS or Enron or taking a world beating role as the beacon of good governance.

No-one wants burdensome regulation but putting good governance at the top of a directors list of responsibilities will result in healthy businesses which allow the executive to drive forward from a firm foundation.

It would take little to transform corporate governance in the UK - and surely this would set us apart from other countries as a place for the reputable to do business? As a Chartered Director (there are still less than 1000 in the country) as a start EVERY listed company should have a CDir on the Board as a minimum within 12 months - at least this would show more than lip service to good governance.

To borrow from a leading expert in this field - Prof Bob Garratt - "A fish rots from the head"!

The Demise of Enterprise…UK

Without apology I copy below a blog post from George Derbyshire of the NFEA - a thoughtful and questioning article on the demise of Enterprise UK.

I read about the forthcoming closure of Enterprise UK with some sadness. I, and NFEA, have been involved since its earliest days, when three or four people camped out in space borrowed from the CBI in Centrepoint. Indeed NFEA director Sally Agass acted as interim Chief Executive on one occasion.

The organisation has some energetic and creative people and they can be proud of their achievements. Enterprise Week has certainly been worthwhile, as has Enterprising Britain (in which Enterprise Furness and NWES distinguished themselves.) I wish them all well in the future.

But of course Enterprise UK fell into the trap we advise all our clients about - it was over dependent on one source of funding. It only had one client and once that tap was turned off, it had nowhere to go. And the business organisations who make up its Board can’t be expected to take up the slack.

Indeed it could be regarded simply as an outsourced part of the operations of BIS.

I simply don’t understand why the previous Government felt it right to set up new organisations to carry out its wishes everytime it had a bright idea. All it did was create new bodies which inevitably had their own overheads and administrative burdens to carry, had no long term sustainability and which ran the risk of getting in the way of existing and more established organisations.

It would have been better all round to tap into the expertise of those of us who were already active on the ground, who had the experience, stability and dare I say low overheads to deliver the goods. This way the Government would have achieved its objectives and even strengthened the existing infrastructure.

But there is a wider point to be made. This is simply one example of the way the enterprise structure is being dismantled. The RDAs and BusinessLink are in wind-down mode and every week we are hearing about more closed programmes and business advisers being declared redundant. Third sector, voluntary and social enterprise providers - and enterprise agencies are just one part of a wide and deep network of providers - are not immune from this. The shockwaves are spreading widely across the business support pond.

The irony is that these independent organisations make up the Big Society that Mr Cameron is urging upon us - dedicated people, mission-driven, locally-based, quick on their feet and committed to their local communities. At a time when the state of the economy is causing renewed concerns, when unemployment is trending upwards and public sector job losses are being declared daily the need for a vigorous enterprise sector is, I’d have thought, obvious. We can help start new businesses, we can keep people away from unemployment, we can help others to move away from benefits and we can help businesses grow. But that needs a effective and comprehensive business support strategy. Wasn’t it a famous Conservative prime minister who growled “Give us the tools and we will finish the job!”?

How to make a LEP work.

As we progress into 2011 more detail is leaking out as to how LEP's will be structured. There is an amazing amount of goodwill from the business community towards LEPs and it is vital that those who are responsible for the governance take advantage before the enthusiasm wanes.

I have attended a variety of events around LEPs over the last 3 months and I believe that it is critical that each LEP outlines its objectives very early on. Having sat on a variety of Boards and Quangos over the years the common problem which they all face is not living up to expectations. This results from a wide ranging set of objectives which are designed to pacify vocal opinion at the beginning but become a heavy weight around the neck as the reality of delivery differs from the grand ambitions.

A good example of this happened this week at a meeting in Norwich regarding the "New Anglia" LEP. The presentations were tight with the shadow board indicating a concentration on the tourism and energy industries. Now it is arguable if these are the correct priorities but I commend the principle of concentrating on areas where an effect can be seen and measured. The question and answer session however turned into a "What about..." inquisition. The competing demands of the cultural, creative etc industries were all raised and whilst they are important the LEP with limited resources cannot make a difference across the board.

To me it is vital that the LEP concentrates its activities in a few key areas where they can really make an immediate difference. If not they will fail and the business goodwill will evaporate very quickly. It will be interesting to see which argument wins out...a focused narrow approach or a wide "everything to all men" one.

As an aside it is clear that financial resources will be sparse so how about this for one way to make a real difference? All economic officers, departments and budgets in every local authority in the LEP area should be given to the LEP to administer. In Norfolk and Suffolk I would estimate that this would equate to 100 staff and over £5m. It would then be for the LEP to decide on how many staff are required and what they do with the budget. Radical but I would bet that it would make a real difference. Business could then be tasked to match this sum. Perhaps via 1% extra on rates or by a "tithe" on representative movements which want a place on the Board such as Chambers, FSB,IOD etc. Say 10% of membership fees? Match this with UK government or ERDF funds and the budget is transformational.

I would not bet on the above happening but if a LEP just replaces an RDA or LSP it will become a toothless talking shop. If it does business differently such as above it could really become a powerhouse for economic good.

Tell the truth or what people want to hear?

I have always struggled with the concept of telling people what they want to hear rather than what you perceive to be the truth. As a result I am sure that NWES has lost some business as I refuse to compromise just to gain a contract. Is this the right way to do business? Many will call me a fool however my personal beliefs are what drives the company and whilst I will never be highly popular by "telling it straight" I do hope that I am highly respected.

In business there are two ways to look at the gaining of customers - a short term, transactional approach or a long term relationship strategy. I prefer the latter which means having an honest and open relationship with the customer. Often this means telling them NOT to buy your product or service and sometimes even going to a competitor who may be better placed to deliver a solution to that particular need. In a percentage of cases you will lose the business completely - especially with those individuals who are uncomfortable with the bare honesty. However the majority will respect your candour and the relationship will be strengthened. If there is no trust then there is no long term relationship.

In working with new and existing businesses we strive to always be independant and impartial with our advice - our reputation is too important to us to compromise it with short term "quick fixes".

In my experience however in working with government and major corporates they often want to hear platitudes which reinforce their held view rather than alternative solutions. As I have said before process is more important that outcome in many such cases. This is why we have seen the amazing growth in some firms who win major government contracts and then underperform - usually without sanction. A good example is with New Deal where recent research has indicated that it cost over £30,000 for every new job created. Compare this to NWES where for 10% of that amount we set up new businesses which are proven to be more sustainable than average and who also employ others. Are we asked to the top table to explain how we can do this? No. The truth is someties unpalatable and uncomfortable when it does not sit within preconceived viewpoints.

I live in hope that one day honesty and values are as highly prized as profit.