‘Lifestyle’ Versus Value Creation In Merseyside’s Economy

Merseyside’s economy is often criticised for being too public-sector driven. And now the critque has extended to some sharp observations about the type of businesses which are here, as well as just how few of them there are. Maybe a bit of ‘experience swap’ would help us to get a wider picture?
There has been a lot of comment in recent years about the over-reliance of the Merseyside economy on the public sector, over the private one. It’s not so much, we are told, that there’s too much of the former, but rather that there’s not enough of the latter.
But now it seems even that defence is blown. At his quarterly report to the Liverpool Society of Chartered Accountants, corporate financier Steve Stuart has criticised Merseyside’s private sector for being ‘life-style’ at the expense of ‘value creation’.
This seems fair comment. Apparently, of 27,000 VAT-registered businesses in the area, 26,000 employed fewer than five people – and less than 700 had a turnover of more than £2m.
Too cosy or too costly?
The problem seems to be that most local businesses are averse to interference from outsiders, and like to do things their own way. This is a situation for which Mr Stuart holds local business advisers in part responsible.
Given the choice of external ‘interference’, or keeping things within the family, nearly all business people in these parts chooses to stay cosy. Not many want to take on the extra cost of private equity funding.
Well, I’m not surprised. Who around here has even heard of private equity funding? Of course, those in the world of banking are familiar on a day-to-day basis with this sort of arrangement; but you don’t bump into equity financiers on every corner in these parts.
This is, sadly, a part of the country where having A-levels is quite a considerable achievement for some folk… and where the difference between a pass degree and a doctorate is often seen – if it’s understood at all – as an irrelevant distinction. So not many of our home-grown entrepreneurs are bothered about the fancy stuff.
Who’s responsible for the Merseyside economy?
But before we ‘blame’ anyone too much for this unambitious state of affairs, for inhabiting such cosy comfort zones, it might be interesting to ask exactly who we think is ‘responsible’ for the health of our local economy. And my answer is, I’m not sure anyone really knows.
For my part, I regret that local people seem to need to be so cosy; but I don’t think it reasonable, given the claustrophobic and stultifying circumstances in which they survived until quite recently, to expect everyone in Merseyside who owns a business to want to go Big Time.
Before we see too much progress here I suspect we shall have to shake things up a bit – and one way might, dare I say it, be to bring in business ‘advisers’ from other parts of the country… and invite our home grown ones to work in differently-challenged business environments elsewhere, for the experience this would bring of other ways of doing things.
Then we’d all get a view of how green the grass is (or, depending, isn’t) on the other side of the fence. And that might really make some of us take ownership of pushing our local economy forward.

Posted on November 22, 2005, in Knowledge Ecology And Economy, Liverpool And Merseyside, Politics, Policies And Process, Regeneration, Renewal And Resilience, The Journal. Bookmark the permalink. 1 Comment.

  1. On the whole I agree with you Hilary about this one. The lax research and overzealous condemnation in the conclusions of their research (from an extremely compenent group) where quite surprising.
    I do agree with the general points that they raise, about how business should operate for growth in a global environment and where they can get hold of finanace and advice, but given the fact that the private sector in the city is only now beginning to recover from a thirty year disaster does not seem to be taken into account in the slightest. I think they trained their guns on the wrong target.
    Companies ARE generating profit, creating both internal and structural assets, looking at new areas for growth and further markets, new links and trading partners to exploit opportunities. A new business community and infrastructure is organically growing, taking root and expanding, but we’re only at the very beginnings of the ‘rebirthing’ process.
    I think that the compilers should have aimed their fire at a relatively small group… they certainly seem to have particular expectations. A proper breakdown of the make-up of the private sector in the city would not be THAT differnet to other cities. What is missing from the picture at present are those bigger companies that are tapped into max growth as they have been working in a buoyant economy for so much longer than ours. Most of the companies in NYC and London will look the same as most of the ones the report targeted here, it is just that they have been growing, seeding and operating in cities that recovered decades ago.
    Liverpool’s will do so now that enough critical mass in the community has been reached. The value creating companies are only getting going again, harnessing what is still an extremely poor profit base in the city-region. It must be stressed just how utter, comprehensive and complete was Liverpool’s wipe out in the 1970s’… when you lose 70% of your economy then all those nice international links, business associates and ‘mates’ go along with the crappy branch plants and downtown banks and insurance companies.
    It takes a long time for these resources to be slowly rebuilt…but they are now being so. Organic sectors have to develop…we need enough mass to interprate what we are…right now we are all over the place…this is exactly how it should be… we are leaving no stone (opportunity) unturned.
    City economies develop in leaps and bounds, lurches and from ‘extreme growth poles’, never on a smooth, linear growth curve that looks nice on someones display chart and it is extremely hard to pre-determine were these will come from…so much for the other public sector mantra, when finally embarrassed out of the Soviet utopian stance on the economy..namely that of ‘priming the Rain Makers’..about as forlorn and steeped in reality as it was when the native Americans where at it.
    Now that some small pockets of profit potential and growth have been created these will now be used for the city economy’s next quantum leap in it’s business growth (both by size and numbers)
    The slowness of the recovery in this type of growth dynamic is partly the fault of over reliance on the NON PRODUCTIVE public sector, who have seen entrepreneurial take-up and ‘profits’ as anathema to their public sector ethos…the fools!
    This is one of my criticisms of the assumptions behind shaping the ‘North West’ economy, and indeed, the whole concept of there being a ‘region’ at all.
    Now that we have a fluid and expanding wealth generating capacity in the city we should be working every corner of the globe for opportunities, profits and trading links…after all we are the mercantile city par excellence (if you believe all the E.H guff). We should not be looking to focus our economy within the straight jacket of t’northwest, certain sectors for low grade inward investment as dictated by ‘regen agencies’..or indeed, the ‘rain makers’!
    It was deciding to base the economy on branch plants rather than sort out the structural shortcomings in our economy in the 1950s that left us so unprepared for the problems of the 1970s.
    Everone must remember that the journey has only just begun… we’re operating on about 1% capacity of potential. If you consider that at its height Liverpool controlled, on any one day, about 60% of global commercial transactions, when at its peak Wall Street only ever managed about 27%, you can see what I mean.
    The journey REALLY has only just begun!

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