The 2014 Small Business Review, published by the Centre for Cities, makes interesting reading.
It confirms thoughts I have had, and for which I sometimes have been accused of negativity. The recovery is there for some and not for others.
Indeed our need to talk up of confidence in the market is such that the devil of the detail is lost, and this can prejudice the futures of whole communities around the UK. There is no doubt, there are more jobs created though, conversely, we still have the recent steps taken by government to mitigate the negative impact of zero hours contracts. Productivity still remains around 14% below its pre-recession levels and improvement in this remains a key requirement of recovery.
Of course, the recovery continues to be defined in the media by the key experience of the capital and the Home Counties. London continues to dominate in knowledge-intensive businesses, with 85% of all SME growth and 27% of start-ups in the last three years being attributed to the capital.
We repeatedly see government references to the need to mitigate the effects of a London-centric society and yet there remains little tangible evidence of this happening. The recovery is underway, but for some areas of the country it is tantamount to comparing the difference between an above the knee and below the knee amputation, rather than the saving of the limb.
Significant parts of the North East continue to fare far less well in comparison with much the rest of the country, in the review. In Sunderland, for example, we see the lowest density of SMEs per 10,000 population and, in Middlesbrough, we see the highest level of company closures.
With the prospect of HS2 adding to an infrastructure that is South of Leeds and HS3 simply connecting laterally across the country from Leeds to Manchester, one must accept that there is not a great deal of focus upon the North East these days by government. Our challenge at a local level is to continue to lobby ever more vigorously to change this trend.
But how? It becomes apparent from the report that well-targeted, effective, flexible business support appears to be essential to this. As so much of this comes from Europe, this needs to form part of our renegotiation with any relationship with Europe so that the bureaucracy permits ultimate flexibility to allow companies much needed behavioural diversity, without exploiting public funds.
Training is also important. It is to note that the areas that prosper well in the country have a net higher investment in training. The opening up of markets is also crucial. It is of note that among those parts of the North East that fare worst in fortunes are those areas where firms trade significantly into the local economy, indicating the need for greater, more effective marketing endeavour and the expansion of new markets both home and overseas. This needs to be a matter of priority.
It needn’t be a pessimistic picture, but it needs to be a realistic one if we are to generate the consensus of action that is needed between organisations, public and private, to call governments to account, energise, innovate and allow this region to punch its true weight. To this end we need a full and frank debate in the region and to avoid the consensual back slapping that occurs over business dinners elsewhere.
The truth will set us free, but it will probably tick us off at first!
David Cliff is Managing Director of Gedanken and Chairman of the Institute of Directors’ Northern Sector Group.