Archives for category: Small & medium business [SME]

So many city school leavers will spend years out of work – a breeding ground for medicated despair and anti-social or even criminal activity. Teens clearsighted enough to observe this pre-empt the process and drop out of school early, seeing no point in preparing for a ‘career’ which will never be offered to them.

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Councillor John Clancy’s school breakfast proposal begins to address one aspect of neglect, not confined to inner city areas – a Harborne teacher has spoken feelingly of the various forms of deprivations suffered by children of ‘high-flying’ parents there who are not always well cared for by employees.

Another of our few thoughtful media presences, Professor David Bailey, makes the development of skills one of his four goals.

However there is a problem of motivation, due in part to the creation of an ambience where much of the media is geared to selling junk food and the latest fashion in goods and clothing, focussing on the lives of pop stars and sports personalities.

This will not be changed overnight, if at all, so people from our small and medium enterprises are needed to offer more by visiting schools and telling their stories to pupils when still receptive – no older than nine years – then offering follow up visits to their workplaces.

Why SMEs? Because, as shown on the sites of WM Producers and (covering the whole region) Made in the Midlands, most of these are long established companies, not here for a few years then moving on or being taken over like many of our larger firms.

kirsty pavilions 2Typical of such schools’ ambassadors would be Aston resident Kirsty Davies-Chinnock and perhaps an apprentice from the family owned Smethwick company of which she is CEO. This firm resisted the option of increasing profits by outsourcing to a cheaper workforce abroad because they cared for their employees and their families.

Such people would inspire children at an early age, changing the whole pattern of their lives – and that of the local economy.

 

Source: a former city teacher, currently visiting family in Japan, where the unemployment rate for many years has been just over 4% and all children have some hope for the future.

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john clancy 2John Clancy was well received by a hard to please city group last week. Feedback from three present ranged from a brief ‘convincing’ to ‘intellectually a cut above any other Birmingham councillor that I’ve come across’. This was followed by a very positive twenty minute account from a hypercritical source with inside experience of the city’s political scene over the years.

His manifesto policies, some of which were outlined in the Chamberlain Files, offer obvious benefits to poorer residents and small and medium businesses – and many applauded his support for the wholesale markets, in an article which began:

“The decision which the City Council is now prepared to make to dismiss from the city centre some of its oldest business inhabitants, by moving the Wholesale Markets out of their current site to somewhere outside the city centre, is a momentous, colossal mistake . . .”

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Practical socialism, offering increasing equality of opportunity and security:

“We have to leave big commerce, big retail, big construction and big business to find their own sources of funds. Instead we need to seek out new sources of finance to invest direct, including taking shares, in small, medium-sized and micro-businesses, and remodel the existing Tory LEP to support them.

“We need to become a city of a thousand trades once more – through 100s of new SMEs and sustaining our existing, endangered SMEs.

“We need to step in where the banks have failed. Not just in hubs and zones, not just in corridors and belts but in every ward in the city.”

It is regrettable that many of those who have most to gain from such development are either not on the electoral register or do not turn out to use their vote in their own interests.

Jeremy Paxman summed up this paradox: “those who are most dependent on the state seem to have the least engagement with it”.

john clancy 3Clancy – ‘the arrows’ – might connect! If this section of the public became aware of his manifesto proposals many might well recover faith in the democratic process and develop hope for the future.

 

john clancyThe West Midlands New Economics Group looks forward to hearing and questioning invited speaker Cllr John Clancy, on Saturday, April 6, 10.15-12.00 AM, FOE Warehouse, Allison St, Digbeth. This is a public meeting, open to all.           

The discussion will probably be city-centred, but John Clancy’s experience in the world of venture capital has informed a devastating critique of hedge funds  – “better described as ‘Edge Funds’ as they often operate at the edges of the market, of regulation and, indeed, of the rule of law “ – and some pertinent advice to China’s leaders.

His proposals are consistently directed towards building up the economic and social well-being of the city’s people – particularly the less prosperous. For years he has advocated the use of Brummie Bonds – “a confident act of economic diversification” to community shares and bondsfinance big projects, offering the average person a more satisfactory savings deal. This would be a ”local sourcing of local wealth to invest in regional business and infrastructure”  – instead of individuals, companies and UK pension funds moving funds abroad – but designed on more inclusive basis than the Transport for London bonds. On a smaller scale there are now hundreds of examples of community shares and bonds, information here.

Small and medium businesses at the heart of a rebalancing and relocalising economy

Manufacturing is coming back to the city as the trend to outsourcing is reversing, with wages rising in Asia and the increasing cost of transporting goods. In a videoed address to the council, Cllr Clancy advocates halting the allocation of industrial land to office and retail building, in order to meet the industrial needs of this rebalancing and relocalising economy. Instead of continuing to build global retail, financial markets and office space, a more economically and socially successful city would be built from thousands of small and medium businesses.

Cllr Clancy deplores the situation in which contracts for services, which could have been provided by local small and medium sized businesses, are awarded to ‘outside’ corporates like Capita, Serco, Amey, G4S and VT.

Unemployment

Another videoed address last year recorded his focus on the city’s long-term unemployment ‘iceberg’ – up 49% during the last 12 months – which might well be increased by the decision to move the wholesale markets, “the city’s most long-lasting SME cluster”. Cllr Clancy asserts that the council’s treatment of the markets has impaired the vision of a global city with a local heart, again proposing less emphasis on the global and more on the local, placing the wholesale markets at the heart of Birmingham’s economy.

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Earlier this month, before the report on the markets was available, he described the decision to move the wholesale markets out of their city centre site, as a ‘momentous, colossal mistake’, with catastrophic knock-on effects on the retail markets. He warns against “perpetuating the “old” regime of big business, big finance, mega-retail, big commercial property that got us into the mess in the first place”

Cllr Clancy has focussed on “this hapless government’s LEP creation in the city” which has failed to show “courage and foresight and originality”. Instead of seeing the city’s markets as key to the future and planning for massive investment in the quarter, the council has borrowed £125 million for massive buildings of commercial property – a gamble, with any losses underwritten by the city’s taxpayers.

Change on the horizon?

In this week’s Post (28.3.13, not yet online) he notes with satisfaction that the case for bonds and local investment, which he has been making for several years, is now gaining ground. Greg Clark, Financial Secretary to the Treasury, has said that he would like to see city banks taking deposits from local people and meeting local investment opportunities and that government is working to lower the barriers to entry. The Labour Party is also ‘throwing its future weight’ behind the policy of regional development banks.

Many of these subjects will be debated and discussed on Saturday.

 

The Chamberlain Files has posted a new item, ‘Traders consult lawyers over forced move of markets from Digbeth’

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A decision by Birmingham City Council to move the wholesale market out of Digbeth could be challenged in the courts.

Traders at the adjoining retail markets, who sell fish, meat, vegetables and fruit direct to the public, have taken legal advice and claim that they were not properly consulted about the move

Cllr Ward said he had received a letter from solicitors acting for the retail markets traders asking the cabinet to postpone any decision until further consultation had taken place. The letter warned that transferring the wholesale markets from Digbeth would be “prejudicial” to the retail markets.

Read the article here: http://www.thechamberlainfiles.com/traders-consult-lawyers-over-forced-move-of-markets-from-digbeth/7600

 

A conversation between a local academic and his friend – a CEO in local government elsewhere – raised further questions about the wholesale markets closure

“There is a long history to this but why won’t the Council release the financial figures as they could use these to defend their unpopular position? It’s very odd and likely to promote conspiracy theories and speculation about corruption.

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“Can these figures be required of the Council under the Freedom of Information Act?

“If a report is going to the council on March 25 it must be circulated, perhaps 7 days in advance and be publicly available, unless it is an exempt item (and this must meet strict criteria).

“Is the council actually making monies on this market? If not then they will see it as revenue expenditure they wish to eradicate. The only rationale for closing the markets appears to be the economic situation in the council – a circumstance created by central government. Birmingham City Council is in a perilous financial situation so the suspicion is that this decision is part of a financial strategy to raise monies through disposal of assets to fund expenditure like redundancies.

Any new development should be subject to a proper planning application – not one of Birmingham’s strong points

big city planA further point made is that the involvement and, if possible, support of the Local Economic Partnership could be quite important.  Has this matter been placed on their formal agenda? The Council would not look good if it acted deliberately against the wishes of the LEP. In its Big City Plan (June 2012) LEP proposes “to facilitate the delivery of other sites, such as the redevelopment of the wholesale markets”

“Not our business,” says the LEP and the council leadership, according to Cllr Clancy

B & S LEP logo“The LEP and the Enterprise zone”, he asserts, “should have had the vision to see the city’s markets as key to the future and planned for massive investment in the quarter; to create a space and a place there where the city comes to meet around a thriving, exciting food and restaurant hub”.

But the council ‘on behalf of the government’s LEP’ has borrowed – and risked – £125 million to develop infrastructure and buildings in the heart of the city  - mainly office buildings.

 

Market trader Bernice Ellis of the Open Market Association, who insists that it is essential for the wholesale markets to remain on the Bull Ring site, wrote on Tuesday: 

bernice and carol2We attended a meeting today with Councillor Ian Ward. It had been announced to us, before the cabinet report and recommendations became public on Friday, that the officers are recommending the cabinet to take forward only two of the five options we have been consulting on: Washwood Heath and Witton. When we asked if there was any flexibility we were told no. However, the Washwood Heath site is earmarked for the HS2, so the reality is that only one option is really on the table and that’s Witton.

The remaining three options to remain in site are not financially viable – or so they say. But any financial viability test will include the theoretical sum of money which the council believe the land is worth. Last figure bounced about was £240 million a few years ago. So the figures to stay on site will never stack up done like this.

The following thoughts about the figures are for illustration as we have not been allowed to see the actual facts and figures

The cost of remaining on the current site will never be right because of the way the council uses ‘asset recharge’. In other words that means that the theoretical value of the current site is being charged against the development. So if in theory the land is valued at £240m as it was a few years ago, that loss will be charged against the development.

This is underhanded local authority accounting, with no accountability. And then against the bottom line, year on year, will be the land depreciation charge of 10%, so on the first day of trading the market will be running at a theoretical loss of £264 MILLION plus building costs.

The cabinet are expected to rubber stamp these recommendations on 25th March. But Ian Ward made a press release immediately after our meeting – why?

If this news is confirmed on Monday 25th . . .

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Birmingham City Council is reported to have decided that Digbeth’s historic and commercially viable wholesale markets, which integrate fruit and vegetables, fish, poultry, meat and flower trading operations on one site, are to be forced to leave their city centre site.

In a move worthy of the Secret State, so often featured on this site, and the corporate /political nexus so often deplored here, Birmingham Council will not name the entity which has agreed to develop the out-of-town site and refuses to reveal to their electorate how much it will cost to build the new market.

As economist David Bailey writes:

“It is one of the largest integrated markets in Europe, and the largest in England. Its operational model, in particular its close links with many small firms in the city and the outdoor retail markets, is seen as something of a benchmark internationally.

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Rightminded Councillor John Clancy, referring to the wholesale traders, said in the council chamber:

“I think these are the kind of local micro-businesses we should be support. I am sick and tired of large retail development and enterprise zones, lining up large multinational businesses from outside the city.”

Read more here.

 

Are any of Birmingham’s MPs addressing counterproductive insolvency law and private finance investment practices?

chantrey vellacott dfk

Constructive roles played by firms like accountants Chantrey Vellacott and lawyers Pearson Knightley offer a lifeline to the businesses they administer and should become the norm rather than the exception.

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When high commercial rents and over-late payments lead to cash-flow problems for small businesses, administrators can declare them bankrupt, taking their payment from the firm’s assets first, with the banks following. There is often little or nothing left for all those unsecured creditors who have actually supplied the company with goods and services.

‘Insolvency practitioners’ can offer small & medium businesses a lifeline or deal them a death blow. The best will go to great lengths to ensure that the business continues to operate, either through a merger or under a new owner.

Nick Starling of General Insurance points out in the FT that timing is important: “A short pause in the process is unlikely to affect a business that otherwise has a good future with restructuring. Action needs to be before the event, not afterwards when it is all too often too late”.

‘Investment’ with a hidden agenda can precipitate business failure.The Campaign for Regulation of Asset Based Finance is preparing a submission to the Parliamentary Commission on Banking Standards , focussing on the “unacceptable behaviour” of some private investment firms which, it is alleged, effectively force ‘viable’ companies into administration.

In one instance, the Telegraph reports, David Williams, of insolvency advisers Pearson Knightley, was appointed by a small startup business, Crystal Print, which he described as a very successful little company, with £30,000 a month in invoices.

He was at the factory when the insolvency worker arrived and halted the process by locking the doors, saying that its problems had started when it started dealing with an invoice finance firm.

On a locally-based website this week is the news of how the constructive actions of administrator Chantrey Vellacott DFK brought about a successful merger.

 

 Birmingham councillors please note: new covent garden2

New Covent Garden Market is set for a makeover, funded by developing parts of the site that are no longer needed for the market operation and creating a new public market on the site.

The plan is to redevelop the market, providing 500,000 square feet of modern facilities for the traders who sell their goods in the area. It will include public open spaces, shops, cafes, restaurants, offices and homes and a new centre for the capital’s food industry, known as the Garden Heart.

Ravi Govindia, leader of Wandsworth Council, has confirmed that the Covent Garden Market Authority has chosen VINCI St Modwen (VSM) as its partner for the project. He said: “This is a vital scheme within the Nine Elms on the South Bank regeneration area and we’re delighted to see it moving ahead.

“The project will secure the future of this historic market which is home to more than 200 local businesses and 2,500 jobs.”

 

 

 

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Decision time approaches: the future of the wholesale markets is scheduled to be determined in the new year. Last January Councillor John Clancy said in the council chamber:

“I think these are the kind of local micro-businesses we should be support. I am sick and tired of large retail development and enterprise zones, lining up large multinational businesses from outside the city.”

Paul Dale reminds us however, that though stallholders are campaigning to stay in the city centre, the value of the Digbeth site for redevelopment is immense.

The Bull Ring retail market traders have claimed that moving the Wholesale Markets away from Birmingham city centre will amount to a ‘food tax’ on the city’s poorest, as their cheap fruit, veg, meat and fish prices would soar with the added cost of transporting produce if the suppliers are moved from the Pershore Street Wholesale Markets.

Bernice Ellis of the Open Market Association explains: “We serve low income people, they come to us for the low prices. People will get on a bus to come to us because the price of food is so much lower than anywhere else. That is a direct result of the proximity and the relationship we have with the wholesale markets. We shift large amounts with low profit margins.”

In March, BBC News reported that David Urquhart, Bishop of Birmingham, was to ‘spearhead’ an inquiry into the causes of poverty in Birmingham. By November, the council’s Newsroom relegated the ugly word ‘poverty‘ and announced the findings of ‘Birmingham’s social inclusion process’. The seven recommendations were of an abstract nature.

OB adds a practical eighth recommendation: that no action be taken by the city council that would increase the prices  of inexpensive fresh food to the poorest in the city.