Galatians 6:9
My response to Liverpool’s business ‘exodus exposé’
In the past two weeks, two articles went live on two local upcoming publications in Liverpool and generated significant discussion amongst the Scouse Twitterati.
“Why are companies leaving Liverpool?” on The Post
“The Scourge of Northwesternism” on Liverpolitan
Both are excellent pieces of writing and present a welcome and long overdue long-form alternative to the tabloid monoculture that has, in my opinion, done much to rot the brain of the UK public. Notifications, Whatsapp messages, e-mails and missed calls punctuated the screen of my phone for a couple of days before the furore slowly reduced to smouldering embers. Former colleagues, friends, political contacts, even me ma - all providing their unsolicited opinions to me as the appetiser; setting up that inevitable query as the main…
“What do you think?”
Maybe it’s news fatigue. Maybe the debate has entered a new phase. Maybe other issues, such as the recent tragic events involving gun violence, or the relentless drip of bad news stories about the cost of living have eclipsed its priority within my brain. Or maybe it’s just… moot. Nevertheless, I’ve cogitated for some time over what really came into my mind, and what I felt emotionally, when I read, and re-read, and re-read again, both articles.
My answer is…
“What do you expect?”
Cities, like companies, are composed of labour and capital. There’s just additional concrete and copper in there, for practical purposes of habitability. Labour and capital are fluid resources (the latter significantly more so) which exist in a permanently fluctuating market that spans days, weeks, years, miles, countries, continents, beliefs, prejudices, fears, hubris and dreams. Capital seeks return. Labour seeks fulfilment of its Maslowian requirements. Create an environment where these aspirations can be realised, and your environment shall grow prosperous.
At least, that’s what the textbook says. But much like your driving theory goes out the window when you’re confronted by Roy the plumber, airing his road rage at you from his ‘54 plate Ford Transit after you wouldn’t run a red light for him; there are externalities which, at the very least, complicate matters.
At its 2009 peak, just shy of 150 staff of the North West Regional Development Agency called 12 Princes Parade their office. When I joined the LEP (the stripped down, less powerful, non-statutory, not-so-prodigal son of the RDAs) that replaced it in Liverpool in 2015, there were 34 staff. As more time passed and it was absorbed into the Combined Authority, that number dwindled further still. It must stand somewhere around 25% of its original size, now in its Growth Platform manifestation - notwithstanding some transfers of some roles and the people who undertake them into the Combined Authority (CA) itself. At the same time, the amount of funding that gets channelled through such organisations has been eviscerated - partly by austerity and partly by other factors such as other places and topics taking greater priority for funding in both the UK and EU.
For example, European Regional Development Fund (ERDF) allocation went from over 300,000,000 EUR in 2007 to just shy of £131,000,000 in 2014 to being replaced by a ‘Shared Prosperity Fund’ which will amount to not even 10% of the previous allocation. An entire team of people used to sit across Liverpool Vision and The Mersey Partnership dedicated to bringing in FDI. Now, it’s one bullet point out of dozens, on the job descriptions of a couple of my former colleagues who are at breaking point from the stress of trying to do the work of six or seven people on their own.
Just as reducing the funding available to local authorities and public services has led to an increase in crime, poverty and mismanagement of public institutions; the reduction in monies available for development has led to economic stagnation, scarcity mindset and a now palpable malaise which permeates the diesel and vape-filled air of the city on weeknights. As people become more short-sighted and finances tighten, the list of things that can actually be achieved dwindles. What incentive is there right now to leave a stable, well paid public sector job with a comfortable pension to go and start a risky new business? What incentive is there to build quality buildings, when shoddy new builds are the minimum viable - but altogether acceptable, product? Why buy a new EV when cheap diesels are readily available? The idealists and the self-proclaimed ‘realists’ never seem to meet at any sort of halfway house. However, subscribing exclusively to either is a dangerous proposition. We won’t be Barcelona, but we aren’t Blackpool either.
In the books of Exodus, Deuteronomy and Numbers, several paragraphs nod towards the role of ancestral sin. Liverpolitan rightly made reference to the downstream, present-day effect of smoke-filled backroom deals made in the late nineties and early noughties with central government. These same deals did privilege Manchester - quite significantly, at that. That’s not because of an inherent like or dislike of one area over the other, but because the post-Arndale bombing regeneration plan laid down a playbook for true cohesion across local authorities, and set a precedent for negotiating with central government at scale; a path that was only mirrored by Liverpool City Region authorities after 2010 - and even so, very loosely until the formation of the Liverpool City Region Combined Authority in 2017. Upon the creation of the Greater Manchester Combined Authority, Andy Burnham walked into a bustling Growth Company office of more than 300 staff, with dozens of projects and programmes already in motion. Steve Rotheram walked into an empty 13th floor Merseytravel office with no furniture or a phone line, and six local authority leaders who didn’t much enjoy each others’ company.
I’m not sitting here typing this because I think that my former colleagues, or any of the politicians, or specific elements of the business community or local citizenry have delivered flawless performances for the past two decades. I’m not standing up and saying “Because, cuts” either. One only needs to look at the now dormant Sensor City, or the defunct British Music Experience that occupies the ground floor of the Cunard building, to see examples of where more attentiveness to due diligence and forward planning could come in handy. But, I honestly now get a bit of a ‘rearranging deck chairs on the Titanic’ vibe from flashpoint discussions about funding and projects that measure mere inches, in a macro-level game of miles. That’s the thing with economic development, and indeed tech, and many other areas where the executive level’s actions play out in a particularly public manner. Everybody has an opinion. Very few people have a full appreciation of what goes into execution. Much like the public equities market, the spot price of almost any stock is predominantly governed by national monetary policy and market sentiment, as opposed to how good the quarterly results of a business actually are. You can be an Olympic swimmer, but good luck battling the Atlantic Ocean.
What neither article mentions is that the council and its partners bent over backwards to satisfy the demands of RedX Pharma, who acted in a way which, if people were witness to, would simply serve to reinforce the ‘anti-business’ agenda deeply embedded amongst a very vocal but quite small minority of the population referenced in both articles. Even in healthy markets, businesses move, downsize, shift operations and adjust processes. The companies listed actually omit what; for me personally, is the bitterest departure of all - Liverpool City Region’s own tech almost-Unicorn - Blue Prism which was originally based in Newton-le-Willows, before moving to Warrington and then scaling most of its operations down South. Yet, go to Sheffield, Sunderland, Coventry and other comparable cities and you will find similar stories. This is the toll which the ebb and flow of the macroeconomic tide, embellished with occasional freak waves from passing government yachts, takes on places which are neither ‘big’ nor ‘small’. Our primary means of erosion defence - our publicly funded economic development resource - has been systematically dismantled for over a decade.
If it sounds defeatist, it’s because in some ways I am. There is little rudder remaining to steer the economic boat. Yet, I am simultaneously more bullish than ever on the future prospects of certain segments of Liverpool’s economy because of the strong foundations that have been laid which have proved resilient to most storms so far. Consistent growth in Manufacturing, Tech and Health and Life Sciences offers a direct route to better pay, social mobility and an avenue out of the enticing and locally abundant weekly-paying hospitality and leisure jobs that target 18 - 25 year olds, which incentivise short-term wage-based thinking and often a substance abuse disorder as the cherry on top; right at the time when their minds are malleable, open to ideas and taking an entrepreneurial risk.
The Universities finally seem to be showing glimmers of operating in a more collaborative and local economic growth-aware manner (though the HE topic is so large and complex, and our national economy is so dependent on it I think I’ll write a separate blog post on this very soon).
I say the same things to all of my portfolio companies; “Liverpool can be your home, but it’s probably not where all your customers, employees or investors are.” This shouldn’t be controversial and it isn’t me shitting on the place. It’s just reality and not a lot is going to change anytime soon unless we start the greatest campaign in history to boost fertility rates and immigration. Go and walk through New York, Tokyo or Singapore and appreciate the outsized built environment and social returns which appear exponentially as the population grows to dizzying levels. If you’re looking for something more attainable in relation to Liverpool’s population and size, go walk through Copenhagen, Hamburg, or Porto and see how you can create magnificence and world-beating genuine economic clout without sacrificing a drop of beauty, habitability, culture or soul.
The publicly funded R&D seeds and early semiconductor commercialisation fertiliser which yielded the Silicon Valley bouquet were planted over 50 years before the dot com bubble and it was not obvious until shortly before the bloom that the area would become a hub for internet companies. Liverpool hoping that some black swan event takes place which suddenly catapults it towards skyscrapers, civil service headquarters and an industrial utopia is ‘get rich quick’ thinking, which inevitably leads to failure and loss for most entrepreneurs and stock market traders. What do the ultra successful professionals do? They get rich slowly and accrue the benefits of compound interest through a risk-adjusted strategy where no more than 10% of their eggs are ever in one basket.
My own vision and roadmap for how to generate more homegrown startups that transform into this mittelstand-esque technology ecosystem will shortly be coming out. There are a lot of things we can do that benefit our local economy and society, but it has to be within the realm of reality and feasibility. It should start with a collective psychocultural shift of our internalised and externalised narrative from Liverpool being a stag and hen destination with a few Beatles museums, into a digital nomad destination of choice full of purpose, flamboyance, eloquence and opportunity.
We’re only ever one generation away from being firmly on a track to be more like these places, but it takes time, money and a lot of sweat from people who are often ultimately volunteers. I do an enormous amount of things in terms of supporting other entrepreneurs and helping to build communities for zero financial gain because I believe in patiently building something bigger here that isn’t immediately measurable right now. I know I’m not alone in the business community in having faith in this, and others are stepping up too.
"Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up.” - Galatians 6:9
