Producers or Predators in Regeneration?

There was a lot of political chat around the party conference circuit this week about Good Businesses and Bad Businesses. Ed Miliband used the seductive alliterative descriptors ‘Predators’ and ‘Producers’ to make a distinction between the likes of the evil bonus fuelled casino banks and good honest British manufacturers employing British people to make real things. Or perhaps he meant to distinguish between Tesco (large Riot claims) and Sainsburys (not claiming because they don’t want to deprive front line policing of money).

In doing this he has raised the profile of an issue that David Cameron has been promoting for some time. Cameron’s language is that of corporate responsibility as he said at the end of last year: ‘Britain’s great businesses are not just a force for good in our economy – you are a force for good in our society too.  You have the power, the creativity, and the enterprise to help us tackle some of the most pressing social problems and challenges we face in our country.’

I spent a morning this week with a number of chief executives of major organisations in the industry on the final part of the first Sustainability Leadership course for Real Estate promoted by the UK Green Building Council. On one level it is clear that these messages are getting through and on an even more optimistic level it is also clear that many people do not leave their sense of right and wrong behind when they get into work. Most businesses are staffed and managed by people who want to do the right thing and it feels like they are becoming increasingly empowered as the ‘Loads of Money’ 1980s gradually recede into distant memory.

The immediate general reaction to Ed Miliband’s speech seemed to be that you can’t possibly discriminate between these two categories. The British Chambers of Commerce and many others expressed this view and probably felt that it was impossible that any of their members could be described as predators.

But others in the regeneration world took a different view. This was based on three decades of experience of the public sector working in partnership with business to deliver financial and non financial benefits to deprived communities.

The first evidence offered was the procurement of developers of public land in regeneration areas where best practice is to assess the proposals on both financial and non financial criteria. The non financial criteria would normally be allocated at least 50% of the marks and would include aspects like design quality, sustainability, local labour and community engagement.

This last aspect seems particularly current as Eric Pickles lectures the property industry on the need for them to be able to understand and deliver what local communities want.

Others have developed this general proposition in a couple of directions. Using the example of the HCA Delivery Partner Panel they point out that by using a similar approach firms could be assessed on their track record of delivering these non financial benefits and those falling below a threshold could be excluded from bidding or panel membership. If anything like the same level of scrutiny was placed on these aspects of business as on the financial aspects it would be easy to categorise businesses at least into good, average and bad.

In relation to public land, this would have a dramatic impact on the quality of development delivered.

The other direction relates to privately owned land and uses Tim Leunig’s idea of land auctions (where the local plan allocation is determined by the local authority once land owners have made offers to sell the land to them without planning, allowing the local authority to then give a permission, sell to the highest bidder and pocket the difference).

This process means the land again passes through the control of the local authority allowing it to use the same techniques as with public land to sort the good developers from the bad.

These ideas seem strangely seductive both to the left and the right and there are already suggestions that Boris Johnson is looking to trial some of these ideas inLondon. While they are certainly radical, and in some directions it seems challenging to get from where we are today to the proposed new paradigm, some of these approaches are easy to achieve through leadership and in some cases with some minor revisions to Office of Government Commerce guidance.

And that may be where some of the barriers lie. Forces often described as ‘The Treasury’ seem to relish the idea of predatory businesses biting chunks out of each other and society and feel certain that any other kind of behaviour will be bad for the economy. Elsewhere there are certainly cultural barriers within public sector organisations that have grown up under the dead hand of Treasury cash maximisation dictat with no ability to quantify the wider benefits to society or even to other Government budgets.

If political leaders want to take the country and the economy down this road, and given that both are espousing it it does seem likely that they judge that it will deliver electoral advantage, talk will probably only get us so far. They will have to engage credible business people to propose concrete actions that will remove obstacles and deliver change.

One such businessman is respected private equity leader Nigel Doughty who revealed himself at a British Chambers of Commerce fringe meeting at the Labour conference as a former Socialist Workers Party newspaper seller. Sharing a platform with Peter Marks, chief executive of the Co-op they debated some of the practical ways in which business could do good in society and the benefits to both business and society of this approach. Both these people would give good practical advice to Government.