The business of towns

Businesses are in towns …

I spent an enjoyable day last week at a conference on the future of towns, organised by the University of Southampton and the Centre For Towns. In one of the sessions we set out to answer two questions:

- How do businesses view towns? And;

- How might we harness the power of business to improve the outlook for our towns?

Here are my reflections on the implications arising from the discussion.

… but to varying degrees …

My sense is that among businesses that are not unique to either a single town or a small number of towns, the awareness of the state of individual towns is extremely variable. The sector of an individual business is usually the best predictor of the level of understanding of the general issues facing towns, reflecting differing degrees of exposure to local economic performance.

… with retail in the front line …

The sectors most aware of the challenges facing towns are those national businesses with a wide geographic footprint, reliant on consumer activity in towns for a significant share of their revenues. The high street is a difficult place currently and retail businesses and restaurants are in the eye of the storm coming from the pressure from online sales, squeezed consumer spending, competition for labour and higher import costs.

When these challenges lead to retailers closing stores, the impact is felt directly in terms of lost consumer income in a town as workers lose their jobs. This is only the first stage because footfall typically also drops, potentially leading to a downward spiral hitting other shops and restaurants. This, in turn, reduces the number of people using local transport and bank branches so calls into question the existing levels of provision. There can also be a knock-on effect on museums and galleries once the number of people coming into town centres falls.

… but others not far behind …

Lower levels of activity and reduced spending power have wider implications. For utility suppliers and telecommunications companies, lower demand has the potential to make investment cases weaker in financial terms. These companies are likely to see lower economic growth as a signal to manage their exposure to these areas more rigorously. This is the worst of all worlds as, in economic terms, investment in enabling infrastructure that could provide a boost to restructuring of the area becomes even more valuable in areas where economic activity is falling.

Publicly provided and publicly supported sectors are very aware of the challenges towns face. As economic performance declines, young people and those with in-demand skills tend to leave areas with less opportunity. This means that our towns age, as the population that remains is often of older people who have either retired or are unable to leave in pursuit of work. With limited opportunities, younger people leave, potentially reducing further growth and limiting the scope for revenue raising by local authorities, further increasing the pressure on health and social care services.

… it’s time to turn to solutions …

Those businesses from sectors with a significant presence in towns have been the first to react to the changes in local areas but awareness is growing across the corporate community. This is important because engagement from business is essential if we want to drive change to help towns prosper. Reflecting on the discussion in Bolton, there appear to be three priority areas to create momentum.

… building the business case …

Many customers live in towns and so if incomes fall in towns then the customers in those towns will have less money to spend. If we allow towns to decline, we will be failing to maximise the potential of the resources available to the country and growth will be less than it could be. Increasing the focus on our towns could create a virtuous cycle of growth.

… engaging business in policy-making …

To date, the analysis and discussion of the challenges facing towns has been at the level of intensity and sophistication that is required. There is an urgent need to bring more business perspectives to the table to help policy-makers understand the ways in which possible initiatives could boost business activity.

For this process to be effective, businesses will have to consider devolving more responsibility for decisions and engagement to a more local level. Top down, national solutions will often fail to capture the specific issues in a local area. More local input and control will lead to better decisions and more efficient use of resources.

… and harnessing the power of purpose.

Businesses today are increasingly aware of their wider responsibilities and many talk of the need to engage with all their stakeholders through the definition of purpose. This has led to initiatives such as on diversity and inclusiveness, environmental impact and more wide-ranging corporate social responsibility activity. To date, a geographic dimension has not had as prominent role but now is the time to change this and to harness the power of purpose across the UK’s towns to create stronger and more inclusive economic growth through better decision-making.