Exploring the systems by which we organise our livelihoods

barrow cadbury blog header

 barrow cadbury karen

 

In this Barrow Cadbury Trust blog, the co-ordinator of Localise West Midlands gives feedback on the opportunity to research the assumption at the heart of Localise West Midlands’ mission offered by the Trust.

The assumption is: “. . .that in a more localised economy, more people have a stake, which redistributes economic power and resilience, reducing disconnection and inequality . . . in need of exploration in the face of growing inequality and economic failure”. She continues:

“There are plentiful ideas around what we have been calling community economic development: social inclusion as CSR, community-led job creation, co-ops and social enterprises, local procurement initiatives. To many economic development practitioners these are very nice projects that go into a little box labelled “voluntary sector” and have little to do with the real economy, which is about big sites, tax breaks for multinational corporations – “prostituting ourselves for inward investment” as the Centre for Local Economic Strategies‘ Neil McInroy colourfully puts it.

“Our project, Mainstreaming Community Economic Development, is an attempt to take localised economies out of this little box. Firstly, to see the social potential not only of voluntary sector initiatives with social objectives, but also of private sector activity that is locally controlled and based, where the community’s participation is as owners, investors, purchasers and networkers . . . ”.

To read the whole article go to the Barrow Cadbury Trust blog

 

“Humanity is conducting a huge, uncontrolled and almost certainly irreversible climate experiment with the only home it is likely to have”: Financial Times

We summarise the thoughts of Martin Wolf, the FT’s chief economics commentator here, because Localise West Midlands’ aims and policies are designed with his ‘politically sellable vision of a prosperous low-carbon economy’ in mind. He wrote, yesterday:

“Last week the concentration of carbon dioxide in the atmosphere was reported to have passed 400 parts per million for the first time in 4.5m years. It is also continuing to rise at a rate of about 2 parts per million every year. On the present course, it could be 800 parts per million by the end of the century. Thus, all the discussions of mitigating the risks of catastrophic climate change  have turned out to be empty words.

“Collectively, humanity has yawned and decided to let the dangers mount . . . clutching at straws “

“(H)umanity is conducting a huge, uncontrolled and almost certainly irreversible climate experiment  with the only home it is likely to have. Moreover, if one judges by the basic science and the opinions of the vast majority of qualified scientists, risk of calamitous change is large . . . ”

Meanwhile, Wolf notes, ‘deniers’ clutch at straws: “It is noted, for example, that average global temperatures have not risen recently, though they are far higher than a century ago. Yet periods of falling temperature within a rising trend have occurred before”.

Bequeathing a planet in climatic chaos is a rather bigger concern than leaving a burden of public debt

“What makes the inaction more remarkable is that we have been hearing so much hysteria about the dire consequences of piling up a big burden of public debt on our children and grandchildren. But all that is being bequeathed is financial claims of some people on other people. If the worst comes to the worst, a default will occur. Some people will be unhappy. But life will go on. Bequeathing a planet in climatic chaos is a rather bigger concern. There is nowhere else for people to go and no way to reset the planet’s climate system”

So why are we behaving like this?

  • The first reason is that, as the civilisation of ancient Rome was built on slaves, ours is built on fossil fuels.
  • A second reason is opposition to any interventions in the free market. . . to admit that a free economy generates a vast global external cost is to admit that the large-scale government regulation so often proposed by hated environmentalists is justified. For many libertarians or classical liberals, the very idea is unsupportable. It is far easier to deny the relevance of the science.
  • A third reason may be the pressure of responding to immediate crises that has consumed almost all the attention of policy makers in the high-income countries since 2007.
  • A fourth is a touching confidence that, should the worst comes to the worst, human ingenuity will find some clever ways of managing the worst results of climate change.
  • A fifth is the complexity of reaching effective and enforceable global agreements on the control of emissions among so many countries.
  • A sixth is indifference to the interests of people to be born in a relatively distant future. As the old line goes: “Why should I care about future generations? What have they ever done for me?”
  • A final (and related) reason is the need to strike a just balance between poor countries and rich ones and between those who emitted most of the greenhouse gases in the past and those who will emit in the future.

What might shift such a course?

Wolf: “My view is, increasingly, that there is no point in making moral demands. People will not do something on this scale because they care about others, even including their own more remote descendants. They mostly care rather too much about themselves for that . . .

“A necessary, albeit not sufficient condition, then, is a politically sellable vision of a prosperous low-carbon economy. That is not what people now see. Substantial resources must be invested in the technologies that would credibly deliver such a future . . .

Institutions must also be developed that can deliver it

Neither the technological nor the institutional conditions exist at present. In their absence, there is no political will to do anything real about the process driving our experiment with the climate.

Yes, there is talk and wringing of hands. But there is, predictably, no effective action. If that is to change, we must start by offering humanity a far better future. Fear of distant horror is not enough.

martin.wolf@ft.com


Read the whole article here (free registration):  

http://www.ft.com/cms/s/0/c926f6e8-bbf9-11e2-a4b4-00144feab7de.html#ixzz2TLKEQjvu

Note also news of the sea-levels forecast submitted to the IPCC from ICE2Sea, a four-year programme of study by scientists from 24 leading EU institutions.

 

 

Our current economic predicament defined and the MCED way forward highlighted

 

Rob Hopkins, founder of the Transition Movement, quotes a brief but pointed analysis from a new report by Dr Tim Morgan called ‘The Perfect Storm: energy, finance and the end of growth‘, published by FTSE 250 company Tullett Prebon, saying:

“It’s stirring stuff.  His analysis of why we have ended up in our current economic predicament runs thus:

hopkins 1

He offers the best, and most to-the-point discussion of why energy return on energy invested (EROEI) matters, and why peak oil ought not be thought about as just the end of cheap energy, rather as the end of energy with a low EROEI.

Hopkins then quotes from a ‘fascinating post’ by Karen Leach of Localise West Midlands on the REconomy site, which gives him a sense of why what she calls “community economic development” or on this website we might call REconomy or “community resilience as economic development” is so different from the current all-prevailing approach, and why it addresses our needs far better.

Writing about their excellent recently published report ‘Mainstreaming Community Economic Development’, she summarises the report’s finding thus:

hopkins 2

 

West Midlands MEP advocates the ‘Green Deal’ for social housing

phillip bennion2In a newsletter this week (not yet available on his website) Local Euro MP Phil Bennion expresses the hope that the government’s ‘Green Deal’ will be more widely extended to help people in rented social housing:

“Millions of homes in the UK do not have full double-glazing. More than half do not have enough insulation or an efficient condensing boiler. Most do not even have proper thermostats. The Green Deal will make a difference . . . The next step is to help tenants in social housing cut their bills too, using a similar approach”.

green deal defra logoPhil Bennion pointed out that not only could tenants facing growing fuel poverty be made more comfortable and enabled to cut their bills, but that there would be increased employment opportunities for those carrying out energy efficiency upgrades. He continued:

“In the European Parliament’s Employment committee, I’m working on a report on the financial pressure facing tenants in social housing. The big worry is fuel poverty, with soaring energy bills squeezing budgets for food and other basic essentials.

“Rolling out the Green Deal approach to social housing would be tricky, but it would help tackle fuel poverty where the need is greatest. In the West Midlands, many housing associations are already making the most of similar schemes (Ed. see Tipton and Walsall).

“I want to see the EU keep up the pressure so governments and local authorities are given the tools to help tenants in social housing to cut their bills too. The process needs to be as practical and accessible as possible.”

*

encraft logoOn the website of Encraft, the environmental engineering firm which prepared a full feasibility study for the city, working in partnership with Localise West Midlands, we read that the eventual aim of Birmingham’s Green Deal project is to retrofit over 14,000 private homes, small businesses and social housing units across Birmingham with the full range of energy efficiency and microgeneration technologies.

birmingham energy savers3An LWM consultant hopes that Birmingham Energy Savers* will indeed be given ‘the tools’ it needs to engage social housing providers with the Green Deal and to make it financially viable for them to improve their housing stock and reduce fuel poverty.

 

* website currently ‘under development’

 

 

 

 

 

 

LWM and others in the region want to know more about locally based SMEs

 

lwm logoLocalise West Midlands argues that small and medium locally based businesses, including those who may be part of a larger national franchise, have a greater ‘local multiplier effect’ on local communities, increasing the community’s prosperity directly, as well as creating comparatively high numbers of jobs.

LWM finds that SMEs:

  • are more likely to feel a sense of allegiance to that place and community;
  • have an interest in supporting the area and
  • may be less likely to disinvest in the midst of economic turbulence than ‘footloose’ companies

Overall, LWM finds that while individual small businesses come and go there is a stability to a strong small-business ecosystem which provides resilience against the massive shocks of inward investor loss.

It is difficult to find out what is made in the region

This complaint, made by an LWM researcher many years ago, was reinforced in June, when a member of Localise West Midlands met three local manufacturers and was interested to hear Peter Davies (Professional Polishing, Smethwick) say that – although the usual downbeat attitude to manufacturing persists – when he attends business gatherings the attitude is buoyant, with news of orders coming in.

It was suggested that an aggregator site, like our very useful Brummie, be set up to cover positive news from those West Midlands producers who tend to appear in the mainstream press only if they close down. However, on consulting aggregator supremo Mark Blackstock, and then the editor of the Birmingham Press, it was pointed out that these firms usually have no section on their websites for such news, so a robotic operation would not be possible.

A manually operated site was set up and – because of this information shortfall – hours of online research are needed before piecing together cheering news which is usually buried in the specialist press.

PPS logoAn honourable exception is the Professional Polishing Services company, now masterminded by Aston’s Kirsty Chinnock Davies, named as an IoD West Midlands Director of the Year, who never hides her firm’s light under a bushel, recording and sending out news of awards and machinery acquired.

The latest instance of PPS outreach is her invitation to share a video, issued to mark the company’s 30th anniversary: http://youtu.be/dYgJf_lJgAY.

PPS machinery 30 anniversary video

In 2003, Localise West Midlands, in partnership with Advantage West Midlands and other organisations, set up a conference on public procurement in the West Midlands Region. Since this conference, which focussed solely on regional food, localising public procurement in the West Midlands has developed significantly.

LWM and other organisations seeking stronger regional economies would welcome information about both food and goods produced in the region, to promote local economy ‘good news’ stories and to facilitate a move to more localised supply chains, bringing economic benefits to the West Midlands.

 

Learn more about Birmingham’s Green Commission at the Locanta on Tuesday

locanta restaurant2

 

Phil Beardmore, independent consultant and member of Localise West Midlands, will introduce the discussion on the new Green Commission.

  • Is this the means to achieve Birmingham’s ambitious energy and environmental targets?
  • Or is it going to be another bureaucratic fudge, failing to face up to the need for decisive leadership?

FOR DETAILS GO TO  http://ourbirmingham.org/?p=2687

 

 

Alternative inflation report – or what Mervyn King does not mention

Our Retail Prices Index (RPI) stands at 4.8 % and the index the Bank of England targets – called the Consumer Price Index stands at 3.1 %. They are higher than the targeted indices of any of our G7 competitors.  Almost double the next one down the list.

France                 1.7  %

Germany            1.2 %

USA                      1.2

Italy                     1. 0 %

Canada                 1.0%     (June  figure)

Japan                 -0.7 %    ( June  figure)

This report was originally just intended to keep the fact that this country has usually got the highest inflation figure in the G7, despite us having inflation indices that understate inflation, in the minds of various people we are lobbying.  But we now use it to outline how our ideas about inflation are developing. As such we hope it is more interesting than the Bank of England’s quarterly Inflation Report, which concentrates on optimistic predictions that are almost always wrong in recent years.

We have consistently warned that food and energy prices are straining living standards across the world. Of course food is of far less weight than in the inflation baskets of the developed world than it was in the past , or than it is the developing world. It averages about 40% in some of the most populous Islamic countries, like Pakistan and Egypt for example, where social instability could have global consequences.

So although the fires and floods that are becoming a regular summer occurrence on the Europe-Asia landmass put pressure on our standard of living, it is many times more serious elsewhere.   

For example, Russia has again banned wheat exports which is already driving prices up outside that country. Stopping  farmers exporting is one of the world’s traditional ways of holding down prices in producer countries’ home markets.

Rather than inflation in the UK being the result of a series of one-off occurances as Mervyn King insists,  perhaps we are heading for a new world-wide era of Austerity. With inflation rather than deflation being the main global issue. What we have been promoting as our Regional Prosperity and Inflation Framework, might well have to serve as an ‘Austerity & Inflation’ Framework.

We have also recently published our outline of what an inflation index for our home region would actually tell us.

Using the most authoritative housing affordability figures for the regions – produced by the Halifax – we can see how housing prices, which should have weight in any proper inflation indices, demonstrate how a clear ‘Two Income Trap’ emerged under New Labour. It seems it now takes 2 incomes to buy a home that could be bought on one income when New Labour came to power. This fits with our long standing argument that two incomes are now required to run a household that could be run on one income a generation ago. But interestingly, the movement in house prices occurred as early as the Lawson boom of the late 1980s as far as the West Midlands is concerned. But real house prices fell back under John Major, before becoming the national phenomenon since. This is explained further on this project’s main webpage and it can also be accessed here.

This erosion in real wages did not help manufacturing jobs survive in the West Midlands, even in the later years of the Thatcher government. Had Nigel Lawson had an authoritative index for inflation in regions like ours, perhaps he would have heeded the warning it would have been sounding – and have restrained his inflationary boom before it became a national disaster. Labour would not then have slid down the same slipway. But that would have been a very different Britain, which might today have more manufacturing and less household debt than it has actually come to have.

We have recently set out a path for reform to the Statistics Authority’s review of inflation, and we are grateful to the Trust that has regularly supported us in this area of work  in recent years – The Andrew Wainwright Reform Trust.

Our report last month challenged the notion that we have been struggling with a global deflation in any way comparable to the 1930s and can be found here.

Andrew Lydon

LWM Regional Prosperity & Inflation Project


A trend set in – Alternative inflation report for June

Our Retail Prices Index (RPI) stands at 5 % and the index the Bank of England targets – called the Consumer Price Index stands at 3.2 %. They are higher than the targeted indices of any of our G7 competitors.

France                 1.5  %

Italy                     1. 3 %

Canada                1.4  %   ( May  figure)

USA                      1.1  %

Germany            0.9 %

Japan                 -0.9 %    ( May  figure)

It looks like a trend has now firmly set in for us to be the G7  inflationary economy. Besides undermining our living standards this will help overseas companies keep their grip on our home markets. In the post war decades, we could always rely on the Italians and often the French to have higher inflation than us.

Much has been said about how various world leaders have saved us from a repeat of the 1930s. But no repeat of the 1930s deflation has ever been on the cards in the last few years.  The price of food and energy had fallen after the First World War and had no tendency towards rising until the rearmament began in the late 1930s. This can be seen in the graph below of the UK cost of living index, the vast majority of which was food and energy purchases.

By contrast there has been an under-lying upwards push on food and energy prices through out most of the last couple of crisis years. Recently we have seen demonstrations against  the price increases across India and as drought grips important grain producing regions around Russia  the upwards pressure on food prices is set to continue.

Commentators have been talking about how close we have been to deflation. But  in the UK particularly, this is indicative of the poor standard of economics in this country. Briefings from the Bank of England in particular, often seem to suggest that  inflation does not just mean that prices are rising. They imply that inflation only becomes something when wage claims begin to be put forward on the assumption that prices will go on rising.

We have recently set out how we think inflation and especially house prices have undermined the standard of living in our West Midlands home region which you can go to by clicking here.

Last month’s edition of this report included an examination of how the UK lost track of its own people’s living standards in the 1980s,  and how conservatives are still politically blighted by it.  It can be accessed here

Andrew Lydon

LWM        Regional Prosperity & Inflation Project

The Green Economy and Local Job Creation

On July 12th our latest speaker meeting sparked a lively discussion on green jobs in the West Midlands- Where will they come from? Who will they employ? And how they will shape the future economy?

Keith Budden, manager of Be Birmingham’s Environmental Partnership, kicked the evening off with a short presentation, outlining the potential to create 1.5 million jobs in the UK by de-carbonising the grid, developing the use of green technologies and encouraging green skills. Such advances have the potential to build upon the manufacturing expertise specific to Birmingham, with city- wide initiatives like the Green New Deal facilitating investment into local businesses and training schemes.

However, the expansion of small scale, sustainable employment opportunities is equally important: jobs which we don’t think of as ‘green’ such as driving a milk float are equally part of the green economy in terms of their contributin to a local food supply. Such activities create the diversity that encourages local resourcefulness, a thriving local economy and conserves our ‘city of 1000 trades’. It is therefore important to facilitate the conditions in which there is sufficient funding, coordination and commitment to allow this diversity to thrive.

At present many small businesses do exist but largely in isolation and are made financially viable only by those taking a moral standpoint. Jon Morris expressed that the Government’s Green Investment Bank model would do little to strengthen local linkages, effectively putting our green future into the hands of the UK’s major banks who traditionally have found it much easier to channel investment to larger companies rather than getting involved in small-scale enterprise.

Peak oil will have a major role in the shift towards a more localised approach, as a decline in cheap foreign imports will encourage the re-emergence of local repair industries (with Birmingham City Council currently mapping reuse and repair businesses in the area) and make the innovation, manufacture and marketing of products and services more economic at a local level.

Discussion followed on what needs to be done to catalyse the green economy in order to create green jobs. A need for networking between organisations, businesses and individuals it was felt has great potential. A free networking forum would provide the opportunity to match innovative grassroots ideas with those who could make it happen, whilst raising awareness of possible allies,  funding opportunities and support systems to assist in extending influence and creating employment.

This could spark the creation of a local green directory, much like finditinbirmigham.com but for all things green. The possibility of a ‘Green Dragons Den’ could also be a great way to share advice and empower people’s ideas, perhaps providing the break they need to catalyse local innovation and job creation.

Right now what is needed are enabling activities and structures, coupled with leadership from local institutions, in order to begin a transition to a diverse, sustainable local economy.

Anna Watson

Alternative inflation report – Living standards in the West Midlands

None of our current inflation indices register the unique house price inflation the UK has had. Had they done so in any manner comparable to Germany and the US,  there would have been far higher inflation registered across the UK under New Labour. Looking at housing  affordability indices gives us some idea of the seriousness of the real inflation being missed and an index that shows this up region by region would show a revealing story for the West Midlands.

Our house prices have changed so rapidly over the last generation in the UK  that we have adopted the practice of measuring affordability in terms of the number of years annual income one would need to buy a house. One of the most comprehensive set of figures for house prices across the regions has been compiled by the old Halifax Building Society (and its successors) since 1983.

The following chart shows their figures for 1983 for some of the ‘southern’ English regions including London.

The West Country, East Anglia and the East and West Midlands are included. I have left out the others so that the images are not too crowded. In the early years of  the Thatcher government, it is still the people of the West Midlands that find it easiest to buy their houses. The average house can be bought on the 3 times average male earnings that were the traditional lending standard. (But with a deposite also necessary).  It was London and especially the West Country where this was becoming a stretch. The full Halifax figures can be found here.

 

However look what had happened by September 1992 when the UK got kicked out of the Exchange Rate Mechanism.

It is now the West Midlands whose buying power has been erroded. The region is already on the way to being one where  a household, which not long before could be run on one income, could no longer. We were falling into what is in the USA refered to as the ‘Two Income Trap’. In the General Election of a few months before, the WM conurbation had for the first time  become the southern most sub-region to mainly vote  Labour.  The Conservative government lost here a whole Parliament before they lost the UK as  a  whole.  And even in 2010 the conurbation did not respond to David Cameron.

Under the John Major government house prices fell back and incomes slowly grew so that Labour did not actually inherit the Two Income Trap in 1997. But when the housing market peaked in 2007 we were all trapped. On the basis of traditional 3 times income lending, the whole of the UK was in the trap.  The average house required 5.86 times the average full time male wage . 2 incomes.  Most of the regions we have been particuarly looking at were slightly above that. The West Midlands had tasted this earlier than the others, but we were actually all in the same boat/trap now.How this situation will now evolve is difficult to say, but some regions will show a trend before others. Maybe it could even be that the West Midlands will show it up first. But for government to head off another wrong turn we will need to reform the way we measure inflation so that we have region by region figures that pick up housing inflation as part of the basket with other sensitive items such as food and energy.

Andrew Lydon