Liverpool Party Flats: The Case for Better Regulation

Councillor Nick Small

The sharing economy has many benefits for consumers. Digital platforms like Uber, Deliveroo and Airbnb are disrupting many industries such as taxis, takeaway food and hotels.

Over the last few years, Liverpool, as the UK’s fifth most visited city, has seen a massive increase in Airbnb-style, short-term lets. This is good news for many. People can make some extra money with few barriers to entry by renting out rooms. The latest Airbnb UK Insights Report states that a typical UK host on their platform earns £3,100 a year. Meanwhile, visitors get more choice and flexibility about where they can stay and how much they pay with 78% of guests claiming they choose to travel on Airbnb so they can “live like a local”. Sharing platforms enhance our tourism capacity supplying temporary demand for accommodation more flexibly around big events and there’s emerging evidence post-pandemic that some visitors prefer sharing homes because they consider them safer than other forms of accommodation such as hotels and hostels where there is a higher chance of interaction.

The sharing economy offers new opportunities for economic growth. The average guest travelling with Airbnb spends £100 per day in the UK and 43% of this is spent in the neighbourhoods in which they stay which undoubtedly creates new jobs. The sharing economy is environmentally-sustainable too. When finite resources are shared, fewer resources are wasted. Consumption is reduced.

But there are downsides. The pace of change means that, as with other parts of the sharing economy, analogue regulation built for another age is struggling to keep pace with the structure of the digital economy. New challenges have emerged around workers’ rights, while the enforcement of traditional consumer protections has become more difficult in markets where services are increasingly delivered online.  For example, who does the consumer take legal action against if the service isn’t provided as promised? Is it the host or the platform? Who exactly is providing the service? Meanwhile, in another area of concern, our tax bases are being eroded by new digital platforms where value is often offshored.

We’re also seeing other issues. Longstanding residents are experiencing problems with anti-social behaviour, noise and general disturbance from short-term lets, and there can be environmental issues too, especially with waste collection with bins being left out on non-collection days. In some cases, short-term lets are being used anonymously for criminal activities. What we are finding is that as the number of short-term lets grows and becomes concentrated in an area, the bigger the problem often is for residents.

There are four main problems we’re seeing in Liverpool.

Firstly, there’s a lack of data available for councils and other public agencies, like the fire service and police, about exactly where short-term lets are located. Some platforms do share information but it’s on a very high level. This means it can be difficult to enforce existing laws and regulations around environmental health, nuisance and fire safety. Criminal activities can be very hard to detect and police.

---

‘Longstanding residents are experiencing problems with anti-social behaviour, noise and general disturbance from short-term lets.’

---

Secondly, there’s a lack of awareness of existing regulation amongst operators. Many people renting out their homes as short-term lets can find themselves unwittingly falling foul of mortgage agreements, tenancy agreements banning subletting or restrictive covenants. Sometimes this can have major negative implications for homeowners, such as banks withdrawing fixed-term mortgage deals.

Thirdly, councils are seeing their tax base changing as the distinction between homes and hotels becomes more blurred. Owners of short-term lets may often legitimately still pay council tax rather than businesses rates. Council tax is generally at a lower rate than business rates, so councils lose out. Student homes are exempt from council tax (and business rates), but there’s some anecdotal local evidence that rooms in purpose-built student accommodation are being rented out on sharing platforms with no local tax being paid. Of course, this goes beyond people not declaring their financial activities; it’s as much about the structure of the tax system. In most incidences, short-term lets qualifying for Business Rates or even tax relief is perfectly legal, but is it right? Cities like Liverpool, with a weak tax base to start with, are particularly exposed when homes are converted into short-term lets with implications for frontline public services. Since 2010, councils have seen central government support grants dwindle away and the proceeds of business rate growth retained locally, but if business rates end up coming at the expense of Council Tax revenues, it just adds to the pressures on public sector budgets.

Finally, there’s often a negative impact on local housing markets with family homes being taken out of the traditional housing supply and people being denied access to affordable housing. When rental yields for short-term lets exceed yields for tenancies, as they do in Liverpool, communities suffer as homes get bought up by speculative investors and local people, especially young people, get priced out of local housing.

We are seeing all four of these downsides in Liverpool. It is especially noticeable in the city centre, in Anfield and in the Smithdown and Sefton Park areas, but these negative effects are being felt in other communities across the city too.

That’s why I tabled a motion along with five other councillors  - Christine Banks, Laura Robertson-Collins, James Roberts, Lena Simic and Billy Marratt -  to Liverpool City Council’s Strategic Development and Housing Select Committee calling for the introduction of a register of tourist accommodation providers. We welcome the ongoing public consultation launched by the Department of Culture, Media and Sport into this matter examining, as it is, how other places around the world are addressing these important issues.

Scotland is well ahead of England on this. The Scottish Government set up an expert panel on the sharing economy in 2017. It included representatives from sharing economy platforms like Airbnb. As a result, the Scottish Government brought in the Licensing Order and Control Area Amendment Regulations in March of this year which will introduce a licensing scheme for short-term lets; existing hosts will have until 1 April 2023 to apply. This means Scottish councils will know what’s happening in their area, house by house, street by street, so they’ll be able to prioritise resources and tackle problems more effectively.

The new regulations allow Scottish councils to declare control areas, where owners will need a specific change of use planning permission to convert a dwelling into a short-term let. Edinburgh City Council became the first council in Scotland to use these new powers. There are already similar planning powers in England, but only in London and only covering certain types of short-term lets. In London, owners need planning permission if they are renting out their home for more than 90 days a year. Responsible platforms like Airbnb enforce this; others do not. Elsewhere in England, there is no such requirement.

The Welsh Government announced proposals for additional regulatory and tax measures against short-term lets in July. A new mandatory licensing scheme is planned. Councils will be able to require homeowners to change the status of their dwellings from primary homes into second homes or short-term holiday accommodation. They’ll also be able to charge additional council tax on second homes and holiday lets.

In Northern Ireland, they’ve had a tourist accommodation certificate scheme, which covers sharing platforms, in place since 1992. It is an offence to offer tourist accommodation without a certificate and is punishable by a £2,500 fine or six months imprisonment.

Outside the UK, other places are doing even more.

In Portugal, there’s a national registration scheme for all tourist accommodation and councils can introduce containment areas limiting the number of short-term lets. Meanwhile, starting last month, the city of Barcelona has banned outright the short-term let of private rooms, though not whole houses or apartments, which are still acceptable providing owners have a licence.

It goes on. The Netherlands has a national registration scheme that local councils can opt into. Ireland has designated some areas as Rent Pressure Zones, where hosts can only rent out rooms after being licensed to do so. New York City requires sharing platforms to share data on hosts with the city authorities. Boston only allows short-term lets in homes where hosts are present and San Francisco bans short-term lets in second homes entirely. Both have local registration schemes. In Japan, there’s been a licensing regime in place since 2018. If the host doesn’t live onsite, they must have a designated administrator to be responsible. A short-term let can only be operated for 180 days a year and waste has to be collected as trade waste, rather than domestic waste.

---

‘Our tax bases are being eroded by new digital platforms where value is often offshored. Cities like Liverpool, with a weak tax base to start with, are particularly exposed when homes are converted into short-term lets with implications for frontline public services.’

---

So what interventions are we calling for in Liverpool?

First, we want to recognise good practice. There are a lot of great hosts in Liverpool causing few, if any, problems for neighbours. I live in the city centre and have had an Airbnb host as a neighbour for several years. I’ve never encountered any issues. The council is starting to work more closely with responsible hosts in the same way that it works with the Private Landlords’ Forum and that is exactly as it should be. There’s a lot that everyone can learn from each other through better dialogue. Responsible hosts should have a voice on groups like the Liverpool City Region Visitor Economy Board.

Secondly, we need new powers on planning. Permission for a change of use to a short-term let must be introduced and, as a minimum, the 90-day requirement in London should be extended to the rest of England. This would allow councils to assess each and every application on its individual merits, taking into account the amenity value for neighbours and whether the area is primarily residential or mixed use. We could then put conditions in place as appropriate including operational management plans which look at how a short-term let is managed. If we get this right, it will stop communities becoming blighted by an over-concentration of short-term lets.

Thirdly, there should be a national tourist accommodation registration scheme, delivered locally by councils. I see Liverpool’s landlord licensing scheme as being a roaring success, as it’s given the council extra financial resources as well as the data to enforce health and safety, consumer protection and other regulations much more effectively. It means there’s no race to the bottom. Responsible operators are rewarded, dodgy operators are targeted for enforcement and problems for neighbours are reduced. Most importantly, it will give councils better data to respond to change in a strategic way, giving communities more power to shape the future of their neighbourhoods.

Finally, there needs to be changes in how short-terms lets are taxed. They should be treated as businesses, subject to business rates and not council tax. Waste generated by short-term lets should not be collected by councils at the same price as those paid by permanent residents. It should be more expensive.

The Department of Culture, Media and Sport consultation is open until 21 September. As a result of our motion, Liverpool City Council will be submitting evidence into that process. We’ll be supporting the proposal that councils be given the strongest possible powers to make the sharing economy work better for everyone. I hope that the new Government will respond positively to that suggestion.

---

Nick Small is the Labour and Co-operative Councillor for the Central Liverpool ward and has been in elected office since 2004. He is currently part of a 6-member group campaigning for stronger regulation of the short-term let market within the city.  Nick tweets @cllrnicksmall.

Share this article

---

What do you think? Let us know.

Write a letter for our Short Reads section, join the debate via Twitter or Facebook or just drop us a line at team@liverpolitan.co.uk

Liverpool: UK capital of computer games

Mark Butler

View fullsize

In a significant piece of regional business news, global consumer technology giant Sony have announced their acquisition of Liverpool-based games studio, Firesprite (8th Sept 2021). Which raises the question, should we treat this development with excitement or an impending sense of doom? We’ve been here before…

Sony, of course, already has a presence in the city, dating back to 1993 when it bought out Psygnosis, probably the region’s most well-known developer, notable for scoring gaming hits on the Atari and Amega ST systems. Under Sony’s wing, but still retaining a degree of independence, the same team brought us the seminal Wipeout series of games for the PlayStation. Eventually, Psygnosis were rebranded as part of SCE Worldwide Studios.

In 2012 though, Sony closed their Liverpool studio, retaining studios instead in the South East, although they did thankfully maintain a presence at Wavertree Technology Park, managing business areas like testing, validation and localisation for games produced elsewhere. This meant it remained a significant local employer with around 500 staff. But what was going to happen to all the game-makers? Fortunately, after the closure of Sony’s Liverpool studio, there was no desire to give up. Five of its former employees including Managing Director Graeme Ankers and Lee Carus as Art Director, immediately banded together to found Firesprite and it has done rather well. Since launching, the company has grown rapidly and now employs 250 people, making it a significant city centre tech industry employer. Yet, unless you were paying close attention, you could be forgiven for having missed it. Firesprite’s success seems to have been by and large missed by local politicians and media.

Now that things have come full circle and Sony has acquired Firesprite, this could potentially be a worry for the local digital sector. Beyond Liverpool, Sony has form for closing studios, shutting down Evolution Studios in Runcorn in 2016, Guerilla Cambridge in 2017 and Sony’s own Manchester studio in 2020. Games can be a sink or swim business. Could history once again repeat itself and the jobs at Firesprite move elsewhere? Hopefully not and the signs so far are good, with seemingly several new games in the pipeline for Firesprite under Sony. A more positive narrative is that this combined business of Sony’s existing operations in the city and Firesprite means Sony Interactive Entertainment now employs approximately 750 people in Liverpool, split between Sony’s new city centre office in the former Liverpool Echo building and Firesprite’s Fleet Street office. This at a stroke makes Sony one of the larger employers in the city centre and one of the largest tech employers in the region. Arguably it puts Liverpool at the heart of Sony’s European interactive entertainment business. This is something local leaders and the press should be shouting from the rooftops about.

It’s not so great a leap to imagine the whole operation combined into the former Liverpool Echo complex, which still has empty space, including the old print hall which, with enough investment and creative thinking, could be converted into a bold games studio complex. Imagine seeing SONY INTERACTIVE ENTERTAINMENT EUROPE lit up in big illuminated letters from your ship on the Mersey. That would be a big sign, pun intended, that Liverpool is a city of the future.

Interactive entertainment is one of Liverpool’s economic success stories… but you’d be hard-pressed to find more than a passing mention of it in local economic development documents.

---

It’s not all about Sony though by any means. Another major studio, Lucid Games, employs around 150 people in its Baltic Triangle base and there are a variety of other interactive entertainment firms of various sizes and specialisms in the region including Milky Tea, Ripstone, Wushu, Draw & Code, Cosmonaut and Starship amongst others. One of the few big foreign direct investment successes for Liverpool in recent years was Avalanche Studios of Sweden opening a Liverpool studio in 2020 to go with its existing operations in Stockholm, Malmo and New York.

So interactive entertainment really is one of Liverpool’s economic successes stories and a major unique selling point. The city is one of only a relatively small number of locations in the UK that can be said to be a centre for the industry. Yet, despite this decades-long strength in the gaming sector, local authorities seem to have done little to promote it over the years. This is especially strange for a high growth industry which creates well paid, rewarding (if sometimes intense) creative jobs, and one with relatively low barriers to entry for young trainees. That said, one important public investment in the sector locally has been The Studio School in Baltic Triangle, which helps prep young people to enter the industry.

More could be done though. But first our city leaders and those organisations responsible for driving investment into the City Region need to step up and recognise the golden opportunity that this sector represents. Despite the fact that the sector is already successful and growing, you would be hard-pressed to find anything more than a passing mention of it in local economic development documents, let alone on front pages where it deserves to be. Interactive entertainment should be just as high a priority for the region as the port and tourism. The games industry is a credit to the region and for that we should thank those working within it. The time is now for more public sector effort to back this up.

View fullsize

View fullsize

Liverpool’s Baltic Triangle district

At the moment, Liverpool City Council’s recent draft cultural strategy barely even mentions games, while it mentions the film industry repeatedly. The local Liverpool City Region Growth Hub makes a better stab at things with its LCR Tech initiative promoting the sector, yet it seems interactive entertainment has been siloed within ‘tech’ rather than being considered as one of the City Region’s cultural as well as technological strengths. Given that the walls between film, games, events, online content and other forms of art, culture and entertainment are collapsing rapidly, this seems short-sighted. Interactive entertainment is as much as part of the Liverpool City Region ‘culture’ sector as the film industry. I would argue more so, as the creative leadership of these games is in Liverpool, whereas the majority of filming in Liverpool is location shooting for projects led from elsewhere. Why doesn’t the Liverpool Film Office expand its remit to all forms of digital entertainment, with some new game sector experienced staff recruited to help grow the industry locally? Such an investment would pay for itself very quickly many times over.

We should shout about the success of this sector in the region more, but more also needs to be done to ensure Liverpool doesn’t lose its competitive advantage in this global industry. The city has already lost some of its advantage in the much more lauded film sector. Despite the city being one of the most filmed in the UK for decades, it is now far behind other areas in the development of film studios. In the time Liverpool has been discussing developing Littlewoods Studios, numerous film studio projects have sprung up across the UK, some of them even going from planning to fully opening in that time. Belfast alone has had permanent, large-scale sound studios for over ten years and is expanding aggressively, whereas Liverpool is yet to complete its ‘pop up’ Depot film studios and with no start date yet announced for the main Littlewoods project.

In contrast, the games industry in Liverpool is already up and running, innovating and growing as one of the biggest clusters of its kind in the UK. Today, concepts for digital interactive experiences created and developed by professionals in Liverpool are being enjoyed worldwide. Yet, it would be easy enough to lose this advantage without the right support and promotion. A few years ago, the sector came fairly close to exiting the city when the two largest studios (Sony and Bizarre Creations) pulled down the shutters in quick succession. Contributors to Liverpolitan have spoken to games industry insiders in years past, who felt the region’s authorities were not then placing enough importance on supporting the sector, taking it for granted, while at the same time Greater Manchester was forging ahead developing MediaCityUK and attracting digital investment globally.

Perhaps things are better now, since the creation of the City Region Combined Authority. Yet even there, the sector struggles to receive the same sort of attention as other ‘designated economic growth areas’ such as green energy, modular construction and advanced manufacturing. While these are all important sectors, the region needs to face up to the fact that, in those sectors, we’re up against equally strong, if not stronger, offers from other areas like Yorkshire and the North East. Yet the Liverpool City Region has a real competitive advantage in interactive entertainment arguably now unmatched in the UK outside of London and its satellite, Guildford. Aside from the well paid employment and the training and advancement opportunities the sector offers for local young people, the opportunity for further re-purposing of unused former industrial space in the city – always popular for studios – is another benefit. Not to mention the fact that, while the sector may not attract tourists, games are globally cool and a brilliant marketing opportunity for the city that is contemporary rather than historic.

LCR has a golden opportunity with interactive entertainment and it cannot afford to miss this chance again.

---

Make no mistake, high growth in this area could be transformative for the region. You only have to look at Montreal, Canada for an example. In the 1990s, Montreal was struggling from decline in its manufacturing industries. (sound familiar?) Ubisoft was attracted to open the first real games studio in the region in an old industrial building in the city, starting with 50 employees in 1997. At the time, a much smaller operation than Sony in Liverpool.

From that small beginning, Ubisoft Montreal now employs 3,500 people and is one of the largest games studios in the world. Many other studios have followed their lead to set up shop in the region including Electronic Arts, Eidos Interactive, THQ and Warner Bros. This was achieved by strong public and private collaboration, notably with also significant national support from the Canadian Government. Montreal is now the fifth largest games industry city in the world and the sector has spilled out into the wider region, now employing around 11,000 people across Quebec. Imagine if the games industry in Liverpool in the 1990s had been nurtured in the same way? Oh what could have been…

Similarly, in Malmo, Sweden, a former shipbuilding city which had experienced severe economic decline (sound familiar?), the growth of a games industry has also had a huge impact. Malmo is now home to over 30 studios, has its own cross-city sector trade organisation, Game City, and training institution, Game Assembly. Malmo pitches itself as the European capital of games.

Why shouldn’t the Liverpool City Region have the same level of ambition with this sector? LCR has a golden opportunity with interactive entertainment and it cannot afford to miss this chance again. So we’re laying down a challenge to our regional leaders: prioritise digital interactive entertainment in terms of publicity, grant funding, space allocation, development support and political will. This is a call for local authorities to work hand-in-hand with the region’s interactive entertainment sector and throw their shoulders fully behind Liverpool as the UK capital of games!

Share this article

Is profit a dirty word in Liverpool?

Paul Bryan

View fullsize

Liverpool is, as the oft-told story goes, famously a socialist city. From the powerful campaigning firebrand, Bessie Braddock in the 1950s, through Derek Hatton and The Boys from the Black Stuff all the way to union-supremo Len McCluskey, and the huge, open-air campaign rallies which treated Jeremy Corbyn as saviour. Bar the occasional intermission from the Liberals, Labour has pretty much had its own way since the Beatles broke up.

One common thread through the politics of all those years is a strong dose of what I’d call working class patrician moralism – with the leaders of the movement strongly convinced they know what’s good for the rest of us. As Steve Fielding noted in The Spectator, for better or worse, Labour has always been on a moral crusade, with its core supporters convinced they are on the right side of history, particularly in the fights against inequality, and for social justice. Occasionally, this has taken a semi-religious turn such as when ex-Prime Minister, Tony Blair declared himself ‘my brother’s keeper’, though this moral high-handedness may also have played its part in Labour’s last historic general election defeat under Corbyn – with Blair himself urging the party to stop ‘deluding ourselves that belief in our own righteousness is enough’. In Liverpool though, this ‘Labour knows best’ quality appears to be a home banker for success at the ballot box, even in the face of some quite outrageous revelations from the recent Caller Report into the workings of Liverpool City Council and the office of ex-Major Joe Anderson.

Aspiration, anyone?

“Why are people buying yachts? What do you need a yacht for, for heaven sake?”, exclaimed Liverpool City Council’s now Deputy Major and economic lead, Jane Corbett in a public debate hosted by The Royal Society of the Arts on one of those glorious pre-Covid days of 2018. ‘Because you might want one’ didn’t seem like the kind of answer, Councillor Corbett would give the time of day. Clearly there are some things one just shouldn’t spend your money on. The moralistic tone remains alive and kicking.

A deep ideological failure lies at the heart of the city region

---

Quibbles about the advisability of ocean-going luxuries aside (from a councillor representing a maritime city), there was something else notable in that discussion. Leading a debate on ‘How not to run an unfair business’, was a certain, Charles Wookey, CEO of charity, A Blueprint for a Better Business (BBB). You may not have heard of them, but Liverpool City Council certainly have. Their ethical business pitch has been adopted wholesale by the city’s leadership in both the pre-and post Joe Anderson days. Liverpool’s ‘Inclusive Growth Plan for a Stronger, Fairer City’, published in 2018 along with their Council Procurement Policy, and Fair City Policy were straight out of the BBB playbook; as is the just published 2021 City Plan by Team Liverpool, a collection of the city’s leading lights in the public and third sectors. The adoption of these principles which coalesce around the idea of ‘fairness’ is likely having a profound effect on the city’s approach to attracting investment and its hopes for post-Covid recovery. From informing the overall meta-diagnosis of Liverpool’s economic problems and its preferred solutions, to the instigation of new restrictions on the terms under which the Council is prepared to issue contracts of work, ‘fairness’ is the lens through which the city’s future opportunities will be filtered. Or at least, that is the stated intention. Moonlighting as a member of Blueprint’s Advisory Council, it’s likely Councillor Corbett has played the key role in drawing Liverpool’s leaders into BBBs way of thinking and their (albeit free) management coaching services.

The high priests of purpose-driven business

Quite how this adoption of fairness may affect Liverpool’s economic future, is something I’ll get to later, but first it’s worth asking, is there anything sinister about this relationship between Liverpool’s leaders and Blueprint? No. There’s no conspiracy here. But is it something we should be worried about? Perhaps. After all, if Blueprint have the ear of those responsible for driving much needed investment into the region, it’s important to understand what is being advocated and what effects it’s likely to have on the ground. Especially because BBB have a somewhat pessimistic view on the traditional role of the private sector and are keen to change the way it works. In essence, they believe the world needs a ‘system change’ in which businesses are driven, not by profit, but by a ‘purpose’ that benefits society. They want to see our economic system “optimised for human wellbeing and a sustainable eco-system”, rather than for growth. As Wookey goes on to explain, they are out to displace two dominant ideas – “one, that the purpose of business is to maximise profit, and the other, that people are self-interested and motivated simply by money, status and power.”

For Blueprint For A Better Business, the search for profit, allied to that pesky desire to want more (growth) is put in the dock, tried and found guilty of crimes against society. You’ll be familiar with the narrative because these days it passes for common sense. The sins of business or at least large corporations, we’re told, are legion. Hooked on short-term profits and thinking of nothing but shareholder value at the expense of everything and everyone else, large businesses are seen as the fox in the henhouse, in need of some serious therapy to get over their compulsion to be a destroyer of worlds. If you are haunted by nightmares about the excesses of capitalism – from the oil spills of Deep Water Horizon to the sweat shops of Thailand, this sentiment will strike a chord. Closer to home – zero-hours contracts, glass-ceilings and the peddling of sugary drinks to the obese are just the tip of a well-rounded rap sheet of sin.

You could be forgiven for thinking these ideas sound kind of socialist or green-socialist and you can understand why these sentiments might appeal to those of a left-wing persuasion - the Left have been hankering for a system change since, well, forever. But and this is interesting, behind BBB lies not an activist fringe group, but a team of hardened senior business professionals. Blueprint count amongst their number former executives from organisations such as Unilever, M&S, UNESCO, Goldman Sachs and the TUC. And they were founded by an Archbishop (of Westminster). If anything, their roots lie in Christian morality and the belief that everybody should be treated with dignity and that we are never more fulfilled than when in service to others.

An unlikely moral alliance

So, what you find is two things coming together that can comfortably live in an accommodation. A moral desire to be and do ‘good’ in business circles and a deep-felt criticism of the failings of the market on the Left. From both angles, they feel the need for something new. But, and here’s a bit of a kicker – outside of the odd Extinction Rebellion march and the extremes of Momentum, nobody is really asking to completely up-end capitalism (let’s face it, not even the Chinese). Partly, because we’ve seen some of the alternatives and they weren’t great. But also, because well … we need business and everyone knows it – especially those who work in one. Or buy products from one. Or who have the good fortune to spend the money raised from taxing them. Money makes the world go round. So, with a deep breath, the conclusion is reached - what we need, it seems, is a Faustian pact.

And that’s where Blueprint For A Better Business comes in. They take the high moral ground and try to translate it into some kind of actionable programme for business leaders and the politicians who regulate them. And the price of the ticket is simply accepting that making a profit is not enough. Or even a worthy pursuit. It’s something that is allowed but only as a reward for achieving a definable social purpose as part of a renewed social contract between business and society. Even then profits are only acceptable if they are ‘fair’.

As a result, for businesses, dealing with the local authority becomes more challenging. If you want their ear and their help, increasingly you need to show you’re hitting or at least on a journey to hit Blueprint’s five core principles – that you’re honest and fair; a good citizen; have a social purpose, are a responsible employer and are a guardian for future generations. Sure, some of those translate to perfectly decent goals such as welcoming more scrutiny, achieving the Real Living Wage or paying your taxes on time. But many others are just plain subjective. Who gets to decide what is ‘fair’? And what qualifies those who sit in judgement?

It’s so tempting for public authorities to create a wall of additional requirements that make it harder for businesses to focus on their core task – and these are additionally burdensome for smaller organisations who just don’t have the bandwidth to keep up. What’s more, because fairness (whether outcomes or in process) is so subjective, prejudices can be projected onto the process of deciding who is and isn’t a worthy business partner, which can have disastrous unintended consequences.

Monetising social value

How’s that for a ‘pro-investment environment’? Can you imagine the Google’s and Apple’s of this world knocking down the city’s door, with those kinds of trade-offs? How about Amazon? You know, maybe they would. After all, we live in the age of the activist CEO. Of IKEA and Grolsch suspending their adverts from the new TV broadcaster, GB News, because the station didn’t match their ‘humanistic values’; while in the light of the Black Lives Matter protests, racial equality is now used to sell sausages. I doubt there’s a single business school that isn’t running modules on Corporate Social Responsibility (CSR). The mantra that ‘Being Good is Good for Business’ is somewhat of an unchallengeable tenant of acceptable belief – even if the data is less convincing.

Of course, it does raise the question, if you are being good to be seen to do good so that you can personally benefit, are you still doing ‘good’? For anyone who has seen the documentary, The Corporation (2003) or read the book, you’ll know that big business has been described as psychopathic for this very reason. They have a tendency to reflect back what they think you want to hear, so that you will do what they want you to do (buy their products). But to be sceptical for one minute, the morals and values to which business attaches itself, tend to be fluid. As writer, Nick Asbury writes in his incredibly insightful article for The Creative Review, when brands like Dove, Pepsi and McDonalds mix social issues with a sales message, not only does it come across as crass, but “Whenever you see a brand adopt a cause – whether it’s Andrex doing Clean or Dove doing Feminism – it’s always with the zeal of a recent convert. They are going to be the one to lead the conversation…because brands always have to cast themselves as the hero.” Damn right!

Can councils avoid being gamed?

Of course, councils like Liverpool know that when they are encouraging employers to act fair and be enlightened and ethical in their dealings, those businesses (especially the big ones who have more budget and resource) are more than capable of gaming the system. For example, paying for trees to be planted to counter-act emissions is generally seen as ‘greenwash’. Donating to a foodbank when you are squeezing the life out of farmers would likely go in the same category. All it takes, is a small charitable donation, a glossy video and social media campaign and hey presto, you are on the right side of the moral maze. Even better if you managed to cut your plastic use by 10% or start a conversation about body shape. This does point to a certain naivety in BBBs position and that of our elected local representatives. Who really wants to be taking moral lessons from a business? Did anyone vote for them? What is it about their constitution that makes us believe, that when the chips are down – their ‘purpose’ is anything other than to do the thing that allows them to continue to exist – making a profit?

I should point out that the purpose of this article is not to attack business – but to defend it from those who would wrap it up in unnecessary restrictions sourced from their own Instagramable prejudices. There are a host of dangers hidden under that appealing label of ‘fairness’.

CEOs – pack in the inferiority complex

But first, business leaders need to remember that their companies do already have a ‘social purpose’ and it’s one they don’t have to apologise for. Successful businesses provide products and services that customers want. And those outputs make people’s lives better – saving them time, bringing pleasure, opening up new opportunities and experiences. They innovate new technologies and processes transforming productivity and delivering progress across society. They create wealth – investing in jobs which transform lives, because there is one thing you can know for certain – if you want to give your life some purpose and you haven’t got a job, the first thing you should do, as psychologist Jordan Peterson recommends in his book, 12 Rules for Life – is get a job. No matter how crummy the job, you’ll feel better about yourself and ready to make the next step. The profits of business also fund every social programme in existence - from educating the next generation, to the safety net of social care. Maybe our CEOs should spend less time worrying about their lack of purpose or signalling their virtue and more time remembering that their core profit-making mission is one that delivers more benefits to society than any social state-funded programme. They do a magnificent job of making billions of lives better. And they do it, by tapping into the core human motivation to improve your lot. Is it time to resuscitate Gordon Gekko?

Some investors not welcome in Liverpool

“If Amazon isn’t on a journey (of improvement), no, I wouldn’t want them anywhere near us.” Back to Liverpool’s Deputy Major, Jane Corbett and that public debate. She was asked if Liverpool would follow New York’s lead and reject a big business like Amazon if they were looking to invest. She’d already said she takes a tick list of the 5 core Blueprint For A Better Business values around with her when she visits local companies. “We’d sit down and have a talk… Are they going to benefit the city? Are they going to pay us proper business rates? Why are they coming to Liverpool? Because we’ve got people so desperate, they might work for them?”

Let that sink in. Some people might be so desperate that they’d choose to take a job. The Councillor would save them from that misery. BBB values being used to turn away investment.

Leaving with a pocket full of dreams and returning with the same.

---

Corbett talks about commerce in very moral terms – good investors, good money, good businesses - presumably in contrast to bad investors, bad money and bad businesses. Perhaps this is not entirely surprising in a region still reeling from revelations about alleged cronyism, property deals gone wrong and lack of accountability under ex-Major Joe Anderson. But, given Corbett’s background in the Labour movement, it seems plausible that her moral qualms are founded at least in part by a generalised feeling of antipathy towards the dirty business of business. An instinct that at best, sees private enterprise as an unfortunate price to be paid in return for a state-funded shopping list of social provision. Back to that Faustian pact. If you’re going to sup with the devil, use a long spoon. Or in this case, an obligation for business to be purpose-led, not profit-led. I wonder what the Dragons Den presenters would make of that? Maybe they’d agree? The plan, according to Corbett is to show BBB definitions of what makes a good business to the next generation of young people so that “hopefully it becomes embedded in the city.”

But what does it mean in the here and now?

In one aspect, Liverpool is very far from unique. In 2013, central government introduced the Public Services (Social Value) Act, which requires all those responsible for commissioning public services to think about how they can derive wider social, economic and environmental benefits from any contract. Public servants keep a keen eye on additional benefits for their area or stakeholders – be it jobs and apprenticeships, green initiatives, equality and inclusivity drives and so on. The public procurement process has become more complex as a result and more subjective as businesses applying for work need to provide evidence for a raft of measures that fall outside their core mission to provide a good quality service or product at the right price. The government freely admits councils have sometimes struggled to implement it, and issued an updated Social Value Model in December 2020, which for now will be used by central government departments only.

The findings of the recent damning Caller Report into Liverpool City Council however, showed how good intentions can deliver poor outcomes. The report, led by an independent inspector, found “multiple apparent failures” in the council’s highways, regeneration and property management functions. Plots of land worth over £1m were sold for £1 plus overage – a share in future value increases. Sixty-five property deals negotiated by the council were examined by the inspector and problems were found with all of them.

What starts in the head - An economic misdiagnosis?

As reported in PlaceNorthWest, Caller questioned how social value had been interpreted under Joe Anderson’s administration - “the mayor’s…concept of social value was best achieved by employing contractors with a Liverpool postcode base” – which resulted in deals that failed to reach the council’s statutory duty to achieve best value. There you have it. Decisions founded in a moral position to extract social value (by choosing Liverpool-based suppliers) resulted in less value for local taxpayers. The ideas in your head shape the reality on the ground. Attempts to pass off the administration’s inadequacies as merely an embodiment of the ‘bad apple’ theory – where all the faults are caused by the actions of a few rogue individuals, seem unpersuasive as a complete explanation.

What if some of the biggest flaws in the Joe Anderson administration were ideological, rather than just managerial? What if their understanding of what’s ailing the Liverpool economy and what it needs led them to make bad decisions? What if those flaws are still present today under the Mayorship of his replacement – Joanne Anderson (no relation)? After all, though she may have changed the makeup of the cabinet – many of the councillors were elected under both leaders. What if Liverpool Labour is the problem? And what if the council’s relationship with Blueprint For A Better Business is the clearest indication yet of what’s going wrong?

Snubbing the PM, for the people

"I can never respect somebody who won't apologise for what he said…And he won't do that and until he does that, I've refused to shake his hand when it was offered to me last year and I'll continue to do that." So said Steve Rotherham, the recently re-elected Liverpool City Region Metro Mayor talking about his relationship with the country’s most powerful man, Boris Johnson, the UK Prime Minister. As he explained on the BBC’s Political Thinking Podcast, the bad blood dated back to the 2004 Spectator article about the Hillsborough disaster that was published (but not written) by Johnson when he was the magazine’s editor.

The piece had wrongly claimed the city was in denial about the role "drunken" fans had played in the 1989 tragedy and had a tendency to "wallow in victim status". Understandably, the article caused wide-spread offence throughout Liverpool.

Talking about the work Steve had done with Boris over implementing Covid testing trials in Liverpool, Steve concluded, "it was really difficult for me to do business with somebody I had no respect whatsoever for, but I had to do the right thing... for the people in the Liverpool City region."

Did Steve do the right thing? Putting aside the question of whether Boris has already apologised (possibly repeatedly), the primary responsibility of a Regional Mayor is to put the interests of their constituents first. Steve comes across as a moral and decent man but on this occasion, he may have put his personal feelings ahead of his duty. Alienating the Prime Minister, who as prize-giver-in-chief has more influence over the direction of government investment than anyone else, doesn’t feel like the pragmatic move. So far, the UK government’s ‘Levelling Up’ agenda, which has seen government departments relocating from London to other parts of the country, has by-passed Liverpool. It is certainly not the first time the city region has missed out on big-ticket investments. From High Speed 2 to the relocation of the C4 headquarters to the north, or even the new UK Infrastructure Bank, Liverpool remains off the map.

Sticking it to the Tories was also a favoured pastime of Joe Anderson, who bitterly and publicly complained about the effect of Tory cuts to the council’s budget. Many times, he took to the airwaves to gripe; sometimes coloured with doom-laden predictions about the inevitability of riots. Even on the occasions when he had the then Prime Minister, David Cameron’s attention (for once) he quickly found himself ensconced in tit-for-tat battles, such as the time in 2013 when the goal of promoting the inaugural International Festival of Business was overshadowed by public arguments between the two men about the city’s rough treatment by the government. How to win friends and influence people it was not. Playing to the gallery it certainly was.

Lack of belief results in puppets

What ties the tales of Steve and Joe together is that sense of outraged moralism triumphing over pragmatically doing what needs to be done to get the rewards for your people. Sometimes, however unpalatable, you have to suck it up. And maybe, if you’ve stopped really seeing the prize on offer and how big it could be, and just how much you are missing out on – well then maybe you’re just less motivated to try. Maybe your words about aspiration and the ‘best days being ahead’ are hollow and just for the gallery, because deep-down you don’t believe it yourself. While Joe Anderson, when in power, was playing with (giant) French puppets (x3), grandstanding about Tory cuts, and messing about with bus lanes, other regions were taking a more pragmatic view, doing the hard yards in Westminster and private sector boardrooms to secure the influence which led to vital investments such as the nearly £40m Manchester pocketed for establishing the National Graphene Institute in 2015 or the 2022 Commonwealth Games which went to Birmingham. It’s hard to think of many (any?) Liverpool equivalents as the leadership tended to focus on ultra-short-term photo-opportunity wins such as the International Business Festival, now much shrunk and rebadged in the favoured moral terms, ‘Good Business Festival’.

Even Joe’s annual trips to MIPIM, Europe’s largest property convention, which were often treated to excitable rolling commentary and great fanfare in the Liverpool Echo, tended to result in little more than glossy CGIs of the still largely unbuilt Liverpool Waters. Leaving with a pocket full of dreams and returning with the same has generally been the order of the day. So, either Joe’s team were not very good at pitching or coming up with investable ideas, or they didn’t try hard enough. Maybe, it just didn’t seem that important to them.

In Liverpool business circles, the talk never strays far from the subject of skills, or more precisely the lack of them. When not re-locating their businesses out of the region like premium sports brand Castore did only recently, CEOs like Asif Hamid of Wirral-based, The Contact Company are left lamenting the shallow talent pool and the slowing effect it has on growth. The worry is that too many leave school without qualifications and families that have never seen anyone attend university become cut-off from the best opportunities. But there is nothing new in this. Liverpool has suffered a brain drain for decades –as many of the best and brightest are forced to seek opportunities elsewhere. Even today, with its healthy student population, the city has a graduate retention rate lower than many of its city rivals. There’s no mystery here. Jobs are the trigger for rising educational attainment. Fail to build a diverse and deep job market and those that can, will move elsewhere.

Foreign Direct Investment (FDI) 2020

Ranking UK cities & towns by the number of FDI-financed projects they have secured (sub-selection displayed only). Liverpool ranked 14th between 2011-2020 but has slipped to 17th in the last year of recorded data.

Source: EY Attractiveness Survey 2021 (UK)

Liverpool’s economic balance sheet

There are positives to talk about the Liverpool City Region economy – the growth of the port, rising demand for industrial and logistics space, the successes of the visitor economy and the beginning of a revival in health care sciences. The unemployment rate has fallen from 10% to 4% since 2014 and the number of people holding degree level qualifications is slowly on the rise. Plus, the alarming decline in total population has thankfully been put into reverse. All to the good. But beware the relentless positive spin from those naturally invested in the regeneration game. A cold look at the other side of the balance sheet reveals that Liverpool is still grossly under-performing. The Draft Industrial Strategy published by the office of the Metro Major reveals the City Region is still in need of an economic miracle and sets out the ‘underlying fragility’ of the economy. Liverpool is the fourth most deprived local authority in England, with a life expectancy 6 years lower than the national average. Its employment rate (even pre-pandemic) was also lower than average and the ONS estimates 51,000 of its residents earn below the Real Living Wage. The city of Liverpool ranked 17th for Foreign Direct Investment in 2020 placing it below such economic luminaries as Peterborough and Northampton and only one place above Newport. It’s doubtful if it ranks much better for Domestic Private Investment, though it’s hard to tell for sure as the statistics tend to get unhelpfully rolled into the North West as a whole, likely hiding a multitude of inequalities. The office take-up statistics, a solid measure of the strength of any city’s business activity are miserable. Of the UK’s big nine cities outside of London, Liverpool has the 8th lowest 10-year average (approx. 533,000 sq feet per year) compared to over 2,000,000sqft in Manchester. That’s a crippling 43% below the average take-up across the nine cities. It also commands the lowest rental rates. The building of new stock outside of the recent Paddington Village development is all but non-existent. And that was true long before anybody had heard of Covid. Perhaps most worryingly, Liverpool’s productivity rates which measure the output per worker (Gross Value Added per head) are only 74% of the UK average. Too many of the region’s employment opportunities are focussed on low productivity sectors and Liverpool just doesn’t have anywhere like enough representation in the high-tech industries of tomorrow. As Rafa Benitez, the manager of Liverpool’s two football clubs might say – FACT.

More investment please

What should we conclude from this barrage of data? Liverpool needs more investment like a vampire needs blood. It needs more of everything. More investment from the state, from the private sector, from overseas, from home-grown businesses. It needs more access to venture capital. It needs to diversify, and attack sectors in which it is currently losing out to others, rather than throwing up its hands in defeat and forever banging on about the ones where it is strong now. It needs to step up and compete with its rival regions head-on rather than accepting a subsidiary role. Be better at playing the ‘influence game’. Resource key development and regeneration functions properly with the right level of expertise. Be ambitious and demanding. Fight the right fights for its people. But its leadership won’t do what’s needed as long as it is hooked on the wrong thing – its focus on fairness and the metrics of inequality, not realising they are the symptoms, not the cause of this prolonged failure to attract enough investment, enough ‘stuff’.

Average annual sq ft office take up in the Big Nine Regional Cities (2011-2020)

Source: The Big Nine, Quarterly update of regional office activity

Rationalising low aspiration

Liverpool’s current obsession with morals and good business ethics is at the heart of this misdiagnosis. It is the rationalisation of limited aspirations. Accepting the idea that economic growth is a problem, not a solution and seeing business as something which needs to coached away from its destructive tendencies rather than the source of wealth creation, is forcing the city down a dead-end. What they are left with is a focus on redistribution, because they can’t see the transformative power of growth to improve people’s lives. Fairness, while worthy, becomes about moving the counters around the checkerboard. Fiddling with the rules, but never really changing the game. The leadership has accepted an anti-business, low aspiration narrative because it is misdiagnosing the region’s core problems and its own role in adding to them.

Fairness means accepting defeat

When a moral focus on being a good citizen meets a left wing reflex to identify inequality as the primary social ill and businesses and capitalism as the source of those problems – you end up with a potentially toxic investment agenda that is christened under the name, ‘Fairness’. Instead of understanding that increased investment drives social opportunity, you instead end up fixating on redistribution issues – chasing social justice by achieving a more equitable sharing of the same level of resources that have already proven themselves to be inadequate. As definitions of what is ‘fair’ shift you find yourselves creating a mountain of regulations or informal requirements which make it ever harder for business to act in an entrepreneurial way, particularly prejudicing those small organisations that don’t have the bandwidth to play the game.

But worse – you’ve stopped even trying to grow the cake in any meaningful way, because without realising it, you’ve accepted the limits of low aspiration – your efforts to attract investment become sporadic and half hearted – besides, who wants new jobs when we have a climate emergency on? They’ll only make things worse.

A deep ideological failure lies at the heart of the city region and particularly Liverpool’s sub-par performance. One that sees red lights and limitations everywhere. One that accepts low ambitions as if they were part of the natural order. One that doffs its cap to other cities, for want of imagination about what could be. The kind of ideological blind-spot that leaves our leaders wondering why anyone might want a yacht; that diagnoses symptoms as cause and defaults to lazy moralising about the common good, while wrapping businesses up in ever more unprofitable, energy-sapping restrictions. The city region needs to wake up and kick out the snake-oil salesmen of purpose-driven business from the corridors of power. For a maritime city, it has long since hit the iceberg. It’s time to stop re-arranging the deck chairs. This Titanic needs more lifeboats. And its marinas need more yachts.

Paul Bryan is the Editor and Co-Founder of Liverpolitan. He is also a freelance content writer, script editor, communications strategist and creative coach.

Share this article