The reality of jobs and growth – a view from a bike

600px-SalfordSkyline

Yesterday I spent my lunch break on a bit of a cycle around the border of Manchester city centre and Salford. I didn’t see anything special, or remarkable, but learnt a lot, I think, about the economy, jobs, work and growth in Manchester’s apparently booming economy.

Building work and infrastructure development were everywhere in the centre of Manchester, it was hard to move; the cars were snarled up and people were busily hurrying between work and shops.

The inner suburbs of Salford, down Liverpool Road into Pendleton, were different: shops few and far between, the building projects were on freeze, people were on the streets, but just walking, or in groups talking, hanging out, not rushing around.

Pendleton precinct was busier, apparently overflowing with supermarkets – Aldi, Lidl and a Tesco Extra, all in one small space, competing on price for the same customers. Very different from fifteen years ago when I lived here, with just one small Tesco available to people without transport.

The Salford University strip was all-but abandoned in the summer, save for lone international students; and the old performing arts building that previously brought music (mostly a crash of drums) to a corner of Lower Broughton has now closed, moved to a state-of-the-art facility at Salford Quays.

Greater Manchester, apparently, is the only city in the UK that grew its economy as much as London in the decade before the recession. But a short ride like this, around the Manchester – Salford border, tell us more than growth figures can.

It’s not just the startling difference between the glass high rises of the centre and the concrete high rises of Pendleton. Or the difference between the busy workers of the city centre and the slower pace of the Salford streets.

It’s more than this: in the heart of city, in this shiny model of regeneration and growth, the faces of people hurrying to and from work, nipping out for a sandwich, off to the shops of a lunch break, tell all: Manchester is not a city of high powered jobs and executive lunches groaning under the weight of economic growth; it’s one of mundane office work and plastic sandwiches. Some might be enjoying the spoils, but for most Manchester’s is a service sector economy where growth has little meaning for the people with the jobs, let alone for those without.

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The Co-operative Bank and the co-operative economy

Until a month ago, when the Co-operative Bank’s problems began to surface, it was regularly said that co-operatives are enjoying a renaissance. A new report on the co-operative sector shows that the recent difficulties at the Bank should be seen as an anomaly, not an example of the UK’s co-operative economy.

There are two arguments forwarded as to why co-operatives are enjoying a renaissance. First, customers are turning to known, trusted businesses and co-operatives exemplify this, both in the UK and elsewhere. Second, co-operatives are showing stronger financial resilience because they are not owned by outside investors and therefore are able to think long term rather than bow to short term shareholder pressure.

Both are simplifications of a complex business landscape, but as shown in Co-operatives UK’s new report,Homegrown: The UK Co-operative Economy 2013, both contain kernels of truth.

The recent revelations about the Co-operative Bank – which pulled out of a major deal to buy Lloyds bank branches, was subsequently downgraded by Moody’s to ‘junk’ status and then revealed a capital hole of £1.5 billion that resulted in a partial stock market flotation – has put both of these into question.

The Co-operative Bank is, after all, an iconic UK co-operative brand with very high levels of trust precisely because it is a mutually owned bank. Although it is a small part of the co-operative sector, accounting for only about 6% of the sector’s turnover, the knock on effect of the Bank’s high profile problems for other co-operative and mutual businesses are potentially huge.

Homegrown, though, shows that regardless of whether or not the Bank’s problems are significant as reported in the press, we must not extrapolate from the Bank to the wider co-operative sector.

– Co-operatives, the annual report shows, have grown year on year since the start of the credit crunch. Since 2008 turnover has grown by 23%, the number of members by 36%, and the number of co-operatives by 28%. The sector is growing at a startling rate in a terrible economic climate.

– It shows that trust in co-operatives is high. 52% of people describe co-operatives as trusted, whilst only 7% – yes 7! – say the same of PLCs.

– It shows that this can’t be down to one or two businesses. There are over 6,000 co-operative businesses. High profile examples like The Co-operative Group and John Lewis, but other also other large yet less well known businesses like Milk Link, First Milk, Midcounties Co-operative, Unimer, and many others.

– And it shows that co-operatives aren’t working in boom industries – the vast majority of the co-operative sector is made up of retailers and farmers, hardly two sectors you’d put money on to thrive over the last few years.

Clearly, co-operatives are no panacea for a struggling economy. They need to compete, financing growth is difficult, they suffer from many of the management issues other businesses have. The Co-operative Bank illustrates that.

But even the Financial Times, one of the papers most critical of the Co-operative Bank’s bid for expansion, recognised that the Co-operative Bank is an anomaly, not an example of the co-operative economy:

“Co-operative businesses grew in number, turnover and jobs last year, underlining the movement’s resurgence despite the travails of the Co-operative Group.”