The London Playground

THE SUFFOLK SMALL BUSINESS PROJECT

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Introduction

The possibility of this scenario actually happening is seen as something of a nightmare to many of the current small businesses in Suffolk. The small business community envisaged by this scenario remains remote, fragmented, and tied to low value added activities. London bears an overwhelming influence upon the community, which means that much of the traditional character of the county is lost. Equally, the Suffolk economy becomes dependent upon the London market for its economic prosperity. There will be areas that do share this prosperity, but, by and large, most of the prosperity will be narrowly focussed within the small business community, and a general prosperity is unlikely to be enjoyed by the bulk of the inhabitants of Suffolk.

Narrative

There are some who say that the course of events witnessed in Suffolk to 2020 represents the culmination of a long-term trend that first became evident 50 years earlier. It was in the 1970s that a number of financial companies moved their back office processing facilities to Suffolk. This trend continued until about the end of the twentieth century, when the same companies started to relocate their back office facilities to the developing world.

However, the India Gate atrocity of 2007, where a local Al Quaeda group successfully detonated a dirty bomb which paralysed much of the off-shore infrastructure of outsourced activities, led to the reversal of that trend. By 2010, much of the back office processing of the UK financial institutions had been relocated back to the UK, with Suffolk becoming a much favoured location for this activity.

This boost to the local economy was welcomed by the public authorities at first. It provided a localised boost to the local labour market, and had quite an accelerator effect upon local small businesses. It wasn’t until much later on that the longer-term costs of this trend became evident. One of the first costs that became evident was the impact of the newly located businesses on the recently opened University of Suffolk.

The University of Suffolk was launched with high hopes of becoming a world centre of academic excellence. However, it was also charged with meeting the needs of the local business community, and it was in this paradox that the problem occurred. By 2009, most of the employment growth in Suffolk was to meet the demand of the inwardly locating businesses. However, as most of this employment growth was for junior to mid-level clerical workers (management and more skilled staff were parachuted into Suffolk from other areas - most notably London and South East England), the demand for training by employers was for workers located in the low value added areas of corporate life. Local critics, with some justification, accused the University of “dumbing down” the labour market as it sought to meet the needs of the local employment market. In either case, by no way could the University of Suffolk claim to be a world class centre of academic excellence by 2020.

This had a negative effect on the local small business community in a number of ways. The lack of a high value added sector within the Suffolk economy meant that it remained an economy that lagged the rest of the UK in terms of disposable income. The failure of the University to become a centre of excellence meant that Suffolk did not become a cultural centre within the UK. Taken together, this led to the more gifted young people of Suffolk continuing to look to other parts of the UK - most notably London - for their prospects of career advancement. By 2020, the Suffolk population had aged more appreciably than other areas in the UK, and was populated by a relatively high number of households who lived well below the average UK household disposable income. Under these conditions - the flight of young talent and an impoverished customer base - the Suffolk small business sector struggled to find prosperity.

Those small businesses who did find prosperity, did so by following the traditional route - selling into the London market. By 2009, the pressure on Central Government to improve the transport links to London was overwhelming. The newly located large businesses wanted to facilitate the movement of their staff, small businesses wanted access to their principal market, and the population in general wanted a greater degree of integration with London. This led to the development of the Regional Transport Plan by the newly elected administration of Michael Portillo. By 2014, the full benefits of the improved investment in road and rail links was starting to be felt.

Suffolk was becoming more closely integrated into the London market - it was starting to become part of London. The improved links served to facilitate the flight of talent from Suffolk and the influx of weekend residents to Suffolk. The leisure sector did benefit from these improvements, but once again, the bulk of the newly created jobs were at the minimum wage, which meant that prosperity was not readily shared around the county.

Running parallel to the improved transport links were the improved communication links between Suffolk and the wider world. The influx of Branch Offices and “Country Head Offices” led to a greater demand for an improved communications infrastructure. Generally speaking, this demand was satisfied, but gave rise to a curious paradox. On the one hand, the communications links between centres of business, such as Ipswich, and the wider world were world class; the communications links between the non-developed areas of Suffolk and the wider world were virtually non-existent. A curious division emerged in the small business community - the Broadband haves and the Broadband have-nots. Many had hoped that this division would have disappeared by 2020, but it had not. By 2020, it had become a key factor in determining the location of small business. The areas with good ICT access developed at a much appreciable rate faster than those without good ICT access.

This provides a good part of the explanation of continued rural poverty in Suffolk to 2020. The remaining argument can be summarised in the term “environmental degradation”. By 2020, the full effects of climate change had started to be felt in Suffolk. The net effect of this was to quicken the pace at which farming was no longer commercially viable. Some farmers responded to this trend by moving out of farming and into the growing leisure industry. However, for many, this was the lesser of the two evils, as the leisure industry proved to be quite fickle in terms of commercial viability. For many in the farming community, there was no choice other than to struggle on in the face of ever increasing poverty. The occasional farmer hit the jackpot when their land was re-designated as suitable for residential housing development, but the sight of a prosperous farmer in 2020 became as rare as the sight of a healthy fox after the fox-hunting ban of 2006.

Over the period 2005 to 2020, the early century population forecasts for inward migration had proven to be significantly understated. The population of Suffolk actually rose by 22% during the period 2001 to 2020. Of the additional 150,000 new permanent residents, 135,000 moved into Suffolk - mainly from London and South East England - as inward migrants. This served to significantly change the nature of the county. Many newcomers were High Income Families who were relocating to what they saw as an improved lifestyle in rural surroundings. A good number of newcomers were Independent Elders as Suffolk became the new retirement destination for the well heeled. The effect of the inward migration was to crowd out the traditional Country Dwellers living in Suffolk.

The crowding out was felt most keenly in the housing market. Labour shortages in the construction industry restricted the rate at which houses could be brought into habitation, and, by 2012, the growth of housing demand was growing much faster than housing supply. Liquidity to the local housing market was brought by the incomers, mainly at the expense of the existing residents. This resulted in very high house price inflation in Suffolk, and a resentment on the part of the indigenous population towards those moving into the area. Although this spilled into local politics, it never quite found root at a policy level within Government, which many in Suffolk saw as retaining the London interest.

Whilst these divisions in the community of Suffolk have yet to find a voice politically, there are signs that the tensions have become quite acute. It is not now uncommon for weekenders to find their houses broken into and vandalised. Generally speaking, when this does occur, the local residents tend to be unsympathetic towards their plight. In many ways, Suffolk has come to be similar to West Wales of the 1980s - populated by two different groups who are extremely hostile towards each other. We cannot see, at this point in time, exactly how this will play out. However, under the newly proposed devolution legislation, it is quite likely that Suffolk will deem weekender homes as uninhabited and subject to seizure for use as social housing. Although Suffolk has become a suburb of London, Suffolk people have not become Londoners.

Milestones

If this scenario were to come to pass, what would the key milestones be? We feel that there are five key milestones that need to be looked for:

1. Large companies - that current policies of attracting inward investment into Suffolk works, and that a significant number of inward investors locate offices within the county. As this happens, the key functions to the company remain in the point of origin, either in the UK or overseas, and that the primary objective in locating in Suffolk is to reap the benefits of lower staff costs and of lower premises costs.

2. University of Suffolk - this initiative fails to become a world centre of excellence. It fails to attract high quality students and high quality teaching staff. The University does not fully integrate with the local small business community, because its primary focus is to serve the employment needs of the large employers locating within the county.

3. Net loss of talent - poor employments prospects and a mediocre University fail in the net retention of talent within the Suffolk economy. Good transport links to London aid the flight of young talent away from Suffolk.

4. Infrastructure - improved transport links to areas outside of Suffolk are combined with good ICT roll-out in parts of the Suffolk economy. This creates a paradox within the Suffolk business community. On the one hand, in those areas with good links, first class businesses are located. On the other hand, in those areas with poor links, business tends to remain under-developed and impoverished.

5. Social composition - Suffolk continues to be an attractive place for commuters to relocate and for seniors to retire to. This crowds out the Country Dwellers, and there are great stresses within the social composition of Suffolk. However, this fails to lessen the appeal of the county as a destination in which to locate.

These are empirical propositions. We can measure the extent to which they are, or are not, actually happening. Evidence that suggests that they are happening may also suggest that elements of this scenario will be present in the future.

Of course, this is not to say that we would find this future desirable. If we did, then we could take steps to see that it comes to pass. If we find it undesirable, then we could take steps to ensure that it didn’t come to pass. The key point is that the future is in our hands. It is up to us to decide what we are to make of it.

This section was produced with assistance from Victoria Freestone on secondment from the European Futures Observatory.

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