The government has tried to engage the private sector in numerous regeneration initiatives – the New Deal, Neighbourhood Renewal Strategy and Sustainable Communities to name just a few. But, Andrew Carter argues, public agencies need to begin seeing things from a business perspective if they are ever going to successfully engage the private sector.
For all the government’s efforts to involve the private sector in promoting local development through entrepreneurship and wealth creation, a number of significant barriers are preventing businesses from getting fully on board. Here are four of the principal problems.
1) Understanding the language: the economic development lexicon so beloved of public and voluntary-sector agencies (think ‘social exclusion’ or ‘neighbourhood management’) comes across to business as little more than jargon. It is easy to dismiss this as semantics, but if different interests cannot communicate clearly then the ability to develop strong cross-sector relationships will be constrained.
This was highlighted in a recent evaluation undertaken by The SMART Company of a London Business Broker pilot – a national scheme aimed at involving more businesses in neighbourhood renewal. One objective of the Pilot is to get more long-term unemployed people, often from specific geographical areas, into jobs.
But do businesses care who job applicants are or where they were from? Some do, but the over-riding objective of employers is to appoint people with appropriate skills and attributes. The lesson is simple: if government want to resolve hard-to-crack unemployment, it needs to begin responding to the needs of the employer.
2) Starting from a different place: government regeneration initiatives are often ‘sold’ to the private sector from the perspective of ‘solving problems’ or ‘meeting needs’. This automatically creates negative images that not only impact on how decision-makers view regeneration neighbourhoods, but also on how residents themselves interpret their communities.A more successful approach would be to start by helping businesses identify the potential of untapped markets in deprived communities and feel confident in developing cross-sector partnerships based on business principles.
3) Getting beyond talk and charity: businesses are often involved too early – in ‘talking shops’ with little clarity on aims and outcomes – or when it is too late to make any real impact. Initiatives like Local Strategic Partnerships have attempted to address this but the evidence on success is mixed.
The London Private Investment Commission, founded and managed by the London Development Agency (LDA), provides a model for rethinking how to engage the private sector. Responsible for leveraging private finance for the LDA, the Commission consists of a group of investors, financiers, insurers, bankers, developers and professional services firms. By providing a discussion forum for these private sector experts, the Commission is able to assist the LDA in developing programmes that are more attractive to private sector investors.
4) Seeing the private sector as client: in much of Europe and the US, local government collects and distributes tax revenues, and business is seen as a client who pays taxes and expects decent services in return.Business sits at the heart of local government because the local economy is central to the locality’s future. Wide ranging incentives have been developed to encourage this, especially tax-based programmes, which target the bottom-line of businesses that get involved.
Local government in the UK is only just beginning to adjust to this perspective. Business Improvement Districts and the Local Government Business Incentive Scheme represent two early attempts to build the more obvious connection between local taxes and local services.
Ensuring the business angle
The key to engaging businesses in public policy initiatives is to speak their language and address the issues in a way that reflects their needs and priorities. Public agencies need to make it easy and rewarding for business to engage in public policy initiatives. Identifying the direct role for businesses and offering targeted services that will appeal to them are two straightforward steps to achieving this.
Companies need to be involved if today’s social and economic development challenges are ever going to be addressed. To make this happen, public agencies must get better at seeing things from the business perspective.
Andrew Carter is a director of the SMART Company. Previously with oneLondon, he is a recognised expert in neighbourhood renewal, inner city enterprise development and community economic development.
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