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Hello and welcome to this special programme as we examine the state | :00:33. | :00:37. | |
of the region's economy. Thousands of public sector job losses, pay | :00:37. | :00:42. | |
freezes and the rising cost of fuel have all taken their toll on | :00:42. | :00:45. | |
families across the south-west in the last year. In the week of the | :00:45. | :00:48. | |
Budget and with the government's measures to deal with the UK's debt | :00:48. | :00:52. | |
being felt across the region, tonight we'll assess what impact | :00:52. | :00:55. | |
they're having on households and businesses here, with the help of | :00:55. | :00:59. | |
business leaders, tafpbged with moving the economy forward, job | :00:59. | :01:02. | |
seekers desperate for work, experts who will assess the health of the | :01:02. | :01:07. | |
economy and MPs, we'll aim to find out how well placed the South West | :01:07. | :01:10. | |
is to deal with the ongoing austerity measures and look at | :01:10. | :01:14. | |
where potential growth comes from. If you're looking for a job, what | :01:14. | :01:18. | |
are your prospects of finding work? Do we have the skills in the South | :01:18. | :01:23. | |
West that employers are looking for? Youth unemployment is at its | :01:24. | :01:27. | |
highest level since current records began, what does the South West | :01:27. | :01:31. | |
have to offer its young people? One award-winning student says not | :01:31. | :01:37. | |
enough. My name is Sam Coumbe, I'm a | :01:37. | :01:44. | |
student at Plymouth University. The award I won was because I started | :01:44. | :01:48. | |
running the Farmers' Market. It's become a real success. My aim after | :01:48. | :01:52. | |
I graduate is to enter the graduate job market in a position of either | :01:52. | :01:55. | |
retail management or sales and marketing, though I have been | :01:55. | :01:59. | |
rejected by several firms so far. I've had two interviews, with two | :01:59. | :02:03. | |
different firms. But it is daunting when you receive e-mails from | :02:03. | :02:08. | |
companies saying that they've had 13,000 applicants for less than 200 | :02:08. | :02:12. | |
positions. It does really put doubt in your mind. Through my placement | :02:12. | :02:15. | |
search it became apparent there's little in this part of the country. | :02:15. | :02:19. | |
If I want to get into a graduate position, I am going to have to | :02:19. | :02:24. | |
move away to another part of the country or another part of the | :02:24. | :02:27. | |
worldment The Government have got their policies in place in terms of | :02:28. | :02:31. | |
the educational side of things. I feel they could be doing more when | :02:31. | :02:35. | |
it comes to students leaving university. It's all well and good | :02:35. | :02:39. | |
with a masters degree or PhD, but if you don't know what to do with | :02:39. | :02:44. | |
it when you leave, it's really just a piece of paper. | :02:44. | :02:46. | |
Chris Dawson what should someone like Sam do to single themselves | :02:46. | :02:51. | |
out in the jobs market? They need to go direct to the employer, offer | :02:52. | :02:55. | |
their services, for instance, we're forming an academy now which I'm | :02:55. | :02:59. | |
going to lobby the Government and Sir Philip Green is doing the same | :02:59. | :03:04. | |
thing. We will train those people, highly train them, so all our | :03:04. | :03:09. | |
enterprises we hit the ground running at 500mph. If they get into | :03:10. | :03:13. | |
our academy, I think it's better than any university. That's a | :03:13. | :03:16. | |
generalisation of a degree. You're being trained right to go at the | :03:16. | :03:21. | |
coal face. Believe it or not, we struggle to get trained managers. | :03:21. | :03:25. | |
We pay the right rate, not over or under. I think the academy is the | :03:25. | :03:29. | |
way forward. The Government need to get their hand in the pocket and | :03:29. | :03:34. | |
help us with it. The academy is self-centred because we want these | :03:34. | :03:39. | |
guys coming directly to us. Brent Ben if we're to drive the economy | :03:39. | :03:41. | |
forward it's essential to keep people like Sam in the South West. | :03:41. | :03:46. | |
How do we do that? I start by saying it's very good news that we | :03:46. | :03:49. | |
have people like Sam with the skills set in the South West. It's | :03:50. | :03:53. | |
good news that you want to remain in the south-west. You will look at | :03:53. | :03:59. | |
regions where they don't have the education or the attractions to | :03:59. | :04:04. | |
retain people. We need to sell the story of the South West to business | :04:04. | :04:09. | |
leaders and it's getting out there. We have a job seeker here Nichola | :04:09. | :04:13. | |
Wren, give us your experience of looking for a job. It's really | :04:13. | :04:18. | |
difficult. There are so many applicants for each job. You'll | :04:18. | :04:23. | |
apply for, I'm a PA, and I'll apply for a job that 300 people have gone | :04:23. | :04:29. | |
for. I've applied for probably about 400 or 500 jobs in the last | :04:29. | :04:33. | |
two years. I've had three interviews. Three? Yeah. You have | :04:33. | :04:38. | |
youngsters who you're worried about as well? I have teenagers. I have a | :04:38. | :04:42. | |
son who's 226789 he's just gone into an apprenticeship. My daughter | :04:42. | :04:46. | |
is 17. She's at college at the moment. She's hoping to study | :04:46. | :04:50. | |
criminal psychology. I'm just concerned that she's narrowing her | :04:50. | :04:53. | |
field too much and that she should look at doing something that's a | :04:53. | :04:57. | |
bit more useful. What are you thinking about in terms of her | :04:57. | :05:01. | |
prospects? I don't think they're good at the moment. I just, I | :05:01. | :05:05. | |
suppose I'm just at the end of my tether at minute. I'm feeling that | :05:05. | :05:10. | |
it's like banging your head against a brick wall. Anne Carlisle, you | :05:10. | :05:14. | |
wanted to say something? Yes I head up University college Falmouth, | :05:14. | :05:21. | |
which is creative industries and if there's one skill we are imbueing | :05:21. | :05:27. | |
in students and that's true of all the further education in the South | :05:28. | :05:34. | |
West is entrepreneurial skills. Most of the sectors which are | :05:34. | :05:37. | |
rapidly growing were not conceived of five years ago. The ability to | :05:37. | :05:41. | |
set up a business and have graduate skills and join businesses already | :05:41. | :05:45. | |
in existence is critical. We've got some fantastic statistics in the | :05:45. | :05:49. | |
South West which are five times more likely graduates are more | :05:49. | :05:53. | |
likely to set up their own businesses than in other parts of | :05:53. | :05:57. | |
the UK. So it's not all doom and gloom. It's really about building | :05:57. | :06:01. | |
on what is a truly entrepreneurial spirit and making sure we teach our | :06:01. | :06:07. | |
students and graduates the skills to be able to go out and be | :06:07. | :06:10. | |
innovators. How concerned are you about losing skills from the region, | :06:10. | :06:14. | |
because there aren't the jobs here for people like Sam? We have to | :06:14. | :06:17. | |
build the skills in the first place. When we've got them it's important | :06:17. | :06:23. | |
to unlock the doors into employment. We've been working hard in Cornwall | :06:23. | :06:26. | |
for some time. We have a scheme where we've funded graduates into | :06:26. | :06:30. | |
firms for the first year and in that 12 months they grow the | :06:30. | :06:34. | |
business and 90% of graduates have stayed on in that job because the | :06:34. | :06:38. | |
firm is grown from it. We're looking to expand on that hugely | :06:38. | :06:43. | |
now. We're also bringing together Cornish bursary to support up to | :06:43. | :06:48. | |
600 Cornish students in graduate positions and guaranteeing them | :06:48. | :06:52. | |
another year in employment, getting them in there, grow the businesses. | :06:52. | :06:58. | |
It's good for the economy and the employee. Hugo Swire, clearly the | :06:58. | :07:01. | |
Government's policies on employment aren't working at the moment. | :07:01. | :07:05. | |
Unemployment is up again. We have youth unemployment at record levels. | :07:05. | :07:11. | |
When is this oil tanker going to start turning? Youth unemployment | :07:11. | :07:14. | |
rose year on year in the last Government at a time of record | :07:14. | :07:17. | |
growth in the economy. It's nothing new. If you come oust further | :07:17. | :07:22. | |
education owing a lot of money, already, then you can't get a job | :07:22. | :07:26. | |
it's very debilitating. The Government is doing a lot with the | :07:26. | :07:29. | |
youth contract, which will help a lot of people. What's going to help | :07:29. | :07:33. | |
people is growth in the economy, stability in the economy and | :07:33. | :07:36. | |
confidence in the economy. I think in the South West we're incredibly | :07:36. | :07:40. | |
well placed with renewable energies. We should become the green | :07:40. | :07:44. | |
peninsula around the world. Tourism, we have a lot going for us. Too | :07:44. | :07:49. | |
often we sell ourselves short. It's going to take time. When it comes | :07:49. | :07:53. | |
right, it will come right quite quickly. Alison Seabeck where would | :07:53. | :07:58. | |
you like to see support targeted, particularly for young people? | :07:58. | :08:02. | |
We've seen 183% increase in youth unemployment across the South West. | :08:02. | :08:07. | |
We need very clearly to have real jobs with real wages with real | :08:07. | :08:11. | |
chances at the end of it. This Government isn't delivering that. | :08:11. | :08:14. | |
The youth contract is an interesting proposal, but it won't | :08:14. | :08:17. | |
deliver what we need. You're talking about the guaranteed job | :08:17. | :08:23. | |
for six months for young people. Absolutely, paid for out of a | :08:23. | :08:28. | |
banker's bonus. The point is that you have the university, who | :08:28. | :08:32. | |
Plymouth University, fantastic business sector within it, trying | :08:32. | :08:36. | |
to encourage young people to do it. What the vice Chancellor has come | :08:36. | :08:40. | |
out publicically and said is that they are expected a 10% drop off in | :08:40. | :08:45. | |
young people who are not from wealthy families going in, young | :08:45. | :08:48. | |
people with real entrepreneurial skills potentially, which so far | :08:48. | :08:52. | |
have been growing. Government have got to look at this. We grow our | :08:52. | :08:56. | |
young people in the South West. The reason the peninsula dental school | :08:56. | :09:00. | |
came here is because we needed dentists here and we knew if we | :09:00. | :09:04. | |
taught them here, they would stay here. We have to work really hard | :09:04. | :09:08. | |
on that. I want to come back to Sam who featured in the film. What do | :09:08. | :09:11. | |
you think of what you have heard? With the fees increasing, it's | :09:11. | :09:16. | |
going to attract a certain calibre of student. It's going to be �9,000 | :09:16. | :09:20. | |
a year to attend university. Post graduate courses will be more as | :09:20. | :09:25. | |
well. Academies are the way forward, integrating work experience. That's | :09:25. | :09:29. | |
absolutely essential. I mean, it's extremely difficult to get a degree | :09:29. | :09:33. | |
these days doesn't count as much as it did 20 years ago. You need to | :09:33. | :09:37. | |
have the relevant work experience. That proves you can do it at the | :09:37. | :09:42. | |
ground level and move through. I think the philosophy is changing | :09:42. | :09:45. | |
with regards to degrees and work experience. More comments from the | :09:46. | :09:49. | |
audience in a moment. The Government's mantra throughout the | :09:49. | :09:52. | |
public sector cuts sthat private sector would pick up the slack. The | :09:53. | :09:57. | |
figures for the greater South West for the last year suggest that's | :09:57. | :10:01. | |
not happening. 37,000 public sector jobs were cut, just 6,000 private | :10:01. | :10:05. | |
sector jobs have been created. Here's one public sector worker | :10:05. | :10:08. | |
with the driver and vehicle licensing agency, who fears she's | :10:08. | :10:16. | |
about to lose her job. I'm Louise Munn and I work for the | :10:16. | :10:22. | |
DVLA. The Government are proposing to close the 39 regional offices of | :10:22. | :10:27. | |
the DVLA. That will result in the loss of about 1200 jobs. It's | :10:27. | :10:31. | |
insult,, did he grading. We work so hard to provide a public service | :10:31. | :10:37. | |
where we k. We are a department that generates income for the | :10:37. | :10:41. | |
Government through number plate transfers etc. I am personally fed | :10:41. | :10:45. | |
up of the Government blaming the previous administration. It's not a | :10:45. | :10:49. | |
blame game. We're here. We've got to deal with, it as we keep getting | :10:49. | :10:53. | |
told, but why hit the public services? It is getting to the | :10:53. | :10:57. | |
stage already where we're thinking, can we afford to fill the tank with | :10:57. | :11:03. | |
petrol? We can afford �10 here and then we can only afford �20 worth | :11:03. | :11:07. | |
of shopping or whatever. I've already faced redundancy through | :11:07. | :11:12. | |
the MOD in Northern Ireland once. I relocated my family back home to | :11:12. | :11:17. | |
Cornwall as a result to stay employed. My fear is that I'm not | :11:17. | :11:25. | |
going to be able to continue supporting my family as I want to. | :11:25. | :11:28. | |
What are the prospects of the private sector picking up the slack | :11:28. | :11:32. | |
from the public sector cuts? problem with these things is always | :11:32. | :11:36. | |
timing. Unfortunately the private sector may fill that gap over time, | :11:36. | :11:40. | |
but it won't happen this year and probably not next year. I have | :11:40. | :11:44. | |
confidence in the economy and entrepreneurial spirit, we've heard | :11:44. | :11:47. | |
about, it will happen in time. You have to back the youth that is | :11:47. | :11:51. | |
coming up behind us. But in the next year, the next couple of years, | :11:51. | :11:57. | |
it is not going to happen. Demand is too weak. Are we replacing like | :11:57. | :12:00. | |
for like. Some of the statistics suggest we are losing well paid | :12:00. | :12:05. | |
public sector jobs, but they're being replaced by lower paid part- | :12:05. | :12:09. | |
time private sector jobs. That's always the way in the down part of | :12:09. | :12:12. | |
the downturn. We're in a period where we're losing jobs and the | :12:12. | :12:16. | |
ones being created are not the high value, high productivity jobs that | :12:16. | :12:20. | |
you need for the long-term. We have to make that adjustment through the | :12:20. | :12:23. | |
cycle. At the moment it's not happening. I'm sure it will happen | :12:23. | :12:27. | |
in the future. But we probably need measures now to help the economy | :12:27. | :12:32. | |
grow better. We're not getting the productist or employment growth we | :12:32. | :12:38. | |
need. We heard Louise's story at the DVLA, and Catherine Craig | :12:38. | :12:41. | |
possibly staff face a change to pay because of this hint now that | :12:41. | :12:45. | |
regional pay might be introduced. What do you think that would do to | :12:45. | :12:51. | |
workers like Louise? Well, first of all, regional pay is not something | :12:51. | :12:57. | |
new. It's been mooted right back at the beginning of the noughties. | :12:57. | :13:00. | |
you think it would drive down public sector wages in this part of | :13:00. | :13:04. | |
the world? Yes, of course it would. We know there's a pay freeze in | :13:04. | :13:10. | |
place. We know that pension contributions are going up. If we | :13:10. | :13:15. | |
find that pay is down and constrained in this respect, I | :13:15. | :13:18. | |
think there will be a mass migration. The figures suggested in | :13:18. | :13:21. | |
this debate in the run up to the Budget would suggest that the | :13:21. | :13:25. | |
private sector cannot keep wais with some of the growth in public | :13:25. | :13:29. | |
sector wages. The gap is something like 8% on average. Yes and that | :13:29. | :13:33. | |
figure is a little bit fluid at the moment, because we know there's a | :13:33. | :13:38. | |
pay freeze in place and job cuts and everything else. But of course, | :13:38. | :13:45. | |
prior to that, prior to the recession, that gap wasn't so big. | :13:45. | :13:49. | |
These differentials move a lot. In a boom time the private sector | :13:49. | :13:53. | |
moves ahead. In a downturn the public sector moves ahead. You have | :13:53. | :13:57. | |
to lock over a long period of time and see what the differentials are. | :13:57. | :14:03. | |
If the Government is true to its theme, wanting growth, growth is | :14:03. | :14:08. | |
about productivity and employment. The things that drive productivity | :14:08. | :14:12. | |
are high value jobs, high skills which are well paid. | :14:12. | :14:16. | |
comfortable are you with the idea of regional pay? I don't want to | :14:16. | :14:20. | |
see regional pay pushing down the wages. I don't want to see that. | :14:20. | :14:24. | |
I'm very uncomfortable with it. I want to see private sector pay | :14:24. | :14:27. | |
increasing so that people can continue to share in a greater | :14:27. | :14:30. | |
prosperity rather than penalising those who happen to work in the | :14:30. | :14:34. | |
public sector. We have to remember that the last Government basically | :14:34. | :14:39. | |
crashed our economy. In the last year in office, one of every �4 | :14:39. | :14:43. | |
they were spending was borrowed money. I can hear tuting, because | :14:43. | :14:47. | |
we're living in the present. Absolutely. But the coalition | :14:47. | :14:50. | |
Government is dealing with the mess that was left behind. Tackling the | :14:50. | :14:55. | |
private finances, driving down the deficit has to be the priority. | :14:55. | :15:00. | |
Let's talk about the public sector pay premium in the South West about | :15:00. | :15:04. | |
7.5% according to the Institute for Fiscal Studies. The public sector | :15:04. | :15:08. | |
pay freeze proposed that will bring back the pay premium close to | :15:08. | :15:12. | |
levels of 2008 just before the final crisis. But we're kidding | :15:12. | :15:15. | |
ourselves if we think we're going to get ourselves out of the | :15:15. | :15:20. | |
financial crisis by paying more for the public sect or. We had a system | :15:20. | :15:23. | |
where we're borrowing money at the moment to pay for the public sector | :15:23. | :15:27. | |
we have. We spent too much money at the time, we didn't fix the roof | :15:27. | :15:32. | |
when the sun was shining. Now we've paid for that. What we need to do | :15:32. | :15:36. | |
is free up private enterprise. It is the private sector which will | :15:36. | :15:39. | |
lead the recovery. At the moment too many small businesses, the | :15:39. | :15:43. | |
lifeblood of the economy, they even struggle to take on an extra worker. | :15:44. | :15:49. | |
Taking on one extra member of staff can double the amount of paper work. | :15:49. | :15:54. | |
The real debate here and remember where the growth will come from. | :15:54. | :15:58. | |
I'm glad the TPA here, I'd-a membership form, I don't know how | :15:58. | :16:04. | |
you become ally of the TPA. TaxPayers' Alliance. It's almost | :16:04. | :16:08. | |
like the mantra, blame Labour. I'm wondering we're two years into this | :16:08. | :16:12. | |
coalition Government now, when do we get the coalition standing up | :16:12. | :16:17. | |
and being counted? The criticism is often levelled at Labour that you | :16:17. | :16:20. | |
didn't fix the roof when the sun was shining. How did we get where | :16:20. | :16:25. | |
we are now? In my authority at the moment the leader of the council | :16:25. | :16:30. | |
won an award two years ago for the most achieving council. One of the | :16:30. | :16:37. | |
criteria was having built seven new schools with Government money from | :16:37. | :16:41. | |
the Labour Government. We don't hear her blaming Labour for her | :16:41. | :16:45. | |
awards. But there wasn't the public money to do this. We hear this like | :16:45. | :16:48. | |
a mantra. Let's go back to regional pay. What Chris Dawson said is | :16:49. | :16:53. | |
revealing. Good businesses like his are not interested in a race to the | :16:53. | :16:58. | |
bottom on wages. They're not interested in having, they don't | :16:58. | :17:02. | |
believe that public sector wages being cut is the way to equalise. | :17:02. | :17:08. | |
What I'm saying at the moment is if we have regional pay for the South | :17:08. | :17:11. | |
West, Plymouth can kiss goodbye, for example, to John Lewis ever | :17:11. | :17:17. | |
coming here. I want to come back to Robertment | :17:17. | :17:23. | |
People will see politicians quablg about whose fault it is the economy | :17:23. | :17:26. | |
is broken. We need to get the economy growing. That has to | :17:26. | :17:30. | |
involve tax cuts. That's the point I was going to make. Nigel has | :17:30. | :17:33. | |
rightly said that the private sector growth will take a little | :17:33. | :17:36. | |
time to come along. What we should be talking about now is the | :17:37. | :17:41. | |
stimulus to the economy to make that private sector growth come | :17:41. | :17:45. | |
along. I'm quite certain if we get the stimulus, the private sector | :17:45. | :17:50. | |
has the oblt to take the slack from the public. That's what we should | :17:50. | :17:56. | |
be talking about. Nobody wants to see redundancies particularly when | :17:56. | :17:59. | |
it's dedicated public servants doing a great job. I want to give | :17:59. | :18:04. | |
credit to the public sector employees who know what the big | :18:04. | :18:08. | |
picture is. Cornwall we had an agreement with the unions taking a | :18:08. | :18:13. | |
volume un tri3% cut in pay and other conditions. Everybody | :18:13. | :18:16. | |
realises, including in the public sector, that an expensive public | :18:16. | :18:21. | |
sector is not good for the economy. It's unsustainable, particularly | :18:21. | :18:25. | |
when it relies on unsustainable borrowing. You know full well how | :18:25. | :18:29. | |
important it is that your staff at Cornwall Council are reasonably | :18:29. | :18:33. | |
well paid so they can spend in the Cornish economy. If there's this | :18:33. | :18:37. | |
race to the bottom as Tudor Evans pointed out, what impact could that | :18:37. | :18:42. | |
have on spending power from your employees and other public sector | :18:42. | :18:46. | |
workers? It's a key factor. These people are the customers as well. | :18:46. | :18:49. | |
We're not talking about a race to the bottom. It's about finding a | :18:49. | :18:54. | |
reasonable level. I think the key point here is there's a big world | :18:54. | :18:58. | |
out there. Throughout Europe there are lots of well paid jobs being | :18:58. | :19:01. | |
created in renewable energy, one of the high growth sectors. The south- | :19:01. | :19:04. | |
west is very well placed to take advantage of that. We have a | :19:04. | :19:09. | |
fantastic set of universities. We have a dedicated renewable energy | :19:09. | :19:13. | |
faculty at Exeter University in Cornwall and now the South West | :19:13. | :19:17. | |
marine energy park. We should be looking at solutions. We will look | :19:17. | :19:21. | |
at this later, the prospects of renewable energy being part of the | :19:21. | :19:25. | |
drive of growth in the South West. Back to Hugo Swire. This emerged | :19:25. | :19:29. | |
over the weekend, the idea of regional pay featuring heavily in | :19:29. | :19:32. | |
the budget this coming week, what do you make of the idea? I think in | :19:33. | :19:38. | |
principle it's a good idea. I think where you have very high cost areas | :19:38. | :19:41. | |
to live in, particularly London and the south-east, you have cheaper | :19:41. | :19:45. | |
places around the country and it makes sense to me to vary rates. | :19:45. | :19:50. | |
The private sector do that in a number of ways. Why can't the | :19:50. | :19:53. | |
public sector do it as well? cost of living is high down here, | :19:53. | :19:58. | |
but we may end up with lower wages. That would no doubt be factored | :19:58. | :20:02. | |
into whatever regional pay solution comes about. The fact is just going | :20:02. | :20:05. | |
back to your earlier point, you can't have it both ways. You can't | :20:05. | :20:11. | |
say that the country has got to stay on this fiscal course in terms | :20:11. | :20:14. | |
of preserving economic cred yint and every time people say why are | :20:14. | :20:19. | |
we on it, for instance we're paying in excess of �120 million a day for | :20:19. | :20:23. | |
debt, everyone groans and let's live in the real world and forget | :20:23. | :20:27. | |
that Labour got us into the mess. That's the real world we're in. | :20:27. | :20:31. | |
want to come back to Louise, whose film we saw. You've had a pay | :20:31. | :20:36. | |
freeze I think for a while now. pay freeze for three years. | :20:36. | :20:40. | |
what about the prospects of regional pay? If you kept your job, | :20:40. | :20:44. | |
let's face it first of all, your job is at risk, if you kept it, | :20:44. | :20:49. | |
regal pay might be another prospect to confront. The gentleman needs to | :20:49. | :20:53. | |
remember that yes, the higher cost of living in London is higher, but | :20:53. | :20:57. | |
so is pay. In Cornwall for example, we have water rates, one of the | :20:57. | :21:03. | |
highest in the countries, council tax etc. The cost of inflation has | :21:03. | :21:11. | |
gone up, petrol has gone up. That's national. If the pay is frozen or | :21:11. | :21:16. | |
reduced, I'm already worse off. Under your proposal I'm going to be | :21:16. | :21:20. | |
unemployed trying to support my husband and child, pay rent, | :21:20. | :21:24. | |
council tax, water rates, my living cost, try and pay off my debt that | :21:24. | :21:27. | |
I already have due to your Government. We've frozen council | :21:27. | :21:32. | |
tax for two years. Inflation and petrol charges are the same | :21:32. | :21:38. | |
wherever you live in the country. You could reduce duty on petrol. | :21:38. | :21:42. | |
have. We have frozen the increase in petrol duty. Let's see what | :21:42. | :21:48. | |
happens in the Budget. We must move on. If the businesses are expected | :21:48. | :21:51. | |
to be driving the economy forward with growth, what help are they | :21:51. | :21:56. | |
getting to expand and take on more staff? Here's the view of one South | :21:56. | :22:04. | |
West businessman. I'm a landlord at the White Hart | :22:04. | :22:07. | |
Hotel in Holsworthy. The event business is somewhere I feel that | :22:07. | :22:11. | |
can expand. In the last three years we've doubled business year on year. | :22:11. | :22:14. | |
One of the issues is to get into events you have to tender, pay | :22:14. | :22:21. | |
money up front. You would like to go to the bank and say "Can I have | :22:21. | :22:27. | |
an overdraft" They say no. Six years ago, it wasn't a problem. | :22:27. | :22:31. | |
They couldn't throw enough money at me. Even when I had a mortgage and | :22:31. | :22:36. | |
a business loan, they said do you want some more? Now, I don't | :22:36. | :22:40. | |
believe I could get a penny out of my bank. I have tried 14 different | :22:40. | :22:43. | |
banks. One of the reasons they don't like to lend money, is they | :22:43. | :22:47. | |
say we're in a sector that they don't want to lend to. The banking | :22:47. | :22:50. | |
system has changed because of their failures. Sorting the country out | :22:50. | :22:54. | |
is very important. If we keep squeezing small business, then | :22:54. | :22:58. | |
without small businesses, what do we have? We are being crucified | :22:58. | :23:05. | |
because of their failures. Richard Davis, why are you as | :23:05. | :23:09. | |
bankers so reluctant to lend to someone like John? I can only speak | :23:09. | :23:12. | |
for Lloyds and say that actually we're not. That's a sector we are | :23:12. | :23:16. | |
growing in. It's interesting, it's a sector that's gone through a lot | :23:16. | :23:19. | |
of difficult times, but like so many different secondors, there are | :23:19. | :23:24. | |
winners in each sector and the answer is to pick them. On the | :23:24. | :23:27. | |
wider point, clearly there is a lack of confidence amongst a lot of | :23:27. | :23:32. | |
businesses at the moment. There's a big requirement amongst banks to | :23:32. | :23:36. | |
help restore that confidence. You're still not quite delivering. | :23:36. | :23:44. | |
Under Project Merlin you missed the most recent targets for lending to | :23:44. | :23:49. | |
small businesses. Lloyds hit our targets. If you take one particular | :23:49. | :23:52. | |
case, the economy in the South West today, one of the things we | :23:53. | :23:56. | |
undershoot on is businesses that export. We don't have enough that | :23:56. | :24:01. | |
export. One of the things I care passionately about, there's a range | :24:01. | :24:05. | |
of things available to businesss to support exporting, funding | :24:05. | :24:09. | |
mechanisms. Do I think they're widely known about? No I don't. My | :24:09. | :24:14. | |
fear is there could be businesses who perhaps get a chance to sell to | :24:14. | :24:21. | |
Germany, whatever, but are put off because they think it will be | :24:21. | :24:22. | |
difficult. Now you've had difficulty trying to get lending | :24:23. | :24:27. | |
from banks as well. It's a nightmare. My experience is that | :24:27. | :24:31. | |
the entire banking industry has closed to what is described as buck | :24:31. | :24:35. | |
and spade style hotels. There are two hotels adjoining my three | :24:35. | :24:42. | |
hotels that are both closed down, boarded up, almost 50 fulltime jobs | :24:42. | :24:46. | |
lost, because the entire banking industry will not give a mortgage | :24:46. | :24:51. | |
to a hotel. The valuations, what this has resulted in, is one of my | :24:51. | :24:56. | |
hotels I paid �1.2 million for ten years ago. Five years ago it was | :24:56. | :25:04. | |
valued at �2.1 million. Lloyds have just come back in and revalued it, | :25:04. | :25:10. | |
54-bed rooms, between �400,000 and �700,000. The reason the two hotels | :25:10. | :25:15. | |
adjoining my hotels are empty and semi-derelict is because nobody can | :25:15. | :25:20. | |
borrow a penny as a mortgage to buy a hotel in this part of the country. | :25:20. | :25:25. | |
These are key industries for the south-west, the pub industry, hotel | :25:25. | :25:28. | |
industry. Why are banks so reluctant to lend to them? Maybe it | :25:28. | :25:33. | |
will help if I tell you on Friday we helped a Cornish business buy a | :25:33. | :25:37. | |
prestigious hotel in Cornwall which they have great plans for actually. | :25:37. | :25:41. | |
In a few years they will grow. do people like John and Mark need | :25:41. | :25:46. | |
to do to get the lending freed up from the banks. You need to know | :25:46. | :25:49. | |
your market, I've seen the television programme with Mark on | :25:49. | :25:54. | |
it and he knows his market. You need to know the market, that | :25:54. | :25:58. | |
applies to hoteliers and publicans. You need to provide what customers | :25:58. | :26:03. | |
want. The point is because the banks have closed down the lending, | :26:03. | :26:08. | |
what that's done to people in the hotel sector, not just Torquay, a | :26:08. | :26:14. | |
lot of areas in the South West, it has driven the values down by 60%. | :26:14. | :26:22. | |
Anybody with a 35% or 40% mortgage five years ago is now in negative | :26:22. | :26:26. | |
equity, medium sized hotels, if you have a ten or 12 bedroom guest | :26:26. | :26:29. | |
house and you're struggling a bit, previously you could have gone and | :26:29. | :26:33. | |
got a bit of an overdraft to help up through to the next summer. Now | :26:33. | :26:37. | |
the bank is more than likely definitely going to say no to any | :26:37. | :26:41. | |
form of lending, borrowing, overdraft, and unbeknown to you | :26:41. | :26:45. | |
you're in negative equity. So you can't think oh, well it's not great, | :26:45. | :26:49. | |
I'll sell up and move on. You have to wait until the bank come and put | :26:49. | :26:53. | |
the shutters up. John, we saw in the film a moment ago, you're | :26:53. | :26:58. | |
trying to expand your business, the irony of all this, you realise you | :26:58. | :27:03. | |
have to diversify, but the banks won't you -- give you the money. | :27:03. | :27:09. | |
had the smoking ban, we hit the recession. 37 pubs were closing a | :27:09. | :27:13. | |
week. In the film you said you tried 14 banks, does that include | :27:13. | :27:17. | |
Lloyds? It does. One of the issues about the mortgages, they will only | :27:17. | :27:21. | |
value my business on a closed premises, they will not give me a | :27:21. | :27:25. | |
mortgage based on my business and my property value as it is. | :27:25. | :27:28. | |
Everything is a close boarded business because we're high risk. | :27:28. | :27:34. | |
Why is that? I would say when you look at that business, I mean, you | :27:34. | :27:38. | |
may value it in many ways. I think picking up on Mark's point, I don't | :27:38. | :27:44. | |
think the industry is to blame for those. Values are what they are. We | :27:44. | :27:51. | |
reflect the economy. No, you are. If what had happened to the hotel | :27:51. | :27:55. | |
market and borrowing happened to residential mortgages, because | :27:55. | :28:01. | |
unless, all right you might lend �10 million to a boutique style | :28:01. | :28:05. | |
hotel in London or specific things, but the road my hotels are in, I | :28:05. | :28:09. | |
have a lot of hotels closed up. It's because the tap has been | :28:09. | :28:13. | |
turned off. If that happened with residential mortgages people would | :28:13. | :28:16. | |
be rioting in the streets if the value of all their homes dropped by | :28:16. | :28:22. | |
65%. As someone who's trying to help the region's business | :28:22. | :28:24. | |
community move forward, what do you make of the bank's position at the | :28:24. | :28:32. | |
moment? Well, listening to Richard and not going into a bank -- banker | :28:32. | :28:38. | |
bashing session, there is no doubt from the 63,000 VAT registered | :28:38. | :28:42. | |
businesss in our area that they have a major problem in access to | :28:42. | :28:45. | |
finance. That spreads right across the board. If we could free up | :28:45. | :28:49. | |
lending to some of our brilliant small and micro businesses it would | :28:49. | :28:53. | |
be great. But it is just not happening at the moment. If we look | :28:53. | :28:56. | |
at some of the other systems near Europe, German model would be a | :28:56. | :29:00. | |
good example, where there is much more localised banking, much more | :29:00. | :29:03. | |
dedicated relationships with small businesses, greater commitment, | :29:03. | :29:07. | |
then we might get somewhere. damaging do you think this is to | :29:07. | :29:10. | |
the region's economy that businesses are not getting the | :29:10. | :29:15. | |
lending they need? It's enormously damaging. The amount of growth | :29:15. | :29:18. | |
potential in small businesses who want to employ, invest and get on, | :29:18. | :29:22. | |
but they haven't got that liquidity to make it happen. Everyone along | :29:22. | :29:25. | |
the front row wants to say something. Growth comes from | :29:25. | :29:29. | |
investment and export growth. That requires credit. If the credit | :29:29. | :29:33. | |
system isn't running, then the oil in the economy is not working and | :29:33. | :29:39. | |
the engine stops. Innovation also requires money and risk taking. | :29:39. | :29:43. | |
That is a truth. The other truth is every downturn I've experienced, | :29:43. | :29:46. | |
the banks have done what they're doing at the moment. The hotel | :29:46. | :29:50. | |
industry is one of those that they always pick on. They are seen as a | :29:50. | :29:53. | |
higher risk. Chris Dawson, if you can't get lending from the bank, | :29:53. | :29:57. | |
how do you expand? We haven't got any lending at all. How do you do | :29:57. | :30:02. | |
it? Make money. We're very cash rich. We have been for a long time. | :30:02. | :30:06. | |
We generate a few quid for sure. I have a question before you go into | :30:06. | :30:12. | |
that. Richard, do you lend to the system, the person or the trade? If | :30:12. | :30:17. | |
I come along for a loan what would you say? Your starting point, if | :30:17. | :30:21. | |
you look at what is a successful business, it's the person running | :30:21. | :30:24. | |
it. Why? Because they need to know their market, how they're running | :30:24. | :30:29. | |
their business etc. You don't consider that any more. You used to. | :30:29. | :30:32. | |
We get fed into a computer and if it ticks all the boxes well you | :30:32. | :30:37. | |
might, but chances are you don't. They don't talk to the real person? | :30:37. | :30:43. | |
No. Decisions are made a long way from here. In terms of credit, if | :30:43. | :30:47. | |
you can't get it from the banks what do you do? It's a real | :30:47. | :30:52. | |
challenge as we come out and try to expand the private sector as a | :30:52. | :30:57. | |
driver for jobs is where is that growth capital going to come from? | :30:57. | :31:03. | |
My view is that is one area, I'm a great believer the Government duds | :31:03. | :31:06. | |
best for business when it lets business crack on with it. We have | :31:06. | :31:14. | |
a failure in the system. What the Government should do is look to | :31:14. | :31:17. | |
start disintermediating the provision of capital for business. | :31:17. | :31:22. | |
Where are the signs of growth in the south-west? The BBC | :31:22. | :31:25. | |
commissioned skpeerion to assess the health of businesses across | :31:25. | :31:30. | |
England. It revealed that Exeter has the highest proportion of high | :31:30. | :31:33. | |
growth businesses. Weymouth and Portland, the biggest percentage in | :31:33. | :31:37. | |
business startups and Torbay perhaps surprisingly, the highest | :31:37. | :31:41. | |
exporting potential in our region. One businessman from Torbay is with | :31:41. | :31:46. | |
us now. Graham, what did you make of that statistics that there's a | :31:46. | :31:49. | |
great exporting potential in Torbay? I didn't fully understand | :31:49. | :31:55. | |
it. I don't associate the Torbay I see as somewhere that's ready to | :31:55. | :32:00. | |
boom as an exporting town. You're an exporting business. We are. | :32:00. | :32:04. | |
We've been in Torbay for 70 years. We didn't move to Torbay because | :32:05. | :32:08. | |
the opportunity is there. Having said that, I think if you look at | :32:08. | :32:12. | |
Torbay as a town and I see something, a town going the wrong | :32:12. | :32:16. | |
direction. It's getting very tired. It's lacking investment in the town | :32:16. | :32:22. | |
centre. We've talked about the hotels in the area. We're running a | :32:22. | :32:25. | |
successful exporting business despite the area. I don't collate | :32:25. | :32:29. | |
that report with the Torbay that I see. That's interesting. What one | :32:29. | :32:35. | |
thing would encourage businesses to come to Torbay in your mind, what | :32:35. | :32:39. | |
needs to be done? In my mind, if you have a successful, if you want | :32:39. | :32:42. | |
to attract people to the town and you want to attract businesses to | :32:42. | :32:48. | |
an area and make it grow, it starts from the centre. We have one of the | :32:48. | :32:51. | |
greatest opportunities, it's a beautiful town. That's a key asset. | :32:51. | :32:54. | |
We're seeing that being eroded, over years of lack of investment in | :32:55. | :32:59. | |
the town centre. We're seeing... It's a beautiful town but is it | :32:59. | :33:03. | |
enough to encourage a business to relocate there? It's part of the | :33:03. | :33:07. | |
formula. We're competing. I mean a town is competing with other towns. | :33:07. | :33:10. | |
Tim Jones from the Local Enterprise Partnership, that's one of your | :33:10. | :33:15. | |
areas to drive the economy to a point where businesses see it as an | :33:15. | :33:20. | |
attractive opportunity, was going wrong in Torbay then? 40 years of | :33:20. | :33:24. | |
fiddling around waiting to put a decent road network in is one of | :33:24. | :33:28. | |
the biggest problems. It was abandoned by the public investment | :33:28. | :33:32. | |
in transport. Fortunately that decision has finally been made and | :33:32. | :33:36. | |
Torbay has the chance to turn it around. Sthat key? I don't think so. | :33:36. | :33:44. | |
The Torbay has basically sat on its hands wait for -- waiting for the | :33:44. | :33:47. | |
road thinking it will end its problems. You have a centre where | :33:47. | :33:53. | |
shops are closing on a week live basis. The council drive retail out | :33:53. | :33:56. | |
of the town centre by charging rates beyond what businesses can | :33:56. | :34:01. | |
afford. Thinking that putting in a road will change the economy. | :34:02. | :34:06. | |
other tangible things are you looking at to stimulate growth in | :34:06. | :34:09. | |
the area? Transport is high on the list. Access to finance is high on | :34:09. | :34:13. | |
the list. At a local level, Broadband, which is a massive | :34:13. | :34:17. | |
driver of productivity is a key component. If we could drive that | :34:17. | :34:20. | |
into small businesses that would immediately translate no a better | :34:20. | :34:25. | |
economy. You were previously with the RDA, which has effectively been | :34:25. | :34:30. | |
replaced by the local enterprise partnerships. How well place ready | :34:30. | :34:35. | |
they to deliver the stimulus? are very different animals from the | :34:35. | :34:40. | |
RDA. They had a supply line of projects it was hoping to do. The | :34:40. | :34:44. | |
LEPs were created but obviously there is a period where the new | :34:44. | :34:48. | |
businesses, if that's what they are, need to get going. Have they got | :34:48. | :34:51. | |
the same resources, access to finances behind them that the RDA | :34:52. | :34:55. | |
had? The question isn't necessarily... Hang on. Let Nigel | :34:55. | :34:59. | |
answer? Have they got the funding? They haven't got the funding in the | :34:59. | :35:03. | |
right place for investment today. Because it's relying on the private | :35:03. | :35:05. | |
sector again. When the private sector is healthy and wants to | :35:05. | :35:09. | |
invest, I'm sure the money will come through. There are funds | :35:09. | :35:13. | |
available, the regional growth fund. We have heard this week that | :35:13. | :35:16. | |
Cornwall is getting more money after 2013 from the European system. | :35:16. | :35:20. | |
There are funds available. But it's in a different place than it was | :35:20. | :35:27. | |
when the RDA was in place. I find it interesting, my career was with | :35:27. | :35:29. | |
a multinational, the conversation when you talk about the economy | :35:29. | :35:33. | |
down here is where is the money to help. What we should be talking | :35:33. | :35:36. | |
about is where are the opportunities. There are hundreds... | :35:36. | :35:40. | |
So it's a different animal to the RDA. You're here to facilitate. | :35:40. | :35:44. | |
find the opportunities, help them realise those. As Nigel said, the | :35:44. | :35:47. | |
first thing is and this is why I don't necessarily agree with Tim | :35:47. | :35:52. | |
wholly in the sense that the road and rail network are important, if | :35:52. | :35:55. | |
your horizon is global or international, which is where | :35:55. | :35:59. | |
Cornwall and the South West have to see the future and superBroadband | :35:59. | :36:02. | |
makes that future very accessible as to the sort of people that Ann | :36:02. | :36:06. | |
is turning out from Falmouth, if we have a global perspective and we | :36:06. | :36:09. | |
really find the opportunity and work out the business case, there | :36:09. | :36:13. | |
is every reason why the South West could perform better than any other | :36:13. | :36:17. | |
region. Dr Antoinette Young an interesting statistic about the | :36:17. | :36:22. | |
number of business startups in the area. Are you seeing that from the | :36:22. | :36:27. | |
network of business people you talk to, are more people starting up | :36:27. | :36:32. | |
their new businesses? I'm heavily involved with an organisation | :36:32. | :36:36. | |
called Women in Business Networking. We had a meeting just before | :36:36. | :36:39. | |
Christmas. This is over the South West. They asked, who expects their | :36:39. | :36:44. | |
business to grow next year and every hand went up. We're talking | :36:44. | :36:49. | |
about 80 women who are Seoul traders or they're decision makers | :36:49. | :36:51. | |
in whatever organisation they work. I'm very optimistic about the | :36:51. | :36:58. | |
economy. If you paraphrase warren Buffet, he said the problem is fear. | :36:58. | :37:04. | |
People are afraid to spend and invest. If everybody holds steady, | :37:04. | :37:11. | |
keeps patient, it will come back. You can't squash entrepreneurs. | :37:11. | :37:18. | |
am extremely optimistic. Torbay is the most fantastic place to grow | :37:18. | :37:22. | |
one of the biggest markets in the world, which is provision for an | :37:22. | :37:27. | |
ageing population, health and well being. In the South West we have | :37:27. | :37:31. | |
digital, environmental sustainability, we have all sorts | :37:31. | :37:36. | |
of sectors which you can follow them all the way from the South | :37:36. | :37:41. | |
West to enormous global markets. That's critical to growth not | :37:41. | :37:46. | |
responding to microbusinesses, it's saying can we cluster, can we | :37:46. | :37:49. | |
configure ourselves and play on very big fields and do it the way | :37:49. | :37:53. | |
other economies do. We're well positioned to do it. The bulgt is - | :37:53. | :37:57. | |
- Budget is this week. What do you want it to deliver to stimulate | :37:57. | :38:01. | |
growth? I want to take the lowest pay out of paying income tax. The | :38:01. | :38:05. | |
quicker we do that, the more we will deliver pound coins in the | :38:05. | :38:12. | |
back pockets of people. Cutting VAT. That would be the quick fix. What | :38:12. | :38:17. | |
one thing from the Budget? Just to maintain our international fiscal | :38:17. | :38:19. | |
credibility, which will benefit every business up and down the | :38:19. | :38:23. | |
country. We must leave it there. Plenty of concerns and questions | :38:23. | :38:25. | |
about the region's economy have been raised during the course of | :38:25. | :38:29. | |
this debate. We may get a clearer idea about some of the answers | :38:29. | :38:32. |