Thursday, 25 April 2013

Alan Lear to his MP, Rob Flello:

Dear Mr Flello,
I am writing to you to express my concerns about our Labour-led council and its officers taking this city deeper and deeper into debt that the residents can’t afford, on a controversial and total gamble of moving our civic centre from Stoke to Hanley. They are doing this in the forlorn hope that it will generate the local economy by inducing new businesses to locate there.
My concerns are:
1) In the report to Cabinet recommending the CBD development, 31May 2012, this paragraph appears:

1.3. From when the concept of a Central Business District was first discussed, there has been a recognition that, in the absence of an established 'office market', to enable a project of this nature to commence it will require a public sector, or similar anchor tenant, on which future marketing can be promoted and built. This report has been produced to seek members' support to the City Council taking up office accommodation in the critical initial phase of the development. If the City Council does not commit to establishing significance in the new central business district it is extremely unlikely that the development will progress.
If this is the case then it is self-evident that this is a foolhardy and reckless commitment of public funds to a venture that is doomed to failure if it was required to stand as a privately funded business venture. I’m absolutely astounded that not one councillor took this statement up and questioned the logic of taking the decision to go forward with this move.

2) The Council wants to build upon the retail sector and bring in large companies to the CBD. This sector, as anyone who keeps up with the news, is in meltdown due to the economic situation. Only today we see the closure of a Hovis bread making plant, Tesco and even Apple are showing that there is a huge decline in their profits. Locally we have a 28% retail unit vacancy level and shops are continually closing down to such a degree that my local High Street seems to be changing on a weekly basis. You yourself, only today, commented on Prime Minister’s Question time about the huge increases in the referral and use of Food Banks which have to, in some cases, limit their distribution of food to only families with children. What will happen to these people if they are subjected to more benefit cuts and a probable rise in council tax to pay for this move?
3) For any large business to commit to a business start-up in any particular location they look at its infrastructure. What are the transport network systems like? How easily can materials be brought in and finished products distributed to customers? How skilled and adaptable are the local workforce? What is the local educational attainment level? How much poverty and deprivation exists? What type of economy already exists? What is the average wage for the locality and how much disposable income do the residents have? Personally I feel that Hanley falls desperately short of expectations on quite a few of the above. I believe this is why we can’t get any information on which firms are interested into taking up occupancy in the CBD. On the other hand we are told that there have been 29 expressions of interest in moving to Stoke, which has the benefit of the transport network previously mentioned.
4) With large retail organisations the Pareto principle applies or the 80-20 rule of thumb. Any large organisation will take 80% of its earnings/profit out of the area/community where they are located. You only have to think of Kier or Tesco. They don’t buy from our local businesses therefore they are not really contributing to our local economy. True they do contribute wages (the 20%) but the majority are so low that they attract in work benefits. In addition these companies take all of their profit and it is placed on the books of their parent companies far removed from the communities in which their profits were generated. 
5) I believe the council is failing to demonstrate its understanding of our local retail economy. There are nearly 300,000 stores in the country with 86% employing fewer than 10 people. The importance of retail to local economies should not be underestimated. It is one of the few sectors with a presence in every neighbourhood across the six towns. These local economies are underpinned by retail as a provider of employment and the goods and services people need and want. Where there is this amount of small retail activity there is a multiplier effect for other consumer facing enterprises (tourism, food and drink, sports and leisure, personal services as diverse as hair and beauty and banking, evening and night-time economy). The council shouldn’t be concentrating on building another retail park which will take years, it should invest in this local economy which already exists. The council could start to do this tomorrow.

6) I was horrified to recently discover that we are currently in debt to the tune of nearly £280 million pounds to the Public Works Loans Board and that some of the loans are not due to mature until the 2050s. The information also shows that we are currently paying interest on those loans at a rate of £12.3 million pounds per year. It also shows that our Labour led council borrowed £74.4 million in 2012 with yearly interest payments of £2.6 million. With this huge outstanding debt hanging over the good people of this great city I cannot think of one good reason to continue with this controversial and uneconomical move of the civic centre from Stoke to Hanley. We don’t know how much this will cost as neither our Council Leader, Councillor Pervez nor Peter Bates, the Assistant Director for Financial Services are able to give us any answers other than it is a gamble that will bring businesses and jobs to Hanley and we should trust them to handle this kind of budget.

As my local MP I do hope that you will take up my concerns with the other local MPs and I do hope that you can persuade them and the Labour cabinet members on our council to rescind their decision to move the civic centre. If they continue to proceed with this move then I predict that it will be a reckless and a financial disaster. 
Yours sincerely,
Alan Lear

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