The future of the Commonwealth

Etoile submission influences UK Parliament's Foreign Affairs Committee report

by Martin Roche, Etoile Partner

London 15th November | The UK House of Commons Foreign Affairs Committee published the findings and recommendations of its hearings into the role and future of the Commonwealth, from the point of view of the United Kingdom. Etoile had submitted written evidence to the Committee. The essence of our case, which is strongly echoed in the Committee’s report, is that while the Commonwealth is rightly highly valued in diplomatic, political and sporting circles, its core values are little understood, even by elites (the Committee cites Etoile’s Populus survey of senior 100 UK influencers. See page 24) and huge numbers of citizens in member countries lack any clear understanding of its values and function or its relevance in their lives.

We made two fundamental proposals:

1. Turn the Commonwealth into a global democratic foundation:
with the mandate to speak for democracy and the common man in a way that no other international organisation can. It is the “North” and the “South”, the “East” and the “West”, it straddles both hemispheres and contains 30% of the world’s population. As such it is uniquely equipped to offer examples of a multiple versions of democracy, not just the “western” model with all its historical baggage, which may have limited appeal or relevance to other emerging economies/states. It thus has the potential to be a great force for good in the 21st century in a world where democracy cannot be taken for granted.

2. Build it into a growing economic development force in the world:
There are many diverse economic philosophies to be found across the Commonwealth and it would be naïve to imagine that the Commonwealth might rally round a single economic dogma, but all want economic success to improve the well-being of their people and assist many to escape from poverty. Etoile would endorse moves to build structures and processes that generated far more trade and investment— and accompanying development—across and between Commonwealth countries, and indeed other countries not currently members of the Commonwealth, than is currently the case.

In its summary, the Committee noted:

“The Commonwealth has appeared less active and less publicly visible in recent years and there is evidence that it is missing opportunities to influence events. The Commonwealth Secretariat must sharpen, strengthen and promote its diplomatic performance.
The Commonwealth must speak with greater unity in the international community;

• there is a growing perception that the Commonwealth has become indifferent because it fails to stand up for the values that it has declared as fundamental to its existence

• on issues such as development, trade and investment, climate change and global pandemics, the Commonwealth is in danger of becoming immaterial as beleaguered nations look elsewhere for the help they need, and

• the work programme assigned to the Commonwealth Secretariat requires critical review with the objective of concentrating on priority matters that will bring the greatest benefit to the people of the Commonwealth.”

Etoile was not alone in expressing concerns about how the Commonwealth positions itself and communicates across the globe. We were however the only geopolitical and communications consultancy to submit evidence and ideas to the Committee and the clarity, robustness and sense of our analysis and recommendations resonates in the Committee’s report. Commonwealth nations account for 30% of the world’s population and include huge economies such as India and the UK and many of the world’s fastest growing economies in Africa. Etoile believes the Commonwealth is rich in potential as a force for democracy and peace and as an instrument of global trade and greater economic stability. But time is short. The Commonwealth has to win the support and relevance of many millions of people worldwide and do it soon before minds find new places to rest. The Commonwealth must communicate better, stand up boldly for its core values and reach out to a world hungry for its message of democracy, rule of law, peace, stability, human rights, mutually beneficial economic progress and the brotherhood of man.

That’s surely something worth doing very well and doing soon.

NOTE: Etoile’s submission to the Committee was written by Graham Barr, Roger Cartwright, Ron Hepburn and Martin Roche.

South Africa can be a new international finance star

Article first published in South Africa's Business Report

By Martin Roche

In 2007 just before the world suffered its worst financial crisis in living memory, the head of one of Europe’s most respected financial regulation authorities asked for a report into the reputations, regulatory structures and market potential of a dozen “new wave” economies around the world. The report grew in importance as the financial crisis worsened. It provided some of the answers to the big questions being asked by the finance houses, and the big legal and accountancy practices; “If the United States and Europe are in crisis, where should we be seeking new opportunities?”

Greatest potential
Of all the countries in the study, South Africa had the greatest potential. It has a regulatory structure rated among the very best in the world and a sophisticated and long-established commercial legal system with skilled practitioners and dependable courts. Its accountants are admired worldwide for the quality of their training, their probity and industry. The country has sound banks (untainted by the failures and scandals of the global crash) and solid businesses in areas like insurance and fund management.

How could this potential be unleashed? How could the biggest financial services economy in Africa position itself to become the financial hub for a booming “New Africa” - and compete on the global stage as a finance centre to rival other successful hubs like Singapore or Beijing?

It’s a very big idea. At the core is a strategy designed to bring wide-spread benefits to South Africa. One that will widen and deepen the economy, bring new business and employment opportunities and do so in a way that protects and enhances South Africa’s reputation for honesty and fair dealing in finance. It’s an idea that will enable the country to win the confidence of the world’s financial policemen, media and governments.

Its key objectives would be to bring new business to indigenous finance concerns, attract international finance and allied firms, provide an ever-growing number of high quality jobs for local people, stimulate the business hospitality, convention and tourism sectors and steadily grow revenue for city, provincial and national exchequers.

To capitalise on this extraordinary opportunity, South Africa has to develop a strategy with a universal set of credible brand benefits and express them in a way that informs and persuades mobile capital and gives local voters and international observers real confidence that the benefits of building the finance sector will be deep and lasting.

The way any country presents itself as a centre for finance has to be very different from five years ago. Then, with booming economies across the world and a seemingly non-stop growth in personal wealth everywhere, the finance industry was seen as the saviour of the universe.

Finance reputations in tatters
The reputations of many of the world’s largest finance concerns are now in tatters and hundreds of millions of people have had at least a third wiped off their personal wealth. Scandal follows scandal, heads roll; jail doors open, share prices collapse and people in banking and finance now enjoy lower public confidence in Britain, Europe and the United States than estate agents, journalists and politicians.

Trust has evaporated and with it went belief in the credibility of the marketing propositions and brand promises made by finance houses and finance jurisdictions. Thus the strategy for South Africa and the guarding of the country’s reputation have to be seen to be driven by a partnership of democratically-elected politicians, regulators, the central bank and the industry. Every word, every detail and every nuance matters.

Most important to the attraction of foreign investment is that very few people in the world know of or understand South Africa’s credentials in finance. So it will require a sophisticated strategy and a highly-professional campaign to alert, inform, stimulate and motivate the world of international finance to the potential of South Africa as a country with a view of finance and its supervision that the world is hungry for - because it needs the rebirth of trust.

It calls for the skills and experience of people who work in this world and have a track record of helping countries make breakthroughs in this field.

In 2009, Etoile took this thinking to the government of the Western Cape, where it received a warm, professional and enthusiastic reception. A finance industry body is now considering the idea.

We hope that what will emerge is a partnership between public and private sectors with the right strategies and plans to deliver a breakthrough and give the world new reasons to admire, support and applaud South Africa.

There is a great deal at stake and no time to lose. The Economist Intelligence Unit, the highly respected in-depth research arm of The Economist magazine, recently forecast that while South Africa’s finance industry will grow in the next decade, its predominant position as Africa’s top finance centre will be eroded by competition from other African countries.

The most recent entry into the business of hosting international financial operations is Botswana, which offers a stable Government and sound governance, regulation and infrastructure. Its initiative is already proving successful, much to the benefit of the country and its people.

Windows of opportunity rarely stay open for long. South Africa needs to grasp this opportunity now while it still can and to look to the best people in the field to help it achieve the breakthrough that is possible. It would be a great pity if the opportunity were to be squandered by treating it merely as a short-term marketing opportunity for the local finance industry.

Martin Roche, a partner of geopolitical consultancy, Etoile Partners, has worked on place marketing and foreign direct investment assignments across the world.

Trust broken – can it be mended?

By Ronald Hepburn, Etoile Partner

The Economist this week leads with an indictment of the lack of morals of the banking industry, globally (see Banksters). They it accuses them of “a culture of casual dishonesty”; collusion, cartels, greed and a scant regard for the truth are not trust makers. The finance industry relies on one thing, trust. It is the core attribute which persuades people to allow the industry to handle their money; but trust is now the last thing we can bestow upon our bankers.

I have a small confession to make; I worked in the investment banking industry for 10 years, through the heady Champagne days of the 90s. I saw the deregulation of the industry and the free-for-all that ensued. I saw first-hand the destruction of value of the broking house for which I worked as it collapsed. At first it thought it was above regulation, then it tried to fiddle its way out of trouble, then it lost the trust of the regulators and shareholders. This was a Japanese collapse and the shock to the people of Japan was as palpable as they were forced to question their faith in the system.

Then as now, the issue remains the same. Bankers – and for that matter all people involved in the financial services industry – go wrong when they forget the fundamental social purpose they are there to serve. That purpose is not to make money for shareholders – that is merely a by-product. 

Banks need to rediscover their social purpose
About three years ago, just after Lord Turner, then Chairman of the FSA, accused the industry he regulated as being “socially useless” (Financial Services Authority chairman backs tax on 'socially useless' banks), I found myself chairing a meeting of City communications directors. I challenged them to answer the “socially useless” accusation of their own regulator. To a man and woman, they referred to their CSR policies – the thin veneer of do-goodery of the financial services corporation. After some further discussion there was general agreement that in fact they had no “social” purpose - other than to make money for the shareholders – and themselves of course, which could be seen as anti-social. And here is the rub. With such an attitude, moral rectitude in business dealings flies out of the window. They were all wrong in fact and I shall explain why.

Money and the single-minded pursuit of it flies in the face of the real purpose of the financial services industry, the social purpose which gives it permission to exists, which is to take custody of money lent to it by the public (shareholders, savers) and make sure it doesn’t get stolen or frittered away. Ideally it should also grow and be safe, while be put to good use. Most importantly it should still be there when the people whose money it is need it. This is the social purpose of the finance industry in an oversimplified nutshell.

Ah! But clearly there must be exceptions? Please let me have them? Proprietary trading? Surely that has no social purpose? It does actually, although the traders themselves wouldn’t recognise it. Proprietary traders (who use their own funds to trade securities for profit) provide much needed liquidity in the market. Derivatives traders? Amongst other things they provide farmers in Lincolnshire, Denmark and Alabama with valuable information about the price of their pork bellies in the future and allow oil and gas exploration teams to estimate the future viability of their finds.

The banking industry needs to buy back its soul, remember its real purpose and keep in mind that the money they are playing with is not theirs. They are just keeping it in trust. And the people, the regulators, the governments don’t trust them.

Time for Barclays tabula rasa

By Etoile Partner, Martin Roche

On Monday, my colleague, Trevor Datson, suggested that Barclays Bank chief executive, Bob Diamond, would be unlikely to hold out against the clamour for his head to roll in the wake of the LIBOR rate fixing scandal. Trevor’s instincts were spot on, for the very next morning, even before London’s financial markets were open, Mr Diamond had quit. Now it’s said in informed circles that what finally did for the mega-high-earning Mr Diamond was pressure from the Governor of the Bank of England, Sir Mervyn King, and from the Chairman of the UK Financial Services Authority, Lord Adair, for him to fall on his sword. If the rumours are true, and they make perfect sense to me, the regulators have acted at speed to try and limit the reputational damage to the City of London, send a signal to the world that the authorities are firmly in charge and give Barclays the earliest possible chance to start again with a tabula rasa – a clean slate.

So, what kind of man or woman is needed to rescue one of the world’s biggest banks from the trough of public despair and disgust into which Barclays has been plunged by the LIBOR rate-faxing, the miss-selling of retail and small business products, legal but publicly unpopular tax avoidance practices and a breathtaking degree of corporate arrogance by its now departed chief executive?

Who runs Barclays matters to the global economy and particularly to the places Barclays does most of its business, London and New York. The bank came through the crash of 2008 in a strong position and with a balance sheet that allowed it to snap up what was left of Lehman Brothers to become a much bigger player on the New Your investment banking scene. That fast and clever move was seen as a typically self-confident piece of entrepreneurial chutzpah of the type that had for centuries put London at the forefront of world finance.

Who runs Barclays matters, because the banks – those bailed out by the taxpayers and those like Barclays that were not – have since the crash of 2008 to keep winning the public’s “licence to operate”. How they behave is no longer simply a matter for shareholders and regulators, but also for politicians and the general public. All of the banks hold our financial future in their hands. The indebtedness of the UK’s banks is greater than the entire GDP of the United Kingdom, so now they are playing in the last chance saloon. More scandal and more failure could result in the City of London losing many of the privileges and tax benefits that give it a global competitive edge. The public wants the City to succeed, but not at any price.

The challenge for the new boss of Barclays will be to find ways of keeping the bank rich in swashbuckling dash, derring-do and breathtaking deal-making, whilst reducing reliance on high-risk trading and derivatives products, expanding lending to business in what is still a very uncertain market, satisfying the ordinary banking needs of corporate and retail customers, giving regulators little cause for concern and rebuilding the bank’s reputation for integrity. Perhaps even bringing it back to being the uncompromisingly principled and scrupulously honest bank of its Quaker founders. Maybe our readers will tell me if they think I’m being naïve in seeking a more ethically based banking culture.

Without doubt, the new boss at Barclays will need the toughest and thickest of skin, lots of high level experience in finance, in managing people and turning strategic theory into winning banking for customer and shareholder. But I venture that it will be personal values and strength of character that will wholly condition whether the new captain steers a straight and true course safely into port or strikes a reef and goes down with the ship. He or she will need an outstandingly gifted head of communications who comes with an equally strong reputation for integrity and strength of character. Such creatures are rare in most walks of business and public life and have all but disappeared from the City in recent years.

Let me give you an example of the type of advice the new Barclays’ communications chief must have the guts and experience to give his chief executive. Yesterday, the departed Bob Diamond gave evidence before the Treasury Select Committee of The House of Commons, one of the most powerful committees of Parliament. Now Mr Diamond is an American, though he’s no stranger to the UK, having lived here for 16 years, so he knows how the British behave in formal and informal situations. Yesterday he referred to every member of the Select Committee by their first name. That action sent all the wrong signals. Firstly, it showed discourtesy to Parliament and to the Committee (the Committee chair and members at all times called him Mr Diamond). It could also mislead the outsider into thinking that Mr Diamond and each Committee member are personal friends. What Mr Diamond appeared to be trying to do was what we in the communications business call “borrowing interest.” In short, he was trying to get some of the status and authority of the Committee and its members to run off on him and convince us he is as good a guy as they are and not the banker he is thought to be. Personally, I would not buy a used car from Mr Diamond. But he is history. His successor has to have very special qualities and a truly brilliant communications machine in support. Advice note Number 1 – when in formal settings be formal. That’s how proper bank managers behave.

Anything else will not be a tabula rasa. It will be a false start not a fresh start.

London does not have a divine right to rule the banking world.

by Trevor Datson, Etoile Partner

Forget the individuals: Institutionally, London's banks are beginning to look and behave like wounded animals, and rival financial centres old and new are not only right to be licking their lips, they would be foolish not to.

Emerging relatively unscathed from the credit crunch, Barclays might have been forgiven for a moment of self-congratulation, no matter how weakly deserved. But the breathtaking audacity of the dodgy dealings on its trading floor has unseated its chairman Marcus Agius, whose resignation stands only a limited chance of saving the scalp of CEO Bob Diamond. If Diamond is forced to go - and the British media are unlikely to settle for less as they enjoy a moment's respite from examination of their own equally pernicious practices - then that sets a very troubling precedent for rival bosses. Because the one thing that we do know for sure about attempted LIBOR fiddling is that no one bank would stand an earthly chance of achieving this by itself. There are many more skeletons in the cupboard, and it's only a matter of time before the U.S. DoJ and the UK's FSA shake them out.

The advisers of these woebegone CEOs would do well to consider fronting up before the truth is dragged out of them. Currently, the spotlight is on Barclays, but it will only take one or two more dominoes to topple before the entire industry is held guilty by association. If the truth is merely murky rather than entirely black, better to get it out there while one or two people still actually care about the detail of what happened.

Needless to say the City of London can't rely on Westminster to dig it out of its self-created abyss. It's an interesting tightrope for the politicians, and one that history suggests they will straddle in a spectacularly painful fashion. Prime Minister David Cameron knows full well that Britain's unbalanced and tottering economy can't survive for long without the tax take from the City, but equally he knows that voters will have absolutely no truck with any expressed sympathy for his paymasters. Ed Miliband is in an identical position, albeit with the advantage that no-one will hold him too much to account just yet.

About the only thing that London's bankers have earned honestly in recent years is their awful reputation. Can it be recovered? Of course, but we're talking years, and that recovery will only ever be partial. The banks will be hamstrung by their own past and by a political and regulatory environment that might once have saved them, but which will now open the doors to the competition.

London does not have a divine right to rule the banking world. It has in some sense already abdicated. And the conventional pretenders to the throne (New York? Paris? Frankfurt? Really?) are assuredly not whiter than white. So, in some small way, the door to new ideas in banking is ajar. And bankers in Asia, the Gulf and even southern Africa are taking note. Honest bankers have nothing to fear from the sunshine.

Can Egypt become North Africa’s economic powerhouse?

By Martin Roche, Etoile Partner

It’s a time of great hope and great uncertainty in Egypt. Hope springs from the broadly successful arrival of democratic politics that delivered a credible result in the presidential elections of last Sunday. President-elect Mohamed Morsi has called for unity after winning 51.7% of the vote. Unity is fundamental if the next few months is not to see renewed tension between the President’s Muslim Brotherhood, the Army, which has decades of political, military and economic power under its command and the countless thousands of “Arab Spring” democrats whose protests brought down Hosni Mubarak, amid events that sparked protest in many Arab lands.

A period of political stability is crucial for Egypt. It needs to get its economy moving if it is to give hope to 3.1 million people out of work (12.1%). Most are young people. 52% have a technical or vocational qualification and 29% have a degree or similar level qualification. These are smart people and the bedrock of Egypt’s political, economic and social future. Given the right conditions they are the entrepreneurs, managers and skilled workers who can modernise Egypt’s economy, create new ventures, revitalise tiered brands, expand the country’s export markets, bring new life to its tourism and leisure infrastructure and tap into the big market opportunities in telecommunications, financial services, oil and gas, agriculture and horticulture and transport.

With 80 million people (it’s the largest population in the Middle East and third largest in all of Africa), a mixed economy ranging from gas and oil production, manufacture, agriculture and services, a top tier of highly educated graduates, a centuries old tradition of trading and export and import, some of the most fertile land in the region, the great asset of the Suez Canal and a location that makes it one of the great gateways of the world, Egypt has enormous future potential.

If Egypt can find stability that helps give local capital confidence and can extend a genuine welcome to mobile international capital then the whole country could become a model for new economic progress in the Middle East and Africa. If it wants inward investment – and that’s yet to be established – it will need to do all the basics well. That means making it easy for potential investors to find the right premises, people and support services, and safe homes and schools for expatriate executives. It means flexible labour laws, easily understood legal and tax systems, incentives to attract and keep business and, above all, a national economic development strategy that makes clear the benefits for Egyptian society and for inward investors.

All of that is a big job in itself and political consensus will be vital. If it can secure a consensus it will then have to build the necessary structures to attract mobile capital and have a compelling communications strategy and programme that will get the attention of the world and convince sceptical, nervous and under-informed investors that Egypt makes commercial sense, is a place to make money and a place capable of being a new economic powerhouse. With the support of international organisations and strong allies Egypt can move forward, though it must first demonstrate vision, energy, drive and verifiable determination to move up Egypt into the first division of economies.

This is Egypt’s “Yes we can” moment. It is simply a great country. Now it can be a great economy. I wish it well.

Can the UK stay the leader in EU FDI?

Labour surges in UK local government elections, but Britain’s role in the EU comes centre stage as UKIP records record vote

Can the UK stay the leader in EU FDI, asks Etoile Partner, Martin Roche

  

Britain’s Labour leader Ed Milliband has something to celebrate this weekend. His party, which was heavily defeated at the last UK General Election in 2010, had a triumphant night in this year’s round of local authority elections. Based on the latest figures, Labour would have a very health majority of 90 seats in the national Parliament if it translated its local authority success in to a General Election win in 2015.

Ed Milliband, UK opposition leader

Well, Labour won’t be carried away by last night’s events. It knows from experience that incumbent British governments often suffer big local government setbacks in mid-term. And voters have shown their dissatisfaction with the Conservative/Liberal Democrat Coalition by boosting Labour. In the past such protest votes often went to the third largest party in UK politics, the traditionally Left of Centre Liberal Democrats, but they are now in Coalition government with the Right of Centre Conservative party. The Coalition has lost its early gleam of freshness and dependability as its austerity measures bite into the wallets of hard pressed families, as growth remains invisible and as a series of big policy and public relations gaffes have undermined its reputation for steadiness under fire. Not surprisingly, Labour’s favourability ratings have been creeping up and the reward came in the form of hundreds of new councillors and Labour regaining control of big and important cities in England and Wales.

But the story of the night that is most likely to have more rapid impact than Labour’s success is the 13% of the vote won by the United Kingdom Independence Party, where it had candidates. This is a record figure for UKIP, which has nearly tripled its poll ratings in the last year. UKIP wants Britain out of the EU and says it is winning voters over who believe the Conservative party has let them down by not having a national referendum on EU membership and being soft on EU issues, particularly immigration and the extradition of violent criminals and terrorists (though these are actually nothing at all to do with the EU).

Almost all UKIP votes are won at the expense of the Conservative party. At present, UKIP has no members of parliament and given the UK system of voting at general elections, it is unlikely to win any seats at the next election. But it could split the vote in many marginal Conservative held seats, thus letting Labour in. That prospect terrifies many Conservative MPs. As they go back to their constituencies this weekend they are likely to hear from local party officials that the Conservative party has to take a much firmer anti-EU line and demand and get big changes in the country’s relations with the EU. Conservative fundamentalist believe that electoral success will come from being ever more economically and socially Right wing, despite that fact that all past evidence says that winning power in the UK is about wining the Centre ground.

For Coalition Prime Minister and Conservative party leader, David Cameron, the prospect of an internal party fight over Europe must fill him with dread. The issue of Europe nearly tore the Conservative party apart in the 1990s and was one of the main reasons why it failed to win power from 1997 until 2010 and even then it failed to win a majority. To secure power Cameron had to go into government with the strongly pro-EU Liberal Democrats and any attempt now by Cameron to surrender to the will of his Eurosceptic Right wing would almost certainly bring down the Coalition, with the country likely to blame the Conservatives for forcing a general election.

Since Britain joined the European Union forty years ago it has consistently been the best performing EU nation in terms of FDI. Britain’s FDI salesmen have put EU membership at the top of the list of reasons to choose the UK as a business location. Membership confers automatic, tariff free entry into the EU’s market for goods and services – a market over 400 million strong – the single biggest and richest market in the world. Britain’s Department for Business and Enterprise says that some three and half million jobs in the UK are directly linked to the export of goods and services to the EU. Britain far outstrips other EU nations when it comes to FDI, scoring around 40% of all FDI into the EU. So, if the UK’s Conservatives become more and more strident and alarmist about the EU’s shortcomings the mobile businesses of the world may start to think twice about the long term sense of investing in a Britain that wants to take a different direction from the majority of its EU friends and allies. It may not be only a bloody political battle in the UK, but it could also be terribly damaging to global perceptions of Britain as a good place to do business.

David Cameron will need the wisdom of Solomon and the political skills of a magician to steer his way through the next six months to a year. If growth starts to come back into the economy he can probably hold off his Right wing with a promise that he will win the next election because he will have brought the UK back from economic calamity and towards new prosperity. If there is no growth he may be forced to appease the Right and put the EU issue centre stage.

My bet is that if that happens the Conservative party will not win the next election because the British voter will wake up to the fact that the EU may not be the most wonderful thing in their lives but rather the EU than risk 3.5 million jobs, cut the country off from the world’s most affluent giant market and fall out with 26 other nations, all of which are its friends and allies. Two other factors will be of huge importance in any debate about the UK’s future in Europe. The first is the City of London, the world’s leading financial centre. There are lots of EU policy issues the City hates, but it loves doing business and doing business inside the EU is easy, plus if London becomes a capital on the fringe of the great EU market Paris, Frankfurt and Amsterdam will not be slow to try and steal some of London’s business and win the crown of being the finance centre of choice for those inside the EU. The City of London not only usually votes Conservative, but also supplies much of its funding. If it sees its global dominance threatened it may well put the brake on Conservative Eurosceptic ambitions for a Britain far less engaged with Europe.

The other factor is the Euro. If the Euro starts to recover that recovery will fuel growth across Europe and will hugely strengthen the political legitimacy of the EU and cut much of the ground away from the Eurosceptics. If the Euro crisis deepens, not only will the EU start to fracture as an effective political force, we’ll all be in such economic trouble across the world that the disintegration of a partnership of nations will hardly be noticed. So, smart people everywhere should do what they can to bring the Euro back to health.

The Kent Phoenix

How political leadership, partnership, strong strategy and enthusiasm is creating a new high end science and technology hub in the Garden of England

Kent is the English county called the Garden of England. Plant a seed in Kent and it will grow and flourish – apples, pears, cherries, grapes, strawberries, blackcurrants, almost every vegetable imaginable and oats, barley, grain and…well Kent feeds millions of people on a daily basis. Non-agri businesses also grow and flourish in Kent, but sometimes bad news comes along.

Early 2011 brought grim news for the coastal town of Sandwich in the South East of Kent Pfizer, one of the world’s biggest and most distinguished pharmaceuticals businesses, announced that after 50 years it was to close its Sandwich facility. 2,400 jobs direct jobs were set to go (at one point the facility employed 6,000 people) and Kent County Council estimated that the coastal Kent economy would see job losses of approaching 8,000 when the Pfizer redundancies were added to big cuts in public sector employment and through jobs going as local firms contracting or failing in the wake of the credit crunch.

Pfizer’s decision to end its time at Sandwich was a commercial reaction to very large changes in the way global pharmaceuticals undertake research and development. Across the globe the giant players have been moving from an exclusively in-house R&D model to new approach that, among other benefits, reduces risk and central costs.

Sandwich, one of the oldest established towns in England, is also home to the famous Royal St Georges Golf Club. The one sure bright spot in a difficult year for the local economy was Royal St Georges hosting the Open Championship. Many millions of pounds were spent in the area over the weeks before and during the great event, but all the time worries about the future of the local economy were never far away.

Lightning speed

But then something happened that I’ve seen happen in other parts of the UK and overseas, but which has been relatively unusual in the South East of England. The political machine unified and moved at lightning speed to help find a strategy for future progress and build a machine fit for the task.

David Willets, the UK government minister responsible for industrial policy called on the leader of Kent’s top level of local government, Paul Carter, to lead a taskforce charged with finding ways of creating a commercially viable future for Pfizer’s huge Sandwich site, which also housed some of the world’s most advanced and specialised pharmaceutical R&D labs and equipment.

Finding a future for the site was critical, but equally important was giving hope to all those world-class scientists, specialist engineers, IT managers and other experts with skills the world was hungry to buy. If there was no hope work in the immediate area most people would move away, so quickly finding ways of keeping significant numbers of commercially oriented life scientists living locally was central to creating a new cutting edge life sciences hub at Sandwich.

Carter and local Member of Parliament, Laura Sandys, were in no doubt that what appeared to be a desperate situation of closure - in the eye of a global financial storm, with most of the world’s economies flat-lining and businesses contracting and dying at every turn, was in fact a great opportunity to remodel the local economy, recover from the loss of Pfizer and establish the conditions for successful new businesses.