APPENDIX 11
Memorandum from Broughton Green Party
INWARD INVESTMENT
Inward investment is uncritically welcomed and
even sought by local authorities, because it is thought to be
a relatively easy way of gaining income, jobs and status for the
area. But, as experience is starting to show, it also brings many
problems and any income that it brings is often outweighed by
heavier costs of many kinds. The jobs it brings seem to miss local
people, and outsiders are brought in to fill them. The promises
that inward investment makes are not met.
Here we examine why this might be so. Inward
investment leads to the following problems in the local area:
— Heightened susceptibility to external
fluctuations
— Destruction of local assets, including
natural habitat
— Disruption of Local House Prices
— Increased local tension
— Lowered quality of life for local
people
— Lowered wealth creation by local
people
in addition to an important non-local phenomenon:
— Inward investment subverts government
guidelines
One of the main root causes of these problems
is that incoming organisations have less loyalty to the local
community than local organisations, and know less of local ways.
Linked with this is a tendency in many cases to unfairly favour
incoming organisations.
DEPENDENCY
The local community becomes dependent on incoming
organisations for jobs, rather than building up their own local
economic vitality. The full range of local management and entrepreneurial
expertise is not developed, but rather it is stifled. (A limited
range of local skills might be developed, but not the full range
the community needs to stand on its own feet; in particular it
is rare for an incoming organisation to fill its top management
with local people.) Dependency on the incoming organisation is
built up. Then when the incoming organisation closes its local
operations local people are left stranded. The effect is pronounced
with the incoming organisations are large—and it is often
the large, high profile, inward investment that is sought.
LOSS OF
LOCAL CONTROL
The construction and the running of facilities
brought about by inward investment will not be under local control.
Therefore they will often be insensitive to local conditions and
needs. Decisions are made that do not take these needs into account—and
local people can do nothing about it.
HEIGHTENED SUSCEPTIBILITY
TO EXTERNAL
FLUCTUATIONS
This is a particular danger when the incoming
organisations are based in other countries and cultures. The inward
investment is sought and agreed when their economies seem sound,
such as in South East Asia. But, as we have seen, even South East
Asia economies can collapse. The effect of these sudden fluctuations
are carried through into the local community; often large numbers
of local people are laid off. And, because of the dependency that
has been fostered, the local community is in no state to cope
with such large sudden disruption.
For instance, OptecDD came to Flintshire in
1988, and are now discarding 114 jobs in two sites. Halla Euro
Enterprises came to Merthyr T. and are now discarding around 100
jobs. In such cases the incoming organization is often given government
grants and easy access to land, especially greenfield land, and,
shortly afterwards, disappears from the area. Some are cowboys;
others leave because of external fluctuations, but in either case
the community and environment both sustain damage (as detailed
in other sections) yet the highly-touted benefits of allowing
these firms to come does not materialize. Inward investment is
fickle.
LOCAL ASSETS
DESTROYED
Often local assets are destroyed, and in particular
natural habitat. Either a large incoming organisation is given
special permission to build on greenfield sites, though this is
rare. Or, and this is very common, business parks are planned
in a hope that unspecified inward investment can be `attracted',
and these are often on greenfield sites and other sites that are
valuable as natural habitat and local footpaths and walks can
become unattractive and uninteresting. It is business parks that
are the more devastating because they are speculative `opportunities',
and local opposition to them is often stifled or unable to be
sufficiently focused. In addition to this, greenfield areas are
designated for housing to house the incomers—lower than
average density in order to `attract' incoming top management—and
more land is taken for roads and services.
Consider what happens when a piece of woodland,
or other natural habitat, is destroyed. When people are displaced
they can (almost always) find elsewhere to live. But this is not
true for the denizens of natural habitat—birds, mammals,
reptiles, amphibians, invertebrates, etc. If their habitat, e.g.,
a small wood holding 10,000 of them, is destroyed, they have nowhere
to go, and thus the whole population dies out. If the `inward
investment' is fickle, as above, and disappears after a mere ten
years as OptecDD has done, then the wildlife community cannot
be re-created. Destroying wildlife habitat is a one-way process
that cannot meaningfully be reversed.
LOCAL FIRMS
UNDERMINED
In many cases local firms, which should be being
built up, are undermined by the inward investment. The larger
incoming firm can compete unfairly with local firms for good employees,
input resources and markets, because they can cross subsidize
these operations from outside the local community.
EFFECT ON
LOCAL JOBS
Often incoming organisations seem to `offer
jobs' (e.g., 6000 by LG). An attractive offer. but . . .
Many of the top jobs are filled from outside.
In the case of LG many of the skilled jobs come from Korea with
the firm.
If the incoming firm is merely moving from another
part of the UK then there is no net benefit to the UK as the jobs
`gained' in one place are `lost' in another.
Though sometimes local wages might increase
(as above) sometimes they drop because of inward investment. Wales
has one of the lowest wage rates—£1.50 per hour is
common, and considerably lower is not unknown even though illegal.
TWO CLASSES
In some cases two classes build up in the local
community. Towns and villages become divided between `community'
and `commuter' areas (a clear example of this can be found in
New Mills, Cheshire). Though such divisions are not usually intended
they happen because of two factors. One is that, as just mentioned,
the management of incoming organisations is filled with incoming
people while lower grade jobs are filled with local people; thus
the perception grows, linked with the dependency above, that local
people are not so worthy of the higher status posts. The other
is that extra housing that is built for incoming top management
tends to be situated away from where local people live, thus exacerbating
the division by a geographical separation.
DISRUPTION OF
LOCAL HOUSE
PRICES
When a large firm comes in, such as LG Newport,
house prices both drop and rise. They drop near the huge plant
- and the compensation available in the case of LG is not sufficient.
Then they rise further away from the plant, out of the reach of
local people. This creates, as just mentioned, two classes and
also forces some local people out of the area.
New housing is often built, thereby reducing
the pressure on prices a little. But the problem is that these
are often sparsely distributed executive houses, which make very
inefficient use of land and thus consume much more land than is
necessary.
INCREASED LOCAL
TENSION
The fact that local firms are undermined and
that two classes develop leads to increased tension in the local
community. People are not just consumers of jobs and goods `provided'
for them; people are human beings (some would add, created in
the image of God), which means they have capacity for vision and
morale. When this is damaged then bitterness takes root as local
people feel at a disadvantage, an air of hopelessness and lack
of dignity can pervade the local community, and such things as
vandalism increases.
INCREASED LOCAL
COSTS
As a result of these problems brought about
by inward investment, the costs of maintaining local community
services increases. One example among many others is schooling.
With lowered morale and increased bitterness and hopelessness,
children become more unsettled and harder to teach, thus more
resources (both economic and in terms of teacher effort and frustration)
become spent on tackling these problems and the costs increase.
People may resignedly accept it because the effect is gradual
and imperceptible, yet a major contributor to it is the original
`inward investment', which now contributes nothing to meeting
these increased costs. Thus the `inward investment' is merely
income and not profit; in many cases it represents a loss to the
local community even in financial terms. Another example is of
a different kind: many of the more gifted or qualified of local
people who join the incoming organisations and gain some career
advancement there, then move elsewhere, often within those organisations,
and are lost to the local community. This effect is so pronounced
in developing countries, in that their `best' people come to the
West in such numbers that the economic value of such people exceeds
the aid that the West gives those nations.
LOWER QUALITY
OF LIFE
To enhance quality of life is one of the main
aims of the more recent planning guidelines, and also other government
initiatives such as research funding. But, because one or more
of the above problems of destruction of local resources, undermining
of local firms, the development of divided communities and increased
community tension occur, the quality of life of local people deteriorates.
Quality of life is not the same as standard of living (which might
appear to increase for a time); it is deeper and much more important,
and especially for the longer term. The link between this and
the increased breakdown of family life has not been disproved.
LOWER WEALTH
CREATION
Wealth creation is the other main plank of government
strategy. But wealth creation is not the same as increasing GNP
or money flow; it must take into account the destruction of assets
and the lowered ability of local people to create their own wealth.
In this way inward investment, while it might appear on the surface
to enhance wealth creation, can actually damage and undermine
it. The increased dependency and lowering of top management experience
among local people is particularly worrying in this regard.
DIVERSION OF
LOCAL RESOURCES
Resources of the local community are diverted
from building up local enterprises and communities to seeking
and maintaining and meeting the costs of inward investment. A
proportion of almost every budget in the local authority is diverted,
either formally or informally, towards inward investment. All
this resource is resource that would often be better spent on
building up the local community and encouraging local enterprises.
Further, the measure of number of jobs created
per hectare of land destroyed is lower for inward investment than
for local investment.
INWARD INVESTMENT
SUBVERTS GOVERNMENT
GUIDELINES
Lastly, inward investment in not just a local
matter, not just affecting the local community.
The UK Round Table on Sustainable Development
studied the development process in depth and, in 1997, came to
the pessimistic conclusion that while national Government policy
and guidance is for sustainable development, "mechanisms
are not in place on the ground" to achieve it in practice.
It gave the example of Northampton, which, contrary to the national
guidance, allowed a firm to close its town-centre operation and
move to a large development outside, with the results such that
an increase in car use was inevitable, as well as a damaging of
the centre of the town's vitality.
The reason for such ill-considered decisions,
they said, is that Local Authorities feel under many pressures,
not least to "compete" with neighbouring ones for "inward
investment". For instance, a large developer will play one
authority off against another to obtain what they consider `the
best deal', which is often an out-of-town greenfield site. Thus
this on-the-ground mechanism effectively subverts the Government's
intentions in planning.
It is high time to alter these `mechanisms on
the ground'. It is important for Local Authorities to reconsider
their `competition' for inward investment.
CONCLUSION
Of course, not all instances of inward investment
brings all these problems; but it is a fact that many inward investments
do bring many of them, especially over the longer term. We are
not saying there should be absolutely no migration of organisations.
What we are saying is that inward investment should not be uncritically
welcomed, that each and every of the problems associated with
it should be carefully considered before each inward investment
is agreed, and for each that is agreed, sound steps be taken to
prevent and ameliorate each problem; moreover, the cost of amelioration
should be borne by the incoming organisations.
Because of the irreversible damage caused (e.g.,
loss of wildlife habitat), it is imperative that the utmost caution
be exercised in all decisions that result in it. The damage should
only be allowed in the most exceptional circumstances. Inward
investment is seldom such. Possibly a local firm might be allowed
to expand, causing such damage, but inward investment is in too
many cases totally unnecessary, and there is not sound, overwhelming
reason to cause such damage.
Dr A Basden
Cheshire Federation of Green Parties
25 January 1998
| Cllr K Armstrong-Braun
Broughton Green Party
|
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