Enterprise in Deprived Urban Areas The London Context

1
Enterprise in Deprived Urban Areas The London
Context

• Ros Dunn
• Director, Strategy and Corporate Planning
• London Development Agency
• Launch conference, 24th November 2004

November 2004
2
London characteristics

• Uniquely international, highly competitive world
  city Healey Baker top European business
  location and over 50 world share in several city
  markets
• Diverse business base with fast growing sectors
  e.g. creative businesses employing 500,000
• Average productivity per person 25 higher than
  in rest of UK
• Nearly 75 of Londons firms sole traders
• High business start up and high morbidity rates
• Second highest rate of unemployment among
  English regions with lower rates of participation
  in the labour market
• A persistent economic geography of rich and poor
  boroughs in inner and East London in particular
  Hackney, Tower Hamlets and Newham
• Highest proportion of children living in poverty
  in GB 48 in inner London

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Urban regeneration and enterprise policies -
national

• National agenda promoting a step change in
  Britains enterprise culture
• Importance of the business community in
  responding to urban deprivation
• Addressing market failures that create the
  enterprise gap in deprived urban areas. Market
  failures identified early on
• - consistent availability of high quality
  business advice
• - access to finance and
• - postcode prejudice in where businesses operate
  from and provide products/services to
• Attempting solutions including borrowing ideas
  from the United States e.g.
• - City Growth Strategies
• - Business Improvement Districts
• - Community Investment Tax Credit
• Attracting private sector investment is critical
  to success Business led approach

4
Urban regeneration and enterprise policies -
London

• Londons Economic Development Strategy
• - Investment in places and infrastructure
• - Investment in people
• - Investment in enterprise
• - Investment in marketing and promotion
• London Development Agency investing in increasing
  participation in the knowledge economy including
  addressing barriers for start ups and BME
  business, working with business support partners
  to provide customer responsive high impact
  business advice, support for social enterprises.
• Specific actions to promote enterprise in areas
  with low business start up and survival rates
  through
• 1) Innovation centres creative hubs
• 2) priority area programmes
• 3) City Growth Strategies and
• 4) LNET
• Range of local interventions e.g. LDA Inner City
  Entrepreneurs Fund, New Economics Foundation -
  Inner City 100, Objective 2 SME Innovation
  Support Programme

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Challenges of enterprise in deprived urban areas

• Barriers facing businesses in deprived urban
  areas differences in kind or degree?
• High costs of London base presents considerable
  barriers for businesses e.g. affordable business
  accommodation and individuals e.g. costs of
  transport, childcare and housing
• Access to finance particularly a problem for
  small businesses which might resort to credit
  cards and overdrafts
• Less likely to access know-how and specialist
  business support
• Moving into new markets especially
  internationalising business activities less
  than 10 of Londons firms operate
  internationally
• Business management and planning only half of
  London businesses have a Business Plan

6
Stimulating enterprise and innovation on the
ground

• Changing language and concepts from need to
  opportunity, from grants to loans, from spending
  to investment
• Identifying and understanding inner city markets
  and spending power - Porters Competitive
  Advantages, US Social Compact drilldown model.
  Practical implications in developing inner city
  retail markets.
• Inner city cluster development and city growth
  strategies
• Jobs brokerage and linking local cluster
  development to local employment opportunities
• Investment Inner City Entrepreneurs Fund,
  Access to finance loan and equity funds Community
  Investment Tax Credits
• Supporting Social Enterprises to address market
  failures e.g. in childcare
• London EU Innovative Actions programme
  Jumpstart- Connect provides small grants for
  inner city businesses

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Case study - Jumpstart

• Innovative Actions Jumpstart programme
  application of LDA EU funds to address London
  challenges
• INSPIRE strand provides a grant up to 100,000 to
  bidders to establish a pilot to inspire Londons
  minority business communities to improve access
  to and uptake of innovation
• Pilots will be expected to be sustainable and
  their results mainstreamed
• pilots contracted covering sectors
• - Ethnic Food
• - Women Innovators and Entrepreneurs
• - Ethnic Hair and Beauty

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Case Study Salon Strategies Ethnic Hair and
Beauty

• The UK Ethnic Hair and Beauty Market
• London has around 80 of the market
• The UK market for beauty products specifically
  designed for black women was worth 52.2 million
  in 2002
• Issues and Barriers
• Limited ambition to innovate due to the lack of
  expert knowledge
• Inefficient delivery of business support to the
  sector
• Inefficiencies in the supply chain
• Encourage innovation by harnessing the innovation
  of minority ethnic hair and beauty
• business owners through
• Interaction with further Education Institutes and
  support agencies
• Creating Innovation Panels of knowledge angels
  and established ethnic hair and beauty
  specialists and suppliers to act as peer-mentors
• Improving management and entrepreneurial skills
  of minority salon owners
• Creating virtual online ethnic hair and beauty
  knowledge network

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Learning from experience and from each other

• Some London questions for the Network
• How do other cities work with the private sector?
  A London example for LNET to review is the London
  Access to finance programme
• How do other cities maximise local opportunities?
  Winner of Enterprising London award Holts
  Jewellers links local opportunities to business
  success and international competitiveness.
• What other tools have cities got that London
  could consider? London has been adding to its
  toolbox recently e.g. Business Improvement
  Districts and Community Development Financial
  Institutions
• How do cities leverage local assets e.g. Higher
  Education Institutions or major employers?
• How have economic development agencies
  mainstreamed inner city enterprise into all
  their activities for example, capturing the
  legacy of major events, city supply chain
  development

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LNET Potential for London

• As EU funding shifts Eastwards, chance to capture
  and promote learning amongst old and new members
• Outward looking 5 core partners and a focus on
  wider dissemination
• Practitioner focused tools and resources for
  economic development professionals
• A learning method that prioritises asking why
  interventions work
• Cross city peer to peer case study review to
  produce testimonials and resources with Europe
  wide currency
• New ideas but within limited budgets how can we
  get maximum results from what we are already
  doing?