This is an approximate transcript of the speech given by Mark E Thomas at Hellens Garden Festival, 11 June, 2022.
What a wonderful environment, and how lucky we are to be here in early summer to talk about the future of the county of Herefordshire – the challenges it faces and how we can overcome those challenges.
I am planning to do a bit of talking myself, but also to allow plenty of time for discussion.
But before I get into talking about Herefordshire, I thought I should briefly tell you how I come to be standing here.
How did I Get Here?
I have spent the largest part of my career as a management consultant, working – largely in the private sector – with Chief Executives and their teams on issues of long-term strategy. Basically, helping them figure out how to grow their businesses profitably.
While I was doing that, I began to be aware of the issue of rising inequality in the US and the UK. And the more I looked, the more concerned I became. Around 2014, I became convinced that in both countries the trends were unsustainable and that if we did nothing to change them, we would not reach the year 2050 with our civilisation is recognisably intact. Rather than being comparable with prosperous northern European countries, we would more nearly resemble the way South Africa – which is currently the world’s most unequal country – is today, with a tiny proportion of extremely wealthy people who live surrounded by intense security which protects them from the mass of the population are living in or not very far above, poverty.
This was a shock to me. When my parents were born, my grandparents assumed that my parents would have better opportunities that they had had. When my brothers and I were born, my parents assumed that we would have better opportunities than they had had. And when my children were born, I made the same assumption. It seemed like a law of nature that each new generation would have better opportunities – and on average be better off – than the previous one. The shock was when I realised that I no longer believed that this was true for my own children. I realised that that supposed ‘law of nature’ appeared to be going into reverse.
So, in 2015, I decided to leave consulting in order to research and write the book 99%. The book makes, in essence, three simple but important points:
- that the US and the UK are on a trend to unwind the social contracts that have defined their civilisation;
- that this is happening, not because it is in any way inevitable or that our social contracts have suddenly become unaffordable, but because we have internalised a series of myths about the economy which between them imply that there is no alternative to the current pattern of policy-making; and
- when we look around the world – or indeed at our own history – we see clearly that there are alternatives. Many countries do a worse job of looking after their citizens than the UK and the US – but there are plenty which are doing consistently better, and the gap is widening. We should learn from them and from our own history and recreate a situation in which each new generation has better opportunities than the last.
Of course, I hoped that the book would be well received – and I was delighted when the Financial Times selected it as one of their best books of 2019. But I was under no illusion that the book on its own would have any real impact. The world is full of good and even important books which have not produced any significant change in society.
So at the same time that the book was published, with a few friends and my wife, I set up the 99% Organisation to shift government policy so as to build a world fit for future generations to live in. When we started, there were half-a-dozen of us; there are now well over 3,000. The 99% organisation is highly unusual: it runs almost without money. We have no employees – literally everybody is a volunteer – and therefore very little expenditure; it also has hardly any income. It is an organisation that runs on love not money.
Many members join in order to be kept up-to-date with our analysis of what is going on in the UK. But even more join because they want to help to drive the change. This has enabled us to set up a number of projects. I will not go into them all now, but there is one – the Herefordshire 2030 project, which I am going to talk about.
As you may have guessed from what I have already said, many of our projects are about trying to influence government policy on important issues. They are top-down projects.
But one day, I was talking to Matthew Taylor who was at the time the Chief Executive of the Royal Society for the Arts, and when he understood what we were doing, he suggested: “Why don’t you set up a project in Herefordshire looking at what could be done bottom-up within the county to tackle these issues?” So we agreed jointly to launch the Herefordshire 2030 project looking at what could be done to make the county greener, fairer and more prosperous by the year 2030.
The Challenges Facing Herefordshire
We assembled a team (of volunteers) to look at three issues:
- economy (how is Herefordshire’s economy performing compared with the rest of the country, and what could we do about it?);
- environment (Herefordshire is a beautiful county, but it does face serious environmental challenges – are we on track to address them, and if not, what should we do?); and
- equity (how do we stack up in terms of deprivation, and how could we improve?)
These are all meaty issues and I would certainly not claim to be expert on all of them, but I hope that I can give you at least a flavour of some of the key conclusions that the team has come up with so far.
In fact, we do have one expert right here in the audience: Jeff Beatty, who is a Quaker and Chair of the Hereford Community Land Trust, who is leading the work on Equity. I hope I can do justice to his and the other project leaders’ good work.
Let me start with economic growth.
If we look back over the 20 years or so since Herefordshire became independent from Worcestershire, we see 20 years of drift. In 1998, Herefordshire ranked 86th out of 232 local authorities in the country in terms of GDP per capita. By 2018, we had slipped to 218th. In 1998, Herefordshire’s GDP per capita was 7% higher than that of Worcestershire; by 2018, it was 10% lower.
Although Herefordshire is one of the smaller counties in Britain, this is not a trivial matter. Our economy is around £4 billion per annum; it should be around £5 billion. That drift is costing us £1 billion every year. The GDP gap with the UK (excluding London) average is around £5,000 per head of population. As a result, our wages are lower and our services less well-funded. I will come back to look at deprivation in the county when I talk about Equity.
But now let’s just think about what went wrong? The short answer is that while there were some sectors of our economy that performed better than average, most underperformed – especially the largest sectors (public sector, real estate and manufacturing). We had some smaller winners, such as utilities, IT and telecommunications, hotels and restaurants, and of course agriculture, but we had big losers.
Manufacturing is Herefordshire’s largest single economic sector, accounting for around 18% of the county’s economy and 11,273 jobs (that was roughly one in eight of the 90,000 economically active people in the county) at the time of the last census in 2011.
But between 1998 and 2018, the manufacturing sector’s GDP contracted by 11% – or £86 million – compared to growth in the UK’s manufacturing sector of 3%. The period between 2000 and 2009 was the worst, caused by among others the sale of Bulmers (resulting in the loss of around 100 high value jobs in management, sales, marketing and R&D on top of the closure of its inhouse transport fleet) and redundancies at Wiggins Special Metals (more than 2,000 jobs lost), Thorn Lighting (300 jobs lost), and others.
This underperformance came to an abrupt halt in 2009 and, in the following six years, Herefordshire’s manufacturing sector staged a strong recovery, driven by inward investment, existing business expansion and new business formation on the Rotherwas Enterprise Zone, Leominster Industrial Estate, Moreton Business Park and elsewhere.
Unfortunately, this recovery gave way to another period of sharp decline in the aftermath of the Brexit referendum, which wiped out around half of the progress over the previous six years.
What will it take to avoid another lost decade?
To answer the question, we need to look at the root causes.
The team conducted a survey of Herefordshire-based businesses to understand the barriers to their growth:
- the number one issue raised was availability of skilled managers and staff;
- number two was lack of access to capital; and
- number three was being able to access new customers.
One root cause of these problems is that Herefordshire has a very unusual population structure: compared with the rest of the country, we have a higher percentage of school-age children and people over 55, and a lower percentage of people between 16 and 55, which is of course prime working age.
Because we have not until recently had a university, many young people leave to further their education and are not replaced by an equivalent number of incomers. And most of them do not return. For businesses, this means both a shortage of highly skilled young staff and fewer customers with salaries to spend.
The other key issue is access to capital. To close the gap with the rest of the country, we simply need to invest far more in business growth – around £100 million extra per annum.
But most Herefordshire businesses are quite small; and small businesses are not well served by the structure of financial services in the UK. They are too small to float on the stock market and raise money by issuing shares; and they are too small to be of serious interest to the major banks – and therefore they are under-served. The UK is almost unique in them not having a community banking sector which caters for small and medium-sized enterprises. Fortunately there are moves to try to create a community banking sector, and we are talking to some of the UK’s leading players.
So the problem is systemic: none of these causes can be addressed by individual businesses acting alone – it will require a joint effort between the business community as a whole and the Council to address these issues.
And the same thing is true of the environment.
Although Herefordshire is one of the most beautiful counties in the country, it is by no means free from environmental concerns. I am sure you are all aware of the problems of pollution in the Wye and the Lugg. Were you also aware that Herefordshire has higher per capita emissions of greenhouse gases than the average for the rest of the country?
There are two ways of looking at emissions:
- personal carbon (equivalent) footprint – this approach, which was popularised by the large oil companies from 2004 onwards, essentially puts the onus on the individual to reduce his or her own footprint. But there are limits to what an individual can do (even if they can afford to spend money on becoming greener). I can electrify the heating in my house and buy my electricity from a ‘green’ energy supplier, but if the overall mix of generation in the UK does not shift away from coal- and gas-fired power stations, there may be no overall reduction in emissions at all;
- the producing industry footprint – this approach means that, for example, responsibility for pollution from transport, which is almost entirely due to the burning of fossil fuels, is allocated to the producers of those fossil fuels not to the drivers of the vehicles. Did you know that out of the millions of companies in the world, more than half of global industrial emissions since 1988 – the year the Intergovernmental Panel on Climate Change was established – are down to just 25 corporate and state-owned producers of fossil fuels?
Both of these views are important: there are certainly many things that we as individuals can do to reduce our personal footprints which would make a real difference – and where we can do them, we should. But if tackling climate change is left to individual action without systemic change, it will not be enough. That is true for the world as a whole, and it is also true for Herefordshire. So we also need to take responsibility for production.
When we look at the producing industry view of Herefordshire’s greenhouse gas emissions, what we see is that over 50% of the emissions which are produced in the county come from agriculture. This is mainly not CO2 but principally methane from livestock and nitrous oxide from artificial fertilisers, and animal manure. These are just as damaging to the environment as C02. And within agriculture, the bulk of the emissions come from poultry and livestock.
In the UK, there are already trends away from consumption of meat. A couple of years ago, the Lancet published a study which looked at the challenge of feeding a world where the population is set to grow by a third in the next 35 years. Their study concluded that if everybody adopted a plant-rich diet, we could both feed the entire population without further deforestation and dramatically reduce carbon-equivalent emissions from agriculture.
Our team replicated this analysis for Herefordshire and concluded that a combination of reduction in food waste and switching of production from poultry and livestock towards arable and forestry could enable a drastic reduction in agricultural emissions. Conversely without such a change, only marginal reductions in agricultural emissions are possible – and since agriculture represents such a large part of the county’s overall production footprint, the goal of becoming carbon-neutral as a county would be impossible.
But, again, the causes are systemic. Farmers themselves have very little freedom of action: they are caught on one side by a rapidly-shifting and unclear system of government grants – the ELMS (Environmental Land Management Scheme) and on the other by the enormously powerful buying power of supermarkets whose policies both drive down prices and restrict farm profits and, in some cases, encourage food waste which runs at 7% of harvest.
Some farmers have done fantastic work adopting patterns of regenerative agriculture and charging premium prices for their products. But the market for these premium products is too small to make this an option for farmers in general at the moment.
If we seriously want to make the county green, we need to move beyond merely celebrating the remarkable actions of individual consumers and individual farmers and create a supportive system which enables all farmers to move profitably towards greener forms of agriculture.
Finally, let me sketch the situation in the county regarding equity and deprivation.
There is rather better news when it comes to equity: Herefordshire has significantly less extremes of wealth and poverty than the rest of the country, despite our weaker overall economic underperformance. The richest parts of Herefordshire just creep into the top 10% in the country as a whole; and, thankfully, the poorest parts only just creep into the bottom 10%.
Nevertheless, we should not be complacent: before COVID and the recent cost-of-living crisis, we had approximately 10% of the population – that is over 19,000 people – in the county living in poverty. And around half of those are children. And unfortunately the trend is in the wrong direction. We do not have data for this year, but it is safe to assume that when they become available, they will show a worsening of the picture.
There is a lot of very good work being done around the county to try to help those who fall through the cracks and into poverty – and thousands of people are helped in some way. Without this work, the problem would be far worse than it is today. But what would be really good would be to try to find a more systemic solution: a way of stopping people falling into poverty in the first place and preventing those who do from getting stuck there.
The team has been looking at what it would take to reduce the numbers in poverty by 40% by the year 2030. It turns out this is quite a task.
Although the percentage in poverty is lower here than in many other places, poverty in Herefordshire is also more difficult to tackle. In London, for example, poverty is highly concentrated in certain boroughs. This means that if you establish support centres in these boroughs, you can reach a high percentage of the population who needs help. In Herefordshire, although there are some concentrations in Hereford itself and Leominster, for example, almost half of the poverty is rural – it is very widely spread. In most parts of the country, the distribution of poverty follows the 80:20 rule, and this makes it easier to tackle; in Herefordshire it does not.
In London, you are never far from public transport, and that transport is regular and frequent. For many people in Herefordshire, public transport is not a realistic option. So if you do not have a car, you are isolated from support and from the jobs that might help you out of poverty.
So we need to develop a Herefordshire-specific solution. And to do that, we need cooperation between all relevant players in the public, private and third sectors.
Why Haven’t We Fixed These Problems Already?
For all three of these problems, Herefordshire has a large number of very bright and highly-motivated people working hard to solve them. And yet they are not being solved. Why not?
We think there are four reasons:
- each of these problems presents as thousands of important but small issues rather than as a single overall problem, and therefore it is tempting to attempt to solve them in a fragmented way; this leads to
- the total scale of the proposed solutions not matching the scale of the problems; and
- most of the proposed solutions being point-solutions to the symptoms rather than systemically addressing the root causes of the problem; and finally,
- The county has not come together in a way which would permit such systemic solutions to be developed and deployed.
What It Would Take To Fix Them
Fixing these problems will need a change from business as usual. If we continue as we have been going, we risk another lost decade in all three areas. We believe that the formation of a powerful Herefordshire Regeneration Partnership – a genuine partnership of equals between the Council, the Business Community and the Third Sector – will be essential to tackling these problems systemically and at the required scale.
And we are working to build support for such an idea.
Your role in the change
At this point you may be thinking, “this all sounds very interesting, but I don’t see how I can help.”
You probably can, if you would like. The team is always looking for new members to help understand the problems, develop solutions and – most importantly – build support for action.
We need people who can help us by:
- Helping analyse the problems and develop potential solutions
- Validating our recommendations to make sure they are robust
- ‘Cheerleading’, lobbying and recruiting others into the team.
If you are interested in helping in any of the three areas I have talked about: Equity, Environment or Economy, let me know and I will find a way.
So that’s enough of me talking. Now we have time for any questions, and for you to share your ideas.
If you would like to help, please sign up and let us know.