24 September 2008

Two separate essays this week - Please treat accordingly

Until last week, the credit crunch seemed something that was happening in far away places and unlikely to have much impact on our plans for economic regeneration in Torbay.  Although the property market was enduring hard times, this was something we had all seen before.  It just seemed the usual story of house prices getting so high that nobody could afford to put a roof over their head.  Then nature takes its course and prices drop back over a period of years, before the whole merry go round starts up again.  Bad news for anybody who bought a property for the first time last year, but not the end of the world for most other folk.

However, the financial shocks of the last fortnight will inevitably have an impact on all our lives and it would be naïve to believe that Torbay will remain immune.  I had hoped that as we had missed out on the upswing of the last fifteen years of national prosperity, then it would only be fair if Torbay could now be excused the downswing.  I have to say that does not look likely, but I do believe that there are grounds for believing that the impact here will be less great than elsewhere.

The financial shocks will now transmit into economic slowdown as the banking and financial services sector of our economy (the powerhouse of the last fifteen years) retrench.  The availability of mortgages, loans and credit will become more restricted, exasperating the slowdown.  As the UK economy is so dependant upon this sector, also we are more exposed to mortgage debt and personal borrowings than elsewhere in the world, then the UK economy will take a substantial hit.  There will be negligible economic growth for some time, rising unemployment and people’s standard of living will take a tumble - squeezed by higher prices and fuel bills from inflation already in the system.

It will be even worse for the Government’s Finances as tax revenues fall and spending continues to rise.  There are predictions of a £100 Billion plus Government deficit for next year, which puts us back in the position we faced in the 1970’s when the I.M.F. had to come to our rescue.

Although the purpose of this week’s essay is to look forward, rather than backwards, in a nutshell we are in a gigantic mess.  The music has stopped and the most fantastic game of pass the parcel (the only simple explanation of the complex world of sub prime mortgages, securitisation, hedge funds, you name it) has suddenly come to an end.  At the same time, the Government has been on a ‘spend, spend, spend’ mission and now has nothing in reserve for the rainy days that lie ahead.

So why do I believe that the impact of this downturn will be less severe in Torbay than elsewhere in the UK?

The simple answer is that our economic base is very different to elsewhere.  The greatest economic driver is state spending, in particular to support the health, wellbeing and social care of our older population, as well as the spending power of our older population itself - and the spending power of the older population who make up the bulk of our tourists. The great advantage of being retired is that you are highly unlikely to be made redundant.

Many of the entrepreneurs who want to come and invest in Torbay see great opportunities in leisure and tourism, also supported living projects and ‘retirement villages.’  They also calculate that many older people have the benefit of the proceeds of earlier house sales and safe pensions - and all these Grey Pounds need to be spent somewhere.

As our national economy weakens, so will the value of the Pound, especially against the Euro.  Indeed, this is happening already and makes Torbay an attractive destination for overseas visitors. It should also be a boost for our language schools.  Again, this helps our local economy.  

There is also the feeling that Torbay is a bit of a blank canvass.  So little has happened here in the last twenty years, opportunities abound.  It is significant that few of the developers who we have been talking to, following the success of the Mayoral Vision presentations, have phoned up and said they are no longer interested.  Of course, some will find it more difficult to raise finance and others will be less willing to sign on the dotted line and actually start work.  We are perhaps fortunate that most of our largest projects are at the early stages of planning and are only likely to take shape when recovery is underway.

Additionally, work on the Kingskerswell By Pass should start in 2010 - assuming the Government doesn’t completely run out of money - which will remove, at a stroke, the main barrier to progress that we now face.

Finally, I believe that there may be a diaspora of banker and city types.  If we can get our act together (and so far it looks quite promising) and create cultural regeneration here in Torbay, with a real sense of ‘buzz’ and excitement to match our stunning natural environment, then why shouldn’t we attract at least our fair share of the brightest and best looking for the next big thing?  With Blue Flag Beaches, our various business incubator units, the Seachange Projects at Cockington and Berry Head, a vibrant Arts scene, cultural and literary festivals, the opportunities of Geopark status, expansion of the South Devon College and potential university status, as well as the ambition of the Mayoral Vision, then why not come here?

It certainly beats staring at a sea of red on a screen on the floor of a city dealing room.

During the boom years many talented people decided to move out of London and the South East in pursuit of a better quality of life in the South West.  There are even greater reasons for doing so now.  We should make Torbay top of their list.

Part Two

It is fascinating to note how all those who claim to speak up for (or scribble for) Brixham, came out against the Fast Ferry Project.

Some suggested that the experiment should be ‘delayed.’  Others suggested that such a craft would not fit into the harbour or else create a Tsunami like wake that would engulf any poor soul eating their sandwiches at Fishcombe Cove.  Others suggested that it would make all other activities in the Bay impossible - despite the fact that similar services operate in the congested waters of the Solent.

On the first day of operation (and seeing none of the above had come true) their criticism focused on the lack of toilets on board for the fifteen minute journey, despite the fact that most Brixhamites of my acquaintance have survived much longer bus journeys, without anything untoward occurring.

What none of them have mentioned, even now, after four weeks of successful operation, is that over 20,000 passengers have taken the Fast Ferry across the Bay contributing to a September spending spree in the town, equivalent to a small cruise ship every day of the week.

On Sunday the Fast Ferry was the only ferry operating and delivering full loads of 100 plus passengers for much of the day - including Yours Truly and a few friends who enjoyed lunch in the sunshine at the Breakwater Café.

If I was the Chairman of the Brixham Chamber of Trade I would be writing to Brian Souter, asking him to make this a permanent service and arranging for the Town Band to meet the next sailing.

A permanent Fast Ferry could be the biggest thing for Brixham since Prince William of Orange turned up in 1688 and built the original multi storey car park (according to legend).  Once again, the ‘usual suspects’ have got it all wrong.

Nick Bye
Mayor of Torbay

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