Honda: why Swindon powerless to fight factory closures
With Honda confirming the closure of its car plant in Swindon, many are focused on who and what’s to blame – and whether or not it’s the fault of Brexit. But the people of Swindon will be more concerned about the 3,500 factory jobs that will be lost and the further 3,500 jobs in the area that could be affected.
Local stakeholders from business and government have responded with shock and sympathy. The line from business leaders was: “Employers, government and local authorities must do all they can to deliver tangible assistance and guidance for the people and communities that will be affected by an announcement of this scale.”
Note the cautious reference to “doing all they can”. Because business representatives and the local authorities know full well that what they can do is limited. A big reason for this is their inability to speak as one voice and because there are serious limits to any kind of practical, coordinated regional response. Our research into local business groups indicates that the people of Swindon simply cannot rely on their interests being protected.
Realities of local government
Attempts by UK governments over the past 50 years or so to form credible regional authorities – and to absorb the shocks of factories closing – have a very chequered history. The latest incarnation are the Local Enterprise Partnerships, or LEPs, of which there are 38 across England. Before the LEPs, there was New Labour’s Regional Development Agencies (RDAs); before the RDAs, there were the Thatcherite Training and Enterprise Councils (TECs).
All these bodies have tried to drive economic growth and create jobs in the regions that they operate. To a greater or lesser degree, they have all intended to be “employer-led” – which means they are run by boards of directors comprised mainly of appointed senior members of the “local business community”. The theory goes that these people are best placed to understand the employment needs of the local area and how to direct regional investments.
So the Swindon and Wiltshire LEP, responsible for the area where the Honda plant sits, will now somehow be charged with concocting a plan to mitigate the damage caused by the recent plant closure. The workforce has the Unite trade union as its representative at the bargaining table. But who is in the LEP driving seat and what are their powers?
The make-up of the Swindon and Wiltshire board is typical of most LEPs, in that it is made up of eight members from the private sector and two from the public sector (namely the leaders of the two local councils). The private sector board members come from a fairly random set of business sectors, including minerals, water, tourism, corporate law, pharmaceuticals, education and the military. There are no representatives from the car industry.
The Swindon and Wiltshire LEP’s budget (around £300m over three years) is mainly earmarked for local transport infrastructure improvement projects. The remainder is for employment and training programmes, which ex-Honda workers will need access to. But this is very dependent on EU funding, so it’s very unclear how long those will last.
None of this is to criticise or question the people running the Swindon and Wiltshire LEP. They are doubtless highly experienced, well-networked and well-intentioned individuals – and it is always hard to recruit the right people from business to devote their unpaid time to important public duties so credit is due to them.
But the relatively random and, by their design, undemocratic make-up of LEPs, and the real constraints on their spending, illustrate the wider problem of “business-led” regional development in the UK. In our recent research, we pointed out the eerie similarities between the LEPs and the doomed, recession-hit TEC experiment of the early-1990s. It was a similar story later in the 1990s following factory closures by Fujitsu, Siemens and others in England’s North East – the “task forces” put in place by New Labour to help spur development were relatively impotent.
Our research demonstrates the unrepresentative structure of LEP boards in England. For example, we calculated that members from banking, finance and insurance make up about 40% of private sector board membership (118 out of a total 616 seats in 2016), even though this sector employs only 20% of the adult workforce. There is no role for trades union representatives in the way LEPs are designed.
While it is true that some LEP boards were more representative of local business than others, a common theme across the country is the over-representation of financial and consultancy services and the under-representation of large, labour-intensive sectors such as retail and social care, in which tens of thousands of people tend to work in any LEP area.
If our regional authorities were given real teeth, with the most important local employers required to engage seriously in decisions that affected local communities (like they do in Germany, for example), then the people of Swindon might have greater confidence in their representatives to protect them from massive shocks, like the announcement of a factory closure. As it is, LEPs are England’s main regional institutions but they are pretty much powerless to shape events.
Patrick McGurk, Senior Lecturer in Management Practice, Queen Mary University of London and Richard Meredith, PhD Researcher, Work and Employment Relations Unit within Centre for Research on Employment and Work, University of Greenwich