Another path for the city economy

What would it take for Edinburgh to set out on a different economic path, asks Gavin Corbett.

Being the sole Green on the City Council’s Economy Committee can be a bit lonely. There’s occasional lights at the end of the tunnel, like the sustainable economy paper earlier this year, but there’s an awful lot of business as usual on the menu: airport expansion; bland, homogenous inward investment; more hotel space; more office space; more pressure on local business.

So it was uplifting, in the last couple of weeks, to take part in two discussions which, together, could sow the seeds on a different economic path.

This first was the launch of the Edinburgh Social Enterprise Strategy. Social enterprise has grown in the city from being simply an aspiration to being a sector with a turnover of £44 million and employing 4,400 people. Small beginnings still, but with a capacity to grow and add value in a way that corporations never can. Many of our most successful social enterprises, like Changeworks, add to the city’s distinctive character.

Both at the event and in meeting with Edinburgh Social Enterprise Network staff, there’s been genuine appreciation of the way that the City Council has supported the sector –for example, through the Business Gateway located at the Council headquarters. To continue that development, the single biggest ask was for help to promote the sector, not least to the Council’s 17,000 staff, but also to the city as a whole. Edinburgh as a “Social Enterprise Capital” has a nice feel to it and, is arguably, more grounded in reality than the well-meaning, but rather laboured, attempts to position Edinburgh as a co-operative capital (wonderful work though many co-ops do).

And the mainstream private sector has a role to play too. I was encouraged by the enthusiasm shown by Edinburgh Chambers of Commerce chief executive David Birrell at the launch event. The proof of the pudding, as ever, will be in the eating. Will private sector mentors come forward to help with social enterprise governance? Will new alliances be built between mainstream business and social enterprise to bid for public sector contracts? I hope so.

The second discussion was around the potential for Edinburgh to become an ethical finance hub. Over the last five years there has been renewed interest (to say the least!) on the ethics and performance of our banks. To my mind, there is huge latent demand for products which use money in benign ways, although the travails of erstwhile market leader, the Co-op Bank, have not helped in the short term.

This week, at the Council’s Economy Committee, councillors heard from a number of experts who were urging Edinburgh to take the next step on from its role as an acknowledged centre for financial services, to develop an ethical edge. I heard two key messages from those experts. Firstly, from the Islamic Finance Council, a willingness to see our investment-starved small business sector as a recipient for equity finance, given the prohibition in Islam on interest-based products. Secondly, more from the non-faith based participants, an interest in how to translate latent demand for ethical finance products into actual take-up. That seemed to be very similar to what the Social Enterprise sector was telling us.

Both of these ideas seem worth pursuing further. But I also want to pitch in a couple of my own. Firstly, that the City Council would need to be able to match the private and third sectors stride for stride. It would be unfortunate if, in promoting Edinburgh as a financial centre, the Council was not also prepared to look at its own Treasury management functions and how the Lothian pension fund invests along ethical lines.

Secondly, this whole focus may be much more radical than a few more niche products by niche providers. The continuing crisis in banking is an opportunity to rethink banks from first principles – as set out by my parliamentary colleague Patrick Harvie in parliament this week, in arguing for a new direction for our biggest name in banking, RBS.

Having just seen RBS close down the local branch in my own neighbourhood this summer, I know what I’d prefer.