2017 Rich List . . . some challenges and opportunities for London

2017 Rich List . . . some challenges and opportunities for London

John Griffiths reflects on the opportunities for London by rethinking philanthropy in the capital.

The Sunday Times’ publication of the Rich List 2017 shows that the rich are getting richer. The wealthiest 1000 individuals, who enjoy a combined total wealth of £685 billion, saw this increase by 14%, or £82.5 billion, in the last year.[1]

Much of the reaction to the List has focused on how it shows the UK is becoming more unequal. Whilst the combined wealth of the richest top 500 (£580bn) is more than the £576bn of the top 1000 last year, the mega-rich now have more wealth than the poorest 40% of all households in the country. According to research by the Equality Trust, their increase in wealth last year (equivalent to £226m per day) would pay the grocery bills for all food bank users nationwide for 56 years, or for adult social care in England for the next four.[2]

The understandable media interest in who features on the latest Rich List overshadows other intriguing aspects to the annual compilation. In particular, where this vast wealth lies and, at a time of swingeing cuts to public spending, what some of the rich choose to do with their money. The List’s information on the location of the rich, and their increasing inclination to give their wealth away (£3.2bn in 2017; up 20% on 2016), represents a fascinating challenge for London.

London is home to more billionaires than any other city in the world. Of the 134 billionaires in Britain, 86 (64%) are based in the capital. New York, in second place, has 74; the highest other ranking European capital is Paris with 33. Yet London’s increasing polarisation of wealth is potentially the greatest risk to its economic success.

London is a city of contradictions. The capital contains the highest proportion (15%) of people in families with incomes in the bottom tenth nationally and the second highest proportion (15%) of people in the top tenth, after the South East.[3] The London Fairness Commission reported last year that for every £1 of wealth owned by the bottom 10% of London households, the top 10% owns £172. In short, London is again ‘becoming a city of great divides.’[4]

“Time for a Peabody moment?”

This apparent “re-Victorianization of London” has put the names of the great nineteenth century individual and corporate philanthropists back in the spotlight. Their altruism may have been driven as much by the perceived threat to the social fabric from the massed urban poor, as a sense of unfairness. Yet, in its call to arms (“Time for a ‘Peabody’ moment?”), the London Fairness Commission heralded “a new philanthropic age [believing] that the time is ripe for London’s wealthiest residents and businesses to come together in an exemplary social philanthropic effort.”[5]

Halting the apparent slide back to Victorian levels of inequality should be a strong argument for individual and corporate philanthropists to engage in shaping an economy which can both deliver “inclusive growth” and sustain a healthy civil society.[6] However, the work to date on The Way Ahead, a new vision of support for civil society in London has struggled to include business. Defining civil society in a way that highlights the distinctions between the different sectors, The Way Ahead is too last century for our increasingly common purpose. “Civil society is where people take action to improve their own lives or the lives of others and act where government or the private sector don’t.” (p6) It will remain difficult to motivate business if we do not acknowledge that an enabling state and an enlightened private sector are as much a part of civil society as voluntary and community organisations, or informal associations.

Responsible businesses can and do take action to improve the lives of others.[7] However, as with individual philanthropy, corporate giving (of money, time or resources) will always remain an unreliable substitute for state spending for reasons which academics label as “philanthropic insufficiency” and “philanthropic particularism.”[8] “Philanthropic insufficiency” is the realisation that charitable giving will never replace the redistributive role of the state because it is unable to meet the scale of need. London local government receives approximately £22 billion of funding to spend on services.[9] This is almost four times greater than the total cash giving by private sources in London (£5.6 billion). “Philanthropic particularism” is the recognition that donors choose which causes to invest in, responding to needs which they can relate to and not on the basis of objective evidence.[10] This can give philanthropic activities their strength, but also means that they cannot ensure consistency and equality.

And yet individual and corporate philanthropy has a far longer history than public spending in tackling the capital’s social needs. This is not to underplay the influence of the state, but rather to put its recent shrinking in historical context.[11] Philanthropy will never be able to replace state-funded provision. However, it does have the transformative potential to mitigate public sector cuts by meeting needs that lie outside the responsibility of government, as well as to supplement existing but diminishing state provision. Identifying where this can and should happen in London is the key challenge for London’s stakeholders engaged in The Way Ahead.

The exact level or proportion of giving in London is not known. Cash giving in the capital is estimated at £5.6 billion a year from all private sources, accounting for 29% of all UK giving. This is a significantly greater proportion than London’s contribution to UK GDP (22%).[12] In terms of volunteering, a recent report by City Philanthropy[13]found that 39% of London employees volunteer on an ad hoc and/or regular basis.

Whilst the UK in general, and London in particular, are generous in terms of the amount of money, time and insight given to charitable causes, there is a strong perception that London and Londoners have the potential to scale up their philanthropic activities in the capital. Businesses in London would like to be better integrated within their wider community and have greater social impact. Companies told the London Fairness Commission that they would like to scale up their successful philanthropic initiatives so as to reach a greater proportion of London’s population.[14]

The harder challenge of making philanthropy more effective is linked to one of the inherent weaknesses in private giving; the difficulty of influencing such activity so that it can be coordinated and directed at meeting the most pressing needs of Londoners. This is likely to be contentious on at least two counts. Firstly, reaching a workable consensus on what the priority needs for London are and, secondly, agreeing on the most appropriate vehicle to coordinate and (re)distribute philanthropy alongside public, trust and foundation funds. Opportunities do exist, however, to shape this agenda at a number of levels which are both place and theme-based. A few of these are summarised here as “Give More; “Give Local” and “Give Together.”

(1)  Give More

The Mayor of London, potentially working with the incumbent Lord Mayor and the City of London, can make greater use of the Bully Pulpit to challenge London’s business community to co-invest in future strategic priorities for a civil society. London is home to the corporate HQs of many of the FTSE500. In 2014, the top 500 companies in the UK spent £3.25bn on CSR-related activity. This sounds impressive. It actually represents just 0.026% of profit and well below the 0.5% benchmark which only very few corporate citizens manage to reach.[15] London’s civic leaders need to challenge business to give more (following the example of Mayors Bloomberg and De Blasio in New York City):

  • Harnessing CSR – the old, paternalistic models of top-down CSR (ie the board “adopting a charity” for its staff to fundraise for – and appropriating the credit) are changing. Employees, particularly millennials forging careers in the City, want to know they are working for corporates which do good as well as make money. This is becoming a powerful driver and top companies now have to compete for the best recruits on the basis of their social responsibility. A good example of an initiative which has tapped into this zeitgeist is BeyondMe; there are new models out there which need promoting and scaling up as they offer more sustained engagement of corporate resources to support civil society organisations and address social needs.

 

Awards and recognition schemes – there are quite a few awards already – the Lord Mayor’s Dragon Awards, for example, have now been going for 30 years. In Rocket Science’s recent review for the City Bridge Trust of the City of London’s initiatives to promote philanthropy, we argued that opportunities are being missed for a more coordinated and joined up approach between Mansion House and City Hall to champion and encourage corporate giving and corporate community engagement in the capital, potentially linking such action to the Mayor of London’s proposed “Business Compact”.

  • Exploiting mayoral powers of convening – the philanthropy review for City Bridge Trust highlighted the soft power of both the Mayor and the Lord Mayor and how this can be used to corral and persuade businesses to do more for London. The Mayor’s Fund to Advance New York City has been a cornerstone of the former and current Mayors’ philanthropic initiatives, facilitating public-private collaborations that support initiatives which respond to the needs of the city’s most disadvantaged communities.

(2)  Give Local

Community organisations need to be better prepared to work with companies’ sense of place at a more local level. In recent years there has been a proliferation of intermediary and brokerage organisations which match private companies with civil society organisations. East London Business Alliance; Heart of the City; City Action and Team London, as well as local models like Business and Community Together in Kensington and Chelsea, Community Southwark or Love Kingston pair companies, including SMEs, with charities, source employee volunteers and introduce business skills to community organisations.

The emergence also of place-based giving initiatives, on the back of the success of Islington Giving, and the growth of Business Improvement Districts (BIDs), provide additional infrastructure and conduits for engaging businesses in civil society locally. And yet there is a strong sense that much of this activity is happening in relative isolation, if not in competition, rather than based on a shared sense of purpose or a common vision for how business can best support London’s civil society.[16]

  • Influencing CSR beyond the FTSE 250 is about getting to SMEs. This requires finding new conduits or points of contact with companies of this size which are committed long-term to particular town centres or neighbourhoods in the capital. Last year Rocket Science and Future of London wrote a report for the GLA/LEP on Business Improvement Districts in the capital of which there are now more than 50 – a quarter of the total in the UK. It argued that BIDs are a potential broker and convenor of business engagement in local communities and in supporting civil society. Some are doing this already (eg Better BanksideBaker Street Quarter Partnership); more could be persuaded or shown how. The GLA has contemplated setting up a BIDs’ Innovation Fund – why not include as one of the fund’s themes an invitation for BID partnerships to support Civil Society Organisations and local infrastructure?

(3) Give Together

On a thematic basis, the Big Lottery Fund, on the back of recent research by Collaborate, is recommending the mapping of London’s funding ecology. This should better equip the funding community in London to align and complement their work, resulting in more effective distribution of funds to meet the needs of Londoners, whilst also providing a way ahead for businesses which are interested in co-investing in a shared agenda.[17]

  • Employer Supported Volunteering – this initiative, a plank in the Conservative Party’s 2015 Manifesto, has had a somewhat stop-start evolution.  http://blogs.ncvo.org.uk/2015/07/10/from-csr-to-hr-the-future-of-employer-supported-volunteering/  For this to work, it needs effective brokers (at the local level) which connect business volunteers to VCSOs (and other manifestations of a civil society). This has to be more than about teams painting community buildings – though that has its place. At a pan London level, there seems an opportunity for an agency like the GLA’s Team London to promote and broker Lawyers for London; Accountants for London; Planners for London etc. – ie connecting the professions to communities where the skills and resources are so needed and where they can be applied for mutual benefit.
  • Social Value Act – potentially this legislation gives statutory sector commissioners greater leverage over business and redefines the parameters for CSR. Instead of companies defining their responsibilities and deciding what they would like to contribute, the public sector can now set the agenda and determine the priorities. The Way Ahead task group which has looked at Consistent Commissioning found examples of commissioners now developing a prospectus or, in the case of the Mayor of Liverpool, a Social Value Charter which is a call to action for business to invest more as partners in the local communities of Liverpool.

According to Robert Watts, the new compiler of the Rich List, HM Revenue and Customs, along with divorce lawyers, estate agents and auction houses take more than a passing interest in the List’s annual publication. Collectively, London’s statutory and independent funders should too.

For more information on The Way Ahead please refer to: http://londonfunders.org.uk/what-we-do/london-funders-projects

[1] The Sunday Times Magazine, Rich List 2017, May 7 2017

[2] https://www.equalitytrust.org.uk/richest-1000-people-have-more-wealth-poorest-40

[3] London’s 2015 Poverty Profile, Trust for London

[4] London Communities Commission

[5] London Fairness Commission 2016 p53.

[6] See: Prosperity and poverty – the challenge of social renewal in difficult times The Chris Patten Lecture, given by Julia Unwin at Newcastle Institute for Social Renewal, 22 November 2016

[7] See, for example, the report of The London Communities Commission: Evidence and Draft Recommendations for Action with the Business Sector, March 2016

[8] Mohan, J. and Breeze. B. (2015) The Logic of Charity: Great Expectations in Hard Times, Macmillan

[9] http://www.londoncouncils.gov.uk/our-key-themes/local-government-finance/local-government-funding-and-expenditure/total-funding

[10] Davies, R. (2016) Public good by private means. Charities Aid Foundation

[11] Bradley, K. (2009) Poverty, Philanthropy and the State: Charities and the Working Classes in London

[12] Pharoah, C. and Walker, C. (2015) ‘More to Give: London Millennials networking towards a Better World’ City Philanthropy

[13] Pharoah, C. and Walker, C. (2015) ‘More to Give: London Millennials working towards a better world’ City Philanthropy

[14] London Fairness Commission (2016)

[15] Figures quoted in the report of The London Communities Commission: Evidence and Draft Recommendations for Action with the Business Sector, March 2016

[16] The Evolution of London’s Business Improvement Districts (2016)

[17] A New Funding Ecology – A Blueprint for Action (2015)


John is the Managing Director at Rocket Science based in our London office.  You can check his profile here.

What could Sadiq Khan do for BIDs in London?

What could Sadiq Khan do for BIDs in London?

Why we need to carry on supporting the BID movement in London. John Griffiths offers his thoughts for the Mayor for London.

One of Boris Johnson’s final acts as Mayor of London was to announce he had achieved his 2012 manifesto target of seeing 50 Business Improvement Districts set up in the capital. London’s reaching 50 BIDs (almost a quarter of the total in the UK) does not mean we are at saturation point. Several of the 14 boroughs which have not embraced BIDs are considering their feasibility, including Wandsworth, Tower Hamlets and Haringey.  However, the 50 BID milestone is an opportune moment to reflect on what BIDs have achieved, their strengths and weaknesses and how the new Mayor of London may decide to enable them to work more collaboratively with other partners who are interested in the place-shaping of London’s many different communities.

The first BID in London, Kingston First, was set up in 2005 and in 2015 entered its third 5-year term. Term renewal is regarded as one of the most telling indicators of a BID’s success.  All BIDs in the capital which have held renewal ballots since 2012 have seen an increase in turnout and approval rates.  And yet, whilst London’s BIDs seem here to stay, they still face considerable challenges:

  • Cuts in local government funding mean that BIDs have an opportunity to expand their responsibilities and importance, but this also threatens their raison d’etre as business-led membership organisations which, first and foremost, exist to add value to statutory provision not substitute for it;
  • Opportunities presented by the government’s commitment to devolution and localism also bring risks and uncertainties for BIDs in terms of their financial sustainability, given changes to local government finance, rate revaluation and new taxation mechanisms;
  • Expectations of BIDs to play a role as convenors and enablers of local/neighbourhood plans bring added responsibility and requirements in terms of professional skills, and expectations of greater accountability and transparency to stakeholders other than just a BID’s levy payers.

BIDs appeal to the majority of London’s councils for different reasons. Inevitably, as town halls face further funding cuts, BIDs appear attractive as a money-saving device. Within that framework, some London boroughs adopt a hands-off approach, reaching a baseline-agreement for local services, but largely recognising BIDs’ autonomy as private-sector organisations. In contrast to this laissez-faire approach, others have sought collaboration in the form of public-private partnerships. Councils that have redefined themselves as enablers, see BIDs as integral to establishing new forms of service delivery and stimulating economic growth. Boroughs which have taken this approach include the City of Westminster, now home to eight BIDs; Lambeth (6); Southwark and Camden (4 each).

Westminster, for example, recently instigated regular meetings between the Leader of the Council, the Cabinet Member for Regeneration, Business and Economic Development and the borough’s BID chief executives.  This is a clear signal to the BIDs that they are regarded as key to the economic development of the borough.

The meetings enable the BIDs to report back on council services in their areas, but also to identify opportunities for contracting out services, including to local BID partnerships.

The council has also encouraged BIDs (eg Victoria and the New West End Company) to support the work of local Neighbourhood Forums; as business led forums they can then access Community Infrastructure Levy funding to support the development of a Neighbourhood Plan.

Lambeth’s transformation into a ‘Cooperative Council’ includes identifying opportunities to break up bigger contracts as they come up for renewal; smaller contracts, delivered more locally, have provided opportunities for BIDs (eg Vauxhall BID taking over management of Vauxhall Park under a council contract). The Council’s bi-monthly BID forum also lets BIDs propose and test new ideas, including South Bank BID’s proposal for a shared apprenticeship scheme.

Systems for engagement need to be robust. There will be occasions when the BID’s and the local authority’s interests conflict. Angel BID, for example, which has a close working relationship with LB Islington, found itself leading a vociferous and ultimately successful community campaign against the council’s proposed parking policy. In Croydon, relations with the BID became temporarily strained last year when the Council’s Labour administration took umbrage at the blue uniforms, along with bowler hats, of the BID’s new Street Ambassadors. They now wear an eye-catching pink.

A recent report[1] commissioned by the GLA and the London Enterprise Panel recommended that the new Mayor should focus less on the setting up of yet more BIDs, but rather find ways to support existing BIDs as agents of local partnership. The growth in number and diversity of BIDs in the capital calls for a greater awareness of the sector’s segmentation, enabling groups of BIDs to collaborate on different issues, as well with the voluntary sub-regional arrangements of boroughs which are linked to London’s devolution proposals. In the meantime, this is happening as much by chance as by design, with an ad hoc mix of BID-financed infrastructure and area-based partnerships in place (eg the Cross River Partnership), providing support for both inter-BID collaboration, as well as cross-borough public-private initiatives.

As, in the words of one BID Chief Executive, the “new kids on the municipal block”, BIDs are quickly having to find their feet in a fast-changing environment for both local government and wider governance arrangements in London.  It will be those BIDs with an enterprising mind set, political nous, an open and supportive relationship with their local community and a propensity to collaborate which succeed.  As new BIDs continue to emerge whilst others grow in maturity, the London BID community will become increasingly diverse.  This will require a variety of different support arrangements and partnerships – both area and issue based – in order to harness BID energies and resources, enabling BIDs to maximise their contribution to tackling London’s policy priorities which is in the interests of both their members and the wider community.

John Griffiths is a Director of Rocket Science, co-authors with Future of London of The Evolution of London’s Business Improvement Districts

[1] The Evolution of London’s Business Improvement Districts March 2016

 

 

John is Managing Director at Rocket Science based in our London office.  You can check out his profile here.